trator shall require such standard review for each new en-
trant to the Preferred Lender Program.
(h) INDEPENDENT STUDY OF LOAN PROGRAMS.—
(1) STUDY REQUIRED.—The Administrator shall
conduct a comprehensive assessment of the perform-
ance of the loan programs authorized by section 7(a)
of the Small Business Act (15 U.S.C. 636(a)) and
title V of the Small Business Investment Act of 1958
(15 U.S.C. 661) addressing the matters described in
paragraph (2) and resulting in a report to Congress
pursuant to paragraph (5).
(2) MATTERS TO BE ASSESSED.—In addition to
such other matters as the Administrator considers ap-
propriate, the assessment required by paragraph (1)
shall address, with respect to each loan program de-
scribed in paragraph (1) for each of the fiscal years
described in paragraph (3)—
(A) the number and frequency of deferrals
and defaults;
(B) default rates;
(C) comparative loss rates, by—
(i) type of lender (separately address-
ing preferred lenders, certified lenders, and
general participation lenders);
(ii) term of the loan; and
(iii) dollar value of the loan at dis-
bursement; and
(D) the economic models used by the Office
of Management and Budget to calculate the cred-
it subsidy rate applicable to the loan programs.
(3) PERIOD OF ASSESSMENT.—The assessments
undertaken pursuant to paragraph (2) shall address
data for the period beginning with the first full fiscal
year of the implementation of each loan program de-
scribed in paragraph (1) through fiscal year 1995.
(4) PERFORMANCE BY THE PRIVATE SECTOR.—
(A) CONTRACTOR
PERFORMANCE.—A pri-
vate sector contractor shall be used by the Ad-
ministrator to conduct the assessment required
by paragraph (1) and to prepare the report to
Congress required by paragraph (3).
(B) SOLICITATION AND AWARD.—The con-
tract shall be awarded pursuant to a solicitation
issued not later than 60 days after the date of
the enactment of this Act, which shall provide for
full and open competition. The Administrator
shall make every reasonable effort to award the
contract not later that 60 days after the date
specified in the solicitation for receipt of propos-
als.
(C) ACCESS TO INFORMATION.—The Admin-
istrator shall provide to the contractor access to
any information collected by or available to the
Administration with regard to the loan pro-
grams being assessed. The contractor shall pre-
serve the confidentiality of any information for
which confidentiality is protected by law or
properly asserted by the person submitting such
information.
(D) CONTRACT
FUNDING.—The Adminis-
trator shall fund the cost of the contract from the
amounts appropriated for the salaries and ex-
penses of the Administration for fiscal year
1997.
(5) REPORT TO CONGRESS.—
(A) CONTENTS.—The contractor shall sub-
mit a report of—
(i) its analyses of the matters to be as-
sessed pursuant to paragraph (2); and
(ii) its independent recommendations,
with respect to each loan program, regard-
ing—
(I) improving the Administra-
tion’s timely collection and subsequent
management of data to measure the
performance of each loan program de-
scribed in paragraph (1); and
(II) reducing loss rates for each
such loan program.
(B) SUBMISSION
BY
CONTRACTOR.—The
contractor shall submit the report required by
subparagraph (A) not later than 6 months after
the date of the contract award.
(C) SUBMISSION TO CONGRESS.—The Ad-
ministrator shall submit the report received from
the contractor pursuant to subparagraph (B) to
the Committees on Small Business of the House
of Representatives and the Senate within 30
days of receipt of the report. The Administrator
shall append his comments, and those of the Of-
fice of Management and Budget, if any, to the
report.
(i) GENERAL ACCOUNTING OFFICE STUDY.—
(1) IN GENERAL.—The General Accounting Of-
fice shall conduct a comparison of the cost of liquida-
tion for—
(A) loans guaranteed under the Preferred
Lenders Program that are authorized by section
7(a) of the Small Business Act (15 U.S.C.
636(a)) and liquidated by the Preferred Lenders;
(B) loans made and liquidated by, Preferred
Lenders, but not guaranteed under the authority
in section 7(a); and
(C) loans guaranteed by the Small Business
Administration under the authority in section
7(a) and liquidated by the Administration, tak-
ing into account all of the related costs incurred
by the Federal Government.
