II 

110TH CONGRESS 

1ST SESSION S. 985 

To establish a pilot program to provide low interest loans to nonprofit, 

community-based lending intermediaries, to provide midsize loans to small 

business concerns, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 26, 2007 

Mr. LEVIN introduced the following bill; which was read twice and referred 

to the Committee on Small Business and Entrepreneurship 

A BILL 

To establish a pilot program to provide low interest loans 

to nonprofit, community-based lending intermediaries, to 

provide midsize loans to small business concerns, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Inter5 mediary Lending Pilot Program Act of 2007’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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1 (1) Small and emerging businesses, particularly 

2 startups and businesses that lack sufficient or con3 ventional collateral, continue to face barriers access4 ing midsized loans in amounts between $35,000 and 

5 $200,000, with affordable terms and conditions. 

6 (2) Consolidation in the banking industry has 

7 resulted in a decrease in the number of small, locally 

8 controlled banks with not more than $100,000,000 

9 in assets and has changed the method by which 

10 banks make small business credit decisions with— 

11 (A) credit scoring techniques replacing re12 lationship-based lending, which often works to 

13 the disadvantage of small or startup businesses 

14 that do not conform with a bank’s standardized 

15 credit formulas; and 

16 (B) less flexible terms and conditions, 

17 which are often necessary for small and emerg18 ing businesses. 

19 (3) In the environment described in paragraphs 

20 (1) and (2), nonprofit intermediary lenders, includ21 ing community development corporations, provide fi22 nancial resources that supplement the small business 

23 lending and investments of a bank by— 

24 (A) providing riskier, up front, or subordi25 nated capital; 


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1 (B) offering flexible terms and under2 writing procedures; and 

3 (C) providing technical assistance to busi4 nesses in order to reduce the transaction costs 

5 and risk exposure of banks. 

6 (4) Several Federal programs, including the 

7 Microloan Program under section 7(m) of the Small 

8 Business Act (15 U.S.C. 636(m)) and the Inter9 mediary Relending Program of the Department of 

10 Agriculture, have demonstrated the effectiveness of 

11 working through nonprofit intermediaries to address 

12 the needs of small business concerns that are unable 

13 to access capital through conventional sources. 

14 (5) More than 1,000 nonprofit intermediary 

15 lenders in the United States are— 

16 (A) successfully providing financial and 

17 technical assistance to small and emerging busi18 nesses; 

19 (B) working with banks and other lenders 

20 to leverage additional capital for their business 

21 borrowers; and 

22 (C) creating employment opportunities for 

23 low income individuals through their lending 

24 and business development activities. 


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1 SEC. 3. SMALL BUSINESS INTERMEDIARY LENDING PILOT 

2 PROGRAM. 

3 (a) IN GENERAL.—Section 7 of the Small Business 

4 Act (15 U.S.C. 636) is amended by inserting after sub5 section (k) the following: 

6 ‘‘(l) SMALL BUSINESS INTERMEDIARY LENDING

7 PROGRAM.— 

8 ‘‘(1) DEFINITIONS.—In this subsection— 

9 ‘‘(A) the term ‘intermediary’ means a pri10 vate, nonprofit entity that seeks to borrow, or 

11 has borrowed, funds from the Administrator to 

12 provide midsize loans to small business con13 cerns under this subsection, including— 

14 ‘‘(i) a private, nonprofit community 

15 development corporation; 

16 ‘‘(ii) a consortium of private, non17 profit organizations or nonprofit commu18 nity development corporations; 

19 ‘‘(iii) a quasi-governmental economic 

20 development entity (such as a planning 

21 and development district), other than a 

22 State, county, or municipal government; 

23 and 

24 ‘‘(iv) an agency of or nonprofit entity 

25 established by a Native American Tribal 

26 Government; 


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1 ‘‘(B) the term ‘midsize loan’ means a fixed 

2 rate loan of not less than $35,000 and not 

3 more than $200,000, made by an intermediary 

4 to a startup, newly established, or growing 

5 small business concern; and 

6 ‘‘(C) the term ‘Program’ means the 3-year 

7 small business intermediary lending pilot pro8 gram established under paragraph (2). 

