IB 
Union Calendar No. 283 
111TH CONGRESS 
2D SESSION 
H. R. 5297 
[Report No. 111–499] 
To create the Small Business Lending Fund Program to direct the Secretary 
of the Treasury to make capital investments in eligible institutions in 
order to increase the availability of credit for small businesses, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 13, 2010 
Mr. FRANK of Massachusetts (for himself, Ms. WATERS, Mrs. MALONEY, Mr. 
GUTIERREZ, Mr. WATT, Mr. MOORE of Kansas, Mr. HINOJOSA, Mr. 
MEEKS of New York, Mr. MILLER of North Carolina, Mr. SCOTT of 
Georgia, Mr. AL GREEN of Texas, Ms. BEAN, Ms. MOORE of Wisconsin, 
Mr. ELLISON, Mr. KLEIN of Florida, Mr. PERLMUTTER, Mr. PETERS, 
Mr. MAFFEI, and Mrs. DAHLKEMPER) introduced the following bill; 
which was referred to the Committee on Financial Services 
MAY 27, 2010 
Additional sponsors: Ms. NORTON and Ms. CLARKE 
MAY 27, 2010 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on May 13, 2010] 
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A BILL 
To create the Small Business Lending Fund Program to 
direct the Secretary of the Treasury to make capital 
investments in eligible institutions in order to increase 
the availability of credit for small businesses, and for 
other purposes. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
TITLE I—SMALL BUSINESS 
LENDING FUND 
SECTION 1. SHORT TITLE. 
This title may be cited as the ‘‘Small Business Lending 
Fund Act of 2010’’. 
SEC. 2. PURPOSE. 
The purpose of this title is to address the ongoing ef-
fects of the financial crisis on small businesses by providing 
temporary authority to the Secretary of the Treasury to 
make capital investments in eligible institutions in order 
to increase the availability of credit for small businesses. 
SEC. 3. DEFINITIONS. 
For purposes of this title: 
(1) APPROPRIATE COMMITTEES OF CONGRESS.— 
The term ‘‘appropriate committees of Congress’’ 
means— 
(A) the Committee on Small Business and 
Entrepreneurship, the Committee on Agriculture, 
Nutrition, and Forestry, the Committee on 
Banking, Housing, and Urban Affairs, the Com-
mittee on Finance, the Committee on the Budget, 
and the Committee on Appropriations of the 
Senate; and 
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(B) the Committee on Small Business, the 
Committee on Agriculture, the Committee on Fi-
nancial Services, the Committee on Ways and 
Means, the Committee on the Budget, and the 
Committee on Appropriations of the House of 
Representatives. 
(2) APPROPRIATE FEDERAL BANKING AGENCY.— 
The term ‘‘appropriate Federal banking agency’’ has 
the meaning given such term under section 3(q) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(q)). 
(3) BANK HOLDING COMPANY.—The term ‘‘bank 
holding company’’ has the meaning given such term 
under section 2(a)(1) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1841(2)(a)(1)). 
(4) CALL
REPORT.—The term ‘‘call report’’ 
means— 
(A) reports of Condition and Income sub-
mitted to the Office of the Comptroller of the 
Currency, the Board of Governors of the Federal 
Reserve System, and the Federal Deposit Insur-
ance Corporation; 
(B) the Office of Thrift Supervision Thrift 
Financial Report; and 
(C) any report that is designated by the Of-
fice of the Comptroller of the Currency, the 
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Board of Governors of the Federal Reserve Sys-
tem, the Federal Deposit Insurance Corporation, 
or the Office of Thrift Supervision, as applicable, 
as a successor to any report referred to in sub-
paragraph (A) or (B). 
(5) CDCI.—The term ‘‘CDCI’’ means the Com-
munity Development Capital Initiative created by the 
Secretary under the Troubled Asset Relief Program 
established by the Emergency Economic Stabilization 
Act of 2008. 
(6) CDCI INVESTMENT.—The term ‘‘CDCI in-
vestment’’ means, with respect to any eligible institu-
tion, the principal amount of any investment made 
by the Secretary in such eligible institution under the 
CDCI that has not been repaid. 
(7) CPP.—The term ‘‘CPP’’ means the Capital 
Purchase Program created by the Secretary under the 
Troubled Asset Relief Program established by the 
Emergency Economic Stabilization Act of 2008. 
(8) CPP INVESTMENT.—The term ‘‘CPP invest-
ment’’ means, with respect to any eligible institution, 
the principal amount of any investment made by the 
Secretary in such eligible institution under the CPP 
that has not been repaid. 
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(9) ELIGIBLE INSTITUTION.—The term ‘‘eligible 
institution’’ means— 
(A) any insured depository institution, 
which— 
(i) is not controlled by a bank holding 
company or savings and loan holding com-
pany that is also an eligible institution; 
(ii) has total assets of equal to or less 
than $10,000,000,000, as reported in the 
call report as of the end of the fourth quar-
ter of calendar year 2009; and 
(iii) is not directly or indirectly con-
trolled by any company or other entity that 
has total consolidated assets of more than 
$10,000,000,000, as so reported; 
(B) any bank holding company which has 
total 
assets 
of 
equal 
to 
or 
less 
than 
$10,000,000,000; and 
(C) any savings and loan holding company 
which has total assets of equal to or less than 
$10,000,000,000. 
(10) FUND.—The term ‘‘Fund’’ means the Small 
Business Lending Fund established by section 4(a)(1) 
of this title. 
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(11) INSURED
DEPOSITORY
INSTITUTION.—The 
term ‘‘insured depository institution’’ has the mean-
ing given such term under section 3(c)(2) of the Fed-
eral Deposit Insurance Act (12 U.S.C. 1813(c)(2)). 
