I 

111TH CONGRESS 

2D SESSION H. R. 5302 

To establish the State Small Business Credit Initiative, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 13, 2010 

Mr. PETERS (for himself, Mr. LEVIN, Mr. DINGELL, Mr. MAFFEI, Mr. SARBANES, Mr. REYES, Ms. NORTON, Mr. SCHAUER, Mr. PASCRELL, Mr. 

STUPAK, Ms. TSONGAS, Mr. WATT, Mr. TONKO, Mr. ETHERIDGE, Ms. 

LINDA T. SA ́NCHEZ of California, Mr. ADLER of New Jersey, Mr. KANJORSKI, Mr. MOORE of Kansas, Mr. MICHAUD, Ms. SUTTON, Ms. BEAN, 

Mr. LIPINSKI, Ms. MOORE of Wisconsin, Mr. LOEBSACK, Mr. KILDEE, 

and Mr. MILLER of North Carolina) introduced the following bill; which 

was referred to the Committee on Financial Services 

A BILL 

To establish the State Small Business Credit Initiative, 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 ‘‘State Small Business 

5 Credit Initiative Act of 2010’’. 


smartinez on DSKB9S0YB1PROD with BILLS
2 

•HR 5302 IH

1 SEC. 2. DEFINITIONS. 

2 For purposes of this Act, the following definitions 

3 shall apply: 

4 (1) APPROPRIATE FEDERAL BANKING AGEN5 CY.—The term ‘‘appropriate Federal banking agen6 cy’’— 

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

8 of the Federal Deposit Insurance Act; and 

9 (B) includes the National Credit Union 

10 Administration Board in the case of any credit 

11 union the deposits of which are insured in ac12 cordance with the Federal Credit Union Act. 

13 (2) ENROLLED LOAN.—The term ‘‘enrolled 

14 loan’’ means a loan made by a financial institution 

15 lender that is enrolled by a participating State in an 

16 approved State capital access program in accordance 

17 with this Act. 

18 (3) FEDERAL CONTRIBUTION.—The term ‘‘Fed19 eral contribution’’ means the portion of the contribu20 tion made by a participating State to, or for the ac21 count of, an approved State program that is made 

22 with Federal funds allocated to the State by the Sec23 retary under section 3. 

24 (4) FINANCIAL INSTITUTION.—The term ‘‘fi25 nancial institution’’ means any insured depository 

26 institution, insured credit union, or community deVerDate Mar 15 2010 01:09 May 14, 2010 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5302.IH H5302

smartinez on DSKB9S0YB1PROD with BILLS
3 

•HR 5302 IH

1 velopment financial institution, as those terms are 

2 each defined in section 103 of the Riegle Community 

3 Development and Regulatory Improvement Act of 

4 1994. 

5 (5) PARTICIPATING STATE.—The term ‘‘partici6 pating State’’ means any State that has been ap7 proved for participation in the Program under sec8 tion 4. 

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

10 the State Small Business Credit Initiative estab11 lished under this Act. 

12 (7) QUALIFYING LOAN OR SWAP FUNDING FA13 CILITY.—The term ‘‘qualifying loan or swap funding 

14 facility’’ means a contractual arrangement between a 

15 participating State and a private financial entity 

16 under which— 

17 (A) the participating State delivers funds 

18 to the entity as collateral; 

19 (B) the entity provides funding from the 

20 arrangement back to the participating State; 

21 and 

22 (C) the full amount of resulting funding 

23 from the arrangement, less any fees and other 

24 costs of the arrangement, is contributed to, or 

25 for the account of, an approved State program. 


smartinez on DSKB9S0YB1PROD with BILLS
4 

•HR 5302 IH

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

2 means a fund, established by a participating State, 

3 dedicated to a particular financial institution lender, 

4 for the purposes of— 

5 (A) depositing all required premium 

6 charges paid by the financial institution lender 

7 and by each borrower receiving a loan under an 

8 approved State program from that financial in9 stitution lender; 

10 (B) depositing contributions made by the 

11 participating State, including State contribu12 tions made with Federal contributions; and 

13 (C) covering losses on enrolled loans by 

14 disbursing accumulated funds. 

