IB 
Union Calendar No. 75
108TH CONGRESS 
1ST SESSION 
H. R. 923
[Report No. 108–153] 
To amend the Small Business Investment Act of 1958 to allow certain 
premier certified lenders to elect to maintain an alternative loss reserve. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 26, 2003
Mr. DOOLITTLE introduced the following bill; which was referred to the 
Committee on Small Business 
JUNE 12, 2003 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on February 26, 2003] 
A BILL 
To amend the Small Business Investment Act of 1958 to 
allow certain premier certified lenders to elect to main-
tain an alternative loss reserve.
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 ‘‘Premier Certified Lend-
ers Program Improvement Act of 2003’’. 
SEC. 2. LOSS RESERVES OF PREMIER CERTIFIED LENDERS 
TEMPORARILY DETERMINED ON THE BASIS 
OF 
OUTSTANDING 
BALANCE 
OF 
DEBEN-
TURES. 
Paragraph (6) of section 508(c) of the Small Business 
Investment Act of 1958 (15 U.S.C. 697e(c)) is amended—
(1) by striking ‘‘The Administration’’ and in-
serting the following: 
‘‘(A) IN
GENERAL.—The Administration’’; 
and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(B) TEMPORARY
REDUCTION
BASED
ON 
OUTSTANDING
BALANCE.—Notwithstanding sub-
paragraph (A), during the 2-year period begin-
ning on the date that is 90 days after the date 
of the enactment of this subparagraph, the Ad-
ministration shall allow the certified develop-
ment company to withdraw from the loss reserve 
such amounts as are in excess of 1 percent of the 
aggregate outstanding balances of debentures to 
which such loss reserve relates. The preceding 
sentence shall not apply with respect to any de-
benture before 100 percent of the contribution de-
scribed in paragraph (4) with respect to such de-
benture has been made.’’. 
SEC. 3. ALTERNATIVE LOSS RESERVE PILOT PROGRAM FOR 
CERTAIN PREMIER CERTIFIED LENDERS. 
(a) IN GENERAL.—Subsection (c) of section 508 of the 
Small Business Investment Act of 1958 (15 U.S.C. 697e) 
is amended by adding at the end the following new para-
graphs: 
‘‘(7) ALTERNATIVE LOSS RESERVE.—
‘‘(A) ELECTION.—With respect to any eligi-
ble calendar quarter, any qualified high loss re-
serve PCL may elect to have the requirements of 
this paragraph apply in lieu of the requirements 
of paragraphs (2) and (4) for such quarter. 
‘‘(B) CONTRIBUTIONS.—
‘‘(i) 
ORDINARY
RULES
INAPPLI-
CABLE.—Except as provided under clause 
(ii) and paragraph (5), a qualified high loss 
reserve PCL that makes the election de-
scribed in subparagraph (A) with respect to 
a calendar quarter shall not be required to 
make contributions to its loss reserve during 
such quarter.
‘‘(ii) BASED
ON
LOSS.—A qualified 
high loss reserve PCL that makes the elec-
tion described in subparagraph (A) with re-
spect to any calendar quarter shall, before 
the last day of such quarter, make such con-
tributions to its loss reserve as are necessary 
to ensure that the amount of the loss reserve 
of the PCL is—
‘‘(I) not less than $100,000; and 
‘‘(II) sufficient, as determined by 
a qualified independent auditor, for 
the PCL to meet its obligations to pro-
tect the Federal Government from risk 
of loss. 
‘‘(iii) CERTIFICATION.—Before the end 
of any calendar quarter for which an elec-
tion is in effect under subparagraph (A), 
the head of the PCL shall submit to the Ad-
ministrator a certification that the loss re-
serve of the PCL is sufficient to meet such 
PCL’s obligation to protect the Federal Gov-
ernment from risk of loss. Such certification 
shall be in such form and submitted in such 
manner as the Administrator may require 
and shall be signed by the head of such PCL
and the auditor making the determination 
under clause (ii)(II). 
‘‘(C) DISBURSEMENTS.—
‘‘(i) ORDINARY RULE INAPPLICABLE.—
Paragraph (6) shall not apply with respect 
to any qualified high loss reserve PCL for 
any calendar quarter for which an election 
is in effect under subparagraph (A). 
‘‘(ii) EXCESS FUNDS.—At the end of 
each calendar quarter for which an election 
is in effect under subparagraph (A), the Ad-
ministration shall allow the qualified high 
loss reserve PCL to withdraw from its loss 
reserve the excess of—
‘‘(I) the amount of the loss reserve, 
over 
‘‘(II) the greater of $100,000 or 
the amount which is determined under 
subparagraph (B)(ii) to be sufficient to 
meet the PCL’s obligation to protect 
the Federal Government from risk of 
loss. 
