I 

110TH CONGRESS 

1ST SESSION H. R. 1332 

To improve the access to capital programs of the Small Business 

Administration, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 6, 2007 

Ms. BEAN (for herself, Mr. CHABOT, and Ms. VELA ́ZQUEZ) introduced the 

following bill; which was referred to the Committee on Small Business 

A BILL 

To improve the access to capital programs of the Small 

Business Administration, 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; TABLE OF CONTENTS. 

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

5 ‘‘Small Business Lending Improvements Act of 2007’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—7(A) PROGRAM 

Sec. 101. Authority for fee contributions. 

Sec. 102. Rural Lending Outreach Program. 

Sec. 103. Community Express program made permanent. 


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Sec. 104. Medical Professionals in Designated Shortage Areas Program. 

Sec. 105. Increased Veteran Participation Program. 

Sec. 106. Alternative size standard. 

Sec. 107. Support to regional offices. 

TITLE II—504 PROGRAM 

Sec. 201. Certified Development Company Economic Development Loan Program. 

Sec. 202. Definitions. 

Sec. 203. Eligibility of development companies to be designated as certified development companies. 

Sec. 204. Definition of rural areas. 

Sec. 205. Businesses in low-income areas. 

Sec. 206. Combinations of certain goals. 

Sec. 207. Refinancing. 

Sec. 208. Additional equity injections. 

Sec. 209. Loan liquidations. 

Sec. 210. Closing costs. 

Sec. 211. Maximum 504 and 7(a) loan eligibility. 

Sec. 212. Eligibility for energy efficiency projects. 

Sec. 213. Loans for plant projects used for energy-efficient purposes. 

Sec. 214. Extension of period during which loss reserves of premier certified 

lenders determined on the basis of outstanding balance of debentures. 

Sec. 215. Extension of alternative loss reserve pilot program for certain premier 

certified lenders. 

1 TITLE I—7(A) PROGRAM 

2 SEC. 101. AUTHORITY FOR FEE CONTRIBUTIONS. 

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

4 636(a)) is amended— 

5 (1) in paragraph (18)(A) by striking ‘‘shall col6 lect’’ and inserting ‘‘shall assess and collect’’; 

7 (2) in paragraph (18) by adding at the end the 

8 following: 

9 ‘‘(C) OFFSET.—The Administrator may, 

10 as provided in paragraph (32), offset fees as11 sessed and collected under subparagraph (A).’’; 

12 (3) in paragraph (23) by striking subparagraph 

13 (C) and adding at the end the following: 


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1 ‘‘(C) OFFSET.—The Administrator may, 

2 as provided in paragraph (32), offset fees as3 sessed and collected under subparagraph (A).’’; 

4 and 

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

6 ‘‘(32) FEE CONTRIBUTIONS.— 

7 ‘‘(A) IN GENERAL.—To the extent that 

8 amounts are made available to the Adminis9 trator for the purpose of fee contributions, the 

10 Administrator shall— 

11 ‘‘(i) first consider contributing to fees 

12 paid by small business borrowers under 

13 clauses (i) through (iii) of paragraph 

14 (18)(A), to the maximum extent possible; 

15 and 

16 ‘‘(ii) then consider contributing to fees 

17 paid by small business lenders under para18 graph (23)(A). 

19 ‘‘(B) QUARTERLY ADJUSTMENT.—Each 

20 fee contribution under subparagraph (A) shall 

21 be effective for one fiscal quarter and shall be 

22 adjusted as necessary for each fiscal quarter 

23 thereafter to ensure that the amounts under 

24 subparagraph (A) are fully used. The fee con25 tribution for a fiscal quarter shall be based on 


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1 the loans that the Administrator projects will be 

2 made during that fiscal quarter, given the pro3 gram level authorized by law for that fiscal year 

4 and any other factors that the Administrator 

5 considers appropriate.’’. 

6 SEC. 102. RURAL LENDING OUTREACH PROGRAM. 

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

8 636(a)) is amended— 

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

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

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

12 The Administrator shall carry out a rural lending 

13 outreach program to provide up to an 85 percent 

14 guaranty for loans of $250,000 or less. The program 

15 shall be carried out only through lenders located in 

16 rural areas (as ‘rural’ is defined in section 501(f) of 

17 the Small Business Investment Act of 1958). For a 

18 loan made through the program, the following shall 

19 apply: 

20 ‘‘(A) The Administrator shall approve or 

21 disapprove the loan within 36 hours. 

