Calendar No. 166

106TH CONGRESS

1ST SESSION S. 918

[Report No. 106–84]

A BILL

To authorize the Small Business Administration to

and for other purposes.sistance to military reservists’ small businesses,provide financial and business development asJUNE 23, 1999

Reported with an amendment
II

Calendar No. 166

106TH CONGRESS

1ST SESSION S. 918

[Report No. 106–84]

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

APRIL 29, 1999

Mr. KERRY (for himself, Mr. BOND, Mr. BINGAMAN, Ms. LANDRIEU, Mr.

HARKIN, Mr. LIEBERMAN, Mr. WELLSTONE, Mr. KOHL, Mr. BURNS, Mr.

ROBB, Mr. EDWARDS, Mr. LEVIN, Mr. GRAHAM, Ms. SNOWE, Mr.

AKAKA, Mrs. MURRAY, Mr. CLELAND, Mr. KENNEDY, Mr. JEFFORDS,

Ms. COLLINS, Mr. ABRAHAM, Mr. LEAHY, Mr. BAUCUS, Mr. KERREY,

Mr. GRASSLEY, Mr. MOYNIHAN, Mrs. LINCOLN, Mr. BAYH, Mr. CHAFEE,

Mr. LAUTENBERG, Mr. COCHRAN, Mr. DASCHLE, Mr. GORTON, Mr.

HELMS, Mr. SANTORUM, Mr. THURMOND, Mr. HOLLINGS, Mr. BREAUX,

Mr. DEWINE, Mr. ROCKEFELLER, Mr. INHOFE, Mr. GREGG, Mr. DODD,

Ms. MIKULSKI, Mr. SARBANES, Mr. SMITH of Oregon, Mr. BENNETT,

Mr. ENZI, Mr. TORRICELLI, Mr. HATCH, and Mr. INOUYE) introduced

the following bill; which was read twice and referred to the Committee

on Small Business

JUNE 23, 1999

Reported by Mr. BOND, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To authorize the Small Business Administration to provide
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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 of 1999’’.

6 SEC. 2. REPAYMENT DEFERRAL FOR ACTIVE DUTY RESERV7 ISTS.

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

9 is amended by adding at the end the following:

10 ‘‘(n) REPAYMENT DEFERRED FOR ACTIVE DUTY RE11 SERVISTS.—

12 ‘‘(1) DEFINITIONS.—In this subsection:

13 ‘‘(A) ELIGIBLE RESERVIST.—The term ‘el14 igible reservist’ means a member of a reserve

15 component of the Armed Forces ordered to ac16 tive duty during a period of military conflict.

17 ‘‘(B) OWNER, MANAGER, OR KEY EM18 PLOYEE.—An owner, manager, or key employee

19 described in this subparagraph is an individual

20 who—

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

22 ownership interest in the small business

23 concern described in subparagraph (D)(ii);
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1 ‘‘(ii) is a manager responsible for the

2 day-to-day operations of such small busi3 ness concern; or

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

5 the Administration) of such small business

6 concern.

7 ‘‘(C) PERIOD OF MILITARY CONFLICT.—

8 The term ‘period of military conflict’ means—

9 ‘‘(i) a period of war declared by Con10 gress;

11 ‘‘(ii) a period of national emergency

12 declared by Congress or by the President;

13 or

14 ‘‘(iii) a period of a contingency oper15 ation, as defined in section 101(a) of title

16 10, United States Code.

17 ‘‘(D) QUALIFIED BORROWER.—The term

18 ‘qualified borrower’ means—

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

20 reservist and who, received a direct loan

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

22 ordered to active duty; or

23 ‘‘(ii) a small business concern that re24 ceived a direct loan under subsection (a) or

25 (b) before an eligible reservist, who is an
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1 owner, manager, or key employee described

2 in subparagraph (B), was ordered to active

3 duty.

4 ‘‘(2) DEFERRAL OF DIRECT LOANS.—

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

6 shall, upon written request, defer repayment of

7 principal and interest due on a direct loan made

8 under subsection (a) or (b), if such loan was in9 curred by a qualified borrower.

10 ‘‘(B) PERIOD OF DEFERRAL.—The period

11 of deferral for repayment under this paragraph

12 shall begin on the date on which the eligible re13 servist is ordered to active duty and shall termi14 nate on the date that is 180 days after the date

15 such eligible reservist is discharged or released

16 from active duty.

17 ‘‘(C) INTEREST RATE REDUCTION DURING

18 DEFERRAL.—Notwithstanding any other provi19 sion of law, during the period of deferral de20 scribed in subparagraph (B), the Administra21 tion may, in its discretion, reduce the interest

22 rate on any loan qualifying for a deferral under

23 this paragraph.

