II 

109TH CONGRESS 

1ST SESSION S. 2162 

To foster local development by facilitating the delivery of financial assistance 

to small businesses, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 21, 2005 

Ms. SNOWE introduced the following bill; which was read twice and referred 

to the Committee on Small Business and Entrepreneurship 

A BILL 

To foster local development by facilitating the delivery of 

financial assistance to small businesses, 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; DEFINITION. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Local Development Business Loan Program Act of 

6 2005’’. 

7 (b) DEFINITION.—In this Act, the term ‘‘Adminis8 trator’’ means the Administrator of the Small Business 

9 Administration. 
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1 SEC. 2. DEVELOPMENT COMPANY LOAN PROGRAMS. 

2 (a) TITLE OF PROGRAM.—Title V of the Small Busi3 ness Investment Act of 1958 (15 U.S.C. 695 et seq.) is 

4 amended by adding at the end the following: 

5 ‘‘SEC. 511. PROGRAM TITLE. 

6 ‘‘The programs authorized by this title shall be 

7 known as the ‘Local Development Business Loan Pro8 gram’.’’. 

9 (b) EXISTING MATERIALS.—The Administrator may 

10 use informational materials created, or that were in the 

11 process of being created, before the date of enactment of 

12 this Act that do not refer to a program under title V of 

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

14 695 et seq.) as the ‘‘Local Development Business Loan 

15 Program’’. 

16 (c) NEW MATERIALS.—Any informational materials 

17 created by the Administrator on or after the date of enact18 ment of this Act shall refer to any program under title 

19 V of the Small Business Investment Act of 1958 (15 

20 U.S.C. 695 et seq.) as the ‘‘Local Development Business 

21 Loan Program’’. 

22 SEC. 3. PROGRAM AUTHORIZATIONS. 

23 Section 20 of the Small Business Act (15 U.S.C. 631 

24 note) is amended by adding at the end the following: 

25 ‘‘(f) FISCAL YEAR 2007.—For the program author26 ized under section 7(a)(13) of this Act and the Local De-
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1 velopment Business Loan Program under the Small Busi2 ness Investment Act of 1958, the Administrator is author3 ized to make $8,000,000,000 in financings, and there are 

4 authorized to be appropriated to the Administrator such 

5 sums as may be necessary to carry out such programs. 

6 ‘‘(g) FISCAL YEAR 2008.—For the program author7 ized under section 7(a)(13) of this Act and the Local De8 velopment Business Loan Program under the Small Busi9 ness Investment Act of 1958, the Administrator is author10 ized to make $8,500,000,000 in financings, and there are 

11 authorized to be appropriated to the Administrator such 

12 sums as may be necessary to carry out such programs.’’. 

13 SEC. 4. LOAN LIQUIDATIONS. 

14 Section 510 of the Small Business Investment Act 

15 of 1958 (15 U.S.C. 697g) is amended— 

16 (1) by redesignating subsection (e) as sub17 section (g); and 

18 (2) by inserting after subsection (d) the fol19 lowing: 

20 ‘‘(e) PARTICIPATION.— 

21 ‘‘(1) IN GENERAL.—Any qualified State or local 

22 development company which elects not to apply for 

23 authority to foreclose and liquidate defaulted loans 

24 under this section, or which the Administrator deter25 mines to be ineligible for such authority, shall con-
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1 tract with a qualified third-party to perform fore2 closure and liquidation of defaulted loans in its port3 folio. The contract shall be contingent upon approval 

4 by the Administrator with respect to the qualifica5 tions of the contractor and the terms and conditions 

6 of liquidation activities. 

7 ‘‘(2) COMMENCEMENT.—The provisions of this 

8 subsection shall not require any development com9 pany to liquidate defaulted loans until the Adminis10 trator has adopted and implemented a program to 

11 compensate and reimburse development companies, 

12 as provided under subsection (f). 

