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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3719 Introduced in House (IH)]

104th CONGRESS
  2d Session
                                H. R. 3719

 To amend the Small Business Act and Small Business Investment Act of 
                                 1958.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 26, 1996

Mrs. Meyers of Kansas introduced the following bill; which was referred 
                   to the Committee on Small Business

_______________________________________________________________________

                                 A BILL

 
 To amend the Small Business Act and Small Business Investment Act of 
                                 1958.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Business 
Programs Improvement Act of 1996''.
    (b) Table of Contents.--

Sec. 1. Short title; table of contents.
Sec. 2. Administrator defined.
Sec. 3. Effective date.
               TITLE I--AMENDMENTS TO SMALL BUSINESS ACT

Sec. 101. References.
Sec. 102. Risk management database.
Sec. 103. Section 7(a) loan program.
Sec. 104. Disaster loan program.
Sec. 105. Microloan demonstration program.
Sec. 106. Small business development center program.
Sec. 107. Women's demonstration grant program.
Sec. 108. Nonjudicial foreclosure.
Sec. 109. Miscellaneous authorities to provide loans and other 
                            financial assistance.
Sec. 110. Small business competitiveness demonstration program.
Sec. 111. Amendment to Small Business Guaranteed Credit Enhancement Act 
                            of 1993.
         TITLE II--AMENDMENTS TO SMALL BUSINESS INVESTMENT ACT

Sec. 201. References.
Sec. 202. Modifications to development company debenture program.
Sec. 203. Required actions upon default.
Sec. 204. Loan liquidation pilot program.
Sec. 205. Registration of certificates.

SEC. 2. ADMINISTRATOR DEFINED.

    In this Act, the term ``Administrator'' means the Administrator of 
the Small Business Administration.

SEC. 3. EFFECTIVE DATE.

    Except as otherwise expressly provided, this Act and the amendments 
made by this Act shall take effect on October 1, 1996.

               TITLE I--AMENDMENTS TO SMALL BUSINESS ACT

SEC. 101. REFERENCES.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Small Business Act (15 
U.S.C. 631 et seq.).

SEC. 102. RISK MANAGEMENT DATA BASE.

    Section 4(b) (15 U.S.C. 633) is amended by inserting after 
paragraph (2) the following:
            ``(3) Risk management database.--
                    ``(A) Establishment.--The Administration shall 
                establish, within the management system for the loan 
                programs authorized by subsections (a) and (b) of 
                section 7 of this Act and title V of the Small Business 
                Investment Act of 1958, a management information system 
                that will generate a database capable of providing 
                timely and accurate information in order to identify 
                loan underwriting, collections, recovery, and 
                liquidation problems.
                    ``(B) Information to be maintained.--In addition to 
                such other information as the Administration considers 
                appropriate, the database established under 
                subparagraph (A) shall, with respect to each loan 
                program described in subparagraph (A), include 
                information relating to--
                            ``(i) the identity of the institution 
                        making the guaranteed loan or issuing the 
                        debenture;
                            ``(ii) the identity of the borrower;
                            ``(iii) the total dollar amount of the loan 
                        or debenture;
                            ``(iv) the total dollar amount of 
                        government exposure in each loan;
                            ``(v) the district of the Administration in 
                        which the borrower has its principal office;
                            ``(vi) the borrower's principal line of 
                        business, as identified by Standard Industrial 
                        Classification Code (or any successor to that 
                        system);
                            ``(vii) the delinquency rate for each 
                        program (including number of instances and days 
                        overdue);
                            ``(viii) the number of defaults in each 
                        program (including losses and recoveries);
                            ``(ix) the number of deferrals or 
                        forbearances in each program (including days 
                        and number of instances); and
                            ``(x) comparisons on the basis of loan 
                        program, lender, Administration district and 
                        region, for all the data elements maintained.
                    ``(C) Deadline for operational capability.--The 
                database established under subparagraph (A) shall be 
                operational not later than March 31, 1997, and shall 
                capture data beginning on the first day of the first 
                quarter of fiscal year 1997 beginning after such date 
                and thereafter.''.

SEC. 103. SECTION 7(a) LOAN PROGRAM.

