442 
State does not want this section to apply with respect to loans made 
in the State; or 
(2) on or after the date on which such a law is adopted or such a 
certification is made, pursuant to a commitment to make the loan that 
was entered into before the date on which the law is adopted or the 
certification is made. 
(d) EXCESSIVE INTEREST.— 
(1) FORFEITURE.—If the maximum rate of interest authorized under 
subsection (a) on a loan made by a licensee exceeds the rate that would 
be authorized by applicable State law if the State law were not pre-
empted under subsection (a), the charging of interest at a rate in ex-
cess of the rate authorized by subsection (a) shall be deemed a for-
feiture of the greater of— 
(A) all interest that the loan carries with it; or 
(B) all interest that has been agreed to be paid on the loan. 
(2) DOUBLE RECOVERY.—In the case of a loan with respect to which 
there is a forfeiture of interest under paragraph (1), the person that 
paid the interest may recover from the licensee that made the loan, in 
a civil action commenced in a court of appropriate jurisdiction not later 
than 2 years after the most recent payment of interest, an amount 
equal to twice the amount of the interest paid on the loan. 
§ 303113. Conflicts of interest 
(a) IN GENERAL.—For the purpose of controlling conflicts of interest 
that may be detrimental to small business concerns, to licensees, to the 
shareholders, partners, or members of small business concerns or licensees, 
or to the purposes of this subtitle, the Administrator shall adopt regulations 
to govern transactions with— 
(1) any officer, director, shareholder, partner, or member of a li-
censee; or 
(2) any person or concern in which any interest, direct or indirect, 
financial or otherwise, is held by any officer, director, shareholder, 
partner, or member of— 
(A) a licensee; or 
(B) any person or concern with an interest, direct or indirect, 
financial or otherwise, in a licensee. 
(b) CONTENTS.—The regulations under subsection (a) shall include ap-
propriate requirements for public disclosure necessary to the purposes of 
this section. 
§ 303114. Ineligibility of guaranteed obligations for pur-
chase by Federal Financing Bank 
No provision of law authorizes the Federal Financing Bank to acquire— 
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(1) any obligation the payment of principal or interest on which has 
at any time been guaranteed in whole or in part under this chapter; 
(2) any obligation that is an interest in an obligation described in 
paragraph (1); or 
(3) any obligation that is secured by, or substantially all of the value 
of which is attributable to, an obligation described in paragraph (1) or 
(2). 
§ 303115. Trust certificates 
(a) ISSUANCE.— 
(1) IN GENERAL.—The Administrator may issue trust certificates 
representing ownership of all or a fractional part of— 
(A) debentures issued by a licensee and guaranteed by the Ad-
ministrator under this chapter; or 
(B) participating securities issued by a licensee and purchased 
and guaranteed under section 303104 of this title. 
(2) TRUST OR POOL.—A trust certificate issued under paragraph (1) 
shall be based on and backed by a trust or pool approved by the Ad-
ministrator and composed solely of guaranteed debentures or guaran-
teed participating securities. 
(b) GUARANTEE.— 
(1) IN GENERAL.—The Administrator may, on such terms and con-
ditions as the Administrator considers appropriate, guarantee the time-
ly payment of the principal of and interest on trust certificates issued 
by the Administrator (or an agent of the Administrator) for purposes 
of this section. 
(2) LIMITATION.—A guarantee shall be limited to the extent of prin-
cipal and interest on the guaranteed debentures or the redemption 
price of and priority payments on the participating securities that com-
pose the trust or pool. 
(3) PREPAYMENT OR REDEMPTION.— 
(A) REDUCTION OF GUARANTEE.—If a debenture in a trust or 
pool is prepaid or a participating security is redeemed, voluntarily 
or involuntarily, or in the event of default of a debenture or vol-
untary or involuntary redemption of a participating security, the 
guarantee of timely payment of principal and interest on the re-
lated trust certificates shall be reduced in proportion to the 
amount of principal and interest that the prepaid debenture or re-
deemed participating security and priority payments represent in 
the trust or pool. 
(B) LIMITATION ON GUARANTEE OF INTEREST.—Interest on a 
prepaid or defaulted debenture or a priority payment on a partici-
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pating security shall accrue and be guaranteed by the Adminis-
trator only through the date of payment on the guarantee. 
(C) CALL OF TRUST CERTIFICATE.—During the term of a trust 
certificate, the trust certificate may be called for redemption due 
to prepayment or default of all debentures or redemption, vol-
untary or involuntary, of all participating securities residing in the 
trust or pool. 
(c) FULL FAITH AND CREDIT OF THE UNITED STATES.—The full faith 
and credit of the United States is pledged to the payment of all amounts 
that may be required to be paid under any guarantee of a trust certificate 
issued by the Administrator (or an agent of the Administrator) under this 
section. 
(d) FEES.— 
(1) ADMINISTRATOR.—The Administrator shall not collect a fee for 
a guarantee under this section. 
