II 

Calendar No. 352 

110TH CONGRESS 

1ST SESSION S. 1256 

[Report No. 110–154] 

To amend the Small Business Act to reauthorize loan programs under that 

Act, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 1, 2007 

Mr. KERRY (for himself, Ms. SNOWE, Mr. LEVIN, Ms. LANDRIEU, Mr. OBAMA, 

and Mr. TESTER) introduced the following bill; which was read twice and 

referred to the Committee on Small Business and Entrepreneurship 

SEPTEMBER 12, 2007 

Reported by Mr. KERRY, with an amendment 

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

A BILL 

To amend the Small Business Act to reauthorize loan 

programs under that Act, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Lend5 ing Reauthorization and Improvements Act of 2007’’. 


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1 SEC. 2. TABLE OF CONTENTS. 

2 The table of contents of this Act is as follows: 

Sec. 1. Short title. 

Sec. 2. Table of contents. 

Sec. 3. Definitions. 

Sec. 4. Authorization of appropriations. 

TITLE I—MICROLOAN PROGRAMS 

Sec. 101. Conforming technical change in average smaller loan size. 

Sec. 102. Inclusion of persons with disabilities. 

Sec. 103. Microloan program improvements. 

Sec. 104. PRIME reauthorization and transfer to the Small Business Act. 

TITLE II—INTERMEDIARY LENDING PILOT PROGRAM 

Sec. 201. Findings. 

Sec. 202. Small business intermediary lending pilot program. 

TITLE III—7(a) LOAN PROGRAM 

Sec. 301. Preferred lenders program. 

Sec. 302. Maximum loan amount. 

Sec. 303. Maximum 504 and 7(a) loan eligibility. 

Sec. 304. Loan pooling. 

Sec. 305. Alternative size standard. 

Sec. 306. Alternative variable interest rate. 

Sec. 307. Minority small business development. 

Sec. 308. Lowering of fees. 

Sec. 309. International trade loans. 

Sec. 310. Rural lending outreach program. 

TITLE IV—CERTIFIED DEVELOPMENT COMPANIES; 504 LOAN 

PROGRAM 

Sec. 401. Development company loan programs. 

Sec. 402. Loan liquidations. 

Sec. 403. Additional equity injections. 

Sec. 404. Businesses in low-income areas. 

Sec. 405. Combinations of certain goals. 

Sec. 406. Refinancing under the Local Development Business Loan Program. 

Sec. 407. Technical correction. 

Sec. 408. Definitions for the Small Business Investment Act of 1958. 

Sec. 409. Repeal of sunset on reserve requirements for premier certified lenders. 

Sec. 410. Certified development companies. 

Sec. 411. Conforming amendments. 

Sec. 412. Closing costs. 

Sec. 413. Definition of rural. 

Sec. 414. Regulations and effective date. 

Sec. 415. Limitation on time for final approval of companies. 

Sec. 416. Child Care Lending Pilot Program. 


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1 SEC. 3. DEFINITIONS. 

2 In this Act— 

3 (1) the terms ‘‘Administration’’ and ‘‘Adminis4 trator’’ mean the Small Business Administration 

5 and the Administrator thereof, respectively; 

6 (2) the term ‘‘504 Loan Program’’ means the 

7 program to provide financing to small business con8 cerns by guarantees of loans under title V of the 

9 Small Business Investment Act of 1958 (15 U.S.C. 

10 695 et seq.), which are funded by debentures guar11 anteed by the Administrator; and 

12 (3) the term ‘‘small business concern’’ has the 

13 meaning given that term in section 3 of the Small 

14 Business Act (15 U.S.C. 632). 

15 SEC. 4. AUTHORIZATION OF APPROPRIATIONS. 

16 Section 20 of the Small Business Act (15 U.S.C. 631 

17 note) is amended— 

18 (1) by redesignating subsection (j) as sub19 section (f); and 

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

21 ‘‘(g) MICROLOAN.—For each of fiscal years 2007 

22 through 2010, the Administration is authorized to make, 

23 as provided in section 7(m)— 

24 ‘‘(1) $80,000,000 in technical assistance grants; 

25 ‘‘(2) $110,000,000 in direct loans; and 


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1 ‘‘(3) $50,000,000 in deferred participation 

2 loans. 

3 ‘‘(h) GENERAL BUSINESS LOANS.—The Administra4 tion is authorized to make, as provided in section 7(a)— 

5 ‘‘(1) $18,000,000,000 in general business loans 

6 in fiscal year 2007; 

7 ‘‘(2) $19,000,000,000 in general business loans 

8 in fiscal year 2008; 

9 ‘‘(3) $20,000,000,000 in general business loans 

10 in fiscal year 2009; and 

11 ‘‘(4) $21,000,000,000 in general business loans 

12 in fiscal year 2010. 

13 ‘‘(i) CERTIFIED DEVELOPMENT COMPANY

14 FINANCINGS.—The Administration is authorized to make, 

15 as provided in section 7(a)(13) and as provided in section 

16 504 of the Small Business Investment Act of 1958 (15 

17 U.S.C. 697a)— 

18 ‘‘(1) $8,000,000,000 in certified development 

19 company financings in fiscal year 2007; 

20 ‘‘(2) $8,500,000,000 in certified development 

21 company financings in fiscal year 2008; 

22 ‘‘(3) $9,000,000,000 in certified development 

23 company financings in fiscal year 2009; and 

24 ‘‘(4) $9,500,000,000 in certified development 

25 company financings in fiscal year 2010. 


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1 ‘‘(j) DEPARTMENT OF DEFENSE.—For each of fiscal 

2 years 2007 through 2010, the Administration is author3 ized to make $500,000,000 in loans as provided in section 

4 7(a)(21). 

5 ‘‘(k) PRIME PROGRAM.— 

6 ‘‘(1) IN GENERAL.—There are authorized to be 

7 appropriated to the Administrator $15,000,000 for 

8 each of fiscal years 2007 through 2010 to carry out 

9 section 37, which shall remain available until ex10 pended. 

11 ‘‘(2) CERTAIN PROGRAMS.—In addition to the 

12 amount authorized under paragraph (1), there are 

13 authorized to be appropriated to the Administrator 

14 $2,000,000 each of fiscal years 2007 through 2010 

15 to carry out section 37(c)(4), which shall remain 

16 available until expended. 

17 ‘‘(l) ADDITIONAL AUTHORIZATIONS AND LIMITA18 TIONS.— 

19 ‘‘(1) IN GENERAL.—There are authorized to be 

20 appropriated to the Administration for each of fiscal 

21 years 2007 through 2010 such sums as may be nec22 essary to carry out the provisions of this Act not 

23 elsewhere provided for, including administrative ex24 penses and necessary loan capital for disaster loans 

25 pursuant to section 7(b), and to carry out the Small 


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1 Business Investment Act of 1958, including salaries 

2 and expenses of the Administration. 

3 ‘‘(2) LIMITATIONS.—Notwithstanding any other 

4 provision of this section, for each of fiscal years 

5 2007 through 2010— 

6 ‘‘(A) no funds are authorized to be used as 

7 loan capital for the loan program authorized by 

8 section 7(a)(21) in any such fiscal year, except 

9 by transfer from another Federal department or 

10 agency to the Administration, unless the pro11 gram level authorized for general business loans 

12 under subsection (h) is fully funded for that fis13 cal year; and 

14 ‘‘(B) the Administration may not approve 

15 loans on its own behalf or on behalf of any 

16 other Federal department or agency, by con17 tract or otherwise, under terms and conditions 

18 other than those specifically authorized under 

19 this Act or the Small Business Investment Act 

20 of 1958, except that it may approve loans under 

21 section 7(a)(21) of this Act in gross amounts of 

22 not more than $2,000,000.’’. 


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1 TITLE I—MICROLOAN 

2 PROGRAMS 

3 SEC. 101. CONFORMING TECHNICAL CHANGE IN AVERAGE 

4 SMALLER LOAN SIZE. 

5 Section 7(m) of the Small Business Act (15 U.S.C. 

6 636(m)) is amended— 

7 (1) in paragraph (3)(F)(iii), by striking 

8 ‘‘$7,500’’ and inserting ‘‘$10,000’’; and 

9 (2) in paragraph (6)(C), by striking ‘‘$7,500’’ 

10 each place that term appears and inserting 

11 ‘‘$10,000’’. 

12 SEC. 102. INCLUSION OF PERSONS WITH DISABILITIES. 

13 Section 7(m)(1)(A)(i) of the Small Business Act (15 

14 U.S.C. 636(m)(1)(A)(i)) is amended by inserting ‘‘persons 

15 with disabilities,’’ before ‘‘and minority’’. 

16 SEC. 103. MICROLOAN PROGRAM IMPROVEMENTS. 

17 (a) INTERMEDIARY ELIGIBILITY REQUIREMENTS.— 

18 Section 7(m)(2) of the Small Business Act (15 U.S.C. 

19 636(m)(2)) is amended— 

20 (1) in subparagraph (A), by striking ‘‘in para21 graph (10); and’’ and inserting ‘‘of the term ‘inter22 mediary’ under paragraph (11);’’; and 

23 (2) in subparagraph (B)— 

24 (A) by striking ‘‘(B) has at least’’ and in25 serting the following: 


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1 ‘‘(B) has— 

2 ‘‘(i) at least’’; and 

3 (B) by striking the period at the end and 

4 inserting the following: ‘‘; or 

5 ‘‘(ii) a full-time employee who has not 

6 less than 3 years experience making 

7 microloans to startup, newly established, or 

8 growing small business concerns; and 

9 ‘‘(C) has at least 1 year experience pro10 viding, as an integral part of its microloan pro11 gram, intensive marketing, management, and 

12 technical assistance to its borrowers.’’. 

13 (b) LIMITATION ON THIRD PARTY TECHNICAL AS14 SISTANCE.—Section 7(m)(4)(E)(ii) of the Small Business 

15 Act (15 U.S.C. 636(m)(4)(E)(ii)) is amended— 

16 (1) in the clause heading, by striking ‘‘TECH17 NICAL ASSISTANCE’’ and inserting ‘‘THIRD PARTY

18 TECHNICAL ASSISTANCE’’; and 

19 (2) by striking ‘‘25 percent’’ and inserting ‘‘30 

20 percent’’. 

21 (c) LOAN TERMS.—Section 7(m) of the Small Busi22 ness Act (15 U.S.C. 636(m)) is amended— 

23 (1) in paragraph (1)(B)(i), by striking ‘‘short24 term,’’; and 


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1 (2) in paragraph (11)(B), by striking ‘‘short2 term,’’. 

3 (d) INCREASED FLEXIBILITY FOR PROVIDING TECH4 NICAL ASSISTANCE TO POTENTIAL BORROWERS.—Section 

5 7(m)(4)(E)(i) of the Small Business Act (15 U.S.C. 

6 636(m)(4)(E)(i)) is amended by striking ‘‘25 percent’’ and 

7 inserting ‘‘30 percent’’. 

8 SEC. 104. PRIME REAUTHORIZATION AND TRANSFER TO 

9 THE SMALL BUSINESS ACT. 

10 (a) PROGRAM REAUTHORIZATION.—The Small Busi11 ness Act (15 U.S.C. 631 et seq.) is amended— 

12 (1) by redesignating section 37 as section 39; 

13 and 

14 (2) by inserting after section 36 the following: 

15 ‘‘SEC. 37. PROGRAM FOR INVESTMENT IN MICROENTRE16 PRENEURS. 

17 ‘‘(a) DEFINITIONS.—In this section: 

18 ‘‘(1) CAPACITY BUILDING SERVICES.—The term 

19 ‘capacity building services’ means services provided 

20 to an organization that is, or that is in the process 

21 of becoming, a microenterprise development organi22 zation or program, for the purpose of enhancing its 

23 ability to provide training and services to disadvan24 taged entrepreneurs. 


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1 ‘‘(2) COLLABORATIVE.—The term ‘collabo2 rative’ means 2 or more nonprofit entities that agree 

3 to act jointly as a qualified organization under this 

4 section. 

5 ‘‘(3) DISADVANTAGED ENTREPRENEUR.—The 

6 term ‘disadvantaged entrepreneur’ means a micro7 entrepreneur that— 

8 ‘‘(A) is a low-income person; 

9 ‘‘(B) is a very low-income person; or 

10 ‘‘(C) lacks adequate access to capital or 

11 other resources essential for business success, 

12 or is economically disadvantaged, as determined 

13 by the Administrator. 

14 ‘‘(4) DISADVANTAGED NATIVE AMERICAN EN15 TREPRENEUR.—The term ‘disadvantaged Native 

16 American entrepreneur’ means a disadvantaged en17 trepreneur who is also a member of an Indian Tribe. 

18 ‘‘(5) INDIAN TRIBE.—The term ‘Indian tribe’ 

19 has the meaning given that term in section 4(a) of 

20 the Indian Self-Determination and Education Assist21 ance Act. 

22 ‘‘(6) INTERMEDIARY.—The term ‘intermediary’ 

23 means a private, nonprofit entity that seeks to serve 

24 microenterprise development organizations and pro25 grams, as authorized under subsection (d). 


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1 ‘‘(7) LOW-INCOME PERSON.—The term ‘low-in2 come person’ means having an income, adjusted for 

3 family size, of not more than— 

4 ‘‘(A) for metropolitan areas, 80 percent of 

5 the area median income; and 

6 ‘‘(B) for nonmetropolitan areas, the great7 er of— 

8 ‘‘(i) 80 percent of the area median in9 come; or 

10 ‘‘(ii) 80 percent of the statewide non11 metropolitan area median income. 

12 ‘‘(8) MICROENTREPRENEUR.—The term ‘micro13 entrepreneur’ means the owner or developer of a 

14 microenterprise. 

15 ‘‘(9) MICROENTERPRISE.—The term ‘micro16 enterprise’ means a sole proprietorship, partnership, 

17 or corporation that— 

18 ‘‘(A) has fewer than 5 employees; and 

19 ‘‘(B) generally lacks access to conventional 

20 loans, equity, or other banking services. 

21 ‘‘(10) MICROENTERPRISE DEVELOPMENT ORGA22 NIZATION OR PROGRAM.—The term ‘microenterprise 

23 development organization or program’ means a non24 profit entity, or a program administered by such an 

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1 tions or other nonprofit development organizations 

2 and social service organizations, that provides serv3 ices to disadvantaged entrepreneurs. 

4 ‘‘(11) TRAINING AND TECHNICAL ASSIST5 ANCE.—The term ‘training and technical assistance’ 

6 means services and support provided to disadvan7 taged entrepreneurs, such as assistance for the pur8 pose of enhancing business planning, marketing, 

9 management, financial management skills, and as10 sistance for the purpose of accessing financial serv11 ices. 

12 ‘‘(12) VERY LOW-INCOME PERSON.—The term 

13 ‘very low-income person’ means having an income, 

14 adjusted for family size, of not more than 150 per15 cent of the poverty line (as defined in section 673(2) 

16 of the Community Services Block Grant Act (42 

17 U.S.C. 9902(2)), including any revision required by 

18 that section). 

19 ‘‘(b) ESTABLISHMENT OF PROGRAM.—The Adminis20 trator shall establish a microenterprise technical assist21 ance and capacity building grant program to provide as22 sistance from the Administration in the form of grants 

23 to qualified organizations in accordance with this section. 

24 ‘‘(c) USES OF ASSISTANCE.—A qualified organization 

25 shall use grants made under this section— 


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1 ‘‘(1) to provide training and technical assist2 ance to disadvantaged entrepreneurs; 

3 ‘‘(2) to provide training and capacity building 

4 services to microenterprise development organiza5 tions and programs and groups of such organiza6 tions to assist such organizations and programs in 

7 developing microenterprise training and services; 

8 ‘‘(3) to aid in researching and developing the 

9 best practices in the field of microenterprise and 

10 technical assistance programs for disadvantaged en11 trepreneurs; 

12 ‘‘(4) to provide training and technical assist13 ance to disadvantaged Native American entre14 preneurs and prospective entrepreneurs; and 

15 ‘‘(5) for such other activities as the Adminis16 trator determines are consistent with the purposes of 

17 this section. 

18 ‘‘(d) QUALIFIED ORGANIZATIONS.—For purposes of 

19 eligibility for assistance under this section, a qualified or20 ganization shall be— 

21 ‘‘(1) a nonprofit microenterprise development 

22 organization or program (or a group or collaborative 

23 thereof) that has a demonstrated record of delivering 

24 microenterprise services to disadvantaged entre25 preneurs; 


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1 ‘‘(2) an intermediary; 

2 ‘‘(3) a microenterprise development organiza3 tion or program that is accountable to a local com4 munity, working in conjunction with a State or local 

5 government or Indian tribe; or 

6 ‘‘(4) an Indian tribe acting on its own, if the 

7 Indian tribe certifies that no private organization or 

8 program referred to in this subsection exists within 

9 its jurisdiction. 

10 ‘‘(e) ALLOCATION OF ASSISTANCE; SUBGRANTS.— 

11 ‘‘(1) ALLOCATION OF ASSISTANCE.— 

12 ‘‘(A) IN GENERAL.—The Administrator 

13 shall allocate assistance from the Administra14 tion under this section to ensure that— 

15 ‘‘(i) activities described in subsection 

16 (c)(1) are funded using not less than 75 

17 percent of amounts made available for 

18 such assistance; and 

19 ‘‘(ii) activities described in subsection 

20 (c)(2) are funded using not less than 15 

21 percent of amounts made available for 

22 such assistance. 

23 ‘‘(B) LIMIT ON INDIVIDUAL ASSISTANCE.— 

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1 cent of the total funds appropriated under this 

2 section in a single fiscal year. 

3 ‘‘(2) TARGETED ASSISTANCE.—The Adminis4 trator shall ensure that not less than 50 percent of 

5 the grants made under this section are used to ben6 efit very low-income persons, including those resid7 ing on Indian reservations. 

8 ‘‘(3) SUBGRANTS AUTHORIZED.— 

9 ‘‘(A) IN GENERAL.—A qualified organiza10 tion receiving assistance under this section may 

11 provide grants using that assistance to qualified 

12 small and emerging microenterprise organiza13 tions and programs, subject to such rules and 

14 regulations as the Administrator determines to 

15 be appropriate. 

16 ‘‘(B) LIMIT ON ADMINISTRATIVE EX17 PENSES.—Not more than 7.5 percent of assist18 ance received by a qualified organization under 

19 this section may be used for administrative ex20 penses in connection with the making of sub21 grants under subparagraph (A). 

22 ‘‘(4) DIVERSITY.—In making grants under this 

23 section, the Administrator shall ensure that grant 

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1 prise organizations, serving urban, rural, and Indian 

2 tribal communities serving diverse populations. 

3 ‘‘(5) PROHIBITION ON PREFERENTIAL CONSID4 ERATION OF CERTAIN ADMINISTRATION PROGRAM

5 PARTICIPANTS.—In making grants under this sec6 tion, the Administrator shall ensure that any appli7 cation made by a qualified organization that is a 

8 participant in the program established under section 

9 7(m) does not receive preferential consideration over 

10 applications from other qualified organizations that 

11 are not participants in such program. 

12 ‘‘(f) MATCHING REQUIREMENTS.— 

13 ‘‘(1) IN GENERAL.—Financial assistance under 

14 this section shall be matched with funds from 

15 sources other than the Federal Government on the 

16 basis of not less than 50 percent of each dollar pro17 vided by the Administration. 

18 ‘‘(2) SOURCES OF MATCHING FUNDS.—Fees, 

19 grants, gifts, funds from loan sources, and in-kind 

20 resources of a grant recipient from public or private 

21 sources may be used to comply with the matching 

22 requirement in paragraph (1). 

23 ‘‘(3) EXCEPTION.— 

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1 vere constraints on available sources of match2 ing funds, the Administrator may reduce or 

3 eliminate the matching requirements of para4 graph (1). 

5 ‘‘(B) LIMITATION.—Not more than 10 per6 cent of the total funds made available from the 

7 Administration in any fiscal year to carry out 

8 this section may be excepted from the matching 

9 requirements of paragraph (1), as authorized by 

10 subparagraph (A) of this paragraph. 

11 ‘‘(g) APPLICATIONS FOR ASSISTANCE.—An applica12 tion for assistance under this section shall be submitted 

13 in such form and in accordance with such procedures as 

14 the Administrator shall establish. 

15 ‘‘(h) RECORDKEEPING AND REPORTING.— 

16 ‘‘(1) IN GENERAL.—Each organization that re17 ceives assistance from the Administration under this 

18 section shall— 

19 ‘‘(A) submit to the Administration not less 

20 than once in every 18-month period, financial 

21 statements audited by an independent certified 

22 public accountant; 

23 ‘‘(B) submit an annual report to the Ad24 ministration on its activities; and 


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1 ‘‘(C) keep such records as may be nec2 essary to disclose the manner in which any as3 sistance under this section is used. 

4 ‘‘(2) ACCESS.—The Administration shall have 

5 access upon request, for the purposes of determining 

6 compliance with this section, to any records of any 

7 organization that receives assistance from the Ad8 ministration under this section. 

9 ‘‘(3) DATA COLLECTION.—Each organization 

10 that receives assistance from the Administration 

11 under this section shall collect information relating 

12 to, as applicable— 

13 ‘‘(A) the number of individuals counseled 

14 or trained; 

15 ‘‘(B) the number of hours of counseling 

16 provided; 

17 ‘‘(C) the number of startup small business 

18 concerns formed; 

19 ‘‘(D) the number of small business con20 cerns expanded; 

21 ‘‘(E) the number of low-income individuals 

22 counseled or trained; and 

23 ‘‘(F) the number of very low-income indi24 viduals counseled or trained.’’. 


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1 (b) CONFORMING REPEAL.—Subtitle C of title I of 

2 the Riegle Community Development and Regulatory Im3 provement Act of 1994 (15 U.S.C. 6901 note) is repealed. 

4 (c) REFERENCES.—All references in Federal law, 

5 other than subsection (d) of this section, to the ‘‘Program 

6 for Investment in Microentrepreneurs Act of 1999’’ or the 

7 ‘‘PRIME Act’’ shall be deemed to be references to section 

8 37 of the Small Business Act, as added by this section. 

9 (d) RULE OF CONSTRUCTION.—Nothing in this sec10 tion or the amendments made by this section shall affect 

11 any grant or assistance provided under the Program for 

12 Investment in Microentrepreneurs Act of 1999, before the 

13 date of enactment of this Act, and any such grant or as14 sistance shall be subject to the Program for Investment 

15 in Microentrepreneurs Act of 1999, as in effect on the day 

16 before the date of enactment of this Act. 

17 TITLE II—INTERMEDIARY 

18 LENDING PILOT PROGRAM 

19 SEC. 201. FINDINGS. 

20 Congress finds the following: 

21 (1) Small and emerging businesses, particularly 

22 startups and businesses that lack sufficient or con23 ventional collateral, continue to face barriers access24 ing midsized loans in amounts between $35,000 and 

25 $200,000, with affordable terms and conditions. 


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1 (2) Consolidation in the banking industry has 

2 resulted in a decrease in the number of small, locally 

3 controlled banks with not more than $100,000,000 

4 in assets and has changed the method by which 

5 banks make small business credit decisions with— 

6 (A) credit scoring techniques replacing re7 lationship-based lending, which often works to 

8 the disadvantage of small or start-up businesses 

9 that do not conform with a bank’s standardized 

10 credit formulas; and 

11 (B) less flexible terms and conditions, 

12 which are often necessary for small and emerg13 ing businesses. 

