Small Business Administration Reauthorization and Amendment Act of 1988
PL 100-590 (H.R.4174), enacted 11/03/1988

PUBLIC LAW 100-590—NOV. 3,1988 
102 STAT. 2989 
Public Law 100-590 
100th Congress 
An Act 
To amend the Small Business Act and the Small Business Investment Act of 1958, 
Nov. 3,1988 
and for other purposes. 
[H.R. 4174] 
Be it enacted by the Seriate and House of Representatives of the 
United States of 
America in Congress assembled, 
Small Business 
Administration 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
Reauthorization 
(a) SHORT TITLE.—This Act may be cited as the "Small Business 
A^^ggs"®"' 
Administration Reauthorization and Amendment Act of 1988". 
15 use 631 note. 
(b) TABLE OF CONTENTS.— 
TITLE I-GENERAL REAUTHORIZATION PROVISIONS 
Sec. 101. Program levels and authorizations. 
Sec. 102. Form simplification and preferred financing. 
Sec. 103. Guarantee percentages for preferred lenders. 
Sec. 104. Examinations of small business investment companies. 
Sec. 105. Minimum life of limited partnership small business investment compa-
nies. 
Sec. 106. Periodic small business investment company debenture sales. 
Sec. 107. General Accounting OfHce evaluation of the service corps of retired 
executives. 
Sec. 108. Participation in the small business innovation and research program. 
Sec. 109. SBA program data and evaluation. 
Sec. 110. Breakout procurement center representatives. 
Sec. 111. Amendments relating to revolving funds. 
Sec. 112. Development company loan program. 
Sec. 113. Secondary market in development company loans. 
Sec. 114. Development company debentures. 
Sec. 115. Development company loans—policy. 
Sec. 116. Development company loans—leased premises. 
Sec. 117. Development companies—staff and overhead. 
Sec. 118. Disaster loan policy. 
Sec. 119. Definition of disasters. 
Sec. 120. Disaster assistance. 
Sec. 121. Disaster mitigation actions. 
Sec. 122. Unsecured disaster loans. 
Sec. 123. National directory of small businesses. 
Sec. 124. Women-owned business. 
Sec. 125. Analysis of financing sources. 
Sec. 126. Effective data collection on women-owned business. 
Sec. 127. Management and technical assistance for women-owned small business. 
Sec. 128. New procurement center representatives. 
Sec. 129. Rural area business development plans. 
Sec. 130. Increased contract opportunities. 
Sec. 131. Private sector cooperation. 
Sec. 132. Background check policy—fingerprinting. 
Sec. 133. Amendments relating to program for blind and handicapped. 
Sec. 134. Miscellaneous amendments. 
Sec. 135. Funding extensions. 
Sec. 136. Promulgation of rules. 
Sec. 137. Effective date. 
TITLE II-PREFERRED SURETY BOND GUARANTEE PROGRAM 
Sec. 201. Short title. 
Sec. 202. Authority of the administration. 
Sec. 203. Indemnification. 
Sec. 204. Reports and audits of participating sureties. 
102 STAT. 2990 
PUBLIC LAW 100-590—NOV. 3, 1988 
Sec. 205. Regulations. 
Sec. 206. Evaluation and report. 
. . 
Sec. 207. Sunset. 
Sec. 208. Revolving fund. 
Sec. 209. Effective date. 
' 
* 
TITLE I—GENERAL REAUTHORIZATION 
PROVISIONS 
SEC. 101. PROGRAM LEVELS AND AUTHORIZATIONS. 
Loans. 
Section 20 of the Small Business Act (15 U.S.C. 631 note) is 
amended by striking the first sentence of subsection (a), by striking 
subsections (b) through (x), by redesignating subsections (y) and (z) as 
subsections (b) and (c), and by adding the following new subsections: 
"(d) The following program levels are authorized for fiscal year 
1989— 
"(1) for the programs authorized by section 7(a) of this Act, 
the Administration is authorized to make $62,000,000 in direct 
and immediate participation loans; and of such sum, the 
Administration is authorized to make $17,000,000 in loans as 
provided in paragraph (10), $24,000,000 in loans as provided in 
paragraph (11), and $21,000,000 in loans to disabled veterans 
and Vietnam era veterans as defined in section 1841, title 38, 
United States Code, under the general terms and conditions of 
section 7(a) of this Act; 
"(2) for the programs authorized by secton 7(a) of this Act and 
section 504 of the Small Business Investment Act of 1958, the 
Administration is authorized to make $3,407,000,000 in deferred 
participation loans and guarantees of debentures; and of such 
sum, the Administration is authorized to make $5,000,000 in 
loans as provided in paragraph (10), $65,000,000 in loans as 
provided in paragraph (11), $60,000,000 in loans as provided in 
paragraph (12), and $460,000,000 in loans as provided in para-
graph (13) and guarantees of debentures as provided in section 
504; 
"(3) for the programs authorized by title III of the Small 
Business Investment Act of 1958, the Administration is au-
thorized to make $39,000,000 in direct purchases of debentures 
and preferred securities and to make $272,000,000 in guarantees 
of debentures; 
"(4) for the programs authorized by part B of title IV of the 
Small Busness Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $1,500,000,000; 
and 
"(5) for the programs authorized in sections 404 and 405 of the 
Small Business Investment Act of 1958, the Administration is 
not authorized to enter into any guarantees. 
"(e) There are authorized to be appropriated to the Administra-
tion for fiscal year 1989 such sums as may be necessary to carry out 
the provisions of this Act and the Small Business Investment Act of 
1958, including $228,000,000 for salaries and expenses of the 
Administration, of which up to $2,600,000 may be available for the 
operations of the Service (Dorps oif Retired Executives. There also are 
hereby authorized to be appropriated such sums as may be nec-
essary and appropriate for the carrying out of the provisions and 
purposes, including administrative expenses, of sections 7(bXl) and 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 2991 
7(bX2) of this Act; and there are authorized to be transferred from 
the disaster loan revolving fund such sums as may be necessary and 
appropriate for such administrative expenses. 
"(f) The following program levels are authorized for fiscal year 
1990— 
"(1) for the programs authorized by section 7(a) of this Act, 
the Administration is authorized to make $65,000,000 in direct 
and immediate participation loans; and of such sum, the 
Administration is authorized to make $18,000,000 in loans as 
provided in pareigraph (10), $25,000,000 in loans as provided in 
paragraph (11), and $22,000,000 in loans to disabled veterans 
and Vietnam era veterans as defined in section 1841, title 38, 
United States Code, under the general terms and conditions of 
section 7(a) of this Act; 
"(2) for the programs authorized by section 7(a) of this Act 
and section 504 of the Small Business Investment Act of 1958, 
the Administration is authorized to make $3,543,000,000 in 
deferred participation loans and guarantees of debentures; and 
of such sum, the Administration is authorized to make 
$5,000,000 in loans as provided in paragraph (10), $68,000,000 in 
loans as provided in paragraph (11), $62,000,000 in loans as 
provided in paragraph (12), and $478,000,000 in loans as pro-
vided in paragraph (13) and guarantees of debentures as pro-
vided in section 504; 
"(3) for the programs authorized by title III of the Small 
Business Investment Act of 1958, the Administration is 
authorized to make $41,000,000 in direct purchases of deben-
tures and preferred securities and to make $283,000,000 in 
guarantees of debentures; 
"(4) for the programs authorized by part B of title IV of the 
Small Business Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $1,560,000,000; 
and 
"(5) for the programs authorized in sections 404 and 405 of the 
Small Business Investment Act of 1958, the Administration is 
not authorized to enter into any guarantees. 