(2) AGENT OF THE ADMINISTRATOR.—This subsection does not pre-
clude an agent of the Administrator from collecting a fee approved by 
the Administrator for performing the functions described in subsection 
(f)(2). 
(e) SUBROGATION; OWNERSHIP RIGHTS IN DEBENTURES AND PARTICI-
PATING SECURITIES.— 
(1) SUBROGATION.—If the Administrator pays a claim under a guar-
antee issued under this section, the Administrator shall be subrogated 
fully to the rights satisfied by the payment. 
(2) OWNERSHIP RIGHTS IN DEBENTURES AND PARTICIPATING SECU-
RITIES.—No Federal, State or local law shall preclude or limit the ex-
ercise by the Administrator of the Administrator’s ownership rights in 
the debentures or participating securities residing in a trust or pool 
against which trust certificates are issued. 
(f) CENTRAL REGISTRATION; REGULATION
OF BROKERS
AND DEAL-
ERS.— 
(1) CENTRAL REGISTRATION.—The Administrator shall provide for 
a central registration of all trust certificates sold under this section. 
(2) AGENT.— 
(A) IN GENERAL.—The Administrator shall contract with 1 or 
more agents to carry out on behalf of the Administrator the pool-
ing and the central registration functions of this section including, 
notwithstanding any other provision of law— 
(i) maintenance on behalf of and under the direction of the 
Administrator, such commercial bank accounts or investments 
in obligations of the United States as may be necessary to fa-
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cilitate trusts or pools backed by debentures or participating 
securities guaranteed under this chapter; and 
(ii) the issuance of trust certificates to facilitate such 
poolings. 
(B) BOND OR INSURANCE.—An agent under subparagraph (A) 
shall provide a fidelity bond or insurance in such amounts as the 
Administrator determines to be necessary to fully protect the in-
terests of the Government. 
(3) DISCLOSURE.—The Administrator shall require a seller of a trust 
certificate issued under this section to disclose to the purchaser, before 
the sale, information on the terms, conditions, and yield of the trust 
certificate. 
(4) REGULATION OF BROKERS AND DEALERS.—The Administrator 
may regulate brokers and dealers in trust certificates sold under this 
section. 
(5) EFFECT OF SUBSECTION.—This subsection does not preclude the 
use of a book-entry or other electronic form of registration for trust 
certificates. 
(g) PERIODIC ISSUANCE OF TRUST CERTIFICATES.—The Administrator 
shall issue trust certificates under this section— 
(1) at periodic intervals of not less than every 12 months; and 
(2) at such shorter intervals as the Administrator considers appro-
priate, taking into consideration the amount and number of trust cer-
tificates. 
§ 303116. Regulations 
The Administrator may prescribe regulations governing the operations of 
licensees, and regulations to carry out this subtitle, in accordance with the 
purposes of this subtitle. 
§ 303117. Unlawful acts and omissions 
(a) VIOLATION BY LICENSEE DEEMED VIOLATION BY PERSON PARTICI-
PATING.—If a licensee violates any provision of this subtitle (including a 
regulation issued under this subtitle) by reason of its failure to comply with 
the terms of the provision (or regulation) or by reason of its engaging in 
any act or practice that constitutes or will constitute a violation of the pro-
vision (or regulation), the violation shall also be a violation and an unlawful 
act on the part of any person who, directly or indirectly, authorizes, orders, 
participates in, or causes, brings about, counsels, aids, or abets in the com-
mission of any act, practice, or transaction that constitutes or will con-
stitute, in whole or in part, the violation. 
(b) BREACH OF FIDUCIARY DUTY.—It shall be unlawful for an officer, 
director, employee, agent, or other participant in the management or con-
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duct of the affairs of a licensee to engage in any act or practice, or to omit 
any act, in breach of the fiduciary duty of the officer, director, employee, 
agent, or participant if, as a result of engaging in the act or practice or 
of the omission to act, the licensee suffers or is in imminent danger of suf-
fering financial loss or other damage. 
(c) DISQUALIFICATION OF OFFICERS AND EMPLOYEES FOR DISHONESTY, 
FRAUD, OR BREACH OF TRUST.—Except with the written consent of the 
Administrator, it shall be unlawful— 
(1) for any person to take office as an officer, director, or employee 
of a licensee, or to become an agent or participant in the conduct of 
the affairs or management of a licensee, if the person— 
(A) has been convicted of— 
(i) a felony; or 
(ii) a lesser criminal offense that involves dishonesty or 
breach of trust; or 
(B) has been found civilly liable in damages, or is permanently 
or temporarily enjoined by an order, judgment, or decree of a 
court of competent jurisdiction, by reason of any act or practice 
involving fraud or breach of trust; or 
(2) for any person to continue to serve in any of the above-described 
capacities, if the person, after November 6, 1966— 
(A) is convicted of— 
(i) a felony; or 
(ii) a lesser criminal offense that involves dishonesty or 
breach of trust; or 
(B) is found civilly liable in damages, or is permanently or tem-
porarily enjoined by an order, judgment, or decree of a court of 
competent jurisdiction, by reason of any act or practice involving 
fraud or breach of trust. 
