I
105TH CONGRESS
1ST SESSION
H. R. 2261
To reauthorize and amend the programs of the Small Business Act and
the Small Business Investment Act, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 25, 1997
Mr. TALENT (for himself and Mr. LAFALCE) introduced the following bill;
which was referred to the Committee on Small Business
A BILL
To reauthorize and amend the programs of the Small Busi-
ness Act and the Small Business Investment Act, 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; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Small Business Assistance Programs Reauthorization
Amendments Acts of 1997’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title; table of contents.
TITLE I—AUTHORIZATIONS
Sec. 101. Authorizations.
TITLE II—FINANCIAL PROGRAMS
Subtitle A—General Business Loans
Sec. 201. Securitization.
Sec. 202. Background check of loan applicants.
Subtitle B—Certified Development Company Program
Sec. 221. Reauthorization of fees.
Sec. 222. PCLP participation
Sec. 223. PCLP eligibility.
Sec. 224. Loss reserves.
Sec. 225. Goals.
Sec. 226. Technical amendments.
Sec. 227. Promulgation of regulations.
Sec. 228. Technical amendment.
Sec. 229. Repeal.
Sec. 230. Loan servicing and liquidation.
Sec. 231. Use of proceeds.
Sec. 232. Lease of property.
Sec. 233. Seller financing.
Sec. 234. Preexisting conditions.
Subtitle C—Small Business Investment Company Program
Sec. 241. 5-year commitments.
Sec. 242. Program reform.
Sec. 243. Fees.
Sec. 244. Examination fees.
Subtitle D—Microloan Program
Sec. 251. Microloan program extension.
TITLE III—WOMEN’S BUSINESS ENTERPRISES
Sec. 301. Reports.
Sec. 302. Council duties.
Sec. 303. Council membership.
Sec. 304. Authorization of appropriations.
Sec. 305. Women’s business centers.
Sec. 306. Office of Women’s Business Ownership.
TITLE IV—COMPETITIVENESS PROGRAM
Sec. 401. Program term.
Sec. 402. Monitoring agency performance.
Sec. 403. Reports to Congress.
Sec. 404. Small business participation in dredging.
Sec. 405. Technical amendment.
TITLE V—MISCELLANEOUS PROVISIONS
Sec. 501. Small business development centers.
Sec. 502. Small business export promotion.
Sec. 503. Pilot preferred surety bond guarantee program extension.
Sec. 504. Very small business concerns.
TITLE I—AUTHORIZATIONS
SEC. 101. AUTHORIZATIONS.
Section 20 of the Small Business Act (15 U.S.C. 631
note) is amended by striking subsections (l) through (q)
and inserting the following:
‘‘(l) The following program levels are authorized for
fiscal year 1998:
‘‘(1) For the programs authorized by this Act,
the Administration is authorized to make—
‘‘(A) $40,000,000 in technical assistance
grants, as provided in section 7(m); and
‘‘(B) $60,000,000 in loans, as provided in
section 7(m).
‘‘(2) For the programs authorized by this Act,
the 
Administration 
is 
authorized 
to 
make
$15,040,000,000 in deferred participation loans and
other financings. Of such sum, the Administration is
authorized to make—
‘‘(A) $11,000,000,000 in general business
loans as provided in section 7(a);
‘‘(B) $3,000,000,000 in financings as pro-
vided in section 7(a)(13) of this Act and section
504 of the Small Business Investment Act of
1958;
‘‘(C) $1,000,000,000 in loans as provided
in section 7(a)(21); and
‘‘(D) $40,000,000 in loans as provided in
section 7(m).
‘‘(3) For the programs authorized by title III of
the Small Business Investment Act of 1958, the Ad-
ministration is authorized to make—
‘‘(A) $600,000,000 in purchases of partici-
pating securities; and
‘‘(B) $500,000,000 in guarantees of de-
bentures.
‘‘(4) For the programs authorized by part B of
title IV of the Small Business Investment Act of
1958, the Administration is authorized to enter into
guarantees not to exceed $2,000,000,000, of which
not more than $650,000,000 may be in bonds ap-
proved pursuant to section 411(a)(3) of that Act.