13 ‘‘(f) COMPENSATION AND REIMBURSEMENT.— 

14 ‘‘(1) REIMBURSEMENT OF EXPENSES.—The 

15 Administrator shall reimburse each qualified State 

16 or local development company for all expenses paid 

17 by such company as part of the foreclosure and liq18 uidation activities, if the expenses— 

19 ‘‘(A) were approved in advance by the Ad20 ministrator, either specifically or generally; or 

21 ‘‘(B) were incurred by the development 

22 company on an emergency basis without prior 

23 approval from the Administrator, if the Admin24 istrator determines that the expenses were rea25 sonable and appropriate. 
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1 ‘‘(2) COMPENSATION FOR RESULTS.—The Ad2 ministrator shall develop a schedule to compensate 

3 and provide an incentive to qualified State or local 

4 development companies that foreclose and liquidate 

5 defaulted loans. The schedule shall be based on a 

6 percentage of the net amount recovered, but shall 

7 not exceed a maximum amount. The schedule shall 

8 not apply to any foreclosure which is conducted pur9 suant to a contract between a development company 

10 and a qualified third party to perform the fore11 closure and liquidation.’’. 

12 SEC. 5. ADDITIONAL EQUITY INJECTIONS. 

13 Section 502(3)(B)(ii) of the Small Business Invest14 ment Act of 1958 (15 U.S.C. 696(3)(B)(ii)) is amended 

15 to read as follows: 

16 ‘‘(ii) FUNDING FROM INSTITU17 TIONS.—If a small business concern— 

18 ‘‘(I) provides the minimum con19 tribution required under subpara20 graph (C), not less than 50 percent of 

21 the total cost of any project financed 

22 under clause (i), (ii), or (iii) of sub23 paragraph (C) shall come from the in24 stitutions described in subclauses (I), 

25 (II), and (III) of clause (i); and 
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1 ‘‘(II) provides more than the 

2 minimum contribution required under 

3 subparagraph (C), any excess con4 tribution may be used to reduce the 

5 amount required from the institutions 

6 described in subclauses (I), (II), and 

7 (III) of clause (i), except that the 

8 amount from such institutions may 

9 not be reduced to an amount that is 

10 less than the amount of the loan made 

11 by the Administrator.’’. 

12 SEC. 6. BUSINESSES IN LOW-INCOME AREAS. 

13 Section 501(d)(3)(A) of the Small Business Invest14 ment Act of 1958 (15 U.S.C. 695(d)(3)(A)) is amended 

15 by inserting after ‘‘business district revitalization,’’ the 

16 following: ‘‘or expansion of businesses in low-income com17 munities which would be eligible for a new markets tax 

18 credit pursuant to section 45D(a) of the Internal Revenue 

19 Code of 1986, or implementing regulations issued there20 under,’’. 

21 SEC. 7. COMBINATIONS OF CERTAIN GOALS. 

22 Section 501(e) of the Small Business Investment Act 

23 of 1958 (15 U.S.C. 695(e)) is amended by adding at the 

24 end the following: 
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1 ‘‘(7) A small business concern that is uncondi2 tionally owned by more than 1 individual, or a cor3 poration, the stock of which is owned by more than 

4 1 individual, shall be deemed to have achieved a 

5 public policy goal required under subsection (d)(3) if 

6 a combined ownership share of not less than 51 per7 cent is held by individuals who are in 1 of the 

8 groups described in subparagraph (C) or (E) of sub9 section (d)(3).’’. 

10 SEC. 8. MAXIMUM 504 AND 7(a) LOAN ELIGIBILITY. 

11 Section 502(2) of the Small Business Investment Act 

12 of 1958 (15 U.S.C. 696(2)) is amended by adding at the 

13 end the following: 

14 ‘‘(C) COMBINATION FINANCING.—Notwith15 standing any other provision of law, financing 

16 under this title may be provided to a borrower 

17 in the maximum amount provided in this sub18 section, and a loan guarantee under section 

19 7(a) of the Small Business Act may be provided 

20 to the same borrower in the maximum amount 

21 provided in section 7(a)(3)(A) of such Act, to 

22 the extent that the borrower otherwise qualifies 

23 for such assistance.’’. 
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1 SEC. 9. REFINANCING. 

