§ 10903. Authorization of appropriations 
(a) CERTAIN ADMINISTRATIVE EXPENSES.—For each fiscal year, there 
are authorized to be appropriated such sums as are necessary, to remain 
available until expended— 
(1) to carry out the small business development center program, but 
not to exceed the annual funding level specified in section 27102 of this 
title; 
(2) to pay the expenses of the National Small Business Development 
Center Advisory Board under section 27109 of this title; 
(3) to pay the expenses of the information sharing system under sec-
tion 27104(j) of this title; 
(4) to pay the expenses of the Association for conducting the accredi-
tation program under section 27111 of this title; 
(5) to pay the expenses of the Administration, including salaries of 
examiners, for conducting examinations as part of the accreditation 
program conducted by the Association; and 
(6) to pay for small business development center grants as directed 
by Congress. 
(b) PROGRAMS
FOR WHICH PROGRAM LEVELS ARE ESTABLISHED 
UNDER SECTION 10902.— 
(1) IN GENERAL.—There are authorized to be appropriated to the 
Administration for each of fiscal years 2005 and 2006 such sums as 
are necessary to carry out— 
(A) the provisions of this subtitle and subtitle II not elsewhere 
provided for (including salaries and expenses of the Administration 
and necessary loan capital for loans under the disaster loan pro-
gram); and 
(B) subtitle III. 
(2) LIMITATIONS.—Notwithstanding any other provision of this sub-
section, for each of fiscal years 2005 and 2006, respectively— 
(A) no funds are authorized to be used as loan capital for the 
loan program authorized by section 20512 of this title except by 
transfer from another Federal agency to the Administration, un-
less the program level authorized for general business loans under 
subsection (a)(2)(A) or (b)(2)(A) of section 10902 of this title is 
fully funded; and 
(B) the Administrator may not approve loans on behalf of the 
Administration or on behalf of any other Federal agency, by con-
tract or otherwise, under terms or conditions other than those spe-
cifically authorized under this subtitle or subtitle II or III, except 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00075
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
that the Administrator may approve loans under section 20512 of 
this title in gross amounts of not more than $2,000,000. 
(c) OFFICE OF ADVOCACY.—There is authorized to be appropriated to 
carry out section 10307 of this title $1,000,000, to remain available until 
expended. 
(d) OFFICE OF VETERANS BUSINESS DEVELOPMENT.—There are author-
ized to be appropriated to carry out section 10313 of this title— 
(1) $1,500,000 for fiscal year 2005; and 
(2) $2,000,000 for fiscal year 2006. 
(e) LOSSES AND INTEREST SUBSIDIES.—There are authorized to be ap-
propriated for each fiscal year such sums as are necessary for losses and 
interest subsidies incurred by the accounts referred to in section 
10332(a)(1) of this title. 
(f) HUBZONE PROGRAM.—There is authorized to be appropriated to 
carry out chapter 253 $10,000,000 for each of fiscal years 2004 through 
2006. 
(g) FAST PROGRAM.— 
(1) IN GENERAL.—There is authorized to be appropriated to carry 
out the FAST program (including mentoring networks) under section 
26345 of this title $10,000,000 for each of fiscal years 2001 through 
2005. 
(2) MENTORING DATABASE.—Of the total amount made available 
under paragraph (1) for fiscal years 2001 through 2005, a reasonable 
amount, not to exceed a total of $500,000, may be used by the Admin-
istrator to carry out section 26345(f)(3) of this title. 
(h) SMALL BUSINESS DEVELOPMENT CENTER PROGRAM.—There are au-
thorized to be appropriated to carry out chapter 271— 
(1) $130,000,000 for fiscal year 2005; and 
(2) $135,000,000 for fiscal year 2006. 
(i) NATIONAL VETERANS BUSINESS DEVELOPMENT CORPORATION.— 
(1) IN GENERAL.—Subject to paragraph (2), there are authorized to 
be appropriated to the National Veterans Business Development Cor-
poration to carry out section 27514 of this title— 
(A) $4,000,000 for fiscal year 2001; 
(B) $4,000,000 for fiscal year 2002; 
(C) $2,000,000 for fiscal year 2003; and 
(D) $2,000,000 for fiscal year 2004. 
(2) MATCHING REQUIREMENT.— 
(A) FISCAL YEAR 2002.—The amount made available to the Na-
tional Veterans Business Development Corporation for fiscal year 
2002 may not exceed twice the amount that the Corporation cer-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00076
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
tifies that it will provide for that fiscal year from sources other 
than the Federal Government. 
(B) SUBSEQUENT FISCAL YEARS.—The amount made available 
to the National Veterans Business Development Corporation for 
fiscal year 2003 or 2004 may not exceed the amount that the Cor-
poration certifies that it will provide for that fiscal year from 
sources other than the Federal Government. 
(3) PRIVATIZATION.—The National Veterans Business Development 
Corporation shall institute and implement a plan to raise private funds 
and become a self-sustaining corporation. 
(j) BUSINESS GRANTS AND COOPERATIVE AGREEMENTS.—There is au-
thorized to be appropriated to carry out section 29102 of this title 
$6,600,000 for each of fiscal years 2001 through 2006, to remain available 
until expended. 
(k) PAUL D. COVERDELL DRUG-FREE WORKPLACE PROGRAM.— 
(1) IN GENERAL.—There is authorized to be appropriated to carry 
out section 29104 of this title (other than section 29104(b)(2) of this 
title) $5,000,000 for each of fiscal years 2005 and 2006. Amounts 
made available under this paragraph shall remain available until ex-
pended. 
(2) SMALL
BUSINESS
DEVELOPMENT
CENTERS.—Of the total 
amount made available under paragraph (1) for each of fiscal years 
2005 and 2006, not more than the greater of 10 percent or $500,000 
may be used to carry out section 27104(b)(20) of this title. 
(3) ADDITIONAL
AUTHORIZATION
FOR
TECHNICAL
ASSISTANCE 
GRANTS.—There are authorized to be appropriated to carry out section 
29104(b)(2) of this title $1,500,000 for each of fiscal years 2005 and 
2006. Amounts made available under this paragraph shall remain avail-
able until expended. 
(4) LIMITATION ON ADMINISTRATIVE COSTS.—Not more than 5 per-
cent of the total amount made available under this subsection for any 
fiscal year shall be used for administrative costs (determined without 
regard to the administrative costs of eligible intermediaries). 
(l) NEW MARKETS VENTURE CAPITAL COMPANY PROGRAM.— 
(1) IN GENERAL.—There are authorized to be appropriated for fiscal 
years 2001 through 2006, to remain available until expended, the fol-
lowing sums: 
(A) Such subsidy budget authority as is necessary to guarantee 
$150,000,000 of debentures under chapter 305. 
(B) $30,000,000 to make grants under chapter 305. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00077
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(2) FUNDS
COLLECTED
FOR
EXAMINATIONS.—Funds deposited 
under section 30512(d) of this title are authorized to be appropriated 
only for the costs of examinations under section 30512 of this title and 
for the costs of other oversight activities with respect to the new mar-
kets venture capital company program. 
(m) RENEWABLE FUEL CAPITAL INVESTMENT COMPANY PROGRAM.— 
(1) IN GENERAL.—Subject to the availability of appropriations, the 
Administrator may make $15,000,000 in operational assistance grants 
under section 30707 of this title for each of fiscal years 2008 and 
2009. 
(2) FUNDS
COLLECTED
FOR
EXAMINATIONS.—Funds deposited 
under section 30711(d) of this title are authorized to be appropriated 
only for the costs of examinations under section 30711 of this title and 
for the costs of other oversight activities with respect to the renewable 
fuel capital investment company program. 
Subtitle II—Loan, Contracting, and 
Related Assistance Programs 
DIVISION A—GENERAL PROVISIONS 
CHAPTER 201—GENERAL PROVISIONS 
Sec. 
20101.
Certification of compliance with child support obligations. 
20102.
Authorities in carrying out programs for small business concerns in areas with high 
proportions of unemployed or low-income individuals and small business concerns 
owned by low-income individuals. 
20103.
Extension or renewal of loans. 
20104.
Deferral of repayment for active duty reservists. 
20105.
Ownership interest arising from community property law. 
§ 20101. Certification of compliance with child support obli-
gations 
(a) IN GENERAL.—A recipient of financial assistance under this subtitle 
shall certify that the recipient is not more than 60 days delinquent under 
the terms of any— 
(1) administrative order; 
(2) court order; or 
(3) repayment agreement entered into between the recipient and the 
custodial parent or State agency providing child support enforcement 
services; 
that requires the recipient to pay child support (as defined in section 459(i) 
of the Social Security Act (42 U.S.C. 659(i))). 
(b) ENFORCEMENT.—The Administrator shall promulgate such regula-
tions as are necessary to enforce compliance with this section. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00078
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
§ 20102. Authorities in carrying out programs for small busi-
ness concerns in areas with high proportions of 
unemployed or low-income individuals and small 
business concerns owned by low-income individ-
uals 
In carrying out section 20504 of this title and the business development 
program, the Administrator may— 
(1) use, with their consent, the services and facilities of Federal 
agencies without reimbursement, and, with the consent of any State or 
political subdivision of a State, accept and use the services and facili-
ties of the State or subdivision without reimbursement; 
(2) accept, in the name of the Administration, and employ or dispose 
of in furtherance of the purposes of this subtitle, any money or prop-
erty, real, personal, or mixed, tangible, or intangible, received by gift, 
devise, bequest, or otherwise; 
(3) accept voluntary and uncompensated services, notwithstanding 
section 1342 of title 31; and 
(4)(A) employ experts and consultants or organizations of experts 
and consultants as authorized by section 3109 of title 5, except that 
no individual may be employed under this subsection for more than 100 
days in any fiscal year; 
(B) compensate individuals employed under subparagraph (A) at 
rates not in excess of the daily equivalent of the highest rate payable 
under section 5332 of title 5, including travel time; 
(C) allow individuals employed under subparagraph (A), while away 
from their homes or regular places of business, travel expenses (includ-
ing per diem in lieu of subsistence) as authorized by section 5703 of 
title 5 for persons in the Government service employed intermittently, 
while so employed; and 
(D) notwithstanding section 3109(b) of title 5, renew contracts for 
employment under subparagraph (A) annually. 
§ 20103. Extension or renewal of loans 
(a) IN GENERAL.—The Administrator may extend the maturity of or 
renew a loan under the general business loan program, disaster loan pro-
gram, or microloan program for additional periods not to exceed 10 years 
beyond the period stated in the loan if the extension or renewal will aid in 
the orderly liquidation of the loan. 
(b) INAPPLICABILITY
TO CERTAIN DISASTER LOANS.—Subsection (a) 
does not apply to a loan under the disaster loan program that has a term 
of more than 20 years. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00079
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
§ 20104. Deferral of repayment for active duty reservists 
(a) DEFINITIONS.—In this section: 
(1) ELIGIBLE RESERVIST.—The term ‘‘eligible reservist’’ means a 
member of a reserve component of the Armed Forces ordered to active 
duty during a period of military conflict. 
(2) ESSENTIAL EMPLOYEE.—The term ‘‘essential employee’’ means 
an individual who is employed by a small business concern and whose 
managerial or technical expertise is critical to the successful day-to-day 
operations of the small business concern. 
(3) PERIOD OF MILITARY CONFLICT.—The term ‘‘period of military 
conflict’’ means— 
(A) a period of war declared by Congress; 
(B) a period of national emergency declared by Congress or by 
the President; or 
(C) a period of a contingency operation (as defined in section 
101(a) of title 10). 
(4) 
QUALIFIED
BORROWER.—The 
term 
‘‘qualified 
borrower’’ 
means— 
(A) an individual who is an eligible reservist and who received 
a direct loan under the general business loan program or a dis-
aster assistance program before being ordered to active duty; or 
(B) a small business concern that received a direct loan under 
the general business loan program or a disaster assistance pro-
gram before an eligible reservist, who is an essential employee, was 
ordered to active duty. 
(b) DEFERRAL OF DIRECT LOANS.— 
(1) IN GENERAL.—The Administrator shall, on written request, defer 
repayment of principal and interest due on a direct loan made under 
the general business loan program or a disaster assistance program if 
the loan was incurred by a qualified borrower. 
(2) PERIOD OF DEFERRAL.—The period of deferral for repayment 
under paragraph (1) shall begin on the date on which the eligible re-
servist is ordered to active duty and terminate on the date that is 180 
days after the date on which the eligible reservist is discharged or re-
leased from active duty. 
(3) INTEREST
RATE
REDUCTION
DURING
DEFERRAL.—Notwith-
standing any other provision of law, during the period of deferral under 
paragraph (2), the Administrator may reduce the interest rate on a 
loan qualifying for a deferral under this subsection. 
(c) DEFERRAL OF LOAN GUARANTEES AND OTHER FINANCINGS.—The 
Administrator shall— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00080
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(1) encourage intermediaries participating in the microloan program 
to defer repayment of a microloan made with proceeds made available 
under the microloan program, if the microloan was incurred by a small 
business concern that is eligible to apply for assistance under section 
21303 of this title; and 
(2) establish guidelines to— 
(A) encourage lenders and other intermediaries to defer repay-
ment of, or provide other relief relating to— 
(i) loan guarantees under the general business loan pro-
gram and financings under the certified development company 
program that were incurred by small business concerns that 
are eligible to apply for assistance under section 21303 of 
this title; and 
(ii) loan guarantees provided under the microloan program 
if the intermediary provides relief to a small business concern 
under this subsection; and 
(B) implement a program to provide for the deferral of repay-
ment or other relief to any intermediary providing relief to a small 
business borrower under this subsection. 
§ 20105. Ownership interest arising from community prop-
erty law 
Ownership requirements to determine the eligibility of a small business 
concern that applies for assistance under any credit program under this 
subtitle shall be determined without regard to any ownership interest of a 
spouse arising solely from the application of the community property law 
of a State for purposes of determining marital interests. 
DIVISION B—GENERAL BUSINESS LOAN 
PROGRAM 
CHAPTER 203—GENERAL PURPOSE LOANS 
Sec. 
20301.
Loan authority. 
20302.
Methods of participation. 
20303.
No credit elsewhere. 
20304.
Sound and secure requirement. 
20305.
Level of participation in guaranteed loans. 
20306.
Maximum loan amounts. 
20307.
Interest rates. 
20308.
Prepayment charges. 
20309.
Maximum term. 
20310.
Deferment of payments. 
20311.
Guarantee fees. 
20312.
Certified lenders program. 
20313.
Penalty fee on late payment. 
20314.
Yearly fee. 
20315.
Notification to Congress of significant policy or administrative changes. 
20316.
Pilot programs. 
20317.
Calculation of subsidy rate. 
20318.
Leasing. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00081
Fmt 6652
Sfmt 6231
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
20319.
Real estate appraisals. 
20320.
Express loan program. 
20321.
Loan application preparation and loan servicing by qualified development companies. 
20322.
Increased veteran/reservist participation program. 
§ 20301. Loan authority 
To the extent and in such amounts as are provided in advance in appro-
priation Acts, the Administrator may make loans to small business concerns 
(including a small business concern owned by a qualified Indian tribe) for 
plant acquisition, construction, conversion, or expansion, including the ac-
quisition of land, material, supplies, equipment, and working capital. 
§ 20302. Methods of participation 
The Administrator may make a loan under section 20301 of this title— 
(1) directly; or 
(2) in cooperation with a bank or other lending institution or any 
other entity through an agreement to participate on an immediate or 
deferred (guaranteed) basis. 
§ 20303. No credit elsewhere 
(a) IN GENERAL.—No financial assistance shall be extended under the 
general business loan program if the applicant can obtain credit elsewhere. 
(b) IMMEDIATE PARTICIPATION.—No immediate participation may be 
purchased unless it is shown that a deferred participation is not available. 
(c) DIRECT FINANCING.—No direct financing may be made unless it is 
shown that a participation is not available. 
§ 20304. Sound and secure requirement 
(a) IN GENERAL.—A loan made under the general business loan program 
shall be of such sound value or so secured as reasonably to ensure repay-
ment. 
(b) REASONABLE DOUBT.—In applying subsection (a) in the case of a 
loan to assist a public or private organization for the disabled or to assist 
a disabled individual as provided in section 20503 of this title, any reason-
able doubt shall be resolved in favor of the applicant. 
(c) ENERGY MEASURES.—Recognizing that greater risk may be associ-
ated with a loan for an energy measure as provided in section 20505 of this 
title, in applying subsection (a) in the case of such a loan— 
(1) factors in determining sound value shall include— 
(A) quality of the product or service; 
(B) technical qualifications of the applicant or employees of the 
applicant; 
(C) sales projections; and 
(D) the financial status of the applicant; and 
(2) the loan need not be as sound as is generally required for a loan 
under the general business loan program. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00082
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(d) NO DELEGATION OF AUTHORITY.—The authority conferred by this 
subsection shall be exercised solely by Administration personnel and shall 
not be delegated to other than Administration personnel. 
§ 20305. Level of participation in guaranteed loans 
(a) IN GENERAL.—Except as provided in subsection (b), in an agreement 
to participate in a loan on a deferred basis under the general business loan 
program (including a loan made under the preferred lenders program), par-
ticipation by the Administrator shall be equal to— 
(1) 75 percent of the balance of the financing outstanding at the 
time of disbursement of the loan, if the balance exceeds $150,000; or 
(2) 85 percent of the balance of the financing outstanding at the 
time of disbursement of the loan, if the balance is less than or equal 
to $150,000. 
(b) REDUCED PARTICIPATION ON REQUEST.— 
(1) IN GENERAL.—The guarantee percentage specified by subsection 
(a) for a loan under the general business loan program may be reduced 
on the request of the participating lender. 
(2) PROHIBITION.—The Administrator shall not use the guarantee 
percentage requested by a participating lender under paragraph (1) as 
a criterion for establishing priorities in approving loan guarantee re-
quests under the general business loan program. 
(c) PARTICIPATION UNDER EXPORT WORKING CAPITAL PROGRAM.—Not-
withstanding subsection (a), under an agreement to participate in a loan on 
a deferred basis under the export working capital program, participation by 
the Administrator shall not exceed 90 percent. 
(d) REFINANCING OF INDEBTEDNESS.—On any portion of a loan used to 
refinance indebtedness held by a bank or other lending institution, the Ad-
ministrator shall limit the amount of deferred participation to 80 percent 
of the amount of the loan at the time of disbursement. 
§ 20306. Maximum loan amounts 
(a) IN GENERAL.—Except as provided in subsection (b) and subject to 
subsection (c), no loan shall be made to a borrower under the general busi-
ness loan program if the total amount outstanding and committed (on a de-
ferred basis, through a participation on an immediate basis, or directly) to 
the borrower under the general business loan program and microloan pro-
gram would exceed $1,500,000 (or if the gross loan amount would exceed 
$2,000,000). 
(b) SMALL BUSINESS CONCERN
IN INDUSTRY ENGAGED
IN
OR AD-
VERSELY AFFECTED BY INTERNATIONAL TRADE.—A loan solely for the 
purposes provided in section 20510 of this title may be made under the gen-
eral business loan program and microloan program if the total amount out-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00083
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
standing and committed (on a deferred basis) to the borrower under the 
general business loan program would not exceed $1,750,000, of which not 
more than $1,250,000 may be used for working capital, supplies, or 
financings under section 20508 of this title for export purposes. 
(c) DIRECT LOANS; PARTICIPATION ON AN IMMEDIATE BASIS.—No loan 
shall be made under the general business loan program, either directly or 
in cooperation with banks or other lending institutions through agreements 
to participate on an immediate basis, if the amount would exceed $350,000. 
§ 20307. Interest rates 
(a) MAXIMUM RATE PRESCRIBED BY THE ADMINISTRATOR.—Notwith-
standing the provisions of the constitution of any State or the laws of any 
State limiting the rate or amount of interest that may be charged, taken, 
received, or reserved, the maximum legal rate of interest on a financing 
made on a deferred basis under the general business loan program shall not 
exceed a rate prescribed by the Administrator. 
(b) DIRECT LOANS AND IMMEDIATE PARTICIPATION LOANS.—The rate 
of interest for the Administrator’s share of any direct loan or immediate 
participation loan under the general business loan program shall not exceed 
the current average market yield on outstanding marketable obligations of 
the United States with remaining periods to maturity comparable to the av-
erage maturities of such loans and adjusted to the nearest 0.125 percent, 
and an additional amount as determined by the Administrator, but not to 
exceed one percent per year. 
(c) PREFERRED LENDERS PROGRAM.—The maximum interest rate for a 
loan under the general business loan program that is guaranteed under the 
preferred lenders program shall not exceed the maximum interest rate, as 
determined by the Administrator, applicable to other loans guaranteed 
under the general business loan program. 
(d) LOANS TO ASSIST THE DISABLED.—In the case of a loan under the 
general business loan program to assist a public or private organization for 
the disabled or to assist a disabled individual as provided in section 20503 
of this title, the interest rate shall be 3 percent per year. 