"(g) There are authorized to be appropriated to the Administra-
tion for fiscal year 1990 such sums as may be necessary to carry out 
the provisions of this Act and the Small Business Investment Act of 
1958, including $238,000,000 for salaries and expenses of the 
Administration, of which $2,700,000 shall be available for the oper-
ations of the Service Corps of Retired Executives. There also are 
hereby authorized to be appropriated such sums as may be nec-
essary and appropriate for the carrying out of the provisions and 
purposes, including administrative expenses, of sections 7(bXl) and 
7(bX2) of this Act; and there are authorized to be transferred from 
the disaster loan revolving fund such sums as may be necessary and 
appropriate for such administrative expenses. 
"(h) There are authorized to be appropriated to the Administra-
tion for fiscal year 1991 such sums as may be necessary to carry out 
the provisions of this Act and the Small Business Investment Act of 
1958. There also are hereby authorized to be appropriated such sums 
as may be necessary and appropriate for the carrying out of the 
provisions and purposes, including adminif>trative expenses, of sec-
tions 7(bXl) and 7(bX2) of this Act; and there are authorized to be 
transferred from the disaster loan revolving fund such sums as may 
be necessary and appropriate for such administrative expenses.". 
102 STAT. 2992 
PUBLIC LAW 100-590—NOV. 3, 1988 
SEC. 102. FORM SIMPLIFICATION AND PREFERRED FINANCING. 
(a) CERTIFIED LOAN PROGRAM.—Section 7 of the Small Business 
Act (15 U.S.C. 636) is amended by adding to subsection (a) the 
following new paragraph: 
"(19) During fiscal years 1989, 1990, and 1991, in addition to the 
preferred lenders program authorized by the proviso in section 
5(bX7), the Administration is authorized to establish a certified loan 
program for lenders who establish their knowledge of Administra-
tion laws and regulations concerning the loan guarantees program 
and their proficiency in program requirements. In order to encour-
£ige certified lenders and preferred lenders to provide loans of 
$50,000 or less in guarantees to eligible small business loan 
applicants, the Administration (A) shall develop and shall allow 
participating lenders in the certified loan program and in the 
preferred loan program to solely utilize a uniform and simplified 
loan form for such loans and (B) shall allow such lenders to retain 
one-half of the fee collected pursuant to section 7(aX16) on such 
loans: Provided, That a participating lender may not retain any fee 
pursuant to this paragraph if the amount committed and outstand-
ing to the applicant would exceed $50,000 unless such excess amount 
was not approved under the provisions of this paragraph. The 
designation of a lender as a certified lender shall be suspended or 
revoked at any time that the Administration determines that the 
lender is not adhering to its rules and regulations or if the Adminis-
tration determines that the loss experience of the lender is excessive 
as compared to other lenders: Provided further, That any suspension 
or revocation of the designation shall not affect any outstanding 
guarantee: And, provided further. That the Administration may not 
reduce the per centum of guarantee as a criterion of eligibility for 
participation in this program, except as otherwise provided by law.". 
15 use 636 note. 
(b) REPORTS.—The Administration shall take appropriate steps to 
expand participation in the certified loan program and shall report 
to the Small Business Committees of the Senate and the House of 
Representatives on the amount of loans approved and the amount of 
losses sustained under the provisions of section 7(aX19) of the Small 
Business Act. An interim report shall be submitted not later than 
one year after date of enactment of this Act and a final report shall 
be submitted not later than 18 months after the date of enactment. 
SEC. 103. GUARANTEE PERCENTAGES FOR PREFERRED LENDERS. 
Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is 
amended by inserting after the word "thereto" in the second pro-
viso, ", but any such reduction shall not exceed five points". 
SEC. 104. EXAMINATIONS OF SMALL BUSINESS INVESTMENT COMPANIES. 
Section 310 of the Small Business Investment Act of 1958 (15 
U.S.C. 687b) is amended by striking the second sentence of subsec-
tion (b) and by adding the following new subsection to such section: 
Law 
"(c) Each small business investment company shall be examined 
enforcement and at least every two years in such detail so as to determine whether or 
"™«- 
not— 
"(1) it has engaged solely in lawful activities and those con-
templated by this title; 
"(2) it has engaged in prohibited conflicts of interest; 
"(3) it has acquired or exercised illegal control of an assisted 
small business; 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 2993 
"(4) it has made investments in small businesses for not less 
than four years in the case of section 301(d) licensees and in all 
other cases, not less than five years; 
"(5) it has invested more than 20 per centum of its capital in 
any individual small business; 
"(6) it has engaged in relending, foreign investments, or 
passive investments; or 
"(7) it has charged an interest rate in excess of the maximum 
permitted by law: 
Provided, That the Administration may waive the exEimination (A) 
for up to one additional year if, in its discretion, it determines such a 
delay would be appropriate, based upon the amount of debentures 
being issued by the company and its repajonent record, the prior 
operating experience of the company, the contents and results of the 
last examination and the management expertise of the company, or 
(B) if it is a company whose operations have been suspended while 
the company is involved in Utigation or is in receivership.". 
SEC. 105. MINIMUM LIFE OF LIMITED PARTNERSHIP SMALL BUSINESS 
INVESTMENT COMPANIES. 
Section 301 of the Small Business Investment Act of 1958 (15 
U.S.C. 681) is amended by striking from subsection (a) "has succes-
sion for a period of not less than thirty years unless sooner dissolved 
by its shareholders or partners" and inserting in lieu thereof ", if 
incorporated, has succession for a period of not less than thirty 
years unless sooner dissolved by its shareholders, and if a limited 
partnership, has succession for a period of not less than ten years,". 
SEC. 106. PERIODIC SMALL BUSINESS INVESTMENT COMPANY DEBEN-
TURE SALES. 
(a) IN GENERAL.—Title i n of the Small Business Investment Act of 
1958 is amended by adding at the end thereof the following new 
section: 
PERIODIC ISSUANCE OF GUARANTEES AND TRUST CERTIFICATES 
"SEC. 322. The Administration shall issue guarantees under sec- 
15 use 687m. 
tion 303 and trust certificates under section 321 at periodic intervals 
of not less than every three months and shall do so at such shorter 
intervals as its deems appropriate, taking into consideration the 
amount and number of such guarantees or trust certificates.". 
(b) CLERICAL AMENDMENT.—^The table of sections for title m is 
amended by adding the following new item: 
"Sec. 322. Periodic issuance of guarantees and trust certificates.". 
SEC. 107. GENERAL ACCOUNTING OFFICE EVALUATION OF THE SERVICE 
15 USC 637 note. 
CORPS OF RETIRED EXECUTIVES. 
The Comptroller General shall, not later than December 1, 1989, Reports. 
transmit a report to the Small Business Committees of the Senate 
and the House of Representatives on the functions being performed 
by volunteers in the Service Corps of Retired Executives and the 
Active Corps of Executives. Such report shall include his evaluation 
of the pr(^ams and shall include conclusions and recommendations 
concerning the efficiency and cost effectiveness of such volunteers. 
102 STAT. 2994 
PUBLIC LAW 100-590—NOV. 3, 1988 
SEC. 108. PARTICIPATION IN THE SMALL BUSINESS INNOVATION AND 
RESEARCH PROGRAM. 
Subsection (j) of section 9 of the Small Business Act (15 U.S.C. 
638(j)) is amended as follows: 
(1) by striking "and" at the end of paragraph (4); 
(2) by striking the period at the end of paragraph (5) and 
inserting a semicolon; and 
(3) by adding the following new paragraphs: 
"(6) standardized and orderly withdrawal from program 
participation by an agency having a SBIR program; at the 
discretion of the Administration, such directives may require a 
phased withdrawal over a period of time sufficient in duration 
to minimize any adverse impact on small business concerns; and 
"(7) the voluntary participation in a SBIR program by a 
Federal agency not required to establish such a program pursu-
ant to subsection (f).". 