2 Section 502 of the Small Business Investment Act 

3 of 1958 (15 U.S.C. 696) is amended by adding at the end 

4 the following: 

5 ‘‘(7) PERMISSIBLE DEBT REFINANCING.— 

6 ‘‘(A) IN GENERAL.—Any financing ap7 proved under this title may include a limited 

8 amount of debt refinancing. 

9 ‘‘(B) EXPANSIONS.—If the project involves 

10 expansion of a small business concern which 

11 has existing indebtedness collateralized by fixed 

12 assets, any amount of existing indebtedness 

that does not exceed 1 13 ⁄2 of the project cost of 

14 the expansion may be refinanced and added to 

15 the expansion cost, providing that— 

16 ‘‘(i) the proceeds of the indebtedness 

17 were used to acquire land, including a 

18 building situated thereon, to construct a 

19 building thereon, or to purchase equip20 ment; 

21 ‘‘(ii) the borrower has been current on 

22 all payments due on the existing debt for 

23 at least the preceding year; and 

24 ‘‘(iii) the financing under section 504 

25 will provide better terms or rate of interest 
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1 than exists on the debt at the time of refi2 nancing.’’. 

3 SEC. 10. FEES. 

4 (a) IN GENERAL.—Section 503(d) of the Small Busi5 ness Investment Act of l958 (15 U.S.C. 697(d)) is amend6 ed— 

7 (1) by striking paragraph (2); 

8 (2) by redesignating paragraph (3) as para9 graph (2); and 

10 (3) in paragraph (2), as so redesignated, by 

11 striking ‘‘0.125 percent’’ and inserting ‘‘0.185 per12 cent’’. 

13 (b) EFFECTIVE DATE.—The amendments made by 

14 subsection (a) shall take effect and apply to loans under 

15 section 503(d) of the Small Business Investment Act of 

16 l958 (15 U.S.C. 697(d)) approved on or after 30 days 

17 after the date of enactment of this Act. 

18 SEC. 11. TECHNICAL CORRECTION. 

19 Section 501(e)(2) of the Small Business Investment 

20 Act of 1958 (15 U.S.C. 695(e)(2)) is amended by striking 

21 ‘‘outstanding’’. 

22 SEC. 12. SBIA DEFINITIONS. 

23 Section 103 of the Small Business Investment Act 

24 of 1958 (15 U.S.C. 662) is amended— 
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1 (1) by striking paragraph (6) and inserting the 

2 following: 

3 ‘‘(6) the term ‘development company’ means an 

4 entity incorporated under State law with the author5 ity to promote and assist the growth and develop6 ment of small business concerns in the areas in 

7 which it is authorized to operate by the Adminis8 trator;’’; 

9 (2) in paragraph (16), by striking ‘‘and’’ at the 

10 end; 

11 (3) in paragraph (17), by striking the period at 

12 the end and inserting ‘‘; and’’; and 

13 (4) by adding at the end the following: 

14 ‘‘(18) the term ‘certified development company’ 

15 means a development company that the Adminis16 trator has certified meets the criteria of section 

17 506.’’. 

18 SEC. 13. REPEAL OF SUNSET ON RESERVE REQUIREMENTS 

19 FOR PREMIER CERTIFIED LENDERS. 

20 Section 508(c)(6)(B) of the Small Business Invest21 ment Act of 1958 (15 U.S.C. 697e(c)(6)(B)) is amend22 ed— 

23 (1) in the heading, by striking ‘‘TEMPORARY

24 REDUCTION’’ and inserting ‘‘REDUCTION’’; and 
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1 (2) by striking ‘‘Notwithstanding subparagraph 

2 (A), during the 2-year period beginning on the date 

3 that is 90 days after the date of enactment of this 

4 subparagraph, the’’ and inserting ‘‘The’’. 