22 ‘‘(B) The program shall use abbreviated 

23 application and documentation requirements. 

24 ‘‘(C) Minimum credit standards, as the 

25 Administrator considers necessary to limit the 


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1 rate of default on loans made under the pro2 gram, shall apply.’’. 

3 SEC. 103. COMMUNITY EXPRESS PROGRAM MADE PERMA4 NENT. 

5 (a) IN GENERAL.—Section 7(a) of the Small Busi6 ness Act (15 U.S.C. 636(a)) is amended by adding at the 

7 end the following: 

8 ‘‘(34) COMMUNITY EXPRESS PROGRAM.—The 

9 Administrator shall carry out a Community Express 

10 Program for loans of $250,000 or less. For a loan 

11 made under this paragraph, the following shall 

12 apply: 

13 ‘‘(A) The loan shall be made to a business 

14 concern— 

15 ‘‘(i) the majority ownership interest of 

16 which is directly held by individuals who 

17 are women, minorities, or veterans of the 

18 Armed Forces; or 

19 ‘‘(ii) that is located in a low- or mod20 erate-income area, as defined by the Ad21 ministrator. 

22 ‘‘(B) The loan shall comply with the collat23 eral policy of the Administration, except that, if 

24 the amount of the loan is less than or equal to 


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1 $25,000, the Administration shall not require 

2 the lender to take collateral. 

3 ‘‘(C) The loan shall include terms requir4 ing the lender to ensure that technical assist5 ance is provided to the borrower, through the 

6 lender or a third-party provider. 

7 ‘‘(D) The Administration shall approve or 

8 disapprove the loan within 36 hours.’’. 

9 (b) NOTICE AND COMMENT.—The program required 

10 by section 7(a)(34) of the Small Business Act, as added 

11 by subsection (a), shall be established after the oppor12 tunity for notice and comment and not later than 180 days 

13 after the date of the enactment of this Act. 

14 SEC. 104. MEDICAL PROFESSIONALS IN DESIGNATED 

15 SHORTAGE AREAS PROGRAM. 

16 (a) IN GENERAL.—Section 7(a) of the Small Busi17 ness Act (15 U.S.C. 636(a)) is amended by adding at the 

18 end the following: 

19 ‘‘(35) MEDICAL PROFESSIONALS IN DES20 IGNATED SHORTAGE AREAS PROGRAM.—The Admin21 istrator shall carry out a Medical Professionals in 

22 Designated Shortage Areas Program. For a loan 

23 made under this paragraph, the following shall 

24 apply: 


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1 ‘‘(A) The loan shall be made to a business 

2 concern that provides properly licensed medical, 

3 dental, or psychiatric services to the public. 

4 ‘‘(B) The loan shall be for the purpose of 

5 opening a business concern in a health profes6 sional shortage area (as defined in section 332 

7 of the Public Health Service Act (42 U.S.C. 

8 254e)). 

9 ‘‘(C) The loan shall include the participa10 tion by the Administration equal to 90 percent 

11 of the balance of the financing outstanding at 

12 the time of disbursement. 

13 ‘‘(D) The fees on the loan under para14 graphs (18) and (23) shall be reduced by half.’’. 

15 (b) NOTICE AND COMMENT.—The program required 

16 by section 7(a)(35) of the Small Business Act, as added 

17 by subsection (a), shall be established after the oppor18 tunity for notice and comment and not later than 180 days 

19 after the date of the enactment of this Act. 

20 SEC. 105. INCREASED VETERAN PARTICIPATION PROGRAM. 

21 (a) IN GENERAL.—Section 7(a) of the Small Busi22 ness Act (15 U.S.C. 636(a)) is amended by adding at the 

23 end the following: 

24 ‘‘(36) INCREASED VETERAN PARTICIPATION

25 PROGRAM.—The Administrator shall carry out an 


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1 Increased Veteran Participation Program. For a 

2 loan made under this paragraph, the following shall 

3 apply: 

4 ‘‘(A) The loan shall be made to a business 

5 concern the majority ownership interest of 

6 which is directly held by individuals who are 

7 veterans of the Armed Forces. 

8 ‘‘(B) The loan shall include the participa9 tion by the Administration equal to 90 percent 

10 of the balance of the financing outstanding at 

11 the time of disbursement. 

