I 

111TH CONGRESS 

2D SESSION H. R. 5297 

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 

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. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Lend5 ing Fund Act of 2010’’. 


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1 SEC. 2. PURPOSE. 

2 The purpose of this Act is to address the ongoing 

3 effects of the financial crisis on small businesses by pro4 viding temporary authority to the Secretary of the Treas5 ury to make capital investments in eligible institutions in 

6 order to increase the availability of credit for small busi7 nesses. 

8 SEC. 3. DEFINITIONS. 

9 For purposes of this Act: 

10 (1) APPROPRIATE COMMITTEES OF CON11 GRESS.—The term ‘‘appropriate committees of Con12 gress’’ means— 

13 (A) the Committee on Small Business and 

14 Entrepreneurship, the Committee on Agri15 culture, Nutrition, and Forestry, the Committee 

16 on Banking, Housing, and Urban Affairs, the 

17 Committee on Finance, the Committee on the 

18 Budget, and the Committee on Appropriations 

19 of the Senate; and 

20 (B) the Committee on Small Business, the 

21 Committee on Agriculture, the Committee on 

22 Financial Services, the Committee on Ways and 

23 Means, the Committee on the Budget, and the 

24 Committee on Appropriations of the House of 

25 Representatives. 


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1 (2) APPROPRIATE FEDERAL BANKING AGEN2 CY.—The term ‘‘appropriate Federal banking agen3 cy’’ has the meaning given such term under section 

4 3(q) of the Federal Deposit Insurance Act (12 

5 U.S.C. 1813(q)). 

6 (3) BANK HOLDING COMPANY.—The term 

7 ‘‘bank holding company’’ has the meaning given 

8 such term under section 2(a)(1) of the Bank Hold9 ing Company Act of 1956 (12 U.S.C. 

10 1841(2)(a)(1)). 

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

12 means— 

13 (A) reports of Condition and Income sub14 mitted to the Office of the Comptroller of the 

15 Currency, the Board of Governors of the Fed16 eral Reserve System, and the Federal Deposit 

17 Insurance Corporation; 

18 (B) the Office of Thrift Supervision Thrift 

19 Financial Report; and 

20 (C) any report that is designated by the 

21 Office of the Comptroller of the Currency, the 

22 Board of Governors of the Federal Reserve Sys23 tem, the Federal Deposit Insurance Corpora24 tion, or the Office of Thrift Supervision, as apVerDate Mar 15 2010 21:04 May 13, 2010 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5297.IH H5297

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1 plicable, as a successor to any report referred to 

2 in subparagraph (A) or (B). 

3 (5) CDCI.—The term ‘‘CDCI’’ means the Com4 munity Development Capital Investment program 

5 created by the Secretary under the Troubled Asset 

6 Relief Program established by the Emergency Eco7 nomic Stabilization Act of 2008. 

8 (6) CDCI INVESTMENT.—The term ‘‘CDCI in9 vestment’’ means, with respect to any eligible insti10 tution, the principal amount of any investment made 

11 by the Secretary in such eligible institution under 

12 the CDCI that has not been repaid. 

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

14 Purchase Program created by the Secretary under 

15 the Troubled Asset Relief Program established by 

16 the Emergency Economic Stabilization Act of 2008. 

17 (8) CPP INVESTMENT.—The term ‘‘CPP in18 vestment’’ means, with respect to any eligible insti19 tution, the principal amount of any investment made 

20 by the Secretary in such eligible institution under 

21 the CPP that has not been repaid. 

22 (9) ELIGIBLE INSTITUTION.—The term ‘‘eligi23 ble institution’’ means— 

24 (A) any insured depository institution, 

25 which— 


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1 (i) is not controlled by a bank holding 

2 company or savings and loan holding com3 pany that is also an eligible institution; 

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

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

6 call report as of the end of the fourth 

7 quarter of calendar year 2009; and 

8 (iii) is not directly or indirectly con9 trolled by any company or other entity that 

10 has total assets of equal to or less than 

11 $10,000,000,000, as so reported; 

12 (B) any bank holding company, which— 

13 (i) has total assets of equal to or less 

14 than $10,000,000,000; and 

15 (ii) has one or more insured deposi16 tory institution subsidiaries that have com17 bined total assets of equal to or less than 

18 $10,000,000,000, as reported in the call 

19 report of each insured depository institu20 tion subsidiary as of the end of the fourth 

21 quarter of calendar year 2009; and 

22 (C) any savings and loan holding company, 

23 which— 

24 (i) has total assets of equal to or less 

25 than $10,000,000,000; and 


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1 (ii) has one or more insured deposi2 tory institution subsidiaries that have total 

3 assets of equal to or less than 

4 $10,000,000,000, as reported in the call 

5 report of each insured depository institu6 tion subsidiary as of the end of the fourth 

7 quarter of calendar year 2009. 