5 SEC. 14. ELIGIBILITY OF DEVELOPMENT COMPANIES TO BE 

6 DESIGNATED AS CERTIFIED DEVELOPMENT 

7 COMPANIES AND AUTHORITY TO ISSUE DE8 BENTURES; AND PROVIDING AN AREA OF 

9 OPERATIONAL AUTHORITY, FUNDING RE10 STRICTIONS, AND ETHICAL REQUIREMENTS. 

11 Section 506 of the Small Business Investment Act 

12 of 1958 (15 U.S.C. 697c) is amended— 

13 (1) in the heading, by striking ‘‘RESTRIC14 TIONS ON DEVELOPMENT COMPANY ASSIST15 ANCE’’ and inserting ‘‘CERTIFIED DEVELOPMENT

16 COMPANIES’’; and 

17 (2) by inserting before ‘‘Notwithstanding any 

18 other provision of law’’ the following: 

19 ‘‘(a) AUTHORITY TO ISSUE DEBENTURES.—A devel20 opment company may issue debentures under this title if 

21 the Administrator certifies that the company meets the 

22 following criteria: 

23 ‘‘(1) SIZE.— 

24 ‘‘(A) IN GENERAL.—Except as provided in 

25 subparagraph (B), the development company 
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1 shall be a small business concern with fewer 

2 than 500 employees, and shall not be under the 

3 control of any entity that does not meet the size 

4 standards established by the Administrator for 

5 a small business concern. 

6 ‘‘(B) EXCEPTION.—Any development com7 pany that was certified by the Administrator 

8 before December 31, 2005, may continue to 

9 issue debentures under this title. 

10 ‘‘(2) PURPOSE.—A primary purpose of the de11 velopment company shall be to benefit the commu12 nity by fostering economic development to create and 

13 preserve jobs and stimulate private investment. 

14 ‘‘(3) PRIMARY FUNCTION.—A primary function 

15 of the development company shall be to accomplish 

16 its purpose by providing long term financing to 

17 small business concerns under the Local Develop18 ment Business Loan Program. The development 

19 company may also provide or support other local 

20 economic development activities to assist the commu21 nity. 

22 ‘‘(4) NONPROFIT STATUS.— 

23 ‘‘(A) IN GENERAL.—Except as provided in 

24 subparagraph (B), the development company 

25 shall be a nonprofit corporation. 
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1 ‘‘(B) EXCEPTION.—A development com2 pany certified by the Administrator before Jan3 uary 1, 1987, may continue to issue debentures 

4 under this title and retain its status as a for5 profit enterprise. 

6 ‘‘(5) GOOD STANDING.—The development com7 pany— 

8 ‘‘(A) shall be in good standing in the State 

9 in which such company is incorporated and in 

10 any other State in which it conducts business; 

11 and 

12 ‘‘(B) shall be in compliance with all laws, 

13 including taxation requirements, in the State in 

14 which such company is incorporated and in any 

15 other State in which it conducts business. 

16 ‘‘(6) MEMBERSHIP OF DEVELOPMENT COM17 PANY.—There shall be— 

18 ‘‘(A) not fewer than 25 members of the de19 velopment company (or owners or stockholders, 

20 if the corporation is a for-profit entity) none of 

21 whom may own or control more than 10 percent 

22 of the voting membership of the company; and 

23 ‘‘(B) at least 1 member of the development 

24 company (none of whom is in a position to con-
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1 trol the development company) from each of the 

2 following: 

3 ‘‘(i) Government organizations that 

4 are responsible for economic development. 

5 ‘‘(ii) Financial institutions that pro6 vide commercial long term fixed asset fi7 nancing. 

8 ‘‘(iii) Community organizations that 

9 are dedicated to economic development. 

10 ‘‘(iv) Businesses. 

11 ‘‘(7) BOARD OF DIRECTORS.— 

12 ‘‘(A) IN GENERAL.—The development com13 pany shall have a board of directors. 

