HR 3719 RDS
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, with respect to the portion of any
project derived from funds set forth in section
502(3)—
‘‘(A) negotiate the elimination of any pre-
payment penalties or late fees on defaulted
loans made prior to September 30, 1996;
‘‘(B) decline to pay any prepayment pen-
alty or late fee on the default based purchase
of loans issued after September 30, 1996; and
HR 3719 RDS
‘‘(C) for any project financed after Sep-
tember 30, 1996, decline to pay any default in-
terest rate higher than the interest rate on the
note prior to the date of default.’’.
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 90 days after the date of the enactment
of this Act, the Administrator shall allow not less than
15 development companies authorized to make loans and
issue debentures under title V of the Small Business In-
vestment Act of 1958 to participate in the pilot program.
The development companies admitted shall agree not to
take any action that would create a potential conflict of
interest involving the development company, the third
party lender, or an associate of the third party lender. In
order to qualify to participate in the pilot, each develop-
ment company shall—
(1) have a minimum of 6 years experience in
the program established by such title V;
HR 3719 RDS
(2) have made, during the last 6 fiscal years, an
average of 10 loans per year through the program
established by such title V; and
(3) have a minimum of 2 years experience, ei-
ther independently or through an agent, in liquidat-
ing loans under the authority of a Federal, State, or
other 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, subject to such company ob-
taining prior written approval from the Adminis-
trator before committing the agency to purchase any
other indebtedness secured by the property: Pro-
vided, That the Administrator shall approve or deny
a request for such purchase within a period of 5
business days; and
(2) liquidate such loans in a reasonable and
sound manner and according to commercially accept-
ed practices pursuant to a liquidation plan approved
HR 3719 RDS
by the administrator in advance of its implementa-
tion. If the Administrator does not approve or deny
a request made by a certified development company
within a period of 5 business days, such request
shall be deemed to be approved.
(d) AUTHORITY OF THE ADMINISTRATOR.—In carry-
ing out the pilot program, the Administrator shall—
(1) have full authority to deny participation in
the pilot program or rescind the authority granted
any development company under this section upon a
10-day written notice stating the reasons for the de-
nial or rescission; and
(2) implement the pilot program no later than
90 days after the admission 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;
HR 3719 RDS
(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:
HR 3719 RDS
‘‘(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) (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)’’;