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

16 (A) a State of the United States; 

17 (B) the District of Columbia; 

18 (C) when designated by a State of the 

19 United States, a political subdivision of that 

20 State that the Secretary determines has the ca21 pacity to participate in the Program; and 

22 (D) under the circumstances described in 

23 section 4(d), a municipality of a State of the 

24 United States to which the Secretary has given 

25 a special permission under section 4(d). 


smartinez on DSKB9S0YB1PROD with BILLS
5 

•HR 5302 IH

1 (10) STATE CAPITAL ACCESS PROGRAM.—The 

2 term ‘‘State capital access program’’ means a pro3 gram of a State that— 

4 (A) uses public resources to promote pri5 vate access to credit; and 

6 (B) meets the eligibility criteria in section 

7 5(c). 

8 (11) STATE OTHER CREDIT SUPPORT PRO9 GRAM.—The term ‘‘State other credit support pro10 gram’’— 

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

12 (i) uses public resources to promote 

13 private access to credit; 

14 (ii) is not a State capital access pro15 gram; and 

16 (iii) meets the eligibility criteria in 

17 section 6(c); and 

18 (B) includes, collateral support programs, 

19 loan participation programs, and credit guar20 antee programs. 

21 (12) STATE PROGRAM.—The term ‘‘State pro22 gram’’ means a State capital access program or a 

23 State other credit support program. 

24 (13) SECRETARY.—The term ‘‘Secretary’’ 

25 means the Secretary of the Treasury. 


smartinez on DSKB9S0YB1PROD with BILLS
6 

•HR 5302 IH

1 SEC. 3. FEDERAL FUNDS ALLOCATED TO STATES. 

2 (a) PROGRAM ESTABLISHED; PURPOSE.—There is 

3 established the State Small Business Credit Initiative 

4 (Program), to be administered by the Secretary. Under 

5 the Program, the Secretary shall allocate Federal funds 

6 to participating States and make the allocated funds avail7 able to the participating States as provided in this section 

8 for the uses described in this section. 

9 (b) ALLOCATION FORMULA.— 

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

11 the date of enactment of this Act, the Secretary 

12 shall allocate Federal funds to participating States 

13 so that each State is eligible to receive an amount 

14 equal to the average of the respective amounts that 

15 the State— 

16 (A) would receive under the 2009 Alloca17 tion; and 

18 (B) would receive under the 2010 Alloca19 tion. 

20 (2) 2009 ALLOCATION FORMULA.— 

21 (A) IN GENERAL.—The Secretary shall de22 termine the 2009 Allocation by allocating Fed23 eral funds among the States in the proportion 

24 that each such State’s 2008 State employment 

25 decline bears to the aggregate of the 2008 

26 State employment declines for all States. 


smartinez on DSKB9S0YB1PROD with BILLS
7 

•HR 5302 IH

1 (B) MINIMUM ALLOCATION.—The Sec2 retary shall adjust the allocations under sub3 paragraph (A) for each State to the extent nec4 essary to ensure that no State receives less than 

5 0.9 percent of the Federal funds. 

6 (C) 2008 STATE EMPLOYMENT DECLINE

7 DEFINED.—For purposes of this paragraph and 

8 with respect to a State, the term ‘‘2008 State 

9 employment decline’’ means the excess (if any) 

10 of— 

11 (i) the number of individuals em12 ployed in such State determined for De13 cember 2007; over 

14 (ii) the number of individuals em15 ployed in such State determined for De16 cember 2008. 

17 (3) 2010 ALLOCATION FORMULA.— 

18 (A) IN GENERAL.—The Secretary shall de19 termine the 2010 Allocation by allocating Fed20 eral funds among the States in the proportion 

21 that each such State’s 2009 unemployment 

22 number bears to the aggregate of the 2009 un23 employment numbers for all of the States. 

