I 

108TH CONGRESS 

1ST SESSION H. R. 923

To amend the Small Business Investment Act of 1958 to allow certain 

premier certified lenders to elect to maintain an alternative loss reserve. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 26, 2003

Mr. DOOLITTLE introduced the following bill; which was referred to the 

Committee on Small Business 

A BILL

To amend the Small Business Investment Act of 1958 to 

allow certain premier certified lenders to elect to maintain an alternative loss reserve.

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 ‘‘Premier Certified 

5 Lenders Program Improvement Act of 2002’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 

8 (1) The Premier Certified Lenders Program 

9 (PCLP) established under section 508 of the Small 

10 Business Investment Act of 1958 (15 U.S.C. 697e) 
2

•HR 923 IH 

1 has been very successful in helping small businesses 

2 expand. 

3 (2) Increasing the number of premier certified 

4 lenders will allow the Government to make available 

5 more resources to small businesses even as the Small 

6 Business Administration downsizes. 

7 (3) The PCLP requires premier certified lend8 ers to set aside unnecessarily large amounts in loss 

9 reserve accounts. 

10 (4) Requiring premier certified lenders to main11 tain unnecessarily large loss reserve accounts is inef12 ficient and limits the ability of lenders to serve addi13 tional small businesses and of new lenders to join 

14 the PCLP. 

15 (5) Premier certified lenders should be required 

16 to maintain loss reserve accounts in amounts com17 mensurate with the risk of loss associated with the 

18 PCLP loan portfolio of the lender. 

19 (6) Changing the PCLP to require that premier 

20 certified lenders maintain loss reserve accounts in 

21 amounts which reflect the risk of loss associated 

22 with the loans of the PCLP will protect taxpayers 

23 and improve the ability of the PCLP to help small 

24 businesses create economic development. 
3

•HR 923 IH 

1 SEC. 3. ALTERNATIVE LOSS RESERVE FOR CERTAIN PRE2 MIER CERTIFIED LENDERS. 

3 (a) IN GENERAL.—Section 508(c) of the Small Busi4 ness Investment Act of 1958 (15 U.S.C. 697e(c)) is 

5 amended by adding at the end the following new para6 graph: 

7 ‘‘(7) ALTERNATIVE LOSS RESERVE.—

8 ‘‘(A) ELECTION.—With respect to any cal9 endar quarter, any qualified high loss reserve 

10 PCL may elect to have the requirements of this 

11 paragraph apply in lieu of the requirements of 

12 paragraphs (2) and (4). 

13 ‘‘(B) CONTRIBUTIONS.—

14 ‘‘(i) ORDINARY RULES INAPPLI15 CABLE.—Except as provided under clause 

16 (ii) and paragraph (5), a qualified high 

17 loss reserve PCL which makes the election 

18 described in subparagraph (A) with respect 

19 to a calendar quarter shall not be required 

20 to make contributions to its loss reserve 

21 during such quarter. 

22 ‘‘(ii) BASED ON RISK OF LOSS.—A 

23 company which makes the election de24 scribed in subparagraph (A) with respect 

25 to any calendar quarter shall, before the 

26 last day of such quarter, make such con-
4

•HR 923 IH 

1 tributions to its loss reserve as are nec2 essary to ensure that the amount of the 

3 loss reserve of the company is—

4 ‘‘(I) not less than $25,000; and 

5 ‘‘(II) sufficient, as determined by 

6 a third-party auditor employed by the 

7 company, to protect the Federal Gov8 ernment from the risk of loss associ9 ated with the portfolio of PCLP loans 

10 of the company. 

11 ‘‘(C) QUALIFIED HIGH LOSS RESERVE

12 PCL.—The term ‘qualified high loss reserve 

13 PCL’ means, with respect to any calendar year, 

14 any company designated as a premier certified 

15 lender, if the Administrator determines that—

16 ‘‘(i) the amount of the loss reserve of 

17 the company is not less than $25,000; 

18 ‘‘(ii) the company has established a 

19 process for analyzing the risk of loss asso20 ciated with its portfolio of PCLP loans and 

21 for grading each PCLP loan made by the 

22 company on the basis of the risk of loss as23 sociated with such loan; and 

24 ‘‘(iii)(I) in the case of a company 

25 which was a qualified high loss reserve 
5

•HR 923 IH 

1 PCL with respect to the preceding cal2 endar year, a third-party auditor employed 

3 by the company has certified during each 

4 calendar quarter of such year that the 

5 amount of the loss reserve of the company 

6 is sufficient to protect the Federal Govern7 ment from the risk of loss associated with 

8 the portfolio of PCLP loans of the com9 pany; and 

10 ‘‘(II) in the case of any other com11 pany, a third-party auditor employed by 

12 the company has certified during the pre13 ceding 90 days that the loss reserve of the 

14 company is sufficient to protect the Fed15 eral Government from the risk of loss asso16 ciated with the portfolio of PCLP loans of 

17 the company. 

18 ‘‘(D) PCLP LOAN.—For purposes of this 

19 paragraph, the term ‘PCLP loan’ means any 

20 loan guaranteed under this section. 

21 ‘‘(E) CALENDAR QUARTER.—For purposes 

22 of this paragraph, the term ‘calendar quarter’ 

23 means—

24 ‘‘(i) the period which begins on Janu25 ary 1 and ends on March 31 of each year; 
6

•HR 923 IH 

1 ‘‘(ii) the period which begins on April 

2 1 and ends on June 30 of each year; 

3 ‘‘(iii) the period which begins on July 

4 1 and ends on September 30 of each year; 

5 or 

6 ‘‘(iv) the period which begins on Octo7 ber 1 and ends on December 31 of each 

8 year.’’. 

9 (b) CONFORMING AMENDMENT.—Section 

10 508(b)(2)(D) of the Small Business Investment Act of 

11 1958 (15 U.S.C. 697e(b)(2)(D)) is amended by striking 

12 ‘‘subsection (c)(2)’’ and inserting ‘‘subsection (c)’’.

Æ