(2) REPORT.—Not later than 9 months after the
date of enactment of this Act the General Accounting
Office shall deliver the results of the study to the Com-
mittees on Small Business of the House and Senate.
SEC. 104. DISASTER LOAN PROGRAM.
(a) INTEREST RATE.—Section 7(c) (15 U.S.C. 636(c))
is amended by redesignating paragraphs (6) and (7) as
paragraphs (8) and (9), respectively, and by inserting after
paragraph (5) the following:
‘‘(6) DISASTERS COMMENCING AFTER OCTOBER 1,
1996.—Notwithstanding any other provision of law,
the interest rate on the Federal share of any loan
made under subsection (b)(1) and (b)(2) on account
of a disaster commencing on or after October 1, 1996,
shall be in the case of a homeowner, or business, or
other concern, including agricultural cooperatives,
unable to obtain credit elsewhere, at the rate pre-
scribed by the Administration but not more than 3⁄4
of the rate determined by the Secretary of the Treas-
ury, taking into consideration the current average
market yield on outstanding marketable obligations of
the United States with remaining periods to maturity
comparable to the average maturities of such loans
plus an additional charge of not to exceed 1 percent
per annum as determined by the Administrator, and
adjusted to the nearest 1⁄8 of 1 percent.
‘‘(7) LIABILITY.—Whoever wrongfully misapplies
the proceeds of a loan under subsection (b) shall be
liable to the Administrator in an amount equal to
11⁄2 times the original principal amount of the loan.’’.
(b) PRIVATE SECTOR LOAN SERVICING DEMONSTRA-
TION PROGRAM.—
(1)(A) DEMONSTRATION PROGRAM REQUIRED.—
The Administration shall conduct a demonstration
program, within the parameters described in para-
graph (2), to evaluate the comparative costs and bene-
fits of having the Administration’s portfolio of disas-
ter loans serviced under contract rather than directly
by employees of the Administration.
(B) INITIATION DATE.—Not later than 90 days
after the date of enactment of this Act, the Adminis-
ance of the loan servicing by the contractor ex-
ceeds the cost of performance of the loan servic-
ing by employees of the Administration. The Ad-
ministrator may terminate the contract during
its initial term (or any subsequent option pe-
riod), based upon performance and cost criteria
specified in the solicitation and included in the
contract.
(D) DISPOSITION
OF
GOVERNMENT
FUR-
NISHED PROPERTY.—The contract shall require
the contractor to—
(i) maintain the confidentiality of the
loan files furnished by the Administration;
and
(ii) return such loan files and other
Government-furnished property within a
specified period after expiration (or termi-
nation) of the contract.
(3) TERM OF DEMONSTRATION PROGRAM.—
(A) IN GENERAL.—The demonstration pro-
gram required by paragraph (1) shall commence
on the first day of the first fiscal year quarter
after the award of the contract and continue
through the last day of the fiscal year quarter at
the expiration of the 2-year contract period or
any subsequent contract option.
(B) EARLY TERMINATION.—If the Adminis-
trator terminates each contract pursuant to
paragraph (2)(C), the demonstration program
shall end on the effective date of such termi-
nation.
(4) REPORTS.—
(A) INTERIM REPORTS.—The Administrator
shall submit to the Committees on Small Busi-
ness of the House of Representatives and Senate
interim reports on the conduct of the demonstra-
tion program not later than 60 days prior to the
expiration of the initial 2-year contract perform-
ance period, each subsequent option period, or
termination of a contract. The contractor shall
be afforded a reasonable opportunity to attach
comments to each such report.
(B) FINAL
REPORT.—The Administrator
shall submit to the Committees on Small Busi-
ness of the House of Representatives and Senate
a final report within 120 days of the termi-
nation of the demonstration program.
(c) DEFINITION OF DISASTER.—(1) Section 3(k) (15
U.S.C. 632(k)) is amended by striking ‘‘ocean conditions’’
and inserting ‘‘ocean conditions, or government action (reg-
ulatory or otherwise)’’.
(2) For the purposes of this Act this amendment shall
be considered effective with respect to any disaster occurring
on or after March 1, 1994.
SEC. 105. MICROLOAN DEMONSTRATION PROGRAM.