9 ‘‘(2) ESTABLISHMENT.—There is established a 

10 3-year small business intermediary lending pilot pro11 gram, under which the Administrator may provide 

12 direct loans to eligible intermediaries, for the pur13 pose of making fixed interest rate midsize loans to 

14 startup, newly established, and growing small busi15 ness concerns. 

16 ‘‘(3) PURPOSES.—The purposes of the Program 

17 are— 

18 ‘‘(A) to assist small business concerns in 

19 those areas suffering from a lack of credit due 

20 to poor economic conditions; 

21 ‘‘(B) to create employment opportunities 

22 for low income individuals; 

23 ‘‘(C) to establish a midsize loan program 

24 under which the Administrator may provide 

25 loans to eligible intermediaries to enable such 


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1 intermediaries to provide midsize loans, particu2 larly loans in amounts averaging not more than 

3 $150,000, to startup, newly established, or 

4 growing small business concerns for working 

5 capital or the acquisition of materials, supplies, 

6 or equipment; 

7 ‘‘(D) to test the effectiveness of inter8 mediaries— 

9 ‘‘(i) as a delivery system for a midsize 

10 loan program; and 

11 ‘‘(ii) in addressing the credit needs of 

12 small businesses and leveraging other 

13 sources of credit; and 

14 ‘‘(E) to determine the advisability and fea15 sibility of implementing a midsize loan program 

16 nationwide. 

17 ‘‘(4) ELIGIBILITY FOR PARTICIPATION.—An 

18 intermediary shall be eligible to receive loans under 

19 the Program if that intermediary has not less than 

20 1 year of experience making loans to startup, newly 

21 established, or growing small business concerns. 

22 ‘‘(5) LOANS TO INTERMEDIARIES.— 

23 ‘‘(A) APPLICATION.—Each intermediary 

24 desiring a loan under this subsection shall subVerDate Aug 31 2005 22:05 Mar 28, 2007 Jkt 059196 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S985.IS S985

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1 mit an application to the Administrator that de2 scribes— 

3 ‘‘(i) the type of small business con4 cerns to be assisted; 

5 ‘‘(ii) the size and range of loans to be 

6 made; 

7 ‘‘(iii) the geographic area to be served 

8 and its economic, poverty, and unemploy9 ment characteristics; 

10 ‘‘(iv) the status of small business con11 cerns in the area to be served and an anal12 ysis of the availability of credit; and 

13 ‘‘(v) the qualifications of the applicant 

14 to carry out this subsection. 

15 ‘‘(B) LOAN LIMITS.—Notwithstanding sub16 section (a)(3), no loan may be made to an 

17 intermediary under this subsection if the total 

18 amount outstanding and committed to the 

19 intermediary from the business loan and invest20 ment fund established by this Act would, as a 

21 result of such loan, exceed $1,000,000 during 

22 the participation of the intermediary in the Pro23 gram. 


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1 ‘‘(C) LOAN DURATION.—Loans made by 

2 the Administrator under this subsection shall be 

3 for a maximum term of 20 years. 

4 ‘‘(D) APPLICABLE INTEREST RATES.— 

5 Loans made by the Administrator to an inter6 mediary under the Program shall bear an an7 nual interest rate equal to 1.00 percent. 

8 ‘‘(E) FEES; COLLATERAL.—The Adminis9 trator may not charge any fees or require col10 lateral with respect to any loan made to an 

11 intermediary under this subsection. 

12 ‘‘(F) LEVERAGE.—Any loan to a small 

13 business concern under this subsection shall not 

14 exceed 75 percent of the total cost of the 

15 project funded by such loan, with the remaining 

16 funds being leveraged from other sources, in17 cluding— 

18 ‘‘(i) banks or credit unions; 

19 ‘‘(ii) community development financial 

20 institutions; and 

21 ‘‘(iii) other sources with funds avail22 able to the intermediary lender. 

