‘‘(A) The loan shall be made to a business 
concern that provides properly licensed medical, 
dental, or psychiatric services to the public. 
‘‘(B) The loan shall be for the purpose of 
opening a business concern in a health profes-
sional shortage area (as defined in section 332 
of the Public Health Service Act (42 U.S.C. 
254e)). 
‘‘(C) The loan shall include the participa-
tion by the Administration equal to 90 percent 
of the balance of the financing outstanding at 
the time of disbursement. 
‘‘(D) The fees on the loan under para-
graphs (18) and (23) shall be reduced by half.’’. 
(b) NOTICE AND COMMENT.—The program required 
by section 7(a)(35) of the Small Business Act, as added 
by subsection (a), shall be established after the oppor-
tunity for notice and comment and not later than 180 days 
after the date of the enactment of this Act. 
SEC. 105. INCREASED VETERAN PARTICIPATION PROGRAM. 
(a) IN GENERAL.—Section 7(a) of the Small Busi-
ness Act (15 U.S.C. 636(a)) is amended by adding at the 
end the following: 
‘‘(36) INCREASED
VETERAN
PARTICIPATION 
PROGRAM.—The Administrator shall carry out an 
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Increased Veteran Participation Program. For a 
loan made under this paragraph, the following shall 
apply: 
‘‘(A) The loan shall be made to a business 
concern the majority ownership interest of 
which is directly held by individuals who are 
veterans of the Armed Forces. 
‘‘(B) The loan shall include the participa-
tion by the Administration equal to 90 percent 
of the balance of the financing outstanding at 
the time of disbursement. 
‘‘(C) The fees on the loan under para-
graphs (18) and (23) shall not apply.’’. 
(b) NOTICE AND COMMENT.—The program required 
by section 7(a)(36) of the Small Business Act, as added 
by subsection (a), shall be established after the oppor-
tunity for notice and comment and not later than 180 days 
after the date of the enactment of this Act. 
SEC. 106. ALTERNATIVE SIZE STANDARD. 
(a) IN GENERAL.—Section 3(a) of the Small Busi-
ness Act (15 U.S.C. 632(a)) is amended by adding at the 
end the following: 
‘‘(4) In addition to any other size standard 
under this subsection, the Administrator shall estab-
lish, and permit a lender making a loan under sec-
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tion 7(a) and a lender making a loan under the de-
velopment company loan program to use, an alter-
native size standard. The alternative size standard 
shall be based on factors including maximum tan-
gible net worth and average net income.’’. 
(b) APPLICABILITY.—Until the Administrator estab-
lishes, under section 3(a)(4) of the Small Business Act 
(as added by subsection (a)), an alternative size standard 
in the case of a lender making a loan under section 7(a) 
of that Act, the alternative size standard in section 
121.301(b) of title 13, Code of Federal Regulations, shall 
apply to such a case. 
SEC. 107. SUPPORT TO REGIONAL OFFICES. 
Section 7(a) of the Small Business Act (15 U.S.C. 
636(a)) is amended by adding at the end the following: 
‘‘(37) SUPPORT TO REGIONAL OFFICES.—The 
Administrator shall carry out a program, within an 
element of the Administration already in existence 
as of the date of the enactment of the Small Busi-
ness Lending Improvements Act of 2007, to provide 
support to regional offices of the Administration in 
assisting small lenders who do not participate in the 
preferred lender program to participate in the 7(a) 
program.’’. 
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TITLE II—504 PROGRAM 
SEC. 201. CERTIFIED DEVELOPMENT COMPANY ECONOMIC 
DEVELOPMENT LOAN PROGRAM. 
Section 504 of the Small Business Investment Act 
of 1958 (15 U.S.C. 697a) is amended— 
(1) by redesignating subsections (a) and (b) as 
subsections (b) and (c); and 
(2) by inserting before subsection (b) (as so re-
designated) the following: 
‘‘(a) The program to provide financing to small busi-
nesses by guarantees of loans under this Act which are 
funded by debentures guaranteed by the Administration 
shall be known as the ‘Certified Development Company 
Economic Development Loan Program’ or ‘504 Loan Pro-
gram’.’’. 
