II 

110TH CONGRESS 

1ST SESSION S. 1256 

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, and Mr. LEVIN) introduced the following bill; which was read twice and referred to the Committee on Small 

Business and Entrepreneurship 

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’’. 

6 SEC. 2. TABLE OF CONTENTS. 

7 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 


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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. 

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; 


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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 guar6 anteed 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 sub14 section (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 

22 loans. 

23 ‘‘(h) GENERAL BUSINESS LOANS.—The Administra24 tion is authorized to make, as provided in section 7(a)— 


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

2 in fiscal year 2007; 

3 ‘‘(2) $19,000,000,000 in general business loans 

4 in fiscal year 2008; 

5 ‘‘(3) $20,000,000,000 in general business loans 

6 in fiscal year 2009; and 

7 ‘‘(4) $21,000,000,000 in general business loans 

8 in fiscal year 2010. 

9 ‘‘(i) CERTIFIED DEVELOPMENT COMPANY

10 FINANCINGS.—The Administration is authorized to make, 

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

12 504 of the Small Business Investment Act of 1958 (15 

13 U.S.C. 697a)— 

14 ‘‘(1) $8,000,000,000 in certified development 

15 company financings in fiscal year 2007; 

16 ‘‘(2) $8,500,000,000 in certified development 

17 company financings in fiscal year 2008; 

18 ‘‘(3) $9,000,000,000 in certified development 

19 company financings in fiscal year 2009; and 

20 ‘‘(4) $9,500,000,000 in certified development 

21 company financings in fiscal year 2010. 

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

23 years 2007 through 2010, the Administration is author24 ized to make $500,000,000 in loans as provided in section 

25 7(a)(21). 


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1 ‘‘(k) PRIME PROGRAM.— 

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

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

4 each of fiscal years 2007 through 2010 to carry out 

5 section 37, which shall remain available until ex6 pended. 

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

8 amount authorized under paragraph (1), there are 

9 authorized to be appropriated to the Administrator 

10 $2,000,000 each of fiscal years 2007 through 2010 

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

12 available until expended. 

13 ‘‘(l) ADDITIONAL AUTHORIZATIONS AND LIMITA14 TIONS.— 

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

16 appropriated to the Administration for each of fiscal 

17 years 2007 through 2010 such sums as may be nec18 essary to carry out the provisions of this Act not 

19 elsewhere provided for, including administrative ex20 penses and necessary loan capital for disaster loans 

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

22 Business Investment Act of 1958, including salaries 

23 and expenses of the Administration. 


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

2 provision of this section, for each of fiscal years 

3 2007 through 2010— 

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

5 loan capital for the loan program authorized by 

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

7 by transfer from another Federal department or 

8 agency to the Administration, unless the pro9 gram level authorized for general business loans 

10 under subsection (h) is fully funded for that fis11 cal year; and 

12 ‘‘(B) the Administration may not approve 

13 loans on its own behalf or on behalf of any 

14 other Federal department or agency, by con15 tract or otherwise, under terms and conditions 

16 other than those specifically authorized under 

17 this Act or the Small Business Investment Act 

18 of 1958, except that it may approve loans under 

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

20 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. 

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 22:13 May 03, 2007 Jkt 059200 PO 00000 Frm 00063 Fmt 6652 Sfmt 6201 E:\BILLS\S1256.IS S1256

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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 22:13 May 03, 2007 Jkt 059200 PO 00000 Frm 00077 Fmt 6652 Sfmt 6201 E:\BILLS\S1256.IS 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. 

Æ 


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