II

103D CONGRESS

1ST SESSION S. 1274

To authorize funding for certain Small Business Administration programs,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 21 (legislative day, JUNE 30), 1993

Mr. BUMPERS (for himself, Mr. WOFFORD, and Mr. KOHL) introduced the following bill; which was read twice and referred to the Committee on Small

Business

A BILL

To authorize funding for certain Small Business

Administration programs, 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; TABLE OF CONTENTS.

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

5 ‘‘Small Business Credit Reform Act of 1993’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. General authorizations.

Sec. 3. Microloan program authorizations.

Sec. 4. Extension of State limitation on interest rates.

Sec. 5. Guaranteed business loan program amendments.

Sec. 6. Interest rate for Preferred Lenders Program.
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Sec. 7. Microloan program amendments.

Sec. 8. Regulations.

Sec. 9. White House Conference on Small Business.

1 SEC. 2. GENERAL AUTHORIZATIONS.

2 (a) FINANCINGS FOR FISCAL YEAR 1993.—Section

3 20(g)(2) of the Small Business Act (15 U.S.C. 631 note)

4 is amended—

5 (1) by striking ‘‘$7,030,000,000’’ and inserting

6 ‘‘$8,455,000,000’’;

7 (2) in subparagraph (A), by striking

8 ‘‘$6,200,000,000’’ and inserting ‘‘$7,500,000,000’’;

9 and

10 (3) in subparagraph (C), by striking

11 ‘‘$775,000,000’’ and inserting ‘‘$900,000,000’’.

12 (b) FINANCINGS FOR FISCAL YEAR 1994.—Section

13 20(i)(2) of the Small Business Act (15 U.S.C. 631 note)

14 is amended—

15 (1) by striking ‘‘$8,083,000,000’’ and inserting

16 ‘‘$11,258,000,000’’;

17 (2) in subparagraph (A), by striking

18 ‘‘$7,200,000,000’’ and inserting ‘‘$8,000,000,000’’;

19 (3) in subparagraph (B), by striking ‘‘and’’ at

20 the end;

21 (4) by redesignating subparagraph (C) as sub22 paragraph (D);

23 (5) by inserting after subparagraph (B) the fol24 lowing new subparagraph:
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1 ‘‘(C) $2,000,000,000 in loans, as provided

2 in section 7(a)(21); and’’; and

3 (6) in subparagraph (D), as redesignated, by

4 striking ‘‘$825,000,000’’ and inserting

5 ‘‘$1,200,000,000’’.

6 (c) FINANCINGS FOR FISCAL YEAR 1995.—Section

7 20 of the Small Business Act (15 U.S.C. 631 note) is

8 amended by striking subsections (k) and (l), as added by

9 section 405(3) of the Small Business Credit and Business

10 Opportunity Enhancement Act of 1992, and inserting the

11 following:

12 ‘‘(l) The following program levels are authorized for

13 fiscal year 1995:

14 ‘‘(1) For the programs authorized by this Act,

15 the Administration is authorized to make

16 $13,360,000,000 in deferred participation loans and

17 other financings. Of such sum, the Administration is

18 authorized to make—

19 ‘‘(A) $9,000,000,000 in general business

20 loans, as provided in section 7(a);

21 ‘‘(B) $3,000,000,000 in loans, as provided

22 in section 7(a)(21);

23 ‘‘(C) $60,000,000 in loans, as provided in

24 section 7(a)(12)(B); and
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1 ‘‘(D) $1,300,000,000 in financings, as pro2 vided in section 7(a)(13) of this Act and section

3 504 of the Small Business Investment Act of

4 1958.

5 ‘‘(2)(A) For the programs authorized by title

6 III of the Small Business Investment Act of 1958,

7 the Administration is authorized to make

8 $23,000,000 in purchases of preferred securities,

9 $244,000,000 in guarantees of debentures, of which

10 $44,000,000 is authorized in guarantees of deben11 tures from companies operating pursuant to section

12 301(d) of such Act, and $400,000,000 in guarantees

13 of participating securities.

14 ‘‘(B) There are authorized to be appropriated

15 to the Administration for fiscal year 1995, such

16 sums as may be necessary to carry out subpara17 graph (A), including salaries and expenses of the

18 Administration.

19 ‘‘(3) For the programs authorized by part B of

20 title IV of the Small Business Investment Act of

21 1958, the Administration is authorized to enter into

22 guarantees of not more than $2,180,000,000.’’.

23 (d) FINANCINGS FOR FISCAL YEAR 1996.—Section

24 20 of the Small Business Act (15 U.S.C. 631 note) is

25 amended—
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1 (1) by striking subsections (m) and (n) and in2 serting the following:

3 ‘‘(m) The following program levels are authorized for

4 fiscal year 1996:

5 ‘‘(1) For the programs authorized by this Act,

6 the Administration is authorized to make

7 $14,960,000,000 in deferred participation loans and

8 other financings. Of such sum, the Administration is

9 authorized to make—

10 ‘‘(A) $10,000,000,000 in general business

11 loans, as provided in section 7(a);

12 ‘‘(B) $3,500,000,000 in loans, as provided

13 in section 7(a)(21);

14 ‘‘(C) $60,000,000 in loans, as provided in

15 section 7(a)(12)(B); and

16 ‘‘(D) $1,400,000,000 in financings, as pro17 vided in section 7(a)(13) of this Act and section

18 504 of the Small Business Investment Act of

19 1958.

