S. 1274

One Hundred Third Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Tuesday,

the fifth day of January, one thousand nine hundred and ninety-three

An Act

To reduce the subsidy cost for the Guaranteed Business Loan Program of the

Small Business Administration, 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; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Small Business

Guaranteed Credit Enhancement Act of 1993’’.

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

is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. General authorizations.

Sec. 3. Authority to impose secondary market fees.

Sec. 4. Penalties.

Sec. 5. Authority to reduce loan guarantee percentages.

Sec. 6. Study and report.

Sec. 7. Repealer.

Sec. 8. Microloan program amendments.

Sec. 9. Small Business Development Center Program.

Sec. 10. White House Conference on Small Business.

Sec. 11. National Women’s Business Council.

SEC. 2. GENERAL AUTHORIZATIONS.

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

is amended—

(1) in subsection (g)(2) by striking ‘‘$7,030,000,000’’ and

by inserting in lieu thereof ‘‘$7,155,000,000’’;

(2) in subsection (g)(2) by striking ‘‘$775,000,000’’ and by

inserting in lieu thereof ‘‘$900,000,000’’;

(3) in subsection (i)(2) by striking ‘‘$8,083,000,000’’ and

by inserting in lieu thereof ‘‘$8,458,000,000’’; and

(4) in subsection (i)(2) by striking ‘‘$825,000,000’’ and by

inserting in lieu thereof ‘‘$1,200,000,000’’.

SEC. 3. AUTHORITY TO IMPOSE SECONDARY MARKET FEES.

(a) ADDITIONAL GUARANTEE FEES.—Section 5(g) of the Small

Business Act (15 U.S.C. 634) is amended by striking paragraph

(4) and by inserting in lieu thereof the following:

‘‘(4)(A) The Administration may collect the following fees

for loan guarantees sold into the secondary market pursuant

to the provisions of subsection (f): an amount equal to (A)
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not more than 4⁄10 of one percent per year of the outstanding

principal amount of the portion of such loan guaranteed by

the Administration, and (B) not more than 50 percent of the

portion of the sale price which is in excess of 110 percent

of the outstanding principal amount of the portion of such

loan guaranteed by the Administration. Any such fees imposed

by the Administration shall be collected by the Administration

or by the agent which carries out on behalf of the Administration the central registration functions required by subsection

(h) of this section and shall be paid to the Administration

and used solely to reduce the subsidy on loans guaranteed

under section 7(a) of this Act: Provided, That such fees shall

not be charged to the borrower whose loan is guaranteed:

and, Provided further, That nothing herein shall preclude any

agent of the Administration from collecting a fee approved

by the Administration for the functions described in subsection

(h)(2).

‘‘(B) The Administration is authorized to impose and collect,

either directly or through a fiscal and transfer agent, a reasonable penalty on late payments of the fee authorized under

subparagraph (A) in an amount not to exceed 5 percent of

such fee per month plus interest.’’.

(b) Any new fees imposed by the Administration pursuant

to the authority conferred by subsection (a) shall be applicable

only to loans initially sold in the secondary market pursuant to

the provisions of section 5(f) of the Small Business Act after August

31, 1993.

SEC. 4. PENALTIES.

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:

‘‘(22) The Administration is authorized to permit participating lenders to impose and collect a reasonable penalty fee

on late payments of loans guaranteed under this subsection

in an amount not to exceed 5 percent of the monthly loan

payment per month plus interest.’’.

SEC. 5. AUTHORITY TO REDUCE LOAN GUARANTEE PERCENTAGES.

(a) GUARANTEE PERCENTAGES.—Section 7(a)(2) of the Small

Business Act (15 U.S.C. 636) is amended—

(1) by striking from the end of clause (B)(i) the word

‘‘and’’ and by redesignating clause (B)(ii) as (B)(iv) and by

inserting the following after clause (B)(i):

‘‘(ii) not less than 75 percent of the financing outstanding at the time of disbursement, if such financing is more

than $155,000 and the period of maturity of such financing

is more than 10 years, except that the participation by

the Administration may be reduced below 75 percent upon

request of the participating lender;

‘‘(iii) not less than 85 percent of the financing outstanding at the time of disbursement, if such financing is more

than $155,000 and the period of maturity of such financing

is 10 years or less, except that the participation by the

Administration may be reduced below 85 percent upon

request of the participating lender; and’’;
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(2) by striking the words ‘‘85 percent under subparagraph

(B)’’ and by inserting in lieu thereof the following: ‘‘the above

specified percentums’’;

(3) by striking from paragraph (B) the words ‘‘not less

than 80 percent, except upon’’ and by inserting in lieu thereof

the following: ‘‘not less than 70 percent, unless a lesser percent

is required by clause (B)(ii) or upon the’’; and

(4) by inserting after the third sentence the following:

‘‘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, which is

made applicable to other loan guarantees under section 7(a).’’.