(12) PROGRAM.—The term ‘‘Program’’ means the 
Small Business Lending Fund Program authorized 
by section 4(a)(2) of this title. 
(13) SAVINGS AND LOAN HOLDING COMPANY.— 
The term ‘‘savings and loan holding company’’ has 
the 
meaning 
given 
such 
term 
under 
section 
10(a)(1)(D) of the Home Owners’ Loan Act (12 
U.S.C. 1467a(a)(1)(D)). 
(14) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(15) SMALL BUSINESS LENDING.— 
(A) IN GENERAL.—The term ‘‘small busi-
ness lending’’ means small business lending, as 
defined by and reported in an eligible institu-
tion’s quarterly call report, of the following 
types: 
(i) Commercial and industrial loans 
plus. 
(ii) Owner-occupied nonfarm, nonresi-
dential real estate loans. 
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(iii) Loans to finance agricultural pro-
duction and other loans to farmers. 
(iv) Loans secured by farmland. 
(B) TREATMENT
OF
HOLDING
COMPA-
NIES.—In the case of eligible institutions that 
are bank holding companies or savings and loan 
holding companies having one or more insured 
depository institution subsidiaries, small busi-
ness lending shall be measured based on the com-
bined small business lending reported in the call 
report of the insured depository institution sub-
sidiaries. 
(16) 
MINORITY-OWNED
AND
WOMEN-OWNED 
BUSINESS.—The terms ‘‘minority-owned business’’ 
and ‘‘women-owned business’’ shall have the meaning 
given the terms ‘‘minority-owned business’’ and 
‘‘women’s 
business’’, 
respectively, 
under 
section 
21A(r)(4) of the Federal Home Loan Bank Act (12 
U.S.C. 1441A(r)(4)). 
SEC. 4. SMALL BUSINESS LENDING FUND. 
(a) FUND AND PROGRAM.— 
(1) FUND ESTABLISHED.—There is established in 
the Treasury of the United States a fund to be known 
as the ‘‘Small Business Lending Fund’’, which shall 
be administered by the Secretary. 
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(2) PROGRAMS AUTHORIZED.—The Secretary is 
authorized to establish the Small Business Lending 
Fund Program for using the Fund consistent with 
this title. 
(b) USE OF FUND.— 
(1) IN GENERAL.—Subject to paragraph (2), the 
Fund shall be available to the Secretary, without fur-
ther appropriation or fiscal year limitation, for the 
costs of purchases (including commitments to pur-
chase), and modifications of such purchases, of pre-
ferred stock and other financial instruments from eli-
gible institutions on such terms and conditions as are 
determined by the Secretary in accordance with this 
title. 
(2) MAXIMUM PURCHASE LIMIT.—The aggregate 
amount of purchases (and commitments to purchase) 
made pursuant to paragraph (1) may not exceed 
$30,000,000,000. 
(3) PROCEEDS
USED
TO
PAY
DOWN
PUBLIC 
DEBT.—All funds received by the Secretary in connec-
tion with purchases made pursuant to paragraph (1), 
including interest payments, dividend payments, and 
proceeds from the sale of any financial instrument, 
shall be paid into the general fund of the Treasury for 
reduction of the public debt. 
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(c) CREDITS TO THE FUND.—There shall be credited 
to the Fund amounts made available pursuant to section 
9, to the extent provided by appropriations Acts. 
(d) TERMS.— 
(1) APPLICATION.— 
(A) 
INSTITUTIONS
WITH
ASSETS
OF 
$1,000,000,000
OR
LESS.—Eligible institutions 
having total assets equal to or less than 
$1,000,000,000, as reported in a call report as of 
the end of the fourth quarter of calendar year 
2009, may apply to receive a capital investment 
from the Fund in an amount not exceeding 5 
percent of risk-weighted assets, as reported in the 
call report immediately preceding the date of ap-
plication, less the amount of any CDCI invest-
ment and any CPP investment. 
(B) INSTITUTIONS WITH ASSETS OF MORE 
THAN
$1,000,000,000
AND
LESS
THAN 
$10,000,000,000.—Eligible institutions having total 
assets of more than $1,000,000,000 but less than 
$10,000,000,000, as of the end of the fourth quar-
ter of calendar year 2009, may apply to receive 
a capital investment from the Fund in an 
amount not exceeding 3 percent of risk-weighted 
assets, as reported in the call report immediately 
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preceding the date of application, less the 
amount of any CDCI investment and any CPP 
investment. 
(C) TREATMENT OF HOLDING COMPANIES.— 
In the case of an eligible institution that is a 
bank holding company or a savings and loan 
holding company having one or more insured de-
pository institution subsidiaries, total assets 
shall be measured based on the combined total 
assets reported in the call report of the insured 
depository institution subsidiaries as of the end 
of the fourth quarter of calendar year 2009 and 
risk-weighted assets shall be measured based on 
the combined risk-weighted assets of the insured 
depository institution subsidiaries as reported in 
the call report immediately preceding the date of 
application. 
(D) TREATMENT OF APPLICANTS THAT ARE 
INSTITUTIONS CONTROLLED BY HOLDING COMPA-
NIES.—If an eligible institution that applies to 
receive a capital investment under the Program 
is under the control of a bank holding company 
or a savings and loan holding company, then the 
Secretary may use the Fund to purchase pre-
ferred stock or other financial instruments from 
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the top-tier bank holding company or savings 
and loan holding company of such eligible insti-
tution, as applicable. For purposes of this para-
graph, the term ‘‘control’’ with respect to a bank 
holding company shall have the same meaning 
as in section 2(a)(2) of the Bank Holding Com-
pany Act of 1956 (12 U.S.C. 1841(2)(a)(2)). For 
purposes of this paragraph, the term ‘‘control’’ 
with respect to a savings and loan holding com-
pany shall have the same meaning as in 10(a)(2) 
of the Home Owners’ Loan Act (12 U.S.C. 