24 ‘‘(3) DEFERRAL OF LOAN GUARANTEES AND

25 OTHER FINANCINGS.—The Administration shall—
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1 ‘‘(A) encourage intermediaries partici2 pating in the program under subsection (m) to

3 defer repayment of a loan made with proceeds

4 made available under that subsection, if such

5 loan was incurred by a small business concern

6 that is eligible to apply for assistance under

7 subsection (b)(3); and

8 ‘‘(B) not later than 30 days after the date

9 of enactment of this subsection, establish guide10 lines to—

11 ‘‘(i) encourage lenders and other

12 intermediaries to defer repayment of, or

13 provide other relief relating to, loan guar14 antees under subsection (a) and financings

15 under section 504 of the Small Business

16 Investment Act of 1958 that were incurred

17 by small business concerns that are eligible

18 to apply for assistance under subsection

19 (b)(3), and loan guarantees provided under

20 subsection (m) if the intermediary provides

21 relief to a small business concern under

22 this paragraph; and

23 ‘‘(ii) implement a program to provide

24 for the deferral of repayment or other re25 lief to any intermediary providing relief to
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1 a small business borrower under this para2 graph.’’.

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 with ‘‘Provided,

8 That no loan’’, the following:

9 ‘‘(3)(A) In this paragraph—

10 ‘‘(i) the term ‘economic injury’ means an

11 economic harm to a business concern that re12 sults in the inability of the business concern—

13 ‘‘(I) to meet its obligations as they

14 mature;

15 ‘‘(II) to pay its ordinary and nec16 essary operating expenses; or

17 ‘‘(III) to market, produce, or provide

18 a product or service ordinarily marketed,

19 produced, or provided by the business con20 cern;

21 ‘‘(ii) the term ‘owner, manager, or key em22 ployee’ means an individual who—

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

24 ownership in the small business concern;
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1 ‘‘(II) is a manager responsible for the

2 day-to-day operations of such small busi3 ness concern; or

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

5 by the Administration) of such small busi6 ness concern; and

7 ‘‘(iii) the term ‘period of military conflict’

8 has the meaning given the term in subsection

9 (n)(1).

10 ‘‘(B) The Administration may make such dis11 aster loans (either directly or in cooperation with

12 banks or other lending institutions through agree13 ments to participate on an immediate or deferred

14 basis) to assist a small business concern (including

15 a small business concern engaged in the lease or

16 rental of real or personal property) that has suffered

17 or that is likely to suffer economic injury as the re18 sult of the owner, manager, or key employee of such

19 small business concern being ordered to active mili20 tary duty during a period of military conflict.

21 ‘‘(C) A small business concern described in sub22 paragraph (B) shall be eligible to apply for assist23 ance under this paragraph during the period begin24 ning on the date on which the owner, manager, or

25 key employee is ordered to active duty and ending
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1 on the date that is 180 days after the date on which

2 such owner, manager, or key employee is discharged

3 or released from active duty.

4 ‘‘(D) Any loan or guarantee extended pursuant

5 to this paragraph shall be made at an annual inter6 est rate of 4 percent, without regard to the ability

7 of the small business concern to secure credit else8 where.

9 ‘‘(E) No loan may be made under this para10 graph, either directly or in cooperation with banks

11 or other lending institutions through agreements to

12 participate on an immediate or deferred basis, if the

13 total amount outstanding and committed to the bor14 rower under this subsection would exceed

15 $1,500,000, unless such applicant constitutes a

16 major source of employment in its surrounding area,

17 as determined by the Administration, in which case

18 the Administration, in its discretion, may waive the

19 $1,500,000 limitation.

20 ‘‘(F) For purposes of assistance under this

21 paragraph, no declaration of a disaster area shall be

22 required.’’.

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

24 the Small Business Act (15 U.S.C. 633(c)) is amended—
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1 (1) in paragraph (1), by striking ‘‘7(b)(4),’’;

2 and

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

4 7(b)(5), 7(b)(6), 7(b)(7), 7(b)(8),’’.

5 SEC. 4. BUSINESS DEVELOPMENT AND MANAGEMENT AS6 SISTANCE FOR MILITARY RESERVISTS’

7 SMALL BUSINESSES.

8 (a) IN GENERAL.—Section 8 of the Small Business

9 Act (15 U.S.C. 637) is amended by adding at the end the

10 following:

11 ‘‘(l) MANAGEMENT ASSISTANCE FOR SMALL BUSI12 NESSES AFFECTED BY MILITARY OPERATIONS.—The Ad13 ministration shall utilize, as appropriate, its entrepre14 neurial development and management assistance pro15 grams, including programs involving State or private sec16 tor partners, to provide business counseling and training

17 to any small business concern adversely affected by the

18 deployment of units of the Armed Forces of the United

19 States in support of a period of military conflict (as de20 fined in section 7(n)(1)).’’.

21 (b) ENHANCED PUBLICITY DURING OPERATION AL22 LIED FORCE.—For the duration of Operation Allied Force

23 and for 120 days thereafter, the Administration shall en24 hance its publicity of the availability of assistance provided

25 pursuant to the amendments made by this Act, including
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1 information regarding the appropriate local office at which

2 affected small businesses may seek such assistance.