    (a) Servicing and Liquidation of Loans by Preferred Lenders.--
Section 7(a)(2)(C)(ii)(II) (15 U.S.C. 636(a)(2)(C)(ii)(II)) is amended 
to read as follows:
                                    ``(II) complete authority to 
                                service and liquidate such loans 
                                without obtaining the prior specific 
                                approval of the Administration for 
                                routine servicing and liquidation 
                                activities.''.
    (b) Certified Lenders Program.--Section 7(a)(19) (15 U.S.C. 
636(a)(19)) is amended to read as follows:
            ``(19) Certified lenders program.--
                    ``(A) Establishment.--In addition to the Preferred 
                Lenders Program authorized by the proviso in section 
                5(b)(7), the Administration is authorized to establish 
                a Certified Lenders Program for lenders who establish 
                their knowledge of Administration laws and regulations 
                concerning the guaranteed loan program and their 
                proficiency in program requirements.
                    ``(B) Designation of certified lenders.--
                            ``(i) Requirement.--The Administration may 
                        designate a lender as a certified lender only 
                        if the lender has made in each of the preceding 
                        2 fiscal years--
                                    ``(I) 8 or more loans guaranteed 
                                under this subsection to small business 
                                concerns located in areas other than a 
                                rural area; or
                                    ``(II) 4 or more loans guaranteed 
                                under this subsection to small business 
                                concerns located in a rural area.
                            ``(ii) Suspension and revocation.--The 
                        designation of a lender as a certified lender 
                        shall be suspended or revoked at any time that 
                        the Administration determines that the lender 
                        is not adhering to its rules and regulations or 
                        that the loss experience of the lender is 
                        excessive as compared to other lenders, but 
                        such suspension or revocation shall not affect 
                        any outstanding guarantee.
                            ``(iii) Rural area defined.--In this 
                        subparagraph, the term `rural area' has the 
                        meaning given such term by subsection 
                        (m)(11)(C).
                    ``(C) Uniform and simplified loan forms.--In order 
                to encourage all lending institutions and other 
                entities making loans authorized under this subsection 
                to provide loans of $50,000 or less in guarantees to 
                eligible small business loan applicants, the 
                Administration shall develop and allow participating 
                lenders to solely utilize a uniform and simplified loan 
                form for such loans.
                    ``(D) Low documentation loan program.--The 
                Administration may carry out the low documentation loan 
                program for loans of $100,000 or less only through 
                preferred lenders and certified lenders.''.
    (c) Limitation on Conducting Pilot Projects.--Section 7(a) (15 
U.S.C. 636(a)) is amended by adding at the end the following new 
paragraph:
            ``(25) Limitation on conducting pilot projects.--
                    ``(A) In general.--Not more than 10 percent of the 
                total number of loans guaranteed in any fiscal year 
                under this subsection may be awarded as part of a pilot 
                program established by the Administration.
                    ``(B) Pilot program defined.--In this paragraph, 
                the term `pilot program' means any lending program 
                initiative, project, innovation, or other activity not 
                specifically authorized by law.''.
    (d) Securitization of Unguaranteed Portions of SBA Loans.--Section 
5(f)(3) (15 U.S.C. 634(f)(3)) is amended by adding at the end the 
following: ``The Administration may not prohibit a lender from 
securitizing the non-guaranteed portion of any loan made under section 
7(a) pursuant to the regulations contained in section 120.420 of title 
13, Code of Federal Regulations, solely due to the status of the lender 
as a depository institution.''.
    (e) Conditions on Purchase of Loans.--
            (1) Servicing fee.--Section 5(g)(5) (15 U.S.C. 634(g)(5)) 
        is amended by adding at the end the following:
    ``(C) In the event the Administration pays a claim under a 
guarantee issued under this Act, the servicing fees paid to the lender 
from the earliest date of default to the date of payment of the claim 
shall be no more than the agreed upon rate, minus one percent.
            (2) Payment of accrued interest.--Section 7(a)(17) is 
        amended--
                    (A) by striking ``(17) The Administration'' and 
                inserting ``(17)(A) The Administration''; and
                    (B) by adding at the end the following:
            ``(B) Any bank or other lending institution making a claim 
        for payment on the guaranteed portion of a loan made under this 
        subsection shall be paid the accrued interest due on the loan 
        from the earliest date of default to the date of payment of the 
        claim at a rate not to exceed the rate of interest on the loan 
        on the date of default, minus one percent.
    (f) Transfer of Loan Servicing Functions to Centralized Centers.--
Not later than 60 days after the date of the enactment of this Act, the 
Administrator shall complete the transfer of loan servicing functions 
of the Administration, including arrangement for the transfer of 
appropriate personnel, from district offices to centralized loan 
servicing centers.
    (g) Preferred Lender Standard Review Program.--Not later than 30 
days after the date of the enactment of this Act, the Administrator 
shall implement the standard review program for the Preferred Lender 
Program established pursuant to section 5(b)(7) of the Small Business 
Act (15 U.S.C. 634(b)(7)). The Administrator shall require such 
standard review for each new entrant to the Preferred Lender Program.
    (h) Independent Study of Loan Programs.--
            (1) Study required.--The Administrator shall conduct a 
        comprehensive assessment of the performance of the loan 
        programs authorized by section 7(a) of the Small Business Act 
        (15 U.S.C. 636(a)) and title V of the Small Business Investment 
        Act of 1958 (15 U.S.C. 661) addressing the matters described in 
        paragraph (2) and resulting in a report to Congress pursuant to 
        paragraph (5).
            (2) Matters to be assessed.--In addition to such other 
        matters as the Administrator considers appropriate, the 
        assessment required by paragraph (1) shall address, with 
        respect to each loan program described in paragraph (1) for 
        each of the fiscal years described in paragraph (3), the 
        following:
                    (A) the number and frequency of deferrals and 
                defaults;
                    (B) default rates;
                    (C) comparative loss rates, by--
                            (i) type of lender (separately addressing 
                        preferred lenders, certified lenders, and 
                        general participation lenders);
                            (ii) term of the loan; and
                            (iii) dollar value of the loan at 
                        disbursement; and
                    (D) the economic models used by the Office of 
                Management and Budget to calculate the credit subsidy 
                rate applicable to the loan programs.
            (3) Period of assessment.--The assessments undertaken 
        pursuant to paragraph (2) shall address data for the period 
        beginning with the first full fiscal year of the implementation 
        of each loan program described in paragraph (1) through fiscal 
        year 1995.
            (4) Performance by the private sector.--
                    (A) Contractor performance.--A private sector 
                contractor shall be used by the Administrator to 
                conduct the assessment required by paragraph (1) and to 
                prepare the report to Congress required by paragraph 
                (3).
                    (B) Solicitation and award.--The contract shall be 
                awarded pursuant to a solicitation issued not later 
                than 60 days after the date of the enactment of this 
                Act, which shall provide for full and open competition. 
                The Administrator shall make every reasonable effort to 
                award the contract not later that 60 days after the 
                date specified in the solicitation for receipt of 
                proposals.
                    (C) Access to information.--The Administrator shall 
                provide to the contractor access to any information 
                collected by or available to the Administration with 
                regard to the loan programs being assessed. The 
                contractor shall preserve the confidentiality of any 
                information for which confidentiality is protected by 
                law or properly asserted by the person submitting such 
                information.
                    (D) Contract funding.--The Administrator shall fund 
                the cost of the contract from the amounts appropriated 
                for the salaries and expenses of the Administration for 
                fiscal year 1997.
            (5) Report to congress.
                    (A) Contents.--The contractor shall submit a report 
                of--
                            (i) its analyses of the matters to be 
                        assessed pursuant to paragraph (2);
                            (ii) its independent recommendations, with 
                        respect to each loan program, regarding the 
                        following:
                                    (I) improving the Administration's 
                                timely collection and subsequent 
                                management of data to measure the 
                                performance of each loan program 
                                described in paragraph (1); and
                                    (II) reducing loss rates for each 
                                such loan program.
                    (B) Submission by contractor.--The contractor shall 
                submit the report required by subparagraph (A) not 
                later than 6 months after the date of the contract 
                award.
                    (C) Submission to congress.--The Administrator 
                shall submit the report received from the contractor 
                pursuant to subparagraph (B) to the Committees on Small 
                Business of the House of Representatives and the Senate 
                within 15 days of receipt of the report.

SEC. 104. DISASTER LOAN PROGRAM.

    (a) Interest Rate.--Section 7(c)(5) (15 U.S.C. 636(c)(5)) is 
amended to read as follows:
            ``(5) Interest rate for disasters commencing after october 
        1, 1996.--Notwithstanding any other provision of law, the 
        interest rate on the Federal share of any loan made under 
        paragraph (1) or (2) of subsection (b) on account of a disaster 
        commencing on or after October 1, 1996, shall be the rate 
        determined by the Secretary of the Treasury, taking into 
        consideration the current average market yield on outstanding 
        marketable obligations of the United States with remaining 
        periods to maturity comparable to the average maturities of 
        such loan plus an additional charge of 2 percent per year, 
        adjusted to the nearest one-eighth of 1 percent.''.
    (b) Repeal of Obsolete Provisions.--
            (1) The undesignated paragraph following subparagraph (D) 
        of section 7(b)(2) (15 U.S.C. 636(b)) is amended by striking 
        the sentence that begins ``Notwithstanding any other provision 
        of law'' through the end of subsection (b).
            (2) Paragraphs (3) and (4) of section 7(c) (15 U.S.C. 
        636(c)) are repealed.
    (c) Outsourcing of Loan Servicing.--
            (1) Pilot program.--The Administrator shall carry out a 
        pilot program under which the servicing of not less than 20 
        percent of the total portfolio of loans made to homeowners 
        under section 7(b) of the Small Business Act (including loans 
made before the date of the enactment of this Act) will be carried out 
by 1 or more private entities under contracts entered into by the 
Administration.
            (2) Initiation date.--Not later than 90 days after the date 
        of enactment of this Act, the Administrator shall begin 
        implementation of the pilot program.
            (3) Report.--Not later than 2 fiscal years after the date 
        of award of the contracts provided for in paragraph (1), the 
        Administrator shall transmit to Congress a report containing a 
        description and assessment of the results of the pilot program.