(a) 
TECHNICAL
ASSISTANCE
GRANT
REQUIRE-
MENTS.—Section 7(m)(4) (15 U.S.C. 636(m)(4)) is amend-
ed—
(1) in subparagraph (A) by striking ‘‘25 per-
cent’’ and inserting ‘‘20 percent’’; and
(2) in subparagraph (B) by striking ‘‘25 per-
cent’’ and inserting ‘‘35 percent’’.
(b) IMPLEMENTATION OF GUARANTEED MICROLOAN
PILOT PROGRAM.—
(1) 
ACTION
REQUIRED.—The 
Administrator
shall implement or submit a detailed report explain-
ing the impediments to the implementation of a
Guaranteed Microloan Pilot Program pursuant to
section 7(m)(12) (15 U.S.C. 636(m)(12)) addressing
the matters described in paragraph (2) by the dead-
line specified in paragraph (3).
(2) CONTENTS OF IMPLEMENTATION REPORT.—
In addition to such other matters as the Adminis-
trator may deem appropriate, the plan required by
paragraph (1) shall include any identified impedi-
ments to implementation of a Guaranteed Microloan
Pilot Program that, in the opinion of the Adminis-
trator, require amendments to the program’s author-
izing legislation, and if such impediments are identi-
fied, includes recommendations for such statutory
changes.
(3) DEADLINE FOR SUBMISSION.—The plan re-
quired by paragraph (2) shall be submitted to the
Committees on Small Business of the House of Rep-
resentatives and Senate not later than December 1,
1996.
(c) LIMITATION ON FUNDING.—In the event that the
Administrator shall fail to submit the report required by
subsection (b)(1) by the deadline specified in subsection
(b)(3), none of the amounts appropriated to carry out the
Microloan Program authorized by section 7(m)(12) of the
Small Business Act (15 U.S.C. 636(m)(12)) during fiscal
year 1997 may be expended until such time as the pilot
program is implemented or the report is submitted.
SEC. 106. SMALL BUSINESS DEVELOPMENT CENTER PRO-
GRAM.
(a) ASSOCIATE ADMINISTRATOR FOR SMALL BUSINESS
DEVELOPMENT CENTERS.—
(1) DUTIES.—Section 21(h) (15 U.S.C. 648(h))
is amended to read as follows:
‘‘(h) ASSOCIATE ADMINISTRATOR FOR SMALL BUSI-
NESS DEVELOPMENT CENTERS.—
‘‘(1) APPOINTMENT
AND
COMPENSATION.—The
Administrator shall appoint an Associate Adminis-
trator for Small Business Development Centers who
shall report to an official who is not more than one
level below the Office of the Administrator and who
shall serve without regard to the provisions of title 5
governing appointments in the competitive service,
and without regard to chapter 51, and subchapter III
of chapter 53 of such title relating to classification
and General Schedule pay rates, but at a rate not less
than the rate of GS17 of the General Schedule.
‘‘(2) DUTIES.—
‘‘(A) IN GENERAL.—The sole responsibility
of the Associate Administrator for Small Busi-
ness Development Centers shall be to administer
the small business development center program.
Duties of the position shall include, but are not
limited to, recommending the annual program
budget, reviewing the annual budgets submitted
by each applicant, establishing appropriate
funding levels therefore, selecting applicants to
participate in this program, implementing the
provisions of this section, maintaining a clear-
inghouse to provide for the dissemination and
exchange of information between small business
development centers and conducting audits of re-
cipients of grants under this section.
‘‘(B) CONSULTATION
REQUIREMENTS.—In
carrying out the duties described in this sub-
section, the Associate Administrator shall confer
with and seek the advice of the Board established
by subsection (i) and Administration officials in
areas served by the small business development
centers; however, the Associate Administrator
shall be responsible for the management and ad-
ministration of the program and shall not be
subject to the approval or concurrence of such
Administration officials.’’.
(2) 
REFERENCES
TO
ASSOCIATE
ADMINIS-
TRATOR.—Section 21 (15 U.S.C. 648) is amended—
(A) in subsection (c)(7) by striking ‘‘Deputy
Associate Administrator of the Small Business
Development Center program’’ and inserting
‘‘Associate Administrator for Small Business De-
velopment Centers’’; and
(B) in subsection (i)(2) by striking ‘‘Deputy
Associate Administrator for Management Assist-
ance’’ and inserting ‘‘Associate Administrator
for Small Business Development Centers’’.
