HR 1332 PCS
tion, and the term ‘certified development company’ 
means a development company which the Adminis-
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 
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fostering economic development to create and pre-
serve jobs and stimulate private investment. 
‘‘(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 Certified Devel-
opment Company Economic Development 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 
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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 
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 
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officer to manage daily operations, and a full-time 
professional staff qualified to market the Certified 
Development Company Economic Development Loan 
Program and handle all aspects of loan approval and 
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. 
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