Small Business Lending Enhancement Act of 1995
PL 104-36 (S.895), enacted 10/12/1995

PUBLIC LAW 104-36—OCT. 12, 1995 
109 STAT. 295 
Public Law 104-36 
104th Congress 
An Act 
To amend the Small Business Act and the Small Business Investment Act of 
n t i9 IQQ*; 
1958 to reduce the cost to the Federal Government of guaranteeing certain loans 
— 
'-
and debentures, and for other purposes. 
[S. 895] 
Be it enacted by the Senate and House of Representatives 
of 
the United States of America in Congress assembled. 
Small Business 
Lending 
SECTION 1. SHORT TITLE. 
Enhancement 
Act of 1995 
This Act may be cited as the "Small Business Lending Enhance- 
15 use 631 note 
ment Act of 1995". 
SEC. 2. REDUCED LEVEL OF PARTICIPATION IN GUARANTEED LOANS. 
Section 7(a)(2) of the Small Business Act (15 U.S.C. 636(a)(2)) 
is amended to read as follows: 
"(2) LEVEL OF PARTICIPATION IN GUARANTEED LOANS.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), in an agreement to participate in a loan on a deferred 
basis under this subsection (including a loan made under 
the Preferred Lenders Program), such participation by the 
Administration shall be equal to— 
"(i) 75 percent of the balance of the financing 
outstanding at the time of disbursement of the loan, 
if such balance exceeds $100,000; or 
"(ii) 80 percent of the balance of the financing 
outstanding at the time of disbursement of the loan, 
if such balance is less than or equal to $100,000. 
"(B) REDUCED PARTICIPATION UPON REQUEST.— 
"(i) IN GENERAL.—^The guarantee percentage speci-
fied by subparagraph (A) for any loan under this sub-
section may be reduced upon the request of the partici-
pating lender. 
"(ii) PROHIBITION.—^The Administration shall not 
use the guarantee percentage requested by a partici-
pating lender under clause (i) as a criterion for 
establishing priorities in approving loan guarantee 
requests under this subsection. 
"(C) INTEREST RATE UNDER PREFERRED LENDERS PRO-
GRAM.— 
"(i) IN GENERAL.—^The maximum interest rate for 
a loan guaranteed under the Preferred Lenders Pro-
gram shall not exceed the maximum interest rate, 
as determined by the Administration, applicable to 
other loans guaranteed under this subsection. 
"(ii) PREFERRED LENDERS PROGRAM DEFINED.—For 
purposes of this subparagraph, the term 'Preferred 
109 STAT. 296 
PUBLIC LAW 104-36—OCT. 12, 1995 
Lenders Program' means any program established by 
the Administrator, as authorized under the proviso 
in section 5(b)(7), under which a written agreement 
between the lender and the Administration delegates 
to the lender— 
"(I) complete authority to make and close loans 
with a guarantee from the Administration without 
obtaining the prior specific 
approval of the 
Administration; and 
"(II) authority to service and liquidate such 
loans.". 
SEC. 3. GUARANTEE FEES. 
(a) AMOUNT OF FEES.—Section 7(a)(18) of the Small Business 
Act (15 U.S.C. 636(a)(18)) is amended to read as follows: 
"(18) GUARANTEE FEES.— 
"(A) IN GENERAL.—^With respect to each loan guaran-
teed under this subsection (other than a loan that is repay-
able in 1 year or less), the Administration shall collect 
a guarantee fee, which shall be payable by the participating 
lender and may be charged to the borrower, in an amount 
equal to the sum of— 
"(i) 3 percent of the amount of the deferred partici-
pation share of the loan that is less than or equal 
to $250,000; 
"(ii) if the deferred participation share of the loan 
exceeds 
$250,000, 3.5 percent of the 
difference 
between— 
"(I) $500,000 or the total deferred participation 
share of the loan, whichever is less; and 
"(II) $250,000; and 
"(iii) if the deferred participation share of the loan 
exceeds $500,000, 3.875 percent of the difference 
between— 
"(I) the total deferred participation share of 
the loan; and 
"(II) $500,000. 
"(B) EXCEPTION FOR CERTAIN LOANS.—Notwithstanding 
subparagraph (A), if the total deferred participation share 
of a loan guaranteed under this subsection is less than 
or equal to $80,000, the guarantee fee collected under 
subparagraph (A) shall be in an amount equal to 2 percent 
of the total deferred participation share of the loan.". 
(b) REPEAL OF PROVISIONS ALLOWING RETENTION OF FEES BY 
LENDERS.—Section 7(a)(19) of the Small Business Act (15 U.S.C. 
