IB 

Union Calendar No. 283 

111TH CONGRESS 

2D SESSION H. R. 5297 

[Report No. 111–499] 

To create the Small Business Lending Fund Program to direct the Secretary 

of the Treasury to make capital investments in eligible institutions in 

order to increase the availability of credit for small businesses, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 13, 2010 

Mr. FRANK of Massachusetts (for himself, Ms. WATERS, Mrs. MALONEY, Mr. 

GUTIERREZ, Mr. WATT, Mr. MOORE of Kansas, Mr. HINOJOSA, Mr. 

MEEKS of New York, Mr. MILLER of North Carolina, Mr. SCOTT of 

Georgia, Mr. AL GREEN of Texas, Ms. BEAN, Ms. MOORE of Wisconsin, 

Mr. ELLISON, Mr. KLEIN of Florida, Mr. PERLMUTTER, Mr. PETERS, 

Mr. MAFFEI, and Mrs. DAHLKEMPER) introduced the following bill; 

which was referred to the Committee on Financial Services 

MAY 27, 2010 

Additional sponsors: Ms. NORTON and Ms. CLARKE

MAY 27, 2010 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on May 13, 2010] 


jbell on DSKDVH8Z91PROD with BILLS
2 

•HR 5297 RH

A BILL 

To create the Small Business Lending Fund Program to 

direct the Secretary of the Treasury to make capital 

investments in eligible institutions in order to increase 

the availability of credit for small businesses, and for 

other purposes. 


jbell on DSKDVH8Z91PROD with BILLS
3 

•HR 5297 RH

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

3 TITLE I—SMALL BUSINESS 

4 LENDING FUND 

5 SECTION 1. SHORT TITLE. 

6 This title may be cited as the ‘‘Small Business Lending 

7 Fund Act of 2010’’. 

8 SEC. 2. PURPOSE. 

9 The purpose of this title is to address the ongoing ef10 fects of the financial crisis on small businesses by providing 

11 temporary authority to the Secretary of the Treasury to 

12 make capital investments in eligible institutions in order 

13 to increase the availability of credit for small businesses. 

14 SEC. 3. DEFINITIONS. 

15 For purposes of this title: 

16 (1) APPROPRIATE COMMITTEES OF CONGRESS.— 

17 The term ‘‘appropriate committees of Congress’’ 

18 means— 

19 (A) the Committee on Small Business and 

20 Entrepreneurship, the Committee on Agriculture, 

21 Nutrition, and Forestry, the Committee on 

22 Banking, Housing, and Urban Affairs, the Com23 mittee on Finance, the Committee on the Budget, 

24 and the Committee on Appropriations of the 

25 Senate; and 


jbell on DSKDVH8Z91PROD with BILLS
4 

•HR 5297 RH

1 (B) the Committee on Small Business, the 

2 Committee on Agriculture, the Committee on Fi3 nancial Services, the Committee on Ways and 

4 Means, the Committee on the Budget, and the 

5 Committee on Appropriations of the House of 

6 Representatives. 

7 (2) APPROPRIATE FEDERAL BANKING AGENCY.— 

8 The term ‘‘appropriate Federal banking agency’’ has 

9 the meaning given such term under section 3(q) of the 

10 Federal Deposit Insurance Act (12 U.S.C. 1813(q)). 

11 (3) BANK HOLDING COMPANY.—The term ‘‘bank 

12 holding company’’ has the meaning given such term 

13 under section 2(a)(1) of the Bank Holding Company 

14 Act of 1956 (12 U.S.C. 1841(2)(a)(1)). 

15 (4) CALL REPORT.—The term ‘‘call report’’ 

16 means— 

17 (A) reports of Condition and Income sub18 mitted to the Office of the Comptroller of the 

19 Currency, the Board of Governors of the Federal 

20 Reserve System, and the Federal Deposit Insur21 ance Corporation; 

22 (B) the Office of Thrift Supervision Thrift 

23 Financial Report; and 

24 (C) any report that is designated by the Of25 fice of the Comptroller of the Currency, the 


jbell on DSKDVH8Z91PROD with BILLS
5 

•HR 5297 RH

1 Board of Governors of the Federal Reserve Sys2 tem, the Federal Deposit Insurance Corporation, 

3 or the Office of Thrift Supervision, as applicable, 

4 as a successor to any report referred to in sub5 paragraph (A) or (B). 

6 (5) CDCI.—The term ‘‘CDCI’’ means the Com7 munity Development Capital Initiative created by the 

8 Secretary under the Troubled Asset Relief Program 

9 established by the Emergency Economic Stabilization 

10 Act of 2008. 

11 (6) CDCI INVESTMENT.—The term ‘‘CDCI in12 vestment’’ means, with respect to any eligible institu13 tion, the principal amount of any investment made 

14 by the Secretary in such eligible institution under the 

15 CDCI that has not been repaid. 

16 (7) CPP.—The term ‘‘CPP’’ means the Capital 

17 Purchase Program created by the Secretary under the 

18 Troubled Asset Relief Program established by the 

19 Emergency Economic Stabilization Act of 2008. 

20 (8) CPP INVESTMENT.—The term ‘‘CPP invest21 ment’’ means, with respect to any eligible institution, 

22 the principal amount of any investment made by the 

23 Secretary in such eligible institution under the CPP 

24 that has not been repaid. 


jbell on DSKDVH8Z91PROD with BILLS
6 

•HR 5297 RH

1 (9) ELIGIBLE INSTITUTION.—The term ‘‘eligible 

2 institution’’ means— 

3 (A) any insured depository institution, 

4 which— 

5 (i) is not controlled by a bank holding 

6 company or savings and loan holding com7 pany that is also an eligible institution; 

8 (ii) has total assets of equal to or less 

9 than $10,000,000,000, as reported in the 

10 call report as of the end of the fourth quar11 ter of calendar year 2009; and 

12 (iii) is not directly or indirectly con13 trolled by any company or other entity that 

14 has total consolidated assets of more than 

15 $10,000,000,000, as so reported; 

16 (B) any bank holding company which has 

17 total assets of equal to or less than 

18 $10,000,000,000; and 

19 (C) any savings and loan holding company 

20 which has total assets of equal to or less than 

21 $10,000,000,000. 

22 (10) FUND.—The term ‘‘Fund’’ means the Small 

23 Business Lending Fund established by section 4(a)(1) 

24 of this title. 


jbell on DSKDVH8Z91PROD with BILLS
7 

•HR 5297 RH

1 (11) INSURED DEPOSITORY INSTITUTION.—The 

2 term ‘‘insured depository institution’’ has the mean3 ing given such term under section 3(c)(2) of the Fed4 eral Deposit Insurance Act (12 U.S.C. 1813(c)(2)). 

5 (12) PROGRAM.—The term ‘‘Program’’ means the 

6 Small Business Lending Fund Program authorized 

7 by section 4(a)(2) of this title. 

8 (13) SAVINGS AND LOAN HOLDING COMPANY.— 

9 The term ‘‘savings and loan holding company’’ has 

10 the meaning given such term under section 

11 10(a)(1)(D) of the Home Owners’ Loan Act (12 

12 U.S.C. 1467a(a)(1)(D)). 

13 (14) SECRETARY.—The term ‘‘Secretary’’ means 

14 the Secretary of the Treasury. 

15 (15) SMALL BUSINESS LENDING.— 

16 (A) IN GENERAL.—The term ‘‘small busi17 ness lending’’ means small business lending, as 

18 defined by and reported in an eligible institu19 tion’s quarterly call report, of the following 

20 types: 

21 (i) Commercial and industrial loans 

22 plus. 

23 (ii) Owner-occupied nonfarm, nonresi24 dential real estate loans. 


jbell on DSKDVH8Z91PROD with BILLS
8 

•HR 5297 RH

1 (iii) Loans to finance agricultural pro2 duction and other loans to farmers. 

3 (iv) Loans secured by farmland. 

4 (B) TREATMENT OF HOLDING COMPA5 NIES.—In the case of eligible institutions that 

6 are bank holding companies or savings and loan 

7 holding companies having one or more insured 

8 depository institution subsidiaries, small busi9 ness lending shall be measured based on the com10 bined small business lending reported in the call 

11 report of the insured depository institution sub12 sidiaries. 

13 (16) MINORITY-OWNED AND WOMEN-OWNED

14 BUSINESS.—The terms ‘‘minority-owned business’’ 

15 and ‘‘women-owned business’’ shall have the meaning 

16 given the terms ‘‘minority-owned business’’ and 

17 ‘‘women’s business’’, respectively, under section 

18 21A(r)(4) of the Federal Home Loan Bank Act (12 

19 U.S.C. 1441A(r)(4)). 

20 SEC. 4. SMALL BUSINESS LENDING FUND. 

21 (a) FUND AND PROGRAM.— 

22 (1) FUND ESTABLISHED.—There is established in 

23 the Treasury of the United States a fund to be known 

24 as the ‘‘Small Business Lending Fund’’, which shall 

25 be administered by the Secretary. 


jbell on DSKDVH8Z91PROD with BILLS
9 

•HR 5297 RH

1 (2) PROGRAMS AUTHORIZED.—The Secretary is 

2 authorized to establish the Small Business Lending 

3 Fund Program for using the Fund consistent with 

4 this title. 

