I
104TH CONGRESS
1ST SESSION
H. R. 2150
To amend the Small Business Act and the Small Business Investment Act
of 1958 to reduce the cost to the Federal Government of guaranteeing
certain loans and debentures, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 1, 1995
Mrs. MEYERS of Kansas introduced the following bill; which was referred to
the Committee on Small Business
A BILL
To amend the Small Business Act and the Small Business
Investment Act of 1958 to reduce the cost to the Federal
Government of guaranteeing certain loans and deben-
tures, and for other purposes.
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 ‘‘Small Business Credit
Efficiency Act of 1995’’.
SEC. 2. FEE FOR LOAN GUARANTEES SOLD ON SECONDARY
MARKET.
Section 5(g)(4)(A) of the Small Business Act (15
U.S.C. 634(g)(4)(A)) is amended by striking ‘‘4⁄10 of one
percent’’ and inserting ‘‘one-half of 1 percent’’.
SEC. 3. GENERAL BUSINESS LOANS.
(a) REDUCED LEVEL OF PARTICIPATION IN GUARAN-
TEED LOANS.—Section 7(a)(2) of the Small Business Act
(15 U.S.C. 636(a)(2)) is amended to read as follows:
‘‘(2) LEVEL
OF
PARTICIPATION
IN
GUARAN-
TEED LOANS.—
‘‘(A) IN GENERAL.—In agreements to par-
ticipate in loans on a deferred basis under this
subsection, such participation by the Adminis-
tration shall be—
‘‘(i) equal to 80 percent of the balance
of the financing outstanding at the time of
disbursement if such financing is less than
or equal to $100,000; and
‘‘(ii) equal to 75 percent of the bal-
ance of the financing outstanding at the
time of disbursement if such financing is
greater than $100,000.
‘‘(B) 
REDUCED
PARTICIPATION.—The
guarantee percentage specified by subparagraph
(A) for any loan may be reduced upon the re-
quest of the participating lender. The Adminis-
tration shall not use the percent of guarantee
requested as a criterion for establishing prior-
ities in approving guarantee requests.
‘‘(C) INTEREST RATE UNDER PREFERRED
LENDERS
PROGRAM.—The maximum interest
rate for a loan guaranteed under the Preferred
Lenders Program shall not exceed the maxi-
mum interest rate, as determined by the Ad-
ministration, which is made applicable to other
loan guarantees under this subsection.
‘‘(D) PREFERRED LENDERS PROGRAM DE-
FINED.—In this paragraph, the term ‘Preferred
Lenders Program’ means a program under
which a written agreement between the lender
and the Administration delegates to the lend-
er—
‘‘(i) complete authority to make and
close loans with a guarantee from the Ad-
ministration without obtaining the prior
specific approval of the Administration;
and
‘‘(ii) authority to service and liquidate
such loans.’’.
(b) GUARANTEE FEES.—Section 7(a)(18) of the
Small Business Act (15 U.S.C. 636(a)(18)) is amended
to read as follows:
‘‘(18) GUARANTEE FEES.—
‘‘(A) GENERAL FEE.—The Administration
shall collect a guarantee fee equal to—
‘‘(i) 2 percent of the gross amount of
any loan guaranteed under this subsection
of an amount less than $250,000;
‘‘(ii) 2.5 percent of the gross amount
of any loan guaranteed under this sub-
section of an amount equal to or greater
than $250,000 and less than $500,000; or
‘‘(iii) 3 percent of the gross amount of
any loan guaranteed under this subsection
of an amount equal to or greater than
$500,000.
Such fee shall be payable by the participating
lending institution and may be charged to the
borrower.
‘‘(B) 
ADDITIONAL
FEE
TO
OFFSET
COST.—
‘‘(i) IN GENERAL.—In addition to the
guarantee fee to be collected under sub-
paragraph (A), the Administration shall
collect a fee for loans guaranteed under
this subsection (other than loans for which
a guarantee fee may be collected under
section 5(g)(4)(A)) in an amount equal to
not more than four-tenths of 1 percent per
year of the outstanding principal portion of
such loan guaranteed by the Administra-
tion.
‘‘(ii) 
USE.—Fees 
collected 
under
clause (i) shall be used solely to offset the
cost (as defined by section 502(5) of the
Congressional Budget Act of 1974) of
guaranteeing loans under this subsection.
‘‘(iii) 
PAYMENT.—Fees 
collected
under clause (i) shall be payable by the
participating lending institution and shall
not be charged to the borrower.’’.
(c) REPEAL OF PROVISIONS ALLOWING RETENTION
OF GUARANTEE FEES BY LENDERS.—Section 7(a)(19) of
the Small Business Act (15 U.S.C. 636(a)(19)) is amend-
ed—
(1) in subparagraph (B)—
(A) by striking ‘‘shall (i) develop’’ and in-
serting ‘‘shall develop’’; and