1467a(a)(2)). 
(E) REQUIREMENT TO PROVIDE A SMALL 
BUSINESS LENDING PLAN.—At the time that an 
applicant submits an application to the Sec-
retary for a capital investment under the Pro-
gram, the applicant shall deliver to the appro-
priate Federal banking agency a small business 
lending plan describing how the applicant’s busi-
ness strategy and operating goals will allow it to 
address the needs of small businesses in the areas 
it serves. This plan shall be confidential super-
visory information. 
(2) CONSULTATION
WITH
REGULATORS.—For 
each eligible institution that applies to receive a cap-
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ital investment under the Program, the Secretary 
shall consult with the appropriate Federal banking 
agency for the eligible institution to determine wheth-
er the eligible institution may receive such capital in-
vestment. 
(3) INELIGIBILITY
OF
INSTITUTIONS
ON
FDIC 
PROBLEM BANK LIST.— 
(A) IN
GENERAL.—An eligible institution 
may not receive any capital investment under 
the Program if— 
(i) such institution is on the FDIC 
problem bank list; or 
(ii) such institution has been removed 
from the FDIC problem bank list for less 
than 90 days. 
(B) FDIC PROBLEM BANK LIST DEFINED.— 
For purposes of this subparagraph, the term 
‘‘FDIC problem bank list’’ means the list of in-
stitutions with a current rating of 4 or 5 under 
the Uniform Financial Institutions Rating Sys-
tem, or such other list designated by the Federal 
Deposit Insurance Corporation. 
(4) INCENTIVES TO LEND.— 
(A) REQUIREMENTS ON PREFERRED STOCK 
AND OTHER FINANCIAL INSTRUMENTS.—Any pre-
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ferred stock or other financial instrument issued 
to Treasury by an eligible institution receiving 
a capital investment under the Program shall 
provide that— 
(i) the rate at which dividends or in-
terest are payable shall be 5 percent per 
annum initially; 
(ii) within the first 2 years after the 
date of the capital investment under the 
Program, the rate may be adjusted based on 
the amount of an eligible institution’s small 
business lending. Changes in the amount of 
small business lending shall be measured 
against the amount of small business lend-
ing reported by the eligible institution in its 
call report for the last quarter in calendar 
year 2009 or the average amount of small 
business lending reported by the eligible in-
stitution in all call reports for calendar 
year 2009, whichever is lower, minus ad-
justments from each quarterly balance in 
respect of— 
(I) net loan charge offs with re-
spect to small business lending; and 
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(II) gains realized by the eligible 
institution resulting from mergers, ac-
quisitions or purchases of loans after 
origination and syndication; which ad-
justments shall be determined in ac-
cordance with guidance promulgated 
by the Secretary; and 
(iii) during any calendar quarter dur-
ing the initial 2-year period referred to in 
clause (ii), an institution’s rate shall be ad-
justed to reflect the following schedule, based 
on that institution’s change in the amount 
of small business lending relative to the 
baseline— 
(I) if the amount of small business 
lending has increased by less than 2.5 
percent, the dividend or interest rate 
shall be 5 percent; 
(II) if the amount of small busi-
ness lending has increased by 2.5 per-
cent or greater, but by less than 5.0 
percent, the dividend or interest rate 
shall be 4 percent; 
(III) if the amount of small busi-
ness lending has increased by 5.0 per-
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cent or greater, but by less than 7.5 
percent, the dividend or interest rate 
shall be 3 percent; 
(IV) if the amount of small busi-
ness lending has increased by 7.5 per-
cent or greater, and but by less than 
10.0 percent, the dividend or interest 
rate shall be 2 percent; or 
(V) if the amount of small busi-
ness lending has increased by 10 per-
cent or greater, the dividend or interest 
rate shall be 1 percent. 
(B) BASIS OF INITIAL RATE.—The initial 
dividend or interest rate shall be based on call 
report data published in the quarter immediately 
preceding the date of the capital investment 
under the Program. 
(C) TIMING OF RATE ADJUSTMENTS.—Any 
rate adjustment shall occur in the calendar quar-
ter following the publication of call report data, 
such that the rate based on call report data from 
any one calendar quarter, which is published in 
the first following calendar quarter, shall be ad-
justed in that first following calendar quarter 
and payable in the second following quarter. 
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(D) RATE FOLLOWING INITIAL 2-YEAR PE-
RIOD.—Generally, the rate based on call report 
data from the eighth calendar quarter after the 
date of the capital investment under the Pro-
gram shall be payable until the expiration of the 
41⁄2-year period that begins on the date of the in-
vestment. In the case where the amount of small 
business lending has remained the same or de-
creased relative to the institution’s baseline in 
the eighth quarter after the date of the capital 
investment under the Program, the rate shall be 
7 percent until the expiration of the 41⁄2-year pe-
riod that begins on the date of the investment. 
(E) RATE FOLLOWING INITIAL 41⁄2-YEAR PE-
RIOD.—The dividend or interest rate paid on 
any preferred stock or other financial instrument 
issued by an eligible institution that receives a 
capital investment under the Program shall in-
crease to 9 percent at the end of the 41⁄2-year pe-
riod that begins on the date of the capital invest-
ment under the Program. 
