in subclauses (I), (II), and (III) of clause
(i).
‘‘(C) FUNDING FROM A SMALL BUSINESS
CONCERN.—The small business concern (or its
owners, stockholders, or affiliates) receiving as-
sistance through a body authorized by this title
shall provide—
‘‘(i) at least 15 percent of the total
cost of the project financed, if the small
business concern has been in operation for
a period of 2 years or less;
‘‘(ii) at least 15 percent of the total
cost of the project financed if the project
involves the construction of a limited or
single purpose building or structure;
‘‘(iii) at least 20 percent of the total
cost of the project financed if the project
involves both of the conditions set forth in
clauses (i) and (ii); or
‘‘(iv) at least 10 percent of the total
cost of the project financed, in all other
circumstances, at the discretion of the de-
velopment company.’’.
(b) GUARANTEE FEE FOR DEVELOPMENT COMPANY
DEBENTURES.—Section 
503(b)(7)(A) 
(15 
U.S.C.
697(b)(7)(A)) is amended by striking ‘‘0.125 percent’’ and
inserting ‘‘0.625 percent’’.
(c) FEES TO OFFSET SUBSIDY COST.—Section
503(d) (15 U.S.C. 697(d)) is amended to read as follows:
‘‘(d) CHARGES FOR ADMINISTRATION EXPENSES.—
‘‘(1) LEVEL OF CHARGES.—The Administration
shall continue to impose charges for administrative
expenses with respect to each debenture for which
payment of principal and interest is guaranteed
under subsection (a) at the level in effect on the
date of the enactment of this paragraph. To the ex-
tent that such charges exceed the administrative
costs of the program as provided by non-govern-
mental employees, such excess proceeds shall be used
to offset the cost (as such term is defined in section
502 of the Credit Reform Act of 1990) to the Ad-
ministration of making guarantees under subsection
(a).
‘‘(2) PARTICIPATION FEE.—The Administration
shall also impose a one-time fee of 50 basis points
on the total participation in any project of any insti-
tution described in subclause (I), (II), or (III) of
section 502(3)(B)(i). Such fee shall be imposed only
when the participation of the institution will occupy
a senior credit position to that of the development
company. Such fee shall be collected by the develop-
ment company, forwarded to the Administration,
and used to offset the cost (as such term is defined
in section 502 of the Credit Reform Act of 1990) to
the Administration of making guarantees under sub-
section (a).
‘‘(3) DEVELOPMENT COMPANY FEE.—The Ad-
ministration shall collect annually from each devel-
opment company a fee of .0125 percent of the out-
standing principal balance of any debenture guaran-
teed by the Administration. Such fee shall be derived
from the servicing fees collected by the development
company pursuant to regulation, and shall not be
derived from any additional fees imposed on small
business concerns. All proceeds of the fee shall be
used to offset the cost (as such term is defined in
section 502 of the Credit Reform Act of 1990) to
the Administration of making guarantees under sub-
section (a).’’.
(d) FEES COLLECTED BY AGENTS FOR CENTRAL
REGISTRATION
OF
TRUST
CERTIFICATES.—Section
505(d) (15 U.S.C. 697b(d)) is amended by adding at the
end the following: ‘‘The excess of any fees collected for
the functions described in subsection (f)(2) shall be used
to offset the cost (as such term is defined in section 502
of the Credit Reform Act of 1990) to the Administration
of making guarantees under subsection (a).’’.
SEC. 203. REQUIRED ACTIONS UPON DEFAULT.
Section 503 (15 U.S.C. 697) is amended by adding
at the end the following:
‘‘(f) REQUIRED ACTIONS UPON DEFAULT.—
‘‘(1) DEADLINES.—
‘‘(A) INITIAL
ACTIONS.—Not later than
the 45th day after the date on which a payment
on a loan funded through a debenture guaran-
teed under this section is due and not received,
the Administration shall—
‘‘(i) take all necessary steps to bring
such a loan current; or
‘‘(ii) implement a formal written de-
ferral agreement.
‘‘(B) PURCHASE OR ACCELERATION OF DE-
BENTURE.—Not later than the 65th day after
the date on which a payment on a loan de-
scribed in subparagraph (A) is due and not re-
ceived, and absent a formal written deferral
agreement, the Administration shall take all
necessary steps to purchase or accelerate the
debenture.
‘‘(2) PREPAYMENT PENALTIES.—The Adminis-
tration shall—
‘‘(A) negotiate the elimination of any pre-
payment penalties on defaulted loans made
prior to September 30, 1996;
‘‘(B) decline to pay any prepayment pen-
alty on the default based purchase of loans is-
sued after September 30, 1996; and
‘‘(C) for any project financed after Sep-
tember 30, 1996, decline to pay any default in-
terest rate on the portion of any project funded
through community injection funds described in
section 502(3).’’
SEC. 204. LOAN LIQUIDATION PILOT PROGRAM.