12 ‘‘(C) The fees on the loan under para13 graphs (18) and (23) shall not apply.’’. 

14 (b) NOTICE AND COMMENT.—The program required 

15 by section 7(a)(36) of the Small Business Act, as added 

16 by subsection (a), shall be established after the oppor17 tunity for notice and comment and not later than 180 days 

18 after the date of the enactment of this Act. 

19 SEC. 106. ALTERNATIVE SIZE STANDARD. 

20 (a) IN GENERAL.—Section 3(a) of the Small Busi21 ness Act (15 U.S.C. 632(a)) is amended by adding at the 

22 end the following: 

23 ‘‘(4) In addition to any other size standard 

24 under this subsection, the Administrator shall estab25 lish, and permit a lender making a loan under secVerDate Aug 31 2005 22:25 Mar 07, 2007 Jkt 059196 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1332.IH H1332

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1 tion 7(a) and a lender making a loan under the de2 velopment company loan program to use, an alter3 native size standard. The alternative size standard 

4 shall be based on factors including maximum tan5 gible net worth and average net income.’’. 

6 (b) APPLICABILITY.—Until the Administrator estab7 lishes, under section 3(a)(4) of the Small Business Act 

8 (as added by subsection (a)), an alternative size standard 

9 in the case of a lender making a loan under section 7(a) 

10 of that Act, the alternative size standard in section 

11 121.301(b) of title 13, Code of Federal Regulations, shall 

12 apply to such a case. 

13 SEC. 107. SUPPORT TO REGIONAL OFFICES. 

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

15 636(a)) is amended by adding at the end the following: 

16 ‘‘(37) SUPPORT TO REGIONAL OFFICES.—The 

17 Administrator shall carry out a program, within an 

18 element of the Administration already in existence 

19 as of the date of the enactment of the Small Busi20 ness Lending Improvements Act of 2007, to provide 

21 support to regional offices of the Administration in 

22 assisting small lenders who do not participate in the 

23 preferred lender program to participate in the 7(a) 

24 program.’’. 


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1 TITLE II—504 PROGRAM 

2 SEC. 201. CERTIFIED DEVELOPMENT COMPANY ECONOMIC 

3 DEVELOPMENT LOAN PROGRAM. 

4 Section 504 of the Small Business Investment Act 

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

6 (1) by redesignating subsections (a) and (b) as 

7 subsections (b) and (c); and 

8 (2) by inserting before subsection (b) (as so re9 designated) the following: 

10 ‘‘(a) The program to provide financing to small busi11 nesses by guarantees of loans under this Act which are 

12 funded by debentures guaranteed by the Administration 

13 shall be known as the ‘Certified Development Company 

14 Economic Development Loan Program’ or ‘504 Loan Pro15 gram’.’’. 

16 SEC. 202. DEFINITIONS. 

17 Section 103(6) of the Small Business Investment Act 

18 of 1958 (15 U.S.C. 662(6)) is amended to read as follows: 

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

20 entity incorporated under State law with the author21 ity to promote and assist the growth and develop22 ment of small-business concerns in the areas in 

23 which it is authorized to operate by the Administra24 tion, and the term ‘certified development company’ 

25 means a development company which the AdminisVerDate Aug 31 2005 23:12 Mar 07, 2007 Jkt 059200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1332.IH H1332

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1 tration has determined meets the criteria of section 

2 506;’’. 

3 SEC. 203. ELIGIBILITY OF DEVELOPMENT COMPANIES TO 

4 BE DESIGNATED AS CERTIFIED DEVELOP5 MENT COMPANIES. 

6 Section 506 of the Small Business Investment Act 

7 of 1958 (15 U.S.C. 697c) is amended to read as follows: 

8 ‘‘SEC. 506. CERTIFIED DEVELOPMENT COMPANIES. 

9 ‘‘(a) AUTHORITY TO ISSUE DEBENTURES.—A devel10 opment company may issue debentures pursuant to this 

11 Act if the Administration certifies that the company meets 

12 the following criteria: 

13 ‘‘(1) SIZE.—The development company is re14 quired to be a small concern with fewer than 500 

15 employees and not under the control of any entity 

16 which does not meet the Administration’s size stand17 ards as a small business, except that any develop18 ment company which was certified by the Adminis19 tration prior to December 31, 2005 may continue to 

20 issue debentures. 

