104TH CONGRESS

2D SESSION H. R. 3719

AN ACT

To amend the Small Business Act and Small

Business Investment Act of 1958.
104TH CONGRESS

2D SESSION H. R. 3719

AN ACT

To amend the Small Business Act and Small Business

Investment Act of 1958.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Small Business Programs Improvement Act of 1996’’.
2

•HR 3719 EH

1 (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. Miscellaneous authorities to provide loans and other financial assistance.

Sec. 108. Small business competitiveness demonstration program.

Sec. 109. Amendment to Small Business Guaranteed Credit Enhancement Act

of 1993.

Sec. 110. 1998 authorizations.

Sec. 111. Level of participation for export working capital loans.

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. 206. Preferred surety bond guarantee program.

Sec. 207. Sense of the Congress.

2 SEC. 2. ADMINISTRATOR DEFINED.

3 In this Act, the term ‘‘Administrator’’ means the Ad4 ministrator of the Small Business Administration.

5 SEC. 3. EFFECTIVE DATE.

6 Except as otherwise expressly provided, this Act and

7 the amendments made by this Act shall take effect on Oc8 tober 1, 1996.
3

•HR 3719 EH

1 TITLE I—AMENDMENTS TO

2 SMALL BUSINESS ACT

3 SEC. 101. REFERENCES.

4 Except as otherwise expressly provided, whenever in

5 this title an amendment or repeal is expressed in terms

6 of an amendment to, or repeal of, a section or other provi7 sion, the reference shall be considered to be made to a

8 section or other provision of the Small Business Act (15

9 U.S.C. 631 et seq.).

10 SEC. 102. RISK MANAGEMENT DATABASE.

11 Section 4(b) (15 U.S.C. 633) is amended by inserting

12 after paragraph (2) the following:

13 ‘‘(3) RISK MANAGEMENT DATABASE.—

14 ‘‘(A) ESTABLISHMENT.—The Administra15 tion shall establish, within the management sys16 tem for the loan programs authorized by sub17 sections (a) and (b) of section 7 of this Act and

18 title V of the Small Business Investment Act of

19 1958, a management information system that

20 will generate a database capable of providing

21 timely and accurate information in order to

22 identify loan underwriting, collections, recovery,

23 and liquidation problems.

24 ‘‘(B) INFORMATION TO BE MAINTAINED.—

25 In addition to such other information as the
4

•HR 3719 EH

1 Administration considers appropriate, the

2 database established under subparagraph (A)

3 shall, with respect to each loan program de4 scribed in subparagraph (A), include informa5 tion relating to—

6 ‘‘(i) the identity of the institution

7 making the guaranteed loan or issuing the

8 debenture;

9 ‘‘(ii) the identity of the borrower;

10 ‘‘(iii) the total dollar amount of the

11 loan or debenture;

12 ‘‘(iv) the total dollar amount of gov13 ernment exposure in each loan;

14 ‘‘(v) the district of the Administration

15 in which the borrower has its principal of16 fice;

17 ‘‘(vi) the borrower’s principal line of

18 business, as identified by Standard Indus19 trial Classification Code (or any successor

20 to that system);

21 ‘‘(vii) the delinquency rate for each

22 program (including number of instances

23 and days overdue);

24 ‘‘(viii) the number of defaults in each

25 program (including losses and recoveries);
5

•HR 3719 EH

1 ‘‘(ix) the number of deferrals or

2 forbearances in each program (including

3 days and number of instances); and

4 ‘‘(x) comparisons on the basis of loan

5 program, lender, Administration district

6 and region, for all the data elements main7 tained.

8 ‘‘(C) DEADLINE FOR OPERATIONAL CAPA9 BILITY.—The database established under sub10 paragraph (A) shall be operational not later

11 than March 31, 1997, and shall capture data

12 beginning on the first day of the first quarter

13 of fiscal year 1997 beginning after such date

14 and thereafter.’’.

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

16 (a) SERVICING AND LIQUIDATION OF LOANS BY PRE17 FERRED LENDERS.—Section 7(a)(2)(C)(ii)(II) (15 U.S.C.

18 636(a)(2)(C)(ii)(II)) is amended to read as follows:

19 ‘‘(II) complete authority to serv20 ice and liquidate such loans without

21 obtaining the prior specific approval

22 of the Administration for routine serv23 icing and liquidation activities, but

24 shall not take any actions creating an
6

•HR 3719 EH

1 actual or apparent conflict of inter2 est.’’.

3 (b) CERTIFIED LENDERS PROGRAM.—Section

4 7(a)(19) (15 U.S.C. 636(a)(19)) is amended to read as

5 follows:

6 ‘‘(19)(A) CERTIFIED LENDERS PROGRAM.—

7 ‘‘(i) ESTABLISHMENT.—In addition to the

8 Preferred Lenders Program authorized by the

9 proviso in section 5(b)(7), the Administration is

10 authorized to establish a Certified Lenders Pro11 gram for lenders who establish their knowledge

12 of Administration laws and regulations concern13 ing the guaranteed loan program and their pro14 ficiency in program requirements.

15 ‘‘(ii) SUSPENSION AND REVOCATION.—The

16 designation of a lender as a certified lender

17 shall be suspended or revoked at any time that

18 the Administration determines that the lender

19 is not adhering to its rules and regulations or

20 that the loss experience of the lender is exces21 sive as compared to other lenders, but such sus22 pension or revocation shall not affect any out23 standing guarantee.

24 ‘‘(B) UNIFORM AND SIMPLIFIED LOAN

25 FORMS.—In order to encourage all lending institu-
7

•HR 3719 EH

1 tions and other entities making loans authorized

2 under this subsection to provide loans of $50,000 or

3 less in guarantees to eligible small business loan ap4 plicants, the Administration shall develop and allow

5 participating lenders to solely utilize a uniform and

6 simplified loan form for such loans.

7 ‘‘(C) LOW DOCUMENTATION LOAN PROGRAM.—

8 The Administrator may carry out the low docu9 mentation loan program for loans of $100,000 or

10 less only through Preferred Lenders and Certified

11 Lenders, or lenders with significant experience mak12 ing small business loans. The Administration shall

13 give special consideration to lenders who have made

14 loans under the authority of this section. The Ad15 ministrator shall promulgate regulations defining the

16 experience necessary for lenders other than Pre17 ferred or Certified Lenders for participation as a

18 lender in the low documentation loan program no

19 later than 90 days after the date of enactment of

20 this subsection.

