PUBLIC LAW 104–36—OCT. 12, 1995 109 STAT. 295

Public Law 104–36

104th Congress

An Act

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.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Small Business Lending Enhancement Act of 1995’’.

SEC. 2. REDUCED LEVEL OF PARTICIPATION IN GUARANTEED LOANS.

Section 7(a)(2) of the Small Business Act (15 U.S.C. 636(a)(2))

is amended to read as follows:

‘‘(2) LEVEL OF PARTICIPATION IN GUARANTEED LOANS.—

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

(B), in an agreement to participate in a loan on a deferred

basis under this subsection (including a loan made under

the Preferred Lenders Program), such participation by the

Administration shall be equal to—

‘‘(i) 75 percent of the balance of the financing

outstanding at the time of disbursement of the loan,

if such balance exceeds $100,000; or

‘‘(ii) 80 percent of the balance of the financing

outstanding at the time of disbursement of the loan,

if such balance is less than or equal to $100,000.

‘‘(B) REDUCED PARTICIPATION UPON REQUEST.—

‘‘(i) IN GENERAL.—The guarantee percentage specified by subparagraph (A) for any loan under this subsection may be reduced upon the request of the participating lender.

‘‘(ii) PROHIBITION.—The Administration shall not

use the guarantee percentage requested by a participating lender under clause (i) as a criterion for

establishing priorities in approving loan guarantee

requests under this subsection.

‘‘(C) INTEREST RATE UNDER PREFERRED LENDERS PROGRAM.—

‘‘(i) IN GENERAL.—The maximum interest rate for

a loan guaranteed under the Preferred Lenders Program shall not exceed the maximum interest rate,

as determined by the Administration, applicable to

other loans guaranteed under this subsection.

‘‘(ii) PREFERRED LENDERS PROGRAM DEFINED.—For

purposes of this subparagraph, the term ‘Preferred

15 USC 631 note.

Small Business

Lending

Enhancement

Act of 1995.

Oct. 12, 1995

[S. 895]
109 STAT. 296 PUBLIC LAW 104–36—OCT. 12, 1995

Lenders Program’ means any program established by

the Administrator, as authorized under the proviso

in section 5(b)(7), under which a written agreement

between the lender and the Administration delegates

to the lender—

‘‘(I) complete authority to make and close loans with a guarantee from the Administration without

obtaining the prior specific approval of the

Administration; and

‘‘(II) authority to service and liquidate such loans.’’.

SEC. 3. GUARANTEE FEES.

(a) AMOUNT OF FEES.—Section 7(a)(18) of the Small Business

Act (15 U.S.C. 636(a)(18)) is amended to read as follows:

‘‘(18) GUARANTEE FEES.— ‘‘(A) IN GENERAL.—With respect to each loan guaran- teed under this subsection (other than a loan that is repayable in 1 year or less), the Administration shall collect

a guarantee fee, which shall be payable by the participating

lender and may be charged to the borrower, in an amount

equal to the sum of— ‘‘(i) 3 percent of the amount of the deferred participation share of the loan that is less than or equal

to $250,000;

‘‘(ii) if the deferred participation share of the loan

exceeds $250,000, 3.5 percent of the difference

between—

‘‘(I) $500,000 or the total deferred participation

share of the loan, whichever is less; and

‘‘(II) $250,000; and

‘‘(iii) if the deferred participation share of the loan

exceeds $500,000, 3.875 percent of the difference

between—

‘‘(I) the total deferred participation share of

the loan; and

‘‘(II) $500,000.

‘‘(B) EXCEPTION FOR CERTAIN LOANS.—Notwithstanding subparagraph (A), if the total deferred participation share

of a loan guaranteed under this subsection is less than

or equal to $80,000, the guarantee fee collected under

subparagraph (A) shall be in an amount equal to 2 percent

of the total deferred participation share of the loan.’’. (b) REPEAL OF PROVISIONS ALLOWING RETENTION OF FEES BY

LENDERS.—Section 7(a)(19) of the Small Business Act (15 U.S.C.

636(a)(19)) is amended—

(1) in subparagraph (B)—

(A) by striking ‘‘shall (i) develop’’ and inserting ‘‘shall

develop’’; and

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

the end of the subparagraph and inserting a period; and

(2) by striking subparagraph (C).