14 ‘‘(B) MEMBERS OF BOARD.—Each member 

15 of the board of directors shall be— 

16 ‘‘(i) a member of the development 

17 company; and 

18 ‘‘(ii) elected by a majority of the 

19 members of the development company. 

20 ‘‘(C) REPRESENTATION OF ORGANIZA21 TIONS AND INSTITUTIONS.— 

22 ‘‘(i) IN GENERAL.—There shall be at 

23 least 1 member of the board of directors 

24 from not fewer than 3 of the 4 organiza25 tions and institutions described in para-
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1 graph (6)(B), none of whom is in a posi2 tion to control the development company. 

3 ‘‘(ii) MAXIMUM PERCENTAGE.—Not 

4 more than 50 percent of the members of 

5 the board of directors shall be from any 1 

6 of the organizations and institutions de7 scribed in paragraph (6)(B). 

8 ‘‘(D) MEETINGS.—The board of directors 

9 of the development company shall meet on a 

10 regular basis to make policy decisions for such 

11 company. 

12 ‘‘(8) PROFESSIONAL MANAGEMENT AND

13 STAFF.— 

14 ‘‘(A) IN GENERAL.—The development com15 pany shall have full-time professional manage16 ment, including a chief executive officer to man17 age daily operations and a full-time professional 

18 staff qualified to market the Local Development 

19 Business Loan Program and handle all aspects 

20 of loan approval and servicing, including liq21 uidation, if appropriate. 

22 ‘‘(B) INDEPENDENT MANAGEMENT AND

23 OPERATION.—Except as provided in paragraph 

24 (9), the development company shall be inde25 pendently managed and operated to pursue the 
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1 economic development purpose of the company 

2 and shall employ directly the chief executive of3 ficer. 

4 ‘‘(9) MANAGEMENT AND OPERATION EXCEP5 TIONS.— 

6 ‘‘(A) AFFILIATION.—A development com7 pany may be an affiliate of another local non8 profit service corporation (other than a develop9 ment company), a purpose of which is to sup10 port economic development in the area in which 

11 the development company operates. 

12 ‘‘(B) STAFFING.—A development company 

13 may satisfy the requirement for full-time pro14 fessional staff under paragraph (8)(A) by con15 tracting for the required staffing with— 

16 ‘‘(i) a local nonprofit service corpora17 tion; 

18 ‘‘(ii) a nonprofit affiliate of a local 

19 nonprofit service corporation; 

20 ‘‘(iii) an entity wholly or partially op21 erated by a governmental agency; or 

22 ‘‘(iv) another entity approved by the 

23 Administration. 

24 ‘‘(C) DIRECTORS.—A development com25 pany and a local nonprofit service corporation 
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1 with which it is affiliated may have in common 

2 some, but not all, members of their respective 

3 board of directors. 

4 ‘‘(D) RURAL AREAS.—A development com5 pany in a rural area may satisfy the require6 ments of a full-time professional staff and pro7 fessional management ability under paragraph 

8 (8)(A) by contracting for such services with an9 other certified development company that— 

10 ‘‘(i) has such staff and management 

11 ability; and 

12 ‘‘(ii) is located in the same State as 

13 the development company or in a State 

14 that is contiguous to the State in which 

15 the development company is located. 

16 ‘‘(E) PREVIOUSLY CERTIFIED.—A develop17 ment company that, on or before December 31, 

18 2005, was certified by the Administrator and 

19 had contracted with a for-profit company to 

20 provide staffing and management services, may 

21 continue to do so. 

22 ‘‘(b) USE OF EXCESS FUNDS.—Any funds generated 

23 by a certified development company from making loans 

24 under section 503 or 504 that remain unexpended after 

25 payment of staff, operating, and overhead expenses shall 
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1 be retained by the certified development company as a re2 serve for— 

3 ‘‘(1) future operations; 

4 ‘‘(2) expanding the area in which the certified 

5 development company operates through the methods 

6 authorized by this Act; or 

7 ‘‘(3) investment in other local economic develop8 ment activity in the State from which such funds 

9 were generated. 

