I 

111TH CONGRESS 

1ST SESSION H. R. 3739 

To amend title V of the Small Business Investment Act of 1958 to provide 

for improved long-term financing to small business concerns, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 7, 2009 

Mr. BUCHANAN introduced the following bill; which was referred to the 

Committee on Small Business 

A BILL 

To amend title V of the Small Business Investment Act 

of 1958 to provide for improved long-term financing to 

small business concerns, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Job Creation and Eco5 nomic Development Through CDC Modernization Act of 

6 2009’’. 


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1 TITLE I—GENERAL PROVISIONS 

2 SEC. 101. PROGRAM LEVELS. 

3 Section 20 of the Small Business Act is amended by 

4 adding the following new subsection after subsection (e): 

5 ‘‘(f) PROGRAM LEVELS.— 

6 ‘‘(1) FISCAL YEAR 2010.—For financings au7 thorized by section 7(a)(13) of this Act and title V 

8 of the Small Business Investment Act of 1958, the 

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

10 in guarantees of debentures for fiscal year 2010. 

11 ‘‘(2) FISCAL YEAR 2011.—For financings au12 thorized by section 7(a)(13) of this Act and title V 

13 of the Small Business Investment Act of 1958, the 

14 Administrator is authorized to make 

15 $10,000,000,000 in guarantees of debentures for fis16 cal year 2011.’’. 

17 SEC. 102. DEFINITIONS. 

18 Section 103 of the Small Business Investment Act 

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

20 (1) By amending paragraph (6) to read as fol21 lows: 

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

23 any corporation organized in order promote eco24 nomic development and the growth of small business 

25 concerns and includes companies chartered under a 


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1 special State law authorizing them to operate on a 

2 statewide basis;’’. 

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

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

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

6 end the following new paragraphs: 

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

8 means a development company that the Adminis9 trator has determined meets the criteria set forth in 

10 section 501; 

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

12 means— 

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

14 State, or 

15 ‘‘(B) a combination of political subdivisions 

16 which— 

17 ‘‘(i) has been formed to promote eco18 nomic or community development; 

19 ‘‘(ii) is composed of representatives of 

20 the State or a political subdivision acting 

21 in their official capacity; and 

22 ‘‘(iii) include an area in an adjacent 

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

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1 cient to support the formation of a sepa2 rate development company; 

3 such term includes entities meeting the require4 ments of clauses (i) through (iii), such as, but 

5 not limited to, a council of governments, re6 gional development corporation, regional plan7 ning commission, or economic development dis8 trict; 

9 ‘‘(22) the term ‘member’ means any person au10 thorized to vote for a director of a corporation or the 

11 dissolution or merger of a company. For purposes of 

12 this definition, a shareholder of a for-profit corpora13 tion shall be considered a member; 

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

15 have the same meaning as those terms are given in 

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

17 Code; and 

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

19 small business concern— 

20 ‘‘(A) the primary business of which is clas21 sified in sector 31, 32, or 33 of the North 

22 American Industrial Classification System; and 

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

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


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1 TITLE II—CERTIFIED 

2 DEVELOPMENT COMPANIES 

3 SEC. 201. CERTIFIED DEVELOPMENT COMPANIES. 

4 Section 501 of the Small Business Investment Act 

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

6 ‘‘SEC. 501. CERTIFIED DEVELOPMENT COMPANIES. 

7 ‘‘(a) CERTIFIED DEVELOPMENT COMPANY DEBEN8 TURE AUTHORITY.—Only development companies cer9 tified by the Administrator shall have the authority to 

10 issue debentures under this Act. 

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

12 company shall be certified for the purposes of issuing de13 bentures if the Administrator determines that it meets 

14 each of the following criteria: 

15 ‘‘(1) SMALL CONCERN.— 

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

17 subparagraph (C) of paragraph (2), the com18 pany, including its affiliates, shall have no more 

19 than 200 employees. 

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

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

22 be under the control of any other concern. 

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

24 company is organized as a not-for-profit cor25 poration. 


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1 ‘‘(2) EXCEPTIONS.— 

2 ‘‘(A) FOR PROFIT STATUS.—If a develop3 ment company was chartered as a for-profit 

4 corporation and issued debentures prior to Jan5 uary 1, 1987, the company shall not be re6 quired to change its status to not-for-profit in 

7 order to be certified. 

8 ‘‘(B) AFFILIATION GRANDFATHER.—Any 

9 company that was authorized by the Adminis10 trator to issue debentures before December 31, 

11 2005, shall be eligible for certification without 

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

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

14 local governmental entity unless that not-for15 profit corporation or local governmental entity 

16 is another entity that issues debentures under 

17 this title. 

18 ‘‘(C) AFFILIATION WITH LOCAL GOVERN19 MENTAL ENTITIES.—Any company that was or20 ganized after the date of enactment of the Job 

21 Creation and Economic Development through 

22 CDC Modernization Act of 2009 shall be eligi23 ble for certification without regard to its status 

24 as part of or affiliation with any local govern25 mental entity. 


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1 ‘‘(3) GOOD STANDING.—A development com2 pany shall be in good standing and comply with all 

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

4 authorized to conduct business. 

5 ‘‘(4) MEMBERSHIP.— 

6 ‘‘(A) IN GENERAL.—The development com7 pany shall have at least 25 members. 

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

9 control more than 10 percent of the total voting 

10 power in the development company. 

11 ‘‘(C) RESIDENCE.—Members must be resi12 dents of the State in which the development 

13 company is chartered or authorized to do busi14 ness. 

15 ‘‘(D) DIVERSITY.—The development com16 pany must have at least one member from each 

17 of the following: 

18 ‘‘(i) A local governmental entity. 

19 ‘‘(ii) A financial institution subject to 

20 regulation by a Federal organization be21 longing to the Federal Financial Institu22 tions Examination Council and provides 

23 long-term fixed asset financing in the com24 mercial market. 


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

2 other than a development company, that is 

3 dedicated to promoting economic growth. 

4 ‘‘(iv) A for-profit businesses, other 

5 than a financial institution described in 

6 clause (ii). 

7 ‘‘(E) EMPLOYMENT STATUS.—Membership 

8 in a development company shall not be predi9 cated on employment status and an individual 

10 who retired from or was terminated (for rea11 sons other than fraud or the commission of a 

12 crime) from an entity described in subpara13 graph (D) shall be deemed to be from the orga14 nization described in that subparagraph. 

15 ‘‘(5) BOARD OF DIRECTORS.— 

16 ‘‘(A) IN GENERAL.—The development com17 pany’s board consists of members and each di18 rector receives a majority vote of the members 

19 unless the development company is a for-profit 

20 corporation in which case the board need not 

21 consist entirely of members. 

22 ‘‘(B) BOARD REPRESENTATION.—There 

23 shall be at least one director from not fewer 

24 than 3 of the 4 types of organizations specified 

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1 nization shall have more than 50 percent rep2 resentation on the board of the development 

3 company. If the development company is a for4 profit corporation, financial institution rep5 resentatives may make up more than 50 per6 cent of the board. 

7 ‘‘(C) AFFILIATED ENTITY REPRESENTA8 TION RESTRICTIONS.—A development company 

9 that is described in subsection (b)(1)(C) of this 

10 section may have any or all of its board mem11 bers appointed by entities affiliated with the 

12 company and may include common members 

13 who also serve on the affiliate’s board of direc14 tors if the appointment of board members was 

15 exercised by an affiliate prior to December 31, 

16 2005. 

17 ‘‘(D) SPECIAL RULE FOR CERTAIN DEVEL18 OPMENT COMPANIES.—The board of directors 

19 for any development company issuing deben20 tures before December 31, 2005, and incor21 porated under a State law requiring, or which 

22 is interpreted by the State’s legal department 

23 as imposing specific requirements on, the num24 ber and selection of members, board members, 

25 or both, and the rights and privileges conferred 


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1 by such State law, may adhere to such provi2 sions. 

3 ‘‘(6) PROFESSIONAL MANAGEMENT AND

4 STAFF.— 

5 ‘‘(A) IN GENERAL.—The development com6 pany shall have full-time independent profes7 sional management, including a chief executive 

8 officer to manage the daily operations and a 

9 full-time professional staff qualified to carry out 

10 the functions authorized under this title. 

11 ‘‘(B) UTILIZATION OF STAFF FROM AF12 FILIATED ENTITIES.—A development company 

13 shall not be denied certification under this sec14 tion if its chief executive or full-time profes15 sional staff is from an affiliated entity as de16 scribed in subsection (b)(1)(C). 

17 ‘‘(C) STAFF UNDER CONTRACT.—The Ad18 ministrator shall not deny certification to a de19 velopment company that contracts for its full 

20 time staff if one of the following conditions is 

21 met: 

22 ‘‘(i) The development company is lo23 cated in a rural area, obtains its staff 

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1 ministrator and that development company 

2 operates in the same or a contiguous 

3 State. 

4 ‘‘(ii) The development company had 

5 issued debentures under this title prior to 

6 December 31, 2005, and had contracted 

7 with a for-profit business concern to pro8 vide staffing and management services. 

9 ‘‘(c) APPLICATIONS.— 

10 ‘‘(1) DEVELOPMENT COMPANIES ISSUING DE11 BENTURES BEFORE SEPTEMBER 30, 2009.— 

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

13 any development company that issued deben14 tures pursuant to this title before September 

15 30, 2009, the Administrator shall develop, after 

16 an opportunity for notice and comment, no 

17 later than 90 days after the date of enactment 

18 of the Job Creation and Economic Development 

19 Through CDC Modernization Act of 2009, a 

20 short-form application that contains sufficient 

21 information for the Administrator to determine 

22 that the development company currently meets 

23 the standards set forth in subsection (b). In de24 veloping such application, the Administrator 

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1 work necessary to determine whether the devel2 opment company meets the standards for cer3 tification and may limit the application to the 

4 filing of reports previously submitted to the Ad5 ministrator. 

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

7 through contracts, the application shall include 

8 a copy of the contract. 

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

10 Administrator shall certify the development 

11 company if the application demonstrates that 

12 the applicant meets the standards in subsection 

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

14 request for certification shall be made within 7 

15 business days from the date the initial submis16 sion of the application is received by the Ad17 ministrator. If the Administrator takes no ac18 tion to approve or disapprove within 7 business 

19 days, the application for certification is deemed 

20 approved and no further action is required by 

21 the Administrator or the development company 

22 to obtain certification. If the Administrator dis23 approves the application, the Administrator 

24 shall provide in writing within 3 business days 

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1 ment is not provided within the time specified, 

2 the application is deemed approved and no fur3 ther action is required by the Administrator or 

4 the development company to obtain certifi5 cation. 

6 ‘‘(ii) For those development companies 

7 that submit contracts under subparagraph 

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

9 the application only if the Administrator finds 

10 that the entity servicing the applicant is no 

11 longer able to provide the employees or services 

12 needed by the applicant to perform the func13 tions that would be authorized under this title. 

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

15 Administrator disapproves the application for 

16 certification and provides a written statement 

17 as set forth in subparagraph (B), the develop18 ment company may file a new application lim19 ited solely to the address the concerns of the 

20 Administrator and the certification procedures 

21 set forth in subparagraph (B) shall recom22 mence. 

23 ‘‘(D) APPEALS.—If the Administrator dis24 approves an application in accordance with the 

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


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1 applicant may, within 10 calendar days after 

2 receipt of the disapproval, appeal such dis3 approval. The Administrator shall conduct a 

4 hearing to determine such appeal pursuant to 

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

6 States Code, and shall issue a decision not later 

7 than 45 days after the appeal is filed. The deci8 sion on appeal shall constitute final agency ac9 tion for purposes of chapter 7, title 5 United 

10 States Code. 

11 ‘‘(E) GRANDFATHERING.— 

12 ‘‘(i) IN GENERAL.—For the period 2 

13 years after date of enactment of the Job 

14 Creation and Economic Development 

15 through CDC Modernization Act of 2009, 

16 any development company that was issuing 

17 debentures on or before the date set forth 

18 in this clause (i) shall be deemed to be a 

19 certified development company. 

20 ‘‘(ii) COMPLETION OF APPLICATION

21 PROCESS.—The procedures set forth in 

22 this paragraph for determining certifi23 cation shall apply to any development com24 pany meeting the qualifications of clause 

25 (i). 


