I
104TH CONGRESS
1ST SESSION
H. R. 2125
To provide for the termination of the present Small Business Administration
and certain of its functions, to establish a Small Business Administration
in the Department of the Treasury and an Office of Small Business
Advocacy in the Executive Office of the President, and for other pur-
poses.
IN THE HOUSE OF REPRESENTATIVES
JULY 27, 1995
Mr. DREIER (for himself, Mr. HEFLEY, Mr. SOLOMON, Mr. COX of California,
Mr. MCCOLLUM, Mr. HILLEARY, Mr. ROHRABACHER, Mr. ROYCE, Mr.
NEUMANN, Mr. STOCKMAN, and Mr. BAKER of California) introduced the
following bill; which was referred to the Committee on Small Business
A BILL
To provide for the termination of the present Small Business
Administration and certain of its functions, to establish
a Small Business Administration in the Department of
the Treasury and an Office of Small Business Advocacy
in the Executive Office of the President, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Small Business Admin-
istration Transfer Act’’.
TITLE I—REORGANIZATION OF
SMALL BUSINESS FUNCTIONS
SEC. 101. TERMINATION OF PRESENT SMALL BUSINESS AD-
MINISTRATION.
(a) IN GENERAL.—The present Small Business Ad-
ministration shall terminate on September 30, 1996.
(b) PRESENT SMALL BUSINESS ADMINISTRATION
DEFINED.—In this Act, the term ‘‘present Small Business
Administration’’ means the Small Business Administra-
tion established by section 4(a) of the Small Business Act,
as in effect on the day before the effective date of this
Act.
SEC. 102. ESTABLISHMENT OF SMALL BUSINESS ADMINIS-
TRATION IN DEPARTMENT OF THE TREAS-
URY.
(a) ESTABLISHMENT.—There is established in the
Department of the Treasury a Small Business Adminis-
tration (hereinafter in this section referred to as the ‘‘Ad-
ministration’’).
(b) APPOINTMENT OF UNDER SECRETARY.—The Ad-
ministration shall be headed by an Under Secretary of the
Treasury who shall be appointed by the President, by and
with the advice and consent of the Senate, and who shall
be compensated at the rate provided for level III of the
Executive Schedule in section 5314 of title 5, United
States Code.
(c) APPOINTMENT
OF
DEPUTY
UNDER
SEC-
RETARY.—The Secretary of the Treasury is authorized to
appoint a Deputy Under Secretary who shall assist in the
exercise of the functions vested in the Administration and
who shall be compensated at the rate provided for level
IV of the Executive Schedule in section 5315 of title 5,
United States Code.
SEC. 103. ESTABLISHMENT OF OFFICE OF SMALL BUSINESS
ADVOCACY IN EXECUTIVE OFFICE OF THE
PRESIDENT.
(a) ESTABLISHMENT.—There is established in the
Executive Office of the President an Office of Small Busi-
ness Advocacy (hereinafter in this section referred to as
the ‘‘Office’’).
(b) DIRECTOR.—The Office shall be headed by a Di-
rector who shall be appointed by the President, by and
with the advice and consent of the Senate, and who shall
be compensated at the rate provided for level IV of the
Executive Schedule in section 5315 of title 5, United
States Code.
(c) FUNCTIONS OF THE DIRECTOR.—The Director is
authorized to carry out any of the functions assigned to
the Chief Counsel of Advocacy of the Small Business Ad-
ministration under the Small Business Act, as in effect
on the day before the effective date of this Act.
SEC. 104. CONFORMING AMENDMENTS TO TITLE 5, UNITED
STATES CODE.
(a) SECTION 5314.—Section 5314 of title 5, United
States Code, is amended—
(1) by striking ‘‘Administrator of the Small
Business Administration.’’; and
(2) by striking ‘‘Under Secretaries of the
Treasury (3).’’ and inserting ‘‘Under Secretaries of
the Treasury (4).’’.