SEC. 105. MICROLOAN DEMONSTRATION PROGRAM.

    (a) Technical Assistance Grant Requirements.--Section 7(m)(4) (15 
U.S.C. 636(m)(4)) is amended--
            (1) in subparagraph (A) by striking ``25 percent'' and 
        inserting ``20 percent''; and
            (2) in subparagraph (B) by striking ``25 percent'' and 
        inserting ``35 percent''.
    (b) Limitation on Spending.-- Section 7(m)(12) (15 U.S.C. 
636(m)(12)) is amended by adding at the end the following new 
subparagraph:
            ``(D) Limitation on spending.--None of the amounts 
        appropriated to carry out this subsection for fiscal year 1997 
        may be expended until such date as the Administrator has 
        implemented the pilot program under this paragraph.''.

SEC. 106. SMALL BUSINESS DEVELOPMENT CENTER PROGRAM.

    (a) Elimination of Requirement for Location at Institutions of 
Higher Learning.--Section 21(a)(1) (15 U.S.C. 648(a)(1)) is amended by 
striking ``: Provided, That'' and all that follows through ``small 
business community''.
    (b) Authority To Charge Reasonable Fees.--
            (1) In general.--Section 21(a)(3) (15 U.S.C. 648(a)(3)) is 
        amended by adding at the end the following:
                    ``(D) Fees.--Small business development centers may 
                charge reasonable and necessary fees for their 
                services. Such fees may not exceed $15.00 per hour and 
                may not be mandated by the Administration.''.
            (2) Conforming amendments.--Section 21 (15 U.S.C. 648) is 
        amended--
                    (A) in subsection (a)(3)--
                            (i) by striking ``(3) The Small Business'' 
                        and inserting the following:
            ``(3) Administration of program.--
                    ``(A) General management and oversight.--The Small 
                Business'';
                            (ii) by striking ``(A) Small Business'' and 
                        inserting the following:
                    ``(B) Association of small business development 
                centers.--Small Business'';
                            (iii) by striking ``(B) Provisions'' and 
                        inserting the following:
                    ``(C) Audits, cost principals, and administrative 
                requirements.--Provisions''; and
                            (iv) by aligning the remainder of the text 
                        of each of subparagraphs (A), (B), and (C), as 
                        designated by clauses (i), (ii), and (iii) of 
                        this subparagraph, with the text of 
                        subparagraph (D), as added by paragraph (1) of 
                        this subsection; and
                    (B) in subsection (k)(2) by striking ``subsection 
                (a)(3)(A)'' and inserting ``subsection (a)(3)(B)''.
    (c) Associate Administrator for Small Business Development 
Centers.--
            (1) Duties.--Section 21(h) (15 U.S.C. 648(h)) is amended to 
        read as follows:
    ``(h) Associate Administrator for Small Business Development 
Centers.--
            ``(1) Appointment and compensation.--The Administrator 
        shall appoint an Associate Administrator for Small Business 
        Development Centers who shall report to an official who is not 
        more than one level below the Office of the Administrator and 
        who shall serve without regard to the provisions of title 5 
        governing appointments in the competitive service, and without 
        regard to chapter 51, and subchapter III of chapter 53 of such 
        title relating to classification and General Schedule pay 
        rates, but at a rate not less than the rate of GS-17 of the 
        General Schedule.
            ``(2) Duties.--
                    ``(A) In general.--The sole responsibility of the 
                Associate Administrator for Small Business Development 
                Centers shall be to administer the small business 
                development center program. Duties of the position 
                shall include, but are not limited to, recommending the 
                annual program budget, reviewing the annual budgets 
                submitted by each applicant, establishing appropriate 
                funding levels therefore, selecting applicants to 
                participate in this program, implementing the 
                provisions of this section, maintaining a clearinghouse 
                to provide for the dissemination and exchange of 
                information between small business development centers 
                and conducting audits of recipients of grants under 
                this section.
                    ``(B) Consultation requirements.--In carrying out 
                the duties described in this subsection, the Associate 
                Administrator shall confer with and seek the advice of 
                the Board established by subsection (i) and 
                Administration officials in areas served by the small 
                business development centers; however, the Associate 
                Administrator shall be responsible for the management 
                and administration of the program and shall not be 
                subject to the approval or concurrence of such 
                Administration officials.''.
            (2) References to associate administrator.--Section 21 (15 
        U.S.C. 648) is amended--
                    (A) in subsection (c)(7) by striking ``Deputy 
                Associate Administrator of the Small Business 
                Development Center program'' and inserting ``Associate 
                Administrator for Small Business Development Centers''; 
                and
                    (B) in subsection (i)(2) by striking ``Deputy 
                Associate Administrator for Management Assistance'' and 
                inserting ``Associate Administrator for Small Business 
                Development Centers''.
    (d) Extension or Renewal of Cooperative Agreements.--Section 
21(k)(3) (15 U.S.C. 648(k)(3)) is amended to read as follows:
            ``(3) Extension or renewal of cooperative agreements.--
                    ``(A) In general.--In extending or renewing a 
                cooperative agreement of a small business development 
                center, the Administration shall consider the results 
                of the examination and certification program conducted 
                pursuant to paragraphs (1) and (2).
                    ``(B) Certification requirement.--After September 
                30, 2000, the Administration may not renew or extend 
                any cooperative agreement with a small business 
                development center unless the center has been approved 
                under the certification program conducted pursuant to 
                this subsection; except that the Associate 
                Administrator for Small Business Development Centers 
                may waive such certification requirement, in the 
                discretion of the Associate Administrator, upon a 
                showing that the center is making a good faith effort 
                to obtain certification.''.
    (e) Technical Correction.--Section 21(l) (15 U.S.C. 648(l)) is 
amended to read as follows:
    ``(l) Contract Authority.--The authority to enter into contracts 
shall be in effect for each fiscal year only to the extent and in the 
amounts as are provided in advance in appropriations Acts. After the 
administration has entered a contract, either as a grant or a 
cooperative agreement, with any applicant under this section, it shall 
not suspend, terminate, or fail to renew or extend any such contract 
unless the Administration provides the applicant with written 
notification setting forth the reasons therefor and affording the 
applicant an opportunity for a hearing, appeal, or other administrative 
proceeding under the provisions of chapter 7 of title 5, United States 
Code.''.

SEC. 107. WOMEN'S DEMONSTRATION GRANT PROGRAM.

    Section 29(g) (15 U.S.C. 656(g)) is amended by striking ``1997'' 
and inserting ``1996''.

SEC. 108. NONJUDICIAL FORECLOSURE.

    The Small Business Act (15 U.S.C. 631 et seq.) is amended by 
redesignating section 30 as section 31 and by inserting after section 
29 the following:

``SEC. 30. NONJUDICIAL FORECLOSURE.