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1 ‘‘(iii) EFFECT OF DENIAL.—The de2 nial or rejection of an application for cer3 tification as set forth in this subsection 

4 shall have no affect on the ability of a de5 velopment company meeting the qualifica6 tions in clause (i) from continuing to issue 

7 debentures during the entire two-year pe8 riod established in that clause. 

9 ‘‘(iv) FAILURE TO OBTAIN CERTIFI10 CATION.—Any development company that 

11 fails to obtain certification in accordance 

12 with the procedures set forth in this para13 graph during the period set forth in clause 

14 (i) shall be considered to be a new develop15 ment company and the procedures of para16 graph (2) shall apply. The authority to 

17 issue debentures shall cease for any devel18 opment company covered by this subpara19 graph that has failed to obtain certification 

20 from the Administrator during the time 

21 period set forth in clause (i). 

22 ‘‘(F) AUTOMATIC QUALIFICATION PROVI23 SION.—If the Administrator fails to implement 

24 the certification process set forth in this para25 graph, any development company that was 


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1 issuing debentures before September 30, 2009, 

2 pursuant to this title shall be considered cer3 tified until such time as the Administrator de4 velops the certification procedures set forth in 

5 this paragraph. 

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

7 by a development company or the Administrator 

8 pursuant to this paragraph shall have no im9 pact on any guarantee of a debenture issued 

10 prior to the date of enactment of the Job Cre11 ation and Economic Development Through 

12 CDC Modernization Act of 2009. 

13 ‘‘(2) APPLICATION PROCESS FOR NEW DEVEL14 OPMENT COMPANIES.— 

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

16 company that has not issued debentures prior 

17 to September 30, 2009, the Administrator shall 

18 develop no later than 180 days after the date 

19 of enactment of the Job Creation and Economic 

20 Development Through CDC Modernization Act 

21 of 2009, after an opportunity for notice and 

22 comment, an application form for certification 

23 that provides the Administrator with sufficient 

24 information to insure that the applicant meets 

25 the standards set forth in subsection (b). The 


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1 Administrator shall certify such development 

2 company or reject the application within 60 cal3 endar days from the date the initial submission 

4 was received by the Administrator. If the Ad5 ministrator rejects the application, the Adminis6 trator shall provide in writing within 7 business 

7 days after the decision, the reason for rejecting 

8 the application. 

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

10 shall be able to appeal the disapproval of an ap11 plication under the procedures set forth in 

12 paragraph (1)(D).’’. 

13 SEC. 202. CERTIFIED DEVELOPMENT COMPANY; OPER14 ATIONAL REQUIREMENTS. 

15 (a) OPERATIONAL REQUIREMENTS.—Section 502 of 

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

17 696) is amended to read as follows: 

18 ‘‘SEC. 502. OPERATIONAL REQUIREMENTS FOR CERTIFIED 

19 DEVELOPMENT COMPANIES. 

20 ‘‘(a) MAINTENANCE OF STANDARDS FOR CERTIFI21 CATION.—Any company certified pursuant to section 501 

22 shall continue to comply with the requirements of that sec23 tion to remain certified. The Administrator shall develop 

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1 tified development companies, demonstrating their contin2 ued compliance. The form shall be developed in a manner 

3 that the estimated time for completion shall take no more 

4 than 2 hours. 

5 ‘‘(b) ETHICS AND CONFLICT OF INTERESTS.—A cer6 tified development company, its officers, employees, and 

7 contractors shall act ethically and avoid activities which 

8 constitute a conflict of interest or appear to constitute a 

9 conflict of interest. For purposes of this subsection, con10 duct that is unethical includes, but is not limited to, the 

11 actions specified in section 120.140 of title 13, Code of 

12 Federal Regulations as in effect on January 1, 2009. 

13 ‘‘(1) BY ASSOCIATES.—An associate may not be 

14 an officer, director, or manager of more than 1 cer15 tified development company. The term ‘associate’ 

16 shall have the same meaning given the term ‘Asso17 ciate of a CDC’ in section 120.10 of title 13, Code 

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

19 2009. For the purposes of this subsection, 10 per20 cent shall be substituted wherever section 120.10 of 

21 title 13, Code of Federal Regulation uses 20 per22 cent. 

23 ‘‘(2) BY ENTITIES.—Except as provided in sec24 tions 501(b)(5) and 501(b)(6), no person, sole pro25 prietorship, partnership, or corporation shall control 


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1 or have managerial control of more than one cer2 tified development company. Control means any of 

3 the following: 

4 ‘‘(A) The ability to appoint or remove 

5 members of the company or member of its 

6 board of directors. 

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

8 or fee changes affecting revenues of the cer9 tified development. 

10 ‘‘(C) The ability to veto, overrule, or mod11 ify decisions of the certified development com12 pany’s body. 

13 ‘‘(D) The ability to, either directly or con14 tractually, to appoint, hire, reassign, or dismiss 

15 those managers and employees responsible for 

16 the daily operations of the certified development 

17 company. 

18 ‘‘(E) The ability to access the certified de19 velopment company’s resources or amend its 

20 budget. 

21 ‘‘(F) The ability to control another cer22 tified development company pursuant to provi23 sions in a contract. 


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1 ‘‘(c) MEETINGS.—The board of directors of the cer2 tified development company shall meet on a regular basis 

3 to make policy decisions for the company. 

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

5 a certified development company may use a loan com6 mittee to process loans in the State in which it operates 

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

8 loan committee shall be residents of the certified develop9 ment company’s state of operation or the adjacent local 

10 economic area. Such loan committees shall meet on a peri11 odic basis as set forth by the board of directors. 

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

13 ‘‘(1) IN GENERAL.—Certified development com14 panies shall not recommend or approve a guarantee 

15 of a debenture that will be collateralized by property 

16 being constructed or acquired on which an institu17 tion, as provided in section 508(c)(1)(A), will have 

18 a first lien position. 

19 ‘‘(2) EXCEPTION.—The prohibition in para20 graph (1) shall not apply to any certified develop21 ment company that was affiliated with or part of 

22 any entity that took a first lien position between Oc23 tober 1, 2003, and September 30, 2005. 

24 ‘‘(f) AFFILIATION WITH LENDERS OPERATING

25 UNDER SECTION 7 OF THE SMALL BUSINESS ACT.— 


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

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

3 who participates in the loan programs authorized in 

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

5 U.S.C. 636). 

6 ‘‘(2) EXCEPTION.—The prohibition in para7 graph (1) shall not apply to any certified develop8 ment company that is affiliated with an entity au9 thorized by the Administrator to operate under sec10 tion 7(a) of the Small Business Act if such affili11 ation occurred on or before November 6, 2003. 

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

13 development company shall not lose its status due an 

14 affiliation with an institution regulated by the Na15 tional Credit Union Administration if the develop16 ment company was affiliated with such an institu17 tion prior to January 1, 2007. 

18 ‘‘(g) SERVICING AND PACKAGING GUARANTEED

19 LOANS.—A certified development company is authorized 

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

21 7(c) of the Small Business Act (15 U.S.C. 636), to service 

22 such loans, and to charge a reasonable fee for servicing 

23 such loans. 

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

25 by a certified development company from the issuance of 


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

2 private secondary market, or fees described in subsection 

3 (g) that remain unexpended after payment of staff, oper4 ating, and overhead expenses shall be used by the certified 

5 development company for— 

6 ‘‘(1) operating reserves; 

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

8 development company operates through the methods 

9 authorized in section 505 (relating to multi-State 

10 operation); 

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

12 economic development activity or community devel13 opment primarily in the State from which such 

14 funds were generated; or 

15 ‘‘(4) investment in small business investment 

16 companies subject to the limitations in subsection 

17 (i). 

18 ‘‘(i) LIMITATIONS WITH RESPECT TO SMALL BUSI19 NESS INVESTMENT COMPANIES.—A certified development 

20 company shall not— 

21 ‘‘(1) invest excess funds in a small business in22 vestment company that the Administrator deter23 mines to be capitally impaired as set forth in section 

24 107.1830 of title 13, Code of Federal Regulation, as 

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1 lation to that regulation, but may maintain its in2 vestment in such company if such investment was 

3 made prior to the determination of capital impair4 ment; and 

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

6 small business concern that has financing with a 

7 small business investment company in which the cer8 tified development company has invested excess 

9 funds. 

10 ‘‘(j) ECONOMIC DEVELOPMENT ACTIVITIES.—A com11 pany certified pursuant to this section shall carry out each 

12 of the following economic development activities that cre13 ate or preserve jobs in urban and rural areas: 

14 ‘‘(1) The company shall provide long-term fi15 nancing to small business concerns through deben16 tures described in section 506. 

17 ‘‘(2) The company shall operate any other pro18 gram to assist small business concerns or commu19 nities that promote local economic development and 

20 job creation or preservation. 

21 ‘‘(k) RESTRICTIONS ON ASSISTANCE.— 

22 ‘‘(1) IN GENERAL.—After the date of enact23 ment of the Job Creation and Economic Develop24 ment Through CDC Modernization Act of 2009, no 

25 certified development company may accept funding 


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1 from any source, including any Federal agency (as 

2 that term is defined in section 551 of title 5, United 

3 States Code) if the source imposes— 

4 ‘‘(A) conditions on the types of small busi5 ness concerns that a certified development com6 pany may provide assistance to under this title; 

7 or 

8 ‘‘(B) conditions or requirements, directly 

9 or indirectly, upon any small business concern 

10 receiving assistance under this title. 

11 ‘‘(2) EXCEPTION.—The conditions of subpara12 graphs (A) and (B) of paragraph (1) shall not apply 

13 if the source provides all of the financing that will 

14 be provided by the certified development company to 

15 the small business concern, provided further that 

16 any conditions or restrictions are limited solely to 

17 the financing provided by the source of funding. 

18 ‘‘(l) REVOCATION AND SUSPENSION.—The Adminis19 trator may suspend or revoke a certified development com20 pany’s status if the Administrator determines, after a 

21 hearing on the record as set forth in section 554, 556, 

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

23 development company no longer— 

24 ‘‘(1) meets the eligibility criteria established 

25 under section 501; 


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

2 section; or 

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

4 regulations, or provisions of law. 

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

6 suspension or revocation under subsection (l) shall not af7 fect any outstanding debenture guarantee.’’. 

8 SEC. 203. ACCREDITED LENDERS PROGRAM. 

9 Section 503 of the Small Business Investment of 

10 1958 (15 U.S.C. 697) is amended to read as follows: 

11 ‘‘SEC. 503. ACCREDITED LENDERS PROGRAM. 

12 ‘‘(a) ESTABLISHMENT.—A certified development 

13 company may apply for status to become an accredited 

14 certified development company if it meets the operational 

15 standards of section 502 and the criteria in subsection (b). 

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

17 after opportunity for notice and comment, develop 

18 an application for certified development companies 

19 seeking to become accredited certified development 

20 companies. 

21 ‘‘(2) PROCESSING OF APPLICATION.—The Ad22 ministrator shall make a determination within 30 

23 days after a complete application has been filed by 

24 the certified development company. 


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1 ‘‘(3) REAPPLICATION.—If the Administrator re2 jects the application, the Administrator shall provide 

3 in writing the reasons for the rejection. Any certified 

4 development company may reapply which will recom5 mence the processing time limits set forth in para6 graph (2), and such reapplication shall be limited to 

7 addressing the reasons for rejection. If the Adminis8 trator rejects a second application, that shall be con9 sidered final agency action for purposes of Chapter 

10 7 of title 5, United States Code. 

11 ‘‘(b) STANDARDS FOR ACCREDITED CERTIFIED DE12 VELOPMENT COMPANY PROGRAM.—The Administrator 

13 shall designate a certified development company as accred14 ited if it meets the following standards: 

15 ‘‘(1) has been a certified development company 

16 for not less than the preceding 12 months and has 

17 issued debentures as authorized under this title dur18 ing that time period; 

19 ‘‘(2) has well-trained, qualified personnel who 

20 are knowledgeable in the lending policies and proce21 dures for certified development companies; 

22 ‘‘(3) has the ability to process, close, and serv23 ice the loan issued under this title; 


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1 ‘‘(4) has a loss rate on the company’s deben2 tures that is reasonable and acceptable to the Ad3 ministrator; 

4 ‘‘(5) has a history of submitting to the Admin5 istrator complete and accurate debenture guaranty 

6 application packages; and 

7 ‘‘(6) has the ability to serve small business 

8 credit needs for financing plant and equipment as a 

9 certified development company. 

