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103D CONGRESS

1ST SESSION H. R. 2766

To amend the 7(a) Loan Program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 28, 1993

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

Committee on Small Business

A BILL

To amend the 7(a) Loan Program, 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 SEC. 2. AUTHORITY TO IMPOSE SECONDARY MARKET FEES.

4 (a) Section 5(g) of the Small Business Act (15 U.S.C.

5 634) is amended by striking paragraph (4) and by insert6 ing in lieu thereof the following:

7 ‘‘(4) The Administration may collect the following

8 fees for loan guarantees sold into the secondary market

9 pursuant to the provisions of subsection (f): an amount

10 equal to (A) not more than .4 percent per year on the

11 outstanding balance of such loan guaranteed by the Ad12 ministration, and (B) not more than 50 percent of that
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1 portion of the sale price which is in excess of 110 percent

2 of the outstanding principal amount of such loan guaran3 teed by the Administration. Any such fees imposed by the

4 Administration shall be collected by the agent which car5 ries out on behalf of the Administration the central reg6 istration functions required by subsection (h) of this sec7 tion and shall be paid to the Administration and used sole8 ly to reduce the subsidy on loans guaranteed under section

9 7(a) of this Act: Provided, That such fees shall not be

10 charged to the borrower whose loan is guaranteed: and,

11 Provided further, That nothing herein shall preclude any

12 agent of the Administration from collecting a fee approved

13 by the Administration for the functions described in sub14 section (h)(2).’’.

15 (b) Any new fees imposed by the Administration pur16 suant to the authority conferred by subsection (a) shall

17 be applicable only to loans initially sold in the secondary

18 market pursuant to the provisions of section 5(f) of the

19 Small Business Act after August 31, 1993.

20 SEC. 3. AUTHORITY TO REDUCE LOAN GUARANTEE PER21 CENTAGES.

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

23 U.S.C. 636) is amended—

24 (1) by striking from the end of clause (B)(i) the

25 word ‘‘and’’ and by redesignating clause (B)(ii) as
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1 (B)(iv) and by inserting the following after clause

2 (B)(i):

3 ‘‘(ii) not less than 75 percent of the

4 financing outstanding at the time of dis5 bursement, if such financing is more than

6 $155,000 and the period of maturity of

7 such financing is more than 10 years, ex8 cept that the participation by the Adminis9 tration may be reduced below 75 percent

10 upon request of the participating lender;

11 ‘‘(iii) not less than 85 percent of the

12 financing outstanding at the time of dis13 bursement, if such financing is more than

14 $155,000 and the period of maturity of

15 such financing is 10 years or less, except

16 that the participation by the Administra17 tion may be reduced below 85 percent

18 upon request of the participating lender;

19 and’’;

20 (2) by striking the words ‘‘85 percent under

21 subparagraph (B)’’ and by inserting in lieu thereof

22 the following: ‘‘the above specified percentums’’;

23 (3) by striking from paragraph (B) the words

24 ‘‘not less than 80 percent, except upon’’ and by in25 serting in lieu thereof the following: ‘‘not less than
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1 70 percent, unless a lesser percent is required by

2 clause (B)(ii) or upon the’’; and

3 (4) by inserting after the third sentence the fol4 lowing: ‘‘The maximum interest rate for a loan guar5 anteed under the Preferred Lenders Program shall

6 not exceed the maximum interest rate, as deter7 mined by the Administration, which is made applica8 ble to other loan guarantees under section 7(a).’’.

9 (b) The amendments made by subsection (a) shall be

10 effective September 1, 1993, but shall not be applicable

11 to loan guarantee applications received by the Administra12 tion prior to August 21, 1993.

13 SEC. 4. STUDY AND REPORT.

14 The Administration shall study, monitor and evaluate

15 the impact of the amendments made by sections 2 and

16 3 of this Act on the ability of small business concerns to

17 obtain financing and the impact of such sections on the

18 effectiveness, viability and growth of the secondary market

19 authorized by section 5(f) of the Small Business Act. Not

20 later than 16 months after the date of enactment, and

21 annually thereafter, the Administration shall submit to the

22 Committees on Small Business of the Senate and the

23 House of Representatives a report containing the Adminis24 tration’s findings and recommendations on such impact,

25 specifically including changes in the interest rates on
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1 financings provided to small business concerns through

2 the use of the secondary market.

3 SEC. 5. REPEALER.

4 Sections 2 and 3 of this Act are hereby repealed on

5 September 30, 1996.

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