In the House of Representatives, U. S.,

September 12, 1995.

Resolved, That the bill from the Senate (S. 895) entitled

‘‘An Act to amend the Small Business Act to reduce the level

of participation by the Small Business Administration in certain loans guaranteed by the Administration, and for other

purposes’’, do pass with the following

AMENDMENTS:

Strike out all after the enacting clause, and insert:

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Small Business Credit

3 Efficiency Act of 1995’’.

4 SEC. 2. FEE FOR LOAN GUARANTEES SOLD ON SECONDARY

5 MARKET.

6 Section 5(g)(4)(A) of the Small Business Act (15

U.S.C. 634(g)(4)(A)) is amended by striking ‘‘4 7 ⁄10 of one

8 percent’’ and inserting ‘‘one-half of 1 percent’’.

9 SEC. 3. GENERAL BUSINESS LOANS.

10 (a) REDUCED LEVEL OF PARTICIPATION IN GUARAN11 TEED LOANS.—Section 7(a)(2) of the Small Business Act

12 (15 U.S.C. 636(a)(2)) is amended to read as follows:
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1 ‘‘(2) LEVEL OF PARTICIPATION IN GUARANTEED

2 LOANS.—

3 ‘‘(A) IN GENERAL.—In agreements to par4 ticipate in loans on a deferred basis under this

5 subsection, such participation by the Adminis6 tration shall be—

7 ‘‘(i) equal to 80 percent of the balance

8 of the financing outstanding at the time of

9 disbursement if such financing is less than

10 or equal to $100,000; and

11 ‘‘(ii) equal to 75 percent of the balance

12 of the financing outstanding at the time of

13 disbursement if such financing is greater

14 than $100,000.

15 ‘‘(B) REDUCED PARTICIPATION.—The guar16 antee percentage specified by subparagraph (A)

17 for any loan may be reduced upon the request of

18 the participating lender. The Administration

19 shall not use the percent of guarantee requested

20 as a criterion for establishing priorities in ap21 proving guarantee requests.

22 ‘‘(C) INTEREST RATE UNDER PREFERRED

23 LENDERS PROGRAM.—The maximum interest

24 rate for a loan guaranteed under the Preferred

25 Lenders Program shall not exceed the maximum
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1 interest rate, as determined by the Administra2 tion, which is made applicable to other loan

3 guarantees under this subsection.

4 ‘‘(D) PREFERRED LENDERS PROGRAM DE5 FINED.—In this paragraph, the term ‘Preferred

6 Lenders Program’ means a program under

7 which a written agreement between the lender

8 and the Administration delegates to the lender—

9 ‘‘(i) complete authority to make and

10 close loans with a guarantee from the Ad11 ministration without obtaining the prior

12 specific approval of the Administration;

13 and

14 ‘‘(ii) authority to service and liquidate

15 such loans.’’.

16 (b) GUARANTEE FEES.—Section 7(a)(18) of the Small

17 Business Act (15 U.S.C. 636(a)(18)) is amended to read

18 as follows:

19 ‘‘(18) GUARANTEE FEES.—

20 ‘‘(A) GENERAL FEE.—For any loan or fi21 nancing made under this subsection other than a

22 loan repayable in a period of one year or less,

23 the Administration shall collect a guarantee fee

24 equal to—
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1 ‘‘(i) 2 percent of the gross amount of

2 any loan guaranteed under this subsection

3 of an amount less than $250,000;

4 ‘‘(ii) 2.5 percent of the gross amount of

5 any loan guaranteed under this subsection

6 of an amount equal to or greater than

7 $250,000 and less than $500,000; or

8 ‘‘(iii) 3 percent of the gross amount of

9 any loan guaranteed under this subsection

10 of an amount equal to or greater than

11 $500,000.

12 Such fee shall be payable by the participating

13 lending institution and may be charged to the

14 borrower.

15 ‘‘(B) ADDITIONAL FEE TO OFFSET COST.—

16 ‘‘(i) IN GENERAL.—In addition to the

17 guarantee fee to be collected under subpara18 graph (A), the Administration shall collect

19 a fee for loans guaranteed under this sub20 section (other than loans for which a guar21 antee fee may be collected under section

22 5(g)(4)(A)) in an amount equal to not more

23 than four-tenths of 1 percent per year of the

24 outstanding principal portion of such loan

25 guaranteed by the Administration.
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1 ‘‘(ii) USE.—Fees collected under clause

2 (i) shall be used solely to offset the cost (as

3 defined by section 502(5) of the Congres4 sional Budget Act of 1974) of guaranteeing

5 loans under this subsection.

6 ‘‘(iii) PAYMENT.—Fees collected under

7 clause (i) shall be payable by the partici8 pating lending institution and shall not be

9 charged to the borrower.’’.

10 (c) REPEAL OF PROVISIONS ALLOWING RETENTION OF

11 GUARANTEE FEES BY LENDERS.—Section 7(a)(19) of the

12 Small Business Act (15 U.S.C. 636(a)(19)) is amended—

13 (1) in subparagraph (B)—

14 (A) by striking ‘‘shall (i) develop’’ and in15 serting ‘‘shall develop’’; and

16 (B) by striking ‘‘, and (ii)’’ and all that fol17 lows before the period at the end; and

18 (2) by striking subparagraph (C).

19 SEC. 4. MODIFICATIONS TO DEVELOPMENT COMPANY DE20 BENTURE PROGRAM.

21 (a) MAXIMUM LOAN AMOUNT.—Section 502(2) of the

22 Small Business Investment Act of 1958 (15 U.S.C. 696(2))

23 is amended to read as follows:
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1 ‘‘(2) Loans made by the Administration under

2 this section shall be limited to $1,250,000 for each

3 such identifiable small business concern.’’.

4 (b) FEE TO OFFSET COST.—Section 503(b)(3) of the

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

6 697(b)(3)) is amended by inserting before the semicolon the

7 following: ‘‘and includes a one-eighth of 1 percent fee which

8 shall be paid to the Administration and which shall be used

9 solely to offset the cost (as defined by section 502(5) of the

10 Congressional Budget Act of 1974) of guaranteeing the de11 benture.’’.

Amend the title so as to read: ‘‘An Act to amend the

Small Business Act and the Small Business Investment Act

of 1958 to reduce the cost to the Federal Government of

guaranteeing certain loans and debentures, and for other purposes.’’.

Attest:

Clerk.
104TH CONGRESS

1ST SESSION S. 895

AMENDMENTS