10 ‘‘(c) EXPEDITED PROCESSING OF GUARANTEE AP11 PLICATIONS.—The Administrator shall develop an expe12 dited procedure for processing a guarantee application or 

13 servicing action submitted by an accredited certified devel14 opment company. For purposes of this subsection, an ex15 pedited procedure is one that takes at least two business 

16 days less than the processing performed for certified devel17 opment companies that have not been accredited. 

18 ‘‘(d) SUSPENSION OR REVOCATION OF ACCREDITED

19 STATUS.—The Administrator may suspend or revoke a 

20 certified development company’s accredited status if the 

21 Administrator determines, after a hearing on the record 

22 as set forth in section 554, 556, and 557 of title 5, United 

23 States Code, that the certified development company no 

24 longer meets the eligibility criteria established under this 

25 section (which shall not include a time limit on the term 


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1 of the certified development company’s accredited status) 

2 or failed to adhere to the Administrator’s rules, regula3 tions, or is violating some other provision of law. Such 

4 suspension or revocation shall have no effect on the devel5 opment company’s status as certified. 

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

7 EXISTING GUARANTEES.—A suspension or revocation of 

8 accredited status shall not affect any outstanding deben9 ture guarantee. 

10 ‘‘(f) GRANDFATHER PROVISION.—Any certified de11 velopment company that was accredited by the date of en12 actment of the Job Creation and Economic Development 

13 Through CDC Modernization Act shall remain accredited 

14 for 24 months after that date. If the certified development 

15 company does not have an application for accreditation ap16 proved by the Administrator within the 24 months, its ac17 creditation standard shall lapse. 

18 ‘‘(g) AUTOMATIC QUALIFICATION.— 

19 ‘‘(1) IN GENERAL.—Until the Administrator de20 velops procedures for granting accredited status, any 

21 certified development company that was accredited 

22 as of the date of enactment of the Job Creation and 

23 Economic Development through CDC Modernization 

24 Act of 2009 shall be deemed to be accredited. 


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1 ‘‘(2) APPLICATIONS.—Any certified develop2 ment company that satisfies the provision of para3 graph (1) shall have 24 months in which to submit 

4 the application established by this section for accred5 ited status. 

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

7 The denial or rejection of an application for accred8 ited status as set forth in this section shall have no 

9 affect on the ability of a development company that 

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

11 maintaining its status during the 24 months speci12 fied in this subsection. 

13 ‘‘(h) PROMULGATION OF ACCREDITING STAND14 ARDS.—The Administrator shall develop standards for ac15 crediting, suspension and revocation under the program 

16 established by this section only after notice and an oppor17 tunity for comment as set forth in section 553(b) of title 

18 5, United States Code. After the development of such 

19 standards, the Administrator shall publish such standards 

20 in the Code of Federal Regulations. 

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

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

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

24 Job Creation and Economic Development Through CDC 

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1 erence to the term ‘accredited certified development com2 pany’.’’. 

3 SEC. 204. PREMIER CERTIFIED LENDER PROGRAM. 

4 Section 504 of the Small Business Investment Act 

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

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

7 ‘‘(a) ESTABLISHMENT.—A certified development 

8 company accredited under section 503 may apply for sta9 tus to become a premier certified development company. 

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

11 after opportunity for notice and comment, develop 

12 an application for accredited certified development 

13 companies seeking to become premier certified devel14 opment companies. 

15 ‘‘(2) PROCESSING OF APPLICATION.—The Ad16 ministrator shall make a determination within 60 

17 days after a complete application has been filed by 

18 an accredited certified development company. 

19 ‘‘(3) REAPPLICATION.—If the Administrator re20 jects the application, the Administrator shall provide 

21 in writing the reasons for the rejection. Any accred22 ited certified development company may reapply 

23 which will recommence the processing time limits set 

24 forth in paragraph (2), and such reapplication shall 

25 be limited to addressing the reasons for rejection. If 


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1 the Administrator rejects a second application, that 

2 shall be considered final agency action for purposes 

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

4 ‘‘(b) STANDARDS FOR OBTAINING PREMIER CER5 TIFIED DEVELOPMENT COMPANY STATUS.—The Admin6 istrator shall designate an accredited certified develop7 ment company as a premier certified development com8 pany if the application submitted pursuant to subsection 

9 (a) demonstrates that the accredited certified development 

10 company meets the following standards: 

11 ‘‘(1) Has been an accredited certified develop12 ment company for at least 12 months. 

13 ‘‘(2) Has submitted to the Administrator ade14 quately analyzed debenture guarantee applications. 

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

16 the Administrator regulations, loans under this title. 

17 ‘‘(4) Has serviced its loan portfolio in accord18 ance with the standards set by the Administrator. 

19 ‘‘(5) Has established a loan loss reserve estab20 lished in accordance with this section that the Ad21 ministrator determines is sufficient to meet its obli22 gations to protect the Federal Government from the 

23 risk of loss on each debenture guaranteed under this 

24 section. 


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

2 in order to protect the Federal Government against 

3 the risk of loss, to the following: 

4 ‘‘(A) on account of a debenture, the pro5 ceeds of which were used to fund a loan ap6 proved prior to the date of enactment of the 

7 Job Creation and Economic Development 

8 through CDC Modernization Act of 2009, 

9 agrees to reimburse the Administrator for 10 

10 percent of any loss sustained by the Adminis11 trator as a result of a default by the company 

12 in the payment of principal or interest on a de13 benture issued by such company and guaran14 teed by the Administrator; 

15 ‘‘(B) on account of a debenture, the pro16 ceeds of which were used to fund a loan ap17 proved prior to the date of enactment of the 

18 Job Creation and Economic Development 

19 through CDC Modernization Act of 2009 and 

20 which were issued during the period in which 

21 the company had made a selection pursuant to 

22 section 508(c)(7) of the Small Business Invest23 ment Act of 1958, as in effect on the day before 

24 such date of enactment, agrees to reimburse the 

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1 tained by the Administrator as a result of a de2 fault by the company in the payment of prin3 cipal or interest on a debenture issued by such 

4 company and guaranteed by the Administrator; 

5 or 

6 ‘‘(C) on account of a debenture, the pro7 ceeds of which are used to fund a loan approved 

8 on or after the date of enactment of the Job 

9 Creation and Economic Development through 

10 CDC Modernization Act of 2009, upon closing, 

11 pay to the Administrator a one-time participa12 tion fee in the amount equal to the higher of 

13 the following: 

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

15 debenture. 

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

17 debenture equal to 10 percent of the 

18 amount of the company’s historic loss rate 

19 on debentures guaranteed under this sec20 tion as determined by the Administrator. 

21 The rate specified by this clause shall be 

22 determined annually based upon the com23 pany’s loan losses as of close of business 

24 on June 30th and notice of the determina25 tion shall be provided to each company not 


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1 later than August 31. Such rate shall be 

2 applicable to loans approved during the fis3 cal year commencing after the determina4 tion is made and shall expire and have no 

5 further application after the end of such 

6 fiscal year. If no timely determination has 

7 been made prior to the commencement of 

8 a fiscal year, including the year of enact9 ment of the Job Creation and Economic 

10 Development through CDC Modernization 

11 Act of 2009, one may be made after the 

12 commencement and it shall be applicable 

13 to loans approved during the balance of 

14 such fiscal year commencing 30 days after 

15 notification to the development company 

16 involved. 

17 ‘‘(c) SUSPENSION OR REVOCATION OF PREMIER STA18 TUS.—The Administrator may suspend or revoke an ac19 credited certified development company’s premier status 

20 if the Administrator determines, after a hearing on the 

21 record as set forth in section 554, 556, and 557 of title 

22 5, United States Code, that the accredited certified devel23 opment company no longer meets the eligibility criteria for 

24 premier status as established under this section or failed 

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


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1 violating some other provision of law. Such revocation or 

2 suspension shall have no effect on its status as an accred3 ited certified development company. 

4 ‘‘(d) LOAN LOSS RESERVE.— 

5 ‘‘(1) ASSETS.—Each loan loss reserve main6 tained by the premier certified development company 

7 for loans made pursuant to the authority in sub8 section (g)(1) shall be comprised of— 

9 ‘‘(A) segregated funds on deposit in an ac10 count or accounts with a federally insured de11 pository institution or institutions selected by 

12 the company, subject to a collateral assignment 

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

14 Administrator that shall amount to 10 percent 

15 of the company’s exposure as determined pursu16 ant to subsection (b)(6); 

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

18 with a collateral assignment in favor of, and a 

19 commercially reasonable format acceptable to, 

20 the Administrator; or 

21 ‘‘(C) any combination of the assets de22 scribed in subparagraphs (A) and (B). 

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

24 make contributions to the loss reserve, either cash or 


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1 letters of credit as provided above, in the following 

2 amounts and at the following intervals: 

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

4 closed. 

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

6 1 year after a debenture is closed. 

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

8 2 years after a debenture is closed. 

9 ‘‘(3) REPLENISHMENT.—If a loss has been sus10 tained by the Administrator, any portion of the loss 

11 reserve, and other funds provided by the premier 

12 certified development company as necessary, may be 

13 used to reimburse the Administrator for the premier 

14 certified development company’s share of the loss as 

15 provided for in subsection (b)(6). If the premier cer16 tified development company utilizes the reserve, it 

17 shall, within 30 calendar days, replace an equivalent 

18 amount of funds. 

19 ‘‘(4) DISBURSEMENTS.— 

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

21 shall allow the premier certified development 

22 company to withdraw from the loss reserve 

23 amounts attributable to any debenture that has 

24 been repaid. 


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1 ‘‘(B) REDUCTION.—The Administrator 

2 shall allow the premier certified development to 

3 withdraw from the loss reserve such amounts as 

4 are in excess of 1 percent of the aggregate out5 standing balances of debentures to which such 

6 loss reserve relates. The reduction authorized 

7 by this subparagraph shall not apply with re8 spect to any debenture before 100 percent of 

9 the contribution described in paragraph (2) 

10 with respect to such debenture has been made. 

11 ‘‘(C) RULE OF CONSTRUCTION.—The pro12 vision contained in subparagraph (B) shall be 

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

14 90 days after the date of enactment of the Job 

15 Creation and Economic Development through 

16 CDC Modernization Act of 2009. 

17 ‘‘(e) BUREAU OF PREMIER CERTIFIED DEVELOP18 MENT COMPANY LENDER OVERSIGHT.— 

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

20 a Bureau of Premier Certified Development Com21 pany Lender Oversight in the Office of Lender Over22 sight at the United States Small Business Adminis23 tration which shall have responsibility and capability 

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1 opment companies and such other responsibilities as 

2 the Administrator designates. 

3 ‘‘(2) ANNUAL REVIEW.—The Bureau estab4 lished in paragraph (1) annually shall review the fi5 nancing made by each premier certified development 

6 company. Such review shall include the premier cer7 tified development company’s credit decisions and 

8 general compliance with the eligibility requirements 

9 for each financing approved as a result of its status 

10 as a premier certified development company. 

11 ‘‘(3) RANDOM AUDITS.—The Bureau shall de12 velop and implement a method for sampling the de13 bentures issued by premier certified development 

14 companies. Such sampling shall be similar to the 

15 random file audits of development companies that 

16 utilize the Abridged Submission Method described in 

17 chapter 4 of subpart C of Standard Operating Pro18 cedure 50 10 (5)(A) as was in effect on March 2, 

19 2009. 

20 ‘‘(4) REVIEW OF LENDERS PROVIDING SENIOR

21 FINANCING.— 

22 ‘‘(A) CALCULATION OF LOAN LOSS

23 RATE.—The Bureau shall periodically calculate 

24 the loss rate of all debentures approved under 

25 this section and shall calculate a loss rate on 


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1 the basis of the total debentures attributable to 

2 projects approved by premier certified develop3 ment companies in which each lender is a par4 ticipating lender. 

