I

103D CONGRESS

2D SESSION H. R. 4685

To authorize the establishment of a premier lending program for participants

in the certified development company program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 30, 1994

Mr. LAFALCE introduced the following bill; which was referred to the

Committee on Small Business

A BILL

To authorize the establishment of a premier lending program

for participants in the certified development company

program, 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 That this Act may be cited as the ‘‘Premier Lenders Pro4 gram Authorization Act of 1994’’.

5 (a) Title V of the Small Business Investment Act of

6 1958 (15 U.S.C. 695 et seq.) is amended by inserting the

7 following new section:
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1 ‘‘SEC. 508. PREMIER LENDERS PROGRAM.

2 ‘‘(a) The Administration is authorized to establish a

3 Premier Lenders Program for certified development com4 panies which meet the requirements of subsection (b).

5 ‘‘(b) The Administration may designate a participant

6 in accelerated lenders program as a premier lender if such

7 company—

8 ‘‘(1) has been an active participant in the accel9 erated lenders program for at least the last 12

10 months: Provided, That prior to January 1, 1996,

11 the Administration may waive this provision if the

12 applicant is qualified to participate in the acceler13 ated lenders program;

14 ‘‘(2) has a history of submitting to the Admin15 istration adequately analyzed debenture guaranty

16 application packages; and

17 ‘‘(3) agrees to assume and to reimburse the Ad18 ministration for 5 percent of any loss sustained by

19 the Administration on account of default by the cer20 tified development company in the payment of prin21 cipal and interest on a debenture issued by such

22 company and guaranteed by the Administration

23 under this section.

24 ‘‘(c) Upon approval of an applicant as a premier lend25 er, the certified development company shall establish a loss

26 reserve in an amount equal to the anticipated losses to
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1 the certified development company pursuant to subsection

2 (b)(3) based upon the historic loss rate on debentures is3 sued by such company, or 3 percent of the aggregate prin4 cipal amount of debentures issued by such company and

5 guaranteed by the Administration under this section,

6 whichever is greater. The loss reserve shall be comprised

7 of segregated assets of the development company which

8 shall be securitized in favor of the Administration or of

9 such unqualified letters of credit or indemnity agreements

10 from a third party as the Administration deems appro11 priate.

12 ‘‘(d) Upon designation and qualification of a com13 pany as a premier lender, and subject to such terms and

14 conditions as the Administration may determine and not15 withstanding the provisions of section 503(b)(6), the Ad16 ministration may permit a premier lender to approve loans

17 to be funded with the proceeds of and to authorize the

18 guaranty of a debenture issued by such company. The ap19 proval by the premier lender shall be subject to the final

20 approval as to eligibility of any such guaranty by the Ad21 ministration pursuant to subsection 503(a) of this Act,

22 but such final approval shall not include decisions by the

23 company involving creditworthiness, loan closing, or com24 pliance with legal requirements imposed by law or regula25 tion.
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1 ‘‘(e) The designation of a qualified State or local de2 velopment company as a premier lender may be suspended

3 or revoked if the Administration determines that the com4 pany—

5 ‘‘(1) has not continued to meet the criteria for

6 eligibility under subsection (b);

7 ‘‘(2) has not established or maintained the loss

8 reserve required under subsection (c); or

9 ‘‘(3) is failing to adhere to the Administration’s

10 rules and regulations or is violating any other appli11 cable provision of law.

12 ‘‘(f) Suspension or revocation shall not affect any out13 standing debenture guarantee.’’.

14 (b) The Administration shall promulgate such regula15 tions to carry out this section within one hundred and

16 eighty days of the date of enactment.

17 (c) The Administration shall report to the Small

18 Business Committee of the United States Senate and to

19 the Small Business Committee of the United States House

20 of Representatives within one year, and annually there21 after, on the implementation of this section, specifically

22 including data on the number of development companies

23 designated as premier lenders, their debenture guarantee

24 volume, and the loss rate under this program, along with
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1 such other information as the Administration deems

2 appropriate.

3 (d) Section 508 of the Small Business Investment Act

4 is repealed on October 1, 1999.

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