I 
109TH CONGRESS 
2D SESSION 
H. R. 5924 
To amend the Small Business Act to provide for loan guarantees for certain 
private disaster loans. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 27, 2006 
Mr. BAKER introduced the following bill; which was referred to the Committee 
on Small Business 
A BILL 
To amend the Small Business Act to provide for loan 
guarantees for certain private disaster loans. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. PRIVATE DISASTER LOANS. 
(a) IN GENERAL.—Section 7 of the Small Business 
Act (15 U.S.C. 636) is amended— 
(1) by redesignating subsections (c) and (d) as 
subsections (d) and (e), respectively; and 
(2) by inserting after subsection (b) the fol-
lowing: 
‘‘(c) PRIVATE DISASTER LOANS.— 
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‘‘(1) DEFINITIONS.—In this subsection— 
‘‘(A) the term ‘disaster area’ means a 
county, parish, or similar unit of general local 
government in which a disaster was declared 
under subsection (b); 
‘‘(B) the term ‘eligible small business con-
cern’ means a business concern that is— 
‘‘(i) is a small business concern, as 
defined in this Act; or 
‘‘(ii) is a small business concern, as 
defined in section 103 of the Small Busi-
ness Investment Act of 1958; and 
‘‘(C) the term ‘qualified private lender’ 
means any privately-owned bank or other lend-
ing institution that the Administrator deter-
mines meets the criteria established under para-
graph (10). 
‘‘(2) AUTHORIZATION.—The Administrator may 
guarantee timely payment of all principal and inter-
est as scheduled on any loan issued— 
‘‘(A) by a qualified private lender to an eli-
gible small business concern located in a dis-
aster area; and 
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‘‘(B) during the 24-month period begin-
ning on the date on which the disaster area is 
designated. 
‘‘(3) USE OF LOANS.—A loan guaranteed by 
the Administrator under this subsection may be used 
for— 
‘‘(A) any purpose authorized under sub-
section (a) or (b); and 
‘‘(B) acquiring or developing real estate for 
the purpose of selling or renting such real es-
tate. 
‘‘(4) ONLINE APPLICATIONS.— 
‘‘(A) IN GENERAL.— 
‘‘(i) ESTABLISHMENT.—The Adminis-
trator may establish, directly or through 
an agreement with another entity, an on-
line application process for loans guaran-
teed under this subsection. 
‘‘(ii) OTHER FEDERAL ASSISTANCE.— 
The Administrator may coordinate with 
the head of any other appropriate Federal 
agency so that any application submitted 
through an online application process es-
tablished under clause (i) may be consid-
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ered for any other Federal assistance pro-
gram for disaster relief. 
‘‘(B) CONTENTS.— 
‘‘(i) IN GENERAL.—An online applica-
tion process established under subpara-
graph (A) shall allow an applicant for a 
guarantee under this subsection to specify 
the qualified private lender from which the 
applicant seeks to obtain a loan. 
‘‘(ii) OFFERS FOR LOANS.— 
‘‘(I) IN GENERAL.—If an appli-
cant does not specify a qualified pri-
vate lender under clause (i), any 
qualified private lender may be se-
lected to or opt to consider the appli-
cation. 
‘‘(II) PROCESS.—The Adminis-
trator may, via the online process or 
another predetermined and objective 
process, determine a means of distrib-
uting or otherwise making available 
for consideration applications where a 
qualified private lender has not been 
specified by the applicant. 
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‘‘(5) REFINANCING.—A loan guaranteed under 
this subsection may be used to refinance any debt 
under this Act or the Small Business Investment 
Act of 1958. 
‘‘(6) MAXIMUM AMOUNTS.— 
‘‘(A) GUARANTEE PERCENTAGE.—The Ad-
ministrator may guarantee not more than 85 
percent of a loan under this subsection. 
‘‘(B) LOAN
AMOUNTS.—The maximum 
amount of a loan guaranteed under this sub-
section shall be $3,000,000. 
‘‘(7) LOAN TERM.—The longest term of a loan 
for a loan guaranteed under this subsection shall 
be— 
‘‘(A) 15 years for any loan that is issued 
without collateral; and 
‘‘(B) 25 years for any loan that is issued 
with collateral. 
