SEC. 103. REAUTHORIZATIONS FOR CERTAIN OTHER PRO-
GRAMS. 
(a) NEW MARKETS VENTURE CAPITAL PROGRAM.— 
Section 368 of the Small Business Investment Act of 1958 
(15 U.S.C. 689q) is amended in subsection (a) by striking 
‘‘2001 through 2006’’ and inserting ‘‘2007 through 
2010’’. 
(b) PILOT PROGRAM FOR VERY SMALL BUSINESS 
CONCERNS.—Section 304 of the Small Business Adminis-
tration Reauthorization and Amendments Act of 1994 (15 
U.S.C. 644 note) is amended in subsection (i) by striking 
‘‘2003’’ and inserting ‘‘2010’’. 
TITLE II—FINANCE 
Subtitle A—Certified Development 
Company Program 
SEC. 201. SHORT TITLE; DEFINITION. 
(a) SHORT TITLE.—This subtitle may be cited as the 
‘‘Certified Development Company Program Act’’. 
(b) DEFINITION.—In this subtitle, the term ‘‘Admin-
istrator’’ means the Administrator of the Small Business 
Administration. 
SEC. 202. DEVELOPMENT COMPANY LOAN PROGRAMS. 
Title V of the Small Business Investment Act of 1958 
(15 U.S.C. 695 et seq.) is amended by inserting before 
section 501 the following: 
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‘‘SEC. 500. PROGRAM TITLE. 
‘‘The programs authorized by this title shall be 
known as the ‘Certified Development Company Pro-
gram’.’’. 
SEC. 203. LOAN LIQUIDATIONS. 
Section 510 of the Small Business Investment Act 
of 1958 (15 U.S.C. 697g) is amended— 
(1) by redesignating subsection (e) as sub-
section (g); and 
(2) by inserting after subsection (d) the fol-
lowing: 
‘‘(e) PARTICIPATION.— 
‘‘(1) IN GENERAL.—Any certified development 
company which elects not to apply for authority to 
foreclose and liquidate defaulted loans under this 
section, or which the Administrator determines to be 
ineligible for such authority, shall contract with a 
qualified third party to perform foreclosure and liq-
uidation of defaulted loans in its portfolio. The con-
tract shall be contingent upon approval by the Ad-
ministrator with respect to the qualifications of the 
contractor and the terms and conditions of liquida-
tion activities. 
‘‘(2) COMMENCEMENT.—The provisions of this 
subsection shall not require any certified develop-
ment company to liquidate defaulted loans until the 
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Administrator has adopted and implemented a pro-
gram to compensate and reimburse certified develop-
ment companies, as provided under subsection (f). 
‘‘(f) COMPENSATION AND REIMBURSEMENT.— 
‘‘(1) REIMBURSEMENT OF EXPENSES.— 
‘‘(A) IN
GENERAL.—The Administrator 
shall reimburse each certified development com-
pany for all expenses paid by such company as 
part of the foreclosure and liquidation activities, 
if the expenses— 
‘‘(i) were specifically approved in ad-
vance by the Administrator, in which case 
the reimbursement shall be made within 30 
days after reimbursement is requested; 
‘‘(ii) were derived from a contract de-
scribed in subsection (e)(1) that was ap-
proved in advance by the Administrator 
under subsection (e)(1), in which case the 
reimbursement shall be made within 30 
days after reimbursement is requested; or 
‘‘(iii) were incurred by the certified 
development company on an emergency 
basis and the expenses were reasonable 
and appropriate, in which case the reim-
bursement shall be made within 30 days 
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after the expenses are determined to be 
reasonable and appropriate. 
‘‘(B) DETERMINATION.—A determination 
whether expenses are reasonable and appro-
priate shall be made by the Administrator with-
in 30 days after reimbursement is requested for 
those expenses. 
‘‘(2) COMPENSATION FOR RESULTS.—The Ad-
ministrator shall develop a schedule to compensate 
and provide an incentive to certified development 
companies that foreclose and liquidate defaulted 
loans. The schedule shall be based on a percentage 
of the net amount recovered, but shall not exceed a 
maximum amount. The schedule shall not apply to 
any foreclosure which is conducted pursuant to a 
contract between a certified development company 
and a qualified third party to perform the fore-
closure and liquidation.’’. 
SEC. 204. ADDITIONAL EQUITY INJECTIONS. 
