Union Calendar No. 130

104TH CONGRESS

1ST SESSION H. R. 2150

[Report No. 104–239]

A BILL

To amend the Small Business Act and the Small

poses.certain loans and debentures, and for other purcost to the Federal Government of guaranteeingBusiness Investment Act of 1958 to reduce the

SEPTEMBER 6, 1995

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 130

104TH CONGRESS

1ST SESSION H. R. 2150

[Report No. 104–239]

To amend the Small Business Act and the Small Business Investment Act

of 1958 to reduce the cost to the Federal Government of guaranteeing

certain loans and debentures, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

AUGUST 1, 1995

Mrs. MEYERS of Kansas introduced the following bill; which was referred to

the Committee on Small Business

SEPTEMBER 6, 1995

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Omit the part struck through and insert the part printed in italic]

A BILL

To amend the Small Business Act and the Small Business

Investment Act of 1958 to reduce the cost to the Federal

Government of guaranteeing certain loans and debentures, 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,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Small Business Credit

3 Efficiency Act of 1995’’.

4 SEC. 2. FEE FOR LOAN GUARANTEES SOLD ON SECONDARY

5 MARKET.

6 Section 5(g)(4)(A) of the Small Business Act (15

U.S.C. 634(g)(4)(A)) is amended by striking ‘‘4 7 ⁄10 of one

8 percent’’ and inserting ‘‘one-half of 1 percent’’.

9 SEC. 3. GENERAL BUSINESS LOANS.

10 (a) REDUCED LEVEL OF PARTICIPATION IN GUARAN11 TEED LOANS.—Section 7(a)(2) of the Small Business Act

12 (15 U.S.C. 636(a)(2)) is amended to read as follows:

13 ‘‘(2) LEVEL OF PARTICIPATION IN GUARAN14 TEED LOANS.—

15 ‘‘(A) IN GENERAL.—In agreements to par16 ticipate in loans on a deferred basis under this

17 subsection, such participation by the Adminis18 tration shall be—

19 ‘‘(i) equal to 80 percent of the balance

20 of the financing outstanding at the time of

21 disbursement if such financing is less than

22 or equal to $100,000; and

23 ‘‘(ii) equal to 75 percent of the bal24 ance of the financing outstanding at the

25 time of disbursement if such financing is

26 greater than $100,000.
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1 ‘‘(B) REDUCED PARTICIPATION.—The

2 guarantee percentage specified by subparagraph

3 (A) for any loan may be reduced upon the re4 quest of the participating lender. The Adminis5 tration shall not use the percent of guarantee

6 requested as a criterion for establishing prior7 ities in approving guarantee requests.

8 ‘‘(C) INTEREST RATE UNDER PREFERRED

9 LENDERS PROGRAM.—The maximum interest

10 rate for a loan guaranteed under the Preferred

11 Lenders Program shall not exceed the maxi12 mum interest rate, as determined by the Ad13 ministration, which is made applicable to other

14 loan guarantees under this subsection.

15 ‘‘(D) PREFERRED LENDERS PROGRAM DE16 FINED.—In this paragraph, the term ‘Preferred

17 Lenders Program’ means a program under

18 which a written agreement between the lender

19 and the Administration delegates to the lend20 er—

21 ‘‘(i) complete authority to make and

22 close loans with a guarantee from the Ad23 ministration without obtaining the prior

24 specific approval of the Administration;

25 and
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1 ‘‘(ii) authority to service and liquidate

2 such loans.’’.

3 (b) GUARANTEE FEES.—Section 7(a)(18) of the

4 Small Business Act (15 U.S.C. 636(a)(18)) is amended

5 to read as follows:

6 ‘‘(18) GUARANTEE FEES.—

7 ‘‘(A) GENERAL FEE.—The For any loan or

8 financing made under this subsection other than

9 a loan repayable in a period of one year or less,

10 the Administration shall collect a guarantee fee

11 equal to—

12 ‘‘(i) 2 percent of the gross amount of

13 any loan guaranteed under this subsection

14 of an amount less than $250,000;

15 ‘‘(ii) 2.5 percent of the gross amount

16 of any loan guaranteed under this sub17 section of an amount equal to or greater

18 than $250,000 and less than $500,000; or

19 ‘‘(iii) 3 percent of the gross amount of

20 any loan guaranteed under this subsection

21 of an amount equal to or greater than

22 $500,000.

23 Such fee shall be payable by the participating

24 lending institution and may be charged to the

25 borrower.
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1 ‘‘(B) ADDITIONAL FEE TO OFFSET

2 COST.—

3 ‘‘(i) IN GENERAL.—In addition to the

4 guarantee fee to be collected under sub5 paragraph (A), the Administration shall

6 collect a fee for loans guaranteed under

7 this subsection (other than loans for which

8 a guarantee fee may be collected under

9 section 5(g)(4)(A)) in an amount equal to

10 not more than four-tenths of 1 percent per

11 year of the outstanding principal portion of

12 such loan guaranteed by the Administra13 tion.

14 ‘‘(ii) USE.—Fees collected under

15 clause (i) shall be used solely to offset the

16 cost (as defined by section 502(5) of the

17 Congressional Budget Act of 1974) of

18 guaranteeing loans under this subsection.

19 ‘‘(iii) PAYMENT.—Fees collected

20 under clause (i) shall be payable by the

21 participating lending institution and shall

22 not be charged to the borrower.’’.

23 (c) REPEAL OF PROVISIONS ALLOWING RETENTION

24 OF GUARANTEE FEES BY LENDERS.—Section 7(a)(19) of
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1 the Small Business Act (15 U.S.C. 636(a)(19)) is amend2 ed—

3 (1) in subparagraph (B)—

4 (A) by striking ‘‘shall (i) develop’’ and in5 serting ‘‘shall develop’’; and

6 (B) by striking ‘‘, and (ii)’’ and all that

7 follows before the period at the end; and

8 (2) by striking subparagraph (C).

9 SEC. 4. MODIFICATIONS TO DEVELOPMENT COMPANY DE10 BENTURE PROGRAM.

11 (a) MAXIMUM LOAN AMOUNT.—Section 502(2) of

12 the Small Business Investment Act of 1958 (15 U.S.C.

13 696(2)) is amended to read as follows:

14 ‘‘(2) Loans made by the Administration under

15 this section shall be limited to $1,250,000 for each

16 such identifiable small business concern.’’.

17 (b) FEE TO OFFSET COST.—Section 503(b)(3) of the

18 Small Business Investment Act of 1958 (15 U.S.C.

19 697(b)(3)) is amended by inserting before the semicolon

20 the following: ‘‘and includes a one-eighth of 1 percent fee

21 which shall be paid to the Administration and which shall

22 be used solely to offset the cost (as defined by section

23 502(5) of the Congressional Budget Act of 1974) of guar24 anteeing the debenture.’’.