certified development company’s share of the loss as 
provided for in subsection (b)(6). If the premier cer-
tified development company utilizes the reserve, it 
shall, within 30 calendar days, replace an equivalent 
amount of funds. 
‘‘(4) DISBURSEMENTS.— 
‘‘(A) IN
GENERAL.—The Administrator 
shall allow the premier certified development 
company to withdraw from the loss reserve 
amounts attributable to any debenture that has 
been repaid. 
‘‘(B) 
REDUCTION.—The 
Administrator 
shall allow the premier certified development 
company to withdraw from the loss reserve such 
amounts as are in excess of 1 percent of the ag-
gregate outstanding balances of debentures to 
which such loss reserve relates. The reduction 
authorized by this subparagraph shall not apply 
with respect to any debenture before 100 per-
cent of the contribution described in paragraph 
(2) with respect to such debenture has been 
made. 
‘‘(5) APPLICABILITY.—This subsection shall 
apply only to a premier certified development com-
pany designated as a premier certified development
company by the Administrator under this section on 
or after the date of the enactment of the Small 
Business Financing and Investment Act of 2009. 
The loan loss reserve requirements relating to any 
premier certified development company certified 
prior to the date of the enactment of such Act shall 
continue to be governed by regulations in effect on 
the date of the enactment of such Act. 
‘‘(e) BUREAU OF PREMIER CERTIFIED DEVELOP-
MENT COMPANY LENDER OVERSIGHT.— 
‘‘(1) IN GENERAL.—There is hereby established 
a Bureau of Premier Certified Development Com-
pany Lender Oversight in the Office of Lender Over-
sight at the Administration which shall have respon-
sibility and capability for carrying out oversight of 
premier certified development companies and such 
other responsibilities as the Administrator des-
ignates. 
‘‘(2) ANNUAL
REVIEW.—The Bureau estab-
lished in paragraph (1) annually shall review the fi-
nancing made by each premier certified development 
company. Such review shall include the premier cer-
tified development company’s credit decisions and 
general compliance with the eligibility requirements
for each financing approved as a result of its status 
as a premier certified development company. 
‘‘(3) RANDOM AUDITS.—The Bureau shall de-
velop and implement a method for sampling the de-
bentures issued by premier certified development 
companies. Such sampling shall be similar to the 
random file audits of development companies that 
utilize the Abridged Submission Method described in 
chapter 4 of subpart C of Standard Operating Pro-
cedure 50 10 (5)(A) as was in effect on March 2, 
2009. 
‘‘(4) REVIEW OF LENDERS PROVIDING SENIOR 
FINANCING.— 
‘‘(A) 
CALCULATION
OF
LOAN
LOSS 
RATE.—The Bureau shall periodically calculate 
the loss rate of all debentures approved under 
this section and shall calculate a loss rate on 
the basis of the total debentures attributable to 
projects approved by premier certified develop-
ment companies in which each lender is a par-
ticipating lender. 
‘‘(B) NOTIFICATION.—If the Bureau deter-
mines that the loss rate on debentures involving 
an individual lender exceeds the average for all
debentures approved under this section, it shall 
advise the Administrator. 
‘‘(5) USE OF REVIEWS AND AUDITS.—The Ad-
ministrator shall consider the findings under para-
graphs (2), (3), and (4) in carrying out the respon-
sibilities under subsection (h). 
‘‘(f) SALE OF CERTAIN DEFAULTED LOANS.— 
‘‘(1) NOTICE.—If, upon default in repayment, 
the Administrator acquires a debenture issued by a 
premier certified development company and identi-
fies such loan for inclusion in a bulk asset sale of 
defaulted or repurchased loans or other financing, 
the Administrator shall give prior notice thereof to 
any premier certified development company which 
has a contingent liability under this section. The no-
tice shall be given to the premier certified develop-
ment company as soon as possible after the financ-
ing is identified, but not less than 90 days before 
the date the Administrator first makes any records 
on such financing available for examination by pro-
spective purchasers prior to its offering in a package 
of loans for bulk sale. 