5 (b) USE OF FUND.— 

6 (1) IN GENERAL.—Subject to paragraph (2), the 

7 Fund shall be available to the Secretary, without fur8 ther appropriation or fiscal year limitation, for the 

9 costs of purchases (including commitments to pur10 chase), and modifications of such purchases, of pre11 ferred stock and other financial instruments from eli12 gible institutions on such terms and conditions as are 

13 determined by the Secretary in accordance with this 

14 title. 

15 (2) MAXIMUM PURCHASE LIMIT.—The aggregate 

16 amount of purchases (and commitments to purchase) 

17 made pursuant to paragraph (1) may not exceed 

18 $30,000,000,000. 

19 (3) PROCEEDS USED TO PAY DOWN PUBLIC

20 DEBT.—All funds received by the Secretary in connec21 tion with purchases made pursuant to paragraph (1), 

22 including interest payments, dividend payments, and 

23 proceeds from the sale of any financial instrument, 

24 shall be paid into the general fund of the Treasury for 

25 reduction of the public debt. 


jbell on DSKDVH8Z91PROD with BILLS
10 

•HR 5297 RH

1 (c) CREDITS TO THE FUND.—There shall be credited 

2 to the Fund amounts made available pursuant to section 

3 9, to the extent provided by appropriations Acts. 

4 (d) TERMS.— 

5 (1) APPLICATION.— 

6 (A) INSTITUTIONS WITH ASSETS OF

7 $1,000,000,000 OR LESS.—Eligible institutions 

8 having total assets equal to or less than 

9 $1,000,000,000, as reported in a call report as of 

10 the end of the fourth quarter of calendar year 

11 2009, may apply to receive a capital investment 

12 from the Fund in an amount not exceeding 5 

13 percent of risk-weighted assets, as reported in the 

14 call report immediately preceding the date of ap15 plication, less the amount of any CDCI invest16 ment and any CPP investment. 

17 (B) INSTITUTIONS WITH ASSETS OF MORE

18 THAN $1,000,000,000 AND LESS THAN

19 $10,000,000,000.—Eligible institutions having total 

20 assets of more than $1,000,000,000 but less than 

21 $10,000,000,000, as of the end of the fourth quar22 ter of calendar year 2009, may apply to receive 

23 a capital investment from the Fund in an 

24 amount not exceeding 3 percent of risk-weighted 

25 assets, as reported in the call report immediately 


jbell on DSKDVH8Z91PROD with BILLS
11 

•HR 5297 RH

1 preceding the date of application, less the 

2 amount of any CDCI investment and any CPP 

3 investment. 

4 (C) TREATMENT OF HOLDING COMPANIES.— 

5 In the case of an eligible institution that is a 

6 bank holding company or a savings and loan 

7 holding company having one or more insured de8 pository institution subsidiaries, total assets 

9 shall be measured based on the combined total 

10 assets reported in the call report of the insured 

11 depository institution subsidiaries as of the end 

12 of the fourth quarter of calendar year 2009 and 

13 risk-weighted assets shall be measured based on 

14 the combined risk-weighted assets of the insured 

15 depository institution subsidiaries as reported in 

16 the call report immediately preceding the date of 

17 application. 

18 (D) TREATMENT OF APPLICANTS THAT ARE

19 INSTITUTIONS CONTROLLED BY HOLDING COMPA20 NIES.—If an eligible institution that applies to 

21 receive a capital investment under the Program 

22 is under the control of a bank holding company 

23 or a savings and loan holding company, then the 

24 Secretary may use the Fund to purchase pre25 ferred stock or other financial instruments from 


jbell on DSKDVH8Z91PROD with BILLS
12 

•HR 5297 RH

1 the top-tier bank holding company or savings 

2 and loan holding company of such eligible insti3 tution, as applicable. For purposes of this para4 graph, the term ‘‘control’’ with respect to a bank 

5 holding company shall have the same meaning 

6 as in section 2(a)(2) of the Bank Holding Com7 pany Act of 1956 (12 U.S.C. 1841(2)(a)(2)). For 

8 purposes of this paragraph, the term ‘‘control’’ 

9 with respect to a savings and loan holding com10 pany shall have the same meaning as in 10(a)(2) 

11 of the Home Owners’ Loan Act (12 U.S.C. 

12 1467a(a)(2)). 

13 (E) REQUIREMENT TO PROVIDE A SMALL

14 BUSINESS LENDING PLAN.—At the time that an 

15 applicant submits an application to the Sec16 retary for a capital investment under the Pro17 gram, the applicant shall deliver to the appro18 priate Federal banking agency a small business 

19 lending plan describing how the applicant’s busi20 ness strategy and operating goals will allow it to 

21 address the needs of small businesses in the areas 

22 it serves. This plan shall be confidential super23 visory information. 

24 (2) CONSULTATION WITH REGULATORS.—For 

25 each eligible institution that applies to receive a capVerDate Mar 15 2010 02:28 May 28, 2010 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6203 E:\BILLS\H5297.RH H5297

jbell on DSKDVH8Z91PROD with BILLS
13 

•HR 5297 RH

1 ital investment under the Program, the Secretary 

2 shall consult with the appropriate Federal banking 

3 agency for the eligible institution to determine wheth4 er the eligible institution may receive such capital in5 vestment. 

6 (3) INELIGIBILITY OF INSTITUTIONS ON FDIC

7 PROBLEM BANK LIST.— 

8 (A) IN GENERAL.—An eligible institution 

9 may not receive any capital investment under 

10 the Program if— 

11 (i) such institution is on the FDIC 

12 problem bank list; or 

13 (ii) such institution has been removed 

14 from the FDIC problem bank list for less 

15 than 90 days. 

16 (B) FDIC PROBLEM BANK LIST DEFINED.— 

17 For purposes of this subparagraph, the term 

18 ‘‘FDIC problem bank list’’ means the list of in19 stitutions with a current rating of 4 or 5 under 

20 the Uniform Financial Institutions Rating Sys21 tem, or such other list designated by the Federal 

22 Deposit Insurance Corporation. 

23 (4) INCENTIVES TO LEND.— 

24 (A) REQUIREMENTS ON PREFERRED STOCK

25 AND OTHER FINANCIAL INSTRUMENTS.—Any preVerDate Mar 15 2010 02:28 May 28, 2010 Jkt 089200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6203 E:\BILLS\H5297.RH H5297

jbell on DSKDVH8Z91PROD with BILLS
14 

•HR 5297 RH

1 ferred stock or other financial instrument issued 

2 to Treasury by an eligible institution receiving 

3 a capital investment under the Program shall 

4 provide that— 

5 (i) the rate at which dividends or in6 terest are payable shall be 5 percent per 

7 annum initially; 

8 (ii) within the first 2 years after the 

9 date of the capital investment under the 

10 Program, the rate may be adjusted based on 

11 the amount of an eligible institution’s small 

12 business lending. Changes in the amount of 

13 small business lending shall be measured 

14 against the amount of small business lend15 ing reported by the eligible institution in its 

16 call report for the last quarter in calendar 

17 year 2009 or the average amount of small 

18 business lending reported by the eligible in19 stitution in all call reports for calendar 

20 year 2009, whichever is lower, minus ad21 justments from each quarterly balance in 

22 respect of— 

23 (I) net loan charge offs with re24 spect to small business lending; and 


jbell on DSKDVH8Z91PROD with BILLS
15 

•HR 5297 RH

1 (II) gains realized by the eligible 

2 institution resulting from mergers, ac3 quisitions or purchases of loans after 

4 origination and syndication; which ad5 justments shall be determined in ac6 cordance with guidance promulgated 

7 by the Secretary; and 

8 (iii) during any calendar quarter dur9 ing the initial 2-year period referred to in 

10 clause (ii), an institution’s rate shall be ad11 justed to reflect the following schedule, based 

12 on that institution’s change in the amount 

13 of small business lending relative to the 

14 baseline— 

15 (I) if the amount of small business 

16 lending has increased by less than 2.5 

17 percent, the dividend or interest rate 

18 shall be 5 percent; 

19 (II) if the amount of small busi20 ness lending has increased by 2.5 per21 cent or greater, but by less than 5.0 

22 percent, the dividend or interest rate 

23 shall be 4 percent; 

24 (III) if the amount of small busi25 ness lending has increased by 5.0 perVerDate Mar 15 2010 02:28 May 28, 2010 Jkt 089200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6203 E:\BILLS\H5297.RH H5297

jbell on DSKDVH8Z91PROD with BILLS
16 

•HR 5297 RH

1 cent or greater, but by less than 7.5 

2 percent, the dividend or interest rate 

3 shall be 3 percent; 

4 (IV) if the amount of small busi5 ness lending has increased by 7.5 per6 cent or greater, and but by less than 

7 10.0 percent, the dividend or interest 

8 rate shall be 2 percent; or 

9 (V) if the amount of small busi10 ness lending has increased by 10 per11 cent or greater, the dividend or interest 

12 rate shall be 1 percent. 

