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103D CONGRESS
1ST SESSION
H. R. 2766
To amend the 7(a) Loan Program, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 28, 1993
Mr. LAFALCE introduced the following bill; which was referred to the
Committee on Small Business
A BILL
To amend the 7(a) Loan Program, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SEC. 2. AUTHORITY TO IMPOSE SECONDARY MARKET FEES.
(a) Section 5(g) of the Small Business Act (15 U.S.C.
634) is amended by striking paragraph (4) and by insert-
ing in lieu thereof the following:
‘‘(4) The Administration may collect the following
fees for loan guarantees sold into the secondary market
pursuant to the provisions of subsection (f): an amount
equal to (A) not more than .4 percent per year on the
outstanding balance of such loan guaranteed by the Ad-
ministration, and (B) not more than 50 percent of that
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portion of the sale price which is in excess of 110 percent
of the outstanding principal amount of such loan guaran-
teed by the Administration. Any such fees imposed by the
Administration shall be collected by the agent which car-
ries out on behalf of the Administration the central reg-
istration functions required by subsection (h) of this sec-
tion and shall be paid to the Administration and used sole-
ly to reduce the subsidy on loans guaranteed under section
7(a) of this Act: Provided, That such fees shall not be
charged to the borrower whose loan is guaranteed: and,
Provided further, That nothing herein shall preclude any
agent of the Administration from collecting a fee approved
by the Administration for the functions described in sub-
section (h)(2).’’.
(b) Any new fees imposed by the Administration pur-
suant to the authority conferred by subsection (a) shall
be applicable only to loans initially sold in the secondary
market pursuant to the provisions of section 5(f) of the
Small Business Act after August 31, 1993.
SEC. 3. AUTHORITY TO REDUCE LOAN GUARANTEE PER-
CENTAGES.
(a) Section 7(a)(2) of the Small Business Act (15
U.S.C. 636) is amended—
(1) by striking from the end of clause (B)(i) the
word ‘‘and’’ and by redesignating clause (B)(ii) as
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(B)(iv) and by inserting the following after clause
(B)(i):
‘‘(ii) not less than 75 percent of the
financing outstanding at the time of dis-
bursement, if such financing is more than
$155,000 and the period of maturity of
such financing is more than 10 years, ex-
cept that the participation by the Adminis-
tration may be reduced below 75 percent
upon request of the participating lender;
‘‘(iii) not less than 85 percent of the
financing outstanding at the time of dis-
bursement, if such financing is more than
$155,000 and the period of maturity of
such financing is 10 years or less, except
that the participation by the Administra-
tion may be reduced below 85 percent
upon request of the participating lender;
and’’;
(2) by striking the words ‘‘85 percent under
subparagraph (B)’’ and by inserting in lieu thereof
the following: ‘‘the above specified percentums’’;
(3) by striking from paragraph (B) the words
‘‘not less than 80 percent, except upon’’ and by in-
serting in lieu thereof the following: ‘‘not less than
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70 percent, unless a lesser percent is required by
clause (B)(ii) or upon the’’; and
(4) by inserting after the third sentence the fol-
lowing: ‘‘The maximum interest rate for a loan guar-
anteed under the Preferred Lenders Program shall
not exceed the maximum interest rate, as deter-
mined by the Administration, which is made applica-
ble to other loan guarantees under section 7(a).’’.
(b) The amendments made by subsection (a) shall be
effective September 1, 1993, but shall not be applicable
to loan guarantee applications received by the Administra-
tion prior to August 21, 1993.
SEC. 4. STUDY AND REPORT.
The Administration shall study, monitor and evaluate
the impact of the amendments made by sections 2 and
3 of this Act on the ability of small business concerns to
obtain financing and the impact of such sections on the
effectiveness, viability and growth of the secondary market
authorized by section 5(f) of the Small Business Act. Not
later than 16 months after the date of enactment, and
annually thereafter, the Administration shall submit to the
Committees on Small Business of the Senate and the
House of Representatives a report containing the Adminis-
tration’s findings and recommendations on such impact,
specifically including changes in the interest rates on
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financings provided to small business concerns through
the use of the secondary market.
SEC. 5. REPEALER.
Sections 2 and 3 of this Act are hereby repealed on
September 30, 1996.
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