‘‘(2) LIMITATIONS.—The Administrator shall 
not offer any loan described in paragraph (1) as 
part of a bulk sale unless the Administrator—
‘‘(A) provides prospective purchasers with 
the opportunity to examine the Administration’s 
records with respect to such loan; and 
‘‘(B) provides the notice required by para-
graph (1). 
‘‘(g) LOAN APPROVAL AUTHORITY.— 
‘‘(1) IN GENERAL.—A premier certified develop-
ment company may, under conditions determined by 
the Administrator in regulations published in the 
Code of Federal Regulations, issue guarantees on 
debentures, approve, authorize, close, service, fore-
close, litigate (except that the Administrator may 
monitor conduct of any such litigation), and liq-
uidate loans that are funded with proceeds of a de-
benture issued by a premier certified development 
company unless the Administrator advises the com-
pany that loans involving a specific institutional 
lender are to be submitted to the Administrator for 
further consideration, and approval by the Adminis-
trator. 
‘‘(2) PROGRAM GOALS.—Each premier certified 
development company shall establish a goal of proc-
essing no less than 50 percent of the applications for 
assistance under this title that the premier certified 
development company receives. Failure to meet this
goal shall have no affect on the company’s status as 
a premier certified development company under this 
section. 
‘‘(3) SCOPE OF REVIEW.—The approval of a 
loan and guarantee of a debenture by a premier cer-
tified development company shall be subject to final 
approval as to the eligibility of any guarantee by the 
Administrator as set forth in section 506, but such 
final approval shall not include review of decisions 
by the premier certified development company in-
volving creditworthiness, loan closing, or compliance 
with legal requirements imposed by law or regula-
tion. 
‘‘(h) SUSPENSION OR REVOCATION.—The Adminis-
trator may suspend or revoke an accredited certified devel-
opment company’s premier status if the Administrator de-
termines, after a hearing on the record as set forth in sec-
tions 554, 556, and 557 of title 5, United States Code, 
that the accredited certified development company no 
longer meets the eligibility criteria established under this 
section, fails to maintain adequate loan loss reserves man-
dated in this section even if it meets the other eligibility 
requirements for premier status, or violates the Adminis-
trator’s rules, regulations, or some other provision of law. 
The Administrator shall consider the review of the premier
‘‘(1) has members, from each of the States in 
which it operates with not fewer than 25 members 
who reside in such States; 
‘‘(2) has a board of directors that contains not 
fewer than 2 members from each State in which the 
company makes loans and issues debentures and are 
residents of that State; 
‘‘(3) maintains a separate loan committee to 
process loans in each expansion State and the mem-
bers of the loan committee are solely residents of the 
expansion State; and 
‘‘(4) files an application developed by the Ad-
ministrator which provides— 
‘‘(A) notice of the intention to make loans 
in multiple States; 
‘‘(B) a specification of the States in which 
the company intends to make loans; 
‘‘(C) a list of members in each expansion 
State; and 
‘‘(D) a detailed statement on how the com-
pany will comply with the requirements of this 
subsection. 
‘‘(b) LOAN
COMMITTEES.—The requirements of 
paragraph (3) of subsection (a) shall not require a devel-
opment company to establish a loan committee in its State
of incorporation or in a local economic area outside the 
State of incorporation unless such area is part of an ex-
pansion State. 
‘‘(c) REVIEW.— 
‘‘(1) IN GENERAL.—The Administrator shall re-
view each application for expansion under subsection 
(a), but such review shall be limited to that informa-
tion needed to determine whether the company will 
comply with the requirements of subsection (a). 
‘‘(2) DEADLINE FOR DECISION.—The Adminis-
trator shall make a decision on each application 
under subsection (a) within 15 calendar days after 
the receipt of the application. If no such decision is 
granted, the application is deemed to be approved 
and no further action is required by the applicant or 
the Administrator for the company to expand into 
the States specified in the application. 
