Strengthening Entrepreneurs' Economic Development Act of 2013

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Strengthening Entrepreneurs' 
Economic Development Act of 2013''.

SEC. 2. DIRECT LENDING PROGRAM FOR SMALL BUSINESS CONCERNS.

    (a) Establishment.--The Administrator of the Small Business 
Administration shall--
            (1) establish and carry out a loan program (in this Act 
        referred to as the ``program''); and
            (2) establish a process under which an eligible small 
        business concern may submit an application to the Administrator 
        for the purpose of securing a loan under the program.
    (b) Loan Amount.--Each loan made to an eligible small business 
concern under the program shall be in an amount not to exceed $150,000.
    (c) Repayment Period.--An eligible small business concern that 
receives a loan under the program shall repay the loan not later than 6 
years after the date on which such loan is disbursed.
    (d) No Prepayment Penalty.--There shall be no prepayment penalty on 
a loan made under the program.
    (e) Interest Rate.--The maximum legal rate of interest on any loan 
made under the program shall not exceed the sum of the rate prescribed 
by the Administrator pursuant to section 7(a)(4)(A) of the Small 
Business Act (15 U.S.C. 636(a)(4)(A)) for direct loans plus 5 percent.
    (f) Borrower Fees.--With respect to each loan made to an eligible 
small business concern under the program, the Administrator may collect 
a fee from the borrower using the formula established under section 
7(a)(18) of the Small Business Act (15 U.S.C. 636(a)(18)).
    (g) Underwriting Standards.--Not later than 180 days after the date 
of enactment of this Act, the Administrator shall issue guidance 
regarding prudent underwriting standards that must be used for loans 
made under the program.
    (h) Lender Participation.--
            (1) Lenders.--
                    (A) In general.--The Administrator shall establish 
                a process under which the Administrator makes available 
                to lenders each loan application submitted for the 
                purpose of such lenders originating, underwriting, 
                closing, and servicing the loan for which the applicant 
                applied.
                    (B) Eligibility.--Lenders are eligible to receive a 
                loan application described in subparagraph (A) if they 
                participate in the program.
                    (C) Local lenders.--The Administrator shall first 
                make available a loan application described in 
                subparagraph (A) to lenders within 50 miles of the 
                principal office of the loan applicant.
                    (D) Preferred lenders.--If a lender described in 
                subparagraph (C) does not agree to originate, 
                underwrite, close, and service the loan applied for 
                within 5 business days of receiving a loan application 
                described in subparagraph (A), the Administrator shall 
                subsequently make available such loan application to 
                lenders in the Preferred Lenders Program under section 
                7(a)(2)(C)(ii) of the Small Business Act (15 U.S.C. 
                636(a)(2)(C)(ii)).
                    (E) Authority of administration to lend.--If a 
                lender described in subparagraphs (C) and (D) does not 
                agree to originate, underwrite, close, and service the 
                loan applied for within 10 business days of receiving a 
                loan application described in subparagraph (A), the 
                Administrator shall, in accordance with the 
                underwriting standards promulgated under subsection 
                (g), consider such loan for origination, underwriting, 
                closing, and servicing by the Administration within 10 
                business days.
            (2) Asset sales.--The Administrator shall offer to sell 
        loans made by the Administrator under the program. Such sales 
        shall be made through the semi-annual public solicitation (in 
        the Federal Register and in other media) of offers to purchase. 
        The Administrator may contract with vendors for due diligence, 
        asset valuation, and other services related to such sales. The 
        Administrator may not sell any loan under the program for less 
        than 90 percent of the net present value of the loan, as 
        determined and certified by a qualified third party.
            (3) Loans not sold.--The Administrator shall maintain and 
        service loans made by the Administrator under this paragraph 
        that are not sold through the asset sales under this 
        subsection.
    (i) Definitions.--In this Act:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Small Business Administration.
            (2) Eligible small business concern.--The term ``eligible 
        small business concern'' means a small business concern that 
        has less than 20 employees.
            (3) Small business concern.--The term ``small business 
        concern'' has the same meaning given such term under section 3 
        of the Small Business Act (15 U.S.C. 632).

SEC. 3. FEE FOR HIGH-DOLLAR 7(A) LOANS.

    Section 7(a) of the Small Business Act is amended--
            (1) by redesignating paragraphs (31) through (35) as 
        paragraphs (32) through (36); and
            (2) by inserting the following new paragraph:
            ``(31) Fee for high-dollar loans.--With respect to each 
        loan in excess of $2,000,000 approved under this subsection, 
        the Administration shall assess, collect, and retain a fee not 
        to exceed a certain percentage, as determined by the 
        Administrator, of the outstanding balance of the deferred 
        participation share of the loan, as necessary to reduce to zero 
        the cost to the Administration of making loans under this 
        subsection. As used in the paragraph, the term `cost' has the 
        meaning given that term in section 502 of the Federal Credit 
        Reform Act of 1990 (2 U.S.C. 661a).''.

Summary: Strengthening Entrepreneurs' Economic Development Act of 2013 - Directs the Administrator of the Small Business Administration (SBA) to establish and carry out a direct lending program for small businesses (businesses with fewer than 20 employees). Sets forth provisions governing the amount and repayment period of, and interest rate on, such a loan. Authorizes the Administrator to collect a fee from the borrower. Directs the Administrator to: (1) issue guidance regarding prudent underwriting standards for such loans; (2) establish a process of making each loan application available to lenders for the purpose of originating, underwriting, closing, and servicing the loan; (3) first give priority to lenders within 50 miles of the principal office of the applicant, then make such applications available to lenders in the Preferred Lenders Program, and then consider such a loan for origination, underwriting, closing, and servicing by the Administrator; (4) offer to sell loans made under the program through the semi-annual public solicitation of offers to purchase; and (5) maintain and service loans that are not sold through asset sales. Amends the Small Business Act to require the SBA, for each small business loan in excess of $2 million that is approved under such Act, to collect a fee not to exceed a certain percentage of the outstanding balance of the deferred participation share of the loan as necessary to reduce to zero the cost to the SBA of making such loan.