24 (B) MINIMUM ALLOCATION.—The Sec25 retary shall adjust the allocations under subVerDate Mar 15 2010 01:09 May 14, 2010 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5302.IH H5302

smartinez on DSKB9S0YB1PROD with BILLS
8 

•HR 5302 IH

1 paragraph (A) for each State to the extent nec2 essary to ensure that no State receives less than 

3 0.9 percent of the Federal funds. 

4 (C) 2009 UNEMPLOYMENT NUMBER DE5 FINED.—For purposes of this paragraph and 

6 with respect to a State, the term ‘‘2009 unem7 ployment number’’ means the number of indi8 viduals within such State who were determined 

9 to be unemployed by the Bureau of Labor Sta10 tistics for December 2009. 

11 (c) AVAILABILITY OF ALLOCATED AMOUNT.—The 

12 amount allocated by the Secretary to each participating 

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

14 State as follows: 

15 (1) ALLOCATED AMOUNT GENERALLY TO BE

16 AVAILABLE TO STATE IN ONE-THIRDS.—Except as 

17 provided in paragraph (2)— 

18 (A) the Secretary shall apportion the par19 ticipating State’s allocated amount into one20 thirds; 

21 (B) the Secretary shall transfer to the par22 ticipating State the first one-third when the 

23 Secretary approves the State for participation 

24 under section 4; and 


smartinez on DSKB9S0YB1PROD with BILLS
9 

•HR 5302 IH

1 (C) the Secretary shall transfer to the par2 ticipating State each successive one-third when 

3 the State has certified to the Secretary that it 

4 has expended, transferred, or obligated 80 per5 cent of the last transferred one-third for Fed6 eral contributions to, or for the account of, 

7 State programs. 

8 The Secretary may withhold the transfer of any suc9 cessive one-third pending results of a financial audit. 

10 (2) EXCEPTION.—The Secretary may, in the 

11 Secretary’s discretion, transfer the full amount of 

12 the participating State’s allocated amount to the 

13 State in a single transfer if the participating State 

14 applies to the Secretary for approval to use the full 

15 amount of the allocation as collateral for a quali16 fying loan or swap funding facility. 

17 (3) TRANSFERRED AMOUNTS.—Each amount 

18 transferred to a participating State under this sec19 tion shall remain available to the State until used by 

20 the State as permitted under paragraph (4). 

21 (4) USE OF TRANSFERRED FUNDS.—Each par22 ticipating State may use funds transferred to it 

23 under this section only— 

24 (A) for making Federal contributions to, or 

25 for the account of, an approved State program; 


smartinez on DSKB9S0YB1PROD with BILLS
10 

•HR 5302 IH

1 (B) as collateral for a qualifying loan or 

2 swap funding facility; 

3 (C) in the case of the first one-third trans4 ferred, for paying administrative costs incurred 

5 by the State in implementing an approved State 

6 program in an amount not to exceed 5 percent 

7 of that first one-third; or 

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

9 transferred, for paying administrative costs in10 curred by the State in implementing an ap11 proved State program in an amount not to ex12 ceed 3 percent of that successive one-third. 

13 (5) TERMINATION OF AVAILABILITY OF

14 AMOUNTS NOT TRANSFERRED WITHIN 2 YEARS OF

15 PARTICIPATION.—Any portion of a participating 

16 State’s allocated amount that has not been trans17 ferred to the State under this section by the end of 

18 the 2-year period beginning on the date that the 

19 Secretary approves the State for participation may 

20 be deemed by the Secretary to be no longer allocated 

21 to the State and no longer available to the State and 

22 shall be returned to the General Fund. 

23 (6) DEFINITIONS.—For purposes of this sec24 tion— 


smartinez on DSKB9S0YB1PROD with BILLS
11 

•HR 5302 IH

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

2 the total amount of Federal funds allocated by 

3 the Secretary under subsection (b) to the par4 ticipating State; and 

5 (B) the term ‘‘one-third’’ means— 

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

7 one-thirds, an amount equal to 33 percent 

8 of a participating State’s allocated amount; 

9 and 

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

11 an amount equal to 34 percent of a partici12 pating State’s allocated amount. 