SEC. 202. DEFINITIONS. 
Section 103(6) of the Small Business Investment Act 
of 1958 (15 U.S.C. 662(6)) is amended to read as follows: 
‘‘(6) the term ‘development company’ means an 
entity incorporated under State law with the author-
ity to promote and assist the growth and develop-
ment of small-business concerns in the areas in 
which it is authorized to operate by the Administra-
tion, and the term ‘certified development company’ 
means a development company which the Adminis-
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tration has determined meets the criteria of section 
506;’’. 
SEC. 203. ELIGIBILITY OF DEVELOPMENT COMPANIES TO 
BE DESIGNATED AS CERTIFIED DEVELOP-
MENT COMPANIES. 
Section 506 of the Small Business Investment Act 
of 1958 (15 U.S.C. 697c) is amended to read as follows: 
‘‘SEC. 506. CERTIFIED DEVELOPMENT COMPANIES. 
‘‘(a) AUTHORITY TO ISSUE DEBENTURES.—A devel-
opment company may issue debentures pursuant to this 
Act if the Administration certifies that the company meets 
the following criteria: 
‘‘(1) SIZE.—The development company is re-
quired to be a small concern with fewer than 500 
employees and not under the control of any entity 
which does not meet the Administration’s size stand-
ards as a small business, except that any develop-
ment company which was certified by the Adminis-
tration prior to December 31, 2005 may continue to 
issue debentures. 
‘‘(2) PURPOSE.—The primary purpose of the 
development company is to benefit the community by 
fostering economic development to create and pre-
serve jobs and stimulate private investment. 
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‘‘(3) PRIMARY FUNCTION.—The primary func-
tion of the development company is to accomplish its 
purpose by providing long term financing to small 
businesses by the utilization of the 504 Loan Pro-
gram. It may also provide or support such other 
local economic development activities to assist the 
community. 
‘‘(4) NON-PROFIT
STATUS.—The development 
company is a non-profit corporation, except that a 
development company certified by the Administra-
tion prior to January 1, 1987, may retain its status 
as a for-profit corporation. 
‘‘(5) GOOD STANDING.—The development com-
pany is in good standing in its State of incorpora-
tion and in any other State in which it conducts 
business, and is in compliance with all laws, includ-
ing taxation requirements, in its State of incorpora-
tion and in any other State in which it conducts 
business. 
‘‘(6) MEMBERSHIP.—The development company 
has at least 25 members (or stockholders if the cor-
poration is a for-profit entity), none of whom may 
own or control more than 10 percent of the com-
pany’s voting membership, consisting of representa-
tion from each of the following groups (none of 
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which are in a position to control the development 
company): 
‘‘(A) Government organizations that are 
responsible for economic development. 
‘‘(B) Financial institutions that provide 
commercial long term fixed asset financing. 
‘‘(C) Community organizations that are 
dedicated to economic development. 
‘‘(D) Businesses. 
‘‘(7) BOARD OF DIRECTORS.—The development 
company has a board of directors that— 
‘‘(A) is elected from the membership by 
the members; 
‘‘(B) represents at least three of the four 
groups enumerated in subsection (a)(6) and no 
group is in a position to control the company; 
and 
‘‘(C) meets on a regular basis to make pol-
icy decisions for such company. 
