I 

109TH CONGRESS 

2D SESSION H. R. 5352 

To reauthorize programs to assist small business concerns, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 11, 2006 

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

Committee on Small Business 

A BILL 

To reauthorize programs to assist 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; TABLE OF CONTENTS. 

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

5 ‘‘Small Business Reauthorization Act of 2006’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—AUTHORIZATIONS 

Sec. 101. Section 20 reauthorizations. 

Sec. 102. Reauthorizations for certain Small Business Act programs. 

Sec. 103. Reauthorizations for certain other programs. 


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TITLE II—FINANCE 

Subtitle A—Certified Development Company Program 

Sec. 201. Short title; definition. 

Sec. 202. Development Company Loan Programs. 

Sec. 203. Loan liquidations. 

Sec. 204. Additional equity injections. 

Sec. 205. Businesses in low-income areas. 

Sec. 206. Combinations of certain goals. 

Sec. 207. Maximum 504 and 7(a) loan eligibility. 

Sec. 208. Refinancing. 

Sec. 209. Fees. 

Sec. 210. Technical correction. 

Sec. 211. Small Business Investment Act definition. 

Sec. 212. Repeal of sunset on reserve requirements for premier certified lenders. 

Sec. 213. Eligibility of development companies to be designated as certified development companies and authority to issue debentures; and 

providing an area of operational authority, funding restrictions, 

and ethical requirements. 

Sec. 214. Conforming amendments. 

Sec. 215. Closing costs. 

Sec. 216. Definition of rural. 

Sec. 217. Regulations and effective date. 

Subtitle B—Small Business Lending Improvement 

Sec. 221. Short title. 

Sec. 222. National preferred lenders program. 

Sec. 223. Maximum loan amount. 

Sec. 224. Alternative size standard. 

Sec. 225. Timely payment of 7(a) secondary market fee. 

Subtitle C—Small Business Investment 

Sec. 241. Participating Security Small Business Investment Companies. 

TITLE III—ENTREPRENEURSHIP 

Subtitle A—National Small Business Regulatory Assistance 

Sec. 301. Short title. 

Sec. 302. Purpose. 

Sec. 303. Definitions. 

Sec. 304. Small business regulatory assistance program. 

Sec. 305. Promulgation of regulations. 

Subtitle B—Vocational and Technical Entrepreneurship Development 

Sec. 311. Short title. 

Sec. 312. Vocational and technical entrepreneurship development program. 

Subtitle C—Native American Small Business Development 

Sec. 321. Findings and purposes. 

Sec. 322. Small Business Development Center assistance to Indian tribe members, Alaska Natives, and Native Hawaiians. 


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Sec. 323. State consultation with tribal organizations. 

Subtitle D—Second-Stage Small Business Development 

Sec. 331. Short title. 

Sec. 332. Purpose. 

Sec. 333. Pilot program. 

Sec. 334. Regulations. 

Sec. 335. Definitions. 

Sec. 336. Authorization of appropriations. 

Subtitle E—Trade Provisions 

Sec. 341. Establishment of Associate Administrator for International Trade in 

Small Business Administration. 

TITLE IV—MISCELLANEOUS 

Sec. 401. Small business disaster loans. 

Sec. 402. Disaster loans for incidents of national significance. 

Sec. 403. Small Business Development Center Portability Grants. 

Sec. 404. Assistance to out-of-state businesses. 

Sec. 405. Elimination of unnecessary programs. 

Sec. 406. Technical correction. 

Sec. 407. Combating waste, fraud, and abuse. 

Sec. 408. Relief available against Administrator. 

Sec. 409. Economic injury disaster loans to nonprofits. 

Sec. 410. Extension of co-sponsorship authority. 

Sec. 411. Regulations on size standards of franchisees. 

Sec. 412. District Directors prohibited from being involved in selection of 

SBDC directors. 

1 TITLE I—AUTHORIZATIONS 

2 SEC. 101. SECTION 20 REAUTHORIZATIONS. 

3 Section 20 of the Small Business Act (15 U.S.C. 647) 

4 is amended by inserting after subsection (e) the following 

5 new subsections: 

6 ‘‘(f) FISCAL YEAR 2007.— 

7 ‘‘(1) PROGRAM LEVELS.—The following pro8 gram levels are authorized for fiscal year 2007: 

9 ‘‘(A) For the programs authorized by this 

10 Act, the Administrator is authorized to make— 


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1 ‘‘(i) $80,000,000 in technical assist2 ance grants, as provided in section 7(m); 

3 and 

4 ‘‘(ii) $110,000,000 in direct loans, as 

5 provided in section 7(m). 

6 ‘‘(B) For the programs authorized by this 

7 Act, the Administrator is authorized to make 

8 $27,050,000,000 in deferred participation loans 

9 and other financings. Of such sum, the Admin10 istrator is authorized to make— 

11 ‘‘(i) $18,000,000,000 in general busi12 ness loans, as provided in section 7(a); 

13 ‘‘(ii) $8,500,000,000 in certified de14 velopment company financings, as provided 

15 in section 7(a)(13) and as provided in sec16 tion 504 of the Small Business Investment 

17 Act of 1958; 

18 ‘‘(iii) $500,000,000 in loans, as pro19 vided in section 7(a)(21); and 

20 ‘‘(iv) $50,000,000 in loans, as pro21 vided in section 7(m). 

22 ‘‘(C) For the programs authorized by title 

23 III of the Small Business Investment Act of 

24 1958, the Administrator is authorized to 

25 make— 


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1 ‘‘(i) $300,000,000 in purchases of 

2 participating securities; and 

3 ‘‘(ii) $4,000,000,000 in guarantees of 

4 debentures. 

5 ‘‘(D) For the programs authorized by part 

6 B of title IV of the Small Business Investment 

7 Act of 1958, the Administrator is authorized to 

8 enter into guarantees not to exceed 

9 $6,500,000,000, of which not more than 50 

10 percent may be in bonds approved pursuant to 

11 section 411(a)(3) of that Act. 

12 ‘‘(E) The Administrator is authorized to 

13 make grants or enter into cooperative agree14 ments for a total amount of $7,000,000 for the 

15 Service Corps of Retired Executives program 

16 authorized by section 8(b)(1). 

17 ‘‘(2) ADDITIONAL AUTHORIZATIONS.— 

18 ‘‘(A) There are authorized to be appro19 priated to the Administrator for fiscal year 

20 2007 such sums as may be necessary to carry 

21 out the provisions of this Act not elsewhere pro22 vided for, including administrative expenses and 

23 necessary loan capital for disaster loans pursu24 ant to section 7(b), and to carry out the Small 


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1 Business Investment Act of 1958, including sal2 aries and expenses of the Administration. 

3 ‘‘(B) Notwithstanding any other provision 

4 of this paragraph, for fiscal year 2007— 

5 ‘‘(i) no funds are authorized to be 

6 used as loan capital for the loan program 

7 authorized by section 7(a)(21) except by 

8 transfer from another Federal department 

9 or agency to the Administration, unless the 

10 program level authorized for general busi11 ness loans under paragraph (1)(B)(i) is 

12 fully funded; and 

13 ‘‘(ii) the Administration may not ap14 prove loans on its own behalf or on behalf 

15 of any other Federal department or agen16 cy, by contract or otherwise, under terms 

17 and conditions other than those specifically 

18 authorized under this Act or the Small 

19 Business Investment Act of 1958, except 

20 that it may approve loans under section 

21 7(a)(21) of this Act in gross amounts of 

22 not more than $2,000,000. 

23 ‘‘(g) FISCAL YEAR 2008.— 

24 ‘‘(1) PROGRAM LEVELS.—The following pro25 gram levels are authorized for fiscal year 2008: 


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1 ‘‘(A) For the programs authorized by this 

2 Act, the Administrator is authorized to make— 

3 ‘‘(i) $80,000,000 in technical assist4 ance grants, as provided in section 7(m); 

5 and 

6 ‘‘(ii) $110,000,000 in direct loans, as 

7 provided in section 7(m). 

8 ‘‘(B) For the programs authorized by this 

9 Act, the Administrator is authorized to make 

10 $29,050,000,000 in deferred participation loans 

11 and other financings. Of such sum, the Admin12 istrator is authorized to make— 

13 ‘‘(i) $19,000,000,000 in general busi14 ness loans, as provided in section 7(a); 

15 ‘‘(ii) $9,500,000,000 in certified de16 velopment company financings, as provided 

17 in section 7(a)(13) and as provided in sec18 tion 504 of the Small Business Investment 

19 Act of 1958; 

20 ‘‘(iii) $500,000,000 in loans, as pro21 vided in section 7(a)(21); and 

22 ‘‘(iv) $50,000,000 in loans, as pro23 vided in section 7(m). 

24 ‘‘(C) For the programs authorized by title 

25 III of the Small Business Investment Act of 


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1 1958, the Administrator is authorized to 

2 make— 

3 ‘‘(i) $300,000,000 in purchases of 

4 participating securities; and 

5 ‘‘(ii) $4,000,000,000 in guarantees of 

6 debentures. 

7 ‘‘(D) For the programs authorized by part 

8 B of title IV of the Small Business Investment 

9 Act of 1958, the Administrator is authorized to 

10 enter into guarantees not to exceed 

11 $7,000,000,000, of which not more than 50 

12 percent may be in bonds approved pursuant to 

13 section 411(a)(3) of that Act. 

14 ‘‘(E) The Administrator is authorized to 

15 make grants or enter into cooperative agree16 ments for a total amount of $8,000,000 for the 

17 Service Corps of Retired Executives program 

18 authorized by section 8(b)(1). 

19 ‘‘(2) ADDITIONAL AUTHORIZATIONS.— 

20 ‘‘(A) There are authorized to be appro21 priated to the Administrator for fiscal year 

22 2008 such sums as may be necessary to carry 

23 out the provisions of this Act not elsewhere pro24 vided for, including administrative expenses and 

25 necessary loan capital for disaster loans pursuVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 ant to section 7(b), and to carry out the Small 

2 Business Investment Act of 1958, including sal3 aries and expenses of the Administration. 

4 ‘‘(B) Notwithstanding any other provision 

5 of this paragraph, for fiscal year 2008— 

6 ‘‘(i) no funds are authorized to be 

7 used as loan capital for the loan program 

8 authorized by section 7(a)(21) except by 

9 transfer from another Federal department 

10 or agency to the Administration, unless the 

11 program level authorized for general busi12 ness loans under paragraph (1)(B)(i) is 

13 fully funded; and 

14 ‘‘(ii) the Administrator may not ap15 prove loans on its own behalf or on behalf 

16 of any other Federal department or agen17 cy, by contract or otherwise, under terms 

18 and conditions other than those specifically 

19 authorized under this Act or the Small 

20 Business Investment Act of 1958, except 

21 that it may approve loans under section 

22 7(a)(21) of this Act in gross amounts of 

23 not more than $2,000,000. 

24 ‘‘(h) FISCAL YEAR 2009.— 


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1 ‘‘(1) PROGRAM LEVELS.—The following pro2 gram levels are authorized for fiscal year 2009: 

3 ‘‘(A) For the programs authorized by this 

4 Act, the Administrator is authorized to make— 

5 ‘‘(i) $80,000,000 in technical assist6 ance grants, as provided in section 7(m); 

7 and 

8 ‘‘(ii) $110,000,000 in direct loans, as 

9 provided in section 7(m). 

10 ‘‘(B) For the programs authorized by this 

11 Act, the Administrator is authorized to make 

12 $31,050,000,000 in deferred participation loans 

13 and other financings. Of such sum, the Admin14 istrator is authorized to make— 

15 ‘‘(i) $20,000,000,000 in general busi16 ness loans, as provided in section 7(a); 

17 ‘‘(ii) $10,500,000,000 in certified de18 velopment company financings, as provided 

19 in section 7(a)(13) and as provided in sec20 tion 504 of the Small Business Investment 

21 Act of 1958; 

22 ‘‘(iii) $500,000,000 in loans, as pro23 vided in section 7(a)(21); and 

24 ‘‘(iv) $50,000,000 in loans, as pro25 vided in section 7(m). 


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1 ‘‘(C) For the programs authorized by title 

2 III of the Small Business Investment Act of 

3 1958, the Administrator is authorized to 

4 make— 

5 ‘‘(i) $300,000,000 in purchases of 

6 participating securities; and 

7 ‘‘(ii) $4,000,000,000 in guarantees of 

8 debentures. 

9 ‘‘(D) For the programs authorized by part 

10 B of title IV of the Small Business Investment 

11 Act of 1958, the Administrator is authorized to 

12 enter into guarantees not to exceed 

13 $7,500,000,000, of which not more than 50 

14 percent may be in bonds approved pursuant to 

15 section 411(a)(3) of that Act. 

16 ‘‘(E) The Administrator is authorized to 

17 make grants or enter into cooperative agree18 ments for a total amount of $9,000,000 for the 

19 Service Corps of Retired Executives program 

20 authorized by section 8(b)(1). 

21 ‘‘(2) ADDITIONAL AUTHORIZATIONS.— 

22 ‘‘(A) There are authorized to be appro23 priated to the Administrator for fiscal year 

24 2009 such sums as may be necessary to carry 

25 out the provisions of this Act not elsewhere proVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 vided for, including administrative expenses and 

2 necessary loan capital for disaster loans pursu3 ant to section 7(b), and to carry out the Small 

4 Business Investment Act of 1958, including sal5 aries and expenses of the Administration. 

6 ‘‘(B) Notwithstanding any other provision 

7 of this paragraph, for fiscal year 2009— 

8 ‘‘(i) no funds are authorized to be 

9 used as loan capital for the loan program 

10 authorized by section 7(a)(21) except by 

11 transfer from another Federal department 

12 or agency to the Administration, unless the 

13 program level authorized for general busi14 ness loans under paragraph (1)(B)(i) is 

15 fully funded; and 

16 ‘‘(ii) the Administrator may not ap17 prove loans on its own behalf or on behalf 

18 of any other Federal department or agen19 cy, by contract or otherwise, under terms 

20 and conditions other than those specifically 

21 authorized under this Act or the Small 

22 Business Investment Act of 1958, except 

23 that it may approve loans under section 

24 7(a)(21) of this Act in gross amounts of 

25 not more than $2,000,000. 


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1 ‘‘(i) FISCAL YEAR 2010.— 

2 ‘‘(1) PROGRAM LEVELS.—The following pro3 gram levels are authorized for fiscal year 2010: 

4 ‘‘(A) For the programs authorized by this 

5 Act, the Administrator is authorized to make— 

6 ‘‘(i) $80,000,000 in technical assist7 ance grants, as provided in section 7(m); 

8 and 

9 ‘‘(ii) $110,000,000 in direct loans, as 

10 provided in section 7(m). 

11 ‘‘(B) For the programs authorized by this 

12 Act, the Administrator is authorized to make 

13 $33,050,000,000 in deferred participation loans 

14 and other financings. Of such sum, the Admin15 istration is authorized to make— 

16 ‘‘(i) $21,000,000,000 in general busi17 ness loans, as provided in section 7(a); 

18 ‘‘(ii) $11,500,000,000 in certified de19 velopment company financings, as provided 

20 in section 7(a)(13) and as provided in sec21 tion 504 of the Small Business Investment 

22 Act of 1958; 

23 ‘‘(iii) $500,000,000 in loans, as pro24 vided in section 7(a)(21); and 


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1 ‘‘(iv) $50,000,000 in loans, as pro2 vided in section 7(m). 

3 ‘‘(C) For the programs authorized by title 

4 III of the Small Business Investment Act of 

5 1958, the Administrator is authorized to 

6 make— 

7 ‘‘(i) $300,000,000 in purchases of 

8 participating securities; and 

9 ‘‘(ii) $4,000,000,000 in guarantees of 

10 debentures. 

11 ‘‘(D) For the programs authorized by part 

12 B of title IV of the Small Business Investment 

13 Act of 1958, the Administrator is authorized to 

14 enter into guarantees not to exceed 

15 $8,000,000,000, of which not more than 50 

16 percent may be in bonds approved pursuant to 

17 section 411(a)(3) of that Act. 

18 ‘‘(E) The Administrator is authorized to 

19 make grants or enter into cooperative agree20 ments for a total amount of $10,000,000 for 

21 the Service Corps of Retired Executives pro22 gram authorized by section 8(b)(1). 

23 ‘‘(2) ADDITIONAL AUTHORIZATIONS.— 

24 ‘‘(A) There are authorized to be appro25 priated to the Administrator for fiscal year 


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1 2010 such sums as may be necessary to carry 

2 out the provisions of this Act not elsewhere pro3 vided for, including administrative expenses and 

4 necessary loan capital for disaster loans pursu5 ant to section 7(b), and to carry out the Small 

6 Business Investment Act of 1958, including sal7 aries and expenses of the Administration. 

8 ‘‘(B) Notwithstanding any other provision 

9 of this paragraph, for fiscal year 2010— 

10 ‘‘(i) no funds are authorized to be 

11 used as loan capital for the loan program 

12 authorized by section 7(a)(21) except by 

13 transfer from another Federal department 

14 or agency to the Administration, unless the 

15 program level authorized for general busi16 ness loans under paragraph (1)(B)(i) is 

17 fully funded; and 

18 ‘‘(ii) the Administrator may not ap19 prove loans on its own behalf or on behalf 

20 of any other Federal department or agen21 cy, by contract or otherwise, under terms 

22 and conditions other than those specifically 

23 authorized under this Act or the Small 

24 Business Investment Act of 1958, except 

25 that it may approve loans under section 


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1 7(a)(21) of this Act in gross amounts of 

2 not more than $2,000,000.’’. 