13 (B) BASIS OF INITIAL RATE.—The initial 

14 dividend or interest rate shall be based on call 

15 report data published in the quarter immediately 

16 preceding the date of the capital investment 

17 under the Program. 

18 (C) TIMING OF RATE ADJUSTMENTS.—Any 

19 rate adjustment shall occur in the calendar quar20 ter following the publication of call report data, 

21 such that the rate based on call report data from 

22 any one calendar quarter, which is published in 

23 the first following calendar quarter, shall be ad24 justed in that first following calendar quarter 

25 and payable in the second following quarter. 


jbell on DSKDVH8Z91PROD with BILLS
17 

•HR 5297 RH

1 (D) RATE FOLLOWING INITIAL 2-YEAR PE2 RIOD.—Generally, the rate based on call report 

3 data from the eighth calendar quarter after the 

4 date of the capital investment under the Pro5 gram shall be payable until the expiration of the 

41 6 ⁄2-year period that begins on the date of the in7 vestment. In the case where the amount of small 

8 business lending has remained the same or de9 creased relative to the institution’s baseline in 

10 the eighth quarter after the date of the capital 

11 investment under the Program, the rate shall be 

7 percent until the expiration of the 41 12 ⁄2-year pe13 riod that begins on the date of the investment. 

(E) RATE FOLLOWING INITIAL 41 14 ⁄2-YEAR PE15 RIOD.—The dividend or interest rate paid on 

16 any preferred stock or other financial instrument 

17 issued by an eligible institution that receives a 

18 capital investment under the Program shall increase to 9 percent at the end of the 41 19 ⁄2-year pe20 riod that begins on the date of the capital invest21 ment under the Program. 

22 (F) LIMITATION ON RATE REDUCTIONS

23 WITH RESPECT TO CERTAIN AMOUNT.—The re24 duction in the dividend or interest rate payable 

25 to Treasury by any eligible institution shall be 


jbell on DSKDVH8Z91PROD with BILLS
18 

•HR 5297 RH

1 limited such that the rate reduction shall not 

2 apply to a dollar amount of the investment made 

3 by Treasury that is greater than the dollar 

4 amount increase in the amount of small business 

5 lending realized under this program. The Sec6 retary may issue guidelines that will apply to 

7 new capital investments limiting the amount of 

8 capital available to eligible institutions con9 sistent with this limitation. 

10 (G) RATE ADJUSTMENTS FOR S CORPORA11 TION.—Before making a capital investment in 

12 an eligible institution that is an S corporation 

13 or a corporation organized on a mutual basis, 

14 the Secretary may adjust the dividend or interest 

15 rate on the financial instrument to be issued to 

16 the Secretary, from the dividend or interest rate 

17 that would apply under subparagraphs (A) 

18 through (F), to take into account any differential 

19 tax treatment of securities issued by such eligible 

20 institution. For purpose of this subparagraph, 

21 the term ‘‘S corporation’’ has the same meaning 

22 as in section 1361(a) of the Internal Revenue 

23 Code of 1986. 

24 (H) REPAYMENT DEADLINE.—The capital 

25 investment received by an eligible institution 


jbell on DSKDVH8Z91PROD with BILLS
19 

•HR 5297 RH

1 under the Program shall be repaid by the end of 

2 the 10-year period that begins on the date of the 

3 capital investment under the Program. 

4 (5) ADDITIONAL INCENTIVES TO REPAY.—The 

5 Secretary may, by regulation or guidance issued 

6 under section 5(9), establish repayment incentives in 

7 addition to the incentive in paragraph (4)(E) that 

8 will apply to new capital investments in a manner 

9 that the Secretary determines to be consistent with the 

10 purposes of this title. 

11 (6) CAPITAL PURCHASE PROGRAM REFINANCE.— 

12 (A) IN GENERAL.—The Secretary shall, in a 

13 manner that the Secretary determines to be con14 sistent with the purposes of this title, issue regu15 lations and other guidance to permit eligible in16 stitutions to refinance securities issued to Treas17 ury under the CDCI and the CPP for securities 

18 to be issued under the Program. 

19 (B) PROHIBITION ON PARTICIPATION BY

20 NON-PAYING CPP PARTICIPANTS.—Subparagraph 

21 (A) shall not apply to any eligible institution 

22 that has ever missed a dividend payment due 

23 under the CPP. 

24 (7) MINORITY OUTREACH.—The Secretary shall 

25 require eligible institutions receiving capital investVerDate Mar 15 2010 02:28 May 28, 2010 Jkt 089200 PO 00000 Frm 00019 Fmt 6652 Sfmt 6203 E:\BILLS\H5297.RH H5297

jbell on DSKDVH8Z91PROD with BILLS
20 

•HR 5297 RH

1 ments under the Program to provide outreach and ad2 vertising in the appropriate language of the applicant 

3 pool describing the availability and application proc4 ess of receiving loans from the eligible institution that 

5 are made possible by the Program through the use of 

6 print, radio, television or electronic media outlets 

7 which target organizations, trade associations, and 

8 individuals that represent or work within or are 

9 members of minority communities. 

10 (8) ADDITIONAL TERMS.—The Secretary may, by 

11 regulation or guidance issued under section 5(9), 

12 make modifications that will apply to new capital in13 vestments in order to manage risks associated with 

14 the administration of the Fund in a manner con15 sistent with the purposes of this title. 

16 (9) MINIMUM UNDERWRITING STANDARDS.—The 

17 appropriate Federal banking agency for an eligible 

18 institution that receives funds under the Program 

19 shall within 60 days issue regulations defining min20 imum underwriting standards that must be used for 

21 loans made by the eligible institution using such 

22 funds. 


jbell on DSKDVH8Z91PROD with BILLS
21 

•HR 5297 RH

1 SEC. 5. ADDITIONAL AUTHORITIES OF THE SECRETARY. 

2 The Secretary may take such actions as the Secretary 

3 deems necessary to carry out the authorities in this title, 

4 including, without limitation, the following: 

5 (1) The Secretary may use the services of any 

6 agency or instrumentality of the United States or 

7 component thereof on a reimbursable basis, and any 

8 such agency or instrumentality or component thereof 

9 is authorized to provide services as requested by the 

10 Secretary using all authorities vested in or delegated 

11 to that agency, instrumentality, or component. 

12 (2) The Secretary may enter into contracts, in13 cluding contracts for services authorized by section 

14 3109 of title 5, United States Code. 

15 (3) The Secretary may designate any bank, sav16 ings association, trust company, security broker or 

17 dealer, asset manager, or investment adviser as a fi18 nancial agent of the Federal Government and such in19 stitution shall perform all such reasonable duties re20 lated to this title as financial agent of the Federal 

21 Government as may be required. The Secretary shall 

22 have authority to amend existing agreements with fi23 nancial agents, entered into during the 2-year period 

24 before the date of enactment of this title, to perform 

25 reasonable duties related to this title. 


jbell on DSKDVH8Z91PROD with BILLS
22 

•HR 5297 RH

1 (4) The Secretary may exercise any rights re2 ceived in connection with any preferred stock or other 

3 financial instruments or assets purchased or acquired 

4 pursuant to the authorities granted under this title. 

5 (5) Subject to section 4(b)(3), the Secretary may 

6 manage any assets purchased under this title, includ7 ing revenues and portfolio risks therefrom. 

8 (6) The Secretary may sell, dispose of, transfer, 

9 exchange or enter into securities loans, repurchase 

10 transactions, or other financial transactions in regard 

11 to, any preferred stock or other financial instrument 

12 or asset purchased or acquired under this title, upon 

13 terms and conditions and at a price determined by 

14 the Secretary. 

15 (7) The Secretary may manage or prohibit con16 flicts of interest that may arise in connection with the 

17 administration and execution of the authorities pro18 vided under this title. 

19 (8) The Secretary may establish and use vehicles, 

20 subject to supervision by the Secretary, to purchase, 

21 hold, and sell preferred stock or other financial in22 struments and issue obligations. 

23 (9) The Secretary may, in consultation with the 

24 Administrator of the Small Business Administration, 

25 issue such regulations and other guidance as may be 


jbell on DSKDVH8Z91PROD with BILLS
23 

•HR 5297 RH

1 necessary or appropriate to define terms or carry out 

2 the authorities or purposes of this title. 

