I 

116TH CONGRESS 

2D SESSION H. R. 8211 

To amend the Small Business Investment Act of 1958 to improve the loan 

guaranty program, enhance the ability of small manufacturers to access 

affordable capital, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 11, 2020 

Ms. CRAIG (for herself and Mr. CHABOT) introduced the following bill; which 

was referred to the Committee on Small Business 

A BILL 

To amend the Small Business Investment Act of 1958 to 

improve the loan guaranty program, enhance the ability 

of small manufacturers to access affordable capital, 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 ‘‘504 Modernization and 

5 Small Manufacturer Enhancement Act of 2020’’. 


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1 SEC. 2. ADDITIONS TO POLICY GOALS FOR THE DEVELOP2 MENT COMPANY PROGRAM. 

3 Section 501(d)(3) of the Small Business Investment 

4 Act of 1958 (15 U.S.C. 695(d)(3)) is amended— 

5 (1) by redesignating subparagraphs (A) through 

6 (L) as subparagraphs (B) through (M), respectively; 

7 (2) by inserting before subparagraph (B) (as so 

8 redesignated) the following: 

9 ‘‘(A) workforce development through work10 based or work-integrated training, which shall 

11 be satisfied by demonstrating that a small busi12 ness concern that is a subject of the project 

13 has— 

14 ‘‘(i) a documented in-house training 

15 program, the duration of which is not 

16 shorter than 12 weeks; or 

17 ‘‘(ii) entered into a contract with an 

18 entity— 

19 ‘‘(I) to provide trained applicants 

20 for any open position of employment 

21 at the small business concern; and 

22 ‘‘(II) that ensures that any appli23 cant provided to the small business 

24 concern under subclause (I) has un25 dergone not fewer than 12 weeks of 


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1 training that is relevant to the open 

2 position described in that subclause,’’; 

3 (3) by amending subparagraph (D) (as so re4 designated) to read as follows: 

5 ‘‘(D) expansion of minority-owned, em6 ployee-owned, or women-owned business devel7 opment,’’; 

8 (4) in subparagraph (L) (as so redesignated), 

9 by striking ‘‘producers, or’’ and inserting ‘‘pro10 ducers,’’; 

11 (5) in subparagraph (M) (as so redesignated), 

12 by striking the period at the end and inserting a 

13 comma; 

14 (6) by inserting after subparagraph (M) the fol15 lowing new subparagraphs: 

16 ‘‘(N) enhanced ability for small business 

17 concerns to reduce costs by using energy effi18 cient products and generating renewable en19 ergy, or 

20 ‘‘(O) aid revitalizing of any area for which 

21 a disaster has been declared or determined 

22 under subparagraph (A), (B), (C), or (E) of 

23 section 7(b)(2) of the Small Business Act.’’; 

24 and 


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1 (7) in the flush text following subparagraph 

2 (O), as added by paragraph (6), by striking ‘‘sub3 paragraphs (J) and (K)’’ and inserting ‘‘subpara4 graphs (K) and (L)’’. 

5 SEC. 3. INCREASE IN LOAN AMOUNTS FOR MANUFAC6 TURING LOANS. 

7 Section 502 of the Small Business Investment Act 

8 of 1958 (15 U.S.C. 696) is amended— 

9 (1) in the matter preceding paragraph (1), by 

10 striking ‘‘The Administration’’ and inserting the fol11 lowing: 

12 ‘‘(a) IN GENERAL.—The Administration’’; and 

13 (2) in subsection (a), as so designated— 

14 (A) in paragraph (2)(A)— 

15 (i) in the matter preceding clause (i), 

16 by striking ‘‘section’’ and inserting ‘‘sub17 section’’; and 

18 (ii) in clause (iii), by striking 

19 ‘‘$5,500,000’’ and inserting ‘‘$6,500,000’’; 

20 (B) in paragraph (3)(A), by striking ‘‘this 

21 section’’ and inserting ‘‘this subsection’’; and 

22 (C) in paragraph (5), by striking ‘‘this sec23 tion’’ and inserting ‘‘this subsection’’. 


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1 SEC. 4. IMPROVEMENTS TO 504 LOAN CLOSING PROCE2 DURE. 