(e) PAYMENT OF ACCRUED INTEREST.— 
(1) IN GENERAL.—A bank or other lending institution making a 
claim for payment on the guaranteed portion of a loan made under the 
general business loan program shall be paid the accrued interest due 
on the loan from the earliest date of default to the date of payment 
of the claim at a rate not to exceed the rate of interest on the loan 
on the date of default, minus one percent. 
(2) LOANS SOLD ON SECONDARY MARKET.—If a loan described in 
paragraph (1) is sold on the secondary market, the amount of interest 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00084
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
paid to a bank or other lending institution described in that paragraph 
from the earliest date of default to the date of payment of the claim 
shall be no more than the agreed upon rate, minus one percent. 
(3) APPLICABILITY.—Paragraphs (1) and (2) do not apply to loans 
made on or after October 1, 2000. 
§ 20308. Prepayment charges 
(a) IN GENERAL.—A borrower that prepays a loan guaranteed under the 
general business loan program shall remit to the Administrator a subsidy 
recoupment fee calculated in accordance with subsection (b) if— 
(1) the loan is for a term of not less than 15 years; 
(2) the prepayment is voluntary; 
(3) the amount of prepayment in any calendar year is more than 25 
percent of the outstanding balance of the loan; and 
(4) the prepayment is made within the first 3 years after disburse-
ment of the loan proceeds. 
(b) SUBSIDY RECOUPMENT FEE.—The subsidy recoupment fee charged 
under subsection (a) shall be— 
(1) 5 percent of the amount of prepayment, if the borrower prepays 
during the first year after disbursement; 
(2) 3 percent of the amount of prepayment, if the borrower prepays 
during the second year after disbursement; and 
(3) one percent of the amount of prepayment, if the borrower pre-
pays during the third year after disbursement. 
§ 20309. Maximum term 
(a) IN GENERAL.—Except as provided in subsection (b), no loan (includ-
ing a loan renewal or extension) shall be made under the general business 
loan program for a term or terms exceeding 25 years. 
(b) EXCEPTION.—Any portion of a loan that is made under the general 
business loan program for the purpose of acquiring real property or con-
structing, converting, or expanding a facility may have a term of 25 years 
plus such additional period as is estimated may be required to complete the 
construction, conversion, or expansion. 
§ 20310. Deferment of payments 
The Administrator may defer payments on the principal of a loan under 
the general business loan program for a grace period, and use such other 
methods as the Administrator considers necessary and appropriate, to en-
sure the successful establishment and operation of a small business concern. 
§ 20311. Guarantee fees 
(a) IN GENERAL.—With respect to a loan guaranteed under the general 
business loan program (other than a loan that is repayable in one year or 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00085
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
less), the Administrator shall collect a guarantee fee, which shall be payable 
by the participating lender, and may be charged to the borrower, as follows: 
(1) A guarantee fee of not to exceed 2 percent of the deferred par-
ticipation share of a total loan amount that is not more than $150,000. 
(2) A guarantee fee of not to exceed 3 percent of the deferred par-
ticipation share of a total loan amount that is more than $150,000, 
but not more than $700,000. 
(3) A guarantee fee of not to exceed 3.5 percent of the deferred par-
ticipation share of a total loan amount that is more than $700,000. 
(4) In addition to the guarantee fee under paragraph (3), a guar-
antee fee equal to 0.25 percent of any portion of the deferred participa-
tion share that is more than $1,000,000. 
(b) RETENTION OF CERTAIN FEES.—A lender participating in the gen-
eral business loan program may retain not more than 25 percent of a fee 
collected under subsection (a)(1). 
§ 20312. Certified lenders program 
(a) IN GENERAL.—The Administrator may establish a certified lenders 
program for lenders that establish their knowledge of Administration laws 
(including regulations) concerning the guaranteed loan program and their 
proficiency in program requirements. 
(b) SUSPENSION OR REVOCATION.—The designation of a lender as a cer-
tified lender shall be suspended or revoked at any time that the Adminis-
trator determines that the lender is not adhering to regulations prescribed 
by the Administrator or that the loss experience of the lender is excessive 
as compared with that of other lenders, but the suspension or revocation 
shall not affect any outstanding guarantee. 
(c) UNIFORM AND SIMPLIFIED LOAN FORM.—To encourage all lending 
institutions and other entities making loans under the general business loan 
program to provide loans of $50,000 or less in guarantees to eligible small 
business loan applicants, the Administrator shall develop, and allow partici-
pating lenders to solely use, a uniform and simplified loan form for such 
loans. 
(d) LOAN LIQUIDATION.— 
(1) IN GENERAL.—The Administrator may permit a lender partici-
pating in the certified lenders program to liquidate a loan made with 
a guarantee from the Administrator in accordance with a liquidation 
plan approved by the Administrator. 
(2) AUTOMATIC APPROVAL.—If the Administrator does not approve 
or deny a request for approval of a liquidation plan within 10 business 
days after the date on which the request is made (or with respect to 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00086
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
any routine liquidation activity under such a plan, within 5 business 
days), the request shall be deemed to be approved. 
§ 20313. Penalty fee on late payment 
The Administrator may permit a participating lender to impose and col-
lect a reasonable penalty fee on late payment of a loan guaranteed under 
the general business loan program in an amount not to exceed 5 percent 
of the monthly loan payment per month plus interest. 
§ 20314. Yearly fee 
(a) DEFINITION OF COST.—In this section, the term ‘‘cost’’ has the 
meaning given the term in section 502 of the Federal Credit Reform Act 
of 1990 (2 U.S.C. 661a). 
(b) FEE.—With respect to a loan approved under the general business 
loan program, the Administrator shall assess, collect, and retain a fee, not 
to exceed 0.55 percent per year of the outstanding balance of the deferred 
participation share of the loan, in an amount established once annually by 
the Administrator in the Administrator’s annual budget request to Con-
gress, as necessary to reduce to zero the cost to the Administrator of mak-
ing guarantees under the general business loan program. 
(c) PAYER.—The yearly fee assessed under subsection (b) shall be pay-
able by the participating lender and shall not be charged to the borrower. 
(d) LOWERING OF BORROWER FEES.—If the Administrator determines 
that fees paid by lenders and by small business borrowers for guarantees 
under the general business loan program may be reduced, consistent with 
reducing to zero the cost to the Administrator of making such guarantees— 
(1) the Administrator shall first consider reducing fees paid by small 
business borrowers under paragraphs (1) to (3) of section 20311(a) of 
this title, to the maximum extent possible; and 
(2) fees paid by small business borrowers shall not be increased 
above the levels in effect on December 8, 2004. 
§ 20315. Notification to Congress of significant policy or ad-
ministrative changes 
Not later than 15 days before making any significant policy or adminis-
trative change affecting the operation of the general business loan program, 
the Administrator shall notify the Committee on Small Business and Entre-
preneurship of the Senate and the Committee on Small Business of the 
House of Representatives of the change. 
§ 20316. Pilot programs 
(a) DEFINITION OF PILOT PROGRAM.—In this section, the term ‘‘pilot 
program’’ means a lending program initiative, project, innovation, or other 
activity not specifically authorized by law. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00087
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(b) LIMITATION.—Not more than 10 percent of the number of loans 
guaranteed in any fiscal year under the general business loan program may 
be awarded as part of a pilot program commenced on or after October 1, 
1996. 
(c) LOW DOCUMENTATION LOAN PROGRAM.— 
(1) IN GENERAL.—The Administrator may carry out the low docu-
mentation loan program for loans of $100,000 or less only through 
lenders with significant experience in making small business loans. 
(2) REGULATIONS.—The Administrator shall promulgate regulations 
defining the experience necessary for participation as a lender in the 
low documentation loan program. 
§ 20317. Calculation of subsidy rate 
All fees, interest, and profits received and retained by the Administrator 
under the general business loan program shall be included in the calcula-
tions made by the Director of the Office of Management and Budget to off-
set the cost (as defined in section 502 of the Federal Credit Reform Act 
of 1990 (2 U.S.C. 661a)) to the Administrator of purchasing and guaran-
teeing loans under this subtitle. 
§ 20318. Leasing 
In addition to such other lease arrangements as the Administrator may 
authorize, a borrower may permanently lease to one or more tenants not 
more than 20 percent of any property constructed with the proceeds of a 
loan guaranteed under the general business loan program if the borrower 
permanently occupies and uses not less than 60 percent of the total business 
space in the property. 
§ 20319. Real estate appraisals 
With respect to a loan under the general business loan program that is 
secured by commercial real property, an appraisal of the property by a State 
licensed or certified appraiser— 
(1) shall be required by the Administrator in connection with any 
such loan for more than $250,000; or 
(2) may be required by the Administrator or the lender in connection 
with any such loan for $250,000 or less, if an appraisal is necessary 
for appropriate evaluation of creditworthiness. 
§ 20320. Express loan program 
(a) RESTRICTION TO EXPRESS LENDER.—The authority to make an ex-
press loan shall be limited to lenders that the Administrator considers quali-
fied to make express loans. 
(b) EFFECT OF DESIGNATION.—Designation as an express lender for 
purposes of making an express loan does not preclude the lender from tak-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00088
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
ing any other action authorized by the Administrator for that lender under 
the general business loan program. 
(c) RETENTION OF DESIGNATION OF EXPRESS LENDER.—An express 
lender shall retain that designation unless— 
(1) the Administrator determines that the express lender has violated 
the law (including regulations); or 
(2) the Administrator modifies the requirements to be an express 
lender and the lender no longer satisfies those requirements. 
(d) MAXIMUM LOAN AMOUNT.—The maximum loan amount under the 
express loan program is $350,000. 
(e) OPTION TO PARTICIPATE.—Except as otherwise provided in this sec-
tion, the Administrator shall take no regulatory, policy, or administrative 
action, without regard to whether the action requires notification under sec-
tion 20315 of this title, that has the effect of requiring a lender to make 
an express loan. 
(f) RENEWABLE ENERGY AND ENERGY EFFICIENCY.—The Administrator 
may make a loan under the express loan program for the purpose of— 
(1) purchasing a renewable energy system; or 
(2) carrying out an energy efficiency project for a small business 
concern. 
§ 20321. Loan application preparation and loan servicing by 
qualified development companies 
Notwithstanding any other provision of law, a qualified development com-
pany (as defined in section 33101 of this title) may— 
(1) prepare applications for deferred participation loans under the 
general business loan program; and 
(2) service loans under the general business loan program and 
charge a reasonable fee for servicing the loans. 
§ 20322. Increased veteran/reservist participation program 
(a) DEFINITIONS.—In this section: 
(1) COST.—The term ‘‘cost’’ has the meaning given the term in sec-
tion 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a). 
(2) PILOT PROGRAM.—The term ‘‘pilot program’’ means the pilot 
program established under subsection (b). 
(3) VETERAN/RESERVIST PARTICIPATION LOAN.—The term ‘‘veteran/ 
reservist participation loan’’ means a loan made under the general busi-
ness loan program to a small business concern owned and controlled 
by veterans or by reservists. 
(b) ESTABLISHMENT.—The Administrator shall establish and carry out a 
pilot program under which the Administrator shall reduce the fees for vet-
eran/reservist participation loans. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00089
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(c) DURATION.—The pilot program shall terminate at the end of the sec-
ond full fiscal year after the date on which the Administrator establishes 
the pilot program. 
(d) MAXIMUM
PARTICIPATION.—A veteran/reservist participation loan 
shall include the maximum participation levels by the Administrator per-
mitted for loans made under the general business loan program. 
(e) FEES.— 
(1) IN GENERAL.—The fee on a veteran/reservist participation loan 
shall be equal to 50 percent of the fee otherwise applicable to that loan 
under section 20311 of this title. 
(2) WAIVER.—The Administrator may waive paragraph (1) for a fis-
cal year if— 
(A) for the fiscal year before that fiscal year, the annual esti-
mated rate of default of veteran/reservist participation loans ex-
ceeds that of loans made under the general business loan program 
that are not veteran/reservist participation loans; 
(B) the cost to the Administrator of making loans under the 
general business loan program is greater than zero and the cost 
is directly attributable to the cost of making veteran/reservist par-
ticipation loans; and 
(C) no additional source of revenue authority is available to re-
duce the cost of making loans under the general business loan pro-
gram to zero. 
(3) EFFECT OF WAIVER.—If the Administrator waives the reduction 
of fees under paragraph (2), the Administrator— 
(A) shall not assess or collect fees in an amount greater than 
necessary to ensure that the cost of the general business loan pro-
gram is not greater than zero; and 
(B) shall reinstate the fee reductions under paragraph (1) when 
the conditions in paragraph (2) no longer apply. 
(4) NO INCREASE OF FEES.—The Administrator shall not increase 
the fees under 20311 of this title on loans made under the general 
business loan program that are not veteran/reservist participation loans 
as a direct result of the pilot program. 
(f) GAO REPORT.— 
(1) IN GENERAL.—Not later than one year after the date on which 
the pilot program terminates, the Comptroller General shall submit to 
the Committee on Small Business of the House of Representatives and 
the Committee on Small Business and Entrepreneurship of the Senate 
a report on the pilot program. 
(2) CONTENTS.—The report under paragraph (1) shall include— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00090
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(A) the number of veteran/reservist participation loans for which 
fees were reduced under the pilot program; 
(B) a description of the impact of the pilot program on the gen-
eral business loan program; 
(C) an evaluation of the efficacy and potential fraud and abuse 
of the pilot program; and 
(D) recommendations for improving the pilot program. 
CHAPTER 205—SPECIAL PURPOSE LOANS 
Sec. 
20501.
Applicability of chapter 203. 
20502.
Residential or commercial construction or rehabilitation for sale. 
20503.
The disabled. 
20504.
Unemployed or low-income individuals. 
20505.
Energy measures. 
20506.
Pollution control facilities. 
20507.
Certified development companies. 
20508.
Export working capital program. 
20509.
Qualified employee trusts. 
20510.
International trade. 
20511.
Business development. 
20512.
Closure of defense installations; termination of defense programs; veterans and certain 
other individuals associated with defense. 
20513.
Loans for energy efficient technologies. 
§ 20501. Applicability of chapter 203 
The provisions of chapter 203 apply to this chapter except to the extent 
that any such provision is inconsistent with a provision of this chapter. 
§ 20502. Residential or commercial construction or rehabili-
tation for sale 
(a) IN GENERAL.—The Administrator may provide a loan under the gen-
eral business loan program to finance residential or commercial construction 
or rehabilitation for sale. 
(b) LIMITATION.—A loan under subsection (a) shall not be used primarily 
for the acquisition of land. 
§ 20503. The disabled 
The Administrator may provide a guaranteed loan under the general busi-
ness loan program to assist a public or private organization for the disabled 
or a disabled individual (including a service-disabled veteran) in estab-
lishing, acquiring, or operating a small business concern. 
§ 20504. Unemployed or low-income individuals 
(a) IMPLEMENTATION.—The general business loan program shall be used 
to— 
(1) assist in the establishment, preservation, and strengthening of 
small business concerns and improve the managerial skills employed in 
small business concerns, with special attention to, and particular em-
phasis on the preservation or establishment of, small business concerns 
that are— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00091
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(A) located in urban or rural areas with high proportions of un-
employed or low-income individuals; or 
(B) owned by low-income individuals; and 
(2) mobilize for those objectives private as well as public managerial 
skills and resources. 
(b) LOAN AUTHORITY.—The Administrator may provide a loan under the 
general business loan program to a small business concern or to a qualified 
person seeking to establish a small business concern if the Administrator 
determines that providing the loan will further the purposes stated in sub-
section (a). 
§ 20505. Energy measures 
(a) IN GENERAL.—The Administrator may provide a loan under the gen-
eral business loan program to provide assistance (including startup assist-
ance) to a small business concern to enable the small business concern to 
design architecturally, or engineer, manufacture, distribute, market, install, 
or service, an energy measure. 
(b) LIMITATION.—The proceeds of a loan under subsection (a) shall not 
be used primarily for research and development. 
§ 20506. Pollution control facilities 
(a) IN GENERAL.—The Administrator may provide a deferred participa-
tion loan under the general business loan program to finance the planning, 
design, or installation of a pollution control facility for the purposes speci-
fied in section 404 of the Small Business Investment Act of 1958 (15 
U.S.C. 694–1), as in effect before the date of repeal of that section. 
(b) LIMIT ON AMOUNT.—A loan under subsection (a) may not result in 
a total amount outstanding and committed (on a deferred basis) to a bor-
rower under the general business loan program and microloan program of 
more than $1,000,000. 
§ 20507. Certified development companies 
The Administrator may provide financing under the general business loan 
program to certified development companies for the purposes of, and subject 
to the restrictions in, the certified development company program. 
§ 20508. Export working capital program 
(a) IN GENERAL.—The Administrator may provide extensions of credit, 
standby letters of credit, revolving lines of credit for export purposes, and 
other financing to enable small business concerns (including small business 
export trading companies and small business export management compa-
nies) to develop foreign markets. 
(b) RATE OF INTEREST.—A bank or participating lending institution may 
establish such a rate of interest on a financing under subsection (a) as is 
legal and reasonable. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00092
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(c) CONSIDERATIONS.—When considering a loan or guarantee application, 
the Administrator shall give weight to export-related benefits, including the 
opening of new markets for United States goods and services abroad and 
encouraging the involvement of small business concerns (including agricul-
tural concerns) in the export market. 
(d) MARKETING OF EXPORT FINANCING PROGRAM.—The Administrator 
shall aggressively market the export working capital program to small busi-
ness concerns. 
§ 20509. Qualified employee trusts 
(a) DEFINITION OF QUALIFIED EMPLOYEE TRUST.—In this section: 
(1) TRUST MAINTAINED BY SMALL BUSINESS CONCERN.—The term 
‘‘qualified employee trust’’, with respect to a small business concern, 
means a trust— 
(A) that forms part of an employee stock ownership plan (as de-
fined in section 4975(e) of the Internal Revenue Code of 1986 (26 
U.S.C. 4975(e)) that— 
(i) is maintained by the small business concern; and 
(ii) provides that each participant in the plan is entitled to 
direct the plan as to the manner in which voting rights under 
qualifying employer securities (as defined in section 4975(e) 
of the Internal Revenue Code of 1986 (26 U.S.C. 4975(e)) 
that are allocated to the account of the participant are to be 
exercised with respect to a corporate matter that (by law or 
charter) must be decided by a majority vote of outstanding 
common shares voted; and 
(B) the trustee of which enters into an agreement with the Ad-
ministrator that is binding on the trust and on the small business 
concern and provides that— 
(i) a loan guaranteed under the general business loan pro-
gram shall be used solely for the purchase of qualifying em-
ployer securities of the small business concern; 
(ii) all funds acquired by the small business concern in the 
purchase shall be used by the small business concern solely 
for the purposes for which the loan was guaranteed; 
(iii) the small business concern will provide such funds as 
are necessary for the timely repayment of the loan, and the 
property of the small business concern shall be available as 
security for repayment of the loan; and 
(iv) all qualifying employer securities acquired by the trust 
in the purchase shall be allocated to the accounts of partici-
pants in the plan who are entitled to share in the allocation, 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00093
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
and each participant has a nonforfeitable right, not later than 
the date on which the loan is repaid, to all such qualifying 
employer securities that are allocated to the participant’s ac-
count. 
(2) TRUST
MAINTAINED
BY
EMPLOYEE
ORGANIZATION.—A trust 
maintained by an employee organization may be treated as a qualified 
employee trust with respect to a small business concern in accordance 
with regulations prescribed under subsection (f). 
(b) IN GENERAL.—The Administrator may guarantee a loan under the 
general business loan program to a qualified employee trust with respect to 
a small business concern, on the same basis as if the qualified employee 
trust were the same entity as the small business concern, for the purpose 
of purchasing stock of the small business concern under a plan approved 
by the Administrator that, when carried out, results in the qualified em-
ployee trust owning at least 51 percent of the stock of the small business 
concern. 
(c) PLAN.— 
(1) SUBMISSION
WITH
APPLICATION.—A plan requiring approval 
under subsection (b) shall be submitted to the Administrator by the 
trustee of the qualified employee trust with the application for a loan 
guarantee. 
(2) AGREEMENT.—The plan shall include an agreement with the Ad-
ministrator that is binding on the qualified employee trust and on the 
small business concern and provides that— 
(A) not later than the date on which the loan guaranteed under 
subsection (b) is repaid (or as soon after that date as is consistent 
with the requirements of section 401(a) of the Internal Revenue 
Code of 1986 (26 U.S.C. 401(a))), at least 51 percent of the total 
stock of the small business concern shall be allocated to the ac-
counts of at least 51 percent of the employees of the small busi-
ness concern who are entitled to share in the allocation; 
(B) there will be periodic reviews of the role in the management 
of the small business concern of employees to whose accounts 
stock is allocated; and 
(C) there will be adequate management to ensure management 
expertise and continuity. 