(F) LIMITATION
ON
RATE
REDUCTIONS 
WITH RESPECT TO CERTAIN AMOUNT.—The re-
duction in the dividend or interest rate payable 
to Treasury by any eligible institution shall be 
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limited such that the rate reduction shall not 
apply to a dollar amount of the investment made 
by Treasury that is greater than the dollar 
amount increase in the amount of small business 
lending realized under this program. The Sec-
retary may issue guidelines that will apply to 
new capital investments limiting the amount of 
capital available to eligible institutions con-
sistent with this limitation. 
(G) RATE ADJUSTMENTS FOR S CORPORA-
TION.—Before making a capital investment in 
an eligible institution that is an S corporation 
or a corporation organized on a mutual basis, 
the Secretary may adjust the dividend or interest 
rate on the financial instrument to be issued to 
the Secretary, from the dividend or interest rate 
that would apply under subparagraphs (A) 
through (F), to take into account any differential 
tax treatment of securities issued by such eligible 
institution. For purpose of this subparagraph, 
the term ‘‘S corporation’’ has the same meaning 
as in section 1361(a) of the Internal Revenue 
Code of 1986. 
(H) REPAYMENT
DEADLINE.—The capital 
investment received by an eligible institution 
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under the Program shall be repaid by the end of 
the 10-year period that begins on the date of the 
capital investment under the Program. 
(5) ADDITIONAL
INCENTIVES
TO
REPAY.—The 
Secretary may, by regulation or guidance issued 
under section 5(9), establish repayment incentives in 
addition to the incentive in paragraph (4)(E) that 
will apply to new capital investments in a manner 
that the Secretary determines to be consistent with the 
purposes of this title. 
(6) CAPITAL PURCHASE PROGRAM REFINANCE.— 
(A) IN GENERAL.—The Secretary shall, in a 
manner that the Secretary determines to be con-
sistent with the purposes of this title, issue regu-
lations and other guidance to permit eligible in-
stitutions to refinance securities issued to Treas-
ury under the CDCI and the CPP for securities 
to be issued under the Program. 
(B) PROHIBITION
ON
PARTICIPATION
BY 
NON-PAYING CPP PARTICIPANTS.—Subparagraph 
(A) shall not apply to any eligible institution 
that has ever missed a dividend payment due 
under the CPP. 
(7) MINORITY OUTREACH.—The Secretary shall 
require eligible institutions receiving capital invest-
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ments under the Program to provide outreach and ad-
vertising in the appropriate language of the applicant 
pool describing the availability and application proc-
ess of receiving loans from the eligible institution that 
are made possible by the Program through the use of 
print, radio, television or electronic media outlets 
which target organizations, trade associations, and 
individuals that represent or work within or are 
members of minority communities. 
(8) ADDITIONAL TERMS.—The Secretary may, by 
regulation or guidance issued under section 5(9), 
make modifications that will apply to new capital in-
vestments in order to manage risks associated with 
the administration of the Fund in a manner con-
sistent with the purposes of this title. 
(9) MINIMUM UNDERWRITING STANDARDS.—The 
appropriate Federal banking agency for an eligible 
institution that receives funds under the Program 
shall within 60 days issue regulations defining min-
imum underwriting standards that must be used for 
loans made by the eligible institution using such 
funds. 
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SEC. 5. ADDITIONAL AUTHORITIES OF THE SECRETARY. 
The Secretary may take such actions as the Secretary 
deems necessary to carry out the authorities in this title, 
including, without limitation, the following: 
(1) The Secretary may use the services of any 
agency or instrumentality of the United States or 
component thereof on a reimbursable basis, and any 
such agency or instrumentality or component thereof 
is authorized to provide services as requested by the 
Secretary using all authorities vested in or delegated 
to that agency, instrumentality, or component. 
(2) The Secretary may enter into contracts, in-
cluding contracts for services authorized by section 
3109 of title 5, United States Code. 
(3) The Secretary may designate any bank, sav-
ings association, trust company, security broker or 
dealer, asset manager, or investment adviser as a fi-
nancial agent of the Federal Government and such in-
stitution shall perform all such reasonable duties re-
lated to this title as financial agent of the Federal 
Government as may be required. The Secretary shall 
have authority to amend existing agreements with fi-
nancial agents, entered into during the 2-year period 
before the date of enactment of this title, to perform 
reasonable duties related to this title. 
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(4) The Secretary may exercise any rights re-
ceived in connection with any preferred stock or other 
financial instruments or assets purchased or acquired 
pursuant to the authorities granted under this title. 
(5) Subject to section 4(b)(3), the Secretary may 
manage any assets purchased under this title, includ-
ing revenues and portfolio risks therefrom. 
(6) The Secretary may sell, dispose of, transfer, 
exchange or enter into securities loans, repurchase 
transactions, or other financial transactions in regard 
to, any preferred stock or other financial instrument 
or asset purchased or acquired under this title, upon 
terms and conditions and at a price determined by 
the Secretary. 
(7) The Secretary may manage or prohibit con-
flicts of interest that may arise in connection with the 
administration and execution of the authorities pro-
vided under this title. 
(8) The Secretary may establish and use vehicles, 
subject to supervision by the Secretary, to purchase, 
hold, and sell preferred stock or other financial in-
struments and issue obligations. 
(9) The Secretary may, in consultation with the 
Administrator of the Small Business Administration, 
issue such regulations and other guidance as may be 
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necessary or appropriate to define terms or carry out 
the authorities or purposes of this title. 
SEC. 6. CONSIDERATIONS. 