5 ‘‘(B) NOTIFICATION.—If the Bureau deter6 mines that the loss rate on debentures involving 

7 an individual lender exceeds the average for all 

8 debentures approved under this section, it shall 

9 advise the Administrator. 

10 ‘‘(5) USE OF REVIEWS AND AUDITS.—The Ad11 ministrator shall consider the findings under para12 graphs (2), (3), and (4) in carrying out the respon13 sibilities under subsection (h). 

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

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

16 the Administrator acquires a debenture issued by a 

17 premier certified development company and identi18 fies such loan for inclusion in a bulk asset sale of 

19 defaulted or repurchased loans or other financing, it 

20 shall give prior notice thereof to any premier cer21 tified development company which has a contingent 

22 liability under this section. The notice shall be given 

23 to the premier certified development company as 

24 soon as possible after the financing is identified, but 

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1 trator first makes any records on such financing 

2 available for examination by prospective purchasers 

3 prior to its offering in a package of loans for bulk 

4 sale. 

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

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

7 part of a bulk sale unless it— 

8 ‘‘(A) provides prospective purchasers with 

9 the opportunity to examine the Small Business 

10 Administration’s records with respect to such 

11 loan; and 

12 ‘‘(B) provides the notice required by para13 graph (1). 

14 ‘‘(g) LOAN APPROVAL AUTHORITY.— 

15 ‘‘(1) IN GENERAL.—A premier certified develop16 ment company may, under conditions determined by 

17 the Administrator in regulations published in the 

18 Code of Federal Regulations, issue guarantees on 

19 debentures, approve, authorize, close, service, fore20 close, litigate (except that the Administrator may 

21 monitor conduct of any such litigation), and liq22 uidate loans that are funded with proceeds of a de23 benture issued by a premier certified development 

24 company unless the Administrator advises the com25 pany that loans involving a specific institutional 


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1 lender are to be submitted to the Administrator for 

2 further consideration, and approval by the Adminis3 trator. 

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

5 development company shall establish a goal of proc6 essing no less than 50 percent of the applications for 

7 assistance under this title that the premier certified 

8 development company receives. Failure to meet this 

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

10 a premier certified development company under this 

11 section. 

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

13 loan and guarantee of a debenture by a premier cer14 tified development company shall be subject to final 

15 approval as to the eligibility of any guarantee by the 

16 Administrator as set forth in section 506, but such 

17 final approval shall not include review of decisions 

18 by the premier certified development company in19 volving creditworthiness, loan closing, or compliance 

20 with legal requirements imposed by law or regula21 tion. 

22 ‘‘(h) SUSPENSION OR REVOCATION.—The Adminis23 trator may suspend or revoke an accredited certified devel24 opment company’s premier status if the Administrator de25 termines, after a hearing on the record as set forth in secVerDate Nov 24 2008 05:35 Oct 08, 2009 Jkt 089200 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\H3739.IH H3739

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1 tion 554, 556, and 557 of title 5, United States Code, 

2 that the accredited certified development company no 

3 longer meets the eligibility criteria established under this 

4 section, fails to maintain adequate loan loss reserves man5 dated in this section even if it meets the other eligibility 

6 requirements for premier status, or violates the Adminis7 trator’s rules, regulations, or some other provision of law. 

8 The Administrator shall consider the review of the premier 

9 certified development company conducted pursuant to sub10 section (e) in determining whether to suspend or revoke 

11 an accredited development company’s premier status. 

12 Such suspension or revocation shall have no effect on the 

13 development company’s status as an accredited certified 

14 development company. 

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

16 suspension or revocation of premier status shall not affect 

17 any outstanding debenture guarantee. 

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

19 term ‘premier certified lender’ or ‘PCL’ in legislation en20 acted, or regulations adopted, prior to the enactment of 

21 the Job Creation and Economic Development Through 

22 CDC Modernization Act of 2009 shall be deemed to be 

23 a reference to the term ‘premier certified development 

24 company’.’’. 


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1 SEC. 205. MULTI STATE OPERATIONS. 

2 Section 505 of the Small Business Investment Act 

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

4 ‘‘SEC. 505. MULTI STATE OPERATIONS. 

5 ‘‘(a) AUTHORIZATION.—The Administrator shall per6 mit an accredited or premier certified development com7 pany to make loans or issue debentures in any State that 

8 is contiguous to the State of incorporation of that com9 pany only if the company— 

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

11 which it operates with not fewer than 25 members 

12 who reside in such States; 

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

14 fewer than 2 members from each State in which the 

15 company makes loans and issues debentures and are 

16 residents of that State; 

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

18 process loans in each expansion State and the mem19 bers of the loan committee are solely residents of the 

20 expansion State; and 

21 ‘‘(4) files an application developed by the Ad22 ministrator which provides— 

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

24 in multiple States; 

25 ‘‘(B) specifies the States in which the com26 pany intends to make loans; 


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

2 State; and 

3 ‘‘(D) a detailed statement on how the com4 pany will comply with the requirements of this 

5 subsection. 

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

7 paragraph (3) of subsection (a) shall not require a devel8 opment company to establish a loan committee in its State 

9 of incorporation or in a local economic area outside the 

10 State of incorporation unless such area is part of an ex11 pansion State. 

12 ‘‘(c) REVIEW.— 

13 ‘‘(1) IN GENERAL.—The Administrator shall re14 view each application for expansion under subsection 

15 (a), but such review shall be limited to that informa16 tion needed to determine whether the company will 

17 comply with the requirements of subsection (a). 

18 ‘‘(2) DEADLINE FOR DECISION.—The Adminis19 trator shall make a decision on each application 

20 under subsection (a) within 15 calendar days after 

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

22 granted, the application is deemed to be approved 

23 and no further action is required by the applicant or 

24 the Administrator for the company to expand into 

25 the States specified in the application. 


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1 ‘‘(3) APPLICATION RESUBMITTAL.—If the Ad2 ministrator rejects the application for expansion, the 

3 Administrator shall provide in writing the reasons 

4 for denial within 10 calendar days of the decision. 

5 The applicant then may resubmit the application but 

6 the review of such resubmitted applications will be 

7 limited only to the areas in which the Administrator 

8 found the original application deficient. The dead9 lines in paragraph (2) shall apply to resubmitted ap10 plications. 

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

12 denied, the applicant may, within 10 calendar days 

13 after receipt of the disapproval, appeal such dis14 approval. The Administrator shall conduct a hearing 

15 to determine such appeal pursuant to sections 554, 

16 556, and 557 of title 5, United States Code, and 

17 shall issue a decisions not later than 45 days after 

18 the appeal is filed. The decision on appeal shall con19 stitute final agency action for purposes of chapter 7, 

20 title 5 United States Code. 

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

22 Administrator fails to develop an application as required 

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

24 Job Creation and Economic Development Through CDC 

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1 tified development company only need submit the informa2 tion required in subsection (a) to the Administrator to be 

3 deemed eligible to commence operations authorized by this 

4 section. Such eligibility shall not be terminated if the Ad5 ministrator develops an application after the 60-day period 

6 set forth in this subsection. 

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

8 premier certified development company authorized to op9 erate in multiple States pursuant to this section may 

10 maintain an aggregate accounting of all revenue and ex11 penses of the company for purposes of this title. 

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

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

14 in multiple States as authorized in this section shall 

15 not count jobs created or retained in one State to16 wards any applicable job creation or retention re17 quirements mandated by this title in another State. 

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

19 under the authority of this section shall be required 

20 to meet any job creation or retention requirement of 

21 this title on the date that is 2 years after the cer22 tified development company closed its first loan in 

23 its new State of operation. 

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

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


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

2 Territories of the United States located in the Pacific 

3 Ocean shall be deemed to be contiguous to any State abut4 ting the Pacific Ocean, including Alaska and Hawaii, and 

5 territories of the United States located in the Caribbean 

6 Sea shall be deemed contiguous to any State abutting the 

7 Gulf of Mexico. 

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

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

10 loan committees, any certified, accredited, or premier de11 velopment company or applicant operating in a local eco12 nomic development area that crosses the border of another 

13 State shall not be considered to be operating under the 

14 provisions of this section and shall not be required to com15 ply with the requirements of this section for multi-State 

16 operation.’’. 

17 SEC. 206. GUARANTY OF DEBENTURES. 

18 Section 506 of the Small Business Investment Act 

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

20 ‘‘SEC. 506. GUARANTY OF DEBENTURES. 

21 ‘‘(a) AUTHORITY TO GUARANTEE.—Except as pro22 vided in subsection (c), the Administrator may guarantee 

23 the timely payment of all principal and interest as sched24 uled on any debenture issued by a certified development 

25 company. 


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1 ‘‘(b) TERMS AND CONDITIONS OF THE GUAR2 ANTEE.—Such guarantees may be made on such terms 

3 and conditions as the Administrator may by regulation, 

4 published in the Code of Federal Regulations, determine 

5 to be appropriate, except that the Administrator shall not 

6 decline to issue such guarantee when the ownership inter7 ests of the small business concern and the ownership inter8 ests of the property to be financed with the proceeds of 

9 the loan made pursuant to subsection (e)(1) are not iden10 tical because one or more of the following classes of rel11 atives have an ownership interest in either the small busi12 ness concern or the property: father, mother, son, daugh13 ter, wife, husband, brother, or sister, if the Administrator 

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

15 that such ownership interest, such guarantee, and the pro16 ceeds of such loan, will substantially benefit the small 

17 business concern. 

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

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

20 all amounts guaranteed under this section. 

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

22 certified development company with respect to which a 

23 guarantee is made under this section may be subordinated 

24 by the Administrator to any other debenture, promissory 

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


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1 ‘‘(e) STANDARDS FOR ADMINISTRATOR GUARAN2 TEES.—No guarantee may be made with respect to any 

3 debenture under this section unless— 

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

5 making one or more loans to small business concerns 

6 the proceeds of which shall be used for the purposes 

7 set forth in section 507; 

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

9 less than the rate of interest determined by the Sec10 retary of the Treasury for purposes of section 

11 303(b) of the Small Business Investment Act of 

12 1958; 

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

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

15 from the proceeds of such debenture plus, at the 

16 election of the borrower, other amounts attributable 

17 to the administrative and closing costs of such loans, 

18 except for the attorney fees of the borrower; 

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

20 such proceeds does not exceed an amount equal to 

21 50 percent of the cost of the project with respect to 

22 which such loan is made; 

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

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1 tified development companies, approves each loan to 

2 be made from such proceeds; and 

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

4 proceeds of such debenture, the Administrator— 

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

6 shall be payable by the borrower, in an amount 

7 established annually by the Administration, 

8 which amount shall not exceed— 

9 ‘‘(i) the lesser of— 

10 ‘‘(I) 0.9375 percent per year of 

11 the outstanding balance of the loan; 

12 or 

13 ‘‘(II) the minimum amount nec14 essary to reduce the cost (as defined 

15 in section 502 of the Federal Credit 

16 Reform Act of 1990) to the Adminis17 trator of purchasing and guaranteeing 

18 debentures under this title to zero; 

19 and 

20 ‘‘(ii) 50 percent of the amount estab21 lished under clause (i) in the case of a loan 

22 made during the 2-year period beginning 

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

24 loan; and 


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

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

3 of the Federal Credit Reform Act of 1990) to 

4 the Administrator of making guarantees under 

5 this section. 

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

7 Notwithstanding the provisions of the constitution or laws 

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

9 may be charged, taken, received, or reserved, the max10 imum legal rate of interest on any commercial loan which 

11 funds any portion of the cost of the project financed pur12 suant to this title which is not funded by a debenture 

13 guaranteed under this section shall be a rate which is es14 tablished by the Administrator who shall publish such rate 

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

16 the Administration’s website. 

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

18 is issued under this section shall provide for the payment 

19 of principal and interest on a semiannual basis. 

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

21 The Administrator may impose an additional charge for 

22 administrative expenses with respect to each debenture for 

23 which payment of principal and interest is guaranteed 

24 under this section. Such administrative expenses may in25 clude— 


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

2 closing, servicing, late payment or loan assumption; 

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

4 underwriters, or debenture funding; and 

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

6 debenture guaranty and from the certified develop7 ment company to reduce the subsidy cost. 

