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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7560 Introduced in House (IH)]

<DOC>

118th CONGRESS
  2d Session
                                H. R. 7560

To amend the Small Business Act to codify the Community Advantage Loan 
                    Program, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 6, 2024

Ms. Chu (for herself and Ms. Velazquez) introduced the following bill; 
         which was referred to the Committee on Small Business

_______________________________________________________________________

                                 A BILL

 
To amend the Small Business Act to codify the Community Advantage Loan 
                    Program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Community Advantage Loan Program Act 
of 2024''.

SEC. 2. COMMUNITY ADVANTAGE LOAN PROGRAM.

    (a) Establishment of Community Advantage Loan Program.--Section 
7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended by adding 
at the end the following:
            ``(38) Community advantage loan program.--
                    ``(A) Purposes.--The purposes of the Community 
                Advantage Loan Program are--
                            ``(i) to create a mission-oriented loan 
                        guarantee program;
                            ``(ii) to increase lending to small 
                        business concerns in underserved and rural 
                        markets, including to new businesses;
                            ``(iii) to ensure that the program under 
                        this subsection expands inclusion and more 
                        broadly meets congressional intent to reach 
                        borrowers who are unable to get credit 
                        elsewhere on reasonable terms and conditions;
                            ``(iv) to help underserved small business 
                        concerns become bankable by utilizing the small 
                        dollar financing and business support 
                        experience of mission-oriented lenders;
                            ``(v) to allow certain mission-oriented 
                        lenders, primarily financial intermediaries 
                        focused on economic development in underserved 
                        markets, access to guarantees for loans under 
                        this subsection and provide management and 
                        technical assistance to small business concerns 
                        as needed; and
                            ``(vi) to assist covered institutions with 
                        providing business support services and 
                        technical assistance to small business 
                        concerns, when needed.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Community advantage network 
                        partner.--The term `Community Advantage Network 
                        Partner'--
                                    ``(I) means a nonprofit, mission-
                                oriented organization that acts as a 
                                Referral Agent to covered institutions 
                                in order to expand the reach of the 
                                program to small business concerns in 
                                underserved markets; and
                                    ``(II) does not include a covered 
                                institution making loans under the 
                                program.
                            ``(ii) Covered institution.--The term 
                        `covered institution' means an entity that--
                                    ``(I) is--
                                            ``(aa) a development 
                                        company, as defined in section 
                                        103 of the Small Business 
                                        Investment Act of 1958 (15 
                                        U.S.C. 662), participating in 
                                        the program established under 
                                        title V of such Act (15 U.S.C. 
                                        695 et seq.);
                                            ``(bb) a nonprofit 
                                        intermediary, as defined in 
                                        subsection (m)(11), 
                                        participating in the microloan 
                                        program under subsection (m);
                                            ``(cc) a non-Federally 
                                        regulated entity certified as a 
                                        community development financial 
                                        institution by the Community 
                                        Development Financial 
                                        Institutions Fund established 
                                        under section 104(a) of the 
                                        Community Development Banking 
                                        and Financial Institutions Act 
                                        of 1994 (12 U.S.C. 4703(a)); or
                                            ``(dd) an eligible 
                                        intermediary, as defined in 
                                        subsection (l)(1), 
                                        participating in the small 
                                        business intermediary lending 
                                        program established under 
                                        subsection (l)(2);
                                    ``(II) has approved and disbursed 
                                10 similarly sized loans during the 24-
