eral banking agency or, in the case of a financial in-
stitution that is a non depository community develop-
ment financial institution, the Community Develop-
ment Financial Institution Fund, that the financial 
institution has sufficient commercial lending experi-
ence and financial and managerial capacity to par-
ticipate in the approved State capital access program. 
The determination by the State shall not be review-
able by the Secretary. 
(2) INVESTMENT AUTHORITY.—Subject to appli-
cable State law, the participating State may invest, 
or cause to be invested, funds held in a reserve fund 
by establishing a deposit account at the financial in-
stitution lender in the name of the participating 
State. In the event that funds in the reserve fund are 
not deposited in such an account, such funds shall be 
invested in a form that the participating State deter-
mines is safe and liquid. 
(3) LOAN TERMS AND CONDITIONS TO BE DETER-
MINED BY AGREEMENT.—A loan to be filed for enroll-
ment in an approved State capital access program 
may be made with such interest rate, fees, and other 
terms and conditions, and the loan may be enrolled 
in the approved State capital access program and 
claims may be filed and paid, as agreed upon by the 
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financial institution lender and the borrower, con-
sistent with applicable law. 
(4) LENDER
CAPITAL
AT-RISK.—A loan to be 
filed for enrollment in the State capital access pro-
gram must require the financial institution lender to 
have a meaningful amount of its own capital re-
sources at risk in the loan. 
(5) PREMIUM CHARGES MINIMUM AND MAXIMUM 
AMOUNTS.—The insurance premium charges payable 
to the reserve fund by the borrower and the financial 
institution lender shall be prescribed by the financial 
institution lender, within minimum and maximum 
limits that require that the sum of the insurance pre-
mium charges paid in connection with a loan by the 
borrower and the financial institution lender may not 
be less than 2 percent nor more than 7 percent of the 
amount of the loan enrolled in the approved State 
capital access program. 
(6) STATE CONTRIBUTIONS.—In enrolling a loan 
in an approved State capital access program, the 
participating State may make a contribution to the 
reserve fund to supplement Federal contributions 
made under this Program. 
(7) LOAN PURPOSE.— 
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(A) PARTICULAR LOAN PURPOSE REQUIRE-
MENTS AND PROHIBITIONS.—In connection with 
the filing of a loan for enrollment in an ap-
proved State capital access program, the finan-
cial institution lender— 
(i) shall obtain an assurance from each 
borrower that— 
(I) the proceeds of the loan will be 
used for a business purpose; 
(II) the loan will not be used to 
finance such business activities as the 
Secretary, by regulation, may pro-
scribe as prohibited loan purposes for 
enrollment in an approved State cap-
ital access program; and 
(III) the borrower is not— 
(aa) an executive officer, di-
rector, or principal shareholder of 
the financial institution lender; 
(bb) a member of the imme-
diate family of an executive offi-
cer, director, or principal share-
holder of the financial institution 
lender; or 
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(cc) a related interest of any 
such executive officer, director, 
principal shareholder, or member 
of the immediate family; 
(ii) shall provide assurances to the 
participating State that the loan has not 
been made in order to place under the pro-
tection of the approved State capital access 
program prior debt that is not covered 
under the approved State capital access 
program and that is or was owed by the 
borrower to the financial institution lender 
or to an affiliate of the financial institution 
lender; 
(iii) shall not allow the enrollment of 
a loan to a borrower that is a refinancing 
of a loan previously made to that borrower 
by the financial institution lender or an af-
filiate of the financial institution lender; 
and 
(iv) may include additional restric-
tions on the eligibility of loans or borrowers 
that are not inconsistent with the provisions 
and purposes of this title, including compli-
ance with all applicable Federal and State 
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laws, regulations, ordinances, and Executive 
orders. 
(B) DEFINITIONS.—For purposes of this 
subsection, the terms ‘‘executive officer’’, ‘‘direc-
tor’’, ‘‘principal shareholder’’, ‘‘immediate fam-
ily’’, and ‘‘related interest’’ refer to the same re-
lationship to a financial institution lender as the 
relationship described in part 215 of title 12 of 
the Code of Federal Regulations, or any successor 
to such part. 