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

9 Small Business Lending Fund established by section 

10 4(a)(1) of this Act. 

11 (11) INSURED DEPOSITORY INSTITUTION.—The 

12 term ‘‘insured depository institution’’ has the mean13 ing given such term under section 3(c)(2) of the 

14 Federal Deposit Insurance Act (12 U.S.C. 

15 1813(c)(2)). 

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

17 the Small Business Lending Fund Program author18 ized by section 4(a)(2) of this Act. 

19 (13) SAVINGS AND LOAN HOLDING COMPANY.— 

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

21 the meaning given such term under section 

22 10(a)(1)(D) of the Home Owners’ Loan Act (12 

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

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

25 means the Secretary of the Treasury. 


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1 (15) SMALL BUSINESS LENDING.—The term 

2 ‘‘small business lending’’ means— 

3 (A) commercial and industrial loans plus 

4 owner-occupied nonfarm, nonresidential real es5 tate loans; 

6 (B) loans to finance agricultural produc7 tion and other loans to farmers; and 

8 (C) loans secured by farmland, as defined 

9 by and reported in an eligible institution’s quar10 terly call report. 

11 In the case of eligible institutions that are bank 

12 holding companies or savings and loan holding com13 panies having one or more insured depository insti14 tution subsidiaries, small business lending shall be 

15 measured based on the combined small business 

16 lending reported in the call report of the insured de17 pository institution subsidiaries. 

18 SEC. 4. SMALL BUSINESS LENDING FUND. 

19 (a) FUND AND PROGRAM.— 

20 (1) FUND ESTABLISHED.—There is established 

21 in the Treasury of the United States a fund to be 

22 known as the ‘‘Small Business Lending Fund’’, 

23 which shall be administered by the Secretary. 

24 (2) PROGRAMS AUTHORIZED.—The Secretary is 

25 authorized to establish the Small Business Lending 


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1 Fund Program for using the Fund consistent with 

2 this Act, and a program for the allocation of Federal 

3 funds to participating States to expand the avail4 ability of credit to small businesses. 

5 (b) USE OF FUND.— 

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

7 the Fund shall be available to the Secretary, without 

8 further appropriation or fiscal year limitation, for 

9 the costs of purchases (including commitments to 

10 purchase), and modifications of such purchases, of 

11 preferred stock and other financial instruments from 

12 eligible institutions on such terms and conditions as 

13 are determined by the Secretary in accordance with 

14 this Act. 

15 (2) MAXIMUM PURCHASE LIMIT.—The aggre16 gate amount of purchases (and commitments to pur17 chase) made pursuant to paragraph (1) may not ex18 ceed $30,000,000,000. 

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

20 to the Fund amounts made available pursuant to section 

21 9, to the extent provided by appropriations Acts. 

22 (d) TERMS.— 

23 (1) APPLICATION.— 

24 (A) Eligible institutions having total assets 

25 equal to or less than $1,000,000,000, as reVerDate Mar 15 2010 21:04 May 13, 2010 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5297.IH H5297

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1 ported in a call report as of the end of the 

2 fourth quarter of calendar year 2009, may 

3 apply to receive a capital investment from the 

4 Fund in an amount not exceeding 5 percent of 

5 risk-weighted assets, as reported in the call re6 port immediately preceding the date of applica7 tion, less the amount of any CDCI investment 

8 and any CPP investment. 

9 (B) Eligible institutions having total assets 

10 of more than $1,000,000,000 but less than 

11 $10,000,000,000, as of the end of the fourth 

12 quarter of calendar year 2009, may apply to re13 ceive a capital investment from the Fund in an 

14 amount not exceeding 3 percent of risk-weight15 ed assets, as reported in the call report imme16 diately preceding the date of application, less 

17 the amount of any CDCI investment and any 

18 CPP investment. 

19 (C) In the case of an eligible institution 

20 that is a bank holding company or a savings 

21 and loan holding company having one or more 

22 insured depository institution subsidiaries, total 

23 assets shall be measured based on the combined 

24 total assets reported in the call report of the in25 sured depository institution subsidiaries as of 


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1 the end of the fourth quarter of calendar year 

2 2009 and risk-weighted assets shall be meas3 ured based on the combined risk-weighted as4 sets of the insured depository institution sub5 sidiaries as reported in the call report imme6 diately preceding the date of application. 

