I 

111TH CONGRESS 

1ST SESSION H. R. 3854 

To amend the Small Business Act and the Small Business Investment Act 

of 1958 to improve programs providing access to capital under such 

Acts, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 20, 2009 

Mr. SCHRADER (for himself, Ms. VELA ́ZQUEZ, Mrs. HALVORSON, and Mrs. 

KIRKPATRICK of Arizona) introduced the following bill; which was referred to the Committee on Small Business 

A BILL 

To amend the Small Business Act and the Small Business 

Investment Act of 1958 to improve programs providing 

access to capital under such Acts, 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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Small Business Financing and Investment Act of 2009’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 


tjames on DSKG8SOYB1PROD with BILLS
2 

•HR 3854 IH

TITLE I—SMALL BUSINESS LENDING ENHANCEMENTS 

Sec. 101. Small lender outreach program. 

Sec. 102. Rural lending outreach program. 

Sec. 103. Community Express Program made permanent. 

Sec. 104. Increased veteran participation program made permanent. 

Sec. 105. Leasing policy. 

Sec. 106. National lender training program. 

Sec. 107. Applications for repurchase of loans. 

Sec. 108. Alternative size standard. 

Sec. 109. Pilot program authority. 

Sec. 110. Loans to cooperatives. 

Sec. 111. Capital backstop program. 

Sec. 112. Loans to finance goodwill. 

Sec. 113. Appellate process and ombudsman. 

Sec. 114. Extension of recovery and relief loan benefits. 

Sec. 115. Reduced documentation for business stabilization loans. 

Sec. 116. Expanded eligibility for business stabilization loans. 

Sec. 117. Increased amount of business stabilization loans. 

Sec. 118. Extension of business stabilization loans. 

Sec. 119. SBA secondary market lending authority made permanent. 

Sec. 120. SBA secondary market lending authority expanded. 

Sec. 121. Increased loan limits. 

Sec. 122. Real estate appraisals. 

Sec. 123. Additional support for Express Loan Program. 

Sec. 124. Authorization of appropriations. 

TITLE II—CDC ECONOMIC DEVELOPMENT LOAN PROGRAM 

Subtitle A—General Provisions 

Sec. 201. Program levels. 

Sec. 202. Definitions. 

Subtitle B—Certified Development Companies 

Sec. 211. Certified development companies. 

Sec. 212. Certified development company; operational requirements. 

Sec. 213. Accredited lenders program. 

Sec. 214. Premier certified lender program. 

Sec. 215. Multi-State operations. 

Sec. 216. Guaranty of debentures. 

Sec. 217. Economic development through debentures. 

Sec. 218. Project funding requirements. 

Sec. 219. Private debenture sales and pooling of debentures. 

Sec. 220. Foreclosure and liquidation of loans. 

Sec. 221. Reports and regulations. 

Sec. 222. Program name. 

Subtitle C—Miscellaneous 

Sec. 231. Report on standard operating procedures. 

Sec. 232. Alternative size standard. 

TITLE III—MICROLENDING EXPANSION 

Sec. 301. Microloan credit building initiative. 


tjames on DSKG8SOYB1PROD with BILLS
3 

•HR 3854 IH

Sec. 302. Flexible credit terms. 

Sec. 303. Increased program participation. 

Sec. 304. Increased limit on intermediary borrowing. 

Sec. 305. Expanded borrower education assistance. 

Sec. 306. Interest rates and loan size. 

Sec. 307. Reporting requirement. 

Sec. 308. Surplus interest rate subsidy for businesses. 

Sec. 309. Authorization of appropriations. 

TITLE IV—SMALL BUSINESS INVESTMENT COMPANY 

MODERNIZATION 

Sec. 401. Increased investment from States. 

Sec. 402. Expedited licensing for experienced applicants. 

Sec. 403. Revised leverage limitations for successful SBICs. 

Sec. 404. Consistency for cost control. 

Sec. 405. Investment in veteran-owned small businesses. 

Sec. 406. Limitations on prepayment. 

Sec. 407. Investment with certain passive entities. 

Sec. 408. Investment in smaller enterprises. 

Sec. 409. Capital impairment. 

Sec. 410. Tangible net worth. 

Sec. 411. Development of agency record. 

Sec. 412. Program levels. 

TITLE V—INVESTMENT IN SMALL MANUFACTURERS AND 

RENEWABLE ENERGY SMALL BUSINESSES 

Subtitle A—Enhanced New Markets Venture Capital Program 

Sec. 501. Expansion of New Markets Venture Capital Program. 

Sec. 502. Improved nationwide distribution. 

Sec. 503. Increased investment in small business concerns engaged primarily in 

manufacturing. 

Sec. 504. Expanded uses for operational assistance in manufacturing. 

Sec. 505. Updating definition of low-income geographic area. 

Sec. 506. Expanding operational assistance to conditionally approved companies. 

Sec. 507. Limitation on time for final approval. 

Sec. 508. Streamlined application for New Markets Venture Capital Program. 

Sec. 509. Elimination of matching requirement. 

Sec. 510. Simplified formula for operational assistance grants. 

Sec. 511. Authorization of appropriations and enhanced allocation for small 

manufacturing. 

Subtitle B—Expanded Investment in Small Business Renewable Energy 

Sec. 521. Expanded investment in renewable energy. 

Sec. 522. Renewable Energy Capital Investment Program made permanent. 

Sec. 523. Expanded eligibility for small businesses. 

Sec. 524. Expanded uses for operational assistance in manufacturing and small 

businesses. 

Sec. 525. Expansion of Renewable Energy Capital Investment Program. 

Sec. 526. Simplified fee structure to expedite implementation. 

Sec. 527. Increased operational assistance grants. 

Sec. 528. Authorizations of appropriations. 


tjames on DSKG8SOYB1PROD with BILLS
4 

•HR 3854 IH

TITLE VI—SMALL BUSINESS HEALTH INFORMATION 

TECHNOLOGY FINANCING PROGRAM 

Sec. 601. Small business health information technology financing program. 

TITLE VII—SMALL BUSINESS EARLY-STAGE INVESTMENT 

PROGRAM 

Sec. 701. Small business early-stage investment program. 

TITLE VIII—SBA DISASTER PROGRAM REFORM 

Sec. 801. Revised collateral requirements. 

Sec. 802. Increased limits. 

Sec. 803. Revised repayment terms. 

Sec. 804. Revised disbursement process. 

Sec. 805. Grant program. 

Sec. 806. Regional disaster working groups. 

Sec. 807. Outreach grants for loan applicant assistance. 

Sec. 808. Authorization of appropriations. 

TITLE IX—REGULATIONS 

Sec. 901. Regulations. 

1 TITLE I—SMALL BUSINESS 

2 LENDING ENHANCEMENTS 

3 SEC. 101. SMALL LENDER OUTREACH PROGRAM. 

4 Section 7(a) of the Small Business Act (15 U.S.C. 

5 636(a)) is amended by adding at the end the following: 

6 ‘‘(34) SMALL LENDER OUTREACH PROGRAM.— 

7 The Administrator shall establish and carry out a 

8 program to provide support to regional, district, and 

9 branch offices of the Administration to assist small 

10 lenders, who do not participate in the Preferred 

11 Lenders Program, to participate in the programs 

12 under this subsection.’’. 


tjames on DSKG8SOYB1PROD with BILLS
5 

•HR 3854 IH

1 SEC. 102. RURAL LENDING OUTREACH PROGRAM. 

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

3 636(a)), as amended by this Act, is further amended by 

4 adding at the end the following: 

5 ‘‘(35) RURAL LENDING OUTREACH PROGRAM.— 

6 ‘‘(A) IN GENERAL.—The Administrator 

7 shall establish and carry out a rural lending 

8 outreach program (hereinafter referred to in 

9 this paragraph as the ‘program’) to provide 

10 loans under this subsection in accordance with 

11 this paragraph. 

12 ‘‘(B) MAXIMUM PARTICIPATION.—A loan 

13 under the program shall include the maximum 

14 participation levels by the Administrator per15 mitted for loans made under this subsection. 

16 ‘‘(C) MAXIMUM LOAN AMOUNT.—The max17 imum amount of a loan under the program 

18 shall be $250,000. 

19 ‘‘(D) USE OF RURAL LENDERS.—The pro20 gram shall be carried out through lenders lo21 cated in a rural area (as such term is defined 

22 under subsection (m)(11)(C)) or, if a small 

23 business concern located in a rural area does 

24 not have a lender located within 30 miles of the 

25 principal place of business of such concern, 


tjames on DSKG8SOYB1PROD with BILLS
6 

•HR 3854 IH

1 through any lender chosen by such concern that 

2 provides loans under this subsection. 

3 ‘‘(E) TIME FOR APPROVAL.—The Adminis4 trator shall approve or disapprove a loan under 

5 the program within 36 hours. 

6 ‘‘(F) DOCUMENTATION.—The program 

7 shall use abbreviated application and docu8 mentation requirements. 

9 ‘‘(G) CREDIT STANDARDS.—Minimum 

10 credit standards, as the Administrator considers 

11 necessary to limit the rate of default on loans 

12 made under the program, shall apply.’’. 

13 SEC. 103. COMMUNITY EXPRESS PROGRAM MADE PERMA14 NENT. 

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

16 636(a)), as amended by this Act, is further amended by 

17 adding at the end the following: 

18 ‘‘(36) COMMUNITY EXPRESS PROGRAM.— 

19 ‘‘(A) IN GENERAL.—The Administrator 

20 shall carry out a Community Express Program 

21 to provide loans under this subsection in ac22 cordance with this paragraph. 

23 ‘‘(B) REQUIREMENTS.—For a loan made 

24 under the Community Express Program, the 

25 following shall apply: 


tjames on DSKG8SOYB1PROD with BILLS
7 

•HR 3854 IH

1 ‘‘(i) The loan shall be in an amount 

2 not exceeding $250,000. 

3 ‘‘(ii) The loan shall be made to a 

4 small business concern the majority owner5 ship interest of which is directly held by in6 dividuals the Administrator determines 

7 are, without regard to the geographic loca8 tion of such individuals, women, members 

9 of qualified Indian tribes, socially or eco10 nomically disadvantaged individuals, vet11 erans, or members of the reserve compo12 nents of the Armed Forces. 

13 ‘‘(iii) The loan shall comply with the 

14 collateral policy of the Administration. 

15 ‘‘(iv) The loan shall include terms re16 quiring the lender to provide, at the ex17 pense of the lender, technical assistance to 

18 the borrower through the lender or a third19 party provider. 

20 ‘‘(v) The Administrator shall approve 

21 or disapprove the loan within 36 hours.’’. 

22 SEC. 104. INCREASED VETERAN PARTICIPATION PROGRAM 

23 MADE PERMANENT. 

24 Section 7(a) of the Small Business Act (15 U.S.C. 

25 636(a)), as amended by this Act, is further amended— 


tjames on DSKG8SOYB1PROD with BILLS
8 

•HR 3854 IH

1 (1) by redesignating the second paragraph (32), 

2 as added by section 208 of the Military Reservist 

3 and Veteran Small Business Reauthorization and 

4 Opportunity Act of 2008 (Public Law 110–186; 122 

5 Stat. 631), as paragraph (33); and 

6 (2) in paragraph (33), as so redesignated by 

7 paragraph (1) of this section— 

8 (A) by striking ‘‘pilot program’’ each place 

9 it appears and inserting ‘‘program’’; 

10 (B) by striking subparagraphs (C) and 

11 (F); and 

12 (C) by redesignating subparagraphs (D) 

13 and (E) as subparagraphs (C) and (D), respec14 tively. 

15 SEC. 105. LEASING POLICY. 

16 Section 7(a) of the Small Business Act (15 U.S.C. 

17 636(a)), as amended by this Act, is further amended by 

18 striking paragraph (28) and inserting the following: 

19 ‘‘(28) LEASING.—If a loan under this sub20 section is used to acquire or construct a facility, the 

21 assisted small business concern— 

22 ‘‘(A) shall permanently occupy and use not 

23 less than 50 percent of the space in such facil24 ity; and 


tjames on DSKG8SOYB1PROD with BILLS
9 

•HR 3854 IH

1 ‘‘(B) may, on a temporary or permanent 

2 basis, lease to others not more than 50 percent 

3 of the space in such facility.’’. 

4 SEC. 106. NATIONAL LENDER TRAINING PROGRAM. 

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

7 further amended by adding at the end the following: 

8 ‘‘(37) NATIONAL LENDER TRAINING PRO9 GRAM.— 

10 ‘‘(A) IN GENERAL.—The Administrator 

11 shall establish and carry out, through the re12 gional offices of the Administration, a lender 

13 training program for new and existing lenders 

14 under this subsection with respect to the lend15 ing systems, policies, and procedures of the Ad16 ministration. 

17 ‘‘(B) FEES.—The Administrator shall 

18 charge a fee for the program established under 

19 subparagraph (A) to reduce the cost of such 

20 program to zero. 

21 ‘‘(C) LIMITATION.—The program estab22 lished under subparagraph (A) may not be car23 ried out by contract with a nongovernmental 

24 entity.’’. 


tjames on DSKG8SOYB1PROD with BILLS
10 

•HR 3854 IH

1 (b) PARTICIPATION.—An entity may not be permitted 

2 to participate in any program under the Small Business 

3 Act (15 U.S.C. 631 et seq.) or the Small Business Invest4 ment Act of 1958 (15 U.S.C. 661 et seq.) that is amended 

5 under this Act, as a lending or investment entity or as 

6 an agent of the Small Business Administration, unless 

7 such entity satisfies the following: 

8 (1) The entity has as the primary mission of 

9 the entity the financing or development of small 

10 business concerns. 

11 (2) The entity has a full-time staff dedicated to 

12 loan making activities, investment activities, or en13 trepreneurial development training. 

14 (3) The entity does not significantly participate 

15 in activities unrelated to the primary mission of the 

16 entity. 

17 SEC. 107. APPLICATIONS FOR REPURCHASE OF LOANS. 

18 Section 7(a) of the Small Business Act (15 U.S.C. 

19 636(a)), as amended by this Act, is further amended by 

20 adding at the end the following: 

21 ‘‘(38) APPLICATIONS FOR REPURCHASE OF

22 LOANS.— 

23 ‘‘(A) IN GENERAL.—Not later than 45 

24 days after the date of the receipt of a claim 

25 from a lender for proper payment of the guarVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
11 

•HR 3854 IH

1 anteed portion of a loan under this subsection 

2 due to default, the Administrator shall make a 

3 final determination with respect to the approval 

4 or denial of such claim. 

5 ‘‘(B) LATE DETERMINATIONS.—If the Ad6 ministrator does not make a final determination 

7 under subparagraph (A) in the time period 

8 specified in such subparagraph, the claim shall 

9 be approved and paid promptly.’’. 

10 SEC. 108. ALTERNATIVE SIZE STANDARD. 

11 (a) IN GENERAL.—Section 3(a) of the Small Busi12 ness Act (15 U.S.C. 632(a)) is amended by adding at the 

13 end the following: 

14 ‘‘(5) In addition to any other size standard 

15 under this subsection, the Administrator shall estab16 lish and permit a lender making a loan under section 

17 7(a) to use an alternative size standard. The alter18 native size standard shall be based on factors includ19 ing the maximum tangible net worth and average 

20 net income of a business concern.’’. 

21 (b) APPLICABILITY.—Until the Administrator estab22 lishes under section 3(a)(5) of the Small Business Act, 

23 as added by subsection (a) of this section, an alternative 

24 size standard for use by a lender making a loan under 

25 section 7(a) of such Act, the alternative size standard in 


tjames on DSKG8SOYB1PROD with BILLS
12 

•HR 3854 IH

1 section 121.301(b) of title 13, Code of Federal Regula2 tions, shall apply in such a case. 

3 SEC. 109. PILOT PROGRAM AUTHORITY. 

4 Section 7(a) of the Small Business Act (15 U.S.C. 

5 636(a)), as amended by this Act, is further amended by 

6 striking paragraph (25) and inserting the following: 

7 ‘‘(25) LIMITATION ON CONDUCTING PILOT

8 PROJECTS.— 

9 ‘‘(A) LIMITATION ON NUMBER.—Not more 

10 than 10 percent of the total number of loans 

11 guaranteed in any fiscal year under this sub12 section may be awarded as part of a pilot pro13 gram. 

14 ‘‘(B) DOLLAR LIMITATIONS.— 

15 ‘‘(i) IN GENERAL.—With respect to 

16 any pilot program under this subsection es17 tablished on or after the date of the enact18 ment of the Small Business Financing and 

19 Investment Act of 2009, no loan shall be 

20 made under such program if such loan 

21 would result in the total amount of loans 

22 made during a fiscal year under all such 

23 programs to be in excess of 5 percent of 

24 the total amount of loans guaranteed in 

25 such fiscal year under this subsection. 


tjames on DSKG8SOYB1PROD with BILLS
13 

•HR 3854 IH

1 ‘‘(ii) CERTAIN PRE-EXISTING PRO2 GRAMS.—With respect to any pilot pro3 gram under this subsection established be4 fore the date of the enactment of the Small 

5 Business Financing and Investment Act of 

6 2009, no loan shall be made under such 

7 program if such loan would result in the 

8 total amount of loans made during a fiscal 

9 year under all such programs to be in ex10 cess of 10 percent of the total amount of 

11 loans guaranteed in such fiscal year under 

12 this subsection. 

13 ‘‘(C) EXPIRATION.— 

14 ‘‘(i) IN GENERAL.—Except as pro15 vided in clause (iii), the duration of any 

16 pilot program under this subsection may 

17 not exceed 3 years. 

18 ‘‘(ii) DESIGNATION AS NEW PRO19 GRAM.—For purposes of this subpara20 graph, a pilot program shall not be treated 

21 as a new pilot program solely on the basis 

22 of a modification or change in the pilot 

23 program, including the change of its name. 

24 ‘‘(iii) EXISTING PROGRAMS.—With re25 spect to any pilot program in existence on 


tjames on DSKG8SOYB1PROD with BILLS
14 

•HR 3854 IH

1 the date of the enactment of the Small 

2 Business Financing and Investment Act of 

3 2009, such program may continue in effect 

4 for a period not exceeding 3 years after 

5 such date without regard to the duration 

6 of such program before such date. 

7 ‘‘(D) REGULATIONS.— 

8 ‘‘(i) IN GENERAL.—With respect to 

9 each pilot program under this subsection, 

10 including each pilot program in existence 

11 on the date of the enactment of the Small 

12 Business Financing and Investment Act of 

13 2009, the Administrator shall— 

14 ‘‘(I) issue regulations for such 

15 program after providing notice in the 

16 Federal Register and an opportunity 

17 for comment; and 

18 ‘‘(II) ensure that such regula19 tions are published in the Code of 

20 Federal Regulations. 

21 ‘‘(ii) PILOT PROGRAMS ESTABLISHED

22 AFTER DATE OF ENACTMENT.—With re23 spect to any pilot program established 

24 after the date of the enactment of the 

25 Small Business Financing and Investment 


tjames on DSKG8SOYB1PROD with BILLS
15 

•HR 3854 IH

1 Act of 2009, such program shall not take 

2 effect until the requirements under this 

3 subparagraph are satisfied. 

4 ‘‘(E) REPEAL OF AUTHORITY TO WAIVE

5 CERTAIN RULES.— 

6 ‘‘(i) IN GENERAL.—Notwithstanding 

7 section 120.3 of title 13, Code of Federal 

8 Regulations, the Administrator may not 

9 from time to time suspend, modify, or 

10 waive rules for a limited period of time to 

11 test new programs or ideas with respect to 

12 this subsection, unless such suspension, 

13 modification, or waiver is explicitly author14 ized by Act of Congress. 

15 ‘‘(ii) EXISTING PILOT PROGRAMS.— 

16 Nothing under clause (i) may be construed 

17 to affect a pilot program in existence on 

18 the date of the enactment of the Small 

19 Business Financing and Investment Act of 

20 2009. 

21 ‘‘(F) PILOT PROGRAM.—For purposes of 

22 this paragraph, the term ‘pilot program’ means 

23 any lending program initiative, project, innova24 tion, or other activity not specifically authorized 

25 by Act of Congress.’’. 


tjames on DSKG8SOYB1PROD with BILLS
16 

•HR 3854 IH

1 SEC. 110. LOANS TO COOPERATIVES. 

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

3 636(a)), as amended by this Act, is further amended by 

4 adding at the end the following: 

5 ‘‘(39) COOPERATIVES.—The Administration 

6 may provide loans under this subsection to any coop7 erative that— 

8 ‘‘(A) is not organized as a tax-exempt enti9 ty; 

10 ‘‘(B) is engaged in a legal business activ11 ity; 

12 ‘‘(C) obtains financial benefits for the co13 operative and for the members of such coopera14 tive; and 

15 ‘‘(D) is eligible under applicable size stand16 ards of the Administration, including that any 

17 business entity that is a member of such coop18 erative is eligible under applicable size stand19 ards of the Administration.’’. 

20 SEC. 111. CAPITAL BACKSTOP PROGRAM. 

21 Section 7(a) of the Small Business Act (15 U.S.C. 

22 636(a)), as amended by this Act, is further amended by 

23 adding at the end the following: 

24 ‘‘(40) CAPITAL BACKSTOP PROGRAM.— 

25 ‘‘(A) IN GENERAL.—The Administrator 

26 shall establish a process under which a small 


tjames on DSKG8SOYB1PROD with BILLS
17 

•HR 3854 IH

1 business concern may submit an application to 

2 the Administrator for the purpose of securing a 

3 loan under this subsection. With respect to such 

4 application, the Administrator shall collect all 

5 information necessary to determine the credit6 worthiness and repayment ability of an appli7 cant and shall determine if such application 

8 meets basic eligibility and credit standards for 

9 a loan under this subsection. 

10 ‘‘(B) PARTICIPATION OF LENDERS.— 

11 ‘‘(i) IN GENERAL.—The Administrator 

12 shall establish a process under which the 

13 Administrator makes available to lenders 

14 each loan application submitted and deter15 mined to meet basic eligibility and credit 

16 standards under subparagraph (A) for the 

17 purpose of such lenders originating, under18 writing, closing, and servicing the loan for 

19 which the applicant applied. 

20 ‘‘(ii) ELIGIBILITY.—Lenders are eligi21 ble to receive a loan application described 

22 in clause (i) if they participate in the pro23 grams established under this subsection. 

24 ‘‘(iii) LOCAL LENDERS.—The Admin25 istrator shall first make available a loan 


tjames on DSKG8SOYB1PROD with BILLS
18 

•HR 3854 IH

1 application described in clause (i) to lend2 ers within 100 miles of the principal office 

3 of the loan applicant. 

4 ‘‘(iv) PREFERRED LENDERS.—If a 

5 lender described in clause (iii) does not 

6 agree to originate, underwrite, close, and 

7 service the loan applied for within 5 busi8 ness days of receiving a loan application 

9 described in clause (i), the Administrator 

10 shall subsequently make available such 

11 loan application to lenders in the Preferred 

12 Lenders Program under paragraph 

13 (2)(C)(ii) of this subsection. 

14 ‘‘(v) AUTHORITY OF ADMINISTRATION

15 TO LEND.—If a lender described in clauses 

16 (iii) or (iv) does not agree to originate, un17 derwrite, close, and service the loan applied 

18 for within 10 business days of receiving a 

19 loan application described in clause (i), the 

20 Administrator shall originate, underwrite, 

21 close, and service such loan. 

22 ‘‘(C) ASSET SALES.—The Administrator 

23 shall offer to sell loans made by the Adminis24 trator under this paragraph. Such sales shall be 

25 made through the semi-annual public solicitaVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
19 

•HR 3854 IH

1 tion (in the Federal Register and in other 

2 media) of offers to purchase. The Administrator 

3 may contract with vendors for due diligence, 

4 asset valuation, and other services related to 

5 such sales. The Administrator may not sell any 

6 loan under this subparagraph for less than 90 

7 percent of the net present value of the loan, as 

8 determined and certified by a qualified third 

9 party. 

10 ‘‘(D) LOANS NOT SOLD.—The Adminis11 trator shall maintain and service loans made by 

12 the Administrator under this paragraph that 

13 are not sold through the asset sales under this 

14 paragraph. 

15 ‘‘(E) EFFECTIVE DATES.—This paragraph 

16 shall have effect on a date if— 

17 ‘‘(i) such date occurs during a period 

18 that— 

19 ‘‘(I) begins on the date the Bu20 reau of Economic Analysis, or any 

21 successor organization, makes a deter22 mination that the gross domestic 

23 product of the United States has de24 creased for three consecutive quarters; 

25 and 


tjames on DSKG8SOYB1PROD with BILLS
20 

•HR 3854 IH

1 ‘‘(II) ends on the date the Bu2 reau of Economic Analysis, or any 

3 successor organization, makes a deter4 mination that the gross domestic 

5 product of the United States has in6 creased for two consecutive quarters; 

7 and 

8 ‘‘(ii) the number of loans provided 

9 under this subsection prior to such date in 

10 the fiscal year including such date is at 

11 least 30 percent less than the number of 

12 such loans provided prior to the same point 

13 in the previous fiscal year. 

14 ‘‘(F) IMPLEMENTATION.—The Adminis15 trator shall establish a group of at least 250 in16 dividuals available to carry out activities under 

17 this paragraph on any date on which this para18 graph has effect under subparagraph (E). The 

19 Administrator shall provide to such group the 

20 training necessary to carry out activities under 

21 this paragraph. 

22 ‘‘(G) APPLICATION OF OTHER LAW.— 

23 Nothing in this paragraph shall be construed to 

24 exempt any activity of the Administrator under 


tjames on DSKG8SOYB1PROD with BILLS
21 

•HR 3854 IH

1 this paragraph from the Federal Credit Reform 

2 Act of 1990 (2 U.S.C. 661 et seq.). 

3 ‘‘(H) AUTHORIZATION OF APPROPRIA4 TIONS.— 

5 ‘‘(i) PROGRAM LEVELS.—The Admin6 istrator is authorized to make loans under 

7 this paragraph in an amount that is equal 

8 to half the amount authorized for loans 

9 under this subsection other than loans 

10 under this paragraph. 

11 ‘‘(ii) AUTHORIZATION OF APPROPRIA12 TIONS.—In addition to amounts made 

13 available to carry out this subsection, there 

14 are authorized to be appropriated such 

15 sums as may be necessary to carry out this 

16 paragraph.’’. 

17 SEC. 112. LOANS TO FINANCE GOODWILL. 

18 Section 7(a) of the Small Business Act (15 U.S.C. 

19 636(a)), as amended by this Act, is further amended by 

20 adding at the end the following: 

21 ‘‘(41) GOODWILL.—The Administrator may not 

22 apply an application, processing, or approval stand23 ard to a loan for the purpose of financing goodwill 

24 under this subsection, unless such standard applies 

25 to all loans under this subsection.’’. 


tjames on DSKG8SOYB1PROD with BILLS
22 

•HR 3854 IH

1 SEC. 113. APPELLATE PROCESS AND OMBUDSMAN. 

2 The Small Business Act (15 U.S.C. 631 et seq.) is 

3 amended— 

4 (1) by redesignating section 44 as section 45; 

5 and 

6 (2) by inserting after section 43 the following: 

7 ‘‘SEC. 44. APPELLATE PROCESS AND OMBUDSMAN. 

8 ‘‘(a) APPELLATE PROCESS.— 

9 ‘‘(1) IN GENERAL.—Not later than 270 days 

10 after the date of the enactment of the Small Busi11 ness Financing and Investment Act of 2009, the Ad12 ministrator shall establish an independent appellate 

13 process within the Administration. The process shall 

14 be available to review material determinations made 

15 by the Administration that affect a lender or invest16 ment company that participates or is applying to 

17 participate in a program administered by the Ad18 ministration. 

19 ‘‘(2) REVIEW PROCESS.—In establishing the 

20 independent appellate process under paragraph (1), 

21 the Administrator shall ensure that— 

22 ‘‘(A) any appeal of a material determina23 tion by the Administration is heard and result24 ing recommendations are provided expedi25 tiously; and 


tjames on DSKG8SOYB1PROD with BILLS
23 

•HR 3854 IH

1 ‘‘(B) appropriate safeguards exist for pro2 tecting the appellant from retaliation by Admin3 istration employees. 