23 ‘‘(G) DELAYED PAYMENTS.—The Adminis24 trator shall not require the repayment of prin25 cipal or interest on a loan made to an interVerDate Aug 31 2005 22:05 Mar 28, 2007 Jkt 059196 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S985.IS S985

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1 mediary under the Program during the 2-year 

2 period beginning on the date of the initial dis3 bursement of funds under that loan. 

4 ‘‘(6) PROGRAM FUNDING FOR MIDSIZE

5 LOANS.— 

6 ‘‘(A) NUMBER OF PARTICIPANTS.—Under 

7 the Program, the Administrator may provide 

8 loans, on a competitive basis, to not more than 

9 20 intermediaries. 

10 ‘‘(B) EQUITABLE DISTRIBUTION OF INTER11 MEDIARIES.—The Administrator shall select 

12 and provide funding under the Program to such 

13 intermediaries as will ensure geographic diver14 sity and representation of urban and rural com15 munities. 

16 ‘‘(7) REPORT TO CONGRESS.— 

17 ‘‘(A) INITIAL REPORT.—Not later than 30 

18 months after the date of enactment of the 

19 Small Business Intermediary Lending Pilot 

20 Program Act of 2007, the Administrator shall 

21 submit a report containing an evaluation of the 

22 effectiveness of the Program to— 

23 ‘‘(i) the Committee on Small Business 

24 and Entrepreneurship of the Senate; and 


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1 ‘‘(ii) the Committee on Small Busi2 ness of the House of Representatives. 

3 ‘‘(B) ANNUAL REPORT.—Not later than 12 

4 months after the date of enactment of the 

5 Small Business Intermediary Lending Pilot 

6 Program Act of 2007, and annually thereafter, 

7 the Administrator shall submit a report con8 taining an evaluation of the effectiveness of the 

9 Program to the Committees described in sub10 paragraph (A). 

11 ‘‘(C) CONTENTS.—The reports submitted 

12 under subparagraphs (A) and (B) shall in13 clude— 

14 ‘‘(i) the number and location of the 

15 intermediaries receiving funds to provide 

16 midsize loans under this subsection; 

17 ‘‘(ii) the amounts of each loan to an 

18 intermediary under this subsection; 

19 ‘‘(iii) the number and amount of 

20 midsize loans made by intermediaries to 

21 small business concerns under this sub22 section; 

23 ‘‘(iv) the repayment history of each 

24 intermediary receiving a loan under this 

25 subsection; 


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1 ‘‘(v) a description of the loan portfolio 

2 of each intermediary receiving a loan under 

3 this subsection, including the extent to 

4 which it provides midsize loans to small 

5 business concerns in rural and economi6 cally depressed areas; 

7 ‘‘(vi) an estimate of the number of low 

8 income individuals who have been em9 ployed as a direct result of the Program; 

10 and 

11 ‘‘(vii) any recommendations for legis12 lative changes that would improve the op13 eration of the Program.’’. 

14 (b) RULEMAKING AUTHORITY.—Not later than 180 

15 days after the date of enactment of this Act, the Adminis16 trator shall issue regulations to carry out section 7(l) of 

17 the Small Business Act, as added by subsection (a). 

18 (c) AUTHORIZATION OF APPROPRIATIONS.— 

19 (1) IN GENERAL.—There are authorized to be 

20 appropriated to the Small Business Administration 

21 such sums as may be necessary for each of the fiscal 

22 years 2008 through 2010 to provide $20,000,000 in 

23 loans under section 7(l) of the Small Business Act, 

24 as added by subsection (a). 


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1 (2) AVAILABILITY.—Any amounts appropriated 

2 under paragraph (1) shall remain available until ex3 pended. 

Æ 


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