14 (3) In the environment described in paragraphs 

15 (1) and (2), nonprofit intermediary lenders, includ16 ing community development corporations, provide fi17 nancial resources that supplement the small business 

18 lending and investments of a bank by— 

19 (A) providing riskier, up front, or subordi20 nated capital; 

21 (B) offering flexible terms and under22 writing procedures; and 

23 (C) providing technical assistance to busi24 nesses in order to reduce the transaction costs 

25 and risk exposure of banks. 


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1 (4) Several Federal programs, including the 

2 Microloan Program under section 7(m) of the Small 

3 Business Act (15 U.S.C. 636(m)) and the Inter4 mediary Relending Program of the Department of 

5 Agriculture, have demonstrated the effectiveness of 

6 working through nonprofit intermediaries to address 

7 the needs of small business concerns that are unable 

8 to access capital through conventional sources. 

9 (5) More than 1,000 nonprofit intermediary 

10 lenders in the United States are— 

11 (A) successfully providing financial and 

12 technical assistance to small and emerging busi13 nesses; 

14 (B) working with banks and other lenders 

15 to leverage additional capital for their business 

16 borrowers; and 

17 (C) creating employment opportunities for 

18 low-income individuals through their lending 

19 and business development activities. 

20 SEC. 202. SMALL BUSINESS INTERMEDIARY LENDING PILOT 

21 PROGRAM. 

22 (a) IN GENERAL.—Section 7 of the Small Business 

23 Act (15 U.S.C. 636) is amended by inserting after sub24 section (k) the following: 


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1 ‘‘(l) SMALL BUSINESS INTERMEDIARY LENDING

2 PROGRAM.— 

3 ‘‘(1) DEFINITIONS.—In this subsection— 

4 ‘‘(A) the term ‘intermediary’ means a pri5 vate, nonprofit entity that seeks to borrow, or 

6 has borrowed, funds from the Administration to 

7 provide midsize loans to small business con8 cerns under this subsection, including— 

9 ‘‘(i) a private, nonprofit community 

10 development corporation; 

11 ‘‘(ii) a consortium of private, non12 profit organizations or nonprofit commu13 nity development corporations; 

14 ‘‘(iii) a quasi-governmental economic 

15 development entity (such as a planning 

16 and development district), other than a 

17 State, county, or municipal government; 

18 and 

19 ‘‘(iv) an agency of or nonprofit entity 

20 established by a Native American Tribal 

21 Government; and 

22 ‘‘(B) the term ‘midsize loan’ means a fixed 

23 rate loan of not less than $35,000 and not 

24 more than $200,000, made by an intermediary 


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1 to a startup, newly established, or growing 

2 small business concern. 

3 ‘‘(2) ESTABLISHMENT.—There is established a 

4 3-year pilot program to be know as the ‘Small Busi5 ness Intermediary Lending Pilot Program’ (referred 

6 to in this subsection as the ‘Program’), under which 

7 the Administrator may provide direct loans to eligi8 ble intermediaries, for the purpose of making fixed 

9 interest rate midsize loans to startup, newly estab10 lished, and growing small business concerns. 

11 ‘‘(3) PURPOSES.—The purposes of the Program 

12 are— 

13 ‘‘(A) to assist small business concerns in 

14 those areas suffering from a lack of credit due 

15 to poor economic conditions; 

16 ‘‘(B) to create employment opportunities 

17 for low-income individuals; 

18 ‘‘(C) to establish a midsize loan program 

19 to be administered by the Administrator to pro20 vide loans to eligible intermediaries to enable 

21 such intermediaries to provide midsize loans, 

22 particularly loans in amounts averaging not 

23 more than $150,000, to startup, newly estab24 lished, or growing small business concerns for 


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1 working capital or the acquisition of materials, 

2 supplies, or equipment; 

3 ‘‘(D) to test the effectiveness of nonprofit 

4 intermediaries— 

5 ‘‘(i) as a delivery system for a midsize 

6 loan program; and 

7 ‘‘(ii) in addressing the credit needs of 

8 small business concerns and leveraging 

9 other sources of credit; and 

10 ‘‘(E) to determine the advisability and fea11 sibility of implementing a midsize loan program 

12 nationwide. 

13 ‘‘(4) ELIGIBILITY FOR PARTICIPATION.—An 

14 intermediary shall be eligible to receive loans under 

15 the Program if the intermediary has not less than 

16 1 year of experience making loans to startup, newly 

17 established, or growing small business concerns. 

18 ‘‘(5) LOANS TO INTERMEDIARIES.— 

19 ‘‘(A) APPLICATION.—Each intermediary 

20 desiring a loan under this subsection shall sub21 mit an application to the Administrator that de22 scribes— 

23 ‘‘(i) the type of small business con24 cerns to be assisted; 


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1 ‘‘(ii) the size and range of loans to be 

2 made; 

3 ‘‘(iii) the geographic area to be served 

4 and its economic, poverty, and unemploy5 ment characteristics; 

6 ‘‘(iv) the status of small business con7 cerns in the area to be served and an anal8 ysis of the availability of credit; and 

9 ‘‘(v) the qualifications of the applicant 

10 to carry out this subsection. 

11 ‘‘(B) LOAN LIMITS.—Notwithstanding sub12 section (a)(3), no loan may be made to an 

13 intermediary under this subsection if the total 

14 amount outstanding and committed to the 

15 intermediary from the business loan and invest16 ment fund established by this Act would, as a 

17 result of such loan, exceed $1,000,000 during 

18 the participation of the intermediary in the Pro19 gram. 

20 ‘‘(C) LOAN DURATION.—Loans made by 

21 the Administrator under this subsection shall be 

22 for a maximum term of 20 years. 

23 ‘‘(D) APPLICABLE INTEREST RATES.— 

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1 mediary under the Program shall bear an an2 nual interest rate equal to 1.00 percent. 

3 ‘‘(E) FEES; COLLATERAL.—The Adminis4 trator may not charge any fees or require col5 lateral with respect to any loan made to an 

6 intermediary under this subsection. 

7 ‘‘(F) LEVERAGE.—Any loan to a small 

8 business concern under this subsection shall not 

9 exceed 75 percent of the total cost of the 

10 project funded by such loan, with the remaining 

11 funds being leveraged from other sources, in12 cluding— 

13 ‘‘(i) banks or credit unions; 

14 ‘‘(ii) community development financial 

15 institutions; and 

16 ‘‘(iii) other sources with funds avail17 able to the intermediary lender. 

18 ‘‘(G) DELAYED PAYMENTS.—The Adminis19 trator shall not require the repayment of prin20 cipal or interest on a loan made to an inter21 mediary under the Program during the first 2 

22 years of the loan. 

23 ‘‘(6) PROGRAM FUNDING FOR MIDSIZE

24 LOANS.— 


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1 ‘‘(A) NUMBER OF PARTICIPANTS.—Under 

2 the Program, the Administrator may provide 

3 loans, on a competitive basis, to not more than 

4 20 intermediaries. 

5 ‘‘(B) EQUITABLE DISTRIBUTION OF INTER6 MEDIARIES.—The Administrator shall select 

7 and provide funding under the Program to such 

8 intermediaries as will ensure geographic diver9 sity and representation of urban and rural com10 munities. 

11 ‘‘(7) REPORT TO CONGRESS.— 

12 ‘‘(A) ANNUAL REPORT.—Not later than 12 

13 months after the date of enactment of the 

14 Small Business Lending Reauthorization and 

15 Improvements Act of 2007, and annually there16 after, the Administrator shall submit a report 

17 containing an evaluation of the effectiveness of 

18 the Program to— 

19 ‘‘(i) the Committee on Small Business 

20 and Entrepreneurship of the Senate; and 

21 ‘‘(ii) the Committee on Small Busi22 ness of the House of Representatives. 

23 ‘‘(B) CONTENTS.—Each report submitted 

24 under subparagraph (A) shall include, for the 


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1 12-month period before the date of that re2 port— 

3 ‘‘(i) the numbers and locations of the 

4 intermediaries receiving funds to provide 

5 midsize loans; 

6 ‘‘(ii) the amounts of each loan to an 

7 intermediary; 

8 ‘‘(iii) the numbers and amounts of 

9 midsize loans made by intermediaries to 

10 small business concerns; 

11 ‘‘(iv) the repayment history of each 

12 intermediary; 

13 ‘‘(v) a description of the loan portfolio 

14 of each intermediary, including the extent 

15 to which it provides midsize loans to small 

16 business concerns in rural and economi17 cally depressed areas; 

18 ‘‘(vi) an estimate of the number of 

19 low-income individuals who have been em20 ployed as a direct result of the Program; 

21 and 

22 ‘‘(vii) any recommendations for legis23 lative changes that would improve the op24 eration of the Program. 


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1 ‘‘(8) TERMINATION.—The authority to make 

2 loans under this subsection shall terminate 3 years 

3 after the date of enactment of the Small Business 

4 Lending Reauthorization and Improvements Act of 

5 2007.’’. 

6 (b) RULEMAKING AUTHORITY.—Not later than 180 

7 days after the date of enactment of this Act, the Adminis8 trator shall issue regulations to carry out section 7(l) of 

9 the Small Business Act, as added by subsection (a). 

10 (c) AUTHORIZATION OF APPROPRIATIONS.— 

11 (1) IN GENERAL.—There are authorized to be 

12 appropriated to the Administrator such sums as may 

13 be necessary for each of fiscal years 2008 through 

14 2010 to provide $20,000,000 in loans under section 

15 7(l) of the Small Business Act, as added by sub16 section (a). 

17 (2) AVAILABILITY.—Any amounts appropriated 

18 pursuant to paragraph (1) shall remain available 

19 until expended. 

20 TITLE III—7(a) LOAN PROGRAM 

21 SEC. 301. PREFERRED LENDERS PROGRAM. 

22 (a) IN GENERAL.—Section 7(a) of the Small Busi23 ness Act (15 U.S.C. 636(a)) is amended by adding at the 

24 end the following: 

25 ‘‘(32) PREFERRED LENDERS PROGRAM.— 


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1 ‘‘(A) DEFINITIONS.—In this paragraph— 

2 ‘‘(i) the term ‘national preferred lend3 er’ means a preferred lender authorized to 

4 operate in any area served by an office of 

5 the Administration under subparagraph 

6 (G); 

7 ‘‘(ii) the term ‘preferred lender’ 

8 means a qualified lender participating in 

9 the program; 

10 ‘‘(iii) the term ‘program’ means the 

11 Preferred Lenders Program established 

12 under subparagraph (B); and 

13 ‘‘(iv) the term ‘qualified lender’ means 

14 a lender that demonstrates— 

15 ‘‘(I) knowledge of and proficiency 

16 in the requirements of the program 

17 under this subsection; 

18 ‘‘(II) the ability to process, close, 

19 service, and liquidate loans; 

20 ‘‘(III) the ability to develop and 

21 analyze complete loan packages; and 

22 ‘‘(IV) a satisfactory performance 

23 history of participation in the pro24 gram under this subsection. 


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1 ‘‘(B) ESTABLISHMENT.—There is estab2 lished a Preferred Lenders Program under 

3 which the Administrator may authorize quali4 fied lenders to make and service loans. 

5 ‘‘(C) APPLICATION.—A qualified lender de6 siring to participate in the program shall sub7 mit an application at such time, in such man8 ner, and accompanied by such information as 

9 the Administrator shall establish. 

10 ‘‘(D) DELEGATED AUTHORITY.—The Ad11 ministrator shall authorize a preferred lender to 

12 take actions relating to loan servicing on behalf 

13 of the Administrator, including— 

14 ‘‘(i) determining eligibility and credit15 worthiness and loan monitoring, collection, 

16 and liquidation; 

17 ‘‘(ii) authority to make and close 

18 loans with a guarantee from the Adminis19 trator without obtaining the prior specific 

20 approval of the Administrator; and 

21 ‘‘(iii) authority to service and liq22 uidate such loans without obtaining the 

23 prior specific approval of the Administrator 

24 for routine servicing and liquidation activi25 ties. 


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1 ‘‘(E) AREA OF OPERATIONS.—The Admin2 istrator shall designate the area for which a 

3 preferred lender may exercise the authority 

4 under subparagraph (D). 

5 ‘‘(F) CONFLICT.—A preferred lender shall 

6 not take any action creating an actual or appar7 ent conflict of interest. 

8 ‘‘(G) NATIONAL OPERATION.— 

9 ‘‘(i) IN GENERAL.—A preferred lender 

10 may request designation as a national pre11 ferred lender by the Administrator, and, 

12 upon such designation, shall have the au13 thority to operate in any area served by an 

14 office of the Administration. 

15 ‘‘(ii) ELIGIBILITY.—The Administra16 tion shall designate a preferred lender as a 

17 national preferred lender if the Adminis18 trator determines that preferred lender 

19 has— 

20 ‘‘(I) satisfactorily operated as a 

21 preferred lender in areas encom22 passing all or part of the territory in 

23 not fewer than 5 district offices of the 

24 Administration for a minimum of 3 

25 years in each territory; 


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1 ‘‘(II) centralized loan approval, 

2 servicing, and liquidation functions 

3 and processes that are satisfactory to 

4 the Administration; 

5 ‘‘(III) uniform written policies 

6 and procedures; 

7 ‘‘(IV) a currency rate that is not 

8 less than the Administration’s na9 tional average currency rate for all 

10 loans under this subsection; 

11 ‘‘(V) a currency rate for loans 

12 made under this subsection that is not 

13 less than the Administration’s na14 tional average currency rate for loans 

15 made under this subsection; 

16 ‘‘(VI) a default rate that is not 

17 more than the Administration’s na18 tional average default rate for loans 

19 made under this subsection; and 

20 ‘‘(VII) received, in the most re21 cent audit and review as a preferred 

22 lender conducted by the Adminis23 trator, a rating that is acceptable or 

24 acceptable with corrective actions re25 quired. 


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1 ‘‘(H) CORRECTIVE ACTION.—If a national 

2 preferred lender fails to continue to meet the 

3 eligibility criteria under subparagraph (G)(ii), 

4 the Administrator shall notify that national pre5 ferred lender of the deficiency and allow a rea6 sonable period of time for that national pre7 ferred lender to meet such criteria. 

8 ‘‘(I) SUSPENSION OR REVOCATION.— 

9 ‘‘(i) IN GENERAL.—The designation of 

10 a lender as a national preferred lender 

11 shall be suspended or revoked at any time 

12 that the Administration determines that 

13 the lender— 

14 ‘‘(I) is not adhering to the rules 

15 or regulations established by the Ad16 ministrator for the program; or 

17 ‘‘(II) has failed to continue to 

18 meet the eligibility criteria specified in 

19 paragraph (G) or take corrective ac20 tion under subparagraph (H). 

21 ‘‘(ii) EFFECT.—A suspension or rev22 ocation under clause (i) shall not affect 

23 any outstanding guarantee of a national 

24 preferred lender.’’. 


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1 (b) CLERICAL AMENDMENT.—Section 7(a)(2)(C) of 

2 the Small Business Act (15 U.S.C. 636(a)(2)(C)) is 

3 amended to read as follows: 

4 ‘‘(C) INTEREST RATE UNDER PREFERRED

5 LENDERS PROGRAM.—The maximum interest 

6 rate for a loan guaranteed under the Preferred 

7 Lenders Program under paragraph (32) shall 

8 not exceed the maximum interest rate as deter9 mined by the Administration, applicable to 

10 other loans guaranteed under this subsection.’’. 

11 (c) CONFORMING AMENDMENT.—Section 7(a)(19) of 

12 the Small Business Act (15 U.S.C. 636(a)(19)) is amend13 ed by striking ‘‘the proviso in section 5(b)(7)’’ and insert14 ing ‘‘paragraph (32)’’. 

15 SEC. 302. MAXIMUM LOAN AMOUNT. 

16 Section 7(a)(3)(A) of the Small Business Act (15 

17 U.S.C. 636(a)(3)(A)) is amended by striking ‘‘$1,500,000 

18 (or if the gross loan amount would exceed $2,000,000’’ 

19 and inserting ‘‘$2,250,000 (or if the gross loan amount 

20 would exceed $3,000,000’’. 

21 SEC. 303. MAXIMUM 504 AND 7(A) LOAN ELIGIBILITY. 

22 (a) COMBINATION FINANCING.— 

23 (1) IN GENERAL.—Section 502(2) of the Small 

24 Business Investment Act of 1958 (15 U.S.C. 


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1 696(2)) is amended by adding at the end the fol2 lowing: 

3 ‘‘(C) COMBINATION FINANCING UNDER

4 SMALL BUSINESS ACT.—Notwithstanding any 

5 other provision of law, financing under this title 

6 may be provided to a borrower in the maximum 

7 amount provided in this subsection, and a loan 

8 guarantee under section 7(a) of the Small Busi9 ness Act may be provided to the same borrower 

10 in the maximum amount provided in section 

11 7(a)(3)(A) of such Act, to the extent that the 

12 borrower otherwise qualifies for such assist13 ance.’’. 

14 (2) CONFORMING AMENDMENT.—Section 

15 7(a)(1) of the Small Business Act (15 U.S.C. 

16 636(a)(1) is amended by adding at the end the fol17 lowing: 

18 ‘‘(C) COMBINATION FINANCING UNDER

19 SMALL BUSINESS INVESTMENT ACT OF 1958.— 

20 Financing under this subsection may be pro21 vided to a borrower in the maximum amount as 

22 provided in subsection (b)(2) of section 502 of 

23 the Small Business Investment Act of 1958 (15 

24 U.S.C. 696).’’. 


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1 (b) REPORTING.—Not later than 90 days after the 

2 date of enactment of this Act, and annually thereafter, 

3 the Administrator shall submit a report to the Committee 

4 on Small Business and Entrepreneurship of the Senate 

5 and the Committee on Small Business of the House of 

6 Representatives that— 

7 (1) includes the number of small business con8 cerns that have financings under both section 7(a) 

9 of the Small Business Act (15 U.S.C. 636(a)) and 

10 title V of the Small Business Investment Act of 

11 1958 (15 U.S.C. 695 et seq.) during the year before 

12 the year of that report; and 

13 (2) describes the total amount and general per14 formance of the financings described in paragraph 

15 (1). 

16 SEC. 304. LOAN POOLING. 

17 Section 5(g)(1) of the Small Business Act (15 U.S.C. 

18 634(g)(1)) is amended— 

19 (1) by inserting ‘‘(A)’’ before ‘‘The Administra20 tion’’; 

21 (2) by striking the colon and all that follows 

22 and inserting a period; and 

23 (3) by adding at the end the following: 

24 ‘‘(B) A trust certificate issued under subparagraph 

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1 proved by the Administrator and composed solely of the 

2 guaranteed portion of such loans. 

3 ‘‘(C) The interest rate on a trust certificate issued 

4 under subparagraph (A) shall be either— 

5 ‘‘(i) the lowest interest rate on any individual 

6 loan in the pool; or 

7 ‘‘(ii) the weighted average interest rate of all 

8 loans in the pool, subject to such limited variations 

9 in loan characteristics as the Administrator deter10 mines appropriate to enhance marketability of the 

11 pool certificates.’’. 

12 SEC. 305. ALTERNATIVE SIZE STANDARD. 

13 Section 3(a) of the Small Business Act (15 U.S.C. 

14 632(a)) is amended by adding at the end the following: 

15 ‘‘(5) OPTIONAL SIZE STANDARD.— 

16 ‘‘(A) IN GENERAL.—The Administrator shall 

17 establish an optional size standard for business loan 

18 applicants under section 7(a) and development com19 pany loan applicants under title V of the Small 

20 Business Investment Act of 1958, which uses max21 imum tangible net worth and average net income as 

22 an alternative to the use of industry standards. 

23 ‘‘(B) INTERIM RULE.—Until the date on which 

24 the optional size standards established under sub25 paragraph (A) are in effect, the alternative size 


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1 standard in section 121.301(b) of title 13, Code of 

2 Federal Regulations, or any successor thereto, may 

3 be used by business loan applicants under section 

4 7(a) and development company loan applicants 

5 under title V of the Small Business Investment Act 

6 of 1958.’’. 

7 SEC. 306. ALTERNATIVE VARIABLE INTEREST RATE. 

8 (a) IN GENERAL.—Section 7(a)(4)(A) of the Small 

9 Business Act (15 U.S.C. 636(a)(4)(A)) is amended by 

10 striking ‘‘prescribed by the Administration,’’ and insert11 ing: ‘‘prescribed by the Administration, including, on vari12 able rate loans, a nationally recognized prime rate of inter13 est and at least 1 other index as an alternative thereto 

14 at the option of the participating lender,’’. 

15 (b) APPLICABILITY.—Not later than 180 days after 

16 the date of enactment of this Act, the Administrator of 

17 the Small Business Administration shall select not less 

18 than 1 alternative index under section 7(a)(4)(A) of the 

19 Small Business Act, as amended by subsection (a), and 

20 make such index available for use by participating lenders. 

21 SEC. 307. MINORITY SMALL BUSINESS DEVELOPMENT. 

22 (a) IN GENERAL.—The Small Business Act (15 

23 U.S.C. 631 et seq.) is amended by inserting after section 

24 37, as added by this Act, the following: 


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1 ‘‘SEC. 38. MINORITY SMALL BUSINESS DEVELOPMENT. 

2 ‘‘(a) OFFICE OF MINORITY SMALL BUSINESS DE3 VELOPMENT.—There is established in the Administration 

4 an Office of Minority Small Business Development, which 

5 shall be administered by the Associate Administrator for 

6 Minority Small Business Development (in this section re7 ferred to as the ‘Associate Administrator’) appointed 

8 under section 4(b)(1). 

9 ‘‘(b) ASSOCIATE ADMINISTRATOR FOR MINORITY

10 SMALL BUSINESS DEVELOPMENT.—The Associate Ad11 ministrator— 

12 ‘‘(1) shall be either— 

13 ‘‘(A) an appointee in the Senior Executive 

14 Service who is a career appointee; or 

15 ‘‘(B) an employee in the competitive serv16 ice; 

17 ‘‘(2) shall be responsible for the formulation, 

18 execution, and promotion of policies and programs of 

19 the Administration that provide assistance to small 

20 business concerns owned and controlled by minori21 ties; 

22 ‘‘(3) shall act as an ombudsman for full consid23 eration of minorities in all programs of the Adminis24 tration (including those under sections 7(j) and 

25 8(a)); 


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1 ‘‘(4) shall work with the Associate Deputy Ad2 ministrator for Capital Access to increase the pro3 portion of loans and loan dollars, and investments 

4 and investment dollars, going to minorities through 

5 the finance programs under this Act and the Small 

6 Business Investment Act of 1958 (including sub7 sections (a), (b), and (m) of section 7 of this Act 

8 and the programs under part A and B of title III 

9 and title V of the Small Business Investment Act of 

10 1958); 

11 ‘‘(5) shall work with the Associate Deputy Ad12 ministrator for Entrepreneurial Development to in13 crease the proportion of counseling and training that 

14 goes to minorities through the entrepreneurial devel15 opment programs of the Administration; 

16 ‘‘(6) shall work with the Associate Deputy Ad17 ministrator for Government Contracting and Minor18 ity Enterprise Development to increase the propor19 tion of contracts, including through the Small Busi20 ness Innovation Research Program and the Small 

21 Business Technology Transfer Program, to minori22 ties; 

23 ‘‘(7) shall work with the partners of the Admin24 istration, trade associations, and business groups to 

25 identify and carry out policies and procedures to 


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1 more effectively market the resources of the Admin2 istration to minorities; 

3 ‘‘(8) shall work with the Office of Field Oper4 ations to ensure that district offices and regional of5 fices have adequate staff, funding, and other re6 sources to market the programs of the Administra7 tion to meet the objectives described in paragraphs 

8 (4) through (7); and 

9 ‘‘(9) shall report to and be responsible directly 

10 to the Administrator. 