3 SEC. 102. REAUTHORIZATIONS FOR CERTAIN SMALL BUSI4 NESS ACT PROGRAMS. 

5 (a) SMALL BUSINESS DEVELOPMENT CENTER PRO6 GRAM.—Section 21 of the Small Business Act (15 U.S.C. 

7 648) is amended in subsection (a)(4)(C)(vii)— 

8 (1) in subclause (I) by striking ‘‘and’’ at the 

9 end; 

10 (2) in subclause (II) by striking the period at 

11 the end; and 

12 (3) by adding at the end the following: 

13 ‘‘(III) $135,000,000 for fiscal 

14 year 2007; and 

15 ‘‘(IV) $114,000,000 for each of 

16 fiscal years 2008 through 2010.’’. 

17 (b) DISASTER MITIGATION PILOT PROGRAM.— 

18 (1) IN GENERAL.—Section 7 of the Small Busi19 ness Act (15 U.S.C. 636) is amended in subsection 

20 (b)(1)(C) by striking ‘‘2000 through 2004’’ and in21 serting ‘‘2007 through 2010’’. 

22 (2) AUTHORIZATION LEVELS.—Section 20 of 

23 the Small Business Act (15 U.S.C. 631 note) is 

24 amended in subsection (c) by striking the colon and 

25 all that follows through the period at the end and 


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1 inserting ‘‘: $15,000,000 for each of fiscal years 

2 2007 through 2010.’’. 

3 (c) MICROLOAN PROGRAM SUPPLEMENTAL

4 GRANTS.—Section 7 of the Small Business Act (15 U.S.C. 

5 636) is amended in subsection (m)(4)(F)(ii) by striking 

6 ‘‘not more than 20’’ and all that follows through the pe7 riod at the end and inserting ‘‘not more than 30 grantees 

8 in each of fiscal years 2007 through 2010, each of whom 

9 may receive a grant under this subparagraph in an 

10 amount not to exceed $150,000 per year.’’. 

11 (d) MICROLOAN PROGRAM DEFERRED PARTICIPA12 TION LOAN PILOT.—Section 7 of the Small Business Act 

13 (15 U.S.C. 636) is amended in subsection (m)(12) by 

14 striking ‘‘1998 through 2000’’ and inserting ‘‘2007 

15 through 2010’’. 

16 (e) BUSINESS GRANTS AND COOPERATIVE AGREE17 MENTS.—Section 8 of the Small Business Act (15 U.S.C. 

18 637) is amended in subsection (n)(3) by striking ‘‘2006’’ 

19 and inserting ‘‘2010’’. 

20 (f) PAUL D. COVERDELL DRUG-FREE WORKPLACE

21 PROGRAM.—Section 27 of the Small Business Act (15 

22 U.S.C. 654) is amended in subsection (g), in each of para23 graphs (1), (2), and (3), by striking ‘‘2006’’ and inserting 

24 ‘‘2010’’. 


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1 (g) WOMEN’S BUSINESS CENTER PROGRAM.—Sec2 tion 29 of the Small Business Act (15 U.S.C. 656) is 

3 amended— 

4 (1) in subsection (k)(1) by striking subpara5 graphs (A) through (D) and inserting the following: 

6 ‘‘(A) $16,500,000 for fiscal year 2007; 

7 ‘‘(B) $16,750,000 for fiscal year 2008; 

8 ‘‘(C) $17,000,000 fiscal year 2009; and 

9 ‘‘(D) $17,250,000 for fiscal year 2010.’’; 

10 (2) in subsection (k)(2)(B) by striking ‘‘over11 sight’’ and all that follows through the period at the 

12 end and inserting ‘‘oversight: 1.4 percent for each of 

13 fiscal years 2007 through 2010.’’; and 

14 (3) in subsection (k)(4)(A) by striking clauses 

15 (i) through (iv) and inserting the following: 

16 ‘‘(i) For fiscal year 2007, 48 percent. 

17 ‘‘(ii) For fiscal year 2008, 42 percent. 

18 ‘‘(iii) For fiscal year 2009, 36 per19 cent. 

20 ‘‘(iv) For fiscal year 2010, 30 per21 cent.’’. 

22 (h) HUBZONE PROGRAM.—Section 31 of the Small 

23 Business Act (15 U.S.C. 657a) is amended in subsection 

24 (d) by striking ‘‘2006’’ and inserting ‘‘2010’’. 


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1 (i) VETERANS PROGRAMS.—Section 32 of the Small 

2 Business Act (15 U.S.C. 657b) is amended in subsection 

3 (c) by striking ‘‘to carry out this section’’ and all that fol4 lows through the period at the end and inserting ‘‘to carry 

5 out this section $2,000,000 for each of fiscal years 2006 

6 through 2010.’’. 

7 (j) NATIONAL VETERANS BUSINESS DEVELOPMENT

8 CORPORATION.—Section 33 of the Small Business Act (15 

9 U.S.C. 657c) is amended— 

10 (1) in subsection (k)(1), by striking subpara11 graphs (A) through (D) and inserting the following: 

12 ‘‘(A) $1,500,000 for fiscal year 2007; 

13 ‘‘(B) $1,000,000 for fiscal year 2008; and 

14 ‘‘(C) $500,000 for fiscal year 2009.’’; and 

15 (2) in subsection (k)(2)(B) by striking ‘‘fiscal 

16 year 2003 or 2004’’ and inserting ‘‘any fiscal year 

17 after 2002’’. 

18 (k) FEDERAL AND STATE TECHNOLOGY PARTNER19 SHIP (FAST) PROGRAM.—Section 34 of the Small Busi20 ness Act (15 U.S.C. 657d) is amended— 

21 (1) in subsection (h)(1) by striking ‘‘2001 

22 through 2005’’ and inserting ‘‘2007 through 2010’’; 

23 and 

24 (2) in subsection (i) by striking ‘‘September 30, 

25 2005’’ and inserting ‘‘September 30, 2010’’. 


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1 SEC. 103. REAUTHORIZATIONS FOR CERTAIN OTHER PRO2 GRAMS. 

3 (a) NEW MARKETS VENTURE CAPITAL PROGRAM.— 

4 Section 368 of the Small Business Investment Act of 1958 

5 (15 U.S.C. 689q) is amended in subsection (a) by striking 

6 ‘‘2001 through 2006’’ and inserting ‘‘2007 through 

7 2010’’. 

8 (b) PILOT PROGRAM FOR VERY SMALL BUSINESS

9 CONCERNS.—Section 304 of the Small Business Adminis10 tration Reauthorization and Amendments Act of 1994 (15 

11 U.S.C. 644 note) is amended in subsection (i) by striking 

12 ‘‘2003’’ and inserting ‘‘2010’’. 

13 TITLE II—FINANCE 

14 Subtitle A—Certified Development 

15 Company Program 

16 SEC. 201. SHORT TITLE; DEFINITION. 

17 (a) SHORT TITLE.—This subtitle may be cited as the 

18 ‘‘Certified Development Company Program Act’’. 

19 (b) DEFINITION.—In this subtitle, the term ‘‘Admin20 istrator’’ means the Administrator of the Small Business 

21 Administration. 

22 SEC. 202. DEVELOPMENT COMPANY LOAN PROGRAMS. 

23 Title V of the Small Business Investment Act of 1958 

24 (15 U.S.C. 695 et seq.) is amended by inserting before 

25 section 501 the following: 


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1 ‘‘SEC. 500. PROGRAM TITLE. 

2 ‘‘The programs authorized by this title shall be 

3 known as the ‘Certified Development Company Pro4 gram’.’’. 

5 SEC. 203. LOAN LIQUIDATIONS. 

6 Section 510 of the Small Business Investment Act 

7 of 1958 (15 U.S.C. 697g) is amended— 

8 (1) by redesignating subsection (e) as sub9 section (g); and 

10 (2) by inserting after subsection (d) the fol11 lowing: 

12 ‘‘(e) PARTICIPATION.— 

13 ‘‘(1) IN GENERAL.—Any certified development 

14 company which elects not to apply for authority to 

15 foreclose and liquidate defaulted loans under this 

16 section, or which the Administrator determines to be 

17 ineligible for such authority, shall contract with a 

18 qualified third party to perform foreclosure and liq19 uidation of defaulted loans in its portfolio. The con20 tract shall be contingent upon approval by the Ad21 ministrator with respect to the qualifications of the 

22 contractor and the terms and conditions of liquida23 tion activities. 

24 ‘‘(2) COMMENCEMENT.—The provisions of this 

25 subsection shall not require any certified develop26 ment company to liquidate defaulted loans until the 


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1 Administrator has adopted and implemented a pro2 gram to compensate and reimburse certified develop3 ment companies, as provided under subsection (f). 

4 ‘‘(f) COMPENSATION AND REIMBURSEMENT.— 

5 ‘‘(1) REIMBURSEMENT OF EXPENSES.— 

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

7 shall reimburse each certified development com8 pany for all expenses paid by such company as 

9 part of the foreclosure and liquidation activities, 

10 if the expenses— 

11 ‘‘(i) were specifically approved in ad12 vance by the Administrator, in which case 

13 the reimbursement shall be made within 30 

14 days after reimbursement is requested; 

15 ‘‘(ii) were derived from a contract de16 scribed in subsection (e)(1) that was ap17 proved in advance by the Administrator 

18 under subsection (e)(1), in which case the 

19 reimbursement shall be made within 30 

20 days after reimbursement is requested; or 

21 ‘‘(iii) were incurred by the certified 

22 development company on an emergency 

23 basis and the expenses were reasonable 

24 and appropriate, in which case the reim25 bursement shall be made within 30 days 


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1 after the expenses are determined to be 

2 reasonable and appropriate. 

3 ‘‘(B) DETERMINATION.—A determination 

4 whether expenses are reasonable and appro5 priate shall be made by the Administrator with6 in 30 days after reimbursement is requested for 

7 those expenses. 

8 ‘‘(2) COMPENSATION FOR RESULTS.—The Ad9 ministrator shall develop a schedule to compensate 

10 and provide an incentive to certified development 

11 companies that foreclose and liquidate defaulted 

12 loans. The schedule shall be based on a percentage 

13 of the net amount recovered, but shall not exceed a 

14 maximum amount. The schedule shall not apply to 

15 any foreclosure which is conducted pursuant to a 

16 contract between a certified development company 

17 and a qualified third party to perform the fore18 closure and liquidation.’’. 

19 SEC. 204. ADDITIONAL EQUITY INJECTIONS. 

20 Section 502(3)(B)(ii) of the Small Business Invest21 ment Act of 1958 (15 U.S.C. 696(3)(B)(ii)) is amended 

22 to read as follows: 

23 ‘‘(ii) FUNDING FROM INSTITU24 TIONS.—If a small business concern— 


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1 ‘‘(I) provides the minimum con2 tribution required under subpara3 graph (C), not less than 50 percent of 

4 the cost of the project shall be pro5 vided by institutions described in sub6 clauses (I), (II), and (III) of clause 

7 (i); and 

8 ‘‘(II) provides more than the 

9 minimum contribution required under 

10 subparagraph (C), any excess con11 tribution may be used to reduce the 

12 amount required from the institutions 

13 described in subclauses (I), (II), and 

14 (III) of clause (i), except that the 

15 amount from such institutions may 

16 not be reduced to an amount that is 

17 less than the amount of the loan made 

18 by the Administrator.’’. 

19 SEC. 205. BUSINESSES IN LOW-INCOME AREAS. 

20 Section 501(d)(3)(A) of the Small Business Invest21 ment Act of 1958 (15 U.S.C. 695(d)(3)(A)) is amended 

22 by inserting after ‘‘business district revitalization,’’ the 

23 following: ‘‘or expansion of businesses in low-income com24 munities as described in section 45D(e) of the Internal 


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1 Revenue Code of 1986, or implementing regulations issued 

2 thereunder,’’. 

3 SEC. 206. COMBINATIONS OF CERTAIN GOALS. 

4 Section 501(e) of the Small Business Investment Act 

5 of 1958 (15 U.S.C. 695(e)) is amended by adding at the 

6 end the following: 

7 ‘‘(7) A small business concern that is uncondi8 tionally owned by more than 1 individual, or a cor9 poration, the stock of which is owned by more than 

10 1 individual, shall be deemed to have achieved a 

11 public policy goal required under subsection (d)(3) if 

12 a combined ownership share of not less than 51 per13 cent is held by individuals who are in 1 of the 

14 groups described in subparagraph (C) or (E) of sub15 section (d)(3).’’. 

16 SEC. 207. MAXIMUM 504 AND 7(a) LOAN ELIGIBILITY. 

17 Section 502(2) of the Small Business Investment Act 

18 of 1958 (15 U.S.C. 696(2)) is amended by adding at the 

19 end the following: 

20 ‘‘(C) COMBINATION FINANCING.—Notwith21 standing any other provision of law, financing 

22 under this title may be provided to a borrower 

23 in the maximum amount provided in this sub24 section, and a loan guarantee under section 

25 7(a) of the Small Business Act may be provided 


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1 to the same borrower in the maximum amount 

2 provided in section 7(a)(3)(A) of such Act, to 

3 the extent that the borrower otherwise qualifies 

4 for such assistance.’’. 

5 SEC. 208. REFINANCING. 

6 Section 502 of the Small Business Investment Act 

7 of 1958 (15 U.S.C. 696) is amended by adding at the end 

8 the following: 

9 ‘‘(7) PERMISSIBLE DEBT REFINANCING.— 

10 ‘‘(A) IN GENERAL.—Any financing ap11 proved under this title may include a limited 

12 amount of debt refinancing. 

13 ‘‘(B) EXPANSIONS.—If the project involves 

14 expansion of a small business concern which 

15 has existing indebtedness collateralized by fixed 

16 assets, any amount of existing indebtedness 

17 that does not exceed one-half of the project cost 

18 of the expansion may be refinanced and added 

19 to the expansion cost, providing that— 

20 ‘‘(i) the proceeds of the indebtedness 

21 were used to acquire land, including a 

22 building situated thereon, to construct a 

23 building thereon, or to purchase equip24 ment; 


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1 ‘‘(ii) the borrower has been current on 

2 all payments due on the existing debt for 

3 at least the preceding year; 

4 ‘‘(iii) the financing under section 504 

5 will provide better terms or rate of interest 

6 than exists on the debt at the time of refi7 nancing; and 

8 ‘‘(iv) the existing indebtedness was 

9 not financed under the Small Business Act 

10 or this Act.’’. 

11 SEC. 209. FEES. 

12 (a) IN GENERAL.—Section 503(d) of the Small Busi13 ness Investment Act of l958 (15 U.S.C. 697(d)) is amend14 ed— 

15 (1) by striking paragraph (2); 

16 (2) by redesignating paragraph (3) as para17 graph (2); and 

18 (3) in paragraph (2), as so redesignated, by 

19 striking ‘‘0.125 percent’’ and inserting ‘‘0.155 per20 cent’’. 

21 (b) EFFECTIVE DATE.—The amendments made by 

22 subsection (a) shall take effect and apply to loans under 

23 section 503(d) of the Small Business Investment Act of 

24 l958 (15 U.S.C. 697(d)) approved on or after 30 days 

25 after the date of enactment of this Act. 


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1 (c) RECOMPUTATION.—Notwithstanding any other 

2 provision of law, the Administrator shall recalculate the 

3 amount of the fee paid by the borrower under section 

4 503(b)(7) of the Small Business Investment Act of 1958 

5 in order that the cost of making guarantees under Title 

6 V of the Small Business Investment Act of 1958 remains 

7 at zero for each fiscal year after the effective date of the 

8 amendments to the Small Business Investment Act of 

9 1958 made by this Act. 

10 SEC. 210. TECHNICAL CORRECTION. 

11 Section 501(e)(2) of the Small Business Investment 

12 Act of 1958 (15 U.S.C. 695(e)(2)) is amended by striking 

13 ‘‘outstanding’’. 

14 SEC. 211. SMALL BUSINESS INVESTMENT ACT DEFINITION. 

15 Section 103 of the Small Business Investment Act 

16 of 1958 (15 U.S.C. 662) is amended by striking para17 graph (6) and inserting the following: 

18 ‘‘(6) the term ‘certified development company’ 

19 means an entity that— 

20 ‘‘(A) the Administrator has certified meets 

21 the criteria of section 506; or 

22 ‘‘(B) as of January 1, 1987, was providing 

23 loans under this title and was a for-profit enter24 prise, and otherwise meets the criteria of sec25 tion 506;’’. 


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1 SEC. 212. REPEAL OF SUNSET ON RESERVE REQUIRE2 MENTS FOR PREMIER CERTIFIED LENDERS. 