SEC. 4. ESTABLISHMENT OF ANNUAL FEE.

(a) IN GENERAL.—Section 7(a) of the Small Business Act (15

U.S.C. 636(a)) is amended by adding at the end the following

new paragraph: ‘‘(23) ANNUAL FEE.—
PUBLIC LAW 104–36—OCT. 12, 1995 109 STAT. 297

‘‘(A) IN GENERAL.—With respect to each loan guaranteed under this subsection, the Administration shall, in

accordance with such terms and procedures as the Administration shall establish by regulation, assess and collect

an annual fee in an amount equal to 0.5 percent of the

outstanding balance of the deferred participation share

of the loan.

‘‘(B) PAYER.—The annual fee assessed under subparagraph (A) shall be payable by the participating lender

and shall not be charged to the borrower.’’. (b) CONFORMING AMENDMENT.—Section 5(g)(4)(A) of the Small Business Act (15 U.S.C. 634(g)(4)(A)) is amended—

(1) by striking the first sentence and inserting the following: ‘‘The Administration may collect a fee for any loan guarantee sold into the secondary market under subsection (f) in

an amount equal to not more than 50 percent of the portion

of the sale price that exceeds 110 percent of the outstanding

principal amount of the portion of the loan guaranteed by

the Administration.’’; and

(2) by striking ‘‘fees’’ each place such term appears and

inserting ‘‘fee’’.

SEC. 5. NOTIFICATION REQUIREMENT.

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is

amended by adding at the end the following new paragraph:

‘‘(24) NOTIFICATION REQUIREMENT.—The Administration

shall notify the Committees on Small Business of the Senate

and the House of Representatives not later than 15 days before

making any significant policy or administrative change affecting

the operation of the loan program under this subsection.’’.

SEC. 6. DEVELOPMENT COMPANY DEBENTURES.

Section 503(b) of the Small Business Investment Act of 1958

(15 U.S.C. 697(b)) is amended—

(1) in paragraph (5), by striking ‘‘and’’ at the end;

(2) in paragraph (6), by striking the period at the end

and inserting ‘‘; and’’; and

(3) by adding at the end the following new paragraph:

‘‘(7) with respect to each loan made from the proceeds

of such debenture, the Administration—

‘‘(A) assesses and collects a fee, which shall be payable

by the borrower, in an amount equal to 0.125 percent

per year of the outstanding balance of the loan; and

‘‘(B) uses the proceeds of such fee to offset the cost

(as such term is defined in section 502 of the Federal

Credit Reform Act of 1990) to the Administration of making

guarantees under subsection (a).’’.

SEC. 7. PILOT PREFERRED SURETY BOND GUARANTEE PROGRAM

EXTENSION.

Section 207 of the Small Business Administration Reauthorization and Amendment Act of 1988 (15 U.S.C. 694b note) is amended

by striking ‘‘September 30, 1995’’ and inserting ‘‘September 30,

1997’’.

SEC. 8. APPLICABILITY.

(a) IN GENERAL.—Except as provided in subsection (b), the

amendments made by this Act do not apply with respect to any

15 USC 634 note.

Regulations.
109 STAT. 298 PUBLIC LAW 104–36—OCT. 12, 1995

LEGISLATIVE HISTORY—S. 895 (H.R. 2150):

HOUSE REPORTS: Nos. 104–239 accompanying H.R. 2150 (Comm. on Small Business) and 104–269 (Comm. of Conference).

SENATE REPORTS: No. 104–129 (Comm. on Small Business).

CONGRESSIONAL RECORD, Vol. 141 (1995):

Aug. 11, considered and passed Senate.

Sept. 12, H.R. 2150 considered and passed House; S. 895, amended, passed

in lieu.

Sept. 28, Senate agreed to conference report.

Sept. 29, House agreed to conference report.

Æ

loan made or guaranteed under the Small Business Act or the

Small Business Investment Act of 1958 before the date of enactment

of this Act.

(b) EXCEPTIONS.—The amendments made by this Act apply

to a loan made or guaranteed under the Small Business Act or

the Small Business Investment Act of 1958 before the date of

enactment of this Act, if the loan is refinanced, extended, restructured, or renewed on or after the date of enactment of this Act.

Approved October 12, 1995.