(b) APPLICATION.—Notwithstanding any other provision of law,

the amendments made by subsection (a) shall be effective September

1, 1993, but shall not be applicable to loan guarantee applications

received by the Administration prior to August 21, 1993. In order

to determine the percent of the loan to be guaranteed pursuant

to the amendments made by subsection (a), the Administration

shall aggregate the outstanding guaranteed principal of multiple

loan guarantees issued on behalf of the same borrower.

SEC. 6. STUDY AND REPORT.

The Administration shall study, monitor and evaluate the

impact of the amendments made by sections 3 and 5 of this Act

on the ability of small business concerns and small business concerns owned and controlled by minorities and women, to obtain

financing and the impact of such sections on the effectiveness,

viability and growth of the secondary market authorized by section

5(f) of the Small Business Act. Not later than 16 months after

the date of enactment, and annually thereafter, the Administration

shall submit to the Committees on Small Business of the Senate

and the House of Representatives a report containing the Administration’s findings and recommendations on such impact, specifically

including changes in the interest rates on financings provided to

small business concerns and small business concerns owned and

controlled by minorities and women, through the use of the secondary market. The Administration shall segregate such findings and

recommendations in the study according to the ethnic and gender

components in these categories. Solely for the purposes of the study

authorized herein, the term ‘‘small business concerns owned and

controlled by minorities’’, includes businesses owned and controlled

by individuals belonging to one of the designated groups listed

in section 8(d)(3)(C) of the Small Business Act.

SEC. 7. REPEALER.

Sections 3 and 5 of this Act are hereby repealed on September

30, 1996.

SEC. 8. MICROLOAN PROGRAM AMENDMENTS.

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

is amended—

(1) in paragraph (1)(B)(iii), by striking ‘‘$15,000’’ and inserting ‘‘$25,000’’;

(2) in paragraph (5)(A), by striking ‘‘6 grants’’ and inserting

‘‘25 grants for terms of up to 5 years’’; and

(3) in paragraph (9)(B) by striking ‘‘3 percent’’ and inserting

‘‘7 percent’’.
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SEC. 9. SMALL BUSINESS DEVELOPMENT CENTER PROGRAM.

(a) CLEARINGHOUSE.—Section 21(c)(7) of the Small Business

Act (15 U.S.C. 648) is amended by striking ‘‘system which will’’

and by inserting in lieu thereof the following: ‘‘system. Subject

to amounts approved in advance in appropriations Acts, the

Administration may make grants or enter cooperative agreements

with one or more centers to carry out the provisions of this paragraph. Said grants or cooperative agreements shall be awarded

for periods of no more than five years duration. The matching

funds provisions of subsection (a) shall not be applicable to grants

or cooperative agreements under this paragraph. The system shall’’. (b) AUTHORIZATION.—Section 25(i) of the Small Business Act

(15 U.S.C. 652) is amended by striking ‘‘$8,000,000 for fiscal year

1993’’ and by inserting in lieu thereof ‘‘$2,000,000 for each of

fiscal years 1993 and 1994’’. (c) REGULATIONS.—Section 223 of the Small Business Credit

and Business Opportunity Enhancement Act of 1992 (15 U.S.C.

631 note) is amended by striking the last sentence of subsection

(b).

SEC. 10. WHITE HOUSE CONFERENCE ON SMALL BUSINESS.

The White House Conference on Small Business Authorization

Act (15 U.S.C. 631 note) is amended—

(1) in section 2 by striking from subsection (a) ‘‘not earlier

than January 1, 1994, and not later than April 1, 1994’’ and

by inserting in lieu thereof ‘‘not earlier than May 1, 1995,

and not later than September 30, 1995’’;

(2) in section 2 by striking from subsection (a) ‘‘December

1, 1992’’ and by inserting in lieu thereof ‘‘March 1, 1994’’;

and

(3) in section 5 by striking the second sentence of subsection (a) and by inserting in lieu thereof the following: ‘‘Subsequent

to the date of enactment of this Act, but not later than 30

days after the date of enactment of this Act, the President

shall select and appoint eleven individuals to the Commission.’’.

SEC. 11. NATIONAL WOMEN’S BUSINESS COUNCIL.

Section 407 of the Women’s Business Ownership Act of 1988

(15 U.S.C. 631 note) is amended to read as follows:

‘‘SEC. 407. AUTHORIZATION.

‘‘(a) IN GENERAL.—There are authorized to be appropriated

to carry out this title—

‘‘(1) $500,000 for fiscal year 1993; and

‘‘(2) $500,000 for fiscal year 1994.
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‘‘(b) LIMITATION ON AUTHORITY.—New spending authority or

authority to enter into contracts as authorized in this Act shall

be effective only to such extent and in such amounts as are provided

in advance in appropriation Acts.

‘‘(c) SUNSET.—This section shall cease to be effective on November 30, 1995.’’.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.