[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 895 Introduced in Senate (IS)]
104th CONGRESS
1st Session
S. 895
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.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 8 (legislative day, June 5), 1995
Mr. Bond introduced the following bill; which was read twice and
referred to the Committee on Small Business
_______________________________________________________________________
A BILL
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.--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--
``(A) 3 percent of the amount of the deferred
participation share of the loan that is less than or
equal to $250,000;
``(B) if the deferred participation share of the
loan exceeds $250,000, 4 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
``(C) if the deferred participation share of the
loan exceeds $500,000, 5 percent of the difference
between--
``(i) the total deferred participation
share of the loan; and
``(ii) $500,000.''.
(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.--In carrying out 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, which shall be payable by the
participating lender, in an aggregate amount equal to not more
than 0.4 percent of the outstanding balance of the deferred
participation share of the loan.''.
(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. TECHNICAL AMENDMENT.
Section 3 of the Small Business Act (15 U.S.C. 632) is amended by
adding at the end the following new subsection:
``(o) Participating Lender.--For purposes of this Act, the term
`participating lender' means any bank or other financial institution
that enters into an agreement with the Administration described section
7(a) to provide financing in accordance with that section.''.
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