Small Business Guaranteed Credit Enhancement Act of 1993
PL 103-81 (S.1274), enacted 08/13/1993

107 STAT. 780 
PUBLIC LAW 103-81—AUG. 13, 1993 
Public Law 103-81 
103d Congress 
Aug. 13, 1993 
[S. 1274] 
Small Business 
Guaranteed 
Credit 
Enhancement 
Act of 1993. 
15 u s e 631 note. 
An Act 
To reduce the subsidy cost for the Guaranteed Business Loan Program of the 
Small Business Administration, and for other purposes. 
Be it enacted by the Senate and House of Representatives 
of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—^This Act may be cited as the "Small Business 
Guaranteed Credit Enhancement Act of 1993". 
(b) TABLE OF CONTENTS.—^The table of contents for this Act 
is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. General authorizations. 
Sec. 3. Authority to impose secondary market fees. 
Sec. 4. Penalties. 
Sec. 5. Authority to reduce loan guarantee percentages. 
Sec. 6. Study and report. 
Sec. 7. Repealer. 
Sec. 8. Microloan program amendments. 
Sec. 9. Small Business Development Center Program. 
Sec. 10. White House Conference on Small Business. 
Sec. 11. National Women's Business Council. 
SEC. 2. GENERAL AUTHORIZATIONS. 
Section 20 of the Small Business Act (15 U.S.C. 631 note) 
is amended— 
(1) in subsection (g)(2) by striking "$7,030,000,000" and 
by inserting in lieu thereof "$7,155,000,000"; 
(2) in subsection (g)(2) by striking "$775,000,000" and by 
inserting in lieu thereof "$900,000,000"; 
(3) in subsection (i)(2) by striking "$8,083,000,000" and 
by inserting in lieu thereof "$8,458,000,000"; and 
(4) in subsection (i)(2) by striking "$825,000,000" and by 
inserting in lieu thereof "$1,200,000,000". 
SEC. 3. AUTHORITY TO IMPOSE SECONDARY MARKET FEES. 
(a) ADDITIONAL GUARANTEE FEES.—Section 5(g) of the Small 
Business Act (15 U.S.C. 634) is amended by striking paragraph 
(4) and by inserting in lieu thereof the following: 
"(4)(A) The Administration may collect the following fees 
for loan guarantees sold into the secondary market pursuant 
to the provisions of subsection (f): an amount equal to (A) 
PUBLIC LAW 103-81—AUG. 13, 1993 
107 STAT. 781 
not more than ^lo of one percent per year of the outstanding 
principal amount of the portion of such loan guaranteed by 
the Administration, and (B) not more than 50 percent of the 
portion of the sale price which is in excess of 110 percent 
of the outstanding principal amount of the portion of such 
loan guaranteed by the Administration. Any such fees imposed 
by the Administration shall be collected by the Administration 
or by the agent which carries out on behalf of the Administra-
tion the central registration functions required by subsection 
(h) of this section and shall be paid to the Administration 
and used solely to reduce the subsidy on loans guaranteed 
under section 7(a) of this Act: Provided, That such fees shall 
not be charged to the borrower whose loan is guaranteed: 
and. Provided further, That nothing herein shall preclude any 
agent of the Administration from collecting a fee approved 
by the Administration for the functions described in subsection 
(h)(2). 
"(B) The Administration is authorized to impose and collect, 
either directly or through a fiscal and transfer agent, a reason-
able penalty on late payments of the fee authorized under 
subparagraph (A) in an amount not to exceed 5 percent of 
such fee per month plus interest.". 
(b) Any new fees imposed by the Administration pursuant 
15 USC 634 note. 
to the authority conferred by subsection (a) shall be applicable 
only to loans initially sold in the secondary market pursuant to 
the provisions of section 5(f) of the Small Business Act after August 
31,1993. 
SEC. 4. PENALTIES. 
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: 
"(22) The Administration is authorized to permit participat-
ing lenders to impose and collect a reasonable penalty fee 
on late payments of loans guaranteed xmder this subsection 
in an amount not to exceed 5 percent of the monthly loan 
payment per month plus interest.". 
SEC. 
5
. AUTHORITY TO REDUCE LOAN GUARANTEE PERCENTAGES. 
(a) GUARANTEE PERCENTAGES.—Section 7(a)(2) of the Small 
Business Act (15 U.S.C. 636) is amended— 
(1) by striking from the end of clause (B)(i) the word 
"and" and by redesignating clause (B)(ii) as (B)(iv) and by 
inserting the following after clause (B)(i): 
"(ii) not less than 75 percent of the financing outstand-
ing at the time of disbursement, if such financing is more 
than $155,000 and the period of maturity of such financing 
is more than 10 years, except that the participation by 
the Administration may be reduced below 75 percent upon 
request of the participating lender; 
"(iii) not less than 85 percent of the financing outstand-
ing at the time of disbursement, if such financing is more 
than $155,000 and the period of maturity of such financing 
is 10 years or less, except that the participation by the 
Administration may be reduced below 85 percent upon 
request of the participating lender; and"; 
107 STAT. 782 
PUBLIC LAW 103-81—AUG. 13, 1993 
Effective date. 
15 u s e 636 note. 
(2) by striking the words "85 percent under subparagraph 
(B)" and by inserting in lieu thereof the following: "the above 
specified percentums"; 
(3) by striking from paragraph (B) the words "not less 
than 80 percent, except upon" and by inserting in lieu thereof 
the following: "not less than 70 percent, unless a lesser percent 
is required by clause (B)(ii) or upon the"; and 
(4) by inserting after the third sentence the following: 
"The maximum interest rate for a loan guaranteed under the 
Preferred Lenders Program shall not exceed the maximum 
interest rate, as determined by the Administration, which is 
made appUcable to other loan guarantees under section 7(a).". 
