‘‘(r) SMALL MANUFACTURER.—For purposes of this 
Act, the term ‘small manufacturer’ means any small busi-
ness concern if—
‘‘(1) the primary business of the concern is clas-
sified in sector 31, 32, or 33 of the North American 
Industrial Classification System; and 
‘‘(2) all of its facilities that are used for produc-
tion are located in the United States. 
‘‘(s) SMALL BUSINESS LENDING COMPANY.—For pur-
poses of this Act, the term ‘small business lending company’ 
means a business concern that is authorized by the Admin-
istrator to make loans pursuant to section 7(a) and whose 
lending activities are not subject to regulation by any Fed-
eral or State regulatory agency. 
‘‘(t) NON-FEDERALLY REGULATED SBA LENDERS.—
For purposes of this Act, the term ‘Non-federally regulated 
SBA lenders’ means a business concern if—
‘‘(1) such concern is authorized by the Adminis-
trator to make loans under section 7; 
‘‘(2) such concern is subject to regulation by a 
State; and 
‘‘(3) the lending activities of such concern are 
not regulated by any Federal banking authority. 
‘‘(u) PROCUREMENT CENTER REPRESENTATIVE.—For 
purposes of this Act, the term ‘procurement center represent-
ative’ means an employee of the Administration whose sole 
responsibility is to perform the functions referred to in sec-
tion 15(l). 
‘‘(v) COMMERCIAL MARKETING REPRESENTATIVE.—
For purposes of this Act, the term ‘commercial marketing 
representative’ means an employee of the Administration 
whose sole responsibility is to perform the functions referred 
to in section 8(d). 
‘‘(w) TEAM.—For purposes of this Act, the term ‘team’ 
means two or more small business concerns who respond 
together to a solicitation, as one entity, for the purposes 
of providing goods or services to a Federal agency. A team
shall be considered a small business concern provided that 
each member of the team is a small business concern.’’. 
SEC. 204. SMALL BUSINESS ADMINISTRATION. 
(a) IN GENERAL.—Section 4 of the Small Business Act 
(15 U.S.C. 633) is amended to read as follows: 
‘‘SEC. 4. SMALL BUSINESS ADMINISTRATION. 
‘‘(a) ESTABLISHMENT.—In order to carry out the poli-
cies of this Act and the Small Business Investment Act of 
1958, there is an agency known as the ‘Small Business Ad-
ministration’ (also referred to in this Act as the Adminis-
tration), which Administration shall be under the general 
direction and supervision of the President and shall not be 
affiliated with or be within any other agency or department
of the Federal Government. The principal office of the Ad-
ministration shall be located in the District of Columbia. 
‘‘(b) APPOINTMENT OF ADMINISTRATOR AND DEPUTY 
ADMINISTRATOR.—
‘‘(1) ADMINISTRATOR.—The management of the 
Administration shall be vested in an Administrator 
who shall be appointed from civilian life by the Presi-
dent, by and with the advice and consent of the Sen-
ate, and who shall be a person of outstanding quali-
fications known to be familiar and sympathetic with 
the needs and problems of small business concerns. 
The Administrator shall not engage in any other 
business, vocation, or employment other than that of 
serving as Administrator. 
‘‘(2) DEPUTY ADMINISTRATOR.—The President 
shall appoint, by and with the advice and consent of 
the Senate, a Deputy Administrator, whose principal 
function shall be to assist the Administrator in the 
daily management of the Administration. 
‘‘(c) POWERS OF THE ADMINISTRATOR.—
‘‘(1) USE
OF
SEAL.—The Administrator may 
adopt, alter, and use a seal, which shall be judicially 
noticed. 
‘‘(2) SUE
AND
BE
SUED.—The Administrator 
may sue and be sued in any court of record of a State
having general jurisdiction, or in any United States 
district court, and jurisdiction is conferred upon such 
district court to determine such controversies without 
regard to the amount in controversy; but no attach-
ment, garnishment, or other similar process, mesne or 
final, shall be issued against the Administrator or his 
property. 
‘‘(3) RULES AND REGULATIONS.—The Adminis-
trator may make such rules and regulations as he 
deems necessary to carry out this Act and the Small 
Business Investment Act of 1958 (15 U.S.C. 661 et 
seq.). Any such rules or regulations, other than those 
relating to agency management or personnel, shall be 
issued pursuant to section 553(b) of title 5, United 
States Code. 
‘‘(4) FACILITIES AND STAFF OF FEDERAL AGEN-
CIES.—Upon request of the Administrator, the head of 
any Federal department or agency may provide, on 
a reimbursable or nonreimbursable basis, informa-
tion, services, facilities (including any field service 
thereof), or any of the personnel of that department 
or agency to the Administrator to assist in carrying 
out this Act and the Small Business Investment Act 
of 1958. 
‘‘(5) INVESTIGATIONS; SUBPOENAS.—
‘‘(A) INVESTIGATIONS.—The Administrator 
may make such investigations as the Adminis-
trator deems necessary to determine whether a 
recipient of or participant in any assistance 
under this Act or any other person has engaged, 
or is about to engage, in any acts or practices 
which constitute, or will constitute, a violation of 
any provision of this Act, or of any rule or regu-
lation under this Act, or of any order issued 
under this Act. 
‘‘(B) 
STATEMENTS.—The 
Administrator 
shall permit any person to file with it a state-
ment in writing, under oath or otherwise as the 
Administrator shall determine, as to all the facts 
and circumstances concerning the matter to be 
investigated. 
‘‘(C) SUBPOENAS.—For the purpose of any 
investigation, the Administrator may administer 
oaths and affirmations, subpoena witnesses, com-
pel their attendance, take evidence, and require 
the production of any books, papers, and docu-
ments which are relevant to the inquiry. Such 
attendance of witnesses and the production of 
any such records may be required from any 
place in the United States.
‘‘(D) CONTEMPT PROCEEDINGS.—In case of 
contumacy by, or refusal to obey a subpoena 
issued to, any person, including a recipient or 
participant, the Administrator may invoke the 
aid of any court of the United States within the 
jurisdiction of which such investigation or pro-
ceeding is carried on, or where such person re-
sides or carries on business, in requiring the at-
tendance and testimony of witnesses and the pro-
duction of books, papers, and documents; and 
such court may issue an order requiring such 
person to appear before the Administrator, there
to produce records, if so ordered, or to give testi-
mony touching the matter under investigation. 
Any failure to obey such order of the court may 
be punished by such court as a contempt thereof. 
All process in any such case may be served in 
the judicial district whereof such person is an 
inhabitant or wherever he may be found. 
‘‘(6) GIFTS.—
‘‘(A) IN
GENERAL.—The Administrator 
may solicit, accept, hold, administer, and utilize 
gifts, devises, bequests, cash, and temporary use 
of property, both real and personal, and dona-
tions of personal services for the purpose of aid-
ing or facilitating the Administrator in pro-
viding training to persons, employees, small 
business concerns and small manufacturers, and 
technical assistance to small business concerns 
and small manufacturers. 
‘‘(B) AUDITS.—Any such gifts, devises, or 
bequests of property shall be held in a separate 
account and shall be subject to quarterly audits 
by the Inspector General of the Administration 
who shall report quarterly to the Congress on the 
Administrator’s use of such gifts, bequests, de-
vises, and donations of personal services includ-
ing an assessment of whether such gifts, bequests, 
devises, and personal services have advanced the 
purposes of this Act. 
‘‘(C) AUTHORITY TO CHARGE FEES.—Not-
withstanding any other provision of this Act, the 
Administrator is authorized to charge nominal 
fees to attendees in order to cover costs for any 
event or publication produced pursuant to sub-
paragraph (A). 
‘‘(D) CONFLICTS
OF
INTEREST.—No em-
ployee of the Administration may accept or so-
licit any gift, bequest, devise, or donation of per-
sonal services if such acceptance or solicitation
would, in the opinion of the General Counsel, 
create a conflict of interest. 
‘‘(E) ACCEPTANCE OF SERVICES AND FA-
CILITIES FOR DISASTER LOAN PROGRAM.—The 
Administrator may accept the services and fa-
cilities of Federal, State, and local agencies and 
groups, both public and private, and utilize such 
gratuitous services and facilities as may, from 
time to time, be necessary, to further the objec-
tives of section 7(b). Subparagraph (B) shall not 
apply to any services or facilities accepted under 
this subparagraph. 
‘‘(7) CO-SPONSORSHIP OF EVENTS.—
‘‘(A) AUTHORIZATION.—The Administrator, 
after consultation with the General Counsel, may 
permit any eligible donor of any gift, bequest, 
devise, or donation of personal services to be a 
named cosponsor of any event conducted by the 
Administrator or any publication of the Admin-
istrator. 