Section 502(3)(B)(ii) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 696(3)(B)(ii)) is amended 
to read as follows: 
‘‘(ii) 
FUNDING
FROM
INSTITU-
TIONS.—If a small business concern— 
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‘‘(I) provides the minimum con-
tribution required under subpara-
graph (C), not less than 50 percent of 
the cost of the project shall be pro-
vided by institutions described in sub-
clauses (I), (II), and (III) of clause 
(i); and 
‘‘(II) provides more than the 
minimum contribution required under 
subparagraph (C), any excess con-
tribution may be used to reduce the 
amount required from the institutions 
described in subclauses (I), (II), and 
(III) of clause (i), except that the 
amount from such institutions may 
not be reduced to an amount that is 
less than the amount of the loan made 
by the Administrator.’’. 
SEC. 205. BUSINESSES IN LOW-INCOME AREAS. 
Section 501(d)(3)(A) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 695(d)(3)(A)) is amended 
by inserting after ‘‘business district revitalization,’’ the 
following: ‘‘or expansion of businesses in low-income com-
munities as described in section 45D(e) of the Internal 
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Revenue Code of 1986, or implementing regulations issued 
thereunder,’’. 
SEC. 206. COMBINATIONS OF CERTAIN GOALS. 
Section 501(e) of the Small Business Investment Act 
of 1958 (15 U.S.C. 695(e)) is amended by adding at the 
end the following: 
‘‘(7) A small business concern that is uncondi-
tionally owned by more than 1 individual, or a cor-
poration, the stock of which is owned by more than 
1 individual, shall be deemed to have achieved a 
public policy goal required under subsection (d)(3) if 
a combined ownership share of not less than 51 per-
cent is held by individuals who are in 1 of the 
groups described in subparagraph (C) or (E) of sub-
section (d)(3).’’. 
SEC. 207. MAXIMUM 504 AND 7(a) LOAN ELIGIBILITY. 
Section 502(2) of the Small Business Investment Act 
of 1958 (15 U.S.C. 696(2)) is amended by adding at the 
end the following: 
‘‘(C) COMBINATION FINANCING.—Notwith-
standing any other provision of law, financing 
under this title may be provided to a borrower 
in the maximum amount provided in this sub-
section, and a loan guarantee under section 
7(a) of the Small Business Act may be provided 
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to the same borrower in the maximum amount 
provided in section 7(a)(3)(A) of such Act, to 
the extent that the borrower otherwise qualifies 
for such assistance.’’. 
SEC. 208. REFINANCING. 
Section 502 of the Small Business Investment Act 
of 1958 (15 U.S.C. 696) is amended by adding at the end 
the following: 
‘‘(7) PERMISSIBLE DEBT REFINANCING.— 
‘‘(A) IN
GENERAL.—Any financing ap-
proved under this title may include a limited 
amount of debt refinancing. 
‘‘(B) EXPANSIONS.—If the project involves 
expansion of a small business concern which 
has existing indebtedness collateralized by fixed 
assets, any amount of existing indebtedness 
that does not exceed one-half of the project cost 
of the expansion may be refinanced and added 
to the expansion cost, providing that— 
‘‘(i) the proceeds of the indebtedness 
were used to acquire land, including a 
building situated thereon, to construct a 
building thereon, or to purchase equip-
ment; 
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‘‘(ii) the borrower has been current on 
all payments due on the existing debt for 
at least the preceding year; 
‘‘(iii) the financing under section 504 
will provide better terms or rate of interest 
than exists on the debt at the time of refi-
nancing; and 
‘‘(iv) the existing indebtedness was 
not financed under the Small Business Act 
or this Act.’’. 
SEC. 209. FEES. 
(a) IN GENERAL.—Section 503(d) of the Small Busi-
ness Investment Act of l958 (15 U.S.C. 697(d)) is amend-
ed— 
(1) by striking paragraph (2); 
(2) by redesignating paragraph (3) as para-
graph (2); and 
(3) in paragraph (2), as so redesignated, by 
striking ‘‘0.125 percent’’ and inserting ‘‘0.155 per-
cent’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect and apply to loans under 
section 503(d) of the Small Business Investment Act of 
l958 (15 U.S.C. 697(d)) approved on or after 30 days 
after the date of enactment of this Act. 
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(c) RECOMPUTATION.—Notwithstanding any other 
provision of law, the Administrator shall recalculate the 
amount of the fee paid by the borrower under section 
503(b)(7) of the Small Business Investment Act of 1958 
in order that the cost of making guarantees under Title 
V of the Small Business Investment Act of 1958 remains 
at zero for each fiscal year after the effective date of the 
amendments to the Small Business Investment Act of 
1958 made by this Act. 
SEC. 210. TECHNICAL CORRECTION. 
Section 501(e)(2) of the Small Business Investment 
Act of 1958 (15 U.S.C. 695(e)(2)) is amended by striking 
‘‘outstanding’’. 
SEC. 211. SMALL BUSINESS INVESTMENT ACT DEFINITION. 