(b) EXTENSION
OR
RENEWAL
OF
COOPERATIVE
AGREEMENTS.—Section 21(k)(3) (15 U.S.C. 648(k)(3)) is
amended to read as follows:
‘‘(3) EXTENSION OR RENEWAL OF COOPERATIVE
AGREEMENTS.—
‘‘(A) IN GENERAL.—In extending or renew-
ing a cooperative agreement of a small business
development center, the Administration shall
consider the results of the examination and cer-
tification program conducted pursuant to para-
graphs (1) and (2).
‘‘(B) CERTIFICATION REQUIREMENT.—After
September 30, 2000, the Administration may not
renew or extend any cooperative agreement with
a small business development center unless the
center has been approved under the certification
program conducted pursuant to this subsection;
except that the Associate Administrator for
Small Business Development Centers may waive
such certification requirement, in the discretion
of the Associate Administrator, upon a showing
that the center is making a good faith effort to
obtain certification.’’.
(c) TECHNICAL
CORRECTION.—Section 21(l) (15
U.S.C. 648(l)) is amended to read as follows:
‘‘(l) CONTRACT AUTHORITY.—The authority to enter
into contracts shall be in effect for each fiscal year only
to the extent and in the amounts as are provided in advance
in appropriations Acts. After the administration has en-
tered a contract, either as a grant or a cooperative agree-
ment, with any applicant under this section, it shall not
suspend, terminate, or fail to renew or extend any such con-
tract unless the Administration provides the applicant with
written notification setting forth the reasons therefore and
affording the applicant an opportunity for a hearing, ap-
peal, or other administrative proceeding under the provi-
sions of chapter 5 of title 5, United States Code.’’.
SEC. 107. MISCELLANEOUS AUTHORITIES TO PROVIDE
LOANS AND OTHER FINANCIAL ASSISTANCE.
(a) FUNDING LIMITATION; SEMINARS.—Section 7(d)
(15 U.S.C. 636(d)) is amended—
(1) by striking ‘‘(d)(1)’’ and inserting ‘‘(d)’’; and
(2) by striking paragraph (2).
(b) TRADE ADJUSTMENT LOANS.—Section 7(e) (15
U.S.C. 636(e)) is amended to read as follows:
‘‘(e) ƒRESERVED≈.’’.
(c) WAIVER OF CREDIT ELSEWHERE TEST FOR COL-
LEGES AND UNIVERSITIES.—Section 7(f) (15 U.S.C. 636(f))
is amended to read as follows:
‘‘(f) ƒRESERVED≈.’’.
(d) LOANS
TO SMALL BUSINESS CONCERNS
FOR
SOLAR
ENERGY
AND
ENERGY
CONSERVATION
MEAS-
URES.—Section 7(l) (15 U.S.C. 636(l)) is amended to read
as follows:
‘‘(l) ƒRESERVED≈.’’.
SEC. 
108. 
SMALL 
BUSINESS 
COMPETITIVENESS 
DEM-
ONSTRATION PROGRAM.
(a) EXTENSION OF DEMONSTRATION PROGRAM.—Sec-
tion 711(c) of the Small Business Competitiveness Dem-
onstration Program Act of 1988 (15 U.S.C. 644 note; 102
Stat. 3890) is amended by striking ‘‘September 30, 1996’’
and inserting ‘‘September 30, 2000’’.
(b) REPORTING OF SUBCONTRACT PARTICIPATION IN
CONTRACTS
FOR
ARCHITECTURAL
AND
ENGINEERING
SERVICES.—Section 714(b)(5) of the Small Business Com-
petitiveness Demonstration Program Act of 1988 (15 U.S.C.
644 note; 102 Stat. 3892) is amended to read as follows:
‘‘(5) DURATION.—The system described in sub-
section (a) shall be established not later than October
1, 1996 (or as soon as practicable thereafter on the
first day of a subsequent quarter of fiscal year 1997),
and shall terminate on September 30, 2000.’’.