‘‘(3) APPLICATION RESUBMITTAL.—If the Ad-
ministrator rejects the application for expansion, the 
Administrator shall provide in writing the reasons 
for denial within 10 calendar days of the decision. 
The applicant then may resubmit the application but 
the review of such resubmitted applications will be 
limited only to the areas in which the Administrator 
found the original application deficient. The dead-
lines in paragraph (2) shall apply to resubmitted ap-
plications. 
‘‘(4) APPEAL.—If a resubmitted application is 
denied, the applicant may, within 10 calendar days 
after receipt of the disapproval, appeal such dis-
approval. The Administrator shall conduct a hearing 
to determine such appeal pursuant to sections 554, 
556, and 557 of title 5, United States Code, and 
shall issue a decision not later than 45 days after 
the appeal is filed. The decision on appeal shall con-
stitute final agency action for purposes of chapter 7 
of title 5, United States Code. 
‘‘(d) FAILURE TO DEVELOP APPLICATION.—If the 
Administrator fails to develop an application as required 
in subsection (a)(4) within 60 days of the enactment of 
the Small Business Financing and Investment Act of 
2009, an accredited or premier certified development com-
pany only need submit the information required in sub-
section (a) to the Administrator to be deemed eligible to 
commence operations authorized by this section. Such eli-
gibility shall not be terminated if the Administrator devel-
ops an application after the 60-day period set forth in this 
subsection. 
‘‘(e) AGGREGATE ACCOUNTING.—An accredited or 
premier certified development company authorized to op-
erate in multiple States pursuant to this section may 
maintain an aggregate accounting of all revenue and ex-
penses of the company for purposes of this title. 
‘‘(f) LOCAL JOB CREATION REQUIREMENTS.— 
‘‘(1) IN GENERAL.—Any company making loans 
in multiple States as authorized in this section shall 
not count jobs created or retained in one State to-
wards any applicable job creation or retention re-
quirements mandated by this title in another State. 
‘‘(2) APPLICABILITY.—Any company operating 
under the authority of this section shall be required 
to meet any job creation or retention requirement of 
this title on the date that is 2 years after the cer-
tified development company closed its first loan in 
its new State of operation. 
‘‘(g) CONTIGUOUS STATES.—For the purposes of this 
section, the States of Alaska and Hawaii shall be deemed 
to be contiguous to any State abutting the Pacific Ocean. 
Territories of the United States located in the Pacific 
Ocean shall be deemed to be contiguous to any State abut-
ting the Pacific Ocean, including Alaska and Hawaii, and 
territories of the United States located in the Caribbean 
Sea shall be deemed contiguous to any State abutting the 
Gulf of Mexico.
‘‘(h) EXEMPTION FOR LOCAL ECONOMIC AREAS.— 
Except as provided in subsection (a)(3) with respect to 
loan committees, any certified, accredited, or premier de-
velopment company or applicant operating in a local eco-
nomic development area that crosses the border of another 
State shall not be considered to be operating under the 
provisions of this section and shall not be required to com-
ply with the requirements of this section for multi-State 
operation.’’. 
SEC. 216. GUARANTY OF DEBENTURES. 
Section 506 of the Small Business Investment Act 
of 1958 (15 U.S.C. 697c) is amended to read as follows: 
‘‘SEC. 506. GUARANTY OF DEBENTURES. 
‘‘(a) AUTHORITY TO GUARANTEE.—Except as pro-
vided in subsection (c), the Administrator may guarantee 
the timely payment of all principal and interest as sched-
uled on any debenture issued by a certified development 
company. 