7 (D) If an eligible institution that applies to 

8 receive a capital investment under the Program 

9 is under the control of a bank holding company 

10 or a savings and loan holding company, then 

11 the Secretary may use the Small Business 

12 Lending Fund to purchase preferred stock or 

13 other financial instruments from the top-tier 

14 bank holding company or savings and loan 

15 holding company of such eligible institution, as 

16 applicable. For purposes of this paragraph, the 

17 term ‘‘control’’ with respect to a bank holding 

18 company shall have the same meaning as in 

19 section 2(a)(2) of the Bank Holding Company 

20 Act of 1956 (12 U.S.C. 1841(2)(a)(2)). For 

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

22 with respect to a savings and loan holding com23 pany shall have the same meaning as in 

24 10(a)(2) of the Home Owners’ Loan Act (12 

25 U.S.C. 1467a(a)(2)). 


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1 (E) At the time that an applicant submits 

2 an application to the Secretary for a capital in3 vestment under the Program, the applicant 

4 shall deliver to the appropriate Federal banking 

5 agency a small business lending plan describing 

6 how the applicant’s business strategy and oper7 ating goals will allow it to address the needs of 

8 small businesses in the areas it serves. This 

9 plan shall be confidential supervisory informa10 tion. 

11 (2) CONSULTATION WITH REGULATORS.—For 

12 each eligible institution that applies to receive a cap13 ital investment under the Program, the Secretary 

14 shall consult with the appropriate Federal banking 

15 agency for the eligible institution to determine 

16 whether the eligible institution may receive such cap17 ital investment. 

18 (3) LIMITATION ON DENIAL.—The Secretary 

19 may not deny an application by an eligible institu20 tion for a capital investment under the Program 

21 solely on the basis of the composite rating of the eli22 gible institution under the Uniform Financial Insti23 tutions Rating System (or an equivalent rating 

24 under a comparable rating system). 

25 (4) INCENTIVES TO LEND.— 


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1 (A) Any preferred stock or other financial 

2 instrument issued to Treasury by an eligible in3 stitution receiving a capital investment under 

4 the Program shall 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 

11 on the amount of an eligible institution’s 

12 small business lending. Changes in small 

13 business lending shall be measured against 

14 the amount of small business lending re15 ported by the eligible institution in its call 

16 report for the last quarter in calendar year 

17 2009 or the average amount of small busi18 ness lending reported by the eligible insti19 tution in all call reports for calendar year 

20 2009, whichever is lower, minus adjust21 ments from each quarterly balance in re22 spect of— 

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


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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, 

12 based on that institution’s change in small 

13 business lending relative to the baseline— 

14 (I) if small business lending has 

15 increased by less than 2.5 percent, the 

16 dividend or interest rate shall be 5 

17 percent; 

18 (II) if small business lending has 

19 increased by 2.5 percent or greater, 

20 but by less than 5.0 percent, the divi21 dend or interest rate shall be 4 per22 cent; 

23 (III) if small business lending 

24 has increased by 5.0 percent or great25 er, but by less than 7.5 percent, the 


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1 dividend or interest rate shall be 3 

2 percent; 

3 (IV) if small business lending has 

4 increased by 7.5 percent or greater, 

5 and but by less than 10.0 percent, the 

6 dividend or interest rate shall be 2 

7 percent; or 

8 (V) if small business lending has 

9 increased by 10 percent or greater, 

10 the dividend or interest rate shall be 

11 1 percent. 

12 (B) The initial dividend or interest rate 

13 shall be based on call report data published in 

14 the quarter immediately preceding the date of 

15 the capital investment under the Program. 

16 (C) Any rate adjustment shall occur in the 

17 calendar quarter following the publication of 

18 call report data, such that the rate based on 

19 call report data from any one calendar quarter, 

20 which is published in the first following cal21 endar quarter, shall be adjusted in that first 

22 following calendar quarter and payable in the 

23 second following quarter. 