21 ‘‘(D) AUTHORITY LIQUIDATE LOANS.—

22 ‘‘(i) IN GENERAL.—Lenders participating

23 in the Certified Lenders Program shall have au24 thority to liquidate loans made with a guaran25 tee from the Administration.
8

•HR 3719 EH

1 ‘‘(ii) APPROVAL.—The Administrator has

2 the authority to require a certified lender to re3 quest approval of a routine liquidation activity,

4 and if the Administrator does not approve or

5 deny a request made by a certified lender with6 in a period of 5 business days, such request

7 shall be deemed to be approved.

8 ‘‘(E) LOW DOCUMENTATION LOAN PROGRAM

9 SUBSIDY RATE.—The Administrator shall with the

10 assistance of the Director of the Office of Manage11 ment and Budget establish and monitor, on an an12 nual basis, the subsidy rate for the low documenta13 tion loan program, independently of other loans au14 thorized by this section.’’.

15 (c) LIMITATION ON CONDUCTING PILOT

16 PROJECTS.—Section 7(a) (15 U.S.C. 636(a)) is amended

17 by adding at the end the following new paragraph:

18 ‘‘(25) LIMITATION ON CONDUCTING PILOT

19 PROJECTS.—

20 ‘‘(A) IN GENERAL.—Not more than 10

21 percent of the total number of loans guaranteed

22 in any fiscal year under this subsection may be

23 awarded as part of a pilot program which is

24 commenced by the Administrator on or after

25 October 1, 1996.
9

•HR 3719 EH

1 ‘‘(B) PILOT PROGRAM DEFINED.—In this

2 paragraph, the term ‘pilot program’ means any

3 lending program initiative, project, innovation,

4 or other activity not specifically authorized by

5 law.’’.

6 (d) SECURITIZATION OF UNGUARANTEED PORTIONS

7 OF SBA LOANS.—Section 5(f)(3) (15 U.S.C. 634(f)(3))

8 is amended by adding at the end the following: ‘‘The Ad9 ministration may not prohibit a lender from securitizing

10 the nonguaranteed portion of any loan made under section

11 7(a). In order to reduce the risk of loss to the government

12 in the event of default, the Administration may require

13 all lenders securitizing, or requesting Administration ap14 proval for the securitization of the nonguaranteed portion

15 of any loan, to retain exposure of up to 10 percent of the

16 amount of the loan, which percentage shall be applicable

17 uniformly to both depository institutions and other lenders

18 unless the Administrator determines that the lender, on

19 a case by case basis, has undertaken other agreements

20 which retain an acceptable exposure to loss by the lender

21 in the event of default of a loan being securitized.’’.

22 (e) CONDITIONS ON PURCHASE OF LOANS.—

23 (1) SERVICING FEE.—Section 5(g)(5) (15

24 U.S.C. 634(g)(5)) is amended by adding at the end

25 the following:
10

•HR 3719 EH

1 ‘‘(C) In the event the Administration pays a claim

2 under a guarantee issued under this Act, the servicing fees

3 paid to the lender from the earliest date of default to the

4 date of payment of the claim shall be no more than the

5 agreed upon rate, minus one percent.’’.

6 (2) PAYMENT OF ACCRUED INTEREST.—Section

7 7(a)(17) is amended—

8 (A) by striking ‘‘(17) The Administration’’

9 and inserting ‘‘(17)(A) The Administration’’;

10 and

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

12 ‘‘(B) Any bank or other lending institution

13 making a claim for payment on the guaranteed por14 tion of a loan made under this subsection shall be

15 paid the accrued interest due on the loan from the

16 earliest date of default to the date of payment of the

17 claim at a rate not to exceed the rate of interest on

18 the loan on the date of default, minus one percent.’’.

19 (f) PLAN FOR TRANSFER OF LOAN SERVICING FUNC20 TIONS TO CENTRALIZED CENTERS.—

21 (1) IMPLEMENTATION PLAN REQUIRED.—The

22 Administrator of the Small Business Administration

23 shall submit a detailed plan for consolidating, in one

24 or more centralized centers, the performance of the

25 various functions relating to the servicing of loans
11

•HR 3719 EH

1 directly made or guaranteed by the Administration

2 pursuant to the Small Business Act, addressing the

3 matters described in paragraph (2) by the deadline

4 specified in paragraph (3).

5 (2) CONTENTS OF PLAN.—In addition to such

6 other matters as the Administrator may deem ap7 propriate, the plan required by paragraph (1) shall

8 include—

9 (A) the proposed number and location of

10 such centralized loan processing centers;

11 (B) the proposed workload (identified by

12 type and numbers of loans and their geographic

13 origin by the Small Business Administration

14 district office) and staffing of each such center;

15 (C) a detailed, time-phased plan for the

16 transfer of the identified loan servicing func17 tions to each proposed center; and

18 (D) any identified impediments to the

19 timely execution of the proposed plan (including

20 adequacy of available financial resources, avail21 ability of needed personnel, facilities, and relat22 ed equipment) and the Administrator’s rec23 ommendations for addressing such impedi24 ments.
12

•HR 3719 EH

1 (3) DEADLINE FOR SUBMISSION.—The plan re2 quired by paragraph (1) shall be submitted to the

3 Committees on the Small Business of the House of

4 Representatives and Senate not later than February

5 28, 1997.

6 (g) PREFERRED LENDER STANDARD REVIEW PRO7 GRAM.—Not later than 60 days after the date of enact8 ment of this Act, the Administrator shall issue a request

9 for proposals regarding the standard review program for

10 the Preferred Lender Program established by section

11 5(b)(7) of the Small Business Act (15 U.S.C. 634(b)(7)).

12 The Administrator shall require such standard review for

13 each new entrant to the Preferred Lender Program.

14 (h) INDEPENDENT STUDY OF LOAN PROGRAMS.—

15 (1) STUDY REQUIRED.—The Administrator

16 shall conduct a comprehensive assessment of the

17 performance of the loan programs authorized by sec18 tion 7(a) of the Small Business Act (15 U.S.C.

19 636(a)) and title V of the Small Business Invest20 ment Act of 1958 (15 U.S.C. 661) addressing the

21 matters described in paragraph (2) and resulting in

22 a report to Congress pursuant to paragraph (5).