‘‘(b) TERMS
AND
CONDITIONS
OF
THE
GUAR-
ANTEE.—Such guarantees may be made on such terms 
and conditions as the Administrator may by regulation, 
published in the Code of Federal Regulations, determine 
to be appropriate, except that the Administrator shall not 
decline to issue such guarantee when the ownership inter-
ests of the small business concern and the ownership inter-
ests of the property to be financed with the proceeds of 
the loan made pursuant to subsection (e)(1) are not iden-
tical because one or more of the following classes of rel-
atives have an ownership interest in either the small busi-
ness concern or the property: father, mother, son, daugh-
ter, wife, husband, brother, or sister, if the Administrator 
or his designee has determined on a case-by-case basis 
that such ownership interest, such guarantee, and the pro-
ceeds of such loan, will substantially benefit the small 
business concern. 
‘‘(c) FULL FAITH AND CREDIT.—The full faith and 
credit of the United States is pledged to the payment of 
all amounts guaranteed under this section. 
‘‘(d) SUBORDINATION.—Any debenture issued by a 
certified development company with respect to which a 
guarantee is made under this section may be subordinated 
by the Administrator to any other debenture, promissory 
note, or other debt or obligation of such company. 
‘‘(e) STANDARDS
FOR ADMINISTRATOR GUARAN-
TEES.—No guarantee may be made with respect to any 
debenture under this section unless— 
‘‘(1) the debenture is issued for the purpose of 
making one or more loans to small business concerns 
the proceeds of which shall be used for the purposes 
set forth in section 507;
‘‘(2) the interest rate on such debentures is not 
less than the rate of interest determined by the Sec-
retary of the Treasury for purposes of section 
303(b); 
‘‘(3) the aggregate amount of such debenture 
does not exceed the amount of the loans to be made 
from the proceeds of such debenture plus, at the 
election of the borrower, other amounts attributable 
to the administrative and closing costs of such loans, 
except for the attorney fees of the borrower; 
‘‘(4) the amount of any loan to be made from 
such proceeds does not exceed an amount equal to 
50 percent of the cost of the project with respect to 
which such loan is made; 
‘‘(5) the Administrator, except to the extent 
provided in section 504 with respect to premier cer-
tified development companies, approves each loan to 
be made from such proceeds; and 
‘‘(6) with respect to each loan made from the 
proceeds of such debenture, the Administrator— 
‘‘(A) assesses and collects a fee, which 
shall be payable by the borrower, in an amount 
established annually by the Administration, 
which amount shall not exceed— 
‘‘(i) the lesser of—
‘‘(I) 0.9375 percent per year of 
the outstanding balance of the loan; 
or 
‘‘(II) the minimum amount nec-
essary to reduce the cost (as defined 
in section 502 of the Federal Credit 
Reform Act of 1990) to the Adminis-
trator of purchasing and guaranteeing 
debentures under this title to zero; 
and 
‘‘(ii) 50 percent of the amount estab-
lished under clause (i) in the case of a loan 
made during the 2-year period beginning 
on October 1, 2002, for the life of the 
loan; and 
‘‘(B) uses the proceeds of such fee to offset 
the cost (as such term is defined in section 502 
of the Federal Credit Reform Act of 1990) to 
the Administrator of making guarantees under 
this section. 
‘‘(f) INTEREST RATES ON COMMERCIAL LOANS.— 
Notwithstanding the provisions of the constitution or laws 
of any State limiting the rate or amount of interest which 
may be charged, taken, received, or reserved, the max-
imum legal rate of interest on any commercial loan which
funds any portion of the cost of the project financed pur-
suant to this title which is not funded by a debenture 
guaranteed under this section shall be a rate which is es-
tablished by the Administrator who shall publish such rate 
quarterly in, at a minimum, the Federal Register and on 
the Administration’s website. 
‘‘(g) DEBENTURE REPAYMENT.—Any debenture that 
is issued under this section shall provide for the payment 
of principal and interest on a semiannual basis. 