3 Section 508(c)(6)(B) of the Small Business Invest4 ment Act of 1958 (15 U.S.C. 697e(c)(6)(B)) is amend5 ed— 

6 (1) in the heading, by striking ‘‘TEMPORARY

7 REDUCTION’’ and inserting ‘‘REDUCTION’’; and 

8 (2) by striking ‘‘Notwithstanding subparagraph 

9 (A), during the 2-year period beginning on the date 

10 that is 90 days after the date of enactment of this 

11 subparagraph, the’’ and inserting ‘‘The’’. 

12 SEC. 213. ELIGIBILITY OF DEVELOPMENT COMPANIES TO 

13 BE DESIGNATED AS CERTIFIED DEVELOP14 MENT COMPANIES AND AUTHORITY TO ISSUE 

15 DEBENTURES; AND PROVIDING AN AREA OF 

16 OPERATIONAL AUTHORITY, FUNDING RE17 STRICTIONS, AND ETHICAL REQUIREMENTS. 

18 (a) IN GENERAL.—Section 506 of the Small Business 

19 Investment Act of 1958 (15 U.S.C. 697c) is amended— 

20 (1) in the heading, by striking ‘‘RESTRICTIONS

21 ON DEVELOPMENT COMPANY ASSISTANCE’’ and in22 serting ‘‘CERTIFIED DEVELOPMENT COMPANIES’’; 

23 and 

24 (2) by amending such section to read as follows: 


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1 ‘‘(a) AUTHORITY TO ISSUE DEBENTURES.—A cer2 tified development company (as defined in section 103(6)) 

3 may issue debentures under this title. 

4 ‘‘(b) CRITERIA TO BE TREATED AS CERTIFIED DE5 VELOPMENT COMPANY.— 

6 ‘‘(1) IN GENERAL.—The Administrator shall es7 tablish procedures under which an entity, incor8 porated under State law with the authority to pro9 mote and assist the growth and development of 

10 small business concerns in the areas in which it is 

11 authorized to operate by the Administrator, may 

12 apply to be treated as a certified development com13 pany. Upon application of such an entity, the Ad14 ministrator shall determine whether the entity meets 

15 each of the criteria specified in paragraph (2). If the 

16 Administrator determines that the entity does meet 

17 each of the criteria, the Administrator shall so cer18 tify, and the entity shall thereby be treated as a cer19 tified development company as provided by section 

20 103(6)(A). 

21 ‘‘(2) SPECIFIC CRITERIA.—The criteria referred 

22 to in paragraph (1) are as follows: 

23 ‘‘(A) SIZE.—The entity is a small concern 

24 (as defined by the Administrator) with fewer 

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1 trol of an entity that is not a small business 

2 concern (as defined by the Administrator). Any 

3 company that was certified by the Adminis4 trator on or before the date of enactment of the 

5 Small Business Reauthorization Act of 2006 

6 shall continue to be treated as a certified devel7 opment company without regard to any affili8 ation that existed on such date. 

9 ‘‘(B) PURPOSE.—The entity has as a pri10 mary purpose to benefit the community by fos11 tering economic development to create and pre12 serve jobs and stimulate private investment. 

13 ‘‘(C) PRIMARY FUNCTION.—The entity has 

14 as a primary function to accomplish that pri15 mary purpose by providing long term financing 

16 to small business concerns under the Certified 

17 Development Company Program. The entity 

18 may also provide or support other local eco19 nomic development activities to assist the com20 munity. 

21 ‘‘(D) NONPROFIT STATUS.—The entity is 

22 nonprofit. 

23 ‘‘(E) GOOD STANDING.—The entity— 

24 ‘‘(i) is in good standing in the State 

25 in which it is incorporated and in every 


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1 other State in which it conducts business; 

2 and 

3 ‘‘(ii) is in compliance with all laws, in4 cluding taxation requirements, in the State 

5 in which it is incorporated and in every 

6 other State in which it conducts business. 

7 ‘‘(F) MEMBERSHIP.—The entity has— 

8 ‘‘(i) not fewer than 25 members (or 

9 stockholders, if the company is a for-profit 

10 entity), none of whom own or control more 

11 than 10 percent of the voting membership 

12 (or stock, for those companies that are for13 profit entities), and each of whom— 

14 ‘‘(I) have knowledge of the eco15 nomic development needs of the small 

16 businesses served by the company; 

17 and 

18 ‘‘(II) is a resident of the State in 

19 which the company is incorporated or 

20 otherwise has sufficient contacts with 

21 the State in which the company oper22 ates; and 

23 ‘‘(ii) at least 1 member, who is not in 

24 a position to control the entity, from each 

25 of the following: 


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1 ‘‘(I) Government organizations 

2 that are responsible for economic de3 velopment. 

4 ‘‘(II) Financial institutions that 

5 provide commercial long term fixed 

6 asset financing. 

7 ‘‘(III) Community organizations 

8 that are dedicated to economic devel9 opment. 

10 ‘‘(IV) Businesses. 

11 ‘‘(G) BOARD OF DIRECTORS.— 

12 ‘‘(i) IN GENERAL.—The entity has a 

13 board of directors. 

14 ‘‘(ii) MEMBERS OF BOARD.—Each di15 rector is— 

16 ‘‘(I) a member of the entity; and 

17 ‘‘(II) elected a director by the 

18 members of the entity (or for those 

19 companies which are for-profit by the 

20 stockholders according to the bylaws 

21 of those companies). 

22 ‘‘(iii) REPRESENTATION OF ORGANI23 ZATIONS AND INSTITUTIONS.— 

24 ‘‘(I) IN GENERAL.—The entity 

25 has at least 1 director, who is not in 


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1 a position to control the entity, from 

2 at least 3 of the categories described 

3 in subparagraph (F)(ii). 

4 ‘‘(II) MAXIMUM PERCENTAGE.— 

5 For each category described in sub6 paragraph (F)(ii), not more than 50 

7 percent of the directors are from that 

8 category. 

9 ‘‘(iv) MEETINGS.—The board of direc10 tors meets on a regular basis to make pol11 icy decisions for the entity. 

12 ‘‘(H) PROFESSIONAL MANAGEMENT AND

13 STAFF.—The entity has full-time professional 

14 management, including a chief executive officer 

15 to manage daily operations, and a professional 

16 staff that is qualified to market the Certified 

17 Development Company Program and handle all 

18 aspects of loan approval and servicing, includ19 ing liquidation, as described in section 510, 

20 which work for the entity— 

21 ‘‘(i) as employees; 

22 ‘‘(ii) as contractors, through con23 tracting with an entity with which the de24 velopment company is affiliated if such en25 tity is— 


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1 ‘‘(I) a local nonprofit service cor2 poration; 

3 ‘‘(II) a for-profit corporation, but 

4 only if the contracting was in effect, 

5 and the entity was certified by the 

6 Administrator, on or before December 

7 31, 2005; 

8 ‘‘(III) a nonprofit affiliate of a 

9 local nonprofit service corporation; 

10 ‘‘(IV) an entity wholly or par11 tially operated by a government agen12 cy; or 

13 ‘‘(V) another entity approved by 

14 the Administrator, so long as the 

15 other entity also supports local eco16 nomic development; or 

17 ‘‘(iii) if the entity is in a rural area, 

18 as contractors, through contracting with 

19 another certified development company 

20 that is located in the State in which the 

21 entity is located or in a State contiguous 

22 to that State. 

23 ‘‘(I) INDEPENDENT MANAGEMENT AND OP24 ERATION.—The entity employs directly the 

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1 erated to pursue the primary purpose referred 

2 to in subparagraph (B), and— 

3 ‘‘(i) is independent; or 

4 ‘‘(ii) is an affiliate of another local 

5 nonprofit service corporation, so long as 

6 the board of directors of the entity has at 

7 least 1 director not on the board of direc8 tors of the service corporation, and the 

9 board of the directors of the service cor10 poration has at least 1 director not on the 

11 board of directors of the entity. 

12 ‘‘(3) DEFINITION.—In this subsection, the term 

13 ‘local nonprofit service corporation’ means a local 

14 nonprofit service corporation (other than a certified 

15 development company), a purpose of which is to sup16 port economic development in the area in which the 

17 entity operates. 

18 ‘‘(c) USE OF EXCESS FUNDS.— 

19 ‘‘(1) IN GENERAL.—Any funds generated by a 

20 certified development company from making loans 

21 under section 503 or 504 that remain unexpended 

22 after payment of staff, operating, and overhead ex23 penses shall be retained by the certified development 

24 company as a reserve for— 

25 ‘‘(A) future operations; 


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1 ‘‘(B) expanding the area in which the cer2 tified development company operates through 

3 the methods authorized by this title; or 

4 ‘‘(C) investment in other community or 

5 local economic development activity in the State 

6 or associated local economic area from which 

7 such funds were generated. 

8 ‘‘(2) DEFINITION.—For purposes of this sub9 section, the term ‘local economic area’ means an 

10 area that is part of a local trading area that is in 

11 a State other than the State of incorporation of a 

12 certified development company but which is contig13 uous to a part of the company’s State of incorpora14 tion. 

15 ‘‘(d) ETHICAL REQUIREMENTS.— 

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

17 company and the officers, employees, and other staff 

18 of the company shall at all times act ethically and 

19 avoid activities which constitute a conflict of interest 

20 or appear to constitute a conflict of interest. 

21 ‘‘(2) PROHIBITED CONFLICT IN PROJECT

22 LOANS.— 

23 ‘‘(A) IN GENERAL.—A certified develop24 ment company may not— 


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1 ‘‘(i) recommend or approve a guar2 antee of a debenture by the Administrator 

3 under the Certified Development Company 

4 Program that is collateralized by a second 

5 lien position on the property being con6 structed or acquired; and 

7 ‘‘(ii) provide, or be affiliated with a 

8 corporation or other entity which provides, 

9 financing collateralized by a first lien on 

10 the same property. 

11 ‘‘(B) EXCEPTION.—A certified develop12 ment company that was participating as a first 

13 mortgage lender, either directly or through an 

14 affiliate, for the Certified Development Com15 pany Program in either of fiscal years 2004 or 

16 2005 may continue to do so. 

17 ‘‘(3) OTHER ECONOMIC DEVELOPMENT ACTIVI18 TIES.—It shall not be a conflict of interest for a cer19 tified development company to operate multiple pro20 grams to assist small business concerns as part of 

21 carrying out its economic development purpose. 

22 ‘‘(4) ACCEPTANCE OF FUNDING SUBJECT TO

23 RESTRICTIONS.— 

24 ‘‘(A) IN GENERAL.—A certified develop25 ment company may not accept funding that is 


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1 subject to a restriction described in subpara2 graph (B) from a source (including a source 

3 that is a department or agency of the Federal 

4 Government) unless the source also provides all 

5 of the financial assistance to be delivered by the 

6 certified development company under this title 

7 and the restriction is limited solely to the finan8 cial assistance so provided. 

9 ‘‘(B) RESTRICTIONS COVERED.—A restric10 tion referred to in subparagraph (A) is— 

11 ‘‘(i) a condition, priority, or restric12 tion upon the types of small businesses to 

13 which the certified development company 

14 may deliver financial assistance under this 

15 title; or 

16 ‘‘(ii) a condition or requirement, di17 rectly or indirectly, upon the small busi18 ness to which financial assistance is to be 

19 delivered under this title. 

20 ‘‘(e) MULTISTATE OPERATIONS.— 

21 ‘‘(1) AUTHORIZATION.—Notwithstanding any 

22 other provision of law, the Administrator shall per23 mit a certified development company to make loans 

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1 poration of that certified development company, only 

2 if such company— 

3 ‘‘(A) is— 

4 ‘‘(i) an accredited lender under section 

5 507; or 

6 ‘‘(ii) a premier certified lender under 

7 section 508; 

8 ‘‘(B) meets or exceeds performance stand9 ards established by the Administrator; 

10 ‘‘(C) has a membership that contains not 

11 fewer than 25 members from each State in 

12 which the company makes loans and meets the 

13 requirements of paragraph (6)(B) for member14 ship in each State; 

15 ‘‘(D) has a board of directors that contains 

16 not fewer than 1 member from each State in 

17 which the company makes loans; 

18 ‘‘(E) has not fewer than 1 loan com19 mittee— 

20 ‘‘(i) that considers loan applications 

21 from small businesses in States other than 

22 the State of incorporation of the certified 

23 development company; 

24 ‘‘(ii) that has at least one member 

25 with commercial lending experience; and 


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1 ‘‘(iii) that does not have any staff of 

2 the certified development company serving 

3 on the loan committee; and 

4 ‘‘(F) submits to the Administrator, in writ5 ing— 

6 ‘‘(i) a notice of the intention of the 

7 company to make loans in multiple States; 

8 ‘‘(ii) the names of the States in which 

9 the company intends to make loans; 

10 ‘‘(iii) a detailed statement of how the 

11 company will comply with this paragraph, 

12 including a list of the members described 

13 in subparagraph (C). 

14 ‘‘(2) REVIEW.—The Administrator shall verify 

15 whether a certified development company satisfies 

16 the requirements of paragraph (1) on an expedited 

17 basis and, not later than 30 days after the date on 

18 which the Administrator receives the statement de19 scribed in paragraph (1)(E)(iii), the Administrator 

20 shall determine whether such company satisfies such 

21 criteria and provide notice to such company. 

22 ‘‘(3) LOAN COMMITTEE OPERATION.— 

23 ‘‘(A) APPROVAL REQUIRED.—Any loan 

24 made by a certified development company in a 

25 State other than its State of incorporation shall 


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1 be approved by a loan committee established 

2 pursuant to subsection (e)(1)(E) of this section. 

3 No such loan shall be approved if the loan com4 mittee does not have at least one member from 

5 the State in which the loan is made and such 

6 member participates in the review of the loan. 

7 ‘‘(B) RATIFICATION BY BOARD.—Any loan 

8 made in a State other than the State of incor9 poration must be ratified by the Board of Di10 rectors of the certified development company. 

11 ‘‘(4) AGGREGATE ACCOUNTING.—A company 

12 described in paragraph (1) may maintain an aggre13 gate accounting of all revenue and expenses of the 

14 company for purposes of this title. 

15 ‘‘(5) LOCAL JOB CREATION REQUIREMENTS.— 

16 ‘‘(A) IN GENERAL.—Any certified develop17 ment company making loans in multiple States 

18 shall satisfy any applicable job creation or re19 tention requirements separately for each such 

20 State. Such a company shall not count jobs cre21 ated or retained in 1 State towards any applica22 ble job creation or retention requirement in an23 other State. 

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1 ing the 2-year period beginning with the date 

2 on which the Administrator authorizes multi3 State operations. 

4 ‘‘(6) CONTROL OF MULTIPLE COMPANIES.— 

5 ‘‘(A) IN GENERAL.—No one either directly 

6 or indirectly may exercise a position of control 

7 on more than one certified development com8 pany. 

9 ‘‘(B) CLOSE RELATIVES.—No close relative 

10 of an individual who holds a position of control 

11 in a certified development company may hold a 

12 position of control on a certified development 

13 company other than the company on which the 

14 individual serves. 

15 ‘‘(C) DEFINITIONS.—In this paragraph— 

16 ‘‘(i) the term ‘close relative’ means a 

17 spouse, parent, child, or sibling, or the 

18 spouse of a parent, child, or sibling; and 

19 ‘‘(ii) the term ‘position of control’ 

20 means a certified development company’s 

21 officer, member of the board of directors, 

22 manager, chief executive officer, agent in23 volved in the loan process, key employee or 

24 similar management position, or, if the cer25 tified development company is a for-profit 


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1 entity, a holder of 20 percent or more of 

2 the value of the certified development com3 pany’s stock. 

4 ‘‘(7) CONTIGUOUS STATES.—For the purposes 

5 of this subsection, the States of Alaska and Hawaii 

6 and the territories of American Samoa and Guam 

7 shall be deemed to be contiguous to California, Or8 egon, and Washington. 

9 ‘‘(8) LOCAL ECONOMIC AREA OPERATION.—A 

10 certified development company that is operating or 

11 applies for authority to operate in a local economic 

12 area (as defined in subsection (c)(2)) shall not be 

13 deemed to be conducting a multistate operation and 

14 shall not be subject to the eligibility criteria or oper15 ating requirements in this subsection.’’. 

16 (b) TEMPORARY GRANDFATHER CLAUSE.—An entity 

17 that, as of December 31, 2005, was certified by the Ad18 ministrator for purposes of title V of the Small Business 

19 Investment Act of 1958 shall continue to be treated as 

20 a certified development company for purposes of that Act 

21 until the 1-year period beginning with the date of the en22 actment of this Act expires. 

23 SEC. 214. CONFORMING AMENDMENTS. 

24 (a) TITLE HEADING.—The title heading for title V 

25 of the Small Business Investment Act of 1958 is amended 


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1 by striking ‘‘State and Local Development Companies’’ 

2 and inserting ‘‘Certified Development Companies’’. 

