II 

117TH CONGRESS 

1ST SESSION S. 2231 

To amend the Small Business Investment Act of 1958 to improve the loan 

guaranty program, enhance the ability of small manufacturers to access 

affordable capital, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 24, 2021 

Ms. KLOBUCHAR (for herself, Mr. YOUNG, Mr. BOOKER, and Mr. RUBIO) introduced the following bill; which was read twice and referred to the Committee on Small Business and Entrepreneurship 

A BILL 

To amend the Small Business Investment Act of 1958 to 

improve the loan guaranty program, enhance the ability 

of small manufacturers to access affordable capital, 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 ‘‘504 Modernization and 

5 Small Manufacturer Enhancement Act of 2021’’. 


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1 SEC. 2. ADDITIONS TO POLICY GOALS FOR THE DEVELOP2 MENT COMPANY PROGRAM. 

3 Section 501(d)(3) of the Small Business Investment 

4 Act of 1958 (15 U.S.C. 695(d)(3)) is amended— 

5 (1) by redesignating subparagraphs (A) through 

6 (L) as subparagraphs (B) through (M), respectively; 

7 (2) by inserting before subparagraph (B) (as so 

8 redesignated) the following: 

9 ‘‘(A) workforce development through work10 based or work-integrated training, which shall 

11 be satisfied by demonstrating that a small busi12 ness concern that is a subject of the project 

13 has— 

14 ‘‘(i) a documented in-house training 

15 program, the duration of which is not 

16 shorter than 12 weeks; or 

17 ‘‘(ii) entered into a contract with an 

18 entity— 

19 ‘‘(I) to provide trained applicants 

20 for any open position of employment 

21 at the small business concern; and 

22 ‘‘(II) that ensures that any appli23 cant provided to the small business 

24 concern under subclause (I) has un25 dergone not fewer than 12 weeks of 


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1 training that is relevant to the open 

2 position described in that subclause,’’; 

3 (3) by amending subparagraph (D) (as so re4 designated) to read as follows: 

5 ‘‘(D) expansion of minority-owned, em6 ployee-owned, or women-owned business devel7 opment,’’; 

8 (4) in subparagraph (L) (as so redesignated), 

9 by striking ‘‘producers, or’’ and inserting ‘‘pro10 ducers,’’; 

11 (5) in subparagraph (M) (as so redesignated), 

12 by striking the period at the end and inserting a 

13 comma; 

14 (6) by inserting after subparagraph (M) (as so 

15 redesignated) the following new subparagraphs: 

16 ‘‘(N) enhanced ability for small business 

17 concerns to reduce costs by using energy effi18 cient products and generating renewable en19 ergy, 

20 ‘‘(O) aid revitalizing of any area for which 

21 a disaster has been declared or determined 

22 under subparagraph (A), (B), (C), or (E) of 

23 section 7(b)(2) of the Small Business Act, or 

24 ‘‘(P) expansion of small business concerns 

25 with 10 or fewer employees.’’; and 


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1 (7) in the flush text following subparagraph 

2 (P), as added by paragraph (6), by striking ‘‘sub3 paragraphs (J) and (K)’’ and inserting ‘‘subpara4 graphs (K) and (L)’’. 

5 SEC. 3. INCREASE IN LOAN AMOUNTS FOR MANUFAC6 TURING LOANS. 

7 Section 502 of the Small Business Investment Act 

8 of 1958 (15 U.S.C. 696) is amended— 

9 (1) in the matter preceding paragraph (1), by 

10 striking ‘‘The Administration’’ and inserting the fol11 lowing: 

12 ‘‘(a) IN GENERAL.—The Administration’’; and 

13 (2) in subsection (a), as so designated— 

14 (A) in paragraph (2)(A)— 

15 (i) in the matter preceding clause (i), 

16 by striking ‘‘section’’ and inserting ‘‘sub17 section’’; and 

18 (ii) in clause (iii), by striking 

19 ‘‘$5,500,000’’ and inserting ‘‘$6,500,000’’; 

20 and 

21 (B) in paragraph (3)(A), by striking ‘‘this 

22 section’’ and inserting ‘‘this subsection’’. 