(d) CRITERIA.— 
(1) IN GENERAL.—Except as provided in paragraph (2), in deter-
mining whether to guarantee a loan under this section, the Adminis-
trator shall not use the individual business experience or personal as-
sets of employee-owners as criteria. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00094
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(2) EXCEPTION.—To the that extent that any employee-owner as-
sumes managerial responsibilities, the Administrator may consider the 
business expertise of that employee-owner. 
(e) TREATMENT OF CORPORATION AS SMALL BUSINESS CONCERN.—For 
purposes of this section, a corporation that is controlled by any other person 
shall be treated as a small business concern if the corporation would, after 
the plan under subsection (c) is carried out, be treated as a small business 
concern. 
(f) REGULATIONS RELATING TO TREATMENT OF A TRUST MAINTAINED 
BY AN EMPLOYEE ORGANIZATION.—The Administrator may prescribe regu-
lations under which a trust maintained by an employee organization may 
be treated as a qualified employee trust with respect to a small business 
concern if— 
(1) the employee organization represents at least 51 percent of the 
employees of the small business concern; 
(2) the small business concern maintains a plan that— 
(A) is an employee benefit plan that is designed to invest pri-
marily in qualifying employer securities (as defined in section 
4975(e) of the Internal Revenue Code of 1986 (26 U.S.C. 
4975(e))); 
(B) provides that each participant in the plan is entitled to di-
rect the plan as to the manner in which voting rights under quali-
fying employer securities that are allocated to the account of the 
participant are to be exercised with respect to a corporate matter 
that (by law or charter) must be decided by a majority vote of the 
outstanding common shares voted; 
(C) provides that each participant who is entitled to distribution 
from the plan has a right, in the case of qualifying employer secu-
rities that are not readily tradable on an established market, to 
require that the small business concern repurchase the securities 
under a fair valuation formula; and 
(D) meets such other requirements (similar to requirements ap-
plicable to employee stock ownership plans (as defined in section 
4975(e) of the Internal Revenue Code of 1986 (26 U.S.C. 
4975(e))) as the Administrator may prescribe; and 
(3) in the case of a loan guarantee under the general business loan 
program, the employee organization enters into an agreement with the 
Administrator that is described in subsection (a)(1)(B). 
(g) REPORTS.—The Administrator shall— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00095
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(1) compile a separate list of applications for assistance under this 
section, indicating which applications are accepted and which denied; 
and 
(2) periodically submit to Congress a report on the status of em-
ployee-owned firms assisted by the Administrator. 
§ 20510. International trade 
(a) IN GENERAL.—If the Administrator determines that a loan guaran-
teed under the general business loan program will allow an eligible small 
business concern that is engaged in or adversely affected by international 
trade to improve its competitive position, the Administrator may provide a 
loan guarantee to assist the small business concern in— 
(1) the financing of the acquisition, construction, renovation, mod-
ernization, improvement, or expansion of productive facilities or equip-
ment to be used in the United States in the production of a good or 
service involved in international trade; or 
(2) the refinancing of existing indebtedness that is not structured 
with reasonable terms and conditions. 
(b) SECURITY.—A loan under this section shall be secured by a first lien 
position or first mortgage on the property or equipment financed by the 
loan or on other assets of the small business concern. 
(c) ENGAGEMENT IN INTERNATIONAL TRADE.—For purposes of this sec-
tion, a small business concern shall be considered to be engaged in inter-
national trade if, as determined by the Administrator, the small business 
concern is in a position to expand existing export markets or develop new 
export markets. 
(d) ADVERSE EFFECT OF INTERNATIONAL TRADE.—For purposes of this 
section, a small business concern shall be considered to be adversely affected 
by international trade if, as determined by the Administrator, the small 
business concern— 
(1) is confronting increased competition with foreign firms in the rel-
evant market; and 
(2) is injured by such competition. 
(e) FINDINGS BY CERTAIN FEDERAL AGENCIES.—For purposes of sub-
section (d)(2), the Administrator shall accept any finding of injury by the 
International Trade Commission or any finding of injury by the Secretary 
of Commerce under chapter 3 of title II of the Trade Act of 1974 (19 
U.S.C. 2341 et seq.). 
§ 20511. Business development 
(a) IN GENERAL.—The Administrator may make a loan under the gen-
eral business loan program to a small business concern that is eligible for 
assistance under the business development program. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00096
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(b) REQUIREMENTS.—Assistance may be provided under subsection (a) if 
the Administrator determines that— 
(1) the type and amount of assistance requested by a small business 
concern is not otherwise available on reasonable terms from other 
sources; 
(2) with the assistance, the small business concern has a reasonable 
prospect for operating soundly and profitably within a reasonable pe-
riod of time; 
(3) the proceeds of the assistance will be used within a reasonable 
time— 
(A) for plant construction, conversion, or expansion, including 
the acquisition of equipment, facilities, machinery, supplies, or ma-
terial; or 
(B) to supply the small business concern with working capital 
to be used in the manufacture of articles, equipment, supplies, or 
material for defense or civilian production or as may be necessary 
to ensure a well-balanced national economy; and 
(4) the assistance is of such sound value as reasonably to ensure that 
the terms under which the assistance is provided will not be breached 
by the small business concern. 
(c) LIMIT ON AMOUNT.— 
(1) IN GENERAL.—No loan shall be made under this section if the 
total amount outstanding and committed (on a deferred basis, through 
a participation on an immediate basis, or directly) to the borrower 
under the general business loan program would exceed $750,000. 
(2) AMOUNT OF PARTICIPATION.—Subject to paragraph (1), in an 
agreement to participate in a loan on a deferred (guaranteed) basis, 
participation by the Administrator shall be not less than 85 percent of 
the balance of the financing outstanding at the time of disbursement. 
(d) RATE OF INTEREST.—The rate of interest on a financing made on 
a deferred (guaranteed) basis shall be an amount that is legal and reason-
able. 
(e) LIMITATIONS.— 
(1) IN GENERAL.—A financing under this section shall be subject to 
the limitations stated in this subsection. 
(2) IMMEDIATE FINANCING.—No immediate participation may be 
purchased unless it is shown that a deferred participation is not avail-
able. 
(3) DIRECT FINANCING.—No direct financing may be made unless 
it is shown that a participation is unavailable. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00097
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(f) SECURED DEBT INSTRUMENT.—A direct loan or the Administrator’s 
share of an immediate participation loan under this section shall be any se-
cured debt instrument— 
(1) that is subordinated by its terms to all other borrowings of the 
issuer; 
(2) the rate of interest on which does not exceed the current average 
market yield on outstanding marketable obligations of the United 
States with remaining periods to maturity comparable to the average 
maturities of such loans and adjusted to the nearest 0.125 percent; 
(3) the term of which is not more than 25 years; 
(4) the principal on which is amortized at such a rate as the Admin-
istrator considers appropriate; and 
(5) the interest on which is payable not less often than annually. 
§ 20512. Closure of defense installations; termination of de-
fense programs; veterans and certain other indi-
viduals associated with defense 
(a) DEFINITION OF QUALIFIED INDIVIDUAL.—In this section, the term 
‘‘qualified individual’’ means— 
(1) a member of the Armed Forces honorably discharged from active 
duty involuntarily or under a program providing bonuses or other in-
ducements to encourage voluntary separation or early retirement; 
(2) a civilian employee of the Department of Defense involuntarily 
separated from Federal service or retired under a program offering in-
ducements to encourage early retirement; or 
(3) an employee of a prime contractor, subcontractor, or supplier at 
any tier of a Department of Defense program whose employment is in-
voluntarily terminated (or voluntarily terminated under a program of-
fering inducements to encourage voluntary separation or early retire-
ment) due to the termination or substantial reduction of a Department 
of Defense program. 
(b) LOANS.—The Administrator may make a loan on a guaranteed basis 
under the general business loan program— 
(1) to a small business concern that has been (or can reasonably be 
expected to be) detrimentally affected by— 
(A) the closure or substantial reduction of a Department of De-
fense installation; or 
(B) the termination or substantial reduction of a Department 
of Defense program on which the small business concern was a 
prime contractor or subcontractor or supplier at any tier; or 
(2) to a qualified individual or a veteran seeking to establish (or ac-
quire) and operate a small business concern. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00098
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
(c) RESOLUTION OF DOUBT.—Recognizing that greater risk may be asso-
ciated with a loan to a small business concern described in subsection 
(b)(1), in making a determination regarding the sound value of the proposed 
loan under section 20304, any reasonable doubt concerning the small busi-
ness concern’s proposed business plan for transition to nondefense-related 
markets shall be resolved in favor of the loan applicant. 
(d) AMOUNTS OF LOANS.—Loans under this section shall be authorized 
in such amounts as are provided in advance in appropriation Acts for the 
purposes of loans under this section. 
(e) JOB CREATION AND COMMUNITY BENEFIT.—In providing assistance 
under this section, the Administrator shall develop procedures to ensure, to 
the maximum extent practicable, that the assistance is used for projects 
that— 
(1) have the greatest potential for— 
(A) creating new jobs for individuals whose employment is invol-
untarily terminated due to reductions in Federal defense expendi-
tures; or 
(B) preventing the loss of jobs by employees of small business 
concerns described in subsection (b)(1); and 
(2) have substantial potential for stimulating new economic activity 
in communities most affected by reductions in Federal defense expendi-
tures. 
§ 20513. Loans for energy efficient technologies 
(a) DEFINITIONS.—In this section: 
(1) COST.—The term ‘‘cost’’ has the meaning given the term in sec-
tion 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a). 
(2) COVERED ENERGY EFFICIENCY LOAN.—The term ‘‘covered en-
ergy efficiency loan’’ means a loan— 
(A) made under the general business loan program; and 
(B) the proceeds of which are used to— 
(i) purchase energy efficient designs, equipment, or fix-
tures; or 
(ii) reduce the energy consumption of the borrower by 10 
percent or more. 
(3) PILOT PROGRAM.—The term ‘‘pilot program’’ means the pilot 
program established under subsection (b). 
(b) ESTABLISHMENT.—The Administrator shall establish and carry out a 
pilot program under which the Administrator shall reduce the fees for cov-
ered energy efficiency loans. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00099
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
100 
(c) DURATION.—The pilot program shall terminate at the end of the sec-
ond full fiscal year after the date on which the Administrator establishes 
the pilot program. 
(d) MAXIMUM PARTICIPATION.—A covered energy efficiency loan shall in-
clude the maximum participation levels by the Administrator permitted for 
loans made under this division. 
(e) FEES.— 
(1) IN GENERAL.—The fee on a covered energy efficiency loan shall 
be equal to 50 percent of the fee otherwise applicable to that loan 
under 20311 of this title. 
(2) WAIVER.—The Administrator may waive paragraph (1) for a fis-
cal year if— 
(A) for the fiscal year before that fiscal year, the annual rate 
of default of covered energy efficiency loans exceeds that of loans 
made under this division that are not covered energy efficiency 
loans; 
(B) the cost to the Administrator of making loans under this 
division— 
(i) is greater than zero; and 
(ii) is directly attributable to the cost of making covered 
energy efficiency loans; and 
(C) no additional sources of revenue authority are available to 
reduce the cost of making loans under this division to zero. 
(3) EFFECT OF WAIVER.—If the Administrator waives the reduction 
of fees under paragraph (2), the Administrator— 
(A) shall not assess or collect fees in an amount greater than 
necessary to ensure that the cost of the program under this divi-
sion is not greater than zero; and 
(B) shall reinstate the fee reductions under paragraph (1) when 
the conditions in paragraph (2) no longer apply. 
(4) NO INCREASE OF FEES.—The Administrator shall not increase 
the fees under section 20311 of this title on loans made under this divi-
sion that are not covered energy efficiency loans as a direct result of 
the pilot program. 
(f) GAO REPORT.— 
(1) IN GENERAL.—Not later than one year after the date on which 
the pilot program terminates, the Comptroller General shall submit to 
the Committee on Small Business of the House of Representatives and 
the Committee on Small Business and Entrepreneurship of the Senate 
a report on the pilot program. 
(2) CONTENTS.—The report under paragraph (1) shall include— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00100
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
101 
(A) the number of covered energy efficiency loans for which fees 
were reduced under the pilot program; 
(B) a description of the energy efficiency savings with the pilot 
program; 
(C) a description of the impact of the pilot program on the pro-
gram under this division; 
(D) an evaluation of the efficacy and potential fraud and abuse 
of the pilot program; and 
(E) recommendations for improving the pilot program. 
CHAPTER 207—SMALL BUSINESS LENDING COMPANIES 
AND NON-FEDERALLY REGULATED LENDERS 
Sec. 
20701.
Authority to regulate. 
20702.
Capital directive. 
20703.
Civil action. 
20704.
Revocation or suspension of loan authority; cease and desist orders. 
20705.
Removal or suspension of management officials. 
20706.
Appointment of receiver. 
20707.
Taking of possession of assets. 
20708.
Reports. 
§ 20701. Authority to regulate 
The Administrator— 
(1) may supervise the safety and soundness of small business lending 
companies and non-federally regulated lenders; 
(2) in accordance with the purposes of this subtitle, may— 
(A) regulate small business lending companies; 
(B) set capital standards for small business lending companies; 
(C) examine small business lending companies; and 
(D) enforce laws governing small business lending companies; 
and 
(3) in accordance with the purposes of this subtitle, may— 
(A) regulate non-federally regulated lenders; 
(B) examine non-federally regulated lenders; and 
(C) enforce laws governing the lending activities of non-federally 
regulated lenders under the general business loan program. 
§ 20702. Capital directive 
(a) IN GENERAL.—If the Administrator determines that a small business 
lending company is being operated in an imprudent manner, the Adminis-
trator may, in addition to any other action authorized by law, issue a direc-
tive to the small business lending company to increase capital to such level 
as the Administrator determines will result in the safe and sound operation 
of the small business lending company. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00101
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
102 
(b) LIMIT ON DELEGABILITY.—The Administrator may not delegate the 
authority granted under subsection (a) except to an Associate Deputy Ad-
ministrator. 
(c) REGULATIONS.—The Administrator shall issue regulations outlining 
the conditions under which the Administrator may determine the level of 
capital under subsection (a). 
§ 20703. Civil action 
If a small business lending company violates this subtitle or subtitle I, 
the Administrator may bring a civil action in United States district court 
to terminate the rights, privileges, and franchises of the small business lend-
ing company under this subtitle or subtitle I. 
§ 20704. Revocation or suspension of loan authority; cease 
and desist orders 
(a) REVOCATION OR SUSPENSION OF LOAN AUTHORITY.— 
(1) IN GENERAL.—The Administrator may revoke or suspend the au-
thority of a small business lending company or a non-federally regu-
lated lender to make, service, or liquidate business loans under the gen-
eral business loan program— 
(A) for false statements knowingly made in any written submis-
sion required under this subtitle; 
(B) for omission of a material fact from any written submission 
required under this subtitle; 
(C) for willful or repeated violation of this subtitle; 
(D) for willful or repeated violation of any condition imposed by 
the Administrator with respect to any application, request, or 
agreement under this subtitle; or 
(E) for violation of any cease and desist order of the Adminis-
trator under this chapter. 
(2) LIMITATION ON DELEGABILITY.—The Administrator may dele-
gate power to revoke or suspend authority under paragraph (1) only 
to the Deputy Administrator and only if the Administrator is unavail-
able to take the action. 
(3) PROCEDURE.— 
(A) IN GENERAL.—Except as provided in subparagraph (B), the 
Administrator may revoke or suspend authority under paragraph 
(1) only after a hearing under subsection (c). 
(B) SUSPENSION BEFORE HEARING.— 
(i) IN
GENERAL.—The Administrator, after finding ex-
traordinary circumstances and in order to protect the finan-
cial or legal position of the United States, may issue a sus-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00102
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
103 
pension order without conducting a hearing under subsection 
(c). 
(ii) HEARING.—If the Administrator issues a suspension 
under clause (i), the Administrator shall, within 2 business 
days after issuance of the suspension, follow the procedure 
specified in subsection (c). 
(C) ACTION BY THE ADMINISTRATOR AFTER HEARING BY AD-
MINISTRATIVE LAW JUDGE.— 
(i) IN GENERAL.—A revocation or suspension under para-
graph (1) shall be made by the Administrator, except that the 
Administrator shall delegate to an administrative law judge 
appointed under section 3105 of title 5 the authority to con-
duct any hearing required under subsection (c). 
(ii) BASIS OF DECISION.—The Administrator shall base the 
decision to revoke or suspend on the record of the hearing. 
(4) EFFECTIVE PERIOD OF SUSPENSION.—A suspension under para-
graph (1) shall remain in effect until the Administrator makes a deci-
sion under paragraph (3)(C) to permanently revoke the authority of the 
small business lending company or non-federally regulated lender, sus-
pend the authority for a time certain, or terminate the suspension. 
(5) NOTIFICATION OF BORROWERS.—On revocation of the authority 
of a small business lending company or non-federally regulated lender 
under paragraph (1), the small business lending company or non-feder-
ally regulated lender shall, and the Administrator may, notify bor-
rowers of the revocation and of the appointment of a new entity to 
service the borrowers’ loans. 
(b) CEASE AND DESIST ORDERS.— 
(1) IN GENERAL.—If a small business lending company, a non-feder-
ally regulated lender, or other person violates this subtitle or subtitle 
I or is engaging or is about to engage in any act or practice that con-
stitutes or will constitute a violation of this subtitle or subtitle I, the 
Administrator, after an opportunity for hearing under subsection (c), 
may order that— 
(A) the small business lending company, non-federally regulated 
lender, or other person cease and desist from engaging in the act 
or practice or in any failure to act; 
(B) the small business lending company, non-federally regulated 
lender, or other person take such action or to refrain from such 
action as the Administrator considers necessary to ensure compli-
ance with this subtitle; or 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00103
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
104 
(C) the authority of the small business lending company or non- 
federally regulated lender to lend be suspended under subsection 
(a). 
(2) LIMITATION ON DELEGABILITY.—The Administrator may dele-
gate the authority under paragraph (1) only to the Deputy Adminis-
trator and only if the Administrator is unavailable to take the action. 
(3) ORDER BEFORE HEARING.— 
(A) IN GENERAL.—The Administrator, after finding extraor-
dinary circumstances and in order to protect the financial or legal 
position of the United States, may issue a cease and desist order 
without conducting a hearing under subsection (c). 
(B) HEARING.—If the Administrator issues a cease and desist 
order under subparagraph (A), the Administrator shall within 2 
business days follow the procedures specified in subsection (c). 
(c) PROCEDURE.— 
(1) ORDER TO SHOW CAUSE.— 
(A) IN
GENERAL.—Before revoking or suspending authority 
under subsection (a) or issuing a cease and desist order under 
subsection (b), the Administrator shall serve an order to show 
cause on the small business lending company, non-federally regu-
lated lender, or other person why an order revoking or suspending 
the authority or a cease and desist order should not be issued. 
(B) CONTENTS.—An order under subparagraph (A) shall— 
(i) contain a statement of the matters of fact and law as-
serted by the Administrator and the legal authority and juris-
diction under which a hearing is to be held; and 
(ii) state that a hearing will be held before an administra-
tive law judge at a time and place stated in the order. 
(2) HEARING.—A hearing shall be conducted under sections 554, 
556, and 557 of title 5. 
(3) ORDER OF REVOCATION OR SUSPENSION; CEASE AND DESIST 
ORDER.— 
(A) IN GENERAL.—If, after hearing or a waiver of hearing, the 
Administrator determines that an order revoking or suspending 
the authority or a cease and desist order should be issued, the Ad-
ministrator shall promptly issue the order. 
(B) CONTENTS.—An order under subparagraph (A) shall— 
(i) include a statement of the findings of the Administrator 
and the grounds and reasons for the findings; and 
(ii) specify the effective date of the order. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00104
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
105 
(C) SERVICE.—The Administrator shall cause an order under 
subparagraph (A) to be served on the small business lending com-
pany, non-federally regulated lender, or other person that is sub-
ject to the order. 
(4) WITNESSES.—A witness summoned before the Administrator 
shall be paid by the party at whose instance the witness is called the 
same fees and mileage that are paid witnesses in the courts of the 
United States. 
(d) FINAL AGENCY ACTION.—An order under subsection (c)(3) is final 
agency action for purposes of chapter 7 of title 5. 
(e) JUDICIAL REVIEW.—An adversely affected party shall have 20 days 
from the date of issuance of an order under subsection (c)(3) to seek judi-
cial review in United States district court. 
§ 20705. Removal or suspension of management officials 
(a) DEFINITION OF MANAGEMENT OFFICIAL.—In this section, the term 
‘‘management official’’ means an officer, director, general partner, manager, 
employee, agent, or other participant in the management of the affairs of 
a small business lending company’s or non-federally regulated lender’s ac-
tivities under the general business loan program. 
