I 

111TH CONGRESS 

2D SESSION H. R. 6055 

To support and strengthen small businesses manufacturing in America, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2010 

Mr. MURPHY of Connecticut (for himself and Mr. RYAN of Ohio) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL 

To support and strengthen small businesses manufacturing 

in America, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Accounts Receivable 

5 Insurance Program Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Small manufacturers are hurt much more 

9 than their larger competitors when delays in pay10 ments of accounts receivable occur. These small 


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1 firms hold millions of dollars in outstanding receiv2 ables. Especially in an economic slowdown, many 

3 larger firms delay payments to their downstream 

4 suppliers causing disruptions in the domestic indus5 trial supply chain, creating a greater need to insure 

6 payment on terms. 

7 (2) As the number and size of accounts receiv8 ables outstanding increases, these businesses have 

9 fewer resources to buy raw materials, hire workers, 

10 and access adequate lines of credit. Small manufac11 turers and their creditors need additional assurance 

12 that customers will pay their accounts on reasonable 

13 terms. 

14 (3) Failure of payment to downstream suppliers 

15 in a reasonable amount of time has had a significant 

16 negative impact on the cash flow of small suppliers. 

17 The moment a lender sees that a supplier is involved 

18 in a financially troubled industry such as the auto 

19 industry, they move the supplier into a high risk cat20 egory or will not extend credit. Government guaran21 teed account receivables insurance would allow the 

22 middle-market companies access to credit lines they 

23 need to continue day-to-day operations. 


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1 SEC. 3. DEFINITIONS. 

2 For the purpose of this Act the following definitions 

3 apply: 

4 (1) FINANCIAL INSTITUTION.—The term ‘‘fi5 nancial institution’’ means an establishment engaged 

6 in financial transactions (transactions involving the 

7 creation, liquidation, or change in ownership of fi8 nancial assets) and/or in facilitating financial trans9 actions. 

10 (2) INSURANCE INSTITUTION.—The term ‘‘in11 surance institution’’ means an establishment that is 

12 primarily engaged in one of the following: 

13 (A) Underwriting (assuming the risk, as14 signing premiums, and so forth) annuities and 

15 insurance policies. 

16 (B) Facilitating such underwriting by sell17 ing insurance policies, and by providing other 

18 insurance and employee-benefit related services. 

19 (3) GUARANTEE.—The term ‘‘guarantee’’ has 

20 the same meaning as is given the term ‘‘loan guar21 antee’’ in section 502(3) of the Federal Credit Re22 form Act of 1990 (2 U.S.C. 661a(3)). 

23 (4) SECRETARY.—The term ‘‘Secretary’’ means 

24 the Secretary of the Treasury. 


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1 SEC. 4. ACCOUNTS RECEIVABLE INSURANCE. 

2 (a) ESTABLISHMENT OF PROGRAM.—There is estab3 lished within the Department of the Treasury a govern4 ment-backed private accounts receivable insurance pro5 gram to assist small manufacturers in the underwriting 

6 and guarantee of payment on terms through the insurance 

7 of their accounts receivable. 

8 (b) TERMS AND CONDITIONS.— 

9 (1) GUARANTEE.—The Secretary shall, to the 

10 extent amounts are made available under subsection 

11 (c), insure accounts receivable underwritten by fi12 nancial or insurance institutions for small manufac13 turing businesses. 

14 (2) APPLICATION.— 

15 (A) A small manufacturing business shall 

16 submit an application to a financial or insur17 ance institution for participation in the pro18 gram established under this section at such 

19 time, in such manner, and accompanied by such 

20 information as the Secretary may require. 

21 (B) A financial or insurance institution 

22 shall not deny an application solely based on a 

23 small manufacturing business’s lack of short 

24 term positive cash flow or solely on the nature 

25 of their customers’ industry classification. 


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1 (3) DEFAULT.—If a small manufacturing busi2 ness defaults on any portion of an obligation guar3 anteed under paragraph (1)— 

4 (A) the financial or insurance institution 

5 shall have the right to demand payment of the 

6 unpaid amount from the Secretary in exchange 

7 for payment of a fee equal to .5 percent of such 

8 amount; and 

9 (B) within such period as the Secretary 

10 shall specify, the Secretary shall pay to the fi11 nancial or insurance institution the remaining 

12 balance of the obligation, unless the Secretary 

13 determines that such small business or institu14 tion has not taken reasonable steps to seek col15 lection of such obligation in a reasonably timely 

16 manner, which steps shall include— 

17 (i) exhausting all efforts to enforce all 

18 terms and penalties set forth in the under19 lying contract; 

20 (ii) making successive efforts by reg21 istered mail or other similar method on a 

22 regular schedule; and 

23 (iii) pursuing legal action. 

24 (4) LIMITATION.—A financial or insurance in25 stitution shall not be eligible for a guarantee under 


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1 paragraph (1) if such institution insured the ac2 counts receivable of a small manufacturing business 

3 for less than 80 percent of the value of such ac4 counts receivable insured. 

5 (c) FUNDING.—Funding as may be necessary, not to 

6 exceed $500,000,000, for the cost of guarantees under this 

7 section shall be available to the Secretary, without further 

8 appropriation or fiscal year limitation, for the costs of 

9 such program. All funds received by the Secretary in con10 nection with purchases made pursuant to paragraph (1), 

11 including interest payments, dividend payments, and pro12 ceeds from the sale of any financial instrument, shall be 

13 paid into the general fund of the Treasury for reduction 

14 of the public debt. 

15 (d) SUNSET.—The Secretary may not enter into any 

16 contracts or agreements with financial institutions to 

17 make any guarantees under this section after December 

18 31, 2011, or on the date that is 1 year after the date 

19 of the enactment of this Act, whichever is later. 

20 (e) REGULATIONS.—Not later than 90 days after the 

21 date of the enactment of this Act, the Secretary shall issue 

22 regulations to carry out the purposes of this section. 

Æ 


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