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1 SEC. 4. IMPROVEMENTS TO 504 LOAN CLOSING PROCE2 DURE. 

3 Title V of the Small Business Investment Act of 1958 

4 (15 U.S.C. 695 et seq.) is amended— 

5 (1) in section 502, as amended by section 3, by 

6 adding at the end the following new subsections: 

7 ‘‘(b) CLOSING.— 

8 ‘‘(1) AUTHORITY OF CERTAIN DEVELOPMENT

9 COMPANIES.—An accredited lender certified com10 pany may take any of the following actions to facili11 tate the closing of a loan made under subsection (a): 

12 ‘‘(A) Reallocate the cost of the project with 

13 respect to which the loan is made in an amount 

14 that is not more than 10 percent of the overall 

15 cost of the project. 

16 ‘‘(B) Correct any name that is applicable 

17 to the loan, including the name of any bor18 rower, guarantor, eligible passive company de19 scribed in subparagraph (C)(i), and operating 

20 company described in subparagraph (C)(ii). 

21 ‘‘(C) Form any of the following to receive 

22 proceeds of the loan: 

23 ‘‘(i) An eligible passive company that 

24 complies with section 120.111 of title 13, 

25 Code of Federal Regulations, or any suc26 cessor regulation. 


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1 ‘‘(ii) If an eligible passive company is 

2 formed under clause (i), an operating com3 pany with respect to that eligible passive 

4 company. 

5 ‘‘(D) Correct the address of any property 

6 with respect to which the loan is made. 

7 ‘‘(E) Correct the name of any interim 

8 lender or third-party lender. 

9 ‘‘(F) Change any third-party lender or in10 terim lender if that lender is a financial institu11 tion that is regulated by the Federal Govern12 ment or a State government. 

13 ‘‘(G) Make a guarantor a co-borrower or a 

14 co-borrower a guarantor. 

15 ‘‘(H) Add a guarantor that does not 

16 change ownership with respect to the loan. 

17 ‘‘(I) Reduce the amount of standby debt 

18 before the closing as a result of regularly sched19 uled payments. 

20 ‘‘(J) Reduce the cost of the project with 

21 respect to which the loan is made. 

22 ‘‘(2) FEES.—The Administrator shall— 

23 ‘‘(A) issue a rule regarding the amount of 

24 a closing fee that may be financed in a deben25 ture that is issued by a certified development 


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1 company to make one or more loans to small 

2 business concerns, the proceeds of which are 

3 used by that concern for the purposes described 

4 in subsection (a), except that such amount shall 

5 be not less than $3,500; and 

6 ‘‘(B) periodically update the rule issued 

7 under subparagraph (A). 

8 ‘‘(3) NO ADVERSE CHANGE AND FINANCIAL

9 STATEMENT.—Before the closing with respect to a 

10 loan made under subsection (a), the borrower and 

11 any operating company shall— 

12 ‘‘(A) make the certification required under 

13 section 120.892 of title 13, Code of Federal 

14 Regulations, or any successor regulation; and 

15 ‘‘(B) submit to the certified development 

16 company a financial statement that is not more 

17 than 180 days old, which the company shall 

18 certify not later than 120 days before the date 

19 on which the certified development company 

20 issues a debenture with respect to the project to 

21 which the loan relates. 

22 ‘‘(c) ACCREDITED LENDER CERTIFIED COMPANY

23 DEFINED.—In this section, the term ‘accredited lender 

24 certified company’ means a certified development company 

25 that meets the requirements under section 507(b), includVerDate Sep 11 2014 05:26 Jul 02, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231

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1 ing a certified development company that the Administra2 tion has designated as an accredited lender under such 

3 section 507(b).’’; and 

4 (2) by adding at the end the following new sec5 tion: 

6 ‘‘SEC. 511. CLOSING AND OVERSIGHT. 