In exercising the authorities granted in this title, the 
Secretary shall take into consideration— 
(1) increasing the availability of credit for small 
businesses; 
(2) providing funding to eligible institutions 
that serve small businesses that are minority- and 
women-owned and that also serve low- and moderate- 
income, minority, and other underserved or rural 
communities; 
(3) protecting and increasing American jobs; 
(4) ensuring that all eligible institutions may 
apply to participate in the program established under 
this title, without discrimination based on geography; 
(5) providing transparency with respect to use of 
funds provided under this title; 
(6) minimizing the cost to taxpayers of exer-
cising the authorities; and 
(7) promoting and engaging in financial edu-
cation to would-be borrowers. 
SEC. 7. REPORTS. 
The Secretary shall provide to the appropriate com-
mittees of Congress— 
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(1) within 7 days of the end of each month com-
mencing with the first month in which transactions 
are made under the Program, a written report de-
scribing all of the transactions made during the re-
porting period pursuant to the authorities granted 
under this title; 
(2) after the end of March and the end of Sep-
tember, commencing September 30, 2010, a written 
report on all projected costs and liabilities, all oper-
ating expenses, including compensation for financial 
agents, and all transactions made by the Fund, which 
shall include participating institutions and amounts 
each institution has received under the Program; and 
(3) within 7 days of the end of each month com-
mencing with the first month in which transactions 
are made under the Program, a written report detail-
ing how eligible institutions participating in the Pro-
gram have used the funds such institutions received 
under the Program. 
SEC. 8. OVERSIGHT AND AUDITS. 
(a) INSPECTOR GENERAL OVERSIGHT.—The Inspector 
General of the Department of the Treasury shall conduct, 
supervise, and coordinate audits and investigations of the 
purchase (and commitments to purchase) of preferred stock 
and other financial instruments under the Program. 
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(b) GAO AUDIT.—The Comptroller General of the 
United States shall perform an annual audit of the Pro-
gram and issue a report to the appropriate committees of 
Congress containing the results of such audit. 
SEC. 9. CREDIT REFORM; FUNDING. 
(a) CREDIT REFORM.—The cost of purchases of pre-
ferred stock and other financial instruments made as cap-
ital investments under this title shall be determined as pro-
vided under the Federal Credit Reform Act of 1990 (2 
U.S.C. 661 et seq.). 
(b) FUNDS MADE AVAILABLE.—There are hereby au-
thorized to be appropriated, out of funds in the Treasury 
not otherwise appropriated, such sums as may be necessary 
to pay the costs of $30,000,000,000 of capital investments 
in eligible institutions, including the costs of modifying 
such investments, and reasonable costs of administering the 
program of making, holding, managing, and selling the 
capital investments. 
SEC. 10. TERMINATION AND CONTINUATION OF AUTHORI-
TIES. 
(a) TERMINATION OF INVESTMENT AUTHORITY.—The 
authority to make capital investments in eligible institu-
tions, including commitments to purchase preferred stock 
or other instruments, provided under this title shall termi-
nate 1 year after the date of enactment of this title. 
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(b) CONTINUATION
OF OTHER AUTHORITIES.—The 
authorities of the Secretary in section 5 shall not be limited 
by the termination date in subsection (a). 
SEC. 11. PRESERVATION OF AUTHORITY. 
Nothing in this title may be construed to limit the au-
thority of the Secretary under any other provision of law. 
SEC. 12. ASSURANCES. 
(a) SMALL BUSINESS LENDING FUND SEPARATE 
FROM TARP.—The Small Business Lending Fund Pro-
gram is established as separate and distinct from the Trou-
bled Asset Relief Program established by the Emergency 
Economic Stabilization Act of 2008. An institution shall 
not, by virtue of a capital investment under the Small Busi-
ness Lending Fund Program, be considered a recipient of 
the Troubled Asset Relief Program. 
(b) CHANGE IN LAW.—If, after a capital investment 
has been made in an eligible institution under the Program, 
there is a change in law that modifies the terms of the in-
vestment or program in a materially adverse respect for the 
eligible institution, the eligible institution may, after con-
sultation with the appropriate Federal banking agency for 
the eligible institution, repay the investment without im-
pediment. 
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SEC. 13. STUDY AND REPORT WITH RESPECT TO WOMEN- 
OWNED AND MINORITY-OWNED BUSINESSES. 
(a) STUDY.—The Secretary shall conduct a study to 
determine the number of women-owned businesses and mi-
nority-owned businesses that receive assistance as a result 
of the Program, including— 
(1) efforts, including technical assistance and 
outreach that institutions have employed under the 
Program to provide loans to minority- and women- 
owned small businesses; 
(2) loan applications received; 
(3) loan applications approved; and 
(4) and any other relevant data related to such 
transactions to promote the purposes of the Program 
as the Secretary may require. 
(b) REPORT.—Not later than one year after the date 
of enactment of this Act, the Secretary shall submit to Con-
gress a report on the results of the study conducted pursuant 
to subsection (a). 
(c) INFORMATION PROVIDED TO THE SECRETARY.— 
Eligible institutions that participate in the Program shall 
provide the Secretary with such information as the Sec-
retary may require to carry out the study required by this 
section. 
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TITLE II—STATE SMALL 
BUSINESS CREDIT INITIATIVE 
SEC. 201. SHORT TITLE. 
This title may be cited as the ‘‘State Small Business 
Credit Initiative Act of 2010’’. 
SEC. 202. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply: 
(1) APPROPRIATE FEDERAL BANKING AGENCY.— 
The term ‘‘appropriate Federal banking agency’’— 
(A) has the same meaning as in section 3 
of the Federal Deposit Insurance Act; and 
(B) includes the National Credit Union Ad-
ministration Board in the case of any credit 
union the deposits of which are insured in ac-
cordance with the Federal Credit Union Act. 