(b) APPLICATION.—^Notwithstanding any other provision of law, 
the amendments made by subsection (a) shall be effective September 
1, 1993, but shall not be applicable to loan guarantee applications 
received by the Administration prior to August 21, 1993. In order 
to determine the percent of the loan to be guaranteed pursuant 
to the amendments made by subsection (a), the Administration 
shall aggregate the outstanding guaranteed principal of multiple 
loan guarantees issued on behalf of the same borrower. 
15 u s e 634 note. SEC. 6. STUDY AND REPORT. 
Effective date. 
15 use 634 note. 
The Administration shall study, monitor and evaluate the 
impact of the amendments made by sections 3 and 5 of this Act 
on the ability of small business concerns and small business con-
cerns owned and controlled by minorities and women, to obtain 
financing and the impact of such sections on the effectiveness, 
viability and growth of the secondary market authorized by section 
5(f) of the Small Business Act. Not later than 16 months after 
the date of enactment, and annually thereafter, the Administration 
shall submit to the Committees on Small Business of the Senate 
and the House of Representatives a report containing the Adminis-
tration's findings and recommendations on such impact, specifically 
including changes in the interest rates on financings provided to 
small business concerns and small business concerns owned and 
controlled by minorities and women, through the use of the second-
ary market. The Administration shall segregate such findings and 
recommendations in the study according to the ethnic and gender 
components in these categories. Solely for the purposes of the study 
authorized herein, the term "small business concerns owned and 
controlled by minorities", includes businesses owned and controlled 
by individuals belonging to one of the designated groups listed 
in section 8(d)(3)(C) of the Small Business Act. 
SEC. 7. REPEALER. 
Sections 3 and 5 of this Act are hereby repealed on September 
30,1996. 
SEC. 8. MICROLOAN PROGRAM AMENDMENTS. 
Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) 
is amended— 
(1) in paragraph (l)(B)(iii), by striking "$15,000" and insert-
ing "$25,000"; 
(2) in paragraph (5)(A), by striking "6 grants" and inserting 
"25 grants for terms of up to 5 years"; and 
(3) in paragraph (9)(B) by striking "3 percent" and inserting 
"7 percent". 
PUBLIC LAW 103-81—AUG. 13, 1993 
107 STAT. 783 
SEC. 9. SMALL BUSINESS DEVELOPMENT CENTER PROGRAM. 
(a) CLEARINGHOUSE.—Section 21(c)(7) of the Small Business 
Act (15 U.S.C. 648) is amended by striking "system which will" 
and by inserting in lieu thereof the following: "system. Subject 
to amounts approved in advance in appropriations Acts, the 
Administration may make grants or enter cooperative agreements 
with one or more centers to carry out the provisions of this para-
graph. Said grants or cooperative agreements shall be awarded 
for periods of no more than five years duration. The matching 
funds provisions of subsection (a) shall not be applicable to grants 
or cooperative agreements under this paragraph. The system shall". 
(b) AUTHORIZATION.—Section 25(i) of the Small Business Act 
(15 U.S.C. 652) is amended by striking "$8,000,000 for fiscal year 
1993" and by inserting in Ueu thereof "$2,000,000 for each of 
fiscal years 1993 and 1994". 
(c) REGULATIONS.—Section 223 of the Small Business Credit 
and Business Opportunity Enhancement Act of 1992 (15 U.S.C. 
631 note) is amended by striking the last sentence of subsection 
15 USC 648 note, 
(b). 
SEC. 10. WHITE HOUSE CONFERENCE ON SMALL BUSINESS. 
The White House Conference on Small Business Authorization 
Act (15 U.S.C. 631 note) is amended— 
(1) in section 2 by striking from subsection (a) "not earUer 
than January 1, 1994, and not later than April 1, 1994" and 
by inserting in lieu thereof "not earlier than May 1, 1995, 
and not later than September 30,1995"; 
(2) in section 2 by striking from subsection (a) "December 
1, 1992" and by inserting in Ueu thereof "March 1, 1994"; 
and 
(3) in section 5 by striking the second sentence of subsection 
(a) and by inserting in lieu thereof the following: "Subsequent President, 
to the date of enactment of this Act, but not later than 30 
days after the date of enactment of this Act, the President 
sheill select and appoint eleven individuals to the Commission.". 
SEC. 11. NATIONAL WOMEN'S BUSINESS COUNCIL. 
Section 407 of the Women's Business Ownership Act of 1988 
(15 U.S.C. 631 note) is amended to read as follows: 
"SEC. 407. AUTHORIZATION. 
"(a) IN GENERAL.—^There are authorized to be appropriated 
to carry out this title— 
"(1) $500,000 for fiscal year 1993; and 
"(2) $500,000 for fiscal year 1994. 
107 STAT. 784 
PUBLIC LAW 103-81—AUG. 13, 1993 
"(b) LIMITATION ON AUTHORITY.—New spending authority or 
authority to enter into contracts as authorized in this Act shall 
be effective only to such extent and in such amounts as are provided 
in advance in appropriation Acts. 
Termination 
«(c) SuNSET.—^This Section shall cease to be effective on Novem-
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ber 30,1995.". 
Approved August 13, 1993. 
L E G I S L A T I V E H I S T O R Y — S . 1274 (H.R. 2766): 
CONGRESSIONAL RECORD, Vol. 139 (1993): 
July 30, considered and passed Senate. 
Aug. 2, H.R. 2766 considered and passed House. 
Aug. 4, S. 1274 considered and passed House, amended. 
Aug. 5, Senate concurred in House amendment. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 29 (1993): 
Aug. 13, Presidential statement.