A bill to stabilize the small business lending market, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Lending Market 
Stabilization Act of 2008''.

SEC. 2. SMALL BUSINESS LENDING MARKET STABILIZATION.

    (a) Fees.--To the extent the cost of such reduction in fees is 
offset by appropriations--
            (1) with respect to each loan guaranteed under section 7(a) 
        of the Small Business Act (15 U.S.C. 636(a)) for which the 
        application is approved on or after the date of enactment of 
        this Act, the Administrator shall, in lieu of the fees 
        otherwise applicable under paragraphs (23)(A) and (18)(A) of 
        section 7(a) of the Small Business Act (15 U.S.C. 636(a)), 
        collect no fee;
            (2) the Administrator shall, in lieu of the fees otherwise 
        applicable under section 5(b)(14) of the Small Business Act (15 
        U.S.C. 634(b)(14)), collect no fee;
            (3) the Administrator shall, in lieu of the fee otherwise 
        applicable under section 503(d)(2) of the Small Business 
        Investment Act of 1958 (15 U.S.C. 697(d)(2)) for an institution 
        described in subclause (I), (II), or (III) of section 
        502(3)(B)(i) of that Act (15 U.S.C. 696(3)(B)(i)), for any loan 
        guarantee or project subject to such subsection for which the 
        application is pending approval on or after the date of 
        enactment of this Act, collect no fee;
            (4) a development company shall, in lieu of the mandatory 
        0.625 servicing fee under section 120.971(a)(3) of title 13, 
        Code of Federal Regulations, (relating to fees paid by 
        borrowers), collect no fee; and
            (5) the Administrator shall, in lieu of the fee otherwise 
        applicable under section 503(d)(3) of the Small Business 
        Investment Act (15 U.S.C. 697(d)(3)), collect no fee.
    (b) Reimbursement for Waived Fees.--
            (1) In general.--To the extent the cost of such payments is 
        offset by appropriations, the Administrator shall reimburse 
        each development company that does not collect a servicing fee 
        pursuant to subsection (a)(4).
            (2) Amount.--The payment to a development company under 
        paragraph (1) shall be in an amount equal to 0.5 percent of the 
        outstanding principal balance of any guaranteed debenture for 
        which the development company does not collect a servicing fee 
        pursuant to subsection (a)(4).
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Administrator for fiscal year 2009--
            (1) $600,000,000 for loan subsidies and for loan 
        modifications for loans to small business concerns authorized 
        under subsection (a)(1);
            (2) $15,000,000 for lender oversight under section 5(b)(14) 
        of the Small Business Act (15 U.S.C. 634(b)(14));
            (3) $50,000,000 for the elimination of fees under 
        subsection (a)(3);
            (4) $40,000,000 for payments under subsection (b) to offset 
        the elimination of fees under subsection (a)(4); and
            (5) $10,000,000 for the elimination of fees under 
        subsection (a)(5).
    (d) Application of Fee Changes.--If funds are made available to 
carry out subsections (a) and (b), the Administrator shall eliminate 
the fees under subsection (a) for any loan guarantee or project subject 
to such subsection for which the application is approved on or after 
the date of enactment of this Act and make payments under subsection 
(b) until the amount provided for such purpose is expended.
    (e) Maximum Loan Amount.--Section 7(a)(3)(A) of the Small Business 
Act (15 U.S.C. 636(a)(3)(A)) is amended by striking ``$1,500,000 (or if 
the gross loan amount would exceed $2,000,000)'' and inserting 
``$2,250,000 (or if the gross loan amount would exceed $3,000,000)''.
    (f) Main Street Incentives.--
            (1) In general.--Section 502 of the Small Business 
        Investment Act of 1958 (15 U.S.C. 696) is amended--
                    (A) by striking paragraphs (4) and (5) and 
                inserting the following:
            ``(4) Limitation on leasing.--If the use of a loan under 
        this section includes the acquisition of a facility or the 
        construction of a new facility, the small business concern 
        assisted--
                    ``(A) shall permanently occupy and use not less 
                than a total of 50 percent of the space in the 
                facility; and
                    ``(B) may, on a temporary or permanent basis, lease 
                to others not more than 50 percent of the space in the 
                facility.''; and
                    (B) by redesignating paragraph (6) as paragraph 
                (5).
            (2) Policy for 7(a) loans.--Section 7(a)(28) of the Small 
        Business Act (15 U.S.C. 636(a)(28)) is amended to read as 
        follows:
            ``(28) Limitation on leasing.--If the use of a loan under 
        this subsection includes the acquisition of a facility or the 
        construction of a new facility, the small business concern 
        assisted--
                    ``(A) shall permanently occupy and use not less 
                than a total of 50 percent of the space in the 
                facility; and
                    ``(B) may, on a temporary or permanent basis, lease 
                to others not more than 50 percent of the space in the 
                facility.''.
    (g) Low-Interest Refinancing.--Section 502 of the Small Business 
Investment Act of 1958 (15 U.S.C. 696), as amended by subsection (e)(1) 
of this section, is amended by adding at the end the following:
            ``(6) Permissible debt refinancing.--A financing under this 
        title may include refinancing of existing indebtedness, in an 
        amount not to exceed 50 percent of the projected cost of the 
        project financed under this title, if--
                    ``(A) the project financed under this title 
                involves the expansion of a small business concern;
                    ``(B) the existing indebtedness is collateralized 
                by fixed assets;
                    ``(C) the existing indebtedness was incurred for 
                the benefit of the small business concern;
                    ``(D) the proceeds of the existing indebtedness 
                were used to acquire land (including a building 