(2) ENROLLED LOAN.—The term ‘‘enrolled loan’’ 
means a loan made by a financial institution lender 
that is enrolled by a participating State in an ap-
proved State capital access program in accordance 
with this title. 
(3) FEDERAL CONTRIBUTION.—The term ‘‘Fed-
eral contribution’’ means the portion of the contribu-
tion made by a participating State to, or for the ac-
count of, an approved State program that is made 
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with Federal funds allocated to the State by the Sec-
retary under section 203. 
(4) FINANCIAL INSTITUTION.—The term ‘‘finan-
cial institution’’ means any insured depository insti-
tution, insured credit union, or community develop-
ment financial institution, as those terms are each de-
fined in section 103 of the Riegle Community Devel-
opment and Regulatory Improvement Act of 1994. 
(5) PARTICIPATING STATE.—The term ‘‘partici-
pating State’’ means any State that has been ap-
proved for participation in the Program under sec-
tion 204. 
(6) PROGRAM.—The term ‘‘Program’’ means the 
State Small Business Credit Initiative established 
under this title. 
(7) QUALIFYING LOAN OR SWAP FUNDING FACIL-
ITY.—The term ‘‘qualifying loan or swap funding fa-
cility’’ means a contractual arrangement between a 
participating State and a private financial entity 
under which— 
(A) the participating State delivers funds to 
the entity as collateral; 
(B) the entity provides funding from the ar-
rangement back to the participating State; and 
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(C) the full amount of resulting funding 
from the arrangement, less any fees and other 
costs of the arrangement, is contributed to, or for 
the account of, an approved State program. 
(8) RESERVE FUND.—The term ‘‘reserve fund’’ 
means a fund, established by a participating State, 
dedicated to a particular financial institution lender, 
for the purposes of— 
(A) 
depositing 
all 
required 
premium 
charges paid by the financial institution lender 
and by each borrower receiving a loan under an 
approved State program from that financial in-
stitution lender; 
(B) depositing contributions made by the 
participating State, including State contribu-
tions made with Federal contributions; and 
(C) covering losses on enrolled loans by dis-
bursing accumulated funds. 
(9) STATE.—The term ‘‘State’’ means— 
(A) a State of the United States; 
(B) the District of Columbia, the Common-
wealth of Puerto Rico, the Commonwealth of 
Northern Mariana Islands, Guam, American 
Samoa, and the United States Virgin Islands; 
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(C) when designated by a State of the 
United States, a political subdivision of that 
State that the Secretary determines has the ca-
pacity to participate in the Program; and 
(D) under the circumstances described in 
section 204(d), a municipality of a State of the 
United States to which the Secretary has given 
a special permission under section 204(d). 
(10) STATE
CAPITAL
ACCESS
PROGRAM.—The 
term ‘‘State capital access program’’ means a pro-
gram of a State that— 
(A) uses public resources to promote private 
access to credit; and 
(B) meets the eligibility criteria in section 
205(c). 
(11) STATE
OTHER
CREDIT
SUPPORT
PRO-
GRAM.—The term ‘‘State other credit support pro-
gram’’— 
(A) means a program of a State that— 
(i) uses public resources to promote 
private access to credit; 
(ii) is not a State capital access pro-
gram; and 
(iii) meets the eligibility criteria in 
section 206(c); and 
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(B) includes, collateral support programs, 
loan participation programs, and credit guar-
antee programs. 
(12) STATE PROGRAM.—The term ‘‘State pro-
gram’’ means a State capital access program or a 
State other credit support program. 
(13) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
SEC. 203. FEDERAL FUNDS ALLOCATED TO STATES. 
(a) PROGRAM ESTABLISHED; PURPOSE.—There is es-
tablished the State Small Business Credit Initiative (here-
inafter in this title referred to as the ‘‘Program’’), to be 
administered by the Secretary. Under the Program, the Sec-
retary shall allocate Federal funds to participating States 
and make the allocated funds available to the participating 
States as provided in this section for the uses described in 
this section. 
(b) ALLOCATION FORMULA.— 
(1) IN GENERAL.—Not later than 30 days after 
the date of enactment of this title, the Secretary shall 
allocate Federal funds to participating States so that 
each State is eligible to receive an amount equal to 
the average of the respective amounts that the State— 
(A) would receive under the 2009 allocation, 
as determined under paragraph (2); and 
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(B) would receive under the 2010 allocation, 
as determined under paragraph (3). 
(2) 2009 ALLOCATION FORMULA.— 
(A) IN GENERAL.—The Secretary shall de-
termine the 2009 allocation by allocating Fed-
eral funds among the States in the proportion 
that each such State’s 2008 State employment 
decline bears to the aggregate of the 2008 State 
employment declines for all States. 
(B) MINIMUM ALLOCATION.—The Secretary 
shall adjust the allocations under subparagraph 
(A) for each State to the extent necessary to en-
sure that no State receives less than 0.9 percent 
of the Federal funds. 
(C) 2008 STATE EMPLOYMENT DECLINE DE-
FINED.—For purposes of this paragraph and 
with respect to a State, the term ‘‘2008 State em-
ployment decline’’ means the excess (if any) of— 
(i) the number of individuals employed 
in such State determined for December 
2007; over 
(ii) the number of individuals em-
ployed in such State determined for Decem-
ber 2008. 
(3) 2010 ALLOCATION FORMULA.— 
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(A) IN GENERAL.—The Secretary shall de-
termine the 2010 allocation by allocating Fed-
eral funds among the States in the proportion 
that each such State’s 2009 unemployment num-
ber bears to the aggregate of the 2009 unemploy-
ment numbers for all of the States. 