23 (2) MATTERS TO BE ASSESSED.—In addition to

24 such other matters as the Administrator considers

25 appropriate, the assessment required by paragraph
13

•HR 3719 EH

1 (1) shall address, with respect to each loan program

2 described in paragraph (1) for each of the fiscal

3 years described in paragraph (3)—

4 (A) the number and frequency of deferrals

5 and defaults;

6 (B) default rates;

7 (C) comparative loss rates, by—

8 (i) type of lender (separately address9 ing preferred lenders, certified lenders, and

10 general participation lenders);

11 (ii) term of the loan; and

12 (iii) dollar value of the loan at dis13 bursement; and

14 (D) the economic models used by the Of15 fice of Management and Budget to calculate the

16 credit subsidy rate applicable to the loan pro17 grams.

18 (3) PERIOD OF ASSESSMENT.—The assessments

19 undertaken pursuant to paragraph (2) shall address

20 data for the period beginning with the first full fiscal

21 year of the implementation of each loan program de22 scribed in paragraph (1) through fiscal year 1995.

23 (4) PERFORMANCE BY THE PRIVATE SECTOR.—

24 (A) CONTRACTOR PERFORMANCE.—A pri25 vate sector contractor shall be used by the Ad-
14

•HR 3719 EH

1 ministrator to conduct the assessment required

2 by paragraph (1) and to prepare the report to

3 Congress required by paragraph (3).

4 (B) SOLICITATION AND AWARD.—The con5 tract shall be awarded pursuant to a solicitation

6 issued not later than 60 days after the date of

7 the enactment of this Act, which shall provide

8 for full and open competition. The Adminis9 trator shall make every reasonable effort to

10 award the contract not later that 60 days after

11 the date specified in the solicitation for receipt

12 of proposals.

13 (C) ACCESS TO INFORMATION.—The Ad14 ministrator shall provide to the contractor ac15 cess to any information collected by or available

16 to the Administration with regard to the loan

17 programs being assessed. The contractor shall

18 preserve the confidentiality of any information

19 for which confidentiality is protected by law or

20 properly asserted by the person submitting such

21 information.

22 (D) CONTRACT FUNDING.—The Adminis23 trator shall fund the cost of the contract from

24 the amounts appropriated for the salaries and
15

•HR 3719 EH

1 expenses of the Administration for fiscal year

2 1997.

3 (5) REPORT TO CONGRESS.—

4 (A) CONTENTS.—The contractor shall sub5 mit a report of—

6 (i) its analyses of the matters to be

7 assessed pursuant to paragraph (2); and

8 (ii) its independent recommendations,

9 with respect to each loan program, regard10 ing—

11 (I) improving the Administra12 tion’s timely collection and subsequent

13 management of data to measure the

14 performance of each loan program de15 scribed in paragraph (1); and

16 (II) reducing loss rates for each

17 such loan program.

18 (B) SUBMISSION BY CONTRACTOR.—The

19 contractor shall submit the report required by

20 subparagraph (A) not later than 6 months after

21 the date of the contract award.

22 (C) SUBMISSION TO CONGRESS.—The Ad23 ministrator shall submit the report received

24 from the contractor pursuant to subparagraph

25 (B) to the Committees on Small Business of the
16

•HR 3719 EH

1 House of Representatives and the Senate within

2 30 days of receipt of the report. The Adminis3 trator shall append his comments, and those of

4 the Office of Management and Budget, if any,

5 to the report.

6 (i) GENERAL ACCOUNTING OFFICE STUDY.—

7 (1) IN GENERAL.—The General Accounting Of8 fice shall conduct a comparison of the cost of liq9 uidation for—

10 (A) loans guaranteed under the Preferred

11 Lenders Program that are authorized by section

12 7(a) of the Small Business Act (15 U.S.C.

13 636(a)) and liquidated by the Preferred Lend14 ers;

15 (B) loans made and liquidated by, Pre16 ferred Lenders, but not guaranteed under the

17 authority in section 7(a); and

18 (C) loans guaranteed by the Small Busi19 ness Administration under the authority in sec20 tion 7(a) and liquidated by the Administration,

21 taking into account all of the related costs in22 curred by the Federal Government.

23 (2) REPORT.—Not later than 9 months after

24 the date of enactment of this Act the General Ac25 counting Office shall deliver the results of the study
17

•HR 3719 EH

1 to the Committees on Small Business of the House

2 and Senate.

3 SEC. 104. DISASTER LOAN PROGRAM.

4 (a) INTEREST RATE.—Section 7(c) (15 U.S.C.

5 636(c)) is amended by redesignating paragraphs (6) and

6 (7) as paragraphs (8) and (9), respectively, and by insert7 ing after paragraph (5) the following:

8 ‘‘(6) DISASTERS COMMENCING AFTER OCTOBER

9 1, 1996.—Notwithstanding any other provision of

10 law, the interest rate on the Federal share of any

11 loan made under subsection (b)(1) and (b)(2) on ac12 count of a disaster commencing on or after October

13 1, 1996, shall be in the case of a homeowner, or

14 business, or other concern, including agricultural co15 operatives, unable to obtain credit elsewhere, at the

16 rate prescribed by the Administration but not more

than 3 17 ⁄4 of the rate determined by the Secretary of

18 the Treasury, taking into consideration the current

19 average market yield on outstanding marketable ob20 ligations of the United States with remaining peri21 ods to maturity comparable to the average matu22 rities of such loans plus an additional charge of not

23 to exceed 1 percent per annum as determined by the

Administrator, and adjusted to the nearest 1 24 ⁄8 of 1

25 percent but not to exceed 7 per centum per annum.
18

•HR 3719 EH

1 ‘‘(7) LIABILITY.—Whoever wrongfully

2 misapplies the proceeds of a loan under subsection

3 (b) shall be liable to the Administrator in an amount

equal to 11 4 ⁄2 times the original principal amount of

5 the loan.’’.

6 (b) PRIVATE SECTOR LOAN SERVICING DEMONSTRA7 TION PROGRAM.—

8 (1)(A) DEMONSTRATION PROGRAM RE9 QUIRED.—The Administration shall conduct a dem10 onstration program, within the parameters described

11 in paragraph (2), to evaluate the comparative costs

12 and benefits of having the Administration’s portfolio

13 of disaster loans serviced under contract rather than

14 directly by employees of the Administration.