                                month period preceding the date on 
                                which such entity submits an 
                                application to participate in the 
                                program; and
                                    ``(III) is servicing, as of the 
                                date on which such entity begins 
                                participation in the program, not less 
                                than 10 similarly sized loans (other 
                                than a loan described in subclause 
                                (II)) to small business concerns in the 
                                portfolio of the entity.
                            ``(iii) Existing business.--The term 
                        `existing business' means a small business 
                        concern that has been in existence for not less 
                        than 2 years on the date on which a loan is 
                        made to such small business concern under the 
                        program.
                            ``(iv) Low- or moderate-income community.--
                        The term `low- or moderate-income community' 
                        means a census tract designated as low-income 
                        or moderate-income by the Financial 
                        Institutions Examination Council on a public 
                        website of the Council.
                            ``(v) New business.--The term `new 
                        business' means a small business concern that 
                        has been in existence for not more than 2 years 
                        on the date on which a loan is made to such 
                        small business concern under the program.
                            ``(vi) Program.--The term `program' means 
                        the Community Advantage Loan Program 
                        established under subparagraph (C).
                            ``(vii) Referral agent.--The term `Referral 
                        Agent' has the meaning given the term in 
                        section 103.1(f) of title 13, Code of Federal 
                        Regulations, or any successor regulation.
                            ``(viii) Rural area.--The term `rural area' 
                        means any county that the Bureau of the Census 
                        has defined as mostly rural or completely rural 
                        in the most recent decennial census.
                            ``(ix) State.--The term `State' means each 
                        of the several States, the District of 
                        Columbia, and each territory of the United 
                        States.
                            ``(x) Small business concern in underserved 
                        markets.--The term `small business concern in 
                        underserved markets' means a small business 
                        concern--
                                    ``(I) that is located in--
                                            ``(aa) a low- or moderate-
                                        income community;
                                            ``(bb) a HUBZone, as that 
                                        term is defined in section 
                                        31(b);
                                            ``(cc) a rural area;
                                            ``(dd) a community that has 
                                        been designated as an 
                                        empowerment zone or enterprise 
                                        community under section 1391 of 
                                        the Internal Revenue Code of 
                                        1986;
                                            ``(ee) a community that has 
                                        been designated as a qualified 
                                        opportunity zone under section 
                                        1400Z-1 of the Internal Revenue 
                                        Code of 1986; or
                                            ``(ff) a community that has 
                                        been designated as a promise 
                                        zone by the Secretary of 
                                        Housing and Urban Development;
                                    ``(II) for which more than 50 
                                percent of the employees reside in a 
                                low- or moderate-income community;
                                    ``(III) that is a new business;
                                    ``(IV) that is owned and controlled 
                                by one or more veterans or spouses of 
                                veterans;
                                    ``(V) that is located in any area 
                                for which a disaster declaration or 
                                determination described in subparagraph 
                                (A), (B), (C), or (E) of subsection 
                                (b)(2) has been made that has not 
                                terminated more than 2 years before the 
                                date on which a loan is made to the 
                                small business concern under the 
                                program, except--
                                            ``(aa) in the case of a 
                                        disaster that is not a major 
                                        disaster described in 
                                        subsection (b)(2)(A), the 
                                        Administrator may extend such 
                                        period; and
                                            ``(bb) in the case of major 