(a) IN GENERAL.—The Administrator shall carry out
a loan liquidation pilot program (in this section referred
to as the ‘pilot program’) in accordance with the require-
ments of this section.
(b) SELECTION
OF DEVELOPMENT COMPANIES.—
Not later than 60 days after the date of the enactment
of this Act, the Administrator shall—
(1) select no more than 35 and no less than 15
development companies authorized to make loans
and issue debentures under title V of the Small
Business Investment Act of 1958 to participate in
the pilot program. The development companies se-
lected shall—
(A) have a minimum of 6 years experience
in the program established by such title V;
(B) have made an average of 10 loans per
year through the program established by such
title V; and
(C) have shown at least 2 years experience
in liquidating loans under the authority of some
other Federal, State, or local lending program.
(c) AUTHORITY
OF DEVELOPMENT COMPANIES.—
The development companies selected under subsection (b)
shall, for all loans in their portfolio of loans made through
debentures guaranteed under title V of the Small Business
Investment Act of 1958 that are in default after the date
of enactment of this Act, be authorized to—
(1) perform all liquidation and foreclosure func-
tions, including the acceleration or purchase of com-
munity injection funds; and
(2) liquidate such loans in a reasonable and
sound manner and according to commercially accept-
ed practices.
(d) AUTHORITY OF THE ADMINISTRATOR.—In carry-
ing out the pilot program, the Administrator shall—
(1) have full authority to rescind the authority
granted any development company under this section
upon a showing of good cause;
(2) consider the inclusion of additional develop-
ment companies in the pilot program (subject to the
criteria of subsection (b)(1)) in the event an insuffi-
cient number of liquidations occur to enable a valid
sample of the effectiveness of the pilot program; and
(3) implement the pilot program no later than
90 days after the selection of the development com-
panies specified in subsection (b).
(e) REPORT.—
(1) IN
GENERAL.—The Administrator shall
issue a report on the results of the pilot program to
the Committees on Small Business of the House of
Representatives and the Senate. The report shall in-
clude information relating to—
(A) the total dollar amount of each loan
and project liquidated;
(B) the total dollar amount guaranteed by
the Administration;
(C) total dollar losses;
(D) total recoveries both as percentage of
the amount guaranteed and the total cost of the
project; and
(E) a comparison of the pilot program in-
formation with the same information for liq-
uidation conducted outside the pilot program
over the period of time.
(2) REPORTING PERIOD.—The report shall be
based on data from, and issued not later than 90
days after the close of, the first eight 8 fiscal quar-
ters of the pilot program’s operation after the date
of implementation.’’.
SEC. 205. REGISTRATION OF CERTIFICATES.
(a) CERTIFICATES SOLD PURSUANT TO SMALL BUSI-
NESS ACT.—Section 5(h) of the Small Business Act (15
U.S.C. 634(h)) is amended—
(1) by redesignating paragraphs (1) through
(4) as subparagraphs (A) through (D);
(2) by striking ‘‘(h)’’ and inserting ‘‘(h)(1)’’;
(3) by striking subparagraph (A), as redesig-
nated by paragraph (1) of this subsection, and in-
serting the following:
‘‘(A) provide for a central registration of all
loans and trust certificates sold pursuant to sub-
sections (f) and (g) of this section;’’; and
(4) by adding at the end the following:
‘‘(2) Nothing in this subsection shall prohibit the uti-
lization of a book entry or other electronic form of reg-
istration for trust certificates. The Administration may,
with the consent of the Secretary of the Treasury, use the
book-entry system of the Federal Reserve System.’’.
(b) CERTIFICATES SOLD PURSUANT TO SMALL BUSI-
NESS INVESTMENT COMPANY PROGRAM.—Section 321(f)
(15 U.S.C. 6871(f)) is amended—
(1) in paragraph (1) by striking ‘‘Such central
registration shall include’’ and all that follows
through the period at the end of the paragraph; and
(2) by adding at the end the following:
‘‘(5) Nothing in this subsection shall prohibit the use
of a book-entry or other electronic form of registration for
trust certificates.’’.
(c) CERTIFICATES SOLD PURSUANT TO DEVELOP-
MENT COMPANY PROGRAM.—Section 505(f) of the Small
Business Investment Act of 1958 (15 U.S.C. 697b(f)) is
amended—
(1) by redesignating paragraphs (1) through
(4) as subparagraphs (A) through (D);
(2) by striking ‘‘(f)’’ and inserting ‘‘(f)(1)’’;
(3) by striking subparagraph (A), as redesig-
nated by paragraph (1) of this subsection, and in-
serting the following:
‘‘(A) provide for a central registration of all
trust certificates sold pursuant to this section;’’ and
(4) by adding at the end the following:
‘‘(2) Nothing in this subsection shall prohibit the uti-
lization of a book entry or other electronic form of reg-
istration for trust certificates.’’.
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