15 (B) INITIATION DATE.—Not later than 90 days

16 after the date of enactment of this Act, the Adminis17 tration shall issue a request for proposals for the

18 program parameters described in paragraph (2).

19 (2) DEMONSTRATION PROGRAM PARAM20 ETERS.—

21 (A) LOAN SAMPLE.—The sample of loans

22 for the demonstration program shall be ran23 domly drawn from the Administration’s port24 folio of loans made pursuant to section 7(b) of

25 the Small Business Act and include 20,000
19

•HR 3719 EH

1 loans for residential properties and 5,000 loans

2 for commercial properties.

3 (B) CONTRACT AND OPTIONS.—The Ad4 ministration shall solicit and competitively

5 award one or more contracts to service the

6 loans included in the sample of loans described

7 in subparagraph (A) for a term of 2 years with

8 5 2-year options, each to be awarded subject to

9 subparagraph (C).

10 (C) ASSESSMENTS OF PERFORMANCE.—

11 Prior to award of any contract option, the Ad12 ministration shall assess the costs and perform13 ance of each contractor and compare such costs

14 and such performance to the costs and perform15 ance of servicing disaster loans by employees of

16 the Administration. The Administrator shall not

17 exercise a contract option if the cost of per18 formance of the loan servicing by the contractor

19 exceeds the cost of performance of the loan

20 servicing by employees of the Administration.

21 The Administrator may terminate the contract

22 during its initial term (or any subsequent op23 tion period), based upon performance and cost

24 criteria specified in the solicitation and included

25 in the contract.
20

•HR 3719 EH

1 (D) DISPOSITION OF GOVERNMENT FUR2 NISHED PROPERTY.—The contract shall require

3 the contractor to—

4 (i) maintain the confidentiality of the

5 loan files furnished by the Administration;

6 and

7 (ii) return such loan files and other

8 Government-furnished property within a

9 specified period after expiration (or termi10 nation) of the contract.

11 (3) TERM OF DEMONSTRATION PROGRAM.—

12 (A) IN GENERAL.—The demonstration pro13 gram required by paragraph (1) shall com14 mence on the first day of the first fiscal year

15 quarter after the award of the contract and

16 continue through the last day of the fiscal year

17 quarter at the expiration of the 2-year contract

18 period or any subsequent contract option.

19 (B) EARLY TERMINATION.—If the Admin20 istrator terminates each contract pursuant to

21 paragraph (2)(C), the demonstration program

22 shall end on the effective date of such termi23 nation.

24 (4) REPORTS.—
21

•HR 3719 EH

1 (A) INTERIM REPORTS.—The Adminis2 trator shall submit to the Committees on Small

3 Business of the House of Representatives and

4 Senate interim reports on the conduct of the

5 demonstration program not later than 60 days

6 prior to the expiration of the initial 2-year con7 tract performance period, each subsequent op8 tion period, or termination of a contract. The

9 contractor shall be afforded a reasonable oppor10 tunity to attach comments to each such report.

11 (B) FINAL REPORT.—The Administrator

12 shall submit to the Committees on Small Busi13 ness of the House of Representatives and Sen14 ate a final report within 120 days of the termi15 nation of the demonstration program.

16 (c) DEFINITION OF DISASTER.—(1) Section 3(k) (15

17 U.S.C. 632(k)) is amended by striking ‘‘ocean conditions’’

18 and inserting ‘‘ocean conditions, or government action

19 (regulatory or otherwise)’’.

20 (2) For the purposes of this Act this amendment shall

21 be considered effective with respect to any disaster occur22 ring on or after March 1, 1994.
22

•HR 3719 EH

1 SEC. 105. MICROLOAN DEMONSTRATION PROGRAM.

2 (a) TECHNICAL ASSISTANCE GRANT REQUIRE3 MENTS.—Section 7(m)(4) (15 U.S.C. 636(m)(4)) is

4 amended—

5 (1) in subparagraph (A) by striking ‘‘25 per6 cent’’ and inserting ‘‘20 percent’’; and

7 (2) in subparagraph (B) by striking ‘‘25 per8 cent’’ and inserting ‘‘35 percent’’.

9 (b) IMPLEMENTATION OF GUARANTEED MICROLOAN

10 PILOT PROGRAM.—

11 (1) ACTION REQUIRED.—The Administrator

12 shall implement or submit a detailed report explain13 ing the impediments to the implementation of a

14 Guaranteed Microloan Pilot Program pursuant to

15 section 7(m)(12) (15 U.S.C. 636(m)(12)) addressing

16 the matters described in paragraph (2) by the dead17 line specified in paragraph (3).

18 (2) CONTENTS OF IMPLEMENTATION RE19 PORT.—In addition to such other matters as the Ad20 ministrator may deem appropriate, the plan required

21 by paragraph (1) shall include any identified impedi22 ments to implementation of a Guaranteed Microloan

23 Pilot Program that, in the opinion of the Adminis24 trator, require amendments to the program’s author25 izing legislation, and if such impediments are identi-
23

•HR 3719 EH

1 fied, includes recommendations for such statutory

2 changes.

3 (3) DEADLINE FOR SUBMISSION.—The plan re4 quired by paragraph (2) shall be submitted to the

5 Committees on Small Business of the House of Rep6 resentatives and Senate not later than December 1,

7 1996.

8 (c) LIMITATION ON FUNDING.—In the event that the

9 Administrator shall fail to submit the report required by

10 subsection (b)(1) by the deadline specified in subsection

11 (b)(3), none of the amounts appropriated to carry out the

12 Microloan Program authorized by section 7(m)(12) of the

13 Small Business Act (15 U.S.C. 636(m)(12)) during fiscal

14 year 1997 may be expended until such time as the pilot

15 program is implemented or the report is submitted.