§ 303118. Investigations; examinations; valuations 
(a) INVESTIGATION OF VIOLATIONS.— 
(1) IN GENERAL.—The Administrator may make such investigations 
as the Administrator considers necessary to determine whether a li-
censee or any other person has engaged or is about to engage in an 
act or practice that constitutes or will constitute a violation of any pro-
vision of this subtitle (including a regulation under this subtitle) or of 
an order issued under this subtitle. 
(2) STATEMENTS.—The Administrator shall permit any person to 
file with the Administrator a statement in writing, under oath or other-
wise as the Administrator shall determine, as to all the facts and cir-
cumstances concerning the matter to be investigated. 
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447 
(3) POWERS.—For the purpose of any investigation, the Adminis-
trator may administer oaths and affirmations, subpoena witnesses, 
compel the attendance of witnesses, take evidence, and require the pro-
duction of any records that are relevant to the inquiry. The attendance 
of witnesses and the production of any such records may be required 
from any place in the United States. 
(4) CONTUMACY OR REFUSAL TO OBEY ORDER OF THE ADMINIS-
TRATOR.— 
(A) IN GENERAL.—In case of contumacy by, or refusal to obey 
a subpoena issued to, any person (including a licensee), the Ad-
ministrator may invoke the aid of any court of the United States 
within the jurisdiction of which the investigation or proceeding is 
carried on, or in which the person resides or carries on business, 
in requiring the attendance and testimony of witnesses and the 
production of records, and the court may issue an order requiring 
the person to appear before the Administrator, to produce records, 
or to give testimony touching the matter under investigation. 
(B) FAILURE TO OBEY COURT ORDER.—A failure to obey an 
order of the court may be punished by the court as a contempt 
of court. 
(C) PROCESS.—Process in a case under this paragraph may be 
served in the judicial district of which the person is an inhabitant 
or wherever the person may be found. 
(b) EXAMINATIONS OF AND REPORTS BY LICENSEES.— 
(1) IN GENERAL.—A licensee shall be subject to examinations made 
by direction of the Investment Division of SBA, which may be con-
ducted with the assistance of a private sector entity that has the quali-
fications to conduct and expertise in conducting such examinations. 
(2) EXAMINATION FEE.—The Administrator may assess against a li-
censee that is examined, as an examination fee, the cost of the exam-
ination (including compensation of the examiners), and the licensee 
shall pay the examination fee. 
(3) USE OF EXAMINATION FEES.—Examination fees collected under 
this subsection shall be deposited in the account for salaries and ex-
penses of SBA, and are authorized to be appropriated solely to cover 
the costs of examinations and other program oversight activities. 
(4) REPORTS.— 
(A) IN GENERAL.—A licensee shall make such reports to the 
Administrator at such times and in such form as the Adminis-
trator may require. 
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448 
(B) EXEMPTION.—The Administrator may exempt from a re-
quirement to make a report a licensee that is registered under the 
Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) to the 
extent necessary to avoid duplication in reporting requirements. 
(C) VIOLATION.— 
(i) IN GENERAL.—Except as provided in clause (ii), a li-
censee that violates any regulation or written directive issued 
by the Administrator requiring the filing of any regular or 
special report under subparagraph (A) shall pay to the 
United States a civil penalty of not more than $100 for each 
day of the continuance of the licensee’s failure to file the re-
port, unless it is shown that the failure is due to reasonable 
cause and not due to willful neglect. 
(ii) EXEMPTION FROM REPORTING REQUIREMENTS.— 
(I) IN
GENERAL.—If the Administrator determines 
that granting an exemption would not be inconsistent 
with the public interest or the protection of SBA, the 
Administrator may exempt a licensee from clause (i)— 
(aa) in whole or in part; and 
(bb) on such terms and conditions and for such 
period of time as the Administrator considers nec-
essary and appropriate. 
(II) PROCEDURE.—The Administrator may grant an 
exemption under subclause (I)— 
(aa) by regulation; or 
(bb) on application of an interested party, at any 
time previous to a violation described in clause (i), 
by order, after notice and opportunity for hearing. 
(iii) ALTERNATIVE
REQUIREMENTS.—The Administrator 
may for purposes of this subparagraph make any alternative 
requirement that the Administrator considers to be appro-
priate to a situation. 
(iv) CIVIL ACTION.—The civil penalty provided for in this 
subparagraph may be recovered in a civil action brought by 
the Administrator. 