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

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

10 points on the total participation in any project of any 

11 State or local government, bank, other financial institu12 tion, or foundation or not-for-profit institution. Such fee 

13 shall be imposed only when the participation of the entity 

14 described in the previous sentence will occupy a senior 

15 credit position to that of the development company. All 

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

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

18 Act of 1990) to the Administrator of making guarantees 

19 under this section. 

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

21 The Administrator shall collect annually from each devel22 opment company a fee of 0.125 percent of the outstanding 

23 principal balance of any guaranteed debenture authorized 

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

25 shall be derived from the servicing fees collected by the 


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1 certified development company pursuant to regulation, 

2 and shall not be derived from any additional fees imposed 

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

4 be used to offset the cost (as that term is defined in sec5 tion 502 of the Credit Reform Act of 1990) to the Admin6 istrator of making guarantees under this section. 

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

8 section shall apply to any financing approved under this 

9 title on or after October 1, 1996. 

10 ‘‘(l) CALCULATION OF SUBSIDY RATE.—All fees, in11 terest, and profits received and retained by the Adminis12 trator under this section shall be included in the calcula13 tions made by the Director of the Office of Management 

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

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

16 to the Administrator of purchasing and guaranteeing de17 bentures under this title. 

18 ‘‘(m) ACTIONS UPON DEFAULT.— 

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

20 45th day after the date on which a payment on a 

21 loan funded through a debenture guaranteed under 

22 this section is due and not received, the Adminis23 trator shall— 

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

25 loan current; or 


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1 ‘‘(B) implement a formal written deferral 

2 agreement. 

3 ‘‘(2) PURCHASE OR ACCELERATION OF DEBEN4 TURE.—Not later than the 65th day after the date 

5 on which a payment on a loan described in para6 graph (1) is due and not received, and absent a for7 mal written deferral agreement, the Administrator 

8 shall take all necessary steps to purchase or accel9 erate the debenture. 

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

11 to the portion of any project derived from funds not 

12 provided by a debenture issued by a certified devel13 opment company or borrower, the Administrator— 

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

15 prepayment penalties or late fees on defaulted 

16 loans made prior to September 30, 1996; 

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

18 or late fee on the default based purchase of 

19 loans issued after September 30, 1996; and 

20 ‘‘(C) shall not pay default interest rate 

21 higher than the interest rate on the note prior 

22 to the date of default for any project financed 

23 after September 30, 1996. 

24 ‘‘(4) COLLECTION AND SERVICING.— 


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1 ‘‘(A) IN GENERAL.—In the event of the de2 fault of any loan and the repurchase of a de3 benture guaranteed by the Administrator under 

4 this title, the Administrator shall continue to 

5 delegate to the central servicing agent that was 

6 contracted for that service as of January 1, 

7 2009, or successor contractor the authority to 

8 collect and disburse all funds or payments re9 ceived on such defaulted loans, including pay10 ments from guarantors or on notes in com11 promise of the original note. The central serv12 icing agent shall continue to provide an ac13 counting of income and expenses for any such 

14 loan on the same basis it does for any other 

15 loan issued under this title. The central serv16 icing agent shall make the accounting of income 

17 and expenses and reports thereon available as 

18 requested by the certified development company 

19 that issued the debenture or the Administrator. 

20 ‘‘(B) EFFECTIVE DATE.—The require21 ments of subparagraph (A) shall become effec22 tive 180 days after the date of enactment of the 

23 Job Creation and Economic Development 

24 Through CDC Modernization Act of 2009.’’. 


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1 SEC. 207. ECONOMIC DEVELOPMENT THROUGH DEBEN2 TURES. 

3 Section 507 of the Small Business Investment Act 

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

5 ‘‘SEC. 507 ECONOMIC DEVELOPMENT AND DEBENTURES. 

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

7 shall be prohibited from issuing a debenture under this 

8 title unless the project funded with the debenture meets 

9 one of the following economic development objectives: 

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

11 two years of the completion of the project or the 

12 preservation or retention of jobs attributable to the 

13 project. 

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

15 such as stimulating other business development in 

16 the community, bringing new income into the area, 

17 or assisting the community in diversifying and stabi18 lizing its economy. 

19 ‘‘(3) The achievement of one or more of the fol20 lowing public policy goals: 

21 ‘‘(A) Business district revitalization or ex22 pansion of businesses in low-income commu23 nities which would be eligible for a new markets 

24 tax credit under section 45(D)(a) of the Inter25 nal Revenue Code of 1986, or implementing 

26 regulations issued under that section. 


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1 ‘‘(B) Expansion of exports. 

2 ‘‘(C) Expansion of minority business devel3 opment or women-owned business development. 

4 ‘‘(D) Rural development. 

5 ‘‘(E) Expansion of small business concerns 

6 owned and controlled by veterans, as defined in 

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

8 U.S.C. 632(q)), especially service-disabled vet9 erans, as defined in such section 3(q). 

10 ‘‘(F) Enhanced economic competition, in11 cluding the advancement of technology, plan re12 tooling, conversion to robotics, or competition 

13 with imports. 

14 ‘‘(G) Changes necessitated by Federal 

15 budget cutbacks, including defense related in16 dustries. 

17 ‘‘(H) Business restructuring arising from 

18 federally mandated standards or policies affect19 ing the environment or the safety and health of 

20 employees. 

21 ‘‘(I) Reduction of energy consumption by 

22 at least 10 percent. 

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

24 including designs that reduce the use of green25 house gas emitting fossil fuels, or low-impact 


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1 design to produce buildings that reduce the use 

2 of nonrenewable resources and minimize envi3 ronmental impact. 

4 ‘‘(K) Plant, equipment and process up5 grades of renewable energy sources such as the 

6 small-scale production of energy for individual 

7 buildings or communities consumption, com8 monly known as micropower, or renewable fuels 

9 producers including biodiesel and ethanol pro10 ducers. 

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

12 by section 508(d). 

13 ‘‘(b) JOB CREATION AND RETENTION REQUIRE14 MENTS.— 

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

16 creation or retention objective set forth in subsection 

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

18 every $65,000 guaranteed by the Administrator, ex19 cept that the amount shall be $100,000 in the case 

20 of a project of a small manufacturer. 

21 ‘‘(2) EXCEPTIONS.— 

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

23 project for which eligibility is based on the ob24 jectives set forth in subsection (a)(2) or (a)(3) 

25 if the certified development company’s portfolio 


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1 of outstanding debentures creates or retains one 

2 job for every $65,000 guaranteed by the Ad3 ministrator. 

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

5 State-designated enterprise zones, empower6 ment zones, enterprise communities, labor sur7 plus areas designated by the Administrator, the 

8 certified development company’s portfolio may 

9 average not more than $75,000 per job created 

10 or retained. 

11 ‘‘(C) Loans for projects of small manufac12 turers shall be excluded from the calculations in 

13 subparagraphs (A) and (B). 

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

15 business concern that is unconditionally owned by more 

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

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

18 achieved a goal under subsection (a)(3) if a combined own19 ership share of not less than 51 percent is held by individ20 uals who are in 1 of, or a combination of, the groups de21 scribed in subparagraphs (C) or (E) of subsection (a)(1). 

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

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

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

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1 cluding the acquisition of land), equipment and re2 lated project costs, or to acquire the stock of a cor3 poration (as long as the value of the loan for the ac4 quisition of the stock does not exceed the fixed asset 

5 value attributable to such assets as would be eligible 

6 for financing under subsection (a). 

7 ‘‘(2) DEBT REFINANCING.—Any financing ap8 proved under this title may include a limited amount 

9 of debt refinancing if the project involves the expan10 sion of a small business concern. 

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

12 indebtedness may be refinanced and added to the ex13 pansion cost if— 

14 ‘‘(A) the existing indebtedness does not ex15 ceed 50 percent of the project cost of the ex16 pansion; 

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

18 used to acquire land, including a building situ19 ated thereon, to construct a building thereon, or 

20 to purchase equipment; 

21 ‘‘(C) the existing indebtedness is 

22 collateralized by fixed assets; 

23 ‘‘(D) the existing indebtedness was in24 curred for the benefit of the small business con25 cern; 


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

2 used only for refinancing existing indebtedness 

3 or costs relating to the project financed under 

4 this title; 

5 ‘‘(F) the financing under this title will pro6 vide a substantial benefit to the borrower when 

7 prepayment penalties, financing fees, and other 

8 financing costs are accounted for; 

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

10 payments due on the existing debt for not less 

11 than 1 year preceding the date of refinancing; 

12 and 

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

14 provide better terms or rate of interest than the 

15 existing indebtedness at the time of refinancing. 

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

17 (J) and (K) of subsection (a)(1), the terms included have 

18 the meanings given those terms under the Leadership in 

19 Energy and Environmental Design (more generally re20 ferred to as LEED) standard for green building certifi21 cation, as determined by the Administrator through regu22 lation to be published in the Code of Federal Regulation.’’. 

23 SEC. 208. PROJECT FUNDING REQUIREMENTS. 

24 Section 508 of the Small Business Investment Act 

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


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1 ‘‘SEC. 508. PROJECT FUNDING REQUIREMENTS. 

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

3 507 must meet the funding standards set forth in this sec4 tion. 

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

6 only be permitted to guarantee debenture issued by a cer7 tified development company up to the following amounts: 

8 ‘‘(1) $3,000,000 for any project of a small busi9 ness concern. 

10 ‘‘(2) $4,000,000 for any project that meets the 

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

12 ‘‘(3) $4,000,000 for any project to be located in 

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

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

15 ‘‘(4) $8,000,000 for each project of a small 

16 manufacturer. 

17 ‘‘(5) $8,000,000 for each project that reduces 

18 the borrower’s energy consumption by at least 10 

19 percent. 

20 ‘‘(6) $8,000,000 for each project that generates 

21 renewable energy or renewable fuels, such as, but 

22 not limited to, biodiesel or ethanol production. 

23 ‘‘(7) $10,000,000 for each project for a small 

24 business concern that constitutes a major source of 

25 employment as that term is used in section 


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1 7(b)(3)(E) of the Small Business Act (15 U.S.C. 

2 636(b)(3)(E)). 

3 ‘‘(c) FUNDING FROM SOURCES OTHER THAN DE4 BENTURES ISSUED BY CERTIFIED DEVELOPMENT COM5 PANIES.— 

6 ‘‘(1) IN GENERAL.—Any project financed pur7 suant to this title must have the following contribu8 tions from parties other than the debenture issued 

9 by the certified development company: 

10 ‘‘(A) FUNDING FROM INSTITUTIONS.— 

11 ‘‘(i) If a small business concern pro12 vides— 

13 ‘‘(I) the minimum contribution 

14 required by subparagraph (B) not less 

15 than 50 percent of the total cost of 

16 any project financed shall come from 

17 State or local governments, banks or 

18 other financial institutions, or founda19 tions or other not-for-profit institu20 tions; and 

21 ‘‘(II) more than the minimum 

22 contribution required under subpara23 graph (B), any excess contribution 

24 may be used to reduce the amount re25 quired from institutions in described 


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1 in subclause (I), except that the 

2 amount provided by such institution 

3 may not be reduced to an amount 

4 that is less than the amount of the 

5 loan made by the Administrator. 

6 ‘‘(B) FUNDING FROM SMALL BUSINESS

7 CONCERNS.—The small business concern (or its 

8 owners, stockholders, or affiliates) that will 

9 have a project financed pursuant to this title 

10 shall provide— 

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

12 cost of the project financed if the small 

13 business concern has been in operation for 

14 a period of 2 years or less; 

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

16 cost of the project financed if the project 

17 involves construction of a limited or single 

18 purposed building or structure; 

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

20 cost of the project financed if the project 

21 involves both of the conditions in clauses 

22 (i) or (ii); or 

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

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1 cretion of the certified development com2 pany. 

3 ‘‘(2) SELLER FINANCING.—Seller-provided fi4 nancing may be used to meet the requirements of 

5 paragraph (1)(B), if the seller subordinates the in6 terest of the seller in the property to the debenture 

7 guaranteed by the Administrator. 