13 SEC. 4. APPROVING STATES FOR PARTICIPATION. 

14 (a) APPLICATION.—Any State may apply to the Sec15 retary for approval to be a participating State under the 

16 Program and to be eligible for an allocation of Federal 

17 funds under the Program. 

18 (b) GENERAL APPROVAL CRITERIA.—The Secretary 

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

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

21 subdivision of the State has been designated to im22 plement a State program and participate in the Pro23 gram; 

24 (2) all legal actions necessary to enable such 

25 designated department, agency, or political subdiviVerDate Mar 15 2010 01:09 May 14, 2010 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H5302.IH H5302

smartinez on DSKB9S0YB1PROD with BILLS
12 

•HR 5302 IH

1 sion to implement a State program and participate 

2 in the Program have been accomplished; 

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

4 Secretary for approval of a State capital access pro5 gram under section 5 or approval as a State other 

6 credit support program under section 6, in each case 

7 within the time period provided in the respective sec8 tion; and 

9 (4) the State and the Secretary have executed 

10 an allocation agreement that— 

11 (A) conforms to the requirements of this 

12 Act; 

13 (B) ensures that the State program com14 plies with such national standards as are estab15 lished by the Secretary under section 9(a)(2); 

16 (C) sets forth internal control, compliance, 

17 and reporting requirements as established by 

18 the Secretary, and such other terms and condi19 tions necessary to carry out the purposes of this 

20 Act, including an agreement by the State to 

21 allow the Secretary to audit State programs; 

22 (D) requires that the State program be 

23 fully positioned, within 90 days of the State’s 

24 execution of the allocation agreement with the 

25 Secretary, to act on providing the kind of credit 


smartinez on DSKB9S0YB1PROD with BILLS
13 

•HR 5302 IH

1 support that the State program was established 

2 to provide; and 

3 (E) includes an agreement by the State to 

4 deliver to the Secretary, and update annually, a 

5 schedule describing how the State intends to 

6 apportion among its State programs the Fed7 eral funds allocated to the State. 

8 (c) CONTRACTUAL ARRANGEMENTS FOR IMPLEMEN9 TATION OF STATE PROGRAMS.—A State may be approved 

10 to be a participating State, and be eligible for an allocation 

11 of Federal funds under the Program, if the State has con12 tractual arrangements for the implementation and admin13 istration of its State program with— 

14 (1) an existing, approved State program admin15 istered by another State; or 

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

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

18 entities. 

19 (d) SPECIAL PERMISSION.— 

20 (1) CIRCUMSTANCES WHEN A MUNICIPALITY

21 MAY APPLY DIRECTLY.—If a State does not, within 

22 60 days after the date of enactment of this Act, file 

23 with the Secretary a notice of its intent to apply for 

24 approval by the Secretary of a State program or 

25 within 9 months after the date of enactment of this 


smartinez on DSKB9S0YB1PROD with BILLS
14 

•HR 5302 IH

1 Act, file with the Secretary a complete application 

2 for approval of a State program, the Secretary may 

3 grant to municipalities of that State a special per4 mission that will allow them to apply directly to the 

5 Secretary without the State for approval to be par6 ticipating municipalities. 

7 (2) TIMING REQUIREMENTS APPLICABLE TO

8 MUNICIPALITIES APPLYING DIRECTLY.—To qualify 

9 for the special permission, a municipality of a State 

10 must, within 12 months after the date of enactment 

11 of this Act, file with the Secretary a complete appli12 cation for approval by the Secretary of a State pro13 gram. 

14 (3) NOTICES OF INTENT AND APPLICATIONS

15 FROM MORE THAN 1 MUNICIPALITY.—A municipality 

16 of a State may combine with 1 or more other mu17 nicipalities of that State to file a joint notice of in18 tent to file and a joint application. 

19 (4) APPROVAL CRITERIA.—The general ap20 proval criteria in paragraphs (2) and (4) of section 

21 4(b) will apply. 