3 Title V of the Small Business Investment Act of 1958 

4 (15 U.S.C. 695 et seq.) is amended— 

5 (1) in section 502, as amended by section 3, by 

6 adding at the end the following new subsections: 

7 ‘‘(b) CLOSING.— 

8 ‘‘(1) AUTHORITY OF CERTAIN DEVELOPMENT

9 COMPANIES.—An accredited lender certified com10 pany may take any of the following actions to facili11 tate the closing of a loan made under subsection (a): 

12 ‘‘(A) Reallocate the cost of the project with 

13 respect to which the loan is made in an amount 

14 that is not more than 10 percent of the overall 

15 cost of the project. 

16 ‘‘(B) Correct any name that is applicable 

17 to the loan, including the name of any bor18 rower, guarantor, eligible passive company de19 scribed in subparagraph (C)(i), and operating 

20 company described in subparagraph (C)(ii). 

21 ‘‘(C) Form any of the following to receive 

22 proceeds of the loan: 

23 ‘‘(i) An eligible passive company that 

24 complies with section 120.111 of title 13, 

25 Code of Federal Regulations, or any suc26 cessor regulation. 


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1 ‘‘(ii) If an eligible passive company is 

2 formed under clause (i), an operating com3 pany with respect to that eligible passive 

4 company. 

5 ‘‘(D) Correct the address of any property 

6 with respect to which the loan is made. 

7 ‘‘(E) Correct the name of any interim 

8 lender or third-party lender. 

9 ‘‘(F) Change any third-party lender or in10 terim lender if that lender is a financial institu11 tion that is regulated by the Federal Govern12 ment or a State government. 

13 ‘‘(G) Make a guarantor a co-borrower or a 

14 co-borrower a guarantor. 

15 ‘‘(H) Add a guarantor that does not 

16 change ownership with respect to the loan. 

17 ‘‘(I) Reduce the amount of standby debt 

18 before the closing as a result of regularly sched19 uled payments. 

20 ‘‘(J) Reduce the cost of the project with 

21 respect to which the loan is made. 

22 ‘‘(2) FEES.—The Administrator shall— 

23 ‘‘(A) issue a rule regarding the amount of 

24 a closing fee that may be financed in a deben25 ture that is issued by a certified development 


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1 company to make one or more loans to small 

2 business concerns, the proceeds of which are 

3 used by that concern for the purposes described 

4 in subsection (a), except that such amount shall 

5 be not less than $3,500; and 

6 ‘‘(B) periodically update the rule issued 

7 under subparagraph (A). 

8 ‘‘(3) NO ADVERSE CHANGE AND FINANCIAL

9 STATEMENT.—Before the closing with respect to a 

10 loan made under subsection (a), the borrower and 

11 any operating company shall— 

12 ‘‘(A) make the certification required under 

13 section 120.892 of title 13, Code of Federal 

14 Regulations, or any successor regulation; and 

15 ‘‘(B) submit to the certified development 

16 company a financial statement that is not more 

17 than 180 days old, which the company shall 

18 certify not later than 120 days before the date 

19 on which the certified development company 

20 issues a debenture with respect to the project to 

21 which the loan relates. 

22 ‘‘(c) EXPRESS PROGRAM.—An accredited lender cer23 tified company may, with respect to a covered loan, take 

24 any of the following actions with respect to the loan: 


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1 ‘‘(1) Any action described in any of subpara2 graphs (A) through (J) of subsection (b)(1). 

3 ‘‘(2) If the borrower is not delinquent with re4 spect to the loan payments— 

5 ‘‘(A) permit the loan to subordinate to a 

6 new third-party lender loan for the purposes of 

7 refinancing that third-party lender loan, except 

8 that no refinanced amount with respect to the 

9 loan may be increased in order to provide cash 

10 to the borrower; 

11 ‘‘(B) permit a new party to assume respon12 sibility for the loan if the original borrower re13 mains on the loan as the original guarantor; 

14 ‘‘(C) obtain force placed insurance cov15 erage for the loan if the borrower has allowed 

16 insurance coverage with respect to the loan to 

17 lapse; and 

18 ‘‘(D) endorse an insurance check with re19 spect to the property that is financed by the 

20 loan in an amount that is less than $100,000. 