3 SEC. 6. CONSIDERATIONS. 

4 In exercising the authorities granted in this title, the 

5 Secretary shall take into consideration— 

6 (1) increasing the availability of credit for small 

7 businesses; 

8 (2) providing funding to eligible institutions 

9 that serve small businesses that are minority- and 

10 women-owned and that also serve low- and moderate11 income, minority, and other underserved or rural 

12 communities; 

13 (3) protecting and increasing American jobs; 

14 (4) ensuring that all eligible institutions may 

15 apply to participate in the program established under 

16 this title, without discrimination based on geography; 

17 (5) providing transparency with respect to use of 

18 funds provided under this title; 

19 (6) minimizing the cost to taxpayers of exer20 cising the authorities; and 

21 (7) promoting and engaging in financial edu22 cation to would-be borrowers. 

23 SEC. 7. REPORTS. 

24 The Secretary shall provide to the appropriate com25 mittees of Congress— 


jbell on DSKDVH8Z91PROD with BILLS
24 

•HR 5297 RH

1 (1) within 7 days of the end of each month com2 mencing with the first month in which transactions 

3 are made under the Program, a written report de4 scribing all of the transactions made during the re5 porting period pursuant to the authorities granted 

6 under this title; 

7 (2) after the end of March and the end of Sep8 tember, commencing September 30, 2010, a written 

9 report on all projected costs and liabilities, all oper10 ating expenses, including compensation for financial 

11 agents, and all transactions made by the Fund, which 

12 shall include participating institutions and amounts 

13 each institution has received under the Program; and 

14 (3) within 7 days of the end of each month com15 mencing with the first month in which transactions 

16 are made under the Program, a written report detail17 ing how eligible institutions participating in the Pro18 gram have used the funds such institutions received 

19 under the Program. 

20 SEC. 8. OVERSIGHT AND AUDITS. 

21 (a) INSPECTOR GENERAL OVERSIGHT.—The Inspector 

22 General of the Department of the Treasury shall conduct, 

23 supervise, and coordinate audits and investigations of the 

24 purchase (and commitments to purchase) of preferred stock 

25 and other financial instruments under the Program. 


jbell on DSKDVH8Z91PROD with BILLS
25 

•HR 5297 RH

1 (b) GAO AUDIT.—The Comptroller General of the 

2 United States shall perform an annual audit of the Pro3 gram and issue a report to the appropriate committees of 

4 Congress containing the results of such audit. 

5 SEC. 9. CREDIT REFORM; FUNDING. 

6 (a) CREDIT REFORM.—The cost of purchases of pre7 ferred stock and other financial instruments made as cap8 ital investments under this title shall be determined as pro9 vided under the Federal Credit Reform Act of 1990 (2 

10 U.S.C. 661 et seq.). 

11 (b) FUNDS MADE AVAILABLE.—There are hereby au12 thorized to be appropriated, out of funds in the Treasury 

13 not otherwise appropriated, such sums as may be necessary 

14 to pay the costs of $30,000,000,000 of capital investments 

15 in eligible institutions, including the costs of modifying 

16 such investments, and reasonable costs of administering the 

17 program of making, holding, managing, and selling the 

18 capital investments. 

19 SEC. 10. TERMINATION AND CONTINUATION OF AUTHORI20 TIES. 

21 (a) TERMINATION OF INVESTMENT AUTHORITY.—The 

22 authority to make capital investments in eligible institu23 tions, including commitments to purchase preferred stock 

24 or other instruments, provided under this title shall termi25 nate 1 year after the date of enactment of this title. 


jbell on DSKDVH8Z91PROD with BILLS
26 

•HR 5297 RH

1 (b) CONTINUATION OF OTHER AUTHORITIES.—The 

2 authorities of the Secretary in section 5 shall not be limited 

3 by the termination date in subsection (a). 

4 SEC. 11. PRESERVATION OF AUTHORITY. 

5 Nothing in this title may be construed to limit the au6 thority of the Secretary under any other provision of law. 

7 SEC. 12. ASSURANCES. 

8 (a) SMALL BUSINESS LENDING FUND SEPARATE

9 FROM TARP.—The Small Business Lending Fund Pro10 gram is established as separate and distinct from the Trou11 bled Asset Relief Program established by the Emergency 

12 Economic Stabilization Act of 2008. An institution shall 

13 not, by virtue of a capital investment under the Small Busi14 ness Lending Fund Program, be considered a recipient of 

15 the Troubled Asset Relief Program. 

16 (b) CHANGE IN LAW.—If, after a capital investment 

17 has been made in an eligible institution under the Program, 

18 there is a change in law that modifies the terms of the in19 vestment or program in a materially adverse respect for the 

20 eligible institution, the eligible institution may, after con21 sultation with the appropriate Federal banking agency for 

22 the eligible institution, repay the investment without im23 pediment. 


jbell on DSKDVH8Z91PROD with BILLS
27 

•HR 5297 RH

1 SEC. 13. STUDY AND REPORT WITH RESPECT TO WOMEN2 OWNED AND MINORITY-OWNED BUSINESSES. 

3 (a) STUDY.—The Secretary shall conduct a study to 

4 determine the number of women-owned businesses and mi5 nority-owned businesses that receive assistance as a result 

6 of the Program, including— 

7 (1) efforts, including technical assistance and 

8 outreach that institutions have employed under the 

9 Program to provide loans to minority- and women10 owned small businesses; 

11 (2) loan applications received; 

12 (3) loan applications approved; and 

13 (4) and any other relevant data related to such 

14 transactions to promote the purposes of the Program 

15 as the Secretary may require. 

16 (b) REPORT.—Not later than one year after the date 

17 of enactment of this Act, the Secretary shall submit to Con18 gress a report on the results of the study conducted pursuant 

19 to subsection (a). 

20 (c) INFORMATION PROVIDED TO THE SECRETARY.— 

21 Eligible institutions that participate in the Program shall 

22 provide the Secretary with such information as the Sec23 retary may require to carry out the study required by this 

24 section. 


jbell on DSKDVH8Z91PROD with BILLS
28 

•HR 5297 RH

1 TITLE II—STATE SMALL 

2 BUSINESS CREDIT INITIATIVE 

3 SEC. 201. SHORT TITLE. 

4 This title may be cited as the ‘‘State Small Business 

5 Credit Initiative Act of 2010’’. 

6 SEC. 202. DEFINITIONS. 

7 For purposes of this title, the following definitions 

8 shall apply: 

9 (1) APPROPRIATE FEDERAL BANKING AGENCY.— 

10 The term ‘‘appropriate Federal banking agency’’— 

11 (A) has the same meaning as in section 3 

12 of the Federal Deposit Insurance Act; and 

13 (B) includes the National Credit Union Ad14 ministration Board in the case of any credit 

15 union the deposits of which are insured in ac16 cordance with the Federal Credit Union Act. 

17 (2) ENROLLED LOAN.—The term ‘‘enrolled loan’’ 

18 means a loan made by a financial institution lender 

19 that is enrolled by a participating State in an ap20 proved State capital access program in accordance 

21 with this title. 

22 (3) FEDERAL CONTRIBUTION.—The term ‘‘Fed23 eral contribution’’ means the portion of the contribu24 tion made by a participating State to, or for the ac25 count of, an approved State program that is made 


jbell on DSKDVH8Z91PROD with BILLS
29 

•HR 5297 RH

1 with Federal funds allocated to the State by the Sec2 retary under section 203. 

3 (4) FINANCIAL INSTITUTION.—The term ‘‘finan4 cial institution’’ means any insured depository insti5 tution, insured credit union, or community develop6 ment financial institution, as those terms are each de7 fined in section 103 of the Riegle Community Devel8 opment and Regulatory Improvement Act of 1994. 

9 (5) PARTICIPATING STATE.—The term ‘‘partici10 pating State’’ means any State that has been ap11 proved for participation in the Program under sec12 tion 204. 

13 (6) PROGRAM.—The term ‘‘Program’’ means the 

14 State Small Business Credit Initiative established 

15 under this title. 

16 (7) QUALIFYING LOAN OR SWAP FUNDING FACIL17 ITY.—The term ‘‘qualifying loan or swap funding fa18 cility’’ means a contractual arrangement between a 

19 participating State and a private financial entity 

20 under which— 

21 (A) the participating State delivers funds to 

22 the entity as collateral; 

23 (B) the entity provides funding from the ar24 rangement back to the participating State; and 


jbell on DSKDVH8Z91PROD with BILLS
30 

•HR 5297 RH

1 (C) the full amount of resulting funding 

2 from the arrangement, less any fees and other 

3 costs of the arrangement, is contributed to, or for 

4 the account of, an approved State program. 

5 (8) RESERVE FUND.—The term ‘‘reserve fund’’ 

6 means a fund, established by a participating State, 

7 dedicated to a particular financial institution lender, 

8 for the purposes of— 

9 (A) depositing all required premium 

10 charges paid by the financial institution lender 

11 and by each borrower receiving a loan under an 

12 approved State program from that financial in13 stitution lender; 

14 (B) depositing contributions made by the 

15 participating State, including State contribu16 tions made with Federal contributions; and 

17 (C) covering losses on enrolled loans by dis18 bursing accumulated funds. 