(b) REMOVAL OF MANAGEMENT OFFICIAL.— 
(1) NOTICE.—The Administrator may serve on a management offi-
cial a written notice of the Administrator’s intention to remove that 
management official if, in the opinion of the Administrator, the man-
agement official— 
(A) willfully and knowingly commits a substantial violation of— 
(i) this subtitle or subtitle I (including any regulation 
issued under this subtitle or subtitle I); 
(ii) a final cease and desist order under this subtitle; or 
(iii) any agreement under this subtitle by— 
(I) the management official; or 
(II) the small business lending company or non-feder-
ally regulated lender in which the management official is 
a participant; or 
(B) willfully and knowingly commits a substantial breach of a 
fiduciary duty of that participant as a management official, if the 
violation or breach of fiduciary duty is one involving personal dis-
honesty on the part of the management official. 
(2) CONTENTS.—A notice under paragraph (1) shall— 
(A) contain a statement of the facts constituting grounds for 
the notice; and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00105
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
106 
(B) state a time and place at which a hearing under paragraph 
(3) will be held on the notice. 
(3) HEARING.— 
(A) TIMING.—A hearing under sections 554, 556, and 557 of 
title 5 shall be held not earlier than 30 nor later than 60 days 
after the date of service of notice of the hearing, unless an earlier 
or a later date is set by the Administrator at the request of— 
(i) the management official, for good cause; or 
(ii) the Attorney General. 
(B) CONSENT.—Unless the management official appears at a 
hearing under this subsection in person or by an authorized rep-
resentative, the management official shall be deemed to have con-
sented to the issuance of an order of removal under paragraph (1). 
(4) ORDER OF REMOVAL.— 
(A) IN GENERAL.—In the event of consent under paragraph 
(3)(B), or if on the record made at a hearing under this section, 
the Administrator finds that any of the grounds specified in the 
notice of removal has been established, the Administrator may 
issue such orders of removal from office as the Administrator con-
siders appropriate. 
(B) EFFECTIVENESS.—An order under subparagraph (A) 
shall— 
(i) take effect 30 days after the date of service on the sub-
ject small business lending company or non-federally regu-
lated lender and the management official concerned (except in 
the case of an order issued on consent as described in para-
graph (3)(B), which shall become effective at the time speci-
fied in the order); and 
(ii) remain effective and enforceable, except to such extent 
as the order is stayed, modified, terminated, or set aside by 
action of the Administrator or a court in accordance with this 
chapter. 
(c) AUTHORITY TO SUSPEND OR PROHIBIT PARTICIPATION.— 
(1) IN GENERAL.—To protect a small business lending company, a 
non-federally regulated lender, or the interests of the Administration or 
the United States, the Administrator may suspend from office or pro-
hibit from further participation in any manner in the management or 
conduct of the affairs of a small business lending company or non-fed-
erally regulated lender a management official by written notice to that 
effect served on the management official. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00106
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
107 
(2) PROHIBITED
ACTIVITIES.—A suspension or prohibition under 
paragraph (1) may prohibit the management official from making, 
servicing, reviewing, approving, or liquidating any loan under the gen-
eral business loan program. 
(3) EFFECTIVENESS.—A suspension or prohibition under paragraph 
(1)— 
(A) shall take effect on service of notice under subsection (b); 
and 
(B) unless stayed by a court in proceedings under paragraph 
(4), shall remain in effect— 
(i) pending the completion of the administrative pro-
ceedings pursuant to a notice of intention to remove served 
under subsection (b); and 
(ii) until such time as the Administrator dismisses the 
charges specified in the notice, or, if an order of removal or 
prohibition is issued against the management official, until 
the effective date of any such order. 
(4) JUDICIAL REVIEW OF SUSPENSION PRIOR TO HEARING.—Not 
later than 10 days after a management official is suspended or prohib-
ited from participation under paragraph (1), the management official 
may apply to a United States district court for a stay of the suspension 
or prohibition pending the completion of the administrative proceedings 
pursuant to a notice of intent to remove served on the management of-
ficial under subsection (b). 
(d) AUTHORITY TO SUSPEND ON CRIMINAL CHARGES.— 
(1) IN GENERAL.—If a management official is charged in an infor-
mation, indictment, or complaint authorized by a United States attor-
ney, with a felony involving dishonesty or breach of trust, the Adminis-
trator may, by written notice served on the management official, sus-
pend the management official from office or prohibit the management 
official from further participation in any manner in the management 
or conduct of the affairs of the small business lending company or non- 
federally regulated lender in which the management official is a partici-
pant described in subsection (a). 
(2) EFFECTIVENESS.—A suspension or prohibition under paragraph 
(1) shall remain in effect until the information, indictment, or com-
plaint is finally disposed of, or until terminated by the Administrator 
or by order of a United States district court. 
(3) AUTHORITY ON CONVICTION.— 
(A) IN GENERAL.—If a judgment of conviction with respect to 
an offense described in paragraph (1) is entered against a man-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00107
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
108 
agement official, at such time as the judgment is not subject to 
further judicial review, the Administrator may issue and serve on 
the management official an order removing the management offi-
cial, effective on service of a copy of the order on the small busi-
ness lending company or non-federally regulated lender in which 
the management official is a participant described in subsection 
(a). 
(B) JUDGMENT
NOT
SUBJECT
TO
FURTHER
JUDICIAL
RE-
VIEW.—For purposes of subparagraph (A), further judicial review 
does not include the possibility of review of a petition for a writ 
of habeas corpus. 
(4) AUTHORITY ON DISMISSAL OR OTHER DISPOSITION.—A finding 
of not guilty or other disposition of charges described in paragraph (1) 
shall not preclude the Administrator from instituting proceedings under 
section 20704 of this title. 
(e) NOTIFICATION TO SMALL BUSINESS LENDING COMPANY OR NON- 
FEDERALLY REGULATED LENDER.—A copy of a notice required to be 
served on a management official under this chapter shall also be served on 
the small business lending company or non-federally regulated lender in 
which the management official is a participant described in subsection (a). 
(f) DECISION.—After a hearing under this section, and not later than 30 
days after the Administrator notifies the parties that the case has been sub-
mitted for final decision, the Administrator shall— 
(1) render a decision in the matter (which shall include findings of 
fact on which its decision is predicated); and 
(2) issue and cause to be served on each party to the proceeding an 
order or orders consistent with this chapter. 
(g) FINAL AGENCY ACTION.—A decision under subsection (f) shall con-
stitute final agency action for purposes of chapter 7 of title 5. 
(h) JUDICIAL REVIEW.—An adversely affected party shall have 20 days 
from the date of issuance of the order to seek judicial review in United 
States district court. 
§ 20706. Appointment of receiver 
(a) IN GENERAL.—In a civil action under this division, the court may— 
(1) take exclusive jurisdiction over a small business lending company 
or non-federally regulated lender; and 
(2) appoint a receiver to hold and administer the assets of the small 
business lending company or non-federally regulated lender. 
(b) APPOINTMENT
OF ADMINISTRATOR.—On request of the Adminis-
trator, the court may appoint the Administrator as a receiver under sub-
section (a). 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00108
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
109 
§ 20707. Taking of possession of assets 
(a) TAKING OF POSSESSION OF LOAN PORTFOLIO.—If a small business 
lending company or non-federally regulated lender is not in compliance with 
capital requirements or is insolvent, the Administrator may take possession 
of the portfolio of loans guaranteed by the Administrator and sell the loans 
to a third party by means of a receiver appointed under section 20706 of 
this title. 
(b) TAKING OF POSSESSION OF SERVICING ACTIVITIES.—If a small busi-
ness lending company or non-federally regulated lender is not in compliance 
with capital requirements or is insolvent or otherwise operating in an unsafe 
and unsound condition, the Administrator may take possession of servicing 
activities of loans that are guaranteed by the Administrator and sell the 
servicing rights to a third party by means of a receiver appointed under sec-
tion 20706 of this title. 
§ 20708. Reports 
(a) CIVIL PENALTY FOR FAILURE TO FILE.— 
(1) IN GENERAL.—A small business lending company or non-feder-
ally regulated lender that violates a regulation or written directive 
issued by the Administrator regarding the filing of a regular or special 
report shall pay to the United States a civil penalty of not more than 
$5,000 for each day of the continuance of the failure to file the report, 
unless it is shown that the violation is due to reasonable cause and not 
due to willful neglect. 
(2) ENFORCEMENT.—A civil penalty under paragraph (1) may be en-
forced in a civil action brought by the Administrator. 
(3) NONAPPLICABILITY
TO
CERTAIN
SMALL
BUSINESS
LENDING 
COMPANIES.—Paragraph (1) does not apply to an affiliate of a small 
business lending company that procures at least 10 percent of its an-
nual purchasing requirements from small manufacturers. 
(b) EXEMPTION.— 
(1) IN GENERAL.—If the Administrator determines that granting an 
exemption would not be inconsistent with the public interest or the pro-
tection of the Administration, the Administrator may exempt a small 
business lending company or non-federally regulated lender from sub-
section (a)— 
(A) in whole or in part; and 
(B) on such terms and conditions and for such period of time 
as the Administrator considers necessary and appropriate. 
(2) PROCEDURE.—The Administrator may grant an exemption under 
paragraph (1)— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00109
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
110 
(A) by regulation prescribed after an opportunity for notice and 
comment; or 
(B) on application of an interested party, at any time previous 
to a violation described in subsection (a), by order, after notice 
and opportunity for hearing under sections 554, 556, and 557 of 
title 5. 
(c) ALTERNATIVE REQUIREMENTS.—The Administrator may for purposes 
of this section make any alternative requirement that the Administrator 
considers to be appropriate to a situation. 
DIVISION C—MICROLOAN PROGRAM 
CHAPTER 211—MICROLOAN PROGRAM 
Sec. 
21101.
Definitions. 
21102.
Establishment of microloan program. 
21103.
Purposes of microloan program. 
21104.
Eligibility for participation. 
21105.
Loans to intermediaries; loans by intermediaries to small business concerns. 
21106.
Marketing, management, and technical assistance grants to intermediaries. 
21107.
Private sector borrowing technical assistance grants. 
21108.
Grants for management, marketing, technical assistance, and related services. 
§ 21101. Definitions 
In this chapter: 
(1) INTERMEDIARY.—The term ‘‘intermediary’’ means— 
(A) a private, nonprofit entity; 
(B) a private, nonprofit community development corporation; 
(C) a consortium of private, nonprofit organizations or nonprofit 
community development corporations; 
(D) a quasi-governmental economic development entity (such as 
a planning and development district), other than a State, county, 
or municipal government (or any agency of a State, county, or 
municipal government), in a geographic area— 
(i) in which no application is received from an eligible non-
profit organization; or 
(ii) with respect to which the Administrator determines 
that the needs of the geographic area are not adequately 
served by an existing, eligible nonprofit organization that has 
submitted an application; or 
(E) an agency of or nonprofit entity established by a Native 
American Tribal Government; 
that seeks to borrow or has borrowed funds from the Administrator to 
make microloans to small business concerns under the microloan pro-
gram. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00110
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
111 
(2) MICROLOAN.—The term ‘‘microloan’’ means a short-term, fixed 
rate loan of not more than $35,000, made by an intermediary to a 
startup, newly established, or growing small business concern. 
(3) RURAL AREA.—The term ‘‘rural area’’ means a political subdivi-
sion or unincorporated area— 
(A) in a nonmetropolitan county (as defined by the Secretary 
of Agriculture) or its equivalent; or 
(B) in a metropolitan county or its equivalent that has a resi-
dent population of less than 20,000 if the Administrator deter-
mines the political subdivision or unincorporated area to be rural. 
(4) STATE.—The term ‘‘State’’ includes the District of Columbia, 
Puerto Rico, the United States Virgin Islands, Guam, and American 
Samoa. 
§ 21102. Establishment of microloan program 
There is established within the Administration a microloan program. 
§ 21103. Purposes of microloan program 
The purposes of the microloan program are— 
(1) to assist women, low-income, veteran, and minority entrepreneurs 
and business owners and other such individuals possessing the capa-
bility to operate successful business concerns; 
(2) to assist small business concerns in areas suffering from a lack 
of credit due to economic downturns; 
(3) to make loans to eligible intermediaries to enable the inter-
mediaries to provide small-scale loans, particularly loans in amounts 
averaging not more than $10,000, to startup, newly established, or 
growing small business concerns for working capital or the acquisition 
of materials, supplies, or equipment; 
(4) to make grants to eligible intermediaries that, together with non- 
Federal matching funds, will enable the intermediaries to provide inten-
sive marketing, management, and technical assistance to microloan bor-
rowers; 
(5) to make grants to eligible nonprofit entities that, together with 
non-Federal matching funds, will enable the entities to provide inten-
sive marketing, management, and technical assistance to assist low-in-
come entrepreneurs and other low-income individuals obtain private 
sector financing for their businesses, with or without loan guarantees; 
(6) to report to the Committee on Small Business and Entrepreneur-
ship of the Senate and the Committee on Small Business of the House 
of Representatives on the effectiveness of the microloan program and 
the advisability and feasibility of implementing such a program nation-
wide; and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00111
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
112 
(7) to establish a welfare-to-work microloan initiative to test the fea-
sibility of supplementing the technical assistance grants provided under 
sections 21106 and 21107 of this title to individuals who are receiving 
assistance under the State program funded under part A of title IV 
of the Social Security Act (42 U.S.C. 601 et seq.), or under any com-
parable State-funded means-tested program of assistance for low-in-
come individuals, to adequately assist those individuals in— 
(A) establishing small business concerns; and 
(B) eliminating their dependence on that assistance. 
§ 21104. Eligibility for participation 
An intermediary shall be eligible to receive loans and grants under sec-
tions 21105 and 21106 of this title if the intermediary has at least one year 
of experience making microloans to startup, newly established, or growing 
small business concerns and providing, as an integral part of the microloan 
program, intensive marketing, management, and technical assistance to its 
borrowers. 
§ 21105. Loans to intermediaries; loans by intermediaries to 
small business concerns 
(a) IN GENERAL.—Under the microloan program, the Administrator may 
make direct loans to eligible intermediaries for the purpose of making 
microloans to small business concerns under this section. 
(b) LOAN APPLICATIONS.— 
(1) IN GENERAL.—As part of an application for a loan, an inter-
mediary shall submit to the Administrator a description of— 
(A) the type of businesses to be assisted; 
(B) the size and range of loans to be made; 
(C) the geographic area to be served, including a description of 
the economic, poverty, and unemployment characteristics of the 
area; 
(D) the status of small business concerns in the area to be 
served, including an analysis of their credit and technical assist-
ance needs; 
(E) any marketing, management, and technical assistance to be 
provided in connection with a loan made under this chapter; 
(F) the local economic credit markets, including the costs asso-
ciated with obtaining credit locally; 
(G) the qualifications of the applicant to carry out the purposes 
of the microloan program; and 
(H) any plan to involve other technical assistance providers 
(such as counselors from SCORE or small business development 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00112
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
113 
centers) or private sector lenders in assisting selected business 
concerns. 
(2) SELECTION OF INTERMEDIARIES.—In selecting intermediaries to 
participate in the microloan program, the Administrator shall give pri-
ority to applicants that provide loans in amounts averaging not more 
than $10,000. 
(c) INTERMEDIARY CONTRIBUTION.—As a condition of a loan under sub-
section (a), the Administrator shall require an intermediary to contribute 
not less than 15 percent of the loan amount in cash from a non-Federal 
source. 
(d) LOAN LIMITS.—A loan shall not be made under the microloan pro-
gram if the total amount outstanding and committed (on a deferred basis, 
through a participation on an immediate basis, or directly) to one inter-
mediary (excluding outstanding grants) under the general business loan pro-
gram and microloan program would, as a result of the loan, exceed 
$750,000 in the first year of the intermediary’s participation in the 
microloan program or $3,500,000 in any subsequent year of the 
intermediary’s participation in the microloan program. 
(e) LOAN TERM.—A loan made by the Administrator under this chapter 
shall be for a term of 10 years. 
(f) DELAYED PAYMENTS.—Except for a loan loss reserve fund under sub-
section (i), the Administrator shall not require repayment of principal or in-
terest on a loan made to an intermediary under this chapter during the first 
year of the loan. 
(g) NO FEE OR COLLATERAL.—Except for a loan loss reserve fund under 
subsection (i), the Administrator shall not charge any fee or require collat-
eral other than an assignment of the notes receivable of the microloans with 
respect to any loan made to an intermediary under the microloan program. 
(h) INTEREST RATES.— 
(1) IN GENERAL.—Except as provided in paragraph (2), a loan made 
by the Administrator to an intermediary under this chapter shall bear 
an interest rate equal to 1.25 percentage points below the rate deter-
mined by the Secretary of the Treasury for obligations of the United 
States with a period of maturity of 5 years, adjusted to the nearest 
0.125 percent. 
(2) RATES APPLICABLE TO CERTAIN SMALL LOANS.—A loan made 
by the Administrator to an intermediary that makes loans to small 
business concerns and entrepreneurs averaging not more than $7,500 
shall bear an interest rate that is 2 percentage points below the rate 
determined by the Secretary of the Treasury for obligations of the 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00113
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
114 
United States with a period of maturity of 5 years, adjusted to the 
nearest 0.125 percent. 
(3) MULTIPLE SITES OR OFFICES.—The interest rate determined 
under paragraph (1) or (2) shall apply to each separate loanmaking 
site or office of an intermediary only if the site or office meets the re-
quirements of that paragraph. 
(4) RATE BASIS.—The applicable rate of interest under this sub-
section— 
(A) for the first year of an intermediary’s participation in the 
microloan program, shall be applied retroactively based on the ac-
tual lending practices of the intermediary as determined by the 
Administrator before the end of that year; and 
(B) for each subsequent year of an intermediary’s participation 
in the microloan program, shall be based on the actual lending 
practices of the intermediary during the term of the intermediary’s 
participation in the microloan program. 
(i) LOSS RESERVE OF INTERMEDIARIES.— 
(1) IN GENERAL.—The Administrator shall by regulation require an 
intermediary to establish and maintain a loan loss reserve fund until 
all obligations owed to the Administrator under the microloan program 
are repaid. 
(2) LEVEL OF LOAN LOSS RESERVE FUND.— 
(A) IN GENERAL.—Subject to subparagraph (C), the Adminis-
trator shall require the loan loss reserve fund of an intermediary 
to be maintained at a level equal to 15 percent of the outstanding 
balance of the notes receivable owed to the intermediary. 
(B) REVIEW OF LOAN LOSS RESERVE.—
(i) IN
GENERAL.—After the initial 5 years of an 
intermediary’s participation in the microloan program, the 
Administrator shall, at the request of the intermediary, con-
duct a review of the annual loss rate of the intermediary. 
(ii) REVIEW PERIOD.—An intermediary that requests a re-
duction in its loan loss reserve shall be reviewed based on the 
most recent 5-year period preceding the request. 
(C) REDUCTION OF LOAN LOSS RESERVE.—Subject to subpara-
graph (D), the Administrator may reduce the annual loan loss re-
serve requirement of an intermediary to reflect the actual average 
loan loss rate for the intermediary during the preceding 5-year pe-
riod, except that in no case shall the loan loss reserve be reduced 
to less than 10 percent of the outstanding balance of the notes 
receivable owed to the intermediary. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00114
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
115 
(D) REQUIREMENTS.—The Administrator may reduce the an-
nual loan loss reserve requirement of an intermediary only if the 
intermediary demonstrates to the satisfaction of the Administrator 
that— 
(i) the average annual loss rate for the intermediary during 
the preceding 5-year period is less than 15 percent; and 
(ii) no other factors exist that may impair the ability of the 
intermediary to repay all obligations owed to the Adminis-
trator under this chapter. 
(j) LOANS BY INTERMEDIARIES TO SMALL BUSINESS CONCERNS.— 
(1) IN GENERAL.—From funds made available to an intermediary 
under the microloan program, the intermediary shall make short-term, 
fixed rate loans to startup, newly established, and growing small busi-
ness concerns for working capital and the acquisition of materials, sup-
plies, furniture, fixtures, and equipment. 
(2) LOAN AMOUNT.— 
(A) PORTFOLIO REQUIREMENT.—To the extent practicable, an 
intermediary that operates under the microloan program shall 
maintain a microloan portfolio with an average loan size of not 
more than $15,000. 
(B) UNAVAILABILITY
OF
COMPARABLE
CREDIT.—An inter-
mediary may make a loan under the microloan program of more 
than $20,000 to a small business concern only if the small busi-
ness concern demonstrates that— 
(i) it is unable to obtain credit elsewhere at comparable in-
terest rates; and 
(ii) it has good prospects for success. 
(C) MAXIMUM AMOUNT.—An intermediary shall not— 
(i) make a loan under this chapter of more than $35,000; 
or 
(ii) have outstanding or committed to any one borrower 
more than $35,000. 