                                        disaster described in 
                                        subsection (b)(2)(A), that 
                                        period shall be 5 years;
                                    ``(VI) that is owned and controlled 
                                by a member of an Indian Tribe 
                                individually identified (including 
                                parenthetically) in the most recent 
                                list published pursuant to section 104 
                                of the Federally Recognized Indian 
                                Tribe List Act of 1994 (25 U.S.C. 
                                5131);
                                    ``(VII) that is owned and 
                                controlled by an individual who has 
                                completed a term of imprisonment in a 
                                Federal, State, or local jail, or 
                                prison; or
                                    ``(VIII) that is owned and 
                                controlled by an individual with a 
                                disability, as that term is defined in 
                                section 3 of the Americans with 
                                Disabilities Act of 1990 (42 U.S.C. 
                                12102).
                    ``(C) Establishment.--There is established a 
                Community Advantage Loan Program under which the 
                Administration may guarantee loans made by covered 
                institutions under this subsection, with an emphasis on 
                loans made to small business concerns in underserved 
                markets.
                    ``(D) Program levels.--In fiscal year 2024 and each 
                fiscal year thereafter, not more than 10 percent of the 
                number of loans guaranteed under this subsection may be 
                guaranteed under the program.
                    ``(E) Grandfathering of existing lenders.--Any 
                covered institution that was licensed by the 
                Administrator as a Community Advantage small business 
                lending company during the period beginning on May 1, 
                2023, and ending on October 31, 2023, or that 
                participated in the Community Advantage Pilot Program 
                of the Administration, and was in good standing, as 
                determined by the Administration--
                            ``(i) shall be designated as participants 
                        in the program;
                            ``(ii) shall not be required to submit an 
                        application to participate in the program; and
                            ``(iii) for the purpose of determining the 
                        loan loss reserve amount of the covered 
                        institution, shall have participation in the 
                        Community Advantage Pilot Program included in 
                        the calculation under subparagraph (J).
                    ``(F) Requirement to make loans to underserved 
                markets.--Not less than 60 percent of loans made by a 
                covered institution under the program shall consist of 
                loans made to small business concerns in underserved 
                markets.
                    ``(G) Maximum loan amount; collateral.--
                            ``(i) Maximum loan amount.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), the maximum 
                                loan amount for a loan guaranteed under 
                                the program is $350,000.
                                    ``(II) Experienced lenders.--
                                            ``(aa) In general.--The 
                                        Administrator may select not 
                                        more than 8 covered 
                                        institutions to be designated 
                                        as `experienced lenders' to be 
                                        eligible to make loans under 
                                        this paragraph. An experienced 
                                        lender shall have not less than 
                                        5 years of experience making 
                                        loans under the Community 
                                        Advantage Pilot Program of the 
                                        Administration or the program 
                                        established under this 
                                        paragraph.
                                            ``(bb) Maximum loan 
                                        amount.--An experienced lender 
                                        may make a loan guaranteed 
                                        under the program in an amount 
                                        that is not more than $750,000, 
                                        but not less than 60 percent of 
                                        the total number of such loans 
                                        made by an experienced lender 
                                        shall be in an amount that is 
                                        less than or equal to $350,000.
                                            ``(cc) Participation by the 
                                        administration.--With respect 
                                        to an agreement to participate 
                                        in a loan made under this 
                                        subclause on a deferred basis, 
                                        the participation by the 
                                        Administration shall be--

