I 

114TH CONGRESS 

2D SESSION H. R. 5113 

To encourage initiatives for financial products and services that are appropriate and accessible for millions of American small businesses that 

do not have access to the financial mainstream. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 28, 2016 

Mrs. CAROLYN B. MALONEY of New York (for herself, Ms. VELA ́ZQUEZ, Ms. 

HAHN, Mr. VARGAS, Mr. RANGEL, Ms. MOORE, Mr. JOHNSON of Georgia, Ms. CLARKE of New York, Mr. HINOJOSA, Ms. NORTON, Mr. 

HONDA, and Mr. RICHMOND) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To encourage initiatives for financial products and services 

that are appropriate and accessible for millions of American small businesses that do not have access to the 

financial mainstream. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Investing in America’s 

5 Small Businesses Act of 2016’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 


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1 (1) Small businesses in underserved areas have 

2 for generations been unable to access affordable 

3 credit. 

4 (2) A 2013 report commissioned by the U.S. 

5 Small Business Administration shows the major con6 straint limiting the growth, expansion, and wealth 

7 creation of small firms—especially women- and mi8 nority-owned businesses—is inadequate capital. 

9 (3) Small businesses revitalize communities by 

10 creating jobs, and also contribute to the local tax 

11 base, which helps finance investments in schools, 

12 hospitals, infrastructure, and public safety. 

13 (4) A 2015 report from the Carsey School of 

14 Public Policy at the University of New Hampshire 

15 found that 79 percent of CDFI loan volume went to 

16 borrowers from underserved populations. 

17 (5) During the financial crisis, CDFI loan 

18 funds expanded their activity to meet increased de19 mand from borrowers that could not access tradi20 tional lending. From 2006 to 2009, the median fund 

21 deployment ratio grew 3.1 percent annually. 

22 (6) After Superstorm Sandy, CDFIs launched 

23 disaster recovery loan programs and reached out to 

24 affected businesses and organizations to provide 


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1 credit to help grocery stores and social service orga2 nizations re-open to help communities in need. 

3 (7) A 2014 report by the Dardin School of 

4 Business at the University of Virginia found that de5 spite serving predominately low-income markets, 

6 CDFI banks and credit unions had virtually the 

7 same level of performance as mainstream financial 

8 institutions. 

9 SEC. 3. GRANTS TO ESTABLISH LOAN-LOSS RESERVE 

10 FUNDS FOR SMALL BUSINESS LENDING. 

11 (a) IN GENERAL.—The Community Development 

12 Banking and Financial Institutions Act of 1994 (12 

13 U.S.C. 4701 et seq.) is amended by adding at the end 

14 the following: 

15 ‘‘SEC. 123. GRANTS TO ESTABLISH LOAN-LOSS RESERVE 

16 FUNDS FOR SMALL BUSINESS LENDING. 

17 ‘‘(a) PURPOSES.—The purposes of this section are— 

18 ‘‘(1) to make financial assistance available from 

19 the Fund in order to help community development 

20 financial institutions defray the costs of operating 

21 small business loan programs, by providing the 

22 amounts necessary for such institutions to establish 

23 their own loan loss reserve funds to mitigate some 

24 of the losses on such small business loan programs; 


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1 ‘‘(2) to encourage community development fi2 nancial institutions to establish and maintain small 

3 business loan programs that would help provide bor4 rowers access to mainstream financial institutions 

5 and combat high cost small business lending; and 

6 ‘‘(3) to encourage community development fi7 nancial institutions to expand the development serv8 ices they offer and to serve new investment areas 

9 and new targeted populations. 

10 ‘‘(b) GRANTS.— 

11 ‘‘(1) LOAN-LOSS RESERVE FUND GRANTS.— 

12 ‘‘(A) IN GENERAL.—The Fund shall make 

13 grants to community development financial in14 stitutions to enable such institutions to estab15 lish a loan-loss reserve fund in order to defray 

16 the costs of a small business loan program es17 tablished or maintained by such institution. 