(b) SECTION 5315.—Section 5315 of title 5, United
States Code, is amended—
(1) by striking ‘‘Deputy Administrator of the
Small Business Administration.’’;
(2) by striking ‘‘Chief Counsel for Advocacy,
Small Business Administration.’’ and inserting ‘‘Di-
rector of the Office of Small Business Advocacy.’’;
(3) by striking ‘‘Inspector General, Small Busi-
ness Administration.’’; and
(4) by striking ‘‘Deputy Under Secretaries of
the Treasury (or Assistant Secretaries of the Treas-
ury) (2).’’ and inserting ‘‘Deputy Under Secretaries
of the Treasury (or Assistant Secretaries of the
Treasury) (3).’’.
(c) SECTION 5316.—Section 5316 of title 5, United
States Code, is amended by striking ‘‘Associate Adminis-
trators of the Small Business Administration (4).’’.
TITLE II—TERMINATION OF CER-
TAIN 
AUTHORITIES 
UNDER
SMALL BUSINESS ACT AND
SMALL 
BUSINESS 
INVEST-
MENT ACT OF 1958
SEC. 201. REPEAL OF SMALL BUSINESS ACT.
(a) REPEAL.—Except as otherwise provided by this
section, the Small Business Act is repealed effective Sep-
tember 30, 1995.
(b) CONTINUED EFFECTIVENESS OF CERTAIN FUNC-
TIONS.—Notwithstanding subsection (a), the following
provisions of the Small Business Act shall remain in effect
after September 30, 1995:
(1) Section 3(a) (relating to the definition of
‘‘small business concern’’).
(2) Section 4(b)(2) (relating to maintenance of
a small business economic database).
(3) Section 5(f) (relating to the authority of
lenders to sell the guaranteed portion of certain
loans on the secondary market).
(4) Section 7(a), as amended by this Act (relat-
ing to the general business loan program).
(5) Section 8(b)(1)(B) (relating to the Senior
Corps of Retired Executives (SCORE) and the Ac-
tive Corps of Executives (ACE)).
(6) Section 15 (relating to the award of Federal
contracts to small business concerns).
(c) CONTINUED APPLICABILITY OF CERTAIN PROVI-
SIONS.—Notwithstanding subsection (a), the following
provisions of the Small Business Act shall remain in effect
after September 30, 1995, insofar as such provisions apply
to the functions referred to in subsection (b):
(1) Section 3(h) (relating to the definition of
‘‘credit elsewhere’’).
(2) Section 4(e) (relating to denial of assistance
to persons engaged in the production or distribution
of obscene products or services).
(3) Section 4(f) (relating to denial of assistance
to persons not in compliance with child support obli-
gations).
(4) Section 5(b) (relating to general authorities
to carry out functions).
(5) Section 16 (relating to penalties for prohib-
ited acts).
SEC. 202. REPEAL OF SMALL BUSINESS INVESTMENT ACT
OF 1958.
The Small Business Investment Act of 1958 is re-
pealed effective September 30, 1996.
TITLE III—TRANSFERS OF FUNC-
TIONS TO SECRETARY OF THE
TREASURY
SEC. 301. TRANSFER OF GENERAL BUSINESS LOAN PRO-
GRAM.
(a) IN GENERAL.—Section 7(a) of the Small Busi-
ness Act (15 U.S.C. 636(a)) is amended to read as follows:
‘‘(a) GENERAL BUSINESS LOAN PROGRAM.—
‘‘(1) IN
GENERAL.—The Secretary of the
Treasury (hereinafter in this subsection referred to
as the ‘Secretary’) is authorized to guarantee banks
and other financial institutions against loss of prin-
cipal and interest on any loan made to a small busi-
ness concern for plant acquisition, construction, con-
version, or expansion, including the acquisition of
land, material, supplies, equipment, and working
capital.
‘‘(2) TERMS AND CONDITIONS.—The authority
of the Secretary under paragraph (1) shall be sub-
ject to the following terms and conditions:
‘‘(A) 
CREDIT
ELSEWHERE
REQUIRE-
MENT.—No guarantee may be made under this
subsection if the applicant can obtain credit
elsewhere.