20 ‘‘(2)(A) For the programs authorized by title

21 III of the Small Business Investment Act of 1958,

22 the Administration is authorized to make

23 $24,000,000 in purchases of preferred securities,

24 $256,000,000 in guarantees of debentures, of which

25 $46,000,000 is authorized in guarantees of deben-
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1 tures from companies operating pursuant to section

2 301(d) of such Act, and $550,000,000 in guarantees

3 of participating securities.

4 ‘‘(B) There are authorized to be appropriated

5 to the Administration for fiscal year 1996, such

6 sums as may be necessary to carry out subpara7 graph (A), including salaries and expenses.

8 ‘‘(3) For the programs authorized by part B of

9 title IV of the Small Business Investment Act of

10 1958, the Administration is authorized to enter into

11 guarantees not to exceed $2,275,000,000.’’;

12 (2) in subsection (o), by striking ‘‘(o) The’’ and

13 inserting ‘‘(n) The’’; and

14 (3) in subsection (p)—

15 (A) by striking ‘‘(p) There’’ and inserting

16 ‘‘(2) There’’, and indenting appropriately; and

17 (B) by striking ‘‘subsection (o)’’ and in18 serting ‘‘paragraph (1)’’.

19 SEC. 3. MICROLOAN PROGRAM AUTHORIZATIONS.

20 Section 20(k) of the Small Business Act (15 U.S.C.

21 631 note) is amended—

22 (1) by striking paragraph (1);

23 (2) by redesignating paragraphs (2) and (3) as

24 paragraphs (1) and (2), respectively;
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1 (3) in paragraph (1), as redesignated, by strik2 ing ‘‘and’’ at the end;

3 (4) in paragraph (2), as redesignated—

4 (A) in subparagraph (A), by striking

5 ‘‘$60,000,000’’ and inserting ‘‘$80,000,000’’;

6 (B) in subparagraph (B), by striking

7 ‘‘$35,000,000’’ and inserting ‘‘$30,000,000’’;

8 and

9 (C) by striking the period at the end and

10 inserting a semicolon; and

11 (5) by adding at the end the following new

12 paragraphs:

13 ‘‘(3) for fiscal year 1995—

14 ‘‘(A) $100,000,000 to be used for the pro15 vision of loans; and

16 ‘‘(B) $45,000,000 to be used for the provi17 sion of grants; and

18 ‘‘(4) for fiscal year 1996—

19 ‘‘(A) $120,000,000 to be used for the pro20 vision of loans; and

21 ‘‘(B) $55,000,000 to be used for the provi22 sion of grants.’’.
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1 SEC. 4. EXTENSION OF STATE LIMITATION ON INTEREST

2 RATES.

3 Section 112(c) of the Small Business Administration

4 Reauthorization and Amendments Act of 1988 (Public

5 Law 100–590; 102 Stat. 2996) is amended—

6 (1) by striking paragraph (2); and

7 (2) by striking ‘‘(1) IN GENERAL.—’’.

8 SEC. 5. GUARANTEED BUSINESS LOAN PROGRAM AMEND9 MENTS.

10 (a) ADDITIONAL GUARANTEE FEES.—

11 (1) IN GENERAL.—Section 7(a)(18) of the

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

13 amended—

14 (A) by inserting ‘‘(A)’’ after ‘‘(18)’’; and

15 (B) by adding at the end the following new

16 subparagraph:

17 ‘‘(B) In addition to fees collected under sub18 paragraph (A), the Administration shall collect a fee

19 charged to the participating lending institution in

20 any case in which a loan made under this section is

21 sold on the secondary market in an amount equal to

22 50 percent of that portion of the sale price which is

23 in excess of 110 percent of the face value of the

24 loan. Such fee may not be charged to the bor25 rower.’’.
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1 (2) SUNSET.—The amendments made by para2 graph (1) shall remain in effect until September 30,

3 1996.

4 (b) GUARANTEE PERCENTAGES.—

5 (1) IN GENERAL.—Subparagraph (B) of section

6 7(a)(2) of the Small Business Act (15 U.S.C.

7 636(a)(2)) is amended to read as follows:

8 ‘‘(B) subject to the limitation in paragraph

9 (3)—

10 ‘‘(i) not less than 70 percent nor more

11 than 75 percent of the financing outstand12 ing at the time of disbursement, if such fi13 nancing is more than $155,000 and the

14 period of maturity of such financing is not

15 less than 10 years, except that the partici16 pation by the Administration may be re17 duced below 70 percent upon request of

18 the participating lender; and

19 ‘‘(ii) not less than 80 percent of the

20 financing outstanding at the time of dis21 bursement, if such financing is a loan

22 under paragraph (16).’’.