15 u s e 639 note. 
SEC. 109. SBA PROGRAM DATA AND EVALUATION. 
The Small Business Administration shall develop a comprehen-
sive system to systematically acquire data on the number of small 
businesses which participate in Administration programs, the 
nature and extent of their participation, the type of business, the 
results of such participation, and such other information as the 
Administration deems appropriate. It shall also include the number 
and dollar amount of guaranteed loans by lender, and the interest 
rate thereon, and the number and dollar amount of sales in the 
secondary market both by lender and by purchaser. The data shall 
be compiled and maintained to permit a statistically valid analysis 
Reports. 
and computation and evaluation of costs and benefits. The Adminis-
tration shall submit a report to the Small Business Committees 
of the Senate and the House of Representatives not later than 
March 31, 1989, such report to include its conclusions and recom-
mendations and estimate of the costs involved in implementing such 
a program and shall implement the system for all program assist-
ance made available on or after October 1, 1989. 
SEC. 110. BREAKOUT PROCUREMENT CENTER REPRESENTATIVES. 
Subsection (1) of section 15 of the Small Business Act (15 U.S.C. 
644) is amended— 
(1) by striking the term "unrestricted" from subparagraph (D) 
of paragraph (2) each place such term appears; 
(2) by amending subparagraph (E) of paragraph (2) to read as 
follows: 
"(E) have access to procurement records and other data of the 
procurement center commensurate with the level of such rep-
resentative's approved security clearance classification;"; 
(3) by amending paragraph (3) to read as follows: 
"(3) A breakout procurement center representative is authorized 
to appeal the failure to act favorably on any recommendation made 
pursuant to paragraph (2). Such appeal shall be filed and processed 
in the same manner and subject to the same conditions and limi-
tations as an appeal filed by the Administrator pursuant to 
subsection (a)."; 
(4) by amending paragraph (6) to read as follows: 
"(6) For purposes of this subsection, the term 'major procurement 
center' means a procurement center that, in the opinion of the 
Administrator, purchases substantial dollar amounts of other than 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 2995 
commercial items and which has the potential to incur significant 
savings as the result of the placement of a breakout procurement 
center representative"; and 
(5) by adding the following new paragraph: 
"(7XA) At such times as the Administrator deems appropriate, the 
breakout procurement center representative shall conduct famil-
iarization sessions for contracting officers and other appropriate 
personnel of the procurement center to which such representative is 
assigned. Such sessions shall acquamt the participants with the 
provisions of this subsection and shall instruct them in methods 
designed to further the purposes of such subsection. 
"(B) The breakout procurement center representative shall pre- Reports. 
pare and personally deliver an annual briefing and report to the 
head of the procurement center to which such representative is 
assigned. Such briefing and report shall detail the past and planned 
activities of the representative and shall contain such recommenda-
tions for improvement in the operation of the center as may be 
appropriate. The head of such center shall personally receive such 
briefing and report and shall, within sixty calendar days after 
receipt, respond, in writing, to each reconunendation made by such 
representative.". 
SEC. 111. AMENDMENTS RELATING TO REVOLVING FUNDS. 
(a) TBCEDncAL AMENDMENT.—Section 4(c) of the Small Business 
Act (15 U.S.C. 633(c)) is amended— 
(1) by striking from paragraph (1) "III" and inserting in lieu 
thereof "m, IV"; and 
(2) by striking from paragraph (2) "III" and inserting in lieu 
thereof "ffl, IV"; and 
(b) REPEALER.—Section 403 of the Small Business Investment Act 
of 1958 (15 U.S.C. 694) is hereby repealed. Any moneys remaining in 
15 use 694 note. 
the Lease Guarantee Fund on the date of enactment of this Act shall 
be transferred to the Small Business Administration's business loan 
and investment fund. 
(c) POLLUTION CONTROL GUARANTEED LOANS.—Section 7(aX12) of 
the Small Business Act (15 U.S.C. 636(aX12)) is amended— 
(1) by inserting "(A)" after "(12)"; and 
(2) by adding at the end thereof the following new subpara-
graph: 
"(b) The Administration may provide deferred participation loans Environmental 
under this subsection to finance the planning, design, or installation protection. 
of pollution control facilities for the purposes set forth in section 404 
of the Small Business Investment Act of 1958. Notwithstanding the 
limitation expressed in paragraph (3) of this subsection, a loan made 
under this paragraph may not result in a total amount outstanding 
and conmiitted to a borrower from the business loan and investment 
fund of more than $I,000,0(M).". 
(d) TECHNICAL AMENDMENTS TO SECTION 505.—(1) Section 505 of 
the Small Business Investment Act of 1958 is amended by striking 15 USC 697b. 
from subsection (a) "all of a" and by inserting in lieu thereof 
"aUora". 
(2) Such section is further amended by inserting the following title 
at the b^inning of such section: 
102 STAT. 2996 
PUBLIC LAW 100-590—NOV. 3. 1988 
"POOUNG OP DEBENTURES". 
(3) The table of contents for title V of such Act is amended by 
adding after the item relating to section 504 the following new item: 
"Sec. 505. Pooling of debentures.". 
SEC. 112. DEVELOPMENT COMPANY LOAN PROGRAM. 
(a) PERMANENT EXTENSION OF PILOT PROGRAM.—Section 504 of the 
Small Business Investment Act of 1958 (15 U.S.C. 697a) is amended 
to read as foUov^: 
"PRIVATE DEBENTURE SALES 
"SEC. 504. (a) Notwithstanding any other law, rule, or regulation, 
the Administration shall sell to investors, either publicly or by 
private placement, debentures pursuant to section 503 of this title as 
follows: 
"(1) Of the program levels otherwise authorized by law for 
fiscal year 1986, an amount not to exceed $200,000,000. 
"(2) Of the program levels otherwise authorized by law for 
each of fiscal years 1987 and 1988, an amount not to exceed 
$425,000,000. 
"(3) All of the program levels authorized for fiscal year 1989 
and subsequent fiscal years. 
"(b) Nothing in any provision of law shall be construed to au-
thorize the Federal Financing Bank to acquire— 
"(1) any obligation the pajrment of principal or interest on 
which at any time has been guaranteed in whole or in part 
under section 503 of this title and which is being sold pursuant 
to the provisions of the pr(^am authorized in this section; 
"(2) any obligation which is an interest in any obligation 
described in paragraph (1); or 
"(3) any obligation which is secured by, or substantially all of 
the value of which is attributable to, any obligation described in 
paragraph (1) or (2).". 
(b) The table of contents for title V of such Act is amended by 
adding after the item relating to section 503 the following new item: 
"Sec. 504. Private debenture sales.". 
(c) (Ik)MMERClAL LOAN INTEREST RATE.— 
(1) IN GENERAL.—Section 503 of the Small Business Investment 
Act of 1958 (15 U.S.C. 697) is amended— 
(A) by redesignating subsections (c) and (d) as subsections (d) 
and (e), respectively, and 
(B) by inserting after subsection (b) the following new sub-
section: 
"(cXD The purpose of this subsection is to facilitate the orderly 
and necessary flow of long-term loans from certified development 
companies to small business concerns. 
"(2) Notwithstanding the provisions of the constitution or laws of 
any State limiting the rate or amount of interest which may be 
charged, taken, received, or reserved, the maximum legal rate of 
interest on any commercial loan which funds any portion of the cost 
of the project financed pursuant to this section or section 504 which 
is not funded by a debenture guaranteed under this section shall be 
a rate which is established by the Administrator of the Small 
Business Administration under the authority of this section. 