636(a)(19)) is amended— 
(1) in subparagraph (B)— 
(A) by striking "shall (i) develop" and inserting "shall 
develop"; and 
(B) by striking ", and (ii)" and all that follows through 
the end of the subparagraph and inserting a period; and 
(2) by striking subparagraph (C). 
SEC. 4. ESTABLISHMENT OF ANNUAL FEE. 
(a) IN GENERAL.—Section 7(a) of the Small Business Act (15 
U.S.C. 636(a)) is amended by adding at the end the following 
new paragraph: 
"(23) ANNUAL FEE.— 
PUBLIC LAW 104-36—OCT. 12, 1995 
109 STAT. 297 
"(A) IN GENERAL.—^With respect to each loan guaran- Regulations. 
teed under this subsection, the Administration shall, in 
accordance with such terms and procedures as the Adminis-
tration shall establish by regulation, assess and collect 
an annual fee in an amount equal to 0.5 percent of the 
outstanding balance of the deferred participation share 
of the loan. 
"(B) PAYER.—^The annual fee assessed under subpara-
graph (A) shall be payable by the participating lender 
and shall not be charged to the borrower.". 
(b) CONFORMING AMENDMENT.—Section 5(g)(4)(A) of the Small 
Business Act (15 U.S.C. 634(g)(4)(A)) is amended— 
(1) by striking the first sentence and inserting the follow-
ing: "The Administration may collect a fee for any loan guaran-
tee sold into the secondary market under subsection (f) in 
an amount equal to not more than 50 percent of the portion 
of the sale price that exceeds 110 percent of the outstanding 
principal amount of the portion of the loan guaranteed by 
the Administration."; and 
(2) by striking "fees" each place such term appears and 
inserting "fee". 
SEC. 5. NOTIFICATION REQUIREMENT. 
Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is 
amended by adding at the end the following new paragraph: 
"(24) NOTIFICATION REQUIREMENT.—^The Administration 
shall notify the Committees on Small Business of the Senate 
and the House of Representatives not later than 15 days before 
making any significant policy or administrative change affecting 
the operation of the loan program under this subsection.". 
SEC. 6. D E V E L O P M E N T COMPANY DEBENTURES. 
Section 503(b) of the Small Business Investment Act of 1958 
(15 U.S.C. 697(b)) is amended— 
(1) in paragraph (5), by striking "and" at the end; 
(2) in paragraph (6), by striking the period at the end 
and inserting "; and"; and 
(3) by adding at the end the following new paragraph: 
"(7) with respect to each loan made from the proceeds 
of such debenture, the Administration— 
"(A) assesses and collects a fee, which shall be payable 
by the borrower, in an amount equal to 0.125 percent 
per year of the outstanding balance of the loan; and 
"(B) uses the proceeds of such fee to offset the cost 
(as such term is defined in section 502 of the Federal 
Credit Reform Act of 1990) to the Administration of making 
guarantees under subsection (a).". 
SEC. 7. PILOT PREFERRED SURETY BOND GUARANTEE PROGRAM 
EXTENSION. 
Section 207 of the Small Business Administration Reauthoriza-
tion and Amendment Act of 1988 (15 U.S.C. 694b note) is amended 
by striking "September 30, 1995" and inserting "September 30, 
1997". 
SEC. 8. APPLICABILITY. 
15 USC 634 note. 
(a) IN GENERAL.—Except as provided in subsection (b), the 
amendments made by this Act do not apply with respect to any 
109 STAT. 298 
PUBLIC LAW 104-36—OCT. 12, 1995 
loan made or guaranteed under the Small Business Act or the 
Small Business Investment Act of 1958 before the date of enactment 
of this Act. 
(b) EXCEPTIONS.—^The amendments made by this Act apply 
to a loan made or guaranteed under the Small Business Act or 
the Small Business Investment Act of 1958 before the date of 
enactment of this Act, if the loan is refinanced, extended, restruc-
tured, or renewed on or after the date of enactment of this Act. 
Approved October 12, 1995. 
LEGISLATIVE HISTORY—S. 895 (H.R. 2150): 
HOUSE REPORTS: Nos. 104-239 accompanying H.R. 2150 (Comm. on Small Busi-
ness) and 104-269 (Comm. of Conference). 
SENATE REPORTS: No. 104-129 (Comm. on Small Business). 
CONGRESSIONAL RECORD, Vol. 141 (1995): 
Aug. 11, considered and passed Senate. 
Sept. 12, H.R. 2150 considered and passed House; S. 895, amended, passed 
in lieu. 
Sept. 28, Senate agreed to conference report. 
Sept. 29, House agreed to conference report.