(5) SCOPE OF EXAMINATION.—An examination shall be conducted in 
such detail as to determine whether the licensee— 
(A) has engaged solely in lawful activities and those con-
templated by this chapter; 
(B) has engaged in prohibited conflicts of interest; 
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(C) has acquired or exercised illegal control of an assisted small 
business; 
(D) has made investments in small business concerns for not 
less than 1 year; 
(E) has invested more than 20 percent of its capital in any indi-
vidual small business, if that restriction is applicable; 
(F) has engaged in relending, foreign investments, or passive in-
vestments; or 
(G) has charged an interest rate in excess of the maximum per-
mitted by law. 
(6) FREQUENCY OF EXAMINATION.— 
(A) IN GENERAL.—A licensee shall be examined at least every 
2 years. 
(B) WAIVER.—The Administrator may waive an examination of 
a licensee— 
(i) for up to 1 additional year if, the Administrator deter-
mines that such a delay would be appropriate, based on the 
amount of debentures being issued by the licensee and the re-
payment record of the licensee, the prior operating experience 
of the licensee, the contents and results of the last examina-
tion of the licensee, and the management expertise of the li-
censee; or 
(ii) if the licensee’s operations have been suspended while 
the licensee is involved in litigation or is in receivership. 
(c) VALUATIONS.— 
(1) FREQUENCY OF VALUATIONS.— 
(A) IN GENERAL.—A licensee shall submit to the Administrator 
a written valuation of the loans and investments of the licensee 
not less often than semiannually, or otherwise on the request of 
the Administrator, except that a licensee with no leverage out-
standing shall submit a valuation annually unless the Adminis-
trator determines otherwise. 
(B) MATERIAL ADVERSE CHANGES.—Not later than 30 days 
after the end of a fiscal quarter of a licensee during which a mate-
rial adverse change in the aggregate valuation of the loans and in-
vestments or operations of the licensee occurs, the licensee shall 
notify the Administrator in writing of the nature and extent of 
that change. 
(C) INDEPENDENT CERTIFICATION.— 
(i) IN GENERAL.—Not less than once during each fiscal 
year, a licensee shall submit to the Administrator the finan-
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450 
cial statements of the licensee, audited by an independent cer-
tified public accountant approved by the Administrator. 
(ii) AUDIT
REQUIREMENTS.—An audit conducted under 
clause (i) shall include— 
(I) a review of the procedures and documentation used 
by the licensee in preparing the valuations required by 
this section; and 
(II) a statement by the independent certified public 
accountant that the valuations were prepared in con-
formity with the valuation criteria applicable to the li-
censee established in accordance with paragraph (2). 
(2) VALUATION CRITERIA.—A valuation submitted under this sub-
section shall be prepared by the licensee in accordance with valuation 
criteria that— 
(A) shall be established or approved by the Administrator; and 
(B) shall include appropriate safeguards to ensure that the 
noncash assets of a licensee are not overvalued. 
§ 303119. Revocation and suspension of licenses; cease and 
desist orders 
(a) GROUNDS FOR REVOCATION OR SUSPENSION.—The Administrator 
may revoke or suspend a license— 
(1) for a false statement knowingly made in a written statement re-
quired under this chapter (including a regulation under this chapter); 
(2) for failure, in a written statement required under this chapter 
(including a regulation under this chapter), to state a material fact 
necessary to make the statement not misleading in the light of the cir-
cumstances under which the statement is made; 
(3) for willful or repeated violation of, or willful or repeated failure 
to observe, any provision of this chapter (including a regulation under 
this chapter); or 
(4) for violation of, or failure to observe, a cease and desist order 
issued by the Administrator under this section. 
(b) GROUNDS FOR CEASE AND DESIST ORDER.—If a licensee or any 
other person has not complied with any provision of this subtitle (including 
a regulation issued under this subtitle) or is engaging or is about to engage 
in any act or practice that constitutes or will constitute a violation of this 
subtitle (including a regulation), the Administrator may— 
(1) order such licensee or other person— 
(A) to cease and desist from the action or failure to act; and 
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451 
(B) to take such action or to refrain from such action as the 
Administrator considers necessary to ensure compliance with this 
subtitle (including regulations); and 
(2) suspend the license of a licensee against which an order has been 
issued until the licensee complies with the order. 
(c) PROCEDURE.— 
(1) ORDER TO SHOW CAUSE.— 
(A) IN
GENERAL.—Before revoking or suspending a license 
under subsection (a) or issuing a cease and desist order under 
subsection (b), the Administrator shall serve on the licensee and 
any other person involved an order to show cause why an order 
revoking or suspending the license or a cease and desist order 
should not be issued. 
(B) CONTENTS.—An order to show cause shall— 
(i) contain a statement of the matters of fact and law as-
serted by the Administrator and the legal authority and juris-
diction under which a hearing is to be held; and 
(ii) state that a hearing will be held before the Adminis-
trator at a time and place stated in the order. 
(2) DETERMINATION.— 
(A) IN GENERAL.—If, after hearing (or waiver of hearing), the 
Administrator determines on the record that an order revoking or 
suspending the license or a cease and desist order should issue, 
the Administrator shall promptly issue such an order. 