11 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There 

12 are authorized to be appropriated to carry out this sec13 tion— 

14 ‘‘(1) $5,000,000 for fiscal year 2007; 

15 ‘‘(2) $5,000,000 for fiscal year 2008; 

16 ‘‘(3) $5,000,000 for fiscal year 2009; and 

17 ‘‘(4) $5,000,000 for fiscal year 2010.’’. 

18 (b) CONFORMING AMENDMENTS.—Section 4(b)(1) of 

19 the Small Business Act (15 U.S.C. 633(b)(1)) is amended 

20 in sixth sentence, by striking ‘‘Minority Small Business 

21 and Capital Ownership Development’’ and all that follows 

22 through the end of the sentence and inserting ‘‘Minority 

23 Small Business Development.’’. 


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1 SEC. 308. LOWERING OF FEES. 

2 Section 7(a)(23) of the Small Business Act (15 

3 U.S.C. 636(a)(23)) is amended by striking subparagraph 

4 (C) and inserting the following: 

5 ‘‘(C) LOWERING OF FEES.— 

6 ‘‘(i) IN GENERAL.—For loan guaran7 tees made or approved in each full fiscal 

8 year after the date of enactment of the 

9 Small Business Lending Reauthorization 

10 and Improvements Act of 2007, if the fees 

11 paid by all small business borrowers and 

12 by lenders for guarantees under this sub13 section, or the sum of such fees plus any 

14 funds made available for the purpose of re15 ducing fees for loans under this subsection, 

16 as applicable, is more than the amount 

17 necessary to equal the cost to the Adminis18 tration of making such guarantees, the Ad19 ministrator shall reduce fees paid by small 

20 business borrowers and lenders under 

21 clauses (i) through (iv) of paragraph 

22 (18)(A) and subparagraph (A) of this 

23 paragraph. 

24 ‘‘(ii) MAXIMUM.—The fees paid by 

25 small business borrowers and lenders for 

26 guarantees under this subsection may not 


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1 be increased above the maximum level au2 thorized under the amendments made by 

3 division K of the Consolidated Appropria4 tions Act, 2005 (Public Law 108–447; 118 

5 Stat. 3441).’’. 

6 SEC. 309. INTERNATIONAL TRADE LOANS. 

7 (a) IN GENERAL.—Section 7(a)(3)(B) of the Small 

8 Business Act (15 U.S.C. 636(a)(3)(B)) is amended by 

9 striking ‘‘$1,750,000, of which not more than 

10 $1,250,000’’ and inserting ‘‘$2,750,000 (or if the gross 

11 loan amount would exceed $3,670,000), of which not more 

12 than $2,000,000’’. 

13 (b) WORKING CAPITAL.—Section 7(a)(16)(A) of the 

14 Small Business Act (15 U.S.C. 636(a)(16)(A)) is amend15 ed— 

16 (1) in the matter preceding clause (i), by strik17 ing ‘‘in—’’ and inserting ‘‘—’’; 

18 (2) in clause (i)— 

19 (A) by inserting ‘‘in’’ after ‘‘(i)’’; and 

20 (B) by striking ‘‘or’’ at the end; 

21 (3) in clause (ii)— 

22 (A) by inserting ‘‘in’’ after ‘‘(ii)’’; and 

23 (B) by striking the period and inserting ‘‘; 

24 or’’; and 

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


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1 ‘‘(iii) by providing working capital.’’. 

2 (c) COLLATERAL.—Section 7(a)(16)(B) of the Small 

3 Business Act (15 U.S.C. 636(a)(16)(B)) is amended— 

4 (1) by striking ‘‘Each loan’’ and inserting the 

5 following: 

6 ‘‘(i) IN GENERAL.—Except as pro7 vided in clause (ii), each loan’’; and 

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

9 ‘‘(ii) EXCEPTION.—A loan under this 

10 paragraph may be secured by a second lien 

11 position on the property or equipment fi12 nanced by the loan or on other assets of 

13 the small business concern, if the Adminis14 trator determines such lien provides ade15 quate assurance of the payment of such 

16 loan.’’. 

17 (d) REFINANCING.—Section 7(a)(16)(A)(ii) of the 

18 Small Business Act (15 U.S.C. 636(a)(16)(A)(ii)), as 

19 amended by this section, is amended by inserting ‘‘, in20 cluding any debt that qualifies for refinancing under any 

21 other provision of this subsection’’ before the semicolon. 

22 SEC. 310. RURAL LENDING OUTREACH PROGRAM. 

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

24 636(a)), as amended by this Act, is amended— 

25 (1) by striking paragraph (25)(C); and 


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

2 ‘‘(33) RURAL LENDING OUTREACH PROGRAM.— 

3 ‘‘(A) IN GENERAL.—The Administrator 

4 shall carry out a rural lending outreach pro5 gram to provide not more than an 85 percent 

6 guaranty for loans of not more than $250,000. 

7 The program shall be carried out only through 

8 lenders located in rural areas (as the term 

9 ‘rural’ is defined in section 501(f) of the Small 

10 Business Investment Act of 1958 (15 U.S.C. 

11 695(f)). 

12 ‘‘(B) LOAN TERMS.—For a loan made 

13 through the program under this paragraph— 

14 ‘‘(i) the Administrator shall approve 

15 or disapprove the loan within 36 hours of 

16 the time the Administrator receives the ap17 plication; 

18 ‘‘(ii) the program shall use abbre19 viated application and documentation re20 quirements; and 

21 ‘‘(iii) minimum credit standards, as 

22 the Administrator considers necessary to 

23 limit the rate of default on loans made 

24 under the program, shall apply.’’. 


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1 TITLE IV—CERTIFIED DEVELOP2 MENT COMPANIES; 504 LOAN 

3 PROGRAM 

4 SEC. 401. DEVELOPMENT COMPANY LOAN PROGRAMS. 

5 (a) TITLE OF PROGRAM.—Title V of the Small Busi6 ness Investment Act of 1958 (15 U.S.C. 695 et seq.) is 

7 amended by adding at the end the following: 

8 ‘‘SEC. 511. PROGRAM TITLE. 

9 ‘‘(a) IN GENERAL.—Except as provided in subsection 

10 (b), the programs authorized by this title shall be known 

11 collectively as the ‘Local Development Business Loan Pro12 gram’. The Administrator may refer to such program as 

13 the ‘504 Loan Program’, until such usage is no longer 

14 necessary. 

15 ‘‘(b) EXISTING NAME.—Participants in the Local 

16 Development Business Loan Program may continue to 

17 refer to such program as ‘the 504 Loan Program’.’’. 

18 (b) EXISTING MATERIALS.—The Administrator may 

19 use informational materials created, or that were in the 

20 process of being created, before the date of enactment of 

21 this Act that do not refer to a program under title V of 

22 the Small Business Investment Act of 1958 (15 U.S.C. 

23 695 et seq.) as the ‘‘Local Development Business Loan 

24 Program’’. 


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1 (c) NEW MATERIALS.—Any informational materials 

2 created by the Administrator on or after the date of enact3 ment of this Act shall refer to any program under title 

4 V of the Small Business Investment Act of 1958 (15 

5 U.S.C. 695 et seq.) as the ‘‘Local Development Business 

6 Loan Program’’, except that informational materials may 

7 refer to such program as the ‘‘504 Loan Program’’, until 

8 such usage is no longer necessary. 

9 SEC. 402. LOAN LIQUIDATIONS. 

10 Section 510 of the Small Business Investment Act 

11 of 1958 (15 U.S.C. 697g) is amended— 

12 (1) by redesignating subsection (e) as sub13 section (g); and 

14 (2) by inserting after subsection (d) the fol15 lowing: 

16 ‘‘(e) PARTICIPATION.— 

17 ‘‘(1) IN GENERAL.—Any qualified State or local 

18 development company which elects not to apply for 

19 authority to foreclose and liquidate defaulted loans 

20 under this section, or which the Administrator deter21 mines to be ineligible for such authority, shall con22 tract with a qualified third-party to perform fore23 closure and liquidation of defaulted loans in its port24 folio. The contract shall be contingent upon approval 

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1 tions of the contractor and the terms and conditions 

2 of liquidation activities. 

3 ‘‘(2) COMMENCEMENT.—This subsection does 

4 not require any development company to liquidate 

5 defaulted loans until the Administrator has adopted 

6 and implemented a program to compensate and re7 imburse development companies, as provided under 

8 subsection (f). 

9 ‘‘(f) COMPENSATION AND REIMBURSEMENT.— 

10 ‘‘(1) REIMBURSEMENT OF EXPENSES.—The 

11 Administrator shall reimburse each qualified State 

12 or local development company for all expenses paid 

13 by such company as part of the foreclosure and liq14 uidation activities, if the expenses— 

15 ‘‘(A) were— 

16 ‘‘(i) approved in advance by the Ad17 ministrator, either specifically or generally; 

18 or 

19 ‘‘(ii) incurred by the development 

20 company on an emergency basis without 

21 prior approval from the Administrator, if 

22 the Administrator determines that the ex23 penses were reasonable and appropriate; 

24 and 


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1 ‘‘(B) are submitted by the development 

2 company to the Administrator not later than 3 

3 years after the date of the purchase of the de4 benture by the Administrator. 

5 ‘‘(2) COMPENSATION FOR RESULTS.— 

6 ‘‘(A) DEVELOPMENT.—The Administrator 

7 shall develop a schedule to compensate and pro8 vide an incentive to qualified State or local de9 velopment companies that foreclose and liq10 uidate defaulted loans. 

11 ‘‘(B) CRITERIA.—The schedule required 

12 under this paragraph shall— 

13 ‘‘(i) be based on a percentage of the 

14 net amount recovered, but shall not exceed 

15 a maximum amount; and 

16 ‘‘(ii) not apply to any foreclosure 

17 which is conducted under a contract be18 tween a development company and a quali19 fied third party to perform the foreclosure 

20 and liquidation.’’. 

21 SEC. 403. ADDITIONAL EQUITY INJECTIONS. 

22 Section 502(3)(B)(ii) of the Small Business Invest23 ment Act of 1958 (15 U.S.C. 696(3)(B)(ii)) is amended 

24 to read as follows: 


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1 ‘‘(ii) FUNDING FROM INSTITU2 TIONS.—If a small business concern— 

3 ‘‘(I) provides the minimum con4 tribution required under subpara5 graph (C), not less than 50 percent of 

6 the total cost of any project financed 

7 under clause (i), (ii), or (iii) of sub8 paragraph (C) shall come from the in9 stitutions described in subclauses (I), 

10 (II), and (III) of clause (i); and 

11 ‘‘(II) provides more than the 

12 minimum contribution required under 

13 subparagraph (C), any excess con14 tribution may be used to reduce the 

15 amount required from the institutions 

16 described in subclauses (I), (II), and 

17 (III) of clause (i), except that the 

18 amount from such institutions may 

19 not be reduced to an amount that is 

20 less than the amount of the loan made 

21 by the Administrator.’’. 

22 SEC. 404. BUSINESSES IN LOW-INCOME AREAS. 

23 (a) GOALS.—Section 501(d)(3)(A) of the Small Busi24 ness Investment Act of 1958 (15 U.S.C. 695(d)(3)(A)) is 

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1 tion,’’ the following: ‘‘or expansion of businesses in low2 income communities which would be eligible for a new 

3 markets tax credit under section 45D(a) of the Internal 

4 Revenue Code of 1986, or implementing regulations issued 

5 thereunder,’’. 

6 (b) LOAN AMOUNT.—Section 502 of the Small Busi7 ness Investment Act of 1958 (15 U.S.C. 696) is amended 

8 by adding at the end the following: 

9 ‘‘(7) LOW-INCOME GEOGRAPHIC AREAS.—Not10 withstanding any other provision of law, a loan 

11 under this section for use in a low-income geo12 graphic area (as that term is defined in section 351) 

13 may be for not more than $4,000,000.’’. 

14 SEC. 405. COMBINATIONS OF CERTAIN GOALS. 

15 Section 501(e) of the Small Business Investment Act 

16 of 1958 (15 U.S.C. 695(e)) is amended by adding at the 

17 end the following: 

18 ‘‘(7) A small business concern that is unconditionally 

19 owned by more than 1 individual, or a corporation, the 

20 stock of which is owned by more than 1 individual, shall 

21 be deemed to have achieved a public policy goal required 

22 under subsection (d)(3) if a combined ownership share of 

23 not less than 51 percent is held by individuals who are 

24 in 1 of, or a combination of, the groups described in sub25 paragraph (C) or (E) of subsection (d)(3).’’. 


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1 SEC. 406. REFINANCING UNDER THE LOCAL DEVELOPMENT 

2 BUSINESS LOAN PROGRAM. 

3 Section 502 of the Small Business Investment Act 

4 of 1958 (15 U.S.C. 696) is amended by adding at the end 

5 the following: 

6 ‘‘(7) PERMISSIBLE DEBT REFINANCING.— 

7 ‘‘(A) IN GENERAL.—Any financing ap8 proved under this title may include a limited 

9 amount of debt refinancing. 

10 ‘‘(B) EXPANSIONS.—If the project involves 

11 expansion of a small business concern which 

12 has existing indebtedness collateralized by fixed 

13 assets, any amount of existing indebtedness 

that does not exceed 1 14 ⁄2 of the project cost of 

15 the expansion may be refinanced and added to 

16 the expansion cost, if— 

17 ‘‘(i) the proceeds of the indebtedness 

18 were used to acquire land, including a 

19 building situated thereon, to construct a 

20 building thereon, or to purchase equip21 ment; 

22 ‘‘(ii) the borrower has been current on 

23 all payments due on the existing debt for 

24 not less than 1 year preceding the date of 

25 refinancing; and 


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1 ‘‘(iii) the financing under section 504 

2 will provide better terms or rate of interest 

3 than exists on the debt at the time of refi4 nancing.’’. 

5 SEC. 407. TECHNICAL CORRECTION. 

6 Section 501(e)(2) of the Small Business Investment 

7 Act of 1958 (15 U.S.C. 695(e)(2)) is amended by striking 

8 ‘‘outstanding’’. 

9 SEC. 408. DEFINITIONS FOR THE SMALL BUSINESS INVEST10 MENT ACT OF 1958. 

11 Section 103 of the Small Business Investment Act 

12 of 1958 (15 U.S.C. 662) is amended— 

13 (1) by striking paragraph (6) and inserting the 

14 following: 

15 ‘‘(6) the term ‘development company’ means an 

16 entity incorporated under State law with the author17 ity to promote and assist the growth and develop18 ment of small business concerns in the areas in 

19 which it is authorized to operate by the Adminis20 trator;’’; 

21 (2) in paragraph (16), by striking ‘‘and’’ at the 

22 end; 

23 (3) in paragraph (17), by striking the period at 

24 the end and inserting ‘‘; and’’; and 

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


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1 ‘‘(18) the term ‘certified development company’ 

2 means a development company that the Adminis3 trator has certified meets the criteria of section 

4 506.’’. 

5 SEC. 409. REPEAL OF SUNSET ON RESERVE REQUIRE6 MENTS FOR PREMIER CERTIFIED LENDERS. 

7 Section 508(c)(6)(B) of the Small Business Invest8 ment Act of 1958 (15 U.S.C. 697e(c)(6)(B)) is amend9 ed— 

10 (1) in the subparagraph heading, by striking 

11 ‘‘TEMPORARY REDUCTION’’ and inserting ‘‘REDUC12 TION’’; and 

13 (2) by striking ‘‘Notwithstanding subparagraph 

14 (A), during the 2-year period beginning on the date 

15 that is 90 days after the date of enactment of this 

16 subparagraph, the’’ and inserting ‘‘The’’. 

17 SEC. 410. CERTIFIED DEVELOPMENT COMPANIES. 

18 Section 506 of the Small Business Investment Act 

19 of 1958 (15 U.S.C. 697c) is amended— 

20 (1) in the section heading, by striking ‘‘RE21 STRICTIONS ON DEVELOPMENT COMPANY AS22 SISTANCE’’ and inserting ‘‘CERTIFIED DEVELOP23 MENT COMPANIES’’; and 

24 (2) by inserting before ‘‘Notwithstanding any 

25 other provision of law’’ the following: 


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1 ‘‘(a) AUTHORITY TO ISSUE DEBENTURES.—A devel2 opment company may issue debentures under this title if 

3 the Administrator certifies that the company meets the 

4 following criteria: 

5 ‘‘(1) SIZE.— 

6 ‘‘(A) IN GENERAL.—Except as provided in 

7 subparagraph (B), the development company 

8 shall be a small business concern with fewer 

9 than 500 employees, and shall not be under the 

10 control of any entity that does not meet the size 

11 standards established by the Administrator for 

12 a small business concern. 

13 ‘‘(B) EXCEPTION.—Any development com14 pany that was certified by the Administrator 

15 before December 31, 2005, may continue to 

16 issue debentures under this title. 

17 ‘‘(2) PRIMARY PURPOSE.—The primary purpose 

18 of the development company shall be to benefit the 

19 community by fostering economic development to 

20 create and preserve jobs and stimulate private in21 vestment. 

22 ‘‘(3) PRIMARY FUNCTION.—A primary function 

23 of the development company shall be to accomplish 

24 its purpose by providing long-term financing to 

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1 ment Business Loan Program. The development 

2 company shall also provide or support other commu3 nity and local economic development activities to as4 sist the community. 

5 ‘‘(4) NONPROFIT STATUS.— 

6 ‘‘(A) IN GENERAL.—Except as provided in 

7 subparagraph (B), the development company 

8 shall be a nonprofit corporation. 

9 ‘‘(B) EXCEPTION.—A development com10 pany certified by the Administrator before Jan11 uary 1, 1987, may continue to issue debentures 

12 under this title and retain its status as a for13 profit enterprise. 

14 ‘‘(5) GOOD STANDING.—The development com15 pany— 

16 ‘‘(A) shall be in good standing in the State 

17 in which such company is incorporated and in 

18 any other State in which it conducts business; 

19 and 

20 ‘‘(B) shall be in compliance with all laws, 

21 including taxation requirements, in the State in 

22 which such company is incorporated and in any 

23 other State in which it conducts business. 

24 ‘‘(6) MEMBERSHIP OF DEVELOPMENT COM25 PANY.—There shall be— 


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1 ‘‘(A) not fewer than 25 members of the de2 velopment company (or owners or stockholders, 

3 if the corporation is a for-profit entity), none of 

4 whom may own or control more than 10 percent 

5 of the voting membership of the company; and 

6 ‘‘(B) at least 1 member of the development 

7 company (none of whom is in a position to con8 trol the development company) from each of the 

9 following: 

10 ‘‘(i) Government organizations that 

11 are responsible for economic development. 

12 ‘‘(ii) Financial institutions that pro13 vide commercial long-term fixed asset fi14 nancing. 

15 ‘‘(iii) Community organizations that 

16 are dedicated to economic development. 

17 ‘‘(iv) Businesses. 

18 ‘‘(7) BOARD OF DIRECTORS.— 

19 ‘‘(A) IN GENERAL.—The development com20 pany shall have a board of directors. 

21 ‘‘(B) MEMBERS OF BOARD.—Each member 

22 of the board of directors shall be— 

23 ‘‘(i) a member of the development 

24 company; and 


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1 ‘‘(ii) elected by a majority of the 

2 members of the development company. 

3 ‘‘(C) REPRESENTATION OF ORGANIZA4 TIONS AND INSTITUTIONS.— 

5 ‘‘(i) IN GENERAL.—There shall be at 

6 least 1 member of the board of directors 

7 from not fewer than 3 of the 4 organiza8 tions and institutions described in para9 graph (6)(B), none of whom is in a posi10 tion to control the development company. 

11 ‘‘(ii) MAXIMUM PERCENTAGE.—Not 

12 more than 50 percent of the members of 

13 the board of directors shall be from any 1 

14 of the organizations and institutions de15 scribed in paragraph (6)(B). 

16 ‘‘(D) MEETINGS.—The board of directors 

17 of the development company shall meet on a 

18 regular basis to make policy decisions for such 

19 company. 

20 ‘‘(8) PROFESSIONAL MANAGEMENT AND

21 STAFF.— 

22 ‘‘(A) IN GENERAL.—The development com23 pany shall have full-time professional manage24 ment, including a chief executive officer to man25 age daily operations and a full-time professional 


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1 staff qualified to market the Local Development 

2 Business Loan Program and handle all aspects 

3 of loan approval and servicing, including liq4 uidation, if appropriate. 

5 ‘‘(B) INDEPENDENT MANAGEMENT AND

6 OPERATION.—Except as provided in paragraph 

7 (9), the development company shall be inde8 pendently managed and operated to pursue the 

9 economic development purpose of the company 

10 and shall employ directly the chief executive of11 ficer. 

12 ‘‘(9) MANAGEMENT AND OPERATION EXCEP13 TIONS.— 

14 ‘‘(A) AFFILIATION.—A development com15 pany may be an affiliate of another local non16 profit service corporation (other than a develop17 ment company), a purpose of which is to sup18 port economic development in the area in which 

19 the development company operates. 

20 ‘‘(B) STAFFING.—A development company 

21 may satisfy the requirement for full-time pro22 fessional staff under paragraph (8)(A) by con23 tracting for the required staffing with— 

24 ‘‘(i) a local nonprofit service corpora25 tion; 


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1 ‘‘(ii) a nonprofit affiliate of a local 

2 nonprofit service corporation; 

3 ‘‘(iii) an entity wholly or partially op4 erated by a governmental agency; or 

5 ‘‘(iv) another entity approved by the 

6 Administrator. 

7 ‘‘(C) DIRECTORS.—A development com8 pany and a local nonprofit service corporation 

9 with which it is affiliated may have in common 

10 some, but not all, members of their respective 

11 board of directors. 

12 ‘‘(D) RURAL AREAS.—A development com13 pany in a rural area may satisfy the require14 ments of a full-time professional staff and pro15 fessional management ability under paragraph 

16 (8)(A) by contracting for such services with an17 other certified development company that— 

18 ‘‘(i) has such staff and management 

19 ability; and 

20 ‘‘(ii) is located in the same State as 

21 the development company or in a State 

22 that is contiguous to the State in which 

23 the development company is located. 

24 ‘‘(E) PREVIOUSLY CERTIFIED.—A develop25 ment company that, on or before December 31, 


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1 2005, was certified by the Administrator and 

2 had contracted with a for-profit company to 

3 provide staffing and management services, may 

4 continue to do so. 

