[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 895 Engrossed in Senate (ES)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
104th CONGRESS
  1st Session
                                 S. 895

_______________________________________________________________________

                                 AN ACT


 
To amend the Small Business Act to reduce the level of participation by 
 the Small Business Administration in certain loans guaranteed by the 
                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.

    This Act may be cited as the ``Small Business Lending Enhancement 
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 
                        specified by subparagraph (A) for any loan 
                        under this subsection may be reduced upon the 
                        request of the participating lender.
                            ``(ii) Prohibition.--The Administration 
                        shall not use the guarantee percentage 
                        requested by a participating lender under 
                        clause (i) as a criterion for establishing 
                        priorities in approving loan guarantee requests 
                        under this subsection.
                    ``(C) Interest rate under preferred lenders 
                program.--
                            ``(i) In general.--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, applicable to other loans 
                        guaranteed under this subsection.
                            ``(ii) Preferred lenders program defined.--
                        For purposes of this subparagraph, the term 
                        `Preferred 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 
                guaranteed under this subsection (other than a loan 
                that is repayable 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) 2.5 percent of the amount of the 
                        deferred participation 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 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, 3.5 percent of 
                        the difference between--
                                    ``(I) $750,000 or the total 
                                deferred participation share of the 
                                loan, whichever is less; 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.
                    ``(C) Discretionary increase.--Notwithstanding 
                subparagraphs (A) and (B), during the 90-day period 
                beginning on the first day of any fiscal year, the 
                Administration may increase the guarantee fee collected 
                under this paragraph by an amount not to exceed 0.375 
                percent of the total deferred participation share of 
                the loan, if the Administration--
                            ``(i) determines that such action is 
                        necessary to meet projected borrower demand for 
                        loans under this subsection during that fiscal 
                        year, based on the subsidy cost of the loan 
                        program under this subsection and amounts 
                        provided in advance for such program in 
                        appropriations Acts; and
                            ``(ii) not less than 15 days prior to 
                        imposing any such increase, notifies the 
                        Committees on Small Business of the Senate and 
                        the House of Representatives of the 
                        determination made under clause (i).''.
    (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.--
                    ``(A) In general.--With respect to each loan 
                guaranteed under this subsection, the Administration 
                shall, in accordance with such terms and procedures as 
                the Administration 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 
                subparagraph (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 
        following: ``The Administration may collect a fee for any loan 
        guarantee 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.

    (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:
            ``(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. DEVELOPMENT 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 0.0625 
                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 Reauthorization 
and Amendment Act of 1988 (15 U.S.C. 694b note) is amended by striking 
``September 30, 1995'' and inserting ``September 30, 1997''.
            Passed the Senate August 11 (legislative day, July 10), 
      1995.

            Attest:

                                                             Secretary.
104th CONGRESS

  1st Session

                                 S. 895

_______________________________________________________________________

                                 AN ACT

To amend the Small Business Act to reduce the level of participation by 
 the Small Business Administration in certain loans guaranteed by the 
                Administration, and for other purposes.