10 ‘‘(c) ETHICAL REQUIREMENTS.— 

11 ‘‘(1) IN GENERAL.—A certified development 

12 company and the officers, employees, and other staff 

13 of the company shall at all times act ethically and 

14 avoid activities which constitute a conflict of interest 

15 or appear to constitute a conflict of interest. 

16 ‘‘(2) PROHIBITED CONFLICT IN PROJECT

17 LOANS.— 

18 ‘‘(A) IN GENERAL.—No certified develop19 ment company may— 

20 ‘‘(i) recommend or approve a guar21 antee of a debenture by the Administrator 

22 under the Local Business Development 

23 Loan Program that is collateralized by a 

24 second lien position on the property being 

25 constructed or acquired; and 
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1 ‘‘(ii) provide, or be affiliated with a 

2 corporation or other entity which provides, 

3 financing collateralized by a first lien on 

4 the same property. 

5 ‘‘(B) EXCEPTION.—During the 2-year pe6 riod beginning on the date of enactment of this 

7 subsection, a certified development company 

8 that was participating as a first mortgage lend9 er for the Local Business Development Loan 

10 Program in either of fiscal years 2004 or 2005 

11 may continue to do so. 

12 ‘‘(3) OTHER ECONOMIC DEVELOPMENT ACTIVI13 TIES.—It shall not be a conflict of interest for a cer14 tified development company to operate multiple pro15 grams to assist small business concerns as part of 

16 carrying out its economic development purpose. 

17 ‘‘(d) MULTISTATE OPERATIONS.— 

18 ‘‘(1) AUTHORIZATION.—Notwithstanding any 

19 other provision of law, the Administrator shall per20 mit a certified development company to make loans 

21 in any State that is contiguous to the State of incor22 poration of that certified development company, only 

23 if such company— 

24 ‘‘(A) is— 
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1 ‘‘(i) an accredited lender under section 

2 507; or 

3 ‘‘(ii) a premier certified lender under 

4 section 508; 

5 ‘‘(B) has a membership that contains not 

6 fewer than 25 members from each State in 

7 which the company makes loans; 

8 ‘‘(C) has a board of directors that contains 

9 not fewer than 1 member from each State in 

10 which the company makes loans; and 

11 ‘‘(D) maintains not fewer than 1 loan com12 mittee, which shall have not fewer than 1 mem13 ber from each State in which the company 

14 makes loans; and 

15 ‘‘(E) submits to the Administrator, in writ16 ing— 

17 ‘‘(i) a notice of the intention of the 

18 company to make loans in multiple States; 

19 ‘‘(ii) the names of the States in which 

20 the company intends to make loans; 

21 ‘‘(iii) a detailed statement of how the 

22 company will comply with this paragraph, 

23 including a list of the members described 

24 in subparagraph (B). 
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1 ‘‘(2) REVIEW.—The Administrator shall verify 

2 whether a certified development company satisfies 

3 the requirements of paragraph (1) on an expedited 

4 basis and, not later than 30 days after the date on 

5 which the Administrator receives the statement de6 scribed in paragraph (1)(E)(iii), the Administrator 

7 shall determine whether such company satisfies such 

8 criteria and provide notice to such company. 

9 ‘‘(3) LOAN COMMITTEE PARTICIPATION.—For 

10 any loan made by a company described in paragraph 

11 (1), not fewer than 1 member of the loan committee 

12 from the State in which the loan is to be made shall 

13 participate in the review of such loan. 

14 ‘‘(4) AGGREGATE ACCOUNTING.—A company 

15 described in paragraph (1) may maintain an aggre16 gate accounting of all revenue and expenses of the 

17 company for purposes of this title. 