(3) INTEREST LIMIT.—Notwithstanding any provision of law of any 
State (including the constitution of a State) pertaining to the rate or 
amount of interest that may be charged, taken, received, or reserved 
on a loan, the maximum rate of interest to be charged on a microloan 
funded under this chapter shall not exceed the rate of interest applica-
ble to a loan made to an intermediary by the Administrator— 
(A) in the case of a loan of more than $7,500 made by the 
intermediary to a small business concern or entrepreneur, by more 
than 7.75 percentage points; and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00115
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
116 
(B) in the case of a loan of not more than $7,500 made by the 
intermediary to a small business concern or entrepreneur by more 
than 8.5 percentage points. 
(4) REVIEW RESTRICTION.—The Administrator shall not review indi-
vidual microloans made by intermediaries prior to approval. 
(5) ESTABLISHMENT OF CHILD CARE OR TRANSPORTATION BUSI-
NESSES.—In addition to other eligible small business concerns, a bor-
rower under the microloan program may include an individual who will 
use the loan proceeds to establish— 
(A) a for-profit or nonprofit child care establishment; or 
(B) a business providing a for-profit transportation service. 
(k) PROGRAM FUNDING FOR MICROLOANS.— 
(1) NUMBER OF PARTICIPANTS.—Under the microloan program, the 
Administrator may fund, on a competitive basis, not more than 300 
intermediaries. 
(2) ALLOCATION.— 
(A) MINIMUM ALLOCATION.—Subject to the availability of ap-
propriations, of the total amount of new loan funds made available 
for award under the microloan program for each fiscal year, the 
Administrator shall make available for award in each State an 
amount equal to the sum of— 
(i) the lesser of— 
(I) $800,000; or 
(II) 1⁄55 of the total amount of new loan funds made 
available for award under the microloan program for 
that fiscal year; and 
(ii) any additional amount, as determined by the Adminis-
trator. 
(B) REDISTRIBUTION.—If, at the beginning of the third quarter 
of a fiscal year, the Administrator determines that any portion of 
the amount made available to carry out the microloan program is 
unlikely to be made available under subparagraph (A) during that 
fiscal year, the Administrator may make that portion available for 
award in any one or more States without regard to subparagraph 
(A). 
(l) EQUITABLE
DISTRIBUTION
OF
INTERMEDIARIES.—In approving 
microloan program applicants and providing funding to intermediaries 
under the microloan program, the Administrator shall select and provide 
funding to such intermediaries as will ensure appropriate availability of 
loans for small business concerns in all industries located throughout each 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00116
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
117 
State, particularly industries located in urban areas and industries located 
in rural areas. 
§ 21106. Marketing, management, and technical assistance 
grants to intermediaries 
(a) IN GENERAL.—In conjunction with a loan to an intermediary under 
section 21105 of this title, the Administrator may make a grant to the eligi-
ble intermediary for the purpose of providing intensive marketing, manage-
ment, and technical assistance to small business concerns that are borrowers 
under the microloan program. 
(b) GRANT AMOUNT.— 
(1) IN GENERAL.—An intermediary that receives a loan under sec-
tion 21105 of this title shall be eligible to receive a grant in an amount 
equal to not more than 25 percent of the total outstanding balance of 
loans made to the intermediary under the microloan program. 
(2) INTERMEDIARY CONTRIBUTION.— 
(A) IN GENERAL.—As a condition of a grant under paragraph 
(1), the Administrator shall require the intermediary to contribute 
an amount equal to 25 percent of the amount of the grant, ob-
tained solely from a non-Federal source. 
(B) FORM.—In addition to cash or other direct funding, a con-
tribution under subparagraph (A) may include indirect costs or in- 
kind contributions paid for under a non-Federal program. 
(c) ADDITIONAL TECHNICAL ASSISTANCE GRANTS FOR MAKING CERTAIN 
LOANS.— 
(1) IN GENERAL.—An intermediary that has a portfolio of loans 
under the microloan program that averages not more than $10,000 
during the period of the intermediary’s participation in the microloan 
program shall be eligible to receive a grant equal to 5 percent of the 
total outstanding balance of loans made to the intermediary under the 
microloan program, in addition to any grant made under subsection 
(b). 
(2) USE.—A grant under paragraph (1) shall be used to provide 
marketing, management, and technical assistance to small business 
concerns that are borrowers under the microloan program. 
(d) MULTIPLE SITES OR OFFICES.—Eligibility for a grant under sub-
section (b) or (c) shall be determined separately for each loanmaking site 
or office of an intermediary. 
(e) ASSISTANCE TO CERTAIN SMALL BUSINESS CONCERNS.— 
(1) IN GENERAL.—An intermediary may expend an amount not to 
exceed 25 percent of the funds received under subsection (a) to provide 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00117
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
118 
information and technical assistance to small business concerns that 
are prospective borrowers under section 21108 of this title. 
(2) TECHNICAL ASSISTANCE.—An intermediary may provide tech-
nical assistance under paragraph (1) through a third party contract. 
§ 21107. Private 
sector 
borrowing 
technical 
assistance 
grants 
(a) IN GENERAL.—The Administrator may make grants to nonprofit enti-
ties for the purpose of providing marketing, management, and technical as-
sistance to low-income individuals seeking to start or enlarge their own busi-
nesses, if the assistance includes working with the grant recipient to secure 
loans in amounts not to exceed $35,000 from private sector lending institu-
tions, with or without a loan guarantee from the nonprofit entity. 
(b) GRANT AMOUNTS.—The Administrator may make not more than 55 
grants annually under subsection (a), each in an amount not to exceed 
$200,000. 
(c) GRANT RECIPIENT CONTRIBUTION.— 
(1) IN GENERAL.—As a condition of a grant under subsection (a), 
the Administrator shall require the grant recipient to contribute an 
amount equal to 20 percent of the amount of the grant, obtained solely 
from a non-Federal source. 
(2) FORM.—In addition to cash or other direct funding, a contribu-
tion under paragraph (1) may include indirect costs or in-kind con-
tributions paid for under a non-Federal program. 
§ 21108. Grants for management, marketing, technical as-
sistance, and related services 
(a) IN GENERAL.—The Administrator may procure technical assistance 
for intermediaries participating in the microloan program to ensure that the 
intermediaries have the knowledge, skills, and understanding of micro-
lending practices necessary to operate a successful microloan program. 
(b) ASSISTANCE AMOUNT.—The Administrator shall transfer 7 percent of 
the annual appropriation for loans and loan guarantees under this chapter 
to the Administration’s Salaries and Expense Account for the specific pur-
pose of providing one or more technical assistance grants to experienced 
microlending organizations and national and regional nonprofit organiza-
tions that have demonstrated experience in providing training support for 
microenterprise development and financing to achieve the purpose specified 
in subsection (a). 
(c) WELFARE-TO-WORK MICROLOAN INITIATIVE.—Of amounts made 
available to carry out the welfare-to-work microloan initiative under section 
21103(7) of this title for any fiscal year, the Administrator may use not 
more than 5 percent to provide technical assistance, either directly or 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00118
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
119 
through contractors, to welfare-to-work microloan initiative grantees, to en-
sure that the grantees have the knowledge, skills, and understanding of 
microlending and welfare-to-work transition, and other related issues, to op-
erate a successful welfare-to-work microloan initiative. 
DIVISION D—DISASTER ASSISTANCE 
PROGRAMS 
CHAPTER 213—DISASTER LOAN PROGRAM 
Sec. 
21301.
Physical loss disaster loans. 
21302.
Economic injury disaster loans. 
21303.
Loans to assist small business concerns that suffer injury as a result of an essential 
employee’s being ordered to active military duty. 
21304.
Public awareness of disaster declaration and application periods. 
21305.
Disaster loan processing. 
21306.
Disaster assistance employees. 
21307.
Maximum loan amount. 
21308.
Declaration of eligility for additional disaster assistance. 
21309.
Interest rates. 
21310.
Maximum term. 
21311.
Deferment of repayment. 
21312.
Suspension of payments. 
21313.
Participation in loans on deferred basis. 
21314.
Assistance and counseling for disaster victims. 
21315.
Priority in allocating funds. 
21316.
Prohibition of cancellation of certain disaster loans. 
21317.
Prohibition of net earnings clauses. 
21318.
Biennial disaster simulation exercise. 
21319.
Disaster planning responsibilities. 
21320.
Disaster response plan. 
21321.
Coordination of disaster assistance programs with FEMA. 
21322.
Plans to secure sufficient office space. 
21323.
Bond guarantees in procurements relating to a major disaster. 
21324.
Civil penalty. 
§ 21301. Physical loss disaster loans 
(a) IN GENERAL.—Except as to agricultural enterprises, to the extent 
and in such amounts as are provided in advance in appropriation Acts, the 
Administrator may make such a loan (directly or in cooperation with a bank 
or other lending institution through an agreement to participate on an im-
mediate or deferred (guaranteed) basis) as the Administrator determines to 
be necessary or appropriate to repair, rehabilitate, or replace property, real 
or personal, damaged or destroyed by or as a result of a natural or other 
disaster. 
(b) LOAN AMOUNT.— 
(1) IN GENERAL.—The amount of a loan under subsection (a) shall 
be equal to 100 percent of the amount of the loss, minus any amount 
compensated for by insurance or otherwise. 
(2) PROTECTION
FROM
FUTURE
DISASTERS.—The Administrator 
may increase the amount of a loan under subsection (a) by up to 20 
percent of the aggregate costs of the damage or destruction (whether 
or not compensated for by insurance or otherwise) if the Administrator 
determines the increase to be necessary or appropriate to protect the 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00119
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
120 
damaged or destroyed property from future disasters by taking miti-
gating measures, including construction of retaining walls and sea 
walls, grading and contouring land, relocating utilities, and modifying 
structures. 
(3) LIMITATION ON LOAN AMOUNT.— 
(A) IN GENERAL.—No loan under this section shall be made if 
the total amount outstanding and committed to the borrower 
under the disaster loan program would exceed $1,500,000 for any 
one disaster unless an applicant constitutes a major source of em-
ployment in an area suffering a disaster, in which case the Admin-
istrator may waive the $1,500,000 limitation. 
(B) MAJOR SOURCE OF EMPLOYMENT.—For purposes of deter-
mining whether a nonprofit applicant that owns a premises con-
stitutes a major source of employment under subparagraph (A), 
the employees of 2 or more concerns that share the premises as 
a common business premises shall be aggregated. 
(4) LIMITATION ON REDUCTION OF LOAN AMOUNT.— 
(A) IN
GENERAL.—The Administrator shall not reduce the 
amount of a loan— 
(i) for any homeowner on account of loss of real estate to 
less than $100,000 for any one disaster; or 
(ii) for any homeowner or lessee on account of loss of per-
sonal property to less than $20,000 for any one disaster. 
(B) REFINANCING.—The $100,000 and $20,000 amounts in 
subparagraph (A) are in addition to any refinancing for which a 
loan applicant is eligible. 
(c) REFINANCINGS.— 
(1) IN GENERAL.—A loan or guarantee may be made to refinance 
a mortgage or other lien against a totally destroyed or substantially 
damaged home or business concern (other than an agricultural enter-
prise). 
(2) REQUIREMENTS.—A loan or guarantee under paragraph (1) shall 
not be made unless the Administrator determines that— 
(A) the applicant is not able to obtain credit elsewhere; and 
(B) the property is to be repaired, rehabilitated, or replaced. 
(3) AMOUNT.—The amount refinanced under paragraph (1)— 
(A) shall not exceed the amount of physical loss sustained; and 
(B) shall be reduced to the extent that the mortgage or lien is 
satisfied by insurance or otherwise. 
(d) COLLATERAL.—The Administrator shall not require collateral for a 
loan of $14,000 (or such greater amount as the Administrator determines 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00120
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
121 
to be appropriate in the event of a major disaster) or less that is made 
under this section. 
§ 21302. Economic injury disaster loans 
(a) DEFINITIONS.—In this section: 
(1) DISASTER.—The term ‘‘disaster’’ includes— 
(A) a drought; 
(B) a below average water level in one or more of the Great 
Lakes or on any other body of water in the United States that 
supports commerce by small business concerns; and 
(C) an ice storm or blizzard. 
(2) DISASTER AREA.—The term ‘‘disaster area’’ includes— 
(A) a county determined to be a disaster by the President, the 
Secretary of Agriculture, or the Administrator; and 
(B) a county contiguous to a county described in subparagraph 
(A). 
(b) LOANS.—Except as to agricultural enterprises, to the extent and in 
such amounts as are provided in advance in appropriation Acts, the Admin-
istrator may make such a loan (directly or in cooperation with a bank or 
other lending institution through an agreement to participate on an imme-
diate or deferred (guaranteed) basis) as the Administrator determines to be 
necessary or appropriate to a small business concern, private nonprofit orga-
nization, or small agricultural cooperative located in a disaster area if— 
(1) the Administrator determines that the small business concern, 
private nonprofit organization, or agricultural cooperative has suffered 
a substantial economic injury as a result of the disaster; 
(2)(A) the disaster constitutes— 
(i) a major disaster; 
(ii) a natural disaster, as determined by the Secretary of Agri-
culture under section 321 of the Consolidated Farm and Rural 
Development Act (7 U.S.C. 1961), in which case, assistance under 
this section may be provided to farm-related and nonfarm-related 
small business concerns, subject to the other applicable require-
ments of this section; or 
(iii) a disaster, as determined by the Administrator; or 
(B) if no disaster described in subparagraph (A) is declared, the 
Governor of a State in which a disaster has occurred certifies to the 
Administrator that small business concerns, private nonprofits organi-
zations, or small agricultural cooperatives— 
(i) have suffered economic injury as a result of the disaster; and 
(ii) are in need of financial assistance that is not available on 
reasonable terms in the disaster area; and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00121
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
122 
(3) the Administrator determines that the applicant is not able to 
obtain credit elsewhere. 
(c) PROMPT RESPONSE TO CERTIFICATION.—Not later than 30 days 
after the date of receipt of a certification by a Governor of a State under 
subsection (b)(2)(B), the Administrator shall respond in writing to the Gov-
ernor on the Administrator’s determination regarding the certification, stat-
ing the reasons for the determination. 
(d) LIMITATION ON LOAN AMOUNT.— 
(1) IN GENERAL.—No loan under this section shall be made if the 
total amount outstanding and committed to a borrower under the dis-
aster loan program would exceed $1,500,000 for any one disaster un-
less the borrower constitutes a major source of employment in a dis-
aster area, in which case the Administrator may waive the $1,500,000 
limitation. 
(2) MAJOR SOURCE OF EMPLOYMENT.—For purposes of determining 
whether a nonprofit applicant that owns a premises constitutes a major 
source of employment under paragraph (1), the employees of 2 or more 
concerns that share the premises as a common business premises shall 
be aggregated. 
(e) NURSERIES.—The Administrator shall not withhold disaster assist-
ance under this section to a nursery that is a victim of a drought disaster. 
§ 21303. Loans to assist small business concerns that suffer 
injury as a result of an essential employee’s being 
ordered to active military duty 
(a) DEFINITIONS.—In this section: 
(1) ESSENTIAL EMPLOYEE.—The term ‘‘essential employee’’ means 
an individual who is employed by a small business concern and whose 
managerial or technical expertise is critical to the successful day-to-day 
operations of the small business concern. 
(2) PERIOD OF MILITARY CONFLICT.—The term ‘‘period of military 
conflict’’ has the meaning given the term in section 20104(a) of this 
title. 
(3) RESERVIST EXPECTING ACTIVATION.—The term ‘‘reservist ex-
pecting activation’’ means a reservist who— 
(A) has not been ordered to active duty; 
(B) expects to be ordered to active duty during a period of mili-
tary conflict; and 
(C) is a key employee of a small business concern that can rea-
sonably demonstrate that the small business concern will suffer 
economic injury in the absence of the reservist. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00122
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
123 
(4) SUBSTANTIAL ECONOMIC INJURY.—The term ‘‘substantial eco-
nomic injury’’ means an economic harm to a small business concern 
that results in the inability of the small business concern to— 
(A) meet its obligations as they mature; 
(B) pay its ordinary and necessary operating expenses; or 
(C) market, produce, or provide a product or service ordinarily 
marketed, produced, or provided by the small business concern. 
(b) IN GENERAL.—Except as to agricultural enterprises, to the extent 
and in such amounts as are provided in advance in appropriation Acts, the 
Administrator may make a loan (directly or in cooperation with a bank or 
other lending institution through an agreement to participate on an imme-
diate or deferred basis) to assist a small business concern that has suffered 
or that is likely to suffer substantial economic injury as the result of an 
essential employee of the small business concern’s being ordered to active 
military duty during a period of military conflict. 
(c) ELIGIBILITY PERIOD.— 
(1) IN GENERAL.—A small business concern shall be eligible for as-
sistance under this section during the period beginning on the date on 
which an essential employee is ordered to active duty and ending on 
the date that is one year after the date on which the essential employee 
is discharged or released from active duty. 
(2) EXTENSION.—The Administrator may, when appropriate (as de-
termined by the Administrator), extend the ending date specified in 
paragraph (1) by not more than one year. 
(d) INTEREST RATE.—A loan or guarantee made under this section shall 
be made at the same interest rate as in the case of an economic injury loan 
under section 21302 of this title. 
(e) LOAN AMOUNT.— 
(1) IN GENERAL.—Except as provided in paragraph (2), no loan may 
be made under this section if the total amount outstanding and com-
mitted to the borrower under the disaster loan program would exceed 
$1,500,000. 
(2) MAJOR SOURCE OF EMPLOYMENT.—If the Administrator deter-
mines that the applicant constitutes a major source of employment in 
its surrounding area (including a borrower that was not a major source 
of employment before the disaster but became a major source of em-
ployment after the disaster), as determined by the Administrator, the 
Administrator may waive the $1,500,000 limitation under paragraph 
(1). 
(f) PRECONSIDERATION PROCESS.—The Administrator shall establish a 
preconsideration process under which the Administrator— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00123
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
124 
(1) may collect all relevant materials necessary for processing a loan 
to a small business concern under this section before a reservist expect-
ing activation who is employed by the small business concern is acti-
vated; and 
(2) shall distribute funds for any loan approved under paragraph (1) 
if the reservist expecting activation is activated. 
(g) OUTREACH AND TECHNICAL ASSISTANCE PROGRAM.— 
(1) IN GENERAL.—The Administrator, in consultation with the Sec-
retary of Veterans Affairs and the Secretary of Defense, may develop 
a comprehensive outreach and technical assistance program (referred to 
in this subsection as the ‘‘program’’) to— 
(A) market the loans available under this section to reservists 
and family members of reservists (including both reservists that 
are on active duty and reservists that are not on active duty); and 
(B) provide technical assistance to a small business concern ap-
plying for a loan under this section. 
(2) COMPONENTS.—The program shall— 
(A) incorporate appropriate websites maintained by the Admin-
istration, the Department of Veterans Affairs, and the Depart-
ment of Defense; and 
(B) require that information on the program be made available 
to small business concerns directly through— 
(i) the district offices and resource partners of the Admin-
istration, including small business development centers, wom-
en’s business centers, and the SCORE; and 
(ii) the Department of Veterans Affairs, the Department of 
Defense, and other Federal agencies. 
(3) REPORT.— 
(A) IN GENERAL.—The Administrator shall submit to Congress 
a biannnual report on the status of the program. 
(B) CONTENTS.—A report under subparagraph (A) shall in-
clude— 
(i) for the 6-month period ending on the date of the re-
port— 
(I) the number of loans approved under this section; 
(II) the number of loans disbursed under this section; 
and 
(III) the total amount disbursed under this section; 
and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00124
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
125 
(ii) recommendations, if any, to make the program more ef-
fective in serving small business concerns that employ reserv-
ists. 
(C) REPEAL.—This paagraph is repealed effective February 14, 
2011. 
(h) NONCOLLATERALIZED LOANS.— 
(1) IN GENERAL.—Notwithstanding any other provision of law, the 
Administrator may make a loan under this section of not more than 
$50,000 without collateral. 
(2) DEFERRAL OF PAYMENT.—The Administrator may defer pay-
ment of principal and interest on a loan described in paragraph (1) 
during the longer of— 
(A) the one-year period beginning on the date of the initial dis-
bursement of the loan; or 
(B) the period during which the essential employee is on active 
duty. 
(i) PRIORITY.—The Administrator shall— 
(1) give priority to any application for a loan under this section; and 
(2) process and make a determination regarding applications under 
this section prior to processing or making a determination on other 
loan applications under the disaster loan program, on a rolling basis. 
§ 21304. Public awareness of disaster declaration and appli-
cation periods 
(a) COORDINATION WITH FEMA.— 
(1) IN GENERAL.—Notwithstanding any other provision of law, for 
any disaster declared under this chapter or major disaster (including 
any major disaster relating to which the Administrator declares eligi-
bility for additional disaster assistance under section 21308 of this 
title), the Administrator, in consultation with the Administrator of the 
Federal Emergency Management Agency, shall ensure, to the max-
imum extent practicable, that all application periods for disaster relief 
under this subtitle correspond with application deadlines established 
under the Robert T. Stafford Disaster Relief and Emergency Assist-
ance Act (42 U.S.C. 5121 et seq.), or as extended by the President. 