(c) REFERENCES TO ARCHITECTURAL AND ENGINEER-
ING SERVICES.—
(1) IN GENERAL.—The Small Business Competi-
tiveness Demonstration Program Act of 1988 (15
U.S.C. 644 note; 102 Stat. 3889 et seq.) is amended
in subsections (a)(3) and (d) by striking ‘‘surveying
and mapping’’ and inserting ‘‘surveying, mapping,
and landscape architecture’’.
(2) DESIGNATED
INDUSTRY
GROUPS.—Section
717(d) of the Small Business Competitiveness Dem-
onstration Program Act of 1988 (15 U.S.C. 644 note;
102 Stat. 3894) is amended by inserting ‘‘standard
industrial classification codes 0781 (if identified as
pertaining to architecture services),’’ after ‘‘(if identi-
fied as pertaining to mapping services),’’.
(d) REPORTS TO CONGRESS.—
(1) IN
GENERAL.—Section 716 of the Small
Business Competitiveness Demonstration Program
Act of 1988 (15 U.S.C. 644 note; 102 Stat. 3893) is
amended—
(A) in subsection (a), by striking ‘‘fiscal
year 1991 and 1995’’ and inserting ‘‘each of fis-
cal years 1991 through 1999’’;
(B) in subsection (a), by striking ‘‘results’’
and inserting ‘‘cumulative results’’; and
(C) in subsection (c), by striking ‘‘1996’’
and inserting ‘‘1999’’.
(2) CUMULATIVE
REPORT
THROUGH
FISCAL
YEAR 1995.—A cumulative report of the results of the
Small Business Competitiveness Demonstration Pro-
gram for fiscal years 1991 through 1995 shall be sub-
mitted not later than 60 days after the date of the en-
actment of this Act pursuant to section 716(a) of the
Small Business Competitiveness Demonstration Pro-
gram Act of 1988 (15 U.S.C. 644 note; 102 Stat.
3893), as amended by paragraph (1) of this sub-
section.
SEC. 109. AMENDMENT TO SMALL BUSINESS GUARANTEED
CREDIT ENHANCEMENT ACT OF 1993.
(a) Section 7 of the Small Business Guaranteed Credit
Enhancement Act of 1993 (Public Law 10381; 15 U.S.C.
634 note) is repealed effective September 29, 1996.
(b) CLERICAL AMENDMENT.—The table of contents for
the Small Business Guaranteed Credit Enhancement Act of
1993 (Public Law 103–81; 15 U.S.C. 631 note) is amended
by striking the item relating to section 7.
SEC. 110. 1998 AUTHORIZATIONS.
Section 20 (15 U.S.C. 631 note) is amended—
(1) in subsection (p), by striking ‘‘authorized for
fiscal year 1997’’ and inserting ‘‘authorized for each
of fiscal years 1997 and 1998’’;
(2) by striking subsection (p)(3)(B) and by in-
serting the following:
‘‘(B) $268,000,000 in guarantees of deben-
tures; and’’;
(3) in subsection (q)(1) by striking ‘‘fiscal year
1997’’ and inserting ‘‘each of fiscal years 1997 and
1998’’; and
(4) in subsection (q)(2) by striking ‘‘year 1997’’
and inserting ‘‘years 1997 and 1998’’.
SEC. 111. LEVEL OF PARTICIPATION FOR EXPORT WORKING
CAPITAL LOANS.
Section 7(a)(2) (15 U.S.C. 636(a)(2)) is amended by
adding at the end the following:
‘‘(D) PARTICIPATION UNDER EXPORT WORK-
ING
CAPITAL
PROGRAM.—Notwithstanding sub-
paragraph (A), in an agreement to participate
in a loan on a deferred basis under the Export
Working Capital Program established pursuant
to paragraph (14)(A), such participation by the
Administration shall be equal to the rate speci-
fied under this paragraph as in effect on the day
before the date of the enactment of the Small
Business Lending Enhancement Act of 1995.’’.
TITLE 
II—AMENDMENTS 
TO
SMALL 
BUSINESS 
INVEST-
MENT ACT
SEC. 201. REFERENCES.
