I 
108TH CONGRESS 
1ST SESSION 
H. R. 923
To amend the Small Business Investment Act of 1958 to allow certain 
premier certified lenders to elect to maintain an alternative loss reserve. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 26, 2003
Mr. DOOLITTLE introduced the following bill; which was referred to the 
Committee on Small Business 
A BILL 
To amend the Small Business Investment Act of 1958 to 
allow certain premier certified lenders to elect to main-
tain an alternative loss reserve.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Premier Certified 
Lenders Program Improvement Act of 2002’’. 
SEC. 2. FINDINGS. 
The Congress finds the following: 
(1) The Premier Certified Lenders Program 
(PCLP) established under section 508 of the Small 
Business Investment Act of 1958 (15 U.S.C. 697e)
has been very successful in helping small businesses 
expand. 
(2) Increasing the number of premier certified 
lenders will allow the Government to make available 
more resources to small businesses even as the Small 
Business Administration downsizes. 
(3) The PCLP requires premier certified lend-
ers to set aside unnecessarily large amounts in loss 
reserve accounts. 
(4) Requiring premier certified lenders to main-
tain unnecessarily large loss reserve accounts is inef-
ficient and limits the ability of lenders to serve addi-
tional small businesses and of new lenders to join 
the PCLP. 
(5) Premier certified lenders should be required 
to maintain loss reserve accounts in amounts com-
mensurate with the risk of loss associated with the 
PCLP loan portfolio of the lender. 
(6) Changing the PCLP to require that premier 
certified lenders maintain loss reserve accounts in 
amounts which reflect the risk of loss associated 
with the loans of the PCLP will protect taxpayers 
and improve the ability of the PCLP to help small 
businesses create economic development.
SEC. 3. ALTERNATIVE LOSS RESERVE FOR CERTAIN PRE-
MIER CERTIFIED LENDERS. 
(a) IN GENERAL.—Section 508(c) of the Small Busi-
ness Investment Act of 1958 (15 U.S.C. 697e(c)) is 
amended by adding at the end the following new para-
graph: 
‘‘(7) ALTERNATIVE LOSS RESERVE.—
‘‘(A) ELECTION.—With respect to any cal-
endar quarter, any qualified high loss reserve 
PCL may elect to have the requirements of this 
paragraph apply in lieu of the requirements of 
paragraphs (2) and (4). 
‘‘(B) CONTRIBUTIONS.—
‘‘(i) 
ORDINARY
RULES
INAPPLI-
CABLE.—Except as provided under clause 
(ii) and paragraph (5), a qualified high 
loss reserve PCL which makes the election 
described in subparagraph (A) with respect 
to a calendar quarter shall not be required 
to make contributions to its loss reserve 
during such quarter. 
‘‘(ii) BASED
ON
RISK
OF
LOSS.—A 
company which makes the election de-
scribed in subparagraph (A) with respect 
to any calendar quarter shall, before the 
last day of such quarter, make such con-
tributions to its loss reserve as are nec-
essary to ensure that the amount of the 
loss reserve of the company is—
‘‘(I) not less than $25,000; and 
‘‘(II) sufficient, as determined by 
a third-party auditor employed by the 
company, to protect the Federal Gov-
ernment from the risk of loss associ-
ated with the portfolio of PCLP loans 
of the company. 
‘‘(C) QUALIFIED
HIGH
LOSS
RESERVE 
PCL.—The term ‘qualified high loss reserve 
PCL’ means, with respect to any calendar year, 
any company designated as a premier certified 
lender, if the Administrator determines that—
‘‘(i) the amount of the loss reserve of 
the company is not less than $25,000; 
‘‘(ii) the company has established a 
process for analyzing the risk of loss asso-
ciated with its portfolio of PCLP loans and 
for grading each PCLP loan made by the 
company on the basis of the risk of loss as-
sociated with such loan; and 
‘‘(iii)(I) in the case of a company 
which was a qualified high loss reserve
PCL with respect to the preceding cal-
endar year, a third-party auditor employed 
by the company has certified during each 
calendar quarter of such year that the 
amount of the loss reserve of the company 
is sufficient to protect the Federal Govern-
ment from the risk of loss associated with 
the portfolio of PCLP loans of the com-
pany; and 
‘‘(II) in the case of any other com-
pany, a third-party auditor employed by 
the company has certified during the pre-
ceding 90 days that the loss reserve of the 
company is sufficient to protect the Fed-
eral Government from the risk of loss asso-
ciated with the portfolio of PCLP loans of 
the company. 
‘‘(D) PCLP LOAN.—For purposes of this 
paragraph, the term ‘PCLP loan’ means any 
loan guaranteed under this section. 
‘‘(E) CALENDAR QUARTER.—For purposes 
of this paragraph, the term ‘calendar quarter’ 
means—
‘‘(i) the period which begins on Janu-
ary 1 and ends on March 31 of each year;
‘‘(ii) the period which begins on April 
1 and ends on June 30 of each year; 
‘‘(iii) the period which begins on July 
1 and ends on September 30 of each year; 
or 
‘‘(iv) the period which begins on Octo-
ber 1 and ends on December 31 of each 
year.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
508(b)(2)(D) of the Small Business Investment Act of 
1958 (15 U.S.C. 697e(b)(2)(D)) is amended by striking 
‘‘subsection (c)(2)’’ and inserting ‘‘subsection (c)’’.
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