‘‘(D) RECONTRIBUTION.—If the require-
ments of this paragraph apply to a qualified 
high loss reserve PCL for any calendar quarter
‘‘(i) Currency rate. 
‘‘(ii) Delinquency rate. 
‘‘(iii) Default rate. 
‘‘(iv) Liquidation rate. 
‘‘(v) Loss rate. 
‘‘(H) QUALIFIED INDEPENDENT AUDITOR.—
For purpose of this paragraph, the term ‘quali-
fied independent auditor’ means any auditor 
who—
‘‘(i) is compensated by the qualified 
high loss reserve PCL; 
‘‘(ii) is independent of such PCL; and 
‘‘(iii) has been approved by the Ad-
ministrator during the preceding year. 
‘‘(I) PCLP LOAN.—For purposes of this 
paragraph, the term ‘PCLP loan’ means any 
loan guaranteed under this section. 
‘‘(J) ELIGIBLE CALENDAR QUARTER.—For 
purposes of this paragraph, the term ‘eligible cal-
endar quarter’ means—
‘‘(i) the first calendar quarter that be-
gins after the end of the 90-day period be-
ginning with the date of the enactment of 
this paragraph; and
‘‘(ii) the 7 succeeding calendar quar-
ters. 
‘‘(K) CALENDAR
QUARTER.—For purposes 
of this paragraph, the term ‘calendar quarter’ 
means—
‘‘(i) the period which begins on Janu-
ary 1 and ends on March 31 of each year; 
‘‘(ii) the period which begins on April 
1 and ends on June 30 of each year; 
‘‘(iii) the period which begins on July 
1 and ends on September 30 of each year; 
and 
‘‘(iv) the period which begins on Octo-
ber 1 and ends on December 31 of each 
year. 
‘‘(L) REGULATIONS.—Not later than 45 
days after the date of the enactment of this para-
graph, the Administrator shall publish in the 
Federal Register and transmit to the Congress 
regulations to carry out this paragraph. Such 
regulations shall include provisions relating to—
‘‘(i) the approval of auditors under 
subparagraph (H); and 
‘‘(ii) the designation of qualified high 
loss reserve PCLs under subparagraph (F),
including the determination of whether a 
process for analyzing risk of loss is appro-
priate and effective for purposes of subpara-
graph (F)(ii). 
‘‘(8) BUREAU OF PCLP OVERSIGHT.—
‘‘(A) ESTABLISHMENT.—There is hereby es-
tablished in the Small Business Administration 
a bureau to be known as the Bureau of PCLP 
Oversight. 
‘‘(B) PURPOSE.—The Bureau of PCLP 
Oversight shall carry out such functions of the 
Administration under this subsection as the Ad-
ministrator may designate. 
‘‘(C) DEADLINE.—Not later than 90 days 
after the date of the enactment of this Act—
‘‘(i) the Administrator shall ensure 
that the Bureau of PCLP Oversight is pre-
pared to carry out any functions designated 
under subparagraph (B), and 
‘‘(ii) the Office of the Inspector General 
of the Administration shall report to the 
Congress on the preparedness of the Bureau 
of PCLP Oversight to carry out such func-
tions.’’.
(b) INCREASED REIMBURSEMENT FOR LOSSES RE-
LATED TO DEBENTURES ISSUED DURING ELECTION PE-
RIOD.—Subparagraph (C) of section 508(b)(2) of the Small 
Business Investment Act of 1958 (15 U.S.C. 697e(b)(2)) is 
amended by inserting ‘‘(15 percent in the case of any such 
loss attributable to a debenture issued by the company dur-
ing any period for which an election is in effect under sub-
section (c)(7) for such company)’’ before ‘‘; and’’. 
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (D) of section 508(b)(2) of the 
Small Business Investment Act of 1958 (15 U.S.C. 
697e(b)(2)) is amended by striking ‘‘subsection (c)(2)’’ 
and inserting ‘‘subsection (c)’’. 
(2) Paragraph (5) of section 508(c) of the Small 
Business Investment Act of 1958 (15 U.S.C. 697e(c)) 
is amended by striking ‘‘10 percent’’. 
(d) STUDY AND REPORT.—
(1) IN GENERAL.—The Administrator shall enter 
into a contract with a Federal agency experienced in 
community development lending and financial regu-
lation or with a member of the Federal Financial In-
stitutions Examinations Council to study and pre-
pare a report regarding—
(A) the extent to which statutory require-
ments have caused overcapitalization in the loss