I 
109TH CONGRESS 
1ST SESSION H. R. 2639
To establish a pilot program to provide low interest loans to nonprofit, 
community-based lending intermediaries, to provide midsize loans to small 
business concerns, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 25, 2005
Mr. RUSH introduced the following bill; which was referred to the Committee 
on Small Business 
A BILL 
To establish a pilot program to provide low interest loans 
to nonprofit, community-based lending intermediaries, to 
provide midsize loans to small business concerns, and 
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Inter-
mediary Lending Pilot Program Act of 2005’’. 
SEC. 2. FINDINGS. 
Congress finds the following:
(1) Small and emerging businesses, particularly 
startups and businesses that lack sufficient or con-
ventional collateral, continue to face barriers access-
ing midsized loans in amounts between $35,000 and 
$200,000, with affordable terms and conditions. 
(2) Consolidation in the banking industry has 
resulted in a decrease in the number of small, locally 
controlled banks with not more than $100,000,000 
in assets and has changed the method by which 
banks make small business credit decisions with—
(A) credit scoring techniques replacing re-
lationship-based lending, which often works to 
the disadvantage of small or startup businesses 
that do not conform with a banks standardized 
credit formulas; and 
(B) less flexible terms and conditions, 
which are often necessary for small and emerg-
ing businesses. 
(3) In the environment described in paragraphs 
(1) and (2), nonprofit intermediary lenders, includ-
ing community development corporations, provide fi-
nancial resources that supplement the small business 
lending and investments of a bank by—
(A) providing riskier, up front, or subordi-
nated capital;
(B) offering flexible terms and under-
writing procedures; and 
(C) providing technical assistance to busi-
nesses in order to reduce the transaction costs 
and risk exposure of banks. 
(4) Several Federal programs, including the 
Microloan Program under section 7(m) of the Small 
Business Act (15 U.S.C. 636(m)) and the Inter-
mediary Relending Program of the Department of 
Agriculture, have demonstrated the effectiveness of 
working through nonprofit intermediaries to address 
the needs of small business concerns that are unable 
to access capital through conventional sources. 
(5) More than 1,000 nonprofit intermediary 
lenders in the United States are—
(A) successfully providing financial and 
technical assistance to small and emerging busi-
nesses; 
(B) working with banks and other lenders 
to leverage additional capital for their business 
borrowers; and 
(C) creating employment opportunities for 
low income individuals through their lending 
and business development activities.
SEC. 3. SMALL BUSINESS INTERMEDIARY LENDING PILOT 
PROGRAM. 
(a) IN GENERAL.—Section 7 of the Small Business 
Act (15 U.S.C. 636) is amended by inserting after sub-
section (k) the following new subsection: 
‘‘(l) SMALL
BUSINESS
INTERMEDIARY
LENDING 
PROGRAM.—
‘‘(1) DEFINITIONS.—For purposes of this sub-
section—
‘‘(A) the term ‘intermediary’ means a pri-
vate, nonprofit entity that seeks to borrow, or 
has borrowed, funds from the Administration to 
provide midsize loans to small business con-
cerns under this subsection, including—
‘‘(i) a private, nonprofit community 
development corporation; 
‘‘(ii) a consortium of private, non-
profit organizations or nonprofit commu-
nity development corporations; 
‘‘(iii) a quasi-governmental economic 
development entity (such as a planning 
and development district), other than a 
State, county, or municipal government; 
and
‘‘(iv) an agency of or nonprofit entity 
established by a Native American Tribal 
Government; and 
‘‘(B) the term ‘midsize loan’ means a fixed 
rate loan of not less than $35,000 and not 
more than $200,000, made by an intermediary 
to a startup, newly established, or growing 
small business concern. 
‘‘(2) ESTABLISHMENT.—There is established a 
3-year small business intermediary lending pilot pro-
gram (referred to in this section as the ‘Program’), 
under which the Administration may provide direct 
loans to eligible intermediaries, for the purpose of 
making fixed interest rate midsize loans to startup, 
newly established, and growing small business con-
cerns. 
‘‘(3) PURPOSES.—The purposes of the small 
business intermediary lender pilot program are—
‘‘(A) to assist small business concerns in 
those areas suffering from a lack of credit due 
to poor economic conditions; 
‘‘(B) to create employment opportunities 
for low income individuals; 
‘‘(C) to establish a midsize loan program 
to be administered by the Administration to
provide loans to eligible intermediaries to enable 
such intermediaries to provide small scale loans, 
particularly loans in amounts averaging not 
more than $150,000, to startup, newly estab-
lished, or growing small business concerns for 
working capital or the acquisition of materials, 
supplies, or equipment; 
‘‘(D) to test the effectiveness of nonprofit 
intermediaries—
‘‘(i) as a delivery system for a midsize 
loan program; and 
‘‘(ii) in addressing the credit needs of 
small businesses and leveraging other 
sources of credit; and 
‘‘(E) to determine the advisability and fea-
sibility of implementing a midsize loan program 
nationwide. 