(B) CONTENTS.—An order revoking or suspending a license or 
cease and desist order shall— 
(i) include a statement of the findings of the Administrator 
and the grounds and reasons for the order; and 
(ii) state the effective date of the order. 
(C) SERVICE.—The Administrator shall cause an order revoking 
or suspending a license or cease and desist order to be served on 
the licensee and any other person involved. 
(d) SUBPOENAS.— 
(1) IN GENERAL.—The Administrator may require by subpoena the 
attendance and testimony of witnesses and the production of all records 
relating to a hearing from any place in the United States. 
(2) FEES AND MILEAGE.—A witness summoned before the Adminis-
trator shall be paid by the party at whose instance the witness is called 
the same fees and mileage that are paid witnesses in the courts of the 
United States. 
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452 
(3) DISOBEDIENCE OF SUBPOENA.—In case of disobedience to a sub-
poena, the Administrator, or any party to a proceeding before the Ad-
ministrator, may invoke the aid of any court of the United States in 
requiring the attendance and testimony of a witness and the production 
of a record. 
(e) PETITION TO MODIFY OR SET ASIDE ORDER.— 
(1) FILING.— 
(A) PETITION BY RIGHT.—An order issued by the Adminis-
trator under this section shall be final and conclusive unless, with-
in 30 days after service of the order, the licensee or other person 
against which the order is issued appeals to the United States 
court of appeals for the circuit in which the licensee has its prin-
cipal place of business by filing with the clerk of the court a peti-
tion praying that the Administrator’s order be set aside or modi-
fied in the manner stated in the petition. 
(B) PETITION BY LEAVE OF COURT.—After the expiration of 
the 30-day period described in subparagraph (A), a petition may 
be filed only by leave of court on a showing of reasonable grounds 
for failure to file the petition within the 30-day period. 
(2) TRANSCRIPT.—The clerk of the court shall immediately cause a 
copy of the petition to be delivered to the Administrator, and the Ad-
ministrator shall certify and file in the court a transcript of the record 
on which the order complained of was entered. If, before the transcript 
is filed, the Administrator amends or sets aside the order, in whole or 
in part, the petitioner may amend the petition within such time as the 
court may determine, on notice to the Administrator. 
(3) STAY OR SUSPENSION.—The filing of a petition for review shall 
not of itself stay or suspend the operation of the order of the Adminis-
trator, but the court of appeals may restrain or suspend, in whole or 
in part, the operation of the order pending the final hearing and deter-
mination of the petition. 
(4) COURT ACTION.—The court may affirm, modify, or set aside the 
order of the Administrator. 
(5) ADDITIONAL EVIDENCE.— 
(A) REOPENING OF HEARING.—If the court determines that the 
just and proper disposition of the case requires the taking of addi-
tional evidence, the court shall order the Administrator to reopen 
the hearing for the taking of such evidence, in such manner and 
on such terms and conditions as the court considers proper. 
(B) MODIFIED OR NEW FINDINGS.—The Administrator— 
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453 
(i) may modify the findings as to the facts, or make new 
findings, by reason of the additional evidence so taken; and 
(ii) shall file any modified or new findings and the amend-
ments, if any, of the order, with the record of such additional 
evidence. 
(6) LIMITATION ON CONSIDERATION OF OBJECTIONS.—No objection 
to an order of the Administrator shall be considered by the court unless 
the objection was urged before the Administrator or, if it was not so 
urged, unless there were reasonable grounds for failure to do so. 
(7) REVIEW OF JUDGMENT.—A judgment of the court affirming, 
modifying, or setting aside an order of the Administrator shall be sub-
ject only to review by the Supreme Court on certification or certiorari 
as provided in section 1254 of title 28. 
(f) ENFORCEMENT OF ORDER.— 
(1) IN GENERAL.—If a licensee or other person against which an 
order is issued under this section fails to obey the order, the Adminis-
trator— 
(A) may apply to the United States court of appeals for the cir-
cuit in which the licensee has its principal place of business for 
the enforcement of the order; and 
(B) shall file a transcript of the record on which the order com-
plained of was entered. 
(2) NOTICE.—On filing of an application under paragraph (1), the 
court shall cause notice of the application to be served on the licensee 
or other person. 
(3) EVIDENCE, PROCEDURE, AND JURISDICTION.—The evidence to 
be considered, the procedure to be followed, and the jurisdiction of the 
court shall be the same as is provided in subsection (e) for an applica-
tion to set aside or modify an order. 
§ 303120. Removal or suspension of, or prohibition of par-
ticipation by, management officials 
(a) REMOVAL.— 
(1) NOTICE OF REMOVAL.—The Administrator may serve on a man-
agement official a written notice of the Administrator’s intention to re-
move the management official if, in the opinion of the Administrator— 
(A) the management official— 
(i) has willfully and knowingly committed a substantial vio-
lation of— 
(I) this subtitle (including a regulation issued under 
this subtitle); or 
(II) a cease and desist order that has become final; or 
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(ii) has willfully and knowingly committed or engaged in an 
act, omission, or practice that constitutes a substantial breach 
of a fiduciary duty of the management official as a manage-
ment official; and 
(B) the violation or breach of fiduciary duty is one involving 
personal dishonesty on the part of the management official. 