4 ‘‘(3) COMMENT PERIOD.—Not later than 180 

5 days after the date of the enactment of the Small 

6 Business Financing and Investment Act of 2009, the 

7 Administrator shall provide an opportunity for no8 tice and comment on proposed guidelines for the es9 tablishment of an independent appellate process 

10 under this section. 

11 ‘‘(b) AGENCY OMBUDSMAN.— 

12 ‘‘(1) ESTABLISHMENT.—Not later than 180 

13 days after the date of the enactment of the Small 

14 Business Financing and Investment Act of 2009, the 

15 Administrator shall appoint an ombudsman. 

16 ‘‘(2) DUTIES.—The ombudsman appointed in 

17 accordance with paragraph (1) shall— 

18 ‘‘(A) act as a liaison between the Adminis19 tration and any lender or investment company 

20 that participates or is applying to participate in 

21 a program administered by the Administration 

22 with respect to a problem such entity may have 

23 in dealing with the Administration resulting 

24 from a material determination made by the Ad25 ministration; and 


tjames on DSKG8SOYB1PROD with BILLS
24 

•HR 3854 IH

1 ‘‘(B) ensure that safeguards exist to en2 courage complainants to come forward and pre3 serve confidentiality. 

4 ‘‘(c) OTHER AUTHORITY.—An individual carrying 

5 out the independent appellate process established under 

6 subsection (a) or the position of ombudsman established 

7 under subsection (b) is authorized to— 

8 ‘‘(1) examine records and documents relating to 

9 a matter under review pursuant to such subsections; 

10 and 

11 ‘‘(2) initiate the review of a matter under such 

12 subsections if such individual believes that Adminis13 tration procedures have not been followed as in14 tended with respect to such matter, without regard 

15 to whether an appeal or complaint has been made. 

16 ‘‘(d) LIMITATIONS.— 

17 ‘‘(1) IN GENERAL.—An individual carrying out 

18 the independent appellate process established under 

19 subsection (a) or the position of ombudsman estab20 lished under subsection (b) may not, as a result of 

21 the authority provided under this section— 

22 ‘‘(A) make, change, or set aside a law, pol23 icy, or administrative decision; 

24 ‘‘(B) make binding decisions or determine 

25 rights; 


tjames on DSKG8SOYB1PROD with BILLS
25 

•HR 3854 IH

1 ‘‘(C) directly compel an entity to imple2 ment the recommendations of such individual; 

3 or 

4 ‘‘(D) accept jurisdiction over an issue that 

5 is pending in a legal forum. 

6 ‘‘(2) RULE OF CONSTRUCTION.—Activities car7 ried out under this section may not be construed— 

8 ‘‘(A) as a formal investigation, formal 

9 hearing, or binding decision; 

10 ‘‘(B) as limiting any remedy or right of ap11 peal; 

12 ‘‘(C) as affecting any procedure concerning 

13 grievances, appeals, or administrative matters 

14 under law; or 

15 ‘‘(D) as a substitute for an administrative 

16 or judicial proceeding. 

17 ‘‘(e) REPORT.—Not later than one year after the date 

18 of the enactment of the Small Business Financing and In19 vestment Act of 2009 and annually thereafter, the Admin20 istrator shall submit to the Committee on Small Business 

21 of the House of Representatives and the Committee on 

22 Small Business and Entrepreneurship of the Senate a re23 port describing and providing the status of appeals made 

24 under subsection (a) and complaints made under sub25 section (b). 


tjames on DSKG8SOYB1PROD with BILLS
26 

•HR 3854 IH

1 ‘‘(f) DEFINITIONS.—In this section, the following 

2 apply: 

3 ‘‘(1) MATERIAL DETERMINATION.—The term 

4 ‘material determination’ includes determinations re5 lating to— 

6 ‘‘(A) applications for payment relating to a 

7 loan guarantee; and 

8 ‘‘(B) the ability of an entity to participate 

9 in an Administration loan or investing program. 

10 ‘‘(2) INDEPENDENT APPELLATE PROCESS.— 

11 The term ‘independent appellate process’ means a 

12 review by an Administration official who does not di13 rectly or indirectly report to the Administration offi14 cial who made the material determination under re15 view.’’. 

16 SEC. 114. EXTENSION OF RECOVERY AND RELIEF LOAN 

17 BENEFITS. 

18 (a) FEE REDUCTIONS.—Section 501 of title V of di19 vision A of the American Recovery and Reinvestment Act 

20 of 2009 (Public Law 111–5) is amended— 

21 (1) in subsection (a) by striking ‘‘September 

22 30, 2010’’ and inserting ‘‘September 30, 2011’’; and 

23 (2) in subsection (c) by striking paragraph (2). 

24 (b) ECONOMIC STIMULUS LENDING PROGRAM FOR

25 SMALL BUSINESSES.—Section 502(f) of title V of division 


tjames on DSKG8SOYB1PROD with BILLS
27 

•HR 3854 IH

1 A of the American Recovery and Reinvestment Act of 

2 2009 (Public Law 111–5) is amended by striking ‘‘the 

3 date 12 months after the date of enactment of this Act’’ 

4 and inserting ‘‘September 30, 2011’’. 

5 SEC. 115. REDUCED DOCUMENTATION FOR BUSINESS STA6 BILIZATION LOANS. 

7 Section 506(a) of title V of division A of the Amer8 ican Recovery and Reinvestment Act of 2009 (Public Law 

9 111–5) is amended by adding at the end the following: 

10 ‘‘In carrying out such program, the Administrator shall 

11 establish and utilize a one-page application for loans under 

12 this section and shall authorize lenders to utilize the same 

13 documentation and procedural requirements for loans 

14 under this section as such lenders utilize for other loans 

15 of a similar size and type.’’. 

16 SEC. 116. EXPANDED ELIGIBILITY FOR BUSINESS STA17 BILIZATION LOANS. 

18 Section 506(c) of title V of division A of the American 

19 Recovery and Reinvestment Act of 2009 (Public Law 111– 

20 5) is amended by striking ‘‘but shall not include’’ and all 

21 that follows through ‘‘enactment of this Act’’. 

22 SEC. 117. INCREASED AMOUNT OF BUSINESS STABILIZA23 TION LOANS. 

24 Section 506(d) of title V of division A of the Amer25 ican Recovery and Reinvestment Act of 2009 (Public Law 


tjames on DSKG8SOYB1PROD with BILLS
28 

•HR 3854 IH

1 111–5) is amended by striking ‘‘$35,000’’ and inserting 

2 ‘‘$50,000’’. 

3 SEC. 118. EXTENSION OF BUSINESS STABILIZATION LOANS. 

4 Section 506(j) of title V of division A of the American 

5 Recovery and Reinvestment Act of 2009 (Public Law 111– 

6 5) is amended by striking ‘‘September 30, 2010’’ and in7 serting ‘‘September 30, 2011’’. 

8 SEC. 119. SBA SECONDARY MARKET LENDING AUTHORITY 

9 MADE PERMANENT. 

10 Section 509 of title V of division A of the American 

11 Recovery and Reinvestment Act of 2009 (Public Law 111– 

12 5) is amended— 

13 (1) by striking subsection (e); and 

14 (2) by redesignating subsections (f), (h), and (i) 

15 as subsections (e), (f), and (g), respectively. 

16 SEC. 120. SBA SECONDARY MARKET LENDING AUTHORITY 

17 EXPANDED. 

18 Section 509 of title V of division A of the American 

19 Recovery and Reinvestment Act of 2009 (Public Law 111– 

20 5), as amended by this Act, is further amended— 

21 (1) in subsection (c)(1) by adding at the end 

22 the following: ‘‘Such process shall include the des23 ignation of each lender participating in a program 

24 under section 7(a) of the Small Business Act as a 


tjames on DSKG8SOYB1PROD with BILLS
29 

•HR 3854 IH

1 Systematically Important Secondary Market Broker2 Dealer for purposes of this section.’’; and 

3 (2) in subsection (e), as so redesignated by sec4 tion 20 of this Act, by adding at the end the fol5 lowing: ‘‘To the extent that the cost of an elimi6 nation or reduction of fees is offset by appropria7 tions, the Administrator shall in lieu of the fee oth8 erwise applicable under this subsection collect no fee 

9 or reduce fees to the maximum extent possible.’’. 

10 SEC. 121. INCREASED LOAN LIMITS. 

11 Section 7(a) of the Small Business Act (15 U.S.C. 

12 636(a)), as amended by this Act, is further amended— 

13 (1) in paragraph (2)(A)— 

14 (A) in clause (i)— 

15 (i) by inserting after ‘‘$150,000’’ the 

16 following: ‘‘and is less than or equal to 

17 $2,000,000’’; and 

18 (ii) by striking ‘‘or’’ at the end; 

19 (B) in clause (ii) by striking the period at 

20 the end and inserting ‘‘; or’’; and 

21 (C) by adding at the end the following: 

22 ‘‘(iii) 50 percent of the balance of the 

23 financing outstanding at the time of dis24 bursement of the loan, if such balance ex25 ceeds $2,000,000.’’; and 


tjames on DSKG8SOYB1PROD with BILLS
30 

•HR 3854 IH

1 (2) in paragraph (3)(A) by striking 

2 ‘‘$2,000,000’’ and inserting ‘‘$3,000,000’’. 

3 SEC. 122. REAL ESTATE APPRAISALS. 

4 Section 7(a)(29) of the Small Business Act (15 

5 U.S.C. 636(a)(29)) is amended— 

6 (1) in the matter preceding subparagraph (A) 

7 by striking ‘‘a State licensed or certified appraiser’’ 

8 and inserting ‘‘an appraiser licensed or certified by 

9 the State in which such property is located’’; 

10 (2) in subparagraph (A) by striking 

11 ‘‘$250,000’’ and inserting ‘‘$400,000’’; and 

12 (3) in subparagraph (B) by striking 

13 ‘‘$250,000’’ and inserting ‘‘$400,000’’. 

14 SEC. 123. ADDITIONAL SUPPORT FOR EXPRESS LOAN PRO15 GRAM. 

16 Section 7(a)(18)(B) of the Small Business Act (15 

17 U.S.C. 636(a)(18)(B)) is amended by adding after ‘‘under 

18 subparagraph (A)(i)’’ the following: ‘‘, except that a lender 

19 making a loan under paragraph (31) may not retain any 

20 percentage of a fee collected under such subparagraph’’. 

21 SEC. 124. AUTHORIZATION OF APPROPRIATIONS. 

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

23 note) is amended by inserting after subsection (e) the fol24 lowing: 


tjames on DSKG8SOYB1PROD with BILLS
31 

•HR 3854 IH

1 ‘‘(f) FISCAL YEARS 2010 AND 2011 WITH RESPECT

2 TO SECTION 7(a).— 

3 ‘‘(1) PROGRAM LEVELS.—For the programs au4 thorized by this Act, in each of fiscal years 2010 and 

5 2011 commitments for general business loans au6 thorized under section 7(a) may not exceed 

7 $20,000,000,000. 

8 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

9 There are authorized to be appropriated such sums 

10 as may be necessary to carry out paragraph (1).’’. 

11 TITLE II—CDC ECONOMIC 

12 DEVELOPMENT LOAN PROGRAM 

13 Subtitle A—General Provisions 

14 SEC. 201. PROGRAM LEVELS. 

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

16 note), as amended by this Act, is further amended by in17 serting after subsection (f) the following: 

18 ‘‘(g) PROGRAM LEVELS WITH RESPECT TO CDC 

19 ECONOMIC DEVELOPMENT LOAN PROGRAM.— 

20 ‘‘(1) FISCAL YEAR 2010.—For financings au21 thorized by section 7(a)(13) of this Act and title V 

22 of the Small Business Investment Act of 1958, the 

23 Administrator is authorized to make $9,000,000,000 

24 in guarantees of debentures for fiscal year 2010. 


tjames on DSKG8SOYB1PROD with BILLS
32 

•HR 3854 IH

1 ‘‘(2) FISCAL YEAR 2011.—For financings au2 thorized by section 7(a)(13) of this Act and title V 

3 of the Small Business Investment Act of 1958, the 

4 Administrator is authorized to make 

5 $10,000,000,000 in guarantees of debentures for fis6 cal year 2011.’’. 

7 SEC. 202. DEFINITIONS. 

8 Section 103 of the Small Business Investment Act 

9 of 1958 (5 U.S.C. 662) is amended as follows: 

10 (1) By amending paragraph (6) to read as fol11 lows: 

12 ‘‘(6) the term ‘development company’ means 

13 any corporation organized in order to promote eco14 nomic development and the growth of small business 

15 concerns and includes companies chartered under a 

16 special State law authorizing them to operate on a 

17 statewide basis;’’. 

18 (2) By striking ‘‘and’’ at the end of paragraph 

19 (18), by striking the period at the end of paragraph 

20 (19) and inserting a semicolon, and by adding at the 

21 end the following new paragraphs: 

22 ‘‘(20) the term ‘certified development company’ 

23 means a development company that the Adminis24 trator has determined meets the criteria set forth in 

25 section 501; 


tjames on DSKG8SOYB1PROD with BILLS
33 

•HR 3854 IH

1 ‘‘(21) the term ‘local governmental entity’ 

2 means— 

3 ‘‘(A) a State or a political subdivision of a 

4 State; or 

5 ‘‘(B) a combination of political subdivisions 

6 which— 

7 ‘‘(i) has been formed to promote eco8 nomic or community development; 

9 ‘‘(ii) is composed of representatives of 

10 the State or a political subdivision acting 

11 in their official capacity; and 

12 ‘‘(iii) includes an area in an adjacent 

13 State if it is part of a local economic area, 

14 a rural area, or has a population deter15 mined by the Administrator to be insuffi16 cient to support the formation of a sepa17 rate development company; 

18 such term includes entities meeting the require19 ments of clauses (i) through (iii), such as, but 

20 not limited to, a council of governments, re21 gional development corporation, regional plan22 ning commission, or economic development dis23 trict; 

24 ‘‘(22) the term ‘member’ means any person au25 thorized to vote for a director of a corporation or the 


tjames on DSKG8SOYB1PROD with BILLS
34 

•HR 3854 IH

1 dissolution or merger of a company (for purposes of 

2 this definition, a shareholder of a for-profit corpora3 tion shall be considered a member); 

4 ‘‘(23) the terms ‘rural’ and ‘rural area’ shall 

5 have the same meaning as those terms are given in 

6 section 1991(a)(13)(A) of title 7, United States 

7 Code; and 

8 ‘‘(24) the term ‘small manufacturer’ means a 

9 small business concern— 

10 ‘‘(A) the primary business of which is clas11 sified in sector 31, 32, or 33 of the North 

12 American Industrial Classification System; and 

13 ‘‘(B) all of the production facilities of 

14 which are located in the United States.’’. 

15 Subtitle B—Certified Development 

16 Companies 

17 SEC. 211. CERTIFIED DEVELOPMENT COMPANIES. 

18 Section 501 of the Small Business Investment Act 

19 of 1958 (15 U.S.C. 695) is amended to read as follows: 

20 ‘‘SEC. 501. CERTIFIED DEVELOPMENT COMPANIES. 

21 ‘‘(a) CERTIFIED DEVELOPMENT COMPANY DEBEN22 TURE AUTHORITY.—Only development companies cer23 tified by the Administrator shall have the authority to 

24 issue debentures under this Act. 


tjames on DSKG8SOYB1PROD with BILLS
35 

•HR 3854 IH

1 ‘‘(b) CERTIFICATION STANDARDS.—A development 

2 company shall be certified for the purposes of issuing de3 bentures if the Administrator determines that it meets 

4 each of the following criteria: 

5 ‘‘(1) SMALL CONCERN.— 

6 ‘‘(A) IN GENERAL.—Except as provided in 

7 subparagraph (C) of paragraph (2), the com8 pany, including its affiliates, shall have no more 

9 than 200 employees. 

10 ‘‘(B) CONTROL.—Except as provided in 

11 paragraph (2) (B) or (C) the company shall not 

12 be under the control of any other concern. 

13 ‘‘(C) NOT FOR PROFIT.—The development 

14 company is organized as a not-for-profit cor15 poration. 

16 ‘‘(2) EXCEPTIONS.— 

17 ‘‘(A) FOR PROFIT STATUS.—If a develop18 ment company was chartered as a for-profit 

19 corporation and issued debentures prior to Jan20 uary 1, 1987, the company shall not be re21 quired to change its status to not-for-profit in 

22 order to be certified. 

23 ‘‘(B) AFFILIATION GRANDFATHER.—Any 

24 company that was authorized by the Adminis25 trator to issue debentures before December 31, 


tjames on DSKG8SOYB1PROD with BILLS
36 

•HR 3854 IH

1 2005, shall be eligible for certification without 

2 regard to its status as part of, or its affiliation 

3 with, any other not-for-profit corporation or 

4 local governmental entity unless that not-for5 profit corporation or local governmental entity 

6 is another entity that issues debentures under 

7 this title. 

8 ‘‘(C) AFFILIATION WITH LOCAL GOVERN9 MENTAL ENTITIES.—Any company that was or10 ganized after the date of enactment of the 

11 Small Business Financing and Investment Act 

12 of 2009 shall be eligible for certification without 

13 regard to its status as part of or affiliation with 

14 any local governmental entity. 

15 ‘‘(3) GOOD STANDING.—A development com16 pany shall be in good standing and comply with all 

17 laws, in every State in which it is incorporated or 

18 authorized to conduct business. 

19 ‘‘(4) MEMBERSHIP.— 

20 ‘‘(A) IN GENERAL.—The development com21 pany shall have at least 25 members. 

22 ‘‘(B) VOTING RIGHTS.—No member shall 

23 control more than 10 percent of the total voting 

24 power in the development company. 


tjames on DSKG8SOYB1PROD with BILLS
37 

•HR 3854 IH

1 ‘‘(C) RESIDENCE.—Members must be resi2 dents of the State in which the development 

3 company is chartered or authorized to do busi4 ness. 

5 ‘‘(D) DIVERSITY.—The development com6 pany must have at least one member from each 

7 of the following: 

8 ‘‘(i) A local governmental entity. 

9 ‘‘(ii) A financial institution subject to 

10 regulation by a Federal organization be11 longing to the Federal Financial Institu12 tions Examination Council and that pro13 vides long-term fixed asset financing in the 

14 commercial market. 

15 ‘‘(iii) A not-for-profit organization, 

16 other than a development company, that is 

17 dedicated to promoting economic growth. 

18 ‘‘(iv) A for-profit business, other than 

19 a financial institution described in clause 

20 (ii). 

21 ‘‘(E) EMPLOYMENT STATUS.—Membership 

22 in a development company shall not be predi23 cated on employment status and an individual 

24 who retired from or was terminated (for rea25 sons other than fraud or the commission of a 


tjames on DSKG8SOYB1PROD with BILLS
38 

•HR 3854 IH

1 crime) from an entity described in subpara2 graph (D) shall be deemed to be from the orga3 nization described in that subparagraph. 

4 ‘‘(5) BOARD OF DIRECTORS.— 

5 ‘‘(A) IN GENERAL.—The development com6 pany’s board consists of members and each di7 rector receives a majority vote of the members 

8 unless the development company is a for-profit 

9 corporation in which case the board need not 

10 consist entirely of members. 

11 ‘‘(B) BOARD REPRESENTATION.—There 

12 shall be at least one director from not fewer 

13 than 3 of the 4 types of organizations specified 

14 in paragraph (4)(D) but no single type of orga15 nization shall have more than 50 percent rep16 resentation on the board of the development 

17 company. If the development company is a for18 profit corporation, financial institution rep19 resentatives may make up more than 50 per20 cent of the board. 

21 ‘‘(C) AFFILIATED ENTITY REPRESENTA22 TION RESTRICTIONS.—A development company 

23 that is described in paragraph (1)(C) may have 

24 any or all of its board members appointed by 

25 entities affiliated with the company and may inVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00038 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
39 

•HR 3854 IH

1 clude common members who also serve on the 

2 affiliate’s board of directors if the appointment 

3 of board members was exercised by an affiliate 

4 prior to December 31, 2005. 

5 ‘‘(D) SPECIAL RULE FOR CERTAIN DEVEL6 OPMENT COMPANIES.—The board of directors 

7 for any development company issuing deben8 tures before December 31, 2005, and incor9 porated under a State law requiring, or which 

10 is interpreted by the State’s legal department 

11 as imposing specific requirements on, the num12 ber and selection of members, board members, 

13 or both, and the rights and privileges conferred 

14 by such State law, may adhere to such provi15 sions. 

16 ‘‘(6) PROFESSIONAL MANAGEMENT AND

17 STAFF.— 

18 ‘‘(A) IN GENERAL.—The development com19 pany shall have full-time independent profes20 sional management, including a chief executive 

21 officer to manage the daily operations and a 

22 full-time professional staff qualified to carry out 

23 the functions authorized under this title. 

24 ‘‘(B) UTILIZATION OF STAFF FROM AF25 FILIATED ENTITIES.—A development company 


tjames on DSKG8SOYB1PROD with BILLS
40 

•HR 3854 IH

1 shall not be denied certification under this sec2 tion if its chief executive or full-time profes3 sional staff is from an affiliated entity as de4 scribed in paragraph (1)(C). 

5 ‘‘(C) STAFF UNDER CONTRACT.—The Ad6 ministrator shall not deny certification to a de7 velopment company that contracts for its full 

8 time staff if one of the following conditions is 

9 met: 

10 ‘‘(i) The development company is lo11 cated in a rural area, obtains its staff 

12 through contract from another develop13 ment company that is certified by the Ad14 ministrator and that development company 

15 operates in the same or a contiguous 

16 State. 

17 ‘‘(ii) The development company had 

18 issued debentures under this title prior to 

19 December 31, 2005, and had contracted 

20 with a for-profit business concern to pro21 vide staffing and management services. 

22 ‘‘(c) APPLICATIONS.— 

23 ‘‘(1) DEVELOPMENT COMPANIES ISSUING DE24 BENTURES BEFORE SEPTEMBER 30, 2009.— 


tjames on DSKG8SOYB1PROD with BILLS
41 

•HR 3854 IH

1 ‘‘(A) SHORT FORM APPLICATION.—(i) For 

2 any development company that issued deben3 tures pursuant to this title before September 

4 30, 2009, the Administrator shall develop, after 

5 an opportunity for notice and comment, no 

6 later than 90 days after the date of enactment 

7 of the Small Business Financing and Invest8 ment Act of 2009, a short-form application that 

9 contains sufficient information for the Adminis10 trator to determine that the development com11 pany currently meets the standards set forth in 

12 subsection (b). In developing such application, 

13 the Administrator shall be required to limit the 

14 amount of paperwork necessary to determine 

15 whether the development company meets the 

16 standards for certification and may limit the 

17 application to the filing of reports previously 

18 submitted to the Administrator. 

19 ‘‘(ii) For those companies that obtain staff 

20 through contracts, the application shall include 

21 a copy of the contract. 

22 ‘‘(B) CERTIFICATION DECISION.—(i) The 

23 Administrator shall certify the development 

24 company if the application demonstrates that 

25 the applicant meets the standards in subsection 


tjames on DSKG8SOYB1PROD with BILLS
42 

•HR 3854 IH

1 (b). The decision to certify or not approve the 

2 request for certification shall be made within 7 

3 business days from the date the initial submis4 sion of the application is received by the Ad5 ministrator. If the Administrator takes no ac6 tion to approve or disapprove within 7 business 

7 days, the application for certification is deemed 

8 approved and no further action is required by 

9 the Administrator or the development company 

10 to obtain certification. If the Administrator dis11 approves the application, the Administrator 

12 shall provide in writing within 3 business days 

13 the reasons for the disapproval. If such docu14 ment is not provided within the time specified, 

15 the application is deemed approved and no fur16 ther action is required by the Administrator or 

17 the development company to obtain certifi18 cation. 

19 ‘‘(ii) For those development companies 

20 that submit contracts under subparagraph 

21 (A)(ii), the Administrator is limited in rejecting 

22 the application only if the Administrator finds 

23 that the entity servicing the applicant is no 

24 longer able to provide the employees or services 


tjames on DSKG8SOYB1PROD with BILLS
43 

•HR 3854 IH

1 needed by the applicant to perform the func2 tions that would be authorized under this title. 

3 ‘‘(C) APPLICATION RESUBMITTAL.—If the 

4 Administrator disapproves the application for 

5 certification and provides a written statement 

6 as set forth in subparagraph (B), the develop7 ment company may file a new application lim8 ited solely to addressing the concerns of the Ad9 ministrator and the certification procedures set 

10 forth in subparagraph (B) shall recommence. 

11 ‘‘(D) APPEALS.—If the Administrator dis12 approves an application in accordance with the 

13 procedures of subparagraphs (B) or (C), the 

14 applicant may, within 10 calendar days after 

15 receipt of the disapproval, appeal such dis16 approval. The Administrator shall conduct a 

17 hearing to determine such appeal pursuant to 

18 sections 554, 556, and 557 of title 5, United 

19 States Code, and shall issue a decision not later 

20 than 45 days after the appeal is filed. The deci21 sion on appeal shall constitute final agency ac22 tion for purposes of chapter 7 of title 5, United 

23 States Code. 

24 ‘‘(E) GRANDFATHERING.— 


tjames on DSKG8SOYB1PROD with BILLS
44 

•HR 3854 IH

1 ‘‘(i) IN GENERAL.—For the period 2 

2 years after date of enactment of the Small 

3 Business Financing and Investment Act of 

4 2009, any development company that was 

5 issuing debentures on or before the date 

6 set forth in this clause (i) shall be deemed 

7 to be a certified development company. 

8 ‘‘(ii) COMPLETION OF APPLICATION

9 PROCESS.—The procedures set forth in 

10 this paragraph for determining certifi11 cation shall apply to any development com12 pany meeting the qualifications of clause 

13 (i). 

14 ‘‘(iii) EFFECT OF DENIAL.—The de15 nial or rejection of an application for cer16 tification as set forth in this subsection 

17 shall have no effect on the ability of a de18 velopment company meeting the qualifica19 tions in clause (i) from continuing to issue 

20 debentures during the entire two-year pe21 riod established in that clause. 

22 ‘‘(iv) FAILURE TO OBTAIN CERTIFI23 CATION.—Any development company that 

24 fails to obtain certification in accordance 

25 with the procedures set forth in this paraVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00044 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
45 

•HR 3854 IH

1 graph during the period set forth in clause 

2 (i) shall be considered to be a new develop3 ment company and the procedures of para4 graph (2) shall apply. The authority to 

5 issue debentures shall cease for any devel6 opment company covered by this subpara7 graph that has failed to obtain certification 

8 from the Administrator during the time 

9 period set forth in clause (i). 

10 ‘‘(F) AUTOMATIC QUALIFICATION PROVI11 SION.—If the Administrator fails to implement 

12 the certification process set forth in this para13 graph, any development company that was 

14 issuing debentures before September 30, 2009, 

15 pursuant to this title shall be considered cer16 tified until such time as the Administrator de17 velops the certification procedures set forth in 

18 this paragraph. 

19 ‘‘(G) SAVINGS CLAUSE.—Any action taken 

20 by a development company or the Administrator 

21 pursuant to this paragraph shall have no im22 pact on any guarantee of a debenture issued 

23 prior to the date of enactment of the Small 

24 Business Financing and Investment Act of 

25 2009. 


tjames on DSKG8SOYB1PROD with BILLS
46 

•HR 3854 IH

1 ‘‘(2) APPLICATION PROCESS FOR NEW DEVEL2 OPMENT COMPANIES.— 

3 ‘‘(A) IN GENERAL.—For any development 

4 company that has not issued debentures prior 

5 to September 30, 2009, the Administrator shall 

6 develop no later than 180 days after the date 

7 of enactment of the Small Business Financing 

8 and Investment Act of 2009, after an oppor9 tunity for notice and comment, an application 

10 form for certification that provides the Admin11 istrator with sufficient information to insure 

12 that the applicant meets the standards set forth 

13 in subsection (b). The Administrator shall cer14 tify such development company or reject the ap15 plication within 60 calendar days from the date 

16 the initial submission was received by the Ad17 ministrator. If the Administrator rejects the ap18 plication, the Administrator shall provide in 

19 writing within 7 business days after the deci20 sion, the reason for rejecting the application. 