19 (9) STATE.—The term ‘‘State’’ means— 

20 (A) a State of the United States; 

21 (B) the District of Columbia, the Common22 wealth of Puerto Rico, the Commonwealth of 

23 Northern Mariana Islands, Guam, American 

24 Samoa, and the United States Virgin Islands; 


jbell on DSKDVH8Z91PROD with BILLS
31 

•HR 5297 RH

1 (C) when designated by a State of the 

2 United States, a political subdivision of that 

3 State that the Secretary determines has the ca4 pacity to participate in the Program; and 

5 (D) under the circumstances described in 

6 section 204(d), a municipality of a State of the 

7 United States to which the Secretary has given 

8 a special permission under section 204(d). 

9 (10) STATE CAPITAL ACCESS PROGRAM.—The 

10 term ‘‘State capital access program’’ means a pro11 gram of a State that— 

12 (A) uses public resources to promote private 

13 access to credit; and 

14 (B) meets the eligibility criteria in section 

15 205(c). 

16 (11) STATE OTHER CREDIT SUPPORT PRO17 GRAM.—The term ‘‘State other credit support pro18 gram’’— 

19 (A) means a program of a State that— 

20 (i) uses public resources to promote 

21 private access to credit; 

22 (ii) is not a State capital access pro23 gram; and 

24 (iii) meets the eligibility criteria in 

25 section 206(c); and 


jbell on DSKDVH8Z91PROD with BILLS
32 

•HR 5297 RH

1 (B) includes, collateral support programs, 

2 loan participation programs, and credit guar3 antee programs. 

4 (12) STATE PROGRAM.—The term ‘‘State pro5 gram’’ means a State capital access program or a 

6 State other credit support program. 

7 (13) SECRETARY.—The term ‘‘Secretary’’ means 

8 the Secretary of the Treasury. 

9 SEC. 203. FEDERAL FUNDS ALLOCATED TO STATES. 

10 (a) PROGRAM ESTABLISHED; PURPOSE.—There is es11 tablished the State Small Business Credit Initiative (here12 inafter in this title referred to as the ‘‘Program’’), to be 

13 administered by the Secretary. Under the Program, the Sec14 retary shall allocate Federal funds to participating States 

15 and make the allocated funds available to the participating 

16 States as provided in this section for the uses described in 

17 this section. 

18 (b) ALLOCATION FORMULA.— 

19 (1) IN GENERAL.—Not later than 30 days after 

20 the date of enactment of this title, the Secretary shall 

21 allocate Federal funds to participating States so that 

22 each State is eligible to receive an amount equal to 

23 the average of the respective amounts that the State— 

24 (A) would receive under the 2009 allocation, 

25 as determined under paragraph (2); and 


jbell on DSKDVH8Z91PROD with BILLS
33 

•HR 5297 RH

1 (B) would receive under the 2010 allocation, 

2 as determined under paragraph (3). 

3 (2) 2009 ALLOCATION FORMULA.— 

4 (A) IN GENERAL.—The Secretary shall de5 termine the 2009 allocation by allocating Fed6 eral funds among the States in the proportion 

7 that each such State’s 2008 State employment 

8 decline bears to the aggregate of the 2008 State 

9 employment declines for all States. 

10 (B) MINIMUM ALLOCATION.—The Secretary 

11 shall adjust the allocations under subparagraph 

12 (A) for each State to the extent necessary to en13 sure that no State receives less than 0.9 percent 

14 of the Federal funds. 

15 (C) 2008 STATE EMPLOYMENT DECLINE DE16 FINED.—For purposes of this paragraph and 

17 with respect to a State, the term ‘‘2008 State em18 ployment decline’’ means the excess (if any) of— 

19 (i) the number of individuals employed 

20 in such State determined for December 

21 2007; over 

22 (ii) the number of individuals em23 ployed in such State determined for Decem24 ber 2008. 

25 (3) 2010 ALLOCATION FORMULA.— 


jbell on DSKDVH8Z91PROD with BILLS
34 

•HR 5297 RH

1 (A) IN GENERAL.—The Secretary shall de2 termine the 2010 allocation by allocating Fed3 eral funds among the States in the proportion 

4 that each such State’s 2009 unemployment num5 ber bears to the aggregate of the 2009 unemploy6 ment numbers for all of the States. 

7 (B) MINIMUM ALLOCATION.—The Secretary 

8 shall adjust the allocations under subparagraph 

9 (A) for each State to the extent necessary to en10 sure that no State receives less than 0.9 percent 

11 of the Federal funds. 

12 (C) 2009 UNEMPLOYMENT NUMBER DE13 FINED.—For purposes of this paragraph and 

14 with respect to a State, the term ‘‘2009 unem15 ployment number’’ means the number of individ16 uals within such State who were determined to 

17 be unemployed by the Bureau of Labor Statistics 

18 for December 2009. 

19 (c) AVAILABILITY OF ALLOCATED AMOUNT.—The 

20 amount allocated by the Secretary to each participating 

21 State under subsection (b) shall be made available to the 

22 State as follows: 

23 (1) ALLOCATED AMOUNT GENERALLY TO BE

24 AVAILABLE TO STATE IN ONE-THIRDS.— 

25 (A) IN GENERAL.—The Secretary shall— 


jbell on DSKDVH8Z91PROD with BILLS
35 

•HR 5297 RH

1 (i) apportion the participating State’s 

2 allocated amount into one-thirds; 

3 (ii) transfer to the participating State 

4 the first one-third when the Secretary ap5 proves the State for participation under sec6 tion 204; and 

7 (iii) transfer to the participating State 

8 each successive one-third when the State has 

9 certified to the Secretary that it has ex10 pended, transferred, or obligated 80 percent 

11 of the last transferred one-third for Federal 

12 contributions to, or for the account of, State 

13 programs. 

14 (B) AUTHORITY TO WITHHOLD PENDING

15 AUDIT.—The Secretary may withhold the trans16 fer of any successive one-third pending results of 

17 a financial audit. 

18 (C) TRANSFERS CONTINGENT ON INSPECTOR

19 GENERAL AUDITS.— 

20 (i) IN GENERAL.—Before a transfer to 

21 a participating State of the second one22 third or the last one-third, the Inspector 

23 General of the Department of the Treasury 

24 shall carry out an audit of the particiVerDate Mar 15 2010 02:28 May 28, 2010 Jkt 089200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6203 E:\BILLS\H5297.RH H5297

jbell on DSKDVH8Z91PROD with BILLS
36 

•HR 5297 RH

1 pating State’s use of amounts already re2 ceived. 

3 (ii) PENALTY FOR MISSTATEMENT.— 

4 Any participating State that is found to 

5 have intentionally misstated any report 

6 issued to the Secretary under the Program 

7 shall be ineligible to receive any additional 

8 funds under the Program. Funds that had 

9 been allocated or that would otherwise have 

10 been allocated to such participating State 

11 shall be paid into the general fund of the 

12 Treasury for reduction of the public debt. 

13 (iii) MUNICIPALITIES.—For purposes 

14 of this subparagraph, the term ‘‘partici15 pating State’’ shall include a municipality 

16 given special permission to participate in 

17 the Program, pursuant to section 204(d). 

18 (2) TRANSFERRED AMOUNTS.—Each amount 

19 transferred to a participating State under this section 

20 shall remain available to the State until used by the 

21 State as permitted under paragraph (3). 

22 (3) USE OF TRANSFERRED FUNDS.—Each par23 ticipating State may use funds transferred to it 

24 under this section only— 


jbell on DSKDVH8Z91PROD with BILLS
37 

•HR 5297 RH

1 (A) for making Federal contributions to, or 

2 for the account of, an approved State program; 

3 (B) as collateral for a qualifying loan or 

4 swap funding facility; 

5 (C) in the case of the first one-third trans6 ferred, for paying administrative costs incurred 

7 by the State in implementing an approved State 

8 program in an amount not to exceed 5 percent 

9 of that first one-third; or 

10 (D) in the case of each successive one-third 

11 transferred, for paying administrative costs in12 curred by the State in implementing an ap13 proved State program in an amount not to ex14 ceed 3 percent of that successive one-third. 

15 (4) TERMINATION OF AVAILABILITY OF AMOUNTS

16 NOT TRANSFERRED WITHIN 2 YEARS OF PARTICIPA17 TION.—Any portion of a participating State’s allo18 cated amount that has not been transferred to the 

19 State under this section by the end of the 2-year pe20 riod beginning on the date that the Secretary ap21 proves the State for participation may be deemed by 

22 the Secretary to be no longer allocated to the State 

23 and no longer available to the State and shall be re24 turned to the General Fund of the Treasury. 


jbell on DSKDVH8Z91PROD with BILLS
38 

•HR 5297 RH

1 (5) DEFINITIONS.—For purposes of this sec2 tion— 

3 (A) the term ‘‘allocated amount’’ means the 

4 total amount of Federal funds allocated by the 

5 Secretary under subsection (b) to the partici6 pating State; and 

7 (B) the term ‘‘one-third’’ means— 

8 (i) in the case of the first and second 

9 one-thirds, an amount equal to 33 percent 

10 of a participating State’s allocated amount; 

11 and 

12 (ii) in the case of the last one-third, an 

13 amount equal to 34 percent of a partici14 pating State’s allocated amount. 