(2) CONTENTS OF NOTICE.—A notice under paragraph (1) shall— 
(A) contain a statement of the facts constituting grounds for 
the notice; and 
(B) establish a time and place at which a hearing will be held 
on the proposed removal. 
(3) HEARING.— 
(A) TIMING.—A hearing on the notice shall be established for 
a date not earlier than 30 days nor later than 60 days after the 
date of service of the notice under paragraph (1), unless an earlier 
or a later date is set by the Administrator at the request of— 
(i) the management official, for good cause; or 
(ii) the Attorney General. 
(B) CONSENT.—Unless the management official appears at a 
hearing under this paragraph in person or by an authorized rep-
resentative, the management official shall be deemed to have con-
sented to the issuance of an order of removal under paragraph (4). 
(4) ISSUANCE OF ORDER OF REMOVAL.— 
(A) IN GENERAL.—In the event of consent under paragraph 
(3)(B), or if on the record made at a hearing under this sub-
section the Administrator finds that any of the grounds specified 
in the notice of removal has been established, the Administrator 
may issue such orders of removal from office as the Administrator 
considers appropriate. 
(B) EFFECTIVENESS.—An order under subparagraph (A) 
shall— 
(i) become effective on the expiration of 30 days after the 
date of service on the management official and the licensee 
(except in the case of an order issued on consent as described 
in paragraph (3)(B), which shall become effective at the time 
specified in the order); and 
(ii) remain effective and enforceable, except to such extent 
as the order is stayed, modified, terminated, or set aside by 
action of the Administrator or a reviewing court in accord-
ance with this section. 
(b) SUSPENSION OR PROHIBITION OF PARTICIPATION.— 
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455 
(1) IN GENERAL.—The Administrator may, if the Administrator con-
siders it necessary for the protection of the licensee or the interests of 
SBA, suspend from office or prohibit from further participation in any 
manner in the management or conduct of the affairs of a licensee, or 
both, a management official described in subsection (a)(1) by written 
notice to that effect served on the management official and the licensee. 
(2) EFFECTIVENESS.—A suspension or prohibition under paragraph 
(1)— 
(A) shall become effective on service of notice under paragraph 
(1); and 
(B) unless stayed by a court in proceedings under paragraph 
(3), shall remain in effect— 
(i) until completion of the administrative proceedings pur-
suant to a notice of intention to remove served under sub-
section (a); and 
(ii) until such time as the Administrator dismisses the 
charges specified in the notice, or, if an order of removal or 
prohibition is issued against the management official, until 
the effective date of any such order. 
(3) JUDICIAL REVIEW.—Not later than 10 days after a management 
official is suspended from office or prohibited from participation in the 
management or conduct of the affairs of a licensee under paragraph 
(1), the management official may apply to the United States district 
court for the judicial district in which the principal office of the li-
censee is located, or the United States District Court for the District 
of Columbia, for a stay of the suspension or prohibition pending the 
completion of the administrative proceedings pursuant to a notice of in-
tention to remove served on the management official under subsection 
(a), and the court shall have jurisdiction to stay the suspension or pro-
hibition. 
(c) SUSPENSION, OR PROHIBITION
OF PARTICIPATION, ON CRIMINAL 
CHARGES.— 
(1) IN GENERAL.—If a management official is charged, in an infor-
mation, indictment, or complaint authorized by a United States attor-
ney, with the commission of or participation in a felony involving dis-
honesty or breach of trust, the Administrator may, by written notice 
served on the management official, suspend the management official 
from office or prohibit the management official from further participa-
tion in any manner in the management or conduct of the affairs of the 
licensee, or both. 
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456 
(2) EFFECTIVENESS.—A suspension or prohibition under paragraph 
(1) shall remain in effect— 
(A) until the subject information, indictment, or complaint is fi-
nally disposed of; or 
(B) until it is terminated by the Administrator. 
(3) CONVICTION.—If a judgment of conviction with respect to an of-
fense described in paragraph (1) is entered against a management offi-
cial, at such time as the judgment is not subject to further appellate 
review, the Administrator may issue and serve on the management offi-
cial an order removing the management official from office, which re-
moval shall become effective on service of a copy of the order on the 
licensee. 
(4) DISMISSAL OR OTHER DISPOSITION.—A finding of not guilty or 
other disposition of charges described in paragraph (1) shall not pre-
clude the Administrator from thereafter instituting proceedings to sus-
pend or remove the management official from office, or to prohibit the 
management official from participation in the management or conduct 
of the affairs of the licensee, or both, under subsection (a) or (b). 