18 ‘‘(B) APPLICATION.—A community devel19 opment financial institution that wishes to re20 ceive a grant under this paragraph shall submit 

21 an application to the Administrator in such 

22 form and manner and containing such informa23 tion as the Administrator may require. 

24 ‘‘(C) MATCHING REQUIREMENT.—A com25 munity development financial institution shall 


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1 provide non-Federal matching funds in an 

2 amount equal to 50 percent of the amount of 

3 any grant received under this paragraph. 

4 ‘‘(D) USE OF FUNDS.—Any grant amounts 

5 received by a community development financial 

6 institution under this paragraph— 

7 ‘‘(i) may not be used by such institu8 tion to provide direct loans to small busi9 nesses; 

10 ‘‘(ii) may be used by such institution 

11 to help recapture a portion or all of a de12 faulted loan made under the small business 

13 loan program of such institution on or 

14 after the date of the enactment of this sec15 tion; and 

16 ‘‘(iii) may be used to designate and 

17 utilize a fiscal agent for services normally 

18 provided by such an agent. 

19 ‘‘(2) TECHNICAL ASSISTANCE GRANTS.— 

20 ‘‘(A) IN GENERAL.—The Fund shall make 

21 technical assistance grants to community devel22 opment financial institutions to create, support, 

23 or maintain a small business loan program. Any 

24 grant amounts received under this paragraph 

25 may be used for— 


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1 ‘‘(i) technology, staff support, staff 

2 capacity building, and other costs associ3 ated with establishing, supporting, or 

4 maintaining a small business loan pro5 gram; and 

6 ‘‘(ii) establishing, supporting, or 

7 maintaining technical assistance programs 

8 for borrowers. 

9 ‘‘(B) APPLICATION.—A community devel10 opment financial institution that wishes to re11 ceive a grant under this paragraph shall submit 

12 an application to the Administrator in such 

13 form and manner and containing such informa14 tion as the Administrator may require. 

15 ‘‘(c) REPORTS.—For each fiscal year for which 

16 grants are made under this section, the Administrator 

17 shall submit a report to the Committee on Financial Serv18 ices of the House of Representatives and the Committee 

19 on Banking, Housing, and Urban Affairs of the Senate 

20 containing a description of the activities funded and 

21 amounts distributed under this section for such fiscal year, 

22 as well as measurable results of such actions. 

23 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.— 


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1 ‘‘(1) IN GENERAL.—There are authorized to be 

2 appropriated to the Fund $25,000,000 for each of 

3 fiscal years 2017 to 2022 to carry out this section. 

4 ‘‘(2) ADMINISTRATIVE COSTS.—There are au5 thorized to be appropriated to the Fund $2,000,000 

6 for each of fiscal years 2017 to 2022 for the admin7 istrative costs of carrying out this section. 

8 ‘‘(e) DEFINITIONS.—For purposes of this section: 

9 ‘‘(1) SMALL BUSINESS.—The term ‘small busi10 ness’ has the meaning given the term ‘small business 

11 concern’ under section 3(a) of the Small Business 

12 Act (15 U.S.C. 632(a)). 

13 ‘‘(2) SMALL BUSINESS LOAN PROGRAM.—The 

14 term ‘small business loan program’ means a loan 

15 program wherein a community development financial 

16 institution offers loans to small businesses that— 

17 ‘‘(A) are made in amounts not exceeding 

18 $50,000; 

19 ‘‘(B) have no pre-payment penalty; and 

20 ‘‘(C) meet any other affordability require21 ments as may be established by the Adminis22 trator.’’. 

23 (b) CONFORMING AMENDMENT.—The table of con24 tents for the Riegle Community Development and ReguVerDate Sep 11 2014 00:58 May 05, 2016 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5113.IH H5113

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1 latory Improvement Act of 1994 is amended by inserting 

2 after the item relating to section 121 the following: 

‘‘Sec. 122. Grants to establish loan-loss reserve funds. 

‘‘Sec. 123. Grants to establish loan-loss reserve funds for small business lending.’’. 

Æ 


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