22 (5) ALLOCATION TO MUNICIPALITIES.— 

23 (A) IF MORE THAN 3.—If more than 3 mu24 nicipalities, or combination of municipalities as 

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


smartinez on DSKB9S0YB1PROD with BILLS
15 

•HR 5302 IH

1 approval by the Secretary to be participating 

2 municipalities under this subsection, and the 

3 applications meet the approval criteria in para4 graph (4), the Secretary shall allocate Federal 

5 funds to the 3 municipalities with the largest 

6 populations. 

7 (B) IF 3 OR FEWER.—If 3 or fewer mu8 nicipalities, or combination of municipalities as 

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

10 approval by the Secretary to be participating 

11 municipalities under this subsection, and the 

12 applications meet the approval criteria in para13 graph (4), the Secretary shall allocate Federal 

14 funds to each applicant municipality or com15 bination of municipalities. 

16 (6) APPORTIONMENT OF ALLOCATED AMOUNT

17 AMONG PARTICIPATING MUNICIPALITIES.—If the 

18 Secretary approves municipalities to be participating 

19 municipalities under this subsection, the Secretary 

20 shall apportion the full amount of the Federal funds 

21 that are allocated to that State to municipalities 

22 that are approved under this subsection in amounts 

23 proportionate to the population of those municipali24 ties, based on the most recent available decennial 

25 Census. 


smartinez on DSKB9S0YB1PROD with BILLS
16 

•HR 5302 IH

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 6(d) in making the 

6 determination under section 5 or 6 that the State 

7 program or programs to be implemented by the par8 ticipating municipalities, including a State capital 

9 access program, is eligible for Federal contributions 

10 to, or for the account of, the State program. 

11 SEC. 5. 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 Act, 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; 


smartinez on DSKB9S0YB1PROD with BILLS
17 

•HR 5302 IH

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

2 of this Act, 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 4; 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 

22 to 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 

25 loan; and 


smartinez on DSKB9S0YB1PROD with BILLS
18 

•HR 5302 IH

1 (4) provides its portfolio insurance solely for 

2 loans that meet 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; and 

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 

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

13 premium charges paid by the borrowers and by the finan14 cial institution to the reserve fund for loans that meet the 

15 requirements in subsection (c)(4). A participating State 

16 may use the Federal contribution to make its contribution 

17 to the reserve fund of an approved State capital access 

18 program. 

19 (e) MINIMUM PROGRAM REQUIREMENTS FOR STATE

20 CAPITAL ACCESS PROGRAMS.—The Secretary shall, by 

21 regulation or other guidance, prescribe Program require22 ments that meet the following minimum requirements. 

23 (1) EXPERIENCE AND CAPACITY.—The partici24 pating State shall determine for each financial insti25 tution that participates in the State capital access 


smartinez on DSKB9S0YB1PROD with BILLS
19 

•HR 5302 IH

1 program, after consultation with the appropriate 

2 Federal banking agency or, in the case of a financial 

3 institution that is a non-depository community devel4 opment financial institution, the Community Devel5 opment Financial Institution Fund, that the finan6 cial institution has sufficient commercial lending ex7 perience and financial and managerial capacity to 

8 participate in the approved State capital access pro9 gram. The determination by the State shall not be 

10 reviewable by the Secretary. 

11 (2) INVESTMENT AUTHORITY.—Subject to ap12 plicable State law, the participating State may in13 vest, or cause to be invested, funds held in a reserve 

14 fund by establishing a deposit account at the finan15 cial institution lender in the name of the partici16 pating State. In the event that funds in the reserve 

17 fund are not deposited in such an account, such 

18 funds shall be invested in a form that the partici19 pating State determines is safe and liquid. 

20 (3) LOAN TERMS AND CONDITIONS TO BE DE21 TERMINED BY AGREEMENT.—A loan to be filed for 

22 enrollment in an approved State capital access pro23 gram may be made with such interest rate, fees, and 

24 other terms and conditions, and the loan may be en25 rolled in the approved State capital access program 


smartinez on DSKB9S0YB1PROD with BILLS
20 

•HR 5302 IH

1 and claims may be filed and paid, as agreed upon 

2 by the financial institution lender and the borrower, 

3 consistent with applicable law. 