‘‘(B) ELIGIBLE
DONOR.—For purposes of 
this paragraph, the term ‘eligible donor’ means, 
with respect to any event or publication, any 
donor if such donor provides, directly or in-kind, 
at least 50 percent of the cost of such event or
publication, provided further that any such co-
sponsorship must be approved by an Associate 
Administrator, after consultation with the Gen-
eral Counsel. 
‘‘(C) LIMITED DELEGATION.—The Adminis-
trator may not delegate the authority described 
in subparagraph (A) except to the Deputy Ad-
ministrator or any Associate Administrator. 
‘‘(D) REPORT TO CONGRESS.—The Inspec-
tor General of the Administration shall report 
semi-annually to Congress on the Administra-
tor’s use of co-sponsorship. Such report shall in-
clude the Inspector General’s assessment of 
whether such co-sponsorships have advanced the 
purposes of this Act. 
‘‘(d) OTHER PROVISIONS.—
‘‘(1) REQUIREMENTS FOR ASSISTANCE.—No loan 
shall be made or equipment, facilities, or services fur-
nished by the Administrator under this Act to any 
business concern unless the owners, partners, or offi-
cers of such business concern—
‘‘(A) certify to the Administrator the names 
of any attorneys, agents, or other persons en-
gaged by or on behalf of such business concern 
for the purpose of expediting applications made
to the Administrator for assistance of any sort, 
and the fees paid or to be paid to any such per-
sons; 
‘‘(B) execute an agreement binding any 
such business concern for a period of two years 
after any assistance is rendered by the Adminis-
trator to such business concern, to refrain from 
employing, tendering any office or employment 
to, or retaining for professional services, any 
person who, on the date such assistance or any 
part thereof was rendered, or within one year 
prior thereto, shall have served as an officer, at-
torney, agent, or employee of the Administration 
occupying a position or engaging in activities 
which the Administrator shall have determined 
involve discretion with respect to the granting of 
assistance under this Act; and 
‘‘(C) furnish the names of lending institu-
tions to which such business concern has applied 
for loans together with dates, amounts, terms, 
and proof of refusal. 
‘‘(2) AUTHORITY
RELATING
TO
TRANSFER
OF 
FUNCTIONS.—The President may transfer to the Ad-
ministrator any functions, powers, and duties of any 
department or agency which relate primarily to small
business problems. In connection with any such trans-
fer, the President may provide for appropriate trans-
fers of records, property, necessary personnel, and un-
expended balances of appropriations and other funds 
available to the department or agency from which the 
transfer is made. 
‘‘(3) FAIR CHARGES.—To the fullest extent the 
Administrator deems practicable, he shall make a fair 
charge for the use of Government-owned property and 
make and let contracts on a basis that will result in 
a recovery of the direct costs incurred by the Adminis-
trator.
‘‘(4) 
NON-DUPLICATION.—The 
Administrator 
shall not duplicate the work or activity of any other 
department or agency of the Federal Government. 
Nothing contained in this Act shall be construed to 
authorize any such duplication unless such work or 
activity is expressly provided for in this Act. If loan 
applications are being refused or loans denied by such 
other department or agency responsible for such work 
or activity due to administrative withholding from 
obligation or withholding from apportionment, or due 
to administratively declared moratorium, then, for 
purposes of this section, no duplication shall be 
deemed to have occurred.
‘‘(5) PREPAYMENT
OF
RENTALS.—Subsections 
(a) and (b) of section 3324 of title 31, United States 
Code, shall not apply to prepayments of rentals made 
by the Administration on safety deposit boxes used by 
the Administration for the safeguarding of instru-
ments held as security for loans or for the safe-
guarding of other documents. 
‘‘(6) NONDISCRIMINATION.—In carrying out this 
Act and the Small Business Investment Act of 1958, 
the Administrator shall not discriminate on the basis 
of sex or marital status against any person or small 
business concern applying for or receiving assistance 
from the Administrator. 
‘‘(7) GROUPS
RECEIVING
SPECIAL
CONSIDER-
ATION.—In providing assistance under this Act and 
the Small Business Investment Act of 1958, the Ad-
ministrator shall give special consideration to—
‘‘(A) veterans of the Armed Forces of the 
United States and their survivors or dependents; 
and 
‘‘(B) small manufacturers. 
‘‘(8) UNLAWFUL RESIDENTS.—None of the funds 
made available pursuant to this Act may be used to 
provide any direct benefit or assistance to any indi-
vidual in the United States if the Administrator or
the official to which the funds are made available re-
ceives notification that the individual is not lawfully 
within the United States. 
‘‘(9) OBSCENE PRODUCTS AND SERVICES.—The 
Administrator is prohibited from providing any fi-
nancial or other assistance to any business concern or 
other person engaged in the production or distribu-
tion of any product or service that has been deter-
mined to be obscene by a court of competent jurisdic-
tion. 
‘‘(10) ECONOMIC DATABASE; INDICES AND RE-
PORTS.—The Administrator shall—
‘‘(A) establish and maintain an external 
small business economic data base for the pur-
pose of providing the Congress and the President 
information on the economic condition and the 
expansion or contraction of the small business 
sector; 
‘‘(B) publish on a regular basis national 
small business economic indices and, to the ex-
tent feasible, regional small business economic 
indices, which shall include data on—
‘‘(i) employment, layoffs, and new 
hires;
reflected by the data acquired pursuant to sub-
paragraph (A).’’. 
(b) RELATED REPEALS.—
(1) Section 13 of the Small Business Act (15 
U.S.C. 642) is amended to read as follows: 
‘‘SEC. 13. [RESERVED].’’. 
(2) Section 14 of the Small Business Act (15 
U.S.C. 643) is amended to read as follows: 
‘‘SEC. 14. [RESERVED].’’. 
(3) Section 18 of the Small Business Act (15 
U.S.C. 647) is amended to read as follows: 
‘‘SEC. 18. [RESERVED].’’. 
SEC. 205. FINANCIAL MANAGEMENT. 
(a) IN GENERAL.—Section 5 of the Small Business Act 
(15 U.S.C. 634) is amended to read as follows: 
‘‘SEC. 5. FINANCIAL MANAGEMENT. 
‘‘(a) ACCOUNTS.—
‘‘(1) IN GENERAL.—All repayments of loans, de-
bentures, payments of interest and other receipts aris-
ing out of transactions heretofore or hereafter entered 
into by the Administrator shall be deposited into ap-
propriate accounts and funds as determined by the 
Administrator. 
‘‘(2) REPORT AND BUDGET.—The Administrator 
shall submit to the Committees on Appropriations, the
Committee on Small Business and Entrepreneurship 
of the Senate, and the Committee on Small Business 
of the House of Representatives, as soon as possible 
after the beginning of each calendar quarter a full 
and complete report on the status of each of the ac-
counts and funds referred to in paragraph (1). Busi-
ness-type budgets for each of the accounts and funds 
referred to in paragraph (1) shall be prepared, trans-
mitted to the Committees on Appropriations, the
Committee on Small Business and Entrepreneurship 
of the Senate, and the Committee on Small Business 
of the House of Representatives, and considered, and 
enacted in the manner prescribed for wholly owned 
Government corporations under sections 9103 and 
9104 of title 31, United States Code. 
‘‘(3) ISSUANCE OF NOTES.—
‘‘(A) ISSUANCE.—The Administrator may 
issue notes to the Secretary of the Treasury for 
the purpose of obtaining funds necessary for dis-
charging obligations under the accounts and 
funds referred to in paragraph (1) and for au-
thorized expenditures out of the accounts and 
funds. 
‘‘(B) FORM.—The notes authorized by this 
paragraph shall be in such form and denomina-
tions and have such maturities and be subject to 
such terms and conditions as may be prescribed 
by the Administrator with the approval of the 
Secretary of the Treasury. 
‘‘(C) INTEREST
RATE.—Such notes shall 
bear interest at a rate fixed by the Secretary of 
the Treasury, taking into consideration the cur-
rent average market yield of outstanding market-
able obligations of the United States having ma-
turities comparable to the notes issued by the Ad-
ministrator under this paragraph. 
‘‘(D) PURCHASE BY TREASURY.—The Sec-
retary of the Treasury shall purchase any notes 
of the Administration issued under subpara-
graph (A). For purposes of purchasing such 
notes, the Secretary of the Treasury may use as 
a public debt transaction the proceeds from the 
sale of any securities issued under chapter 31 of 
title 31, United States Code. The purposes for 
which such securities may be issued under such 
chapter are extended to include the purchase of 
notes issued by the Administrator under sub-
paragraph (A). All redemptions, purchases, and 
sales by the Secretary of the Treasury of such
notes shall be treated as public debt transactions 
of the United States. 