(B) MINIMUM ALLOCATION.—The Secretary 
shall adjust the allocations under subparagraph 
(A) for each State to the extent necessary to en-
sure that no State receives less than 0.9 percent 
of the Federal funds. 
(C) 2009 
UNEMPLOYMENT
NUMBER
DE-
FINED.—For purposes of this paragraph and 
with respect to a State, the term ‘‘2009 unem-
ployment number’’ means the number of individ-
uals within such State who were determined to 
be unemployed by the Bureau of Labor Statistics 
for December 2009. 
(c) AVAILABILITY
OF
ALLOCATED
AMOUNT.—The 
amount allocated by the Secretary to each participating 
State under subsection (b) shall be made available to the 
State as follows: 
(1) ALLOCATED
AMOUNT
GENERALLY
TO
BE 
AVAILABLE TO STATE IN ONE-THIRDS.— 
(A) IN GENERAL.—The Secretary shall— 
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(i) apportion the participating State’s 
allocated amount into one-thirds; 
(ii) transfer to the participating State 
the first one-third when the Secretary ap-
proves the State for participation under sec-
tion 204; and 
(iii) transfer to the participating State 
each successive one-third when the State has 
certified to the Secretary that it has ex-
pended, transferred, or obligated 80 percent 
of the last transferred one-third for Federal 
contributions to, or for the account of, State 
programs. 
(B) AUTHORITY
TO
WITHHOLD
PENDING 
AUDIT.—The Secretary may withhold the trans-
fer of any successive one-third pending results of 
a financial audit. 
(C) TRANSFERS CONTINGENT ON INSPECTOR 
GENERAL AUDITS.— 
(i) IN GENERAL.—Before a transfer to 
a participating State of the second one- 
third or the last one-third, the Inspector 
General of the Department of the Treasury 
shall carry out an audit of the partici-
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pating State’s use of amounts already re-
ceived. 
(ii) PENALTY
FOR
MISSTATEMENT.— 
Any participating State that is found to 
have intentionally misstated any report 
issued to the Secretary under the Program 
shall be ineligible to receive any additional 
funds under the Program. Funds that had 
been allocated or that would otherwise have 
been allocated to such participating State 
shall be paid into the general fund of the 
Treasury for reduction of the public debt. 
(iii) MUNICIPALITIES.—For purposes 
of this subparagraph, the term ‘‘partici-
pating State’’ shall include a municipality 
given special permission to participate in 
the Program, pursuant to section 204(d). 
(2) TRANSFERRED
AMOUNTS.—Each amount 
transferred to a participating State under this section 
shall remain available to the State until used by the 
State as permitted under paragraph (3). 
(3) USE OF TRANSFERRED FUNDS.—Each par-
ticipating State may use funds transferred to it 
under this section only— 
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(A) for making Federal contributions to, or 
for the account of, an approved State program; 
(B) as collateral for a qualifying loan or 
swap funding facility; 
(C) in the case of the first one-third trans-
ferred, for paying administrative costs incurred 
by the State in implementing an approved State 
program in an amount not to exceed 5 percent 
of that first one-third; or 
(D) in the case of each successive one-third 
transferred, for paying administrative costs in-
curred by the State in implementing an ap-
proved State program in an amount not to ex-
ceed 3 percent of that successive one-third. 
(4) TERMINATION OF AVAILABILITY OF AMOUNTS 
NOT TRANSFERRED WITHIN 2 YEARS OF PARTICIPA-
TION.—Any portion of a participating State’s allo-
cated amount that has not been transferred to the 
State under this section by the end of the 2-year pe-
riod beginning on the date that the Secretary ap-
proves the State for participation may be deemed by 
the Secretary to be no longer allocated to the State 
and no longer available to the State and shall be re-
turned to the General Fund of the Treasury. 
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(2) all legal actions necessary to enable such des-
ignated department, agency, or political subdivision 
to implement a State program and participate in the 
Program have been accomplished; 
(3) the State has filed an application with the 
Secretary for approval of a State capital access pro-
gram under section 205 or approval as a State other 
credit support program under section 206, in each 
case within the time period provided in the respective 
section; and 
(4) the State and the Secretary have executed an 
allocation agreement that— 
(A) conforms to the requirements of this 
title; 
(B) ensures that the State program complies 
with such national standards as are established 
by the Secretary under section 209(a)(2); 
(C) sets forth internal control, compliance, 
and reporting requirements as established by the 
Secretary, and such other terms and conditions 
necessary to carry out the purposes of this title, 
including an agreement by the State to allow the 
Secretary to audit State programs; 
(D) requires that the State program be fully 
positioned, within 90 days of the State’s execu-
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tion of the allocation agreement with the Sec-
retary, to act on providing the kind of credit 
support that the State program was established 
to provide; and 
(E) includes an agreement by the State to 
deliver to the Secretary, and update annually, a 
schedule describing how the State intends to ap-
portion among its State programs the Federal 
funds allocated to the State. 
(c) CONTRACTUAL ARRANGEMENTS FOR IMPLEMENTA-
TION OF STATE PROGRAMS.—A State may be approved to 
be a participating State, and be eligible for an allocation 
of Federal funds under the Program, if the State has con-
tractual arrangements for the implementation and admin-
istration of its State program with— 
(1) an existing, approved State program admin-
istered by another State; or 
(2) an authorized agent of, or entity supervised 
by, the State, including for-profit and not-for-profit 
entities. 
(d) SPECIAL PERMISSION.— 
(1) CIRCUMSTANCES WHEN A MUNICIPALITY MAY 
APPLY DIRECTLY.—If a State does not, within 60 
days after the date of enactment of this title, file with 
the Secretary a notice of its intent to apply for ap-
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proval by the Secretary of a State program or within 
9 months after the date of enactment of this title, file 
with the Secretary a complete application for ap-
proval of a State program, the Secretary may grant 
to municipalities of that State a special permission 
that will allow them to apply directly to the Sec-
retary without the State for approval to be partici-
pating municipalities. 