(2) DEADLINES.—Notwithstanding any other provision of law, not 
later than 10 days before the closing date of an application period for 
a major disaster (including any major disaster relating to which the 
Administrator declares eligibility for additional disaster assistance 
under section 21308 of this title), the Administrator, in consultation 
with the Administrator of the Federal Emergency Management Agency, 
shall submit to the Committee on Small Business and Entrepreneur-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00125
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
126 
ship of the Senate and the Committee on Small Business of the House 
of Representatives a report that includes— 
(A) the deadline for submitting applications for assistance under 
this subtitle relating to the major disaster; 
(B) information regarding the number of loan applications and 
disbursements processed by the Administrator relating to the 
major disaster for each day during the period beginning on the 
date on which the major disaster was declared and ending on the 
date of the report; and 
(C) an estimate of the number of potential applicants that have 
not submitted an application relating to the major disaster. 
(b) PUBLIC AWARENESS OF DISASTERS.—If a disaster is declared under 
this chapter or the Administrator declares eligibility for additional disaster 
assistance under section 21308 of this title, the Administrator shall make 
every effort to communicate through radio, television, print, and web-based 
outlets all relevant information needed by disaster loan applicants, includ-
ing— 
(1) the date of the declaration; 
(2) the names of cities and towns within the disaster area; 
(3) loan application deadlines related to the disaster; 
(4) all relevant contact information for victim services available 
through the Administrator (including links to small business develop-
ment center websites); 
(5) links to relevant Federal and State disaster assistance websites, 
including links to websites providing information regarding assistance 
available from the Federal Emergency Management Agency; 
(6) information on eligibility criteria for the disaster assistance pro-
grams, including where loan applications can be found; and 
(7) loan application materials that clearly state the function of the 
Administration as the Federal source of disaster loans for homeowners 
and renters. 
(c) MARKETING AND OUTREACH.—The Administrator shall create a mar-
keting and outreach plan that— 
(1) encourages a proactive approach to the disaster relief efforts of 
the Administrator; 
(2) makes clear the services provided by the Administrator, including 
contact information, application information, and timelines for submit-
ting applications, the review of applications, and the disbursement of 
funds; 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00126
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
127 
(3) describes each of the disaster assistance programs, including how 
each disaster assistance program is made available and the eligibility 
requirements for each disaster assistance program; 
(4) provides for regional marketing, focusing on disasters occurring 
in each Administration region before June 18, 2008, and likely sce-
narios for disasters in each Administration region; and 
(5) ensures that the marketing plan is made available at small busi-
ness development centers and on the website of the Administration. 
§ 21305. Disaster loan processing 
(a) MAJOR DISASTER LOAN PROCESSING AND LOSS VERIFICATION BY 
QUALIFIED PRIVATE CONTRACTORS.— 
(1) MAJOR DISASTER LOAN PROCESSING.—The Administrator may 
enter into an agreement with a qualified private contractor, as deter-
mined by the Administrator, to process loans under this chapter in the 
event of a major disaster (including any major disaster relating to 
which the Administrator declares eligibility for additional disaster as-
sistance under section 21308 of this title), under which the Adminis-
trator shall pay the contractor a fee for each loan processed. 
(2) LOAN LOSS VERIFICATION.—The Administrator may enter into 
an agreement with a qualified lender or loss verification professional, 
as determined by the Administrator, to verify losses for loans under 
this chapter in the event of a major disaster (including any major dis-
aster relating to which the Administrator declares eligibility for addi-
tional disaster assistance under section 21308 of this title), under 
which the Administrator shall pay the lender or verification professional 
a fee for each loan for which the lender or verification professional 
verifies a loss. 
(b) COORDINATION OF EFFORTS BETWEEN THE ADMINISTRATOR AND 
THE COMMISSIONER OF INTERNAL REVENUE TO EXPEDITE LOAN PROC-
ESSING.—The Administrator and the Commissioner of Internal Revenue 
shall, to the maximum extent practicable, ensure that all relevant and allow-
able tax records for loan approval are shared with loan processors in an ex-
pedited manner on request by the Administrator. 
(c) INFORMATION TRACKING AND FOLLOWUP SYSTEM.— 
(1) INFORMATION TRACKING.— 
(A) IN GENERAL.—The Administrator shall develop, implement, 
and maintain a centralized information system to track commu-
nications between Administration personnel and applicants for dis-
aster assistance. 
(B) INFORMATION TO BE RECORDED.—The information system 
shall ensure that when an applicant for disaster assistance com-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00127
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
128 
municates with Administration personnel on a matter relating to 
the application, the following information is recorded: 
(i) The method of communication. 
(ii) The date of the communication. 
(iii) The identity of the Administration personnel. 
(iv) A summary of the subject matter of the communica-
tion. 
(2) FOLLOWUP.—The Administrator shall ensure that an applicant 
for disaster assistance receives, by telephone, mail, or electronic mail, 
followup communications from Administration personnel at all critical 
stages of the application process, including the following: 
(A) When Administration personnel determine that additional 
information or documentation is required to process the applica-
tion. 
(B) When Administration personnel determine whether to ap-
prove or deny the disaster assistance. 
(C) When the primary contact person managing the application 
for disaster assistance has changed. 
(d) DISASTER ASSISTANCE PROCESSING REDUNDANCY.—The Adminis-
trator shall ensure that the Administration has in place a facility for dis-
aster assistance processing that, when the Administration’s primary facility 
for disaster loan processing becomes unavailable, is able to take over all dis-
aster loan processing from the primary facility within 2 days. 
§ 21306. Disaster assistance employees 
(a) IN GENERAL.—In carrying out the disaster assistance programs, the 
Administrator may, where practicable, ensure that the number of full-time 
equivalent employees— 
(1) in the Office of the Disaster Assistance is not fewer than 800; 
and 
(2) in the Disaster Cadre of the Administration is not fewer than 
1,000. 
(b) REPORT.—In carrying out the disaster assistance programs, if the 
number of full-time employees for the Office of Disaster Assistance or the 
Disaster Cadre of the Administration is below the level required by sub-
section (a) for that office, not later than 21 days after the date on which 
the staffing level decreases below the level required by subsection (a), the 
Administrator shall submit to the Committee on Appropriations and Com-
mittee on Small Business and Entrepreneurship of the Senate and the Com-
mittee on Appropriations and Committee on Small Business of the House 
of Representatives a report that— 
(1) details staffing levels on that date; 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00128
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
129 
(2) requests, if practicable and determined to be appropriate by the 
Administrator, additional funds for additional employees; and 
(3) contains such additional information as the Administrator deter-
mines to be appropriate. 
§ 21307. Maximum loan amount 
(a) AGGREGATE LOAN AMOUNTS.—Except as provided in subsection (b), 
and notwithstanding any other provision of law, the aggregate loan amount 
outstanding and committed to a borrower under the disaster loan program 
shall not exceed $2,000,000. 
(b) WAIVER.—The Administrator may increase the aggregate loan 
amount under subsection (a) for loans relating to a disaster to a level estab-
lished by the Administrator based on appropriate economic indicators for 
the region in which the disaster occurred. 
§ 21308. Declaration of eligibility for additional disaster as-
sistance 
(a) DEFINITIONS.—In this section: 
(1) ELIGIBLE SMALL BUSINESS CONCERN.—The term ‘‘eligible small 
business concern’’ means a small business concern— 
(A) that has suffered major disaster-related substantial eco-
nomic injury as a result of a major disaster; and 
(B)(i) for which not less than 25 percent of the market share 
of the small business concern is from business transacted in the 
major disaster area; 
(ii) for which not less than 25 percent of an input into a pro-
duction process of the small business concern is from the major 
disaster area; or 
(iii) that relies on a provider located in the major disaster area 
for a service that is not readily available elsewhere. 
(2) MAJOR DISASTER-RELATED SUBSTANTIAL ECONOMIC INJURY.— 
The term ‘‘major disaster-related substantial economic injury’’ means 
economic harm to a business concern that results in the inability of the 
business concern to— 
(A) meet its obligations as they mature; 
(B) meet its ordinary and necessary operating expenses; or 
(C) market, produce, or provide a product or service ordinarily 
marketed, produced, or provided by the business concern because 
the business concern relies on materials from the major disaster 
area or sells or markets in the major disaster area. 
(b) DECLARATION OF ELIGIBILITY.—If the President declares a major 
disaster, the Administrator may declare eligibility for additional disaster as-
sistance in accordance with this section. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00129
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
130 
(c) THRESHOLD.—A major disaster for which the Administrator declares 
eligibility for additional disaster assistance under this section shall be a 
major disaster that— 
(1) results in— 
(A) extraordinary levels of casualties or damage; or 
(B) disruption severely affecting the population (including a 
mass evacuation), the infrastructure, the environment, the econ-
omy, national morale, or government functions in an area; 
(2) is comparable to a catastrophic incident described in the Admin-
istrator’s national response plan (including any successor to the na-
tional response plan), unless the national response plan expires and 
there is no successor to the plan, in which case this paragraph shall 
be of no effect; and 
(3) is of such size and scope that— 
(A) the disaster loan program is incapable of providing adequate 
and timely assistance to individuals or business concerns located 
within the major disaster area; or 
(B) a significant number of business concerns outside the major 
disaster area have suffered major disaster-related substantial eco-
nomic injury as a result of the major disaster. 
(d) ADDITIONAL ECONOMIC INJURY DISASTER LOAN ASSISTANCE.— 
(1) IN GENERAL.—If the Administrator declares eligibility for addi-
tional disaster assistance under this section, the Administrator may 
make such loans under this subsection as the Administrator determines 
to be appropriate to eligible small business concerns located anywhere 
in the United States. 
(2) PROCESSING TIME.— 
(A) IN GENERAL.—If the Administrator determines that the av-
erage processing time for applications for disaster loans under this 
subsection relating to a specific major disaster is more than 15 
days, the Administrator shall give priority to the processing of 
such applications submitted by eligible small business concerns lo-
cated inside the major disaster area until the Administrator deter-
mines that the average processing time for such applications is not 
more than 15 days. 
(B) SUSPENSION OF APPLICATIONS FROM OUTSIDE MAJOR DIS-
ASTER AREA.—If the Administrator determines that the average 
processing time for applications for disaster loans under this sub-
section relating to a specific major disaster is more than 30 days, 
the Administrator shall suspend the processing of such applica-
tions submitted by eligible small business concerns located outside 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00130
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
131 
the major disaster area until the Administrator determines that 
the average processing time for such applications is not more than 
15 days. 
(3) LOAN TERMS.—A loan under this subsection shall be made on 
the same terms as a loan under section 21302 of this title. 
§ 21309. Interest rates 
(a) IN GENERAL.—Notwithstanding any other provision of law, except as 
provided in subsection (b), the interest rate on the Administrator’s share 
of a loan under the disaster loan program shall not exceed— 
(1) the average annual interest rate on all interest-bearing obliga-
tions of the United States then forming a part of the public debt as 
computed at the end of the fiscal year next preceding the date of the 
loan and adjusted to the nearest 0.125 percent; plus 
(2) 0.25 percent. 
(b) LOANS UNDER SECTION 21301 OR 21302.— 
(1) IN GENERAL.—The interest rate for a loan under section 21301 
or 21302 of this title shall not exceed the rate of interest that is in 
effect at the time of the occurrence of the disaster. 
(2) DETERMINATION.—Notwithstanding any other provision of law, 
the interest rate on the Federal share of a loan under section 21301 
or 21302 of this title, determined as of the date of the disaster, shall 
be— 
(A) in the case of a homeowner unable to secure credit else-
where, the lesser of— 
(i) a rate prescribed by the Administrator, not to exceed 
half a rate determined by the Secretary of the Treasury tak-
ing into consideration the current average market yield on 
outstanding marketable obligations of the United States with 
remaining periods to maturity comparable to the average ma-
turities of such loans plus an additional charge of not to ex-
ceed one percent per year as determined by the Adminis-
trator, and adjusted to the nearest 0.125 percent; or 
(ii) 4 percent per year; 
(B) in the case of a homeowner able to secure credit elsewhere, 
the lesser of— 
(i) a rate prescribed by the Administrator, not to exceed a 
rate determined by the Secretary of the Treasury taking into 
consideration the current average market yield on outstanding 
marketable obligations of the United States with remaining 
periods to maturity comparable to the average maturities of 
such loans plus an additional charge of not to exceed one per-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00131
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
132 
cent per year as determined by the Administrator, and ad-
justed to the nearest 0.125 percent; or 
(ii) 8 percent per year; 
(C) in the case of a business concern, private nonprofit organi-
zation, or other concern (including an agricultural cooperative) un-
able to obtain credit elsewhere, not to exceed 4 percent per year; 
or 
(D) in the case of a business concern able to obtain credit else-
where, a rate prescribed by the Administrator, not to exceed the 
lowest of— 
(i) the rate prevailing in the private market for similar 
loans; 
(ii) the rate prescribed by the Administrator as the max-
imum interest rate for deferred participation (guaranteed) 
loans under the general business loan program; or 
(iii) 8 percent per year. 
§ 21310. Maximum term 
No loan under the disaster loan program (including any renewal or exten-
sion of a loan) may be made for a period or periods exceeding— 
(1) 30 years; or 
(2) in the case of a loan to a business concern under section 
21309(b)(2)(D) of this title that is able to obtain credit elsewhere, 3 
years. 
§ 21311. Deferment of repayment 
(a) IN GENERAL.—In making a loan under this chapter, the Adminis-
trator may provide the person receiving the loan an option to defer repay-
ment on the loan. 
(b) DEFERMENT PERIOD.—The period of a deferment under subsection 
(a) shall not exceed 4 years. 
§ 21312. Suspension of payments 
(a) IN GENERAL.—The Administrator may consent to a suspension in the 
payment of principal and interest on, and to an extension in the maturity 
of, the Federal share of a loan under the disaster loan program, for a period 
not to exceed 5 years, if— 
(1) the borrower under the loan is a homeowner or a small business 
concern; 
(2) the loan was made to enable— 
(A) the homeowner to repair or replace his or her home; or 
(B) the small business concern to repair or replace plant or 
equipment that was damaged or destroyed as the result of a dis-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00132
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
133 
aster described in clause (i) or (ii) of section 21302(b)(2)(A) of 
this title; and 
(3) the Administrator determines that the suspension is necessary to 
avoid severe financial hardship. 
(b) PURCHASE OF PARTICIPATION OR ASSUMPTION OF OBLIGATION.— 
During any period in which principal and interest charges are suspended 
under subsection (a), the Administrator shall, on the request of any person 
having a participation in the loan, purchase the participation, or assume the 
obligation of the borrower, for the balance of the period, to make principal 
and interest payments on the non-Federal share of the loan, if— 
(1) the Administrator determines that the action is necessary to 
avoid a default; and 
(2) the borrower agrees to make payments to the Administrator in 
an aggregate amount equal to the amount paid in the borrower’s behalf 
by the Administrator, in such manner and at such times (during or 
after the term of the loan) as the Administrator determines having due 
regard for the purposes sought to be achieved by this subsection. 
§ 21313. Participation in loans on deferred basis 
In an agreement to participate in a loan on a deferred basis under the 
disaster loan program, participation by the Administrator shall not be in ex-
cess of 90 percent of the balance of the loan outstanding at the time of 
disbursement. 
§ 21314. Assistance and counseling for disaster victims 
In administering the disaster assistance programs, to the maximum ex-
tent possible, the Administrator shall provide assistance and counseling to 
disaster victims in— 
(1) filing applications (including the provision of information relevant 
to loan processing); and 
(2) loan closing and prompt disbursement of loan proceeds. 
§ 21315. Priority in allocating funds 
In administering the disaster assistance programs, to the maximum ex-
tent possible, the Administrator shall give the disaster loan program a high 
priority in allocating funds for administrative expenses. 
§ 21316. Prohibition of cancellation of certain disaster loans 
No portion of a loan under section 21301 or 21302 of this title shall be 
subject to cancellation under any provision of law. 
§ 21317. Prohibition of net earnings clauses 
In making a loan under this chapter, the Administrator shall not require 
the borrower to pay any nonamortized amount for the first 5 years after 
repayment begins. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00133
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
134 
§ 21318. Biennial disaster simulation exercise 
(a) IN GENERAL.—The Administrator shall conduct a disaster simulation 
exercise at least once every 2 fiscal years. 
(b) REQUIREMENTS.—A disaster simulation exercise shall— 
(1) include the participation of, at a minimum, not fewer than 50 
percent of the individuals in the disaster reserve corps; and 
(2) test, at maximum capacity, all of the information technology and 
telecommunications systems of the Administrator that are vital to the 
activities of the Administrator during a disaster. 
(c) REPORT.—The Administrator shall include in a report under section 
10717(g) of this title a report on a disaster simulation exercise conducted 
under subsection (a). 
§ 21319. Disaster planning responsibilities 
(a) DEFINITIONS.—In this section: 
(1) DISASTER PLANNING OFFICER.—The term‘‘disaster planning of-
ficer’’ means the individual to whom the disaster planning function of 
the Administrator is assigned under subsection (b). 
(2) STATE.—The term ‘‘State’’ means a State of the United States, 
the District of Columbia, Puerto Rico, the Northern Mariana Islands, 
the Virgin Islands, Guam, American Samoa, and any territory or pos-
session of the United States. 
(b) ASSIGNMENT
OF SMALL BUSINESS ADMINISTRATION DISASTER 
PLANNING RESPONSIBILITIES.—The disaster planning function of the Ad-
ministrator shall be assigned to an individual appointed by the Adminis-
trator who— 
(1) is not an employee of the Office of Disaster Assistance of the 
Administration; 
(2) has proven management ability; 
(3) has substantial knowledge in the field of disaster readiness and 
emergency response; and 
(4) has demonstrated significant experience in the area of disaster 
planning. 
(c) RESPONSIBILITIES.—The disaster planning officer shall report di-
rectly and solely to the Administrator and shall be responsible for— 
(1) developing, implementing, and maintaining the comprehensive 
disaster response plan under section 21320 of this title; 
(2) ensuring that there are in-service and pre-service training proce-
dures for the disaster response staff of the Administration; 
(3) coordinating and directing the training exercises of the Adminis-
tration relating to disasters, including disaster simulation exercises and 
disaster exercises coordinated with other government agencies; and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00134
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
135 
(4) other responsibilities relevant to disaster planning and readiness, 
as determined by the Administrator. 
(d) COORDINATION.—In carrying out the responsibilities described in sub-
section (c), the disaster planning officer shall coordinate with— 
(1) the Office of Disaster Assistance of the Administration; 
(2) the Administrator of the Federal Emergency Management Agen-
cy; and 
(3) other Federal, State, and local disaster planning offices, as nec-
essary. 
(e) RESOURCES.—The Administrator shall ensure that the disaster plan-
ning officer has adequate resources to carry out the responsibilities de-
scribed in subsection (c). 
§ 21320. Disaster response plan 
(a) DEFINITION OF STATE.—In this section, the term ‘‘State’’ means a 
State of the United States, the District of Columbia, Puerto Rico, the 
Northern Mariana Islands, the Virgin Islands, Guam, American Samoa, and 
any territory or possession of the United States. 
(b) PLAN.— 
(1) IN GENERAL.—The Administrator shall develop, implement, and 
maintain a comprehensive written disaster response plan. 
(2) CONTENTS.—The disaster response plan shall include the fol-
lowing: 
(A) For each Administration region, a description of the disas-
ters most likely to occur in the Administration region. 
(B) For each disaster described under subparagraph (A)— 
(i) an assessment of the disaster; 
(ii) an assessment of the demand for Administration assist-
ance most likely to occur in response to the disaster; 
(iii) an assessment of the needs of the Administration, with 
respect to such resources as information technology, tele-
communications, human resources, and office space, to meet 
the demand referred to in clause (ii); and 
(iv) guidelines pursuant to which the Administrator will co-
ordinate with other Federal agencies and with State and local 
authorities to best respond to the demand described in clause 
(ii) and to best use the resources referred to in that clause. 
(c) PLAN REVISION.—The Administrator shall update the disaster re-
sponse plan— 
(1) annually; and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00135
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
136 
(2) following any major disaster relating to which the Administrator 
declares eligibility for additional disaster assistance under section 
21308 of this title. 
(d) REQUIRED KNOWLEDGE.—The Administrator shall carry out sub-
sections (b) and (c) through an individual with substantial knowledge in the 
field of disaster readiness and emergency response. 
(e) REPORT.—The Administrator shall include in a report under section 
10717(g) of this title a report on the disaster response plan. 