SEC. 206. APPROVING COLLATERAL SUPPORT AND OTHER 
INNOVATIVE CREDIT ACCESS AND GUAR-
ANTEE INITIATIVES FOR SMALL BUSINESSES 
AND MANUFACTURERS. 
(a) APPLICATION.—A participating State that estab-
lishes a new, or has an existing, credit support program 
that meets the eligibility criteria in subsection (c) may 
apply to the Secretary to have the State other credit support 
program approved as eligible for Federal contributions to, 
or for the account of, the State program. 
(b) APPROVAL.—The Secretary shall approve such 
State other credit support program as eligible for Federal 
contributions to, or for the account of, the program if— 
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(1) the Secretary determines that the State satis-
fies the requirements of paragraphs (1) through (3) of 
section 205(b); 
(2) the Secretary determines that the State other 
credit support program meets the eligibility criteria 
in subsection (c); 
(3) the Secretary determines the State other cred-
it support program to be eligible based on the addi-
tional considerations in subsection (d); and 
(4) within 9 months after the date of enactment 
of this title, the State has filed with Treasury a com-
plete application for Treasury approval. 
(c) ELIGIBILITY CRITERIA FOR STATE OTHER CREDIT 
SUPPORT PROGRAMS.—For a State other credit support 
program to be approved under this section, it must be a 
program of the State that— 
(1) can demonstrate that, at a minimum, 1 dol-
lar of public investment by the State program will 
cause and result in 1 dollar of new private credit; 
(2) can demonstrate a reasonable expectation 
that, when considered with all other State programs 
of the State, such State programs together have the 
ability to use amounts of new Federal contributions 
to, or for the account of, all such programs in the 
State to cause and result in amounts of new small 
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business lending at least 10 times the new Federal 
contribution amount; 
(3) for those State other credit support programs 
that provide their credit support through 1 or more 
financial institution lenders, requires the financial 
institution lenders to have a meaningful amount of 
their own capital resources at risk in their small 
business lending; and 
(4) extends credit support that— 
(A) targets an average borrower size of 500 
employees or less; 
(B) does not extend credit support to bor-
rowers that have more than 750 employees; 
(C) targets support towards loans with an 
average principal amount of $5,000,000 or less; 
and 
(D) does not extend credit support to loans 
that exceed a principal amount of $20,000,000. 
(d) ADDITIONAL CONSIDERATIONS.—In making a de-
termination that a State other credit support program is 
eligible for Federal contributions to, or for the account of, 
the State program, the Secretary shall take into account 
the following additional considerations: 
(1) The anticipated benefits to the State, its 
businesses, and its residents to be derived from the 
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Federal contributions to, or for the account of, the ap-
proved State other credit support program, including 
the extent to which resulting small business lending 
will expand economic opportunities. 
(2) The operational capacity, skills, and experi-
ence of the management team of the State other credit 
support program. 
(3) The capacity of the State other credit support 
program to manage increases in the volume of its 
small business lending. 
(4) The internal accounting and administrative 
controls systems of the State other credit support pro-
gram, and the extent to which they can provide rea-
sonable assurance that funds of the State program are 
safeguarded against waste, loss, unauthorized use, or 
misappropriation. 
(5) The soundness of the program design and im-
plementation plan of the State other credit support 
program. 
(e) FEDERAL CONTRIBUTIONS TO APPROVED STATE 
OTHER CREDIT SUPPORT PROGRAMS.—A State other credit 
support program approved under this section will be eligi-
ble for receiving Federal contributions to, or for the account 
of, the State program in an amount consistent with the 
schedule describing the apportionment of allocated Federal 
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funds among State programs delivered by the State to the 
Secretary under the allocation agreement. 