‘‘(5) The Administration is authorized to make
grants or enter into cooperative agreements—
‘‘(A) for the Service Corps of Retired Ex-
ecutives program authorized by section 8(b)(1),
$4,000,000; and
‘‘(B) for activities of small business devel-
opment centers pursuant to section 21(c)(3)(G),
$15,000,000, to remain available until ex-
pended.
‘‘(m)(1) There are authorized to be appropriated to
the Administration for fiscal year 1998 such sums as may
be necessary to carry out this Act, including administra-
tive expenses and necessary loan capital for disaster loans
pursuant to section 7(b), and to carry out the Small Busi-
ness Investment Act of 1958, including salaries and ex-
penses of the Administration.
‘‘(2) Notwithstanding paragraph (1), for fiscal year
1998—
‘‘(A) no funds are authorized to be provided to
carry out the loan program authorized by section
7(a)(21) except by transfer from another Federal
department or agency to the Administration, unless
the program level authorized for general business
loans under subsection (l)(2)(A) is fully funded; and
‘‘(B) the Administration may not approve loans
on behalf of the Administration or on behalf of any
other department or agency, by contract or other-
wise, under terms and conditions other than those
specifically authorized under this Act or the Small
Business Investment Act of 1958, except that it may
approve loans under section 7(a)(21) of this Act in
gross amounts of not more than $1,250,000.
‘‘(n) The following program levels are authorized for
fiscal year 1999:
‘‘(1) For the programs authorized by this Act,
the Administration is authorized to make—
‘‘(A) $60,000,000 in technical assistance
grants as provided in section 7(m); and
‘‘(B) $60,000,000 in loans, as provided in
section 7(m).
‘‘(2) For the programs authorized by this Act,
the 
Administration 
is 
authorized 
to 
make
$16,540,000,000 in deferred participation loans and
other financings. Of such sum, the Administration is
authorized to make—
‘‘(A) $12,000,000,000 in general business
loans as provided in section 7(a);
‘‘(B) $3,500,000,000 in financings as pro-
vided in section 7(a)(13) of this Act and section
504 of the Small Business Investment Act of
1958;
‘‘(C) $1,000,000,000 in loans as provided
in section 7(a)(21); and
‘‘(D) $40,000,000 in loans as provided in
section 7(m).
‘‘(3) For the programs authorized by title III of
the Small Business Investment Act of 1958, the Ad-
ministration is authorized to make—
‘‘(A) $700,000,000 in purchases of partici-
pating securities; and
‘‘(B) $650,000,000 in guarantees of de-
bentures.
‘‘(4) For the programs authorized by part B of
title IV of the Small Business Investment Act of
1958, the Administration is authorized to enter into
guarantees not to exceed $2,000,000,000, of which
not more than $650,000,000 may be in bonds ap-
proved pursuant to section 411(a)(3) of that Act.
‘‘(5) The Administration is authorized to make
grants or enter cooperative agreements—
‘‘(A) for the Service Corps of Retired Ex-
ecutives program authorized by section 8(b)(1),
$4,500,000; and
‘‘(B) for activities of small business devel-
opment centers pursuant to section 21(c)(3)(G),
not to exceed $15,000,000, to remain available
until expended.
‘‘(o)(1) There are authorized to be appropriated to
the Administration for fiscal year 1999 such sums as may
be necessary to carry out this Act, including administra-
tive expenses and necessary loan capital for disaster loans
pursuant to section 7(b), and to carry out the Small Busi-
ness Investment Act of 1958, including salaries and ex-
penses of the Administration.
‘‘(2) Notwithstanding paragraph (1), for fiscal year
1999—
‘‘(A) no funds are authorized to be provided to
carry out the loan program authorized by section
7(a)(21) except by transfer from another Federal
department or agency to the Administration, unless
the program level authorized for general business
loans under subsection (n)(2)(A) is fully funded; and
‘‘(B) the Administration may not approve loans
on behalf of the Administration or on behalf of any
other department or agency, by contract or other-
wise, under terms and conditions other than those
specifically authorized under this Act or the Small
Business Investment Act of 1958, except that it may
approve loans under section 7(a)(21) of this Act in
gross amounts of not more than $1,250,000.