§ 21321. Coordination of disaster assistance programs with 
FEMA 
(a) IN GENERAL.—The Administrator shall ensure that the disaster as-
sistance programs of the Administration are coordinated, to the maximum 
extent practicable, with the disaster assistance programs of the Federal 
Emergency Management Agency. 
(b) REGULATIONS.— 
(1) IN GENERAL.—The Administrator, in consultation with the Ad-
ministrator of the Federal Emergency Management Agency, shall es-
tablish regulations to ensure that each application for disaster assist-
ance is submitted as quickly as practicable to the Administration or di-
rected to the appropriate agency under the circumstances. 
(2) REVISION.—The regulations shall be revised annually. 
(c) REPORT.—The Administrator shall include in a report under section 
10717(g) of this title a report on the regulations under subsection (b). 
§ 21322. Plans to secure sufficient office space 
(a) IN GENERAL.—The Administrator shall develop long-term plans to se-
cure sufficient office space to accommodate an expanded workforce in times 
of disaster. 
(b) REPORT.—The Administrator shall include in a report under section 
10717(g) of this title a report on the plans developed under subsection (a). 
§ 21323. Bond guarantees in procurements relating to a 
major disaster 
(a) IN GENERAL.—Except as provided in subsection (b), and notwith-
standing any other provision of law, for any procurement relating to a major 
disaster, the Administrator may, on such terms and conditions as the Ad-
ministrator may prescribe, guarantee and enter into commitments to guar-
antee a surety against loss resulting from a breach of the terms of a bid 
bond, payment bond, performance bond, or bonds ancillary thereto, by a 
principal on any total work order or contract amount at the time of bond 
execution that does not exceed $5,000,000. 
(b) INCREASE IN AMOUNT.—On request of the head of any Federal agen-
cy (other than the Administration) involved in reconstruction efforts in re-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00136
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
137 
sponse to a major disaster, the Administrator may guarantee and enter into 
a commitment to guarantee a surety against loss under subsection (a) on 
any total work order or contract amount at the time of bond execution that 
does not exceed $10,000,000. 
(c) LIMITATION ON USE OF OTHER FUNDS.—The Administrator may 
carry out this section only with amounts appropriated in advance specifically 
to carry out this section. 
§ 21324. Civil penalty 
A person that wrongfully misapplies the proceeds of a loan made under 
the disaster loan program shall be liable to the Administrator for a civil 
penalty in the amount that is equal to 1.5 times the original principal 
amount of the loan. 
CHAPTER 215—PRIVATE DISASTER ASSISTANCE 
PROGRAM 
Sec. 
21501.
Definitions. 
21502.
Program. 
21503.
Use of loans. 
21504.
Online applications. 
21505.
Maximum amounts. 
21506.
Terms and conditions. 
21507.
Lenders. 
21508.
Fees. 
21509.
Documentation. 
21510.
Purchase of loans. 
21511.
Regulations. 
21512.
Authorization of appropriations. 
§ 21501. Definitions 
In this chapter: 
(1) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible individual’’ means an 
individual who is eligible for disaster assistance under section 21301 
of this title relating to a major disaster relating to which the Adminis-
trator declares eligibility for additional disaster assistance under sec-
tion 21308 of this title. 
(2) MAJOR DISASTER AREA.—The term ‘‘major disaster area’’ means 
an area for which the President declares a major disaster relating to 
which the Administrator declares eligibility for additional disaster as-
sistance under section 21308 of this title, during the period of the 
major disaster declaration. 
(3) QUALIFIED PRIVATE LENDER.—The term ‘‘qualified private lend-
er’’ means a privately-owned bank or other lending institution that— 
(A) is not a preferred lender; and 
(B) the Administrator determines meets the criteria established 
under section 20511 of this title. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00137
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
138 
(4) SMALL BUSINESS CONCERN.—The term ‘‘small business concern’’ 
means a small business concern (as defined in section 10101 or 30101 
of this title). 
§ 21502. Program 
The Administrator shall carry out a program, to be known as the private 
disaster assistance program, under which the Administrator may guarantee 
timely payment of principal and interest, as scheduled, on any loan made 
to a small business concern located in a major disaster area or to an eligible 
individual. 
§ 21503. Use of loans 
A loan guaranteed by the Administrator under this chapter may be used 
for any purpose authorized under chapter 213. 
§ 21504. Online applications 
(a) ESTABLISHMENT OF PROCESS.—The Administrator may establish, di-
rectly or through an agreement with another entity, an online application 
process for loans guaranteed under this chapter. 
(b) OTHER FEDERAL ASSISTANCE.—The Administrator may coordinate 
with the head of any other appropriate Federal agency so that any applica-
tion submitted through an online application process established under this 
section may be considered for any other Federal assistance program for dis-
aster relief. 
(c) CONSULTATION.—In establishing an online application process under 
this section, the Administrator shall consult with appropriate persons from 
the public and private sectors, including private lenders. 
§ 21505. Maximum amounts 
(a) GUARANTEE PERCENTAGE.—The Administrator may guarantee not 
more than 85 percent of a loan under this chapter. 
(b) LOAN AMOUNT.—The maximum amount of a loan guaranteed under 
this chapter shall be $2,000,000. 
§ 21506. Terms and conditions 
A loan guaranteed under this chapter shall be made under the same 
terms and conditions as a loan under chapter 213. 
§ 21507. Lenders 
(a) IN GENERAL.— 
(1) LOANS TO AN ELIGIBLE INDIVIDUAL.—A loan guaranteed under 
this chapter made to an eligible individual may be made by a preferred 
lender. 
(2) LOANS TO A SMALL BUSINESS CONCERN.—A loan guaranteed 
under this chapter made to a small business concern may be made by 
a qualified private lender or by a preferred lender that also makes 
loans to eligible individuals. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00138
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
139 
(b) COMPLIANCE.—If the Administrator determines that a preferred lend-
er knowingly failed to comply with the underwriting standards for loans 
guaranteed under this chapter or violated the terms of the standard oper-
ating procedure agreement between the preferred lender and the Adminis-
trator, the Administrator shall do one or both of the following: 
(1) Exclude the preferred lender from participating in the private 
disaster assistance program. 
(2) Exclude the preferred lender from participating in the preferred 
lender program for a period of not more than 5 years. 
§ 21508. Fees 
(a) IN GENERAL.—The Administrator shall not collect a guarantee fee 
under this chapter. 
(b) ORIGINATION FEE.—The Administrator may pay a qualified private 
lender or preferred lender an origination fee for a loan guaranteed under 
this chapter in an amount agreed on in advance between the qualified pri-
vate lender or preferred lender and the Administrator. 
§ 21509. Documentation 
(a) IN GENERAL.—A qualified private lender or preferred lender may use 
its own loan documentation for a loan guaranteed by the Administrator 
under this chapter, to the extent authorized by the Administrator. 
(b) NOT PART OF QUALIFICATION CRITERIA.—The ability of a lender to 
use its own loan documentation for a loan guaranteed under this chapter 
shall not be considered part of the criteria for becoming a qualified private 
lender under the regulations promulgated under section 21511 of this title. 
§ 21510. Purchase of loans 
The Administrator may enter into an agreement with a qualified private 
lender or preferred lender to purchase any loan guaranteed under this chap-
ter. 
§ 21511. Regulations 
The Administrator shall promulgate regulations establishing permanent 
criteria for qualified private lenders. 
§ 21512. Authorization of appropriations 
(a) IN GENERAL.—Amounts necessary to carry out this chapter shall be 
made available from amounts appropriated to the Administration to carry 
out chapter 213. 
(b) AUTHORITY TO REDUCE INTEREST RATES AND OTHER TERMS AND 
CONDITIONS.—Funds appropriated to the Administration to carry out this 
chapter may be used by the Administrator to meet the loan terms and con-
ditions specified in section 21506 of this title. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00139
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
142 
(c) TERMS AND CONDITIONS.—A loan guaranteed by the Administrator 
under the program— 
(1) shall be for not more than $150,000; 
(2) shall be a short-term loan, not to exceed 180 days, except that 
the Administrator may extend the term as the Administrator deter-
mines to be appropriate on a case-by-case basis; 
(3) shall have an interest rate not to exceed 300 basis points above 
the interest rate established by the Board of Governors of the Federal 
Reserve System that one bank charges another for reserves that are 
lent on an overnight basis on the date on which the loan is made; 
(4) shall have no prepayment penalty; 
(5) may be made only to a borrower that meets the requirements for 
a loan under chapter 213; 
(6) may be refinanced as part of any subsequent disaster assistance 
provided under chapter 213; 
(7) may receive expedited loss verification and loan processing, if the 
applicant— 
(A) is a major source of employment in the disaster area (which 
shall be determined in the same manner as under section 
21303(e)(2) of this title); or 
(B) is vital to recovery efforts in the region (including providing 
debris removal services, manufactured housing, or building mate-
rials); and 
(8) shall be subject to such additional terms as the Administrator 
determines to be appropriate. 
DIVISION E—BUSINESS DEVELOPMENT 
PROGRAM 
CHAPTER 231—GENERAL PROVISIONS 
Sec. 
23101.
Definitions. 
23102.
Establishment of business development program. 
23103.
Unemployed or low-income individuals. 
23104.
Restrictions on activities of Administration employees. 
23105.
Encouragement of subcontracts. 
23106.
Federal contracts, subcontracts, and deposits. 
23107.
Business opportunity specialists. 
23108.
Requests for investigation. 
§ 23101. Definitions 
In this division: 
(1) ASSOCIATE
ADMINISTRATOR.—The term ‘‘Associate Adminis-
trator’’ means the Associate Administrator for Minority Small Business 
and Capital Ownership Development. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00142
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
143 
(2) BUSINESS ACTIVITY TARGET.—The term ‘‘business activity tar-
get’’ means a target contained in a business plan for contracts awarded 
other than through the program. 
(3) BUSINESS OPPORTUNITY SPECIALIST.—The term ‘‘business op-
portunity specialist’’ means an Administration employee responsible for 
providing business development assistance to a program participant. 
(4) BUSINESS PLAN.—The term ‘‘business plan’’ means the business 
plan of a program participant under section 23318 of this title. 
(5) DIRECTOR.—The term ‘‘Director’’ means the Director of the Di-
vision. 
(6) DISADVANTAGED
OWNER.—The term ‘‘disadvantaged owner’’ 
means an individual on whom eligibility is based for participation in 
the business development program. 
(7) DIVISION.—The term ‘‘Division’’ means the Division of Program 
Certification and Eligibility established by section 10308 of this title. 
(8) ECONOMICALLY
DISADVANTAGED
INDIAN
TRIBE.—The term 
‘‘economically disadvantaged Indian tribe’’ means an Indian tribe that 
the Administrator determines to be economically disadvantaged based 
on consideration of available information such as— 
(A) the per capita income of members of the Indian tribe, ex-
cluding judgment awards; 
(B) the percentage of the local Indian population below the pov-
erty level; and 
(C) the Indian tribe’s access to capital markets. 
(9) EXECUTIVE
AGENCY.—The term ’’executive agency’’ has the 
meaning given the term in section 4 of the Office of Federal Procure-
ment Policy Act (41 U.S.C. 403). 
(10) GRADUATE.—The term ‘‘graduate’’, with reference to a pro-
gram participant, means to graduate the program participant from the 
program under section 23320 of this title. 
(11) INDIAN TRIBE.—The term ‘‘Indian tribe’’ means an Indian 
tribe, band, nation, or other organized group or community of Indians, 
including any Alaska Native village or regional or village corporation 
(within the meaning of the Alaska Native Claims Settlement Act (43 
U.S.C. 1601 et seq.)) that— 
(A) is recognized as eligible for the special programs and serv-
ices provided by the United States to Indians because of their sta-
tus as Indians; or 
(B) is recognized as such by the State in which the Indian tribe, 
band, nation, group, or community resides. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00143
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
144 
(12) PROGRAM.—The term ‘‘program’’ means the business develop-
ment program. 
(13) PROGRAM
PARTICIPANT.—The term ‘‘program participant’’ 
means a small business concern that is participating in the program. 
(14) PROGRAM PARTICIPATION PERIOD.—The term ‘‘program par-
ticipation period’’, with respect to a program participant, means the pe-
riod of program participation applicable to the program participant 
under section 23329 of this title. 
(15) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY SO-
CIALLY AND ECONOMICALLY DISADVANTAGED INDIVIDUALS.— 
(A) IN GENERAL.—The term ‘‘small business concern owned 
and controlled by socially and economically disadvantaged individ-
uals’’ means a small business concern— 
(i) not less than 51 percent of which is unconditionally 
owned by— 
(I) one or more socially and economically disadvan-
taged individuals; 
(II) an economically disadvantaged Indian tribe (or a 
wholly owned business entity of an economically dis-
advantaged Indian tribe); or 
(III) an economically disadvantaged Native Hawaiian 
organization; and 
(ii) the management and daily business operations of which 
are controlled by one or more— 
(I) socially and economically disadvantaged individ-
uals; 
(II) members of an economically disadvantaged Indian 
tribe; or 
(III) Native Hawaiian organizations. 
(B) SIZE
DETERMINATION
FOR
INDIAN
TRIBES.—In deter-
mining the size of a concern owned by an economically disadvan-
taged Indian tribe (or a wholly owned business entity of an eco-
nomically disadvantaged Indian tribe) for purposes of subpara-
graph (A), the concern’s size shall be independently determined 
without regard to its affiliation with the Indian tribe, any entity 
of the tribal government, or any other business enterprise owned 
by the Indian tribe, unless the Administrator determines that one 
or more such tribally owned business concerns have obtained, or 
are likely to obtain, a substantial unfair competitive advantage 
within an industry category. 
(16) SOCIALLY AND ECONOMICALLY DISADVANTAGED INDIVIDUAL.— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00144
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
145 
(A) IN GENERAL.—The term ‘‘socially and economically dis-
advantaged individual’’ means a member of a group of socially dis-
advantaged individuals whose ability to compete in the free enter-
prise system has been impaired due to diminished capital and 
credit opportunities as compared with others in the same business 
area who are not socially disadvantaged. 
(B) DETERMINATION OF DEGREE OF DIMINISHED CREDIT AND 
CAPITAL OPPORTUNITIES.—In determining the degree of dimin-
ished credit and capital opportunities, the Administrator shall con-
sider the assets and net worth of a socially disadvantaged indi-
vidual. 
(C) NET WORTH.—In computing personal net worth for pur-
poses of this paragraph, there shall be excluded— 
(i) the value of investments that disadvantaged owners 
have in their concern, except that the value of such invest-
ments shall be taken into account when comparing the con-
cern to other concerns in the same business area that are 
owned by other than socially disadvantaged persons; and 
(ii) the equity that disadvantaged owners have in their pri-
mary personal residences, except that any portion of such eq-
uity that is attributable to unduly excessive withdrawals from 
a program participant or a concern applying for program par-
ticipation shall be taken into account. 
(17) SOCIALLY DISADVANTAGED INDIVIDUAL.— 
(A) IN
GENERAL.—The term ‘‘socially disadvantaged indi-
vidual’’ means a member of a group of individuals who have been 
subjected to racial or ethnic prejudice or cultural bias because of 
their identity as members of the group without regard to their in-
dividual qualities. 
(B) DETERMINATION.— 
(i) IN
GENERAL.—A determination under subparagraph 
(A) with respect to whether a group has been subjected to 
prejudice or bias shall be made by the Administrator after 
consultation with the Associate Administrator for Minority 
Small Business and Capital Ownership Development. 
(ii) NONDELEGABILITY.—The authority of the Adminis-
trator under clause (i) may not be delegated. 
(18) TERMINATE.—The term ‘‘terminate’’, with reference to a pro-
gram participant, means to suspend or totally deny assistance to a pro-
gram participant under the program, prior to the graduation of the 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00145
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
146 
program participant or prior to the expiration of the program partici-
pant’s program participation period, under section 23321 of this title. 
§ 23102. Establishment of business development program 
There is established within the Administration the business development 
program. 
§ 23103. Unemployed or low-income individuals 
The program shall be used to— 
(1) assist in the establishment, preservation, and strengthening of 
small business concerns and improve the managerial skills employed in 
small business concerns, with special attention to, and particular em-
phasis on the preservation or establishment of, small business concerns 
that are— 
(A) located in urban or rural areas with high proportions of un-
employed or low-income individuals; or 
(B) owned by low-income individuals; and 
(2) mobilize for those objectives private as well as public managerial 
skills and resources. 
§ 23104. Restrictions on activities of Administration employ-
ees 
(a) ACTIVITIES AND TRANSACTIONS RELATING TO OWNERSHIP OF A 
PROGRAM PARTICIPANT.— 
(1) IN GENERAL.—A person within the employ of the Administration 
shall not, during the term of such employment and for a period of 2 
years after the employment has been terminated, engage in any activity 
or transaction described in paragraph (2) with respect to any program 
participant during the person’s term of employment, if the person par-
ticipated personally (directly or indirectly)— 
(A) in decisionmaking responsibilities relating to the program 
participant; or 
(B) with respect to the administration of any assistance pro-
vided to program participants generally under the program. 
(2) ACTIVITIES AND TRANSACTIONS.—The activities and transactions 
referred to in paragraph (1) are— 
(A) the buying, selling, or receiving (except by inheritance) of 
any legal or beneficial ownership of stock or any other ownership 
interest or the right to acquire any such interest; 
(B) the entering into or execution of any written or oral agree-
ment (whether or not legally enforceable) to purchase or otherwise 
obtain any right or interest described in subparagraph (A); and 
(C) the receipt of any other benefit or right that may be an inci-
dent of ownership. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00146
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
147 
(3) ANNUAL CERTIFICATION.— 
(A) IN GENERAL.—An employee described in subparagraph (B) 
shall annually submit to the Administrator a written certification 
regarding compliance with this section. 
(B) EMPLOYEE.—The employees referred to in subparagraph 
(A) are— 
(i) a regional administrator; 
(ii) a district director; 
(iii) the Associate Administrator; 
(iv) an employee whose principal duties relate to the award 
of contracts or the provision of other assistance under the 
program; and 
(v) such other employees as the Administrator may des-
ignate. 
(4) CIVIL PENALTIES.— 
(A) IN GENERAL.—An employee or former employee of the Ad-
ministration who violates this section shall be subject to a civil 
penalty, assessed by the Attorney General, that shall not exceed 
300 percent of the maximum amount of gain that the employee 
realized or could have realized as a result of engaging in the activ-
ity and transaction prohibited by paragraph (1). 
(B) FALSE CERTIFICATION.—In addition to any other remedy 
or sanction provided for under law (including a regulation), a per-
son who makes a false certification under paragraph (3)(A) shall 
be subject to a civil penalty under section 3802 of title 31. 
(b) POLITICAL ACTIVITIES AND AFFILIATIONS.— 
(1) PROHIBITION.—An employee of the Administration who has au-
thority to take, direct others to take, recommend, or approve any action 
with respect to any program or activity under the program shall not, 
with respect to any such action, exercise or threaten to exercise that 
authority on the basis of the political activity or affiliation of any per-
son. 
(2) REPORTING OF SOLICITATION TO VIOLATE.—An employee of the 
Administration whose participation in a violation of paragraph (1) is 
directed or solicited shall expeditiously report the direction or solicita-
tion to the Inspector General of the Administration. 
(3) DISCIPLINARY ACTION.—An employee of the Administration who 
willfully and knowingly violates paragraph (1) or (2) shall be subject 
to disciplinary action, which may consist of separation from service, re-
duction in grade, suspension, or reprimand. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00147
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
148 
(4) APPLICABILITY.—Paragraphs (1) and (2) do not apply to an ac-
tion taken as a penalty or other enforcement of a violation of any law 
(including a regulation) prohibiting or restricting political activity. 
(5) OTHER
PROHIBITIONS, MEASURES, AND
LIABILITIES.—Para-
graphs (1) to (4) are in addition to, and not in lieu of, any other prohi-
bitions, measures, or liabilities that may arise under any other provi-
sion of law. 
§ 23105. Encouragement of subcontracts 
(a) IN GENERAL.—The Administrator shall encourage the placement of 
subcontracts by businesses with small business concerns located in areas of 
high concentration of unemployed or low-income individuals and with pro-
gram participants. 
(b) INCENTIVES AND ASSISTANCE.—The Administrator may provide in-
centives and assistance to a business to aid in the training and upgrading 
of potential program participant subcontractors. 
§ 23106. Federal contracts, subcontracts, and deposits 
The Administrator shall take such steps as are necessary and appro-
priate, in coordination and cooperation with the heads of other Federal 
agencies, to ensure that contracts, subcontracts, and deposits made by the 
Federal Government or with programs aided with Federal funds are placed 
in such a way as to further the purposes of the program. 
§ 23107. Business opportunity specialists 
(a) POSITION.—In each Administration field office responsible for assist-
ing one or more program participants there shall be a position designated 
as a business opportunity specialist. 