21 ‘‘(B) APPEALS.—A development company 

22 shall be able to appeal the disapproval of an ap23 plication under the procedures set forth in 

24 paragraph (1)(D).’’. 


tjames on DSKG8SOYB1PROD with BILLS
47 

•HR 3854 IH

1 SEC. 212. CERTIFIED DEVELOPMENT COMPANY; OPER2 ATIONAL REQUIREMENTS. 

3 (a) OPERATIONAL REQUIREMENTS.—Section 502 of 

4 the Small Business Investment Act of 1958 (15 U.S.C. 

5 696) is amended to read as follows: 

6 ‘‘SEC. 502. OPERATIONAL REQUIREMENTS FOR CERTIFIED 

7 DEVELOPMENT COMPANIES. 

8 ‘‘(a) MAINTENANCE OF STANDARDS FOR CERTIFI9 CATION.—Any company certified pursuant to section 501 

10 shall continue to comply with the requirements of that sec11 tion to remain certified. The Administrator shall develop 

12 a reporting form, which to the extent possible, incor13 porates other documents and reports already kept by cer14 tified development companies, demonstrating their contin15 ued compliance. The form shall be developed in a manner 

16 that the estimated time for completion shall take no more 

17 than 2 hours. 

18 ‘‘(b) ETHICS AND CONFLICT OF INTERESTS.— 

19 ‘‘(1) IN GENERAL.—A certified development 

20 company, its officers, employees, and contractors 

21 shall act ethically and avoid activities which con22 stitute a conflict of interest or appear to constitute 

23 a conflict of interest. For purposes of this sub24 section, conduct that is unethical includes, but is not 

25 limited to, the actions specified in section 120.140 of 


tjames on DSKG8SOYB1PROD with BILLS
48 

•HR 3854 IH

1 title 13, Code of Federal Regulations, as in effect on 

2 January 1, 2009. 

3 ‘‘(2) BY ASSOCIATES.—An associate may not be 

4 an officer, director, or manager of more than 1 cer5 tified development company. The term ‘associate’ 

6 shall have the same meaning given the term ‘Asso7 ciate of a CDC’ in section 120.10 of title 13, Code 

8 of Federal Regulations, as in effect on January 1, 

9 2009. For the purposes of this subsection, 10 per10 cent shall be substituted wherever section 120.10 of 

11 title 13, Code of Federal Regulation uses 20 per12 cent. 

13 ‘‘(3) BY ENTITIES.—Except as provided in sec14 tions 501(b)(5) and 501(b)(6), no person, sole pro15 prietorship, partnership, or corporation shall control 

16 or have managerial control of more than one cer17 tified development company. Control means any of 

18 the following: 

19 ‘‘(A) The ability to appoint or remove a 

20 member of the company or member of its board 

21 of directors. 

22 ‘‘(B) The ability to modify or approve rate 

23 or fee changes affecting revenues of the cer24 tified development company. 


tjames on DSKG8SOYB1PROD with BILLS
49 

•HR 3854 IH

1 ‘‘(C) The ability to veto, overrule, or mod2 ify decisions of the certified development com3 pany’s body. 

4 ‘‘(D) The ability, either directly or contrac5 tually, to appoint, hire, reassign, or dismiss 

6 those managers and employees responsible for 

7 the daily operations of the certified development 

8 company. 

9 ‘‘(E) The ability to access the certified de10 velopment company’s resources or amend its 

11 budget. 

12 ‘‘(F) The ability to control another cer13 tified development company pursuant to provi14 sions in a contract. 

15 ‘‘(c) MEETINGS.—The board of directors of the cer16 tified development company shall meet on a regular basis 

17 to make policy decisions for the company. 

18 ‘‘(d) LOAN COMMITTEES.—The board of directors of 

19 a certified development company may use a loan com20 mittee to process loans in the State in which it operates 

21 as well as adjacent local economic areas. Members of the 

22 loan committee shall be residents of the certified develop23 ment company’s State of operation or the adjacent local 

24 economic area. Such loan committees shall meet on a peri25 odic basis as set forth by the board of directors. 


tjames on DSKG8SOYB1PROD with BILLS
50 

•HR 3854 IH

1 ‘‘(e) PROHIBITED CONFLICT IN PROJECT LOANS.— 

2 ‘‘(1) IN GENERAL.—Certified development com3 panies shall not recommend or approve a guarantee 

4 of a debenture that will be collateralized by property 

5 being constructed or acquired on which an institu6 tion, as provided in section 508(c)(1)(A), will have 

7 a first lien position. 

8 ‘‘(2) EXCEPTION.—The prohibition in para9 graph (1) shall not apply to any certified develop10 ment company that was affiliated with or part of 

11 any entity that took a first lien position between Oc12 tober 1, 2003, and September 30, 2005. 

13 ‘‘(f) AFFILIATION WITH LENDERS OPERATING

14 UNDER SECTION 7 OF THE SMALL BUSINESS ACT.— 

15 ‘‘(1) PROHIBITION.—No certified development 

16 company may invest in, or be an affiliate of, a lender 

17 who participates in the loan programs authorized in 

18 sections 7(a) and 7(c) of the Small Business Act (15 

19 U.S.C. 636(a) and (c)). 

20 ‘‘(2) EXCEPTION.—The prohibition in para21 graph (1) shall not apply to any certified develop22 ment company that is affiliated with an entity au23 thorized by the Administrator to operate under sec24 tion 7(a) of the Small Business Act if such affili25 ation occurred on or before November 6, 2003. 


tjames on DSKG8SOYB1PROD with BILLS
51 

•HR 3854 IH

1 ‘‘(3) CREDIT UNION AFFILIATION.—A certified 

2 development company shall not lose its status due to 

3 an affiliation with an institution regulated by the 

4 National Credit Union Administration if the develop5 ment company was affiliated with such an institu6 tion prior to January 1, 2007. 

7 ‘‘(g) SERVICING AND PACKAGING GUARANTEED

8 LOANS.—A certified development company is authorized 

9 to prepare applications for loans under sections 7(a) or 

10 7(c) of the Small Business Act (15 U.S.C. 636(a) or (c)), 

11 to service such loans, and to charge a reasonable fee for 

12 servicing such loans. 

13 ‘‘(h) USE OF EXCESS FUNDS.—Any funds generated 

14 by a certified development company from the issuance of 

15 debentures under this title, the sale of debentures in the 

16 private secondary market, or fees described in subsection 

17 (g) that remain unexpended after payment of staff, oper18 ating, and overhead expenses shall be used by the certified 

19 development company for— 

20 ‘‘(1) operating reserves; 

21 ‘‘(2) expanding the area in which the certified 

22 development company operates through the methods 

23 authorized in section 505 (relating to multi-State 

24 operation); 


tjames on DSKG8SOYB1PROD with BILLS
52 

•HR 3854 IH

1 ‘‘(3) investment in other community and local 

2 economic development activity or community devel3 opment primarily in the State from which such 

4 funds were generated; or 

5 ‘‘(4) investment in small business investment 

6 companies subject to the limitations in subsection 

7 (i). 

8 ‘‘(i) LIMITATIONS WITH RESPECT TO SMALL BUSI9 NESS INVESTMENT COMPANIES.—A certified development 

10 company shall not— 

11 ‘‘(1) invest excess funds in a small business in12 vestment company that the Administrator deter13 mines to be capitally impaired as set forth in section 

14 107.1830 of title 13, Code of Federal Regulations, 

15 as in effect on January 1, 2009, or any successor 

16 regulation to that regulation, but may maintain its 

17 investment in such company if such investment was 

18 made prior to the determination of capital impair19 ment; and 

20 ‘‘(2) provide a debenture under this title to a 

21 small business concern that has financing with a 

22 small business investment company in which the cer23 tified development company has invested excess 

24 funds. 


tjames on DSKG8SOYB1PROD with BILLS
53 

•HR 3854 IH

1 ‘‘(j) ECONOMIC DEVELOPMENT ACTIVITIES.—A com2 pany certified pursuant to this section shall carry out each 

3 of the following economic development activities that cre4 ate or preserve jobs in urban and rural areas: 

5 ‘‘(1) The company shall provide long-term fi6 nancing to small business concerns through deben7 tures described in section 506. 

8 ‘‘(2) The company shall operate any other pro9 gram to assist small business concerns or commu10 nities that promote local economic development and 

11 job creation or preservation. 

12 ‘‘(k) RESTRICTIONS ON ASSISTANCE.— 

13 ‘‘(1) IN GENERAL.—After the date of enact14 ment of the Small Business Financing and Invest15 ment Act of 2009, no certified development company 

16 may accept funding from any source, including any 

17 Federal agency (as that term is defined in section 

18 551 of title 5, United States Code) if the source im19 poses— 

20 ‘‘(A) conditions on the types of small busi21 ness concerns that a certified development com22 pany may provide assistance to under this title; 

23 or 


tjames on DSKG8SOYB1PROD with BILLS
54 

•HR 3854 IH

1 ‘‘(B) conditions or requirements, directly 

2 or indirectly, upon any small business concern 

3 receiving assistance under this title. 

4 ‘‘(2) EXCEPTION.—The conditions of subpara5 graphs (A) and (B) of paragraph (1) shall not apply 

6 if the source provides all of the financing that will 

7 be provided by the certified development company to 

8 the small business concern, provided further that 

9 any conditions or restrictions are limited solely to 

10 the financing provided by the source of funding. 

11 ‘‘(l) REVOCATION AND SUSPENSION.—The Adminis12 trator may suspend or revoke a certified development com13 pany’s status if the Administrator determines, after a 

14 hearing on the record as set forth in sections 554, 556, 

15 and 557 of title 5, United States Code, that the certified 

16 development company no longer— 

17 ‘‘(1) meets the eligibility criteria established 

18 under section 501 of this title; 

19 ‘‘(2) satisfies the operational standards in this 

20 section; or 

21 ‘‘(3) complies with the Administrator’s rules, 

22 regulations, or provisions of law. 

23 ‘‘(m) EFFECT OF SUSPENSION OR REVOCATION.—A 

24 suspension or revocation under subsection (l) shall not af25 fect any outstanding debenture guarantee.’’. 


tjames on DSKG8SOYB1PROD with BILLS
55 

•HR 3854 IH

1 SEC. 213. ACCREDITED LENDERS PROGRAM. 

2 Section 503 of the Small Business Investment of 

3 1958 (15 U.S.C. 697) is amended to read as follows: 

4 ‘‘SEC. 503. ACCREDITED LENDERS PROGRAM. 

5 ‘‘(a) ESTABLISHMENT.— 

6 ‘‘(1) IN GENERAL.—A certified development 

7 company may apply for status to become an accred8 ited certified development company if it meets the 

9 operational standards of section 502 and the criteria 

10 in subsection (b). 

11 ‘‘(2) APPLICATION.—The Administrator shall, 

12 after opportunity for notice and comment, develop 

13 an application for certified development companies 

14 seeking to become accredited certified development 

15 companies. 

16 ‘‘(3) PROCESSING OF APPLICATION.—The Ad17 ministrator shall make a determination within 30 

18 days after a complete application has been filed by 

19 the certified development company. 

20 ‘‘(4) REAPPLICATION.—If the Administrator re21 jects the application, the Administrator shall provide 

22 in writing the reasons for the rejection. Any certified 

23 development company may reapply which will recom24 mence the processing time limits set forth in para25 graph (3), and such reapplication shall be limited to 

26 addressing the reasons for rejection. If the AdminisVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00055 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
56 

•HR 3854 IH

1 trator rejects a second application, that shall be con2 sidered final agency action for purposes of chapter 

3 7 of title 5, United States Code. 

4 ‘‘(b) STANDARDS FOR ACCREDITED CERTIFIED DE5 VELOPMENT COMPANY PROGRAM.—The Administrator 

6 shall designate a certified development company as accred7 ited if it meets the following standards: 

8 ‘‘(1) Has been a certified development company 

9 for not less than the preceding 12 months and has 

10 issued debentures as authorized under this title dur11 ing that time period. 

12 ‘‘(2) Has well-trained, qualified personnel who 

13 are knowledgeable in the lending policies and proce14 dures for certified development companies. 

15 ‘‘(3) Has the ability to process, close, and serv16 ice the loan issued under this title. 

17 ‘‘(4) Has a loss rate on the company’s deben18 tures that is reasonable and acceptable to the Ad19 ministrator. 

20 ‘‘(5) Has a history of submitting to the Admin21 istrator complete and accurate debenture guaranty 

22 application packages. 

23 ‘‘(6) Has the ability to serve small business 

24 credit needs for financing plant and equipment as a 

25 certified development company. 


tjames on DSKG8SOYB1PROD with BILLS
57 

•HR 3854 IH

1 ‘‘(c) EXPEDITED PROCESSING OF GUARANTEE AP2 PLICATIONS.—The Administrator shall develop an expe3 dited procedure for processing a guarantee application or 

4 servicing action submitted by an accredited certified devel5 opment company. For purposes of this subsection, an ex6 pedited procedure is one that takes at least two business 

7 days less than the processing performed for certified devel8 opment companies that have not been accredited. 

9 ‘‘(d) SUSPENSION OR REVOCATION OF ACCREDITED

10 STATUS.—The Administrator may suspend or revoke a 

11 certified development company’s accredited status if the 

12 Administrator determines, after a hearing on the record 

13 as set forth in sections 554, 556, and 557 of title 5, 

14 United States Code, that the certified development com15 pany no longer meets the eligibility criteria established 

16 under this section (which shall not include a time limit 

17 on the term of the certified development company’s ac18 credited status) or failed to adhere to the Administrator’s 

19 rules, regulations, or is violating some other provision of 

20 law. Such suspension or revocation shall have no effect 

21 on the development company’s status as certified. 

22 ‘‘(e) EFFECT OF SUSPENSION OR REVOCATION ON

23 EXISTING GUARANTEES.—A suspension or revocation of 

24 accredited status shall not affect any outstanding deben25 ture guarantee. 


tjames on DSKG8SOYB1PROD with BILLS
58 

•HR 3854 IH

1 ‘‘(f) GRANDFATHER PROVISION.—Any certified de2 velopment company that was accredited by the date of en3 actment of the Small Business Financing and Investment 

4 Act of 2009 shall remain accredited for 24 months after 

5 that date. If the certified development company does not 

6 have an application for accreditation approved by the Ad7 ministrator within the 24 months, its accreditation stand8 ard shall lapse. 

9 ‘‘(g) AUTOMATIC QUALIFICATION.— 

10 ‘‘(1) IN GENERAL.—Until the Administrator de11 velops procedures for granting accredited status, any 

12 certified development company that was accredited 

13 as of the date of enactment of the Small Business 

14 Financing and Investment Act of 2009 shall be 

15 deemed to be accredited. 

16 ‘‘(2) APPLICATIONS.—Any certified develop17 ment company that satisfies the provision of para18 graph (1) shall have 24 months in which to submit 

19 the application established by this section for accred20 ited status. 

21 ‘‘(3) EFFECT WHILE APPLICATION PENDING.— 

22 The denial or rejection of an application for accred23 ited status as set forth in this section shall have no 

24 effect on the ability of a development company that 

25 meets the standard set forth in paragraph (1) from 


tjames on DSKG8SOYB1PROD with BILLS
59 

•HR 3854 IH

1 maintaining its status during the 24 months speci2 fied in this subsection. 

3 ‘‘(h) PROMULGATION OF ACCREDITING STAND4 ARDS.—The Administrator shall develop standards for ac5 crediting, suspension, and revocation under the program 

6 established by this section only after notice and an oppor7 tunity for comment as set forth in section 553(b) of title 

8 5, United States Code. After the development of such 

9 standards, the Administrator shall publish such standards 

10 in the Code of Federal Regulations. 

11 ‘‘(i) RULE OF CONSTRUCTION.—Any reference to the 

12 term ‘accredited lender’ in any provision of law enacted, 

13 or any regulation adopted, prior to the enactment of the 

14 Small Business Financing and Investment Act of 2009 

15 shall be deemed to be a reference to the term ‘accredited 

16 certified development company’.’’. 

17 SEC. 214. PREMIER CERTIFIED LENDER PROGRAM. 

18 Section 504 of the Small Business Investment Act 

19 of 1958 (15 U.S.C. 697a) is amended to read as follows: 

20 ‘‘SEC. 504. PREMIER CERTIFIED LENDER PROGRAM. 

21 ‘‘(a) ESTABLISHMENT.— 

22 ‘‘(1) IN GENERAL.—A certified development 

23 company accredited under section 503 may apply for 

24 status to become a premier certified development 

25 company. 


tjames on DSKG8SOYB1PROD with BILLS
60 

•HR 3854 IH

1 ‘‘(2) APPLICATION.—The Administrator shall, 

2 after opportunity for notice and comment, develop 

3 an application for accredited certified development 

4 companies seeking to become premier certified devel5 opment companies. 

6 ‘‘(3) PROCESSING OF APPLICATION.—The Ad7 ministrator shall make a determination within 60 

8 days after a complete application has been filed by 

9 an accredited certified development company. 

10 ‘‘(4) REAPPLICATION.—If the Administrator re11 jects the application, the Administrator shall provide 

12 in writing the reasons for the rejection. Any accred13 ited certified development company may reapply 

14 which will recommence the processing time limits set 

15 forth in paragraph (3), and such reapplication shall 

16 be limited to addressing the reasons for rejection. If 

17 the Administrator rejects a second application, that 

18 shall be considered final agency action for purposes 

19 of chapter 7 of title 5, United States Code. 

20 ‘‘(b) STANDARDS FOR OBTAINING PREMIER CER21 TIFIED DEVELOPMENT COMPANY STATUS.—The Admin22 istrator shall designate an accredited certified develop23 ment company as a premier certified development com24 pany if the application submitted pursuant to subsection 


tjames on DSKG8SOYB1PROD with BILLS
61 

•HR 3854 IH

1 (a) demonstrates that the accredited certified development 

2 company meets the following standards: 

3 ‘‘(1) Has been an accredited certified develop4 ment company for at least 12 months. 

5 ‘‘(2) Has submitted to the Administrator ade6 quately analyzed debenture guarantee applications. 

7 ‘‘(3) Has closed, in a proper manner following 

8 the Administrator regulations, loans under this title. 

9 ‘‘(4) Has serviced its loan portfolio in accord10 ance with the standards set by the Administrator. 

11 ‘‘(5) Has established a loan loss reserve estab12 lished in accordance with this section that the Ad13 ministrator determines is sufficient to meet its obli14 gations to protect the Federal Government from the 

15 risk of loss on each debenture guaranteed under this 

16 section. 

17 ‘‘(6) Has agreed, as part of the application and 

18 in order to protect the Federal Government against 

19 the risk of loss, to the following— 

20 ‘‘(A) on account of a debenture, the pro21 ceeds of which were used to fund a loan ap22 proved prior to the date of enactment of the 

23 Small Business Financing and Investment Act 

24 of 2009, agrees to reimburse the Administrator 

25 for 10 percent of any loss sustained by the AdVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00061 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
62 

•HR 3854 IH

1 ministrator as a result of a default by the com2 pany in the payment of principal or interest on 

3 a debenture issued by such company and guar4 anteed by the Administrator; 

5 ‘‘(B) on account of a debenture, the pro6 ceeds of which were used to fund a loan ap7 proved prior to the date of enactment of the 

8 Small Business Financing and Investment Act 

9 of 2009 and which were issued during the pe10 riod in which the company had made a selection 

11 pursuant to section 508(c)(7) of the Small 

12 Business Investment Act of 1958, as in effect 

13 on the day before such date of enactment, 

14 agrees to reimburse the Administrator for 15 

15 percent of any loss sustained by the Adminis16 trator as a result of a default by the company 

17 in the payment of principal or interest on a de18 benture issued by such company and guaran19 teed by the Administrator; or 

20 ‘‘(C) on account of a debenture, the pro21 ceeds of which are used to fund a loan approved 

22 on or after the date of enactment of the Small 

23 Business Financing and Investment Act of 

24 2009, upon closing, pay to the Administrator a 


tjames on DSKG8SOYB1PROD with BILLS
63 

•HR 3854 IH

1 one-time participation fee in the amount equal 

2 to the higher of the following: 

3 ‘‘(i) 0.25 percent of the amount of the 

4 debenture. 

5 ‘‘(ii) A percent of the amount of the 

6 debenture equal to 10 percent of the 

7 amount of the company’s historic loss rate 

8 on debentures guaranteed under this sec9 tion as determined by the Administrator. 

10 The rate specified by this clause shall be 

11 determined annually based upon the com12 pany’s loan losses as of close of business 

13 on June 30 and notice of the determina14 tion shall be provided to each company not 

15 later than August 31. Such rate shall be 

16 applicable to loans approved during the fis17 cal year commencing after the determina18 tion is made and shall expire and have no 

19 further application after the end of such 

20 fiscal year. If no timely determination has 

21 been made prior to the commencement of 

22 a fiscal year, including the year of enact23 ment of the Small Business Financing and 

24 Investment Act of 2009, one may be made 

25 after the commencement and it shall be 


tjames on DSKG8SOYB1PROD with BILLS
64 

•HR 3854 IH

1 applicable to loans approved during the 

2 balance of such fiscal year commencing 30 

3 days after notification to the development 

4 company involved. 

5 ‘‘(c) SUSPENSION OR REVOCATION OF PREMIER STA6 TUS.—The Administrator may suspend or revoke an ac7 credited certified development company’s premier status 

8 if the Administrator determines, after a hearing on the 

9 record as set forth in sections 554, 556, and 557 of title 

10 5, United States Code, that the accredited certified devel11 opment company no longer meets the eligibility criteria for 

12 premier status as established under this section or failed 

13 to adhere to the Administrator’s rules, regulations, or is 

14 violating some other provision of law. Such revocation or 

15 suspension shall have no effect on its status as an accred16 ited certified development company. 

17 ‘‘(d) LOAN LOSS RESERVE.— 

18 ‘‘(1) ASSETS.—Each loan loss reserve main19 tained by the premier certified development company 

20 for loans made pursuant to the authority in sub21 section (g)(1) shall be comprised of— 

22 ‘‘(A) segregated funds on deposit in an ac23 count or accounts with a federally insured de24 pository institution or institutions selected by 

25 the company, subject to a collateral assignment 


tjames on DSKG8SOYB1PROD with BILLS
65 

•HR 3854 IH

1 in favor of, and in a format acceptable to, the 

2 Administrator that shall amount to 10 percent 

3 of the company’s exposure as determined pursu4 ant to subsection (b)(6); 

5 ‘‘(B) irrevocable letter or letters of credit, 

6 with a collateral assignment in favor of, and a 

7 commercially reasonable format acceptable to, 

8 the Administrator; or 

9 ‘‘(C) any combination of the assets de10 scribed in subparagraphs (A) and (B). 

11 ‘‘(2) CONTRIBUTIONS.—The company shall 

12 make contributions to the loss reserve, either cash or 

13 letters of credit as provided above, in the following 

14 amounts and at the following intervals: 

15 ‘‘(A) 50 percent when a debenture is 

16 closed. 

17 ‘‘(B) 25 percent additional not later than 

18 1 year after a debenture is closed. 

19 ‘‘(C) 25 percent additional not later than 

20 2 years after a debenture is closed. 

21 ‘‘(3) REPLENISHMENT.—If a loss has been sus22 tained by the Administrator, any portion of the loss 

23 reserve, and other funds provided by the premier 

24 certified development company as necessary, may be 

25 used to reimburse the Administrator for the premier 


tjames on DSKG8SOYB1PROD with BILLS
66 

•HR 3854 IH

1 certified development company’s share of the loss as 

2 provided for in subsection (b)(6). If the premier cer3 tified development company utilizes the reserve, it 

4 shall, within 30 calendar days, replace an equivalent 

5 amount of funds. 

6 ‘‘(4) DISBURSEMENTS.— 

7 ‘‘(A) IN GENERAL.—The Administrator 

8 shall allow the premier certified development 

9 company to withdraw from the loss reserve 

10 amounts attributable to any debenture that has 

11 been repaid. 

12 ‘‘(B) REDUCTION.—The Administrator 

13 shall allow the premier certified development 

14 company to withdraw from the loss reserve such 

15 amounts as are in excess of 1 percent of the ag16 gregate outstanding balances of debentures to 

17 which such loss reserve relates. The reduction 

18 authorized by this subparagraph shall not apply 

19 with respect to any debenture before 100 per20 cent of the contribution described in paragraph 

21 (2) with respect to such debenture has been 

22 made. 

23 ‘‘(C) RULE OF CONSTRUCTION.—The pro24 vision contained in subparagraph (B) shall be 

25 read as if enacted prior to a date 2 years and 


tjames on DSKG8SOYB1PROD with BILLS
67 

•HR 3854 IH

1 90 days after the date of enactment of the 

2 Small Business Financing and Investment Act 

3 of 2009. 

4 ‘‘(e) BUREAU OF PREMIER CERTIFIED DEVELOP5 MENT COMPANY LENDER OVERSIGHT.— 

6 ‘‘(1) IN GENERAL.—There is hereby established 

7 a Bureau of Premier Certified Development Com8 pany Lender Oversight in the Office of Lender Over9 sight at the Administration which shall have respon10 sibility and capability for carrying out oversight of 

11 premier certified development companies and such 

12 other responsibilities as the Administrator des13 ignates. 

14 ‘‘(2) ANNUAL REVIEW.—The Bureau estab15 lished in paragraph (1) annually shall review the fi16 nancing made by each premier certified development 

17 company. Such review shall include the premier cer18 tified development company’s credit decisions and 

19 general compliance with the eligibility requirements 

20 for each financing approved as a result of its status 

21 as a premier certified development company. 

22 ‘‘(3) RANDOM AUDITS.—The Bureau shall de23 velop and implement a method for sampling the de24 bentures issued by premier certified development 

25 companies. Such sampling shall be similar to the 


tjames on DSKG8SOYB1PROD with BILLS
68 

•HR 3854 IH

1 random file audits of development companies that 

2 utilize the Abridged Submission Method described in 

3 chapter 4 of subpart C of Standard Operating Pro4 cedure 50 10 (5)(A) as was in effect on March 2, 

5 2009. 

6 ‘‘(4) REVIEW OF LENDERS PROVIDING SENIOR

7 FINANCING.— 

8 ‘‘(A) CALCULATION OF LOAN LOSS

9 RATE.—The Bureau shall periodically calculate 

10 the loss rate of all debentures approved under 

11 this section and shall calculate a loss rate on 

12 the basis of the total debentures attributable to 

13 projects approved by premier certified develop14 ment companies in which each lender is a par15 ticipating lender. 

16 ‘‘(B) NOTIFICATION.—If the Bureau deter17 mines that the loss rate on debentures involving 

18 an individual lender exceeds the average for all 

19 debentures approved under this section, it shall 

20 advise the Administrator. 

21 ‘‘(5) USE OF REVIEWS AND AUDITS.—The Ad22 ministrator shall consider the findings under para23 graphs (2), (3), and (4) in carrying out the respon24 sibilities under subsection (h). 

25 ‘‘(f) SALE OF CERTAIN DEFAULTED LOANS.— 


tjames on DSKG8SOYB1PROD with BILLS
69 

•HR 3854 IH

1 ‘‘(1) NOTICE.—If, upon default in repayment, 

2 the Administrator acquires a debenture issued by a 

3 premier certified development company and identi4 fies such loan for inclusion in a bulk asset sale of 

5 defaulted or repurchased loans or other financing, 

6 the Administrator shall give prior notice thereof to 

7 any premier certified development company which 

8 has a contingent liability under this section. The no9 tice shall be given to the premier certified develop10 ment company as soon as possible after the financ11 ing is identified, but not less than 90 days before 

12 the date the Administrator first makes any records 

13 on such financing available for examination by pro14 spective purchasers prior to its offering in a package 

15 of loans for bulk sale. 

16 ‘‘(2) LIMITATIONS.—The Administrator shall 

17 not offer any loan described in paragraph (1) as 

18 part of a bulk sale unless the Administrator— 

19 ‘‘(A) provides prospective purchasers with 

20 the opportunity to examine the Administration’s 

21 records with respect to such loan; and 

22 ‘‘(B) provides the notice required by para23 graph (1). 

24 ‘‘(g) LOAN APPROVAL AUTHORITY.— 


tjames on DSKG8SOYB1PROD with BILLS
70 

•HR 3854 IH

1 ‘‘(1) IN GENERAL.—A premier certified develop2 ment company may, under conditions determined by 

3 the Administrator in regulations published in the 

4 Code of Federal Regulations, issue guarantees on 

5 debentures, approve, authorize, close, service, fore6 close, litigate (except that the Administrator may 

7 monitor conduct of any such litigation), and liq8 uidate loans that are funded with proceeds of a de9 benture issued by a premier certified development 

10 company unless the Administrator advises the com11 pany that loans involving a specific institutional 

12 lender are to be submitted to the Administrator for 

13 further consideration, and approval by the Adminis14 trator. 

