To amend title 38, United States Code, to provide for the reauthorization of the Department of Veterans Affairs small business loan program, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veteran-Owned Small Business 
Promotion Act of 2009''.

SEC. 2. REAUTHORIZATION AND IMPROVEMENT OF DEPARTMENT OF VETERANS 
              AFFAIRS SMALL BUSINESS LOAN PROGRAM.

    (a) Reauthorization.--
            (1) In general.--Chapter 37 of title 38, United States 
        Code, is amended by striking section 3751.
            (2) Clerical amendment.--The table of sections at the 
        beginning of such chapter is amended by striking the item 
        relating to section 3751.
            (3) Conforming amendment.--Section 3749 of such title is 
        amended by striking subsection (e).
    (b) Expansion of Eligibility for Small Business Loans.--Chapter 37 
of such title is further amended--
            (1) in section 3741--
                    (A) by striking paragraph (2);
                    (B) by striking ``this subchapter--'' and all that 
                follows through ```disabled veteran''' and inserting 
                ``this subchapter, the term `disabled veteran'''; and
                    (C) by striking ``30 percent'' and inserting ``10 
                percent''; and
            (2) in section 3742(a)(3)(A), by striking ``of the Vietnam 
        era or disabled veterans''.
    (c) Repeal of Authority To Make Direct Loans.--Chapter 37 of such 
title, as amended by subsections (a) and (b), is further amended--
            (1) in section 3742--
                    (A) in subsection (a)--
                            (i) in paragraph (2), by striking ``(A) 
                        loan guaranties, or (B) direct loans'' and 
                        inserting ``loan guarantees''; and
                            (ii) in paragraph (3)(A), by striking ``and 
                        that at least 51 percent of a business concern 
                        must be owned by disabled veterans in order for 
                        such concern to qualify for a direct loan'';
                    (B) in subsection (b)--
                            (i) by striking paragraph (1) and 
                        redesignating paragraphs (2) through (4) as 
                        paragraphs (1) through (3), respectively; and
                            (ii) in paragraph (2), as so redesignated, 
                        by striking ``make or'';
                    (C) in subsection (c), by striking ``made or'';
                    (D) in subsection (d)--
                            (i) by striking paragraph (2);
                            (ii) by striking ``(1) Except as provided 
                        in paragraph (2) of this subsection, the'' and 
                        inserting ``The''; and
                            (iii) by striking ``make or''; and
                    (E) in subsection (e)--
                            (i) in paragraph (1)--
                                    (I) in the first sentence, by 
                                striking ``or, if the loan was a direct 
                                loan made by the Secretary, may suspend 
                                such obligation''; and
                                    (II) in the second sentence, by 
                                striking ``or while such obligation is 
                                suspended'';
                            (ii) by striking ``or suspend'' each place 
                        it appears;
                            (iii) by striking ``or suspension'' each 
                        place it appears
                            (iv) by striking ``or suspends'' each place 
                        it appears; and
                            (v) in paragraph (4)(B), by striking ``or 
                        suspended'';
            (2) in section 3743--
                    (A) by striking ``that is provided a direct loan 
                under this subchapter, or'';
                    (B) by striking the comma between ``subchapter'' 
                and ``shall'';
                    (C) by striking ``direct or''; and
                    (D) by striking ``for the amount of such direct 
                loan or, in the case of a guaranteed loan,'';
            (3) in section 3746, by striking ``made or'' both places it 
        appears;
            (4) in section 3749(b), by striking ``and direct loan''; 
        and
            (5) in section 3750, by striking ``made or''.
    (d) Increase of Maximum Guaranty Amount.--Section 3742(b)(2), as 
redesignated by subsection (c)(1)(B)(i), is amended by striking 
``$200,000'' and inserting ``$500,000''.
    (e) Authority To Enter Into a Contract.--Section 3742 of such 
title, as amended by subsection (c), is further amended by adding at 
the end the following new subsection:
    ``(f) The Secretary shall enter into a contract with an appropriate 
entity for the purpose of carrying out the program under this 
subchapter.''.
    (f) Authority of Secretary To Subsidize Interest Rates of 
Guaranteed Loan.--Section 3745 of such title is amended by striking 
subsection (b) and inserting the following new subsection (b):
    ``(b) For any loan guaranteed under this subchapter, the Secretary 
may pay to the lender such amounts as may be required to reduce the 
rate of interest payable by the veterans' small business concern by up 
to one-half of one percent, except that the rate of interest payable by 
such concern shall not be less than one-half of one percent.''.
    (g) Preference for Members of National Guard and Reserves Activated 
in Support of Global War on Terrorism.--Section 3748 of such title is 
amended--
            (1) by striking ``and, second'' and inserting ``second''; 
        and
            (2) by inserting before the period at the end ``, and, 
        third, to veterans' small business concern in which veterans 
        who, as members of a reserve component, are activated in 
        support of the Global War on Terrorism have a significant 
        ownership interest''.
    (h) Authorization of Appropriations.--Section 3749(c)(1) of such 
title is amended by striking ``a total of $25,000,000'' and inserting 
``$1,000,000,000 for each fiscal year''.