"(3) The Administrator is authorized and directed to establish and 
publish quarterly a maximum legal interest rate for any commercial 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 2997 
loan which funds any portion of the cost of the project financed 
pursuant to this section or section 504 which is not funded by a 
debenture guaranteed under this section.". 
(2) REPEALER.—The amendment made by paragraph (1) shall be 15 use 697 note. 
repealed on October 1, 1990. 
SEC. 
1
1
3
. 
SECONDARY 
MARKET 
IN 
DEVELOPMENT 
COMPANY 
LOANS. 
Section 5 of the Small Business Act (15 U.S.C. 634) is amended by 
striking from subsection (g) "except those" and by inserting in lieu 
thereof "except separate trust certificates shall be issued for loans 
approved". 
SEC. 114. DEVELOPMENT COMPANY DEBENTURES. 
Section 503(aX2) of the Small Business Investment Act of 1958 (15 
U.S.C. 697(aX2)) is amended by inserting before the period at the end 
thereof the following: ": Provided, That the Administration shall not 
decline to issue such guarantee when the ownership interests of the 
small business concern and the ownership interests of the property 
to be financed with the proceeds of a loan made pursuant to 
subsection (bXD are not identical because one or more of the follow-
ing classes of relatives have an ownership interest in either the 
small business concern or the property: father, mother, son, daugh-
ter, wife, husband, brother, or sister: Provided further, That the 
Administrator or his designee has determined on a case-by-case 
basis that such ownership interest, such guarantee, and the pro-
ceeds of such loan, will substantially benefit the small business 
concern". 
SEC. 115. DEVELOPMENT COMPANY LOANS—POLICY. 
(a) PoucY.—Section 501 of the Small Business Investment Act of Urban areas. 
1958 (15 U.S.C. 695) is amended by redesignating subsections (a) and Rural areas. 
0)) as subsections (b) and (c), respectively, and by adding the follow-
ing new subsection prior thereto: 
'(a) The Congress hereby finds and declares that the purpose of 
this title is to foster economic development in both urban and rural 
areas by providing long term financing for small business concerns 
through the development company program authorized by this title. 
In order to carry out this objective, the Administration is hereby 
directed to place greater emphasis on the needs of rural areas and 
the promotion of the development company program in such areas, 
and is further directed to develop a plan for greater outreach of 
procurement and export trade seminars in such areas. As used in 
this title, the term rural areas' means those localities with popu-
lations of less than 20,000.". 
(b) TECHNICAL AMENDMENTS TO THE SECTION.—<1) Title V of such 
Act is further amended by inserting the following heading at the 
beginning of section 501: 
"STATE DEVELOPMENT COMPANIES". 
(2) The table of contents of such Act is amended by inserting 
before the item relating to section 502 the following new item: 
"Sec. 502. State development companies.". 
SEC. 116. DEVELOPMENT COMPANY LOANS—LEASED PREMISES. 
(a) IN GENERAL.—Section 502 of the Small Business Investment 
Act of 1958 (15 U.S.C. 696) is further amended by adding the 
following at the end thereof: 
102 STAT. 2998 
PUBLIC LAW 100-590—NOV. 3, 1988 
"(4) If the project is to construct a new facility, up to 33 per 
centum of the total project may be leased, if reasonable projections 
of growth demonstrate that the assisted small business concern will 
need additional space within three years and will fully utilize such 
additional space within ten years.". 
(b) TECHNICAL AMENDMENTS TO THE SECTION.—(1) Title V of such 
Act is further amended by inserting the following heading at the 
beginning of section 502: 
"LOANS FOR PLANT ACQUISITION, CONSTRUCTION, CONVERSION, AND 
EXPANSION". 
(2) The table of contents of such Act is amended by inserting 
before the item relating to section 503 the following new item: 
"Sec. 502. Loans for plant acquisition, construction, conversion, and expansion.". 
SEC. 117. DEVELOPMENT COMPANIES—STAFF AND OVERHEAD. 
(a) STAFF.—Section 503(d) of the Small Business Investment Act of 
1958 (15 U.S.C. 697(d)) is amended— 
(1) by inserting "(1)" after "(d)"; 
(2) by redesignating paragraphs (1), (2), and (3) as subpara-
graphs (A), (B), and (C), respectively; and 
(3) by adding at the end thereof the following new paragraph: 
Rural areas. 
"(2) A Company in a rural area shall be deemed to have satisfied 
the requirements of a full-time professional staff and professional 
management ability if it contracts with another certified develop-
ment company which has such staff and management ability and 
which is located in the same general area to provide such services.". 
(b) OVERHEAD.—The Small Business Investment Act of 1958 is 
amended by adding at the end thereof the following new section: 
"RESTRICTIONS ON DEVELOPMENT COMPANY ASSISTANCE 
15 use 697c. 
"SEC. 506. NOTWITHSTANDING ANY OTHER PROVISION OF LAW: (1) on 
or after May 1, 1991, no development company may accept funding 
from any source, including but not limited to any department or 
agency of the United States Government, if such funding includes 
any conditions, priorities or restrictions upon the types of small 
businesses to which they may provide financial assistance under 
this title or if it includes any conditions or imposes any require-
ments, directly or indirectly, upon any recipient of assistance under 
this title; and (2) before such date, no department or agency of the 
United States Government which provides funding to any develop-
ment company shall impose any condition, priority or restriction 
upon the type of small business which receives financing under this 
title nor shall it include any condition or impose any requirement, 
directly or indirectly, upon any recipient of assistance under this 
title: Provided, That the foregoing shall not affect any such condi-
tions, priorities or restrictions if the department or agency also 
provides all of the financial assistance to be delivered by the devel-
opment company to the small business and such conditions, prior-
ities or restrictions are limited solely to the financial assistance so 
provided.". 
(c) REPORT.—Not later than one hundred and eighty days after the 
effective date of this Act, the Small Business Administration shall 
report to the Small Business Committees of the Senate and the 
House of Representatives on the amount and nature of all financial 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 2999 
assistance or income being received by certified development com-
panies from sources other than the Small Business Administration 
or those being assisted by the programs authorized in title V of the 
Small Business Investment Act of 1958. The report shall include any 
conditions or restrictions imposed on the development companies 
due to such financial assistance, a comparison of all sources of 
income which comprise the development companies' budgets, an 
analysis of the financial impact of various sources of financial 
assistance, and the feasibility of restricting assistance received from 
the Federal Government solely to Small Business Administration 
funding. 
(d) The table of contents of such Act is amended by inserting the 
following new item at the end thereof: 
"Sec. 506. Restrictions on development company assistance.". 
SEC. 118. DISASTER LOAN POLICY. 
Section 2 of the Small Business Act (15 U.S.C. 631) is amended by 
adding the following new subsection: 
"(g) In administering the disaster loan program authorized by 
section 7 of this Act, to the maximum extent possible, the Adminis-
tration shall provide assistance and counseling to disaster victims in 
filing applications, providing information relevant to loan process-
ing, and in loan closing and prompt disbursement of loan proceeds 
and shall give the disaster program a high priority in allocating 
funds for administrative expenses.". 
SEC. 119. DEFINITION OF DISASTERS. 
(a) NATURAL DISASTERS.—Section 7 of the Small Business Act (15 
U.S.C. 636) is amended by striking from paragraph (1) of subsection 
(b) "floods, riots or civil disorders, or other catastrophes:" and 
inserting in lieu thereof "natural or other disasters:". 
(b) IN GENERAL.—Section 3 of the Small Business Act (15 U.S.C. 