‘‘(B) SOUND
VALUE
REQUIREMENT.—No
guarantee may be made under this subsection
on a loan unless the loan is of such sound value
or so secured as reasonably to assure repay-
ment.
‘‘(C) MAXIMUM
GUARANTEE
PERCENT-
AGE.—No guarantee may be made under this
subsection extending to more than 75 percent
of the balance of the financing outstanding at
the time of disbursement.
‘‘(D) 
MAXIMUM
LOAN
AMOUNTS.—No
guarantee may be made under this subsection if
the total amount outstanding and committed to
the borrower under this subsection would ex-
ceed $750,000.
‘‘(E) MAXIMUM LOAN TERM.—No guaran-
tee may be made under this subsection on a
loan if the terms of the loan permit repayment
more than 25 years after the date of the loan;
except that such portion of a loan made for the
purpose of acquiring real property or construct-
ing, converting, or expanding facilities may
have a maturity of 25 years plus such addi-
tional period as is estimated may be required to
complete such construction, conversion, or ex-
pansion.
‘‘(F) 
MAXIMUM
INTEREST
RATE.—No
guarantee may be made under this subsection
on a loan if the rate of interest charged on the
loan exceeds such rate as may be prescribed by
the Secretary.
‘‘(3) GUARANTEE AGREEMENTS.—
‘‘(A) IN
GENERAL.—The Secretary shall
enter into a guarantee agreement with each fi-
nancial institution participating in the program
established under this subsection.
‘‘(B) TERMS AND CONDITIONS.—A guar-
antee agreement entered into under subpara-
graph (A) shall contain such terms and condi-
tions as may be necessary to carry out the ob-
jectives of this subsection and to require the fi-
nancial institution to comply with the require-
ments of this subsection.
‘‘(C) TANGIBLE ASSETS REQUIREMENT.—
As part of each guarantee agreement entered
under this paragraph, a financial institution
shall agree to maintain at all times during the
period of its participation in the program estab-
lished under this subsection tangible capital as-
sets in an amount not less than 6 percent of
the total assets of the financial institution.
‘‘(D) AUTHORITY
TO
MAKE
LOANS.—A
guarantee agreement entered into under this
paragraph shall delegate to the financial insti-
tution—
‘‘(i) complete authority to make and
close loans with a guarantee from the Sec-
retary under this subsection without ob-
taining the prior specific approval of the
Secretary; and
‘‘(ii) complete authority to service and
liquidate such loans.
‘‘(4) GUARANTEE FEES.—
‘‘(A) AUTHORITY TO COLLECT.—The Sec-
retary shall collect a guarantee fee equal to 2
percent of the guaranteed amount of any loan
made under this subsection other than a loan
repayable in 1 year or less. The fee shall be
payable by the lender and may be charged to
the borrower.
‘‘(B) ADJUSTMENT
OF
AMOUNT.—The
Secretary may increase or decrease the amount
of fees collected pursuant to this paragraph if
the Secretary determines, after providing notice
and opportunity for public comment, that such
an increase or decrease is necessary to cover the
Secretary’s costs of administration of the pro-
gram under this subsection.
‘‘(5) REDUCTION IN GUARANTEES TO CERTAIN
LENDERS.—The Secretary shall reduce the guaran-
teed portion of loans made by a financial institution
under the program established by this subsection if
the Secretary determines that losses on loans made
by the financial institution under the program have
exceeded average losses on loans made under the
program by other financial institutions.
‘‘(6) ABILITY OF A FINANCIAL INSTITUTION TO
CALL LOANS.—Notwithstanding any other provision
of this Act, the Secretary shall not limit the ability
of a financial institution participating in the pro-
gram established under this subsection to call a loan
guaranteed under this subsection.
‘‘(7) PENALTY FEES.—The Secretary is author-
ized to permit lenders participating in the program
established under this subsection to impose and col-
lect a reasonable penalty fee on late payments of
loans guaranteed under this subsection.