24 (D) Generally, the rate based on call re25 port data from the eighth calendar quarter 


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1 after the date of the capital investment under 

2 the Program shall be payable until the expira3 tion of the 5-year period that begins on the 

4 date of the investment. In the case where lend5 ing has remained the same or decreased relative 

6 to the institution’s baseline in the eighth quar7 ter after the date of the capital investment 

8 under the Program, the rate shall be 7 percent 

9 until the expiration of the 5-year period that 

10 begins on the date of the investment. 

11 (E) The dividend or interest rate paid on 

12 any preferred stock or other financial instru13 ment issued by an eligible institution that re14 ceives a capital investment under the Program 

15 shall increase to 9 percent at the end of the 5- 

16 year period that begins on the date of the cap17 ital investment under the Program. 

18 (F) The reduction in the dividend or inter19 est rate payable to Treasury by any eligible in20 stitution shall be limited such that the rate re21 duction shall not apply to an amount of the in22 vestment made by Treasury that is greater than 

23 the increase in lending realized under this pro24 gram. The Secretary may issue guidelines that 

25 will apply to new capital investments limiting 


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1 the amount of capital available to eligible insti2 tutions consistent with this limitation. 

3 (G) Before making a capital investment in 

4 an eligible institution that is an S corporation 

5 or a corporation organized on a mutual basis, 

6 the Secretary may adjust the dividend or inter7 est rate on the financial instrument to be issued 

8 to the Secretary, from the dividend or interest 

9 rate that would apply under subparagraphs (A) 

10 through (F), to take into account any differen11 tial tax treatment of securities issued by such 

12 eligible institution. For purpose of this subpara13 graph, the term ‘‘S corporation’’ has the same 

14 meaning as in section 1361(a) of the Internal 

15 Revenue Code of 1986. 

16 (5) ADDITIONAL INCENTIVES TO REPAY.—The 

17 Secretary may, by regulation or guidance issued 

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

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

20 will apply to new capital investments in a manner 

21 that the Secretary determines to be consistent with 

22 the purposes of this Act. 

23 (6) CAPITAL PURCHASE PROGRAM REFI24 NANCE.—The Secretary shall, in a manner that the 

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1 poses of this Act, issue regulations and other guid2 ance to permit eligible institutions to refinance secu3 rities issued to Treasury under the CDCI and the 

4 CPP for securities to be issued under the Program. 

5 (7) ADDITIONAL TERMS.—The Secretary may, 

6 by regulation or guidance issued under section 5(9), 

7 make modifications that will apply to new capital in8 vestments in order to manage risks associated with 

9 the administration of the Small Business Lending 

10 Fund in a manner consistent with the purposes of 

11 this Act. 

12 SEC. 5. ADDITIONAL AUTHORITIES OF THE SECRETARY. 

13 The Secretary may take such actions as the Secretary 

14 deems necessary to carry out the authorities in this Act, 

15 including, without limitation, the following: 

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

17 agency or instrumentality of the United States or 

18 component thereof on a reimbursable basis, and any 

19 such agency or instrumentality or component thereof 

20 is authorized to provide services as requested by the 

21 Secretary using all authorities vested in or delegated 

22 to that agency, instrumentality, or component. 

23 (2) The Secretary may enter into contracts, in24 cluding contracts for services authorized by section 

25 3109 of title 5, United States Code. 


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1 (3) The Secretary may designate any bank, sav2 ings association, trust company, or security broker 

3 or dealer as a financial agent of the Federal Govern4 ment and such institution shall perform all such rea5 sonable duties related to this Act as financial agent 

6 of the Federal Government as may be required. The 

7 Secretary shall have authority to amend existing 

8 agreements with financial agents, entered into dur9 ing the 2-year period before the date of enactment 

10 of this Act, to perform reasonable duties related to 

11 this Act. 

12 (4) The Secretary may exercise any rights re13 ceived in connection with any preferred stock or 

14 other financial instruments or assets purchased or 

15 acquired pursuant to the authorities granted under 

16 this Act. 

17 (5) The Secretary may manage any assets pur18 chased under this Act, including revenues and port19 folio risks therefrom. 

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

21 exchange or enter into securities loans, repurchase 

22 transactions, or other financial transactions in re23 gard to, any preferred stock or other financial in24 strument or asset purchased or acquired under this 


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1 Act, upon terms and conditions and at a price deter2 mined by the Secretary. 

3 (7) The Secretary may manage or prohibit con4 flicts of interest that may arise in connection with 

5 the administration and execution of the authorities 

6 provided under this Act. 

7 (8) The Secretary may establish and use vehi8 cles, subject to supervision by the Secretary, to pur9 chase, hold, and sell preferred stock or other finan10 cial instruments and issue obligations. 