‘‘(4) PAYMENTS TO TREASURY.—
‘‘(A) EXCESS FUNDS.—Moneys in any ac-
count or fund referred to in paragraph (1) which 
are not needed for current operations shall re-
main in such account or fund and shall be avail-
able solely to carry out the provisions and pur-
poses of programs operated from such account or 
fund pursuant to law as provided in appropria-
tions Acts. 
‘‘(B) ACTUAL
INTEREST.—Following the 
close of each fiscal year, the Administrator shall 
pay into the miscellaneous receipts of the United 
States Treasury the actual interest that the Ad-
ministrator collects during that fiscal year on all 
financings made under this Act. 
‘‘(C) OTHER INTEREST.—Except on those 
loan disbursements on which interest is paid 
under subparagraph (B), the Administrator shall 
pay into miscellaneous receipts of the Treasury, 
following the close of each fiscal year, interest re-
ceived by the Administration on financing func-
tions performed under this Act and titles III and 
V of the Small Business Investment Act of 1958
if the capital used to perform such functions 
originated from appropriated funds. Such pay-
ments shall be treated by the Department of the 
Treasury as interest income, not as retirement of 
indebtedness. 
‘‘(5) CONTRIBUTIONS TO EMPLOYEES COMPENSA-
TION FUND.—The Administrator shall contribute to 
the employee’s compensation fund, on the basis of an-
nual billings as determined by the Secretary of Labor, 
for the benefit payments made from such fund on ac-
count of employees engaged in carrying out functions 
financed by the accounts and funds referred to in 
paragraph (1). The annual billings shall also include 
a statement of the fair portion of the cost of the ad-
ministration of such funds, which shall be paid by the 
Administrator into the Treasury as miscellaneous re-
ceipts. 
‘‘(6) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated, in any fiscal 
year, such sums as may be necessary for losses and 
interest subsidies incurred by the accounts and funds 
referred to in paragraph (1) and not previously reim-
bursed. All borrowing authority contained in this sub-
section shall be effective only to such extent or in such
100
amounts as are provided in advance in appropriation 
Acts. 
‘‘(b) FINANCIAL MANAGEMENT POWERS.—
‘‘(1) SALE OF FINANCINGS, ETC.—
‘‘(A) IN
GENERAL.—The Administrator, 
under regulations prescribed by him and codified 
in the Code of Federal Regulations, may assign 
or sell at public or private sale, or otherwise dis-
pose of for cash or credit, in his discretion and 
upon such terms and conditions and for such 
consideration as he shall determine to be reason-
able, any evidence of debt, contract, claim, per-
sonal property, or security assigned to or held by 
him in connection with the payment of loans 
granted under this Act, and to collect or com-
promise all obligations assigned to or held by 
him and all legal or equitable rights accruing to 
him in connection with the payment of such 
loans until such time as such obligations may be 
referred to the Attorney General for suit or col-
lection. 
‘‘(B) LIMITATION.—Notwithstanding sub-
paragraph (A), the Administrator shall not sell 
any portion of the Administration’s interest in, 
or the rights of the Administration with respect
101
to, any loan made directly or through immediate 
participation under section 7(b), including by 
direct sale, through the sale of loan participa-
tions, or by including such loan in a pool of as-
sets for the purpose of selling asset-backed securi-
ties during—
‘‘(i) the 3-year period beginning on the 
date that such loan was originated; and 
‘‘(ii) the 3-month period beginning at 
the end of such 3-year period if, at any
time during the 3-month period ending at 
the end of such 3-year period, the Adminis-
trator was engaged in negotiations with the 
borrower for the purpose of substantially al-
tering the terms of such loan. 
‘‘(2) USE
OF
FEDERAL
RESERVE
DEPOSI-
TORIES.—All moneys of the Administrator not other-
wise employed may be deposited with the Treasury of 
the United States subject to check by authority of the 
Administrator. The Federal Reserve banks are author-
ized and directed to act as depositaries, custodians, 
and fiscal agents for the Administrator in the general 
performance of its powers conferred by this Act. Any 
banks insured by the Federal Deposit Insurance Cor-
poration, when designated by the Secretary of the
102
Treasury, shall act as custodians and financial agents 
for the Administrator. Each Federal Reserve bank, 
when designated by the Administrator as fiscal agent 
for the Administrator, shall be entitled to be reim-
bursed for all expenses incurred as such fiscal agent. 
‘‘(3) REAL PROPERTY.—
‘‘(A) 
CONVEYANCE.—The 
Administrator 
may convey and execute in the name of the Ad-
ministration deeds of conveyance, deeds of re-
lease, assignments and satisfactions of mortgages, 
and any other written instrument relating to 
real property or any interest therein acquired by 
the Administrator pursuant to the provisions of 
this Act. Such authority may be exercised by the 
Administrator or by any officer or agent ap-
pointed by him without the execution of any ex-
press delegation of power or power of attorney. 
‘‘(B) OTHER
AUTHORITY.—The Adminis-
trator may deal with, complete, renovate, im-
prove, modernize, insure, or rent, or sell for cash 
or credit upon such terms and conditions and for 
such consideration as the Administrator shall de-
termine to be reasonable, any real property con-
veyed to or otherwise acquired by him in connec-
103
tion with the payment of loans granted under 
this Act. 
‘‘(4) COLLECTIONS.—The Administrator may 
pursue to final collection, by way of compromise or 
otherwise, all claims against third parties assigned to 
the Administrator in connection with loans made by 
him, including by obtaining deficiency judgments or 
otherwise in the case of mortgages assigned to the Ad-
ministrator. 
‘‘(5) ACQUISITION OF PROPERTY.—The Adminis-
trator may acquire, in any lawful manner, any prop-
erty (real, personal, or mixed, tangible or intangible), 
whenever deemed necessary or appropriate to the con-
duct of the activities authorized in subsection (a) or 
(b) of section 7. 
‘‘(6) POWER OF ATTORNEY.—Nothing in this sec-
tion shall prevent the Administrator from delegating 
any authority provided under this section by power 
of attorney to any officer or agent he may appoint. 
‘‘(c) SALE OF GUARANTEED LOANS BY LENDERS.—
‘‘(1) IN GENERAL.—The guaranteed portion of 
any loan made pursuant to this Act may be sold by 
the lender, and by any subsequent holder, consistent 
with regulations on such sales as the Administrator 
shall establish, subject to the following limitations:
104
‘‘(A) Prior to the approval of the sale, or 
upon any subsequent sale, of any loan guaran-
teed by the Administrator, if the lender certifies 
that such loan has been properly closed and that 
the lender has substantially complied with the 
provisions of the guarantee agreement and the 
regulations of the Administrator, the Adminis-
trator shall review and approve only materials 
not previously approved. 
‘‘(B) All fees due the Administrator on a 
guaranteed loan shall have been paid in full 
prior to any sale. 
‘‘(C) Each loan, except each loan made 
under section 7(a)(14), shall have been fully dis-
bursed to the borrower prior to any sale. 
‘‘(2) TREATMENT IN SECONDARY MARKET.—After 
a loan is sold in the secondary market, the lender 
shall remain obligated under its guarantee agreement 
with the Administrator, and shall continue to service 
the loan in a manner consistent with the terms and 
conditions of such agreement. 
‘‘(3) PROCEDURES.—The Administrator shall de-
velop such procedures as are necessary for: 
‘‘(A) The facilitation, administration, and 
promotion of secondary market operations.
105
‘‘(B) Assessing the increase of small busi-
ness access to capital at reasonable rates and 
terms as a result of secondary market operations. 
‘‘(4) CERTAIN
REGULATIONS
REQUIRED.—The 
unguaranteed portion of any loan made under section 
7(a) shall not be sold unless a final regulation pro-
mulgated by the Administrator is in effect that ap-
plies uniformly to both depository institutions and 
other lenders and sets forth the terms and conditions 
under which such sales can be permitted, including 
maintenance of appropriate reserve requirements and 
other safeguards to protect the safety and soundness 
of the program. 
‘‘(5) PREPAYMENTS.—Nothing in this subsection 
or subsection (d) shall be interpreted to impede or ex-
tinguish the right of the borrower or the successor in 
interest to such borrower to prepay (in whole or in 
part) any loan made pursuant to section 7(a), the 
guaranteed portion of which may be included in such 
trust or pool, or to impede or extinguish the rights of 
any party pursuant to subsection (f)(3). 