    ``(a) General Rule.--The Administrator may foreclose a mortgage 
upon a breach of a covenant or condition in a debt instrument or 
mortgage if such debt instrument or mortgage authorizes acceleration or 
foreclosure.
    ``(b) Designation and Removal of Trustee.--
            ``(1) Designation.--The Administrator shall, in writing, 
        designate by name, title, or position, a foreclosure trustee 
        who shall have the power to conduct a foreclosure sale pursuant 
        to this section and shall supersede any trustee designated in 
        the mortgage. The Administrator may designate as foreclosure 
        trustee--
                    ``(A) an officer or employee of the Small Business 
                Administration;
                    ``(B) an individual who is a resident of the State 
                in which the security property is located; or
                    ``(C) a partnership, association, or corporation 
                authorized to transact business under the laws of the 
                State in which the security property is located.
            ``(2) Authorization for multiple foreclosure trustees.--The 
        Administrator may designate such foreclosure trustees as the 
        Administrator determines necessary to carry out the purposes of 
        this section. The Administrator may designate one or more 
        foreclosure trustees for the purpose of proceedings with 
        multiple foreclosures or a class of foreclosures.
            ``(3) Removal of foreclosure trustees.--The Administrator 
        may remove a foreclosure trustee and designate a successor 
        trustee as provided in this section. The foreclosure sale shall 
        continue, notwithstanding the removal of the foreclosure 
        trustee and designation of a successor foreclosure trustee, 
        unless otherwise postponed by the successor foreclosure 
        trustee.
    ``(c) Notice of Foreclosure Sale.--
            ``(1) In general.--
                    ``(A) Not earlier than 21 days nor later than 
                twenty years after acceleration of a debt instrument or 
                demand on a guaranty, the foreclosure trustee shall 
                serve a notice of a foreclosure sale in accordance with 
                this section. In computing the time period, all periods 
                during which there is in effect a judicially imposed 
                stay of foreclosure or a stay imposed by section 362 of 
                title 11, United States Code, shall be excluded.
                    ``(B) In the event of partial payment or written 
                acknowledgement of the debt after acceleration of the 
                debt instrument, the right to foreclosure shall be 
                deemed to accrue again at the time of each such payment 
                or acknowledgement.
            ``(2) Requirements of foreclosure sale.--The notice of 
        foreclosure sale shall include--
                    ``(A) the name, title, and business address of the 
                foreclosure trustee as of the date of the notice;
                    ``(B) the names of the original parties to the debt 
                instrument and the mortgage, and any assignees of the 
                mortgagor of record;
                    ``(C) the street address or location of the 
                security property, and a generally accepted designation 
                used to describe the security property, or so much 
                thereof as is to be offered for sale, sufficient to 
                identify the property to be sold;
                    ``(D) the date of the mortgage, the office in which 
                the mortgage is filed, and the location of the filing 
                of the mortgage;
                    ``(E) a statement that a default has occurred, and 
                the date of the acceleration of the debt instrument;
                    ``(F) the date, time, and place of the foreclosure 
                sale;
                    ``(G) a statement that the foreclosure is being 
                conducted in accordance with this Act;
                    ``(H) the types of costs, if any, to be paid by the 
                purchaser upon transfer of title; and
                    ``(I) the terms and conditions of sale, including 
                the method and time of payment of the foreclosure 
                purchase price.
            ``(3)  Service of notice of foreclosure sale.--
                    ``(A) Record notice.--Not later than 21 days before 
                the date of the foreclosure sale, notice of foreclosure 
                sale shall be filed in the manner authorized for filing 
                a notice of an action concerning real property 
                according to the law of the State in which the security 
                property is located.
                    ``(B) Notice by mail.--
                            ``(i) Not later than 21 days before the 
                        date of the foreclosure sale, notice of the 
                        foreclosure shall be sent by registered or 
                        certified mail, return receipt requested to--
                                    ``(I) the current owner of record 
                                of the security property as the record 
                                appears on the date that the notice of 
                                foreclosure sale is recorded pursuant 
                                to subsection (a);
                                    ``(II) all debtors, including the 
                                mortgagor, assignees of record of the 
                                mortgagor, and guarantors of the debt 
                                instrument;
                                    ``(III) all persons having liens, 
                                interests or encumbrances of record 
                                upon the security property, as the 
                                record appears on the date that the 
                                notice of foreclosure sale is recorded 
                                pursuant to subsection (a); and
                                    ``(IV) any occupants of the 
                                security property.
                If the names of the occupants of the security property 
                are not known to the agency, or the security property 
                has more than one dwelling unit, the notice shall be 
                posted at the security property.
                    ``(C) Notice by publication.--Notice of a 
                foreclosure sale shall be published for three 
                successive weeks prior to the sale in a newspaper of 
                general circulation in any county or counties in which 
                the security property is located. In a case in which no 
                newspaper has a weekly general circulation in at least 
                one county in which the security property is located, a 
                copy of the notice of foreclosure sale shall be posted 
                at least 21 days prior to the sale at the courthouse of 
                any county or counties in which the property is located 
                and at the place where the sale is to be held.
    ``(d) Cancellation of Foreclosure Sale.--
            ``(1) In general.--The foreclosure trustee shall cancel the 
        foreclosure sale, at any time prior to the sale--
                    ``(A) if the debtor or the holder of any 
                subordinate interest in the security property tenders 
                the performance due under the debt instrument and 
                mortgage, including any amounts due because of the 
                exercise of the right to accelerate, and the expenses 
                of proceeding to foreclosure incurred to the time of 
                tender; or
                    ``(B) if the security property is the principal 
                dwelling of the debtor, and the debtor--
                            ``(i) pays or tenders all sums which would 
                        have been due at the time of tender in the 
                        absence of any acceleration;
                            ``(ii) performs any other obligation which 
                        would have been required in the absence of any 
                        acceleration; and
                            ``(iii) pays or tenders all costs of 
                        foreclosure incurred for which payment from the 
                        proceeds of the sale would be allowed; or
                    ``(C) or any reason approved by the Administrator.