632) is amended— 
(1) by adding the following new subsection: 
"(k) For the purposes of this Act, the term 'disaster' means a 
sudden event which causes severe damage including, but not limited 
to, floods, hurricanes, tornadoes, earthquakes, fires, explosions, 
volcanoes, windstorms, landslides or mudslides, tidal waves, ocean 
conditions resulting in the closure of customary fishing waters, riots, 
civil disorders or other catastrophes, except it does not include 
economic dislocations."; and 
(2) by redesignating the second subsection "(i)" as subsection 
"(1)". 
SEC. 120. DISASTER ASSISTANCE. 
(a) ECONOMIC INJURY.—Section 7(c) of the Small Business Act (15 
U.S.C. 636(c)) is amended by adding the following new paragraph: 
"(7) The Administration shall not withhold disaster assistance 
pursuant to this paragraph to nurseries who are victims of drought 
disasters. As used in section 7(b)(2) the term "an area affected by a 
disaster" includes any county, or county contiguous thereto, deter-
mined to be a disaster by the President, the Secretary of Agriculture 
or the Administrator of the Small Business Administration.". 
(b) INTEREST RATES.—Section 7(c) of the Act is further amended by 
striking "business concern" from paragraph (5)(C) and inserting in 
lieu thereof "business or other concern, including agricultural co-
operatives,". 
102 STAT. 3000 
PUBLIC LAW 100-590—NOV. 3, 1988 
SEC. 121. DISASTER MITIGATION ACTIONS. 
Section 7 of the Small Business Act (15 U.S.C. 636) is further 
amended by inserting prior to the semicolon at the end of subsection 
(bXlXA) the following: 
": Arid provided further. That the Administration may increase 
the amount of the loan by up to an additional 20 per centum if it 
determines such increase to be necessary or appropriate in 
order to protect the damaged or destroyed property from pos-
sible future disasters by taking mitigating measures, including, 
but not limited to, construction of retaining walls and sea walk, 
grading and contouring land, relocating utilities and modifying 
structures". 
SEC. 122. UNSECURED DISASTER LOANS. 
Section 7(c) of the Small Business Act (15 U.S.C. 636(c)) is further 
amended by striking from paragraph (6) "refinancing." and insert-
ing in lieu thereof "refinancing: Provided further. That the Adminis-
tration shall not require collateral for loans of $10,000 or less which 
are made under paragraph (1) of subsection (b).". 
SEC. 123. NATIONAL DIRECTORY OF SMALL BUSINESSES. 
The Small Business Administration shall undertake a study to 
determine the feasibility and need for developing an expanded 
national directory of small businesses to effectuate fully the pur-
poses of section 15(a) of the Small Business Act. The Agency shall 
examine existing resources such as the PASS system, the advocacy 
data base, and other resources to ascertain the costs and other 
requirements necessary to effectuate such a directory, including a 
concern's capability, standard industrial codes and Federal supply 
numbers identifying such capability, and other data deemed rel-
Reports. 
evant. The Small Business Administration shall submit a report to 
the Small Business Committees of the Senate and the House of 
Representatives not later than June 1, 1989. This report shall 
include conclusions and recommendations and an estimate of the 
costs involved in implementing such a system. 
SEC. 124. WOMEN-OWNED BUSINESS. 
Section 303 of Public Law 96-302 (15 U.S.C. 631b) is amended by 
adding the following new subsection: 
"(e) The information and data required to be reported pursuant to 
subsection (a) shall separately detail those portions of such informa-
tion and data that are relevant to— 
"(1) small business concerns owned and controlled by socially 
and economically disadvantaged individuals as defined pursu-
ant to section 8(d) of the Small Business Act; and 
"(2) small business concerns owned and controlled by 
women.". 
SEC. 125. ANALYSIS OF FINANCING SOURCES. 
(a) STUDY.—Not later than June 1, 1989, or one hundred and 
eighty days after the effective date of this section (whichever is 
later), the Office of the Chief Counsel for Advocacy of the Small 
Business Administration (hereinafter referred to in this section as 
the "Office") shall conduct and complete a study to determine, with 
respect to the service sector of the economy— 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 3001 
(1) the level of demand for debt capital by small business 
concerns; 
(2) the level of availability of such capital for such concerns; 
and 
(3) how new or innovative financing techniques or the 
improvement of existing techniques can be used to satisfy the 
unmet demand for such capital by such concerns consistent 
with acceptable standards of safety and soundness for loans and 
investments made by commercial and business lenders and 
institutional investors. 
(b) CONSULTATION AND COOPERATION.—In performing such study, 
the Office shall consult with the Federal Reserve Board, the 
Comptroller of the Currency, the Department of Commerce, other 
relevant agencies and departments of Government, trade and 
professional associations, and other organizations representing the 
interest of such business and service sector business concerns. Each 
department and agency shall afford the Office such assistance and 
cooperation as may be necessary to achieve the purposes of this 
subsection. 
(c) REPORT.—The study performed pursuant to subsection (a) shall 
be reported to the Committees on Small Business of the Senate and 
House of Representatives within one hundred and eighty days after 
the effective date of this section. 
SEC. 126. EFFECTIVE DATA COLLECTION ON WOMEN-OWNED BUSINESS. 
(a) STUDY.—Not later than June 1, 1989, or one hundred and 
eighty days after the effective date of this section (whichever is 
later), the Office of the Chief Counsel for Advocacy of the Small 
Business Administration (hereinafter referred to in this section £is 
the "Office") shall conduct and complete a study to determine the 
most cost effective and accurate means to gather and present data 
on women-owned businesses, including data on sole proprietorship, 
partnership. Sub S corporations and regular corporations. 
(b) CONSULTATION AND COOPERATION.—In performing such study, 
the Office shall consult with the Department of Labor, including the 
Bureau of Labor Statistics, the Department of Conm^rce* including 
the Bureau of the Census, the Internal ReveniK Service, oiher 
relevant Eigencies and departments of Government, trade and 
professional associations, and other organizations representing the 
interest of women-owned businesses. Each department and agency 
shall afford the Office such assistance and cooperation as may be 
necessary to achieve the purposes of this subsection. 
(c) REPORT.—The study performed pursuant to subsection <a), 
together with such recommendations for legislative or administra-
tive change £is may be appropriate, shall be reported to the Commit-
tees on Small Business of the Senate and House of Representatives 
within one hundred and eighty days after the effective date of this 
section. 
SEC. 127. MANAGEMENT AND TECHNICAL ASSISTANCE FOR WOMEN-
OWNED SMALL BUSINESS. 
(a) ESTABLISHMENT.—Subsection (c) of section 8 of the Small Busi-
ness Act (15 U.S.C. 637(c)) is amended to read as follows: 
"(cXD Subject to the requirements of paragraph (2), the Adminis-
tration shall provide financial assistance to private organizations to 
102 STAT. 3002 
PUBLIC LAW 100-590—NOV. 3, 1988 
Public 
information. 
Grants. 
Contracts. 
Reports. 
conduct demonstration projects for the benefit of small business 
concerns owned and controlled by women. 
"(2) No amount of financial assistance shall be provided pursuant 
to tfaJs subsection unless the recipient organization agrees, as a 
condition of receiving such assistance, that— 
''(A) it will obtain, after its application has been approved but 
prior to the disbursement of funds pursuant to this subsection, 
cash contributions from private sector sources in an amount at 
least equal to the amount of funds such organization will re-
ceive under this subsection; and 
"(B) it will provide the types of services and assistance to 
present and potential women owners of small business concerns 
as are described in paragraph (3). For the purposes of this 
subsection such concerns may be either 'start-up' businesses or 
established 'on-going* concerns. 