3 (b) SECTION 501.—Section 501 of such Act is 

4 amended— 

5 (1) in the section heading by striking ‘‘state de6 velopment companies’’ and inserting ‘‘certified devel7 opment companies’’; 

8 (2) in subsection (b) by striking ‘‘State develop9 ment companies’’ and inserting ‘‘certified develop10 ment companies’’; and 

11 (3) in subsection (c) by striking ‘‘State develop12 ment company’’ both places such term appears and 

13 inserting ‘‘certified development company’’. 

14 (c) SECTION 502.—Section 502 of such Act is 

15 amended in the first sentence by striking ‘‘State and local 

16 development companies’’ and inserting ‘‘certified develop17 ment companies’’. 

18 (d) SECTION 503.—Section 503 of such Act is 

19 amended— 

20 (1) in subsection (a)(1), by striking ‘‘qualified 

21 State or local development company’’ and inserting 

22 ‘‘certified development company’’; and 

23 (2) by striking subsection (e) and inserting the 

24 following: 


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1 ‘‘(e) SECTION 7(a) LOANS.—The Administrator shall 

2 not prevent or in any manner impede a certified develop3 ment company from providing assistance to a business 

4 with respect to preparing applications for loans under sec5 tion 7(a) of the Small Business Act, or for servicing such 

6 loans so long as the fee that the certified development 

7 company charges the business for providing that assist8 ance or servicing is no more than reasonable. Nothing in 

9 this provision shall authorize a certified development com10 pany to issue loans pursuant to section 7(a) of the Small 

11 Business Act.’’. 

12 (e) SECTION 505.—Section 505 of such Act is 

13 amended in subsection (a) by striking ‘‘State or local de14 velopment companies’’ and inserting ‘‘certified develop15 ment companies’’. 

16 (f) SECTION 507.—Section 507 of such Act is amend17 ed— 

18 (1) in subsection (a) by striking ‘‘State and 

19 local development companies’’ and inserting ‘‘cer20 tified development companies’’; 

21 (2) in subsection (b) by striking ‘‘qualified 

22 State or local development company’’ and inserting 

23 ‘‘certified development company’’; 


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1 (3) in subsection (c) by striking ‘‘qualified 

2 State or local development company’’ and inserting 

3 ‘‘certified development company’’; 

4 (4) in subsection (d)(1) by striking ‘‘qualified 

5 State or local development company’’ and inserting 

6 ‘‘certified development company’’; and 

7 (5) by striking subsection (e). 

8 (g) SECTION 509.—Section 509 of such Act is 

9 amended in subsection (e)(1)(A) by striking ‘‘qualified 

10 State or local development company’’ and inserting ‘‘cer11 tified development company’’. 

12 (h) SECTION 510.—Section 510 of such Act is 

13 amended— 

14 (1) in subsection (a) by striking ‘‘qualified 

15 State or local development company (as defined in 

16 section 503(e))’’ and inserting ‘‘certified develop17 ment company’’; 

18 (2) in subsection (b)(1) by striking ‘‘qualified 

19 State or local development company’’ and inserting 

20 ‘‘certified development company’’; 

21 (3) in subsection (b)(1)(B)(i)(II) by striking 

22 ‘‘qualified State and local development companies’’ 

23 and inserting ‘‘certified development companies’’; 

24 (4) in subsection (c)(1) in the matter preceding 

25 subparagraph (A) by striking ‘‘qualified State or 


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1 local development company’’ and inserting ‘‘certified 

2 development company’’; 

3 (5) in subsection (c)(1)(B)(i)(II) by striking 

4 ‘‘qualified State or local development company’’ both 

5 places such term appears and inserting ‘‘certified de6 velopment company’’; 

7 (6) in subsection (c)(2)(A)(i), by striking 

8 ‘‘qualified State or local development company’’ and 

9 inserting ‘‘certified development company’’; 

10 (7) in subsection (c)(2)(A)(iii), by striking 

11 ‘‘qualified State or local development company’’ and 

12 inserting ‘‘certified development company’’; 

13 (8) in subsection (c)(2)(B)(i), by striking 

14 ‘‘qualified State or local development company’’ and 

15 inserting ‘‘certified development company’’; 

16 (9) in subsection (c)(2)(C)(i), by striking 

17 ‘‘qualified State or local development company’’ and 

18 inserting ‘‘certified development company’’; 

19 (10) in subsection (c)(2)(D), by striking ‘‘quali20 fied State or local development company’’ and in21 serting ‘‘certified development company’’; 

22 (11) in subsection (c)(3), by striking ‘‘qualified 

23 State or local development company’’ and inserting 

24 ‘‘certified development company’’; 


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1 (12) in subsection (d), by striking ‘‘qualified 

2 State or local development company’’ and inserting 

3 ‘‘certified development company’’; 

4 (13) in subsection (e)(1), by striking ‘‘qualified 

5 State and local development companies’’ and insert6 ing ‘‘certified development companies’’; 

7 (14) in subsection (e)(2)(A), by striking ‘‘quali8 fied State or local development company’’ and in9 serting ‘‘certified development company’’; and 

10 (15) in subsection (e)(2)(B), by striking ‘‘quali11 fied State or local development company’’ and in12 serting ‘‘certified development company’’. 

13 SEC. 215. CLOSING COSTS. 

14 Section 503(b) of the Small Business Investment Act 

15 of 1958 (15 U.S.C. 697(b)) is amended by striking para16 graph (4) and inserting the following: 

17 ‘‘(4) the aggregate amount of such debenture 

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

19 from the proceeds of such debenture plus, at the 

20 election of the borrower, other amounts attributable 

21 to the administrative and closing costs of such loans, 

22 except for the attorney fees of the borrower;’’. 


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1 SEC. 216. DEFINITION OF RURAL. 

2 Section 501 of the Small Business Investment Act 

3 of 1958 (15 U.S.C. 695) is amended by adding at the end 

4 the following: 

5 ‘‘(f) As used in this title, the terms ‘rural’ and ‘rural 

6 area’ have the meaning given such terms in section 

7 343(a)(13) of the Consolidated Farm and Rural Develop8 ment Act (7 U.S.C. 1991(a)(13)).’’. 

9 SEC. 217. REGULATIONS AND EFFECTIVE DATE. 

10 (a) IN GENERAL.—The Administrator shall, after no11 tice and comment, publish rules to implement this subtitle 

12 and the amendments made by this subtitle in final form. 

13 (b) CONSEQUENCE OF DELAY.—If the Administrator 

14 has not complied with subsection (a) as of the date that 

15 is 180 days after the enactment of this Act, any entity, 

16 then, from that date until the date on which the Adminis17 trator has complied with subsection (a), any entity that 

18 applies to be treated as a certified development company 

19 shall be treated as a certified development company. 

20 Subtitle B—Small Business 

21 Lending Improvement 

22 SEC. 221. SHORT TITLE. 

23 This subtitle may be cited as the ‘‘Small Business 

24 Lending Improvement Act’’. 


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1 SEC. 222. NATIONAL PREFERRED LENDERS PROGRAM. 

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

3 636(a)(2)) is amended by adding at the end the following: 

4 ‘‘(E) NATIONAL PREFERRED LENDERS

5 PROGRAM.—The Administrator shall establish a 

6 National Preferred Lenders Program by regula7 tion or procedural notice. Any preferred lender 

8 authorized by the Administrator to operate as a 

9 preferred lender on a national basis prior to the 

10 date of the enactment of the Small Business 

11 Reauthorization Act of 2006 shall continue that 

12 status to the extent that the lender continues to 

13 meet the qualifications for preferred lender sta14 tus under this section. ’’. 

15 SEC. 223. MAXIMUM LOAN AMOUNT. 

16 Section 7(a)(3) of the Small Business Act (15 U.S.C. 

17 636(a)(3)(A)) is amended— 

18 (1) in subparagraph (A), by striking 

19 ‘‘$1,500,000 (or if the gross loan amount would ex20 ceed $2,000,000)’’ and inserting ‘‘$2,250,000 (or if 

21 the gross loan amount would exceed $3,000,000)’’; 

22 and 

23 (2) in subparagraph (B), by striking 

24 ‘‘$1,750,000, of which not more than $1,250,000’’ 

25 and inserting ‘‘$2,500,000, of which not more than 

26 $2,000,000’’. 


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1 SEC. 224. ALTERNATIVE SIZE STANDARD. 

2 Section 3(a)(3) of the Small Business Act (15 U.S.C. 

3 632(a)(3)) is amended— 

4 (1) by striking ‘‘When establishing’’ and insert5 ing the following: 

6 ‘‘ESTABLISHMENT OF SIZE STANDARDS.— 

7 ‘‘(A) IN GENERAL.—When establishing’’; and 

8 (2) by adding at the end the following: 

9 ‘‘(B) ALTERNATIVE SIZE STANDARD.— 

10 ‘‘(i) IN GENERAL.—Not later than 180 

11 days after the date of enactment of this sub12 paragraph, the Administrator shall establish an 

13 alternative size standard under paragraph (2), 

14 that shall be applicable to loan applicants under 

15 section 7(a) or under title V of the Small Busi16 ness Investment Act of 1958 (15 U.S.C. 695 et 

17 seq.). 

18 ‘‘(ii) CRITERIA.—The alternative size 

19 standard established under clause (i) shall uti20 lize the maximum net worth and maximum net 

21 income of the prospective borrower as an alter22 native to the use of industry standards. 

23 ‘‘(iii) AFFILIATION.—In developing the size 

24 standard, the Administrator shall not take into 

25 account any affiliation between the prospective 

26 borrower and any other entity if the prospective 


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1 borrower has no legal recourse to an affiliate to 

2 repay the loan made pursuant to section 7(a). 

3 ‘‘(iv) INTERIM RULE.—Until the Adminis4 trator establishes an alternative size standard 

5 under clause (i), the Administrator shall use the 

6 alternative size standard in section 121.301(b) 

7 of title 13, Code of Federal Regulations, for 

8 loan applicants under section 7(a) or under title 

9 V of the Small Business Investment Act of 

10 1958 (15 U.S.C. 695 et seq.).’’. 

11 SEC. 225. TIMELY PAYMENT OF 7(a) SECONDARY MARKET 

12 FEE. 

13 Section 5(g)(2) of the Small Business Act is amend14 ed— 

15 (1) by inserting ‘‘(A)’’ before ‘‘The Administra16 tion’’; and 

17 (2) by adding at the end the following: 

18 ‘‘(B)(i) With respect to the Administration’s guar19 anty of the timely payment of the principal and interest 

20 on trust certificates issued under this subsection on or 

21 after October 1, 2007, the Administration may assess, col22 lect, and retain a fee in the amount and frequency, as es23 tablished annually by the Administration, as necessary to 

24 reduce to zero the cost (as defined in section 502 of the 

25 Federal Credit Reform Act of 1990) to the Administration 


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1 of making this guaranty. The Administration may con2 tract with an agent to carry out, on behalf of the Adminis3 tration, the assessment and collection of such fee. 

4 ‘‘(ii) The fee specified in clause (i) shall be— 

5 ‘‘(I) payable by the holders of such trust certifi6 cates; and 

7 ‘‘(II) deducted from the amounts otherwise pay8 able to the holders of such trust certificates, until 

9 the fee is paid in full. 

10 ‘‘(iii) The fee specified in clause (i) shall not be 

11 charged to any borrower whose loan is represented in the 

12 secondary market by a trust certificate authorized under 

13 subparagraph (A).’’. 

14 Subtitle C—Small Business 

15 Investment 

16 SEC. 241. PARTICIPATING SECURITY SMALL BUSINESS IN17 VESTMENT COMPANIES. 

18 Part A of title III of the Small Business Investment 

19 Act of 1958 (15 U.S.C. 681 et seq.) is amended by adding 

20 at the end the following: 

21 ‘‘SEC. 321. PARTICIPATING SECURITY SMALL BUSINESS IN22 VESTMENT COMPANIES. 

23 ‘‘(a) APPLICATION.—This section applies to compa24 nies licensed to use participating securities pursuant to 

25 this title after September 30, 2004. Except as provided 


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1 in this section, all other provisions of this title apply to 

2 companies licensed to use participating securities after 

3 September 30, 2004. 

4 ‘‘(b) AUTHORITY TO GUARANTEE.— 

5 ‘‘(1) IN GENERAL.— 

6 ‘‘(A) In order to encourage small business 

7 investment companies to provide equity capital 

8 to small businesses, the Administrator is au9 thorized to guarantee the payment of the re10 demption price and prioritized payments on 

11 participating securities issued by such compa12 nies which are licensed pursuant to section 

13 301(c) of this Act, and a trust or a pool acting 

14 on behalf of the Administrator is authorized to 

15 purchase such securities. 

16 ‘‘(B) Participating securities guaranteed 

17 under this section may not exceed 100 percent 

18 of the regulatory capital of the company as de19 fined by the Administrator. 

20 ‘‘(2) TERMS AND CONDITIONS OF THE GUAR21 ANTEE.—Such guarantees and purchases shall be 

22 made on such terms and conditions as the Adminis23 trator shall establish by regulation. 

24 ‘‘(c) RESTRICTIONS ON PARTICIPATING SECURI25 TIES.—In addition to any limitations imposed by the AdVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00055 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 ministrator that are not inconsistent with this section, 

2 participating securities guaranteed under this section shall 

3 be subject to the following restrictions and limitations: 

4 ‘‘(1) OBLIGATIONS OF WITH RESPECT TO PAR5 TICIPATING SECURITIES AND PRIORITIZED PAY6 MENTS.— 

7 ‘‘(A) IN GENERAL.—Participating securi8 ties shall be redeemed not later than 10 years 

9 after their date of issuance for an amount equal 

10 to 100 percent of the original issue price plus 

11 the amount of any accrued prioritized payment. 

12 ‘‘(B) OBLIGATION TO MAKE PRIORITIZED

13 PAYMENTS AND REDEEM PARTICIPATING SECU14 RITIES.— 

15 ‘‘(i) IN GENERAL.—A company li16 censed under this section shall be obligated 

17 to pay accrued and unpaid prioritized pay18 ments and redeem its participating securi19 ties irrespective of the profitability of the 

20 company. 

21 ‘‘(ii) LIMITATION ON IN-KIND DIS22 TRIBUTIONS.—A company may not make 

23 any in-kind distributions unless all accrued 

24 prioritized payments and leverage out25 standing as of the date of distribution have 


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1 been paid in full by cash payment by the 

2 company. 

3 ‘‘(2) PRIORITIZED PAYMENTS.— 

4 ‘‘(A) IN GENERAL.—Prioritized payments 

5 on participating securities shall be preferred 

6 and cumulative and payable out of any gross re7 ceipts of the issuing company. 

8 ‘‘(B) INTEREST RATE OF PRIORITY PAY9 MENTS.—Prioritized payments shall accrue at a 

10 rate determined by the Secretary of the Treas11 ury taking into consideration the current aver12 age market yield on outstanding marketable ob13 ligations of the United States with remaining 

14 periods to maturity comparable to the average 

15 maturities on such securities, adjusted to the 

16 nearest one-eighth of 1 percent, plus an addi17 tional charge, in an amount established annu18 ally by the Administrator, as necessary to re19 duce to zero the cost (as defined in section 502 

20 of the Federal Credit Reform Act of 1990 (2 

21 U.S.C. 661a)) to the Administrator of pur22 chasing and guaranteeing participating securi23 ties under this section, which amount may not 

24 exceed 1.5 percent per year, and which shall be 

25 paid to and retained by the Administrator. 


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1 ‘‘(C) PAYMENT OF ACCRUED PRIORITIZED

2 PAYMENTS.—Any accrued but unpaid 

3 prioritized payments shall be due and payable 

4 on the seventh anniversary of the date of 

5 issuance of the participating security to which 

6 they apply. Prioritized payments accruing after 

7 the seventh anniversary shall be paid semiannu8 ally thereafter until the participating security to 

9 which they apply has been redeemed. 

10 ‘‘(3) SENIORITY OF PARTICIPATING SECU11 RITY.—In the event of liquidation of the company, 

12 participating securities and accrued but unpaid 

13 prioritized payments shall be senior in priority for 

14 all purposes to all other equity interests in the 

15 issuing company, whenever created. 

16 ‘‘(4) INVESTMENT IN EQUITY CAPITAL.—Any 

17 company issuing a participating security under this 

18 section shall commit to invest or shall invest an 

19 amount equal to the outstanding face value of such 

20 security solely in equity capital. 

21 ‘‘(5) LIMITATIONS ON OUTSIDE DEBT.—The 

22 only debt other than leverage obtained in accordance 

23 with this title which any company issuing a partici24 pating security under this section may have outVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00058 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 standing shall be temporary debt in amounts limited 

2 to not more than 50 percent of private capital. 

3 ‘‘(d) DISTRIBUTIONS BY LICENSEE.— 

4 ‘‘(1) ORDER AND TYPES OF DISTRIBUTIONS.— 

5 ‘‘(A) PAYMENT OF PRIORITIZED PAY6 MENTS.—Accrued but unpaid prioritized pay7 ments shall be paid whenever a company has 

8 gross receipts on payment dates prescribed by 

9 the Administrator. If not previously paid in full, 

10 accrued but unpaid prioritized payments shall 

11 be paid upon the seventh anniversary of the 

12 issuance of the participating security to which 

13 they apply and semiannually thereafter until 

14 the participating security is redeemed in full. 

