[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 895 Reported in Senate (RS)]
Calendar No. 166
104th CONGRESS
1st Session
S. 895
[Report No. 104-129]
_______________________________________________________________________
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.
_______________________________________________________________________
August 5 (legislative day, July 10), 1995
Reported with an amendment
Calendar No. 166
104th CONGRESS
1st Session
S. 895
[Report No. 104-129]
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 (for himself, Mr. Bumpers, Mr. Wellstone, Mr. Burns, and Ms.
Snowe) introduced the following bill; which was read twice and referred
to the Committee on Small Business
August 5 (legislative day, July 10), 1995
Reported by Mr. Bond, with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
_______________________________________________________________________
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,
<DELETED>SECTION 1. SHORT TITLE.</DELETED>
<DELETED> This Act may be cited as the ``Small Business Lending
Enhancement Act of 1995''.</DELETED>
<DELETED>SEC. 2. REDUCED LEVEL OF PARTICIPATION IN GUARANTEED
LOANS.</DELETED>
<DELETED> Section 7(a)(2) of the Small Business Act (15 U.S.C.
636(a)(2)) is amended to read as follows:</DELETED>
<DELETED> ``(2) Level of participation in guaranteed
loans.--</DELETED>
<DELETED> ``(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--</DELETED>
<DELETED> ``(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</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(B) Reduced participation upon
request.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(C) Interest rate under preferred
lenders program.--</DELETED>
<DELETED> ``(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.</DELETED>
<DELETED> ``(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--</DELETED>
<DELETED> ``(I) complete authority
to make and close loans with a
guarantee from the Administration
without obtaining the prior specific
approval of the Administration;
and</DELETED>
<DELETED> ``(II) authority to
service and liquidate such
loans.''.</DELETED>
<DELETED>SEC. 3. GUARANTEE FEES.</DELETED>
<DELETED> (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:</DELETED>
<DELETED> ``(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--</DELETED>
<DELETED> ``(A) 3 percent of the amount of the
deferred participation share of the loan that is less
than or equal to $250,000;</DELETED>
<DELETED> ``(B) if the deferred participation share
of the loan exceeds $250,000, 4 percent of the
difference between--</DELETED>
<DELETED> ``(i) $500,000 or the total
deferred participation share of the loan,
whichever is less; and</DELETED>
<DELETED> ``(ii) $250,000; and</DELETED>
<DELETED> ``(C) if the deferred participation share
of the loan exceeds $500,000, 5 percent of the
difference between--</DELETED>
<DELETED> ``(i) the total deferred
participation share of the loan; and</DELETED>
<DELETED> ``(ii) $500,000.''.</DELETED>
<DELETED> (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--</DELETED>
<DELETED> (1) in subparagraph (B)--</DELETED>
<DELETED> (A) by striking ``shall (i) develop'' and
inserting ``shall develop''; and</DELETED>
<DELETED> (B) by striking ``, and (ii)'' and all
that follows through the end of the subparagraph and
inserting a period; and</DELETED>
<DELETED> (2) by striking subparagraph (C).</DELETED>
<DELETED>SEC. 4. ESTABLISHMENT OF ANNUAL FEE.</DELETED>
<DELETED> (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:</DELETED>
<DELETED> ``(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.''.</DELETED>
<DELETED> (b) Conforming Amendment.--Section 5(g)(4)(A) of the Small
Business Act (15 U.S.C. 634(g)(4)(A)) is amended--</DELETED>
<DELETED> (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</DELETED>
<DELETED> (2) by striking ``fees'' each place such term
appears and inserting ``fee''.</DELETED>
<DELETED>SEC. 5. TECHNICAL AMENDMENT.</DELETED>
<DELETED> Section 3 of the Small Business Act (15 U.S.C. 632) is
amended by adding at the end the following new subsection:</DELETED>
<DELETED> ``(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.''.</DELETED>
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).''.