16 SEC. 106. SMALL BUSINESS DEVELOPMENT CENTER PRO17 GRAM.

18 (a) ASSOCIATE ADMINISTRATOR FOR SMALL BUSI19 NESS DEVELOPMENT CENTERS.—

20 (1) DUTIES.—Section 21(h) (15 U.S.C. 648(h))

21 is amended to read as follows:

22 ‘‘(h) ASSOCIATE ADMINISTRATOR FOR SMALL BUSI23 NESS DEVELOPMENT CENTERS.—

24 ‘‘(1) APPOINTMENT AND COMPENSATION.—The

25 Administrator shall appoint an Associate Adminis-
24

•HR 3719 EH

1 trator for Small Business Development Centers who

2 shall report to an official who is not more than one

3 level below the Office of the Administrator and who

4 shall serve without regard to the provisions of title

5 5 governing appointments in the competitive service,

6 and without regard to chapter 51, and subchapter

7 III of chapter 53 of such title relating to classifica8 tion and General Schedule pay rates, but at a rate

9 not less than the rate of GS–17 of the General

10 Schedule.

11 ‘‘(2) DUTIES.—

12 ‘‘(A) IN GENERAL.—The sole responsibility

13 of the Associate Administrator for Small Busi14 ness Development Centers shall be to admin15 ister the small business development center pro16 gram. Duties of the position shall include, but

17 are not limited to, recommending the annual

18 program budget, reviewing the annual budgets

19 submitted by each applicant, establishing appro20 priate funding levels therefore, selecting appli21 cants to participate in this program, implement22 ing the provisions of this section, maintaining a

23 clearinghouse to provide for the dissemination

24 and exchange of information between small
25

•HR 3719 EH

1 business development centers and conducting

2 audits of recipients of grants under this section.

3 ‘‘(B) CONSULTATION REQUIREMENTS.—In

4 carrying out the duties described in this sub5 section, the Associate Administrator shall con6 fer with and seek the advice of the Board estab7 lished by subsection (i) and Administration offi8 cials in areas served by the small business de9 velopment centers; however, the Associate Ad10 ministrator shall be responsible for the manage11 ment and administration of the program and

12 shall not be subject to the approval or concur13 rence of such Administration officials.’’.

14 (2) REFERENCES TO ASSOCIATE ADMINIS15 TRATOR.—Section 21 (15 U.S.C. 648) is amended—

16 (A) in subsection (c)(7) by striking ‘‘Dep17 uty Associate Administrator of the Small Busi18 ness Development Center program’’ and insert19 ing ‘‘Associate Administrator for Small Busi20 ness Development Centers’’; and

21 (B) in subsection (i)(2) by striking ‘‘Dep22 uty Associate Administrator for Management

23 Assistance’’ and inserting ‘‘Associate Adminis24 trator for Small Business Development Cen25 ters’’.
26

•HR 3719 EH

1 (b) EXTENSION OR RENEWAL OF COOPERATIVE

2 AGREEMENTS.—Section 21(k)(3) (15 U.S.C. 648(k)(3)) is

3 amended to read as follows:

4 ‘‘(3) EXTENSION OR RENEWAL OF COOPERA5 TIVE AGREEMENTS.—

6 ‘‘(A) IN GENERAL.—In extending or re7 newing a cooperative agreement of a small busi8 ness development center, the Administration

9 shall consider the results of the examination

10 and certification program conducted pursuant

11 to paragraphs (1) and (2).

12 ‘‘(B) CERTIFICATION REQUIREMENT.—

13 After September 30, 2000, the Administration

14 may not renew or extend any cooperative agree15 ment with a small business development center

16 unless the center has been approved under the

17 certification program conducted pursuant to

18 this subsection; except that the Associate Ad19 ministrator for Small Business Development

20 Centers may waive such certification require21 ment, in the discretion of the Associate Admin22 istrator, upon a showing that the center is mak23 ing a good faith effort to obtain certification.’’.

24 (c) TECHNICAL CORRECTION.—Section 21(l) (15

25 U.S.C. 648(l)) is amended to read as follows:
27

•HR 3719 EH

1 ‘‘(l) CONTRACT AUTHORITY.—The authority to enter

2 into contracts shall be in effect for each fiscal year only

3 to the extent and in the amounts as are provided in ad4 vance in appropriations Acts. After the administration has

5 entered a contract, either as a grant or a cooperative

6 agreement, with any applicant under this section, it shall

7 not suspend, terminate, or fail to renew or extend any

8 such contract unless the Administration provides the ap9 plicant with written notification setting forth the reasons

10 therefore and affording the applicant an opportunity for

11 a hearing, appeal, or other administrative proceeding

12 under the provisions of chapter 5 of title 5, United States

13 Code.’’.

14 SEC. 107. MISCELLANEOUS AUTHORITIES TO PROVIDE

15 LOANS AND OTHER FINANCIAL ASSISTANCE.

16 (a) FUNDING LIMITATION; SEMINARS.—Section 7(d)

17 (15 U.S.C. 636(d)) is amended—

18 (1) by striking ‘‘(d)(1)’’ and inserting ‘‘(d)’’;

19 and

20 (2) by striking paragraph (2).

21 (b) TRADE ADJUSTMENT LOANS.—Section 7(e) (15

22 U.S.C. 636(e)) is amended to read as follows:

23 ‘‘(e) øRESERVED¿.’’.
28

•HR 3719 EH

1 (c) WAIVER OF CREDIT ELSEWHERE TEST FOR COL2 LEGES AND UNIVERSITIES.—Section 7(f) (15 U.S.C.

3 636(f)) is amended to read as follows:

4 ‘‘(f) øRESERVED¿.’’.

5 (d) LOANS TO SMALL BUSINESS CONCERNS FOR

6 SOLAR ENERGY AND ENERGY CONSERVATION MEAS7 URES.—Section 7(l) (15 U.S.C. 636(l)) is amended to

8 read as follows:

9 ‘‘(l) øRESERVED¿.’’.

10 SEC. 108. SMALL BUSINESS COMPETITIVENESS DEM11 ONSTRATION PROGRAM.

12 (a) EXTENSION OF DEMONSTRATION PROGRAM.—

13 Section 711(c) of the Small Business Competitiveness

14 Demonstration Program Act of 1988 (15 U.S.C. 644 note;

15 102 Stat. 3890) is amended by striking ‘‘September 30,

16 1996’’ and inserting ‘‘September 30, 2000’’.

17 (b) REPORTING OF SUBCONTRACT PARTICIPATION IN

18 CONTRACTS FOR ARCHITECTURAL AND ENGINEERING

19 SERVICES.—Section 714(b)(5) of the Small Business

20 Competitiveness Demonstration Program Act of 1988 (15

21 U.S.C. 644 note; 102 Stat. 3892) is amended to read as

22 follows:

23 ‘‘(5) DURATION.—The system described in sub24 section (a) shall be established not later than Octo25 ber 1, 1996 (or as soon as practicable thereafter on
29

•HR 3719 EH

1 the first day of a subsequent quarter of fiscal year

2 1997), and shall terminate on September 30,

3 2000.’’.