3 SEC. 5. GUIDELINES.

4 Not later than 30 days after the date of enactment

5 of this Act, the Administrator of the Small Business Ad6 ministration shall issue such guidelines as the Adminis7 trator determines to be necessary to carry out this Act

8 and the amendments made by this Act.

9 SEC. 6. EFFECTIVE DATES.

10 (a) IN GENERAL.—Except as provided in subsection

11 (b), the amendments made by this Act shall take effect

12 on the date of the enactment of this Act.

13 (b) DISASTER LOANS.—The amendments made by

14 section 3 shall apply to economic injury suffered or likely

15 to be suffered as the result of a period of military conflict

16 occurring on or after March 24, 1999.

17 SECTION 1. SHORT TITLE.

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

19 Small Business Relief Act of 1999’’.

20 SEC. 2. REPAYMENT DEFERRAL FOR ACTIVE DUTY RESERV21 ISTS.

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

23 is amended by adding at the end the following:

24 ‘‘(n) REPAYMENT DEFERRED FOR ACTIVE DUTY RE25 SERVISTS.—
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1 ‘‘(1) DEFINITIONS.—In this subsection:

2 ‘‘(A) ELIGIBLE RESERVIST.—The term ‘eli3 gible reservist’ means a member of a reserve com4 ponent of the Armed Forces ordered to active

5 duty during a period of military conflict.

6 ‘‘(B) ESSENTIAL EMPLOYEE.—The term ‘es7 sential employee’ means an individual who is

8 employed by a small business concern and whose

9 managerial or technical expertise is critical to

10 the successful day-to-day operations of that small

11 business concern.

12 ‘‘(C) PERIOD OF MILITARY CONFLICT.—The

13 term ‘period of military conflict’ means—

14 ‘‘(i) a period of war declared by Con15 gress;

16 ‘‘(ii) a period of national emergency

17 declared by Congress or by the President; or

18 ‘‘(iii) a period of a contingency oper19 ation, as defined in section 101(a) of title

20 10, United States Code.

21 ‘‘(D) QUALIFIED BORROWER.—The term

22 ‘qualified borrower’ means—

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

24 reservist and who received a direct loan
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1 under subsection (a) or (b) before being or2 dered to active duty; or

3 ‘‘(ii) a small business concern that re4 ceived a direct loan under subsection (a) or

5 (b) before an eligible reservist, who is an es6 sential employee, was ordered to active

7 duty.

8 ‘‘(2) DEFERRAL OF DIRECT LOANS.—

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

10 shall, upon written request, defer repayment of

11 principal and interest due on a direct loan made

12 under subsection (a) or (b), if such loan was in13 curred by a qualified borrower.

14 ‘‘(B) PERIOD OF DEFERRAL.—The period of

15 deferral for repayment under this paragraph

16 shall begin on the date on which the eligible re17 servist is ordered to active duty and shall termi18 nate on the date that is 180 days after the date

19 such eligible reservist is discharged or released

20 from active duty.

21 ‘‘(C) INTEREST RATE REDUCTION DURING

22 DEFERRAL.—Notwithstanding any other provi23 sion of law, during the period of deferral de24 scribed in subparagraph (B), the Administration

25 may, in its discretion, reduce the interest rate on
13

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1 any loan qualifying for a deferral under this

2 paragraph.

3 ‘‘(3) DEFERRAL OF LOAN GUARANTEES AND

4 OTHER FINANCINGS.—The Administration shall—

5 ‘‘(A) encourage intermediaries participating

6 in the program under subsection (m) to defer re7 payment of a loan made with proceeds made

8 available under that subsection, if such loan was

9 incurred by a small business concern that is eli10 gible to apply for assistance under subsection

11 (b)(3); and

12 ‘‘(B) not later than 30 days after the date

13 of enactment of this subsection, establish guide14 lines to—

15 ‘‘(i) encourage lenders and other inter16 mediaries to defer repayment of, or provide

17 other relief relating to, loan guarantees

18 under subsection (a) and financings under

19 section 504 of the Small Business Invest20 ment Act of 1958 that were incurred by

21 small business concerns that are eligible to

22 apply for assistance under subsection (b)(3),

23 and loan guarantees provided under sub24 section (m) if the intermediary provides re-
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1 lief to a small business concern under this

2 paragraph; and

3 ‘‘(ii) implement a program to provide

4 for the deferral of repayment or other relief

5 to any intermediary providing relief to a

6 small business borrower under this para7 graph.’’.

