I

106TH CONGRESS

1ST SESSION H. R. 1056

To provide for a loan guarantee program to address the Year 2000 computer

problems of small business concerns, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 10, 1999

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

Committee on Small Business

A BILL

To provide for a loan guarantee program to address the

Year 2000 computer problems of 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 Year

5 2000 Readiness Act’’.

6 SEC. 2. FINDINGS.

7 Congress finds that—

8 (1) the failure of many computer programs to

9 recognize the Year 2000 may have extreme negative
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1 financial consequences in the Year 2000, and in sub2 sequent years for both large and small businesses;

3 (2) small businesses are well behind larger busi4 nesses in implementing corrective changes to their

5 automated systems;

6 (3) many small businesses do not have access to

7 capital to fix mission critical automated systems,

8 which could result in severe financial distress or fail9 ure for small businesses; and

10 (4) the failure of a large number of small busi11 nesses due to the Year 2000 computer problem

12 would have a highly detrimental effect on the econ13 omy in the Year 2000 and in subsequent years.

14 SEC. 3. YEAR 2000 COMPUTER PROBLEM LOAN GUARANTEE

15 PROGRAM.

16 (a) PROGRAM ESTABLISHED.—Section 7(a) of the

17 Small Business Act (15 U.S.C. 636(a)) is amended by

18 adding at the end the following:

19 ‘‘(27) YEAR 2000 COMPUTER PROBLEM PRO20 GRAM.—

21 ‘‘(A) DEFINITIONS.—In this paragraph—

22 ‘‘(i) the term ‘eligible lender’ means

23 any lender designated by the Administra24 tion as eligible to participate in the general
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1 business loan program under this sub2 section; and

3 ‘‘(ii) the term ‘Year 2000 computer

4 problem’ means, with respect to informa5 tion technology, and embedded systems,

6 any problem that adversely affects the

7 processing (including calculating, compar8 ing, sequencing, displaying, or storing),

9 transmitting, or receiving of date-depend10 ent data—

11 ‘‘(I) from, into, or between—

12 ‘‘(aa) the 20th or 21st cen13 turies; or

14 ‘‘(bb) the years 1999 and

15 2000; or

16 ‘‘(II) with regard to leap year

17 calculations.

18 ‘‘(B) ESTABLISHMENT OF PROGRAM.—The

19 Administration shall—

20 ‘‘(i) establish a loan guarantee pro21 gram, under which the Administration

22 may, during the period beginning on the

23 date of enactment of this paragraph and

24 ending on December 31, 2000, guarantee

25 loans made by eligible lenders to small
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1 business concerns in accordance with this

2 paragraph; and

3 ‘‘(ii) notify each eligible lender of the

4 establishment of the program under this

5 paragraph, and otherwise take such actions

6 as may be necessary to aggressively market

7 the program under this paragraph.

8 ‘‘(C) USE OF FUNDS.—A small business

9 concern that receives a loan guaranteed under

10 this paragraph shall only use the proceeds of

11 the loan to—

12 ‘‘(i) address the Year 2000 computer

13 problems of that small business concern,

14 including the repair and acquisition of in15 formation technology systems, the pur16 chase and repair of software, the purchase

17 of consulting and other third party serv18 ices, and related expenses; and

19 ‘‘(ii) provide relief for a substantial

20 economic injury incurred by the small busi21 ness concern as a direct result of the Year

22 2000 computer problems of the small busi23 ness concern or of any other entity (includ24 ing any service provider or supplier of the

25 small business concern), if such economic
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1 injury has not been compensated for by in2 surance or otherwise.

3 ‘‘(D) LOAN AMOUNTS.—

4 ‘‘(i) IN GENERAL.—Notwithstanding

5 paragraph (3)(A) and subject to clause (ii)

6 of this subparagraph, a loan may be made

7 to a borrower under this paragraph even if

8 the total amount outstanding and commit9 ted (by participation or otherwise) to the

10 borrower from the business loan and in11 vestment fund, the business guaranty loan

12 financing account, and the business direct

13 loan financing account would thereby ex14 ceed $750,000.