‘‘(d) ISSUANCE OF TRUST CERTIFICATES.—
‘‘(1) IN
GENERAL.—The Administrator may 
issue trust certificates representing ownership of all or 
a fractional part of the guaranteed portion of one or
106
more loans which have been guaranteed by the Ad-
ministration under this Act, or under section 502 of 
the Small Business Investment Act of 1958. Such 
trust certificates shall be based on and backed by a 
trust or pool approved by the Administrator and com-
posed solely of the entire guaranteed portion of such 
loans. 
‘‘(2) GUARANTEE.—
‘‘(A) AUTHORIZATION.—The Administrator 
is authorized, upon such terms and conditions as 
are deemed appropriate, to guarantee the timely 
payment of the principal of and interest on trust 
certificates issued by the Administrator or its 
agent for purposes of this subsection. Such guar-
antee shall be limited to the extent of principal 
and interest on the guaranteed portions of loans 
which compose the trust or pool. The full faith 
and credit of the United States is pledged to the 
payment of all amounts which may be required 
to be paid under any guarantee of such trust cer-
tificates issued by the Administrator or its agent 
pursuant to this subsection. 
‘‘(B) PREPAYMENT.—In the event that a 
loan in such trust or pool is prepaid, either vol-
untarily or in the event of default, the guarantee
108
and shall be paid to the Administrator and used 
solely to reduce the subsidy on loans guaranteed 
under section 7(a). Any such fee shall not be 
charged to the borrower whose loan is guaran-
teed. Nothing in this paragraph shall preclude 
any agent of the Administrator from collecting a 
fee approved by the Administrator for the func-
tions described in subsection (e). 
‘‘(C) LATE
FEES.—The Administrator is 
authorized to impose and collect, either directly 
or through a fiscal and transfer agent, a reason-
able penalty on late payments of the fee author-
ized under subparagraph (A) in an amount not 
to exceed 5 percent of such fee per month plus in-
terest. 
‘‘(4) SUBROGATION.—In the event the Adminis-
trator pays a claim under a guarantee issued under 
this subsection, it shall be subrogated fully to the 
rights satisfied by such payment. 
‘‘(5) LAWS SUPERSEDED.—No federal, state, or 
local law, shall preclude or limit the exercise by the 
Administrator of its ownership rights in the portions 
of loans constituting the trust or pool against which 
the trust certificates are issued.
109
‘‘(e) CENTRAL REGISTRY OF LOANS AND TRUST CER-
TIFICATES.—
‘‘(1) ESTABLISHMENT.—Upon the adoption of 
final rules and regulations, the Administrator shall—
‘‘(A) provide for a central registration of all 
loans and trust certificates sold pursuant to sub-
sections (c) and (d); 
‘‘(B) contract with an agent to carry out on 
behalf of the Administrator the central registra-
tion functions of this subsection and the issuance 
of trust certificates to facilitate pooling; 
‘‘(C) prior to any sale, require the seller to 
disclose to a purchaser of the guaranteed portion 
of a loan guaranteed under this Act, and to the 
purchaser of a trust certificate issued pursuant 
to subsection (d), information on the terms, con-
ditions, and yield of such instrument; and 
‘‘(D) have the authority to regulate brokers 
and dealers in guaranteed loans and trust cer-
tificates sold pursuant to subsections (c) and (d). 
‘‘(2) BONDING
REQUIREMENT.—The agent re-
ferred to in paragraph (1)(B) shall provide a fidelity 
bond or insurance in such amounts as the Adminis-
trator determines to be necessary to fully protect the 
interest of the Government.
110
‘‘(3) SELLER.—For purposes of this subsection, 
the term ‘seller’, with respect to the sale of any loan, 
does not include the entity which made the loan or 
any individual or entity which sells three or fewer 
guaranteed loans per year. 
‘‘(4) BOOK-ENTRY SYSTEM.—Nothing in this sub-
section shall prohibit the utilization of a book-entry 
or other electronic form of registration for trust cer-
tificates. The Administrator may, with the consent of 
the Secretary of the Treasury, use the book-entry sys-
tem of the Federal Reserve System. 
‘‘(5) AGENT
FEES.—The Administrator may 
compensate an agent described in paragraph (1)(B) 
through transaction and servicing fees charged to pro-
gram users and through interest earnings on pay-
ments under the agent’s control. 
‘‘(f) OTHER SPECIAL RULES AND AUTHORITIES RE-
LATED TO LOAN PROGRAMS.—
‘‘(1) IN GENERAL.—The Administrator may take 
any and all actions (including the procurement of the 
services of attorneys by contract in any office where 
an attorney or attorneys are not or cannot be eco-
nomically employed full time to render such services) 
when he determines such actions are necessary or de-
sirable in making, servicing, compromising, modi-
111
fying, liquidating, or otherwise dealing with or real-
izing on loans made under the provisions of this Act. 
With respect to deferred participation loans, the Ad-
ministrator may, in the discretion of and pursuant to 
regulations promulgated by the Administrator, au-
thorize participating lending institutions to take ac-
tions relating to loan servicing on behalf of the Ad-
ministrator, including determining eligibility and
creditworthiness and loan monitoring, collection, and 
liquidation. 
‘‘(2) FEES.—The Administrator may impose, re-
tain, and use only those fees which are specifically 
authorized by law or which are in effect on September 
30, 1994, and in the amounts and at the rates in ef-
fect on such date, except that the Administrator may, 
subject to approval in appropriations Acts, impose, 
retain, and utilize, additional fees—
‘‘(A) not to exceed $100 for each loan serv-
icing action (other than a loan assumption) re-
quested after disbursement of the loan, including 
any substitution of collateral, release or substi-
tution of a guarantor, reamortization, or similar 
action; 
‘‘(B) not to exceed $300 for loan assump-
tions;
112
‘‘(C) not to exceed 1 percent of the amount 
of requested financings under title III of the 
Small Business Investment Act of 1958 for which 
the applicant requests a commitment from the 
Administrator for funding during the following 
year; 
‘‘(D) to recover the direct, incremental cost 
involved in the production and dissemination of 
compilations of information produced by the Ad-
ministrator under the authority of this Act and 
the Small Business Investment Act of 1958; and 
‘‘(E) collect, retain and utilize, subject to 
approval in appropriations Acts, any amounts 
collected by fiscal transfer agents and not used 
by such agent as payment of the cost of loan 
pooling or debenture servicing operations, except 
that amounts collected under this subsection shall 
be utilized solely to facilitate the administration 
of the program that generated the excess 
amounts. 
‘‘(3) POWER
TO
UNDERTAKE
AND
SUSPEND 
LOANS.—
‘‘(A) IN GENERAL.—Subject to the require-
ments and conditions contained in this para-
graph, upon application by a small business
113
concern which is the recipient of a loan made 
under this Act, the Administrator may under-
take the small business concern’s obligation to 
make the required payments under such loan or 
may suspend such obligation if the loan was a 
direct loan made by the Administrator. While 
such payments are being made by the Adminis-
trator pursuant to the undertaking of such obli-
gation or while such obligation is suspended, no 
such payment with respect to the loan may be re-
quired from the small business concern. 
‘‘(B) REQUIREMENTS.—The Administrator 
may undertake or suspend for a period of not to 
exceed 5 years any small business concern’s obli-
gation under this paragraph only if—
‘‘(i) without such undertaking or sus-
pension of the obligation, the small business 
concern would, in the sole discretion of the 
Administrator, become insolvent or remain 
insolvent; 
‘‘(ii) with the undertaking or suspen-
sion of the obligation, the small business 
concern would, in the sole discretion of the 
Administrator, become or remain a viable 
small business concern; and
115
those which were due under the loan during 
such period; 
‘‘(ii) pursuant to a repayment schedule 
agreed upon by the Administrator and the 
small business concern; or 
‘‘(iii) by a combination of the pay-
ments described in clauses (i) and (ii). 
‘‘(E) SECURITY; OTHER ACTIONS.—The Ad-
ministrator shall, prior to the undertaking or 
suspension of the obligation, take such action, 
and require the small business concern to take 
such action as the Administrator deems appro-
priate in the circumstances, including the provi-
sion of such security as the Administrator deems 
necessary or appropriate to insure that the 
rights and interests of the lender (Administra-
tion or participant) will be safeguarded ade-
quately during and after the period in which 
such obligation is so undertaken or suspended. 
‘‘(F) REQUIRED PAYMENTS.—For purposes 
of this paragraph, the term ‘required payments’ 
means, with respect to any loan, payments of 
principal and interest under the loan. 
‘‘(4) INTEREST RATE ON DEFERRED PARTICIPA-
TION SHARE.—Upon purchase by the Administrator
116
of any deferred participation entered into under sec-
tion 7, the Administrator may continue to charge a 
rate of interest not to exceed that initially charged by 
the participating institution on the amount so pur-
chased for the remaining term of the indebtedness. 