‘‘(8) FEES.— 
‘‘(A) IN
GENERAL.—The Administrator 
may not collect a guarantee fee under this sub-
section. 
‘‘(B) ORIGINATION
FEE.—The Adminis-
trator shall pay a qualified private lender an 
origination fee for a loan guaranteed under this 
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subsection equal to 15⁄100 of 1 percent of the 
amount of the loan. 
‘‘(9) DOCUMENTATION.—A qualified private 
lender may use its own loan documentation for a 
loan guaranteed by the Administrator, to the extent 
authorized by the Administrator, except that the Ad-
ministrator may not require such use by regulation, 
or otherwise. 
‘‘(10) IMPLEMENTATION.— 
‘‘(A) IN
GENERAL.—Not later than 30 
days after the date of enactment of this sub-
section, the Administrator shall— 
‘‘(i) establish interim criteria for 
qualified private lenders; and 
‘‘(ii) begin accepting applications from 
banks and lending institutions. 
‘‘(B) REGULATIONS.— 
‘‘(i) IN GENERAL.—Not later than 90 
days after the date of enactment of this 
subsection, the Administrator shall promul-
gate regulations establishing permanent 
criteria for qualified private lenders. 
‘‘(ii) EXISTING
QUALIFIED
PRIVATE 
LENDERS.—A bank or lending institution 
that the Administrator determined met the 
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criteria established under subparagraph 
(A)(i) may continue to operate as a quali-
fied private lender if the Administrator de-
termines that such bank or lending institu-
tion meets the criteria established under 
clause (i). 
‘‘(11) OTHER
ASSISTANCE.—The fact that a 
small business concern receives assistance under this 
subsection shall not preclude such business concern 
from receiving other assistance under this Act. 
‘‘(12) AUTHORIZATION OF APPROPRIATIONS.— 
‘‘(A) IN GENERAL.—Amounts necessary to 
carry out this subsection shall be made avail-
able from amounts appropriated to the Admin-
istration under subsection (b). 
‘‘(B) AUTHORITY
TO
REDUCE
INTEREST 
RATES.—Funds appropriated to the Adminis-
tration to carry out this subsection, may be 
used by the Administrator, to the extent avail-
able, to reduce the applicable rate of interest 
for a loan guaranteed under this subsection by 
not more than 3 percentage points.’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to disasters declared under 
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section 7(b)(2) of the Small Business Act (631 
U.S.C. 636(b)(2)) before, on, or after the date of en-
actment of this Act. 
(2) CONSTRUCTION.—For any disaster de-
scribed in paragraph (1) that was declared before 
the date of enactment of this Act, the 24-month pe-
riod described in section 7(c)(2)(B) of the Small 
Business Act, as amended by this Act, shall begin on 
the date on which such disaster was declared. 
SEC. 2. TECHNICAL AND CONFORMING AMENDMENTS. 
The Small Business Act (15 U.S.C. 631 et seq.) is 
amended— 
(1) in section 4(c)— 
(A) in paragraph (1), by striking ‘‘7(c)(2)’’ 
and inserting ‘‘7(d)(2)’’; and 
(B) in paragraph (2)— 
(i) by striking ‘‘7(c)(2)’’ and inserting 
‘‘7(d)(2)’’; and 
(ii) by striking ‘‘7(e),’’; and 
(2) in section 7(b), in the undesignated matter 
following paragraph (3)— 
(A) by striking ‘‘That the provisions of 
paragraph (1) of subsection (c)’’ and inserting 
‘‘That the provisions of paragraph (1) of sub-
section (d)’’; and 
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(B) by striking ‘‘Notwithstanding the pro-
visions of any other law the interest rate on the 
Administration’s share of any loan made under 
subsection (b) except as provided in subsection 
(c),’’ and inserting ‘‘Notwithstanding any other 
provision of law, and except as provided in sub-
section (d), the interest rate on the Administra-
tion’s share of any loan made under subsection 
(b)’’. 
Æ 
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