‘‘(p) The following program levels are authorized for
fiscal year 2000:
‘‘(1) For the programs authorized by this Act,
the Administration is authorized to make—
‘‘(A) $75,000,000 in technical assistance
grants as provided in section 7(m); and
‘‘(B) $60,000,000 in direct loans, as pro-
vided in section 7(m).
‘‘(2) For the programs authorized by this Act,
the 
Administration 
is 
authorized 
to 
make
$19,040,000,000 in deferred participation loans and
other financings. Of such sum, the Administration is
authorized to make—
‘‘(A) $13,500,000,000 in general business
loans as provided in section 7(a);
‘‘(B) $4,500,000,000 in financings as pro-
vided in section 7(a)(13) of this Act and section
504 of the Small Business Investment Act of
1958;
‘‘(C) $1,000,000,000 in loans as provided
in section 7(a)(21); and
‘‘(D) $40,000,000 in loans as provided in
section 7(m).
‘‘(3) For the programs authorized by title III of
the Small Business Investment Act of 1958, the Ad-
ministration is authorized to make—
‘‘(A) $850,000,000 in purchases of partici-
pating securities; and
‘‘(2) Notwithstanding paragraph (1), for fiscal year
2000—
‘‘(A) no funds are authorized to be provided to
carry out the loan program authorized by section
7(a)(21) except by transfer from another Federal
department or agency to the Administration, unless
the program level authorized for general business
loans under subsection (p)(2)(A) is fully funded; and
‘‘(B) the Administration may not approve loans
on behalf of the Administration or on behalf of any
other department or agency, by contract or other-
wise, under terms and conditions other than those
specifically authorized under this Act or the Small
Business Investment Act of 1958, except that it may
approve loans under section 7(a)(21) of this Act in
gross amounts of not more than $1,250,000.’’.
TITLE II—FINANCIAL
PROGRAMS
Subtitle A—General Business
Loans
SEC. 201. SECURITIZATION.
The Administrator shall prescribe final regulations
permitting bank and nonbank lenders to sell or securitize
the nonguaranteed portion of loans made under section
7(a) of the Small Business Act (15 U.S.C. 636) that were
originated or purchased by the lender, provided there is
recourse to the lender for any defaulted loans. For loans
sold or securitized without recourse, the Administrator
shall prescribe regulations establishing minimum retention
requirements to ensure that lenders selling or securitizing
such loans retain sufficient risk to protect taxpayer inter-
est. These regulations shall be promulgated and take ef-
fect within 120 days of the date of enactment of this Act.
SEC. 202. BACKGROUND CHECK OF LOAN APPLICANTS.
Section 7(a)(1) of the Small Business Act (15 U.S.C.
636(a)(1)) is amended by striking ‘‘(1)’’ and inserting the
following:
‘‘(1)(A) CREDIT ELSEWHERE.—, and by adding
the following new paragraph at the end:
‘‘(B) BACKGROUND CHECKS.—Prior to the ap-
proval of any loan made pursuant to this subsection,
or section 503 of the Small Business Investment
Act, the Administrator shall verify the applicant’s
criminal background, or lack thereof, through the
use of the National Crime Information Center com-
puter system at the Federal Bureau of Investigation.
However, evidence of a criminal background shall
not be used as the sole reason for the denial of a
loan under this subsection.
Subtitle B—Certified Development
Company Program
SEC. 221. REAUTHORIZATION OF FEES.
Section 503 of the Small Business Investment 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
(4) by striking from subsection (f) ‘‘1997’’ and
inserting ‘‘2000’’.
SEC. 222. PCLP PARTICIPATION.
Section 508(a) of the Small Business Investment Act
of 1958 (15 U.S.C. 697e(a)) is amended by striking ‘‘not
more than 15’’.
SEC. 223. PCLP ELIGIBILITY.
Section 508(b)(2) of the Small Business Investment
Act of 1958 (15 U.S.C. 697e(b)(2)) is amended by strik-
ing 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. 224. LOSS RESERVES.
Section 508(c) of the Small Business Investment Act
of 1958 (15 U.S.C. 697e(c)) is amended to read as follows:
‘‘(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
letters of credit as provided above, in the following
amounts and at the following intervals:
‘‘(A) 50 percent when a debenture is
closed;
‘‘(B) 25 percent additional not later than
1 year after a debenture is closed; and
‘‘(C) 25 percent additional not later than
2 years after a debenture is closed.