Except as otherwise expressly provided, whenever in
this title an amendment or repeal is expressed in terms of
an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or
other provision of the Small Business Investment Act of
1958 (15 U.S.C. 661 et seq.).
SEC. 202. MODIFICATIONS TO DEVELOPMENT COMPANY DE-
BENTURE PROGRAM.
(a) DECREASED LOAN TO VALUE RATIOS.—Section
502(3) (15 U.S.C. 696(3)) is amended to read as follows:
‘‘(3) CRITERIA FOR ASSISTANCE.—
‘‘(A) IN GENERAL.—Any development com-
pany assisted under this section or section 503
of this title must meet the criteria established by
the Administration, including the extent of par-
ticipation to be required or amount of paid-in
capital to be used in each instance as is deter-
mined to be reasonable by the Administration.
‘‘(B) COMMUNITY INJECTION FUNDS.—
‘‘(i) SOURCES OF FUNDS.—Community
injection funds may be derived, in whole or
in part, from—
‘‘(I) State or local governments;
‘‘(II) banks or other financial in-
stitutions;
‘‘(III) foundations or other not-
for-profit institutions; or
‘‘(IV) the small business concern
(or its owners, stockholders, or affili-
ates) receiving assistance through a
body authorized by this title.
‘‘(ii) FUNDING FROM INSTITUTIONS.—
Not less than 50 percent of the total cost of
any project financed pursuant to clauses
(i), (ii), or (iii) of subparagraph (C) shall
come from the institutions described in sub-
clauses (I), (II), and (III) of clause (i).
‘‘(C) FUNDING
FROM
A
SMALL
BUSINESS
CONCERN.—The small business concern (or its
owners, stockholders, or affiliates) receiving as-
sistance through a body authorized by this title
shall provide—
‘‘(i) at least 15 percent of the total cost
of the project financed, if the small business
concern has been in operation for a period
of 2 years or less;
‘‘(ii) at least 15 percent of the total
cost of the project financed if the project in-
volves the construction of a limited or single
purpose building or structure;
‘‘(iii) at least 20 percent of the total
cost of the project financed if the project in-
volves both of the conditions set forth in
clauses (i) and (ii); or
‘‘(iv) at least 10 percent of the total
cost of the project financed, in all other cir-
cumstances, at the discretion of the develop-
ment company.’’.
(b) GUARANTEE FEE FOR DEVELOPMENT COMPANY
DEBENTURES.—Section 
503(b)(7)(A) 
(15 
U.S.C.
697(b)(7)(A)) is amended by striking ‘‘0.125 percent’’ and
inserting ‘‘0.8125 percent’’.
(c) FEES TO OFFSET SUBSIDY COST.—Section 503(d)
(15 U.S.C. 697(d)) is amended to read as follows:
‘‘(d) CHARGES FOR ADMINISTRATION EXPENSES.—
‘‘(1) LEVEL OF CHARGES.—The Administration
may impose an additional charge for administrative
expenses with respect to each debenture for which
payment of principal and interest is guaranteed
under subsection (a).
‘‘(2) PARTICIPATION FEE.—The Administration
shall also impose a one-time fee of 50 basis points on
the total participation in any project of any institu-
tion described in subclause (I), (II), or (III) of section
502(3)(B)(i). Such fee shall be imposed only when the
participation of the institution will occupy a senior
credit position to that of the development company.
Such fee shall be collected by the development com-
pany, forwarded to the Administration, and used to
offset the cost (as such term is defined in section 502
of the Credit Reform Act of 1990) to the Administra-
tion of making guarantees under subsection (a).
‘‘(3) DEVELOPMENT
COMPANY
FEE.—The Ad-
ministration shall collect annually from each develop-
ment company a fee of 0.125 percent of the outstand-
ing principal balance of any guaranteed debenture
authorized by the Administration after September 30,
1996. Such fee shall be derived from the servicing fees
collected by the development company pursuant to
regulation, and shall not be derived from any addi-
tional fees imposed on small business concerns. All
proceeds of the fee shall be used to offset the cost (as
such term is defined in section 502 of the Credit Re-
form Act of 1990) to the Administration of making
guarantees under subsection (a).’’.