5 ‘‘(b) USE OF EXCESS FUNDS.—Any funds generated 

6 by a certified development company from making loans 

7 under section 503 or 504 that remain unexpended after 

8 payment of staff, operating, and overhead expenses shall 

9 be retained by the certified development company as a re10 serve for— 

11 ‘‘(1) future operations; 

12 ‘‘(2) expanding the area in which the certified 

13 development company operates through the methods 

14 authorized by this Act; or 

15 ‘‘(3) investment in other community and local 

16 economic development activity or community devel17 opment in the State from which such funds were 

18 generated. 

19 ‘‘(c) ETHICAL REQUIREMENTS.— 

20 ‘‘(1) IN GENERAL.—A certified development 

21 company and the officers, employees, and other staff 

22 of the company shall at all times act ethically and 

23 avoid activities which constitute a conflict of interest 

24 or appear to constitute a conflict of interest. 


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1 ‘‘(2) PROHIBITED CONFLICT IN PROJECT

2 LOANS.— 

3 ‘‘(A) IN GENERAL.—No certified develop4 ment company may— 

5 ‘‘(i) recommend or approve a guar6 antee of a debenture by the Administrator 

7 under the Local Business Development 

8 Loan Program that is collateralized by a 

9 second lien position on the property being 

10 constructed or acquired; and 

11 ‘‘(ii) provide, or be affiliated with a 

12 corporation or other entity which provides, 

13 financing collateralized by a first lien on 

14 the same property. 

15 ‘‘(B) EXCEPTION.—During the 2-year pe16 riod beginning on the date of enactment of the 

17 Small Business Lending Reauthorization and 

18 Improvements Act of 2007, a certified develop19 ment company that was participating as a first 

20 mortgage lender for the Local Business Devel21 opment Loan Program in either of fiscal years 

22 2004 or 2005 may continue to do so. 

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1 grams to assist small business concerns as part of 

2 carrying out its economic development purpose. 

3 ‘‘(d) MULTISTATE OPERATIONS.— 

4 ‘‘(1) AUTHORIZATION.—Notwithstanding any 

5 other provision of law, the Administrator shall per6 mit a certified development company to make loans 

7 in any State that is contiguous to the State of incor8 poration of that certified development company, only 

9 if such company— 

10 ‘‘(A) is— 

11 ‘‘(i) an accredited lender under section 

12 507; or 

13 ‘‘(ii) a premier certified lender under 

14 section 508; 

15 ‘‘(B) has a membership that contains, 

16 from each of the States in which it operates, 

17 not fewer than 25 members who reside in that 

18 State; 

19 ‘‘(C) has a board of directors that contains 

20 not fewer than 2 members from each State in 

21 which the company makes loans; 

22 ‘‘(D) maintains not fewer than 1 loan com23 mittee, which shall have not fewer than 1 mem24 ber from each State in which the company 

25 makes loans; and 


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1 ‘‘(E) submits to the Administrator, in writ2 ing— 

3 ‘‘(i) a notice of the intention of the 

4 company to make loans in multiple States; 

5 ‘‘(ii) the names of the States in which 

6 the company intends to make loans; and 

7 ‘‘(iii) a detailed statement of how the 

8 company will comply with this paragraph, 

9 including a list of the members described 

10 in subparagraph (B). 

11 ‘‘(2) REVIEW.—The Administrator shall verify 

12 whether a certified development company satisfies 

13 the requirements of paragraph (1) on an expedited 

14 basis and, not later than 30 days after the date on 

15 which the Administrator receives the statement de16 scribed in paragraph (1)(E)(iii), the Administrator 

17 shall determine whether such company satisfies such 

18 criteria and provide notice to such company. 

19 ‘‘(3) LOAN COMMITTEE PARTICIPATION.—For 

20 any loan made by a company described in paragraph 

21 (1), not fewer than 1 member of the loan committee 

22 from the State in which the loan is to be made shall 

23 participate in the review of such loan. 

24 ‘‘(4) AGGREGATE ACCOUNTING.—A company 

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1 gate accounting of all revenue and expenses of the 

2 company for purposes of this title. 

3 ‘‘(5) SERVICE TO CERTIFIED DEVELOPMENT

4 COMPANIES.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subparagraph (B), an associate of a certified 

7 development company may not be an officer, di8 rector, or manager of more than 1 certified de9 velopment company. 

10 ‘‘(B) EXCEPTION.— 

11 ‘‘(i) IN GENERAL.—Notwithstanding 

12 any other provision of law, a person who is 

13 serving on the board of directors of a cer14 tified development company may serve on 

15 the board of directors, but not as an offi16 cer, of not more than 1 additional certified 

17 development company, if— 

18 ‘‘(I) such companies are not lo19 cated in the same State; 

20 ‘‘(II) each board of directors de21 termines that the service by such per22 son on such board does not constitute 

23 a conflict of interest; and 

24 ‘‘(III) there is not a contractual 

25 relationship between— 


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1 ‘‘(aa) the person and such 

2 additional certified development 

3 company, except for the contract 

4 of such person to serve as a 

5 member of the board of directors 

6 of such company, if any; or 

7 ‘‘(bb) the certified develop8 ment companies of which such 

9 person is a member of the board 

10 of directors. 

11 ‘‘(ii) MAXIMUM NUMBER OF MEM12 BERS.—A certified development company 

13 may not have more than 1 member of the 

14 board of directors of such company in com15 mon with any other board of directors of 

16 a certified development company. 

17 ‘‘(C) DEFINITION.—As used in this para18 graph, the term ‘associate of a certified develop19 ment company’ has the meaning given the term 

20 ‘Associate of a CDC’ in section 120.10 of title 

21 13, Code of Federal Regulations (or any cor22 responding similar regulation or ruling). 

23 ‘‘(6) LOCAL JOB CREATION REQUIREMENTS.— 

24 ‘‘(A) IN GENERAL.—Subject to subpara25 graph (B), any certified development company 


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1 making loans in multiple States shall satisfy 

2 any applicable job creation or retention require3 ments separately for each such State. Such a 

4 company shall not count jobs created or re5 tained in 1 State towards any applicable job 

6 creation or retention requirement in another 

7 State. 

8 ‘‘(B) APPLICABILITY.—This paragraph 

9 shall apply to a certified development company 

10 relating to a State beginning 2 years after the 

11 date that certified development company began 

12 making loans in that State. 

13 ‘‘(7) CONTIGUOUS STATES.—For purposes of 

14 this subsection, the States of Alaska and Hawaii 

15 shall be deemed to be contiguous to any State abut16 ting the Pacific Ocean. 

17 ‘‘(8) LOCAL ECONOMIC AREA REQUIREMENT

18 AND EXEMPTION.— 

19 ‘‘(A) DEFINITION.—In this paragraph, the 

20 term ‘local economic area’ means an area, as 

21 determined by the Administrator, that— 

22 ‘‘(i) is in a State other than the State 

23 in which a development company is incor24 porated; 


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1 ‘‘(ii) shares a border with the area of 

2 operations of the development company; 

3 and 

4 ‘‘(iii) is a part of a local trade area 

5 (including a city that is bisected by a State 

6 line and a metropolitan statistical area 

7 that is bisected by a State line) that is 

8 contiguous to the area of operations of the 

9 development company. 

10 ‘‘(B) EXEMPTION.—An applicant operating 

11 in a local economic area shall not be considered 

12 to be operating in a multistate area, and shall 

13 not be required to comply with the require14 ments for multistate operation. 

15 ‘‘(e) RESTRICTIONS ON DEVELOPMENT COMPANY

16 ASSISTANCE.—’’. 

17 SEC. 411. CONFORMING AMENDMENTS. 

18 Section 503 of the Small Business Investment Act 

19 of 1958 (15 U.S.C. 697) is amended— 

20 (1) in subsection (a)(1), by striking ‘‘qualified 

21 State or local development company’’ and inserting 

22 ‘‘certified development company’’; and 

23 (2) by striking subsection (e) and inserting the 

24 following: 


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1 ‘‘(e) SECTION 7(a) LOANS.—Notwithstanding any 

2 other provision of law, a certified development company 

3 is authorized to prepare applications for deferred partici4 pation loans under section 7(a) of the Small Business Act, 

5 to service such loans, and to charge a reasonable fee for 

6 servicing such loans.’’. 

7 SEC. 412. CLOSING COSTS. 

8 Section 503(b) of the Small Business Investment Act 

9 of 1958 (15 U.S.C. 697(b)) is amended by striking para10 graph (4) and inserting the following: 

11 ‘‘(4) the aggregate amount of such debenture 

12 does not exceed the amount of the loans to be made 

13 from the proceeds of such debenture plus, at the 

14 election of the borrower, other amounts attributable 

15 to the administrative and closing costs of such loans, 

16 except for the attorney fees of the borrower;’’. 

17 SEC. 413. DEFINITION OF RURAL. 

18 Section 501 of the Small Business Investment Act 

19 of 1958 (15 U.S.C. 695) is amended by adding at the end 

20 the following: 

21 ‘‘(f) As used in this title, the term ‘rural’ includes 

22 any area that is not— 

23 ‘‘(1) a city or town that has a population great24 er than 50,000 inhabitants; or 


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1 ‘‘(2) the urbanized area contiguous and adja2 cent to a city or town described in paragraph (1).’’. 

3 SEC. 414. REGULATIONS AND EFFECTIVE DATE. 

4 (a) IN GENERAL.—Except as provided in subsection 

5 (b), the Administrator shall— 

6 (1) publish proposed rules to implement this 

7 title and the amendments made by this title, not 

8 later than 120 days after the date of enactment of 

9 this Act; and 

10 (2) publish such rules in final form not later 

11 than 120 days after the date of publication under 

12 paragraph (1). 

13 (b) MULTISTATE OPERATIONS.—As soon as is prac14 ticable after the date of enactment of this Act, the Admin15 istrator shall promulgate regulations to implement section 

16 506(d) of the Small Business Investment Act of 1958, as 

17 added by this title. Such regulations shall become effective 

18 not later than 120 days after the date of enactment of 

19 this Act. 

20 (c) EFFECTIVE DATE.— 

21 (1) IN GENERAL.—Except as otherwise specifi22 cally provided this title, this title and the amend23 ments made by this title shall become effective 240 

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1 less of whether the Administrator has promulgated 

2 the regulations required under subsection (a). 

3 (2) MULTISTATE OPERATIONS.—Section 506(d) 

4 of the Small Business Investment Act of 1958, as 

5 added by this title, shall become effective 120 days 

6 after the date of enactment of this Act, regardless 

7 of whether the Administrator has promulgated the 

8 regulations required under subsection (b). 

9 SEC. 415. LIMITATION ON TIME FOR FINAL APPROVAL OF 

10 COMPANIES. 

11 Section 354(d) of the Small Business Investment Act 

12 of 1958 (15 U.S.C. 689c(d)) is amended by striking ‘‘a 

13 period of time, not to exceed 2 years,’’ and inserting ‘‘2 

14 years’’. 

15 SEC. 416. CHILD CARE LENDING PILOT PROGRAM. 

16 (a) CHILD CARE LENDING PILOT PROGRAM.—Sec17 tion 502 of the Small Business Investment Act of 1958 

18 (15 U.S.C. 696), as amended by this Act, is amended— 

19 (1) in the matter preceding paragraph (1)— 

20 (A) by striking ‘‘The Administration’’ and 

21 inserting the following: 

22 ‘‘(a) AUTHORIZATION.—The Administration’’; 

23 (B) by striking ‘‘and such loans’’ and in24 serting ‘‘. Such loans’’; 


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1 (C) by striking ‘‘: Provided, however, That 

2 the foregoing powers shall be subject to the fol3 lowing restrictions and limitations:’’ and insert4 ing a period; and 

5 (D) by adding at the end the following: 

6 ‘‘(b) RESTRICTIONS AND LIMITATIONS.—The author7 ity under subsection (a) shall be subject to the following 

8 restrictions and limitations:’’; and 

9 (2) in subsection (b)(1), as so redesignated— 

10 (A) by inserting after ‘‘USE OF PRO11 CEEDS.—’’ the following: 

12 ‘‘(A) IN GENERAL.—’’; and 

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

14 ‘‘(B) LOANS TO SMALL, NONPROFIT CHILD

15 CARE BUSINESSES.— 

16 ‘‘(i) IN GENERAL.—Notwithstanding 

17 subsection (a), the proceeds of any loan de18 scribed in subsection (a) may be used by 

19 the certified development company to as20 sist a small, nonprofit child care business, 

21 if— 

22 ‘‘(I) the loan is used for a sound 

23 business purpose that has been ap24 proved by the Administrator; 


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1 ‘‘(II) each such business meets 

2 all of the same eligibility requirements 

3 applicable to for-profit businesses 

4 under this title, except for status as a 

5 for-profit business; 

6 ‘‘(III) 1 or more individuals has 

7 personally guaranteed the loan; 

8 ‘‘(IV) each such business has 

9 clear and singular title to the collat10 eral for the loan; and 

11 ‘‘(V) each such business has suf12 ficient cash flow from its operations to 

13 meet its obligations on the loan and 

14 its normal and reasonable operating 

15 expenses. 

16 ‘‘(ii) LIMITATION ON VOLUME.—Not 

17 more than 7 percent of the total number of 

18 loans guaranteed in any fiscal year under 

19 this title may be awarded under this sub20 paragraph. 

21 ‘‘(iii) DEFINED TERM.—For purposes 

22 of this subparagraph, the term ‘small, non23 profit child care business’ means an estab24 lishment that— 


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1 ‘‘(I) is organized in accordance 

2 with section 501(c)(3) of the Internal 

3 Revenue Code of 1986; 

4 ‘‘(II) is primarily engaged in pro5 viding child care for infants, toddlers, 

6 pre-school, or pre-kindergarten chil7 dren (or any combination thereof), 

8 and may provide care for older chil9 dren when they are not in school, and 

10 may offer pre-kindergarten edu11 cational programs; 

12 ‘‘(III) including its affiliates, has 

13 tangible net worth that does not ex14 ceed $7,000,000, and has average net 

15 income (excluding any carryover 

16 losses) for the 2 completed fiscal years 

17 preceding the date of the application 

18 for assistance under this subpara19 graph that does not exceed 

20 $2,500,000; and 

21 ‘‘(IV) is licensed as a child care 

22 provider by the State, insular area, or 

23 the District of Columbia, in which it 

24 is located. 


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1 ‘‘(iv) SUNSET PROVISION.—This sub2 paragraph shall cease to have effect on 

3 September 30, 2010, and shall apply to all 

4 loans authorized under this subparagraph 

5 that are applied for, approved, or dis6 bursed during the period beginning on the 

7 date of enactment of this subparagraph 

8 and ending on September 30, 2010.’’. 

9 (b) REPORTS.— 

10 (1) SMALL BUSINESS ADMINISTRATION.— 

11 (A) IN GENERAL.—Not later than 6 

12 months after the date of enactment of this Act, 

13 and every 6 months thereafter until September 

14 30, 2010, the Administrator shall submit a re15 port on the implementation of the program 

16 under section 502(b)(1)(B) of the Small Busi17 ness Investment Act of 1958, as added by this 

18 Act, to— 

19 (i) the Committee on Small Business 

20 and Entrepreneurship of the Senate; and 

21 (ii) the Committee on Small Business 

22 of the House of Representatives. 

23 (B) CONTENTS.—Each report under sub24 paragraph (A) shall contain— 


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1 (i) the date on which the program is 

2 implemented; 

3 (ii) the date on which the rules are 

4 issued under subsection (c); and 

5 (iii) the number and dollar amount of 

6 loans under the program applied for, ap7 proved, and disbursed during the 6-month 

8 period ending on the date of that report— 

9 (I) with respect to nonprofit child 

10 care businesses; and 

11 (II) with respect to for-profit 

12 child care businesses. 

13 (2) GOVERNMENT ACCOUNTABILITY OFFICE.— 

14 (A) IN GENERAL.—Not later than March 

15 31, 2010, the Comptroller General of the 

16 United States shall submit a report on the child 

17 care small business loans authorized by section 

18 502(b)(1)(B) of the Small Business Investment 

19 Act of 1958, as added by this Act, to— 

20 (i) the Committee on Small Business 

21 and Entrepreneurship of the Senate; and 

22 (ii) the Committee on Small Business 

23 of the House of Representatives. 

24 (B) CONTENTS.—The report under sub25 paragraph (A) shall contain information gathVerDate Aug 31 2005 00:08 Sep 13, 2007 Jkt 059200 PO 00000 Frm 00077 Fmt 6652 Sfmt 6401 E:\BILLS\S1256.RS S1256

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1 ered during the first 2 years of the loan pro2 gram, including— 

3 (i) an evaluation of the timeliness of 

4 the implementation of the loan program; 

5 (ii) a description of the effectiveness 

6 and ease with which certified development 

7 companies, lenders, and small business 

8 concerns have participated in the loan pro9 gram; 

10 (iii) a description and assessment of 

11 how the loan program was marketed; 

12 (iv) by location (State, insular area, 

13 and the District of Columbia) and in total, 

14 the number of child care small businesses, 

15 categorized by status as a for-profit or 

16 nonprofit business, that— 

17 (I) applied for a loan under the 

18 program (and whether it was a new or 

19 expanding child care provider); 

20 (II) were approved for a loan 

21 under the program; and 

22 (III) received a loan disburse23 ment under the program (and whether 

24 they are a new or expanding child 

25 care provider); and 


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1 (v) with respect to businesses de2 scribed under clause (iv)(III)— 

3 (I) the number of such busi4 nesses in each State, insular area, and 

5 the District of Columbia, as of the 

6 year of enactment of this Act; 

7 (II) the total amount loaned to 

8 such businesses under the program; 

9 (III) the total number of loans to 

10 such businesses under the program; 

11 (IV) the average loan amount 

12 and term; 

13 (V) the currency rate, delin14 quencies, defaults, and losses of the 

15 loans; 

16 (VI) the number and percent of 

17 children served who receive subsidized 

18 assistance; and 

19 (VII) the number and percent of 

20 children served who are low income. 

21 (C) ACCESS TO INFORMATION.— 

22 (i) IN GENERAL.—The Administration 

23 shall collect and maintain such information 

24 as may be necessary to carry out this para25 graph from certified development centers 


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1 and child care providers, and such centers 

2 and providers shall comply with a request 

3 for information from the Administration 

4 for that purpose. 

5 (ii) PROVISION OF INFORMATION TO

6 GOVERNMENT ACCOUNTABILITY OFFICE.— 

7 The Administration shall provide informa8 tion collected under this subparagraph to 

9 the Comptroller General of the United 

10 States for purposes of the report required 

11 by this paragraph. 

12 (c) RULEMAKING AUTHORITY.—Not later than 120 

13 days after the date of enactment of this Act, the Adminis14 trator shall issue final rules to carry out the loan program 

15 authorized by section 502(b)(1)(B) of the Small Business 

16 Investment Act of 1958, as added by this Act. 

17 SECTION 1. SHORT TITLE. 

18 This Act may be cited as the ‘‘Small Business Lending 

19 Reauthorization and Improvements Act of 2007’’. 

20 SEC. 2. TABLE OF CONTENTS. 

21 The table of contents of this Act is as follows: 

Sec. 1. Short title. 

Sec. 2. Table of contents. 

Sec. 3. Definitions. 

Sec. 4. Authorization of appropriations. 

TITLE I—MICROLOAN PROGRAMS 

Sec. 101. Conforming technical change in average smaller loan size. 

Sec. 102. Inclusion of persons with disabilities. 

Sec. 103. Microloan Program improvements. 


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Sec. 104. PRIME reauthorization and transfer to the Small Business Act. 

Sec. 105. Report to Congress on the Microloan Program. 

TITLE II—INTERMEDIARY LENDING PILOT PROGRAM 

Sec. 201. Findings. 

Sec. 202. Small business intermediary lending pilot program. 

TITLE III—7(a) LOAN PROGRAM 

Sec. 301. Preferred Lenders Program. 

Sec. 302. Maximum loan amount. 

Sec. 303. Maximum 504 and 7(a) loan eligibility. 

Sec. 304. Loan pooling. 

Sec. 305. Alternative size standard. 

Sec. 306. Alternative variable interest rate. 

Sec. 307. Minority small business development. 

Sec. 308. Lowering of fees. 

Sec. 309. International trade loans. 

Sec. 310. Rural lending outreach program. 

TITLE IV—CERTIFIED DEVELOPMENT COMPANIES; 504 LOAN 

PROGRAM 

Sec. 401. Development company loan programs. 

Sec. 402. Loan liquidations. 

Sec. 403. Additional equity injections. 

Sec. 404. Uniform leasing policy. 

Sec. 405. Businesses in low-income communities. 

Sec. 406. Combinations of certain goals. 

Sec. 407. Refinancing under the Local Development Business Loan Program. 

Sec. 408. Technical correction. 

Sec. 409. Definitions for the Small Business Investment Act of 1958. 

Sec. 410. Repeal of sunset on reserve requirements for premier certified lenders. 

Sec. 411. Certified development companies. 

Sec. 412. Conforming amendments. 

Sec. 413. Closing costs. 

Sec. 414. Definition of rural. 

Sec. 415. Regulations and effective date. 

Sec. 416. Limitation on time for final approval of companies. 

Sec. 417. Child Care Lending Pilot Program. 

Sec. 418. Debenture repayment. 

Sec. 419. Real estate appraisals. 

1 SEC. 3. DEFINITIONS. 

2 In this Act— 

3 (1) the terms ‘‘Administration’’ and ‘‘Adminis4 trator’’ mean the Small Business Administration and 

5 the Administrator thereof, respectively; 


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1 (2) the term ‘‘504 Loan Program’’ means the 

2 program to provide financing to small business con3 cerns by guarantees of loans under title V of the 

4 Small Business Investment Act of 1958 (15 U.S.C. 

5 695 et seq.), which are funded by debentures guaran6 teed by the Administrator; and 

7 (3) the term ‘‘small business concern’’ has the 

8 meaning given that term in section 3 of the Small 

9 Business Act (15 U.S.C. 632). 

10 SEC. 4. AUTHORIZATION OF APPROPRIATIONS. 

11 Section 20 of the Small Business Act (15 U.S.C. 631 

12 note) is amended— 

13 (1) by redesignating subsection (j) as subsection 

14 (f); and 

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

16 ‘‘(g) MICROLOAN.—For each of fiscal years 2007 

17 through 2010, the Administration is authorized to make, 

18 as provided in section 7(m)— 

19 ‘‘(1) $80,000,000 in technical assistance grants; 

20 ‘‘(2) $110,000,000 in direct loans; and 

21 ‘‘(3) $50,000,000 in deferred participation loans. 

22 ‘‘(h) GENERAL BUSINESS LOANS.—The Administra23 tion is authorized to make, as provided in section 7(a)— 

24 ‘‘(1) $18,000,000,000 in general business loans 

25 in fiscal year 2007; 


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1 ‘‘(2) $19,000,000,000 in general business loans 

2 in fiscal year 2008; 

3 ‘‘(3) $20,000,000,000 in general business loans 

4 in fiscal year 2009; and 

5 ‘‘(4) $21,000,000,000 in general business loans 

6 in fiscal year 2010. 