15 SEC. 204. APPROVING STATES FOR PARTICIPATION. 

16 (a) APPLICATION.—Any State may apply to the Sec17 retary for approval to be a participating State under the 

18 Program and to be eligible for an allocation of Federal 

19 funds under the Program. 

20 (b) GENERAL APPROVAL CRITERIA.—The Secretary 

21 shall approve a State to be a participating State, if— 

22 (1) a specific department, agency, or political 

23 subdivision of the State has been designated to imple24 ment a State program and participate in the Pro25 gram; 


jbell on DSKDVH8Z91PROD with BILLS
39 

•HR 5297 RH

1 (2) all legal actions necessary to enable such des2 ignated department, agency, or political subdivision 

3 to implement a State program and participate in the 

4 Program have been accomplished; 

5 (3) the State has filed an application with the 

6 Secretary for approval of a State capital access pro7 gram under section 205 or approval as a State other 

8 credit support program under section 206, in each 

9 case within the time period provided in the respective 

10 section; and 

11 (4) the State and the Secretary have executed an 

12 allocation agreement that— 

13 (A) conforms to the requirements of this 

14 title; 

15 (B) ensures that the State program complies 

16 with such national standards as are established 

17 by the Secretary under section 209(a)(2); 

18 (C) sets forth internal control, compliance, 

19 and reporting requirements as established by the 

20 Secretary, and such other terms and conditions 

21 necessary to carry out the purposes of this title, 

22 including an agreement by the State to allow the 

23 Secretary to audit State programs; 

24 (D) requires that the State program be fully 

25 positioned, within 90 days of the State’s execuVerDate Mar 15 2010 02:28 May 28, 2010 Jkt 089200 PO 00000 Frm 00039 Fmt 6652 Sfmt 6203 E:\BILLS\H5297.RH H5297

jbell on DSKDVH8Z91PROD with BILLS
40 

•HR 5297 RH

1 tion of the allocation agreement with the Sec2 retary, to act on providing the kind of credit 

3 support that the State program was established 

4 to provide; and 

5 (E) includes an agreement by the State to 

6 deliver to the Secretary, and update annually, a 

7 schedule describing how the State intends to ap8 portion among its State programs the Federal 

9 funds allocated to the State. 

10 (c) CONTRACTUAL ARRANGEMENTS FOR IMPLEMENTA11 TION OF STATE PROGRAMS.—A State may be approved to 

12 be a participating State, and be eligible for an allocation 

13 of Federal funds under the Program, if the State has con14 tractual arrangements for the implementation and admin15 istration of its State program with— 

16 (1) an existing, approved State program admin17 istered by another State; or 

18 (2) an authorized agent of, or entity supervised 

19 by, the State, including for-profit and not-for-profit 

20 entities. 

21 (d) SPECIAL PERMISSION.— 

22 (1) CIRCUMSTANCES WHEN A MUNICIPALITY MAY

23 APPLY DIRECTLY.—If a State does not, within 60 

24 days after the date of enactment of this title, file with 

25 the Secretary a notice of its intent to apply for apVerDate Mar 15 2010 02:28 May 28, 2010 Jkt 089200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6203 E:\BILLS\H5297.RH H5297

jbell on DSKDVH8Z91PROD with BILLS
41 

•HR 5297 RH

1 proval by the Secretary of a State program or within 

2 9 months after the date of enactment of this title, file 

3 with the Secretary a complete application for ap4 proval of a State program, the Secretary may grant 

5 to municipalities of that State a special permission 

6 that will allow them to apply directly to the Sec7 retary without the State for approval to be partici8 pating municipalities. 

9 (2) TIMING REQUIREMENTS APPLICABLE TO MU10 NICIPALITIES APPLYING DIRECTLY.—To qualify for 

11 the special permission, a municipality of a State 

12 must, within 12 months after the date of enactment 

13 of this title, file with the Secretary a complete appli14 cation for approval by the Secretary of a State pro15 gram. 

16 (3) NOTICES OF INTENT AND APPLICATIONS

17 FROM MORE THAN 1 MUNICIPALITY.—A municipality 

18 of a State may combine with 1 or more other munici19 palities of that State to file a joint notice of intent 

20 to file and a joint application. 

21 (4) APPROVAL CRITERIA.—The general approval 

22 criteria in paragraphs (2) and (4) shall apply. 

23 (5) ALLOCATION TO MUNICIPALITIES.— 

24 (A) IF MORE THAN 3.—If more than 3 mu25 nicipalities, or combination of municipalities as 


jbell on DSKDVH8Z91PROD with BILLS
42 

•HR 5297 RH

1 provided in paragraph (3), of a State apply for 

2 approval by the Secretary to be participating 

3 municipalities under this subsection, and the ap4 plications meet the approval criteria in para5 graph (4), the Secretary shall allocate Federal 

6 funds to the 3 municipalities with the largest 

7 populations. 

8 (B) IF 3 OR FEWER.—If 3 or fewer munici9 palities, or combination of municipalities as 

10 provided in paragraph (3), of a State apply for 

11 approval by the Secretary to be participating 

12 municipalities under this subsection, and the ap13 plications meet the approval criteria in para14 graph (4), the Secretary shall allocate Federal 

15 funds to each applicant municipality or com16 bination of municipalities. 

17 (6) APPORTIONMENT OF ALLOCATED AMOUNT

18 AMONG PARTICIPATING MUNICIPALITIES.—If the Sec19 retary approves municipalities to be participating 

20 municipalities under this subsection, the Secretary 

21 shall apportion the full amount of the Federal funds 

22 that are allocated to that State to municipalities that 

23 are approved under this subsection in amounts pro24 portionate to the population of those municipalities, 

25 based on the most recent available decennial census. 


jbell on DSKDVH8Z91PROD with BILLS
43 

•HR 5297 RH

1 (7) APPROVING STATE PROGRAMS FOR MUNICI2 PALITIES.—If the Secretary approves municipalities 

3 to be participating municipalities under this sub4 section, the Secretary shall take into account the ad5 ditional considerations in section 206(d) in making 

6 the determination under section 205 or 206 that the 

7 State program or programs to be implemented by the 

8 participating municipalities, including a State cap9 ital access program, is eligible for Federal contribu10 tions to, or for the account of, the State program. 

11 SEC. 205. APPROVING STATE CAPITAL ACCESS PROGRAMS. 

12 (a) APPLICATION.—A participating State that estab13 lishes a new, or has an existing, State capital access pro14 gram that meets the eligibility criteria in subsection (c) 

15 may apply to Secretary to have the State capital access 

16 program approved as eligible for Federal contributions to 

17 the reserve fund. 

18 (b) APPROVAL.—The Secretary shall approve such 

19 State capital access program as eligible for Federal con20 tributions to the reserve fund if— 

21 (1) within 60 days after the date of enactment 

22 of this title, the State has filed with the Secretary a 

23 notice of intent to apply for approval by the Sec24 retary of a State capital access program; 


jbell on DSKDVH8Z91PROD with BILLS
44 

•HR 5297 RH

1 (2) within 9 months after the date of enactment 

2 of this title, the State has filed with the Secretary a 

3 complete application for approval by the Secretary of 

4 a capital access program; 

5 (3) the State satisfies the requirements of sub6 sections (a) and (b) of section 204; and 

7 (4) the State capital access program meets the 

8 eligibility criteria in subsection (c). 

9 (c) ELIGIBILITY CRITERIA FOR STATE CAPITAL AC10 CESS PROGRAMS.—For a State capital access program to 

11 be approved under this section, it must be a program of 

12 the State that— 

13 (1) provides portfolio insurance for business 

14 loans based on a separate loan-loss reserve fund for 

15 each financial institution; 

16 (2) requires insurance premiums to be paid by 

17 the financial institution lenders and by the business 

18 borrowers to the reserve fund to have their loans en19 rolled in the reserve fund; 

20 (3) provides for contributions to be made by the 

21 State to the reserve fund in amounts at least equal to 

22 the sum of the amount of the insurance premium 

23 charges paid by the borrower and the financial insti24 tution to the reserve fund for any newly enrolled loan; 

25 and 


jbell on DSKDVH8Z91PROD with BILLS
45 

•HR 5297 RH

1 (4) provides its portfolio insurance solely for 

2 loans that meet both the following requirements: 

3 (A) The borrower has 500 employees or less 

4 at the time that the loan is enrolled in the Pro5 gram. 

6 (B) The loan amount does not exceed 

7 $5,000,000. 