7 ‘‘(a) SBA DISTRICT COUNSELS.—Beginning on the 

8 date of enactment of this section, with respect to the pro9 gram established under this title, district counsels of the 

10 Administration shall be subject to the same requirements, 

11 and shall have the same authority and responsibilities, as 

12 in effect with respect to that program on the day before 

13 the date of enactment of this section, except that— 

14 ‘‘(1) the Office of Credit Risk Management of 

15 the Administration shall have the responsibility for 

16 all duties relating to conducting file reviews of loans 

17 made under this title; and 

18 ‘‘(2) district counsels of the Administration 

19 shall not have any responsibility relating to the re20 view of closing packages with respect to a loan made 

21 under this title. 

22 ‘‘(b) DESIGNATED ATTORNEYS.—For the purposes of 

23 this title, the following provisions and requirements shall 

24 apply with respect to a designated attorney of a certified 

25 development company: 


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1 ‘‘(1) A designated attorney that meets the re2 quirements determined under paragraph (2) shall be 

3 responsible for certifying documents relating to the 

4 closing of a loan described in this title. 

5 ‘‘(2) The Administrator may determine any 

6 continuing education requirements that the des7 ignated attorney shall be required to satisfy in order 

8 to be permitted to close a loan made under this title. 

9 ‘‘(3) If, as of the date of enactment of this sec10 tion, a certified development company does not have 

11 a designated attorney, during the 270-day period be12 ginning on that date of enactment, the certified de13 velopment company may identify such an attorney, 

14 subject to the approval of the Administrator.’’. 

15 SEC. 5. CERTIFIED DEVELOPMENT COMPANY LOANS FOR 

16 SMALL MANUFACTURERS. 

17 (a) CONTRIBUTION REQUIREMENT.—Section 

18 502(a)(3)(C) of the Small Business Investment Act of 

19 1958, as designated by section 3, is amended— 

20 (1) by redesignating clauses (i), (ii), (iii), and 

21 (iv) as subclauses (I), (II), (III), and (IV), respec22 tively, and adjusting the margins of such subclauses 

23 accordingly; 

24 (2) by inserting before subclause (I), as so re25 designated, the following: 


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1 ‘‘(i) for a small business concern that 

2 is not a small manufacturer (as defined in 

3 section 501(e)(7))—’’; 

4 (3) in subclause (III), as so redesignated, by 

5 striking ‘‘clauses (i) and (ii)’’ and inserting ‘‘sub6 clauses (I) and (II)’’; 

7 (4) in subclause (IV) as so redesignated, by 

8 striking the period and the end and inserting ‘‘; or’’; 

9 and 

10 (5) by adding at the end the following: 

11 ‘‘(ii) for a small manufacturer (as de12 fined in section 501(e)(7))— 

13 ‘‘(I) at least 5 percent of the 

14 total cost of the project financed, if 

15 the small business concern has been in 

16 operation for a period of 2 years or 

17 less; 

18 ‘‘(II) at least 5 percent of the 

19 total cost of the project financed, if 

20 the project involves a limited or single 

21 purpose building or structure; 

22 ‘‘(III) at least 10 percent of the 

23 total cost of the project financed if the 

24 project involves both of the conditions 

25 set forth in subclauses (I) and (II); or 


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1 ‘‘(IV) at least 5 percent of the 

2 total cost of the project financed, in 

3 all other circumstances, at the discre4 tion of the development company.’’. 