15 ‘‘(B) TAX DISTRIBUTIONS.— 

16 ‘‘(i) IN GENERAL.—If a company is 

17 operating as a limited partnership or as a 

18 subchapter S corporation or an equivalent 

19 pass-through entity for tax purposes and if 

20 there are no accumulated and unpaid 

21 prioritized payments, the company may 

22 make annual distributions to the partners, 

23 shareholders, or members in amounts not 

24 greater than each partner’s, shareholder’s, 

25 or member’s maximum tax liability attribVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00059 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 utable to the operations of the company; 

2 provided, however, that such distributions 

3 shall not be permitted in any period in 

4 which distributions characterized as either 

5 return of capital or profit are sufficient to 

6 pay the liability calculated in accordance 

7 with this paragraph. 

8 ‘‘(ii) INTERIM TAX DISTRIBUTIONS.— 

9 A company may also elect to make a dis10 tribution under this paragraph at any time 

11 during any calendar quarter based on an 

12 estimate of the maximum tax liability. If a 

13 company makes one or more interim dis14 tributions for a calendar year, and the ag15 gregate amount of those distributions ex16 ceeds the maximum amount that the com17 pany could have distributed based on a sin18 gle annual computation, any subsequent 

19 distribution by the company under this 

20 paragraph shall be reduced by an amount 

21 equal to the excess amount distributed. 

22 ‘‘(C) PAYMENT OF OUTSTANDING LEVER23 AGE AND RETURN OF CAPITAL.—After making 

24 any distributions pursuant to subparagraphs 

25 (A) and (B), whenever a company with particiVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00060 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 pating securities outstanding has gross receipts 

2 it shall return capital to its investors, specifi3 cally including the Administrator. Any distribu4 tions made under this subparagraph shall be 

5 made to private investors and to the Adminis6 trator in the ratio of private capital to leverage 

7 as of the date of the distribution until leverage 

8 outstanding as of the date of distribution has 

9 been redeemed in full. 

10 ‘‘(D) DISTRIBUTION OF PROFITS.—After 

11 making distributions pursuant to subpara12 graphs (A), (B), and (C), a company shall dis13 tribute any profits in excess reserves for reason14 ably anticipated expenses and other liabilities 

15 for the following 12 months to its investors and 

16 to the Administrator in accordance with the fol17 lowing: 

18 ‘‘(i) To the Administrator, 50 percent 

19 of the leverage percent reduced by the 

20 weighted average of all prioritized payment 

21 rates paid by the company with respect to 

22 participating securities issued by the com23 pany to the date of distribution. 


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1 ‘‘(ii) The balance to the company’s 

2 private investors in accordance with the 

3 company’s controlling documents. 

4 ‘‘(iii) A company operating under this 

5 section shall be entitled to subtract from 

6 any calculation of profit management ex7 penses not more than 2.5 percent of the 

8 combined capital of the company plus an 

9 additional $125,000 if the combined cap10 ital of the company is less than 

11 $20,000,000. 

12 ‘‘(E) IN-KIND PROFIT DISTRIBUTIONS.— 

13 ‘‘(i) A licensee may elect to may make 

14 all or part of distribution under subpara15 graph (C), including any distribution to 

16 the Administrator, as an in-kind distribu17 tion only to the extent that such securities 

18 are publicly traded and marketable. 

19 ‘‘(ii) In-kind distributions to the Ad20 ministrator shall be deposited with a trust21 ee designated by the Administrator that 

22 has substantial expertise and experience in 

23 the sale of thinly traded securities. Des24 ignation of the trustee must occur not 


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1 later than 180 days after the effective date 

2 of this section. 

3 ‘‘(iii) If the Administrator receives in4 kind distributions and upon sale of such 

5 securities realizes less than the value of 

6 such securities at the date of the distribu7 tion, the Administrator shall not be per8 mitted to seek from the licensee the dif9 ference between the value of such securi10 ties on the date of the in-kind distribution 

11 and the value on the date of sale by the 

12 Administrator. 

13 ‘‘(iv) If the Administrator receives in14 kind distributions and upon sale of such 

15 securities realizes more than the value of 

16 such securities at the date of distribution, 

17 the Administrator shall be entitled to re18 tain the difference between the value of 

19 such securities on the date of the in-kind 

20 distribution and the value on the date of 

21 sale by the Administrator. Any excess 

22 value received by the Administrator shall 

23 not reduce any liability of the company 

24 with respect to prioritized payments or re25 demption of participating securities. 


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1 ‘‘(e) LEVERAGE FEES.— 

2 ‘‘(1) IN GENERAL.—The Administrator shall 

3 collect a fee of three percent of the face amount of 

4 any leverage granted to a licensee pursuant to this 

5 section. 

6 ‘‘(2) TIMING OF FEE PAYMENT.— 

7 ‘‘(A) One-third of such fee is payable upon 

8 the date at which the Administrator and li9 censee enter into a commitment for such lever10 age. 

11 ‘‘(B) Two-thirds of such fee is payable 

12 upon the date such leverage is drawn. 

13 ‘‘(C) If there is no commitment between 

14 the Administrator and the licensee under sub15 paragraph (A), all of such fee is due on the 

16 date on which the leverage is drawn by the li17 censee. 

18 ‘‘(f) CALCULATION OF SUBSIDY RATE.—All fees, in19 terest, and profits received and retained by the Adminis20 trator under this section shall be included in the calcula21 tions made by the Director of the Office of Management 

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

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

24 to the Administrator of purchasing and guaranteeing de25 bentures and participating securities under this Act. 


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1 ‘‘(g) DEFINITIONS.—In this section: 

2 ‘‘(1) The term ‘participating security’ means a 

3 participating debt security issued to the Adminis4 trator that obligates the issuing company to pay 

5 prioritized payments and principal when due and a 

6 percentage of the profits, if any, of the company to 

7 the Administrator as provided in this section. 

8 ‘‘(2) The term ‘prioritized payments’ means in9 terest payable on such participating securities in ac10 cordance with this section. 

11 ‘‘(3) The term ‘gross receipts’ means any cash 

12 received by a small business investment company, in13 cluding investment proceeds (both return of capital 

14 and profit), interest, dividends, and fees, other than 

15 capital contributed by a partner, the proceeds of the 

16 issuance of participating securities, and other money 

17 (if any) borrowed by the small business investment 

18 company. 

19 ‘‘(4) The term ‘equity capital’ means common 

20 or preferred stock or a similar instrument, including 

21 subordinated debt with equity features which is not 

22 amortized and which provides for interest payments 

23 from appropriate sources, as determined by the Ad24 ministrator. 


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1 ‘‘(5) The term ‘combined capital’ means the ag2 gregate amount of private capital, outstanding lever3 age, and commitments of the Administrator held by 

4 the company. 

5 ‘‘(6) The term ‘management expenses’ includes 

6 salaries, office expenses, travel, business develop7 ment, office and equipment rental, bookkeeping and 

8 the development, investigation and monitoring of in9 vestments, but does not include the cost of services 

10 provided by specialized outside consultants, outside 

11 lawyers, and outside auditors, who perform services 

12 not generally expected of a venture capital company, 

13 nor does such term include the cost of services pro14 vided by any affiliate of the company that are not 

15 part of the normal process of making and moni16 toring venture capital investments. 

17 ‘‘(7) The term ‘leverage percent’ means the per18 cent calculated by dividing the aggregate amount of 

19 participating security leverage previously drawn by 

20 the company (including leverage previously repaid) 

21 by that same amount plus the aggregate amount of 

22 capital previously contributed to the company by its 

23 private investors (including capital previously re24 turned to those investors). 


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1 ‘‘(8) The term ‘maximum tax liability’ means 

2 the amount of income allocated to each partner, 

3 shareholder, or member (including an allocation to 

4 the Administration as if it were a taxpayer) for Fed5 eral income tax purposes in the income tax return 

6 filed or to be filed by the company with respect to 

7 the fiscal year of the company immediately pre8 ceding such distribution, multiplied by the highest 

9 combined marginal Federal and State income tax 

10 rates for corporations or individuals, whichever is 

11 higher, on each type of income included in such re12 turn. 

13 ‘‘(9) The term ‘State income tax’ means the in14 come tax of the State where the company’s principal 

15 place of business is located.’’. 

16 TITLE III—ENTREPRENEURSHIP 

17 Subtitle A—National Small 

18 Business Regulatory Assistance 

19 SEC. 301. SHORT TITLE. 

20 This subtitle may be cited as the ‘‘National Small 

21 Business Regulatory Assistance Act’’. 

22 SEC. 302. PURPOSE. 

23 The purpose of this subtitle is to establish a program 

24 to— 


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1 (1) provide confidential assistance to small 

2 business concerns; 

3 (2) provide small business concerns with the in4 formation necessary to improve their rate of compli5 ance with Federal and State regulations; 

6 (3) create a partnership among Federal agen7 cies to increase outreach efforts to small business 

8 concerns with respect to regulatory compliance; 

9 (4) provide a mechanism for unbiased feedback 

10 to Federal agencies on the regulatory environment 

11 for small business concerns; and 

12 (5) utilize the service delivery network of Small 

13 Business Development Centers to improve access of 

14 small business concerns to programs to assist them 

15 with regulatory compliance. 

16 SEC. 303. DEFINITIONS. 

17 In this subtitle, the definitions set forth in section 

18 37(a) of the Small Business Act (as added by section 304 

19 of this subtitle) shall apply. 

20 SEC. 304. SMALL BUSINESS REGULATORY ASSISTANCE PRO21 GRAM. 

22 The Small Business Act (15 U.S.C. 637 et seq.) is 

23 amended— 

24 (1) by redesignating section 37 as section 99; 

25 and 


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1 (2) by inserting after section 36 the following 

2 new section: 

3 ‘‘SEC. 37. SMALL BUSINESS REGULATORY ASSISTANCE PRO4 GRAM. 

5 ‘‘(a) DEFINITIONS.—In this section, the following 

6 definitions apply: 

7 ‘‘(1) ASSOCIATION.—The term ‘Association’ 

8 means the association recognized by the Adminis9 trator of the Small Business Administration under 

10 section 21(a)(3)(A). 

11 ‘‘(2) PARTICIPATING SMALL BUSINESS DEVEL12 OPMENT CENTER.—The term ‘participating Small 

13 Business Development Center’ means a Small Busi14 ness Development Center participating in the pro15 gram. 

16 ‘‘(3) PROGRAM.—The term ‘program’ means 

17 the regulatory assistance program established under 

18 this section. 

19 ‘‘(4) REGULATORY COMPLIANCE ASSISTANCE.— 

20 The term ‘regulatory compliance assistance’ means 

21 assistance provided by a Small Business Develop22 ment Center to a small business concern to enable 

23 the concern to comply with Federal regulatory re24 quirements. 


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1 ‘‘(5) SMALL BUSINESS DEVELOPMENT CEN2 TER.—The term ‘Small Business Development Cen3 ter’ means a Small Business Development Center 

4 described in section 21. 

5 ‘‘(6) STATE.—The term ‘State’ means each of 

6 the several States, the District of Columbia, the 

7 Commonwealth of Puerto Rico, the Virgin Islands, 

8 Guam, and American Samoa. 

9 ‘‘(b) AUTHORITY.—In accordance with this section, 

10 the Administrator shall establish a program to provide 

11 regulatory compliance assistance to small business con12 cerns through selected Small Business Development Cen13 ters, the Association of Small Business Development Cen14 ters, and Federal compliance partnership programs. 

15 ‘‘(c) SMALL BUSINESS DEVELOPMENT CENTERS.— 

16 ‘‘(1) IN GENERAL.—In carrying out the pro17 gram, the Administrator shall enter into arrange18 ments with selected Small Business Development 

19 Centers under which such Centers shall provide— 

20 ‘‘(A) access to information and resources, 

21 including current Federal and State nonpuni22 tive compliance and technical assistance pro23 grams similar to those established under section 

24 507 of the Clean Air Act (42 U.S.C. 7661f); 

25 ‘‘(B) training and educational activities; 


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1 ‘‘(C) confidential, free-of-charge, one-on2 one, in-depth counseling to the owners and op3 erators of small business concerns regarding 

4 compliance with Federal and State regulations, 

5 as long as such counseling is not considered to 

6 be the practice of law in a State in which a 

7 Small Business Development Center is located 

8 or in which such counseling is conducted; 

9 ‘‘(D) technical assistance; 

10 ‘‘(E) referrals to experts and other pro11 viders of compliance assistance who meet such 

12 standards for educational, technical, and profes13 sional competency as are established by the Ad14 ministrator; and 

15 ‘‘(F) access to the Internet and training on 

16 Internet use, including the use of the Internet 

17 website established by the Administrator under 

18 subsection (d)(1)(C). 

19 ‘‘(2) REPORTS.— 

20 ‘‘(A) IN GENERAL.—Each selected Small 

21 Business Development Center shall transmit to 

22 the Administrator a quarterly report that in23 cludes— 


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1 ‘‘(i) a summary of the regulatory com2 pliance assistance provided by the center 

3 under the program; and 

4 ‘‘(ii) any data and information ob5 tained by the center from a Federal agency 

6 regarding regulatory compliance that the 

7 agency intends to be disseminated to small 

8 business concerns. 

9 ‘‘(B) ELECTRONIC FORM.—Each report re10 quired under subparagraph (A) shall be trans11 mitted in electronic form. 

12 ‘‘(C) INTERIM REPORTS.—A participating 

13 Small Business Development Center may trans14 mit to the Administrator such interim reports 

15 as the Center considers appropriate. 

16 ‘‘(d) DATA REPOSITORY AND CLEARINGHOUSE.— 

17 ‘‘(1) IN GENERAL.—In carrying out the pro18 gram, the Administrator shall— 

19 ‘‘(A) act as the repository of and clearing20 house for data and information submitted by 

21 Small Business Development Centers; 

22 ‘‘(B) submit to the President, the Com23 mittee on Small Business and Entrepreneurship 

24 of the Senate, and the Committee on Small 


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1 Business of the House of Representatives an 

2 annual report that includes— 

3 ‘‘(i) a description of the types of as4 sistance provided by participating Small 

5 Business Development Centers under the 

6 program; 

7 ‘‘(ii) data regarding the number of 

8 small business concerns that contacted 

9 participating Small Business Development 

10 Centers regarding assistance under the 

11 program; 

12 ‘‘(iii) data regarding the number of 

13 small business concerns assisted by partici14 pating Small Business Development Cen15 ters under the program; 

16 ‘‘(iv) data and information regarding 

17 outreach activities conducted by partici18 pating Small Business Development Cen19 ters under the program, including any ac20 tivities conducted in partnership with Fed21 eral agencies; 

22 ‘‘(v) data and information regarding 

23 each case known to the Administrator in 

24 which one or more Small Business Devel25 opment Centers offered conflicting advice 


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1 or information regarding compliance with a 

2 Federal or State regulation to one or more 

3 small business concerns; and 

4 ‘‘(vi) any recommendations for im5 provements in the regulation of small busi6 ness concerns; 

7 ‘‘(C) establish an Internet website that— 

8 ‘‘(i) provides access to Federal, State, 

9 academic, and industry association Inter10 net websites containing industry-specific 

11 regulatory compliance information that the 

12 Administrator deems potentially useful to 

13 small businesses attempting to comply with 

14 Federal regulations; and 

15 ‘‘(ii) arranges such Internet websites 

16 in industry-specific categories. 

17 ‘‘(e) ELIGIBILITY.— 

18 ‘‘(1) IN GENERAL.—A Small Business Develop19 ment Center shall be eligible to receive assistance 

20 under the program only if the center is certified 

21 under section 21(k)(2). 

22 ‘‘(2) WAIVER.—With respect to a Small Busi23 ness Development Center seeking assistance under 

24 the program, the administrator may waive the cer25 tification requirement set forth in paragraph (1) if 


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1 the Administrator determines that the center is 

2 making a good faith effort to obtain such certifi3 cation. 

4 ‘‘(3) EFFECTIVE DATE.—The restriction de5 scribed in paragraph (1) shall not apply to any 

6 Small Business Development Center before October 

7 1, 2005. 

8 ‘‘(f) SELECTION OF PARTICIPATING STATE PRO9 GRAMS.— 

10 ‘‘(1) ESTABLISHMENT OF PROGRAM.—In con11 sultation with the Association and giving substantial 

12 weight to the Association’s recommendations, the 

13 Administrator shall select the Small Business Devel14 opment Center programs of 2 States from each of 

15 the following groups of States to participate in the 

16 program: 

17 ‘‘(A) Group 1: Maine, Massachusetts, New 

18 Hampshire, Connecticut, Vermont, and Rhode 

19 Island. 

20 ‘‘(B) Group 2: New York, New Jersey, 

21 Puerto Rico, and the Virgin Islands. 

22 ‘‘(C) Group 3: Pennsylvania, Maryland, 

23 West Virginia, Virginia, the District of Colum24 bia, and Delaware. 


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1 ‘‘(D) Group 4: Georgia, Alabama, North 

2 Carolina, South Carolina, Mississippi, Florida, 

3 Kentucky, and Tennessee. 

4 ‘‘(E) Group 5: Illinois, Ohio, Michigan, In5 diana, Wisconsin, and Minnesota. 