8 ‘‘(3) COLLATERALIZATION.— 

9 ‘‘(A) IN GENERAL.—The collateral pro10 vided by the small business concern shall gen11 erally include a subordinate lien position on the 

12 property being financed under this title, and is 

13 only one of the factors to be evaluated in the 

14 credit determination. Additional collateral shall 

15 be required only if the Administrator deter16 mines, on a case-by-case basis, that additional 

17 security is necessary to protect the interest of 

18 the Government. 

19 ‘‘(B) APPRAISALS.—With respect to com20 mercial real property provided by the small 

21 business concern as collateral, an appraisal of 

22 the property by a State licensed or certified ap23 praiser— 

24 ‘‘(i) shall be required by the Adminis25 trator before disbursement of the loan if 


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1 the estimated value of that property is 

2 more than $400,000; or 

3 ‘‘(ii) may be required by the Adminis4 trator or the lender before disbursement of 

5 the loan if the estimated value of that 

6 property is $400,000 or less, and such ap7 praisal is necessary for appropriate evalua8 tion of creditworthiness. 

9 ‘‘(C) ADJUSTMENT.—The Administrator 

10 shall periodically adjust the amount under sub11 paragraph (B) to account for the effects of in12 flation, provided that no such adjustment shall 

13 be less than $50,000. 

14 ‘‘(4) LIMITATION ON LEASING.— 

15 ‘‘(A) If the project funded under this sec16 tion includes the acquisition of a facility or the 

17 construction of a new facility, the small busi18 ness concern— 

19 ‘‘(i) shall permanently occupy and use 

20 not less than 50 percent of the project 

21 property; and 

22 ‘‘(ii) may, on a temporary or perma23 nent basis, lease to others not more than 

24 50 percent of the project property. 


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1 ‘‘(B) For purposes of this paragraph, the 

2 term ‘project property’ means— 

3 ‘‘(i) the building and any exterior 

4 areas used in connection with the building 

5 or a part thereof and includes all of the 

6 parcels of real property included in the 

7 project in the aggregate; and 

8 ‘‘(ii) occupancy and use of the project 

9 property by the operating company shall be 

10 deemed to be occupancy and used by the 

11 small business concern that received fund12 ing under this section. 

13 ‘‘(d) REGULATIONS.—(1) The Administrator shall 

14 promulgate regulations, after notice and comment, rules 

15 to implement the provisions of this section within 60 days 

16 after enactment of the Job Creation and Economic Devel17 opment Through CDC Modernization Act of 2009. The 

18 Administrator may limit the comment period to 15 days 

19 to meet this deadline. 

20 ‘‘(2) If the Administrator fails to promulgate the reg21 ulations as provided in paragraph (1), all leases entered 

22 into, absent clear and convincing evidence of fraud, shall 

23 be deemed to be in compliance with the limitations on leas24 ing in this subparagraph for purposes of honoring the 


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1 guarantee on the debenture issued by the certified develop2 ment company. 

3 ‘‘(3) Any regulation of the Administrator or interpre4 tation of any regulation by the Administrator or the Office 

5 of Hearings and Appeals that restricts the use of proceeds 

6 for leased projects that was in effect on the date of enact7 ment of the Job Creation and Economic Development 

8 Through CDC Modernization Act of 2009 shall hereby 

9 cease to apply. 

10 ‘‘(4) Any interpretation of the leasing provisions 

11 issued by the Administrator prior to the issuance of regu12 lations required by paragraph (1) shall be considered null 

13 and void and may be not be used in any court of com14 petent jurisdiction, be it Federal or State court, to dis15 honor any guarantee of a debenture issued by a certified 

16 development company for a project funded pursuant to 

17 this section. 

18 ‘‘(e) OWNERSHIP CALCULATION.—Ownership re19 quirements to determine the eligibility of a small business 

20 concern that applies for funding under this title shall be 

21 determined without regard to any ownership interest of 

22 a spouse arising solely from the application of the commu23 nity property laws of a State for purposes of determining 

24 marital interests. 


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1 ‘‘(f) COMBINATION FINANCING.—Financing under 

2 this title may be provided to a borrower in the maximum 

3 amount provided in this section, and a loan guarantee 

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

5 636(a)) may be provided to the same borrower in the max6 imum amount provided in section 7(a)(3)(A) of such Act, 

7 to the extent that the borrower otherwise qualifies for such 

8 assistance. 

9 ‘‘(g) RULES FOR DEBENTURES FUNDING PROJECTS

10 IN LOW-INCOME AREAS.— 

11 ‘‘(1) SIZE STANDARDS.—For purposes of deter12 mining the size of small business concern seeking 

13 funds for a project described in subsection (b)(3), 

14 the size standard promulgated by the Administrator 

15 in section 121.201 of title 13, Code of Federal Reg16 ulations as in effect on January, 1, 2009, or any 

17 successor regulation, shall be increased by 25 per18 cent. 

19 ‘‘(2) PERSONAL LIQUIDITY.— 

20 ‘‘(A) IN GENERAL.—The amount of per21 sonal resources of an owner for a project de22 scribed in subsection (b)(3) that are excluded 

23 from the amount required to reduce the portion 

24 of the project funded by the Administrator shall 

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1 quired for funding of any other project de2 scribed in subsection (b). 

3 ‘‘(B) DEFINITION.—For purposes of sub4 paragraph (A), the term ‘owner’ means any 

5 person that owns not less than 20 percent of 

6 the equity or has not less than 20 percent of 

7 the voting rights (in the case of a small busi8 ness organized as a partnership) of a small 

9 business concern seeking funds under this sec10 tion. 

11 ‘‘(h) APPLICABILITY OF CREDIT ELSEWHERE AND

12 PERSONAL RESOURCES REGULATIONS.—Except as pro13 vided in subsection (c)(1)(B) with respect to project fund14 ing, the Administrator shall be prohibited from applying 

15 the regulations set forth in section 120.101 and 120.102 

16 of title 13, Code of Federal Regulation as in effect on Jan17 uary 1, 200,9 or any successor regulation that applies a 

18 credit elsewhere or personal resources test to any applica19 tion for a loan under this title pending or filed after the 

20 date of enactment of the Job Creation and Economic De21 velopment through CDC Modernization Act of 2009.’’. 

22 SEC. 209. PRIVATE DEBENTURE SALES AND POOLING OF 

23 DEBENTURES. 

24 Section 509 of the Small Business Investment Act 

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


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1 ‘‘SEC. 509. PRIVATE DEBENTURE SALES AND POOLING OF 

2 DEBENTURES. 

3 ‘‘(a) PRIVATE DEBENTURE SALES.—Notwith4 standing any other law, rule, or regulation, the Adminis5 trator shall sell to investors, either publicly or by private 

6 placement, debentures issued by certified development 

7 companies pursuant to this title for the full amount of the 

8 program levels authorized in each fiscal year and if there 

9 is not authorization of a level, the amount of debentures 

10 actually issued. 

11 ‘‘(b) FEDERAL FINANCING BANK.—Nothing in any 

12 provision of law shall be construed to authorize the Fed13 eral Financing Bank to acquire— 

14 ‘‘(1) any obligation the payment of principal or 

15 interest on which at any time has been guaranteed 

16 in whole or in part under this title and which is 

17 being sold pursuant to the provisions of this section; 

18 ‘‘(2) any obligation which is an interest in any 

19 obligation which is an interest in any obligation de20 scribed in paragraph (1); or 

21 ‘‘(3) any obligation which is secured by, or sub22 stantially all of the value of which is attributable to, 

23 any obligation described in paragraph (1) or (2). 

24 ‘‘(c) POOLING OF DEBENTURES.— 

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1 ership of all or a fractional part of debentures issued 

2 by certified development companies and guaranteed 

3 under this title if such trust certificates are based on 

4 and backed by a trust or pool approved by the Ad5 ministrator and composed solely of guaranteed de6 bentures. 

7 ‘‘(2) GUARANTEE OF TRUST CERTIFICATES.— 

8 The Administrator is authorized, upon such terms 

9 and conditions as are deemed appropriate, to guar10 antee the timely payment of the principal of and in11 terest on trust certificates issued by the Adminis12 trator or its agent for purposes of this section. Such 

13 guarantee shall be limited to the extent of principal 

14 and interest on the guaranteed debentures which 

15 compose the trust or pool. In the event that a deben16 ture in such trust or pool is prepaid, either volun17 tarily or in the event of default, the guarantee of 

18 timely payment of principal and interest on the trust 

19 certificates shall be reduced in proportion to the 

20 amount of principal and interest such prepaid deben21 ture represents in the trust or pool. Interest on pre22 paid or defaulted debentures shall accrue and be 

23 guaranteed by the Administrator only through the 

24 date of payment on the guarantee. During the term 

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1 tion due to prepayment or default of all debentures 

2 constituting the pool. 

3 ‘‘(3) FULL FAITH AND CREDIT.—The full faith 

4 and credit of the United States is pledged to the 

5 payment of all amounts which may be required to be 

6 paid under any guarantee of such trust certificates 

7 issued by the Administrator or its agent pursuant to 

8 this section. 

9 ‘‘(4) PROHIBITION ON GUARANTEE FEE FOR

10 POOLS.—The Administrator shall not collect any fee 

11 for any guarantee under this section: provided, that 

12 nothing herein shall preclude any agent of the Ad13 ministrator from collecting a fee approved by the 

14 Administrator for the functions performed in para15 graph (6)(F). 

16 ‘‘(5) SUBROGATION.— 

17 ‘‘(A) IN GENERAL.—In the event the Ad18 ministrator pays a claim under a guarantee 

19 issued under this section, it shall be subrogated 

20 fully to the rights satisfied by such payment. 

21 ‘‘(B) ADMINISTRATOR EXERCISE OF

22 RIGHTS.—No Federal, State, or local law shall 

23 preclude or limit the exercise by the Adminis24 trator of its ownership rights in the debentures 


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1 constituting the trust or pool against which the 

2 trust certificates are issued. 

3 ‘‘(6) CENTRAL REGISTRATION.— 

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

5 shall provide for a central registration of all 

6 trust certificates sold pursuant to this section. 

7 ‘‘(B) CONTRACT.—The Administrator shall 

8 contract with an agent to carry out on behalf 

9 of the Administrator the central registration 

10 functions of this section and the issuance of 

11 trust certificates to facilitate pooling. 

12 ‘‘(C) BOND.—The Administrator shall re13 quire the contractor to provide a fidelity bond 

14 or insurance in such amounts as is deemed nec15 essary to fully protect the interests of the Gov16 ernment. 

17 ‘‘(D) DISCLOSURE REQUIREMENTS.—The 

18 Administrator shall, prior to any sale, require 

19 the seller to disclose to a purchaser of a trust 

20 certificate issued pursuant to this section, infor21 mation on terms, conditions, and yield of such 

22 instruments. 

23 ‘‘(E) AUTHORITY TO REGULATE.—The Ad24 ministrator shall have the authority to regulate 


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1 brokers and dealers in trust certificates sold 

2 pursuant to this section. 

3 ‘‘(F) BOOK ENTRY PERMITTED.—Nothing 

4 in this paragraph shall prohibit the utilization 

5 of a book-entry or other electronic form of reg6 istration for trust certificates.’’. 

7 SEC. 210. FORECLOSURE AND LIQUIDATION OF LOANS. 

8 Section 510 of the Small Business Investment Act 

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

10 ‘‘SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS. 