"(3) The types of services and assistance referred to in paragraph 
(2XB) shall include the following: 
"(A) financial assistance, which assistance shall include train-
ing and counseling in how to apply for and secure business 
credit and investment capital; prepare and present financial 
statements; manage cash flow and otherwise manage the finan-
cial operations of a business concern; 
"(B) management assistance, which assistance shall include 
training and counseling in how to plan, organize, staff, direct 
and control each major activity and function of a small business 
concern; and 
"(C) marketing assistance, which assistance shall include 
trainii^ and counseling in how to identify and s^ment domes-
tic and international market opportunities; prepare and execute 
marketing plans; develop pricing strategies; locate contract 
opportunities; n^otiate contracts; and utilize varying pubUc 
relations and advertising techniques. 
"(4) Applications for financial assistance pursuant to this subsec-
tion shall be evaluated and ranked in accordance with predeter-
mined selection criteria that shall be stated in terms of relative 
importance. Such criteria and their relative importance shall be 
made publicly available and stated in each solicitation for applica-
tions made by the Administration. Such criteria shall include— 
"(A) a criterion that specifically refers to the experience of 
the offering organization in conducting programs or on-going 
efforts deseed to impart or uj^ade the business skiUs of 
women business owners or potentisd owners; 
"(B) a criterion that specifically refers to the present ability of 
the offering organization to commence a demonstration project 
within a minimum amount of time; and 
"(C) a criterion that specifically refers to the ability of the 
applicant organization to provide training and services to a 
representative number of women who are both socially and 
economically disadvantaged. 
"(5) The financial assistance authorized pursuant to this subsec-
tion shall be made by grant, contract, or cooperative agreement and 
may contain such provision, as necessary, to provide for payments in 
lump sum or installments, and in advance or by way or reimburse-
ment. 
"(6XA) The Administration shall prepare and transmit a report to 
the Committees on Small Business of the Senate and House of 
Representatives on the effectiveness of all demonstration projects 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 3003 
conducted under the authority of this subsection. Such report shall 
provide information concerning— 
"(i) the number of individuals receiving assistance; 
"(ii) the number of start-up business concerns formed; 
"(iii) the gross receipts of assisted concerns; 
"(iv) increases or decreases in profits of £issisted concerns; and 
"(v) the emplojnment increases or decreases of assisted con-
cerns. 
"(B) The report required pursuant to paragraph (A) shall cover at 
least a twenty-four month period and shall be submitted not later 
than thirty months after the effective date of this paragraph. 
"(7) This subsection shall cease to be effective after September 30, Termination 
1991.". 
date. 
(b) TECHNICAL AMENDMENT.—Subsection Qy) of section 8 of the 
Small Business Act (15 U.S.C. 637(b)) is amended by— 
(1) striking out "and" at the end of paragraph (14); 
(2) striking out "public." at the end of paragraph (15) and 
inserting in lieu thereof "public; and"; and 
(3) by adding the following new paragraph: 
"(16) to make studies of matters materially affecting the 
competitive strength of small business, and of the effect on 
small business of Federal laws, programs, and regulations, and 
to make recommendations to the appropriate Federal agency or 
agencies for the adjustment of such progrgmas and regulations to 
the needs of small business.". 
(c) AUTHORIZATION.—There is authorized to be appropriated 
is use 637 note. 
$10,000,000 to carry out the demonstration projects required pursu-
ant to subsection (a). The initial projects authorized to be financed 
by this section shall be funded by January 31, 1989. Notwithstand-
ing any other provision of law, the Small Business Administration 
may use such expedited acquisition methods as it deems appropriate 
to achieve the purposes of this subsection, except that it shall insure 
that all eligible sources are provided a reasonable opportunity to 
submit proposals. 
(d) DEFINITION.—For the purposes of this section, the term "small 15 use 637 note. 
business concern owned and controlled by women" means any small 
business concern— 
(1) that is at least 51 per centum owned by one or more 
women; and 
(2) whose management and daily business operations are 
controlled by one or more of such women. 
(e) New spending authority or authority to enter into contracts as 15 use 637 note. 
authorized in this section shall be effective only to such extent and 
in such amounts as are provided in advance in appropriation Acts. 
SEC. 128. NEW PROCUREMENT CENTER REPRESENTATIVES. 
(a) EMPLOYMENT OF REPRESENTATIVE.—(1) Within one hundred and 
eighty days after the effective date of this title, the Small Business 
Administration shall have completed such measures as may be 
necessary to employ seven procurement center representatives to be 
stationed in States where no such representatives are stationed or 
designated to be stationed as of such effective date. 
(2) Ilie representatives employed pursuant to paragraph (1) shall 
be in addition to and not in lieu of any representatives that may be 
employed pursuant to any other provision of law or under any 
exercise of administrative discretion and stationed in such States at 
the present time. 
102 STAT. 3004 
PUBLIC LAW 100-590—NOV. 3, 1988 
15 u s e 637 note. 
SEC. 129. RURAL AREA BUSINESS DEVELOPMENT PLANS. 
Within six months of the effective date of this Act, the Adminis-
trator shall identify each Federal agency havi^e substantial 
procurement or ^rwtmaking authority and shall notify each agency 
so identified. Within six months of notification, each agency shaU 
develop rural area business enterprise development plans. Such 
plans shall establish rural area enterprise development objectives 
for the agency and methods for encouraging prime contractors, 
subcontractors and grant recipients to use small business concerns 
located in rural areas as subcontractors, suppliers, and otiberwise. 
Such plans shall, to the extent the agency deems appropriate and 
feasible, include incentive techniques as encouragement. 
SEC. 130. INCREASED CONTRACT OPPORTUNITIES. 
(1) REPORT.—Not later than one hundred and eightv days after the 
effective date of this section, the Chief Counsel for Advocacy of the 
Small Business Administration (hereinafter referred to as the 
"Chief Counsel") shall report to the Small Business Committees of 
the Senate and the House of Representatives, including— 
(a) an assessment (based on information available to him) of 
the extent to which the empl(^ees of Federal a^ncies and 
departments are performing professional and techmcal services 
for foreign governments (or other non-domestic entities) for 
which there are responsible domestic sources, and 
(b) reconmiendations for specific steps by the Administration 
or other agencies to develop further information with respect to 
the forgoing issue. 
(2) COOPERATION.—In pr|^>aring the report, the Chief Counsel 
shall consult with the Office of Management and Budget, the 
Department of Commerce, Department of the Interior, other rel-
evant agencies of the (government, and trade and professional 
associations representing the interests of small business concerns. 
E^ch agency and department head shall afford the Clhief Counsel 
assistance and cooperation to facilitate compilation and submission 
of his report. 
SEC. 131. PRIVATE SECTOR COOPERATION. 
(a) EXTENSION OP EFFECTIVE DATE.—Section 7(b) of the Small 
Business Computer Security and Education Act of 1984 (15 U.S.C. 
633 note) is amended by strmng the first sentence and inserting the 
following: "The amendments made to section 4(bX3) of the Small 
Business Act by section 3 of this Act are repealed on October 1,1988. 
The amendments made to section 8(bXlXA) of the Small Business 
Act by section 5(aX2) of this Act are repealed on October 1, 1990.". 
(b) CospoNSORED EVENTS.—Section 8(bXlXA) of the Small Business 
Act (15 U.S.C. 637(bXlXA)) is amended— 
(1) by inserting aifter "Provided, That the Administration 
shaU take such actions as it deems appropriate to ensure" the 
following: "that any Administration program participating in 
such cosponsored activities receives appropriate recognition and 
publicity, and"; 
(2) by adding at the end thereof the following: "In the case of 
cosponsored activities which include the participation of a Fed-
eral, State, or local public official or agency, the Administration 
shsdl take such actions as it deems necessary to ensure that the 
cooperation does not constitute or imply an endorsement by the 
Administration of or give undue rec^nition to the public offi-
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 3005 
cial or agency, and that the Administration is given primary 
recc^ition in all cosponsored printed materials, whether the 
participant is a profit-making concern or a governmental 
agency or official."; and 
(3) by inserting in clause (i) after "agreement" the following: 
", executed on behalf of the agency by an employee of the 
agency in Washington, District of Columbia, and who shall also 
approve, in advance, any printed materials to be distributed at 
the conference,". 