5 (b) CREATION OR RETENTION OF JOBS REQUIRE6 MENT.—Section 501(e) of the Small Business Investment 

7 Act of 1958 (15 U.S.C. 695(e)) is amended— 

8 (1) in paragraph (1), by striking ‘‘creates or re9 tains’’ and all that follows through the period at the 

10 end and inserting ‘‘creates or retains 1 job for every 

11 $75,000 guaranteed by the Administration, except 

12 that the amount is $150,000 in the case of a project 

13 of a small manufacturer.’’; 

14 (2) in paragraph (2), by striking ‘‘creates or re15 tains’’ and all that follows through the period at the 

16 end and inserting ‘‘creates or retains 1 job for every 

17 $75,000 guaranteed by the Administration, except 

18 that the amount is $150,000 in the case of a project 

19 of a small manufacturer.’’; 

20 (3) by redesignating paragraph (6) as para21 graph (7); and 

22 (4) by inserting after paragraph (5) the fol23 lowing: 

24 ‘‘(6) For a loan for a project directed toward the cre25 ation of job opportunities under subsection (d)(1), the AdVerDate Sep 11 2014 05:26 Jul 02, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231

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1 ministrator shall publish on the website of the Administra2 tion the number of jobs created or retained under the 

3 project as of the date that is 2 years after the completion 

4 (as determined based on information provided by the de5 velopment company) of the project.’’. 

6 (c) COLLATERAL REQUIREMENTS.—Section 

7 502(a)(3)(E)(i) of the Small Business Investment Act of 

8 1958, as designated by section 3, is amended by adding 

9 at the end the following: ‘‘Additional collateral shall not 

10 be required in the case of a small manufacturer (as de11 fined in section 501(e)(7)).’’. 

12 (d) DEBT REFINANCING.—Section 502(a)(7)(B) of 

13 the Small Business Investment Act of 1958, as designated 

14 by section 3, is amended— 

15 (1) in the matter preceding clause (i), by insert16 ing ‘‘(or in the case of a small manufacturer (as de17 fined in section 501(e)(7)), that does not exceed 100 

18 percent of the project cost of the expansion)’’ after 

19 ‘‘cost of the expansion’’; 

20 (2) in clause (v), by adding ‘‘and’’ at the end; 

21 (3) by striking clause (vi); and 

22 (4) by redesignating clause (vii) as clause (vi). 

23 (e) AMOUNT OF GUARANTEED DEBENTURE.—Sec24 tion 503(a) of the Small Business Investment Act of 1958 


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1 (15 U.S.C. 697(a)) is amended by adding at the end the 

2 following: 

3 ‘‘(5) Any debenture issued by a State or local devel4 opment company to a small manufacturer (as defined in 

5 section 501(e)(7)) with respect to which a guarantee is 

6 made under this subsection shall be in an amount equal 

7 to not more than 50 percent of the cost of the project 

8 with respect to which such debenture is issued, without 

9 regard to whether good cause has been shown.’’. 

10 SEC. 6. ASSISTANCE FOR SMALL MANUFACTURERS. 

11 Title V of the Small Business Investment Act of 1958 

12 (15 U.S.C. 695 et seq.), as amended by section 4(2), is 

13 further amended by adding at the end the following new 

14 section: 

15 ‘‘SEC. 512. ASSISTANCE FOR SMALL MANUFACTURERS. 

16 ‘‘(a) IN GENERAL.—The Administrator shall ensure 

17 that each district office of the Administration partners 

18 with not less than 1 resource partner to provide training 

19 to small business concerns assigned a North American In20 dustry Classification System code for manufacturing on 

21 obtaining assistance under the program carried out under 

22 this title, including with respect to the application process 

23 under that program and partnering with development 

24 companies under this title. 


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1 ‘‘(b) RESOURCE PARTNER DEFINED.—In this sec2 tion, the term ‘resource partner’ means— 

3 ‘‘(1) a small business development center (de4 fined in section 3 of the Small Business Act); 

5 ‘‘(2) a women’s business center (described 

6 under section 29 of such Act); 

7 ‘‘(3) a chapter of the Service Corps of Retired 

8 Executives (established under section 8(b)(1)(B) of 

9 such Act); and 

10 ‘‘(4) a Veteran Business Outreach Center (de11 scribed under section 32 of such Act).’’. 