            ``(2) Limitation.--The debtor may not, without the approval 
        of the Administrator, cure the default under paragraph (1)(B) 
        if, within the preceding 12 months, the debtor has cured a 
        default after being served with a notice of foreclosure sale 
        pursuant to this Act.
            ``(3) Notice of cancellation.--The foreclosure trustee 
        shall file a notice of the cancellation in the same place and 
        manner provided for the filing of the notice of foreclosure 
        sale under paragraph (2).
    ``(e) Stay.--If, prior to the time of sale, foreclosure proceedings 
under this section are stayed in any manner, including the filing of 
bankruptcy, no person may thereafter cure the default under the 
provisions of subsection (d)(1)(B) without the approval of the 
Administrator. If the default is not cured at the time a stay is 
terminated, the foreclosure trustee shall proceed to sell the security 
property as provided in this section.
    ``(f) Conduct of Sale.--
            ``(1) Sale procedures.--Any foreclosure sale conducted 
        pursuant to this section shall be at a public auction between 
        the hours of 9:00 a.m. and 4:00 p.m. The foreclosure sale shall 
        be held at the location specified in the notice of foreclosure 
        sale, which shall be a location where real estate foreclosure 
        auctions are customarily held in the county or one of the 
        counties in which the property to be sold is located or at a 
        courthouse therein, or upon the property to be sold. Sale of 
        security property situated in two or more counties may be held 
        in any one of the counties in which any part of the security 
        property is situated. The foreclosure trustee may designate the 
        order in which multiple tracts of security property are sold.
            ``(2) Bidding requirements.--Written one-price sealed bids 
        may be accepted by the foreclosure trustee, if submitted by the 
        Administrator or other persons for entry by announcement by the 
        foreclosure trustee at the sale. The sealed bids shall be 
        submitted in accordance with the terms set forth in the notice 
        of foreclosure sale. The Administrator or any other person may 
        bid at the foreclosure sale, even if the Administrator or other 
        person previously submitted a written one-price bid. The 
        Administrator may bid a credit against the debt due without the 
        tender or payment of cash. The foreclosure trustee may serve as 
        auctioneer, or may employ an auctioneer who may be paid from 
        the sale proceeds. If an auctioneer is employed, the 
        foreclosure trustee is not required to attend the sale. The 
        foreclosure trustee or an auctioneer may bid as directed by the 
        Administrator.
            ``(3) Postponement of sale.--The foreclosure trustee shall 
        have discretion, prior to or at the time of sale, to postpone 
        the foreclosure sale. The foreclosure trustee may postpone a 
        sale to a later hour the same day by announcing or posting the 
        new time and place of the foreclosure sale at the time and 
        place originally scheduled for the foreclosure sale. The 
        foreclosure trustee may instead postpone the foreclosure sale 
        for not fewer than 9 nor more than 31 days, by serving notice 
        that the foreclosure sale has been postponed to a 
specified date, and the notice may include any revisions the 
foreclosure trustee deems appropriate. The notice shall be served by 
publication, mailing, and, if appropriate, posting in accordance with 
subsection (c), except that publication may be made on any of three 
separate days prior to the new date of the foreclosure sale, and 
mailing may be made at any time at least 7 days prior to the new date 
of the foreclosure sale.
            ``(4) Liability of successful bidder who fails to comply.--
        The foreclosure trustee may require a bidder to make a cash 
        deposit before the bid is accepted. The amount or percentage of 
        the cash deposit shall be stated by the foreclosure trustee in 
        the notice of foreclosure sale. A successful bidder at the 
        foreclosure sale who fails to comply with the terms of the sale 
        shall forfeit the cash deposit or, at the election of the 
        foreclosure trustee, shall be liable to the agency on a 
        subsequent sale of the property for all net losses incurred by 
        the agency as a result of such failure.
            ``(5) Effect of sale.--Any foreclosure sale held in 
        accordance with this Act shall be conclusively presumed to have 
        been conducted in a legal, fair, and commercially reasonable 
        manner. The sale price shall be conclusively presumed to 
        constitute the reasonably equivalent value of the security 
        property.
    ``(g) Transfer of Title and Possession.--
        `(1) Deed.--After receipt of the purchase price in accordance 
        with the terms of the sale as provided in the notice of 
        foreclosure sale, the foreclosure trustee shall execute and 
        deliver to the purchaser a deed conveying the security property 
        to the purchaser that grants and conveys title to the security 
        property without warranty or covenants to the purchaser. The 
        execution of the foreclosure trustee's deed shall have the 
        effect of conveying all of the right, title, and interest in 
        the security property covered by the mortgage. Notwithstanding 
        any other law provision of law, the foreclosure trustee's deed 
        shall constitute a conveyance of the security property.
            ``(2) Death of purchaser prior to consummation of sale.--If 
        a purchaser dies before execution and delivery of the deed 
        conveying the security property to the purchaser, the 
        foreclosure trustee shall execute and deliver the deed to the 
        representative of the purchaser's estate upon payment of the 
        purchase price in accordance with the terms of sale. Such 
        delivery to the representative of the purchaser's estate shall 
        have the same effect as if accomplished during the lifetime of 
        the purchaser.
            ``(3) Purchaser considered bona fide purchaser without 
        notice.--The purchaser of property under this Act shall be 
        presumed to be a bona fide purchaser without notice of defects, 
        if any, in the title conveyed to the purchaser.
            ``(4) Possession by purchaser; continuing interests.--A 
        purchaser at a foreclosure sale conducted pursuant to this Act 
        shall be entitled to possession upon passage of title to the 
        security property, subject to any interest or interests senior 
        to that of the mortgage. The right to possession of any person 
        without an interest senior to the mortgage who is in possession 
        of the property shall terminate immediately upon the passage of 
        title to the security property, and the person shall vacate the 
        security property immediately. The purchaser shall be entitled 
        to take any steps available under Federal law or State law to 
        obtain possession.
            ``(5) Right of redemption; right of possession.--This Act 
        shall preempt all Federal and State rights of redemption or 
        possession under statutory or common law. Upon conclusion of 
        the public auction of the security property, no person shall 
        have a right of redemption.
            ``(6) Prohibition of imposition of tax on conveyance by the 
        agency.--No tax, or fee in the nature of a tax, for the 
        transfer of title to the security property by the foreclosure 
        trustee's deed shall be imposed upon or collected from the 
        foreclosure trustee or the purchaser by any State or political 
        subdivision thereof.
    ``(h) Record of Foreclosure and Sale.--
            ``(1) Recital requirements.--The foreclosure trustee shall 
        recite in the deed to the purchaser, or in an addendum to the 
        foreclosure trustee's deed, or shall prepare an affidavit 
        stating--
                    ``(A) the date, time, and place of sale;
                    ``(B) the date of the mortgage, the office in which 
                the mortgage is filed, and the location of the filing 
                of the mortgage;
                    ``(C) the persons served with the notice of 
                foreclosure sale;
