I

103D CONGRESS

1ST SESSION H. R. 1788

To amend the Small Business Act to promote lending to small business

concerns in States in which there are a declining number of federally

insured financial institutions.

IN THE HOUSE OF REPRESENTATIVES

APRIL 21, 1993

Mr. MACHTLEY (for himself and Mr. NEAL of Massachusetts) introduced the

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

A BILL

To amend the Small Business Act to promote lending to

small business concerns in States in which there are

a declining number of federally insured financial institutions.

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 and Credit Availability Act of 1993’’.
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1 SEC. 2. LOAN GUARANTEES IN QUALIFIED STATES.

2 (a) PARTICIPATION AUTHORITY.—Section 7(a) of the

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

4 adding at the end the following new paragraph:

5 ‘‘(22) LOAN GUARANTEES IN QUALIFIED

6 STATES.—

7 ‘‘(A) IN GENERAL.—The Administration

8 shall, in accordance with the requirements of

9 this paragraph, participate on a guaranteed

10 basis in loans under this subsection to small

11 business concerns in qualified States.

12 ‘‘(B) GUARANTEE AMOUNTS.—In agree13 ments to participate on a guaranteed basis in

14 loans described in subparagraph (A), such par15 ticipation by the Administration shall be—

16 ‘‘(i) not less than 90 percent of the

17 balance of the loan outstanding at the time

18 of disbursement, if the loan is not less

19 than $200,000, nor more than $500,000;

20 and

21 ‘‘(ii) not less than 95 percent of the

22 balance of the loan outstanding at the time

23 of disbursement, if the loan is less than

24 $200,000.

25 ‘‘(C) TEMPORARY WAIVER OF GUARANTEE

26 FEES.—
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1 ‘‘(i) FIRST 2 FISCAL YEARS.—In each

2 of the first 2 fiscal years beginning after

3 the date of the enactment of this para4 graph, the Administration shall waive any

5 guarantee fee in connection with a loan de6 scribed in subparagraph (A).

7 ‘‘(ii) REMAINING FISCAL YEARS.—In

8 the 3rd, 4th, and 5th fiscal years begin9 ning after the date of the enactment of

10 this paragraph, the Administration may

11 collect a guarantee fee in connection with

12 a loan described in subparagraph (A) in an

13 amount equal to not more than 1 percent

14 of the outstanding balance of the guaran15 teed amount of the loan. Any such fee

16 shall be payable by the participating lend17 ing institution and may be charged to the

18 borrower.

19 ‘‘(D) RETENTION OF FEE PERCENTAGE BY

20 LENDERS.—In order to encourage lending insti21 tutions to make loans to small business con22 cerns in qualified States, the Administration

23 shall permit lending institutions to retain, on

24 loans described in subparagraph (A) of
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$200,000 or less, 1 1 ⁄2 of any fee to be paid to

2 the Administration under subparagraph (C)(ii).

3 ‘‘(E) PRESUMPTION.—For a loan de4 scribed in subparagraph (A), any reasonable

5 doubt as to the ability of an applicant to repay

6 the loan shall be resolved in favor of the appli7 cant.

8 ‘‘(F) APPLICABILITY.—The provisions of

9 this paragraph shall be in effect in each of the

10 first 5 fiscal years beginning after the date of

11 the enactment of this paragraph. For such pe12 riod, provisions of this section which are incon13 sistent with this paragraph shall not apply.

14 ‘‘(G) DEFINITIONS.—For purposes of this

15 paragraph, the following definitions apply:

16 ‘‘(i) INSURED DEPOSITORY INSTITU17 TION.—The term ‘insured depository insti18 tution’—

19 ‘‘(I) has the same meaning as in

20 section 3 of the Federal Deposit In21 surance Act; and

22 ‘‘(II) includes an insured credit

23 union, as defined in section 101 of the

24 Federal Credit Union Act.
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1 ‘‘(ii) STATE.—The term ‘State’ means

2 each of the several States and the District

3 of Columbia.

4 ‘‘(iii) QUALIFIED STATE.—The term

5 ‘qualified State’ means any State in

6 which—

7 ‘‘(I) during the 12-month period

8 ending on the date of enactment of

9 this paragraph, 1 or more insured de10 pository institutions having combined

11 total assets of not less than

12 $100,000,000 closed due to an inabil13 ity to meet the demands of depositors;

14 or

15 ‘‘(II) during the 12-month period

16 ending on the date of enactment of

17 this paragraph, 2 or more insured de18 pository institutions having combined

19 total assets of not less than

20 $150,000,000 closed due to an inabil21 ity to meet the demands of deposi22 tors.’’.

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