21 ‘‘(3) Certify that the loan is compliant with the 

22 appraisal requirements and environmental policies 

23 and procedures applicable to the loan under Stand24 ard Operating Procedure 50 10 6 of the AdministraVerDate Sep 11 2014 01:01 Sep 15, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8211.IH H8211

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1 tion, effective August 28, 2020, or any successor 

2 Standard Operating Procedure. 

3 ‘‘(d) DEFINITIONS.—In this section— 

4 ‘‘(1) the term ‘accredited lender certified com5 pany’ means a certified development company that 

6 meets the requirements under section 507(b), includ7 ing a certified development company that the Ad8 ministration has designated as an accredited lender 

9 under such section 507(b); and 

10 ‘‘(2) the term ‘covered loan’— 

11 ‘‘(A) means a loan made under subsection 

12 (a) in an amount that is not more than 

13 $500,000; and 

14 ‘‘(B) does not include a loan made to a 

15 borrower that is a franchise that, or is in an in16 dustry that, has a high rate of default, as annu17 ally determined by the Administrator.’’; and 

18 (2) by adding at the end the following new sec19 tion: 

20 ‘‘SEC. 511. CLOSING AND OVERSIGHT. 

21 ‘‘(a) SBA DISTRICT COUNSELS.—Beginning on the 

22 date of enactment of this section, with respect to the pro23 gram established under this title, district counsels of the 

24 Administration shall be subject to the same requirements, 

25 and shall have the same authority and responsibilities, as 


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1 in effect with respect to that program on the day before 

2 the date of enactment of this section, except that— 

3 ‘‘(1) the Office of Credit Risk Management of 

4 the Administration shall have the responsibility for 

5 all duties relating to conducting file reviews of loans 

6 made under this title; and 

7 ‘‘(2) district counsels of the Administration 

8 shall not have any responsibility relating to the re9 view of closing packages with respect to a loan made 

10 under this title. 

11 ‘‘(b) DESIGNATED ATTORNEYS.—For the purposes of 

12 this title, the following provisions and requirements shall 

13 apply with respect to a designated attorney of a certified 

14 development company: 

15 ‘‘(1) A designated attorney that meets the re16 quirements determined under paragraph (2) shall be 

17 responsible for certifying documents relating to the 

18 closing of a loan described in this title. 

19 ‘‘(2) The Administrator may determine any 

20 continuing education requirements that the des21 ignated attorney shall be required to satisfy in order 

22 to be permitted to close a loan made under this title. 

23 ‘‘(3) If, as of the date of enactment of this sec24 tion, a certified development company does not have 

25 a designated attorney, during the 270-day period beVerDate Sep 11 2014 01:01 Sep 15, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H8211.IH H8211

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1 ginning on that date of enactment, the certified de2 velopment company may identify such an attorney, 

3 subject to the approval of the Administrator.’’. 

4 SEC. 5. CERTIFIED DEVELOPMENT COMPANY LOANS FOR 

5 SMALL MANUFACTURERS. 

6 (a) CONTRIBUTION REQUIREMENT.—Section 

7 502(a)(3)(C) of the Small Business Investment Act of 

8 1958, as designated by section 3, is amended— 

9 (1) by redesignating clauses (i), (ii), (iii), and 

10 (iv) as subclauses (I), (II), (III), and (IV), respec11 tively, and adjusting the margins of such subclauses 

12 accordingly; 

13 (2) by inserting before subclause (I), as so re14 designated, the following: 

15 ‘‘(i) for a small business concern that 

16 is not a small manufacturer (as defined in 

17 section 501(e)(7))—’’; 

18 (3) in subclause (III), as so redesignated, by 

19 striking ‘‘clauses (i) and (ii)’’ and inserting ‘‘sub20 clauses (I) and (II)’’; 

21 (4) in subclause (IV) as so redesignated, by 

22 striking the period and the end and inserting ‘‘; or’’; 

23 and 

24 (5) by adding at the end the following: 


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1 ‘‘(ii) for a small manufacturer (as de2 fined in section 501(e)(7))— 

3 ‘‘(I) at least 5 percent of the 

4 total cost of the project financed, if 

5 the small business concern has been in 

6 operation for a period of 2 years or 

7 less; 

8 ‘‘(II) at least 5 percent of the 

9 total cost of the project financed, if 

10 the project involves a limited or single 

11 purpose building or structure; 

12 ‘‘(III) at least 10 percent of the 

13 total cost of the project financed if the 

14 project involves both of the conditions 

15 set forth in subclauses (I) and (II); or 

16 ‘‘(IV) at least 5 percent of the 

17 total cost of the project financed, in 

18 all other circumstances, at the discre19 tion of the development company.’’. 