SEC. 3. LIMITATION ON REQUIREMENT OF SMALL BUSINESS CONCERNS OWNED AND 
              CONTROLLED BY VETERANS TO FURNISH CERTAIN BONDS.

    (a) Limitation.--Subchapter II of chapter 81 of title 38, United 
States Code, is amended by adding at the end the following new section:
``Sec. 8129. Small business concerns owned and controlled by veterans: 
              contractor bonds
    ``(a) Bonds Required.--Notwithstanding subchapter II of chapter 31 
of title 40, in entering into a contract with a small business concern 
owned and controlled by veterans for the construction, alteration, or 
repair of any public building or public work of the Department the 
Secretary--
            ``(1) may not require the concern to furnish a performance 
        or payment bond in an amount that exceeds 50 percent of the 
        amount of the contract; and
            ``(2) shall ensure that the concern does not require any 
        subcontractor that is a small business concern owned and 
        controlled by veterans to furnish a performance or payment bond 
        in an amount that exceeds 50 percent of the amount of the 
        subcontract.
    ``(b) Payment of Subcontractor Bonds.--In entering into a contract 
described in subsection (a) with the Secretary, a prime contractor may 
furnish a performance or payment bond on behalf of a subcontractor that 
is a small business concern owned and controlled by veterans.
    ``(c) Definition.--For purposes of this section, the term `small 
business concern owned and controlled by veterans' means a small 
business concern that is included in the small business database 
maintained by the Secretary under section 8127(f) of this title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end of the items relating to 
such subchapter the following new item:

``8129. Small business concerns owned and controlled by veterans: 
                            contractor bonds.''.

SEC. 4. TREATMENT OF SMALL BUSINESS CONCERNS OWNED AND CONTROLLED BY 
              VETERANS A SOCIALLY AND ECONOMICALLY DISADVANTAGED.

    Section 8128 of such title is amended--
            (1) by redesignating subsection (b) as subsection (c); and
            (2) by inserting after subsection (a) the following new 
        subsection:
    ``(b) Treatment as Socially and Economically Disadvantaged.--The 
Secretary may evaluate a bid submitted by a small business concern 
owned and controlled by veterans and award a contract to such a concern 
on the same basis as the Administrator of the Small Business 
Administration may evaluate a bid submitted by a socially and 
economically disadvantaged small business concern and award a contract 
to such a concern under section 8(a) of the Small Business Act (15 
U.S.C. 637(a)).''.

Summary: Veteran-Owned Small Business Promotion Act of 2009 - Reinstates (under current law, terminated as of the end of FY1986) the veteran-owned small business loan program, under which the Secretary of Veterans Affairs may provide loans to veteran-owned small businesses for: (1) financing plant construction, conversion, or expansion; (2) financing the acquisition of equipment, facilities, machinery, supplies, or materials; or (3) supplying working capital.

Makes eligible for such loans small business owners who are veterans and have a disability rated at 10% (under current law, 30%) or more, and includes all veterans (under current law, limited to Vietnam era veterans and veterans discharged or released due to a disability incurred or aggravated in the line of duty).

Repeals the authority to make direct loans under the program (thereby allowing only loan guaranties).

Increases from $200,000 to $500,000 the maximum loan guaranty amount.

Authorizes the Secretary to subsidize a loan lender in order to reduce by up to 1/2% the interest rate paid by the veteran-owned small business.

Includes under a loan preference members of the National Guard and reserves activated in support of the Global War on Terrorism.

Limits performance bond requirements of veteran-owned small businesses with respect to the construction, alteration, or repair of any Department of Veterans Affairs (VA) public building or public work.

Treats a small business owned and controlled by veterans as a socially and economically disadvantaged small business for purposes of contracts awarded to the latter businesses under provisions of the Small Business Act.