‘‘(5) SUBORDINATION
TO
CERTAIN
STATE
TAX 
LIENS.—Any interest held by the Administrator in
property, as security for a loan, shall be subordinate 
to any lien on such property for taxes due on the 
property to a State, or political subdivision thereof, 
in any case where such lien would, under applicable 
State law, be superior to such interest if such interest 
were held by any party other than the United States. 
‘‘(g) RISK MANAGEMENT DATABASE.—
‘‘(1) ESTABLISHMENT.—The Administrator shall 
maintain, within the management system for the loan 
programs authorized by subsections (a) and (b) of sec-
tion 7 and title V of the Small Business Investment 
Act of 1958, a management information system that 
will generate a database capable of providing timely 
and accurate information in order to identify loan 
underwriting, collections, recovery, and liquidation 
problems. 
‘‘(2) CONTENTS.—In addition to such other in-
formation as the Administrator considers appro-
117
priate, the database established under this subsection 
shall, with respect to each loan program described in 
paragraph (1), include information relating to—
‘‘(A) the identity of the institution making 
the guaranteed loan or issuing the debenture; 
‘‘(B) the identity of the borrower; 
‘‘(C) the total dollar amount of the loan or 
debenture; 
‘‘(D) the total dollar amount of government 
exposure in each loan; 
‘‘(E) the district of the Administration in 
which the borrower has its principal office; 
‘‘(F) the principal line of business of the 
borrower, as identified by North American In-
dustrial Classification System Code; 
‘‘(G) the delinquency rate for each program 
(including number of instances and days over-
due); 
‘‘(H) the number and amount of repur-
chases, losses, and recoveries in each program; 
‘‘(I) the number of deferrals or forbearances 
in each program (including days and number of 
instances);
118
‘‘(J) comparisons on the basis of loan pro-
gram, lender, Administration district and re-
gion, for all the data elements maintained; and 
‘‘(K) underwriting characteristics of each 
loan that has entered into default, including 
term, amount and type of collateral, loan-to-
value and other actual and projected ratios, line 
of business, credit history, and type of loan.’’. 
(b) RELATED REPEAL.—Section 17 of the Small Busi-
ness Act (15 U.S.C. 646) is amended to read as follows: 
‘‘SEC. 17. [RESERVED].’’. 
SEC. 206. ORGANIZATION AND STAFF. 
(a) IN GENERAL.—Section 6 of the Small Business Act 
(15 U.S.C. 635) is amended to read as follows: 
‘‘SEC. 6. ORGANIZATION AND STAFF. 
‘‘(a) GENERAL ORGANIZATIONAL AUTHORITY.—
‘‘(1) OFFICES.—Except as otherwise provided in 
this Act, the Administrator may create subsidiary of-
fices in the Administration to carry out this Act and 
the Small Business Investment Act of 1958. 
‘‘(2) EMPLOYEES.—The Administrator may, in 
accordance with applicable provisions of title 5, 
United States Code, select, employ, appoint, and fix 
the compensation of such officers, employees, attor-
neys, and agents as shall be necessary to carry out
119
this Act and the Small Business Investment Act of 
1958. 
‘‘(b) ASSOCIATE
ADMINISTRATORS.—The Adminis-
trator shall only appoint the following Associate Adminis-
trators: 
‘‘(1) The Associate Administrator for Capital Ac-
cess, who shall be appointed from civilian life and 
have a minimum of five years experience in pro-
viding investment or banking services to businesses. 
‘‘(2) The Associate Administrator for Govern-
ment Contracting and Minority Small Business Op-
portunities, who shall have a minimum of five years 
of experience in Federal procurement. 
‘‘(3) The Associate Administrator for Enterprise 
Outreach and Training, who shall have a minimum 
of five years experience in community-based outreach 
programs. 
‘‘(4) The Associate Administrator for Adminis-
tration and Management, who shall act as the Chief 
Operating Officer for the Administration and who 
shall oversee the activities of the regional administra-
tors. 
‘‘(c) ESTABLISHMENT OF CERTAIN OFFICES.—There 
are in the Administration the following offices:
120
‘‘(1) The Office of Minority Small Business and 
Capital Ownership Development, which shall be ad-
ministered by the assistant administrator appointed 
under subsection (d)(1). 
‘‘(2) The Office of Veterans Business, which shall 
be administered by the assistant administrator ap-
pointed under subsection (d)(2). 
‘‘(3) The Office of Small Business Development 
Centers, which shall be administered by the assistant 
administrator appointed under subsection (d)(3). 
‘‘(4) The Office of Investment, which shall be ad-
ministered by the assistant administrator appointed 
under subsection (d)(4). 
‘‘(5) The Office of Lender Oversight, which shall 
be administered by the assistant administrator ap-
pointed under subsection (d)(5). 
‘‘(6) The Office of Congressional and Legislative 
Affairs, which shall be administered by the assistant 
administrator appointed under subsection (d)(6). 
‘‘(7) The Office of International Trade, which 
shall be administered by the assistant administrator 
appointed under subsection (d)(7). 
‘‘(8) The Office of Women’s Business Ownership, 
which shall be administered by the assistant adminis-
trator appointed under subsection (d)(8).
121
‘‘(d) ASSISTANT
ADMINISTRATORS.—The Adminis-
trator shall appoint the following Assistant Administrators: 
‘‘(1) The Assistant Administrator for Minority 
Small Business and Capital Ownership Development, 
who—
‘‘(A) shall have a minimum of 5 years expe-
rience within the Administration in assisting
minority small businesses before being appointed 
under this paragraph; 
‘‘(B) shall be responsible for carrying out 
subsections (a), (b), and (c) of section 8; 
‘‘(C) shall be a career employee in the Sen-
ior Executive Service; and 
‘‘(D) shall report to the Associate Adminis-
trator for Government Contracting and Minority 
Small Business Opportunities. 
‘‘(2) The Assistant Administrator for Veterans 
Business, who—
‘‘(A) shall have a minimum of 5 years expe-
rience within the Administration or the Depart-
ment of Veterans Affairs (or in combination) in 
providing entrepreneurial outreach to veterans 
before being appointed under this paragraph; 
‘‘(B) shall be responsible for the formula-
tion, execution, and promotion of the policies
122
and programs of the Administration that provide 
assistance to small business concerns owned and 
controlled by veterans and small business con-
cerns owned and controlled by service-disabled 
veterans; 
‘‘(C) shall act as an ombudsman for full 
consideration of veterans in all programs of the 
Administration; 
‘‘(D) shall be a career employee and may be 
an appointee in the Senior Executive Service; 
and 
‘‘(E) shall report to the Associate Adminis-
trator for Enterprise Outreach and Training. 
‘‘(3) The Assistant Administrator for Small 
Business Development Centers who—
‘‘(A) shall have a minimum of 5 years expe-
rience in entrepreneurial outreach to small busi-
nesses or as an educator in a business program 
in an institution of higher learning (or in com-
bination), before being appointed under this 
paragraph; 
‘‘(B) shall carry out section 21; 
‘‘(C) shall be a career employee and may be 
an appointee in the Senior Executive Service; 
and
123
‘‘(D) shall report to the Associate Adminis-
trator for Enterprise Outreach and Training. 
‘‘(4) The Assistant Administrator for Investment 
who—
‘‘(A) shall carry out title III of the Small 
Business Investment Act of 1958; 
‘‘(B) shall be a career employee and may be 
an appointee in the Senior Executive Service; 
and 
‘‘(C) shall report to the Associate Adminis-
trator for Capital Access. 
‘‘(5) The Assistant Administrator for Lender 
Oversight who—
‘‘(A) shall have a minimum of 5 years expe-
rience in oversight of lending institutions before 
being appointed under this paragraph; 
‘‘(B) shall carry out section 7(a) and assist 
the Administrator in carrying out section 23; 
‘‘(C) shall be a career employee and may be 
an appointee in the Senior Executive Service; 
and 
‘‘(D) shall report to the Associate Adminis-
trator for Capital Access. 
‘‘(6) The Assistant Administrator for Congres-
sional and Legislative Affairs who—
124
‘‘(A) shall have a minimum of 5 years expe-
rience as an employee reimbursed pursuant to 
the Senators’ Clerk Hire Allowance Account es-
tablished under section 1 of Public Law 100–137 
(2 U.S.C. 58c) or the Members’ Representational 
Allowance established under section 101 of the 
House of Representatives Administrative Reform 
Technical Corrections Act (2 U.S.C. 57b) or as 
an employee of a committee of the House or Sen-
ate (or in combination) before being appointed 
under this paragraph; and 
‘‘(B) shall report directly to the Adminis-
trator. 