15 ‘‘(ii) EXCEPTION.—A loan may not be

16 made to a borrower under this paragraph

17 if the total amount outstanding and com18 mitted (by participation or otherwise) to

19 the borrower from the business loan and

20 investment fund, the business guaranty

21 loan financing account, and the business

22 direct loan financing account would there23 by exceed $1,000,000.

24 ‘‘(E) ADMINISTRATION PARTICIPATION.—

25 Notwithstanding paragraph (2)(A), in an agree-
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1 ment to participate in a loan under this para2 graph, participation by the Administration shall

3 not exceed—

4 ‘‘(i) 85 percent of the balance of the

5 financing outstanding at the time of dis6 bursement of the loan, if the balance ex7 ceeds $100,000;

8 ‘‘(ii) 90 percent of the balance of the

9 financing outstanding at the time of dis10 bursement of the loan, if the balance is

11 less than or equal to $100,000; and

12 ‘‘(iii) notwithstanding clauses (i) and

13 (ii), in any case in which the subject loan

14 is processed in accordance with the re15 quirements applicable to the SBAExpress

16 Pilot Program, 50 percent of the balance

17 outstanding at the time of disbursement of

18 the loan.

19 ‘‘(F) PERIODIC REVIEWS.—The Inspector

20 General of the Administration shall periodically

21 review a representative sample of loans guaran22 teed under this paragraph to mitigate the risk

23 of fraud and ensure the safety and soundness

24 of the loan program.
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1 ‘‘(G) ANNUAL REPORT.—The Administra2 tion shall annually submit to the Committees on

3 Small Business of the House of Representatives

4 and the Senate a report on the results of the

5 program carried out under this paragraph dur6 ing the preceding 12-month period, which shall

7 include information relating to—

8 ‘‘(i) the total number of loans guaran9 teed under this paragraph;

10 ‘‘(ii) with respect to each loan guaran11 teed under this paragraph—

12 ‘‘(I) the amount of the loan;

13 ‘‘(II) the geographic location of

14 the borrower; and

15 ‘‘(III) whether the loan was made

16 to repair or replace information tech17 nology and other automated systems

18 or to remedy an economic injury; and

19 ‘‘(iii) the total number of eligible lend20 ers participating in the program.’’.

21 (b) GUIDELINES.—

22 (1) IN GENERAL.—Not later than 30 days after

23 the date of enactment of this Act, the Administrator

24 of the Small Business Administration shall issue

25 guidelines to carry out the program under section
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1 7(a)(27) of the Small Business Act, as added by this

2 section.

3 (2) REQUIREMENTS.—Except to the extent that

4 it would be inconsistent with this section or section

5 7(a)(27) of the Small Business Act, as added by this

6 section, the guidelines issued under this subsection

7 shall, with respect to the loan program established

8 under section 7(a)(27) of the Small Business Act, as

9 added by this section—

10 (A) provide maximum flexibility in the es11 tablishment of terms and conditions of loans

12 originated under the loan program so that such

13 loans may be structured in a manner that en14 hances the ability of the applicant to repay the

15 debt;

16 (B) if appropriate to facilitate repayment,

17 establish a moratorium on principal payments

18 under the loan program for up to 1 year begin19 ning on the date of the origination of the loan;

20 (C) provide that any reasonable doubts re21 garding a loan applicant’s ability to service the

22 debt be resolved in favor of the loan applicant;

23 and

24 (D) authorize an eligible lender (as defined

25 in section 7(a)(27)(A) of the Small Business
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1 Act, as added by this section) to process a loan

2 under the loan program in accordance with the

3 requirements applicable to loans originated

4 under another loan program established pursu5 ant to section 7(a) of the Small Business Act

6 (including the general business loan program,

7 the Preferred Lender Program, the Certified

8 Lender Program, the Low Documentation Loan

9 Program, and the SBAExpress Pilot Program),

10 if—

11 (i) the eligible lender is eligible to par12 ticipate in such other loan program; and

13 (ii) the terms of the loan, including

14 the principal amount of the loan, are con15 sistent with the requirements applicable to

16 loans originated under such other loan pro17 gram.

18 (c) REPEAL.—Effective on December 31, 2000, this

19 section and the amendments made by this section are re20 pealed.

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