S. 314

One Hundred Sixth Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Wednesday,

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

An Act

To provide for a loan guarantee program to address the Year 2000 computer problems

of small business concerns, 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 Year 2000 Readiness Act’’.

SEC. 2. FINDINGS.

Congress finds that—

(1) the failure of many computer programs to recognize

the Year 2000 may have extreme negative financial consequences in the Year 2000, and in subsequent years for both

large and small businesses;

(2) small businesses are well behind larger businesses in

implementing corrective changes to their automated systems;

(3) many small businesses do not have access to capital

to fix mission critical automated systems, which could result

in severe financial distress or failure for small businesses;

and

(4) the failure of a large number of small businesses due

to the Year 2000 computer problem would have a highly detrimental effect on the economy in the Year 2000 and in subsequent years.

SEC. 3. YEAR 2000 COMPUTER PROBLEM LOAN GUARANTEE PROGRAM.

(a) PROGRAM ESTABLISHED.—Section 7(a) of the Small Business

Act (15 U.S.C. 636(a)) is amended by adding at the end the following:

‘‘(27) YEAR 2000 COMPUTER PROBLEM PROGRAM.— ‘‘(A) DEFINITIONS.—In this paragraph—

‘‘(i) the term ‘eligible lender’ means any lender

designated by the Administration as eligible to participate in the general business loan program under this

subsection; and

‘‘(ii) the term ‘Year 2000 computer problem’ means,

with respect to information technology, and embedded

systems, any problem that adversely effects the processing (including calculating, comparing, sequencing,

displaying, or storing), transmitting, or receiving of

date-dependent data—

‘‘(I) from, into, or between—

‘‘(aa) the 20th or 21st centuries; or
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‘‘(bb) the years 1999 and 2000; or

‘‘(II) with regard to leap year calculations.

‘‘(B) ESTABLISHMENT OF PROGRAM.—The Administration shall—

‘‘(i) establish a loan guarantee program, under

which the Administration may, during the period

beginning on the date of enactment of this paragraph

and ending on December 31, 2000, guarantee loans

made by eligible lenders to small business concerns

in accordance with this paragraph; and

‘‘(ii) notify each eligible lender of the establishment

of the program under this paragraph, and otherwise

take such actions as may be necessary to aggressively

market the program under this paragraph.

‘‘(C) USE OF FUNDS.—A small business concern that

receives a loan guaranteed under this paragraph shall only

use the proceeds of the loan to—

‘‘(i) address the Year 2000 computer problems of

that small business concern, including the repair and

acquisition of information technology systems, the purchase and repair of software, the purchase of consulting

and other third party services, and related expenses;

and

‘‘(ii) provide relief for a substantial economic injury

incurred by the small business concern as a direct

result of the Year 2000 computer problems of the small

business concern or of any other entity (including any

service provider or supplier of the small business concern), if such economic injury has not been compensated for by insurance or otherwise.

‘‘(D) LOAN AMOUNTS.— ‘‘(i) IN GENERAL.—Notwithstanding paragraph

(3)(A) and subject to clause (ii) of this subparagraph,

a loan may be made to a borrower under this paragraph even if the total amount outstanding and committed (by participation or otherwise) to the borrower

from the business loan and investment fund, the business guaranty loan financing account, and the business

direct loan financing account would thereby exceed

$750,000.

‘‘(ii) EXCEPTION.—A loan may not be made to a

borrower under this paragraph if the total amount

outstanding and committed (by participation or otherwise) to the borrower from the business loan and

investment fund, the business guaranty loan financing

account, and the business direct loan financing account

would thereby exceed $1,000,000.

‘‘(E) ADMINISTRATION PARTICIPATION.—Notwithstanding paragraph (2)(A), in an agreement to participate

in a loan under this paragraph, participation by the

Administration shall not exceed—

‘‘(i) 85 percent of the balance of the financing outstanding at the time of disbursement of the loan, if

the balance exceeds $100,000;

‘‘(ii) 90 percent of the balance of the financing

outstanding at the time of disbursement of the loan,

if the balance is less than or equal to $100,000; and
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‘‘(iii) notwithstanding clauses (i) and (ii), in any

case in which the subject loan is processed in accordance with the requirements applicable to the

SBAExpress Pilot Program, 50 percent of the balance

outstanding at the time of disbursement of the loan.

‘‘(F) PERIODIC REVIEWS.—The Inspector General of the

Administration shall periodically review a representative

sample of loans guaranteed under this paragraph to mitigate the risk of fraud and ensure the safety and soundness

of the loan program.

‘‘(G) ANNUAL REPORT.—The Administration shall

annually submit to the Committees on Small Business

of the House of Representatives and the Senate a report

on the results of the program carried out under this paragraph during the preceding 12-month period, which shall

include information relating to—

‘‘(i) the total number of loans guaranteed under

this paragraph;

‘‘(ii) with respect to each loan guaranteed under

this paragraph—

‘‘(I) the amount of the loan;

‘‘(II) the geographic location of the borrower;

and

‘‘(III) whether the loan was made to repair

or replace information technology and other automated systems or to remedy an economic injury;

and

‘‘(iii) the total number of eligible lenders participating in the program.’’.

(b) GUIDELINES.— (1) IN GENERAL.—Not later than 30 days after the date

of enactment of this Act, the Administrator of the Small Business Administration shall issue guidelines to carry out the

program under section 7(a)(27) of the Small Business Act, as

added by this section.

(2) REQUIREMENTS.—Except to the extent that it would

be inconsistent with this section or section 7(a)(27) of the Small

Business Act, as added by this section, the guidelines issued

under this subsection shall, with respect to the loan program

established under section 7(a)(27) of the Small Business Act,

as added by this section—

(A) provide maximum flexibility in the establishment

of terms and conditions of loans originated under the loan

program so that such loans may be structured in a manner

that enhances the ability of the applicant to repay the

debt;

(B) if appropriate to facilitate repayment, establish

a moratorium on principal payments under the loan program for up to 1 year beginning on the date of the origination of the loan;

(C) provide that any reasonable doubts regarding a

loan applicant’s ability to service the debt be resolved in

favor of the loan applicant; and

(D) authorize an eligible lender (as defined in section

7(a)(27)(A) of the Small Business Act, as added by this

section) to process a loan under the loan program in accordance with the requirements applicable to loans originated
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under another loan program established pursuant to section 7(a) of the Small Business Act (including the general

business loan program, the Preferred Lender Program, the

Certified Lender Program, the Low Documentation Loan

Program, and the SBAExpress Pilot Program), if—

(i) the eligible lender is eligible to participate in

such other loan program; and

(ii) the terms of the loan, including the principal

amount of the loan, are consistent with the requirements applicable to loans originated under such other

loan program.

(c) REPEAL.—Effective on December 31, 2000, this section and

the amendments made by this section are repealed.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.