                                                    ``(AA) 75 percent 
                                                of the balance of the 
                                                financing outstanding 
                                                at the time of the 
                                                disbursement of the 
                                                loan, if that balance 
                                                is more than $350,000;

                                                    ``(BB) as described 
                                                in clause (i) of 
                                                paragraph (2)(G), if 
                                                the balance of the 
                                                financing outstanding 
                                                at the time of the 
                                                disbursement of the 
                                                loan is as described in 
                                                that clause; or

                                                    ``(CC) as described 
                                                in clause (ii) of 
                                                paragraph (2)(G), if 
                                                the balance of the 
                                                financing outstanding 
                                                at the time of the 
                                                disbursement of the 
                                                loan is as described in 
                                                that clause.

                            ``(ii) Collateral.--
                                    ``(I) In general.--A covered 
                                institution may not require collateral 
                                with respect to a loan guaranteed under 
                                the program if the amount of that loan 
                                is less than or equal to $50,000.
                                    ``(II) Policies and procedures of 
                                covered institution.--In determining 
                                the amount of collateral required with 
                                respect to a loan guaranteed under the 
                                program, a covered institution may use 
                                the collateral policies and procedures 
                                of the covered institution with respect 
                                to similarly sized commercial loans 
                                made by the covered institution that 
                                are not guaranteed by the 
                                Administrator.
                    ``(H) Interest rates.--The maximum allowable 
                interest rate prescribed by the Administration on any 
                financing made on a deferred basis pursuant to the 
                program shall not exceed the maximum allowable interest 
                rate under sections 120.213 and 120.214 of title 13, 
                Code of Federal Regulations, or any successor 
                regulations.
                    ``(I) Refinancing of community advantage program 
                loans.--A loan guaranteed under the program or 
                guaranteed under the Community Advantage Pilot Program 
                of the Administration may be refinanced into another 
                loan under this subsection that is made by a lender 
                that does not participate in the program.
                    ``(J) Loan loss reserve requirements.--
                            ``(i) Loan loss reserve account for covered 
                        institutions.--A covered institution--
                                    ``(I) with not more than 5 years of 
                                participation in the program shall 
                                maintain a loan loss reserve account 
                                with an amount equal to 5 percent of 
                                the outstanding amount of the 
                                unguaranteed portion of the loan 
                                portfolio of the covered institution 
                                under the program; and
                                    ``(II) with more than 5 years of 
                                participation in the program shall 
                                maintain a loan loss reserve account 
                                with an amount equal to the average 
                                repurchase rate of the covered 
                                institution over the 36-month period 
                                preceding the most recent recalculation 
                                conducted under clause (iii), except 
                                that such amount shall not be less than 
                                3 percent of the outstanding amount of 
                                the unguaranteed portion of the loan 
                                portfolio of the covered institution 
                                under the program.
                            ``(ii) Additional loan loss reserve amount 
                        for selling loans on the secondary market.--In 
                        addition to the amount required in the loan 
                        loss reserve account under clause (i), a 
                        covered institution that sells a program loan 
                        on the secondary market shall be required to 
                        maintain the following additional amounts in 
                        the loan loss reserve account:
                                    ``(I) For a covered institution 
                                with less than 5 years of experience 
                                selling program loans on the secondary 
                                market, an amount equal to 3 percent of 
                                the guaranteed portion of each program 
                                loan sold on the secondary market.
                                    ``(II) For a covered institution 
                                with more than 5 years of experience 
                                selling program loans on the secondary 
                                market, an amount equal to the average 
                                repurchase rate for loans sold by the 
                                covered institution on the secondary 
                                market over the 36-month period 
                                preceding the most recent recalculation 
                                conducted under clause (iii), except 
                                that such amount shall be not less than 
                                2 percent of the guaranteed portion of 
                                each program loan sold into the 
                                secondary market.
                            ``(iii) Recalculation.--On October 1 of 
                        each year, the Administrator shall recalculate 
                        the loan loss reserve required under clauses 
                        (i) and (ii).
                    ``(K) Training.--
                            ``(i) In general.--Upon the initial entry 
                        of a covered institution into the program, and 
                        on an ongoing basis, the Administrator shall 
                        provide accessible trainings to support 
                        compliance by the covered institution with 
                        program requirements and to improve 
                        communication between the covered institution 
                        and the Administration. Such trainings shall 
                        include--
                                    ``(I) guidance with respect to the 
                                program for following the regulations 
                                of the Administration; and
                                    ``(II) guidance for covered 
                                institutions participating in the 
                                program that is intended to help 
                                lenders effectively reach and support 
                                small business concerns in underserved 
                                markets, including management and 
                                technical assistance delivery.
                            ``(ii) Contract.--The Administrator may 
                        enter into a contract to provide any training 
                        described in clause (i) with an organization--
                                    ``(I) with expertise in lending 