                    ``(D) the date and place of filing of the notice of 
                foreclosure sale under subsection (c)
                    ``(E) that the foreclosure was conducted in 
                accordance with the provisions of this Act; and
                    ``(F) the sale amount.
            ``(2) Effect of recitals.--The recitals set forth in 
        paragraph (1) shall be prima facie evidence of the truth of 
        such recitals. Compliance with the requirements of paragraph 
        (1) shall create a conclusive presumption of the validity of 
        the sale in favor of bona fide purchasers and encumbrancers for 
        value without notice.
            ``(3) Deed to be accepted for filing.--The register of 
        deeds or other appropriate official of the county or counties 
        where real estate deeds are regularly filed shall accept for 
        filing and shall file the foreclosure trustee's deed and 
        affidavit, if any, and any other instruments submitted for 
        filing in relation to the foreclosure of the security property 
        under this Act.
    ``(h) Effect of Sale.--A sale conducted under this Act to a bona 
fide purchaser shall bar all claims upon the security property by--
            ``(1) any person to whom the notice of foreclosure sale was 
        mailed as provided in this Act who claims an interest in the 
        property subordinate to that of the mortgage, and the heir, 
        devisee, executor, administrator, successor, or assignee 
        claiming under any such person;
            ``(2) any person claiming any interest in the property 
        subordinate to that of the mortgage, if such person had actual 
        knowledge of the sale;
            ``(3) any person so claiming, whose assignment, mortgage, 
        or other conveyance was not filed in the proper place for 
        filing, or whose judgment or decree was not filed in the proper 
        place for filing, prior to the date of filing of the notice of 
        foreclosure sale as required by subsection (c), and the heir, 
        devisee, executor, administrator, successor, or assignee of 
        such a person; or
            ``(4) any other person claiming under a statutory lien or 
        encumbrance not required to be filed and attaching to the title 
        or interest of any person designated in any of the foregoing 
        subsections of this section.
    ``(i) Disposition of Sale Proceeds.--
            ``(1) Distribution of sale proceeds.--The foreclosure 
        trustee shall distribute the proceeds of the foreclosure sale 
        in the following order:
                    ``(A)(i) First, to pay the commission of the 
                foreclosure trustee, other than an agency employee, in 
                an amount not to exceed 5 percent of the sum collected, 
                plus the foreclosure trustee's costs.
                    ``(ii) The amounts described in clause (i) shall be 
                computed on the gross proceeds of all security property 
                sold at a single sale.
                    ``(B) Thereafter, to pay the expense of any 
                auctioneer employed by the foreclosure trustee, if any, 
                except that the commission payable to the foreclosure 
                trustee pursuant to subparagraph (A) shall be reduced 
                by the amount paid to an auctioneer, unless the 
                Administrator determines that such reduction would 
                adversely affect the ability of the Administrator to 
                retain qualified foreclosure trustees or auctioneers.
                    ``(C) Thereafter, to pay for the costs of 
                foreclosure, including--
                            ``(i) reasonable and necessary advertising 
                        costs and postage incurred in giving notice 
                        pursuant to subsection (c);
                            ``(ii) mileage for posting notices and for 
                        the foreclosure trustee's or auctioneer's 
                        attendance at the sale at the rate provided in 
                        section 1921 of title 28, United States Code, 
                        for mileage by the most reasonable road 
                        distance;
                            ``(iii) reasonable and necessary costs 
                        actually incurred in connection with any search 
                        of title and lien records; and
                            ``(iv) necessary costs incurred by the 
                        foreclosure trustee to file documents.
                    ``(D) Thereafter, to pay valid real property tax 
                liens or assessments, if required by the notice of 
                foreclosure sale.
                    ``(E) Thereafter, to pay any liens senior to the 
                mortgage, if required by the notice of foreclosure 
                sale.
                    ``(F) Thereafter, to pay service charges and 
                advancements for taxes, assessments, and property 
                insurance premiums.
                    ``(G) Thereafter, to pay late charges and other 
                administrative costs and the principal and interest 
                balances secured by the mortgagee including 
                expenditures for the necessary protections 
                preservation, and repair of the security property as 
                authorized under the debt instrument or mortgage and 
                interest thereon if provided for in the debt instrument 
                or mortgage, pursuant to the agency's procedures.
            ``(2) Insufficient proceeds.--In the event there are no 
        proceeds of sale or the proceeds are insufficient to pay the 
        costs and expenses set forth in paragraph (1), the 
        Administrator shall pay such costs and expenses as authorized 
        by applicable law.
            ``(3) Surplus moneys.--
                    ``(A) After making the payments required by 
                paragraph (1), the foreclosure trustee shall--
                            ``(i) distribute any surplus to pay liens 
                        in the order of priority under Federal law or 
                        the law of the State where the security 
                        property is located; and
                            ``(ii) pay to the person who was the owner 
                        of record on the date the notice of foreclosure 
                        sale was filed the balance, if any, after any 
                        payments made pursuant to paragraph (1).
                    ``(B) If the person to whom such surplus is to be 
                paid cannot be located, or if the surplus available is 
                insufficient to pay all claimants and the claimants 
                cannot agree on the distribution of the surplus, that 
                portion of the sale proceeds may be deposited by the 
                foreclosure trustee with an appropriate official 
                authorized under law to receive funds under such 
                circumstances. If such a procedure for the deposit of 
                disputed funds is not available, and the foreclosure 
                trustee files a bill of interpleader or is sued as a 
                stakeholder to determine entitlement to such funds, the 
                foreclosure trustee's necessary costs in taking or 
                defending such action shall be deducted first from the 
                disputed funds.
    ``(j) Deficiency Judgment.--
            ``(1) In general.--If after deducting the disbursements 
        described in section 13, the price at which the security 
        property is sold at a foreclosure sale is insufficient to pay 
        the unpaid balance of the debt secured by the security 
        property, counsel for the agency may commence an action or 
        actions against any or all debtors to recover the deficiency, 
        unless specifically prohibited by the mortgage. The agency is 
        also entitled to recover any amount authorized by section 11 
        and costs of the action.
            ``(2) Limitation.--Any action commenced to recover the 
        deficiency shall be brought within 6 years of the last sale of 
        security property.
            ``(3) Credits.--The amount payable by a private mortgage 
        guaranty insurer shall be credited to the account of the debtor 
        prior to the commencement of an action for any deficiency owed 
        by the debtor. Nothing in this subsection shall curtail 
or limit the subrogation rights of a private mortgage guaranty 
insurer.''.