‘‘(4) ELIGIBILITY
FOR
PARTICIPATION.—An 
intermediary shall be eligible to receive loans under 
the Program if the intermediary has at least 1 year 
of experience making loans to startup, newly estab-
lished, or growing small business concerns. 
‘‘(5) LOANS TO INTERMEDIARIES.—
‘‘(A) APPLICATION.—Each intermediary 
desiring a loan under this subsection shall sub-
mit an application to the Administration that 
describes—
‘‘(i) the type of small business con-
cerns to be assisted; 
‘‘(ii) the size and range of loans to be 
made; 
‘‘(iii) the geographic area to be served 
and its economic, poverty, and unemploy-
ment characteristics; 
‘‘(iv) the status of small business con-
cerns in the area to be served and an anal-
ysis of the availability of credit; and 
‘‘(v) the qualifications of the applicant 
to carry out this subsection. 
‘‘(B) LOAN LIMITS.—Notwithstanding sub-
section (a)(3), no loan may be made to an 
intermediary under this subsection if the total 
amount outstanding and committed to the 
intermediary from the business loan and invest-
ment fund established by this Act would, as a 
result of such loan, exceed $1,000,000 during 
the participation of the intermediary in the Pro-
gram.
‘‘(C) LOAN
DURATION.—Loans made by 
the Administration under this subsection shall 
be for a maximum term of 20 years. 
‘‘(D) APPLICABLE
INTEREST
RATES.—
Loans made by the Administration to an inter-
mediary under the Program shall bear an an-
nual interest rate equal to 1.00 percent. 
‘‘(E) FEES; COLLATERAL.—The Adminis-
tration may not charge any fees or require col-
lateral with respect to any loan made to an 
intermediary under this subsection. 
‘‘(F) LEVERAGE.—Any loan to a small 
business concern under this subsection shall not 
exceed 75 percent of the total cost of the 
project funded by such loan, with the remaining 
funds being leveraged from other sources, in-
cluding—
‘‘(i) banks or credit unions; 
‘‘(ii) community development financial 
institutions; and 
‘‘(iii) other sources with funds avail-
able to the intermediary lender. 
‘‘(G) DELAYED PAYMENTS.—The Adminis-
tration shall not require the repayment of prin-
cipal or interest on a loan made to an inter-
mediary under the Program during the first 2 
years of the loan. 
‘‘(6) 
PROGRAM
FUNDING
FOR
MIDSIZE 
LOANS.—
‘‘(A) NUMBER OF PARTICIPANTS.—Under 
the Program, the Administration may provide 
loans, on a competitive basis, to not more than 
20 intermediaries. 
‘‘(B) EQUITABLE DISTRIBUTION OF INTER-
MEDIARIES.—The Administration shall select 
and provide funding under the Program to such 
intermediaries as will ensure geographic diver-
sity and representation of urban and rural com-
munities. 
‘‘(7) REPORT TO CONGRESS.—
‘‘(A) INITIAL REPORT.—Not later than 30 
months after the date of enactment of the 
Small Business Intermediary Lending Pilot 
Program Act of 2005, the Administration shall 
submit a report containing an evaluation of the 
effectiveness of the Program to—
‘‘(i) the Committee on Small Business 
and Entrepreneurship of the Senate; and 
‘‘(ii) the Committee on Small Busi-
ness of the House of Representatives.
‘‘(B) ANNUAL REPORT.—Not later than 12 
months after the date of enactment of the 
Small Business Intermediary Lending Pilot 
Program Act of 2005, and annually thereafter, 
the Administration shall submit a report con-
taining an evaluation of the effectiveness of the 
Program to the Committees described in sub-
paragraph (A). 
‘‘(C) CONTENTS.—The reports submitted 
under subparagraphs (A) and (B) shall in-
clude—
‘‘(i) the numbers and locations of the 
intermediaries receiving funds to provide 
midsize loans; 
‘‘(ii) the amounts of each loan to an 
intermediary; 
‘‘(iii) the numbers and amounts of 
midsize loans made by intermediaries to 
small business concerns; 
‘‘(iv) the repayment history of each 
intermediary; 
‘‘(v) a description of the loan portfolio 
of each intermediary, including the extent 
to which it provides midsize loans to small
business concerns in rural and economi-
cally depressed areas; 
‘‘(vi) an estimate of the number of low 
income individuals who have been em-
ployed as a direct result of the Program; 
and 
‘‘(vii) any recommendations for legis-
lative changes that would improve the op-
eration of the Program.’’. 
(b) RULEMAKING AUTHORITY.—Not later than 180 
days after the date of enactment of this Act, the Adminis-
trator shall issue regulations to carry out section 7(l) of 
the Small Business Act, as added by subsection (a). 
(c) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There is authorized to be 
appropriated to the Small Business Administration 
such sums as may be necessary for each of fiscal 
years 2006 through 2008 to provide $20,000,000 in 
loans under section 7(l) of the Small Business Act, 
as added by subsection (a). 
(2) AVAILABILITY.—Any amounts appropriated 
pursuant to paragraph (1) shall remain available 
until expended.
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