11 ‘‘(a) DELEGATION OF AUTHORITY.—In accordance 

12 with this section, the Administrator shall delegate to any 

13 certified development company that meets the eligibility 

14 requirements of subsection (b)(1), the authority to fore15 close and liquidate, or to otherwise treat in accordance 

16 with this section, defaulted loans in its portfolio that are 

17 funded with the proceeds of debentures guaranteed by the 

18 Administrator pursuant to this title. 

19 ‘‘(b) ELIGIBILITY FOR DELEGATION.— 

20 ‘‘(1) REQUIREMENTS.—A certified development 

21 company shall be eligible for a delegation of author22 ity under subsection (a) if— 

23 ‘‘(A) the certified development company— 

24 ‘‘(i) has participated in the loan liq25 uidation pilot program established by the 


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1 Small Business Programs Improvement 

2 Act of 1996 (15 U.S.C. 695 note), before 

3 the enactment of the Job Creation and 

4 Economic Development Through CDC 

5 Modernization Act of 2009; 

6 ‘‘(ii) is an accredited or premier cer7 tified development company; or 

8 ‘‘(iii) during the 3 fiscal years imme9 diately prior to seeking such a delegation, 

10 has made an average of not less than 10 

11 loans per year that are funded with the 

12 proceeds of debentures guaranteed under 

13 this title; and 

14 ‘‘(B) the certified development company— 

15 ‘‘(i) has one or more employees— 

16 ‘‘(I) with not less than 2 years of 

17 substantive, decisionmaking experi18 ence in administering the liquidation 

19 and workout of problem loans secured 

20 in a manner substantially similar to 

21 loans funded with the proceeds of de22 bentures guaranteed under this title; 

23 and 

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1 oped by the Administrator in conjunc2 tion with a certified development com3 pany that meet the requirements of 

4 this paragraph; or 

5 ‘‘(ii) submits to the Administrator 

6 documentation demonstrating that the 

7 company has contracted with a qualified 

8 third-party to perform any liquidation ac9 tivities and secures the approval of the 

10 contract by the Administrator with respect 

11 to the qualifications of the contractor and 

12 the terms and conditions of liquidation ac13 tivities. 

14 ‘‘(2) CONFIRMATION.—On the request, the Ad15 ministrator shall examine the qualifications of any 

16 certified development company described in sub17 section (a) to determine if such company is eligible 

18 for the delegation of authority under this section. If 

19 the Administrator determines that a company is not 

20 eligible, the Administrator shall provide the com21 pany, in writing, with the reasons for such ineligi22 bility. The certified development company shall be 

23 entitled to request delegated authority and the Ad24 ministrator shall review the request only to address 

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1 tified the reasons for the Administrator’s original 

2 determination of ineligibility. 

3 ‘‘(c) SCOPE OF DELEGATED AUTHORITY.— 

4 ‘‘(1) IN GENERAL.—Each certified development 

5 company to which the Administrator delegates au6 thority under section (a) may with respect to any 

7 loan described in subsection (a)— 

8 ‘‘(A) perform all liquidation and fore9 closure functions, including the purchase in ac10 cordance with this subsection of any other in11 debtedness secured by the property securing the 

12 loan, in a reasonable and sound manner accord13 ing to commercially accepted practices, pursu14 ant to a liquidation plan approved in advance 

15 by the Administrator under paragraph (2)(A); 

16 ‘‘(B) litigate any matter relating to the 

17 performance of the functions described in sub18 paragraph (A), except that the Administrator 

19 may— 

20 ‘‘(i) defend or bring any claim if— 

21 ‘‘(I) the outcome of the litigation 

22 may adversely affect the Administra23 tor’s management of the program es24 tablished under this title; or 


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1 ‘‘(II) the Administrator is enti2 tled to legal remedies not available to 

3 a certified development company and 

4 such remedies will benefit either the 

5 Administrator or the certified develop6 ment company; and 

7 ‘‘(ii) oversee the conduct of any such 

8 litigation; and 

9 ‘‘(C) take other appropriate actions to 

10 mitigate loan losses in lieu of total liquidation 

11 or foreclosures, including the restructuring of a 

12 loan in accordance with prudent loan servicing 

13 practices and pursuant to a workout plan ap14 proved in advance by the Administrator under 

15 paragraph (2)(C). 

16 ‘‘(2) ADMINISTRATOR APPROVAL OF PLANS.— 

17 ‘‘(A) CERTIFIED DEVELOPMENT COMPANY

18 SUBMISSION OF PLANS.—Before carrying out 

19 functions described in paragraph (1)(A) or 

20 (1)(C), the certified development company shall 

21 submit to the Administrator a proposed liquida22 tion plan, any proposal for the Administrator to 

23 the purchase of any other indebtedness secured 

24 by the property securing a defaulted loan, or a 

25 workout plan or any combination thereof. 


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1 ‘‘(B) ADMINISTRATOR APPROVAL PROCE2 DURES.— 

3 ‘‘(i) TIMING.—Not late than 15 busi4 ness days after the plans described in sub5 paragraph (A) are received by the Admin6 istrator, the Administrator shall approve or 

7 reject the plan. 

8 ‘‘(ii) NOTICE OF NO DECISION.—With 

9 respect to any plan that cannot be ap10 proved or denied within the 15-day period 

11 required by clause (i), the Administrator 

12 shall within such period provide in accord13 ance with subparagraph (E) notice to the 

14 company that submitted the plan. 

15 ‘‘(C) ROUTINE ACTIONS.—In carrying out 

16 the functions described in paragraph (1)(A), a 

17 certified development company may undertake 

18 routine actions not addressed in a liquidation or 

19 workout plan without obtaining additional ap20 proval from the Administrator. 

21 ‘‘(D) COMPROMISE OF INDEBTEDNESS.— 

22 In carrying out functions described in para23 graph (1)(A), a certified development company 

24 may— 


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1 ‘‘(i) consider an offer made by an obli2 gor to compromise the debt for less than 

3 the full amount owing; and 

4 ‘‘(ii) pursuant to such offer, release 

5 any obligor or other party contingently lia6 ble, if the company secures the written ap7 proval of the Administrator. 

8 ‘‘(E) CONTENTS OF NOTICE OF NO DECI9 SION.—Any notice provided by the Adminis10 trator pursuant to subparagraph (B)(ii) shall— 

11 ‘‘(i) be in writing stating the specific 

12 reasons for which the Administrator was 

13 unable to act on the request submitted 

14 pursuant to subparagraph (A); 

15 ‘‘(ii) provide an estimate of the addi16 tional time needed for the Administrator to 

17 reach a decision on the request; and 

18 ‘‘(iii) specify any additional informa19 tion or documentation that the Adminis20 trator needs to make a decision but was 

21 not provided in the plan submitted by the 

22 certified development company. 

23 ‘‘(3) CONFLICT OF INTEREST.—In carrying out 

24 functions described in paragraph (1), a certified de25 velopment company shall take no action that would 


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1 result in an actual or apparent conflict of interest 

2 between the company (or any employee of the com3 pany) and any third-party lender, associate of a 

4 third-party lender, or any other person participating 

5 in a liquidation, foreclosure, or loss mitigation ac6 tion. 

7 ‘‘(d) SUSPENSION OR REVOCATION OF AUTHOR8 ITY.— 

9 ‘‘(1) IN GENERAL.—The Administrator may re10 voke or suspend a delegation of authority under this 

11 section to certified development company if the Ad12 ministrator determines that the company— 

13 ‘‘(A) does not meet the requirements of 

14 subsection (b)(1); 

15 ‘‘(B) violated any applicable law or rule or 

16 regulation of the Administrator that in the esti17 mation of the Administrator requires revoca18 tion; or 

19 ‘‘(C) fails to comply with any reporting 

20 that may be established by the Administrator 

21 relating to the establishment of eligibility in 

22 subsection (b)(1) or carrying out the functions 

23 described in subsection (c)(1). 


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1 ‘‘(2) WRITTEN NOTICE.—The Administrator 

2 shall provide in writing detailed reason why the dele3 gation of authority was suspended or revoked. 

4 ‘‘(e) PARTICIPATION IN LIQUIDATION.— 

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

6 company which elects not to apply for authority to 

7 foreclose and liquidate defaulted loans under this 

8 section, or which the Administrator determines to be 

9 ineligible for such authority, shall contract with a 

10 qualified third-party to perform foreclosure and liq11 uidation of defaulted loans in its portfolio. 

12 ‘‘(A) CONTRACT APPROVAL.—The contract 

13 entered into by the certified development com14 pany specified in paragraph (1) shall be contin15 gent upon approval by the Administrator with 

16 respect to the qualifications of the contractor 

17 and the terms and conditions of liquidation ac18 tivities. The Administrator shall not unreason19 ably withhold such approval. 

20 ‘‘(B) NOTIFICATION OF REJECTION.—If 

21 the Administrator rejects the contract, the Ad22 ministrator shall provide a notice to the cer23 tified development company, in writing, explain24 ing the reasons for such rejection within ten 

25 business days after submission of the contract. 


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1 ‘‘(C) RESUBMITTAL.—The certified devel2 opment company shall be permitted to resubmit 

3 the contract and the Administrator’s review of 

4 any such resubmittal shall be limited to 

5 insufficiencies described in the notification of 

6 rejection. 

7 ‘‘(D) REGULATIONS.—The Administrator 

8 shall promulgate regulations, after notice and 

9 opportunity for comment, adopting standards 

10 for the approval of qualified third-party con11 tractors within 90 days after the date of enact12 ment of the Job Creation and Economic Devel13 opment Through CDC Modernization Act of 

14 2009. 

15 ‘‘(E) FAILURE TO PROMULGATE REGULA16 TIONS.—If the Administrator fails to promul17 gate such regulations, any contract for liquida18 tion entered into by a certified development 

19 company under this subsection shall be consid20 ered to valid for the purposes of this subsection 

21 and subsection (f). 

22 ‘‘(F) EFFECT OF ADMINISTRATOR’S PRO23 MULGATION OF REGULATIONS.—If the Adminis24 trator promulgates regulations after the dead25 line specified in subparagraph (D), those reguVerDate Nov 24 2008 05:35 Oct 08, 2009 Jkt 089200 PO 00000 Frm 00084 Fmt 6652 Sfmt 6201 E:\BILLS\H3739.IH H3739

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1 lations shall not have any retroactive applica2 tion with respect to contracts that are described 

3 in subparagraph (E). 

4 ‘‘(2) COMMENCEMENT.—This subsection shall 

5 not require any certified development company to 

6 liquidate defaulted loans until the Administrator im7 plements a system to compensate and reimburse cer8 tified development companies for liquidation of any 

9 defaulted loans. 

10 ‘‘(f) COMPENSATION AND REIMBURSEMENT.— 

11 ‘‘(1) REIMBURSEMENT OF EXPENSES.—The 

12 Administrator shall reimburse each certified develop13 ment company for all expenses paid by such com14 pany as part of the foreclosure and liquidation ac15 tivities taken to carry out this section, if the ex16 penses— 

17 ‘‘(A) were— 

18 ‘‘(i) approved in advance by the Ad19 ministrator, either specifically in a plan 

20 submitted pursuant to subsection (c) or 

21 generally, such as, but not limited to, ac22 tions approved by the Administrator in 

23 regulations or other interpretative 

24 issuances; or 


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1 ‘‘(ii) incurred by the development 

2 company on an emergency basis without 

3 prior approval from the Administrator, if 

4 the Administrator determines that the ex5 penses were reasonable and appropriate; 

6 and 

7 ‘‘(B) are submitted by the certified devel8 opment company to the Administrator not later 

9 than 3 years after the date the expense was in10 curred or the bill therefore is submitted to the 

11 certified development company, whichever is 

12 later. 

13 ‘‘(2) ALTERNATIVE REIMBURSEMENT.—As an 

14 alternative to the procedure in paragraph (1), a cer15 tified development company may elect to obtain re16 imbursement for all such expenses from the proceeds 

17 of any collateral provided by the borrower that was 

18 liquidated by the certified development company if 

19 the expenses comply with the requirements of para20 graph (1). Within 6 months of the reimbursement, 

21 the certified development company shall provide the 

22 Administrator with the same information and docu23 mentation it would be required to submit to obtain 

24 payment from the Administrator. 


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1 ‘‘(3) REGULATIONS.—The Administrator shall 

2 promulgate regulations, after notice and comment to 

3 carry out the provisions of paragraphs (1) and (2). 

4 If the Administrator does not promulgate such regu5 lations within one year, certified development compa6 nies shall be authorized, notwithstanding the re7 quirements of subsection (e)(2), to liquidate de8 faulted loans and such costs and expenses incurred, 

9 absent clear and convincing evidence of fraud, shall 

10 be deemed to be approved. 

11 ‘‘(4) COMPENSATION FOR RESULTS.— 

12 ‘‘(A) DEVELOPMENT.—In regulations pro13 mulgated pursuant to paragraph (3), the Ad14 ministrator also shall develop a schedule of 

15 compensation that provides monetary incentives 

16 for certified development companies in order to 

17 increase recoveries on defaulted loans. 