Section 103 of the Small Business Investment Act 
of 1958 (15 U.S.C. 662) is amended by striking para-
graph (6) and inserting the following: 
‘‘(6) the term ‘certified development company’ 
means an entity that— 
‘‘(A) the Administrator has certified meets 
the criteria of section 506; or 
‘‘(B) as of January 1, 1987, was providing 
loans under this title and was a for-profit enter-
prise, and otherwise meets the criteria of sec-
tion 506;’’. 
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SEC. 212. REPEAL OF SUNSET ON RESERVE REQUIRE-
MENTS FOR PREMIER CERTIFIED LENDERS. 
Section 508(c)(6)(B) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 697e(c)(6)(B)) is amend-
ed— 
(1) in the heading, by striking ‘‘TEMPORARY 
REDUCTION’’ and inserting ‘‘REDUCTION’’; and 
(2) by striking ‘‘Notwithstanding subparagraph 
(A), during the 2-year period beginning on the date 
that is 90 days after the date of enactment of this 
subparagraph, the’’ and inserting ‘‘The’’. 
SEC. 213. ELIGIBILITY OF DEVELOPMENT COMPANIES TO 
BE DESIGNATED AS CERTIFIED DEVELOP-
MENT COMPANIES AND AUTHORITY TO ISSUE 
DEBENTURES; AND PROVIDING AN AREA OF 
OPERATIONAL 
AUTHORITY, 
FUNDING 
RE-
STRICTIONS, AND ETHICAL REQUIREMENTS. 
(a) IN GENERAL.—Section 506 of the Small Business 
Investment Act of 1958 (15 U.S.C. 697c) is amended— 
(1) in the heading, by striking ‘‘RESTRICTIONS 
ON DEVELOPMENT COMPANY ASSISTANCE’’ and in-
serting ‘‘CERTIFIED
DEVELOPMENT
COMPANIES’’; 
and 
(2) by amending such section to read as follows: 
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‘‘(a) AUTHORITY TO ISSUE DEBENTURES.—A cer-
tified development company (as defined in section 103(6)) 
may issue debentures under this title. 
‘‘(b) CRITERIA TO BE TREATED AS CERTIFIED DE-
VELOPMENT COMPANY.— 
‘‘(1) IN GENERAL.—The Administrator shall es-
tablish procedures under which an entity, incor-
porated under State law with the authority to pro-
mote and assist the growth and development of 
small business concerns in the areas in which it is 
authorized to operate by the Administrator, may 
apply to be treated as a certified development com-
pany. Upon application of such an entity, the Ad-
ministrator shall determine whether the entity meets 
each of the criteria specified in paragraph (2). If the 
Administrator determines that the entity does meet 
each of the criteria, the Administrator shall so cer-
tify, and the entity shall thereby be treated as a cer-
tified development company as provided by section 
103(6)(A). 
‘‘(2) SPECIFIC CRITERIA.—The criteria referred 
to in paragraph (1) are as follows: 
‘‘(A) SIZE.—The entity is a small concern 
(as defined by the Administrator) with fewer 
than 500 employees and is not under the con-
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trol of an entity that is not a small business 
concern (as defined by the Administrator). Any 
company that was certified by the Adminis-
trator on or before the date of enactment of the 
Small Business Reauthorization Act of 2006 
shall continue to be treated as a certified devel-
opment company without regard to any affili-
ation that existed on such date. 
‘‘(B) PURPOSE.—The entity has as a pri-
mary purpose to benefit the community by fos-
tering economic development to create and pre-
serve jobs and stimulate private investment. 
‘‘(C) PRIMARY FUNCTION.—The entity has 
as a primary function to accomplish that pri-
mary purpose by providing long term financing 
to small business concerns under the Certified 
Development Company Program. The entity 
may also provide or support other local eco-
nomic development activities to assist the com-
munity. 
‘‘(D) NONPROFIT STATUS.—The entity is 
nonprofit. 
‘‘(E) GOOD STANDING.—The entity— 
‘‘(i) is in good standing in the State 
in which it is incorporated and in every 
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other State in which it conducts business; 
and 
‘‘(ii) is in compliance with all laws, in-
cluding taxation requirements, in the State 
in which it is incorporated and in every 
other State in which it conducts business. 
‘‘(F) MEMBERSHIP.—The entity has— 
‘‘(i) not fewer than 25 members (or 
stockholders, if the company is a for-profit 
entity), none of whom own or control more 
than 10 percent of the voting membership 
(or stock, for those companies that are for- 
profit entities), and each of whom— 
‘‘(I) have knowledge of the eco-
nomic development needs of the small 
businesses served by the company; 
and 
‘‘(II) is a resident of the State in 
which the company is incorporated or 
otherwise has sufficient contacts with 
the State in which the company oper-
ates; and 
‘‘(ii) at least 1 member, who is not in 
a position to control the entity, from each 
of the following: 
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‘‘(I) Government organizations 
that are responsible for economic de-
velopment. 