(d) PROCEDURE.— 
(1) HEARING VENUE.—A hearing under this section shall be— 
(A) held in the Federal judicial district or in the territory in 
which the principal office of the licensee is located, unless the 
party afforded the hearing consents to another place; and 
(B) conducted in accordance with chapter 5 of title 5. 
(2) ISSUANCE OF ORDERS.—After a hearing under this section, and 
not later than 90 days after the Administrator notifies the parties that 
the case has been submitted for final decision, the Administrator 
shall— 
(A) render a decision in the matter (which shall include findings 
of fact on which the decision is predicated); and 
(B) serve on each party to the proceeding an order or orders 
consistent with this section. 
(3) MODIFICATION OF ORDER.—The Administrator may modify, ter-
minate, or set aside an order issued under this section— 
(A) at any time, on such notice, and in such manner as the Ad-
ministrator considers proper, unless a petition for review is timely 
filed in a court of appeals of the United States, as provided in 
paragraph (4)(B), and thereafter until the record in the pro-
ceeding has been filed in accordance with paragraph (4)(C); and 
(B) on such filing of the record, with permission of the court. 
(4) JUDICIAL REVIEW.— 
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457 
(A) IN GENERAL.—Judicial review of an order issued under this 
section shall be exclusively as provided in this subsection. 
(B) PETITION FOR REVIEW.—A party to a hearing under this 
section may obtain a review of an order issued under paragraph 
(2) (other than an order issued with the consent of the manage-
ment official concerned or an order issued under subsection (c)) 
by filing in the court of appeals of the United States for the cir-
cuit in which the principal office of the licensee is located, or in 
the United States Court of Appeals for the District of Columbia 
Circuit, not later than 30 days after the date of service of the 
order, a written petition praying that the order of the Adminis-
trator be modified, terminated, or set aside. 
(C) NOTIFICATION TO THE ADMINISTRATOR.—A copy of a peti-
tion filed under subparagraph (B) shall be forthwith transmitted 
by the clerk of the court to the Administrator, and thereupon the 
Administrator shall file in the court the record in the proceeding, 
as provided in section 2112 of title 28. 
(D) COURT JURISDICTION.—On the filing of a petition under 
subparagraph (B)— 
(i) the court shall have jurisdiction, which, on the filing of 
the record under subparagraph (C), shall be exclusive, to af-
firm, modify, terminate, or set aside, in whole or in part, the 
order of the Administrator; 
(ii) review of the proceedings shall be had as provided in 
chapter 7 of title 5; and 
(iii) the judgment and decree of the court shall be final, ex-
cept that the judgment and decree shall be subject to review 
by the Supreme Court on certiorari as provided in section 
1254 of title 28. 
(E) JUDICIAL REVIEW NOT A STAY.—The commencement of 
proceedings for judicial review under this paragraph shall not, un-
less specifically ordered by the court, operate as a stay of any 
order issued by the Administrator under this section. 
§ 303121. Direct civil enforcement actions 
(a) FORFEITURE OF RIGHTS, PRIVILEGES, AND FRANCHISES.— 
(1) IN GENERAL.—If a licensee violates or fails to comply with any 
provision of this subtitle (including a regulation prescribed under this 
subtitle), all of the licensee’s rights, privileges, and franchises derived 
from this subtitle may be forfeited. 
(2) CIVIL ACTION.—Before a licensee is declared dissolved, or its 
rights, privileges, and franchises forfeited, any noncompliance with or 
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458 
violation of this subtitle shall be determined by a court of the United 
States of competent jurisdiction in a civil action brought in the district, 
territory, or other place subject to the jurisdiction of the United States 
in which the principal office of the licensee is located. Any such civil 
action shall be brought by the United States at the instance of the Ad-
ministrator or the Attorney General. 
(b) INJUNCTIONS AND OTHER ORDERS.— 
(1) IN GENERAL.—If a licensee or any other person engages or is 
about to engage in an act or practice that constitutes or will constitute 
a violation of any provision of this subtitle (including a regulation 
under this subtitle) or of any order issued under this subtitle, the Ad-
ministrator may bring a civil action in United States district court or 
in a United States court of any place subject to the jurisdiction of the 
United States for an order enjoining the act or practice, or for an order 
enforcing compliance with the provision, regulation, or order, and the 
court shall have jurisdiction over the civil action and, on a showing by 
the Administrator that the licensee or other person has engaged or is 
about to engage in any such act or practice, a permanent or temporary 
injunction, restraining order, or other order shall be granted without 
bond. 
(2) JURISDICTION
OVER
LICENSEE
AND
ASSETS
OF
THE
LI-
CENSEE.—In a civil action under subsection (a), the court may, to such 
extent as the court considers necessary, take exclusive jurisdiction of 
the licensee and the assets of the licensee, wherever located, and the 
court shall have jurisdiction to appoint a trustee or receiver to hold or 
administer the assets of the licensee under the direction of the court. 