(f) MINIMUM PROGRAM REQUIREMENTS FOR STATE 
OTHER CREDIT SUPPORT PROGRAMS.— 
(1) FUND TO PRESCRIBE.—The Secretary shall, 
by regulation or other guidance, prescribe Program 
requirements for approved State other credit support 
programs. 
(2) CONSIDERATIONS FOR FUND.—In prescribing 
minimum Program requirements for approved State 
other credit support programs, the Secretary shall 
take into consideration, to the extent the Secretary de-
termines applicable and appropriate, the minimum 
Program requirements for approved State capital ac-
cess programs in section 205(e). 
SEC. 207. REPORTS. 
(a) QUARTERLY USE-OF-FUNDS REPORT.— 
(1) IN GENERAL.—Not later than 30 days after 
the beginning of each calendar quarter, beginning 
after the first full calendar quarter to occur after the 
date the Secretary approves a State for participation, 
the participating State shall submit to the Secretary 
a report on the use of Federal funding by the partici-
pating State during the previous calendar quarter. 
(2) REPORT CONTENTS.—The report shall— 
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(A) indicate the total amount of Federal 
funding used by the participating State; 
(B) include a certification by the partici-
pating State that— 
(i) the information provided in accord-
ance with subparagraph (A) is accurate; 
(ii) funds continue to be available and 
legally committed to contributions by the 
State to, or for the account of, approved 
State programs, less any amount that has 
been contributed by the State to, or for the 
account of, approved State programs subse-
quent to the State being approved for par-
ticipation in the Program; and 
(iii) the participating State is imple-
menting its approved State program or pro-
grams in accordance with this title and reg-
ulations issued pursuant to section 210. 
(b) ANNUAL REPORT.—Not later than March 31 of 
each year, beginning March 31, 2011, each participating 
State shall submit to the Secretary an annual report that 
shall include the following information: 
(1) The number of borrowers that received new 
loans originated under the approved State program 
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or programs after the State program was approved as 
eligible for Federal contributions. 
(2) The total amount of such new loans. 
(3) Breakdowns by industry type, loan size, an-
nual sales, and number of employees of the borrowers 
that received such new loans. 
(4) The zip code of each borrower that received 
such a new loan. 
(5) Such other data as the Secretary, in the Sec-
retary’s sole discretion, may require to carry out the 
purposes of the Program. 
(c) FORM.—The reports and data filed pursuant to 
subsections (a) and (b) shall be in such form as the Sec-
retary, in the Secretary’s sole discretion, may require. 
(d) TERMINATION OF REPORTING REQUIREMENTS.— 
The requirement to submit reports under subsections (a) 
and (b) shall terminate for a participating State with the 
submission of the completed reports due on the first March 
31 to occur after 5 complete 12-month periods after the 
State is approved by the Secretary to be a participating 
State. 
SEC. 208. REMEDIES FOR STATE PROGRAM TERMINATION 
OR FAILURES. 
(a) REMEDIES.— 
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(1) IN GENERAL.—If any of the events listed in 
paragraph (2) occur, the Secretary, in the Secretary’s 
discretion, may— 
(A) reduce the amount of Federal funds al-
located to the State under the Program; or 
(B) terminate any further transfers of allo-
cated amounts that have not yet been transferred 
to the State. 
(2) CAUSAL EVENTS.—The events referred to in 
paragraph (1) are— 
(A) termination by a participating State of 
its participation in the Program; 
(B) failure on the part of a participating 
State to submit complete reports under section 
207 on a timely basis; or 
(C) noncompliance by the State with the 
terms of the allocation agreement between the 
Secretary and the State. 
(b) DEALLOCATED AMOUNTS TO BE REALLOCATED.— 
If, after 13 months, any portion of the amount of Federal 
funds allocated to a participating State is deemed by the 
Secretary to be no longer allocated to the State after actions 
taken by the Secretary under subsection (a)(1), the Sec-
retary shall reallocate that portion among the participating 
States, excluding the State whose allocated funds were 
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