4 (c) REFERENCES TO ARCHITECTURAL AND ENGI5 NEERING SERVICES.—

6 (1) IN GENERAL.—The Small Business Com7 petitiveness Demonstration Program Act of 1988

8 (15 U.S.C. 644 note; 102 Stat. 3889 et seq.) is

9 amended in subsections (a)(3) and (d) by striking

10 ‘‘surveying and mapping’’ and inserting ‘‘surveying,

11 mapping, and landscape architecture’’.

12 (2) DESIGNATED INDUSTRY GROUPS.—Section

13 717(d) of the Small Business Competitiveness Dem14 onstration Program Act of 1988 (15 U.S.C. 644

15 note; 102 Stat. 3894) is amended by inserting

16 ‘‘standard industrial classification codes 0781 (if

17 identified as pertaining to architecture services),’’

18 after ‘‘(if identified as pertaining to mapping serv19 ices),’’.

20 (d) REPORTS TO CONGRESS.—

21 (1) IN GENERAL.—Section 716 of the Small

22 Business Competitiveness Demonstration Program

23 Act of 1988 (15 U.S.C. 644 note; 102 Stat. 3893)

24 is amended—
30

•HR 3719 EH

1 (A) in subsection (a), by striking ‘‘fiscal

2 year 1991 and 1995’’ and inserting ‘‘each of

3 fiscal years 1991 through 1999’’;

4 (B) in subsection (a), by striking ‘‘results’’

5 and inserting ‘‘cumulative results’’; and

6 (C) in subsection (c), by striking ‘‘1996’’

7 and inserting ‘‘1999’’.

8 (2) CUMULATIVE REPORT THROUGH FISCAL

9 YEAR 1995.—A cumulative report of the results of

10 the Small Business Competitiveness Demonstration

11 Program for fiscal years 1991 through 1995 shall be

12 submitted not later than 60 days after the date of

13 the enactment of this Act pursuant to section 716(a)

14 of the Small Business Competitiveness Demonstra15 tion Program Act of 1988 (15 U.S.C. 644 note; 102

16 Stat. 3893), as amended by paragraph (1) of this

17 subsection.

18 SEC. 109. AMENDMENT TO SMALL BUSINESS GUARANTEED

19 CREDIT ENHANCEMENT ACT OF 1993.

20 (a) Section 7 of the Small Business Guaranteed Cred21 it Enhancement Act of 1993 (Public Law 103–81; 15

22 U.S.C. 634 note) is repealed effective September 29, 1996.

23 (b) CLERICAL AMENDMENT.—The table of contents

24 for the Small Business Guaranteed Credit Enhancement
31

•HR 3719 EH

1 Act of 1993 (Public Law 103–81; 15 U.S.C. 631 note)

2 is amended by striking the item relating to section 7.

3 SEC. 110. 1998 AUTHORIZATIONS.

4 Section 20 (15 U.S.C. 631 note) is amended—

5 (1) in subsection (p), by striking ‘‘authorized

6 for fiscal year 1997’’ and inserting ‘‘authorized for

7 each of fiscal years 1997 and 1998’’;

8 (2) by striking subsection (p)(3)(B) and by in9 serting the following:

10 ‘‘(B) $268,000,000 in guarantees of de11 bentures; and’’;

12 (3) in subsection (q)(1) by striking ‘‘fiscal year

13 1997’’ and inserting ‘‘each of fiscal years 1997 and

14 1998’’; and

15 (4) in subsection (q)(2) by striking ‘‘year 1997’’

16 and inserting ‘‘years 1997 and 1998’’.

17 SEC. 111. LEVEL OF PARTICIPATION FOR EXPORT WORK18 ING CAPITAL LOANS.

19 Section 7(a)(2) (15 U.S.C. 636(a)(2)) is amended by

20 adding at the end the following:

21 ‘‘(D) PARTICIPATION UNDER EXPORT

22 WORKING CAPITAL PROGRAM.—Notwithstanding

23 subparagraph (A), in an agreement to partici24 pate in a loan on a deferred basis under the

25 Export Working Capital Program established
32

•HR 3719 EH

1 pursuant to paragraph (14)(A), such participa2 tion by the Administration shall be equal to the

3 rate specified under this paragraph as in effect

4 on the day before the date of the enactment of

5 the Small Business Lending Enhancement Act

6 of 1995.’’.

7 TITLE II—AMENDMENTS TO

8 SMALL BUSINESS INVEST9 MENT ACT

10 SEC. 201. REFERENCES.

11 Except as otherwise expressly provided, whenever in

12 this title an amendment or repeal is expressed in terms

13 of an amendment to, or repeal of, a section or other provi14 sion, the reference shall be considered to be made to a

15 section or other provision of the Small Business Invest16 ment Act of 1958 (15 U.S.C. 661 et seq.).

17 SEC. 202. MODIFICATIONS TO DEVELOPMENT COMPANY

18 DEBENTURE PROGRAM.

19 (a) DECREASED LOAN TO VALUE RATIOS.—Section

20 502(3) (15 U.S.C. 696(3)) is amended to read as follows:

21 ‘‘(3) CRITERIA FOR ASSISTANCE.—

22 ‘‘(A) IN GENERAL.—Any development com23 pany assisted under this section or section 503

24 of this title must meet the criteria established

25 by the Administration, including the extent of
33

•HR 3719 EH

1 participation to be required or amount of paid2 in capital to be used in each instance as is de3 termined to be reasonable by the Administra4 tion.

5 ‘‘(B) COMMUNITY INJECTION FUNDS.—

6 ‘‘(i) SOURCES OF FUNDS.—Commu7 nity injection funds may be derived, in

8 whole or in part, from—

9 ‘‘(I) State or local governments;

10 ‘‘(II) banks or other financial in11 stitutions;

12 ‘‘(III) foundations or other not13 for-profit institutions; or

14 ‘‘(IV) the small business concern

15 (or its owners, stockholders, or affili16 ates) receiving assistance through a

17 body authorized by this title.