7 ‘‘(i) CERTIFIED DEVELOPMENT COMPANY

8 FINANCINGS.—The Administration is authorized to make, 

9 as provided in section 7(a)(13) and as provided in section 

10 504 of the Small Business Investment Act of 1958 (15 

11 U.S.C. 697a)— 

12 ‘‘(1) $8,000,000,000 in certified development 

13 company financings in fiscal year 2007; 

14 ‘‘(2) $8,500,000,000 in certified development 

15 company financings in fiscal year 2008; 

16 ‘‘(3) $9,000,000,000 in certified development 

17 company financings in fiscal year 2009; and 

18 ‘‘(4) $9,500,000,000 in certified development 

19 company financings in fiscal year 2010. 

20 ‘‘(j) DEPARTMENT OF DEFENSE.—For each of fiscal 

21 years 2007 through 2010, the Administration is authorized 

22 to make $500,000,000 in loans as provided in section 

23 7(a)(21). 

24 ‘‘(k) PRIME PROGRAM.— 


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1 ‘‘(1) IN GENERAL.—There are authorized to be 

2 appropriated to the Administrator $15,000,000 for 

3 each of fiscal years 2007 through 2010 to carry out 

4 section 37, which shall remain available until ex5 pended. 

6 ‘‘(2) CERTAIN PROGRAMS.—In addition to the 

7 amount authorized under paragraph (1), there are 

8 authorized to be appropriated to the Administrator 

9 $2,000,000 each of fiscal years 2007 through 2010 to 

10 carry out section 37(c)(4), which shall remain avail11 able until expended. 

12 ‘‘(l) ADDITIONAL AUTHORIZATIONS AND LIMITA13 TIONS.— 

14 ‘‘(1) IN GENERAL.—There are authorized to be 

15 appropriated to the Administration for each of fiscal 

16 years 2007 through 2010 such sums as may be nec17 essary to carry out the provisions of this Act not else18 where provided for, including administrative expenses 

19 and necessary loan capital for disaster loans pursu20 ant to section 7(b), and to carry out the Small Busi21 ness Investment Act of 1958, including salaries and 

22 expenses of the Administration. 

23 ‘‘(2) LIMITATIONS.—Notwithstanding any other 

24 provision of this section, for each of fiscal years 2007 

25 through 2010— 


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1 ‘‘(A) no funds are authorized to be used as 

2 loan capital for the loan program authorized by 

3 section 7(a)(21) in any such fiscal year, except 

4 by transfer from another Federal department or 

5 agency to the Administration, unless the pro6 gram level authorized for general business loans 

7 under subsection (h) is fully funded for that fis8 cal year; and 

9 ‘‘(B) the Administration may not approve 

10 loans on its own behalf or on behalf of any other 

11 Federal department or agency, by contract or 

12 otherwise, under terms and conditions other than 

13 those specifically authorized under this Act or 

14 the Small Business Investment Act of 1958, ex15 cept that it may approve loans under section 

16 7(a)(21) of this Act in gross amounts of not more 

17 than $2,000,000.’’. 

18 TITLE I—MICROLOAN 

19 PROGRAMS 

20 SEC. 101. CONFORMING TECHNICAL CHANGE IN AVERAGE 

21 SMALLER LOAN SIZE. 

22 Section 7(m) of the Small Business Act (15 U.S.C. 

23 636(m)) is amended— 

24 (1) in paragraph (3)(F)(iii), by striking 

25 ‘‘$7,500’’ and inserting ‘‘$10,000’’; and 


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1 (2) in paragraph (6)(C), by striking ‘‘$7,500’’ 

2 each place that term appears and inserting 

3 ‘‘$10,000’’. 

4 SEC. 102. INCLUSION OF PERSONS WITH DISABILITIES. 

5 Section 7(m)(1)(A)(i) of the Small Business Act (15 

6 U.S.C. 636(m)(1)(A)(i)) is amended by inserting ‘‘persons 

7 with disabilities,’’ before ‘‘and minority’’. 

8 SEC. 103. MICROLOAN PROGRAM IMPROVEMENTS. 

9 (a) INTERMEDIARY ELIGIBILITY REQUIREMENTS.— 

10 Section 7(m)(2) of the Small Business Act (15 U.S.C. 

11 636(m)(2)) is amended— 

12 (1) in subparagraph (A), by striking ‘‘in para13 graph (10); and’’ and inserting ‘‘of the term ‘inter14 mediary’ under paragraph (11);’’; and 

15 (2) in subparagraph (B)— 

16 (A) by striking ‘‘(B) has at least’’ and in17 serting the following: 

18 ‘‘(B) has— 

19 ‘‘(i) at least’’; and 

20 (B) by striking the period at the end and 

21 inserting the following: ‘‘; or 

22 ‘‘(ii) a full-time employee who has not 

23 less than 3 years experience making 

24 microloans to startup, newly established, or 

25 growing small business concerns; and 


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1 ‘‘(C) has at least 1 year experience pro2 viding, as an integral part of its microloan pro3 gram, intensive marketing, management, and 

4 technical assistance to its borrowers.’’. 

5 (b) LIMITATION ON THIRD PARTY TECHNICAL ASSIST6 ANCE.—Section 7(m)(4)(E)(ii) of the Small Business Act 

7 (15 U.S.C. 636(m)(4)(E)(ii)) is amended— 

8 (1) in the clause heading, by striking ‘‘TECH9 NICAL ASSISTANCE’’ and inserting ‘‘THIRD PARTY

10 TECHNICAL ASSISTANCE’’; and 

11 (2) by striking ‘‘25 percent’’ and inserting ‘‘30 

12 percent’’. 

13 (c) INCREASED FLEXIBILITY FOR PROVIDING TECH14 NICAL ASSISTANCE TO POTENTIAL BORROWERS.—Section 

15 7(m)(4)(E)(i) of the Small Business Act (15 U.S.C. 

16 636(m)(4)(E)(i)) is amended by striking ‘‘25 percent’’ and 

17 inserting ‘‘30 percent’’. 

18 SEC. 104. PRIME REAUTHORIZATION AND TRANSFER TO 

19 THE SMALL BUSINESS ACT. 

20 (a) PROGRAM REAUTHORIZATION.—The Small Busi21 ness Act (15 U.S.C. 631 et seq.) is amended— 

22 (1) by redesignating section 37 as section 39; 

23 and 

24 (2) by inserting after section 36 the following: 


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1 ‘‘SEC. 37. PROGRAM FOR INVESTMENT IN MICROENTRE2 PRENEURS. 

3 ‘‘(a) DEFINITIONS.—In this section: 

4 ‘‘(1) CAPACITY BUILDING SERVICES.—The term 

5 ‘capacity building services’ means services provided to 

6 an organization that is, or that is in the process of 

7 becoming, a microenterprise development organization 

8 or program, for the purpose of enhancing its ability 

9 to provide training and services to disadvantaged en10 trepreneurs. 

11 ‘‘(2) COLLABORATIVE.—The term ‘collaborative’ 

12 means 2 or more nonprofit entities that agree to act 

13 jointly as a qualified organization under this section. 

14 ‘‘(3) DISADVANTAGED ENTREPRENEUR.—The 

15 term ‘disadvantaged entrepreneur’ means a micro16 entrepreneur that— 

17 ‘‘(A) is a low-income person; 

18 ‘‘(B) is a very low-income person; or 

19 ‘‘(C) lacks adequate access to capital or 

20 other resources essential for business success, or 

21 is economically disadvantaged, as determined by 

22 the Administrator. 

23 ‘‘(4) DISADVANTAGED NATIVE AMERICAN ENTRE24 PRENEUR.—The term ‘disadvantaged Native Amer25 ican entrepreneur’ means a disadvantaged entre26 preneur who is also a member of an Indian Tribe. 


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1 ‘‘(5) INDIAN TRIBE.—The term ‘Indian tribe’ has 

2 the meaning given that term in section 4(a) of the In3 dian Self-Determination and Education Assistance 

4 Act. 

5 ‘‘(6) INTERMEDIARY.—The term ‘intermediary’ 

6 means a private, nonprofit entity that seeks to serve 

7 microenterprise development organizations and pro8 grams, as authorized under subsection (d). 

9 ‘‘(7) LOW-INCOME PERSON.—The term ‘low-in10 come person’ means having an income, adjusted for 

11 family size, of not more than— 

12 ‘‘(A) for metropolitan areas, 80 percent of 

13 the area median income; and 

14 ‘‘(B) for nonmetropolitan areas, the greater 

15 of— 

16 ‘‘(i) 80 percent of the area median in17 come; or 

18 ‘‘(ii) 80 percent of the statewide non19 metropolitan area median income. 

20 ‘‘(8) MICROENTREPRENEUR.—The term ‘micro21 entrepreneur’ means the owner or developer of a 

22 microenterprise. 

23 ‘‘(9) MICROENTERPRISE.—The term ‘microenter24 prise’ means a sole proprietorship, partnership, or 

25 corporation that— 


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1 ‘‘(A) has fewer than 5 employees; and 

2 ‘‘(B) generally lacks access to conventional 

3 loans, equity, or other banking services. 

4 ‘‘(10) MICROENTERPRISE DEVELOPMENT ORGANI5 ZATION OR PROGRAM.—The term ‘microenterprise de6 velopment organization or program’ means a non7 profit entity, or a program administered by such an 

8 entity, including community development corpora9 tions or other nonprofit development organizations 

10 and social service organizations, that provides services 

11 to disadvantaged entrepreneurs. 

12 ‘‘(11) TRAINING AND TECHNICAL ASSISTANCE.— 

13 The term ‘training and technical assistance’ means 

14 services and support provided to disadvantaged entre15 preneurs, such as assistance for the purpose of en16 hancing business planning, marketing, management, 

17 financial management skills, and assistance for the 

18 purpose of accessing financial services. 

19 ‘‘(12) VERY LOW-INCOME PERSON.—The term 

20 ‘very low-income person’ means having an income, 

21 adjusted for family size, of not more than 150 percent 

22 of the poverty line (as defined in section 673(2) of the 

23 Community Services Block Grant Act (42 U.S.C. 

24 9902(2)), including any revision required by that sec25 tion). 


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1 ‘‘(b) ESTABLISHMENT OF PROGRAM.—The Adminis2 trator shall establish a microenterprise technical assistance 

3 and capacity building grant program to provide assistance 

4 from the Administration in the form of grants to qualified 

5 organizations in accordance with this section. 

6 ‘‘(c) USES OF ASSISTANCE.—A qualified organization 

7 shall use grants made under this section— 

8 ‘‘(1) to provide training and technical assistance 

9 to disadvantaged entrepreneurs; 

10 ‘‘(2) to provide training and capacity building 

11 services to microenterprise development organizations 

12 and programs and groups of such organizations to as13 sist such organizations and programs in developing 

14 microenterprise training and services; 

15 ‘‘(3) to aid in researching and developing the 

16 best practices in the field of microenterprise and tech17 nical assistance programs for disadvantaged entre18 preneurs; 

19 ‘‘(4) to provide training and technical assistance 

20 to disadvantaged Native American entrepreneurs and 

21 prospective entrepreneurs; and 

22 ‘‘(5) for such other activities as the Adminis23 trator determines are consistent with the purposes of 

24 this section. 


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1 ‘‘(d) QUALIFIED ORGANIZATIONS.—For purposes of 

2 eligibility for assistance under this section, a qualified orga3 nization shall be— 

4 ‘‘(1) a nonprofit microenterprise development or5 ganization or program (or a group or collaborative 

6 thereof) that has a demonstrated record of delivering 

7 microenterprise services to disadvantaged entre8 preneurs; 

9 ‘‘(2) an intermediary; 

10 ‘‘(3) a microenterprise development organization 

11 or program that is accountable to a local community, 

12 working in conjunction with a State or local govern13 ment or Indian tribe; or 

14 ‘‘(4) an Indian tribe acting on its own, if the In15 dian tribe certifies that no private organization or 

16 program referred to in this subsection exists within 

17 its jurisdiction. 

18 ‘‘(e) ALLOCATION OF ASSISTANCE; SUBGRANTS.— 

19 ‘‘(1) ALLOCATION OF ASSISTANCE.— 

20 ‘‘(A) IN GENERAL.—The Administrator 

21 shall allocate assistance from the Administration 

22 under this section to ensure that— 

23 ‘‘(i) activities described in subsection 

24 (c)(1) are funded using not less than 75 


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1 percent of amounts made available for such 

2 assistance; and 

3 ‘‘(ii) activities described in subsection 

4 (c)(2) are funded using not less than 15 

5 percent of amounts made available for such 

6 assistance. 

7 ‘‘(B) LIMIT ON INDIVIDUAL ASSISTANCE.— 

8 No single person may receive more than 10 per9 cent of the total funds appropriated under this 

10 section in a single fiscal year. 

11 ‘‘(2) TARGETED ASSISTANCE.—The Adminis12 trator shall ensure that not less than 50 percent of the 

13 grants made under this section are used to benefit 

14 very low-income persons, including those residing on 

15 Indian reservations. 

16 ‘‘(3) SUBGRANTS AUTHORIZED.— 

17 ‘‘(A) IN GENERAL.—A qualified organiza18 tion receiving assistance under this section may 

19 provide grants using that assistance to qualified 

20 small and emerging microenterprise organiza21 tions and programs, subject to such rules and 

22 regulations as the Administrator determines to 

23 be appropriate. 

24 ‘‘(B) LIMIT ON ADMINISTRATIVE EX25 PENSES.—Not more than 7.5 percent of assistVerDate Aug 31 2005 00:08 Sep 13, 2007 Jkt 059200 PO 00000 Frm 00093 Fmt 6652 Sfmt 6203 E:\BILLS\S1256.RS S1256

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1 ance received by a qualified organization under 

2 this section may be used for administrative ex3 penses in connection with the making of sub4 grants under subparagraph (A). 

5 ‘‘(4) DIVERSITY.—In making grants under this 

6 section, the Administrator shall ensure that grant re7 cipients include both large and small microenterprise 

8 organizations, serving urban, rural, and Indian trib9 al communities serving diverse populations. 

10 ‘‘(5) PROHIBITION ON PREFERENTIAL CONSIDER11 ATION OF CERTAIN ADMINISTRATION PROGRAM PAR12 TICIPANTS.—In making grants under this section, the 

13 Administrator shall ensure that any application 

14 made by a qualified organization that is a partici15 pant in the program established under section 7(m) 

16 does not receive preferential consideration over appli17 cations from other qualified organizations that are 

18 not participants in such program. 

19 ‘‘(f) MATCHING REQUIREMENTS.— 

20 ‘‘(1) IN GENERAL.—Financial assistance under 

21 this section shall be matched with funds from sources 

22 other than the Federal Government on the basis of not 

23 less than 50 percent of each dollar provided by the 

24 Administration. 


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1 ‘‘(2) SOURCES OF MATCHING FUNDS.—Fees, 

2 grants, gifts, funds from loan sources, and in-kind re3 sources of a grant recipient from public or private 

4 sources may be used to comply with the matching re5 quirement in paragraph (1). 

6 ‘‘(3) EXCEPTION.— 

7 ‘‘(A) IN GENERAL.—In the case of an appli8 cant for assistance under this section with severe 

9 constraints on available sources of matching 

10 funds, the Administrator may reduce or elimi11 nate the matching requirements of paragraph 

12 (1). 

13 ‘‘(B) LIMITATION.—Not more than 10 per14 cent of the total funds made available from the 

15 Administration in any fiscal year to carry out 

16 this section may be excepted from the matching 

17 requirements of paragraph (1), as authorized by 

18 subparagraph (A) of this paragraph. 

19 ‘‘(g) APPLICATIONS FOR ASSISTANCE.—An applica20 tion for assistance under this section shall be submitted in 

21 such form and in accordance with such procedures as the 

22 Administrator shall establish. 

23 ‘‘(h) RECORDKEEPING AND REPORTING.— 


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1 ‘‘(1) IN GENERAL.—Each organization that re2 ceives assistance from the Administration under this 

3 section shall— 

4 ‘‘(A) submit to the Administration not less 

5 than once in every 18-month period, financial 

6 statements audited by an independent certified 

7 public accountant; 

8 ‘‘(B) submit an annual report to the Ad9 ministration on its activities; and 

10 ‘‘(C) keep such records as may be necessary 

11 to disclose the manner in which any assistance 

12 under this section is used. 

13 ‘‘(2) ACCESS.—The Administration shall have 

14 access upon request, for the purposes of determining 

15 compliance with this section, to any records of any 

16 organization that receives assistance from the Admin17 istration under this section. 

18 ‘‘(3) DATA COLLECTION.—Each organization 

19 that receives assistance from the Administration 

20 under this section shall collect information relating 

21 to, as applicable— 

22 ‘‘(A) the number of individuals counseled or 

23 trained; 

24 ‘‘(B) the number of hours of counseling pro25 vided; 


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1 ‘‘(C) the number of startup small business 

2 concerns formed; 

3 ‘‘(D) the number of small business concerns 

4 expanded; 

5 ‘‘(E) the number of low-income individuals 

6 counseled or trained; and 

7 ‘‘(F) the number of very low-income indi8 viduals counseled or trained.’’. 

9 (b) CONFORMING REPEAL.—Subtitle C of title I of the 

10 Riegle Community Development and Regulatory Improve11 ment Act of 1994 (15 U.S.C. 6901 note) is repealed. 

12 (c) REFERENCES.—All references in Federal law, other 

13 than subsection (d) of this section, to the ‘‘Program for In14 vestment in Microentrepreneurs Act of 1999’’ or the 

15 ‘‘PRIME Act’’ shall be deemed to be references to section 

16 37 of the Small Business Act, as added by this section. 

17 (d) RULE OF CONSTRUCTION.—Nothing in this section 

18 or the amendments made by this section shall affect any 

19 grant or assistance provided under the Program for Invest20 ment in Microentrepreneurs Act of 1999, before the date of 

21 enactment of this Act, and any such grant or assistance 

22 shall be subject to the Program for Investment in Micro23 entrepreneurs Act of 1999, as in effect on the day before 

24 the date of enactment of this Act. 


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1 SEC. 105. REPORT TO CONGRESS ON THE MICROLOAN PRO2 GRAM. 

3 Section 7(m)(10) of the Small Business Act (15 U.S.C. 

4 638(m)(10)) is amended to read as follows: 

5 ‘‘(10) REPORT TO CONGRESS ON THE MICROLOAN

6 PROGRAM.— 

7 ‘‘(A) IN GENERAL.—Not later than 6 

8 months after the date of enactment of the Small 

9 Business Lending Reauthorization and Improve10 ments Act of 2007, the Comptroller General of 

11 the United States shall submit to the Committee 

12 on Small Business and Entrepreneurship of the 

13 Senate and the Committee on Small Business of 

14 the House of Representatives, a report which in15 cludes— 

16 ‘‘(i) an analysis of the effectiveness of 

17 the Microloan Program and the microloan 

18 technical assistance program; 

19 ‘‘(ii) a description of the loan portfolio 

20 of each intermediary, including the extent 

21 to which it provides microloans to small 

22 business concerns in rural areas; 

23 ‘‘(iii) the numbers and amounts of 

24 microloans made by the intermediaries to 

25 small business concern borrowers; 


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1 ‘‘(iv) an accurate measure of the cost of 

2 the microloan and microloan technical as3 sistance programs; and 

4 ‘‘(v) any recommendations for legisla5 tive changes that would improve the pro6 gram operations. 

7 ‘‘(B) CONSIDERATIONS AND CONSULTA8 TIONS.—In developing the report required by 

9 subparagraph (A), the Comptroller General shall 

10 consult with the microloan intermediaries, the 

11 Committee on Small Business and Entrepreneur12 ship of the Senate and the Committee on Small 

13 Business of the House of Representatives, and 

14 other appropriate industry members, and shall 

15 allow for industry comment.’’. 

16 TITLE II—INTERMEDIARY 

17 LENDING PILOT PROGRAM 

18 SEC. 201. FINDINGS. 

19 Congress finds the following: 

20 (1) Small and emerging businesses, particularly 

21 startups and businesses that lack sufficient or conven22 tional collateral, continue to face barriers accessing 

23 midsized loans in amounts between $35,000 and 

24 $200,000, with affordable terms and conditions. 


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1 (2) Consolidation in the banking industry has 

2 resulted in a decrease in the number of small, locally 

3 controlled banks with not more than $100,000,000 in 

4 assets and has changed the method by which banks 

5 make small business credit decisions with— 

6 (A) credit scoring techniques replacing rela7 tionship-based lending, which often works to the 

8 disadvantage of small or start-up businesses that 

9 do not conform with a bank’s standardized credit 

10 formulas; and 

11 (B) less flexible terms and conditions, which 

12 are often necessary for small and emerging busi13 nesses. 

14 (3) In the environment described in paragraphs 

15 (1) and (2), nonprofit intermediary lenders, includ16 ing community development corporations, provide fi17 nancial resources that supplement the small business 

18 lending and investments of a bank by— 

19 (A) providing riskier, up front, or subordi20 nated capital; 

21 (B) offering flexible terms and underwriting 

22 procedures; and 

23 (C) providing technical assistance to busi24 nesses in order to reduce the transaction costs 

25 and risk exposure of banks. 


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1 (4) Several Federal programs, including the 

2 Microloan Program under section 7(m) of the Small 

3 Business Act (15 U.S.C. 636(m)) and the Inter4 mediary Relending Program of the Department of Ag5 riculture, have demonstrated the effectiveness of work6 ing through nonprofit intermediaries to address the 

7 needs of small business concerns that are unable to ac8 cess capital through conventional sources. 

9 (5) More than 1,000 nonprofit intermediary 

10 lenders in the United States are— 

11 (A) successfully providing financial and 

12 technical assistance to small and emerging busi13 nesses; 

14 (B) working with banks and other lenders to 

15 leverage additional capital for their business bor16 rowers; and 

17 (C) creating employment opportunities for 

18 low-income individuals through their lending 

19 and business development activities. 

20 SEC. 202. SMALL BUSINESS INTERMEDIARY LENDING PILOT 

21 PROGRAM. 

22 (a) IN GENERAL.—Section 7 of the Small Business Act 

23 (15 U.S.C. 636) is amended by inserting after subsection 

24 (k) the following: 


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1 ‘‘(l) SMALL BUSINESS INTERMEDIARY LENDING PRO2 GRAM.— 

3 ‘‘(1) DEFINITIONS.—In this subsection— 

4 ‘‘(A) the term ‘intermediary’ means a pri5 vate, nonprofit entity that seeks to borrow, or 

6 has borrowed, funds from the Administration to 

7 provide midsize loans to small business concerns 

8 under this subsection, including— 

9 ‘‘(i) a private, nonprofit community 

10 development corporation; 

11 ‘‘(ii) a consortium of private, nonprofit 

12 organizations or nonprofit community de13 velopment corporations; 

14 ‘‘(iii) a quasi-governmental economic 

15 development entity (such as a planning and 

16 development district), other than a State, 

17 county, or municipal government; and 

18 ‘‘(iv) an agency of or nonprofit entity 

19 established by a Native American Tribal 

20 Government; and 

21 ‘‘(B) the term ‘midsize loan’ means a fixed 

22 rate loan of not less than $35,000 and not more 

23 than $200,000, made by an intermediary to a 

24 startup, newly established, or growing small 

25 business concern. 


