II

104TH CONGRESS

2D SESSION S. 2177

To authorize the Small Business Administration to provide financial and

business development assistance to military reservists’ small businesses,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 30, 1996

Mr. SANTORUM introduced the following bill; which was read twice and

referred to the Committee on Small Business

A BILL

To authorize the Small Business Administration to provide

financial and business development assistance to military

reservists’ 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.

4 This Act may be cited as the ‘‘Military Reservists

5 Small Business Relief Act’’.
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1 SEC. 2. REPAYMENT DEFERRAL FOR ACTIVE DUTY RESERV2 ISTS.

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

4 is amended by adding at the end the following new sub5 section:

6 ‘‘(n) REPAYMENT DEFERRED FOR ACTIVE DUTY RE7 SERVISTS.—

8 ‘‘(1) IN GENERAL.—The Administration shall,

9 upon written request, defer repayment of a direct

10 loan made pursuant to subsection (a) or (b), if such

11 loan was incurred by a qualified borrower.

12 ‘‘(2) DEFINITIONS.—For purposes of this sub13 section, the following definitions shall apply:

14 ‘‘(A) QUALIFIED BORROWER.—The term

15 ‘qualified borrower’ means—

16 ‘‘(i) an individual who is an eligible

17 Reserve and who received a direct loan

18 under subsection (a) or (b) before being

19 called or ordered to, or retained on, active

20 duty as described in subparagraph (B); or

21 ‘‘(ii) a small business concern that re22 ceived a direct loan under subsection (a) or

23 (b) before an eligible Reserve, who is an

24 owner, manager, or key employee described

25 in subparagraph (C), was called or ordered
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1 to, or retained on, active duty as described

2 in subparagraph (B).

3 ‘‘(B) ELIGIBLE RESERVE.—The term ‘eli4 gible Reserve’ means a member of a reserve

5 component of the Armed Forces serving pursu6 ant to a call or order to active duty, or reten7 tion on active duty, during a period of military

8 conflict.

9 ‘‘(C) OWNER, MANAGER, OR KEY EM10 PLOYEE.—An eligible Reserve is an owner,

11 manager, or key employee described in this sub12 paragraph if the eligible Reserve is an individ13 ual who—

14 ‘‘(i) has not less than a 20 percent

15 ownership interest in the small business

16 concern described in subparagraph (A)(ii);

17 ‘‘(ii) is a manager responsible for the

18 day-to-day operations of such small busi19 ness concern; or

20 ‘‘(iii) is a key employee (as defined by

21 the Administration) of such small business

22 concern.

23 ‘‘(D) PERIOD OF MILITARY CONFLICT.—

24 The term ‘period of military conflict’ means—
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1 ‘‘(i) a period of war declared by the

2 Congress;

3 ‘‘(ii) a period of national emergency

4 declared by the Congress or by the Presi5 dent; or

6 ‘‘(iii) a period for which members of

7 reserve components of the Armed Forces

8 are serving on active duty in the Armed

9 Forces under a call or order to active duty,

10 or retention on active duty, under section

11 688, 12301(a), 12302, 12304, or 12306 of

12 title 10, United States Code.

13 ‘‘(3) PERIOD OF DEFERRAL.—The period of de14 ferral for repayment under this subsection shall

15 begin on the date on which the eligible Reserve is or16 dered to active duty during any period of military

17 conflict and shall terminate on the later of—

18 ‘‘(A) 180 days after the date on which

19 such eligible Reserve is discharged or released

20 from that active duty; and

21 ‘‘(B) 180 days after the date of enactment

22 of this subsection.’’.

23 ‘‘(4) NO ACCRUAL OF INTEREST DURING DE24 FERRAL.—During the period of deferral described in

25 paragraph (3), repayment of principal and interest
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1 on the deferred loan shall not be required and no in2 terest shall accrue on such loan.’’.

3 SEC. 3. DISASTER LOAN ASSISTANCE FOR MILITARY RE4 SERVISTS’ SMALL BUSINESSES.

5 (a) IN GENERAL.—Section 7(b) of the Small Busi6 ness Act (15 U.S.C. 636(b)) is amended by inserting after

7 the undesignated paragraph that begins ‘‘Provided, That

8 no loan’’, the following new paragraph:

9 ‘‘(3)(A) The Administration may make such

10 disaster loans (either directly or in cooperation with

11 banks or other lending institutions through agree12 ments to participate on an immediate or deferred

13 basis) to assist a small business concern (including

14 a small business concern engaged in the lease or

15 rental of real or personal property) that has suffered

16 or is likely to suffer economic injury as the result of

17 the owner, manager, or key employee of such small

18 business concern being ordered to active duty during

19 a period of military conflict.