‘‘(h) CHARGES FOR ADMINISTRATOR’S EXPENSES.— 
The Administrator may impose an additional charge for 
administrative expenses with respect to each debenture for 
which payment of principal and interest is guaranteed 
under this section. Such administrative expenses may in-
clude— 
‘‘(1) development company fees for processing, 
closing, servicing, late payment, or loan assumption; 
‘‘(2) agent or trustee fees for central servicing, 
underwriters, or debenture funding; and 
‘‘(3) fees charged by the Administrator for the 
debenture guaranty and from the certified develop-
ment company to reduce the subsidy cost. 
‘‘(i) PARTICIPATION FEE.—The Administrator shall 
collect a one-time fee in an amount equal to 50 basis 
points on the total participation in any project of any
State or local government, bank, other financial institu-
tion, or foundation or not-for-profit institution. Such fee 
shall be imposed only when the participation of the entity 
described in the previous sentence will occupy a senior 
credit position to that of the development company. All 
proceeds of the fee shall be used to offset the cost (as 
that term is defined in section 502 of the Credit Reform 
Act of 1990) to the Administrator of making guarantees 
under this section. 
‘‘(j) CERTIFIED DEVELOPMENT COMPANY FEE.— 
The Administrator shall collect annually from each devel-
opment company a fee of 0.125 percent of the outstanding 
principal balance of any guaranteed debenture authorized 
by the Administrator after September 30, 1996. Such fee 
shall be derived from the servicing fees collected by the 
certified development company pursuant to regulation, 
and shall not be derived from any additional fees imposed 
on small business concerns. All proceeds of the fee shall 
be used to offset the cost (as that term is defined in sec-
tion 502 of the Credit Reform Act of 1990) to the Admin-
istrator of making guarantees under this section. 
‘‘(k) EFFECTIVE DATE.—The fees authorized by this 
section shall apply to any financing approved under this 
title on or after October 1, 1996.
‘‘(l) CALCULATION OF SUBSIDY RATE.—All fees, in-
terest, and profits received and retained by the Adminis-
trator under this section shall be included in the calcula-
tions made by the Director of the Office of Management 
and Budget to offset the cost (as that term is defined in 
section 502 of the Federal Credit Reform Act of 1990) 
to the Administrator of purchasing and guaranteeing de-
bentures under this title. 
‘‘(m) ACTIONS UPON DEFAULT.— 
‘‘(1) INITIAL
ACTIONS.—Not later than the 
45th day after the date on which a payment on a 
loan funded through a debenture guaranteed under 
this section is due and not received, the Adminis-
trator shall— 
‘‘(A) take all necessary steps to bring such 
loan current; or 
‘‘(B) implement a formal written deferral 
agreement. 
‘‘(2) PURCHASE OR ACCELERATION OF DEBEN-
TURE.—Not later than the 65th day after the date 
on which a payment on a loan described in para-
graph (1) is due and not received, and absent a for-
mal written deferral agreement, the Administrator 
shall take all necessary steps to purchase or accel-
erate the debenture.
‘‘(3) PREPAYMENT PENALTIES.—With respect 
to the portion of any project derived from funds not 
provided by a debenture issued by a certified devel-
opment company or borrower, the Administrator— 
‘‘(A) shall negotiate the elimination of any 
prepayment penalties or late fees on defaulted 
loans made prior to September 30, 1996; 
‘‘(B) shall not pay any prepayment penalty 
or late fee on the default based purchase of 
loans issued after September 30, 1996; and 
‘‘(C) shall not pay a default interest rate 
higher than the interest rate on the note prior 
to the date of default for any project financed 
after September 30, 1996. 
‘‘(4) COLLECTION AND SERVICING.— 
‘‘(A) IN GENERAL.—In the event of the de-
fault of any loan and the repurchase of a de-
benture guaranteed by the Administrator under 
this title, the Administrator shall continue to 
delegate to the central servicing agent that was 
contracted for that service as of January 1, 
2009, or successor contractor the authority to 
collect and disburse all funds or payments re-
ceived on such defaulted loans, including pay-
ments from guarantors or on notes in com-