‘‘(7) The Assistant Administrator for Inter-
national Trade who—
‘‘(A) shall have a minimum of 5 years expe-
rience in international trade matters; 
‘‘(B) shall carry out section 22; 
‘‘(C) shall be a career employee and may be 
an appointee in the Senior Executive Service; 
and 
‘‘(D) shall report to the Associate Adminis-
trator for Enterprise Training and Outreach. 
‘‘(8) The Assistant Administrator for Women’s 
Business Ownership who—
126
to provide services under this Act and the Small 
Business Investment Act of 1958.
‘‘(2) CLOSURE.—Except as provided in para-
graph (3), the Administrator may close or combine 
district offices as the Administrator determines ap-
propriate. The Administrator shall report any such 
closures to Congress. 
‘‘(3) MINIMUM NUMBER.—Each State shall have 
at least one district office, except that one district of-
fice may serve Guam, American Samoa, and the 
Commonwealth of the Northern Mariana Islands. 
‘‘(4) DISTRICT DIRECTORS.—
‘‘(A) IN
GENERAL.—Each district office 
shall have a director appointed by the Adminis-
trator whose salary shall not exceed the rate in 
effect for step 10 of GS–15 of the General Sched-
ule. Each district director shall assist the Ad-
ministrator in carrying out the programs estab-
lished by this Act and the Small Business Invest-
ment Act of 1958. 
‘‘(B) APPEAL OF DECISIONS.—The Admin-
istrator shall issue regulations providing proce-
dures for the appeal of any decision made by 
any district director. Such regulations shall be 
codified in the Code of Federal Regulations.
127
‘‘(C) REVIEW AND REMOVAL.—The Admin-
istrator shall remove and replace any district di-
rector if such district director has failed, with re-
spect to any year, to meet goals developed by the 
Administrator for increasing—
‘‘(i) the number of loans made pursu-
ant to section 7 (other than section 7(b)); 
‘‘(ii) the number of participants in the 
programs established pursuant to section 8; 
‘‘(iii) the amount Federal Government 
procurements from small business concerns 
or from any subcategory of small business 
concern referred to in section 15(g); or 
‘‘(iv) the amount of dollar financings 
for small businesses under the Small Busi-
ness Investment Act of 1958. 
‘‘(D) REASSIGNMENT.—Any district direc-
tor who is removed under subparagraph (C) 
shall be reassigned by the Administrator as a 
procurement center representative or a commer-
cial marketing representative, as determined by 
the Administrator in consultation with the re-
gional administrator. Any such reassignment 
shall, for the first year after reassignment, be at 
the same grade and salary.
128
‘‘(5) DISTRICT
COUNSEL.—Each district office 
shall have a district counsel. Each district counsel 
shall—
‘‘(A) be assigned by, and report to, the Gen-
eral Counsel; 
‘‘(B) provide legal assistance to the district 
director and employees in the district office; and 
‘‘(C) carry out the required review of 
HUBZone firms specified in section 3. 
‘‘(6) BUSINESS
OPPORTUNITY
SPECIALISTS.—
Each district office shall have a minimum number of 
business opportunity specialists to ensure that effec-
tive guidance and oversight are provided to partici-
pants in the program established by section 8(a). The 
specialists shall assist the district director and Assist-
ant Administrator for Minority Small Business and 
Capital Ownership Development. The majority of the 
hours worked by the business opportunity specialist 
shall be devoted to the programs established by section 
8(a), unless the district director demonstrates to the 
Assistant Administrator for Minority Small Business 
and Capital Ownership Development that there are 
an insufficient number of firms certified pursuant to 
section 8(a) to require the employee to devote such 
hours to such programs.
129
‘‘(7) 
PROCUREMENT
CENTER
REPRESENTA-
TIVES.—The Associate Administrator for Government 
Contracting and Minority Small Business, after con-
sultation with the regional administrators and dis-
trict directors, shall assign such procurement center 
representatives to district offices as the Associate Ad-
ministrator determines to be appropriate. Any pro-
curement center representative assigned to a district 
office or procuring agency activity shall report to the 
district director. The Associate Administrator shall 
assign at least one procurement center representative 
in each State. 
‘‘(8) COMMERCIAL
MARKETING
REPRESENTA-
TIVE.—The Associate Administrator for Government 
Contracting and Minority Small Business, after con-
sultation with the regional administrators and dis-
trict directors, shall assign commercial marketing 
representatives to district offices as the Associate Ad-
ministrator determines to be appropriate. Any com-
mercial marketing representative assigned to a dis-
trict office shall report to the district director. 
‘‘(h) GENERAL PERSONNEL AUTHORITY.—
‘‘(1) EXPERTS AND CONSULTANTS.—The Admin-
istrator may procure, for purposes of carrying out 
this Act and the Small Business Investment Act of
130
1958, temporary and intermittent services under sec-
tion 3109(b) of title 5, United States Code. 
‘‘(2) TRAVEL EXPENSES.—Each employee may, 
at the discretion of the Administrator, receive travel 
expenses, including per diem in lieu of subsistence, in 
accordance with applicable provisions under sub-
chapter I of chapter 57 of title 5, United States Code. 
Notwithstanding such subchapter, the Administrator 
may pay the transportation expenses and per diem in 
lieu of subsistence expenses, for travel of any person 
employed by the Administration to render temporary 
services not in excess of 6 months in connection with 
any disaster referred to in section 7(b) from place of 
appointment to, and while at, the disaster area and 
any other temporary posts of duty and return upon 
completion of the assignment. The Administrator may 
extend the 6-month limitation for an additional 6 
months if the Administrator determines the extension 
is necessary to continue efficient disaster loan making 
activities. 
‘‘(3) NOTARY PUBLIC EXPENSES.—The Adminis-
trator may pay the costs of any employee to qualify 
as a notary public. 
‘‘(4) DELEGATIONS.—Except as otherwise pro-
vided in this Act or the Small Business Investment
131
Act of 1958, the Administrator may delegate a func-
tion or responsibility to any employee of the Adminis-
tration. The Administrator shall provide by regula-
tion codified in the Code of Federal Regulations the 
procedures for determining which delegations are to 
be codified in the Code of Federal Regulations. With 
respect to any delegations not promulgated by regula-
tion, the Administrator shall collect and collate such 
delegations and place them in a prominent location 
on the website maintained for the Administration. 
‘‘(5) ADMINISTRATION
WEB
SITE.—Not later 
than 30 days after the enactment of this subsection, 
the Administrator shall redesign the web site of the 
Administration so that the delegations under para-
graph (4) and the organizational chart of the Admin-
istration (including the names of the officials serving 
in those capacities), links to the homepage of each of-
fice, and standard operating procedures, have a 
prominent link on the homepage of the Administra-
tion. Any subsequent redesign after compliance with 
this paragraph shall ensure that the information re-
quired by this paragraph maintains a prominent 
place on the homepage of the Administration.’’. 
(b) CONFORMING AMENDMENTS.—
132
(1) So much of section 22 of the Small Business 
Act (15 U.S.C. 649) as precedes subsection (b) is 
amended to read as follows: 
‘‘SEC. 22. OFFICE OF INTERNATIONAL TRADE. 
‘‘(a) Except as otherwise provided in this section, the 
powers, duties, and responsibilities described in this section 
shall be carried out by the Assistant Administrator for 
International Trade.’’. 
(2) Subsection (b) of section 22 of the Small 
Business Act (15 U.S.C. 649) is amended by striking 
‘‘The Office’’ the first place it appears and inserting 
‘‘The Office of International Trade’’. 
(c) RELATED REPEAL.—Section 32 of the Small Busi-
ness Act (15 U.S.C. 657b) is amended to read as follows: 
‘‘SEC. 32. [RESERVED].’’. 
(d) TRANSITION RULES.—
(1) EXCEPTION TO SALARY LIMITATION OF DIS-
TRICT DIRECTORS.—The salary limitation specified 
in section 6(g)(4)(A) of the Small Business Act (as 
amended by this section) shall not apply with respect 
to any district director whose salary exceeds such lim-
itation on July 1, 2003. 
(2) REMOVAL AND REASSIGNMENT OF DEPUTY 
DISTRICT DIRECTORS.—
133
(A) REMOVAL.—The Administrator may 
not appoint any individual to serve as a deputy 
district director. Any individual serving as a 
deputy district director on the date of the enact-
ment of this Act shall be removed from such posi-
tion and reassigned as provided in this para-
graph. 