15 ‘‘(2) PROGRAM GOALS.—Each premier certified 

16 development company shall establish a goal of proc17 essing no less than 50 percent of the applications for 

18 assistance under this title that the premier certified 

19 development company receives. Failure to meet this 

20 goal shall have no affect on the company’s status as 

21 a premier certified development company under this 

22 section. 

23 ‘‘(3) SCOPE OF REVIEW.—The approval of a 

24 loan and guarantee of a debenture by a premier cer25 tified development company shall be subject to final 


tjames on DSKG8SOYB1PROD with BILLS
71 

•HR 3854 IH

1 approval as to the eligibility of any guarantee by the 

2 Administrator as set forth in section 506, but such 

3 final approval shall not include review of decisions 

4 by the premier certified development company in5 volving creditworthiness, loan closing, or compliance 

6 with legal requirements imposed by law or regula7 tion. 

8 ‘‘(h) SUSPENSION OR REVOCATION.—The Adminis9 trator may suspend or revoke an accredited certified devel10 opment company’s premier status if the Administrator de11 termines, after a hearing on the record as set forth in sec12 tions 554, 556, and 557 of title 5, United States Code, 

13 that the accredited certified development company no 

14 longer meets the eligibility criteria established under this 

15 section, fails to maintain adequate loan loss reserves man16 dated in this section even if it meets the other eligibility 

17 requirements for premier status, or violates the Adminis18 trator’s rules, regulations, or some other provision of law. 

19 The Administrator shall consider the review of the premier 

20 certified development company conducted pursuant to sub21 section (e) in determining whether to suspend or revoke 

22 an accredited development company’s premier status. 

23 Such suspension or revocation shall have no effect on the 

24 development company’s status as an accredited certified 

25 development company. 


tjames on DSKG8SOYB1PROD with BILLS
72 

•HR 3854 IH

1 ‘‘(i) EFFECT OF SUSPENSION OR REVOCATION.—A 

2 suspension or revocation of premier status shall not affect 

3 any outstanding debenture guarantee. 

4 ‘‘(j) RULE OF CONSTRUCTION.—Any reference to the 

5 term ‘premier certified lender’ or ‘PCL’ in legislation en6 acted, or regulations adopted, prior to the enactment of 

7 the Small Business Financing and Investment Act of 2009 

8 shall be deemed to be a reference to the term ‘premier 

9 certified development company’.’’. 

10 SEC. 215. MULTI-STATE OPERATIONS. 

11 Section 505 of the Small Business Investment Act 

12 of 1958 (15 U.S.C. 697b) is amended to read as follows: 

13 ‘‘SEC. 505. MULTI-STATE OPERATIONS. 

14 ‘‘(a) AUTHORIZATION.—The Administrator shall per15 mit an accredited or premier certified development com16 pany to make loans or issue debentures in any State that 

17 is contiguous to the State of incorporation of that com18 pany only if the company— 

19 ‘‘(1) has members, from each of the States in 

20 which it operates with not fewer than 25 members 

21 who reside in such States; 

22 ‘‘(2) has a board of directors that contains not 

23 fewer than 2 members from each State in which the 

24 company makes loans and issues debentures and are 

25 residents of that State; 


tjames on DSKG8SOYB1PROD with BILLS
73 

•HR 3854 IH

1 ‘‘(3) maintains a separate loan committee to 

2 process loans in each expansion State and the mem3 bers of the loan committee are solely residents of the 

4 expansion State; and 

5 ‘‘(4) files an application developed by the Ad6 ministrator which provides— 

7 ‘‘(A) notice of the intention to make loans 

8 in multiple States; 

9 ‘‘(B) a specification of the States in which 

10 the company intends to make loans; 

11 ‘‘(C) a list of members in each expansion 

12 State; and 

13 ‘‘(D) a detailed statement on how the com14 pany will comply with the requirements of this 

15 subsection. 

16 ‘‘(b) LOAN COMMITTEES.—The requirements of 

17 paragraph (3) of subsection (a) shall not require a devel18 opment company to establish a loan committee in its State 

19 of incorporation or in a local economic area outside the 

20 State of incorporation unless such area is part of an ex21 pansion State. 

22 ‘‘(c) REVIEW.— 

23 ‘‘(1) IN GENERAL.—The Administrator shall re24 view each application for expansion under subsection 

25 (a), but such review shall be limited to that informaVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00073 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
74 

•HR 3854 IH

1 tion needed to determine whether the company will 

2 comply with the requirements of subsection (a). 

3 ‘‘(2) DEADLINE FOR DECISION.—The Adminis4 trator shall make a decision on each application 

5 under subsection (a) within 15 calendar days after 

6 the receipt of the application. If no such decision is 

7 granted, the application is deemed to be approved 

8 and no further action is required by the applicant or 

9 the Administrator for the company to expand into 

10 the States specified in the application. 

11 ‘‘(3) APPLICATION RESUBMITTAL.—If the Ad12 ministrator rejects the application for expansion, the 

13 Administrator shall provide in writing the reasons 

14 for denial within 10 calendar days of the decision. 

15 The applicant then may resubmit the application but 

16 the review of such resubmitted applications will be 

17 limited only to the areas in which the Administrator 

18 found the original application deficient. The dead19 lines in paragraph (2) shall apply to resubmitted ap20 plications. 

21 ‘‘(4) APPEAL.—If a resubmitted application is 

22 denied, the applicant may, within 10 calendar days 

23 after receipt of the disapproval, appeal such dis24 approval. The Administrator shall conduct a hearing 

25 to determine such appeal pursuant to sections 554, 


tjames on DSKG8SOYB1PROD with BILLS
75 

•HR 3854 IH

1 556, and 557 of title 5, United States Code, and 

2 shall issue a decision not later than 45 days after 

3 the appeal is filed. The decision on appeal shall con4 stitute final agency action for purposes of chapter 7 

5 of title 5, United States Code. 

6 ‘‘(d) FAILURE TO DEVELOP APPLICATION.—If the 

7 Administrator fails to develop an application as required 

8 in subsection (a)(4) within 60 days of the enactment of 

9 the Small Business Financing and Investment Act of 

10 2009, an accredited or premier certified development com11 pany only need submit the information required in sub12 section (a) to the Administrator to be deemed eligible to 

13 commence operations authorized by this section. Such eli14 gibility shall not be terminated if the Administrator devel15 ops an application after the 60-day period set forth in this 

16 subsection. 

17 ‘‘(e) AGGREGATE ACCOUNTING.—An accredited or 

18 premier certified development company authorized to op19 erate in multiple States pursuant to this section may 

20 maintain an aggregate accounting of all revenue and ex21 penses of the company for purposes of this title. 

22 ‘‘(f) LOCAL JOB CREATION REQUIREMENTS.— 

23 ‘‘(1) IN GENERAL.—Any company making loans 

24 in multiple States as authorized in this section shall 

25 not count jobs created or retained in one State toVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00075 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
76 

•HR 3854 IH

1 wards any applicable job creation or retention re2 quirements mandated by this title in another State. 

3 ‘‘(2) APPLICABILITY.—Any company operating 

4 under the authority of this section shall be required 

5 to meet any job creation or retention requirement of 

6 this title on the date that is 2 years after the cer7 tified development company closed its first loan in 

8 its new State of operation. 

9 ‘‘(g) CONTIGUOUS STATES.—For the purposes of this 

10 section, the States of Alaska and Hawaii shall be deemed 

11 to be contiguous to any State abutting the Pacific Ocean. 

12 Territories of the United States located in the Pacific 

13 Ocean shall be deemed to be contiguous to any State abut14 ting the Pacific Ocean, including Alaska and Hawaii, and 

15 territories of the United States located in the Caribbean 

16 Sea shall be deemed contiguous to any State abutting the 

17 Gulf of Mexico. 

18 ‘‘(h) EXEMPTION FOR LOCAL ECONOMIC AREAS.— 

19 Except as provided in subsection (a)(3) with respect to 

20 loan committees, any certified, accredited, or premier de21 velopment company or applicant operating in a local eco22 nomic development area that crosses the border of another 

23 State shall not be considered to be operating under the 

24 provisions of this section and shall not be required to comVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00076 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
77 

•HR 3854 IH

1 ply with the requirements of this section for multi-State 

2 operation.’’. 

3 SEC. 216. GUARANTY OF DEBENTURES. 

4 Section 506 of the Small Business Investment Act 

5 of 1958 (15 U.S.C. 697c) is amended to read as follows: 

6 ‘‘SEC. 506. GUARANTY OF DEBENTURES. 

7 ‘‘(a) AUTHORITY TO GUARANTEE.—Except as pro8 vided in subsection (c), the Administrator may guarantee 

9 the timely payment of all principal and interest as sched10 uled on any debenture issued by a certified development 

11 company. 

12 ‘‘(b) TERMS AND CONDITIONS OF THE GUAR13 ANTEE.—Such guarantees may be made on such terms 

14 and conditions as the Administrator may by regulation, 

15 published in the Code of Federal Regulations, determine 

16 to be appropriate, except that the Administrator shall not 

17 decline to issue such guarantee when the ownership inter18 ests of the small business concern and the ownership inter19 ests of the property to be financed with the proceeds of 

20 the loan made pursuant to subsection (e)(1) are not iden21 tical because one or more of the following classes of rel22 atives have an ownership interest in either the small busi23 ness concern or the property: father, mother, son, daugh24 ter, wife, husband, brother, or sister, if the Administrator 

25 or his designee has determined on a case-by-case basis 


tjames on DSKG8SOYB1PROD with BILLS
78 

•HR 3854 IH

1 that such ownership interest, such guarantee, and the pro2 ceeds of such loan, will substantially benefit the small 

3 business concern. 

4 ‘‘(c) FULL FAITH AND CREDIT.—The full faith and 

5 credit of the United States is pledged to the payment of 

6 all amounts guaranteed under this section. 

7 ‘‘(d) SUBORDINATION.—Any debenture issued by a 

8 certified development company with respect to which a 

9 guarantee is made under this section may be subordinated 

10 by the Administrator to any other debenture, promissory 

11 note, or other debt or obligation of such company. 

12 ‘‘(e) STANDARDS FOR ADMINISTRATOR GUARAN13 TEES.—No guarantee may be made with respect to any 

14 debenture under this section unless— 

15 ‘‘(1) the debenture is issued for the purpose of 

16 making one or more loans to small business concerns 

17 the proceeds of which shall be used for the purposes 

18 set forth in section 507; 

19 ‘‘(2) the interest rate on such debentures is not 

20 less than the rate of interest determined by the Sec21 retary of the Treasury for purposes of section 

22 303(b); 

23 ‘‘(3) the aggregate amount of such debenture 

24 does not exceed the amount of the loans to be made 

25 from the proceeds of such debenture plus, at the 


tjames on DSKG8SOYB1PROD with BILLS
79 

•HR 3854 IH

1 election of the borrower, other amounts attributable 

2 to the administrative and closing costs of such loans, 

3 except for the attorney fees of the borrower; 

4 ‘‘(4) the amount of any loan to be made from 

5 such proceeds does not exceed an amount equal to 

6 50 percent of the cost of the project with respect to 

7 which such loan is made; 

8 ‘‘(5) the Administrator, except to the extent 

9 provided in section 504 with respect to premier cer10 tified development companies, approves each loan to 

11 be made from such proceeds; and 

12 ‘‘(6) with respect to each loan made from the 

13 proceeds of such debenture, the Administrator— 

14 ‘‘(A) assesses and collects a fee, which 

15 shall be payable by the borrower, in an amount 

16 established annually by the Administration, 

17 which amount shall not exceed— 

18 ‘‘(i) the lesser of— 

19 ‘‘(I) 0.9375 percent per year of 

20 the outstanding balance of the loan; 

21 or 

22 ‘‘(II) the minimum amount nec23 essary to reduce the cost (as defined 

24 in section 502 of the Federal Credit 

25 Reform Act of 1990) to the AdminisVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00079 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
80 

•HR 3854 IH

1 trator of purchasing and guaranteeing 

2 debentures under this title to zero; 

3 and 

4 ‘‘(ii) 50 percent of the amount estab5 lished under clause (i) in the case of a loan 

6 made during the 2-year period beginning 

7 on October 1, 2002, for the life of the 

8 loan; and 

9 ‘‘(B) uses the proceeds of such fee to offset 

10 the cost (as such term is defined in section 502 

11 of the Federal Credit Reform Act of 1990) to 

12 the Administrator of making guarantees under 

13 this section. 

14 ‘‘(f) INTEREST RATES ON COMMERCIAL LOANS.— 

15 Notwithstanding the provisions of the constitution or laws 

16 of any State limiting the rate or amount of interest which 

17 may be charged, taken, received, or reserved, the max18 imum legal rate of interest on any commercial loan which 

19 funds any portion of the cost of the project financed pur20 suant to this title which is not funded by a debenture 

21 guaranteed under this section shall be a rate which is es22 tablished by the Administrator who shall publish such rate 

23 quarterly in, at a minimum, the Federal Register and on 

24 the Administration’s website. 


tjames on DSKG8SOYB1PROD with BILLS
81 

•HR 3854 IH

1 ‘‘(g) DEBENTURE REPAYMENT.—Any debenture that 

2 is issued under this section shall provide for the payment 

3 of principal and interest on a semiannual basis. 

4 ‘‘(h) CHARGES FOR ADMINISTRATOR’S EXPENSES.— 

5 The Administrator may impose an additional charge for 

6 administrative expenses with respect to each debenture for 

7 which payment of principal and interest is guaranteed 

8 under this section. Such administrative expenses may in9 clude— 

10 ‘‘(1) development company fees for processing, 

11 closing, servicing, late payment, or loan assumption; 

12 ‘‘(2) agent or trustee fees for central servicing, 

13 underwriters, or debenture funding; and 

14 ‘‘(3) fees charged by the Administrator for the 

15 debenture guaranty and from the certified develop16 ment company to reduce the subsidy cost. 

17 ‘‘(i) PARTICIPATION FEE.—The Administrator shall 

18 collect a one-time fee in an amount equal to 50 basis 

19 points on the total participation in any project of any 

20 State or local government, bank, other financial institu21 tion, or foundation or not-for-profit institution. Such fee 

22 shall be imposed only when the participation of the entity 

23 described in the previous sentence will occupy a senior 

24 credit position to that of the development company. All 

25 proceeds of the fee shall be used to offset the cost (as 


tjames on DSKG8SOYB1PROD with BILLS
82 

•HR 3854 IH

1 that term is defined in section 502 of the Credit Reform 

2 Act of 1990) to the Administrator of making guarantees 

3 under this section. 

4 ‘‘(j) CERTIFIED DEVELOPMENT COMPANY FEE.— 

5 The Administrator shall collect annually from each devel6 opment company a fee of 0.125 percent of the outstanding 

7 principal balance of any guaranteed debenture authorized 

8 by the Administrator after September 30, 1996. Such fee 

9 shall be derived from the servicing fees collected by the 

10 certified development company pursuant to regulation, 

11 and shall not be derived from any additional fees imposed 

12 on small business concerns. All proceeds of the fee shall 

13 be used to offset the cost (as that term is defined in sec14 tion 502 of the Credit Reform Act of 1990) to the Admin15 istrator of making guarantees under this section. 

16 ‘‘(k) EFFECTIVE DATE.—The fees authorized by this 

17 section shall apply to any financing approved under this 

18 title on or after October 1, 1996. 

19 ‘‘(l) CALCULATION OF SUBSIDY RATE.—All fees, in20 terest, and profits received and retained by the Adminis21 trator under this section shall be included in the calcula22 tions made by the Director of the Office of Management 

23 and Budget to offset the cost (as that term is defined in 

24 section 502 of the Federal Credit Reform Act of 1990) 


tjames on DSKG8SOYB1PROD with BILLS
83 

•HR 3854 IH

1 to the Administrator of purchasing and guaranteeing de2 bentures under this title. 

3 ‘‘(m) ACTIONS UPON DEFAULT.— 

4 ‘‘(1) INITIAL ACTIONS.—Not later than the 

5 45th day after the date on which a payment on a 

6 loan funded through a debenture guaranteed under 

7 this section is due and not received, the Adminis8 trator shall— 

9 ‘‘(A) take all necessary steps to bring such 

10 loan current; or 

11 ‘‘(B) implement a formal written deferral 

12 agreement. 

13 ‘‘(2) PURCHASE OR ACCELERATION OF DEBEN14 TURE.—Not later than the 65th day after the date 

15 on which a payment on a loan described in para16 graph (1) is due and not received, and absent a for17 mal written deferral agreement, the Administrator 

18 shall take all necessary steps to purchase or accel19 erate the debenture. 

20 ‘‘(3) PREPAYMENT PENALTIES.—With respect 

21 to the portion of any project derived from funds not 

22 provided by a debenture issued by a certified devel23 opment company or borrower, the Administrator— 


tjames on DSKG8SOYB1PROD with BILLS
84 

•HR 3854 IH

1 ‘‘(A) shall negotiate the elimination of any 

2 prepayment penalties or late fees on defaulted 

3 loans made prior to September 30, 1996; 

4 ‘‘(B) shall not pay any prepayment penalty 

5 or late fee on the default based purchase of 

6 loans issued after September 30, 1996; and 

7 ‘‘(C) shall not pay a default interest rate 

8 higher than the interest rate on the note prior 

9 to the date of default for any project financed 

10 after September 30, 1996. 

11 ‘‘(4) COLLECTION AND SERVICING.— 

12 ‘‘(A) IN GENERAL.—In the event of the de13 fault of any loan and the repurchase of a de14 benture guaranteed by the Administrator under 

15 this title, the Administrator shall continue to 

16 delegate to the central servicing agent that was 

17 contracted for that service as of January 1, 

18 2009, or successor contractor the authority to 

19 collect and disburse all funds or payments re20 ceived on such defaulted loans, including pay21 ments from guarantors or on notes in com22 promise of the original note. The central serv23 icing agent shall continue to provide an ac24 counting of income and expenses for any such 

25 loan on the same basis it does for any other 


tjames on DSKG8SOYB1PROD with BILLS
85 

•HR 3854 IH

1 loan issued under this title. The central serv2 icing agent shall make the accounting of income 

3 and expenses and reports thereon available as 

4 requested by the certified development company 

5 that issued the debenture or the Administrator. 

6 ‘‘(B) EFFECTIVE DATE.—The require7 ments of subparagraph (A) shall become effec8 tive 180 days after the date of enactment of the 

9 Small Business Financing and Investment Act 

10 of 2009.’’. 

11 SEC. 217. ECONOMIC DEVELOPMENT THROUGH DEBEN12 TURES. 

13 Section 507 of the Small Business Investment Act 

14 of 1958 (15 U.S.C. 697d) is amended to read as follows: 

15 ‘‘SEC. 507 ECONOMIC DEVELOPMENT AND DEBENTURES. 

16 ‘‘(a) IN GENERAL.—A certified development company 

17 shall be prohibited from issuing a debenture under this 

18 title unless the project funded with the debenture meets 

19 one of the following economic development objectives: 

20 ‘‘(1) The creation of job opportunities within 

21 two years of the completion of the project or the 

22 preservation or retention of jobs attributable to the 

23 project. 

24 ‘‘(2) Improving the economy of the locality, 

25 such as stimulating other business development in 


tjames on DSKG8SOYB1PROD with BILLS
86 

•HR 3854 IH

1 the community, bringing new income into the area, 

2 or assisting the community in diversifying and stabi3 lizing its economy. 

4 ‘‘(3) The achievement of one or more of the fol5 lowing public policy goals: 

6 ‘‘(A) Business district revitalization or ex7 pansion of businesses in low-income commu8 nities which would be eligible for a new markets 

9 tax credit under section 45D(a) of the Internal 

10 Revenue Code of 1986, or implementing regula11 tions issued under that section. 

12 ‘‘(B) Expansion of exports. 

13 ‘‘(C) Expansion of minority business devel14 opment or women-owned business development. 

15 ‘‘(D) Rural development. 

16 ‘‘(E) Expansion of small business concerns 

17 owned and controlled by veterans, as defined in 

18 section 3(q) of the Small Business Act (15 

19 U.S.C. 632(q)), especially service-disabled vet20 erans, as defined in such section. 

21 ‘‘(F) Enhanced economic competition, in22 cluding the advancement of technology, plan re23 tooling, conversion to robotics, or competition 

24 with imports. 


tjames on DSKG8SOYB1PROD with BILLS
87 

•HR 3854 IH

1 ‘‘(G) Changes necessitated by Federal 

2 budget cutbacks, including defense related in3 dustries. 

4 ‘‘(H) Business restructuring arising from 

5 federally mandated standards or policies affect6 ing the environment or the safety and health of 

7 employees. 

8 ‘‘(I) Reduction of energy consumption by 

9 at least 10 percent. 

10 ‘‘(J) Increased use of sustainable design, 

11 including designs that reduce the use of green12 house gas emitting fossil fuels, or low-impact 

13 design to produce buildings that reduce the use 

14 of nonrenewable resources and minimize envi15 ronmental impact. 

16 ‘‘(K) Plant, equipment, and process up17 grades of renewable energy sources such as the 

18 small-scale production of energy for individual 

19 buildings or communities consumption, com20 monly known as micropower, or renewable fuels 

21 producers including biodiesel and ethanol pro22 ducers. 

23 ‘‘(4) Debt refinancing to the extent permitted 

24 by subsection (d). 


tjames on DSKG8SOYB1PROD with BILLS
88 

•HR 3854 IH

1 ‘‘(b) JOB CREATION AND RETENTION REQUIRE2 MENTS.— 

3 ‘‘(1) IN GENERAL.—A project meets the job 

4 creation or retention objective set forth in subsection 

5 (a)(1) if the project creates or retains one job for 

6 every $65,000 guaranteed by the Administrator, ex7 cept that the amount shall be $100,000 in the case 

8 of a project of a small manufacturer. 

9 ‘‘(2) EXCEPTIONS.— 

10 ‘‘(A) Paragraph (1) shall not apply to a 

11 project for which eligibility is based on the ob12 jectives set forth in subsection (a)(2) or (a)(3) 

13 if the certified development company’s portfolio 

14 of outstanding debentures creates or retains one 

15 job for every $65,000 guaranteed by the Ad16 ministrator. 

17 ‘‘(B) For projects in Alaska, Hawaii, 

18 State-designated enterprise zones, empower19 ment zones, enterprise communities, or labor 

20 surplus areas designated by the Administrator, 

21 the certified development company’s portfolio 

22 may average not more than $75,000 per job 

23 created or retained. 


tjames on DSKG8SOYB1PROD with BILLS
89 

•HR 3854 IH

1 ‘‘(C) Loans for projects of small manufac2 turers shall be excluded from the calculations in 

3 subparagraphs (A) and (B). 

4 ‘‘(c) COMBINATION OF CERTAIN GOALS.—A small 

5 business concern that is unconditionally owned by more 

6 than 1 individual, or a corporation, the stock of which is 

7 owned by more than 1 individual, shall be deemed to have 

8 achieved a goal under subsection (a)(3) if a combined own9 ership share of not less than 51 percent is held by individ10 uals who are in 1 of, or a combination of, the groups de11 scribed in subparagraphs (C) or (E) of subsection (a)(1). 

12 ‘‘(d) COMPOSITION OF THE PROJECT.— 

13 ‘‘(1) IN GENERAL.—The projects described in 

14 this section shall include, but not be limited to, plant 

15 acquisition, construction, conversion, expansion (in16 cluding the acquisition of land), equipment and re17 lated project costs, or to acquire the stock of a cor18 poration (as long as the value of the loan for the ac19 quisition of the stock does not exceed the fixed asset 

20 value attributable to such assets as would be eligible 

21 for financing under subsection (a)). 

22 ‘‘(2) DEBT REFINANCING.—Any financing ap23 proved under this title may include a limited amount 

24 of debt refinancing if the project involves the expan25 sion of a small business concern. 


tjames on DSKG8SOYB1PROD with BILLS
90 

•HR 3854 IH

1 ‘‘(3) LIMITATION.—The amount of the existing 

2 indebtedness may be refinanced and added to the ex3 pansion cost if— 

4 ‘‘(A) the existing indebtedness does not ex5 ceed 50 percent of the project cost of the ex6 pansion; 

7 ‘‘(B) the proceeds of the indebtedness were 

8 used to acquire land, including a building situ9 ated thereon, to construct a building thereon, or 

10 to purchase equipment; 

11 ‘‘(C) the existing indebtedness is 

12 collateralized by fixed assets; 

13 ‘‘(D) the existing indebtedness was in14 curred for the benefit of the small business con15 cern; 

16 ‘‘(E) the financing under this title will be 

17 used only for refinancing existing indebtedness 

18 or costs relating to the project financed under 

19 this title; 

20 ‘‘(F) the financing under this title will pro21 vide a substantial benefit to the borrower when 

22 prepayment penalties, financing fees, and other 

23 financing costs are accounted for; 

24 ‘‘(G) the borrower has been current on all 

25 payments due on the existing debt for not less 


tjames on DSKG8SOYB1PROD with BILLS
91 

•HR 3854 IH

1 than 1 year preceding the date of refinancing; 

2 and 

3 ‘‘(H) the financing under this title will 

4 provide better terms or rate of interest than the 

5 existing indebtedness at the time of refinancing. 

6 ‘‘(e) DEFINITION.—For purposes of subparagraphs 

7 (J) and (K) of subsection (a)(3), the terms included have 

8 the meanings given those terms under the Leadership in 

9 Energy and Environmental Design (more generally re10 ferred to as LEED) standard for green building certifi11 cation, as determined by the Administrator through regu12 lation to be published in the Code of Federal Regula13 tions.’’. 

14 SEC. 218. PROJECT FUNDING REQUIREMENTS. 

15 Section 508 of the Small Business Investment Act 

16 of 1958 (15 U.S.C. 697e) is amended to read as follows: 

17 ‘‘SEC. 508. PROJECT FUNDING REQUIREMENTS. 

18 ‘‘(a) IN GENERAL.—Any project described in section 

19 507 must meet the funding standards set forth in this sec20 tion. 

21 ‘‘(b) SIZE OF DEBENTURE.—The Administrator shall 

22 only be permitted to guarantee debenture issued by a cer23 tified development company up to the following amounts: 

24 ‘‘(1) $3,000,000 for any project of a small busi25 ness concern. 


tjames on DSKG8SOYB1PROD with BILLS
92 

•HR 3854 IH

1 ‘‘(2) $4,000,000 for any project that meets the 

2 public policy goals set forth in section 507(a)(3). 

3 ‘‘(3) $4,000,000 for any project to be located in 

4 a low-income community as that term is described in 

5 section 507(a)(3)(A). 

6 ‘‘(4) $8,000,000 for each project of a small 

7 manufacturer. 

8 ‘‘(5) $8,000,000 for each project that reduces 

9 the borrower’s energy consumption by at least 10 

10 percent. 

11 ‘‘(6) $8,000,000 for each project that generates 

12 renewable energy or renewable fuels, such as, but 

13 not limited to, biodiesel or ethanol production. 

14 ‘‘(7) $10,000,000 for each project for a small 

15 business concern that constitutes a major source of 

16 employment as that term is used in section 

17 7(b)(3)(E) of the Small Business Act (15 U.S.C. 

18 636(b)(3)(E)). 

19 ‘‘(c) FUNDING FROM SOURCES OTHER THAN DE20 BENTURES ISSUED BY CERTIFIED DEVELOPMENT COM21 PANIES.— 

22 ‘‘(1) IN GENERAL.—Any project financed pur23 suant to this title must have the following contribu24 tions from parties other than the debenture issued 

25 by the certified development company: 


tjames on DSKG8SOYB1PROD with BILLS
93 

•HR 3854 IH

1 ‘‘(A) FUNDING FROM INSTITUTIONS.— 

2 ‘‘(i) If a small business concern pro3 vides— 

4 ‘‘(I) the minimum contribution 

5 required by subparagraph (B), not 

6 less than 50 percent of the total cost 

7 of any project financed shall come 

8 from State or local governments, 

9 banks or other financial institutions, 

10 or foundations or other not-for-profit 

11 institutions; and 

12 ‘‘(II) more than the minimum 

13 contribution required under subpara14 graph (B), any excess contribution 

15 may be used to reduce the amount re16 quired from institutions described in 

17 subclause (I), except that the amount 

18 provided by such institution may not 

19 be reduced to an amount that is less 

20 than the amount of the loan made by 

21 the Administrator. 