18 ‘‘(B) CRITERIA.—The schedule shall— 

19 ‘‘(i) be based on a percentage of the 

20 net amount recovered, but shall not exceed 

21 a maximum amount; and 

22 ‘‘(ii) not apply to any foreclosure 

23 which is conducted under a contract be24 tween a certified development company and 


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1 a qualified third party to perform the fore2 closure and liquidation. 

3 ‘‘(C) PAYMENT.—The Administrator shall 

4 transmit the compensation provided herein to 

5 the development company from the proceeds of 

6 liquidated collateral, unless he utilizes another 

7 source for funds, within 30 days from the date 

8 when the liquidation case has been closed and 

9 documentation received.’’. 

10 SEC. 211. REPORTS AND REGULATIONS. 

11 Title V of the Small Business Investment Act of 1958 

12 (15 U.S.C. 661 and following) is amended by adding at 

13 the end the following: 

14 ‘‘SEC. 511. REPORTS. 

15 ‘‘(a) PREMIER CERTIFIED DEVELOPMENT COMPA16 NIES.—The Administrator shall report annually to the 

17 Committee on Small Business of the House of Representa18 tives and the Committee on Small Business and Entrepre19 neurship of the Senate on the implementation of section 

20 504. Each report shall include— 

21 ‘‘(1) the number of premier certified develop22 ment companies; 

23 ‘‘(2) the debenture volume of each premier cer24 tified development company; 


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1 ‘‘(3) a comparison of the loss rate for premier 

2 certified development companies to the loss rate for 

3 accredited or certified development companies; and 

4 ‘‘(4) such other information as the Adminis5 trator deems appropriate. 

6 ‘‘(b) REPORTS ON LIQUIDATION AND FORE7 CLOSURES.— 

8 ‘‘(1) IN GENERAL.—Based on information pro9 vided by certified development companies and the 

10 Administrator, the Administrator shall submit annu11 ally to the Committee on Small Business and Entre12 preneurship of the Senate and the Committee on 

13 Small Business of the House of Representatives a 

14 report on the results of delegation of authority under 

15 section 510. 

16 ‘‘(2) CONTENTS.—Each report submitted under 

17 paragraph (1) shall include the following informa18 tion: 

19 ‘‘(A) With respect to each loan foreclosed 

20 or liquidated by a certified development com21 pany, or for which losses were otherwise miti22 gated by pursuant to a workout plan— 

23 ‘‘(i) the total cost of the project fi24 nanced with the loan; 


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1 ‘‘(ii) the total original dollar amount 

2 guaranteed by the Administration; 

3 ‘‘(iii) the total dollar amount of the 

4 loan at the time of liquidation, foreclosure, 

5 or mitigation of loss; 

6 ‘‘(iv) the total dollar losses resulting 

7 from the liquidation, foreclosure, or mitiga8 tion of loss; and 

9 ‘‘(v) the total recoveries resulting 

10 from the liquidation, foreclosure, or mitiga11 tion of loss, both as a percentage of the 

12 amount guaranteed and the total cost of 

13 the project financed. 

14 ‘‘(B) With respect to each certified devel15 opment company to which authority is dele16 gated under section 510, the totals of each of 

17 the amounts described in clauses (i) through (v) 

18 of subparagraph (A). 

19 ‘‘(C) With respect to each certified devel20 opment company that contracts with a qualified 

21 third-party contractor pursuant to section 

22 510(e), the total of each of the amounts de23 scribed in clauses (i) through (v) of subpara24 graph (A). 


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1 ‘‘(D) With respect to all loans subject to 

2 foreclosure, liquidation, or mitigation under sec3 tion 510, the totals of each of the amounts de4 scribed in clauses (i) through (v) of subpara5 graph (A). 

6 ‘‘(E) A comparison between— 

7 ‘‘(i) the information provided under 

8 subparagraph (D) with respect to the 12- 

9 month period preceding the date on which 

10 the report is submitted; and 

11 ‘‘(ii) the same information with re12 spect to loans foreclosed and liquidated, or 

13 otherwise treated, by the Administrator 

14 during the same period. 

15 ‘‘(F) The number of times that the Admin16 istrator has failed to approve or reject a liq17 uidation plan, workout plan, request to pur18 chase indebtedness, or failed to approve a third19 party contractor under section 510, including 

20 specific information regarding the reasons for 

21 the Administrator’s failure and any delays that 

22 resulted. 

23 ‘‘(c) REPORTS ON COMBINATION FINANCING.— 

24 ‘‘(1) REPORTING REQUIREMENT.—Not later 

25 than 90 days after the date of enactment of the Job 


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1 Creation and Economic Development Through CDC 

2 Modernization Act of 2009, and annually thereafter, 

3 the Administrator shall submit a report to the Com4 mittee on Small Business and Entrepreneurship of 

5 the Senate and the Committee on Small Business of 

6 the House of Representatives that— 

7 ‘‘(A) includes the number of small business 

8 concerns that have financing under both section 

9 7(a) of the Small Business Act (15 U.S.C. 

10 636(a)) and title V of the Small Business In11 vestment Act of 1958 (15 U.S.C. 695 et seq.) 

12 during the year before the year of that report; 

13 and 

14 ‘‘(B) describes the total amount and gen15 eral performance of the financing described in 

16 subparagraph (A). 

17 ‘‘(d) REPORT ON OTHER ECONOMIC DEVELOPMENT

18 ACTIVITY.—The Administrator shall compile and submit 

19 to Committee on Small Business of the House of Rep20 resentatives and the Committee on Small Business and 

21 Entrepreneurship of the Senate on an annual basis, com22 mencing in the year that the Job Creation and Economic 

23 Development Through CDC Modernization Act of 2009 

24 was enacted, a report that describes the economic and 

25 community development activities, other than loan making 


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1 under this title, of each certified development company 

2 during the prior fiscal year. The Administrator may con3 tract with another party, including non-governmental enti4 ties, to collect information or otherwise assist in the prepa5 ration of the report required by this subsection. 

6 ‘‘SEC. 512. PROMULGATION OF REGULATIONS UNDER THIS 

7 TITLE. 

8 ‘‘(a) DEADLINES FOR IMPLEMENTING REGULA9 TIONS.—Except as expressly provided elsewhere in the Job 

10 Creation and Economic Development Through CDC Mod11 ernization Act of 2009, the Administrator shall promul12 gate regulations under this title, after providing notice and 

13 the opportunity for comment, within 180 days after the 

14 date of enactment of that Act. 

15 ‘‘(b) NOTICE AND COMMENT REQUIREMENTS IN

16 GENERAL.—Except as otherwise provided elsewhere in 

17 this title, the Administrator shall provide, after the date 

18 of enactment of the Job Creation and Economic Develop19 ment Through CDC Modernization Act of 2009, notice of 

20 any proposed change to a regulation implementing this 

21 title V (whether in existence on the date of enactment of 

22 the Job Creation and Economic Development Through 

23 CDC Modernization Act of 2009 or subsequently adopt24 ed), publish such notification in the Federal Register, and 

25 provide a comment period of not less than 60 days.’’. 


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1 SEC. 212. PROGRAM NAME. 

2 Title V of the Small Business Investment Act is 

3 amended by adding the following new section after section 

4 512: 

5 ‘‘SEC. 513 PROGRAM NAME. 

6 ‘‘(a) IN GENERAL.—The program created by this 

7 title shall be referred to as the CDC Economic Develop8 ment Loan Program. 

9 ‘‘(b) MODIFICATION OF MATERIALS USED.—Within 

10 60 days after the date of enactment of the Job Creation 

11 and Economic Development Through CDC Modernization 

12 Act of 2009, the Administrator shall modify all documents 

13 and websites to conform to the name change made by this 

14 section.’’. 

15 TITLE III—MISCELLANEOUS 

16 SEC. 301. TERMINATION OF PILOT PROGRAM REGULATION. 

17 (a) TERMINATION.—Section 120.3 of title 13, Code 

18 of Federal Regulations, as in effect on January 1, 2009, 

19 shall cease to have any force and effect as of the date 

20 of enactment of this Act, and the Administrator is prohib21 ited from adopting a new regulation that authorizes the 

22 Administrator to waive any regulation for the purpose of 

23 conducting a pilot program unless such waiver is specifi24 cally granted by statute. 


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1 (b) EFFECT ON EXISTING PROGRAM.—Subsection 

2 (a) shall have no effect on any pilot program currently 

3 conducted by the Administrator. 

4 (c) FUTURE PILOT PROGRAMS.—Any future pilot 

5 program conducted under the Administrator’s own initia6 tive or pursuant to statutory authority granted in the 

7 Small Business Investment Act of 1958 or section 7 of 

8 the Small Business Act must be implemented only after 

9 notice in the Federal Register and the opportunity for 

10 comment. 

11 SEC. 302. REPORT ON STANDARD OPERATING PROCE12 DURES. 

13 (a) REPORT.—The Administrator of the Small Busi14 ness Administration shall submit to the Committee on 

15 Small Business of the House of Representatives and the 

16 Committee on Small Business and Entrepreneurship of 

17 the Senate a report within 180 days after enactment of 

18 this Act identifying each ‘‘Standard Operating Procedure’’ 

19 issued after January 1, 1996, that relates to the operation 

20 of a development company (in any manner) under title V 

21 of the Small Business Investment Act of 1958, that is still 

22 in effect on the date of enactment of this Act, and the 

23 regulation codified in title 13 of the Code of Federal Regu24 lations that authorizes the issuance of the Standard Oper25 ating Procedure and separately identifies the regulation 


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1 that the Standard Operating Procedure purports to inter2 pret. 

3 (b) INAPPLICABILITY.—If the Administrator fails to 

4 complete the report by the time specified in subsection (a), 

5 the Administrator shall, unless there is clear and con6 vincing evidence of fraud, honor the terms and conditions 

7 of any debenture to the entity that issued the debenture 

8 pursuant to title V of the Small Business Investment Act 

9 of 1958 without regard to whether the entity complied 

10 with any of the Standard Operating Procedures described 

11 in subsection (a) until such time as the Administrator sub12 mits the report required under subsection (a). 

13 (c) DEFINITION.—For purposes of this section, the 

14 term ‘‘Standard Operating Procedure’’ has the meaning 

15 given that term in section 120.10 of title 13, Code of Fed16 eral Regulations as that was in effect on January 1, 2009, 

17 and includes any reference to the acronym ‘‘SOP’’. 

18 SEC. 303. ALTERNATIVE SIZE STANDARD. 

19 (a) REVIEW AND STUDY.— 

20 (1) IN GENERAL.—The Administrator of the 

21 United States Small Business Administration shall 

22 study and review the optional size standard set forth 

23 in section 121.301(b) of title 13, Code of Federal 

24 Regulations as was in effect on January 1, 2009, for 

25 eligibility of a small business concern for financing 


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1 under title V of the Small Business Investment Act 

2 of 1958. 

3 (2) CONTENTS.—The review shall analyze 

4 whether the alternative size standard includes the 

5 business concerns defined in section 3(a)(1) of the 

6 Small Business Act and what if any regulatory 

7 changes are needed in the alternative size standard. 

8 (3) SUBMISSION TO CONGRESS.—The Adminis9 trator shall submit its study and conclusions within 

10 180 days after the date of enactment of the Job 

11 Creation and Economic Development through CDC 

12 Modernization Act of 2009 to the Committee on 

13 Small Business and Entrepreneurship of the Senate 

14 and the Committee on Small Business of the House 

15 of Representatives. 

16 (b) ISSUANCE OF REGULATIONS.—Any changes in 

17 the optional size standard described in subsection (a)(1) 

18 shall be promulgated within 180 days of the submission 

19 of the report to committes referred to in paragraph (3) 

20 of subsection (a). 

21 (c) INTERIM ALTERNATIVE SIZE STANDARD.—Until 

22 the Administrator promulgates regulations either re23 adopting the size standard referred to in subsection (a)(1) 

24 or adopts a new alternative size standard, the alternative 

25 size standard shall be a maximum tangible net worth of 


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1 not more than $15,000,000 and an average net income 

2 after the payment of Federal taxes (but excluding any car3 ryover losses) for the preceding two fiscal years not more 

4 than $5,000,000. 

Æ 


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