6 ‘‘(F) Group 6: Texas, New Mexico, Arkan7 sas, Oklahoma, and Louisiana. 

8 ‘‘(G) Group 7: Missouri, Iowa, Nebraska, 

9 and Kansas. 

10 ‘‘(H) Group 8: Colorado, Wyoming, North 

11 Dakota, South Dakota, Montana, and Utah. 

12 ‘‘(I) Group 9: California, Guam, Hawaii, 

13 Nevada, and Arizona. 

14 ‘‘(J) Group 10: Washington, Alaska, 

15 Idaho, and Oregon. 

16 ‘‘(2) DEADLINE FOR INITIAL SELECTIONS.— 

17 The Administrator shall make selections under para18 graph (1) not later than 60 days after promulgation 

19 of regulations under section 305 of the National 

20 Small Business Regulatory Assistance Act. 

21 ‘‘(3) ADDITIONAL SELECTIONS.—Not earlier 

22 than the date 3 years after the date of the enact23 ment of this paragraph, the Administrator may se24 lect Small Business Development Center programs 

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1 graph (1). The Administrator shall consider the ef2 fect on the programs selected under paragraph (1) 

3 before selecting additional programs under this 

4 paragraph. 

5 ‘‘(4) COORDINATION TO AVOID DUPLICATION

6 WITH OTHER PROGRAMS.—In selecting programs 

7 under this subsection, the Administrator shall give a 

8 preference to Small Business Development Center 

9 programs that have a plan for consulting with Fed10 eral and State agencies to ensure that any assist11 ance provided under this section is not duplicated by 

12 an existing Federal or State program. 

13 ‘‘(g) MATCHING NOT REQUIRED.—Subparagraphs 

14 (A) and (B) of section 21(a)(4) shall not apply to assist15 ance made available under the program. 

16 ‘‘(h) DISTRIBUTION OF GRANTS.— 

17 ‘‘(1) IN GENERAL.—Except as provided in para18 graph (2), each State program selected to receive a 

19 grant under subsection (f) in a fiscal year shall be 

20 eligible to receive a grant in an amount not to ex21 ceed the product obtained by multiplying— 

22 ‘‘(A) the amount made available for grants 

23 under this section for the fiscal year; and 

24 ‘‘(B) the ratio that the population of the 

25 State bears to the population of all the States 


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1 with programs selected to receive grants under 

2 subsection (f) for the fiscal year. 

3 ‘‘(2) MINIMUM AMOUNT.—The minimum 

4 amount that a State program selected to receive a 

5 grant under subsection (f) shall be eligible to receive 

6 under this section for any fiscal year shall be 

7 $200,000. The Administrator shall reduce the 

8 amount described in paragraph (1) as appropriate to 

9 carry out the purposes of this paragraph and sub10 section (i)(2). 

11 ‘‘(i) EVALUATION AND REPORT.—Not later than 3 

12 years after the establishment of the program, the Comp13 troller General of the United States shall conduct an eval14 uation of the program and shall transmit to the Adminis15 trator, the Committee on Small Business and Entrepre16 neurship of the Senate, and the Committee on Small Busi17 ness of the House of Representatives a report containing 

18 the results of the evaluation along with any recommenda19 tions as to whether the program, with or without modifica20 tion, should be extended to include the participation of all 

21 Small Business Development Centers. 

22 ‘‘(j) AUTHORIZATION OF APPROPRIATIONS.— 

23 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

24 there is authorized to be appropriated to carry out 


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1 this section $5,000,000 for fiscal year 2008 and 

2 each subsequent fiscal year. 

3 ‘‘(2) AMOUNTS AUTHORIZED ONLY IF SECTION

4 21 FULLY FUNDED.—No funds are authorized to be 

5 appropriated to carry out this section for a fiscal 

6 year unless the program level authorized to be ap7 propriated to carry out section 21 is fully funded for 

8 that fiscal year. 

9 ‘‘(3) LIMITATION ON USE OF OTHER FUNDS.— 

10 The Administrator shall carry out the program only 

11 with amounts appropriated in advance specifically to 

12 carry out this section.’’. 

13 SEC. 305. PROMULGATION OF REGULATIONS. 

14 After providing notice and an opportunity for com15 ment and after consulting with the Association (but not 

16 later than 180 days after the date of the enactment of 

17 this Act), the Administrator shall promulgate final regula18 tions to carry out this subtitle, including regulations that 

19 establish— 

20 (1) priorities for the types of assistance to be 

21 provided under the program; 

22 (2) standards relating to educational, technical, 

23 and support services to be provided by participating 

24 Small Business Development Centers; 


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1 (3) standards relating to any national service 

2 delivery and support function to be provided by the 

3 Association under the program; 

4 (4) standards relating to any work plan that 

5 the Administrator may require a participating Small 

6 Business Development Center to develop; and 

7 (5) standards relating to the educational, tech8 nical, and professional competency of any expert or 

9 other assistance provider to whom a small business 

10 concern may be referred for compliance assistance 

11 under the program. 

12 Subtitle B—Vocational and Tech13 nical Entrepreneurship Devel14 opment 

15 SEC. 311. SHORT TITLE. 

16 This subtitle may be cited as the ‘‘Vocational and 

17 Technical Entrepreneurship Development Act’’. 

18 SEC. 312. VOCATIONAL AND TECHNICAL ENTREPRENEUR19 SHIP DEVELOPMENT PROGRAM. 

20 (a) IN GENERAL.—The Small Business Act (15 

21 U.S.C. 631 et seq.) is amended by inserting after section 

22 37 (as added by section 304) the following new section: 


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1 ‘‘SEC. 38. VOCATIONAL AND TECHNICAL ENTREPRENEUR2 SHIP DEVELOPMENT PROGRAM. 

3 ‘‘(a) DEFINITIONS.—In this section, the following 

4 definitions apply: 

5 ‘‘(1) ASSOCIATION.—The term ‘Association’ 

6 means the association of small business development 

7 centers recognized under section 21(a)(3)(A). 

8 ‘‘(2) PROGRAM.—The term ‘program’ means 

9 the program established under subsection (b). 

10 ‘‘(3) SMALL BUSINESS DEVELOPMENT CEN11 TER.—The term ‘small business development center’ 

12 means a small business development center described 

13 in section 21. 

14 ‘‘(4) STATE SMALL BUSINESS DEVELOPMENT

15 CENTER.—The term ‘State small business develop16 ment center’ means a small business development 

17 center from each State selected by the Adminis18 trator, in consultation with the Association and giv19 ing substantial weight to the Association’s rec20 ommendations, to carry out the program on a state21 wide basis in such State. 

22 ‘‘(b) ESTABLISHMENT.—In accordance with this sec23 tion, the Administrator shall establish a program under 

24 which the Administrator shall make grants to State small 

25 business development centers to enable such centers to 

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1 ondary schools, postsecondary vocational schools, or tech2 nical schools, for the development and implementation of 

3 curricula designed to promote vocational and technical en4 trepreneurship. 

5 ‘‘(c) GRANT AMOUNT.— 

6 ‘‘(1) MINIMUM GRANT.—Each grant awarded 

7 by the Administrator under the program shall be in 

8 an amount not less than $200,000. 

9 ‘‘(2) NO MATCHING REQUIREMENT.—The Ad10 ministrator shall not require, as a condition of re11 ceiving a grant under this section, that the applicant 

12 provide a matching amount, either in cash or as in13 kind contributions. 

14 ‘‘(d) APPLICATION.—Each State small business de15 velopment center seeking a grant under the program shall 

16 submit to the Administrator an application in such form 

17 as the Administrator may require. The application shall 

18 include information regarding the applicant’s goals and 

19 objectives for the educational programs to be assisted. 

20 ‘‘(e) REPORT TO ADMINISTRATOR.—As a condition of 

21 each grant awarded under the program, the Administrator 

22 shall require the recipient to transmit to the Adminis23 trator, not later than 18 months after the date of receipt 

24 of the grant, a report describing how the grant funds were 

25 used. 


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1 ‘‘(f) COOPERATIVE AGREEMENTS AND CON2 TRACTS.—The Administrator may enter into a cooperative 

3 agreement or contract with any State small business devel4 opment center receiving a grant under this section to pro5 vide additional assistance that furthers the purposes of 

6 this section. 

7 ‘‘(g) EVALUATION OF PROGRAM.—Not later than 

8 March 31, 2010, the Administrator shall transmit to Con9 gress a report containing an evaluation of the program. 

10 ‘‘(h) CLEARINGHOUSE.—The Association shall act as 

11 a clearinghouse of information and expertise regarding vo12 cational and technical entrepreneurship education pro13 grams. In each fiscal year in which grants are made under 

14 the program, the Administrator shall provide additional 

15 assistance to the Association to carry out the functions 

16 described in this subsection. 

17 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—There is 

18 authorized to be appropriated to carry out this section 

19 $7,000,000 for each of fiscal years 2008 through 2010. 

20 Such sums shall remain available until expended. 

21 ‘‘(j) FUNDING LIMITATIONS.— 

22 ‘‘(1) NONAPPLICABILITY OF CERTAIN LIMITA23 TIONS.—Subject to paragraph (2), amounts made 

24 available under this section are in addition to any 

25 amounts available under section 21(a)(4). 


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1 ‘‘(2) AMOUNTS AUTHORIZED ONLY IF SECTION

2 21 FULLY FUNDED.—No funds are authorized to be 

3 appropriated to carry out this section for a fiscal 

4 year unless the program level authorized to be ap5 propriated to carry out section 21 is fully funded for 

6 that fiscal year. 

7 ‘‘(3) LIMITATION ON USE OF FUNDS.—The Ad8 ministrator shall carry out this section using only 

9 amounts appropriated in advance specifically for the 

10 purpose of carrying out this section.’’. 

11 Subtitle C—Native American Small 

12 Business Development 

13 SEC. 321. FINDINGS AND PURPOSES. 

14 (a) FINDINGS.—Congress finds the following: 

15 (1) Approximately 60 percent of Indian tribe 

16 members and Alaska Natives live on or adjacent to 

17 Indian lands, which suffer from an average unem18 ployment rate of 45 percent. 

19 (2) Indian tribe members and Alaska Natives 

20 own more than 197,000 businesses and generate 

21 more than $34,000,000,000 in revenues. The service 

22 industry accounted for 17 percent of these busi23 nesses (of which 40 percent were engaged in busi24 ness and personal services) and 15.1 percent of their 

25 total receipts. The next largest was the construction 


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1 industry (13.9 percent and 15.7 percent, respec2 tively). The third largest was the retail trade indus3 try (7.5 percent and 13.4 percent, respectively). 

4 (3) The number of businesses owned by Indian 

5 tribe members and Alaska Natives grew by 84 per6 cent from 1992 to 1997, and their gross receipts 

7 grew by 179 percent in that period. This is com8 pared to all businesses which grew by 7 percent, and 

9 their total gross receipts grew by 40 percent, in that 

10 period. 

11 (4) The Small Business Development Center 

12 program is cost effective. Clients receiving long-term 

13 counseling under the program in 1998 generated ad14 ditional tax revenues of $468,000,000, roughly 6 

15 times the cost of the program to the Federal Gov16 ernment. 

17 (5) Using the existing infrastructure of the 

18 Small Business Development Center program, small 

19 businesses owned by Indian tribe members, Alaska 

20 Natives, and Native Hawaiians receiving services 

21 under the program will have a higher survival rate 

22 than the average small business not receiving such 

23 services. 


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1 (6) Business counseling and technical assist2 ance is critical on Indian lands where similar serv3 ices are scarce and expensive. 

4 (7) Increased assistance through counseling 

5 under the Small Business Development Center pro6 gram has been shown to reduce the default rate as7 sociated with lending programs of the Small Busi8 ness Administration. 

9 (b) PURPOSES.—The purposes of this subtitle are as 

10 follows: 

11 (1) To stimulate economies on Indian lands. 

12 (2) To foster economic development on Indian 

13 lands. 

14 (3) To assist in the creation of new small busi15 nesses owned by Indian tribe members, Alaska Na16 tives, and Native Hawaiians and expand existing 

17 ones. 

18 (4) To provide management, technical, and re19 search assistance to small businesses owned by In20 dian tribe members, Alaska Natives, and Native Ha21 waiians. 

22 (5) To seek the advice of local Tribal Councils 

23 on where small business development assistance is 

24 most needed. 


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1 (6) To ensure that Indian tribe members, Alas2 ka Natives, and Native Hawaiians have full access 

3 to existing business counseling and technical assist4 ance available through the Small Business Develop5 ment Center program. 

6 SEC. 322. SMALL BUSINESS DEVELOPMENT CENTER AS7 SISTANCE TO INDIAN TRIBE MEMBERS, ALAS8 KA NATIVES, AND NATIVE HAWAIIANS. 

9 (a) IN GENERAL.—Section 21(a) of the Small Busi10 ness Act (15 U.S.C. 648(a)) is amended by adding at the 

11 end the following: 

12 ‘‘(8) ADDITIONAL GRANT TO ASSIST INDIAN

13 TRIBE MEMBERS, ALASKA NATIVES, AND NATIVE HA14 WAIIANS.— 

15 ‘‘(A) IN GENERAL.—Any applicant in an 

16 eligible State that is funded by the Administra17 tion as a Small Business Development Center 

18 may apply for an additional grant to be used 

19 solely to provide services described in subsection 

20 (c)(3) to assist with outreach, development, and 

21 enhancement on Indian lands of small business 

22 startups and expansions owned by Indian tribe 

23 members, Alaska Natives, and Native Hawai24 ians. 


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1 ‘‘(B) ELIGIBLE STATES.—For purposes of 

2 subparagraph (A), an eligible State is a State 

3 that has a combined population of Indian tribe 

4 members, Alaska Natives, and Native Hawai5 ians that comprises at least 1 percent of the 

6 State’s total population, as shown by the latest 

7 available census. 

8 ‘‘(C) GRANT APPLICATIONS.—An applicant 

9 for a grant under subparagraph (A) shall sub10 mit to the Administration an application that is 

11 in such form as the Administration may re12 quire. The application shall include information 

13 regarding the applicant’s goals and objectives 

14 for the services to be provided using the grant, 

15 including— 

16 ‘‘(i) the capability of the applicant to 

17 provide training and services to a rep18 resentative number of Indian tribe mem19 bers, Alaska Natives, and Native Hawai20 ians; 

21 ‘‘(ii) the location of the Small Busi22 ness Development Center site proposed by 

23 the applicant; 


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1 ‘‘(iii) the required amount of grant 

2 funding needed by the applicant to imple3 ment the program; and 

4 ‘‘(iv) the extent to which the applicant 

5 has consulted with local Tribal Councils. 

6 ‘‘(D) APPLICABILITY OF GRANT REQUIRE7 MENTS.—An applicant for a grant under sub8 paragraph (A) shall comply with all of the re9 quirements of this section, except that the 

10 matching funds requirements under paragraph 

11 (4)(A) shall not apply. 

12 ‘‘(E) MAXIMUM AMOUNT OF GRANTS.—No 

13 applicant may receive more than $300,000 in 

14 grants under this paragraph for one fiscal year. 

15 ‘‘(F) REGULATIONS.—After providing no16 tice and an opportunity for comment and after 

17 consulting with the Association recognized by 

18 the Administration pursuant to paragraph 

19 (3)(A) (but not later than 180 days after the 

20 date of enactment of this paragraph), the Ad21 ministration shall issue final regulations to 

22 carry out this paragraph, including regulations 

23 that establish— 

24 ‘‘(i) standards relating to educational, 

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1 vided by Small Business Development Cen2 ters receiving assistance under this para3 graph; and 

4 ‘‘(ii) standards relating to any work 

5 plan that the Administration may require a 

6 Small Business Development Center receiv7 ing assistance under this paragraph to de8 velop. 

9 ‘‘(G) DEFINITIONS.—In this section, the 

10 following definitions apply: 

11 ‘‘(i) INDIAN LANDS.—The term ‘In12 dian lands’ has the meaning given the term 

13 ‘Indian country’ in section 1151 of title 18, 

14 United States Code, the meaning given the 

15 term ‘Indian reservation’ in section 151.2 

16 of title 25, Code of Federal Regulations 

17 (as in effect on the date of enactment of 

18 this paragraph), and the meaning given 

19 the term ‘reservation’ in section 4 of the 

20 Indian Child Welfare Act of 1978 (25 

21 U.S.C. 1903). 

22 ‘‘(ii) INDIAN TRIBE.—The term ‘In23 dian tribe’ means any band, nation, or or24 ganized group or community of Indians lo25 cated in the contiguous United States, and 


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1 the Metlakatla Indian Community, whose 

2 members are recognized as eligible for the 

3 services provided to Indians by the Sec4 retary of the Interior because of their sta5 tus as Indians. 