21 ‘‘(2) PURPOSE.—The primary purpose of the 

22 development company is to benefit the community by 

23 fostering economic development to create and pre24 serve jobs and stimulate private investment. 


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1 ‘‘(3) PRIMARY FUNCTION.—The primary func2 tion of the development company is to accomplish its 

3 purpose by providing long term financing to small 

4 businesses by the utilization of the 504 Loan Pro5 gram. It may also provide or support such other 

6 local economic development activities to assist the 

7 community. 

8 ‘‘(4) NON-PROFIT STATUS.—The development 

9 company is a non-profit corporation, except that a 

10 development company certified by the Administra11 tion prior to January 1, 1987, may retain its status 

12 as a for-profit corporation. 

13 ‘‘(5) GOOD STANDING.—The development com14 pany is in good standing in its State of incorpora15 tion and in any other State in which it conducts 

16 business, and is in compliance with all laws, includ17 ing taxation requirements, in its State of incorpora18 tion and in any other State in which it conducts 

19 business. 

20 ‘‘(6) MEMBERSHIP.—The development company 

21 has at least 25 members (or stockholders if the cor22 poration is a for-profit entity), none of whom may 

23 own or control more than 10 percent of the com24 pany’s voting membership, consisting of representa25 tion from each of the following groups (none of 


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1 which are in a position to control the development 

2 company): 

3 ‘‘(A) Government organizations that are 

4 responsible for economic development. 

5 ‘‘(B) Financial institutions that provide 

6 commercial long term fixed asset financing. 

7 ‘‘(C) Community organizations that are 

8 dedicated to economic development. 

9 ‘‘(D) Businesses. 

10 ‘‘(7) BOARD OF DIRECTORS.—The development 

11 company has a board of directors that— 

12 ‘‘(A) is elected from the membership by 

13 the members; 

14 ‘‘(B) represents at least three of the four 

15 groups enumerated in subsection (a)(6) and no 

16 group is in a position to control the company; 

17 and 

18 ‘‘(C) meets on a regular basis to make pol19 icy decisions for such company. 

20 ‘‘(8) PROFESSIONAL MANAGEMENT AND

21 STAFF.—The development company has full-time 

22 professional management, including a chief executive 

23 officer to manage daily operations, and a full-time 

24 professional staff qualified to market the 504 Pro25 gram and handle all aspects of loan approval and 


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1 servicing, including liquidation, if appropriate. The 

2 development company is required to be independ3 ently managed and operated to pursue its economic 

4 development mission and to employ its chief execu5 tive officer directly, with the following exceptions: 

6 ‘‘(A) A development company may be an 

7 affiliate of another local non-profit service cor8 poration (specifically excluding another develop9 ment company) whose mission is to support 

10 economic development in the area in which the 

11 development company operates. In such a case: 

12 ‘‘(i) The development company may 

13 satisfy the requirement for full-time pro14 fessional staff by contracting with a local 

15 non-profit service corporation (or one of its 

16 non-profit affiliates), or a governmental or 

17 quasi-governmental agency, to provide the 

18 required staffing. 

19 ‘‘(ii) The development company and 

20 the local non-profit service corporation may 

21 have partially common boards of directors. 

22 ‘‘(B) A development company in a rural 

23 area (as defined in section 501(f)) shall be 

24 deemed to have satisfied the requirements of a 

25 full-time professional staff and professional 


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1 management ability if it contracts with another 

2 certified development company which has such 

3 staff and management ability and which is lo4 cated in the same general area to provide such 

5 services. 

6 ‘‘(C) A development company that has 

7 been certified by the Administration as of De8 cember 31, 2005, and that has contracted with 

9 a for-profit company to provide services as of 

10 such date may continue to do so. 

11 ‘‘(b) AREA OF OPERATIONS.—The Administration 

12 shall specify the area in which an applicant is certified 

13 to provide assistance to small businesses under this title, 

14 which may not initially exceed its State of incorporation 

15 unless it proposes to operate in a local economic area 

16 which is required to include part of its State of incorpora17 tion and may include adjacent areas within several States. 

