II 

110TH CONGRESS 

2D SESSION S. 3596 

To stabilize the small business lending market, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 25 (legislative day, SEPTEMBER 17), 2008 

Mr. KERRY introduced the following bill; which was read twice and referred 

to the Committee on Small Business and Entrepreneurship 

A BILL 

To stabilize the small business lending market, 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 ‘‘Small Business Lend5 ing Market Stabilization Act of 2008’’. 

6 SEC. 2. SMALL BUSINESS LENDING MARKET STABILIZA7 TION. 

8 (a) FEES.—To the extent the cost of such reduction 

9 in fees is offset by appropriations— 

10 (1) with respect to each loan guaranteed under 

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


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1 636(a)) for which the application is approved on or 

2 after the date of enactment of this Act, the Adminis3 trator shall, in lieu of the fees otherwise applicable 

4 under paragraphs (23)(A) and (18)(A) of section 

5 7(a) of the Small Business Act (15 U.S.C. 636(a)), 

6 collect no fee; 

7 (2) the Administrator shall, in lieu of the fees 

8 otherwise applicable under section 5(b)(14) of the 

9 Small Business Act (15 U.S.C. 634(b)(14)), collect 

10 no fee; 

11 (3) the Administrator shall, in lieu of the fee 

12 otherwise applicable under section 503(d)(2) of the 

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

14 697(d)(2)) for an institution described in subclause 

15 (I), (II), or (III) of section 502(3)(B)(i) of that Act 

16 (15 U.S.C. 696(3)(B)(i)), for any loan guarantee or 

17 project subject to such subsection for which the ap18 plication is pending approval on or after the date of 

19 enactment of this Act, collect no fee; 

20 (4) a development company shall, in lieu of the 

21 mandatory 0.625 servicing fee under section 

22 120.971(a)(3) of title 13, Code of Federal Regula23 tions, (relating to fees paid by borrowers), collect no 

24 fee; and 


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1 (5) the Administrator shall, in lieu of the fee 

2 otherwise applicable under section 503(d)(3) of the 

3 Small Business Investment Act (15 U.S.C. 

4 697(d)(3)), collect no fee. 

5 (b) REIMBURSEMENT FOR WAIVED FEES.— 

6 (1) IN GENERAL.—To the extent the cost of 

7 such payments is offset by appropriations, the Ad8 ministrator shall reimburse each development com9 pany that does not collect a servicing fee pursuant 

10 to subsection (a)(4). 

11 (2) AMOUNT.—The payment to a development 

12 company under paragraph (1) shall be in an amount 

13 equal to 0.5 percent of the outstanding principal bal14 ance of any guaranteed debenture for which the de15 velopment company does not collect a servicing fee 

16 pursuant to subsection (a)(4). 

17 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

18 are authorized to be appropriated to the Administrator for 

19 fiscal year 2009— 

20 (1) $600,000,000 for loan subsidies and for 

21 loan modifications for loans to small business con22 cerns authorized under subsection (a)(1); 

23 (2) $15,000,000 for lender oversight under sec24 tion 5(b)(14) of the Small Business Act (15 U.S.C. 

25 634(b)(14)); 


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1 (3) $50,000,000 for the elimination of fees 

2 under subsection (a)(3); 

3 (4) $40,000,000 for payments under subsection 

4 (b) to offset the elimination of fees under subsection 

5 (a)(4); and 

6 (5) $10,000,000 for the elimination of fees 

7 under subsection (a)(5). 

8 (d) APPLICATION OF FEE CHANGES.—If funds are 

9 made available to carry out subsections (a) and (b), the 

10 Administrator shall eliminate the fees under subsection (a) 

11 for any loan guarantee or project subject to such sub12 section for which the application is approved on or after 

13 the date of enactment of this Act and make payments 

14 under subsection (b) until the amount provided for such 

15 purpose is expended. 