20 ‘‘(B) Any loan or guarantee under this para21 graph shall be made at an annual interest rate of

22 not more than 4 percent, without regard to the abil23 ity of the small business concern to secure credit

24 elsewhere.
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1 ‘‘(C) No loan shall be made under this para2 graph, either directly or in cooperation with banks

3 or other lending institutions through agreements to

4 participate on an immediate or deferred basis, if the

5 total amount outstanding and committed to the bor6 rower under this subsection would exceed $500,000,

7 except that the Administration may waive the

8 $500,000 limitation if the Administration deter9 mines that the applicant constitutes a major source

10 of employment in an area not larger than a county

11 that is suffering a disaster.

12 ‘‘(D) For purposes of assistance under this

13 paragraph, no declaration of a disaster area shall be

14 required.

15 ‘‘(E) For purposes of this paragraph—

16 ‘‘(i) the term ‘period of military conflict’

17 means—

18 ‘‘(I) a period of war declared by the

19 Congress;

20 ‘‘(II) a period of national emergency

21 declared by the Congress or by the Presi22 dent; or

23 ‘‘(III) a period for which members of

24 reserve components of the Armed Forces

25 are serving on active duty in the Armed
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1 Forces under a call or order to active duty,

2 or retention on active duty, under section

3 688, 12301(a), 12302, 12304, or 12306 of

4 title 10, United States Code;

5 ‘‘(ii) the term ‘economic injury’ includes

6 the inability of a small business concern to mar7 ket or produce a product or to provide a service

8 ordinarily provided by the small business con9 cern; and

10 ‘‘(iii) the term ‘owner, manager, or key

11 employee’ means an individual who—

12 ‘‘(I) has not less than a 20 percent

13 ownership in the small business concern;

14 ‘‘(II) is a manager responsible for the

15 day-to-day operations of such small busi16 ness concern; or

17 ‘‘(III) is a key employee (as defined

18 by the Administration) of such small busi19 ness concern.’’.

20 (b) CONFORMING AMENDMENTS.—Section 4(c) of

21 the Small Business Act (15 U.S.C. 633(c)) is amended—

22 (1) in paragraph (1), by striking ‘‘7(b)(4),’’;

23 and

24 (2) in paragraph (2), by striking ‘‘7(b)(4),

25 7(b)(5), 7(b)(6), 7(b)(7), 7(b)(8),’’.
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1 SEC. 4. REGULATIONS.

2 Not later than 30 days after the date of enactment

3 of this Act, the Small Business Administration may issue

4 such regulations as may be necessary to carry out the

5 amendments made by sections 2 and 3.

6 SEC. 5. APPLICABILITY AND EFFECTIVE DATES.

7 (a) APPLICABILITY.—This Act and the amendments

8 made by this Act shall not apply to any member of a re9 serve component of the Armed Forces serving pursuant

10 to a call or order to active duty, or retention on active

11 duty, during a period of military conflict, who is eligible

12 to participate in the Ready Reserve Mobilization Income

13 Insurance Program established under section 512 of the

14 National Defense Authorization Act for Fiscal Year 1996.

15 (b) EFFECTIVE DATES.—

16 (1) IN GENERAL.—Except as provided in para17 graph (2), the amendments made by this Act shall

18 take effect on the date of enactment of this Act.

19 (2) EXCEPTIONS.—

20 (A) LOAN REPAYMENT DEFERRAL.—The

21 amendment made by section 2 shall apply with

22 respect to any eligible Reserve called or ordered

23 to, or retained on, active duty as the result of

24 a period of military conflict occurring on or

25 after August 1, 1990.
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1 (B) DISASTER LOANS.—The amendments

2 made by section 3 shall apply to economic in3 jury suffered or likely to be suffered as the re4 sult of a period of military conflict occurring on

5 or after August 1, 1990.

6 (c) DEFINITIONS.—For purposes of this section—

7 (1) the term ‘‘economic injury’’ has the same

8 meaning as in section 7(b)(3)(E) of the Small Busi9 ness Act, as added by section 3 of this Act;

10 (2) the term ‘‘eligible Reserve’’ has the same

11 meaning as in section 7(n)(2) of the Small Business

12 Act, as added by section 2 of this Act; and

13 (3) the term ‘‘period of military conflict’’ has

14 the same meaning as in section 7(n)(2) of the Small

15 Business Act, as added by section 2 of this Act.

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