8 SEC. 3. DISASTER LOAN ASSISTANCE FOR MILITARY RE9 SERVISTS’ SMALL BUSINESSES.

10 Section 7(b) of the Small Business Act (15 U.S.C.

11 636(b)) is amended by inserting after the undesignated

12 paragraph that begins with ‘‘Provided, That no loan’’, the

13 following:

14 ‘‘(3)(A) In this paragraph—

15 ‘‘(i) the term ‘essential employee’ means an

16 individual who is employed by a small business

17 concern and whose managerial or technical ex18 pertise is critical to the successful day-to-day op19 erations of that small business concern;

20 ‘‘(ii) the term ‘period of military conflict’

21 has the meaning given the term in subsection

22 (n)(1); and

23 ‘‘(iii) the term ‘substantial economic injury’

24 means an economic harm to a business concern
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1 that results in the inability of the business

2 concern—

3 ‘‘(I) to meet its obligations as they ma4 ture;

5 ‘‘(II) to pay its ordinary and nec6 essary operating expenses; or

7 ‘‘(III) to market, produce, or provide a

8 product or service ordinarily marketed, pro9 duced, or provided by the business concern.

10 ‘‘(B) The Administration may make such dis11 aster loans (either directly or in cooperation with

12 banks or other lending institutions through agree13 ments to participate on an immediate or deferred

14 basis) to assist a small business concern that has suf15 fered or that is likely to suffer substantial economic

16 injury as the result of an essential employee of such

17 small business concern being ordered to active mili18 tary duty during a period of military conflict.

19 ‘‘(C) A small business concern described in sub20 paragraph (B) shall be eligible to apply for assistance

21 under this paragraph during the period beginning on

22 the date on which the essential employee is ordered to

23 active duty and ending on the date that is 90 days

24 after the date on which such essential employee is dis25 charged or released from active duty.
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1 ‘‘(D) Any loan or guarantee extended pursuant

2 to this paragraph shall be made at the same interest

3 rate as economic injury loans under paragraph (2).

4 ‘‘(E) No loan may be made under this para5 graph, either directly or in cooperation with banks or

6 other lending institutions through agreements to par7 ticipate on an immediate or deferred basis, if the

8 total amount outstanding and committed to the bor9 rower under this subsection would exceed $1,500,000,

10 unless such applicant constitutes a major source of

11 employment in its surrounding area, as determined

12 by the Administration, in which case the Administra13 tion, in its discretion, may waive the $1,500,000 lim14 itation.

15 ‘‘(F) For purposes of assistance under this para16 graph, no declaration of a disaster area shall be re17 quired.’’.

18 SEC. 4. BUSINESS DEVELOPMENT AND MANAGEMENT AS19 SISTANCE FOR MILITARY RESERVISTS’ SMALL

20 BUSINESSES.

21 (a) IN GENERAL.—Section 8 of the Small Business Act

22 (15 U.S.C. 637) is amended by adding at the end the fol23 lowing:

24 ‘‘(l) MANAGEMENT ASSISTANCE FOR SMALL BUSI25 NESSES AFFECTED BY MILITARY OPERATIONS.—The Ad-
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1 ministration shall utilize, as appropriate, its entrepre2 neurial development and management assistance programs,

3 including programs involving State or private sector part4 ners, to provide business counseling and training to any

5 small business concern adversely affected by the deployment

6 of units of the Armed Forces of the United States in support

7 of a period of military conflict (as defined in section

8 7(n)(1)).’’.

9 (b) ENHANCED PUBLICITY DURING OPERATION AL10 LIED FORCE.—For the duration of Operation Allied Force

11 and for 120 days thereafter, the Administration shall en12 hance its publicity of the availability of assistance provided

13 pursuant to the amendments made by this Act, including

14 information regarding the appropriate local office at which

15 affected small businesses may seek such assistance.

16 SEC. 5. GUIDELINES.

17 Not later than 30 days after the date of enactment of

18 this Act, the Administrator of the Small Business Adminis19 tration shall issue such guidelines as the Administrator de20 termines to be necessary to carry out this Act and the

21 amendments made by this Act.

22 SEC. 6. EFFECTIVE DATES.

23 (a) IN GENERAL.—Except as provided in subsection

24 (b), the amendments made by this Act shall take effect on

25 the date of the enactment of this Act.
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1 (b) DISASTER LOANS.—The amendments made by sec2 tion 3 shall apply to economic injury suffered or likely to

3 be suffered as the result of a period of military conflict oc4 curring or ending on or after March 24, 1999.