‘‘(8) ANNUAL COMPLIANCE REVIEW.—
‘‘(A) REQUIREMENT.—As a condition of
participation in the program established under
this subsection, each financial institution shall
be subject to an annual review to ensure com-
pliance with the requirements of this sub-
section. Such review shall be carried out by the
Secretary at the expense of the financial insti-
tution.
‘‘(B) 
INSURED
DEPOSITORY
INSTITU-
TIONS.—In the case of an insured depository
institution (as defined by section 3(c)(2) of the
Federal Deposit Insurance Act), the review
under subparagraph (A) may be conducted as
part of an examination conducted by the appro-
priate Federal banking agency (as defined by
section 3(q) of such Act).
‘‘(C) INSURED
CREDIT
UNIONS.—In the
case of an insured credit union (as defined by
section 101(7) of the Federal Credit Union
Act), the review under subparagraph (A) may
be conducted as part of an examination con-
ducted by the National Credit Union Adminis-
tration.’’.
(b) APPLICABILITY.—
(1) GENERAL
RULE.—Except as provided by
paragraph (2), the amendment made by subsection
(a) shall apply to loans made after September 30,
1995.
(2) PHASE-IN PERIOD.—The Secretary of the
Treasury may phase-in application of the amend-
ment to section 7(a) of the Small Business Act made
by subsection (a) of this section to the extent that
the Secretary determines that such a phase-in period
is necessary to prevent disruption to financial insti-
tutions currently participating in the program estab-
lished under section 7(a) of the Small Business Act.
SEC. 302. TRANSFER OF FINANCIAL OBLIGATIONS OWNED
BY SMALL BUSINESS ADMINISTRATION.
(a) TRANSFERS
TO SECRETARY
OF
THE TREAS-
URY.—There are transferred to the Secretary of the
Treasury the loans, notes, bonds, debentures, securities,
and other financial obligations owned by the present Small
Business Administration, together with all assets or other
rights (including security interests) incident thereto, and
all liabilities related thereto, and there are assigned to the
Secretary the functions, powers, and abilities vested in or
delegated to the present Small Business Administration
to manage, service, collect, sell, dispose of, or otherwise
realize proceeds on obligations owed to the present Small
Business Administration under authority of the Small
Business Act and the Small Business Investment Act of
1958 (including those assets purchased from the Federal
Financing Bank pursuant to subsection (e) of this sec-
tion). With respect to obligations owned by the present
Small Business Administration under authority of the
Small Business Investment Act of 1958, this section shall
not take effect until September 30, 1996.
(b) LEGAL RIGHTS, OBLIGATIONS, RESPONSIBIL-
ITIES, AND LIABILITIES.—The Secretary of the Treasury
shall succeed to all rights and obligations of the present
Small Business Administration with respect to any and
all legal rights, obligations, responsibilities, and liabilities
arising out of the obligations described in subsections (a)
and (e) of this section, including any outstanding guaran-
tee of the present Small Business Administration and any
of its defenses against a claim under such guarantee, and
shall have the same legal rights, obligations, responsibil-
ities, and liabilities as the present Small Business Admin-
istration had with respect to such obligations, and the reg-
ulation of brokers and dealers in such obligations.
(c) DEPOSIT OF AMOUNTS RECEIVED FROM TRANS-
FERRED ASSETS.—All amounts received by the Secretary
of the Treasury with respect to any asset transferred to
the Secretary pursuant to subsection (a) or (e) of this sec-
tion shall be deposited in the Treasury as miscellaneous
receipts.
(d) DISPOSITION OF ASSETS.—
(1) IN GENERAL.—The Secretary of the Treas-
ury is authorized to dispose of any loan, debenture,
or other asset acquired by the Secretary pursuant to
subsections (a) and (e) of this section (including ob-
ligations formerly guaranteed pursuant to the Small
Business Act or the Small Business Investment Act
of 1958 that will be or have been acquired by the
Secretary) in the way, in amounts, at prices (for
cash, obligations, property, or combination of cash,
obligations, or property), and on such conditions as
the Secretary considers advisable and in the public
interest.