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

5 filed for enrollment in the State capital access pro6 gram must require the financial institution lender to 

7 have a meaningful amount of its own capital re8 sources at risk in the loan. 

9 (5) PREMIUM CHARGES MINIMUM AND MAX10 IMUM AMOUNTS.—The insurance premium charges 

11 payable to the reserve fund by the borrower and the 

12 financial institution lender shall be prescribed by the 

13 financial institution lender, within minimum and 

14 maximum limits that require that the sum of the in15 surance premium charges paid in connection with a 

16 loan by the borrower and the financial institution 

17 lender may not be less than 2 percent nor more than 

18 7 percent of the amount of the loan enrolled in the 

19 approved State capital access program. 

20 (6) STATE CONTRIBUTIONS.—In enrolling a 

21 loan in an approved State capital access program, 

22 the participating State may make a contribution to 

23 the reserve fund to supplement Federal contribu24 tions made under this Program. 

25 (7) LOAN PURPOSE.— 


smartinez on DSKB9S0YB1PROD with BILLS
21 

•HR 5302 IH

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

3 with the filing of a loan for enrollment in an 

4 approved State capital access program, the fi5 nancial institution lender— 

6 (i) shall obtain an assurance from 

7 each borrower that— 

8 (I) the proceeds of the loan will 

9 be 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 


smartinez on DSKB9S0YB1PROD with BILLS
22 

•HR 5302 IH

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 bor23 rowers that are not inconsistent with the 

24 provisions and purposes of this Act, includ25 ing compliance with all applicable Federal 


smartinez on DSKB9S0YB1PROD with BILLS
23 

•HR 5302 IH

1 and State laws, regulations, ordinances, 

2 and Executive orders. 

3 (B) DEFINITIONS.—For purposes of this 

4 subsection, the terms ‘‘executive officer’’, ‘‘di5 rector’’, ‘‘principal shareholder’’, ‘‘immediate 

6 family’’, and related interest refer to the same 

7 relationship to a financial institution lender as 

8 the relationship described in part 215 of title 

9 12 of the Code of Federal Regulations, or any 

10 successor to such part. 

11 SEC. 6. APPROVING COLLATERAL SUPPORT AND OTHER IN12 NOVATIVE CREDIT ACCESS AND GUARANTEE 

13 INITIATIVES FOR SMALL BUSINESSES AND 

14 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 sup19 port program approved as eligible for Federal contribu20 tions to, 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— 


smartinez on DSKB9S0YB1PROD with BILLS
24 

•HR 5302 IH

1 (1) the Secretary determines that the State sat2 isfies the requirements of paragraphs (1) through 

3 (3) of subsection 5(b); 

4 (2) the Secretary determines that the State 

5 other credit support program meets the eligibility 

6 criteria in subsection (c); 

7 (3) the Secretary determines the State other 

8 credit support program to be eligible based on the 

9 additional considerations in subsection (d); and 

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

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

13 (c) ELIGIBILITY CRITERIA FOR STATE OTHER CRED14 IT SUPPORT PROGRAMS.—For a State other credit sup15 port program to be approved under this section, it must 

16 be a 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 


smartinez on DSKB9S0YB1PROD with BILLS
25 

•HR 5302 IH

1 business lending at least 10 times the new Federal 

2 contribution amount; 

3 (3) for those State other credit support pro4 grams that provide their credit support through 1 or 

5 more financial institution lenders, requires the finan6 cial institution lenders to have a meaningful amount 

7 of their own capital resources at risk in their small 

8 business lending; and 

9 (4) extends credit support that meets the fol10 lowing requirements: 

11 (A) targets an average borrower size of 

12 500 employees or less; 

13 (B) does not extend credit support to bor14 rowers that have more than 750 employees; 

15 (C) targets support towards loans with an 

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

17 and 

18 (D) does not extend credit support to loans 

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

20 (d) ADDITIONAL CONSIDERATIONS.—In making a de21 termination that a State other credit support program is 