                                under this subsection; and primarily 
                                specializing in--
                                            ``(aa) mission-oriented 
                                        lending; and
                                            ``(bb) lending to small 
                                        business concerns in 
                                        underserved markets.
                            ``(iii) Other requirements.--The 
                        Administrator shall provide any training 
                        described in clause (i) for the employees and 
                        contractors of the Administration that 
                        regularly engage with covered institutions or 
                        borrowers under the program.
                    ``(L) Community advantage outreach and education.--
                The Administrator--
                            ``(i) shall develop and implement a plan--
                                    ``(I) to promote the program to 
                                prospective covered institutions; and
                                    ``(II) to conduct outreach and 
                                educate prospective covered 
                                institutions about the program; and
                            ``(ii) may enter into contracts with 1 or 
                        more nonprofit organizations experienced in 
                        working with and training mission-driven 
                        lenders (that are not Community Advantage 
                        Network Partners) to provide the promotion, 
                        outreach, and education described in clause 
                        (i).
                    ``(M) Community advantage network partner 
                participation.--
                            ``(i) In general.--A covered institution 
                        that uses a Community Advantage Network Partner 
                        shall abide by policies and procedures of the 
                        Administration concerning the use of Referral 
                        Agent fees permitted by the Administration and 
                        disclosure of those fees.
                            ``(ii) Payment of fees.--Notwithstanding 
                        any other provision of law, all fees described 
                        in clause (i) shall be paid by the covered 
                        institution to the Community Advantage Network 
                        Partner upon disbursement of the applicable 
                        program loan.
                    ``(N) Delegated authority.--A covered institution 
                is not eligible to receive delegated authority from the 
                Administration under the program until the covered 
                institution has satisfied the following applicable 
                requirements:
                            ``(i) For a covered institution actively 
                        participating in the Community Advantage Pilot 
                        Program of the Administration, as of the day 
                        before the date of enactment of this 
                        paragraph--
                                    ``(I) the covered institution has 
                                approved and fully disbursed not fewer 
                                than 10 loans under that Pilot Program; 
                                and
                                    ``(II) the Administrator has 
                                evaluated the ability of the covered 
                                institution to fulfill program 
                                requirements.
                            ``(ii) For any covered institution not 
                        described in clause (i)--
                                    ``(I) the covered institution has 
                                approved and fully disbursed not fewer 
                                than 20 loans under the program; and
                                    ``(II) the Administrator has 
                                evaluated the ability of the covered 
                                institution to fulfill program 
                                requirements.
                    ``(O) Reporting.--
                            ``(i) Weekly reports.--
                                    ``(I) In general.--The 
                                Administrator shall report on the 
                                website of the Administration, as part 
                                of the weekly reports on lending 
                                approvals under this subsection--
                                            ``(aa) on and after the 
                                        date of enactment of this 
                                        paragraph, the number and 
                                        dollar amount of loans 
                                        guaranteed under the Community 
                                        Advantage Pilot Program of the 
                                        Administration; and
                                            ``(bb) on and after the 
                                        date on which the Administrator 
                                        begins to approve loans under 
                                        the program, the number and 
                                        dollar amount of loans 
                                        guaranteed under the program.
                                    ``(II) Separate accounting.--The 
                                number and dollar amount of loans 
                                reported in a weekly report under 
                                subclause (I) for loans guaranteed 
                                under the Community Advantage Pilot 
                                Program of the Administration and under 
                                the program shall include a breakdown 
                                by the demographic information of the 
                                owners of the small business concerns, 
                                by whether the small business concern 
                                is a new business or an existing 
                                business, and by whether the small 
                                business concern is located in an urban 
                                area or rural area, further 
                                disaggregated by--
                                            ``(aa) loans less than or 
                                        equal to $50,000;
                                            ``(bb) loans greater than 
                                        $50,000 and less than or equal 
                                        to $150,000;
                                            ``(cc) loans greater than 
                                        $150,000 and less than or equal 
                                        to $250,000;
                                            ``(dd) loans greater than 
                                        $250,000 and less than or equal 
                                        to $350,000; and
                                            ``(ee) loans greater than 
                                        $350,000 and less than or equal 
                                        to $750,000.
                            ``(ii) Annual reports.--
                                    ``(I) In general.--For each fiscal 
                                year in which the program is in effect, 
                                the Administration shall submit to the 
                                Committee on Small Business and 
                                Entrepreneurship of the Senate and the 
                                Committee on Small Business of the 
                                House of Representatives, and make 
                                publicly available on the internet, 
                                information about loans provided under 
                                the program and under the Community 
                                Advantage Pilot Program of the 
                                Administration.
                                    ``(II) Contents.--Each report 
                                submitted and made publicly available 
                                under subclause (I) shall include--
                                            ``(aa) the number and 
                                        dollar amounts of loans 
                                        provided to small business 
                                        concerns under the program, 
                                        including a breakdown by--