‘‘(5) REPLENISHMENT.—If a loss has been sus-
tained by the Administration, any portion of the loss
reserve, and other funds provided by the premier
company as necessary, may be used to reimburse the
Administration for the company’s 10 percent share
of the loss as provided in subsection (b)(2)(C). If the
company utilizes the reserve, within 30 days it shall
replace an equivalent amount of funds.
‘‘(6) 
DISBURSEMENTS.—The 
Administration
shall allow the certified development company to
withdraw from the loss reserve amounts attributable
to any debenture which has been repaid.’’.
SEC. 225. GOALS.
Section 508 of the Small Business Investment Act
of 1958 (15 U.S.C. 697e) is amended by inserting the fol-
lowing after subsection (d) and by redesignating sub-
sections (e) to (i) as (f) to (j):
‘‘(e) PROGRAM GOALS.—Certified development com-
panies participating in this program shall establish a goal
SEC. 232. LEASE OF PROPERTY.
Section 502 of the Small Business Investment Act
of 1958 (15 U.S.C. 696) is amended by adding the follow-
ing new subsection:
‘‘(5) Not to exceed 25 percent of any project
may be permanently leased by the assisted small
business: Provided, That the assisted small business
shall be required to occupy and use not less than 55
percent of the space in the project after the execu-
tion of any leases authorized in this section.’’.
SEC. 233. SELLER FINANCING AND COLLATERALIZATION.
Section 502(3) of the Small Business Investment Act
of 1958 (15 U.S.C. 696(3)) is amended by inserting the
following new subparagraphs:
‘‘(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) COLLATERALIZATION.—The collateral
provided by the small business concern gen-
erally shall include a subordinate lien position
on the property being financed under this title,
and is only one of the factors to be evaluated
in the credit determination. Additional collat-
eral shall be required only if the Administration
determines, on a case by case basis, that addi-
tional security is necessary to protect the inter-
est of the Government.’’.
SEC. 234. PREEXISTING CONDITIONS.
Section 502 of the Small Business Investment Act
of 1958 (15 U.S.C. 696) is amended by adding the follow-
ing new paragraph:
‘‘(5) Any loan authorized under this section
shall not be denied or delayed for approval by the
Administration due to concerns over preexisting en-
vironmental conditions: Provided, That the develop-
ment company provides the Administration a letter
issued by the appropriate State or Federal environ-
mental protection agency specifically stating that the
environmental agency will not institute any legal
proceedings against the borrower or, in the event of
a default, the development company or the Adminis-
tration based on the preexisting environmental con-
ditions: Provided further, That the borrower shall
agree to provide environmental agencies access to
the property for any reasonable and necessary reme-
diation efforts or inspections.’’.
Subtitle C—Small Business
Investment Company Program
SEC. 241. 5-YEAR COMMITMENTS.
Section 20(a)(2) of the Small Business Act (15
U.S.C. 631 note) is amended in the last sentence by strik-
ing ‘‘the following fiscal year’’ and inserting ‘‘any one or
more of the 4 subsequent fiscal years’’.
SEC. 242. PROGRAM REFORM.
(a) TAX DISTRIBUTIONS.—Section 303(g)(8) of the
Small Business Investment Act of 1958 (15 U.S.C.
683(g)(8)) is amended in the first sentence—
(1) by inserting ‘‘, for each calendar quarter or
once annually, as the company may elect,’’ after
‘‘the company may’’; and
(2) by inserting ‘‘for the preceding quarter or
year’’ before the period.
(b) LEVERAGE FEE.—Section 303(i) of the Small
Business Investment Act of 1958 (15 U.S.C. 683(i)) is
amended by striking ‘‘, payable upon’’ and all that follows
before the period and inserting the following: ‘‘in the fol-
lowing manner: 1 percent upon the date on which the Ad-
ministration enters into any commitment for such leverage
with the licensee, and the balance of 2 percent (or 3 per-
cent in which case in which no commitment has been en-
tered into by the Administration) on the date on which
the leverage is drawn by the licensee’’.