‘‘(8) 
PROFESSIONAL
MANAGEMENT
AND 
STAFF.—The development company has full-time 
professional management, including a chief executive 
officer to manage daily operations, and a full-time 
professional staff qualified to market the 504 Pro-
gram and handle all aspects of loan approval and 
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servicing, including liquidation, if appropriate. The 
development company is required to be independ-
ently managed and operated to pursue its economic 
development mission and to employ its chief execu-
tive officer directly, with the following exceptions: 
‘‘(A) A development company may be an 
affiliate of another local non-profit service cor-
poration (specifically excluding another develop-
ment company) whose mission is to support 
economic development in the area in which the 
development company operates. In such a case: 
‘‘(i) The development company may 
satisfy the requirement for full-time pro-
fessional staff by contracting with a local 
non-profit service corporation (or one of its 
non-profit affiliates), or a governmental or 
quasi-governmental agency, to provide the 
required staffing. 
‘‘(ii) The development company and 
the local non-profit service corporation may 
have partially common boards of directors. 
‘‘(B) A development company in a rural 
area (as defined in section 501(f)) shall be 
deemed to have satisfied the requirements of a 
full-time professional staff and professional 
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management ability if it contracts with another 
certified development company which has such 
staff and management ability and which is lo-
cated in the same general area to provide such 
services. 
‘‘(C) A development company that has 
been certified by the Administration as of De-
cember 31, 2005, and that has contracted with 
a for-profit company to provide services as of 
such date may continue to do so. 
‘‘(b) AREA
OF OPERATIONS.—The Administration 
shall specify the area in which an applicant is certified 
to provide assistance to small businesses under this title, 
which may not initially exceed its State of incorporation 
unless it proposes to operate in a local economic area 
which is required to include part of its State of incorpora-
tion and may include adjacent areas within several States. 
After a development company has demonstrated its ability 
to provide assistance in its area of operations, it may re-
quest the Administration to be allowed to operate in one 
or more additional States as a multi-state certified devel-
opment company if it satisfies the following criteria: 
‘‘(1) Each additional State is contiguous to the 
State of incorporation, except the States of Alaska 
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and Hawaii shall be deemed to be contiguous to any 
State abutting the Pacific ocean. 
‘‘(2) It demonstrates its proficiency in making 
and servicing loans under section 504 by— 
‘‘(A) requesting and receiving designation 
as an accredited lender under section 507 or a 
premier certified lender under section 508; and 
‘‘(B) meeting or exceeding performance 
standards established by the Administration. 
‘‘(3) The development company adds to the 
membership of its State of incorporation additional 
membership from each additional State and the 
added membership meets the requirements of sub-
section (a)(6). 
‘‘(4) The development company adds at least 
one member to its board of directors in the State of 
incorporation, providing that added member was se-
lected by the membership of the additional State. 
‘‘(5) The company meets such other criteria or 
complies with such conditions as the Administration 
deems appropriate. 
‘‘(c) PROCESSING OF EXPANSION APPLICATIONS.— 
The Administration shall respond to the request of a cer-
tified development company for certification as a multi- 
state company on an expedited basis within 30 days of 
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receipt of a completed application if the application dem-
onstrates that the development company meets the re-
quirements of subsection (b)(1) through (b)(4). 
‘‘(d) USE OF FUNDS LIMITED TO STATE WHERE 
GENERATED.—Any funds generated by a development 
company from making 503 and 504 loans which remain 
after payment of staff, operating and overhead expenses 
shall be retained by the development company as a reserve 
for future operations, for expanding its area of operations 
in a local economic area as authorized by the Administra-
tion, or for investment in other local economic develop-
ment activity in the State from which the funds were gen-
erated. 
‘‘(e) ETHICAL REQUIREMENTS.— 
‘‘(1) IN GENERAL.—Certified development com-
panies, their officers, employees and other staff, 
shall at all times act ethically and avoid activities 
which constitute a conflict of interest or appear to 
constitute a conflict of interest. No one may serve as 
an officer, director or chief executive officer of more 
than one certified development company. 
‘‘(2) 
PROHIBITED
CONFLICT
IN
PROJECT 
LOANS.—As part of a project under section 504, no 
certified development company may recommend or 
approve a guarantee of a debenture by the Adminis-
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