SEC. 132. BACKGROUND CHECK POLICY—FINGERPRINTING. 
The Small Business Administration shall not require fingerprints 
to be obtained for background check purposes from any participant 
in any Administration program who is serving on a voluntary basis 
and without compensation unless the Administration has reason-
able grounds to believe that the participant's record or background 
is such as to make the participant ineligible to participate in the 
relevant program. 
SEC. 133. AMENDMENTS RELATING TO PROGRAMS FOR BLIND AND 
HANDICAPPED. 
(a) IN GENERAL.—Section 15(c) of the Small Business Act (15 
U.S.C. 644(c)) is amended to read as follows: 
"(cXD As used in this subsection: 
"(A) The term 'Committee' means the Committee for Pur-
chase from the Blind and Other Severely Handicapped estab-
lished under the first section of the Act entitled 'An Act to 
create a Committee on Purchases of Blind-made Products, and 
for other purposes', approved June 25, 1938 (41 U.S.C. 46). 
"(B) The term 'public or private organization for the handi-
capped' has the same meaning given such term in section 3(e). 
(C) The term 'handicapped individual' has the same meaning 
given such term in section 3(f). 
"(2XA) During each of fiscal years 1989 through 1993, public or 
private organizations for the handicapped shall be eligible to partici-
pate in prc^ams authorized under this section in an aggregate 
amount for each year as follows: In 1989 not more than $30,000,000, 
in 1990 not more than $40,000,000, and in each of 1991, 1992 and 
1993 not more than $50,000,000. 
"(B) None of the amounts authorized for participation by subpara-
graph (A) may be placed on the procurement list maintained by the 
Committee pursuant to section 2 of the Act entitled 'An Act to 
create a Committee on Purchases of Blindmade Products, and for 
other purposes', approved June 25,1938 (41 U.S.C. 47), 
"(3) The Administrator shall monitor and evaluate such participa-
tion. 
"(4XA) Not later than ten days after the announcement of a 
proposed award of a contract by an agency or department to a public 
or private organization for the handicapped, a for-profit small busi-
ness concern that has experienced or is likely to experience severe 
economic injury as the result of the proposed award may file an 
appeal of the proposed award with the Administrator. 
(B) If such a concern files an appeal of a proposed award under 
subparagraph (A) and the Administrator, after consultation with the 
Executive Director of the Committee, finds that the concern has 
experienced or is likely to experience severe economic injury as the 
result of the proposed award, not later than thirty days after the 
District of 
Columbia. 
15 u s e 637 note. 
Appropriation 
authorization. 
102 STAT. 3006 
PUBLIC LAW 100-590—NOV. 3, 1988 
Reports. 
Records. 
Contracts. 
15 u s e 644 note. 
15 u s e 644 note. 
eontracts. 
filing of the appeal, the Administration shall require each agency 
and department having procurement powers to take such action as 
may be appropriate to alleviate economic injury sustained or likely 
to be sustained by the concern. 
"(5) Each agency and department having procurement powers 
shall report to the Office of Federal Procurement Policy each time a 
contract subject to paragraph (2XA) is entered into, and shall in-
clude in its report the amount of the next higher bid submitted by a 
for-profit small business concern. The Office of Federal Procurement 
Policy shall collect data reported under the preceding sentence 
through the Federal procurement data system and shall report to 
the Administration which shall notify all such agencies and depart-
ments when the maximum amount of awards authorized under 
paragraph (2XA) has been made during any fiscal year. 
"(6) For the purpose of this subsection, a contract may be awarded 
only if at least 75 per centum of the direct labor performed on each 
item being produced under the contract in the sheltered workshop 
or performed in providing each type of service under the contract by 
the sheltered workshop is performed by handicapped individuals. . 
(b) REPORT.—Not later than September 30, 1992, the General 
Accounting Office shall prepare a report describing the impact that 
contracts awarded under section 15(c) of the Small Business Act 
have had on for-profit small business concerns for fiscal years 1989 
through 1991. The report shall be transmitted to the C!ommittees on 
Small Business of the Senate and the House of Representatives. 
(c) TASK FORCE.—There is established within the Small Business 
Administration a task force on purchases from the blind and se-
verely handicapped which shall consist of one representative of the 
small business community appointed by the Administrator of the 
Small Business Administration and one individual knowledgeable in 
the affiars of or experienced in the work of sheltered workshops 
appointed by the Executive Director of the Committee for Purchase 
from the Blind and Other Severely Handicapped established under 
the first section of the Act entitled "An Act to create a C!ommittee 
on Purchases of Blind-made Products, and for other purposes", 
approved June 25, 1938 (41 U.S.C. 46). The task force shall meet at 
least once every six months for the purpose of reviewing the award 
of contracts under section 15(c) of the Small Business Act and 
recommending to the Small Business Administration such adminis-
trative or statutory changes as it deems appropriate. 
SEC. 134. MISCELLANEOUS AMENDMENTS. 
Section 21 of the Small Business Act (15 U.S.C. 648) is amended— 
(1) by striking "Deputy Associate Administrator for Manage-
ment Assistance" each place it appears in subsection (g) and 
inserting in lieu thereof "Associate Administrator for Small 
Business Development Centers"; 
(2) by striking in subsection (g) "the Associate Administrator 
for Management Assistance" and inserting "an official who is 
not more than one level below the Office of the Administrator"; 
and 
(3) by inserting the following at the end of subsection (k): 
"After the administration has entered a contract, either as a 
grant or a cooperative agreement, with any applicant under this 
section, it shall not suspend, terminate or fail to renew or 
extend any such contract unless the Administration provides 
the applicant with written notification setting forth the reasons 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 3007 
therefor and affording the applicant an opportunity for a hear-
ing, appeal or other administrative proceeding under the provi-
sions of the Administrative Procedures Act.". 
SEC. 135. FUNDING EXTENSIONS. 
The Small Business Act is amended as follows: 
(1) by striking from subsection (z) of section 20 "1988 and 1989, 
$3,500,000" and by inserting m lieu thereof "1988 through 1990, 
$3,500,000"; 
(2) by striking from subsection (z) "1988 and 1989, $5,000,000" 
and by inserting in lieu thereof "1988 through 1990, $5,000,000"; 
and 
(3) by inserting in section 21(cX5) after "to such center" the 
following: "or the date the Administration notifies the grantee 
funded under subsection (aXD that funds are available for grant 
applications pursuant to subsection (aX6), which ever date 
occurs last,". 
SEC. 136. PROMULGATION OF RULES. 
Notwithstanding any law, rule or regulation, the Small Business 
Administration shall promulgate final regulations to be effective on 
publication to carry out the provisions of this title within six months 
after the date of enactment. 
SEC. 137. EFFECTIVE DATE. 
This title shall be effective on the date of enactment, except that 
sections 118 through 122 shall be effective for all loan applications 
resulting from disaster declarations made on or after August 1,1988, 
or from disaster declarations whose filing periods were open on 
October 1,1988. Any new credit authority provided for in this Act is 
to be effective for any fiscal year only to such extent or in such 
amounts as are provided in appropriation Acts. 
TITLE II—PREFERRED SURETY BOND 
GUARANTEE PROGRAM 
SEC. 201. SHORT TITLE. 
