[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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