18 After a development company has demonstrated its ability 

19 to provide assistance in its area of operations, it may re20 quest the Administration to be allowed to operate in one 

21 or more additional States as a multi-state certified devel22 opment company if it satisfies the following criteria: 

23 ‘‘(1) Each additional State is contiguous to the 

24 State of incorporation, except the States of Alaska 


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1 and Hawaii shall be deemed to be contiguous to any 

2 State abutting the Pacific ocean. 

3 ‘‘(2) It demonstrates its proficiency in making 

4 and servicing loans under section 504 by— 

5 ‘‘(A) requesting and receiving designation 

6 as an accredited lender under section 507 or a 

7 premier certified lender under section 508; and 

8 ‘‘(B) meeting or exceeding performance 

9 standards established by the Administration. 

10 ‘‘(3) The development company adds to the 

11 membership of its State of incorporation additional 

12 membership from each additional State and the 

13 added membership meets the requirements of sub14 section (a)(6). 

15 ‘‘(4) The development company adds at least 

16 one member to its board of directors in the State of 

17 incorporation, providing that added member was se18 lected by the membership of the additional State. 

19 ‘‘(5) The company meets such other criteria or 

20 complies with such conditions as the Administration 

21 deems appropriate. 

22 ‘‘(c) PROCESSING OF EXPANSION APPLICATIONS.— 

23 The Administration shall respond to the request of a cer24 tified development company for certification as a multi25 state company on an expedited basis within 30 days of 


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1 receipt of a completed application if the application dem2 onstrates that the development company meets the re3 quirements of subsection (b)(1) through (b)(4). 

4 ‘‘(d) USE OF FUNDS LIMITED TO STATE WHERE

5 GENERATED.—Any funds generated by a development 

6 company from making 503 and 504 loans which remain 

7 after payment of staff, operating and overhead expenses 

8 shall be retained by the development company as a reserve 

9 for future operations, for expanding its area of operations 

10 in a local economic area as authorized by the Administra11 tion, or for investment in other local economic develop12 ment activity in the State from which the funds were gen13 erated. 

14 ‘‘(e) ETHICAL REQUIREMENTS.— 

15 ‘‘(1) IN GENERAL.—Certified development com16 panies, their officers, employees and other staff, 

17 shall at all times act ethically and avoid activities 

18 which constitute a conflict of interest or appear to 

19 constitute a conflict of interest. No one may serve as 

20 an officer, director or chief executive officer of more 

21 than one certified development company. 

22 ‘‘(2) PROHIBITED CONFLICT IN PROJECT

23 LOANS.—As part of a project under section 504, no 

24 certified development company may recommend or 

25 approve a guarantee of a debenture by the AdminisVerDate Aug 31 2005 22:25 Mar 07, 2007 Jkt 059196 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H1332.IH H1332

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1 tration that is collateralized by a second lien position 

2 on the property being constructed or acquired and 

3 also provide, or be affiliated with a corporation or 

4 other entity, for-profit or non-profit, which provides, 

5 financing collateralized by a first lien on the same 

6 property, except that business development compa7 nies which were participating as first mortgage lend8 ers for the 504 program in fiscal years 2004 or 

9 2005 may continue to do so. 

10 ‘‘(3) OTHER ECONOMIC DEVELOPMENT ACTIVI11 TIES.—Operation of multiple programs to assist 

12 small business concerns in order for a certified de13 velopment company to carry out its economic devel14 opment mission shall not be deemed a conflict of in15 terest, but notwithstanding any other provision of 

16 law, no development company may accept funding 

17 from any source, including but not limited to any de18 partment or agency of the United States Govern19 ment— 

20 ‘‘(A) if such funding includes any condi21 tions, priorities or restrictions upon the types of 

22 small businesses to which they may provide fi23 nancial assistance under this title; or 

24 ‘‘(B) if it includes any conditions or im25 poses any requirements, directly or indirectly, 


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1 upon any recipient of assistance under this title 

2 unless the department or agency also provides 

3 all of the financial assistance to be delivered by 

4 the development company to the small business 

5 and such conditions, priorities or restrictions 

6 are limited solely to the financial assistance so 

7 provided.’’. 

8 SEC. 204. DEFINITION OF RURAL AREAS. 

9 Section 501 of the Small Business Investment Act 

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

11 the following new subsection: 

12 ‘‘(f) As used in subsection (d)(3)(D), the term ‘rural’ 

13 shall include any area other than— 

14 ‘‘(1) a city or town that has a population great15 er than 50,000 inhabitants; and 

16 ‘‘(2) the urbanized area contiguous and adja17 cent to such a city or town.’’. 