16 (e) MAXIMUM LOAN AMOUNT.—Section 7(a)(3)(A) of 

17 the Small Business Act (15 U.S.C. 636(a)(3)(A)) is 

18 amended by striking ‘‘$1,500,000 (or if the gross loan 

19 amount would exceed $2,000,000)’’ and inserting 

20 ‘‘$2,250,000 (or if the gross loan amount would exceed 

21 $3,000,000)’’. 

22 (f) MAIN STREET INCENTIVES.— 

23 (1) IN GENERAL.—Section 502 of the Small 

24 Business Investment Act of 1958 (15 U.S.C. 696) is 

25 amended— 


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1 (A) by striking paragraphs (4) and (5) and 

2 inserting the following: 

3 ‘‘(4) LIMITATION ON LEASING.—If the use of a 

4 loan under this section includes the acquisition of a 

5 facility or the construction of a new facility, the 

6 small business concern assisted— 

7 ‘‘(A) shall permanently occupy and use not 

8 less than a total of 50 percent of the space in 

9 the facility; and 

10 ‘‘(B) may, on a temporary or permanent 

11 basis, lease to others not more than 50 percent 

12 of the space in the facility.’’; and 

13 (B) by redesignating paragraph (6) as 

14 paragraph (5). 

15 (2) POLICY FOR 7(a) LOANS.—Section 7(a)(28) 

16 of the Small Business Act (15 U.S.C. 636(a)(28)) is 

17 amended to read as follows: 

18 ‘‘(28) LIMITATION ON LEASING.—If the use of 

19 a loan under this subsection includes the acquisition 

20 of a facility or the construction of a new facility, the 

21 small business concern assisted— 

22 ‘‘(A) shall permanently occupy and use not 

23 less than a total of 50 percent of the space in 

24 the facility; and 


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1 ‘‘(B) may, on a temporary or permanent 

2 basis, lease to others not more than 50 percent 

3 of the space in the facility.’’. 

4 (g) LOW-INTEREST REFINANCING.—Section 502 of 

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

6 696), as amended by subsection (e)(1) of this section, is 

7 amended by adding at the end the following: 

8 ‘‘(6) PERMISSIBLE DEBT REFINANCING.—A fi9 nancing under this title may include refinancing of 

10 existing indebtedness, in an amount not to exceed 50 

11 percent of the projected cost of the project financed 

12 under this title, if— 

13 ‘‘(A) the project financed under this title 

14 involves the expansion of a small business con15 cern; 

16 ‘‘(B) the existing indebtedness is 

17 collateralized by fixed assets; 

18 ‘‘(C) the existing indebtedness was in19 curred for the benefit of the small business con20 cern; 

21 ‘‘(D) the proceeds of the existing indebted22 ness were used to acquire land (including a 

23 building situated thereon), to construct or ex24 pand a building thereon, or to purchase equip25 ment; 


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1 ‘‘(E) the borrower has been current on all 

2 payments due on the existing indebtedness for 

3 not less than 1 year preceding the proposed 

4 date of refinancing; 

5 ‘‘(F) the financing under this title will pro6 vide better terms or a better rate of interest 

7 than exists on the existing indebtedness on the 

8 proposed date of refinancing; 

9 ‘‘(G) the financing under this title is not 

10 being used to refinance any debt guaranteed by 

11 the Government; and 

12 ‘‘(H) the financing under this title will be 

13 used only for— 

14 ‘‘(i) refinancing existing indebtedness; 

15 or 

16 ‘‘(ii) costs relating to the project fi17 nanced under this title.’’. 

18 (h) UPDATED JOB CREATION REQUIREMENTS.—Sec19 tion 501(e) of the Small Business Investment Act of 1958 

20 (15 U.S.C. 695(e)) is amended— 

21 (1) in paragraph (1), by striking ‘‘$50,000’’ 

22 and inserting ‘‘$65,000’’; and 

23 (2) in paragraph (2), by striking ‘‘$50,000’’ 

24 and inserting ‘‘$65,000’’. 