6 ‘‘(iii) INDIAN TRIBE MEMBER.—The 

7 term ‘Indian tribe member’ means a mem8 ber of an Indian tribe (other than a Alaska 

9 Native). 

10 ‘‘(iv) ALASKA NATIVE.—The term 

11 ‘Alaska Native’ has the meaning given the 

12 term ‘Native’ in section 3(b) of the Alaska 

13 Native Claims Settlement Act (43 U.S.C. 

14 1602(b)). 

15 ‘‘(v) NATIVE HAWAIIAN.—The term 

16 ‘Native Hawaiian’ means any individual 

17 who is— 

18 ‘‘(I) a citizen of the United 

19 States; and 

20 ‘‘(II) a descendant of the aborigi21 nal people, who prior to 1778, occu22 pied and exercised sovereignty in the 

23 area that now constitutes the State of 

24 Hawaii. 


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1 ‘‘(vi) TRIBAL ORGANIZATION.—The 

2 term ‘tribal organization’ has the meaning 

3 given that term in section 4(l) of the In4 dian Self-Determination and Education 

5 Assistance Act (25 U.S.C. 450b(l)). 

6 ‘‘(H) AUTHORIZATION OF APPROPRIA7 TIONS.—There is authorized to be appropriated 

8 to carry out this paragraph $7,000,000 for each 

9 of fiscal years 2008 through 2010. 

10 ‘‘(I) FUNDING LIMITATIONS.— 

11 ‘‘(i) NONAPPLICABILITY OF CERTAIN

12 LIMITATIONS.—Subject to clause (ii), fund13 ing under this paragraph shall be in addi14 tion to the dollar program limitations spec15 ified in paragraph (4). 

16 ‘‘(ii) AMOUNTS AUTHORIZED ONLY IF

17 REST OF SECTION 21 FULLY FUNDED.—No 

18 funds are authorized to be appropriated to 

19 carry out this paragraph for a fiscal year 

20 unless the program level authorized to be 

21 appropriated to carry out the other activi22 ties under this section is fully funded for 

23 that fiscal year. 

24 ‘‘(iii) LIMITATION ON USE OF

25 FUNDS.—The Administration may carry 


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1 out this paragraph only with amounts ap2 propriated in advance specifically to carry 

3 out this paragraph.’’. 

4 SEC. 323. STATE CONSULTATION WITH TRIBAL ORGANIZA5 TIONS. 

6 Section 21(c) of the Small Business Act (15 U.S.C. 

7 648(c)) is amended by adding at the end the following: 

8 ‘‘(9) ADVICE OF LOCAL TRIBAL ORGANIZA9 TIONS.—A Small Business Development Center re10 ceiving a grant under this section shall request the 

11 advice of tribal organization on how best to provide 

12 assistance to Indian tribe members, Alaska Natives, 

13 and Native Hawaiians and where to locate satellite 

14 centers to provide such assistance.’’. 

15 Subtitle D—Second-Stage Small 

16 Business Development 

17 SEC. 331. SHORT TITLE. 

18 This subtitle may be cited as the ‘‘Second-Stage 

19 Small Business Development Act’’. 

20 SEC. 332. PURPOSE. 

21 The purpose of this subtitle is to establish a four22 year pilot program to— 

23 (1) identify second-stage small business con24 cerns that have the capacity for significant business 

25 growth and job creation; 


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1 (2) facilitate business growth and job creation 

2 by second-stage small business concerns through the 

3 development of peer learning opportunities; and 

4 (3) utilize the network of small business devel5 opment centers to expand access to peer learning op6 portunities for second-stage small business concerns. 

7 SEC. 333. PILOT PROGRAM. 

8 (a) ESTABLISHMENT.—The Administrator shall es9 tablish and carry out a pilot program (referred to in this 

10 subtitle as the ‘‘pilot program’’) to make grants to eligible 

11 entities for the development of peer learning opportunities 

12 for second-stage small business concerns in accordance 

13 with this subtitle. 

14 (b) SELECTION OF GRANT RECIPIENTS.— 

15 (1) IN GENERAL.—From the eligible entities lo16 cated in the States in each of the 10 regions under 

17 paragraph (3), the Administrator shall select 2 eligi18 ble entities to receive grants. 

19 (2) ELIGIBLE ENTITIES.—In this subtitle, the 

20 term ‘‘eligible entity’’ means an entity that— 

21 (A) is eligible to receive funding under sec22 tion 21 of the Small Business Act (15 U.S.C. 

23 648); and 

24 (B) submits to the Secretary an applica25 tion that includes— 


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1 (i) a plan to— 

2 (I) offer peer learning opportuni3 ties to second-stage small business 

4 concerns; and 

5 (II) transition to providing such 

6 opportunities using non-governmental 

7 funding; and 

8 (ii) any other information and assur9 ances that the Secretary may require. 

10 (3) CRITERIA FOR SELECTION.—The Adminis11 trator shall evaluate the plans submitted by the eli12 gible entities under paragraph (2) and select eligible 

13 entities to receive grants on the basis of the merit 

14 of such plans. 

15 (4) REGIONS DESCRIBED.—The regions re16 ferred to in paragraph (1) are as follows: 

17 (A) REGION 1.—Maine, Massachusetts, 

18 New Hampshire, Connecticut, Vermont, and 

19 Rhode Island. 

20 (B) REGION 2.—New York, New Jersey, 

21 Puerto Rico, and the Virgin Islands. 

22 (C) REGION 3.—Pennsylvania, Maryland, 

23 West Virginia, Virginia, the District of Colum24 bia, and Delaware. 


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1 (D) REGION 4.—Georgia, Alabama, North 

2 Carolina, South Carolina, Mississippi, Florida, 

3 Kentucky, and Tennessee. 

4 (E) REGION 5.—Illinois, Ohio, Michigan, 

5 Indiana, Wisconsin, and Minnesota. 

6 (F) REGION 6.—Texas, New Mexico, Ar7 kansas, Oklahoma, and Louisiana. 

8 (G) REGION 7.—Missouri, Iowa, Nebraska, 

9 and Kansas. 

10 (H) REGION 8.—Colorado, Wyoming, 

11 North Dakota, South Dakota, Montana, and 

12 Utah. 

13 (I) REGION 9.—California, Guam, Hawaii, 

14 Nevada, Arizona, and American Samoa. 

15 (J) REGION 10.—Washington, Alaska, 

16 Idaho, and Oregon. 

17 (5) CONSULTATION.—If small business develop18 ment centers have formed an association to pursue 

19 matters of common concern as authorized under sec20 tion 21(a)(3)(A) of the Small Business Act (15 

21 U.S.C. 648(a)(3)(A)), the Administrator shall con22 sult with such association and give substantial 

23 weight to the recommendations of such association 

24 in selecting the grant recipients. 


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1 (6) DEADLINE FOR INITIAL SELECTIONS.—The 

2 Administrator shall make selections under paragraph 

3 (1) not later than 60 days after the promulgation of 

4 regulations under section 334. 

5 (c) USE OF FUNDS.—An eligible entity that receives 

6 a grant under the pilot program shall use the grant to— 

7 (1) identify second-stage small business con8 cerns in the service delivery areas of the eligible enti9 ty; and 

10 (2) establish and conduct peer learning oppor11 tunities for such second-stage small business con12 cerns. 

13 (d) AMOUNT OF GRANT.— 

14 (1) IN GENERAL.—Except as provided in para15 graph (2), a grant under the pilot program shall be 

16 in an amount that does not exceed the product ob17 tained by multiplying— 

18 (A) the amount made available for grants 

19 under the pilot program for the fiscal year for 

20 which the grant is made; and 

21 (B) the ratio that the population of the 

22 State in which the eligible entity is located 

23 bears to the aggregate population the States in 

24 which eligible entities receiving grants for that 

25 fiscal year are located. 


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1 (2) MINIMUM AMOUNT OF GRANT.—A grant 

2 under the pilot program shall be in an amount not 

3 less than $50,000. 

4 (e) MATCHING REQUIREMENT.—As a condition of a 

5 grant under the pilot program, the Administrator shall re6 quire that a matching amount be provided from sources 

7 other than the Federal Government that— 

8 (1) is equal to the amount of the grant, or in 

9 the case of an eligible entity that is a community 

10 college, historically Black college, Hispanic-serving 

11 institution, or other minority institution, is equal to 

12 50 percent of the amount of the grant; 

13 (2) is not less than 50 percent cash; 

14 (3) is not more than 50 percent comprised of 

15 indirect costs and in-kind contributions; and 

16 (4) does not include any indirect cost or in-kind 

17 contribution derived from any Federal program. 

18 (f) QUARTERLY REPORT TO ADMINISTRATOR.— 

19 (1) IN GENERAL.—Each eligible entity that re20 ceives a grant under the pilot program shall submit 

21 to the Administrator a quarterly report that in22 cludes— 

23 (A) a summary of the peer learning oppor24 tunities established by the eligible entity using 

25 grant funds; 


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1 (B) the number of second-stage small busi2 ness concerns assisted using grant funds; and 

3 (C) in the case of an eligible entity that re4 ceives a grant for a second fiscal year or any 

5 subsequent fiscal year— 

6 (i) any measurable economic impact 

7 data resulting from the peer learning op8 portunities established using grant funds; 

9 and 

10 (ii) the number of peer learning op11 portunities established by the eligible enti12 ty that have transitioned from operating 

13 using Government funds to operating with14 out using Government funds. 

15 (2) FORM OF REPORT.—The report required 

16 under paragraph (1) shall be transmitted in elec17 tronic form. 

18 (g) DATA REPOSITORY AND CLEARINGHOUSE.—In 

19 carrying out the pilot program, the Administrator shall act 

20 as the repository of and clearinghouse for data and infor21 mation submitted by the eligible entities. 

22 (h) ANNUAL REPORT ON PILOT PROGRAM.—Not 

23 later than November 1 of each year, the Administrator 

24 shall submit to the President and to Congress, a report 


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1 evaluating the success of the pilot program during the pre2 ceding fiscal year, which shall include the following: 

3 (1) A description of the types of peer learning 

4 opportunities provided with grant funds. 

5 (2) The number of second-stage small business 

6 concerns assisted with grant funds. 

7 (3) For fiscal year 2009 and each subsequent 

8 fiscal year of the pilot program— 

9 (A) data regarding the economic impact of 

10 the peer learning opportunities provided with 

11 grant funds; and 

12 (B) the number of peer learning opportuni13 ties established by grant recipients that have 

14 transitioned from operating using Government 

15 funds to operating without using Government 

16 funds. 

17 (i) PRIVACY REQUIREMENT.—The privacy require18 ments that apply under subparagraphs (A) and (B) of sec19 tion 21(a)(7) of the Small Business Act to financial assist20 ance under section 21 of that Act also apply to financial 

21 assistance under this section. 

22 (j) EVALUATION AND REPORT.—Not later than 3 

23 years after the establishment of the pilot program, the 

24 Comptroller General of the United States shall— 


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1 (1) conduct an evaluation of the pilot program; 

2 and 

3 (2) transmit to Congress and the Administrator 

4 a report containing the results of such evaluation 

5 along with any recommendations as to whether the 

6 pilot program, with or without modification, should 

7 be extended to include the participation of all small 

8 business development centers. 

9 (k) TERMINATION.—The pilot program shall termi10 nate on September 30, 2011. 

11 SEC. 334. REGULATIONS. 

12 After providing notice and an opportunity for com13 ment and after consulting with the association described 

14 in section 333(b)(5) (if any such association has been 

15 formed), the Administrator shall promulgate final regula16 tions to carry out this subtitle, including regulations that 

17 establish— 

18 (1) standards relating to the establishment and 

19 conduct of peer learning opportunities to be provided 

20 by grant recipients, including the number of individ21 uals that may participate in a peer group that is 

22 part of a peer learning opportunity; 

23 (2) standards relating to the educational, tech24 nical, and professional competency of any facilitator 


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1 who delivers peer learning opportunities under the 

2 pilot program; and 

3 (3) requirements for transitioning peer learning 

4 opportunities funded under the pilot program to 

5 non-governmental funding. 

6 SEC. 335. DEFINITIONS. 

7 In this subtitle: 

8 (1) The term ‘‘Administrator’’ means the Ad9 ministrator of the Small Business Administration. 

10 (2) The term ‘‘peer learning opportunities’’ 

11 means formally organized peer groups of owners, 

12 presidents and chief executive officers in non-com13 peting second-stage business concerns, meeting regu14 larly with a professionally trained facilitator. 

15 (3) The term ‘‘second-stage small business con16 cern’’ means a small business concern that— 

17 (A) has experienced high growth dem18 onstrated by— 

19 (i) an average annual revenue or em20 ployee growth rate of at least 15 percent 

21 during the preceding 3 years; or 

22 (ii) any 3 of— 

23 (I) owning proprietary intellec24 tual property; 


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1 (II) addressing an underserved or 

2 growing market; 

3 (III) having a sustainable com4 petitive advantage; 

5 (IV) exporting goods or services 

6 outside of its community; and 

7 (V) having a product or service 

8 that is scalable to a large market; and 

9 (B) does not exceed the size standard for 

10 the North American Industrial Classification 

11 System code of such concern, as established 

12 pursuant to section 3(a) of the Small Business 

13 Act (15 U.S.C. 632(a)). 

14 (4) The term ‘‘small business concern’’ has the 

15 meaning given that term under section 3 of the 

16 Small Business Act (15 U.S.C. 632). 

17 (5) The term ‘‘State’’ means each of the several 

18 States, the District of Columbia, the Commonwealth 

19 of Puerto Rico, the Virgin Islands, Guam, and 

20 American Samoa. 

21 (6) The term ‘‘community college’’ has the 

22 meaning given that term in section 3301(3) of the 

23 Higher Education Act of 1965 (20 U.S.C. 7011(3)). 

24 (7) The term ‘‘historically Black college’’ means 

25 a part B institution, as defined in section 322(2) of 


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1 the Higher Education Act of 1965 (20 U.S.C. 

2 1061(2)). 

3 (8) The term ‘‘Hispanic-serving institution’’ has 

4 the meaning given that term in section 502(a)(5) of 

5 the Higher Education Act of 1965 (20 U.S.C. 

6 1101a(a)(5)). 

7 (9) The term ‘‘minority institution’’ has the 

8 meaning given that term in section 365(3) of the 

9 Higher Education Act of 1965 (20 U.S.C. 

10 1067k(3)). 

11 SEC. 336. AUTHORIZATION OF APPROPRIATIONS. 

12 (a) IN GENERAL.—Subject to subsection (b), there 

13 is authorized to be appropriated to carry out this subtitle 

14 $1,500,000 for each of fiscal years 2008 through 2011. 

15 (b) AMOUNTS AUTHORIZED ONLY IF SECTION 21 

16 FULLY FUNDED.—No funds are authorized to be appro17 priated to carry out this section for a fiscal year unless 

18 the program level authorized to be appropriated to carry 

19 out section 21 is fully funded for that fiscal year. 

20 (c) LIMITATION ON USE OF OTHER FUNDS.—The 

21 Administrator shall carry out this subtitle using only 

22 amounts appropriated in advance specifically for the pur23 pose of carrying out this subtitle. 


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1 Subtitle E—Trade Provisions 

2 SEC. 341. ESTABLISHMENT OF ASSOCIATE ADMINISTRATOR 

3 FOR INTERNATIONAL TRADE IN SMALL BUSI4 NESS ADMINISTRATION. 

5 (a) ESTABLISHMENT.—Section 22(a) of the Small 

6 Business Act (15 U.S.C. 649(a)) is amended by adding 

7 at the end the following: ‘‘The head of the Office shall 

8 be the Associate Administrator for International Trade, 

9 who shall be responsible to the Administrator.’’. 

10 (b) AUTHORITY FOR ADDITIONAL ASSOCIATE AD11 MINISTRATOR.—Section 4(b)(1) of the Small Business Act 

12 (15 U.S.C. 633(b)(1)) is amended— 

13 (1) in the fifth sentence, by striking ‘‘five Asso14 ciate Administrators’’ and inserting ‘‘Associate Ad15 ministrators’’; and 

16 (2) by adding at the end the following: ‘‘One of 

17 the Associate Administrators shall be the Associate 

18 Administrator for International Trade, who shall be 

19 the head of the Office of International Trade estab20 lished under section 22.’’. 

21 (c) DISCHARGE OF ADMINISTRATION INTER22 NATIONAL TRADE RESPONSIBILITIES.—Section 22 of the 

23 Small Business Act, as amended by subsection (a), is fur24 ther amended by adding at the end the following new sub25 section: 


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1 ‘‘(h) The Administrator shall ensure that— 

2 ‘‘(1) the responsibilities of the Administration 

3 regarding international trade are carried out 

4 through the Associate Administrator for Inter5 national Trade; 

6 ‘‘(2) the Associate Administrator for Inter7 national Trade has sufficient resources to carry out 

8 such responsibilities; and 

9 ‘‘(3) the Associate Administrator for Inter10 national Trade has direct supervision and control 

11 over the staff of the Office of International Trade, 

12 and over any employee of the Administration whose 

13 principal duty station is a United States Export As14 sistance Center or any successor entity.’’. 