(c) PERIODIC
ISSUANCE
OF
GUARANTEES
AND
TRUST CERTIFICATES.—Section 320 of the Small Busi-
ness Investment Act of 1958 (15 U.S.C. 687m) is amend-
ed by striking ‘‘three months’’ and inserting ‘‘6 months’’.
(d) INDEXING FOR LEVERAGE.—Section 303 of the
Small Business Investment Act of 1958 (15 U.S.C. 683)
is amended—
(1) in subsection (b)—
(A) in paragraph (2), by adding at the end
the following:
‘‘(D)(i) The dollar amounts in subpara-
graphs (A), (B), and (C) shall be adjusted an-
nually to reflect increases in the Consumer
Price Index established by the Bureau of Labor
Statistics of the Department of Labor.
‘‘(ii) The initial adjustments made under
this subparagraph after the date of enactment
of the Small Business Reauthorization Act of
1997 shall reflect only increases from March
31, 1993.’’; and
(B) by striking paragraph (4) and insert-
ing the following:
‘‘(4) MAXIMUM
AGGREGATE
AMOUNT
OF
LE-
VERAGE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the aggregate amount of
outstanding leverage issued to any company or
companies that are commonly controlled (as de-
termined by the Administrator) may not exceed
$90,000,000, as adjusted annually for increases
in the Consumer Price Index.
‘‘(B) EXCEPTIONS.—The Administrator
may, on a case-by-case basis—
‘‘(i) approve an amount of leverage
that exceeds the amount described in sub-
paragraph (A) for companies under com-
mon control; and
‘‘(ii) impose such additional terms and
conditions as the Administrator determines
to be appropriate to minimize the risk of
loss to the Administration in the event of
default.
‘‘(C) APPLICABILITY
OF
OTHER
PROVI-
SIONS.—Any leverage that is issued to a com-
pany or companies commonly controlled in an
amount that exceeds $90,000,000, whether as a
result of an increase in the Consumer Price
Index or a decision of the Administrator, is sub-
ject to subsection (d).’’; and
(2) by striking subsection (d) and inserting the
following:
‘‘(d) REQUIRED CERTIFICATIONS.—
‘‘(1) IN GENERAL.—The Administrator shall re-
quire each licensee, as a condition of approval of an
application for leverage, to certify in writing—
‘‘(A) for licensees with leverage less than
or equal to $90,000,000, that not less than 20
percent of the licensee’s aggregate dollar
amount of financings will be provided to smaller
enterprises; and
‘‘(B) for licensees with leverage in excess
of $90,000,000, that, in addition to satisfying
the requirements of subparagraph (A), 100 per-
cent of the licensee’s aggregate dollar amount
of financings made in whole or in part with le-
verage in excess of $90,000,000 will be provided
to smaller enterprises as defined in section
103(12).
‘‘(2) MULTIPLE LICENSEES.—Multiple licensees
under common control (as determined by the Admin-
istrator) shall be considered to be a single licensee
for purposes of determining both the applicability of
and compliance with the investment percentage re-
quirements of this subsection.’’.
SEC. 243. FEES.
Section 301 of the Small Business Investment Act
of 1958 (15 U.S.C. 681) is amended by adding the follow-
ing:
‘‘(e) FEES.—
‘‘(1) IN
GENERAL.—The Administration may
prescribe fees to be paid by each applicant for a li-
cense to operate as a small business investment com-
pany under this Act.
‘‘(2) USE
OF
AMOUNTS.—Amounts collected
pursuant to this subsection shall be—
‘‘(A) deposited in the account for salaries
and expenses of the Administration; and
‘‘(B) available without further appropria-
tion solely to cover contracting and other ad-
ministrative costs related to licensing.’’.
SEC. 244. EXAMINATION FEES.
Section 310(b) of the Small Business Investment Act
of 1958 (15 U.S.C. 687b(b)) is amended by inserting after
the first sentence the following: ‘‘Fees collected under this
subsection shall be deposited in the account for salaries
and expenses of the Administration, and shall be available
SEC. 504. VERY SMALL BUSINESS CONCERNS.
Section 304(i) of Public Law 103–403 (15 U.S.C.
644 note) is amended by striking ‘‘1998’’ and inserting
‘‘2000’’.
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