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1 (i) SIZE STANDARD SIMPLIFICATION.—Section 3(a) 

2 of the Small Business Act (15 U.S.C. 632(a)) is amended 

3 by adding at the end the following: 

4 ‘‘(5) OPTIONAL SIZE STANDARD.— 

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

6 shall establish an optional size standard for 

7 business loan applicants under section 7(a) and 

8 development company loan applicants under 

9 title V of the Small Business Investment Act of 

10 1958, which uses maximum tangible net worth 

11 and average net income as an alternative to the 

12 use of industry standards. 

13 ‘‘(B) INTERIM RULE.—Until the date on 

14 which the optional size standard established 

15 under subparagraph (A) is in effect, the alter16 native size standard in section 121.301(b) of 

17 title 13, Code of Federal Regulations (or any 

18 successor thereto) may be used by business loan 

19 applicants under section 7(a) and development 

20 company loan applicants under title V of the 

21 Small Business Investment Act of 1958.’’. 

22 (j) MAXIMUM LOAN SIZE.—Section 502(2)(A) of the 

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

24 696(2)(A)) is amended— 


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1 (1) in clause (i), by striking ‘‘$1,500,000’’ and 

2 inserting ‘‘$3,000,000’’; and 

3 (2) in clause (ii), by striking ‘‘$2,000,000’’ and 

4 inserting ‘‘$3,500,000’’. 

5 (k) LOAN POOLING.—Section 5(g)(1) of the Small 

6 Business Act (15 U.S.C. 634(g)(1)) is amended— 

7 (1) by inserting ‘‘(A)’’ before ‘‘The Administra8 tion’’; 

9 (2) by striking the colon and all that follows 

10 and inserting a period; and 

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

12 ‘‘(B) A trust certificate issued under subparagraph 

13 (A) shall be based on, and backed by, a trust or pool ap14 proved by the Administrator and composed solely of the 

15 guaranteed portion of such loans. 

16 ‘‘(C) The interest rate on a trust certificate issued 

17 under subparagraph (A) shall be either— 

18 ‘‘(i) the lowest interest rate on any individual 

19 loan in the pool; or 

20 ‘‘(ii) the weighted average interest rate of all 

21 loans in the pool, subject to such limited variations 

22 in loan characteristics as the Administrator deter23 mines appropriate to enhance marketability of the 

24 pool certificates.’’. 

25 (l) ALTERNATIVE VARIABLE INTEREST RATE.— 


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1 (1) IN GENERAL.—Section 7(a)(4)(A) of the 

2 Small Business Act (15 U.S.C. 636(a)(4)(A)) is 

3 amended by striking ‘‘prescribed by the Administra4 tion,’’ and inserting: ‘‘prescribed by the Administra5 tion, including, on variable rate loans, a nationally 

6 recognized prime rate of interest and at least 1 

7 other index as an alternative thereto at the option 

8 of the participating lender,’’. 

9 (2) APPLICABILITY.—Not later than 180 days 

10 after the date of enactment of this Act, the Adminis11 trator shall select not less than 1 alternative index 

12 under section 7(a)(4)(A) of the Small Business Act, 

13 as amended by paragraph (1) of this subsection, and 

14 make such index available for use by participating 

15 lenders. 

16 (m) DEFINITIONS.—In this section— 

17 (1) the terms ‘‘Administration’’ and ‘‘Adminis18 trator’’ mean the Small Business Administration 

19 and the Administrator thereof, respectively; 

20 (2) the term ‘‘development company’’ has the 

21 meaning given the term ‘‘development companies’’ in 

22 section 103 of the Small Business Investment Act of 

23 1958 (15 U.S.C. 662); and 


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1 (3) the term ‘‘small business concern’’ has the 

2 same meaning as in section 3 of the Small Business 

3 Act (15 U.S.C. 632). 

Æ 


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