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1 ‘‘(2) ESTABLISHMENT.—There is established a 3- 

2 year pilot program to be know as the ‘Small Business 

3 Intermediary Lending Pilot Program’ (referred to in 

4 this subsection as the ‘Program’), under which the 

5 Administrator may provide direct loans to eligible 

6 intermediaries, for the purpose of making fixed inter7 est rate midsize loans to startup, newly established, 

8 and growing small business concerns. 

9 ‘‘(3) PURPOSES.—The purposes of the Program 

10 are— 

11 ‘‘(A) to assist small business concerns in 

12 those areas suffering from a lack of credit due to 

13 poor economic conditions; 

14 ‘‘(B) to create employment opportunities for 

15 low-income individuals; 

16 ‘‘(C) to establish a midsize loan program to 

17 be administered by the Administrator to provide 

18 loans to eligible intermediaries to enable such 

19 intermediaries to provide midsize loans, particu20 larly loans in amounts averaging not more than 

21 $150,000, to startup, newly established, or grow22 ing small business concerns for working capital 

23 or the acquisition of materials, supplies, or 

24 equipment; 


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1 ‘‘(D) to test the effectiveness of nonprofit 

2 intermediaries— 

3 ‘‘(i) as a delivery system for a midsize 

4 loan program; and 

5 ‘‘(ii) in addressing the credit needs of 

6 small business concerns and leveraging 

7 other sources of credit; and 

8 ‘‘(E) to determine the advisability and fea9 sibility of implementing a midsize loan program 

10 nationwide. 

11 ‘‘(4) ELIGIBILITY FOR PARTICIPATION.—An 

12 intermediary shall be eligible to receive loans under 

13 the Program if the intermediary has not less than 1 

14 year of experience making loans to startup, newly es15 tablished, or growing small business concerns. 

16 ‘‘(5) LOANS TO INTERMEDIARIES.— 

17 ‘‘(A) APPLICATION.—Each intermediary de18 siring a loan under this subsection shall submit 

19 an application to the Administrator that de20 scribes— 

21 ‘‘(i) the type of small business concerns 

22 to be assisted; 

23 ‘‘(ii) the size and range of loans to be 

24 made; 


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1 ‘‘(iii) the geographic area to be served 

2 and its economic, poverty, and unemploy3 ment characteristics; 

4 ‘‘(iv) the status of small business con5 cerns in the area to be served and an anal6 ysis of the availability of credit; and 

7 ‘‘(v) the qualifications of the applicant 

8 to carry out this subsection. 

9 ‘‘(B) LOAN LIMITS.—Notwithstanding sub10 section (a)(3), no loan may be made to an inter11 mediary under this subsection if the total 

12 amount outstanding and committed to the inter13 mediary from the business loan and investment 

14 fund established by this Act would, as a result of 

15 such loan, exceed $1,000,000 during the partici16 pation of the intermediary in the Program. 

17 ‘‘(C) LOAN DURATION.—Loans made by the 

18 Administrator under this subsection shall be for 

19 a maximum term of 20 years. 

20 ‘‘(D) APPLICABLE INTEREST RATES.— 

21 Loans made by the Administrator to an inter22 mediary under the Program shall bear an an23 nual interest rate equal to 1.00 percent. 

24 ‘‘(E) FEES; COLLATERAL.—The Adminis25 trator may not charge any fees or require collatVerDate Aug 31 2005 00:08 Sep 13, 2007 Jkt 059200 PO 00000 Frm 00105 Fmt 6652 Sfmt 6203 E:\BILLS\S1256.RS S1256

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1 eral with respect to any loan made to an inter2 mediary under this subsection. 

3 ‘‘(F) LEVERAGE.—Any loan to a small 

4 business concern under this subsection shall not 

5 exceed 75 percent of the total cost of the project 

6 funded by such loan, with the remaining funds 

7 being leveraged from other sources, including— 

8 ‘‘(i) banks or credit unions; 

9 ‘‘(ii) community development financial 

10 institutions; and 

11 ‘‘(iii) other sources with funds avail12 able to the intermediary lender. 

13 ‘‘(G) DELAYED PAYMENTS.—The Adminis14 trator shall not require the repayment of prin15 cipal or interest on a loan made to an inter16 mediary under the Program during the first 2 

17 years of the loan. 

18 ‘‘(6) PROGRAM FUNDING FOR MIDSIZE LOANS.— 

19 ‘‘(A) NUMBER OF PARTICIPANTS.—Under 

20 the Program, the Administrator may provide 

21 loans, on a competitive basis, to not more than 

22 20 intermediaries. 

23 ‘‘(B) EQUITABLE DISTRIBUTION OF INTER24 MEDIARIES.—The Administrator shall select and 

25 provide funding under the Program to such 


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1 intermediaries as will ensure geographic diver2 sity and representation of urban and rural com3 munities. 

4 ‘‘(7) REPORT TO CONGRESS.— 

5 ‘‘(A) ANNUAL REPORT.—Not later than 12 

6 months after the date of enactment of the Small 

7 Business Lending Reauthorization and Improve8 ments Act of 2007, and annually thereafter, the 

9 Administrator shall submit a report containing 

10 an evaluation of the effectiveness of the Program 

11 to— 

12 ‘‘(i) the Committee on Small Business 

13 and Entrepreneurship of the Senate; and 

14 ‘‘(ii) the Committee on Small Business 

15 of the House of Representatives. 

16 ‘‘(B) CONTENTS.—Each report submitted 

17 under subparagraph (A) shall include, for the 

18 12-month period before the date of that report— 

19 ‘‘(i) the numbers and locations of the 

20 intermediaries receiving funds to provide 

21 midsize loans; 

22 ‘‘(ii) the amounts of each loan to an 

23 intermediary; 


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1 ‘‘(iii) the numbers and amounts of 

2 midsize loans made by intermediaries to 

3 small business concerns; 

4 ‘‘(iv) the repayment history of each 

5 intermediary; 

6 ‘‘(v) a description of the loan portfolio 

7 of each intermediary, including the extent 

8 to which it provides midsize loans to small 

9 business concerns in rural and economically 

10 depressed areas; 

11 ‘‘(vi) an estimate of the number of low12 income individuals who have been employed 

13 as a direct result of the Program; and 

14 ‘‘(vii) any recommendations for legis15 lative changes that would improve the oper16 ation of the Program. 

17 ‘‘(8) TERMINATION.—The authority to make 

18 loans under this subsection shall terminate 3 years 

19 after the date of enactment of the Small Business 

20 Lending Reauthorization and Improvements Act of 

21 2007.’’. 

22 (b) RULEMAKING AUTHORITY.—Not later than 180 

23 days after the date of enactment of this Act, the Adminis24 trator shall issue regulations to carry out section 7(l) of 

25 the Small Business Act, as added by subsection (a). 


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1 (c) AUTHORIZATION OF APPROPRIATIONS.— 

2 (1) IN GENERAL.—There are authorized to be ap3 propriated to the Administrator such sums as may be 

4 necessary for each of fiscal years 2008 through 2010 

5 to provide $20,000,000 in loans under section 7(l) of 

6 the Small Business Act, as added by subsection (a). 

7 (2) AVAILABILITY.—Any amounts appropriated 

8 pursuant to paragraph (1) shall remain available 

9 until expended. 

10 TITLE III—7(a) LOAN PROGRAM 

11 SEC. 301. PREFERRED LENDERS PROGRAM. 

12 (a) IN GENERAL.—Section 7(a) of the Small Business 

13 Act (15 U.S.C. 636(a)) is amended by adding at the end 

14 the following: 

15 ‘‘(32) PREFERRED LENDERS PROGRAM.— 

16 ‘‘(A) DEFINITIONS.—In this paragraph— 

17 ‘‘(i) the term ‘national preferred lend18 er’ means a preferred lender authorized to 

19 operate in any area served by an office of 

20 the Administration under subparagraph 

21 (G); 

22 ‘‘(ii) the term ‘preferred lender’ means 

23 a qualified lender participating in the pro24 gram; 


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1 ‘‘(iii) the term ‘program’ means the 

2 Preferred Lenders Program established 

3 under subparagraph (B); and 

4 ‘‘(iv) the term ‘qualified lender’ means 

5 a lender that demonstrates— 

6 ‘‘(I) knowledge of and proficiency 

7 in the requirements of the program 

8 under this subsection; 

9 ‘‘(II) the ability to process, close, 

10 service, and liquidate loans; 

11 ‘‘(III) the ability to develop and 

12 analyze complete loan packages; and 

13 ‘‘(IV) a satisfactory performance 

14 history of participation in the pro15 gram under this subsection. 

16 ‘‘(B) ESTABLISHMENT.—There is estab17 lished a Preferred Lenders Program under which 

18 the Administrator may authorize qualified lend19 ers to make and service loans. 

20 ‘‘(C) APPLICATION.—A qualified lender de21 siring to participate in the program shall submit 

22 an application at such time, in such manner, 

23 and accompanied by such information as the Ad24 ministrator shall establish. 


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1 ‘‘(D) DELEGATED AUTHORITY.—The Ad2 ministrator shall authorize a preferred lender to 

3 take actions relating to loan servicing on behalf 

4 of the Administrator, including— 

5 ‘‘(i) determining eligibility and credit6 worthiness and loan monitoring, collection, 

7 and liquidation; 

8 ‘‘(ii) authority to make and close loans 

9 with a guarantee from the Administrator 

10 without obtaining the prior specific ap11 proval of the Administrator; and 

12 ‘‘(iii) authority to service and liq13 uidate such loans without obtaining the 

14 prior specific approval of the Administrator 

15 for routine servicing and liquidation activi16 ties. 

17 ‘‘(E) AREA OF OPERATIONS.—The Adminis18 trator shall designate the area for which a pre19 ferred lender may exercise the authority under 

20 subparagraph (D). 

21 ‘‘(F) CONFLICT.—A preferred lender shall 

22 not take any action creating an actual or appar23 ent conflict of interest. 

24 ‘‘(G) NATIONAL OPERATION.— 


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1 ‘‘(i) IN GENERAL.—A preferred lender 

2 may request designation as a national pre3 ferred lender by the Administrator, and, 

4 upon such designation, shall have the au5 thority to operate in any area served by an 

6 office of the Administration. 

7 ‘‘(ii) ELIGIBILITY.—The Administra8 tion shall designate a preferred lender as a 

9 national preferred lender if the Adminis10 trator determines that preferred lender 

11 has— 

12 ‘‘(I) satisfactorily operated as a 

13 preferred lender in areas encompassing 

14 all or part of the territory in not fewer 

15 than 5 district offices of the Adminis16 tration for a minimum of 3 years in 

17 each territory; 

18 ‘‘(II) centralized loan approval, 

19 servicing, and liquidation functions 

20 and processes that are satisfactory to 

21 the Administration; 

22 ‘‘(III) uniform written policies 

23 and procedures; 

24 ‘‘(IV) a currency rate that is not 

25 less than the Administration’s national 


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1 average currency rate for all loans 

2 under this subsection; 

3 ‘‘(V) a currency rate for loans 

4 made under this subsection that is not 

5 less than the Administration’s national 

6 average currency rate for loans made 

7 under this subsection; 

8 ‘‘(VI) a default rate that is not 

9 more than the Administration’s na10 tional average default rate for loans 

11 made under this subsection; and 

12 ‘‘(VII) received, in the most recent 

13 audit and review as a preferred lender 

14 conducted by the Administrator, a rat15 ing that is acceptable or acceptable 

16 with corrective actions required. 

17 ‘‘(H) CORRECTIVE ACTION.—If a national 

18 preferred lender fails to continue to meet the eli19 gibility criteria under subparagraph (G)(ii), the 

20 Administrator shall notify that national pre21 ferred lender of the deficiency and allow a rea22 sonable period of time for that national preferred 

23 lender to meet such criteria. 

24 ‘‘(I) SUSPENSION OR REVOCATION.— 


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1 ‘‘(i) IN GENERAL.—The designation of 

2 a lender as a national preferred lender shall 

3 be suspended or revoked at any time that 

4 the Administration determines that the 

5 lender— 

6 ‘‘(I) is not adhering to the rules 

7 or regulations established by the Ad8 ministrator for the program; or 

9 ‘‘(II) has failed to continue to 

10 meet the eligibility criteria specified in 

11 paragraph (G) or take corrective action 

12 under subparagraph (H). 

13 ‘‘(ii) EFFECT.—A suspension or rev14 ocation under clause (i) shall not affect any 

15 outstanding guarantee of a national pre16 ferred lender.’’. 

17 (b) CLERICAL AMENDMENT.—Section 7(a)(2)(C) of the 

18 Small Business Act (15 U.S.C. 636(a)(2)(C)) is amended 

19 to read as follows: 

20 ‘‘(C) INTEREST RATE UNDER PREFERRED

21 LENDERS PROGRAM.—The maximum interest 

22 rate for a loan guaranteed under the Preferred 

23 Lenders Program under paragraph (32) shall 

24 not exceed the maximum interest rate as deterVerDate Aug 31 2005 00:08 Sep 13, 2007 Jkt 059200 PO 00000 Frm 00114 Fmt 6652 Sfmt 6203 E:\BILLS\S1256.RS S1256

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1 mined by the Administration, applicable to other 

2 loans guaranteed under this subsection.’’. 

3 (c) CONFORMING AMENDMENT.—Section 7(a)(19) of 

4 the Small Business Act (15 U.S.C. 636(a)(19)) is amended 

5 by striking ‘‘the proviso in section 5(b)(7)’’ and inserting 

6 ‘‘paragraph (32)’’. 

7 SEC. 302. MAXIMUM LOAN AMOUNT. 

8 Section 7(a)(3)(A) of the Small Business Act (15 

9 U.S.C. 636(a)(3)(A)) is amended by striking ‘‘$1,500,000 

10 (or if the gross loan amount would exceed $2,000,000’’ and 

11 inserting ‘‘$2,250,000 (or if the gross loan amount would 

12 exceed $3,000,000’’. 

13 SEC. 303. MAXIMUM 504 AND 7(A) LOAN ELIGIBILITY. 

14 (a) COMBINATION FINANCING.— 

15 (1) IN GENERAL.—Section 502(2) of the Small 

16 Business Investment Act of 1958 (15 U.S.C. 696(2)) 

17 is amended by adding at the end the following: 

18 ‘‘(C) COMBINATION FINANCING UNDER

19 SMALL BUSINESS ACT.—Notwithstanding any 

20 other provision of law, financing under this title 

21 may be provided to a borrower in the maximum 

22 amount provided in this subsection, and a loan 

23 guarantee under section 7(a) of the Small Busi24 ness Act may be provided to the same borrower 

25 in the maximum amount provided in section 


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1 7(a)(3)(A) of such Act, to the extent that the bor2 rower otherwise qualifies for such assistance.’’. 

3 (2) CONFORMING AMENDMENT.—Section 7(a)(1) 

4 of the Small Business Act (15 U.S.C. 636(a)(1) is 

5 amended by adding at the end the following: 

6 ‘‘(C) COMBINATION FINANCING UNDER

7 SMALL BUSINESS INVESTMENT ACT OF 1958.—Fi8 nancing under this subsection may be provided 

9 to a borrower in the maximum amount as pro10 vided in subsection (b)(2) of section 502 of the 

11 Small Business Investment Act of 1958 (15 

12 U.S.C. 696).’’. 

13 (b) REPORTING.—Not later than 90 days after the date 

14 of enactment of this Act, and annually thereafter, the Ad15 ministrator shall submit a report to the Committee on 

16 Small Business and Entrepreneurship of the Senate and 

17 the Committee on Small Business of the House of Represent18 atives that— 

19 (1) includes the number of small business con20 cerns that have financings under both section 7(a) of 

21 the Small Business Act (15 U.S.C. 636(a)) and title 

22 V of the Small Business Investment Act of 1958 (15 

23 U.S.C. 695 et seq.) during the year before the year of 

24 that report; and 


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1 (2) describes the total amount and general per2 formance of the financings described in paragraph 

3 (1). 

4 SEC. 304. LOAN POOLING. 

5 Section 5(g)(1) of the Small Business Act (15 U.S.C. 

6 634(g)(1)) is amended— 

7 (1) by inserting ‘‘(A)’’ before ‘‘The Administra8 tion’’; 

9 (2) by striking the colon and all that follows and 

10 inserting a period; and 

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

12 ‘‘(B) A trust certificate issued under subparagraph (A) 

13 shall be based on, and backed by, a trust or pool approved 

14 by the Administrator and composed solely of the guaranteed 

15 portion of such loans. 

16 ‘‘(C) The interest rate on a trust certificate issued 

17 under subparagraph (A) shall be either— 

18 ‘‘(i) the lowest interest rate on any individual 

19 loan in the pool; or 

20 ‘‘(ii) the weighted average interest rate of all 

21 loans in the pool, subject to such limited variations 

22 in loan characteristics as the Administrator deter23 mines appropriate to enhance marketability of the 

24 pool certificates.’’. 


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1 SEC. 305. ALTERNATIVE SIZE STANDARD. 

2 Section 3(a) of the Small Business Act (15 U.S.C. 

3 632(a)) is amended by adding at the end the following: 

4 ‘‘(5) OPTIONAL SIZE STANDARD.— 

5 ‘‘(A) IN GENERAL.—The Administrator shall es6 tablish an optional size standard for business loan 

7 applicants under section 7(a) and development com8 pany loan applicants under title V of the Small Busi9 ness Investment Act of 1958, which uses maximum 

10 tangible net worth and average net income as an al11 ternative to the use of industry standards. 

12 ‘‘(B) INTERIM RULE.—Until the date on which 

13 the optional size standards established under subpara14 graph (A) are in effect, the alternative size standard 

15 in section 121.301(b) of title 13, Code of Federal Reg16 ulations, or any successor thereto, may be used by 

17 business loan applicants under section 7(a) and devel18 opment company loan applicants under title V of the 

19 Small Business Investment Act of 1958.’’. 

20 SEC. 306. ALTERNATIVE VARIABLE INTEREST RATE. 

21 (a) IN GENERAL.—Section 7(a)(4)(A) of the Small 

22 Business Act (15 U.S.C. 636(a)(4)(A)) is amended by strik23 ing ‘‘prescribed by the Administration,’’ and inserting: 

24 ‘‘prescribed by the Administration, including, on variable 

25 rate loans, a nationally recognized prime rate of interest 


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1 and at least 1 other index as an alternative thereto at the 

2 option of the participating lender,’’. 

3 (b) APPLICABILITY.—Not later than 180 days after the 

4 date of enactment of this Act, the Administrator of the 

5 Small Business Administration shall select not less than 1 

6 alternative index under section 7(a)(4)(A) of the Small 

7 Business Act, as amended by subsection (a), and make such 

8 index available for use by participating lenders. 

9 SEC. 307. MINORITY SMALL BUSINESS DEVELOPMENT. 

10 (a) IN GENERAL.—The Small Business Act (15 U.S.C. 

11 631 et seq.) is amended by inserting after section 37, as 

12 added by this Act, the following: 

13 ‘‘SEC. 38. MINORITY SMALL BUSINESS DEVELOPMENT. 

14 ‘‘(a) OFFICE OF MINORITY SMALL BUSINESS DEVEL15 OPMENT.—There is established in the Administration an 

16 Office of Minority Small Business Development, which shall 

17 be administered by the Associate Administrator for Minor18 ity Small Business Development (in this section referred 

19 to as the ‘Associate Administrator’) appointed under section 

20 4(b)(1). 

21 ‘‘(b) ASSOCIATE ADMINISTRATOR FOR MINORITY

22 SMALL BUSINESS DEVELOPMENT.—The Associate Adminis23 trator— 

24 ‘‘(1) shall be either— 


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1 ‘‘(A) an appointee in the Senior Executive 

2 Service who is a career appointee; or 

3 ‘‘(B) an employee in the competitive service; 

4 ‘‘(2) shall be responsible for the formulation, exe5 cution, and promotion of policies and programs of the 

6 Administration that provide assistance to small busi7 ness concerns owned and controlled by minorities; 

8 ‘‘(3) shall act as an ombudsman for full consid9 eration of minorities in all programs of the Adminis10 tration (including those under sections 7(j) and 8(a)); 

11 ‘‘(4) shall work with the Associate Deputy Ad12 ministrator for Capital Access to increase the propor13 tion of loans and loan dollars, and investments and 

14 investment dollars, going to minorities through the fi15 nance programs under this Act and the Small Busi16 ness Investment Act of 1958 (including subsections 

17 (a), (b), and (m) of section 7 of this Act and the pro18 grams under part A and B of title III and title V of 

19 the Small Business Investment Act of 1958); 

20 ‘‘(5) shall work with the Associate Deputy Ad21 ministrator for Entrepreneurial Development to in22 crease the proportion of counseling and training that 

23 goes to minorities through the entrepreneurial devel24 opment programs of the Administration; 


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1 ‘‘(6) shall work with the Associate Deputy Ad2 ministrator for Government Contracting and Minor3 ity Enterprise Development to increase the proportion 

4 of contracts, including through the Small Business 

5 Innovation Research Program and the Small Busi6 ness Technology Transfer Program, to minorities; 

7 ‘‘(7) shall work with the partners of the Admin8 istration, trade associations, and business groups to 

9 identify and carry out policies and procedures to 

10 more effectively market the resources of the Adminis11 tration to minorities; 

12 ‘‘(8) shall work with the Office of Field Oper13 ations to ensure that district offices and regional of14 fices have adequate staff, funding, and other resources 

15 to market the programs of the Administration to meet 

16 the objectives described in paragraphs (4) through (7); 

17 and 

18 ‘‘(9) shall report to and be responsible directly to 

19 the Administrator. 

20 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There are 

21 authorized to be appropriated to carry out this section— 

22 ‘‘(1) $5,000,000 for fiscal year 2007; 

23 ‘‘(2) $5,000,000 for fiscal year 2008; 

24 ‘‘(3) $5,000,000 for fiscal year 2009; and 

25 ‘‘(4) $5,000,000 for fiscal year 2010.’’. 


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1 (b) CONFORMING AMENDMENTS.—Section 4(b)(1) of 

2 the Small Business Act (15 U.S.C. 633(b)(1)) is amended 

3 in sixth sentence, by striking ‘‘Minority Small Business 

4 and Capital Ownership Development’’ and all that follows 

5 through the end of the sentence and inserting ‘‘Minority 

6 Small Business Development.’’. 

7 SEC. 308. LOWERING OF FEES. 

8 Section 7(a)(23) of the Small Business Act (15 U.S.C. 

9 636(a)(23)) is amended by striking subparagraph (C) and 

10 inserting the following: 

11 ‘‘(C) LOWERING OF FEES.— 

12 ‘‘(i) IN GENERAL.—Subject to clause 

13 (ii), for loan guarantees made or approved 

14 in each full fiscal year after the date of en15 actment of the Small Business Lending Re16 authorization and Improvements Act of 

17 2007, if the fees paid by all small business 

18 borrowers and by lenders for guarantees 

19 under this subsection, or the sum of such 

20 fees plus any funds made available for the 

21 purpose of reducing fees for loans under this 

22 subsection, as applicable, is more than the 

23 amount necessary to equal the cost to the 

24 Administration of making such guarantees, 

25 the Administrator shall reduce fees paid by 


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1 small business borrowers and lenders under 

2 clauses (i) through (iv) of paragraph 

3 (18)(A) and subparagraph (A) of this para4 graph. 