(B) REASSIGNMENT.—Any individual re-
moved from office under subparagraph (A) shall 
be reassigned by the Administrator as a procure-
ment center representative or a commercial mar-
keting representative, as determined by the Ad-
ministrator in consultation with the regional ad-
ministrator. Any such reassignment shall be at 
not less than the grade and salary which applied 
to such individual prior to reassignment. 
SEC. 207. LOAN PROGRAMS. 
(a) SMALL BUSINESS LOAN PROGRAM.—So much of 
section 7 of the Small Business Act (15 U.S.C. 636) as pre-
cedes subsection (b) is amended to read as follows: 
‘‘SEC. 7. LOAN PROGRAMS. 
‘‘(a) SMALL BUSINESS LOAN PROGRAM.—
‘‘(1) LOAN
AUTHORITY.—The Administrator 
may, to the extent and in such amounts as provided 
in advance in appropriation Acts, make loans for
134
plant acquisition, construction, conversion, or expan-
sion, including the acquisition of land, material, sup-
plies, equipment, and working capital to any small 
business concern, including those owned by qualified 
Indian tribes for purposes of this Act. 
‘‘(2) METHODS OF PARTICIPATION.—The Admin-
istrator may make such loans either directly or in co-
operation with banks or other financial institutions 
through agreements to participate on an immediate 
or deferred (guaranteed) basis, except that no imme-
diate participation may be purchased unless it is 
shown that a deferred participation is not available 
and no direct financing may be made unless it is 
shown that a participation is not available. 
‘‘(3) NO
CREDIT
ELSEWHERE.—The Adminis-
trator may not make a loan under this subsection if 
the applicant can obtain credit elsewhere. 
‘‘(4) CRIMINAL
BACKGROUND
CHECK.—Before 
making any loan under this subsection or section 502 
or 503 of the Small Business Investment Act of 1958, 
the Administrator may verify the applicant’s crimi-
nal background, or lack thereof, through the best 
available means, including, if possible, use of the Na-
tional Crime Information Center computer system at 
the Federal Bureau of Investigation.
135
‘‘(5) SOUND AND SECURE REQUIREMENT.—
‘‘(A) IN
GENERAL.—Except as otherwise 
provided in this paragraph, any loan made 
under this subsection shall be of such sound value 
or so secured as reasonably to assure repayment. 
‘‘(B) SPECIAL
RULES.—For purposes of 
subparagraph (A), any reasonable doubt regard-
ing the likelihood of repayment shall be resolved 
in favor of the applicant if the applicant is—
‘‘(i) a disabled person (as defined in 
paragraph (8)); or 
‘‘(ii) a small manufacturer. 
‘‘(C) 
COLLATERAL.—The 
Administrator 
shall not refuse to make a loan under this sub-
section solely due to inadequate collateral, but a 
loan shall be secured as fully as possible with 
available assets. If the assets of the business are 
not sufficient to fully secure the loan, other assets 
of the owners of the small business concern may 
be taken as collateral to the extent the aggregate 
amount of collateral does not exceed the amount 
necessary to fully secure the loan. 
‘‘(6) LEVEL OF PARTICIPATION IN GUARANTEED 
LOANS.—
136
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), in an agreement to partici-
pate in a loan on a deferred basis under this 
subsection (including a loan made under the 
Preferred Lenders Program), such participation 
by the Administrator shall be equal to—
‘‘(i) 75 percent of the balance of the fi-
nancing outstanding at the time of dis-
bursement of the loan, if such balance ex-
ceeds $150,000; or 
‘‘(ii) 85 percent of the balance of the fi-
nancing outstanding at the time of dis-
bursement of the loan, if such balance is less 
than or equal to $150,000. 
‘‘(B) REDUCED
PARTICIPATION
UPON
RE-
QUEST.—
‘‘(i) IN GENERAL.—The guarantee per-
centage specified by subparagraph (A) for 
any loan under this subsection may be re-
duced upon the request of the participating 
lender. 
‘‘(ii) 
PROHIBITION.—The 
Adminis-
trator shall not use the guarantee percent-
age requested by a participating lender 
under clause (i) as a criterion for estab-
137
lishing priorities in approving loan guar-
antee requests under this subsection. 
‘‘(C) PARTICIPATION UNDER EXPORT WORK-
ING
CAPITAL
PROGRAM.—Notwithstanding sub-
paragraph (A), in an agreement to participate 
in a loan on a deferred basis under the Export 
Working Capital Program established pursuant 
to paragraph (14), such participation by the Ad-
ministrator shall not exceed 90 percent. 
‘‘(D) CERTAIN RURAL AREAS.—
‘‘(i) IN GENERAL.—In the case of a 
loan to a qualified rural small business con-
cern, this paragraph shall be applied by 
substituting ‘90 percent’ for—
‘‘(I) ‘75 percent’ in subparagraph 
(A)(i); and 
‘‘(II) ‘85 percent’ in subpara-
graph (A)(ii). 
‘‘(ii) QUALIFIED RURAL SMALL BUSI-
NESS CONCERN.—For purposes of this sub-
paragraph, the term ‘qualified rural small 
business concern’ means a small business 
concern located in—
‘‘(I) a rural area (as defined in 
section 343(a)(13) of the Consolidated
138
Farm and Rural Development Act (7 
U.S.C. 1991(a))); and 
‘‘(II) a district with respect to 
which the dollar value and number of 
loans made under this subsection are 
both less than the average for districts 
in the State. 
‘‘(7) MAXIMUM LOAN AMOUNTS.—No loan shall 
be made under this subsection—
‘‘(A) if the total amount outstanding and 
committed (by participation or otherwise) solely 
for purposes of this subsection to the borrower 
would exceed $1,000,000 (or if the gross loan 
amount would exceed $2,000,000), except as pro-
vided in subparagraph (B); 
‘‘(B) if the total amount outstanding and 
committed (on a deferred basis) solely for the 
purposes provided in paragraph (16) to the bor-
rower would exceed $2,000,000 of which not more 
than $1,200,000 may be used for working cap-
ital, supplies, or financings under paragraph 
(14) for export purposes; and 
‘‘(C) if made either directly or in coopera-
tion with banks or other lending institutions
139
through agreements to participate on an imme-
diate basis if the amount would exceed $350,000. 
‘‘(8) INTEREST RATES.—
‘‘(A) MAXIMUM
RATE
SET
BY
ADMINIS-
TRATOR.—Notwithstanding any State limitation 
on the rate or amount of interest which may be 
charged, taken, received, or reserved, the max-
imum legal rate of interest on any financing 
made on a deferred basis pursuant to this sub-
section shall not exceed a rate prescribed by the 
Administrator. 
‘‘(B) IMMEDIATE AND DIRECT LOANS.—The 
rate of interest for the Administrator’s share of 
any direct or immediate participation loan shall 
not exceed the current average market yield on 
outstanding marketable obligations of the United 
States with remaining periods to maturity com-
parable to the average maturities of such loans 
and adjusted to the nearest 1⁄8 of 1 percent, and 
an additional amount as determined by the Ad-
ministrator, but not to exceed 1 percent per year. 
‘‘(C) PREFERRED LENDERS PROGRAM.—The 
maximum interest rate for a loan guaranteed 
under the Preferred Lenders Program conducted 
pursuant to paragraph (31) shall not exceed the
140
maximum interest rate, as determined by the 
Administrator, applicable to other loans guaran-
teed under this subsection. 
‘‘(D) DISABLED PERSONS.—
‘‘(i) IN GENERAL.—The maximum in-
terest rate for a loan made under this sub-
section to a disabled person for the estab-
lishment, acquisition or operation of a 
small business concern shall be 3 percent 
per year. 
‘‘(ii) DISABLED
PERSON.—For the 
purposes of this subparagraph, the term 
‘disabled person’ means any individual 
who—
‘‘(I) is a service-disabled veteran; 
or 
‘‘(II) has a disability (as defined 
in section 3 of the Americans with Dis-
abilities Act of 1990) which limits such 
individual’s selection of any type of 
employment for which such individual 
would 
otherwise 
be 
qualified 
or 
qualifiable. 
‘‘(9) PREPAYMENT CHARGES.—
141
‘‘(A) IN GENERAL.—A borrower who pre-
pays any loan guaranteed under this subsection 
shall remit to the Administrator a subsidy 
recoupment fee calculated in accordance with 
subparagraph (B) if—
‘‘(i) the loan is for a term of not less 
than 15 years; 
‘‘(ii) the prepayment is voluntary; 
‘‘(iii) the amount of prepayment in 
any calendar year is more than 25 percent 
of the outstanding balance of the loan; and 
‘‘(iv) the prepayment is made within 
the first 3 years after disbursement of the 
loan proceeds. 