18 ‘‘(ii) FUNDING FROM INSTITU19 TIONS.—Not less than 50 percent of the

20 total cost of any project financed pursuant

21 to clauses (i), (ii), or (iii) of subparagraph

22 (C) shall come from the institutions de23 scribed in subclauses (I), (II), and (III) of

24 clause (i).
34

•HR 3719 EH

1 ‘‘(C) FUNDING FROM A SMALL BUSINESS

2 CONCERN.—The small business concern (or its

3 owners, stockholders, or affiliates) receiving as4 sistance through a body authorized by this title

5 shall provide—

6 ‘‘(i) at least 15 percent of the total

7 cost of the project financed, if the small

8 business concern has been in operation for

9 a period of 2 years or less;

10 ‘‘(ii) at least 15 percent of the total

11 cost of the project financed if the project

12 involves the construction of a limited or

13 single purpose building or structure;

14 ‘‘(iii) at least 20 percent of the total

15 cost of the project financed if the project

16 involves both of the conditions set forth in

17 clauses (i) and (ii); or

18 ‘‘(iv) at least 10 percent of the total

19 cost of the project financed, in all other

20 circumstances, at the discretion of the de21 velopment company.’’.

22 (b) GUARANTEE FEE FOR DEVELOPMENT COMPANY

23 DEBENTURES.—Section 503(b)(7)(A) (15 U.S.C.

24 697(b)(7)(A)) is amended by striking ‘‘0.125 percent’’ and

25 inserting ‘‘0.9375 percent’’.
35

•HR 3719 EH

1 (c) FEES TO OFFSET SUBSIDY COST.—Section

2 503(d) (15 U.S.C. 697(d)) is amended to read as follows:

3 ‘‘(d) CHARGES FOR ADMINISTRATION EXPENSES.—

4 ‘‘(1) LEVEL OF CHARGES.—The Administration

5 may impose an additional charge for administrative

6 expenses with respect to each debenture for which

7 payment of principal and interest is guaranteed

8 under subsection (a).

9 ‘‘(2) PARTICIPATION FEE.—The Administration

10 shall also impose a one-time fee of 50 basis points

11 on the total participation in any project of any insti12 tution described in subclause (I), (II), or (III) of

13 section 502(3)(B)(i). Such fee shall be imposed only

14 when the participation of the institution will occupy

15 a senior credit position to that of the development

16 company. Such fee shall be collected by the develop17 ment company, forwarded to the Administration,

18 and used to offset the cost (as such term is defined

19 in section 502 of the Credit Reform Act of 1990) to

20 the Administration of making guarantees under sub21 section (a).

22 ‘‘(3) DEVELOPMENT COMPANY FEE.—The Ad23 ministration shall collect annually from each devel24 opment company a fee of 0.125 percent of the out25 standing principal balance of any guaranteed deben-
36

•HR 3719 EH

1 ture authorized by the Administration after Septem2 ber 30, 1996. Such fee shall be derived from the

3 servicing fees collected by the development company

4 pursuant to regulation, and shall not be derived

5 from any additional fees imposed on small business

6 concerns. All proceeds of the fee shall be used to off7 set the cost (as such term is defined in section 502

8 of the Credit Reform Act of 1990) to the Adminis9 tration of making guarantees under subsection (a).’’.

10 (d) EFFECTIVE DATE.—Section 503 (15 U.S.C. 697)

11 is amended by adding at the end the following:

12 ‘‘(f) EFFECTIVE DATE.—The fees authorized by sub13 sections (b) and (c) shall apply to financings approved by

14 the Administration on or after October 1, 1996, but shall

15 not apply to financings approved by the Administration

16 on or after October 1, 1997.’’.

17 SEC. 203. REQUIRED ACTIONS UPON DEFAULT.

18 Section 503 (15 U.S.C. 697) is amended by adding

19 at the end the following:

20 ‘‘(g) REQUIRED ACTIONS UPON DEFAULT.—

21 ‘‘(1) DEADLINES.—

22 ‘‘(A) INITIAL ACTIONS.—Not later than

23 the 45th day after the date on which a payment

24 on a loan funded through a debenture guaran-
37

•HR 3719 EH

1 teed under this section is due and not received,

2 the Administration shall—

3 ‘‘(i) take all necessary steps to bring

4 such a loan current; or

5 ‘‘(ii) implement a formal written de6 ferral agreement.

7 ‘‘(B) PURCHASE OR ACCELERATION OF DE8 BENTURE.—Not later than the 65th day after

9 the date on which a payment on a loan de10 scribed in subparagraph (A) is due and not re11 ceived, and absent a formal written deferral

12 agreement, the Administration shall take all

13 necessary steps to purchase or accelerate the

14 debenture.

15 ‘‘(2) PREPAYMENT PENALTIES.—The Adminis16 tration shall, with respect to the portion of any

17 project derived from funds set forth in section

18 502(3)—

19 ‘‘(A) negotiate the elimination of any pre20 payment penalties or late fees on defaulted

21 loans made prior to September 30, 1996;

22 ‘‘(B) decline to pay any prepayment pen23 alty or late fee on the default based purchase

24 of loans issued after September 30, 1996; and
38

•HR 3719 EH

1 ‘‘(C) for any project financed after Sep2 tember 30, 1996, decline to pay any default in3 terest rate higher than the interest rate on the

4 note prior to the date of default.’’.

5 SEC. 204. LOAN LIQUIDATION PILOT PROGRAM.

6 (a) IN GENERAL.—The Administrator shall carry out

7 a loan liquidation pilot program (in this section referred

8 to as the ‘‘pilot program’’) in accordance with the require9 ments of this section.

10 (b) SELECTION OF DEVELOPMENT COMPANIES.—

11 Not later than 90 days after the date of the enactment

12 of this Act, the Administrator shall allow not less than

13 15 development companies authorized to make loans and

14 issue debentures under title V of the Small Business In15 vestment Act of 1958 to participate in the pilot program.

16 The development companies admitted shall agree not to

17 take any action that would create a potential conflict of

18 interest involving the development company, the third

19 party lender, or an associate of the third party lender. In

20 order to qualify to participate in the pilot, each develop21 ment company shall—

22 (1) have a minimum of 6 years experience in

23 the program established by such title V;
39

•HR 3719 EH

1 (2) have made, during the last 6 fiscal years, an

2 average of 10 loans per year through the program

3 established by such title V; and

4 (3) have a minimum of 2 years experience, ei5 ther independently or through an agent, in liquidat6 ing loans under the authority of a Federal, State, or

7 other lending program.