                                                    ``(AA) the 
                                                demographic information 
                                                of the owners of the 
                                                small business concern;

                                                    ``(BB) whether the 
                                                small business concern 
                                                is located in an urban 
                                                area or rural area; and

                                                    ``(CC) whether the 
                                                small business concern 
                                                is an existing business 
                                                or a new business, as 
                                                provided in the weekly 
                                                reports on lending 
                                                approvals under this 
                                                subsection;

                                            ``(bb) the proportion of 
                                        loans described in item (aa) 
                                        compared to--

                                                    ``(AA) other loans 
                                                made under this 
                                                subsection of any 
                                                amount;

                                                    ``(BB) other loans 
                                                made under this 
                                                subsection of similar 
                                                amounts;

                                                    ``(CC) express 
                                                loans provided under 
                                                paragraph (31) of 
                                                similar amounts; and

                                                    ``(DD) other loans 
                                                made under this 
                                                subsection of similar 
                                                amounts provided to 
                                                small business concerns 
                                                in underserved markets;

                                            ``(cc) a comparison of the 
                                        number and dollar amounts of 
                                        loans provided to small 
                                        business concerns under the 
                                        program and under each category 
                                        of loans described in item 
                                        (aa), broken down by--

                                                    ``(AA) loans less 
                                                than or equal to 
                                                $50,000;

                                                    ``(BB) loans 
                                                greater than $50,000 
                                                and less than or equal 
                                                to $150,000;

                                                    ``(CC) loans 
                                                greater than $150,000 
                                                and less than or equal 
                                                to $250,000;

                                                    ``(DD) loans 
                                                greater than $250,000 
                                                and less than or equal 
                                                to $350,000; and

                                                    ``(EE) loans 
                                                greater than $350,000 
                                                and less than or equal 
                                                to $750,000;

                                            ``(dd) the number and 
                                        dollar amounts of loans 
                                        provided to small business 
                                        concerns under the program by 
                                        State, and the jobs created or 
                                        retained within each State; and
                                            ``(ee) a list of covered 
                                        institutions participating in 
                                        the program and the Community 
                                        Advantage Pilot Program of the 
                                        Administration, including--

                                                    ``(AA) the name, 
                                                location, and contact 
                                                information, such as 
                                                the website and 
                                                telephone number, of 
                                                each covered 
                                                institution; and

                                                    ``(BB) a breakdown 
                                                by the number and 
                                                dollar amount of the 
                                                loans approved for 
                                                small business 
                                                concerns.

                                    ``(III) Timing.--An annual report 
                                required under this clause shall--
                                            ``(aa) be submitted and 
                                        made publicly available not 
                                        later than December 1 of each 
                                        year; and
                                            ``(bb) cover the lending 
                                        activity for the fiscal year 
                                        that ended on September 30 of 
                                        that same year.
                    ``(P) GAO report.--Not later than 5 years after the 
                date of the enactment of this paragraph, the 
                Comptroller General of the United States shall submit 
                to the Administrator, the Committee on Small Business 
                and Entrepreneurship of the Senate, and the Committee 
                on Small Business of the House of Representatives a 
                report--
                            ``(i) assessing--
                                    ``(I) the extent to which the 
                                program fulfills the requirements of 
                                this paragraph; and
                                    ``(II) the performance of covered 
                                institutions participating in the 
                                program; and
                            ``(ii) providing recommendations on the 
                        administration of the program and the findings 
                        under subclauses (I) and (II) of clause (i).
                    ``(Q) Regulations.--
                            ``(i) In general.--Not later than 180 days 
                        after the date of enactment of this paragraph, 
                        the Administrator shall issue rules governing 
                        the program, including metrics for lender 
                        performance, metrics of success and benchmarks 
                        of the program, and criteria for appropriate 
                        management and technical assistance.
                            ``(ii) Updates.--The Administrator shall 
                        consult the report submitted under subparagraph 
                        (P) and, not later than 180 days after the date 
                        on which the Comptroller General of the United 
                        States submits such report, amend any existing 
                        rules of the Administration based on the 
                        recommendations contained in such report.''.
    (b) Participation.--Section 7(a)(2) of the Small Business Act (15 
U.S.C. 636(a)(2)) is amended--
            (1) in subparagraph (A), in the matter preceding clause 
        (i), by striking ``and (F)'' and inserting ``(F), and (G)''; 
        and
            (2) by adding at the end the following:
                    ``(G) Participation in the community advantage loan 
                program.--Subject to subparagraph (G)(i)(II)(cc) of 
                paragraph (38), in an agreement to participate in a 
                loan on a deferred basis under that paragraph, the 
                participation by the Administration shall be--
                            ``(i) 80 percent of the balance of the 
                        financing outstanding at the time of the 
                        disbursement of the loan, if that balance is 
                        greater than $150,000 and less than or equal to 
                        $350,000; or
                            ``(ii) 90 percent of the balance of the 
                        financing outstanding at the time of the 
                        disbursement of the loan, if that balance is 
                        less than or equal to $150,000.''.
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