12 SEC. 7. LEASING RULES FOR NEW FACILITIES AND EXIST13 ING BUILDINGS. 

14 (a) IN GENERAL.—Section 502(a) of the Small Busi15 ness Investment Act of 1958, as designated by section 3, 

16 is amended by striking paragraphs (4) and (5) and insert17 ing the following new paragraphs: 

18 ‘‘(4) NEW FACILITIES.— 

19 ‘‘(A) IN GENERAL.—With respect to a 

20 project to construct a new facility, an assisted 

21 small business concern may permanently lease 

22 not more than 20 percent of the project if such 

23 concern— 

24 ‘‘(i) permanently occupies and uses 

25 not less than 60 percent of the project; 


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1 ‘‘(ii) plans to occupy and use an addi2 tional portion of the project that is not 

3 permanently leased not later than 3 years 

4 after receipt of assistance under this sec5 tion; and 

6 ‘‘(iii) plans to permanently occupy and 

7 use 80 percent of the project not later than 

8 10 years after receipt of such assistance. 

9 ‘‘(B) SMALL MANUFACTURERS.—With re10 spect to an assisted small business concern that 

11 is a small manufacturer (as defined in section 

12 501(e)(7)), subparagraph (A)(i) shall apply 

13 with ‘50 percent’ substituted for ‘60 percent’. 

14 ‘‘(5) EXISTING BUILDINGS.—With respect to a 

15 project to acquire, renovate, or reconstruct an exist16 ing building, the following shall apply: 

17 ‘‘(A) OCCUPANCY REQUIREMENTS.—The 

18 assisted small business concern may perma19 nently lease not more than 50 percent of the 

20 project if the concern permanently occupies and 

21 uses not less than 50 percent of the project. 

22 ‘‘(B) EXCEPTION.—The assisted small 

23 business concern may permanently lease more 

24 than 50 percent of the project if— 

25 ‘‘(i) such concern— 


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1 ‘‘(I) has occupied and used the 

2 existing building for a consecutive 12- 

3 month period before submitting an 

4 application for assistance under this 

5 section; 

6 ‘‘(II) agrees to permanently use 

7 less than 50 percent of the existing 

8 building and permanently lease more 

9 than 50 percent for a consecutive 12- 

10 month period after receiving such as11 sistance; and 

12 ‘‘(III) affirms that the existing 

13 building is appropriate for current 

14 and reasonably anticipated needs; and 

15 ‘‘(ii) the development company assist16 ing such project— 

17 ‘‘(I) provides written notice to 

18 the Administrator on the date on 

19 which the development company closes 

20 the loan for such project; and 

21 ‘‘(II) once each year during the 

22 first 5 years of the loan, and once 

23 every 2 years for the remainder of the 

24 loan— 


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1 ‘‘(aa) conducts an examina2 tion of the assisted small busi3 ness concern to ensure the con4 cern is not a real estate develop5 ment business; and 

6 ‘‘(bb) files with the Adminis7 trator an anti-investor certifi8 cation signed by the development 

9 company and the assisted small 

10 business concern. 

11 ‘‘(C) LEASE TERM.—Any residential lease 

12 made under this paragraph shall be for a term 

13 of not more than 1 year, and any commercial 

14 lease made under this paragraph shall be for a 

15 term of not more than 5 years.’’. 

16 (b) REPORT.—Not later than 5 years after the date 

17 of the enactment of this Act, the Administrator of the 

18 Small Business Administration shall submit to Congress 

19 a report analyzing the impact of the amendments made 

20 by this section on access to capital for small business con21 cerns (as defined under section 3 of the Small Business 

22 Act (15 U.S.C. 632)), and recommending whether similar 

23 notice, examination, and certifications requirements 


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1 should be made to the program established under section 

2 7(a) of the Small Business Act (15 U.S.C. 636(a)). 

Æ 


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