(2) TIMING REQUIREMENTS APPLICABLE TO MU-
NICIPALITIES
APPLYING
DIRECTLY.—To qualify for 
the special permission, a municipality of a State 
must, within 12 months after the date of enactment 
of this title, file with the Secretary a complete appli-
cation for approval by the Secretary of a State pro-
gram. 
(3) NOTICES
OF
INTENT
AND
APPLICATIONS 
FROM MORE THAN 1 MUNICIPALITY.—A municipality 
of a State may combine with 1 or more other munici-
palities of that State to file a joint notice of intent 
to file and a joint application. 
(4) APPROVAL CRITERIA.—The general approval 
criteria in paragraphs (2) and (4) shall apply. 
(5) ALLOCATION TO MUNICIPALITIES.— 
(A) IF MORE THAN 3.—If more than 3 mu-
nicipalities, or combination of municipalities as 
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provided in paragraph (3), of a State apply for 
approval by the Secretary to be participating 
municipalities under this subsection, and the ap-
plications meet the approval criteria in para-
graph (4), the Secretary shall allocate Federal 
funds to the 3 municipalities with the largest 
populations. 
(B) IF 3 OR FEWER.—If 3 or fewer munici-
palities, or combination of municipalities as 
provided in paragraph (3), of a State apply for 
approval by the Secretary to be participating 
municipalities under this subsection, and the ap-
plications meet the approval criteria in para-
graph (4), the Secretary shall allocate Federal 
funds to each applicant municipality or com-
bination of municipalities. 
(6) APPORTIONMENT
OF
ALLOCATED
AMOUNT 
AMONG PARTICIPATING MUNICIPALITIES.—If the Sec-
retary approves municipalities to be participating 
municipalities under this subsection, the Secretary 
shall apportion the full amount of the Federal funds 
that are allocated to that State to municipalities that 
are approved under this subsection in amounts pro-
portionate to the population of those municipalities, 
based on the most recent available decennial census. 
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(7) APPROVING STATE PROGRAMS FOR MUNICI-
PALITIES.—If the Secretary approves municipalities 
to be participating municipalities under this sub-
section, the Secretary shall take into account the ad-
ditional considerations in section 206(d) in making 
the determination under section 205 or 206 that the 
State program or programs to be implemented by the 
participating municipalities, including a State cap-
ital access program, is eligible for Federal contribu-
tions to, or for the account of, the State program. 
SEC. 205. APPROVING STATE CAPITAL ACCESS PROGRAMS. 
(a) APPLICATION.—A participating State that estab-
lishes a new, or has an existing, State capital access pro-
gram that meets the eligibility criteria in subsection (c) 
may apply to Secretary to have the State capital access 
program approved as eligible for Federal contributions to 
the reserve fund. 
(b) APPROVAL.—The Secretary shall approve such 
State capital access program as eligible for Federal con-
tributions to the reserve fund if— 
(1) within 60 days after the date of enactment 
of this title, the State has filed with the Secretary a 
notice of intent to apply for approval by the Sec-
retary of a State capital access program; 
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(2) within 9 months after the date of enactment 
of this title, the State has filed with the Secretary a 
complete application for approval by the Secretary of 
a capital access program; 
(3) the State satisfies the requirements of sub-
sections (a) and (b) of section 204; and 
(4) the State capital access program meets the 
eligibility criteria in subsection (c). 
(c) ELIGIBILITY CRITERIA FOR STATE CAPITAL AC-
CESS PROGRAMS.—For a State capital access program to 
be approved under this section, it must be a program of 
the State that— 
(1) provides portfolio insurance for business 
loans based on a separate loan-loss reserve fund for 
each financial institution; 
(2) requires insurance premiums to be paid by 
the financial institution lenders and by the business 
borrowers to the reserve fund to have their loans en-
rolled in the reserve fund; 
(3) provides for contributions to be made by the 
State to the reserve fund in amounts at least equal to 
the sum of the amount of the insurance premium 
charges paid by the borrower and the financial insti-
tution to the reserve fund for any newly enrolled loan; 
and 
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(4) provides its portfolio insurance solely for 
loans that meet both the following requirements: 
(A) The borrower has 500 employees or less 
at the time that the loan is enrolled in the Pro-
gram. 
(B) The loan amount does not exceed 
$5,000,000. 
(d) FEDERAL CONTRIBUTIONS TO APPROVED STATE 
CAPITAL ACCESS PROGRAMS.—A State capital access pro-
gram approved under this section will be eligible for receiv-
ing Federal contributions to the reserve fund in an amount 
equal to the sum of the amount of the insurance premium 
charges paid by the borrowers and by the financial institu-
tion to the reserve fund for loans that meet the requirements 
in subsection (c)(4). A participating State may use the Fed-
eral contribution to make its contribution to the reserve 
fund of an approved State capital access program. 
(e) MINIMUM PROGRAM REQUIREMENTS FOR STATE 
CAPITAL ACCESS PROGRAMS.—The Secretary shall, by reg-
ulation or other guidance, prescribe Program requirements 
that meet the following minimum requirements: 
(1) EXPERIENCE AND CAPACITY.—The partici-
pating State shall determine for each financial insti-
tution that participates in the State capital access 
program, after consultation with the appropriate Fed-
VerDate Mar 15 2010 
02:28 May 28, 2010
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jbell on DSKDVH8Z91PROD with BILLS