I
105TH CONGRESS
1ST SESSION
H. R. 1734
To amend the Small Business Investment Act of 1958, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 22, 1997
Mr. LAFALCE (for himself, Mr. SISISKY, and Mr. WEYGAND) introduced the
following bill; which was referred to the Committee on Small Business
A BILL
To amend the Small Business Investment Act of 1958, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
That this Act may be cited as the ‘‘Certified Development
Company Enhancement and Improvement Act of 1997’’.
SEC. 2. Section 20 of the Small Business Act (15
U.S.C. 631 note) is amended by inserting the following
new subsection:
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‘‘(r) The following program levels are authorized in
financings as provided in section 7(a)(13) and section 504
of the Small Business Investment Act of 1958:
‘‘(1) $3,000,000,000 for fiscal year 1998;
‘‘(2) $3,500,000,000 for fiscal year 1999; and
‘‘(3) $4,500,000,000 for fiscal year 2000.’’.
SEC. 3. Section 503 of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 697) is amended—
(1) by striking subsection (b)(7)(A) and insert-
ing the following:
‘‘(A) assesses and collects a fee, which
shall be payable by the borrower, in an amount
equal to 0.9375 percent per year of the out-
standing balance of the loan; and’’;
(2) by striking from subsection (d)(2) ‘‘equal to
50 basis points’’ and inserting ‘‘equal to not more
than 50 basis points,’’;
(3) by adding the following at the end of sub-
section (d)(2): ‘‘The amount of the fee authorized
herein shall be established annually by the Adminis-
tration in the minimal amount necessary to reduce
the cost (as that term is defined in section 502 of
the Federal Credit Reform Act of 1990) to the Ad-
ministration of purchasing and guaranteeing deben-
tures under this Act to zero.’’; and
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(4) by striking from subsection (f) ‘‘1997’’ and
inserting ‘‘2000’’.
SEC. 4. Section 508(a) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 697e(a)) is amended by
striking ‘‘not more than 15’’.
SEC. 5. Section 508(b)(2) of the Small Business In-
vestment Act of 1958 (15 U.S.C. 697e(b)(2)) is amended
by striking paragraphs (A) and (B) and inserting:
‘‘(A) is an active certified development
company in good standing and has been an ac-
tive participant in the accredited lenders pro-
gram during the entire 12-month period preced-
ing the date on which the company submits an
application under paragraph (1), except that
the Administration may waive this requirement
if the company is qualified to participate in the
accredited lenders program;
‘‘(B) has a history (i) of submitting to the
Administration adequately analyzed debenture
guarantee application packages and (ii) of prop-
erly closing section 504 loans and servicing its
loan portfolio; and’’.
SEC. 6. Section 508(c) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 697e(c)) is amended to read
as follows:
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‘‘(c) LOSS RESERVE.—
‘‘(1) ESTABLISHMENT.—A company designated
as a premier certified lender shall establish a loss re-
serve for financing approved pursuant to this sec-
tion.
‘‘(2) AMOUNT.—The amount of the loss reserve
shall be equal to 10 percent of the amount of the
company’s exposure as determined under subsection
(b)(2)(C).
‘‘(3) ASSETS.—The loss reserve shall be com-
prised of any combination of the following types of
assets:
‘‘(A) segregated funds on deposit in an ac-
count or accounts with a federally insured de-
pository institution or institutions selected by
the company, subject to a collateral assignment
in favor of, and in a format acceptable to, the
Administration; or
‘‘(B) irrevocable letter or letters of credit,
with a collateral assignment in favor of, and a
commercially reasonable format acceptable to,
the Administration.
‘‘(4) CONTRIBUTIONS.—The company shall
make contributions to the loss reserve, either cash or
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‘‘(5) Not to exceed 25 per centum of the project
may be leased by the assisted small business: Pro-
vided, That the tenant is a small business concern:
And provided further, That the assisted small busi-
ness shall be required to occupy and use not less
than 55 per centum of the space in the project after
the execution of any leases authorized in this sec-
tion.’’.
SEC. 16. Section 502(3) of the Small Business In-
vestment Act of 1958 (15 U.S.C. 696(3)) is amended by
inserting the following new paragraphs:
‘‘(D) SELLER FINANCING.—Seller provided
financing may be used to meet the requirements
of—
‘‘(i) paragraph (B), if the seller subor-
dinates his interest in the property to the
debenture guaranteed by the Administra-
tion; and
‘‘(ii) not to exceed 50 percent of the
amounts required by paragraph (C).
‘‘(E) COLLATERAL REQUIREMENTS.—Col-
lateral provided by the small business concern
shall be valued in an amount estimated as the
reasonable value of the property by a willing
buyer and a willing seller and shall include
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property not a part of the project being fi-
nanced only if the Administration determines to
impose such a requirement on a case-by-case
basis.’’.
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