This title may be cited as the "Preferred Surety Bond Guarantee 
Program Act of 1988". 
SEC. 202. AUTHORITY OF THE ADMINISTRATION. 
Section 411(a) of the Small Business Investment Act of 1958 (15 
U.S.C. 694b(a)) is amended to read as follows: 
"(aXD The Administration may, upon such terms and conditions 
as it may prescribe, guarantee and enter into commitments to 
guarantee any surety against loss resulting from a breach of the 
terms of a bid bond, pa3anent bond, performance bond, or bonds 
ancillary thereto, by a principal on any contract up to $1,250,000. 
"(2) The terms and conditions of said guarantees and commit-
ments may vary from surety to surety on the basis of the Adminis-
tration's experience with the particular surety. 
"(3) The Administration may authorize any surety, without fur-
ther administration approval, to issue, monitor, and service such 
bonds subject to the Administration's guarantee. 
"(4) No such guarantee may be issued, unless— 
15 u s e 631 note. 
15 u s e 648. 
Regulations. 
15 u s e 631 note. 
15 u s e 631 note. 
Preferred Surety 
Bond Guarantee 
Program Act of 
1988 
15 u s e 661 note. 
102 STAT. 3008 
PUBLIC LAW 100-590—NOV. 3, 1988 
"(A) the person who would be principal under the bond is a 
small business concern; 
"(B) the bond is required in order for such person to bid on a 
contract, or to serve as a prime contractor or subcontractor 
thereon; 
"(Q such person is not able to obtain such bond on reasonable 
terms and conditions without a guarantee under this section; 
and 
"(D) there is a reasonable expectation that such principal will 
perform the covenants and conditions of the contract with 
respect to which such bond is required, and the terms and 
conditions of such bond are reasonal>le in the light of the risks 
involved and the extent of the surety's participation.". 
SEC. 203. INDEMNIFICATION. 
(a) IN GENERAL.—Section 4110i>) of the Small Business Investment 
Act of 1958 (15 U.S.C. 694b(b)) is amended— 
(1) by striking paragrajph (3), 
(2) by striking "; and and inserting a i)eriod at the end of 
paragraph (2), 
(3) by redesignating paragraph (2) as paragraph (3), 
(4) by inserting after paragraph (1) the following new 
paragraph: 
"(2) a surety must obtain approval from the Administration 
prior to making any payments pursuant to this subsection 
unless the surety is participating under the authority of sul^ec-
tion (aX3); and", and 
(5) by inserting at the end the following new sentence: 
"In no event shall the Administration pay a surety pursuant to this 
subsection an amount exceeding the guaranteed share of the bond 
available to such surety pursuant to subsection (a).". 
(b) AMOUNT OF INDEMNIFICATION.—Section 411(c) of the Small 
Business Investment Act of 1958 (15 U.S.C. 694b(c)) is amended to 
read as follows: 
"(c) Any guarantee or agreement to indemnify under this section 
shall obligate the Administration to pay to the surety a sum— 
"(1) not to exceed 70 per centum of the loss incurred and paid 
by a surety authorized to issue bonds subject to the Administra-
tion's guarantee under subsection (aX3); 
"(2) not to exceed 90 per centum of the loss incurred and paid 
in tJie case of a surety requiring the Administration's specific 
approval for the issuance of such bond, but in no event may the 
Administration make any duplicate payment pursuant to 
subsection (b) or any other subsection; 
"(3) equal to 90 per centum of the loss incurred and paid in 
the case of a surety requiring the administration's specific 
approval for the issuance of a bond, if— 
"(A) the total amount of the contract at the time of 
execution of the bond or bonds is $100,000 or less, or 
Disadvantaged 
"(B) the bond was issued to a small business concern 
persons. 
owned and controlled by socially and economically dis-
advantaged individuals as defined by section 8(d) of the 
Small Business Act; or 
"(4) determined pursuant to subsection (b), if applicable.", 
(c) LIMITATION OF ADMINISTRATION'S LIABILITY.—Section 411(e) of 
the Small Business Investment Act of 1958 (15 U.S.C. 694b(e)) is 
amended— 
PUBLIC LAW 100-590—NOV. 3, 1988 
102 STAT. 3009 
(1) by striking "or" at the end of paragraph (1), 
(2) by striking the period at the end of paragraph (2) and 
inserting a comma, and 
(3) by adding at the end thereof the following new paragraphs: 
"(3) the surety has breached a material term or condition of 
such guarantee agreement, or 
"(4) the surety has substantially violated the regulations 
promulgated by the Administration pursuant to subsection (d).". 
SEC. 204. REPORTS AND AUDITS OF PARTICIPATING SURETIES. 
Section 411(g) of the Small Business Investment Act (15 U.S.C. 
694b(g)) is amended to read as follows: 
"(g)(1) Each participating surety shall make reports to the 
Administration at such times and in such form as the Administra-
tion may require. 
"(2) The Administration may at all reasonable times audit, in the 
offices of a participating surety, all documents, files, books, records, 
and other material relevant to the Administration's guarantee, 
commitments to guarantee, or agreements to indemnify any surety 
pursuant to this section. 
"(3) Each surety participating under the authority of paragraph 
(3) of subsection (a) shall be audited at least once each year by 
examiners selected and approved by the Administration.". 
SEC. 205. REGULATIONS. 
15 USC 694b 
The Administration shall promulgate final regulations to imple-
ment the amendments made by this title not later than one hundred 
and eighty days after the date of the enactment of this Act. 
SEC. 206. EVALUATION AND REPORT. 
15 USC 694b 
Not later than three years after the date of enactment of this Act 
the Comptroller General of the United States shall transmit a 
report to the Small Business Committees of the Senate and House of 
Representatives, which evaluates— 
(1) the amendments made by this title, 
(2) whether participation in the program by standard surety 
firms has been expanded, and 
(3) whether access to bonds by small business concerns espe-
cially small business concerns owned and controlled by socially 
and economically disadvantaiged individuals has been improved. 
The report shall cover the first two full fiscal years following the 
date of enactment of this Act. 
SEC. 207. SUNSET. 
15 USC 694b 
The provisions contained in section 41 
l(aX3) of the Small Business 
Investment Act of 1958 (15 U.S.C. 694b(aX3)), shall cease to be 
effective on September 30, 1991, or on the last day of the third full 
fiscal year after the date of enactment of this Act, whichever is 
later. 
SEC. 208. REVOLVING FUND. 
Section 412 of the Small Business Investment Act of 1958 (15 
U.S.C. 694c) is amended)— 
(1) by inserting "(a)" before "There", and 
(2) by adding at the end of subsection (a), the following new 
subsection: 
102 STAT. 3010 
PUBLIC LAW 100-590—NOV. 3, 1988 
"(b) Such sums as may be appropriated to the Fund to carry out 
the programs authorized by this part shall be without fiscal year 
limitation.". 
15 u s e 694b 
SEC. 209. EFFECTIVE DATE. 
Except as otherwise provided in this title, the provisions of this 
title shall become effective upon expiration of one hundred and 
eighty days after the date of its enactment. 
Approved November 3, 1988. 
LEGISLATIVE HISTORY—H.R. 4174 (S. 2619): 
HOUSE REPORTS: No. 100-694 (Comm. on Small Business) and No. 100-1029 (Comm. of 
SENATE REPORTS: No. 100-416 accompanying S. 2619 (Comm. on Small Business). 
CONGRESSIONAL RECORD, Vol. 134 (1988): 
July 6, considered and passed House. 
July 14, S. 2619 considered in Senate; proceedings vacated and H.R. 4174, 
amended, passed in lieu. 
Oct. 5, House agreed to conference report. 
Oct. 20, Senate agreed to conference report.