22 ‘‘(B) FUNDING FROM SMALL BUSINESS

23 CONCERNS.—The small business concern (or its 

24 owners, stockholders, or affiliates) that will 


tjames on DSKG8SOYB1PROD with BILLS
94 

•HR 3854 IH

1 have a project financed pursuant to this title 

2 shall provide— 

3 ‘‘(i) at least 15 percent of the total 

4 cost of the project financed if the small 

5 business concern has been in operation for 

6 a period of 2 years or less; 

7 ‘‘(ii) at least 15 percent of the total 

8 cost of the project financed if the project 

9 involves construction of a limited or single 

10 purposed building or structure; 

11 ‘‘(iii) at least 20 percent of the total 

12 cost of the project financed if the project 

13 involves both of the conditions in clauses 

14 (i) and (ii); or 

15 ‘‘(iv) at least 10 percent of the total 

16 cost of the project financed and not cov17 ered by clauses (i), (ii), or (iii), at the dis18 cretion of the certified development com19 pany. 

20 ‘‘(2) SELLER FINANCING.—Seller-provided fi21 nancing may be used to meet the requirements of 

22 paragraph (1)(B), if the seller subordinates the in23 terest of the seller in the property to the debenture 

24 guaranteed by the Administrator. 

25 ‘‘(3) COLLATERALIZATION.— 


tjames on DSKG8SOYB1PROD with BILLS
95 

•HR 3854 IH

1 ‘‘(A) IN GENERAL.—The collateral pro2 vided by the small business concern shall gen3 erally include a subordinate lien position on the 

4 property being financed under this title, and is 

5 only one of the factors to be evaluated in the 

6 credit determination. Additional collateral shall 

7 be required only if the Administrator deter8 mines, on a case-by-case basis, that additional 

9 security is necessary to protect the interest of 

10 the Government. 

11 ‘‘(B) APPRAISALS.—With respect to com12 mercial real property provided by the small 

13 business concern as collateral, an appraisal of 

14 the property by a State licensed or certified ap15 praiser— 

16 ‘‘(i) shall be required by the Adminis17 trator before disbursement of the loan if 

18 the estimated value of that property is 

19 more than $400,000; or 

20 ‘‘(ii) may be required by the Adminis21 trator or the lender before disbursement of 

22 the loan if the estimated value of that 

23 property is $400,000 or less, and such ap24 praisal is necessary for appropriate evalua25 tion of creditworthiness. 


tjames on DSKG8SOYB1PROD with BILLS
96 

•HR 3854 IH

1 ‘‘(C) ADJUSTMENT.—The Administrator 

2 shall periodically adjust the amount under sub3 paragraph (B) to account for the effects of in4 flation, provided that no such adjustment shall 

5 be less than $50,000. 

6 ‘‘(4) LIMITATION ON LEASING.— 

7 ‘‘(A) If the project funded under this sec8 tion includes the acquisition of a facility or the 

9 construction of a new facility, the small busi10 ness concern— 

11 ‘‘(i) shall permanently occupy and use 

12 not less than 50 percent of the project 

13 property; and 

14 ‘‘(ii) may, on a temporary or perma15 nent basis, lease to others not more than 

16 50 percent of the project property. 

17 ‘‘(B) For purposes of this paragraph, the 

18 term ‘project property’ means— 

19 ‘‘(i) the building and any exterior 

20 areas used in connection with the building 

21 or a part thereof and includes all of the 

22 parcels of real property included in the 

23 project in the aggregate; and 

24 ‘‘(ii) occupancy and use of the project 

25 property by the operating company shall be 


tjames on DSKG8SOYB1PROD with BILLS
97 

•HR 3854 IH

1 deemed to be occupancy and use by the 

2 small business concern that received fund3 ing under this section. 

4 ‘‘(d) REGULATIONS.—(1) The Administrator shall 

5 promulgate regulations, after notice and comment, to im6 plement the provisions of this section within 60 days after 

7 enactment of the Small Business Financing and Invest8 ment Act of 2009. The Administrator may limit the com9 ment period to 15 days to meet this deadline. 

10 ‘‘(2) If the Administrator fails to promulgate the reg11 ulations as provided in paragraph (1), all leases entered 

12 into, absent clear and convincing evidence of fraud, shall 

13 be deemed to be in compliance with the limitations on leas14 ing in this subparagraph for purposes of honoring the 

15 guarantee on the debenture issued by the certified develop16 ment company. 

17 ‘‘(3) Any regulation of the Administrator or interpre18 tation of any regulation by the Administrator or the Office 

19 of Hearings and Appeals that restricts the use of proceeds 

20 for leased projects that was in effect on the date of enact21 ment of the Small Business Financing and Investment Act 

22 of 2009 shall hereby cease to apply. 

23 ‘‘(4) Any interpretation of the leasing provisions 

24 issued by the Administrator prior to the issuance of regu25 lations required by paragraph (1) shall be considered null 


tjames on DSKG8SOYB1PROD with BILLS
98 

•HR 3854 IH

1 and void and may be not be used in any court of com2 petent jurisdiction, be it Federal or State court, to dis3 honor any guarantee of a debenture issued by a certified 

4 development company for a project funded pursuant to 

5 this section. 

6 ‘‘(e) OWNERSHIP CALCULATION.—Ownership re7 quirements to determine the eligibility of a small business 

8 concern that applies for funding under this title shall be 

9 determined without regard to any ownership interest of 

10 a spouse arising solely from the application of the commu11 nity property laws of a State for purposes of determining 

12 marital interests. 

13 ‘‘(f) COMBINATION FINANCING.—Financing under 

14 this title may be provided to a borrower in the maximum 

15 amount provided in this section, and a loan guarantee 

16 under section 7(a) of the Small Business Act (15 U.S.C. 

17 636(a)) may be provided to the same borrower in the max18 imum amount provided in section 7(a)(3)(A) of such Act, 

19 to the extent that the borrower otherwise qualifies for such 

20 assistance. 

21 ‘‘(g) RULES FOR DEBENTURES FUNDING PROJECTS

22 IN LOW-INCOME AREAS.— 

23 ‘‘(1) SIZE STANDARDS.—For purposes of deter24 mining the size of a small business concern seeking 

25 funds for a project described in subsection (b)(3), 


tjames on DSKG8SOYB1PROD with BILLS
99 

•HR 3854 IH

1 the size standard promulgated by the Administrator 

2 in section 121.201 of title 13, Code of Federal Reg3 ulations, as in effect on January, 1, 2009, or any 

4 successor regulation, shall be increased by 25 per5 cent. 

6 ‘‘(2) PERSONAL LIQUIDITY.— 

7 ‘‘(A) IN GENERAL.—The amount of per8 sonal resources of an owner for a project de9 scribed in subsection (b)(3) that are excluded 

10 from the amount required to reduce the portion 

11 of the project funded by the Administrator shall 

12 be not less than 25 percent more than that re13 quired for funding of any other project de14 scribed in subsection (b). 

15 ‘‘(B) DEFINITION.—For purposes of sub16 paragraph (A), the term ‘owner’ means any 

17 person that owns not less than 20 percent of 

18 the equity or has not less than 20 percent of 

19 the voting rights (in the case of a small busi20 ness organized as a partnership) of a small 

21 business concern seeking funds under this sec22 tion. 

23 ‘‘(h) APPLICABILITY OF CREDIT ELSEWHERE AND

24 PERSONAL RESOURCES REGULATIONS.—Except as pro25 vided in subsection (c)(1)(B) with respect to project fundVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00099 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
100 

•HR 3854 IH

1 ing, the Administrator shall be prohibited from applying 

2 the regulations set forth in sections 120.101 and 120.102 

3 of title 13, Code of Federal Regulations, as in effect on 

4 January 1, 2009, or any successor regulation that applies 

5 a credit elsewhere or personal resources test to any appli6 cation for a loan under this title pending or filed after 

7 the date of enactment of the Small Business Financing 

8 and Investment Act of 2009.’’. 

9 SEC. 219. PRIVATE DEBENTURE SALES AND POOLING OF 

10 DEBENTURES. 

11 Section 509 of the Small Business Investment Act 

12 of 1958 (15 U.S.C. 697f) is amended to read as follows: 

13 ‘‘SEC. 509. PRIVATE DEBENTURE SALES AND POOLING OF 

14 DEBENTURES. 

15 ‘‘(a) PRIVATE DEBENTURE SALES.—Notwith16 standing any other law, rule, or regulation, the Adminis17 trator shall sell to investors, either publicly or by private 

18 placement, debentures issued by certified development 

19 companies pursuant to this title for the full amount of the 

20 program levels authorized in each fiscal year and if there 

21 is not authorization of a level, the amount of debentures 

22 actually issued. 

23 ‘‘(b) FEDERAL FINANCING BANK.—Nothing in any 

24 provision of law shall be construed to authorize the Fed25 eral Financing Bank to acquire— 


tjames on DSKG8SOYB1PROD with BILLS
101 

•HR 3854 IH

1 ‘‘(1) any obligation the payment of principal or 

2 interest on which at any time has been guaranteed 

3 in whole or in part under this title and which is 

4 being sold pursuant to the provisions of this section; 

5 ‘‘(2) any obligation which is an interest in any 

6 obligation which is an interest in any obligation de7 scribed in paragraph (1); or 

8 ‘‘(3) any obligation which is secured by, or sub9 stantially all of the value of which is attributable to, 

10 any obligation described in paragraph (1) or (2). 

11 ‘‘(c) POOLING OF DEBENTURES.— 

12 ‘‘(1) IN GENERAL.—The Administrator is au13 thorized to issue trust certificates representing own14 ership of all or a fractional part of debentures issued 

15 by certified development companies and guaranteed 

16 under this title if such trust certificates are based on 

17 and backed by a trust or pool approved by the Ad18 ministrator and composed solely of guaranteed de19 bentures. 

20 ‘‘(2) GUARANTEE OF TRUST CERTIFICATES.— 

21 The Administrator is authorized, upon such terms 

22 and conditions as are deemed appropriate, to guar23 antee the timely payment of the principal of and in24 terest on trust certificates issued by the Adminis25 trator or its agent for purposes of this section. Such 


tjames on DSKG8SOYB1PROD with BILLS
102 

•HR 3854 IH

1 guarantee shall be limited to the extent of principal 

2 and interest on the guaranteed debentures which 

3 compose the trust or pool. In the event that a deben4 ture in such trust or pool is prepaid, either volun5 tarily or in the event of default, the guarantee of 

6 timely payment of principal and interest on the trust 

7 certificates shall be reduced in proportion to the 

8 amount of principal and interest such prepaid deben9 ture represents in the trust or pool. Interest on pre10 paid or defaulted debentures shall accrue and be 

11 guaranteed by the Administrator only through the 

12 date of payment on the guarantee. During the term 

13 of the trust certificate, it may be called for redemp14 tion due to prepayment or default of all debentures 

15 constituting the pool. 

16 ‘‘(3) FULL FAITH AND CREDIT.—The full faith 

17 and credit of the United States is pledged to the 

18 payment of all amounts which may be required to be 

19 paid under any guarantee of such trust certificates 

20 issued by the Administrator or its agent pursuant to 

21 this section. 

22 ‘‘(4) PROHIBITION ON GUARANTEE FEE FOR

23 POOLS.—The Administrator shall not collect any fee 

24 for any guarantee under this section, provided that 

25 nothing herein shall preclude any agent of the AdVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00102 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
103 

•HR 3854 IH

1 ministrator from collecting a fee approved by the 

2 Administrator for the functions performed in para3 graph (6)(F). 

4 ‘‘(5) SUBROGATION.— 

5 ‘‘(A) IN GENERAL.—In the event the Ad6 ministrator pays a claim under a guarantee 

7 issued under this section, it shall be subrogated 

8 fully to the rights satisfied by such payment. 

9 ‘‘(B) ADMINISTRATOR EXERCISE OF

10 RIGHTS.—No Federal, State, or local law shall 

11 preclude or limit the exercise by the Adminis12 trator of its ownership rights in the debentures 

13 constituting the trust or pool against which the 

14 trust certificates are issued. 

15 ‘‘(6) CENTRAL REGISTRATION.— 

16 ‘‘(A) IN GENERAL.—The Administrator 

17 shall provide for a central registration of all 

18 trust certificates sold pursuant to this section. 

19 ‘‘(B) CONTRACT.—The Administrator shall 

20 contract with an agent to carry out on behalf 

21 of the Administrator the central registration 

22 functions of this section and the issuance of 

23 trust certificates to facilitate pooling. 

24 ‘‘(C) BOND.—The Administrator shall re25 quire the contractor to provide a fidelity bond 


tjames on DSKG8SOYB1PROD with BILLS
104 

•HR 3854 IH

1 or insurance in such amounts as is deemed nec2 essary to fully protect the interests of the Gov3 ernment. 

4 ‘‘(D) DISCLOSURE REQUIREMENTS.—The 

5 Administrator shall, prior to any sale, require 

6 the seller to disclose to a purchaser of a trust 

7 certificate issued pursuant to this section, infor8 mation on terms, conditions, and yield of such 

9 instruments. 

10 ‘‘(E) AUTHORITY TO REGULATE.—The Ad11 ministrator shall have the authority to regulate 

12 brokers and dealers in trust certificates sold 

13 pursuant to this section. 

14 ‘‘(F) BOOK ENTRY PERMITTED.—Nothing 

15 in this paragraph shall prohibit the utilization 

16 of a book-entry or other electronic form of reg17 istration for trust certificates.’’. 

18 SEC. 220. FORECLOSURE AND LIQUIDATION OF LOANS. 

19 Section 510 of the Small Business Investment Act 

20 of 1958 (15 U.S.C. 697g) is amended to read as follows: 

21 ‘‘SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS. 

22 ‘‘(a) DELEGATION OF AUTHORITY.—In accordance 

23 with this section, the Administrator shall delegate to any 

24 certified development company that meets the eligibility 

25 requirements of subsection (b)(1), the authority to foreVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00104 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
105 

•HR 3854 IH

1 close and liquidate, or to otherwise treat in accordance 

2 with this section, defaulted loans in its portfolio that are 

3 funded with the proceeds of debentures guaranteed by the 

4 Administrator pursuant to this title. 

5 ‘‘(b) ELIGIBILITY FOR DELEGATION.— 

6 ‘‘(1) REQUIREMENTS.—A certified development 

7 company shall be eligible for a delegation of author8 ity under subsection (a) if— 

9 ‘‘(A) the certified development company— 

10 ‘‘(i) has participated in the loan liq11 uidation pilot program established by the 

12 Small Business Programs Improvement 

13 Act of 1996 (15 U.S.C. 695 note), before 

14 the enactment of the Small Business Fi15 nancing and Investment Act of 2009; 

16 ‘‘(ii) is an accredited or premier cer17 tified development company; or 

18 ‘‘(iii) during the 3 fiscal years imme19 diately prior to seeking such a delegation, 

20 has made an average of not less than 10 

21 loans per year that are funded with the 

22 proceeds of debentures guaranteed under 

23 this title; and 

24 ‘‘(B) the certified development company— 

25 ‘‘(i) has one or more employees— 


tjames on DSKG8SOYB1PROD with BILLS
106 

•HR 3854 IH

1 ‘‘(I) with not less than 2 years of 

2 substantive, decisionmaking experi3 ence in administering the liquidation 

4 and workout of problem loans secured 

5 in a manner substantially similar to 

6 loans funded with the proceeds of de7 bentures guaranteed under this title; 

8 and 

9 ‘‘(II) who have completed a train10 ing program on loan liquidation devel11 oped by the Administrator in conjunc12 tion with a certified development com13 pany that meet the requirements of 

14 this paragraph; or 

15 ‘‘(ii) submits to the Administrator 

16 documentation demonstrating that the 

17 company has contracted with a qualified 

18 third party to perform any liquidation ac19 tivities and secures the approval of the 

20 contract by the Administrator with respect 

21 to the qualifications of the contractor and 

22 the terms and conditions of liquidation ac23 tivities. 

24 ‘‘(2) CONFIRMATION.—On the request, the Ad25 ministrator shall examine the qualifications of any 


tjames on DSKG8SOYB1PROD with BILLS
107 

•HR 3854 IH

1 certified development company described in sub2 section (a) to determine if such company is eligible 

3 for the delegation of authority under this section. If 

4 the Administrator determines that a company is not 

5 eligible, the Administrator shall provide the com6 pany, in writing, with the reasons for such ineligi7 bility. The certified development company shall be 

8 entitled to request delegated authority and the Ad9 ministrator shall review the request only to address 

10 whether the certified development company has rec11 tified the reasons for the Administrator’s original 

12 determination of ineligibility. 

13 ‘‘(c) SCOPE OF DELEGATED AUTHORITY.— 

14 ‘‘(1) IN GENERAL.—Each certified development 

15 company to which the Administrator delegates au16 thority under subsection (a) may with respect to any 

17 loan described in subsection (a)— 

18 ‘‘(A) perform all liquidation and fore19 closure functions, including the purchase in ac20 cordance with this subsection of any other in21 debtedness secured by the property securing the 

22 loan, in a reasonable and sound manner accord23 ing to commercially accepted practices, pursu24 ant to a liquidation plan approved in advance 

25 by the Administrator under paragraph (2)(A); 


tjames on DSKG8SOYB1PROD with BILLS
108 

•HR 3854 IH

1 ‘‘(B) litigate any matter relating to the 

2 performance of the functions described in sub3 paragraph (A), except that the Administrator 

4 may— 

5 ‘‘(i) defend or bring any claim if— 

6 ‘‘(I) the outcome of the litigation 

7 may adversely affect the Administra8 tor’s management of the program es9 tablished under this title; or 

10 ‘‘(II) the Administrator is enti11 tled to legal remedies not available to 

12 a certified development company and 

13 such remedies will benefit either the 

14 Administrator or the certified develop15 ment company; and 

16 ‘‘(ii) oversee the conduct of any such 

17 litigation; and 

18 ‘‘(C) take other appropriate actions to 

19 mitigate loan losses in lieu of total liquidation 

20 or foreclosures, including the restructuring of a 

21 loan in accordance with prudent loan servicing 

22 practices and pursuant to a workout plan ap23 proved in advance by the Administrator under 

24 paragraph (2). 

25 ‘‘(2) ADMINISTRATOR APPROVAL OF PLANS.— 


tjames on DSKG8SOYB1PROD with BILLS
109 

•HR 3854 IH

1 ‘‘(A) CERTIFIED DEVELOPMENT COMPANY

2 SUBMISSION OF PLANS.—Before carrying out 

3 functions described in paragraph (1)(A) or 

4 (1)(C), the certified development company shall 

5 submit to the Administrator a proposed liquida6 tion plan, any proposal for the Administrator to 

7 the purchase of any other indebtedness secured 

8 by the property securing a defaulted loan, or a 

9 workout plan or any combination thereof. 

10 ‘‘(B) ADMINISTRATOR APPROVAL PROCE11 DURES.— 

12 ‘‘(i) TIMING.—Not later than 15 busi13 ness days after the plans described in sub14 paragraph (A) are received by the Admin15 istrator, the Administrator shall approve or 

16 reject the plan. 

17 ‘‘(ii) NOTICE OF NO DECISION.—With 

18 respect to any plan that cannot be ap19 proved or denied within the 15-day period 

20 required by clause (i), the Administrator 

21 shall within such period provide in accord22 ance with subparagraph (E) notice to the 

23 company that submitted the plan. 

24 ‘‘(C) ROUTINE ACTIONS.—In carrying out 

25 the functions described in paragraph (1)(A), a 


tjames on DSKG8SOYB1PROD with BILLS
110 

•HR 3854 IH

1 certified development company may undertake 

2 routine actions not addressed in a liquidation or 

3 workout plan without obtaining additional ap4 proval from the Administrator. 

5 ‘‘(D) COMPROMISE OF INDEBTEDNESS.— 

6 In carrying out functions described in para7 graph (1)(A), a certified development company 

8 may— 

9 ‘‘(i) consider an offer made by an obli10 gor to compromise the debt for less than 

11 the full amount owing; and 

12 ‘‘(ii) pursuant to such offer, release 

13 any obligor or other party contingently lia14 ble, if the company secures the written ap15 proval of the Administrator. 

16 ‘‘(E) CONTENTS OF NOTICE OF NO DECI17 SION.—Any notice provided by the Adminis18 trator pursuant to subparagraph (B)(ii) shall— 

19 ‘‘(i) be in writing stating the specific 

20 reasons for which the Administrator was 

21 unable to act on the request submitted 

22 pursuant to subparagraph (A); 

23 ‘‘(ii) provide an estimate of the addi24 tional time needed for the Administrator to 

25 reach a decision on the request; and 


tjames on DSKG8SOYB1PROD with BILLS
111 

•HR 3854 IH

1 ‘‘(iii) specify any additional informa2 tion or documentation that the Adminis3 trator needs to make a decision but was 

4 not provided in the plan submitted by the 

5 certified development company. 

6 ‘‘(3) CONFLICT OF INTEREST.—In carrying out 

7 functions described in paragraph (1), a certified de8 velopment company shall take no action that would 

9 result in an actual or apparent conflict of interest 

10 between the company (or any employee of the com11 pany) and any third-party lender, associate of a 

12 third-party lender, or any other person participating 

13 in a liquidation, foreclosure, or loss mitigation ac14 tion. 

15 ‘‘(d) SUSPENSION OR REVOCATION OF AUTHOR16 ITY.— 

17 ‘‘(1) IN GENERAL.—The Administrator may re18 voke or suspend a delegation of authority under this 

19 section to a certified development company if the 

20 Administrator determines that the company— 

21 ‘‘(A) does not meet the requirements of 

22 subsection (b)(1); 

23 ‘‘(B) violated any applicable law or rule or 

24 regulation of the Administrator that in the estiVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00111 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
112 

•HR 3854 IH

1 mation of the Administrator requires revoca2 tion; or 

3 ‘‘(C) fails to comply with any reporting 

4 that may be established by the Administrator 

5 relating to the establishment of eligibility in 

6 subsection (b)(1) or carrying out the functions 

7 described in subsection (c)(1). 

8 ‘‘(2) WRITTEN NOTICE.—The Administrator 

9 shall provide in writing detailed reason why the dele10 gation of authority was suspended or revoked. 

11 ‘‘(e) PARTICIPATION IN LIQUIDATION.— 

12 ‘‘(1) IN GENERAL.— 

13 ‘‘(A) CONTRACT WITH QUALIFIED THIRD

14 PARTY.—A certified development company 

15 which elects not to apply for authority to fore16 close and liquidate defaulted loans under this 

17 section, or which the Administrator determines 

18 to be ineligible for such authority, shall contract 

19 with a qualified third party to perform fore20 closure and liquidation of defaulted loans in its 

21 portfolio. 

22 ‘‘(B) CONTRACT APPROVAL.—The contract 

23 entered into by the certified development com24 pany specified in subparagraph (A) shall be 

25 contingent upon approval by the Administrator 


tjames on DSKG8SOYB1PROD with BILLS
113 

•HR 3854 IH

1 with respect to the qualifications of the con2 tractor and the terms and conditions of liquida3 tion activities. The Administrator shall not un4 reasonably withhold such approval. 

5 ‘‘(C) NOTIFICATION OF REJECTION.—If 

6 the Administrator rejects the contract, the Ad7 ministrator shall provide a notice to the cer8 tified development company, in writing, explain9 ing the reasons for such rejection within ten 

10 business days after submission of the contract. 

11 ‘‘(D) RESUBMITTAL.—The certified devel12 opment company shall be permitted to resubmit 

13 the contract and the Administrator’s review of 

14 any such resubmittal shall be limited to 

15 insufficiencies described in the notification of 

16 rejection. 

17 ‘‘(E) REGULATIONS.—The Administrator 

18 shall promulgate regulations, after notice and 

19 opportunity for comment, adopting standards 

20 for the approval of qualified third-party con21 tractors within 90 days after the date of enact22 ment of the Small Business Financing and In23 vestment Act of 2009. 

24 ‘‘(F) FAILURE TO PROMULGATE REGULA25 TIONS.—If the Administrator fails to promulVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00113 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
114 

•HR 3854 IH

1 gate such regulations, any contract for liquida2 tion entered into by a certified development 

3 company under this subsection shall be consid4 ered valid for the purposes of this subsection 

5 and subsection (f). 

6 ‘‘(G) EFFECT OF ADMINISTRATOR’S PRO7 MULGATION OF REGULATIONS.—If the Adminis8 trator promulgates regulations after the dead9 line specified in subparagraph (E), those regu10 lations shall not have any retroactive applica11 tion with respect to contracts that are described 

12 in subparagraph (F). 

13 ‘‘(2) COMMENCEMENT.—This subsection shall 

14 not require any certified development company to 

15 liquidate defaulted loans until the Administrator im16 plements a system to compensate and reimburse cer17 tified development companies for liquidation of any 

18 defaulted loans. 

19 ‘‘(f) COMPENSATION AND REIMBURSEMENT.— 

20 ‘‘(1) REIMBURSEMENT OF EXPENSES.—The 

21 Administrator shall reimburse each certified develop22 ment company for all expenses paid by such com23 pany as part of the foreclosure and liquidation ac24 tivities taken to carry out this section, if the ex25 penses— 


tjames on DSKG8SOYB1PROD with BILLS
115 

•HR 3854 IH

1 ‘‘(A) were— 

2 ‘‘(i) approved in advance by the Ad3 ministrator, either specifically in a plan 

4 submitted pursuant to subsection (c) or 

5 generally, such as, but not limited to, ac6 tions approved by the Administrator in 

7 regulations or other interpretative 

8 issuances; or 

9 ‘‘(ii) incurred by the development 

10 company on an emergency basis without 

11 prior approval from the Administrator, if 

12 the Administrator determines that the ex13 penses were reasonable and appropriate; 

14 and 

15 ‘‘(B) are submitted by the certified devel16 opment company to the Administrator not later 

17 than 3 years after the date the expense was in18 curred or the bill therefore is submitted to the 

19 certified development company, whichever is 

20 later. 

21 ‘‘(2) ALTERNATIVE REIMBURSEMENT.—As an 

22 alternative to the procedure in paragraph (1), a cer23 tified development company may elect to obtain re24 imbursement for all such expenses from the proceeds 

25 of any collateral provided by the borrower that was 


tjames on DSKG8SOYB1PROD with BILLS
116 

•HR 3854 IH

1 liquidated by the certified development company if 

2 the expenses comply with the requirements of para3 graph (1). Within 6 months of the reimbursement, 

4 the certified development company shall provide the 

5 Administrator with the same information and docu6 mentation it would be required to submit to obtain 

7 payment from the Administrator. 

8 ‘‘(3) REGULATIONS.—The Administrator shall 

9 promulgate regulations, after notice and comment to 

10 carry out the provisions of paragraphs (1) and (2). 

11 If the Administrator does not promulgate such regu12 lations within one year, certified development compa13 nies shall be authorized, notwithstanding the re14 quirements of subsection (e)(2), to liquidate de15 faulted loans and such costs and expenses incurred, 

16 absent clear and convincing evidence of fraud, shall 

17 be deemed to be approved. 

18 ‘‘(4) COMPENSATION FOR RESULTS.— 

19 ‘‘(A) DEVELOPMENT.—In regulations pro20 mulgated pursuant to paragraph (3), the Ad21 ministrator also shall develop a schedule of 

22 compensation that provides monetary incentives 

23 for certified development companies in order to 

24 increase recoveries on defaulted loans. 

25 ‘‘(B) CRITERIA.—The schedule shall— 


tjames on DSKG8SOYB1PROD with BILLS
117 

•HR 3854 IH

1 ‘‘(i) be based on a percentage of the 

2 net amount recovered, but shall not exceed 

3 a maximum amount; and 

4 ‘‘(ii) not apply to any foreclosure 

5 which is conducted under a contract be6 tween a certified development company and 

7 a qualified third party to perform the fore8 closure and liquidation. 

9 ‘‘(C) PAYMENT.—The Administrator shall 

10 transmit the compensation provided herein to 

11 the development company from the proceeds of 

12 liquidated collateral, unless the Administrator 

13 utilizes another source for funds, within 30 

14 days from the date when the liquidation case 

15 has been closed and documentation received.’’. 