5 ‘‘(ii) MAXIMUM REDUCTION.—A reduc6 tion in fees under clause (i) in any fiscal 

7 year may not exceed the average amount by 

8 which fees paid by all small business bor9 rowers and by lenders for guarantees under 

10 this subsection exceeded the amount nec11 essary to equal the cost to the Administra12 tion of making such guarantees during the 

13 3 most recent fiscal years for which such in14 formation is available before that fiscal 

15 year. 

16 ‘‘(iii) MAXIMUM FEES.—The fees paid 

17 by small business borrowers and lenders for 

18 guarantees under this subsection may not be 

19 increased above the maximum level author20 ized under the amendments made by divi21 sion K of the Consolidated Appropriations 

22 Act, 2005 (Public Law 108–447; 118 Stat. 

23 3441).’’. 


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1 SEC. 309. INTERNATIONAL TRADE LOANS. 

2 (a) IN GENERAL.—Section 7(a)(3)(B) of the Small 

3 Business Act (15 U.S.C. 636(a)(3)(B)) is amended by strik4 ing ‘‘$1,750,000, of which not more than $1,250,000’’ and 

5 inserting ‘‘$2,750,000 (or if the gross loan amount would 

6 exceed $3,670,000), of which not more than $2,000,000’’. 

7 (b) WORKING CAPITAL.—Section 7(a)(16)(A) of the 

8 Small Business Act (15 U.S.C. 636(a)(16)(A)) is amend9 ed— 

10 (1) in the matter preceding clause (i), by strik11 ing ‘‘in—’’ and inserting ‘‘—’’; 

12 (2) in clause (i)— 

13 (A) by inserting ‘‘in’’ after ‘‘(i)’’; and 

14 (B) by striking ‘‘or’’ at the end; 

15 (3) in clause (ii)— 

16 (A) by inserting ‘‘in’’ after ‘‘(ii)’’; and 

17 (B) by striking the period and inserting ‘‘; 

18 or’’; and 

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

20 ‘‘(iii) by providing working capital.’’. 

21 (c) COLLATERAL.—Section 7(a)(16)(B) of the Small 

22 Business Act (15 U.S.C. 636(a)(16)(B)) is amended— 

23 (1) by striking ‘‘Each loan’’ and inserting the 

24 following: 

25 ‘‘(i) IN GENERAL.—Except as provided 

26 in clause (ii), each loan’’; and 


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

2 ‘‘(ii) EXCEPTION.—A loan under this 

3 paragraph may be secured by a second lien 

4 position on the property or equipment fi5 nanced by the loan or on other assets of the 

6 small business concern, if the Administrator 

7 determines such lien provides adequate as8 surance of the payment of such loan.’’. 

9 (d) REFINANCING.—Section 7(a)(16)(A)(ii) of the 

10 Small Business Act (15 U.S.C. 636(a)(16)(A)(ii)), as 

11 amended by this section, is amended by inserting ‘‘, includ12 ing any debt that qualifies for refinancing under any other 

13 provision of this subsection’’ before the semicolon. 

14 SEC. 310. RURAL LENDING OUTREACH PROGRAM. 

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

16 636(a)), as amended by this Act, is amended— 

17 (1) by striking paragraph (25)(C); and 

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

19 ‘‘(33) RURAL LENDING OUTREACH PROGRAM.— 

20 ‘‘(A) IN GENERAL.—The Administrator 

21 shall carry out a rural lending outreach program 

22 to provide not more than an 85 percent guar23 anty for loans of not more than $250,000. The 

24 program shall be carried out only through lend25 ers located in rural areas (as the term ‘rural’ is 


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1 defined in section 501(f) of the Small Business 

2 Investment Act of 1958 (15 U.S.C. 695(f)). 

3 ‘‘(B) LOAN TERMS.—For a loan made 

4 through the program under this paragraph— 

5 ‘‘(i) the Administrator shall approve or 

6 disapprove the loan within 36 hours of the 

7 time the Administrator receives the applica8 tion; 

9 ‘‘(ii) the program shall use abbreviated 

10 application and documentation require11 ments; and 

12 ‘‘(iii) minimum credit standards, as 

13 the Administrator considers necessary to 

14 limit the rate of default on loans made 

15 under the program, shall apply.’’. 

16 TITLE IV—CERTIFIED DEVELOP17 MENT COMPANIES; 504 LOAN 

18 PROGRAM 

19 SEC. 401. DEVELOPMENT COMPANY LOAN PROGRAMS. 

20 (a) TITLE OF PROGRAM.—Title V of the Small Busi21 ness Investment Act of 1958 (15 U.S.C. 695 et seq.) is 

22 amended by adding at the end the following: 

23 ‘‘SEC. 511. PROGRAM TITLE. 

24 ‘‘(a) IN GENERAL.—Except as provided in subsection 

25 (b), the programs authorized by this title shall be known 


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1 collectively as the ‘Local Development Business Loan Pro2 gram’. The Administrator may refer to such program as 

3 the ‘504 Loan Program’, until such usage is no longer nec4 essary. 

5 ‘‘(b) EXISTING NAME.—Participants in the Local De6 velopment Business Loan Program may continue to refer 

7 to such program as ‘the 504 Loan Program’.’’. 

8 (b) EXISTING MATERIALS.—The Administrator may 

9 use informational materials created, or that were in the 

10 process of being created, before the date of enactment of this 

11 Act that do not refer to a program under title V of the Small 

12 Business Investment Act of 1958 (15 U.S.C. 695 et seq.) 

13 as the ‘‘Local Development Business Loan Program’’. 

14 (c) NEW MATERIALS.—Any informational materials 

15 created by the Administrator on or after the date of enact16 ment of this Act shall refer to any program under title V 

17 of the Small Business Investment Act of 1958 (15 U.S.C. 

18 695 et seq.) as the ‘‘Local Development Business Loan Pro19 gram’’, except that informational materials may refer to 

20 such program as the ‘‘504 Loan Program’’, until such usage 

21 is no longer necessary. 

22 SEC. 402. LOAN LIQUIDATIONS. 

23 Section 510 of the Small Business Investment Act of 

24 1958 (15 U.S.C. 697g) is amended— 


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1 (1) by redesignating subsection (e) as subsection 

2 (g); and 

3 (2) by inserting after subsection (d) the fol4 lowing: 

5 ‘‘(e) PARTICIPATION.— 

6 ‘‘(1) IN GENERAL.—Any qualified State or local 

7 development company which elects not to apply for 

8 authority to foreclose and liquidate defaulted loans 

9 under this section, or which the Administrator deter10 mines to be ineligible for such authority, shall con11 tract with a qualified third-party to perform fore12 closure and liquidation of defaulted loans in its port13 folio. The contract shall be contingent upon approval 

14 by the Administrator with respect to the qualifica15 tions of the contractor and the terms and conditions 

16 of liquidation activities. 

17 ‘‘(2) COMMENCEMENT.—This subsection does not 

18 require any development company to liquidate de19 faulted loans until the Administrator has adopted 

20 and implemented a program to compensate and reim21 burse development companies, as provided under sub22 section (f). 

23 ‘‘(f) COMPENSATION AND REIMBURSEMENT.— 

24 ‘‘(1) REIMBURSEMENT OF EXPENSES.—The Ad25 ministrator shall reimburse each qualified State or 


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1 local development company for all expenses paid by 

2 such company as part of the foreclosure and liquida3 tion activities, if the expenses— 

4 ‘‘(A) were— 

5 ‘‘(i) approved in advance by the Ad6 ministrator, either specifically or generally; 

7 or 

8 ‘‘(ii) incurred by the development com9 pany on an emergency basis without prior 

10 approval from the Administrator, if the Ad11 ministrator determines that the expenses 

12 were reasonable and appropriate; and 

13 ‘‘(B) are submitted by the development com14 pany to the Administrator not later than 3 years 

15 after the date of the purchase of the debenture by 

16 the Administrator. 

17 ‘‘(2) COMPENSATION FOR RESULTS.— 

18 ‘‘(A) DEVELOPMENT.—The Administrator 

19 shall develop a schedule to compensate and pro20 vide an incentive to qualified State or local de21 velopment companies that foreclose and liquidate 

22 defaulted loans. 

23 ‘‘(B) CRITERIA.—The schedule required 

24 under this paragraph shall— 


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1 ‘‘(i) be based on a percentage of the net 

2 amount recovered, but shall not exceed a 

3 maximum amount; and 

4 ‘‘(ii) not apply to any foreclosure 

5 which is conducted under a contract be6 tween a development company and a quali7 fied third party to perform the foreclosure 

8 and liquidation.’’. 

9 SEC. 403. ADDITIONAL EQUITY INJECTIONS. 

10 Section 502(3)(B)(ii) of the Small Business Invest11 ment Act of 1958 (15 U.S.C. 696(3)(B)(ii)) is amended to 

12 read as follows: 

13 ‘‘(ii) FUNDING FROM INSTITUTIONS.— 

14 If a small business concern— 

15 ‘‘(I) provides the minimum con16 tribution required under subparagraph 

17 (C), not less than 50 percent of the 

18 total cost of any project financed under 

19 clause (i), (ii), or (iii) of subparagraph 

20 (C) shall come from the institutions de21 scribed in subclauses (I), (II), and 

22 (III) of clause (i); and 

23 ‘‘(II) provides more than the min24 imum contribution required under sub25 paragraph (C), any excess contribution 


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1 may be used to reduce the amount re2 quired from the institutions described 

3 in subclauses (I), (II), and (III) of 

4 clause (i), except that the amount from 

5 such institutions may not be reduced to 

6 an amount that is less than the 

7 amount of the loan made by the Ad8 ministrator.’’. 

9 SEC. 404. UNIFORM LEASING POLICY. 

10 (a) IN GENERAL.—Section 502 of the Small Business 

11 Investment Act of 1958 (15 U.S.C. 696) is amended— 

12 (1) by striking paragraphs (4) and (5) and in13 serting the following: 

14 ‘‘(4) LIMITATION ON LEASING.—If the use of a 

15 loan under this section includes the acquisition of a 

16 facility or the construction of a new facility, the small 

17 business concern assisted— 

18 ‘‘(A) shall permanently occupy and use not 

19 less than a total of 50 percent of the space in the 

20 facility; and 

21 ‘‘(B) may, on a temporary or permanent 

22 basis, lease to others not more than 50 percent 

23 of the space in the facility.’’; and 

24 (2) by redesignating paragraph (6) as para25 graph (5). 


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1 (b) POLICY FOR 7(a) LOANS.—Section 7(a)(28) of the 

2 Small Business Act (15 U.S.C. 636(a)(28)) is amended to 

3 read as follows: 

4 ‘‘(28) LIMITATION ON LEASING.—If the use of a 

5 loan under this subsection includes the acquisition of 

6 a facility or the construction of a new facility, the 

7 small business concern assisted— 

8 ‘‘(A) shall permanently occupy and use not 

9 less than a total of 50 percent of the space in the 

10 facility; and 

11 ‘‘(B) may, on a temporary or permanent 

12 basis, lease to others not more than 50 percent 

13 of the space in the facility.’’. 

14 SEC. 405. BUSINESSES IN LOW-INCOME COMMUNITIES. 

15 (a) GOALS.—Section 501(d)(3)(A) of the Small Busi16 ness Investment Act of 1958 (15 U.S.C. 695(d)(3)(A)) is 

17 amended by inserting after ‘‘business district revitaliza18 tion,’’ the following: ‘‘or expansion of businesses in low-in19 come communities which would be eligible for a new mar20 kets tax credit under section 45D(a) of the Internal Revenue 

21 Code of 1986, or implementing regulations issued under 

22 that section,’’. 

23 (b) ADDITIONAL INCENTIVES.—Section 502 of the 

24 Small Business Investment Act of 1958 (15 U.S.C. 696), 


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1 as amended by this Act, is amended by adding at the end 

2 the following: 

3 ‘‘(6) LOW-INCOME COMMUNITIES.— 

4 ‘‘(A) LOAN AMOUNT.—Notwithstanding 

5 paragraph (2)(A)(ii), a loan under this section 

6 for use in a low-income community (as that 

7 term is used in section 501(d)(3)(A)) may be for 

8 not more than $4,000,000. 

9 ‘‘(B) SIZE STANDARDS.—For purposes of 

10 determining eligibility for a loan under this sec11 tion for use in a low-income community (as that 

12 term is used in section 501(d)(3)(A)), the size 

13 standards established under section 3 of the 

14 Small Business Act (15 U.S.C. 632) shall be in15 creased by 25 percent. 

16 ‘‘(C) PERSONAL LIQUIDITY.— 

17 ‘‘(i) IN GENERAL.—For any loan 

18 under this section for use in a low-income 

19 community (as that term is used in section 

20 501(d)(3)(A)), the amount of personal re21 sources of an owner that are excluded from 

22 the amount required to be provided to re23 duce the portion of the project funded by the 

24 Administration shall be not less than 25 


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1 percent more than that required for other 

2 loans under this section. 

3 ‘‘(ii) DEFINITION.—In this subpara4 graph, the term ‘owner’ means any person 

5 that owns not less than 20 percent of the eq6 uity of the small business concern applying 

7 for the applicable loan.’’. 

8 SEC. 406. COMBINATIONS OF CERTAIN GOALS. 

9 Section 501(e) of the Small Business Investment Act 

10 of 1958 (15 U.S.C. 695(e)) is amended by adding at the 

11 end the following: 

12 ‘‘(7) A small business concern that is unconditionally 

13 owned by more than 1 individual, or a corporation, the 

14 stock of which is owned by more than 1 individual, shall 

15 be deemed to have achieved a public policy goal required 

16 under subsection (d)(3) if a combined ownership share of 

17 not less than 51 percent is held by individuals who are in 

18 1 of, or a combination of, the groups described in subpara19 graph (C) or (E) of subsection (d)(3).’’. 

20 SEC. 407. REFINANCING UNDER THE LOCAL DEVELOPMENT 

21 BUSINESS LOAN PROGRAM. 

22 Section 502 of the Small Business Investment Act of 

23 1958 (15 U.S.C. 696), as amended by this Act, is amended 

24 by adding at the end the following: 

25 ‘‘(7) PERMISSIBLE DEBT REFINANCING.— 


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1 ‘‘(A) IN GENERAL.—Any financing ap2 proved under this title may include a limited 

3 amount of debt refinancing. 

4 ‘‘(B) EXPANSIONS.—If the project involves 

5 expansion of a small business concern which has 

6 existing indebtedness collateralized by fixed as7 sets, any amount of existing indebtedness that 

does not exceed 1 8 ⁄2 of the project cost of the ex9 pansion may be refinanced and added to the ex10 pansion cost, if— 

11 ‘‘(i) the proceeds of the indebtedness 

12 were used to acquire land, including a 

13 building situated thereon, to construct a 

14 building thereon, or to purchase equipment; 

15 ‘‘(ii) the borrower has been current on 

16 all payments due on the existing debt for 

17 not less than 1 year preceding the date of 

18 refinancing; and 

19 ‘‘(iii) the financing under section 504 

20 will provide better terms or rate of interest 

21 than exists on the debt at the time of refi22 nancing.’’. 


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1 SEC. 408. TECHNICAL CORRECTION. 

2 Section 501(e)(2) of the Small Business Investment 

3 Act of 1958 (15 U.S.C. 695(e)(2)) is amended by striking 

4 ‘‘outstanding’’. 

5 SEC. 409. DEFINITIONS FOR THE SMALL BUSINESS INVEST6 MENT ACT OF 1958. 

7 Section 103 of the Small Business Investment Act of 

8 1958 (15 U.S.C. 662) is amended— 

9 (1) by striking paragraph (6) and inserting the 

10 following: 

11 ‘‘(6) the term ‘development company’ means an 

12 entity incorporated under State law with the author13 ity to promote and assist the growth and development 

14 of small business concerns in the areas in which it is 

15 authorized to operate by the Administrator;’’; 

16 (2) in paragraph (16), by striking ‘‘and’’ at the 

17 end; 

18 (3) in paragraph (17), by striking the period at 

19 the end and inserting ‘‘; and’’; and 

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

21 ‘‘(18) the term ‘certified development company’ 

22 means a development company that the Adminis23 trator has certified meets the criteria of section 506.’’. 


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1 SEC. 410. REPEAL OF SUNSET ON RESERVE REQUIREMENTS 

2 FOR PREMIER CERTIFIED LENDERS. 

3 Section 508(c)(6)(B) of the Small Business Investment 

4 Act of 1958 (15 U.S.C. 697e(c)(6)(B)) is amended— 

5 (1) in the subparagraph heading, by striking 

6 ‘‘TEMPORARY REDUCTION’’ and inserting ‘‘REDUC7 TION’’; and 

8 (2) by striking ‘‘Notwithstanding subparagraph 

9 (A), during the 2-year period beginning on the date 

10 that is 90 days after the date of enactment of this 

11 subparagraph, the’’ and inserting ‘‘The’’. 

12 SEC. 411. CERTIFIED DEVELOPMENT COMPANIES. 

13 Section 506 of the Small Business Investment Act of 

14 1958 (15 U.S.C. 697c) is amended— 

15 (1) in the section heading, by striking ‘‘RE16 STRICTIONS ON DEVELOPMENT COMPANY AS17 SISTANCE’’ and inserting ‘‘CERTIFIED DEVELOP18 MENT COMPANIES’’; and 

19 (2) by inserting before ‘‘Notwithstanding any 

20 other provision of law’’ the following: 

21 ‘‘(a) AUTHORITY TO ISSUE DEBENTURES.—A develop22 ment company may issue debentures under this title if the 

23 Administrator certifies that the company meets the fol24 lowing criteria: 

25 ‘‘(1) SIZE.— 


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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subparagraph (B), the development company 

3 shall be a small business concern with fewer than 

4 500 employees, and shall not be under the control 

5 of any entity that does not meet the size stand6 ards established by the Administrator for a small 

7 business concern. 

8 ‘‘(B) EXCEPTION.—Any development com9 pany that was certified by the Administrator be10 fore December 31, 2005, may continue to issue 

11 debentures under this title. 

12 ‘‘(2) PRIMARY PURPOSE.—The primary purpose 

13 of the development company shall be to benefit the 

14 community by fostering economic development to cre15 ate and preserve jobs and stimulate private invest16 ment. 

17 ‘‘(3) PRIMARY FUNCTION.—A primary function 

18 of the development company shall be to accomplish its 

19 purpose by providing long-term financing to small 

20 business concerns under the Local Development Busi21 ness Loan Program. The development company shall 

22 also provide or support other community and local 

23 economic development activities to assist the commu24 nity. 

25 ‘‘(4) NONPROFIT STATUS.— 


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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subparagraph (B), the development company 

3 shall be a nonprofit corporation. 

4 ‘‘(B) EXCEPTION.—A development company 

5 certified by the Administrator before January 1, 

6 1987, may continue to issue debentures under 

7 this title and retain its status as a for-profit en8 terprise. 

9 ‘‘(5) GOOD STANDING.—The development com10 pany— 

11 ‘‘(A) shall be in good standing in the State 

12 in which such company is incorporated and in 

13 any other State in which it conducts business; 

14 and 

15 ‘‘(B) shall be in compliance with all laws, 

16 including taxation requirements, in the State in 

17 which such company is incorporated and in any 

18 other State in which it conducts business. 

19 ‘‘(6) MEMBERSHIP OF DEVELOPMENT COM20 PANY.—There shall be— 

21 ‘‘(A) not fewer than 25 members of the de22 velopment company (or owners or stockholders, if 

23 the corporation is a for-profit entity), none of 

24 whom may own or control more than 10 percent 

25 of the voting membership of the company; and 


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1 ‘‘(B) at least 1 member of the development 

2 company (none of whom is in a position to con3 trol the development company) from each of the 

4 following: 

5 ‘‘(i) Government organizations that are 

6 responsible for economic development. 

7 ‘‘(ii) Financial institutions that pro8 vide commercial long-term fixed asset fi9 nancing. 

10 ‘‘(iii) Community organizations that 

11 are dedicated to economic development. 

12 ‘‘(iv) Businesses. 

13 ‘‘(7) BOARD OF DIRECTORS.— 

14 ‘‘(A) IN GENERAL.—The development com15 pany shall have a board of directors. 

16 ‘‘(B) MEMBERS OF BOARD.—Each member 

17 of the board of directors shall be— 

18 ‘‘(i) a member of the development com19 pany; and 

20 ‘‘(ii) elected by a majority of the mem21 bers of the development company. 

22 ‘‘(C) REPRESENTATION OF ORGANIZATIONS

23 AND INSTITUTIONS.— 

24 ‘‘(i) IN GENERAL.—There shall be at 

25 least 1 member of the board of directors 


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1 from not fewer than 3 of the 4 organizations 

2 and institutions described in paragraph 

3 (6)(B), none of whom is in a position to 

4 control the development company. 

5 ‘‘(ii) MAXIMUM PERCENTAGE.—Not 

6 more than 50 percent of the members of the 

7 board of directors shall be from any 1 of the 

8 organizations and institutions described in 

9 paragraph (6)(B). 

10 ‘‘(D) MEETINGS.—The board of directors of 

11 the development company shall meet on a reg12 ular basis to make policy decisions for such com13 pany. 

14 ‘‘(8) PROFESSIONAL MANAGEMENT AND STAFF.— 

15 ‘‘(A) IN GENERAL.—The development com16 pany shall have full-time professional manage17 ment, including a chief executive officer to man18 age daily operations and a full-time professional 

19 staff qualified to market the Local Development 

20 Business Loan Program and handle all aspects 

21 of loan approval and servicing, including liq22 uidation, if appropriate. 

23 ‘‘(B) INDEPENDENT MANAGEMENT AND OP24 ERATION.—Except as provided in paragraph (9), 

25 the development company shall be independently 


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1 managed and operated to pursue the economic 

2 development purpose of the company and shall 

3 employ directly the chief executive officer. 

4 ‘‘(9) MANAGEMENT AND OPERATION EXCEP5 TIONS.— 

6 ‘‘(A) AFFILIATION.—A development com7 pany may be an affiliate of another local non8 profit service corporation (other than a develop9 ment company), a purpose of which is to support 

10 economic development in the area in which the 

11 development company operates. 

12 ‘‘(B) STAFFING.—A development company 

13 may satisfy the requirement for full-time profes14 sional staff under paragraph (8)(A) by con15 tracting for the required staffing with— 

16 ‘‘(i) a local nonprofit service corpora17 tion; 

18 ‘‘(ii) a nonprofit affiliate of a local 

19 nonprofit service corporation; 

20 ‘‘(iii) an entity wholly or partially op21 erated by a governmental agency; or 

22 ‘‘(iv) another entity approved by the 

23 Administrator. 

24 ‘‘(C) DIRECTORS.—A development company 

25 and a local nonprofit service corporation with 


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1 which it is affiliated may have in common some, 

2 but not all, members of their respective board of 

3 directors. 

4 ‘‘(D) RURAL AREAS.—A development com5 pany in a rural area may satisfy the require6 ments of a full-time professional staff and profes7 sional management ability under paragraph 

8 (8)(A) by contracting for such services with an9 other certified development company that— 

10 ‘‘(i) has such staff and management 

11 ability; and 

12 ‘‘(ii) is located in the same State as the 

13 development company or in a State that is 

14 contiguous to the State in which the devel15 opment company is located. 