SEC. 109. MISCELLANEOUS AUTHORITIES TO PROVIDE LOANS AND OTHER 
              FINANCIAL ASSISTANCE.

    (a) Funding Limitation; Seminars.--Section 7(d) (15 U.S.C. 636(d)) 
is repealed.
    (b) Trade Adjustment Loans.--Section 7(e) (15 U.S.C. 636(e)) is 
repealed.
    (c) Waiver of Credit Elsewhere Test for Colleges and 
Universities.--Section 7(f) (15 U.S.C. 636(f)) is repealed.
    (d) Loans to Handicapped Persons and Organizations for the 
Handicapped.--Section 7(h) (15 U.S.C. 636(h)) is repealed.
    (e) Loans to Small Business Concerns Located in Urban or Rural 
Areas With High Proportions of Unemployed or Low-Income Individuals.--
Section 7(i) (15 U.S.C. 636(i)) is repealed.
    (f) Loans to Small Business Concerns for Solar Energy and Energy 
Conservation Measures.--Section 7(l) (15 U.S.C. 636(l)) is repealed.

SEC. 110. SMALL BUSINESS COMPETITIVENESS DEMONSTRATION PROGRAM.

    (a) Extension of Demonstration Program.--Section 711(c) of the 
Small Business Competitiveness Demonstration Program Act of 1988 (15 
U.S.C. 644 note; 102 Stat. 3890) is amended by striking ``September 30, 
1996'' and inserting ``September 30, 2000''.
    (b) Reporting of Subcontract Participation in Contracts for 
Architectural and Engineering Services.--Section 714(b)(5) of the Small 
Business Competitiveness Demonstration Program Act of 1988 (15 U.S.C. 
644 note; 102 Stat. 3892) is amended to read as follows:
            ``(5) Duration.--The system described in subsection (a) 
        shall be established not later than October 1, 1996 (or as soon 
        as practicable thereafter on the first day of a subsequent 
        quarter of fiscal year 1997), and shall terminate on September 
        30, 2000.''.
    (c) References to Architectural and Engineering Services.--
            (1) In general.--The Small Business Competitiveness 
        Demonstration Program Act of 1988 (15 U.S.C. 644 note; 102 
        Stat. 3889 et seq.) is amended by striking ``architectural and 
        engineering services (including surveying and mapping)'' each 
        place it appears and inserting ``architectural and engineering 
        services (including surveying, mapping, and landscape 
        architecture)''.
            (2) Designated industry groups.--Section 717(d) of the 
        Small Business Competitiveness Demonstration Program Act of 
        1988 (15 U.S.C. 644 note; 102 Stat. 3894) is amended by 
        inserting ``standard industrial classification codes 0731 and 
        0739 (if identified as pertaining to mapping services),'' after 
        ``(if identified as pertaining to mapping services),''.
    (d) Small Business Participation Goals.--
            (1) Enhanced goals for designated industry groups.--Section 
        712(a) of the Small Business Competitiveness Demonstration 
        Program Act of 1988 (15 U.S.C. 644 note; 102 Stat. 3890) is 
        amended to read as follows:
    ``(a) Enhanced Goals for Designated Industry Groups.--Each 
participating agency shall establish an annual small business 
participation goal (calculated on the basis of the total dollar value 
of contract awards) that is--
            ``(1) 35 percent in the case of the designated industry 
        group for architectural and engineering services (including 
        surveying, mapping, and landscape architecture); or
            ``(2) 40 percent in the case of each of the other 
        designated industry groups.''.
            (2) Emerging small business concerns.--
                    (A) Repeal of reserve.--Section 712(b) of the Small 
                Business Competitiveness Demonstration Program Act of 
                1988 (15 U.S.C. 644 note; 102 Stat. 3890-3891) is 
                amended to read as follows:
    ``(b) [Reserved].''.
            (B) Conforming amendment.--Section 713(b) of the Small 
        Business Competitiveness Demonstration Program Act of 1988 (15 
        U.S.C. 644 note; 102 Stat. 3892) is amended by striking ``, 
        which are in excess of the reserve thresholds specified 
        pursuant to section 712(b)''.
    (3) Modifications to solicitation practices.--Section 712(d)(3) of 
the Small Business Competitiveness Demonstration Program Act of 1988 
(15 U.S.C. 644 note; 102 Stat. 3891) is amended by striking ``40 
percent of the contract awards'' and inserting ``the percentage 
applicable to the designated industry group pursuant to subsection 
(a)''.
    (e) Participating Agency.--Section 718(c) of the Small Business 
Competitiveness Demonstration Program Act of 1988 (15 U.S.C. 644 note; 
102 Stat. 3894) is amended--
            (1) by striking ``as part of the Program test plan'';
            (2) by redesignating paragraphs (2) through (10) as 
        paragraphs (3) through (11), respectively; and
            (3) by inserting after paragraph (1) the following:
            ``(2) the Department of Commerce,''.
    (f) Reports to Congress.--
            (1) In general.--Section 716 of the Small Business 
        Competitiveness Demonstration Program Act of 1988 (15 U.S.C. 
        644 note; 102 Stat. 3893) is amended--
                    (A) in subsection (a), by striking ``fiscal year 
                1991 and 1995'' and inserting ``each of fiscal year 
                beginning with fiscal year 1991 and ending with fiscal 
                year 1999'';
                    (B) in subsection (a), by striking ``results'' and 
                inserting ``cumulative results''; and
                    (C) in subsection (c), by striking ``1996'' and 
                inserting ``1999''.
            (2) Cumulative report through fiscal year 1995.--A 
        cumulative report of the results of the Small Business 
        Competitiveness Demonstration Program for fiscal years 1991 
        through 1995 shall be submitted not later than 60 days after 
        the date of the enactment of this Act pursuant to section 
        716(a) of the Small Business Competitiveness Demonstration 
        Program Act of 1988 (15 U.S.C. 644 note; 102 Stat. 3893), as 
        amended by paragraph (1) of this subsection.

SEC. 111. AMENDMENT TO SMALL BUSINESS GUARANTEED CREDIT ENHANCEMENT ACT 
              OF 1993.

    Section 7 of the Small Business Guaranteed Credit Enhancement Act 
of 1993 (Public Law 103-81; 15 U.S.C. 634 note) is repealed effective 
September 29, 1996.

         TITLE II--AMENDMENTS TO SMALL BUSINESS INVESTMENT ACT

SEC. 201. REFERENCES.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Small Business 
Investment Act of 1958 (15 U.S.C. 661 et seq.).

SEC. 202. MODIFICATIONS TO DEVELOPMENT COMPANY DEBENTURE PROGRAM.

    (a) Increased Loan to Value Ratios.--Section 502(3) (15 U.S.C. 
696(3)) is amended to read as follows:
            ``(3) Criteria for assistance.--
                    ``(A) In general.--Any development company assisted 
                under this section must meet the criteria established 
                by the Administration, including the extent of 
                participation to be required or amount of paid-in 
                capital to be used in each instance as is determined to 
                be reasonable by the Administration.
                    ``(B) Community injection funds.--
                            ``(i) Sources of funds.--Community 
                        injection funds may be derived, in whole or in 
                        part, from--
                                    ``(I) State or local governments;
                                    ``(II) banks or other financial 
                                institutions;
                                    ``(III) foundations or other not-
                                for-profit institutions; or
                                    ``(IV) the small business concern 
                                (or its owners, stockholders, or 
                                affiliates) receiving assistance 
                                through a body authorized by this 
                                title.
                            ``(ii) Funding from institutions.--Not less 
                        than 50 percent of the total cost of the 
                        project to be financed shall come from the 
                        institutions described in subclauses (I), (II), 
                        and (III) of clause (i).
                    ``(C) Funding from a small business concern.--The 
                small business concern (or its owners, stockholders, or 
                affiliates) receiving assistance through a body 
                authorized by this title shall provide--
                            ``(i) at least 15 percent of the total cost 
                        of the project financed, if the small business 
                        concern has been in operation for a period of 2 
                        years or less;
                            ``(ii) at least 15 percent of the total 
                        cost of the project financed if the project 
                        involves the construction of a limited or 
                        single purpose building or structure;
                            ``(iii) at least 20 percent of the total 
                        cost of the project financed if the project 
                        involves both of the conditions set forth in 
                        clauses (i) and (ii); or
                            ``(iv) at least 10 percent of the total 
                        cost of the project financed, in all other 
                        circumstances, at the discretion of the 
                        development company.''.
    (b) Guarantee Fee for Development Company Debentures.--Section 
503(b)(7)(A) (15 U.S.C. 697(b)(7)(A)) is amended by striking ``0.125 
percent'' and inserting ``0.625 percent''.
    (c) Fees To Offset Subsidy Cost.--Section 503(d) (15 U.S.C. 697(d)) 
is amended to read as follows:
    ``(d) Charges for Administration Expenses.--
            ``(1) Level of charges.--The Administration shall continue 
        to impose charges for administrative expenses with respect to 
        each debenture for which payment of principal and interest is 
        guaranteed under subsection (a) at the level in effect on the 
        date of the enactment of this paragraph. To the extent that 
        such charges exceed the administrative costs of the program as 
        provided by non-governmental employees, such excess proceeds 
        shall be used to offset the cost (as such term is defined in 
        section 502 of the Credit Reform Act of 1990) to the 
        Administration of making guarantees under subsection (a).
            ``(2) Participation fee.--The Administration shall also 
        impose a one-time fee of 50 basis points on the total 
        participation in any project of any institution described in 
        subclause (I), (II), or (III) of section 502(3)(B)(i). Such fee 
        shall be imposed only when the participation of the institution 
        will occupy a senior credit position to that of the development 
        company. Such fee shall be collected by the development 
        company, forwarded to the Administration, and used to offset 
        the cost (as such term is defined in section 502 of the Credit 
        Reform Act of 1990) to the Administration of making guarantees 
        under subsection (a).
            ``(3) Development company fee.--The Administration shall 
        collect annually from each development company a fee of .0125 
        percent of the outstanding principal balance of any debenture 
        guaranteed by the Administration. Such fee shall be derived 
        from the servicing fees collected by the development company 
        pursuant to regulation, and shall not be derived from any 
        additional fees imposed on small business concerns. All 
        proceeds of the fee shall be used to offset the cost (as such 
        term is defined in section 502 of the Credit Reform Act of 
        1990) to the Administration of making guarantees under 
        subsection (a).''.
    (d) Fees Collected by Agents for Central Registration of Trust 
Certificates.--Section 505(d) (15 U.S.C. 697b(d)) is amended by adding 
at the end the following: ``The excess of any fees collected for the 
functions described in subsection (f)(2) shall be used to offset the 
cost (as such term is defined in section 502 of the Credit Reform Act 
of 1990) to the Administration of making guarantees under subsection 
(a).''.