‘‘(II) Financial institutions that 
provide commercial long term fixed 
asset financing. 
‘‘(III) Community organizations 
that are dedicated to economic devel-
opment. 
‘‘(IV) Businesses. 
‘‘(G) BOARD OF DIRECTORS.— 
‘‘(i) IN GENERAL.—The entity has a 
board of directors. 
‘‘(ii) MEMBERS OF BOARD.—Each di-
rector is— 
‘‘(I) a member of the entity; and 
‘‘(II) elected a director by the 
members of the entity (or for those 
companies which are for-profit by the 
stockholders according to the bylaws 
of those companies). 
‘‘(iii) REPRESENTATION
OF
ORGANI-
ZATIONS AND INSTITUTIONS.— 
‘‘(I) IN
GENERAL.—The entity 
has at least 1 director, who is not in 
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a position to control the entity, from 
at least 3 of the categories described 
in subparagraph (F)(ii). 
‘‘(II) MAXIMUM PERCENTAGE.— 
For each category described in sub-
paragraph (F)(ii), not more than 50 
percent of the directors are from that 
category. 
‘‘(iv) MEETINGS.—The board of direc-
tors meets on a regular basis to make pol-
icy decisions for the entity. 
‘‘(H) PROFESSIONAL
MANAGEMENT
AND 
STAFF.—The entity has full-time professional 
management, including a chief executive officer 
to manage daily operations, and a professional 
staff that is qualified to market the Certified 
Development Company Program and handle all 
aspects of loan approval and servicing, includ-
ing liquidation, as described in section 510, 
which work for the entity— 
‘‘(i) as employees; 
‘‘(ii) as contractors, through con-
tracting with an entity with which the de-
velopment company is affiliated if such en-
tity is— 
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‘‘(I) a local nonprofit service cor-
poration; 
‘‘(II) a for-profit corporation, but 
only if the contracting was in effect, 
and the entity was certified by the 
Administrator, on or before December 
31, 2005; 
‘‘(III) a nonprofit affiliate of a 
local nonprofit service corporation; 
‘‘(IV) an entity wholly or par-
tially operated by a government agen-
cy; or 
‘‘(V) another entity approved by 
the Administrator, so long as the 
other entity also supports local eco-
nomic development; or 
‘‘(iii) if the entity is in a rural area, 
as contractors, through contracting with 
another certified development company 
that is located in the State in which the 
entity is located or in a State contiguous 
to that State. 
‘‘(I) INDEPENDENT MANAGEMENT AND OP-
ERATION.—The entity employs directly the 
chief executive officer, and is managed and op-
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erated to pursue the primary purpose referred 
to in subparagraph (B), and— 
‘‘(i) is independent; or 
‘‘(ii) is an affiliate of another local 
nonprofit service corporation, so long as 
the board of directors of the entity has at 
least 1 director not on the board of direc-
tors of the service corporation, and the 
board of the directors of the service cor-
poration has at least 1 director not on the 
board of directors of the entity. 
‘‘(3) DEFINITION.—In this subsection, the term 
‘local nonprofit service corporation’ means a local 
nonprofit service corporation (other than a certified 
development company), a purpose of which is to sup-
port economic development in the area in which the 
entity operates. 
‘‘(c) USE OF EXCESS FUNDS.— 
‘‘(1) IN GENERAL.—Any funds generated by a 
certified development company from making loans 
under section 503 or 504 that remain unexpended 
after payment of staff, operating, and overhead ex-
penses shall be retained by the certified development 
company as a reserve for— 
‘‘(A) future operations; 
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‘‘(B) expanding the area in which the cer-
tified development company operates through 
the methods authorized by this title; or 
‘‘(C) investment in other community or 
local economic development activity in the State 
or associated local economic area from which 
such funds were generated. 
‘‘(2) DEFINITION.—For purposes of this sub-
section, the term ‘local economic area’ means an 
area that is part of a local trading area that is in 
a State other than the State of incorporation of a 
certified development company but which is contig-
uous to a part of the company’s State of incorpora-
tion. 
‘‘(d) ETHICAL REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—A certified development 
company and the officers, employees, and other staff 
of the company shall at all times act ethically and 
avoid activities which constitute a conflict of interest 
or appear to constitute a conflict of interest. 
‘‘(2) 
PROHIBITED
CONFLICT
IN
PROJECT 
LOANS.— 
‘‘(A) IN
GENERAL.—A certified develop-
ment company may not— 
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