(b) ADEQUATE NUMBER.—To the maximum extent practicable, the Ad-
ministrator shall ensure that an adequate number of business opportunity 
specialists are assigned to each district office to carry out the responsibil-
ities of the program and to assist program participants. 
(c) TRAINING.—The Administrator shall take such actions as are appro-
priate to ensure that any person employed as a business opportunity spe-
cialist receives adequate periodic training to ensure that the employee is ca-
pable of assisting program participants in fully utilizing the program and 
meeting the requirements of this subtitle and subtitle I. 
§ 23108. Requests for investigation 
The Committee on Small Business and Entrepreneurship of the Senate 
or the Committee on Small Business of the House of Representatives may 
request that the Office of the Inspector General of the Administration con-
duct an investigation of any activity conducted under the program. Not later 
than 30 days after the receipt of such a request, the Inspector General shall 
inform the committee, in writing, of the disposition of the request. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00148
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
149 
CHAPTER 233—CONTRACTING 
Sec. 
23301.
Contracting authority. 
23302.
Contracting procedure. 
23303.
Fair market price. 
23304.
Award after completion of program participation period. 
23305.
Award through competition. 
23306.
Participation by program participants in negotiation of contracts to be awarded non-
competitively. 
23307.
Sole source award. 
23308.
Annual certification regarding ownership and control. 
23309.
Annual submission regarding economic disadvantage. 
23310.
Review of economic disadvantage and withdrawal of assets. 
23311.
Hearing on the record. 
23312.
Program participant capability. 
23313.
Percentages of contract performance by program participants. 
23314.
Wholesalers and retailers. 
23315.
Reporting by program participants to business opportunity specialists. 
23316.
Transfer of ownership or control. 
23317.
Assistance for program participants. 
23318.
Business plans. 
23319.
Denial of further assistance. 
23320.
Graduation. 
23321.
Termination. 
23322.
Evaluation of eligibility. 
23323.
Limitation of eligibility to one small business concern. 
23324.
Limitation on denial of admission into program based on unavailability of specific 
contract opportunities. 
23325.
Certification decision. 
23326.
Review of new entrants into the program. 
23327.
Program stages. 
23328.
Attainment of business activity targets. 
23329.
Program participation period. 
23330.
Collection of data on program operations. 
23331.
Approval of contract options and modifications. 
23332.
Orderly and efficient management of program. 
23333.
Participation in federally funded programs and projects. 
§ 23301. Contracting authority 
(a) IN GENERAL.—When the Administrator determines that such action 
is necessary or appropriate, the Administrator shall— 
(1) enter into contracts with procuring agencies obligating the Ad-
ministrator to furnish articles, equipment, supplies, services, or mate-
rials to the Government or to perform construction work for the Gov-
ernment; and 
(2) arrange for the performance of such contracts by negotiating or 
otherwise letting a subcontract to one or more small business concerns 
owned and controlled by socially and economically disadvantaged indi-
viduals— 
(A) for the manufacture, supply, assembly of the articles, equip-
ment, supplies, materials, or parts thereof, for the construction 
work, for the services, or for servicing or processing in connection 
with the manufacturing, construction, or services; or 
(B) for such management services as are necessary to enable 
the Administrator to perform the contract. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00149
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
150 
(b) CONSTRUCTION SUBCONTRACTS.—To the maximum extent prac-
ticable, construction subcontracts awarded by the Administrator under the 
program shall be awarded within the county or State in which the work is 
to be performed. 
(c) INAPPLICABILITY TO CERTAIN PROCUREMENTS.—The requirements 
of the program do not apply to— 
(1) a procurement under conditions described in— 
(A) paragraph (2), (3), (4), (5), or (7) of section 303(c) of the 
Federal Property and Administrative Services Act of 1949 (41 
U.S.C. 253(c)); or 
(B) paragraph (2), (3), (4), (5), or (7) of section 2304(c) of 
title 10; or 
(2) a procurement by an executive agency for which the head of the 
executive agency makes a determination in writing, after consultation 
with the Administrator and the Administrator for Federal Procurement 
Policy, that it is not appropriate or reasonable to publish a notice be-
fore issuing a solicitation. 
§ 23302. Contracting procedure 
(a) IN GENERAL.—If the Administrator certifies to a contracting officer 
of a procuring agency that the Administrator is competent and responsible 
to perform a specific Government procurement contract to be let by the con-
tracting officer, the contracting officer may let the contract to the Adminis-
trator on such terms and conditions as may be agreed on between the Ad-
ministrator and the contracting officer. 
(b) FAILURE TO AGREE.— 
(1) IN GENERAL.—If the Administrator and the contracting officer 
fail to agree on a procurement contract— 
(A) not later than 5 days after the date on which the Adminis-
trator is notified of the contracting officer’s adverse decision, the 
Administrator may notify the contracting officer of the intent to 
appeal the adverse decision; and 
(B) not later than 15 days after that date, the Administrator 
shall file a written request for a reconsideration of the adverse de-
cision with the head of the procuring agency. 
(2) ADVERSE DECISION.—For the purposes of paragraph (1)(A), a 
contracting officer’s adverse decision includes— 
(A) a decision not to make available for award under the pro-
gram a particular procurement requirement; and 
(B) a failure to agree on the terms and conditions of a contract 
to be awarded noncompetitively under the program. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00150
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
151 
(3) SUSPENSION OF ACTION.—On receipt of a notice of intent to ap-
peal under paragraph (1)(A), the agency head shall suspend further ac-
tion regarding the procurement until a written decision on the Adminis-
trator’s request for reconsideration is issued by the agency head, unless 
the contracting officer makes a written determination that urgent and 
compelling circumstances that significantly affect interests of the 
United States will not permit waiting for a reconsideration of the ad-
verse decision. 
(4) DENIAL OF REQUEST FOR RECONSIDERATION.—If the Adminis-
trator’s request for reconsideration is denied, the procuring agency 
head shall specify the reasons why the small business concern selected 
by the Administrator to perform the procurement requirement was de-
termined to be incapable of performing the procurement requirement, 
and the findings supporting the determination, which shall be made a 
part of the contract file for the requirement. 
§ 23303. Fair market price 
(a) IN GENERAL.—A contract may not be awarded under the program 
if the award of the contract would result in a cost to the procuring agency 
that exceeds a fair market price. 
(b) DETERMINATION.— 
(1) IN GENERAL.—The fair market price under subsection (a) shall 
be determined by the procuring agency in accordance with this sub-
section. 
(2) NEW PROCUREMENT.— 
(A) IN GENERAL.—The estimate of a current fair market price 
for a new procurement requirement, or a requirement that does 
not have a satisfactory procurement history, shall be derived from 
a price or cost analysis. 
(B) FACTORS.—A price or cost analysis— 
(i) may take into account prevailing market conditions, 
commercial prices for similar products or services, or data ob-
tained from any other Federal agency; and 
(ii) shall consider such cost or pricing data as may be time-
ly submitted by the Administrator. 
(3) PROCUREMENTS
WITH
SATISFACTORY
PROCUREMENT
HIS-
TORY.— 
(A) IN GENERAL.—The estimate of a current fair market price 
for a procurement requirement that has a satisfactory procure-
ment history shall be based on recent award prices adjusted to en-
sure comparability. 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00151
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
152 
(B) ADJUSTMENT.—An adjustment under subparagraph (A) 
shall take into account differences in quantities, performance 
times, plans, specifications, transportation costs, packaging and 
packing costs, labor and materials costs, overhead costs, and any 
other additional costs that are considered appropriate. 
(c) ESTIMATION METHOD.— 
(1) IN GENERAL.—On the request of the Administrator, the pro-
curing agency shall promptly submit to the Administrator a written 
statement detailing the method used by the procuring agency to esti-
mate the current fair market price for the contract, identifying the in-
formation, studies, analyses, and other data used by the procuring 
agency. 
(2) NONDISCLOSURE.—The procuring agency’s estimate of the cur-
rent fair market price and any supporting data furnished to the Ad-
ministrator shall not be disclosed to any potential offeror other than 
the Administrator. 
(d) PROTEST.—A small business concern selected by the Administrator 
to perform or negotiate a contract to be let under the program may request 
the Administrator to protest the procuring agency’s estimate of the fair 
market price for the contract. 
§ 23304. Award after completion of program participation 
period 
The Administrator shall make an award to a small business concern 
owned and controlled by socially and economically disadvantaged individuals 
that has completed its program participation period if— 
(1) the contract will be awarded as a result of an offer (including 
price) submitted in response to a published solicitation relating to a 
competition conducted under section 23305 of this title; and 
(2) the prospective contract awardee was a program participant eligi-
ble for award of the contract on the date specified for receipt of offers 
contained in the contract solicitation. 
§ 23305. Award through competition 
(a) IN GENERAL.—Except as provided in subsections (b) and (c), a con-
tract opportunity offered for award under the program shall be awarded on 
the basis of competition restricted to eligible program participants if— 
(1) there is a reasonable expectation that— 
(A) at least 2 eligible program participants will submit offers; 
and 
(B) an award can be made at a fair market price; and 
(2) the anticipated award price of the contract (including options) 
will exceed— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00152
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
153 
(A) $5,000,000, in the case of a contract opportunity assigned 
a North American Industry Classification System code for manu-
facturing; or 
(B) $3,000,000, in the case of any other contract opportunity. 
(b) RESTRICTED COMPETITION FOR SMALLER CONTRACTS.— 
(1) IN GENERAL.—The Associate Administrator may approve a re-
quest from a Federal agency to award a contract opportunity under the 
program on the basis of a competition restricted to eligible program 
participants even if the anticipated award price is not expected to ex-
ceed the dollar amounts specified in subsection (a)(2). 
(2) APPROVALS.—Approvals under paragraph (1) shall be granted 
only on a limited basis. 
(3) NONDELEGABILITY.—The authority of the Associate Adminis-
trator under paragraph (1) may not be delegated. 
(c) PROGRAM PARTICIPANTS OWNED AND CONTROLLED BY AN ECONOMI-
CALLY DISADVANTAGED INDIAN TRIBE.—Subsection (a) does not preclude 
the award of a sole source contract under section 23307 of this title, with-
out regard to the anticipated award price of the contract, to a program par-
ticipant that is owned and controlled by an economically disadvantaged In-
dian tribe. 
(d) PROGRAM PARTICIPANTS OWNED AND CONTROLLED BY NATIVE HA-
WAIIAN ORGANIZATIONS.—For purposes of contracting with agencies of the 
Department of Defense, subsection (a) does not preclude the award of a sole 
source contract under section 23307 of this title, without regard to the an-
ticipated award price of the contract, to a program participant that is 
owned and controlled by a Native Hawaiian organization. 
§ 23306. Participation by program participants in negotia-
tion of contracts to be awarded noncompetitively 
A program participant selected by the Administrator to perform a con-
tract to be let noncompetitively under the program shall, when practicable, 
participate in any negotiation of the terms and conditions of the contract. 
§ 23307. Sole source award 
(a) IN GENERAL.—The Administrator shall award a sole source contract 
under the program to a program participant recommended by the Federal 
agency offering the contract opportunity if— 
(1) the program participant is determined to be a responsible con-
tractor with respect to performance of the contract; 
(2) the award of the contract would be consistent with the program 
participant’s business plan; and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00153
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
154 
(3) the award of the contract would not result in the program par-
ticipant’s exceeding the requirements established by section 23328 of 
this title. 
(b) EQUITABLE GEOGRAPHIC DISTRIBUTION.—To the maximum extent 
practicable, the Administrator shall promote the equitable geographic dis-
tribution of sole source contracts awarded under this section. 
§ 23308. Annual certification regarding ownership and con-
trol 
A program participant shall annually certify that the program participant 
meets the requirements of section 23101(15) of this title regarding owner-
ship and control. 
§ 23309. Annual submission regarding economic disadvan-
tage 
A program participant shall annually submit to the Administrator— 
(1) a personal financial statement for each disadvantaged owner; 
(2) a record of all payments made by the program participant to 
each of its disadvantaged owners or to any person or entity affiliated 
with its disadvantaged owners; and 
(3) such other information as the Administrator considers necessary 
to make the determinations required by paragraphs (8) and (16) of 
section 23101 of this title and section 23310 of this title. 
§ 23310. Review of economic disadvantage and withdrawal 
of assets 
(a) ECONOMIC DISADVANTAGE.—If, on the basis of information provided 
by a program participant under section 23309 of this title or information 
otherwise obtained by the Administrator, the Administrator has reason to 
believe that the standards to establish economic disadvantage under section 
23101(15) of this title are not met, the Administrator shall conduct a re-
view to determine whether the program participant and its disadvantaged 
owners continue to be impaired in their ability to compete in the free enter-
prise system due to diminished capital and credit opportunities as compared 
with others in the same business area who are not socially disadvantaged. 
(b) WITHDRAWAL OF ASSETS.— 
(1) IN GENERAL.—If, on the basis of information provided by a pro-
gram participant under section 23309 of this title or information other-
wise obtained by the Administrator, the Administrator has reason to 
believe that the amount of funds or other assets withdrawn from a pro-
gram participant for the personal benefit of its disadvantaged owners 
or any person or entity affiliated with its disadvantaged owners may 
have been unduly excessive, the Administrator shall conduct a review 
to determine whether the withdrawal of funds or other assets was detri-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00154
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
155 
mental to the achievement of the targets, objectives, and goals con-
tained in the program participant’s business plan. 
(2) TERMINATION OR REQUIREMENT TO REINVEST ASSETS.—If the 
Administrator determines in a review under paragraph (1) that funds 
or other assets have been withdrawn to the detriment of the program 
participant’s business, the Administrator shall— 
(A) initiate a proceeding to terminate the program participant 
under section 23321 of this title; or 
(B) require an appropriate reinvestment of funds or other assets 
and such other steps as the Administrator considers necessary to 
ensure the protection of the program participant. 
§ 23311. Hearing on the record 
(a) OPPORTUNITY FOR HEARING.—Before taking an action described in 
subsection (b) with respect to a small business concern, the Administrator 
shall provide the small business concern an opportunity for a hearing on the 
record in accordance with chapter 5 of title 5. 
(b) ACTIONS.—The actions referred to in subsection (a) are— 
(1) denial of admission to the program based on a determination 
that— 
(A) a small business concern is not a small business concern 
owned and controlled by socially and economically disadvantaged 
individuals under section 23101(15) of this title; 
(B) one or more of the owners of a small business concern is 
not a socially disadvantaged individual under section 23101(17) of 
this title; or 
(C) one or more of the owners of a small business concern is 
not a socially and economically disadvantaged individual under 
section 23101(16); 
(2) graduation under section 23320 of this title; 
(3) termination under section 23321 of this title; and 
(4) denial of a request to issue a waiver under section 23316(b) of 
this title. 
(c) DECLINATION OF JURISDICTION.—The administrative law judge se-
lected to preside over a proceeding under this section shall decline to accept 
jurisdiction over any matter that— 
(1) does not, on its face, allege facts that, if proven to be true, would 
warrant reversal or modification of the Administrator’s position; 
(2) is untimely filed; 
(3) is not filed in accordance with the rules of procedure governing 
the proceeding; or 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00155
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
156 
(4) has been decided by or is the subject of an adjudication before 
a court of competent jurisdiction over such matters. 
(d) TIMING.—A proceeding under this section shall be completed and a 
decision rendered, insofar as practicable, not later than 90 days after a peti-
tion for a hearing is filed with the Office of Hearings and Appeals. 
(e) FINAL DECISION.—A decision rendered under this section shall be the 
final decision of the Administrator and shall be binding on the Adminis-
trator and persons in the employ of the Administrator. 
§ 23312. Program participant capability 
(a) ELIGIBILITY FOR ASSISTANCE.— 
(1) IN GENERAL.—A small business concern shall not be eligible for 
assistance under the program unless the Administrator determines that 
with contract, financial, technical, and management support, the small 
business concern— 
(A) will be able to perform contracts that may be awarded to 
the small business concern under 23304 of this title; and 
(B) has reasonable prospects for success in competing in the 
private sector. 
(2) PERIOD OF OPERATION.— 
(A) IN GENERAL.—The Administrator may prescribe a min-
imum period of time during which a prospective program partici-
pant must be in operation to meet the eligibility requirements of 
paragraph (1) only if the Administrator provides a waiver of the 
minimum period as provided in subparagraph (B). 
(B) WAIVER.—The Administrator shall provide that any re-
quirement that the Administrator establishes regarding the period 
of time during which a prospective program participant must have 
been in operation may be waived, and that a prospective program 
participant that otherwise meets the requirements of paragraph 
(1) shall be considered to have demonstrated reasonable prospects 
for success, if— 
(i) the individual or individuals upon whom eligibility is to 
be based have substantial and demonstrated business man-
agement experience; 
(ii) the prospective program participant has demonstrated 
technical expertise to carry out its business plan with a sub-
stantial likelihood for success; 
(iii) the prospective program participant has adequate cap-
ital to carry out its business plan; 
(iv) the prospective program participant has a record of 
successful performance on contracts from governmental and 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00156
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
157 
nongovernmental sources in the primary industry category in 
which the prospective program participant is seeking certifi-
cation; and 
(v) the prospective program participant has, or can dem-
onstrate its ability to timely obtain, the personnel, facilities, 
equipment, and any other requirements needed to perform 
such contracts. 
(b) CAPABILITY.— 
(1) CAPABILITY STATEMENTS.— 
(A) ANNUAL SUBMISSION.—A program participant shall annu-
ally submit to the Administrator a capability statement. 
(B) CONTENTS.—A capability statement shall— 
(i) briefly describe the program participant’s various con-
tract performance capabilities; and 
(ii) include the name and telephone number of the business 
opportunity specialist assigned the program participant. 
(C) STATEMENT
CATEGORIES.—The Administrator shall cat-
egorize capability statements as— 
(i) statements indicating capability primarily dependent on 
local contract support; and 
(ii) statements indicating capability primarily requiring a 
national marketing effort. 
(D) DISSEMINATION OF CAPABILITY STATEMENTS.— 
(i) LOCAL.—The Administrator shall disseminate capability 
statements described in subparagraph (C)(i) to appropriate 
contracting activities in the marketing area of each program 
participant, respectively. 
(ii) NATIONAL.—The Administrator shall disseminate capa-
bility statements described in subparagraph (C)(ii) to the di-
rectors of the offices of small and disadvantaged business uti-
lization for the appropriate Federal agencies, who shall fur-
ther distribute the capability statements to contracting activi-
ties with Federal agencies that may purchase the types of 
items or services described in the capability statements. 
(2) CONTACT BY CONTRACTING ACTIVITIES.—A contracting activity 
that receives a capability statement of a program participant under 
paragraph (1)(D) shall, within 60 days after receipt of the capability 
statement, contact the business opportunity specialist identified in the 
capability statement to indicate the number, type, and approximate dol-
lar value of contract opportunities that the contracting activity may 
award over the succeeding 12-month period and that may be appro-
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00157
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS
158 
priate to consider for award to program participants for which the con-
tracting activity has received capability statements. 
(3) FORECAST OF CONTRACT OPPORTUNITIES.— 
(A) IN GENERAL.—An executive agency that reports to the Fed-
eral Procurement Data System contract actions with an aggregate 
value in excess of $50,000,000 in any fiscal year shall— 
(i) prepare a forecast of expected contract opportunities or 
classes of contract opportunities for the next and succeeding 
fiscal years that program participants are capable of per-
forming; and 
(ii) periodically revise the forecast during the following 
year. 
(B) CONTENTS.—To the extent that the information is avail-
able, a forecast under subparagraph (A) shall specify— 
(i) the approximate number of individual contract opportu-
nities (and the number of opportunities within a class); 
(ii) the approximate dollar value, or range of dollar values, 
for each contract opportunity or class of contract opportuni-
ties; 
(iii) the anticipated time (by fiscal year quarter) for the 
issuance of a procurement request; and 
(iv) the activity responsible for the award and administra-
tion of the contract. 
(C) SUBMISSION OF FORECASTS.—Not later than 10 days after 
completion of a forecast under subparagraph (A), the head of the 
executive agency that prepared the forecast shall submit the fore-
cast to— 
(i) the director of the office of small and disadvantaged 
business utilization established under section 25109 of this 
title for the executive agency; and 
(ii) the Administrator. 
(D) SCOPE OF INFORMATION REPORTED.—A forecast submitted 
under subparagraph (C) may be limited to classes of items and 
services for which there are substantial annual purchases. 
(E) AVAILABILITY OF FORECASTS.—A forecast submitted under 
subparagraph (C) shall be available to small business concerns. 
§ 23313. Percentages of contract performance by program 
participants 
(a) IN GENERAL.—A program participant may not be awarded a contract 
under the program unless the program participant agrees that— 
VerDate Nov 24 2008 
00:04 Apr 23, 2009
Jkt 079200
PO 00000
Frm 00158
Fmt 6652
Sfmt 6221
E:\BILLS\H1983.IH
H1983
smartinez on PROD1PC63 with BILLS