‘‘(I) for a loan in amount that is 
less than or equal to $50,000, an 
amount equal to the lesser of— 
‘‘(aa) 50 percent of the bal-
ance of the financing outstanding 
at the time of disbursement of 
such loan; or 
‘‘(bb) $2,500; 
‘‘(II) for a loan in an amount 
that is greater than $50,000 and not 
greater than $350,000, an amount 
equal to five percent of the financing 
outstanding at the time of disburse-
ment of such loan; or 
‘‘(III) for a loan in an amount 
that is greater than or equal to 
$350,000, an amount equal to three 
percent of the financing outstanding 
at the time of disbursement of such 
loan. 
‘‘(C) DOCUMENTATION.—A bank or other 
lending institution may use its own loan docu-
mentation for a loan guaranteed by the Admin-
istrator under this subsection. 
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‘‘(D) PURCHASE OF LOANS.—The Admin-
istrator may enter into an agreement with a 
bank or other lending institution to purchase 
any loan guaranteed under this subsection. 
‘‘(E) SECONDARY MARKETS.— 
‘‘(i) IN GENERAL.—The Administrator 
shall issue rules for the facilitation, admin-
istration, and promotion of the sale of 
loans guaranteed under this subsection in 
the secondary market in the same manner 
as loans made or guaranteed under sub-
section (a). 
‘‘(ii) TREATMENT.—The rules issued 
under clause (i) shall provide that para-
graphs (1)(A)(ii) and (4)(B)(ii) of sub-
section (a) shall apply with respect loans 
guaranteed under this subsection in the 
same manner as such paragraphs apply to 
loans made or guaranteed under subsection 
(a). 
‘‘(F) LEVEL OF PARTICIPATION IN GUAR-
ANTEED LOANS.—In agreements to participate 
in loans on a deferred basis under this sub-
section, such participation by the Administra-
tion shall be equal to 95 percent of the balance 
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of the financing outstanding at the time of dis-
bursement of the loan. 
‘‘(G) COLLATERAL REQUIREMENTS.— 
‘‘(i) IN GENERAL.—Loans guaranteed 
under this subsection in an amount greater 
than $25,000 shall be secured to the ex-
tent possible, as determined by the bank or 
other lending institution. 
‘‘(ii) LACK OF COLLATERAL.—A bank 
or lending institution may not decline a 
loan based on a lack of collateral, but such 
bank or lending institution may require 
real estate owned by the borrower as col-
lateral. 
‘‘(iii) LIEN ON SUBJECT PROPERTY.— 
A bank or lending institution may also 
take a lien on any residential property of 
the borrower with respect to which the 
loan to be secured by such lien is made. 
‘‘(14) BANK OR OTHER LENDING INSTITUTION 
DEFINED.—In this subsection, the terms ‘bank or 
other lending institution’ means a lender authorized 
by the Administration to participate as a lender 
under subsection (a), other than a small business 
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lending company or a non-Federally regulated lender 
(as such terms are defined in section 3(r)).’’; and 
(15) in the flush left matter at the end— 
(A) by striking ‘‘the Administrator may 
consent’’ and inserting ‘‘the bank or other lend-
ing institution may consent’’; 
(B) by striking ‘‘the Administrator deter-
mines’’ and inserting ‘‘the bank or other lend-
ing institution determines’’; and 
(C) by striking ‘‘In agreements to partici-
pate’’ and all that follows through ‘‘to a dis-
aster loan under paragraph (1) (2) of this sub-
section.’’. 
(b) PRIVATE DISASTER LOANS.—Section 7(c) of the 
Small Business Act (15 U.S.C. 636(c)) is repealed. 
(c) OTHER REQUIREMENTS.—Section 7 of the Small 
Business Act (15 U.S.C. 636) is amended— 
(1) in subsection (d)— 
(A) in paragraph (1)— 
(i) by inserting ‘‘(except a loan under 
subsection (b)’’ after ‘‘to this section’’; and 
(ii) by adding at the end ‘‘The bank 
or other lending institution that made a 
loan under subsection (b) may further ex-
tend the maturity of or renew such loan 
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for additional periods not to exceed ten 
years beyond the period stated therein, if 
such extension or renewal will aid in the 
orderly liquidation of such loan.’’; 
(B) in paragraph (2), by striking ‘‘person, 
firm, or corporation’’ and inserting ‘‘bank or 
other lending institution’’; 
(C) in paragraph (6)— 
(i) by striking ‘‘, either directly or’’; 
(ii) by striking ‘‘on an immediate or 
deferred (guaranteed) basis,’’ and inserting 
‘‘a deferred (guaranteed) basis’’; 
(iii) by striking ‘‘in which case the 
Administration’’ and inserting ‘‘in which 
case the bank or other lending institution 
that made such loan’’; 
(iv) by striking ‘‘That the Administra-
tion shall not require’’ and inserting ‘‘That 
the banks or other lending institutions 
shall not require’’; 
(v) by striking ‘‘(or such higher 
amount as the Administrator determines 
appropriate in the event of a disaster)’’; 
(vi) by striking ‘‘That the Adminis-
trator, in obtaining’’ and inserting ‘‘That 
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the bank or other lending institution, in 
obtaining’’; and 
(vii) by striking ‘‘if the Administrator 
determines’’ and inserting ‘‘if the bank or 
other lending institution determines’’; and 
(D) by striking paragraph (8); 
(2) in subsection (f)(1), by striking ‘‘the Ad-
ministrator’’ and inserting ‘‘the bank or other lend-
ing institution making such a loan’’; and 
(3) in subsection (g), by striking ‘‘the Adminis-
trator shall’’ and inserting ‘‘neither the Adminis-
trator nor a bank or other lending institution may’’. 
(d) CONFORMING AMENDMENTS.—The Small Busi-
ness Act (15 U.S.C. 631) is amended— 
(1) in section 4(c)(2), by striking ‘‘, (7(b)(7), 
7(b)(8)’’; and 
(2) in section 40(b), by striking ‘‘7(b)(9)’’ and 
inserting ‘‘7(b)(7)’’. 
(e) REPEAL OF IMMEDIATE DISASTER ASSISTANCE 
PROGRAM.—Section 42 of the Small Business Act (15 
U.S.C. 657n) is repealed. 
(f) RULES.—Not later than 120 days after the date 
of the enactment of this Act, the Administrator shall issue 
rules for making loans under section 7(b) of the Small 
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