16 SEC. 221. REPORTS AND REGULATIONS. 

17 Title V of the Small Business Investment Act of 1958 

18 (15 U.S.C. 695 et seq.) is amended by adding at the end 

19 the following: 

20 ‘‘SEC. 511. REPORTS. 

21 ‘‘(a) PREMIER CERTIFIED DEVELOPMENT COMPA22 NIES.—The Administrator shall report annually to the 

23 Committee on Small Business of the House of Representa24 tives and the Committee on Small Business and EntrepreVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00117 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
118 

•HR 3854 IH

1 neurship of the Senate on the implementation of section 

2 504. Each report shall include— 

3 ‘‘(1) the number of premier certified develop4 ment companies; 

5 ‘‘(2) the debenture volume of each premier cer6 tified development company; 

7 ‘‘(3) a comparison of the loss rate for premier 

8 certified development companies to the loss rate for 

9 accredited or certified development companies; and 

10 ‘‘(4) such other information as the Adminis11 trator deems appropriate. 

12 ‘‘(b) REPORTS ON LIQUIDATION AND FORE13 CLOSURES.— 

14 ‘‘(1) IN GENERAL.—Based on information pro15 vided by certified development companies and the 

16 Administrator, the Administrator shall submit annu17 ally to the Committee on Small Business and Entre18 preneurship of the Senate and the Committee on 

19 Small Business of the House of Representatives a 

20 report on the results of delegation of authority under 

21 section 510. 

22 ‘‘(2) CONTENTS.—Each report submitted under 

23 paragraph (1) shall include the following informa24 tion: 


tjames on DSKG8SOYB1PROD with BILLS
119 

•HR 3854 IH

1 ‘‘(A) With respect to each loan foreclosed 

2 or liquidated by a certified development com3 pany, or for which losses were otherwise miti4 gated by pursuant to a workout plan— 

5 ‘‘(i) the total cost of the project fi6 nanced with the loan; 

7 ‘‘(ii) the total original dollar amount 

8 guaranteed by the Administration; 

9 ‘‘(iii) the total dollar amount of the 

10 loan at the time of liquidation, foreclosure, 

11 or mitigation of loss; 

12 ‘‘(iv) the total dollar losses resulting 

13 from the liquidation, foreclosure, or mitiga14 tion of loss; and 

15 ‘‘(v) the total recoveries resulting 

16 from the liquidation, foreclosure, or mitiga17 tion of loss, both as a percentage of the 

18 amount guaranteed and the total cost of 

19 the project financed. 

20 ‘‘(B) With respect to each certified devel21 opment company to which authority is dele22 gated under section 510, the totals of each of 

23 the amounts described in clauses (i) through (v) 

24 of subparagraph (A). 


tjames on DSKG8SOYB1PROD with BILLS
120 

•HR 3854 IH

1 ‘‘(C) With respect to each certified devel2 opment company that contracts with a qualified 

3 third-party contractor pursuant to section 

4 510(e), the total of each of the amounts de5 scribed in clauses (i) through (v) of subpara6 graph (A). 

7 ‘‘(D) With respect to all loans subject to 

8 foreclosure, liquidation, or mitigation under sec9 tion 510, the totals of each of the amounts de10 scribed in clauses (i) through (v) of subpara11 graph (A). 

12 ‘‘(E) A comparison between— 

13 ‘‘(i) the information provided under 

14 subparagraph (D) with respect to the 12- 

15 month period preceding the date on which 

16 the report is submitted; and 

17 ‘‘(ii) the same information with re18 spect to loans foreclosed and liquidated, or 

19 otherwise treated, by the Administrator 

20 during the same period. 

21 ‘‘(F) The number of times that the Admin22 istrator has failed to approve or reject a liq23 uidation plan, workout plan, request to pur24 chase indebtedness, or failed to approve a third25 party contractor under section 510, including 


tjames on DSKG8SOYB1PROD with BILLS
121 

•HR 3854 IH

1 specific information regarding the reasons for 

2 the Administrator’s failure and any delays that 

3 resulted. 

4 ‘‘(c) REPORTS ON COMBINATION FINANCING.— 

5 ‘‘(1) REPORTING REQUIREMENT.—Not later 

6 than 90 days after the date of enactment of the 

7 Small Business Financing and Investment Act of 

8 2009, and annually thereafter, the Administrator 

9 shall submit a report to the Committee on Small 

10 Business and Entrepreneurship of the Senate and 

11 the Committee on Small Business of the House of 

12 Representatives that— 

13 ‘‘(A) includes the number of small business 

14 concerns that have financing under both section 

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

16 636(a)) and title V of the Small Business In17 vestment Act of 1958 (15 U.S.C. 695 et seq.) 

18 during the year before the year of that report; 

19 and 

20 ‘‘(B) describes the total amount and gen21 eral performance of the financing described in 

22 subparagraph (A). 

23 ‘‘(d) REPORT ON OTHER ECONOMIC DEVELOPMENT

24 ACTIVITY.—The Administrator shall compile and submit 

25 to the Committee on Small Business of the House of RepVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00121 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
122 

•HR 3854 IH

1 resentatives and the Committee on Small Business and 

2 Entrepreneurship of the Senate on an annual basis, com3 mencing in the year that the Small Business Financing 

4 and Investment Act of 2009 is enacted, a report that de5 scribes the economic and community development activi6 ties, other than loan making under this title, of each cer7 tified development company during the prior fiscal year. 

8 The Administrator may contract with another party, in9 cluding non-governmental entities, to collect information 

10 or otherwise assist in the preparation of the report re11 quired by this subsection. 

12 ‘‘SEC. 512. PROMULGATION OF REGULATIONS UNDER THIS 

13 TITLE. 

14 ‘‘(a) DEADLINES FOR IMPLEMENTING REGULA15 TIONS.—Except as expressly provided elsewhere in the 

16 Small Business Financing and Investment Act of 2009, 

17 the Administrator shall promulgate regulations under this 

18 title, after providing notice and the opportunity for com19 ment, within 180 days after the date of enactment of that 

20 Act. 

21 ‘‘(b) NOTICE AND COMMENT REQUIREMENTS IN

22 GENERAL.—Except as otherwise provided elsewhere in 

23 this title, the Administrator shall provide, after the date 

24 of enactment of the Small Business Financing and Invest25 ment Act of 2009, notice of any proposed change to a regVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00122 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
123 

•HR 3854 IH

1 ulation implementing this title (whether in existence on 

2 the date of enactment of the Small Business Financing 

3 and Investment Act of 2009 or subsequently adopted), 

4 publish such notification in the Federal Register, and pro5 vide a comment period of not less than 60 days.’’. 

6 SEC. 222. PROGRAM NAME. 

7 Title V of the Small Business Investment Act of 1958 

8 (15 U.S.C. 695 et seq.), as amended by this Act, is further 

9 amended by adding at the end the following: 

10 ‘‘SEC. 513 PROGRAM NAME. 

11 ‘‘(a) IN GENERAL.—The program created by this 

12 title shall be referred to as the CDC Economic Develop13 ment Loan Program. 

14 ‘‘(b) MODIFICATION OF MATERIALS USED.—Not 

15 later than 60 days after the date of enactment of the 

16 Small Business Financing and Investment Act of 2009, 

17 the Administrator shall modify all documents and websites 

18 to conform to the name change made by this section.’’. 

19 Subtitle C—Miscellaneous 

20 SEC. 231. REPORT ON STANDARD OPERATING PROCE21 DURES. 

22 (a) REPORT.—The Administrator of the Small Busi23 ness Administration shall submit to the Committee on 

24 Small Business of the House of Representatives and the 

25 Committee on Small Business and Entrepreneurship of 


tjames on DSKG8SOYB1PROD with BILLS
124 

•HR 3854 IH

1 the Senate a report within 180 days after enactment of 

2 this Act identifying each Standard Operating Procedure 

3 issued after January 1, 1996, that relates to the operation 

4 of a development company (in any manner) under title V 

5 of the Small Business Investment Act of 1958, that is still 

6 in effect on the date of enactment of this Act, and the 

7 regulation codified in title 13 of the Code of Federal Regu8 lations that authorizes the issuance of the Standard Oper9 ating Procedure and separately identifies the regulation 

10 that the Standard Operating Procedure purports to inter11 pret. 

12 (b) INAPPLICABILITY.—If the Administrator fails to 

13 complete the report by the time specified in subsection (a), 

14 the Administrator shall, unless there is clear and con15 vincing evidence of fraud, honor the terms and conditions 

16 of any debenture to the entity that issued the debenture 

17 pursuant to title V of the Small Business Investment Act 

18 of 1958 without regard to whether the entity complied 

19 with any of the Standard Operating Procedures described 

20 in subsection (a) until such time as the Administrator sub21 mits the report required under subsection (a). 

22 (c) DEFINITION.—For purposes of this section, the 

23 term ‘‘Standard Operating Procedure’’ has the meaning 

24 given that term in section 120.10 of title 13, Code of FedVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00124 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
125 

•HR 3854 IH

1 eral Regulations, as in effect on January 1, 2009, and 

2 includes any reference to the acronym ‘‘SOP’’. 

3 SEC. 232. ALTERNATIVE SIZE STANDARD. 

4 (a) REVIEW AND STUDY.— 

5 (1) IN GENERAL.—The Administrator of the 

6 Small Business Administration shall study and re7 view the optional size standard set forth in section 

8 121.301(b) of title 13, Code of Federal Regulations, 

9 as in effect on January 1, 2009, for eligibility of a 

10 small business concern for financing under title V of 

11 the Small Business Investment Act of 1958. 

12 (2) CONTENTS.—The review shall analyze 

13 whether the alternative size standard includes the 

14 business concerns defined in section 3(a)(1) of the 

15 Small Business Act and what, if any, regulatory 

16 changes are needed in the alternative size standard. 

17 (3) SUBMISSION TO CONGRESS.—The Adminis18 trator shall submit its study and conclusions within 

19 180 days after the date of enactment of the Small 

20 Business Financing and Investment Act of 2009 to 

21 the Committee on Small Business and Entrepre22 neurship of the Senate and the Committee on Small 

23 Business of the House of Representatives. 

24 (b) ISSUANCE OF REGULATIONS.—Any changes in 

25 the optional size standard described in subsection (a)(1) 


tjames on DSKG8SOYB1PROD with BILLS
126 

•HR 3854 IH

1 shall be promulgated within 180 days of the submission 

2 of the report to committees referred to in paragraph (3) 

3 of subsection (a). 

4 (c) INTERIM ALTERNATIVE SIZE STANDARD.—Until 

5 the Administrator promulgates regulations either re6 adopting the size standard referred to in subsection (a)(1) 

7 or adopts a new alternative size standard, the alternative 

8 size standard shall be a maximum tangible net worth of 

9 not more than $15,000,000 and an average net income 

10 after the payment of Federal taxes (but excluding any car11 ryover losses) for the preceding two fiscal years not more 

12 than $5,000,000. 

13 TITLE III—MICROLENDING 

14 EXPANSION 

15 SEC. 301. MICROLOAN CREDIT BUILDING INITIATIVE. 

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

17 636(m)) is amended by adding at the end the following: 

18 ‘‘(14) CREDIT REPORTING INFORMATION.—The 

19 Administrator shall establish a process, for use by 

20 an intermediary making a loan to a borrower under 

21 this subsection, under which the intermediary shall 

22 provide to the major credit reporting agencies the in23 formation about the borrower, both positive and neg24 ative, that is relevant to credit reporting, such as the 

25 payment activity of the borrower on the loan. Such 


tjames on DSKG8SOYB1PROD with BILLS
127 

•HR 3854 IH

1 process shall allow an intermediary the option of 

2 providing information to the major credit reporting 

3 agencies through the Administration or independ4 ently.’’. 

5 SEC. 302. FLEXIBLE CREDIT TERMS. 

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

7 636(m)), as amended by this Act, is further amended— 

8 (1) in paragraph (1)(B)(i) by striking ‘‘short9 term,’’; 

10 (2) in paragraph (6)(A) by striking ‘‘short11 term,’’; and 

12 (3) in paragraph (11)(B) by striking ‘‘short13 term,’’. 

14 SEC. 303. INCREASED PROGRAM PARTICIPATION. 

15 Section 7(m)(2) of the Small Business Act (15 

16 U.S.C. 636(m)(2)) is amended— 

17 (1) in subparagraph (A) by striking ‘‘paragraph 

18 (10)’’ and inserting ‘‘paragraph (11)’’; and 

19 (2) by amending subparagraph (B) to read as 

20 follows: 

21 ‘‘(B) has— 

22 ‘‘(i) at least— 

23 ‘‘(I) 1 year of experience making 

24 microloans to startup, newly estabVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00127 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
128 

•HR 3854 IH

1 lished, or growing small business con2 cerns; or 

3 ‘‘(II) 1 full-time employee who 

4 has not less than 3 years of experi5 ence making microloans to startup, 

6 newly established, or growing small 

7 business concerns; and 

8 ‘‘(ii) at least— 

9 ‘‘(I) 1 year of experience pro10 viding, as an integral part of its 

11 microloan program, intensive mar12 keting, management, and technical as13 sistance to its borrowers; or 

14 ‘‘(II) 1 full-time employee who 

15 has not less than 1 year of experience 

16 providing intensive marketing, man17 agement, and technical assistance to 

18 borrowers.’’. 

19 SEC. 304. INCREASED LIMIT ON INTERMEDIARY BOR20 ROWING. 

21 Section 7(m)(3)(C) of the Small Business Act (15 

22 U.S.C. 636(m)(3)(C)) is amended— 

23 (1) by striking ‘‘$750,000’’ and inserting 

24 ‘‘$1,000,000’’; 


tjames on DSKG8SOYB1PROD with BILLS
129 

•HR 3854 IH

1 (2) by striking ‘‘$3,500,000’’ and inserting 

2 ‘‘$7,000,000’’; and 

3 (3) by adding at the end the following: ‘‘The 

4 Administrator may treat the amount of $7,000,000 

5 in this subparagraph as if such amount is 

6 $10,000,000 if the Administrator determines, with 

7 respect to an intermediary, that such treatment is 

8 appropriate.’’. 

9 SEC. 305. EXPANDED BORROWER EDUCATION ASSISTANCE. 

10 Section 7(m)(4)(E) of the Small Business Act (15 

11 U.S.C. 636(m)(4)(E)) is amended— 

12 (1) in clause (i) by striking ‘‘25 percent’’ and 

13 inserting ‘‘35 percent’’; and 

14 (2) in clause (ii) by striking ‘‘25 percent’’ and 

15 inserting ‘‘35 percent’’. 

16 SEC. 306. INTEREST RATES AND LOAN SIZE. 

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

18 636(m)), as amended by this Act, is further amended— 

19 (1) in paragraph (3)(F)(iii) by striking 

20 ‘‘$7,500’’ and inserting ‘‘$10,000’’; 

21 (2) in paragraph (6)(C)(i) by striking ‘‘$7,500’’ 

22 and inserting ‘‘$10,000’’; and 

23 (3) in paragraph (6)(C)(ii) by striking 

24 ‘‘$7,500’’ and inserting ‘‘$10,000’’. 


tjames on DSKG8SOYB1PROD with BILLS
130 

•HR 3854 IH

1 SEC. 307. REPORTING REQUIREMENT. 

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

3 636(m)), as amended by this Act, is further amended by 

4 adding at the end the following: 

5 ‘‘(15) REPORTING REQUIREMENT.—Not later 

6 than 90 days after the end of each fiscal year, the 

7 Administrator shall submit to the Committee on 

8 Small Business of the House of Representatives and 

9 the Committee on Small Business and Entrepre10 neurship of the Senate a report that includes, with 

11 respect to such fiscal year of the microloan program, 

12 the following: 

13 ‘‘(A) The names and locations of each 

14 intermediary that received funds to make 

15 microloans or provide marketing, management, 

16 and technical assistance. 

17 ‘‘(B) The amounts of each loan and each 

18 grant provided to each such intermediary in 

19 such fiscal year and in prior fiscal years. 

20 ‘‘(C) A description of the contributions 

21 from non-Federal sources of each such inter22 mediary. 

23 ‘‘(D) The number and amounts of 

24 microloans made by each such intermediary to 

25 all borrowers and to each of the following: 


tjames on DSKG8SOYB1PROD with BILLS
131 

•HR 3854 IH

1 ‘‘(i) Women entrepreneurs and busi2 ness owners. 

3 ‘‘(ii) Low-income entrepreneurs and 

4 business owners. 

5 ‘‘(iii) Veteran entrepreneurs and busi6 ness owners. 

7 ‘‘(iv) Disabled entrepreneurs and busi8 ness owners. 

9 ‘‘(v) Minority entrepreneurs and busi10 ness owners. 

11 ‘‘(E) A description of the marketing, man12 agement, and technical assistance provided by 

13 each such intermediary to all borrowers and to 

14 each of the following: 

15 ‘‘(i) Women entrepreneurs and busi16 ness owners. 

17 ‘‘(ii) Low-income entrepreneurs and 

18 business owners. 

19 ‘‘(iii) Veteran entrepreneurs and busi20 ness owners. 

21 ‘‘(iv) Disabled entrepreneurs and busi22 ness owners. 

23 ‘‘(v) Minority entrepreneurs and busi24 ness owners. 


tjames on DSKG8SOYB1PROD with BILLS
132 

•HR 3854 IH

1 ‘‘(F) The number of jobs created and re2 tained as a result of microloans and marketing, 

3 management, and technical assistance provided 

4 by each such intermediary. 

5 ‘‘(G) The repayment history of each such 

6 intermediary. 

7 ‘‘(H) The number of businesses that 

8 achieved success after receipt of a microloan.’’. 

9 SEC. 308. SURPLUS INTEREST RATE SUBSIDY FOR BUSI10 NESSES. 

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

12 636(m)), as amended by this Act, is further amended by 

13 adding at the end the following: 

14 ‘‘(16) INTEREST ASSISTANCE.— 

15 ‘‘(A) IN GENERAL.—The Administrator is 

16 authorized to use amounts determined unlikely 

17 to be expended under subparagraph (B) to as18 sist borrowers that receive a microloan under 

19 this subsection to reduce the interest paid with 

20 respect to such microloan. 

21 ‘‘(B) AMOUNTS UNLIKELY TO BE EX22 PENDED.—Not later than April 1 of each fiscal 

23 year, the Administrator shall determine if any 

24 amounts made available to carry out this sub25 section for such fiscal year are unlikely to be 


tjames on DSKG8SOYB1PROD with BILLS
133 

•HR 3854 IH

1 expended for activities under this subsection 

2 other than activities under this paragraph.’’. 

3 SEC. 309. AUTHORIZATION OF APPROPRIATIONS. 

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

5 note), as amended by this Act, is further amended by in6 serting after subsection (g) the following: 

7 ‘‘(h) FISCAL YEARS 2010 AND 2011 WITH RESPECT

8 TO SECTION 7(m).— 

9 ‘‘(1) PROGRAM LEVELS.—For the programs au10 thorized by this Act, the Administration is author11 ized to make during each of fiscal years 2010 and 

12 2011— 

13 ‘‘(A) $80,000,000 in technical assistance 

14 grants, as provided in section 7(m); and 

15 ‘‘(B) $110,000,000 in direct loans, as pro16 vided in section 7(m). 

17 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.— 

18 There is authorized to be appropriated such sums as 

19 may be necessary to carry out paragraph (1).’’. 


tjames on DSKG8SOYB1PROD with BILLS
134 

•HR 3854 IH

1 TITLE IV—SMALL BUSINESS IN2 VESTMENT COMPANY MOD3 ERNIZATION 

4 SEC. 401. INCREASED INVESTMENT FROM STATES. 

5 Section 103(13)(C) of the Small Business Investment 

6 Act of 1958 (15 U.S.C. 662(13)(C)) is amended by strik7 ing ‘‘33 percent’’ and inserting ‘‘45 percent’’. 

8 SEC. 402. EXPEDITED LICENSING FOR EXPERIENCED AP9 PLICANTS. 

10 Section 301 of the Small Business Investment Act 

11 of 1958 (15 U.S.C. 681) is amended by inserting after 

12 subsection (c) the following new subsection: 

13 ‘‘(d) LICENSES FOR EXPERIENCED APPLICANTS.— 

14 ‘‘(1) IN GENERAL.—Notwithstanding any other 

15 provision of this section, not later than 60 days after 

16 the initial receipt by the Administrator of any re17 quest (which shall be deemed to be the application) 

18 for a license to operate as a small business invest19 ment company under this Act, the Administrator 

20 shall approve the request and issue such license if 

21 each of the following requirements is satisfied: 

22 ‘‘(A) At least 50 percent of the principal 

23 managers of the applicant consist of at least 

24 two-thirds of the principal managers of a small 


tjames on DSKG8SOYB1PROD with BILLS
135 

•HR 3854 IH

1 business investment company that has been li2 censed under this Act. 

3 ‘‘(B) The licensed small business invest4 ment company specified under subparagraph 

5 (A) has operated under such license for at least 

6 3 years prior to the receipt of the request speci7 fied in this paragraph. 

8 ‘‘(C) The licensed small business invest9 ment company specified under subparagraph 

10 (A)— 

11 ‘‘(i) either has invested at least 70 

12 percent of its private capital and drawn at 

13 least 50 percent of its projected leverage at 

14 the time of the receipt of the request speci15 fied in this paragraph or reserved for in16 vestment and expenses or some combina17 tion of both at least 70 percent of its pri18 vate capital in the one-year period prior to 

19 the date on which the application referred 

20 to in this paragraph was received by the 

21 Administrator; 

22 ‘‘(ii) has maintained 6 consecutive 

23 quarters of profitable net investment in24 come; and 


tjames on DSKG8SOYB1PROD with BILLS
136 

•HR 3854 IH

1 ‘‘(iii) has made at least 3 exits from 

2 investments in small businesses that have 

3 realized profits from those respective in4 vestments. 

5 ‘‘(D) The applicant submits to the Admin6 istrator, in writing, an application consisting of 

7 all of the following: 

8 ‘‘(i) A certification, in the form pre9 scribed by the Administrator, that such ap10 plicant satisfies the requirements of this 

11 subsection and that all information con12 tained in the application is true and com13 plete. 

14 ‘‘(ii) A copy of the organizational doc15 uments of the applicant. 

16 ‘‘(iii) A copy of the operating plan of 

17 the applicant demonstrating that at least 

18 50 percent of the amount of the planned 

19 investments of the applicant will be in the 

20 same or substantially similar investment 

21 stage and use the same or substantially 

22 similar type of investment instruments as 

23 the investments of the licensed small busi24 ness investment company specified under 

25 subparagraph (A). 


tjames on DSKG8SOYB1PROD with BILLS
137 

•HR 3854 IH

1 ‘‘(iv) A certification, in a form pre2 scribed by the Administrator, that the ap3 plicant satisfies the requirements of sub4 sections (a) and (c) of section 302 of this 

5 Act. 

6 ‘‘(E) The applicant is in good standing as 

7 set forth in paragraph (2). 

8 ‘‘(F) The applicant pays all fees prescribed 

9 by the Administrator under subsection (e). 

10 ‘‘(2) GOOD STANDING.—For purposes of this 

11 subsection, an applicant is in good standing if— 

12 ‘‘(A) a licensed leveraged debentured or 

13 non-leveraged small business investment com14 pany specified under paragraph (1)(A) is ac15 tively operating under this Act on the date of 

16 the initial receipt of the application by the Ad17 ministrator to which this subsection applies; 

18 ‘‘(B) no principal manager of the applicant 

19 has been found liable in a civil action for fraud 

20 if the Administrator makes a reasonable deter21 mination based on evidence in the agency 

22 record that such liability has a material adverse 

23 effect on the ability of the applicant to perform 

24 obligations required by a license issued pursu25 ant to this Act; and 


tjames on DSKG8SOYB1PROD with BILLS
138 

•HR 3854 IH

1 ‘‘(C) no principal manager is under inves2 tigation by a governmental agency or authority 

3 for, is under indictment for, or has been con4 victed of a felony for a violation of Federal or 

5 State securities laws, fraud, or another criminal 

6 violation if such investigation, indictment, or 

7 conviction has a material adverse effect on the 

8 ability of the applicant to perform obligations 

9 under a license issued under this Act. 

10 ‘‘(3) LIMITATION.— 

11 ‘‘(A) IN GENERAL.—The Administrator 

12 may remove an application from the approval 

13 process under this subsection if the Adminis14 trator determines based on evidence in the 

15 agency record that the approval of the license 

16 would present an unacceptable risk to the Fed17 eral Government. 

18 ‘‘(B) IN WRITING.—Such determination 

19 shall be made in writing and provided to the 

20 applicant no later than 10 calendar days after 

21 such determination is made. Failure to provide 

22 this determination to the applicant shall be 

23 deemed to be a permanent waiver of the Admin24 istrator’s authority to remove an application 

25 pursuant to this subsection. 


tjames on DSKG8SOYB1PROD with BILLS
139 

•HR 3854 IH

1 ‘‘(C) NON-DELEGABILITY.—The Adminis2 trator may rely on agency personnel to collect 

3 data or other material relevant to establishing 

4 a record, but the decision to remove the appli5 cation may not be delegated by the Adminis6 trator to any subordinate personnel in the agen7 cy. 

8 ‘‘(4) NOTICE AND OPPORTUNITY TO CURE NON9 CONFORMANCE.— 

10 ‘‘(A) NOTICE OF NON-CONFORMANCE.— 

11 Except for a determination made pursuant to 

12 paragraph (3), the Administrator shall provide 

13 an applicant described in paragraph (1) within 

14 60 days after receipt of the application a writ15 ten notice and description of any nonconform16 ance with any requirement of this subsection 

17 based on evidence in the agency record. 

18 ‘‘(B) OPPORTUNITY TO CURE.—The appli19 cant shall have 30 days following the receipt of 

20 notice of nonconformance or the receipt of re21 moval as set forth in paragraph (3) to cure 

22 such nonconformance. 

23 ‘‘(C) FAILURE TO PROVIDE NOTICE.—Fail24 ure to provide the notice within the time limit 

25 set forth in subparagraph (A) shall be deemed 


tjames on DSKG8SOYB1PROD with BILLS
140 

•HR 3854 IH

1 to be acceptance by the Administrator of the 

2 applicant’s conformance with the requirements 

3 of this subsection. 

4 ‘‘(5) BACKGROUND REVIEWS.—The Adminis5 trator shall ensure that a timely background check 

6 of the principal managers of each applicant is com7 pleted with respect to paragraphs (2)(B) and (2)(C). 

8 ‘‘(6) FEES.—The Administrator may charge an 

9 applicant additional fees for carrying out the back10 ground reviews mandated by paragraph (5). Such 

11 fees shall not exceed $10,000. 

12 ‘‘(7) EFFECT OF NON-QUALIFICATION.—The 

13 failure of an applicant to qualify for expedited licen14 sure under this subsection shall have no effect on an 

15 existing license or the ability for the applicant or 

16 any of its individual managers to apply for or receive 

17 a license to operate a small business investment 

18 company under the procedures established elsewhere 

19 in this Act or its implementing regulations. 

20 ‘‘(8) REGULATIONS.—The Administrator shall 

21 develop forms and promulgate regulations to imple22 ment this subsection after providing an opportunity 

23 for notice and comment. Regulations promulgated 

24 pursuant to this paragraph shall be published in the 

25 Code of Federal Regulations.’’. 


tjames on DSKG8SOYB1PROD with BILLS
141 

•HR 3854 IH

1 SEC. 403. REVISED LEVERAGE LIMITATIONS FOR SUCCESS2 FUL SBICS. 

3 (a) MAXIMUM LEVERAGE.—Section 303(b)(2) of the 

4 Small Business Investment Act of 1958 (15 U.S.C. 

5 683(b)(2)) is amended by striking so much of paragraph 

6 (2) as precedes subparagraph (C) and inserting the fol7 lowing: 

8 ‘‘(2) MAXIMUM LEVERAGE.— 

9 ‘‘(A) IN GENERAL.—(i) The maximum 

10 amount of outstanding leverage made available 

11 to any one company licensed under section 

12 301(c) of this Act may not exceed the lesser 

13 of— 

14 ‘‘(I) 300 percent of such com15 pany’s private capital; or 

16 ‘‘(II) $150,000,000. 