8 (c) AUTHORITY OF DEVELOPMENT COMPANIES.—

9 The development companies selected under subsection (b)

10 shall, for all loans in their portfolio of loans made through

11 debentures guaranteed under title V of the Small Business

12 Investment Act of 1958 that are in default after the date

13 of enactment of this Act, be authorized to—

14 (1) perform all liquidation and foreclosure func15 tions, including the acceleration or purchase of com16 munity injection funds, subject to such company ob17 taining prior written approval from the Adminis18 trator before committing the agency to purchase any

19 other indebtedness secured by the property: Pro20 vided, That the Administrator shall approve or deny

21 a request for such purchase within a period of 5

22 business days; and

23 (2) liquidate such loans in a reasonable and

24 sound manner and according to commercially accept25 ed practices pursuant to a liquidation plan approved
40

•HR 3719 EH

1 by the administrator in advance of its implementa2 tion. If the Administrator does not approve or deny

3 a request made by a certified development company

4 within a period of 5 business days, such request

5 shall be deemed to be approved.

6 (d) AUTHORITY OF THE ADMINISTRATOR.—In carry7 ing out the pilot program, the Administrator shall—

8 (1) have full authority to deny participation in

9 the pilot program or rescind the authority granted

10 any development company under this section upon a

11 10-day written notice stating the reasons for the de12 nial or rescission; and

13 (2) implement the pilot program no later than

14 90 days after the admission of the development com15 panies specified in subsection (b).

16 (e) REPORT.—

17 (1) IN GENERAL.—The Administrator shall

18 issue a report on the results of the pilot program to

19 the Committees on Small Business of the House of

20 Representatives and the Senate. The report shall in21 clude information relating to—

22 (A) the total dollar amount of each loan

23 and project liquidated;

24 (B) the total dollar amount guaranteed by

25 the Administration;
41

•HR 3719 EH

1 (C) total dollar losses;

2 (D) total recoveries both as percentage of

3 the amount guaranteed and the total cost of the

4 project; and

5 (E) a comparison of the pilot program in6 formation with the same information for liq7 uidation conducted outside the pilot program

8 over the period of time.

9 (2) REPORTING PERIOD.—The report shall be

10 based on data from, and issued not later than 90

11 days after the close of, the first eight 8 fiscal quar12 ters of the pilot program’s operation after the date

13 of implementation.

14 SEC. 205. REGISTRATION OF CERTIFICATES.

15 (a) CERTIFICATES SOLD PURSUANT TO SMALL BUSI16 NESS ACT.—Section 5(h) of the Small Business Act (15

17 U.S.C. 634(h)) is amended—

18 (1) by redesignating paragraphs (1) through

19 (4) as subparagraphs (A) through (D);

20 (2) by striking ‘‘(h)’’ and inserting ‘‘(h)(1)’’;

21 (3) by striking subparagraph (A), as redesig22 nated by paragraph (1) of this subsection, and in23 serting the following:
42

•HR 3719 EH

1 ‘‘(A) provide for a central registration of all

2 loans and trust certificates sold pursuant to sub3 sections (f) and (g) of this section;’’; and

4 (4) by adding at the end the following:

5 ‘‘(2) Nothing in this subsection shall prohibit the uti6 lization of a book-entry or other electronic form of reg7 istration for trust certificates. The Administration may,

8 with the consent of the Secretary of the Treasury, use the

9 book-entry system of the Federal Reserve System.’’.

10 (b) CERTIFICATES SOLD PURSUANT TO SMALL BUSI11 NESS INVESTMENT COMPANY PROGRAM.—Section 321(f)

12 (15 U.S.C. 6871(f)) is amended—

13 (1) in paragraph (1) by striking ‘‘Such central

14 registration shall include’’ and all that follows

15 through the period at the end of the paragraph; and

16 (2) by adding at the end the following:

17 ‘‘(5) Nothing in this subsection shall prohibit the use

18 of a book-entry or other electronic form of registration for

19 trust certificates.’’.

20 (c) CERTIFICATES SOLD PURSUANT TO DEVELOP21 MENT COMPANY PROGRAM.—Section 505(f) (15 U.S.C.

22 697b(f)) is amended—

23 (1) by redesignating paragraphs (1) through

24 (4) as subparagraphs (A) through (D);

25 (2) by striking ‘‘(f)’’ and inserting ‘‘(f)(1)’’;
43

•HR 3719 EH

1 (3) by striking subparagraph (A), as redesig2 nated by paragraph (1) of this subsection, and in3 serting the following:

4 ‘‘(A) provide for a central registration of all

5 trust certificates sold pursuant to this section;’’ and

6 (4) by adding at the end the following:

7 ‘‘(2) Nothing in this subsection shall prohibit the uti8 lization of a book-entry or other electronic form of reg9 istration for trust certificates.’’.

10 SEC. 206. PREFERRED SURETY BOND GUARANTEE PRO11 GRAM.

12 (a) ADMISSIONS OF ADDITIONAL PROGRAM PARTICI13 PANTS.—Section 411(a) (15 U.S.C. 694(a)) is amended

14 by adding a new paragraph (5), as follows:

15 ‘‘(5)(A) The Administration shall promptly act upon

16 an application from a surety to participate in the Pre17 ferred Surety Bond Guarantee Program, authorized by

18 paragraph (3), in accordance with criteria and procedures

19 established in regulations pursuant to subsection (d).

20 ‘‘(B) The Administration is authorized to reduce the

21 allotment of bond guarantee authority or terminate the

22 participation of a surety in the Preferred Surety Bond

23 Guarantee Program based on the rate of participation of

24 such surety during the 4 most recent fiscal year quarters
44

•HR 3719 EH

1 compared to the median rate of participation by the other

2 sureties in the program.’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 subsection (a) shall apply with respect to applications re5 ceived (or pending substantive evaluation) on or after Oc6 tober 1, 1995.

7 SEC. 207. SENSE OF THE CONGRESS.

8 It is the sense of the Congress that the subsidy mod9 els prepared by the Office of Management and Budget rel10 ative to loan programs sponsored by the United States

11 Small Business Administration have a tendency to:

12 (1) overestimate potential risks of loss; and

13 (2) overemphasize historical losses that may be

14 anomolous and do not truly reflect the success of the

15 programs as a whole.

16 Consequently, Congress mandates the independent

17 study in section 103(h) with hopes of improving the ability

18 of the Office of Management and Budget to more accu19 rately reflect the budgetary implications of such programs.

Passed the House of Representatives September 5,

1996.

Attest:

Clerk.