8 (d) FEDERAL CONTRIBUTIONS TO APPROVED STATE

9 CAPITAL ACCESS PROGRAMS.—A State capital access pro10 gram approved under this section will be eligible for receiv11 ing Federal contributions to the reserve fund in an amount 

12 equal to the sum of the amount of the insurance premium 

13 charges paid by the borrowers and by the financial institu14 tion to the reserve fund for loans that meet the requirements 

15 in subsection (c)(4). A participating State may use the Fed16 eral contribution to make its contribution to the reserve 

17 fund of an approved State capital access program. 

18 (e) MINIMUM PROGRAM REQUIREMENTS FOR STATE

19 CAPITAL ACCESS PROGRAMS.—The Secretary shall, by reg20 ulation or other guidance, prescribe Program requirements 

21 that meet the following minimum requirements: 

22 (1) EXPERIENCE AND CAPACITY.—The partici23 pating State shall determine for each financial insti24 tution that participates in the State capital access 

25 program, after consultation with the appropriate FedVerDate Mar 15 2010 02:28 May 28, 2010 Jkt 089200 PO 00000 Frm 00045 Fmt 6652 Sfmt 6203 E:\BILLS\H5297.RH H5297

jbell on DSKDVH8Z91PROD with BILLS
46 

•HR 5297 RH

1 eral banking agency or, in the case of a financial in2 stitution that is a non depository community develop3 ment financial institution, the Community Develop4 ment Financial Institution Fund, that the financial 

5 institution has sufficient commercial lending experi6 ence and financial and managerial capacity to par7 ticipate in the approved State capital access program. 

8 The determination by the State shall not be review9 able by the Secretary. 

10 (2) INVESTMENT AUTHORITY.—Subject to appli11 cable State law, the participating State may invest, 

12 or cause to be invested, funds held in a reserve fund 

13 by establishing a deposit account at the financial in14 stitution lender in the name of the participating 

15 State. In the event that funds in the reserve fund are 

16 not deposited in such an account, such funds shall be 

17 invested in a form that the participating State deter18 mines is safe and liquid. 

19 (3) LOAN TERMS AND CONDITIONS TO BE DETER20 MINED BY AGREEMENT.—A loan to be filed for enroll21 ment in an approved State capital access program 

22 may be made with such interest rate, fees, and other 

23 terms and conditions, and the loan may be enrolled 

24 in the approved State capital access program and 

25 claims may be filed and paid, as agreed upon by the 


jbell on DSKDVH8Z91PROD with BILLS
47 

•HR 5297 RH

1 financial institution lender and the borrower, con2 sistent with applicable law. 

3 (4) LENDER CAPITAL AT-RISK.—A loan to be 

4 filed for enrollment in the State capital access pro5 gram must require the financial institution lender to 

6 have a meaningful amount of its own capital re7 sources at risk in the loan. 

8 (5) PREMIUM CHARGES MINIMUM AND MAXIMUM

9 AMOUNTS.—The insurance premium charges payable 

10 to the reserve fund by the borrower and the financial 

11 institution lender shall be prescribed by the financial 

12 institution lender, within minimum and maximum 

13 limits that require that the sum of the insurance pre14 mium charges paid in connection with a loan by the 

15 borrower and the financial institution lender may not 

16 be less than 2 percent nor more than 7 percent of the 

17 amount of the loan enrolled in the approved State 

18 capital access program. 

19 (6) STATE CONTRIBUTIONS.—In enrolling a loan 

20 in an approved State capital access program, the 

21 participating State may make a contribution to the 

22 reserve fund to supplement Federal contributions 

23 made under this Program. 

24 (7) LOAN PURPOSE.— 


jbell on DSKDVH8Z91PROD with BILLS
48 

•HR 5297 RH

1 (A) PARTICULAR LOAN PURPOSE REQUIRE2 MENTS AND PROHIBITIONS.—In connection with 

3 the filing of a loan for enrollment in an ap4 proved State capital access program, the finan5 cial institution lender— 

6 (i) shall obtain an assurance from each 

7 borrower that— 

8 (I) the proceeds of the loan will be 

9 used for a business purpose; 

10 (II) the loan will not be used to 

11 finance such business activities as the 

12 Secretary, by regulation, may pro13 scribe as prohibited loan purposes for 

14 enrollment in an approved State cap15 ital access program; and 

16 (III) the borrower is not— 

17 (aa) an executive officer, di18 rector, or principal shareholder of 

19 the financial institution lender; 

20 (bb) a member of the imme21 diate family of an executive offi22 cer, director, or principal share23 holder of the financial institution 

24 lender; or 


jbell on DSKDVH8Z91PROD with BILLS
49 

•HR 5297 RH

1 (cc) a related interest of any 

2 such executive officer, director, 

3 principal shareholder, or member 

4 of the immediate family; 

5 (ii) shall provide assurances to the 

6 participating State that the loan has not 

7 been made in order to place under the pro8 tection of the approved State capital access 

9 program prior debt that is not covered 

10 under the approved State capital access 

11 program and that is or was owed by the 

12 borrower to the financial institution lender 

13 or to an affiliate of the financial institution 

14 lender; 

15 (iii) shall not allow the enrollment of 

16 a loan to a borrower that is a refinancing 

17 of a loan previously made to that borrower 

18 by the financial institution lender or an af19 filiate of the financial institution lender; 

20 and 

21 (iv) may include additional restric22 tions on the eligibility of loans or borrowers 

23 that are not inconsistent with the provisions 

24 and purposes of this title, including compli25 ance with all applicable Federal and State 


jbell on DSKDVH8Z91PROD with BILLS
50 

•HR 5297 RH

1 laws, regulations, ordinances, and Executive 

2 orders. 

3 (B) DEFINITIONS.—For purposes of this 

4 subsection, the terms ‘‘executive officer’’, ‘‘direc5 tor’’, ‘‘principal shareholder’’, ‘‘immediate fam6 ily’’, and ‘‘related interest’’ refer to the same re7 lationship to a financial institution lender as the 

8 relationship described in part 215 of title 12 of 

9 the Code of Federal Regulations, or any successor 

10 to such part. 

11 SEC. 206. APPROVING COLLATERAL SUPPORT AND OTHER 

12 INNOVATIVE CREDIT ACCESS AND GUAR13 ANTEE INITIATIVES FOR SMALL BUSINESSES 

14 AND MANUFACTURERS. 

15 (a) APPLICATION.—A participating State that estab16 lishes a new, or has an existing, credit support program 

17 that meets the eligibility criteria in subsection (c) may 

18 apply to the Secretary to have the State other credit support 

19 program approved as eligible for Federal contributions to, 

20 or for the account of, the State program. 

21 (b) APPROVAL.—The Secretary shall approve such 

22 State other credit support program as eligible for Federal 

23 contributions to, or for the account of, the program if— 


jbell on DSKDVH8Z91PROD with BILLS
51 

•HR 5297 RH

1 (1) the Secretary determines that the State satis2 fies the requirements of paragraphs (1) through (3) of 

3 section 205(b); 

4 (2) the Secretary determines that the State other 

5 credit support program meets the eligibility criteria 

6 in subsection (c); 

7 (3) the Secretary determines the State other cred8 it support program to be eligible based on the addi9 tional considerations in subsection (d); and 

10 (4) within 9 months after the date of enactment 

11 of this title, the State has filed with Treasury a com12 plete application for Treasury approval. 

13 (c) ELIGIBILITY CRITERIA FOR STATE OTHER CREDIT

14 SUPPORT PROGRAMS.—For a State other credit support 

15 program to be approved under this section, it must be a 

16 program of the State that— 

17 (1) can demonstrate that, at a minimum, 1 dol18 lar of public investment by the State program will 

19 cause and result in 1 dollar of new private credit; 

20 (2) can demonstrate a reasonable expectation 

21 that, when considered with all other State programs 

22 of the State, such State programs together have the 

23 ability to use amounts of new Federal contributions 

24 to, or for the account of, all such programs in the 

25 State to cause and result in amounts of new small 


jbell on DSKDVH8Z91PROD with BILLS
52 

•HR 5297 RH

1 business lending at least 10 times the new Federal 

2 contribution amount; 

3 (3) for those State other credit support programs 

4 that provide their credit support through 1 or more 

5 financial institution lenders, requires the financial 

6 institution lenders to have a meaningful amount of 

7 their own capital resources at risk in their small 

8 business lending; and 

9 (4) extends credit support that— 

10 (A) targets an average borrower size of 500 

11 employees or less; 

12 (B) does not extend credit support to bor13 rowers that have more than 750 employees; 

14 (C) targets support towards loans with an 

15 average principal amount of $5,000,000 or less; 

16 and 

17 (D) does not extend credit support to loans 

18 that exceed a principal amount of $20,000,000. 