(3) TRUSTEESHIP OR RECEIVERSHIP OVER LICENSEE.— 
(A) IN GENERAL.—The Administrator may act as trustee or re-
ceiver of the licensee on appointment by a court as provided in 
subparagraph (B). 
(B) APPOINTMENT.—On request of the Administrator, the court 
may appoint the Administrator to act as trustee or receiver of the 
licensee unless the court considers that such an appointment 
would be inequitable or otherwise inappropriate by reason of spe-
cial circumstances involved in the civil action. 
§ 303122. Jurisdiction; service of process 
A civil action or other proceeding brought under section 303118(b)(4)(C), 
303119, 303120, or 303121 of this title by the Administrator to enforce 
any liability or duty created by, or to enjoin any violation of, this subtitle, 
or any regulation or order promulgated under this subtitle shall be brought 
in the district in which the licensee maintains its principal office, and proc-
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459 
ess in such cases may be served in any district in which the defendant main-
tains its principal office or transacts business, or wherever the defendant 
may be found. 
Chapter 305—New Markets Venture 
Capital Company Program 
Sec. 
305101.
Definitions. 
305102.
Establishment of program. 
305103.
Approval of new markets venture capital companies. 
305104.
Guarantee of new markets venture capital company debentures. 
305105.
Trust certificates. 
305106.
Fees. 
305107.
Operational assistance grants. 
305108.
Bank participation. 
305109.
Reporting requirement. 
305110.
Regulations. 
305111.
Unlawful acts and omissions. 
305112.
Examinations. 
305113.
Removal or suspension of directors or officers. 
305114.
Direct civil enforcement actions. 
§ 305101. Definitions 
In this chapter: 
(1) DEVELOPMENTAL VENTURE CAPITAL.— 
(A) IN GENERAL.—The term ‘‘developmental venture capital’’ 
means capital in the form of an equity capital investment in a 
smaller enterprise made with a primary objective of fostering eco-
nomic development in a low-income geographic area. 
(B) EQUITY CAPITAL.—In subparagraph (A), the term ‘‘equity 
capital’’ 
has 
the 
meaning 
given 
the 
term 
in 
section 
303104(g)(1)(B) of this title. 
(2) ELIGIBLE COMPANY.—The term ‘‘eligible company’’ means a 
company that— 
(A) is a newly formed for-profit entity or a newly formed for- 
profit subsidiary of an existing entity; 
(B) has a management team with experience in community de-
velopment financing or relevant venture capital financing; and 
(C) has a primary objective of economic development of 1 or 
more low-income geographic areas. 
(3) LOW-INCOME INDIVIDUAL.—The term ‘‘low-income individual’’ 
means an individual whose income (adjusted for family size) does not 
exceed— 
(A) in the case of an individual residing in a metropolitan area, 
80 percent of the median income of all individuals residing in the 
metropolitan area; and 
(B) in the case of an individual residing in a nonmetropolitan 
area, the greater of— 
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(i) 80 percent of the median income of all individuals resid-
ing in the nonmetropolitan area; or 
(ii) 80 percent of the median income of all individuals re-
siding in all of the nonmetropolitan areas in the State in 
which the individual resides. 
(4) NEW MARKETS VENTURE CAPITAL COMPANY.—The term ‘‘new 
markets venture capital company’’ means a company that— 
(A) has been granted final approval by the Administrator under 
section 305103(c) of this title; and 
(B) has entered into a participation agreement with the Admin-
istrator. 
(5) OPERATIONAL ASSISTANCE.—The term ‘‘operational assistance’’ 
means management, marketing, and other technical assistance that as-
sists a smaller enterprise with business development. 
(6) PARTICIPATION AGREEMENT.—The term ‘‘participation agree-
ment’’ means a participation agreement under section 305103(b)(4)(D) 
of this title. 
(7) PROGRAM.—The term ‘‘program’’ means the new markets ven-
ture capital company program. 
(8) STATE.—The term ‘‘State’’ means a State, the District of Co-
lumbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, the 
Northern Mariana Islands, and any other commonwealth, territory, or 
possession of the United States. 
§ 305102. Establishment of program 
(a) IN GENERAL.—The Administrator shall establish a developmental 
venture capital program to be known as the new markets venture capital 
company program— 
(1) with the purpose of promoting economic development and cre-
ating wealth and job opportunities in low-income geographic areas and 
among individuals living in low-income geographic areas by encouraging 
developmental venture capital investments in smaller enterprises pri-
marily located in low-income geographic areas; and 
(2) with the mission of addressing the unmet equity investment 
needs of smaller enterprises located in low-income geographic areas. 
(b) ACTIVITIES.—Under the program, the Administrator may— 
(1) enter into participation agreements with new markets venture 
capital companies under section 305103(b)(4)(D) of this title for the 
purposes described in subsection (a); 
(2) guarantee debentures issued by new markets venture capital 
companies under section 305104 of this title; and 
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