16 ‘‘(E) PREVIOUSLY CERTIFIED.—A develop17 ment company that, on or before December 31, 

18 2005, was certified by the Administrator and 

19 had contracted with a for-profit company to pro20 vide staffing and management services, may con21 tinue to do so. 

22 ‘‘(b) USE OF EXCESS FUNDS.— 

23 ‘‘(1) IN GENERAL.—Any funds generated by a 

24 certified development company from making loans 

25 under section 503 or 504 that remain unexpended 


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1 after payment of staff, operating, and overhead ex2 penses shall be used by the certified development com3 pany for— 

4 ‘‘(A) operating reserves; 

5 ‘‘(B) expanding the area in which the cer6 tified development company operates through the 

7 methods authorized by this Act; or 

8 ‘‘(C) investment in other community and 

9 local economic development activity or commu10 nity development primarily in the State from 

11 which such funds were generated. 

12 ‘‘(2) REPORTING.—Not later than July 1, 2008, 

13 and every year thereafter, the Administrator shall 

14 compile and submit to Congress a report regarding 

15 the economic and community development activities 

16 of each certified development company during the fis17 cal year before the year of that report, other than 

18 loans made under this title. 

19 ‘‘(c) ETHICAL REQUIREMENTS.— 

20 ‘‘(1) IN GENERAL.—A certified development com21 pany and the officers, employees, and other staff of 

22 the company shall at all times act ethically and avoid 

23 activities which constitute a conflict of interest or ap24 pear to constitute a conflict of interest. 


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1 ‘‘(2) PROHIBITED CONFLICT IN PROJECT

2 LOANS.— 

3 ‘‘(A) IN GENERAL.—No certified develop4 ment company may— 

5 ‘‘(i) recommend or approve a guar6 antee of a debenture by the Administrator 

7 under the Local Business Development Loan 

8 Program that is collateralized by a second 

9 lien position on the property being con10 structed or acquired; and 

11 ‘‘(ii) provide, or be affiliated with a 

12 corporation or other entity which provides, 

13 financing collateralized by a first lien on 

14 the same property. 

15 ‘‘(B) EXCEPTION.—During the 2-year pe16 riod beginning on the date of enactment of the 

17 Small Business Lending Reauthorization and 

18 Improvements Act of 2007, a certified develop19 ment company that was participating as a first 

20 mortgage lender for the Local Business Develop21 ment Loan Program in either of fiscal years 

22 2004 or 2005 may continue to do so. 

23 ‘‘(3) OTHER ECONOMIC DEVELOPMENT ACTIVI24 TIES.—It shall not be a conflict of interest for a cer25 tified development company to operate multiple proVerDate Aug 31 2005 00:08 Sep 13, 2007 Jkt 059200 PO 00000 Frm 00145 Fmt 6652 Sfmt 6203 E:\BILLS\S1256.RS S1256

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1 grams to assist small business concerns as part of car2 rying out its economic development purpose. 

3 ‘‘(d) MULTISTATE OPERATIONS.— 

4 ‘‘(1) AUTHORIZATION.—Notwithstanding any 

5 other provision of law, the Administrator shall permit 

6 a certified development company to make loans in 

7 any State that is contiguous to the State of incorpo8 ration of that certified development company, only if 

9 such company— 

10 ‘‘(A) is— 

11 ‘‘(i) an accredited lender under section 

12 507; or 

13 ‘‘(ii) a premier certified lender under 

14 section 508; 

15 ‘‘(B) has a membership that contains, from 

16 each of the States in which it operates, not fewer 

17 than 25 members who reside in that State; 

18 ‘‘(C) has a board of directors that contains 

19 not fewer than 2 members from each State in 

20 which the company makes loans; 

21 ‘‘(D) maintains not fewer than 1 loan com22 mittee, which shall have not fewer than 1 mem23 ber from each State in which the company makes 

24 loans; and 


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1 ‘‘(E) submits to the Administrator, in writ2 ing— 

3 ‘‘(i) a notice of the intention of the 

4 company to make loans in multiple States; 

5 ‘‘(ii) the names of the States in which 

6 the company intends to make loans; and 

7 ‘‘(iii) a detailed statement of how the 

8 company will comply with this paragraph, 

9 including a list of the members described in 

10 subparagraph (B). 

11 ‘‘(2) REVIEW.—The Administrator shall verify 

12 whether a certified development company satisfies the 

13 requirements of paragraph (1) on an expedited basis 

14 and, not later than 30 days after the date on which 

15 the Administrator receives the statement described in 

16 paragraph (1)(E)(iii), the Administrator shall deter17 mine whether such company satisfies such criteria 

18 and provide notice to such company. 

19 ‘‘(3) LOAN COMMITTEE PARTICIPATION.—For 

20 any loan made by a company described in paragraph 

21 (1), not fewer than 1 member of the loan committee 

22 from the State in which the loan is to be made shall 

23 participate in the review of such loan. 

24 ‘‘(4) AGGREGATE ACCOUNTING.—A company de25 scribed in paragraph (1) may maintain an aggregate 


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1 accounting of all revenue and expenses of the com2 pany for purposes of this title. 

3 ‘‘(5) SERVICE TO CERTIFIED DEVELOPMENT COM4 PANIES.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subparagraph (B), an associate of a certified de7 velopment company may not be an officer, direc8 tor, or manager of more than 1 certified develop9 ment company. 

10 ‘‘(B) EXCEPTION.— 

11 ‘‘(i) IN GENERAL.—Notwithstanding 

12 any other provision of law, a person who is 

13 serving on the board of directors of a cer14 tified development company may serve on 

15 the board of directors, but not as an officer, 

16 of not more than 1 additional certified de17 velopment company, if— 

18 ‘‘(I) such companies are not lo19 cated in the same State; 

20 ‘‘(II) each board of directors de21 termines that the service by such per22 son on such board does not constitute 

23 a conflict of interest; and 

24 ‘‘(III) there is not a contractual 

25 relationship between— 


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1 ‘‘(aa) the person and such 

2 additional certified development 

3 company, except for the contract 

4 of such person to serve as a mem5 ber of the board of directors of 

6 such company, if any; or 

7 ‘‘(bb) the certified develop8 ment companies of which such 

9 person is a member of the board 

10 of directors. 

11 ‘‘(ii) MAXIMUM NUMBER OF MEM12 BERS.—A certified development company 

13 may not have more than 1 member of the 

14 board of directors of such company in com15 mon with any other board of directors of a 

16 certified development company. 

17 ‘‘(C) DEFINITION.—As used in this para18 graph, the term ‘associate of a certified develop19 ment company’ has the meaning given the term 

20 ‘Associate of a CDC’ in section 120.10 of title 13, 

21 Code of Federal Regulations (or any cor22 responding similar regulation or ruling). 

23 ‘‘(6) LOCAL JOB CREATION REQUIREMENTS.— 

24 ‘‘(A) IN GENERAL.—Subject to subpara25 graph (B), any certified development company 


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1 making loans in multiple States shall satisfy 

2 any applicable job creation or retention require3 ments separately for each such State. Such a 

4 company shall not count jobs created or retained 

5 in 1 State towards any applicable job creation 

6 or retention requirement in another State. 

7 ‘‘(B) APPLICABILITY.—This paragraph 

8 shall apply to a certified development company 

9 relating to a State beginning 2 years after the 

10 date that certified development company began 

11 making loans in that State. 

12 ‘‘(7) CONTIGUOUS STATES.—For purposes of this 

13 subsection, the States of Alaska and Hawaii shall be 

14 deemed to be contiguous to any State abutting the Pa15 cific Ocean. 

16 ‘‘(8) LOCAL ECONOMIC AREA REQUIREMENT AND

17 EXEMPTION.— 

18 ‘‘(A) DEFINITION.—In this paragraph, the 

19 term ‘local economic area’ means an area, as de20 termined by the Administrator, that— 

21 ‘‘(i) is in a State other than the State 

22 in which a development company is incor23 porated; 

24 ‘‘(ii) shares a border with the area of 

25 operations of the development company; and 


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1 ‘‘(iii) is a part of a local trade area 

2 (including a city that is bisected by a State 

3 line and a metropolitan statistical area that 

4 is bisected by a State line) that is contig5 uous to the area of operations of the devel6 opment company. 

7 ‘‘(B) EXEMPTION.—An applicant operating 

8 in a local economic area shall not be considered 

9 to be operating in a multistate area, and shall 

10 not be required to comply with the requirements 

11 for multistate operation. 

12 ‘‘(e) RESTRICTIONS ON DEVELOPMENT COMPANY AS13 SISTANCE.—’’. 

14 SEC. 412. CONFORMING AMENDMENTS. 

15 Section 503 of the Small Business Investment Act of 

16 1958 (15 U.S.C. 697) is amended— 

17 (1) in subsection (a)(1), by striking ‘‘qualified 

18 State or local development company’’ and inserting 

19 ‘‘certified development company’’; and 

20 (2) by striking subsection (e) and inserting the 

21 following: 

22 ‘‘(e) SECTION 7(a) LOANS.—Notwithstanding any 

23 other provision of law, a certified development company is 

24 authorized to prepare applications for deferred participa25 tion loans under section 7(a) of the Small Business Act, 


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1 to service such loans, and to charge a reasonable fee for serv2 icing such loans.’’. 

3 SEC. 413. CLOSING COSTS. 

4 Section 503(b) of the Small Business Investment Act 

5 of 1958 (15 U.S.C. 697(b)) is amended by striking para6 graph (4) and inserting the following: 

7 ‘‘(4) the aggregate amount of such debenture does 

8 not exceed the amount of the loans to be made from 

9 the proceeds of such debenture plus, at the election of 

10 the borrower, other amounts attributable to the ad11 ministrative and closing costs of such loans, except for 

12 the attorney fees of the borrower;’’. 

13 SEC. 414. DEFINITION OF RURAL. 

14 Section 501 of the Small Business Investment Act of 

15 1958 (15 U.S.C. 695) is amended by adding at the end the 

16 following: 

17 ‘‘(f) As used in this title, the term ‘rural’ includes any 

18 area that is not— 

19 ‘‘(1) a city or town that has a population greater 

20 than 50,000 inhabitants; or 

21 ‘‘(2) the urbanized area contiguous and adjacent 

22 to a city or town described in paragraph (1).’’. 

23 SEC. 415. REGULATIONS AND EFFECTIVE DATE. 

24 (a) IN GENERAL.—Except as provided in subsection 

25 (b), the Administrator shall— 


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1 (1) publish proposed rules to implement this title 

2 and the amendments made by this title, not later 

3 than 120 days after the date of enactment of this Act; 

4 and 

5 (2) publish such rules in final form not later 

6 than 120 days after the date of publication under 

7 paragraph (1). 

8 (b) MULTISTATE OPERATIONS.—As soon as is prac9 ticable after the date of enactment of this Act, the Adminis10 trator shall promulgate regulations to implement section 

11 506(d) of the Small Business Investment Act of 1958, as 

12 added by this title. Such regulations shall become effective 

13 not later than 120 days after the date of enactment of this 

14 Act. 

15 (c) EFFECTIVE DATE.— 

16 (1) IN GENERAL.—Except as otherwise specifi17 cally provided this title, this title and the amend18 ments made by this title shall become effective 240 

19 days after the date of enactment of this Act, regardless 

20 of whether the Administrator has promulgated the 

21 regulations required under subsection (a). 

22 (2) MULTISTATE OPERATIONS.—Section 506(d) 

23 of the Small Business Investment Act of 1958, as 

24 added by this title, shall become effective 120 days 

25 after the date of enactment of this Act, regardless of 


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1 whether the Administrator has promulgated the regu2 lations required under subsection (b). 

3 SEC. 416. LIMITATION ON TIME FOR FINAL APPROVAL OF 

4 COMPANIES. 

5 Section 354(d) of the Small Business Investment Act 

6 of 1958 (15 U.S.C. 689c(d)) is amended by striking ‘‘a pe7 riod of time, not to exceed 2 years,’’ and inserting ‘‘2 

8 years’’. 

9 SEC. 417. CHILD CARE LENDING PILOT PROGRAM. 

10 (a) CHILD CARE LENDING PILOT PROGRAM.—Section 

11 502 of the Small Business Investment Act of 1958 (15 

12 U.S.C. 696), as amended by this Act, is amended— 

13 (1) in the matter preceding paragraph (1)— 

14 (A) by striking ‘‘The Administration’’ and 

15 inserting the following: 

16 ‘‘(a) AUTHORIZATION.—The Administration’’; 

17 (B) by striking ‘‘and such loans’’ and in18 serting ‘‘. Such loans’’; 

19 (C) by striking ‘‘: Provided, however, That 

20 the foregoing powers shall be subject to the fol21 lowing restrictions and limitations:’’ and insert22 ing a period; and 

23 (D) by adding at the end the following: 


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1 ‘‘(b) RESTRICTIONS AND LIMITATIONS.—The authority 

2 under subsection (a) shall be subject to the following restric3 tions and limitations:’’; and 

4 (2) in subsection (b)(1), as so redesignated— 

5 (A) by inserting after ‘‘USE OF PRO6 CEEDS.—’’ the following: 

7 ‘‘(A) IN GENERAL.—’’; and 

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

9 ‘‘(B) LOANS TO SMALL, NONPROFIT CHILD

10 CARE BUSINESSES.— 

11 ‘‘(i) IN GENERAL.—Notwithstanding 

12 subsection (a), the proceeds of any loan de13 scribed in subsection (a) may be used by the 

14 certified development company to assist a 

15 small, nonprofit child care business, if— 

16 ‘‘(I) the loan is used for a sound 

17 business purpose that has been ap18 proved by the Administrator; 

19 ‘‘(II) each such business meets all 

20 of the same eligibility requirements ap21 plicable to for-profit businesses under 

22 this title, except for status as a for23 profit business; 

24 ‘‘(III) 1 or more individuals has 

25 personally guaranteed the loan; 


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1 ‘‘(IV) each such business has clear 

2 and singular title to the collateral for 

3 the loan; 

4 ‘‘(V) each such business has suffi5 cient cash flow from its operations to 

6 meet its obligations on the loan and its 

7 normal and reasonable operating ex8 penses; and 

9 ‘‘(VI) each such business is located 

10 in Arkansas, Connecticut, Georgia, In11 diana, Iowa, Louisiana, Maine, Mary12 land, Massachusetts, Michigan, Min13 nesota, Missouri, Montana, North 

14 Carolina, South Dakota, Tennessee, 

15 Washington, or Wyoming. 

16 ‘‘(ii) LIMITATION ON VOLUME.—Not 

17 more than 7 percent of the total number of 

18 loans guaranteed in any fiscal year under 

19 this title may be awarded under this sub20 paragraph. 

21 ‘‘(iii) DEFINED TERM.—For purposes 

22 of this subparagraph, the term ‘small, non23 profit child care business’ means an estab24 lishment that— 


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1 ‘‘(I) is organized in accordance 

2 with section 501(c)(3) of the Internal 

3 Revenue Code of 1986; 

4 ‘‘(II) is primarily engaged in pro5 viding child care for infants, toddlers, 

6 pre-school, or pre-kindergarten children 

7 (or any combination thereof), and may 

8 provide care for older children when 

9 they are not in school, and may offer 

10 pre-kindergarten educational pro11 grams; 

12 ‘‘(III) including its affiliates, has 

13 tangible net worth that does not exceed 

14 $7,000,000, and has average net in15 come (excluding any carryover losses) 

16 for the 2 completed fiscal years pre17 ceding the date of the application for 

18 assistance under this subparagraph 

19 that does not exceed $2,500,000; and 

20 ‘‘(IV) is licensed as a child care 

21 provider by the State, insular area, or 

22 the District of Columbia, in which it is 

23 located. 

24 ‘‘(iv) SUNSET PROVISION.—This sub25 paragraph shall cease to have effect on SepVerDate Aug 31 2005 00:08 Sep 13, 2007 Jkt 059200 PO 00000 Frm 00157 Fmt 6652 Sfmt 6203 E:\BILLS\S1256.RS S1256

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1 tember 30, 2010, and shall apply to all 

2 loans authorized under this subparagraph 

3 that are applied for, approved, or disbursed 

4 during the period beginning on the date of 

5 enactment of this subparagraph and ending 

6 on September 30, 2010.’’. 

7 (b) REPORTS.— 

8 (1) SMALL BUSINESS ADMINISTRATION.— 

9 (A) IN GENERAL.—Not later than 6 months 

10 after the date of enactment of this Act, and every 

11 6 months thereafter until September 30, 2010, 

12 the Administrator shall submit a report on the 

13 implementation of the program under section 

14 502(b)(1)(B) of the Small Business Investment 

15 Act of 1958, as added by this Act, to— 

16 (i) the Committee on Small Business 

17 and Entrepreneurship of the Senate; and 

18 (ii) the Committee on Small Business 

19 of the House of Representatives. 

20 (B) CONTENTS.—Each report under sub21 paragraph (A) shall contain— 

22 (i) the date on which the program is 

23 implemented; 

24 (ii) the date on which the rules are 

25 issued under subsection (c); and 


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1 (iii) the number and dollar amount of 

2 loans under the program applied for, ap3 proved, and disbursed during the 6-month 

4 period ending on the date of that report— 

5 (I) with respect to nonprofit child 

6 care businesses; and 

7 (II) with respect to for-profit child 

8 care businesses. 

9 (2) GOVERNMENT ACCOUNTABILITY OFFICE.— 

10 (A) IN GENERAL.—Not later than March 

11 31, 2010, the Comptroller General of the United 

12 States shall submit a report on the child care 

13 small business loans authorized by section 

14 502(b)(1)(B) of the Small Business Investment 

15 Act of 1958, as added by this Act, to— 

16 (i) the Committee on Small Business 

17 and Entrepreneurship of the Senate; and 

18 (ii) the Committee on Small Business 

19 of the House of Representatives. 

20 (B) CONTENTS.—The report under subpara21 graph (A) shall— 

22 (i) contain information gathered dur23 ing the first 2 years of the loan program, 

24 including— 


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1 (I) an evaluation of the timeliness 

2 of the implementation of the loan pro3 gram; 

4 (II) a description of the effective5 ness and ease with which certified de6 velopment companies, lenders, and 

7 small business concerns have partici8 pated in the loan program; 

9 (III) a description and assessment 

10 of how the loan program was marketed; 

11 (IV) by location (State, insular 

12 area, and the District of Columbia) 

13 and in total, the number of child care 

14 small businesses, categorized by status 

15 as a for-profit or nonprofit business, 

16 that— 

17 (aa) applied for a loan under 

18 the program (and whether it was 

19 a new or expanding child care 

20 provider); 

21 (bb) were approved for a 

22 loan under the program; and 

23 (cc) received a loan disburse24 ment under the program (and 


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1 whether they are a new or ex2 panding child care provider); and 

3 (V) with respect to businesses de4 scribed under subclause (IV)(cc)— 

5 (aa) the number of such busi6 nesses in each State, insular area, 

7 and the District of Columbia, as 

8 of the year of enactment of this 

9 Act; 

10 (bb) the total amount loaned 

11 to such businesses under the pro12 gram; 

13 (cc) the total number of loans 

14 to such businesses under the pro15 gram; 

16 (dd) the average loan amount 

17 and term; 

18 (ee) the currency rate, delin19 quencies, defaults, and losses of 

20 the loans; 

21 (ff) the number and percent 

22 of children served who receive sub23 sidized assistance; and 


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1 (gg) the number and percent 

2 of children served who are low in3 come; and 

4 (ii) assess whether there are govern5 ment programs in place making loans or 

6 providing grant funding to nonprofit child 

7 care centers to address child care shortages. 

8 (C) ACCESS TO INFORMATION.— 

9 (i) IN GENERAL.—The Administration 

10 shall collect and maintain such information 

11 as may be necessary to carry out this para12 graph from certified development companies 

13 and child care providers, and such compa14 nies and providers shall comply with a re15 quest for information from the Administra16 tion for that purpose. 

17 (ii) PROVISION OF INFORMATION TO

18 GOVERNMENT ACCOUNTABILITY OFFICE.— 

19 The Administration shall provide informa20 tion collected under this subparagraph to 

21 the Comptroller General of the United 

22 States for purposes of the report required by 

23 this paragraph. 

24 (c) RULEMAKING AUTHORITY.—Not later than 120 

25 days after the date of enactment of this Act, the AdminisVerDate Aug 31 2005 00:08 Sep 13, 2007 Jkt 059200 PO 00000 Frm 00162 Fmt 6652 Sfmt 6203 E:\BILLS\S1256.RS S1256

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1 trator shall issue final rules to carry out the loan program 

2 authorized by section 502(b)(1)(B) of the Small Business 

3 Investment Act of 1958, as added by this Act. 

4 SEC. 418. DEBENTURE REPAYMENT. 

5 Section 503(a) of the Small Business Investment Act 

6 of 1958 (15 U.S.C. 697(a)) is amended by adding at the 

7 end the following: 

8 ‘‘(5) Any debenture that is issued under this section 

9 shall provide for the payment of principal and interest on 

10 a semiannual basis.’’. 

11 SEC. 419. REAL ESTATE APPRAISALS. 

12 (a) IN GENERAL.—Section 7(a)(29) of the Small Busi13 ness Act (15 U.S.C. 636(a)(29)) is amended to read as fol14 lows: 

15 ‘‘(29) REAL ESTATE APPRAISALS.— 

16 ‘‘(A) IN GENERAL.—For any loan under 

17 this subsection that is secured by commercial 

18 real property, an appraisal of that property by 

19 an appraiser licensed or certified by the State in 

20 which that property is located— 

21 ‘‘(i) shall be required by the Adminis22 trator if the estimated value of that prop23 erty is more than $400,000; and 

24 ‘‘(ii) may be required by the Adminis25 trator or the lender if— 


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1 ‘‘(I) the estimated value of that 

2 property is less than $400,000; and 

3 ‘‘(II) an appraisal is necessary 

4 for the appropriate evaluation of cred5 itworthiness. 

6 ‘‘(B) ADJUSTMENT.—The Administrator— 

7 ‘‘(i) shall periodically adjust the 

8 amount under subparagraph (A) to account 

9 for the effects of inflation; and 

10 ‘‘(ii) may not make an adjustment 

11 under clause (i) in an amount less than 

12 $50,000.’’. 

13 (b) CONFORMING AMENDMENT.—Section 502(b)(3)(E), 

14 as so designated by section 417(a) of this Act, is amended— 

15 (1) in clause (ii), by striking ‘‘$250,000’’ each 

16 place that term appears and inserting ‘‘$400,000’’; 

17 and 

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

19 ‘‘(iii) ADJUSTMENT.—The Adminis20 trator— 

21 ‘‘(I) shall periodically adjust the 

22 amount under clause (ii) to account 

23 for the effects of inflation; and 


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1 ‘‘(II) may not make an adjust2 ment under subclause (I) in an 

3 amount less than $50,000.’’. 


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Calendar No. 352 

110TH CONGRESS 

1ST SESSION S. 1256 

[Report No. 110

–154] 

A BILL 

To amend the Small Business Act to reauthorize 

poses. loan programs under that Act, and for other purSEPTEMBER 12, 2007 

Reported with an amendment 


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