23 (2) ADDITIONAL AMENDMENTS.—Section

24 7(a)(2) of the Small Business Act (15 U.S.C.

25 636(a)(2)) is amended—
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1 (A) in the second sentence (immediately

2 following paragraph (2)(B)(ii)), by striking ‘‘85

3 percent’’ and inserting ‘‘the specified percent4 ages’’; and

5 (B) in the third sentence, by striking ‘‘80

6 percent’’ and inserting ‘‘75 percent’’.

7 (c) SYSTEM FOR LOAN PAYMENT AND SERVICING.—

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

9 is amended by adding at the end the following new para10 graph:

11 ‘‘(22)(A) For loans guaranteed under this sub12 section, the Administrator is authorized to establish

13 a centralized loan payment and servicing system.

14 ‘‘(B) Such system shall utilize a fiscal and

15 transfer agent to collect an annual fee on each loan

that is equal to 1 16 ⁄4 of 1 percent of the declining prin17 cipal balance of the loan.’’.

18 SEC. 6. INTEREST RATE FOR PREFERRED LENDERS PRO19 GRAM.

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

21 7(a)(2)) is amended by inserting after the third sentence,

22 the following: ‘‘The maximum interest rate for a loan

23 under the Preferred Lenders Program shall not exceed the

24 maximum interest rate applicable to other loan guarantee
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1 programs under section 7(a), as established by the Admin2 istrator.’’.

3 SEC. 7. MICROLOAN PROGRAM AMENDMENTS.

4 Section 7(m) of the Small Business Act (15 U.S.C.

5 636(m)) is amended—

6 (1) in paragraph (1)(B)(iii), by striking

7 ‘‘$15,000’’ and inserting ‘‘$25,000’’;

8 (2) in paragraph (4)(C)(ii), by inserting ‘‘to de9 fray costs associated with loan fund administration

10 and’’ before ‘‘to provide’’;

11 (3) in paragraph (5)(A), by striking ‘‘6 grants’’

12 and inserting ‘‘12 grants’’;

13 (4) by amending paragraph (9)(A) to read as

14 follows:

15 ‘‘(A) IN GENERAL.—The Administration

16 may provide, directly or through an organiza17 tion described in subparagraph (B), technical

18 assistance for participants and potential partici19 pants in the Microloan Demonstration Program

20 to give such participants and potential partici21 pants such knowledge, skills, and understanding

22 of microlending practices necessary to operate

23 successful microloan programs.’’; and

24 (5) in paragraph (9)(B)—
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1 (A) by striking ‘‘3 percent’’ and inserting

2 ‘‘7 percent’’; and

3 (B) by inserting ‘‘and nonprofit organiza4 tions that have demonstrated experience in pro5 viding training support for microenterprise de6 velopment and financing’’ after ‘‘microlending

7 organizations’’.

8 SEC. 8. REGULATIONS.

9 (a) IMPLEMENTATION.—Not later than 60 days after

10 the date of enactment of this Act, the Administrator of

11 the Small Business Administration (hereafter in this sec12 tion referred to as the ‘‘Administrator’’) shall promulgate

13 interim final regulations to implement the amendments

14 made by this Act.

15 (b) IMPLEMENTATION OF POLLUTION CONTROL AS16 SISTANCE PROVISION.—

17 (1) TECHNICAL CORRECTION.—Section

18 7(a)(12)(B) of the Small Business Act (15 U.S.C.

19 636(a)(12)(B)), as added by section 111(c)(2) of

20 Public Law 100–590, is amended by striking ‘‘(b)’’

21 and inserting ‘‘(B)’’ and by indenting accordingly.

22 (2) REGULATIONS.—Not later than 240 days

23 after the date of enactment of this Act, the Adminis24 trator shall promulgate final regulations, after an
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1 opportunity for notice and public comment, to carry

2 out section 7(a)(12)(B) of the Small Business Act.

3 SEC. 9. WHITE HOUSE CONFERENCE ON SMALL BUSINESS.

4 (a) DATES OF CONFERENCES.—Section 2 of the

5 White House Conference on Small Business Authorization

6 Act (15 U.S.C. 631 note) is amended—

7 (1) by striking ‘‘January 1, 1994’’ and insert8 ing ‘‘May 1, 1995’’;

9 (2) by striking ‘‘April 1, 1994’’ and inserting

10 ‘‘December 31, 1995’’; and

11 (3) by striking ‘‘December 1, 1992’’ and insert12 ing ‘‘March 1, 1994’’.

13 (b) APPOINTMENT OF COMMISSIONERS.—Section

14 5(a) of the White House Conference on Small Business

15 Authorization Act (15 U.S.C. 631 note) is amended by

16 striking ‘‘The President’’ and inserting ‘‘Not later than

17 30 days after the date of enactment of the Small Business

18 Credit Reform Act of 1993, the President’’.

19 (c) AUTHORIZATION OF APPROPRIATIONS.—Section

20 9(a) of the White House Conference on Small Business

21 Authorization Act (15 U.S.C. 631 note) is amended by

22 striking ‘‘$5,000,000’’ and inserting ‘‘$7,000,000’’.

Æ