18 ‘‘(5) DIRECTORS.—Notwithstanding any other 

19 provision of law, a person may serve on the board 

20 of directors, but not as an officer, of more than 1 

21 certified development company if none of the cer22 tified development companies on which the person 

23 serves as a member of the board of directors are lo24 cated or operate in the same area. 
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1 ‘‘(6) LOCAL JOB CREATION REQUIREMENTS.— 

2 Any certified development company making loans in 

3 multiple States shall satisfy any applicable job cre4 ation or retention requirements separately for each 

5 such State. Such a company shall not count jobs 

6 created or retained in 1 State towards any applica7 ble job creation or retention requirement in another 

8 State. 

9 ‘‘(7) CONTIGUOUS STATES.—For purposes of 

10 this subsection, the States of Alaska and Hawaii 

11 shall be deemed to be contiguous to any State abut12 ting the Pacific ocean. 

13 ‘‘(e) RESTRICTIONS ON DEVELOPMENT COMPANY

14 ASSISTANCE.—’’. 

15 SEC. 15. CONFORMING AMENDMENTS. 

16 Section 503 of the Small Business Investment Act 

17 of 1958 (15 U.S.C. 697) is amended— 

18 (1) in subsection (a)(1), by striking ‘‘qualified 

19 State or local development company’’ and inserting 

20 ‘‘certified development company’’; and 

21 (2) by striking subsection (e) and inserting the 

22 following: 

23 ‘‘(e) SECTION 7(a) LOANS.—Notwithstanding any 

24 other provision of law, a certified development company 

25 is authorized to prepare applications for deferred partici-
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1 pation loans under section 7(a) of the Small Business Act, 

2 to service such loans, and to charge a reasonable fee for 

3 servicing such loans.’’. 

4 SEC. 16. CLOSING COSTS. 

5 Section 503(b) of the Small Business Investment Act 

6 of 1958 (15 U.S.C. 697(b)) is amended by striking para7 graph (4) and inserting the following: 

8 ‘‘(4) the aggregate amount of such debenture 

9 does not exceed the amount of the loans to be made 

10 from the proceeds of such debenture plus, at the 

11 election of the borrower, other amounts attributable 

12 to the administrative and closing costs of such loans, 

13 except for the attorney fees of the borrower;’’. 

14 SEC. 17. DEFINITION OF RURAL. 

15 Section 501 of the Small Business Investment Act 

16 of 1958 (15 U.S.C. 695) is amended by adding at the end 

17 the following: 

18 ‘‘(f) As used in this title, the term ‘rural’ shall include 

19 any area that is not— 

20 ‘‘(1) a city or town that has a population great21 er than 50,000 inhabitants; or 

22 ‘‘(2) the urbanized area contiguous and adja23 cent to a city or town described in paragraph (1).’’. 
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1 SEC. 18. REGULATIONS AND EFFECTIVE DATE. 

2 (a) IN GENERAL.—Except as provided in subsection 

3 (b), the Administrator shall— 

4 (1) publish proposed rules to implement this 

5 Act and the amendments made by this Act not later 

6 than 120 days after the date of enactment of this 

7 Act; and 

8 (2) publish such rules in final form not later 

9 than 120 days after the date of publication under 

10 paragraph (1). 

11 (b) MULTISTATE OPERATIONS.—As soon as is prac12 ticable after the date of enactment of this Act, the Admin13 istrator shall promulgate regulations to implement section 

14 506(d) of the Small Business Investment Act of 1958, as 

15 added by section 14 of this Act. Such regulations shall 

16 become effective not later than 120 days after the date 

17 of enactment of this Act. 

18 (c) EFFECTIVE DATE.— 

19 (1) IN GENERAL.—Except as provided in para20 graph (2) and section 10(b), this Act and the 

21 amendments made by this Act shall become effective 

22 240 days after the date of enactment of this Act, re23 gardless of whether the Administrator has promul24 gated the regulations required under subsection (a). 

25 (2) MULTISTATE OPERATIONS.—Section 506(d) 

26 of the Small Business Investment Act of 1958, as 
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1 added by section 14 of this Act, shall become effec2 tive 120 days after the date of enactment of this 

3 Act, regardless of whether the Administrator has 

4 promulgated the regulations required under sub5 section (b). 

Æ