19 (d) ADDITIONAL CONSIDERATIONS.—In making a de20 termination that a State other credit support program is 

21 eligible for Federal contributions to, or for the account of, 

22 the State program, the Secretary shall take into account 

23 the following additional considerations: 

24 (1) The anticipated benefits to the State, its 

25 businesses, and its residents to be derived from the 


jbell on DSKDVH8Z91PROD with BILLS
53 

•HR 5297 RH

1 Federal contributions to, or for the account of, the ap2 proved State other credit support program, including 

3 the extent to which resulting small business lending 

4 will expand economic opportunities. 

5 (2) The operational capacity, skills, and experi6 ence of the management team of the State other credit 

7 support program. 

8 (3) The capacity of the State other credit support 

9 program to manage increases in the volume of its 

10 small business lending. 

11 (4) The internal accounting and administrative 

12 controls systems of the State other credit support pro13 gram, and the extent to which they can provide rea14 sonable assurance that funds of the State program are 

15 safeguarded against waste, loss, unauthorized use, or 

16 misappropriation. 

17 (5) The soundness of the program design and im18 plementation plan of the State other credit support 

19 program. 

20 (e) FEDERAL CONTRIBUTIONS TO APPROVED STATE

21 OTHER CREDIT SUPPORT PROGRAMS.—A State other credit 

22 support program approved under this section will be eligi23 ble for receiving Federal contributions to, or for the account 

24 of, the State program in an amount consistent with the 

25 schedule describing the apportionment of allocated Federal 


jbell on DSKDVH8Z91PROD with BILLS
54 

•HR 5297 RH

1 funds among State programs delivered by the State to the 

2 Secretary under the allocation agreement. 

3 (f) MINIMUM PROGRAM REQUIREMENTS FOR STATE

4 OTHER CREDIT SUPPORT PROGRAMS.— 

5 (1) FUND TO PRESCRIBE.—The Secretary shall, 

6 by regulation or other guidance, prescribe Program 

7 requirements for approved State other credit support 

8 programs. 

9 (2) CONSIDERATIONS FOR FUND.—In prescribing 

10 minimum Program requirements for approved State 

11 other credit support programs, the Secretary shall 

12 take into consideration, to the extent the Secretary de13 termines applicable and appropriate, the minimum 

14 Program requirements for approved State capital ac15 cess programs in section 205(e). 

16 SEC. 207. REPORTS. 

17 (a) QUARTERLY USE-OF-FUNDS REPORT.— 

18 (1) IN GENERAL.—Not later than 30 days after 

19 the beginning of each calendar quarter, beginning 

20 after the first full calendar quarter to occur after the 

21 date the Secretary approves a State for participation, 

22 the participating State shall submit to the Secretary 

23 a report on the use of Federal funding by the partici24 pating State during the previous calendar quarter. 

25 (2) REPORT CONTENTS.—The report shall— 


jbell on DSKDVH8Z91PROD with BILLS
55 

•HR 5297 RH

1 (A) indicate the total amount of Federal 

2 funding used by the participating State; 

3 (B) include a certification by the partici4 pating State that— 

5 (i) the information provided in accord6 ance with subparagraph (A) is accurate; 

7 (ii) funds continue to be available and 

8 legally committed to contributions by the 

9 State to, or for the account of, approved 

10 State programs, less any amount that has 

11 been contributed by the State to, or for the 

12 account of, approved State programs subse13 quent to the State being approved for par14 ticipation in the Program; and 

15 (iii) the participating State is imple16 menting its approved State program or pro17 grams in accordance with this title and reg18 ulations issued pursuant to section 210. 

19 (b) ANNUAL REPORT.—Not later than March 31 of 

20 each year, beginning March 31, 2011, each participating 

21 State shall submit to the Secretary an annual report that 

22 shall include the following information: 

23 (1) The number of borrowers that received new 

24 loans originated under the approved State program 


jbell on DSKDVH8Z91PROD with BILLS
56 

•HR 5297 RH

1 or programs after the State program was approved as 

2 eligible for Federal contributions. 

3 (2) The total amount of such new loans. 

4 (3) Breakdowns by industry type, loan size, an5 nual sales, and number of employees of the borrowers 

6 that received such new loans. 

7 (4) The zip code of each borrower that received 

8 such a new loan. 

9 (5) Such other data as the Secretary, in the Sec10 retary’s sole discretion, may require to carry out the 

11 purposes of the Program. 

12 (c) FORM.—The reports and data filed pursuant to 

13 subsections (a) and (b) shall be in such form as the Sec14 retary, in the Secretary’s sole discretion, may require. 

15 (d) TERMINATION OF REPORTING REQUIREMENTS.— 

16 The requirement to submit reports under subsections (a) 

17 and (b) shall terminate for a participating State with the 

18 submission of the completed reports due on the first March 

19 31 to occur after 5 complete 12-month periods after the 

20 State is approved by the Secretary to be a participating 

21 State. 

22 SEC. 208. REMEDIES FOR STATE PROGRAM TERMINATION 

23 OR FAILURES. 

24 (a) REMEDIES.— 


jbell on DSKDVH8Z91PROD with BILLS
57 

•HR 5297 RH

1 (1) IN GENERAL.—If any of the events listed in 

2 paragraph (2) occur, the Secretary, in the Secretary’s 

3 discretion, may— 

4 (A) reduce the amount of Federal funds al5 located to the State under the Program; or 

6 (B) terminate any further transfers of allo7 cated amounts that have not yet been transferred 

8 to the State. 

9 (2) CAUSAL EVENTS.—The events referred to in 

10 paragraph (1) are— 

11 (A) termination by a participating State of 

12 its participation in the Program; 

13 (B) failure on the part of a participating 

14 State to submit complete reports under section 

15 207 on a timely basis; or 

16 (C) noncompliance by the State with the 

17 terms of the allocation agreement between the 

18 Secretary and the State. 

19 (b) DEALLOCATED AMOUNTS TO BE REALLOCATED.— 

20 If, after 13 months, any portion of the amount of Federal 

21 funds allocated to a participating State is deemed by the 

22 Secretary to be no longer allocated to the State after actions 

23 taken by the Secretary under subsection (a)(1), the Sec24 retary shall reallocate that portion among the participating 

25 States, excluding the State whose allocated funds were 


jbell on DSKDVH8Z91PROD with BILLS
58 

•HR 5297 RH

1 deemed to be no longer allocated, as provided in section 

2 203(b). 

3 SEC. 209. IMPLEMENTATION AND ADMINISTRATION. 

4 (a) GENERAL AUTHORITIES AND DUTIES.—The Sec5 retary shall— 

6 (1) consult with the Administrator of the Small 

7 Business Administration and the appropriate Federal 

8 banking agencies on the administration of the Pro9 gram; 

10 (2) establish minimum national standards for 

11 approved State programs; 

12 (3) provide technical assistance to States for 

13 starting State programs and generally disseminate 

14 best practices; 

15 (4) manage, administer, and perform necessary 

16 program integrity functions for the Program; and 

17 (5) ensure adequate oversight of the approved 

18 State programs, including oversight of the cash flows, 

19 performance, and compliance of each approved State 

20 program. 

21 (b) AUTHORIZATION OF APPROPRIATIONS.—There are 

22 authorized to be appropriated to the Secretary, out of funds 

23 in the Treasury not otherwise appropriated, $2,000,000,000 

24 to carry out the Program, including to pay reasonable costs 

25 of administering the Program. 


jbell on DSKDVH8Z91PROD with BILLS
59 

•HR 5297 RH

1 (c) TERMINATION OF SECRETARY’S PROGRAM ADMIN2 ISTRATION FUNCTIONS.—The authorities and duties of the 

3 Secretary to implement and administer the Program shall 

4 terminate at the end of the 7-year period beginning on the 

5 date of enactment of this title. 

6 SEC. 210. REGULATIONS. 

7 The Secretary, in consultation with the Administrator 

8 of the Small Business Administration, shall issue such regu9 lations and other guidance as the Secretary determines nec10 essary or appropriate to implement this title including, but 

11 not limited to, to define terms, to establish compliance and 

12 reporting requirements, and such other terms and condi13 tions necessary to carry out the purposes of this title. 

14 SEC. 211. OVERSIGHT AND AUDITS. 

15 (a) INSPECTOR GENERAL OVERSIGHT.—The Inspector 

16 General of the Department of the Treasury shall conduct, 

17 supervise, and coordinate audits and investigations of the 

18 use of funds made available under the Program. 

19 (b) GAO AUDIT.—The Comptroller General of the 

20 United States shall perform an annual audit of the Pro21 gram and issue a report to the appropriate committees of 

22 Congress, as such term is defined under section 3(1), con23 taining the results of such audit. 


jbell on DSKDVH8Z91PROD with BILLS
Union Calendar No. 283 

111TH CONGRESS 

2D SESSION H. R. 5297 

[Report No. 111–499] 

A BILL 

To create the Small Business Lending Fund Prosmall businesses, and for other purposes. in order to increase the availability of credit for make capital investments in eligible institutions gram to direct the Secretary of the Treasury to 

MAY 27, 2010 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


jbell on DSKDVH8Z91PROD with BILLS