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

12 Administrator of the Small Business Administration, 

13 issue such regulations and other guidance as may be 

14 necessary or appropriate to define terms or carry 

15 out the authorities or purposes of this Act. 

16 SEC. 6. CONSIDERATIONS. 

17 In exercising the authorities granted in this Act, the 

18 Secretary shall take into consideration— 

19 (1) increasing the availability of credit for small 

20 businesses; 

21 (2) providing funding to eligible institutions 

22 that serve small businesses in low- and moderate-in23 come, minority and other underserved communities; 

24 (3) protecting and increasing American jobs; 


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1 (4) ensuring that all eligible institutions may 

2 apply to participate in the program established 

3 under this Act, without discrimination based on ge4 ography; 

5 (5) providing transparency with respect to use 

6 of funds provided under this Act; and 

7 (6) minimizing the cost to taxpayers of exer8 cising the authorities. 

9 SEC. 7. REPORTS. 

10 The Secretary shall provide to the appropriate com11 mittees of Congress— 

12 (1) within 7 days of the end of each month 

13 commencing with the first month in which trans14 actions are made under the Program, a written re15 port describing all of the transactions made during 

16 the reporting period pursuant to the authorities 

17 granted under this Act; and 

18 (2) after the end of March and the end of Sep19 tember, commencing September 30, 2010, a written 

20 report on all projected costs and liabilities, all oper21 ating expenses, including compensation for financial 

22 agents, and all transactions made by the Fund. 

23 SEC. 8. OVERSIGHT AND AUDITS. 

24 (a) INSPECTOR GENERAL OVERSIGHT.—The Inspec25 tor General of the Department of the Treasury shall conVerDate Mar 15 2010 21:04 May 13, 2010 Jkt 089200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\H5297.IH H5297

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1 duct, supervise, and coordinate audits and investigations 

2 of the purchase (and commitments to purchase) of pre3 ferred stock and other financial instruments under the 

4 Program. 

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

6 United States shall perform an annual audit of the Pro7 gram and issue a report to the appropriate committees 

8 of Congress containing the results of such audit. 

9 SEC. 9. CREDIT REFORM; FUNDING. 

10 (a) CREDIT REFORM.—The cost of purchases of pre11 ferred stock and other financial instruments made as cap12 ital investments under this Act shall be determined as pro13 vided under the Federal Credit Reform Act of 1990 (2 

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

15 (b) FUNDS MADE AVAILABLE.—There are hereby au16 thorized to be appropriated, out of funds in the Treasury 

17 not otherwise appropriated, such sums as may be nec18 essary to pay the costs of $30,000,000,000 of capital in19 vestments in eligible institutions, including the costs of 

20 modifying such investments, and reasonable costs of ad21 ministering the program of making, holding, managing, 

22 and selling the capital investments. 


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1 SEC. 10. TERMINATION AND CONTINUATION OF AUTHORI2 TIES. 

3 (a) TERMINATION OF INVESTMENT AUTHORITY.— 

4 The authority to make capital investments in eligible insti5 tutions, including commitments to purchase preferred 

6 stock or other instruments, provided under this Act shall 

7 terminate 1 year after the date of enactment of this Act. 

8 (b) CONTINUATION OF OTHER AUTHORITIES.—The 

9 authorities of the Secretary in section 5 shall not be lim10 ited by the termination date in subsection (a). 

11 SEC. 11. PRESERVATION OF AUTHORITY. 

12 Nothing in this Act may be construed to limit the 

13 authority of the Secretary under any other provision of 

14 law. 

15 SEC. 12. ASSURANCES. 

16 (a) SMALL BUSINESS LENDING FUND SEPARATE

17 FROM TARP.—The Small Business Lending Fund Pro18 gram is established as separate and distinct from the 

19 Troubled Asset Relief Program established by the Emer20 gency Economic Stabilization Act of 2008. An institution 

21 shall not, by virtue of a capital investment under the Small 

22 Business Lending Fund Program, be considered a recipi23 ent of the Troubled Asset Relief Program. 

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

25 has been made in an eligible institution under the Pro26 gram, there is a change in law that modifies the terms 


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1 of the investment or program in a materially adverse re2 spect for the eligible institution, the eligible institution 

3 may, after consultation with the appropriate Federal 

4 banking agency for the eligible institution, repay the in5 vestment without impediment. 

Æ 


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