(d) EFFECTIVE DATE.—Section 503 (15 U.S.C. 697)
is amended by adding at the end the following:
‘‘(f) EFFECTIVE DATE.—The fees authorized by sub-
sections (b) and (c) shall apply to financings approved by
the Administration on or after October 1, 1996, but shall
not apply to financings approved by the Administration
on or after October 1, 1997.’’.
SEC. 203. REQUIRED ACTIONS UPON DEFAULT.
Section 503 (15 U.S.C. 697) is amended by adding
at the end the following:
‘‘(g) REQUIRED ACTIONS UPON DEFAULT.—
‘‘(1) DEADLINES.—
‘‘(A) INITIAL ACTIONS.—Not later than the
45th day after the date on which a payment on
a loan funded through a debenture guaranteed
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 defer-
ral agreement.
‘‘(B) PURCHASE OR ACCELERATION OF DE-
BENTURE.—Not later than the 65th day after the
date on which a payment on a loan described in
subparagraph (A) is due and not received, 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
‘‘(C) for any project financed after Septem-
ber 30, 1996, decline to pay any default interest
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 develop-
ment companies authorized to make loans and issue deben-
tures under title V of the Small Business Investment Act
of 1958 to participate in the pilot program. The develop-
ment 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 as-
sociate of the third party lender. In order to qualify to par-
ticipate in the pilot, each development company shall—
(1) have a minimum of 6 years experience in the
program established by such title V;
(2) have made, during the last 6 fiscal years, an
average of 10 loans per year through the program es-
tablished by such title V; and
(3) have a minimum of 2 years experience, either
independently or through an agent, in liquidating
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 deben-
tures guaranteed under title V of the Small Business Invest-
ment Act of 1958 that are in default after the date of enact-
ment of this Act, be authorized to—
(1) perform all liquidation and foreclosure func-
tions, including the acceleration or purchase of com-
munity injection funds; and
(2) liquidate such loans in a reasonable and
sound manner and according to commercially accept-
ed practices.
(d) AUTHORITY OF THE ADMINISTRATOR.—In carry-
ing out the pilot program, the Administrator shall—
(1) have full authority to 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 Rep-
resentatives and the Senate. The report shall include
information relating to—
(A) the total dollar amount of each loan
and project liquidated;
(B) the total dollar amount guaranteed by
the Administration;
(C) total dollar losses;
(D) total recoveries both as percentage of the
amount guaranteed and the total cost of the
project; and
(E) a comparison of the pilot program in-
formation with the same information for liquida-
tion 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 quarters
of the pilot program’s operation after the date of im-
plementation.
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 insert-
ing the following:
‘‘(A) provide for a central registration of all
loans and trust certificates sold pursuant to sub-
sections (f) and (g) of this section;’’; and
(4) by adding at the end the following:
‘‘(2) Nothing in this subsection shall prohibit the utili-
zation of a book-entry or other electronic form of registra-
tion 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 DEVELOPMENT
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)’’;
(3) by striking subparagraph (A), as redesig-
nated by paragraph (1) of this subsection, and insert-
ing the following:
‘‘(A) provide for a central registration of all
trust certificates sold pursuant to this section;’’ and
(4) by adding at the end the following:
‘‘(2) Nothing in this subsection shall prohibit the utili-
zation of a book-entry or other electronic form of registra-
tion for trust certificates.’’.
SEC. 206. PREFERRED SURETY BOND GUARANTEE PRO-
GRAM.
(a) ADMISSIONS OF ADDITIONAL PROGRAM PARTICI-
PANTS.—Section 411(a) (15 U.S.C. 694(a)) is amended by
adding a new paragraph (5), as follows:
‘‘(5)(A) The Administration shall promptly act upon
an application from a surety to participate in the Preferred
Surety Bond Guarantee Program, authorized by paragraph
(3), in accordance with criteria and procedures established
in regulations pursuant to subsection (d).
‘‘(B) The Administration is authorized to reduce the
allotment of bond guarantee authority or terminate the par-
ticipation of a surety in the Preferred Surety Bond Guar-
antee Program based on the rate of participation of such
surety during the 4 most recent fiscal year quarters com-
pared to the median rate of participation by the other sure-
ties in the program.’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply with respect to applications received
(or pending substantive evaluation) on or after October 1,
1995.