20 (b) CREATION OR RETENTION OF JOBS REQUIRE21 MENT.—Section 501(e) of the Small Business Investment 

22 Act of 1958 (15 U.S.C. 695(e)) is amended— 

23 (1) in paragraph (1), by striking ‘‘creates or re24 tains’’ and all that follows through the period at the 

25 end and inserting ‘‘creates or retains 1 job for every 


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1 $75,000 guaranteed by the Administration, except 

2 that the amount is $150,000 in the case of a project 

3 of a small manufacturer.’’; 

4 (2) in paragraph (2), by striking ‘‘creates or re5 tains’’ and all that follows through the period at the 

6 end and inserting ‘‘creates or retains 1 job for every 

7 $75,000 guaranteed by the Administration, except 

8 that the amount is $150,000 in the case of a project 

9 of a small manufacturer.’’; 

10 (3) by redesignating paragraph (6) as para11 graph (7); and 

12 (4) by inserting after paragraph (5) the fol13 lowing: 

14 ‘‘(6) For a loan for a project directed toward the cre15 ation of job opportunities under subsection (d)(1), the Ad16 ministrator shall publish on the website of the Administra17 tion the number of jobs created or retained under the 

18 project as of the date that is 2 years after the completion 

19 (as determined based on information provided by the de20 velopment company) of the project.’’. 

21 (c) COLLATERAL REQUIREMENTS.—Section 

22 502(a)(3)(E)(i) of the Small Business Investment Act of 

23 1958, as designated by section 3, is amended by adding 

24 at the end the following: ‘‘Additional collateral shall not 


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1 be required in the case of a small manufacturer (as de2 fined in section 501(e)(7)).’’. 

3 (d) DEBT REFINANCING.—Section 502(a)(7)(B) of 

4 the Small Business Investment Act of 1958, as designated 

5 by section 3, is amended in the matter preceding clause 

6 (i) by inserting ‘‘(or in the case of a small manufacturer 

7 (as defined in section 501(e)(7)), that does not exceed 100 

8 percent of the project cost of the expansion)’’ after ‘‘cost 

9 of the expansion’’. 

10 (e) AMOUNT OF GUARANTEED DEBENTURE.—Sec11 tion 503(a) of the Small Business Investment Act of 1958 

12 (15 U.S.C. 697(a)) is amended by adding at the end the 

13 following: 

14 ‘‘(5) Any debenture issued by a State or local devel15 opment company to a small manufacturer (as defined in 

16 section 501(e)(7)) with respect to which a guarantee is 

17 made under this subsection shall be in an amount equal 

18 to not more than 50 percent of the cost of the project 

19 with respect to which such debenture is issued, without 

20 regard to whether good cause has been shown.’’. 

21 SEC. 6. ASSISTANCE FOR SMALL MANUFACTURERS. 

22 Title V of the Small Business Investment Act of 1958 

23 (15 U.S.C. 695 et seq.), as amended by section 4(2), is 

24 further amended by adding at the end the following new 

25 section: 


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1 ‘‘SEC. 512. ASSISTANCE FOR SMALL MANUFACTURERS. 

2 ‘‘(a) IN GENERAL.—The Administrator shall ensure 

3 that each district office of the Administration partners 

4 with not less than 1 resource partner to provide training 

5 to small business concerns assigned a North American In6 dustry Classification System code for manufacturing on 

7 obtaining assistance under the program carried out under 

8 this title, including with respect to the application process 

9 under that program and partnering with development 

10 companies under this title. 

11 ‘‘(b) RESOURCE PARTNER DEFINED.—In this sec12 tion, the term ‘resource partner’ means— 

13 ‘‘(1) a small business development center (as 

14 defined in section 3 of the Small Business Act); 

15 ‘‘(2) a women’s business center (described 

16 under section 29 of such Act); 

17 ‘‘(3) a chapter of the Service Corps of Retired 

18 Executives (established under section 8(b)(1)(B) of 

19 such Act); and 

20 ‘‘(4) a Veteran Business Outreach Center (de21 scribed under section 32 of such Act).’’. 

Æ 


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