[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 923 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 923
To amend the Small Business Investment Act of 1958 to allow certain
premier certified lenders to elect to maintain an alternative loss
reserve.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 26, 2003
Mr. Doolittle introduced the following bill; which was referred to the
Committee on Small Business
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to allow certain
premier certified lenders to elect to maintain an alternative loss
reserve.
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 ``Premier Certified Lenders Program
Improvement Act of 2002''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The Premier Certified Lenders Program (PCLP)
established under section 508 of the Small Business Investment
Act of 1958 (15 U.S.C. 697e) has been very successful in
helping small businesses expand.
(2) Increasing the number of premier certified lenders will
allow the Government to make available more resources to small
businesses even as the Small Business Administration downsizes.
(3) The PCLP requires premier certified lenders to set
aside unnecessarily large amounts in loss reserve accounts.
(4) Requiring premier certified lenders to maintain
unnecessarily large loss reserve accounts is inefficient and
limits the ability of lenders to serve additional small
businesses and of new lenders to join the PCLP.
(5) Premier certified lenders should be required to
maintain loss reserve accounts in amounts commensurate with the
risk of loss associated with the PCLP loan portfolio of the
lender.
(6) Changing the PCLP to require that premier certified
lenders maintain loss reserve accounts in amounts which reflect
the risk of loss associated with the loans of the PCLP will
protect taxpayers and improve the ability of the PCLP to help
small businesses create economic development.
SEC. 3. ALTERNATIVE LOSS RESERVE FOR CERTAIN PREMIER CERTIFIED LENDERS.
(a) In General.--Section 508(c) of the Small Business Investment
Act of 1958 (15 U.S.C. 697e(c)) is amended by adding at the end the
following new paragraph:
``(7) Alternative loss reserve.--
``(A) Election.--With respect to any calendar
quarter, any qualified high loss reserve PCL may elect
to have the requirements of this paragraph apply in
lieu of the requirements of paragraphs (2) and (4).
``(B) Contributions.--
``(i) Ordinary rules inapplicable.--Except
as provided under clause (ii) and paragraph
(5), a qualified high loss reserve PCL which
makes the election described in subparagraph
(A) with respect to a calendar quarter shall
not be required to make contributions to its
loss reserve during such quarter.
``(ii) Based on risk of loss.--A company
which makes the election described in
subparagraph (A) with respect to any calendar
quarter shall, before the last day of such
quarter, make such contributions to its loss
reserve as are necessary to ensure that the
amount of the loss reserve of the company is--
``(I) not less than $25,000; and
``(II) sufficient, as determined by
a third-party auditor employed by the
company, to protect the Federal
Government from the risk of loss
associated with the portfolio of PCLP
loans of the company.
``(C) Qualified high loss reserve pcl.--The term
`qualified high loss reserve PCL' means, with respect
to any calendar year, any company designated as a
premier certified lender, if the Administrator
determines that--
``(i) the amount of the loss reserve of the
company is not less than $25,000;
``(ii) the company has established a
process for analyzing the risk of loss
associated with its portfolio of PCLP loans and
for grading each PCLP loan made by the company
on the basis of the risk of loss associated
with such loan; and
``(iii)(I) in the case of a company which
was a qualified high loss reserve PCL with
respect to the preceding calendar year, a
third-party auditor employed by the company has
certified during each calendar quarter of such
year that the amount of the loss reserve of the
company is sufficient to protect the Federal
Government from the risk of loss associated
with the portfolio of PCLP loans of the
company; and
``(II) in the case of any other company, a
third-party auditor employed by the company has
certified during the preceding 90 days that the
loss reserve of the company is sufficient to
protect the Federal Government from the risk of
loss associated with the portfolio of PCLP
loans of the company.
``(D) PCLP loan.--For purposes of this paragraph,
the term `PCLP loan' means any loan guaranteed under
this section.
``(E) Calendar quarter.--For purposes of this
paragraph, the term `calendar quarter' means--
``(i) the period which begins on January 1
and ends on March 31 of each year;
``(ii) the period which begins on April 1
and ends on June 30 of each year;
``(iii) the period which begins on July 1
and ends on September 30 of each year; or
``(iv) the period which begins on October 1
and ends on December 31 of each year.''.
(b) Conforming Amendment.--Section 508(b)(2)(D) of the Small
Business Investment Act of 1958 (15 U.S.C. 697e(b)(2)(D)) is amended by
striking ``subsection (c)(2)'' and inserting ``subsection (c)''.
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