                situated thereon), to construct or expand a building 
                thereon, or to purchase equipment;
                    ``(E) the borrower has been current on all payments 
                due on the existing indebtedness for not less than 1 
                year preceding the proposed date of refinancing;
                    ``(F) the financing under this title will provide 
                better terms or a better rate of interest than exists 
                on the existing indebtedness on the proposed date of 
                refinancing;
                    ``(G) the financing under this title is not being 
                used to refinance any debt guaranteed by the 
                Government; and
                    ``(H) the financing under this title will be used 
                only for--
                            ``(i) refinancing existing indebtedness; or
                            ``(ii) costs relating to the project 
                        financed under this title.''.
    (h) Updated Job Creation Requirements.--Section 501(e) of the Small 
Business Investment Act of 1958 (15 U.S.C. 695(e)) is amended--
            (1) in paragraph (1), by striking ``$50,000'' and inserting 
        ``$65,000''; and
            (2) in paragraph (2), by striking ``$50,000'' and inserting 
        ``$65,000''.
    (i) Size Standard Simplification.--Section 3(a) of the Small 
Business Act (15 U.S.C. 632(a)) is amended by adding at the end the 
following:
            ``(5) Optional size standard.--
                    ``(A) In general.--The Administrator shall 
                establish an optional size standard for business loan 
                applicants under section 7(a) and development company 
                loan applicants under title V of the Small Business 
                Investment Act of 1958, which uses maximum tangible net 
                worth and average net income as an alternative to the 
                use of industry standards.
                    ``(B) Interim rule.--Until the date on which the 
                optional size standard established under subparagraph 
                (A) is in effect, the alternative size standard in 
                section 121.301(b) of title 13, Code of Federal 
                Regulations (or any successor thereto) may be used by 
                business loan applicants under section 7(a) and 
                development company loan applicants under title V of 
                the Small Business Investment Act of 1958.''.
    (j) Maximum Loan Size.--Section 502(2)(A) of the Small Business 
Investment Act of 1958 (15 U.S.C. 696(2)(A)) is amended--
            (1) in clause (i), by striking ``$1,500,000'' and inserting 
        ``$3,000,000''; and
            (2) in clause (ii), by striking ``$2,000,000'' and 
        inserting ``$3,500,000''.
    (k) Loan Pooling.--Section 5(g)(1) of the Small Business Act (15 
U.S.C. 634(g)(1)) is amended--
            (1) by inserting ``(A)'' before ``The Administration'';
            (2) by striking the colon and all that follows and 
        inserting a period; and
            (3) by adding at the end the following:
    ``(B) A trust certificate issued under subparagraph (A) shall be 
based on, and backed by, a trust or pool approved by the Administrator 
and composed solely of the guaranteed portion of such loans.
    ``(C) The interest rate on a trust certificate issued under 
subparagraph (A) shall be either--
            ``(i) the lowest interest rate on any individual loan in 
        the pool; or
            ``(ii) the weighted average interest rate of all loans in 
        the pool, subject to such limited variations in loan 
        characteristics as the Administrator determines appropriate to 
        enhance marketability of the pool certificates.''.
    (l) Alternative Variable Interest Rate.--
            (1) In general.--Section 7(a)(4)(A) of the Small Business 
        Act (15 U.S.C. 636(a)(4)(A)) is amended by striking 
        ``prescribed by the Administration,'' and inserting: 
        ``prescribed by the Administration, including, on variable rate 
        loans, a nationally recognized prime rate of interest and at 
        least 1 other index as an alternative thereto at the option of 
        the participating lender,''.
            (2) Applicability.--Not later than 180 days after the date 
        of enactment of this Act, the Administrator shall select not 
        less than 1 alternative index under section 7(a)(4)(A) of the 
        Small Business Act, as amended by paragraph (1) of this 
        subsection, and make such index available for use by 
        participating lenders.
    (m) Definitions.--In this section--
            (1) the terms ``Administration'' and ``Administrator'' mean 
        the Small Business Administration and the Administrator 
        thereof, respectively;
            (2) the term ``development company'' has the meaning given 
        the term ``development companies'' in section 103 of the Small 
        Business Investment Act of 1958 (15 U.S.C. 662); and
            (3) the term ``small business concern'' has the same 
        meaning as in section 3 of the Small Business Act (15 U.S.C. 
        632).

Summary: Small Business Lending Market Stabilization Act of 2008 - Directs the Administrator of the Small Business Administration (SBA), to the extent that the cost is offset by appropriations, to collect no fees currently charged by: (1) the SBA to borrowers and lenders under the SBA's 7(a) loan program (SBA-guaranteed general business loans to small businesses); and (2) development companies under SBA's 504 loan program (local business development loans). Directs the Administrator to reimburse development companies for waived fees.

Increases maximum limits on SBA loans made to small businesses under the Small Business Act and on loans made to development companies under the Small Business Investment Act of 1958.

Authorizes a small business whose SBA loan includes the acquisition of a facility or construction of a new facility to lease up to 50% of the space in such facility.

Permits certain borrowers to refinance a limited amount of their preexisting debt through a new 504 loan.

Directs the SBA to establish an optional business size standard for certain small business loan applicants.

Allows the SBA to use weighted average rates when pooling loans for sale on the secondary market.

Directs the SBA to provide lenders at least one alternative loan interest rate to the prime rate.