(2) LIMITATION ON APPLICABILITY OF CERTAIN
LAWS.—Any disposition by the Secretary of the
Treasury under this subsection, including a disposi-
tion through sale of the Federal Government’s inter-
est in an asset or in a pool of assets, shall not be
subject to the provisions of the Federal Property
and Administrative Services Act of 1949 or the pro-
visions of any Federal or State securities law.
(3) PROHIBITION ON GUARANTEES.—Any dis-
position of an asset under this subsection shall be
without any guarantee of the United States or any
agency or instrumentality thereof.
(4) TRANSFER
OF
INFORMATION.—Notwith-
standing any other provision of law, including the
Privacy Act of 1974, the Secretary may transfer to
a prospective purchaser or transferee of an asset
under this subsection such information as may be in-
cident to the disposition of the asset.
(5) LIMITATION ON APPLICABILITY OF CERTAIN
FILING
REQUIREMENTS.—Notwithstanding 
any
State or local law or regulation to the contrary, no
filing or other action shall be required in order to
continue the perfected status of any security interest
transferred to the Secretary of the Treasury which
was held, on the day before the effective date of this
Act, by the present Small Business Administration
or any representative, transferee, or assignee there-
of.
(6) CONTINUED
APPLICABILITY
OF
CERTAIN
LAWS.—Sections 5 (b) and (e), 7 (c) (1) and (2), 16,
and 17 of the Small Business Act shall remain in ef-
fect with respect to the assets and guarantees trans-
ferred to the Secretary of the Treasury by this Act
as long as the Secretary shall retain any such asset
or guarantee.
(e) OBLIGATIONS HELD BY FEDERAL FINANCING
BANK.—The Secretary of the Treasury is authorized and
directed, subject to funds being specifically appropriated
for such purpose, to purchase from the Federal Financing
Bank all notes, bonds, debentures, or other obligations
held by the Federal Financing Bank that were, on the day
before the effective date of this Act, guaranteed or other-
wise backed by the present Small Business Administra-
tion. Such purchases are to be made at prices determined
by the Federal Financing Bank as if the obligations were
repurchased by the respective obligers consistent with the
terms of such obligations or such other agreements be-
tween the present Small Business Administration and the
Federal Financing Bank as are in effect on the day before
the effective date of this Act.
(f) REGULATORY AUTHORITIES.—Effective Septem-
ber 30, 1996, there are transferred to the Secretary of
the Treasury the regulatory authorities with respect to
small business investment companies and minority enter-
prise small business investment companies conferred by
the Small Business Investment Act of 1958; except that
such regulatory authorities shall expire—
(1) for each loan, debenture, or equity security
purchased or guaranteed by the present Small Busi-
ness Administration, on the date such loan or deben-
officer thereof in the officer’s official capacity, is a party
to a suit, and under this Act any function of that depart-
ment, agency, or officer is transferred to the head of a
department or agency, then the suit shall be continued
with the head of the department or agency substituted.
SEC. 604. COORDINATION OF TRANSFER ACTIVITIES.
(a) PLANNING.—The Administrator of the Small
Business Administration, the Secretary of the Treasury,
and other officials as appropriate shall, beginning as soon
as practicable after the date of the enactment of this Act,
plan for the orderly transfer of functions and personnel
pursuant to this Act.
(b) USE OF PERSONNEL.—With the consent of the
Administrator of the Small Business Administration, the
head of each agency to which functions are transferred
by this Act is authorized to use the services of such offi-
cers, employees, and other personnel of the present Small
Business Administration for such period of time as may
reasonably be needed to facilitate the orderly transfer of
functions pursuant to this Act.
SEC. 605. REFERENCES.
With respect to any functions transferred by this Act
and exercised after the effective date of this Act, reference
in any other Federal law to any department, commission,
or agency or any officer or office the functions of which