18 SEC. 205. BUSINESSES IN LOW-INCOME AREAS. 

19 Section 501(d)(3) of the Small Business Investment 

20 Act of 1958 (15 U.S.C. 695(d)(3)) is amended by insert21 ing after ‘‘business district revitalization’’ the following: 

22 ‘‘or expansion of businesses in low-income communities 

23 that would be eligible for new market tax credit invest24 ments under section 45D of the Internal Revenue Code 

25 of 1986 (26 U.S.C. 45D)’’. 


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1 SEC. 206. COMBINATIONS OF CERTAIN GOALS. 

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

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

4 end the following: 

5 ‘‘(7) A small business concern that is uncondi6 tionally owned by more than one individual, or a cor7 poration whose stock is owned by more than one in8 dividual, is deemed to achieve a public policy goal 

9 under subsection (d)(3) if a combined ownership 

10 share of at least 51 percent is held by individuals 

11 who are in one of the groups listed as public policy 

12 goals specified in subsection (d)(3)(C) or 

13 (d)(3)(E).’’. 

14 SEC. 207. REFINANCING. 

15 Section 502 of the Small Business Investment Act 

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

17 the following: 

18 ‘‘(7) PERMISSIBLE DEBT REFINANCING.—Any 

19 financing approved under this title may also include 

20 a limited amount of debt refinancing for debt that 

21 was not previously guaranteed by the Administra22 tion. If the project involves expansion of a small 

23 business which has existing indebtedness 

24 collateralized by fixed assets, any amount of existing 

25 indebtedness that does not exceed one-half of the 


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1 project cost of the expansion may be refinanced and 

2 added to the expansion cost, providing— 

3 ‘‘(A) the proceeds of the indebtedness were 

4 used to acquire land, including a building situ5 ated thereon, to construct a building thereon or 

6 to purchase equipment; 

7 ‘‘(B) the borrower has been current on all 

8 payments due on the existing debt for at least 

9 the past year; and 

10 ‘‘(C) the 504 financing will provide better 

11 terms or rate of interest than now exists on the 

12 debt.’’. 

13 SEC. 208. ADDITIONAL EQUITY INJECTIONS. 

14 Clause (ii) of section 502(3)(B) of the Small Business 

15 Investment Act of 1958 (15 U.S.C. 696(3)(B)) is amend16 ed to read as follows: 

17 ‘‘(ii) FUNDING FROM INSTITU18 TIONS.— 

19 ‘‘(I) If a small business concern 

20 provides the minimum contribution re21 quired under paragraph (C), not less 

22 than 50 percent of the total cost of 

23 any project financed pursuant to 

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1 tions described in subclauses (I), (II), 

2 and (III) of clause (i). 

3 ‘‘(II) If a small business concern 

4 provides more than the minimum con5 tribution required under paragraph 

6 (C), any excess contribution may be 

7 used to reduce the amount required 

8 from the institutions described in sub9 clauses (I), (II), and (III) of clause (i) 

10 except that the amount from such in11 stitutions may not be reduced to an 

12 amount less than the amount of the 

13 loan made by the Administration.’’. 

14 SEC. 209. LOAN LIQUIDATIONS. 

15 Section 510 of the Small Business Investment Act 

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

17 (1) by redesignating subsection (e) as sub18 section (g); and 

19 (2) by inserting after subsection (d) the fol20 lowing: 

21 ‘‘(e) PARTICIPATION.— 

22 ‘‘(1) MANDATORY.—Any certified development 

23 company which elects not to apply for authority to 

24 foreclose and liquidate defaulted loans under this 

25 section or which the Administration determines to be 


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1 ineligible for such authority shall contract with a 

2 qualified third-party to perform foreclosure and liq3 uidation of defaulted loans in its portfolio. The con4 tract shall be contingent upon approval by the Ad5 ministration with respect to the qualifications of the 

6 contractor and the terms and conditions of liquida7 tion activities. 

8 ‘‘(2) COMMENCEMENT.—The provisions of this 

9 subsection shall not require any development com10 pany to liquidate defaulted loans until the Adminis11 tration has adopted and implemented a program to 

12 compensate and reimburse development companies 

13 as provided under subsection (f). 