17 ‘‘(ii) In applying clause (i)(I) in the case of 

18 a debenture licensee which is in good standing 

19 without the imposition of additional regulatory 

20 standards and whose financings at cost are 

21 comprised of at least 50 percent of loans and 

22 debt securities, such licensee may be leveraged 

23 as follows: 

24 ‘‘(I) The first one-third of private cap25 ital to 300 percent. 


tjames on DSKG8SOYB1PROD with BILLS
142 

•HR 3854 IH

1 ‘‘(II) The second one-third of private 

2 capital to 200 percent. 

3 ‘‘(III) The last third of private capital 

4 to 100 percent. 

5 ‘‘(iii) Notwithstanding clause (i), in the 

6 case of any company operating as a business 

7 development company (as such term is defined 

8 under section 2(a)(48) of the Investment Com9 pany Act of 1940) or a majority-owned sub10 sidiary of such a company that is in good 

11 standing without the imposition of additional 

12 regulatory requirements, the maximum amount 

13 of outstanding leverage made available to such 

14 company shall be $250,000,000. 

15 ‘‘(B) MULTIPLE LICENSEES UNDER COM16 MON CONTROL.—The maximum amount of out17 standing leverage made available to two or more 

18 debenture companies licensed under section 

19 301(c) of this Act that are commonly controlled 

20 (as determined by the Administrator) and not 

21 under capital impairment may not exceed 

22 $350,000,000.’’. 

23 (b) REGULATIONS.—Section 303(b)(2) of the Small 

24 Business Investment Act of 1958 (15 U.S.C. 683(b)(2)), 


tjames on DSKG8SOYB1PROD with BILLS
143 

•HR 3854 IH

1 as amended by this Act, is further amended by adding 

2 at the end the following: 

3 ‘‘(E) REGULATIONS.—The Administrator 

4 shall promulgate regulations, after notice and 

5 opportunity for comment, establishing quantifi6 able objective criteria under which a licensee’s 

7 private capital in its entirety may be leveraged 

8 up to 300 percent. Such regulations shall be 

9 published in the Code of Federal Regulations.’’. 

10 (c) INVESTMENTS IN LOW-INCOME GEOGRAPHIC

11 AREAS.—Section 303(b)(2)(C)(ii) of the Small Business 

12 Investment Act of 1958 (15 U.S.C. 683(b)(2)(C)(ii)) is 

13 amended by striking ‘‘$250,000,000’’ in subclause (II) 

14 and inserting ‘‘$400,000,000’’. 

15 SEC. 404. CONSISTENCY FOR COST CONTROL. 

16 Section 305(c) of the Small Business Investment Act 

17 of 1958 (15 U.S.C. 685(c)) is amended by adding at the 

18 end the following: 

19 ‘‘In addition to the foregoing, with respect to a loan 

20 made, or debt with equity features acquired, under this 

21 section, the minimum coupon rate of interest (cost of 

22 money ceiling) imposed by the Administrator shall not be 

23 less than 19 percent per annum for a loan or a debt secu24 rity, except that nothing herein shall alter or affect provi25 sions permitting higher coupon rates of interest (cost of 


tjames on DSKG8SOYB1PROD with BILLS
144 

•HR 3854 IH

1 money ceilings) and a company may charge up to an addi2 tional 7 percent more than the interest rate set forth in 

3 the loan or debt security in the event of a default. For 

4 purposes of this subsection a default means the occurrence 

5 of any of the following: 

6 ‘‘(1) Failure to pay an amount when due. 

7 ‘‘(2) Failure to provide in a timely manner ma8 terial information required under the applicable fi9 nancing documents. 

10 ‘‘(3) Failure to observe any material term, cov11 enant, or other agreement contained in the applica12 ble financing documents. 

13 ‘‘(4) A representation, warranty, certification, 

14 or statement of fact made by or on behalf of a bor15 rower in any applicable financing document or in 

16 any document delivered in connection therewith, that 

17 was materially incorrect or misleading when made. 

18 ‘‘(5) Any material event of default specified in 

19 the applicable financing documents.’’. 

20 SEC. 405. INVESTMENT IN VETERAN-OWNED SMALL BUSI21 NESSES. 

22 Section 303(b)(2)(C) of the Small Business Invest23 ment Act of 1958 (15 U.S.C. 683(b)(2)(C)) is amended 

24 as follows: 


tjames on DSKG8SOYB1PROD with BILLS
145 

•HR 3854 IH

1 (1) In the heading, by inserting after ‘‘AREAS’’ 

2 the following: ‘‘AND VETERANS’’. 

3 (2) In clause (i), by inserting after ‘‘351)’’ the 

4 following: ‘‘or in a small business concern owned and 

5 controlled by veterans (as such term is defined in 

6 section 3(q)(3) of the Small Business Act)’’. 

7 (3) In clause (iii), by inserting after ‘‘351)’’ the 

8 following: ‘‘or in small business concerns owned and 

9 controlled by veterans (as such term is defined in 

10 section 3(q)(3) of the Small Business Act)’’. 

11 SEC. 406. LIMITATIONS ON PREPAYMENT. 

12 Section 305 of the Small Business Investment Act 

13 of 1958 (15 U.S.C. 685) is amended by adding at the end 

14 the following: 

15 ‘‘(g) A company may require a small business concern 

16 to accept reasonable and customary minimum prepayment 

17 amounts, terms, and notice requirements. 

18 ‘‘(h) The private capital of a licensee may include 

19 funds transferred to an account of the Telecommuni20 cations Development Fund created pursuant to section 

21 714 of the Communications Act of 1934 (47 U.S.C. 614) 

22 and which are described in section 309(j)(8)(C)(iii) of the 

23 Communications Act of 1934 (47 U.S.C. 

24 309(j)(8)(C)(iii)). 


tjames on DSKG8SOYB1PROD with BILLS
146 

•HR 3854 IH

1 ‘‘(i) The authorization to make loans under sub2 section (a) includes the authority to engage in venture 

3 leasing, equipment leasing, real estate sale leasebacks, and 

4 similar arrangements with small business concerns, so 

5 long as such arrangements have an economic purpose 

6 similar to traditional loans. Any transaction covered by 

7 this subsection involving real property shall require the oc8 cupancy of at least 50 percent of the real property by the 

9 small business concern.’’. 

10 SEC. 407. INVESTMENT WITH CERTAIN PASSIVE ENTITIES. 

11 Part A of title III of the Small Business Investment 

12 Act of 1958 (15 U.S.C. 681 et seq.) is amended by adding 

13 at the end the following: 

14 ‘‘SEC. 321. INVESTMENT WITH CERTAIN PASSIVE ENTITIES. 

15 ‘‘A licensee may provide financing to a passive busi16 ness as defined under section 107.720(b)(1) of title 13, 

17 Code of Federal Regulations, as in effect on January 1, 

18 2009, which is a corporation or limited liability company 

19 wholly-owned by the licensee and the sole purpose of which 

20 is to provide financing by the licensee to such concerns 

21 would cause investors in the licensee to incur with respect 

22 to regulated investment companies, income not qualifying 

23 under section 851(b)(2)(A) of the Internal Revenue Code 

24 of 1986. Nothing in this section shall affect the validity 


tjames on DSKG8SOYB1PROD with BILLS
147 

•HR 3854 IH

1 of regulations permitting financings of passive businesses 

2 previously duly promulgated by the Administrator.’’. 

3 SEC. 408. INVESTMENT IN SMALLER ENTERPRISES. 

4 Section 303(d) of the Small Business Investment Act 

5 of 1958 (15 U.S.C. 683(d)) is amended by adding at the 

6 end the following: ‘‘A licensee shall not be required to 

7 achieve any percentage of such financings (at cost) which 

8 is higher than 25 percent which may result from the appli9 cation of prior statutory or regulatory requirements to all 

10 or any portion of the licensee’s portfolio.’’ 

11 SEC. 409. CAPITAL IMPAIRMENT. 

12 Section 303(e) of the Small Business Investment Act 

13 of 1958 (15 U.S.C. 683(e)) is amended by adding at the 

14 end the following: 

15 ‘‘A licensee with Earmarked Assets (as that term is de16 fined by the Administrator) will not be in capital impair17 ment during the first 72 months after its date of licensure, 

18 if its impairment does not exceed 85 percent.’’. 

19 SEC. 410. TANGIBLE NET WORTH. 

20 Section 103 of the Small Business Investment Act 

21 of 1958 (15 U.S.C. 662), as amended by this Act, is fur22 ther amended by striking ‘‘and’’ at the end of paragraph 

23 (23), by striking the period at the end of paragraph (24) 

24 and inserting ‘‘; and’’, and by adding at the end the fol25 lowing: 


tjames on DSKG8SOYB1PROD with BILLS
148 

•HR 3854 IH

1 ‘‘(25) for purposes of the terms ‘small-business 

2 concern’ in paragraph (5) and ‘smaller enterprise’ in 

3 paragraph (12), tangible net worth shall, to the ex4 tent used, mean the total net worth of the small 

5 business, in accordance with General Accepted Ac6 counting Principles, minus all intangibles in accord7 ance with General Accepted Accounting Principles.’’. 

8 SEC. 411. DEVELOPMENT OF AGENCY RECORD. 

9 Part A of title III of the Small Business Investment 

10 Act of 1958 (15 U.S.C. 681 et seq.), as amended by this 

11 Act, is further amended by adding at the end the fol12 lowing: 

13 ‘‘SEC. 322. AGENCY RECORD FOR LICENSING OF SMALL 

14 BUSINESS INVESTMENT COMPANIES. 

15 ‘‘(a) RECORD.—The Associate Administrator for In16 vestment shall establish an agency record of evidence re17 ferring or relating to each application for a license to be18 come a small business investment company. 

19 ‘‘(b) WRITTEN NOTIFICATION.—The Administrator 

20 shall provide a written explanation of any denial of a li21 cense application based upon evidence in the agency 

22 record. Absent an order by a Federal or State court of 

23 general jurisdiction, access to applications and the agency 

24 record shall be limited to the applicant and to the Admin25 istrator and subordinate personnel of the Administrator.’’. 


tjames on DSKG8SOYB1PROD with BILLS
149 

•HR 3854 IH

1 SEC. 412. PROGRAM LEVELS. 

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

3 note), as amended by this Act, is further amended by in4 serting after subsection (h) the following: 

5 ‘‘(i) PART A OF TITLE III OF THE SMALL BUSINESS

6 INVESTMENT ACT OF 1958.— 

7 ‘‘(1) PROGRAM LEVELS 2010.—For fiscal year 

8 2010, in carrying out the program authorized by 

9 part A of title III of the Small Business Investment 

10 Act of 1958, the Administrator is authorized to 

11 make $5,000,000,000 in guarantees of debentures. 

12 ‘‘(2) PROGRAM LEVELS 2011.—For fiscal year 

13 2011, in carrying out the program authorized by 

14 part A of title III of the Small Business Investment 

15 Act of 1958, the Administrator is authorized to 

16 make $5,5000,000,000 in guarantees of deben17 tures.’’. 


tjames on DSKG8SOYB1PROD with BILLS
150 

•HR 3854 IH

1 TITLE V—INVESTMENT IN 

2 SMALL MANUFACTURERS 

3 AND RENEWABLE ENERGY 

4 SMALL BUSINESSES 

5 Subtitle A—Enhanced New 

6 Markets Venture Capital Program 

7 SEC. 501. EXPANSION OF NEW MARKETS VENTURE CAPITAL 

8 PROGRAM. 

9 (a) ADMINISTRATION PARTICIPATION REQUIRED.— 

10 Section 353 of the Small Business Investment Act of 1958 

11 (15 U.S.C. 689b) is amended by striking ‘‘under which 

12 the Administrator may’’ and inserting ‘‘under which the 

13 Administrator shall’’. 

14 (b) REPORT TO CONGRESS.—Not later than 1 year 

15 after the date of the enactment of this Act, the Adminis16 trator of the Small Business Administration shall submit 

17 to Congress a report describing any expansion of the New 

18 Markets Venture Capital Program as a result of this sec19 tion. 

20 SEC. 502. IMPROVED NATIONWIDE DISTRIBUTION. 

21 Section 354 of the Small Business Investment Act 

22 of 1958 (15 U.S.C. 689c) is amended by adding at the 

23 end the following: 

24 ‘‘(f) GEOGRAPHIC EXPANSION.—From among com25 panies submitting applications under subsection (b), the 


tjames on DSKG8SOYB1PROD with BILLS
151 

•HR 3854 IH

1 Administrator shall consider the selection criteria and pro2 motion of nationwide distribution under subsection (c) and 

3 shall, to the extent practicable, approve at least one com4 pany from each geographic region of the Small Business 

5 Administration.’’. 

6 SEC. 503. INCREASED INVESTMENT IN SMALL BUSINESS 

7 CONCERNS ENGAGED PRIMARILY IN MANU8 FACTURING. 

9 (a) DEVELOPMENTAL VENTURE CAPITAL AND PAR10 TICIPATION AGREEMENTS.—Section 351 of the Small 

11 Business Investment Act of 1958 (15 U.S.C. 689) is 

12 amended— 

13 (1) in paragraph (1) by inserting after ‘‘geo14 graphic areas’’ the following: ‘‘or encouraging the 

15 growth or continuation of small business concerns 

16 located in low-income geographic areas and engaged 

17 primarily in manufacturing’’; and 

18 (2) in paragraph (6)(B) by inserting after ‘‘geo19 graphic areas’’ the following: ‘‘or in small business 

20 concerns located in low-income geographic areas at 

21 least 80 percent of which are engaged primarily in 

22 manufacturing’’. 

23 (b) PURPOSES.—Section 352(2) of the Small Busi24 ness Investment Act of 1958 (15 U.S.C. 689a(2)) is 

25 amended— 


tjames on DSKG8SOYB1PROD with BILLS
152 

•HR 3854 IH

1 (1) in the matter preceding subparagraph (A) 

2 by inserting after ‘‘geographic areas’’ the following: 

3 ‘‘and small business concerns located in low-income 

4 geographic areas and engaged primarily in manufac5 turing’’; 

6 (2) in subparagraph (B) by inserting after ‘‘ge7 ographic areas’’ the following: ‘‘or in small business 

8 concerns located in low-income geographic areas and 

9 engaged primarily in manufacturing’’; and 

10 (3) in subparagraph (C) by inserting after 

11 ‘‘smaller enterprises’’ the following: ‘‘and small busi12 ness concerns’’. 

13 (c) ELIGIBILITY, APPLICATIONS, AND REQUIRE14 MENTS FOR FINAL APPROVAL.—Section 354 of the Small 

15 Business Investment Act of 1958 (15 U.S.C. 689c), as 

16 amended by this Act, is further amended— 

17 (1) in subsection (a)(3) by inserting after ‘‘geo18 graphic areas’’ the following: ‘‘or investing in small 

19 business concerns located in low-income geographic 

20 areas and engaged primarily in manufacturing’’; 

21 (2) in subsection (b)— 

22 (A) in paragraph (1) by inserting after 

23 ‘‘geographic areas’’ the following: ‘‘or in small 

24 business concerns located in low-income geoVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00152 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
153 

•HR 3854 IH

1 graphic areas and engaged primarily in manu2 facturing’’; and 

3 (B) in paragraph (4) by inserting after 

4 ‘‘smaller enterprises’’ the following: ‘‘or small 

5 business concerns’’; and 

6 (3) in subsection (d)— 

7 (A) in paragraph (1)— 

8 (i) by striking ‘‘Each’’ and inserting 

9 the following: 

10 ‘‘(A) IN GENERAL.—Except as provided in 

11 subparagraph (B), each’’; and 

12 (ii) by adding at the end the fol13 lowing: 

14 ‘‘(B) SMALL BUSINESS CONCERNS EN15 GAGED PRIMARILY IN MANUFACTURING.—Each 

16 conditionally approved company engaged pri17 marily in development of and investment in 

18 small business concerns located in low-income 

19 geographic areas and engaged primarily in 

20 manufacturing shall raise not less than 

21 $3,000,000 of private capital or binding capital 

22 commitments from one or more investors (other 

23 than agencies or departments of the Federal 

24 Government) who met criteria established by 

25 the Administrator.’’; and 


tjames on DSKG8SOYB1PROD with BILLS
154 

•HR 3854 IH

1 (B) in paragraph (2)(A) by inserting after 

2 ‘‘smaller enterprises’’ the following: ‘‘or small 

3 business concerns’’. 

4 (d) OPERATIONAL ASSISTANCE GRANTS.—Section 

5 358 of the Small Business Investment Act of 1958 (15 

6 U.S.C. 689g) is amended— 

7 (1) in subsection (a)(1) by inserting after 

8 ‘‘smaller enterprises’’ the following: ‘‘and small busi9 ness concerns’’; and 

10 (2) in subsection (b)(1) by inserting after 

11 ‘‘smaller enterprises’’ the following: ‘‘and small busi12 ness concerns’’. 

13 SEC. 504. EXPANDED USES FOR OPERATIONAL ASSISTANCE 

14 IN MANUFACTURING. 

15 Section 351 of the Small Business Investment Act 

16 of 1958 (15 U.S.C. 689), as amended by this Act, is fur17 ther amended in paragraph (5) by inserting after ‘‘busi18 ness development’’ the following: ‘‘or assistance that as19 sists a small business concern located in a low-income geo20 graphic area and engaged primarily in manufacturing with 

21 retooling, updating, or replacing machinery or equip22 ment’’. 


tjames on DSKG8SOYB1PROD with BILLS
155 

•HR 3854 IH

1 SEC. 505. UPDATING DEFINITION OF LOW-INCOME GEO2 GRAPHIC AREA. 

3 Section 351 of the Small Business Investment Act 

4 of 1958 (15 U.S.C. 689), as amended by this Act, is fur5 ther amended— 

6 (1) by striking paragraphs (2) and (3); 

7 (2) by inserting after paragraph (1) the fol8 lowing: 

9 ‘‘(2) LOW-INCOME GEOGRAPHIC AREA.—The 

10 term ‘low-income geographic area’ has the meaning 

11 given the term ‘low-income community’ in section 

12 45D(e) of the Internal Revenue Code of 1986.’’; and 

13 (3) by redesignating paragraphs (4) through 

14 (8) as paragraphs (3) through (7), respectively. 

15 SEC. 506. EXPANDING OPERATIONAL ASSISTANCE TO CON16 DITIONALLY APPROVED COMPANIES. 

17 Section 358(a) of the Small Business Investment Act 

18 of 1958 (15 U.S.C. 689g(a)) is amended by adding at the 

19 end the following: 

20 ‘‘(6) GRANTS TO CONDITIONALLY APPROVED

21 COMPANIES.— 

22 ‘‘(A) IN GENERAL.—Subject to the provi23 sions of this paragraph, upon the request of a 

24 company conditionally approved under section 

25 354(c), the Administrator shall make a grant to 

26 the company under this subsection. 


tjames on DSKG8SOYB1PROD with BILLS
156 

•HR 3854 IH

1 ‘‘(B) REPAYMENT BY COMPANIES NOT AP2 PROVED.—If a company receives a grant under 

3 this paragraph and does not receive final ap4 proval under section 354(e), the company shall 

5 repay the amount of the grant to the Adminis6 trator. 

7 ‘‘(C) DEDUCTION FROM GRANT TO AP8 PROVED COMPANY.—If a company receives a 

9 grant under this paragraph and receives final 

10 approval under section 354(e), the Adminis11 trator shall deduct the amount of such grant 

12 from the amount of any immediately succeeding 

13 grant the company receives for operational as14 sistance. 

15 ‘‘(D) AMOUNT OF GRANT.—No company 

16 may receive a grant of more than $50,000 

17 under this paragraph.’’. 

18 SEC. 507. LIMITATION ON TIME FOR FINAL APPROVAL. 

19 Section 354(d) of the Small Business Investment Act 

20 of 1958 (15 U.S.C. 689c(d)) is amended in the matter 

21 preceding paragraph (1) by striking ‘‘a period of time, not 

22 to exceed 2 years,’’ and inserting ‘‘2 years’’. 


tjames on DSKG8SOYB1PROD with BILLS
157 

•HR 3854 IH

1 SEC. 508. STREAMLINED APPLICATION FOR NEW MARKETS 

2 VENTURE CAPITAL PROGRAM. 

3 Not later than 60 days after the date of the enact4 ment of this Act, the Administrator of the Small Business 

5 Administration shall prescribe standard documents for a 

6 New Markets Venture Capital company final approval ap7 plication under section 354(e) of the Small Business In8 vestment Act of 1958 (15 U.S.C. 689c(e)). The Adminis9 trator shall ensure that the standard documents are de10 signed to substantially reduce the cost burden of the appli11 cation process for companies. 

12 SEC. 509. ELIMINATION OF MATCHING REQUIREMENT. 

13 Section 354(d)(2)(A)(i) of the Small Business Invest14 ment Act of 1958 (15 U.S.C. 689c(d)(2)(A)(i)) is amend15 ed— 

16 (1) in subclause (I) by adding ‘‘and’’ at the 

17 end; 

18 (2) in subclause (II) by striking ‘‘and’’ at the 

19 end; and 

20 (3) by striking subclause (III). 

21 SEC. 510. SIMPLIFIED FORMULA FOR OPERATIONAL AS22 SISTANCE GRANTS. 

23 Section 358(a)(4)(A) of the Small Business Invest24 ment Act of 1958 (15 U.S.C. 689g(a)(4)(A)) is amend25 ed— 


tjames on DSKG8SOYB1PROD with BILLS
158 

•HR 3854 IH

1 (1) by striking ‘‘shall be equal to’’ and all that 

2 follows through the period at the end and inserting 

3 ‘‘shall be equal to the lesser of—’’; and 

4 (2) by adding at the end the following: 

5 ‘‘(i) 10 percent of the resources (in 

6 cash or in-kind) raised by the company 

7 under section 354(d)(2); or 

8 ‘‘(ii) $1,000,000.’’. 

9 SEC. 511. AUTHORIZATION OF APPROPRIATIONS AND EN10 HANCED ALLOCATION FOR SMALL MANUFAC11 TURING. 

12 Section 368(a) of the Small Business Investment Act 

13 of 1958 (15 U.S.C. 689q(a)) is amended— 

14 (1) in the matter preceding paragraph (1) by 

15 striking ‘‘fiscal years 2001 through 2006’’ and in16 serting ‘‘fiscal years 2010 and 2011’’; 

17 (2) in paragraph (1)— 

18 (A) by striking ‘‘$150,000,000’’ and in19 serting ‘‘$100,000,000’’; and 

20 (B) by inserting before the period at the 

21 end the following: ‘‘, of which not less than 50 

22 percent shall be used to guarantee debentures 

23 of companies engaged primarily in development 

24 of and investment in small business concerns loVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00158 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
159 

•HR 3854 IH

1 cated in low-income geographic areas and en2 gaged primarily in manufacturing’’; and 

3 (3) in paragraph (2)— 

4 (A) by striking ‘‘$30,000,000’’ and insert5 ing ‘‘$20,000,000’’; and 

6 (B) by inserting before the period at the 

7 end the following: ‘‘, of which not less than 50 

8 percent shall be used to make grants to compa9 nies engaged primarily in development of and 

10 investment in small business concerns located in 

11 low-income geographic areas and engaged pri12 marily in manufacturing’’. 

13 Subtitle B—Expanded Investment 

14 in Small Business Renewable 

15 Energy 

16 SEC. 521. EXPANDED INVESTMENT IN RENEWABLE EN17 ERGY. 

18 Part C of title III of the Small Business Investment 

19 Act of 1958 (15 U.S.C. 690 et seq.) is amended— 

20 (1) in the heading by striking ‘‘RENEWABLE

21 FUEL CAPITAL INVESTMENT’’ and inserting ‘‘RE22 NEWABLE ENERGY CAPITAL INVESTMENT’’; 

23 (2) in the heading of paragraph (4) of section 

24 381 by striking ‘‘RENEWABLE FUEL CAPITAL INVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00159 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
160 

•HR 3854 IH

1 VESTMENT’’ and inserting ‘‘RENEWABLE ENERGY

2 CAPITAL INVESTMENT’’; 

3 (3) in the heading of section 384 by striking 

4 ‘‘RENEWABLE FUEL CAPITAL INVESTMENT’’ and 

5 inserting ‘‘RENEWABLE ENERGY CAPITAL IN6 VESTMENT’’; and 

7 (4) by striking ‘‘Renewable Fuel Capital Invest8 ment’’ each place it appears and inserting ‘‘Renew9 able Energy Capital Investment’’. 

10 SEC. 522. RENEWABLE ENERGY CAPITAL INVESTMENT PRO11 GRAM MADE PERMANENT. 

12 Part C of title III of the Small Business Investment 

13 Act of 1958 (15 U.S.C. 690 et seq.), as amended by this 

14 Act, is further amended— 

15 (1) in the heading by striking ‘‘PILOT’’; and 

16 (2) by striking section 398. 

17 SEC. 523. EXPANDED ELIGIBILITY FOR SMALL BUSINESSES. 

18 Part C of title III of the Small Business Investment 

19 Act of 1958 (15 U.S.C. 690 et seq.), as amended by this 

20 Act, is further amended by striking ‘‘smaller enterprises’’ 

21 each place it appears and inserting ‘‘small business con22 cerns’’. 


tjames on DSKG8SOYB1PROD with BILLS
161 

•HR 3854 IH

1 SEC. 524. EXPANDED USES FOR OPERATIONAL ASSISTANCE 

2 IN MANUFACTURING AND SMALL BUSI3 NESSES. 

4 Section 381(1) of the Small Business Investment Act 

5 of 1958 (15 U.S.C. 690(1)) is amended by inserting after 

6 ‘‘business development’’ the following: ‘‘, assistance that 

7 assists a small business concern to reduce energy con8 sumption, or assistance that assists a small business con9 cern engaged primarily in manufacturing with retooling, 

10 updating, or replacing machinery or equipment’’. 

11 SEC. 525. EXPANSION OF RENEWABLE ENERGY CAPITAL IN12 VESTMENT PROGRAM. 

13 (a) ADMINISTRATION PARTICIPATION REQUIRED.— 

14 Section 383 of the Small Business Investment Act of 1958 

15 (15 U.S.C. 690b) is amended by striking ‘‘under which 

16 the Administrator may’’ and inserting ‘‘under which the 

17 Administrator shall’’. 

18 (b) REPORT TO CONGRESS.—Not later than 1 year 

19 after the date of the enactment of this Act, the Adminis20 trator of the Small Business Administration shall submit 

21 to Congress a report describing any expansion of the Re22 newable Energy Capital Investment Program as a result 

23 of this section. 


tjames on DSKG8SOYB1PROD with BILLS
162 

•HR 3854 IH

1 SEC. 526. SIMPLIFIED FEE STRUCTURE TO EXPEDITE IM2 PLEMENTATION. 

3 Section 387(a) of the Small Business Investment Act 

4 of 1958 (15 U.S.C. 690f(a)) is amended by striking ‘‘or 

5 grant’’. 

6 SEC. 527. INCREASED OPERATIONAL ASSISTANCE GRANTS. 

7 Section 397(a) of the Small Business Investment Act 

8 of 1958 (15 U.S.C. 690p(a)) is amended by inserting after 

9 ‘‘and 2009’’ the following: ‘‘and $30,000,000 in such 

10 grants for each of fiscal years 2010 and 2011’’. 