‘‘(B) SUBSIDY
RECOUPMENT
FEE.—The 
subsidy recoupment fee charged under subpara-
graph (A) shall be—
‘‘(i) 5 percent of the amount of prepay-
ment, if the borrower prepays during the 
first year after disbursement; 
‘‘(ii) 3 percent of the amount of pre-
payment, if the borrower prepays during 
the second year after disbursement; and
142
‘‘(iii) 1 percent of the amount of pre-
payment, if the borrower prepays during 
the third year after disbursement. 
‘‘(10) MAXIMUM TERM.—No loans made under 
this subsection, including renewals and extensions 
thereof, may be made for a period or periods exceed-
ing 25 years, except that such portion of a loan made 
for the purpose of acquiring real property or con-
structing, converting, or expanding facilities may 
have a maturity of 25 years plus such additional pe-
riod as is estimated may be required to complete such 
construction, conversion, or expansion. 
‘‘(11) CONSTRUCTION AND REHABILITATION OF 
REAL PROPERTY.—The Administrator may make a 
loan under this subsection to finance residential or 
commercial construction or rehabilitation for sale if 
such loan is not used primarily for the acquisition of 
land. 
‘‘(12) UNEMPLOYED AND LOW-INCOME INDIVID-
UALS.—The Administrator may make loans under 
this subsection to any small business concern, or to 
any qualified person seeking to establish such a con-
cern, if the Administrator determines that such loan 
will further the policies established in section 2, with 
particular emphasis on the preservation or establish-
143
ment of small business concerns located in urban or 
rural areas with high proportions of unemployed or 
low-income individuals or owned by low-income indi-
viduals. 
‘‘(13) STATE AND LOCAL DEVELOPMENT COMPA-
NIES.—The Administrator may make loans under 
this subsection to State and local development compa-
nies for the purposes of, and subject to the restrictions 
in, title V of the Small Business Investment Act of 
1958. 
‘‘(14) EXPORT WORKING CAPITAL PROGRAM.—
‘‘(A) IN
GENERAL.—The Administrator 
may provide extensions of credit, standby letters 
of credit, revolving lines of credit for export pur-
poses, and other financing to enable small busi-
ness concerns, including small business export 
trading companies and small business export 
management companies, to develop foreign mar-
kets. 
‘‘(B) INTEREST RATES.—A bank or partici-
pating lending institution may establish the rate 
of interest on such financings as may be legal 
and reasonable. 
‘‘(C) CRITERIA FOR LOANS.—When consid-
ering loan or guarantee applications, the Admin-
144
istrator shall give weight to export-related bene-
fits, including opening new markets for United 
States goods and services abroad and encour-
aging the involvement of small businesses, in-
cluding small manufacturers and agricultural 
concerns, in the export market. 
‘‘(D) 
MARKETING.—The 
Administrator 
shall aggressively market its export financing 
program to small businesses. 
‘‘(15) QUALIFIED EMPLOYEE TRUSTS.—
‘‘(A) LOAN
GUARANTEES.—The Adminis-
trator may guarantee loans under this subsection 
to qualified employee trusts with respect to a 
small business concern for the purpose of pur-
chasing stock of the concern under a plan ap-
proved by the Administrator which, when car-
ried out, results in the qualified employee trust 
owning at least 51 percent of the stock of the 
concern. A qualified employee trust shall be eligi-
ble for any loan guarantee under this subsection 
with respect to a small business concern on the 
same basis as if such trust were the same legal 
entity as such concern. 
‘‘(B) APPROVAL
OF
PLAN.—The plan re-
quiring the Administrator’s approval under sub-
145
paragraph (A) shall be submitted to the Admin-
istrator by the trustee of such trust with its ap-
plication for the guarantee. Such plan shall in-
clude an agreement with the Administrator 
which is binding on such trust and on the small 
business concern and which provides that—
‘‘(i) not later than the date the loan 
guaranteed under subparagraph (A) is re-
paid (or as soon thereafter as is consistent 
with the requirements of section 401(a) of 
the Internal Revenue Code of 1986, at least 
51 percent of the total stock of such concern 
shall be allocated to the accounts of at least 
51 percent of the employees of such concern 
who are entitled to share in such allocation; 
‘‘(ii) there will be periodic reviews of 
the role in the management of such concern 
of employees to whose accounts stock is allo-
cated; and 
‘‘(iii) there will be adequate manage-
ment to assure management expertise and 
continuity. 
‘‘(C) CERTAIN
CHARACTERISTICS
OF
EM-
PLOYEE-OWNERS
DISREGARDED.—In 
deter-
mining whether to guarantee any loan under
146
this paragraph, the individual business experi-
ence or personal assets of employee-owners shall 
not be used as criteria, except that the business 
experience of employee-owners who assume man-
agerial responsibilities may be considered. 
‘‘(D) CERTAIN CORPORATIONS TREATED AS 
SMALL BUSINESS CONCERNS.—For purposes of 
this paragraph, a corporation which is controlled 
by any other person shall be treated as a small 
business concern if such corporation would, after 
the plan described in subparagraph (B) is car-
ried out, be treated as a small business concern. 
‘‘(16) INTERNATIONAL TRADE.—
‘‘(A) IN
GENERAL.—If the Administrator 
determines that a loan guaranteed under this 
subsection will allow an eligible small business 
concern in an industry engaged in or adversely 
affected by international trade to improve its 
competitive position, the Administrator may 
make such loan to assist such concern in—
‘‘(i) the financing of the acquisition, 
construction, 
renovation, 
modernization, 
improvement or expansion of productive fa-
cilities or equipment to be used in the 
United States in the production of goods
147
and services involved in international trade; 
or 
‘‘(ii) the refinancing of existing indebt-
edness which is not structured with reason-
able terms and conditions. 
‘‘(B) SECURITY.—Each loan made under 
this paragraph shall be secured by a first lien 
position or first mortgage on the property or 
equipment financed by the loan or on other as-
sets of the concern. 
‘‘(C) ENGAGED
IN
OR
ADVERSELY
AF-
FECTED BY INTERNATIONAL TRADE.—For pur-
poses of this paragraph, a small business concern 
shall be considered to be engaged in or adversely 
affected by international trade if such concern is 
determined by the Administrator (under regula-
tions prescribed by the Administrator to be—
‘‘(i) in a position to significantly ex-
pand existing export markets or develop 
new export markets; or 
‘‘(ii) adversely affected by import com-
petition in that it—
‘‘(I) is confronting increased di-
rect competition with foreign firms in 
the relevant market; and
148
‘‘(II) can demonstrate injury at-
tributable to such competition. 
‘‘(D) FINDINGS BY INTERNATIONAL TRADE 
COMMISSION.—For purposes of subparagraph 
(C)(ii)(II), the Administrator shall accept any 
finding of injury by the International Trade 
Commission. 
‘‘(17) AUTHORIZED
LENDING
INSTITUTIONS.—
The Administrator shall authorize lending institu-
tions and other entities in addition to banks to make 
loans authorized under this subsection. 
‘‘(18) GUARANTEE FEES.—
‘‘(A) IN
GENERAL.—With respect to each 
loan guaranteed under this subsection (other 
than a loan that is repayable in 1 year or less), 
the Administration shall collect a guarantee fee, 
which shall be payable by the participating lend-
er, but which may be collected in advance by the 
lender from the borrower, as follows: 
‘‘(i) A guarantee fee equal to 1 percent 
of the deferred participation share of a total 
loan amount that is not more than 
$150,000. 
‘‘(ii) A guarantee fee equal to 2.5 per-
cent of the deferred participation share of a
149
total loan amount that is more than 
$150,000, but not more than $700,000. 
‘‘(iii) A guarantee fee equal to 3.5 per-
cent of the deferred participation share of a 
total loan amount that is more than 
$700,000. 
‘‘(B) RETENTION OF CERTAIN FEES.—Lend-
ers participating in the programs established 
under this subsection may retain not more than 
25 percent of a fee collected under subparagraph 
(A)(i). 
‘‘(19) CERTIFIED LENDERS PROGRAM.—
‘‘(A) IN GENERAL.— There is a Certified 
Lenders Program for lenders who establish their 
knowledge of laws and regulations concerning the 
guaranteed loan program and their proficiency 
in program requirements as set forth in regula-
tions codified in the Code of Federal Regulations. 
‘‘(B) SUSPENSION
AND
REVOCATION
OF 
DESIGNATION.—The designation of a lender as a 
certified lender shall be suspended or revoked at 
any time that the Administrator determines that 
the lender is not adhering to established rules 
and regulations or that the loss experience of the 
lender is excessive as compared to other lenders,