SEC. 203. REQUIRED ACTIONS UPON DEFAULT.

    Section 503 (15 U.S.C. 697) is amended by adding at the end the 
following:
    ``(f) Required Actions Upon Default.--
            ``(1) Deadlines.--
                    ``(A) Initial actions.--Not later than the 45th day 
                after the date on which a payment on a loan funded 
through a debenture guaranteed under this section is due and not 
received, the Administration shall--
                            ``(i) take all necessary steps to bring 
                        such a loan current; or
                            ``(ii) implement a formal written deferral 
                        agreement.
                    ``(B) Purchase or acceleration of debenture.--Not 
                later than the 65th day after the date on which a 
                payment on a loan described in subparagraph (A) is due 
                and not received, and absent a formal written deferral 
                agreement, the Administration shall take all necessary 
                steps to purchase or accelerate the debenture.
            ``(2) Prepayment penalties.--The Administration shall--
                    ``(A) negotiate the elimination of any prepayment 
                penalties on defaulted loans made prior to September 
                30, 1996;
                    ``(B) decline to pay any prepayment penalty on the 
                default based purchase of loans issued after September 
                30, 1996; and
                    ``(C) for any project financed after September 30, 
                1996, decline to pay any default interest rate on the 
                portion of any project funded through community 
                injection funds described in section 502(3).''

SEC. 204. LOAN LIQUIDATION PILOT PROGRAM.

    (a) In General.--The Administrator shall carry out a loan 
liquidation pilot program (in this section referred to as the `pilot 
program') in accordance with the requirements of this section.
    (b) Selection of Development Companies.--Not later than 60 days 
after the date of the enactment of this Act, the Administrator shall--
            (1) select no more than 35 and no less than 15 development 
        companies authorized to make loans and issue debentures under 
        title V of the Small Business Investment Act of 1958 to 
        participate in the pilot program. The development companies 
        selected shall--
                    (A) have a minimum of 6 years experience in the 
                program established by such title V;
                    (B) have made an average of 10 loans per year 
                through the program established by such title V; and
                    (C) have shown at least 2 years experience in 
                liquidating loans under the authority of some other 
                Federal, State, or local lending program.
    (c) Authority of Development Companies.--The development companies 
selected under subsection (b) shall, for all loans in their portfolio 
of loans made through debentures guaranteed under title V of the Small 
Business Investment Act of 1958 that are in default after the date of 
enactment of this Act, be authorized to--
            (1) perform all liquidation and foreclosure functions, 
        including the acceleration or purchase of community injection 
        funds; and
            (2) liquidate such loans in a reasonable and sound manner 
        and according to commercially accepted practices.
    (d) Authority of the Administrator.--In carrying out the pilot 
program, the Administrator shall--
            (1) have full authority to rescind the authority granted 
        any development company under this section upon a showing of 
        good cause;
            (2) consider the inclusion of additional development 
        companies in the pilot program (subject to the criteria of 
        subsection (b)(1)) in the event an insufficient number of 
        liquidations occur to enable a valid sample of the 
        effectiveness of the pilot program; and
            (3) implement the pilot program no later than 90 days after 
        the selection of the development companies specified in 
        subsection (b).
    (e) Report.--
            (1) In general.--The Administrator shall issue a report on 
        the results of the pilot program to the Committees on Small 
        Business of the House of Representatives and the Senate. The 
        report shall include information relating to--
                    (A) the total dollar amount of each loan and 
                project liquidated;
                    (B) the total dollar amount guaranteed by the 
                Administration;
                    (C) total dollar losses;
                    (D) total recoveries both as percentage of the 
                amount guaranteed and the total cost of the project; 
                and
                    (E) a comparison of the pilot program information 
                with the same information for liquidation conducted 
                outside the pilot program over the period of time.
            (2) Reporting period.--The report shall be based on data 
        from, and issued not later than 90 days after the close of, the 
        first eight 8 fiscal quarters of the pilot program's operation 
        after the date of implementation.''.

SEC. 205. REGISTRATION OF CERTIFICATES.

    (a) Certificates Sold Pursuant to Small Business Act.--Section 5(h) 
of the Small Business Act (15 U.S.C. 634(h)) is amended--
            (1) by redesignating paragraphs (1) through (4) as 
        subparagraphs (A) through (D);
            (2) by striking ``(h)'' and inserting ``(h)(1)'';
            (3) by striking subparagraph (A), as redesignated by 
        paragraph (1) of this subsection, and inserting the following:
            ``(A) provide for a central registration of all loans and 
        trust certificates sold pursuant to subsections (f) and (g) of 
        this section;''; and
            (4) by adding at the end the following:
    ``(2) Nothing in this subsection shall prohibit the utilization of 
a book entry or other electronic form of registration for trust 
certificates. The Administration may, with the consent of the Secretary 
of the Treasury, use the book-entry system of the Federal Reserve 
System.''.
    (b) Certificates Sold Pursuant to Small Business Investment Company 
Program.--Section 321(f) (15 U.S.C. 6871(f)) is amended--
            (1) in paragraph (1) by striking ``Such central 
        registration shall include'' and all that follows through the 
        period at the end of the paragraph; and
            (2) by adding at the end the following:
    ``(5) Nothing in this subsection shall prohibit the use of a book-
entry or other electronic form of registration for trust 
certificates.''.
    (c) Certificates Sold Pursuant to Development Company Program.--
Section 505(f) of the Small Business Investment Act of 1958 (15 U.S.C. 
697b(f)) is amended--
            (1) by redesignating paragraphs (1) through (4) as 
        subparagraphs (A) through (D);
            (2) by striking ``(f)'' and inserting ``(f)(1)'';
            (3) by striking subparagraph (A), as redesignated by 
        paragraph (1) of this subsection, and inserting the following:
            ``(A) provide for a central registration of all trust 
        certificates sold pursuant to this section;'' and
            (4) by adding at the end the following:
    ``(2) Nothing in this subsection shall prohibit the utilization of 
a book entry or other electronic form of registration for trust 
certificates.''.
                                 <all>
```