11 SEC. 528. AUTHORIZATIONS OF APPROPRIATIONS. 

12 Section 397 of the Small Business Investment Act 

13 of 1958 (15 U.S.C. 690p) is amended— 

14 (1) in the heading by inserting after ‘‘APPRO15 PRIATIONS’’ the following: ‘‘AND PROGRAM LEV16 ELS’’; and 

17 (2) by adding at the end the following: 

18 ‘‘(c) PROGRAM LEVELS.—For the programs author19 ized by this part, the Administration is authorized to make 

20 $1,000,000,000 in guarantees of debentures for each of 

21 fiscal years 2010 and 2011.’’. 


tjames on DSKG8SOYB1PROD with BILLS
163 

•HR 3854 IH

1 TITLE VI—SMALL BUSINESS 

2 HEALTH INFORMATION TECH3 NOLOGY FINANCING PRO4 GRAM 

5 SEC. 601. SMALL BUSINESS HEALTH INFORMATION TECH6 NOLOGY FINANCING PROGRAM. 

7 The Small Business Act (15 U.S.C. 631 et seq.), as 

8 amended by this Act, is further amended by redesignating 

9 section 45 as section 46 and by inserting the following 

10 new section after section 44: 

11 ‘‘SEC. 45. LOAN GUARANTEES FOR HEALTH INFORMATION 

12 TECHNOLOGY. 

13 ‘‘(a) DEFINITIONS.—As used in this section: 

14 ‘‘(1) The term ‘health information technology’ 

15 means computer hardware, software, and related 

16 technology that supports the meaningful EHR use 

17 requirements set forth in section 1848(o)(2)(A) of 

18 the Social Security Act (42 U.S.C. 1395w– 

19 4(o)(2)(A)) and is purchased by an eligible profes20 sional to aid in the provision of health care in a 

21 health care setting, including, but not limited to, 

22 electronic medical records, and that provides for— 

23 ‘‘(A) enhancement of continuity of care for 

24 patients through electronic storage, trans25 mission, and exchange of relevant personal 


tjames on DSKG8SOYB1PROD with BILLS
164 

•HR 3854 IH

1 health data and information, such that this in2 formation is accessible at the times and places 

3 where clinical decisions will be or are likely to 

4 be made; 

5 ‘‘(B) enhancement of communication be6 tween patients and health care providers; 

7 ‘‘(C) improvement of quality measurement 

8 by eligible professionals enabling them to col9 lect, store, measure, and report on the proc10 esses and outcomes of individual and population 

11 performance and quality of care; 

12 ‘‘(D) improvement of evidence-based deci13 sion support; or 

14 ‘‘(E) enhancement of consumer and pa15 tient empowerment. 

16 Such term shall not include information technology 

17 whose sole use is financial management, mainte18 nance of inventory of basic supplies, or appointment 

19 scheduling. 

20 ‘‘(2) The term ‘eligible professional’ means any 

21 of the following: 

22 ‘‘(A) A physician (as defined in section 

23 1861(r) of the Social Security Act (42 U.S.C. 

24 1395x(r)). 


tjames on DSKG8SOYB1PROD with BILLS
165 

•HR 3854 IH

1 ‘‘(B) A practitioner described in section 

2 1842(b)(18)(C) of that Act. 

3 ‘‘(C) A physical or occupational therapist 

4 or a qualified speech-language pathologist. 

5 ‘‘(D) A qualified audiologist (as defined in 

6 section 1861(ll)(3)(B)) of that Act. 

7 ‘‘(E) A qualified medical transcriptionist 

8 who is either certified by or registered with the 

9 Association for Healthcare Documentation In10 tegrity, or a successor association thereto. 

11 ‘‘(F) A State-licensed pharmacist. 

12 ‘‘(G) A State-licensed supplier of durable 

13 medical equipment, prosthetics, orthotics, or 

14 supplies. 

15 ‘‘(3) The term ‘qualified eligible professional’ 

16 means an eligible professional whose office can be 

17 classified as a small business concern by the Admin18 istrator for purposes of this Act under size stand19 ards established under section 3 of this Act. 

20 ‘‘(4) The term ‘qualified medical 

21 transcriptionist’ means a specialist in medical lan22 guage and the healthcare documentation process 

23 who interprets and transcribes dictation by physi24 cians and other healthcare professionals to ensure 


tjames on DSKG8SOYB1PROD with BILLS
166 

•HR 3854 IH

1 accurate, complete, and consistent documentation of 

2 healthcare encounters. 

3 ‘‘(b) LOAN GUARANTEES FOR QUALIFIED ELIGIBLE

4 PROFESSIONALS.— 

5 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

6 the Administrator may guarantee up to 90 percent 

7 of the amount of a loan made to a qualified eligible 

8 professional to be used for the acquisition of health 

9 information technology for use in such eligible pro10 fessional’s medical practice and for the costs associ11 ated with the installation of such technology. Except 

12 as otherwise provided in this section, the terms and 

13 conditions that apply to loans made under section 

14 7(a) of this Act shall apply to loan guarantees made 

15 under this section. 

16 ‘‘(2) LIMITATIONS ON GUARANTEE AMOUNTS.— 

17 The maximum amount of loan principal guaranteed 

18 under this subsection may not exceed— 

19 ‘‘(A) $350,000 with respect to any single 

20 qualified eligible professional; and 

21 ‘‘(B) $2,000,000 with respect to a single 

22 group of affiliated qualified eligible profes23 sionals. 

24 ‘‘(c) FEES.—(1) The Administrator may impose a 

25 guarantee fee on the borrower for the purpose of reducing 


tjames on DSKG8SOYB1PROD with BILLS
167 

•HR 3854 IH

1 the cost (as defined in section 502(5) of the Federal Credit 

2 Reform Act of 1990) of the guarantee to zero in an 

3 amount not to exceed 2 percent of the total guaranteed 

4 portion of any loan guaranteed under this section. The Ad5 ministrator may also impose annual servicing fees on lend6 ers not to exceed 0.5 percent of the outstanding balance 

7 of the guarantees on lenders’ books. 

8 ‘‘(2) No service fees, processing fees, origination fees, 

9 application fees, points, brokerage fees, bonus points, or 

10 other fees may be charged to a loan applicant or recipient 

11 by a lender in the case of a loan guaranteed under this 

12 section. 

13 ‘‘(d) DEFERRAL PERIOD.—Loans guaranteed under 

14 this section shall carry a deferral period of not less than 

15 1 year and not more than 3 years. The Administrator shall 

16 have the authority to subsidize interest during the deferral 

17 period. 

18 ‘‘(e) EFFECTIVE DATE.—No loan may be guaranteed 

19 under this section until the meaningful EHR use require20 ments have been determined by the Secretary of Health 

21 and Human Services. 

22 ‘‘(f) SUNSET.—No loan may be guaranteed under 

23 this section after the date that is 5 years after meaningful 

24 EHR use requirements have been determined by the Sec25 retary of Health and Human Services. 


tjames on DSKG8SOYB1PROD with BILLS
168 

•HR 3854 IH

1 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated such sums as are nec3 essary for the cost (as defined in section 502(5) of the 

4 Federal Credit Reform Act of 1990) of guaranteeing 

5 $10,000,000,000 in loans under this section. The Admin6 istrator shall determine such program cost separately and 

7 distinctly from other programs operated by the Adminis8 trator.’’. 

9 TITLE VII—SMALL BUSINESS 

10 EARLY-STAGE INVESTMENT 

11 PROGRAM 

12 SEC. 701. SMALL BUSINESS EARLY-STAGE INVESTMENT 

13 PROGRAM. 

14 Title III of the Small Business Investment Act of 

15 1958 (15 U.S.C. 681 et seq.) is amended by adding at 

16 the end the following: 

17 ‘‘PART D—SMALL BUSINESS EARLY-STAGE 

18 INVESTMENT PROGRAM 

19 ‘‘SEC. 399A. ESTABLISHMENT OF PROGRAM. 

20 ‘‘The Administrator shall establish and carry out an 

21 early-stage investment program (hereinafter referred to in 

22 this part as the ‘program’) to provide equity investment 

23 financing to support early-stage small businesses in tar24 geted industries in accordance with this part. 


tjames on DSKG8SOYB1PROD with BILLS
169 

•HR 3854 IH

1 ‘‘SEC. 399B. ADMINISTRATION OF PROGRAM. 

2 ‘‘The program shall be administered by the Adminis3 trator acting through the Associate Administrator de4 scribed under section 201. 

5 ‘‘SEC. 399C. APPLICATIONS. 

6 ‘‘(a) IN GENERAL.—Any incorporated body, limited 

7 liability company, or limited partnership organized and 

8 chartered or otherwise existing under Federal or State law 

9 for the purpose of performing the functions and con10 ducting the activities contemplated under the program and 

11 any small business investment company may submit to the 

12 Administrator an application to participate in the pro13 gram. 

14 ‘‘(b) REQUIREMENTS FOR APPLICATION.—An appli15 cation to participate in the program shall include the fol16 lowing: 

17 ‘‘(1) A business plan describing how the appli18 cant intends to make successful venture capital in19 vestments in early-stage small businesses in targeted 

20 industries. 

21 ‘‘(2) Information regarding the relevant venture 

22 capital investment qualifications and backgrounds of 

23 the individuals responsible for the management of 

24 the applicant. 


tjames on DSKG8SOYB1PROD with BILLS
170 

•HR 3854 IH

1 ‘‘(3) A description of the extent to which the 

2 applicant meets the selection criteria under section 

3 399D. 

4 ‘‘(c) APPLICATIONS FROM SMALL BUSINESS INVEST5 MENT COMPANIES.—The Administrator shall establish an 

6 abbreviated application process for small business invest7 ment companies that have received a license under section 

8 301 and that are applying to participate in the program. 

9 Such abbreviated process shall incorporate a presumption 

10 that such small business investment companies satisfac11 torily meet the selection criteria under paragraphs (3) and 

12 (5) of section 399D(b). 

13 ‘‘SEC. 399D. SELECTION OF PARTICIPATING INVESTMENT 

14 COMPANIES. 

15 ‘‘(a) IN GENERAL.—Not later than 90 days after the 

16 date on which the Administrator receives an application 

17 from an applicant under section 399C, the Administrator 

18 shall make a final determination to approve or disapprove 

19 such applicant to participate in the program and shall 

20 transmit such determination to the applicant in writing. 

21 ‘‘(b) SELECTION CRITERIA.—In making a determina22 tion under subsection (a), the Administrator shall consider 

23 each of the following: 


tjames on DSKG8SOYB1PROD with BILLS
171 

•HR 3854 IH

1 ‘‘(1) The likelihood that the applicant will meet 

2 the goals specified in the business plan of the appli3 cant. 

4 ‘‘(2) The likelihood that the investments of the 

5 applicant will create or preserve jobs, both directly 

6 and indirectly. 

7 ‘‘(3) The character and fitness of the manage8 ment of the applicant. 

9 ‘‘(4) The experience and background of the 

10 management of the applicant. 

11 ‘‘(5) The extent to which the applicant will con12 centrate investment activities on early-stage small 

13 businesses in targeted industries. 

14 ‘‘(6) The likelihood that the applicant will 

15 achieve profitability. 

16 ‘‘(7) The experience of the management of the 

17 applicant with respect to establishing a profitable in18 vestment track record. 

19 ‘‘SEC. 399E. GRANTS. 

20 ‘‘(a) IN GENERAL.—The Administrator may make 

21 one or more grants to a participating investment company. 

22 ‘‘(b) GRANT AMOUNTS.— 

23 ‘‘(1) NON-FEDERAL CAPITAL.—A grant made 

24 to a participating investment company under the 

25 program may not be in an amount that exceeds the 


tjames on DSKG8SOYB1PROD with BILLS
172 

•HR 3854 IH

1 amount of the capital of such company that is not 

2 from a Federal source and that is available for in3 vestment on or before the date on which a grant is 

4 drawn upon. Such capital may include legally bind5 ing commitments with respect to capital for invest6 ment. 

7 ‘‘(2) LIMITATION ON AGGREGATE AMOUNT.— 

8 The aggregate amount of all grants made to a par9 ticipating investment company under the program 

10 may not exceed $100,000,000. 

11 ‘‘(c) GRANT PROCESS.—In making a grant under the 

12 program, the Administrator shall commit a grant amount 

13 to a participating investment company and the amount of 

14 each such commitment shall remain available to be drawn 

15 upon by such company— 

16 ‘‘(1) for new-named investments during the 5- 

17 year period beginning on the date on which each 

18 such commitment is first drawn upon; and 

19 ‘‘(2) for follow-on investments and management 

20 fees during the 10-year period beginning on the date 

21 on which each such commitment is first drawn upon, 

22 with not more than 2 additional 1-year periods avail23 able at the discretion of the Administrator. 


tjames on DSKG8SOYB1PROD with BILLS
173 

•HR 3854 IH

1 ‘‘SEC. 399F. INVESTMENTS IN EARLY-STAGE SMALL BUSI2 NESSES IN TARGETED INDUSTRIES. 

3 ‘‘(a) IN GENERAL.—As a condition of receiving a 

4 grant under the program, a participating investment com5 pany shall make all of the investments of such company 

6 in small business concerns, of which at least 50 percent 

7 shall be early-stage small businesses in targeted indus8 tries. 

9 ‘‘(b) EVALUATION OF COMPLIANCE.—With respect to 

10 a grant amount committed to a participating investment 

11 company under section 399E, the Administrator shall 

12 evaluate the compliance of such company with the require13 ments under this section if such company has drawn upon 

14 50 percent of such commitment. 

15 ‘‘SEC. 399G. PRO RATA INVESTMENT SHARES. 

16 ‘‘Each investment made by a participating invest17 ment company under the program shall be treated as com18 prised of capital from grants under the program according 

19 to the ratio that capital from grants under the program 

20 bears to all capital available to such company for invest21 ment. 

22 ‘‘SEC. 399H. GRANT INTEREST. 

23 ‘‘(a) GRANT INTEREST.— 

24 ‘‘(1) IN GENERAL.—As a condition of receiving 

25 a grant under the program, a participating investVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00173 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
174 

•HR 3854 IH

1 ment company shall convey a grant interest to the 

2 Administrator in accordance with paragraph (2). 

3 ‘‘(2) EFFECT OF CONVEYANCE.—The grant in4 terest conveyed under paragraph (1) shall have all 

5 the rights and attributes of other investors attrib6 utable to their interests in the participating invest7 ment company, but shall not denote control or vot8 ing rights to the Administrator. The grant interest 

9 shall entitle the Administrator to a pro rata portion 

10 of any distributions made by the participating in11 vestment company equal to the percentage of capital 

12 in the participating investment company that the 

13 grant comprises. The Administrator shall receive dis14 tributions from the participating investment com15 pany at the same times and in the same amounts as 

16 any other investor in the company with a similar in17 terest. The investment company shall make alloca18 tions of income, gain, loss, deduction, and credit to 

19 the Administrator with respect to the grant interest 

20 as if the Administrator were an investor. 

21 ‘‘(b) MANAGER PROFITS.—As a condition of receiv22 ing a grant under the program, the manager profits inter23 est payable to the managers of a participating investment 

24 company under the program shall not exceed 20 percent 

25 of profits, exclusive of any profits that may accrue as a 


tjames on DSKG8SOYB1PROD with BILLS
175 

•HR 3854 IH

1 result of the capital contributions of any such managers 

2 with respect to such company. Any excess of this amount, 

3 less taxes payable thereon, shall be returned by the man4 agers and paid to the investors and the Administrator in 

5 proportion to the capital contributions and grants paid in. 

6 No manager profits interest (other than a tax distribution) 

7 shall be paid prior to the repayment to the investors and 

8 the Administrator of all contributed capital and grants 

9 made. 

10 ‘‘(c) DISTRIBUTION REQUIREMENTS.—As a condition 

11 of receiving a grant under the program, a participating 

12 investment company shall make all distributions to all in13 vestors in cash and shall make distributions within a rea14 sonable time after exiting investments, including following 

15 a public offering or market sale of underlying investments. 

16 ‘‘SEC. 399I. FUND. 

17 ‘‘There is hereby created within the Treasury a sepa18 rate fund for grants which shall be available to the Admin19 istrator subject to annual appropriations as a revolving 

20 fund to be used for the purposes of the program. All 

21 amounts received by the Administrator, including any 

22 moneys, property, or assets derived by the Administrator 

23 from operations in connection with the program, shall be 

24 deposited in the fund. All expenses and payments, exclud25 ing administrative expenses, pursuant to the operations of 


tjames on DSKG8SOYB1PROD with BILLS
176 

•HR 3854 IH

1 the Administrator under the program shall be paid from 

2 the fund. 

3 ‘‘SEC. 399J. APPLICATION OF OTHER SECTIONS. 

4 ‘‘To the extent not inconsistent with requirements 

5 under this part, the Administrator may apply sections 

6 309, 311, 312, 313, and 314 to activities under this part 

7 and an officer, director, employee, agent, or other partici8 pant in a participating investment company shall be sub9 ject to the requirements under such sections. 

10 ‘‘SEC. 399K. DEFINITIONS. 

11 ‘‘In this part, the following definitions apply: 

12 ‘‘(1) EARLY-STAGE SMALL BUSINESS IN A TAR13 GETED INDUSTRY.—The term ‘early-stage small 

14 business in a targeted industry’ means a small busi15 ness concern that— 

16 ‘‘(A) is domiciled in a State; 

17 ‘‘(B) has not generated gross annual sales 

18 revenues exceeding $15,000,000 in any of the 

19 previous 3 years; and 

20 ‘‘(C) is engaged primarily in researching, 

21 developing, manufacturing, producing, or bring22 ing to market goods, products, or services with 

23 respect to any of the following business sectors: 

24 ‘‘(i) Agricultural technology. 

25 ‘‘(ii) Energy technology. 


tjames on DSKG8SOYB1PROD with BILLS
177 

•HR 3854 IH

1 ‘‘(iii) Environmental technology. 

2 ‘‘(iv) Life science. 

3 ‘‘(v) Information technology. 

4 ‘‘(vi) Digital media. 

5 ‘‘(vii) Clean technology. 

6 ‘‘(viii) Defense technology. 

7 ‘‘(2) PARTICIPATING INVESTMENT COMPANY.— 

8 The term ‘participating investment company’ means 

9 an applicant approved under section 399D to par10 ticipate in the program. 

11 ‘‘(3) SMALL BUSINESS CONCERN.—The term 

12 ‘small business concern’ has the same meaning given 

13 such term under section 3(a) of the Small Business 

14 Act (15 U.S.C. 632(a)). 

15 ‘‘SEC. 399L. AUTHORIZATION OF APPROPRIATIONS. 

16 ‘‘There is authorized to be appropriated to carry out 

17 the program $200,000,000 for the first full fiscal year be18 ginning after the date of the enactment of this part.’’. 

19 TITLE VIII—SBA DISASTER 

20 PROGRAM REFORM 

21 SEC. 801. REVISED COLLATERAL REQUIREMENTS. 

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

23 is amended— 

24 (1) by striking ‘‘(e) [RESERVED].’’ and ‘‘(f) 

25 [RESERVED].’’; and 


tjames on DSKG8SOYB1PROD with BILLS
178 

•HR 3854 IH

1 (2) in subsection (f), as added by section 

2 12068(a)(2) of the Small Business Disaster Re3 sponse and Loan Improvements Act of 2008 (sub4 title B of title XII of the Food, Conservation, and 

5 Energy Act of 2008; Public Law 110–246), by add6 ing at the end the following: 

7 ‘‘(2) REVISED COLLATERAL REQUIREMENTS.— 

8 In making a loan with respect to a business under 

9 subsection (b), if the total approved amount of such 

10 loan is less than or equal to $250,000, the Adminis11 trator may not require the borrower to use the bor12 rower’s home as collateral.’’. 

13 SEC. 802. INCREASED LIMITS. 

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

15 636(b)) is amended— 

16 (1) in paragraph (3)(E) by striking 

17 ‘‘$1,500,000’’ each place it appears and inserting 

18 ‘‘$3,000,000’’; and 

19 (2) in paragraph (8)(A) by striking 

20 ‘‘$2,000,000’’ and inserting ‘‘$3,000,000’’. 

21 SEC. 803. REVISED REPAYMENT TERMS. 

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

23 636(f)) is amended by adding at the end the following: 

24 ‘‘(3) REVISED REPAYMENT TERMS.—In making 

25 loans under subsection (b), the Administrator— 


tjames on DSKG8SOYB1PROD with BILLS
179 

•HR 3854 IH

1 ‘‘(A) may not require repayment to begin 

2 until the date that is 12 months after the date 

3 on which the final disbursement of approved 

4 amounts is made; and 

5 ‘‘(B) shall calculate the amount of repay6 ment based solely on the amounts disbursed.’’. 

7 SEC. 804. REVISED DISBURSEMENT PROCESS. 

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

9 636(f)), as amended by this Act, is further amended by 

10 adding at the end the following: 

11 ‘‘(4) REVISED DISBURSEMENT PROCESS.—In 

12 making a loan under subsection (b), the Adminis13 trator shall disburse loan amounts in accordance 

14 with the following: 

15 ‘‘(A) If the total amount approved with re16 spect to such loan is less than or equal to 

17 $150,000— 

18 ‘‘(i) the first disbursement with re19 spect to such loan shall consist of 40 per20 cent of the total loan amount, or a lesser 

21 percentage of the total loan amount if the 

22 Administrator and the borrower agree on 

23 such a lesser percentage; 

24 ‘‘(ii) the second disbursement shall 

25 consist of 50 percent of the loan amounts 


tjames on DSKG8SOYB1PROD with BILLS
180 

•HR 3854 IH

1 that remain after the first disbursement, 

2 and shall be made when the borrower has 

3 produced satisfactory receipts to dem4 onstrate the proper use of 50 percent of 

5 the first disbursement; and 

6 ‘‘(iii) the third disbursement shall 

7 consist of the loan amounts that remain 

8 after the preceding disbursements, and 

9 shall be made when the borrower has pro10 duced satisfactory receipts to demonstrate 

11 the proper use of the first disbursement 

12 and 50 percent of the second disburse13 ment. 

14 ‘‘(B) If the total amount approved with re15 spect to such loan is more than $150,000 but 

16 less than or equal to $500,000— 

17 ‘‘(i) the first disbursement with re18 spect to such loan shall consist of 20 per19 cent of the total loan amount, or a lesser 

20 percentage of the total loan amount if the 

21 Administrator and the borrower agree on 

22 such a lesser percentage; 

23 ‘‘(ii) the second disbursement shall 

24 consist of 30 percent of the loan amounts 

25 that remain after the first disbursement, 


tjames on DSKG8SOYB1PROD with BILLS
181 

•HR 3854 IH

1 and shall be made when the borrower has 

2 produced satisfactory receipts to dem3 onstrate the proper use of 50 percent of 

4 the first disbursement; 

5 ‘‘(iii) the third disbursement shall 

6 consist of 25 percent of the loan amounts 

7 that remain after the first and second dis8 bursements, and shall be made when the 

9 borrower has produced satisfactory receipts 

10 to demonstrate the proper use of the first 

11 disbursement and 50 percent of the second 

12 disbursement; and 

13 ‘‘(iv) the fourth disbursement shall 

14 consist of the loan amounts that remain 

15 after the preceding disbursements, and 

16 shall be made when the borrower has pro17 duced satisfactory receipts to demonstrate 

18 the proper use of the first and second dis19 bursements and 50 percent of the third 

20 disbursement. 

21 ‘‘(C) If the total amount approved with re22 spect to such loan is more than $500,000— 

23 ‘‘(i) the first disbursement with re24 spect to such loan shall consist of at least 

25 $100,000, or a lesser amount if the AdVerDate Nov 24 2008 04:33 Oct 21, 2009 Jkt 089200 PO 00000 Frm 00181 Fmt 6652 Sfmt 6201 E:\BILLS\H3854.IH H3854

tjames on DSKG8SOYB1PROD with BILLS
182 

•HR 3854 IH

1 ministrator and the borrower agree on 

2 such a lesser amount; and 

3 ‘‘(ii) the number of disbursements 

4 after the first, and the amount of each 

5 such disbursement, shall be in the discre6 tion of the Administrator, but the amount 

7 of each such disbursement shall be at least 

8 $100,000.’’. 

9 SEC. 805. GRANT PROGRAM. 

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

11 636(b)), as amended by this Act, is further amended by 

12 inserting after paragraph (9) the following: 

13 ‘‘(10) GRANTS TO DISASTER-AFFECTED SMALL

14 BUSINESSES.— 

15 ‘‘(A) IN GENERAL.—If the Administrator 

16 declares eligibility for additional disaster assist17 ance under paragraph (9), the Administrator 

18 may make a grant, in an amount not exceeding 

19 $100,000, to a small business concern that— 

20 ‘‘(i) is located in an area affected by 

21 the applicable major disaster; 

22 ‘‘(ii) submits to the Administrator a 

23 certification by the owner of the concern 

24 that such owner intends to reestablish the 


tjames on DSKG8SOYB1PROD with BILLS
183 

•HR 3854 IH

1 concern in the same county in which the 

2 concern was originally located; 

3 ‘‘(iii) has applied for, and was rejected 

4 for, a conventional disaster assistance loan 

5 under this subsection; and 

6 ‘‘(iv) was in existence for at least 2 

7 years before the date on which the applica8 ble disaster declaration was made. 

9 ‘‘(B) PRIORITY.—In making grants under 

10 this paragraph, the Administrator shall give 

11 priority to a small business concern that the 

12 Administrator determines is economically viable 

13 but unable to meet short-term financial obliga14 tions. 

15 ‘‘(C) PROGRAM LEVEL AND AUTHORIZA16 TION OF APPROPRIATIONS.— 

17 ‘‘(i) PROGRAM LEVEL.—The Adminis18 trator is authorized to make $100,000,000 

19 in grants under this paragraph for each of 

20 fiscal years 2010 and 2011. 

21 ‘‘(ii) AUTHORIZATION OF APPROPRIA22 TIONS.—There are authorized to be appro23 priated to the Administrator such sums as 

24 may be necessary to carry out this para25 graph.’’. 


tjames on DSKG8SOYB1PROD with BILLS
184 

•HR 3854 IH

1 SEC. 806. REGIONAL DISASTER WORKING GROUPS. 

2 Section 40 of the Small Business Act (15 U.S.C. 

3 657l) is amended— 

4 (1) in subsection (a), in the matter preceding 

5 paragraph (1), by striking ‘‘or’’ and inserting ‘‘and’’; 

6 (2) by redesignating subsection (d) as sub7 section (e); and 

8 (3) by inserting after subsection (c) the fol9 lowing: 

10 ‘‘(d) REGIONAL DISASTER WORKING GROUPS.—In 

11 carrying out subsection (a), the Administrator, acting 

12 through the regional administrators of the regional offices 

13 of the Administration, shall develop a disaster prepared14 ness and response plan for each region of the Administra15 tion. Each such plan shall be developed in cooperation 

16 with Federal, State, and local emergency response authori17 ties and representatives of businesses located in the region 

18 to which such plan applies. Each such plan shall identify 

19 and include a plan relating to the 3 disasters, natural or 

20 manmade, most likely to occur in the region to which such 

21 plan applies.’’. 

22 SEC. 807. OUTREACH GRANTS FOR LOAN APPLICANT AS23 SISTANCE. 

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

25 636(b)), as amended by this Act, is further amended by 

26 inserting after paragraph (10) the following: 


tjames on DSKG8SOYB1PROD with BILLS
185 

•HR 3854 IH

1 ‘‘(11) OUTREACH GRANTS FOR LOAN APPLI2 CANT ASSISTANCE.— 

3 ‘‘(A) IN GENERAL.—From amounts made 

4 available for administrative expenses relating to 

5 activities under this subsection, the Adminis6 trator is authorized to make grants to the fol7 lowing: 

8 ‘‘(i) A women’s business center in an 

9 area affected by a disaster. 

10 ‘‘(ii) A small business development 

11 center in an area affected by a disaster. 

12 ‘‘(iii) A Veteran Business Outreach 

13 Center in an area affected by a disaster. 

14 ‘‘(iv) A chamber of commerce in an 

15 area affected by a disaster. 

16 ‘‘(B) USE OF GRANT.—An entity specified 

17 under subparagraph (A) shall use a grant re18 ceived under this paragraph to provide applica19 tion preparation assistance to applicants for a 

20 loan under this subsection. 

21 ‘‘(C) PROGRAM LEVEL.—The Adminis22 trator is authorized to make $50,000,000 in 

23 grants under this paragraph for each of fiscal 

24 years 2010 and 2011.’’. 


tjames on DSKG8SOYB1PROD with BILLS
186 

•HR 3854 IH

1 SEC. 808. AUTHORIZATION OF APPROPRIATIONS. 

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

3 note), as amended by this Act, is further amended— 

4 (1) by redesignating subsection (j) as sub5 section (k); and 

6 (2) by inserting after subsection (i) the fol7 lowing: 

8 ‘‘(j) FISCAL YEARS 2010 AND 2011 WITH RESPECT

9 TO SECTION 7(b).—There is authorized to be appropriated 

10 such sums as may be necessary for administrative ex11 penses and loans under section 7(b).’’. 

12 TITLE IX—REGULATIONS 

13 SEC. 901. REGULATIONS. 

14 Except as otherwise provided in this Act or in amend15 ments made by this Act, after an opportunity for notice 

16 and comment, but not later than 180 days after the date 

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

18 regulations to carry out this Act and the amendments 

19 made by this Act. 

Æ 


tjames on DSKG8SOYB1PROD with BILLS