14 ‘‘(f) COMPENSATION AND REIMBURSEMENT.— 

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

16 Administration shall reimburse each certified devel17 opment company for all expenses paid by such com18 pany as part of the foreclosure and liquidation ac19 tivities if the expenses— 

20 ‘‘(A) were approved in advance by the Ad21 ministration either specifically or generally; or 

22 ‘‘(B) were incurred by the company on an 

23 emergency basis without Administration prior 

24 approval but which were reasonable and appro25 priate. 


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1 ‘‘(2) COMPENSATION FOR RESULTS.—The Ad2 ministration shall develop a schedule to compensate 

3 and provide an incentive to qualified State or local 

4 development companies which foreclose and liquidate 

5 defaulted loans. The schedule shall be based on a 

6 percentage of the net amount recovered but shall not 

7 exceed a maximum amount. The schedule shall not 

8 apply to any foreclosure which is conducted pursu9 ant to a contract between a development company 

10 and a qualified third-party to perform the fore11 closure and liquidation.’’. 

12 SEC. 210. CLOSING COSTS. 

13 Paragraph (4) of section 503(b) of the Small Busi14 ness Investment Act of 1958 (15 U.S.C. 697(b)) is amend15 ed to read as follows: 

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

17 does not exceed the amount of loans to be made 

18 from the proceeds of such debenture plus, at the 

19 election of the 504 borrower, other amounts attrib20 utable to the administrative and closing costs of 

21 such loans, except for the borrower’s attorney fees;’’. 

22 SEC. 211. MAXIMUM 504 AND 7(A) LOAN ELIGIBILITY. 

23 Section 502(2) of the Small Business Investment Act 

24 of 1958 (15 U.S.C. 696(2)) is amended by adding at the 

25 end the following: 


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1 ‘‘(C) COMBINATION FINANCING.—Financ2 ing under this title may be provided to a bor3 rower in the maximum amount provided in this 

4 subsection, plus a loan guarantee under section 

5 7(a) of the Small Business Act may also be pro6 vided to the same borrower in the maximum 

7 provided in section 7(a)(3)(A) of such Act.’’. 

8 SEC. 212. ELIGIBILITY FOR ENERGY EFFICIENCY 

9 PROJECTS. 

10 Section 501(d)(3) of the Small Business Investment 

11 Act of 1958 (15 U.S.C. 695(d)(3)) is amended— 

12 (1) in subparagraph (G) by striking ‘‘or’’ at the 

13 end; 

14 (2) in subparagraph (H) by striking the period 

15 at the end and inserting ‘‘, or’’; and 

16 (3) by inserting after subparagraph (H) the fol17 lowing: 

18 ‘‘(I) reduction of energy consumption by at 

19 least 10 percent.’’. 

20 SEC. 213. LOANS FOR PLANT PROJECTS USED FOR ENERGY21 EFFICIENT PURPOSES. 

22 Section 502(2)(A) of the Small Business Investment 

23 Act of 1958 (15 U.S.C. 696(2)(A)) is amended— 

24 (1) in clause (ii) by striking ‘‘and’’ at the end; 


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1 (2) in clause (iii) by striking the period at the 

2 end and inserting ‘‘; and’’; and 

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

4 ‘‘(iv) $4,000,000 for each project that 

5 reduces the borrower’s energy consumption 

6 by at least 10 percent.’’. 

7 SEC. 214. EXTENSION OF PERIOD DURING WHICH LOSS RE8 SERVES OF PREMIER CERTIFIED LENDERS 

9 DETERMINED ON THE BASIS OF OUT10 STANDING BALANCE OF DEBENTURES. 

11 Section 508(c)(6)(B) of the Small Business Invest12 ment Act of 1958 (15 U.S.C. 697e(c)(6)(B)) is amended 

13 by striking ‘‘during the 2-year period beginning on the 

14 date that is 90 days after the date of the enactment of 

15 this subparagraph,’’ and inserting ‘‘through the end of fis16 cal year 2008,’’. 

17 SEC. 215. EXTENSION OF ALTERNATIVE LOSS RESERVE 

18 PILOT PROGRAM FOR CERTAIN PREMIER 

19 CERTIFIED LENDERS. 

20 Section 508(c)(7)(J) of the Small Business Invest21 ment Act of 1958 (15 U.S.C. 697e(c)(7)(J)) is amended 

22 by striking ‘‘means’’ and all that follows through the pe23 riod at the end and inserting ‘‘means each calendar quar24 ter through the end of fiscal year 2008.’’ 

Æ 


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