22 eligible for Federal contributions to, or for the account 

23 of, the State program, the Secretary shall take into ac24 count the following additional considerations: 


smartinez on DSKB9S0YB1PROD with BILLS
26 

•HR 5302 IH

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

2 businesses, and its residents to be derived from the 

3 Federal contributions to, or for the account of, the 

4 approved State other credit support program, includ5 ing the extent to which resulting small business 

6 lending will expand economic opportunities; 

7 (2) the operational capacity, skills, and experi8 ence of the management team of the State other 

9 credit support program; 

10 (3) the capacity of the State other credit sup11 port program to manage increases in the volume of 

12 its small business lending; 

13 (4) the internal accounting and administrative 

14 controls systems of the State other credit support 

15 program, and the extent to which they can provide 

16 reasonable assurance that funds of the State pro17 gram are safeguarded against waste, loss, unauthor18 ized use, or misappropriation; and 

19 (5) the soundness of the program design and 

20 implementation plan of the State other credit sup21 port program. 

22 (e) FEDERAL CONTRIBUTIONS TO APPROVED STATE

23 OTHER CREDIT SUPPORT PROGRAMS.—A State other 

24 credit support program approved under this section will 

25 be eligible for receiving Federal contributions to, or for 


smartinez on DSKB9S0YB1PROD with BILLS
27 

•HR 5302 IH

1 the account of, the State program in an amount consistent 

2 with the schedule describing the apportionment of allo3 cated Federal funds among State programs delivered by 

4 the State to the Secretary under the allocation agreement. 

5 (f) MINIMUM PROGRAM REQUIREMENTS FOR STATE

6 OTHER CREDIT SUPPORT PROGRAMS.— 

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

8 by regulation or other guidance, prescribe Program 

9 requirements for approved State other credit support 

10 programs. 

11 (2) CONSIDERATIONS FOR FUND.—In pre12 scribing minimum Program requirements for ap13 proved State other credit support programs, the Sec14 retary shall take into consideration, to the extent the 

15 Secretary determines applicable and appropriate, the 

16 minimum Program requirements for approved State 

17 capital access programs in section 5(e). 

18 SEC. 7. REPORTS. 

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

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

21 the beginning of each calendar quarter, beginning 

22 after the first full calendar quarter to occur after 

23 the date the Secretary approves a State for partici24 pation, the participating State shall submit to the 

25 Secretary a report on the use of Federal funding by 


smartinez on DSKB9S0YB1PROD with BILLS
28 

•HR 5302 IH

1 the participating State during the previous calendar 

2 quarter. 

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

4 (A) indicate the total amount of Federal 

5 funding used by the participating State; 

6 (B) include a certification by the partici7 pating State that— 

8 (i) the information provided in accord9 ance with subparagraph (A) is accurate; 

10 (ii) funds continue to be available and 

11 legally committed to contributions by the 

12 State to, or for the account of, approved 

13 State programs, less any amount that has 

14 been contributed by the State to, or for the 

15 account of, approved State programs sub16 sequent to the State being approved for 

17 participation in the Program; and 

18 (iii) the participating State is imple19 menting its approved State program or 

20 programs in accordance with this Act and 

21 regulations issued pursuant to section 10. 

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

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

24 State shall submit to the Secretary an annual report that 

25 shall include the following information: 


smartinez on DSKB9S0YB1PROD with BILLS
29 

•HR 5302 IH

1 (1) The number of borrowers that received new 

2 loans originated under the approved State program 

3 or programs after the State program was approved 

4 as eligible for Federal contributions. 

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

6 (3) Breakdowns by industry type, loan size, an7 nual sales, and number of employees of the bor8 rowers that received such new loans. 

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

10 such a new loan. 

11 (5) Such other data that the Secretary, in the 

12 Secretary’s sole discretion, may require to carry out 

13 the purposes of the Program. 

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

15 subsections (a) and (b) shall be in such form as the Sec16 retary, in the Secretary’s sole discretion, may require. 