15 (d) ROLE OF ASSOCIATE ADMINISTRATOR IN CAR16 RYING OUT INTERNATIONAL TRADE POLICY.—Section 

17 2(b)(1) of such Act (15 U.S.C. 631(b)(1)) is amended in 

18 the matter preceding subparagraph (A)— 

19 (1) by inserting ‘‘the Administrator of’’ before 

20 ‘‘the Small Business Administration’’; and 

21 (2) by inserting ‘‘through the Associate Admin22 istrator for International Trade’’ before ‘‘in coopera23 tion with’’. 


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1 (e) CONFORMING AMENDMENTS.—Section 22 of the 

2 Small Business Act (15 U.S.C. 649), as amended by sub3 sections (a) and (c) is further amended— 

4 (1) in subsection (b)— 

5 (A) in the matter preceding paragraph (1), 

6 by striking ‘‘The Office’’ and inserting ‘‘The 

7 Associate Administrator’’; and 

8 (B) in paragraph (3), by striking ‘‘the di9 rector of the Office’’ and inserting ‘‘the Asso10 ciate Administrator’’; 

11 (2) in subsection (c) in the matter preceding 

12 paragraph (1), by striking ‘‘The Office’’ and insert13 ing ‘‘The Associate Administrator’’; 

14 (3) in subsection (d), by striking ‘‘Office’’ both 

15 places it appears and inserting ‘‘Associate Adminis16 trator’’; 

17 (4) in subsection (e), in the matter preceding 

18 paragraph (1), by striking ‘‘The Office’’ and insert19 ing ‘‘The Associate Administrator’’; and 

20 (5) in subsections (f) and (g), by striking ‘‘The 

21 Office’’ and inserting ‘‘The Associate Adminis22 trator’’. 

23 (f) TECHNICAL AMENDMENT.—Section 22 of the 

24 Small Business Act (15 U.S.C. 649), as amended by sub25 sections (a), (c), and (e), is further amended by striking 


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1 the period at the end of subsection (c)(5) and inserting 

2 a semicolon. 

3 (g) EFFECTIVE DATE.—The Administrator shall ap4 point an Associate Administrator for International Trade 

5 pursuant to sections 4 and 22 of the Small Business Act 

6 (15 U.S.C. 648) (as amended by this section) not later 

7 than 90 days after the date of the enactment of this Act. 

8 TITLE IV—MISCELLANEOUS 

9 SEC. 401. SMALL BUSINESS DISASTER LOANS. 

10 (a) INCREASE IN CERTAIN ECONOMIC INJURY DIS11 ASTER LOAN AMOUNTS.—Section 7(b)(2) of the Small 

12 Business Act (15 U.S.C. 636(b)(2)) is amended— 

13 (1) by redesignating subparagraphs (A), (B), 

14 (C), and (D) as clauses (i), (ii), (iii), and (v), respec15 tively; 

16 (2) by striking ‘‘(2) to make sure loans’’ and 

17 inserting the following: ‘‘(2)(A) to make such loans’’; 

18 (3) by striking ‘‘or’’ at the end of each of 

19 clauses (i), (ii), and (iii), as redesignated by para20 graph (1); 

21 (4) by inserting after clause (iii) the following 

22 new clause (iv): 

23 ‘‘(iv) an incident of national significance as 

24 declared by the Secretary of Homeland Security 

25 that is an actual or potential high-impact event 


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1 that requires a coordinated and effective re2 sponse by an appropriate combination of Fed3 eral, State, local, tribal, nongovernmental, or 

4 private-sector entities in order to save lives and 

5 minimize damage and provide the basis for 

6 long-term community recovery and mitigation 

7 activities.’’; 

8 (5) by adding at the end the following new sub9 paragraphs: 

10 ‘‘(B) In the case of an incident of national sig11 nificance described in subparagraph (A)(iv), a loan 

12 or guarantee under this paragraph may be made to 

13 a small business concern or small agricultural coop14 erative located inside or outside the declared disaster 

15 area, if the small business concern or small agricul16 tural cooperative suffered substantial economic in17 jury as a direct result of the incident of national sig18 nificance. 

19 ‘‘(C) The aggregate amount of the following 

20 shall not exceed $10,000,000: 

21 ‘‘(i) Any loan or guarantee made to a 

22 small business concern or small agricultural co23 operative pursuant to a determination of sub24 stantial economic injury as a result of an inciVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00109 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 dent of national significance described in sub2 paragraph (A)(iv). 

3 ‘‘(ii) Any loan or guarantee made to such 

4 small business concern or small agricultural co5 operative under paragraph (1)(D).’’; and 

6 (6) by striking ‘‘: Provided That no loan’’ and 

7 all that follows and inserting the following new sub8 paragraph: 

9 ‘‘(D) No loan or guarantee shall be made to a 

10 small business concern or small agricultural coopera11 tive under this paragraph pursuant to a determina12 tion of substantial economic injury as a result of a 

13 disaster described in subparagraph (A) if the Ad14 ministrator finds such concern or cooperative is able 

15 to obtain credit elsewhere.’’. 

16 (b) TECHNICAL AMENDMENTS.—Section 7(b) of such 

17 Act is further amended— 

18 (1) by striking ‘‘the, Administration’’ and in19 serting ‘‘the Administration’’; and 

20 (2) in paragraph (2)(A)(i), as redesignated by 

21 subsection (a), by striking ‘‘Disaster Relief and 

22 Emergency Assistance Act’’ and inserting ‘‘Robert 

23 T. Stafford Disaster Relief and Emergency Assist24 ance Act (42 U.S.C. 5121 et seq.)’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 subsections (a) and (b) shall apply with respect to a loan 

3 or guarantee made on or after the date of the enactment 

4 of this Act. 

5 SEC. 402. DISASTER LOANS FOR INCIDENTS OF NATIONAL 

6 SIGNIFICANCE. 

7 (a) DISASTER LOANS FOR PRIVATE NONPROFIT OR8 GANIZATIONS.—The Administrator of the Small Business 

9 Administration may make or guarantee an economic in10 jury disaster loan under section 7(b)(2) of the Small Busi11 ness Act (15 U.S.C. 636(b)(2)) to a private nonprofit or12 ganization (as that term is defined in section 29(a)(2) of 

13 such Act (15 U.S.C. 656(a)(2))) that is located in an area 

14 affected by an incident of national significance (as de15 clared by the Secretary of Homeland Security). 

16 (b) DISASTER MITIGATION LOANS FOR SMALL BUSI17 NESSES.— 

18 (1) AUTHORITY.—The Administrator of the 

19 Small Business Administration may make or guar20 antee a mitigation loan to a small business concern 

21 (as defined in section 3 of the Small Business Act 

22 (15 U.S.C. 632)) that receives a loan under section 

23 7(b)(1)(A) of that Act (15 U.S.C. 636(b)(1)(A)) for 

24 the damage or destruction, by reason of an incident 

25 of national significance (as declared by the Secretary 


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1 of Homeland Security), of property owned by the 

2 small business concern. 

3 (2) AMOUNT OF LOAN.—The amount of a loan 

4 under paragraph (1) shall not exceed 20 percent of 

5 the total amount of the cost of the damage or de6 struction referred to in paragraph (1). The total 

7 amount shall be calculated without regard for any 

8 costs for which the small business concern is reim9 bursed under any insurance policy or otherwise. 

10 (c) APPLICABILITY FOR FISCAL YEAR 2006 TO HUR11 RICANES KATRINA AND RITA.— 

12 (1) IN GENERAL.—For fiscal year 2006, the 

13 Administrator— 

14 (A) may carry out subsection (a) with re15 spect to a private nonprofit organization that 

16 was located, as of August 28, 2005, in a hurri17 cane-affected area; and 

18 (B) may carry out subsection (b) with re19 spect to a small business concern that was lo20 cated, as of August 28, 2005, in a hurricane21 affected area, for damage or destruction by rea22 son of Hurricane Katrina or Hurricane Rita. 

23 (2) HURRICANE-AFFECTED AREA DEFINED.— 

24 The term ‘‘hurricane-affected area’’ means a county 

25 or parish in the State of Alabama, Mississippi, LouVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00112 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 isiana, or Texas, that has been designated by the 

2 Administrator of the Small Business Administration 

3 as a disaster area by reason of Hurricane Katrina 

4 or Hurricane Rita under disaster declaration 10176, 

5 10177, 10178, 10179, 10180, 10181, 10203, 10204, 

6 10205, or 10206. 

7 SEC. 403. SMALL BUSINESS DEVELOPMENT CENTER PORT8 ABILITY GRANTS. 

9 Section 21 of the Small Business Act (15 U.S.C.648) 

10 is amended in subsection (a)(4)(C)(viii)— 

11 (1) by striking ‘‘as a result of a business or 

12 government facility down sizing or closing, which has 

13 resulted in the loss of jobs or small business insta14 bility’’ and inserting ‘‘as a result of events that have 

15 resulted, or will result, in business or government fa16 cility downsizing or closing’’; and 

17 (2) by adding at the end the following: ‘‘At the 

18 discretion of the Administrator, awards in excess of 

19 the $100,000 limit imposed by the preceding sen20 tence may be made to recipients to accommodate ex21 traordinary occurrences having catastrophic impact 

22 on the communities’ small businesses.’’. 

23 SEC. 404. ASSISTANCE TO OUT-OF-STATE BUSINESSES. 

24 Section 21 of the Small Business Act (15 U.S.C. 

25 648(b)(3)) is amended in subsection (b)(3) by adding at 


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1 the end the following: ‘‘The Administrator may also, in 

2 the Administrator’s discretion, authorize a small business 

3 development center to provide such assistance to small 

4 businesses located outside the State without regard to geo5 graphic proximity where the small businesses are located 

6 in a disaster area declared under section 7(b)(2)(A).’’ 

7 SEC. 405. ELIMINATION OF UNNECESSARY PROGRAMS. 

8 The following provisions of the Small Business Act 

9 are repealed: 

10 (1) Subsection (h) and (i) of section 7 (15 

11 U.S.C. 636). 

12 (2) Section 24 (15 U.S.C. 651). 

13 (3) Section 25 (15 U.S.C. 652). 

14 SEC. 406. TECHNICAL CORRECTION. 

15 Section 3 of the Small Business Act (15 U.S.C. 632) 

16 is amended in subsection (p)(4)(D)(iv) by striking ‘‘base 

17 closures of redevelopment’’ and inserting ‘‘base closures 

18 or redevelopment’’. 

19 SEC. 407. COMBATING WASTE, FRAUD, AND ABUSE. 

20 (a) IN GENERAL.—Section 16 of the Small Business 

21 Act (15 U.S.C. 645) is amended— 

22 (1) in subsection (a)— 

23 (A) by inserting after ‘‘false’’ the following: 

24 ‘‘or knowingly causes another to make a false 

25 statement’’; 


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1 (B) by inserting after ‘‘this Act’’ the fol2 lowing: ‘‘or the Small Business Investment Act 

3 of 1958’’; and 

4 (C) by striking ‘‘$5,000’’ and inserting 

5 ‘‘$250,000’’; 

6 (2) in subsection (b)— 

7 (A) by inserting after ‘‘being’’ the fol8 lowing: ‘‘an officer, agent, or employee of the 

9 Administration or’’; and 

10 (B) by striking ‘‘$10,000’’ and inserting 

11 ‘‘$250,000’’; 

12 (3) in subsection (c), by striking ‘‘the Adminis13 tration,’’ and all that follows through the period at 

14 the end and inserting ‘‘the Administration, or any 

15 property mortgaged or pledged as security for any 

16 promissory note, or other evidence of indebtedness, 

17 which has been given in order to obtain a loan under 

18 this Act or the Small Business Investment Act of 

19 1958, shall be fined not more than $250,000 or im20 prisoned not more than five years, or both; but if the 

21 value of such property does not exceed $5,000, he 

22 shall be fined not more than $10,000 or imprisoned 

23 not more than one year, or both.’’; and 

24 (4) in subsection (d)(2)(C), by inserting after 

25 ‘‘(or any successor regulation)’’ the following: ‘‘, or 


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1 as specified in part 145 of title 13, Code of Federal 

2 Regulations (or any successor regulation),’’. 

3 (b) AUTHORITY OF ADMINISTRATION TO REQUIRE

4 IDENTIFICATION OF REFERRAL AGENTS AND PACK5 AGERS.—Section 5 of the Small Business Act (15 U.S.C. 

6 634) is amended in subsection (b)— 

7 (1) in paragraph (13) by striking ‘‘and’’ at the 

8 end; 

9 (2) in paragraph (14) by striking the period at 

10 the end and inserting ‘‘; and’’; and 

11 (3) by adding after paragraph (14) the fol12 lowing: 

13 ‘‘(15) require an individual who is a referral 

14 agent or packager (as those terms are defined by the 

15 Administrator) who provides assistance to a small 

16 business concern that applies for a loan under sec17 tion 7 of this Act, or a loan made under the author18 ity of title V of the Small Business Investment Act 

19 of 1958, to provide to the Administrator the individ20 ual’s name, date of birth, and Social Security num21 ber.’’. 

22 SEC. 408. RELIEF AVAILABLE AGAINST ADMINISTRATOR. 

23 Section 5 of the Small Business Act (15 U.S.C. 634) 

24 is amended in subsection (b)(1) by striking ‘‘but no atVerDate Aug 31 2005 01:56 May 12, 2006 Jkt 049200 PO 00000 Frm 00116 Fmt 6652 Sfmt 6201 E:\BILLS\H5352.IH H5352

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1 tachment’’ and all that follows through the semicolon at 

2 the end. 

3 SEC. 409. ECONOMIC INJURY DISASTER LOANS TO NON4 PROFITS. 

5 (a) IN GENERAL.—Section 7 of the Small Business 

6 Act (15 U.S.C. 636) is amended in subsection (b)(2)— 

7 (1) in the matter preceding subparagraph (A)— 

8 (A) by inserting after ‘‘small business con9 cern’’ the following: ‘‘, private nonprofit organi10 zation,’’; and 

11 (B) by inserting after ‘‘the concern’’ the 

12 following: ‘‘, organization,’’; and 

13 (2) in subparagraph (D) by inserting after 

14 ‘‘small business concerns’’ the following: ‘‘, private 

15 nonprofit organizations,’’. 

16 (b) CONFORMING AMENDMENT.—Such section is fur17 ther amended in subsection (c)(5)(C) by inserting after 

18 ‘‘business’’ the following: ‘‘, organization,’’. 

19 SEC. 410. EXTENSION OF CO-SPONSORSHIP AUTHORITY. 

20 Section 132 of the Small Business Reauthorization 

21 and Manufacturing Assistance Act of 2004 (division K of 

22 Public Law 108–447; 118 Stat. 3453; 15 U.S.C. 633 

23 note) is amended in subsection (c) by striking ‘‘2006’’ and 

24 inserting ‘‘2010’’. 


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1 SEC. 411. REGULATIONS ON SIZE STANDARDS OF 

2 FRANCHISEES. 

3 (a) PROMULGATION.—Not later than 180 days after 

4 the date of the enactment of this Act, the Administrator 

5 of the Small Business Administration shall repeal section 

6 121.103(i) of title 13, Code of Federal Regulations (as 

7 in effect on the date of the enactment of this Act), and 

8 promulgate a new regulation, after opportunity for notice 

9 and comment, taking into account whether the franchisee 

10 or licensee— 

11 (1) retains the majority of its profits but not 

12 less than 51 percent; 

13 (2) bears the burdens of its losses; 

14 (3) shares no common ownership or manage15 ment personnel with the franchisor or licensor; 

16 (4) maintains daily control of its operations in17 cluding determining who its customers will be; and 

18 (5) is subject to excessive restrictions on the 

19 sale of its business given the interest of the 

20 franchisor or licensor in protecting the goodwill of 

21 its trademarks, tradenames, or service marks. 

22 (b) FAILURE TO PROMULGATE NEW STANDARD.—If 

23 the Administrator fails to comply with subsection (a), any 

24 franchisee or licensee shall be treated as small for pur25 poses of the Small Business Act until the Administrator 


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1 has issued a final regulation as required under subsection 

2 (a). 

3 SEC. 412. DISTRICT DIRECTORS PROHIBITED FROM BEING 

4 INVOLVED IN SELECTION OF SBDC DIREC5 TORS. 

6 Section 21(c)(2) of the Small Business Act (15 

7 U.S.C. 648(c)(2)) is amended by amending subparagraph 

8 (A) to read as follows: 

9 ‘‘(A) a full-time staff, including a full-time 

10 director who— 

11 ‘‘(i) shall have the authority to make 

12 expenditures under the center’s budget and 

13 shall manage the program activities; and 

14 ‘‘(ii) shall be selected only by the re15 cipient of the grant funds allocated pursu16 ant to subsection (a) of this section and 

17 approved by the Associate Administrator of 

18 the Office of Small Business Development 

19 Centers, through a process under which 

20 employees in district and regional offices of 

21 the Administration, including District Di22 rectors and Regional Administrators, may 

23 provide advice to the Associate Adminis24 trator but shall have no authority to select, 


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1 approve, or disapprove of any person as 

2 full-time director;’’. 

Æ 


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