17 (d) TERMINATION OF REPORTING REQUIRE18 MENTS.—The requirement to submit reports under sub19 sections (a) and (b) shall terminate for a participating 

20 State with the submission of the completed reports due 

21 on the first March 31 to occur after 5 complete 12-month 

22 periods after the State is approved by the Secretary to 

23 be a participating State. 


smartinez on DSKB9S0YB1PROD with BILLS
30 

•HR 5302 IH

1 SEC. 8. REMEDIES FOR STATE PROGRAM TERMINATION OR 

2 FAILURES. 

3 (a) REMEDIES.— 

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

5 paragraph (2) occur, the Secretary, in the Sec6 retary’s discretion, may— 

7 (A) reduce the amount of Federal funds al8 located to the State under the Program; or 

9 (B) terminate any further transfers of allo10 cated amounts that have not yet been trans11 ferred to the State. 

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

13 paragraph (1) are— 

14 (A) termination by a participating State of 

15 its participation in the Program; 

16 (B) failure on the part of a participating 

17 State to submit complete reports under section 

18 7 on a timely basis; or 

19 (C) noncompliance by the State with the 

20 terms of the allocation agreement between the 

21 Secretary and the State. 

22 (b) DE-ALLOCATED AMOUNTS TO BE RE-ALLO23 CATED.—If, after 13 months, any portion of the amount 

24 of Federal funds allocated to a participating State is 

25 deemed by the Secretary to be no longer allocated to the 

26 State after actions taken by the Secretary under subVerDate Mar 15 2010 04:48 May 14, 2010 Jkt 089200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\H5302.IH H5302

smartinez on DSKB9S0YB1PROD with BILLS
31 

•HR 5302 IH

1 section (a)(1), the Secretary shall re-allocate that portion 

2 among the participating States, excluding the State whose 

3 allocated funds were deemed to be no longer allocated, as 

4 provided in section 3(b). 

5 SEC. 9. IMPLEMENTATION AND ADMINISTRATION. 

6 (a) GENERAL AUTHORITIES AND DUTIES.—The Sec7 retary shall— 

8 (1) consult with the Administrator of the Small 

9 Business Administration and the appropriate Fed10 eral banking agencies on the administration of the 

11 Program; 

12 (2) establish minimum national standards for 

13 approved State programs; 

14 (3) provide technical assistance to States for 

15 starting State programs and generally disseminate 

16 best practices; 

17 (4) manage, administer, and perform necessary 

18 program integrity functions for the Program; and 

19 (5) ensure adequate oversight of the approved 

20 State programs, including oversight of the cash 

21 flows, performance, and compliance of each approved 

22 State program. 

23 (b) FUNDING.—There are hereby appropriated to the 

24 Secretary, out of funds in the Treasury not otherwise ap25 propriated, $2,000,000,000 to carry out the Program, inVerDate Mar 15 2010 01:09 May 14, 2010 Jkt 089200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\H5302.IH H5302

smartinez on DSKB9S0YB1PROD with BILLS
32 

•HR 5302 IH

1 cluding to pay reasonable costs of administering the Pro2 gram. In administering the Program, the Secretary is au3 thorized to use the staff and resources of the Department. 

4 (c) EXPEDITED CONTRACTING.—During the 1-year 

5 period beginning on the date of enactment of this Act, the 

6 Secretary may enter into contracts without regard to any 

7 other provision of law regarding public contracts, for pur8 poses of carrying out this Act. 

9 (d) TERMINATION OF SECRETARY’S PROGRAM AD10 MINISTRATION FUNCTIONS.—The authorities and duties 

11 of the Secretary to implement and administer the Program 

12 shall terminate at the end of the 7-year period beginning 

13 on the date of enactment of this Act. 

14 SEC. 10. REGULATIONS. 

15 The Secretary, in consultation with the Administrator 

16 of the Small Business Administration, shall issue such 

17 regulations and other guidance as Secretary determines 

18 necessary or appropriate to implement this Act including, 

19 but not limited to, to define terms, to establish compliance 

20 and reporting requirements, and such other terms and 

21 conditions necessary to carry out the purposes of this Act. 

Æ 


smartinez on DSKB9S0YB1PROD with BILLS