II 110th CONGRESS 2d Session S. 3705 IN THE SENATE OF THE UNITED STATES November 19, 2008 Ms. Snowe introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Small Business Act and the Small Business Investment Act of 1958 to stop the small business credit crunch, and for other purposes.

1.

Short title; Definitions

(a)

Short Title

This Act may be cited as the 10 Steps for a Main Street Economic Recovery Act of 2008. (b)

Definitions

In this Act— (1)the term Administration means the Small Business Administration; (2)the term Administrator means the Administrator of the Small Business Administration; and (3)the term small business concern has the same meaning as in section 3 of the Small Business Act (15 U.S.C. 632).

2.

7(a) loans

(a)

Maximum loan amount

Section 7(a)(3)(A) of the Small Business Act (15 U.S.C. 636(a)(3)(A)) is amended by striking $1,500,000 (or if the gross loan amount would exceed $2,000,000 and inserting $2,500,000 (or if the gross loan amount would exceed $3,000,000. (b)

Refinancing Existing Loans

(1)

In General

Section 7(a) of the Small Business Act (15 U.S.C. 636) is amended by adding at the end the following: (34)

Refinancing existing loans

A borrower that has received a loan under this subsection may refinance the balance of the loan by applying for a loan from the lender that made the original loan or with another lender. . (2)

Technical amendment

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended by striking (32) Increased and inserting (33) Increased. (c)

Alternative size standard

Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) is amended by adding at the end the following: (5)

Optional size standard

(A)

In general

The Administrator shall establish an optional size standard for business loan applicants under section 7(a) and development company loan applicants under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) that uses maximum tangible net worth and average net income as an alternative to the industry size standard. (B)

Interim rule

Until the date on which the optional size standards established under subparagraph (A) are in effect, the alternative size standard in section 121.301(b) of title 13, Code of Federal Regulations, or any successor thereto, may be used by business loan applicants under section 7(a). . (d)

Flexibility for Pooling of Large Loans

Section 5(g)(1) of the Small Business Act (15 U.S.C. 634(g)(1)) is amended by— (1)inserting (A) after (1); (2)striking the colon and inserting a period; (3)striking Provided and all that follows through certificates and inserting the following: (B)A trust certificate issued under this paragraph ; and (4)adding at the end the following: (C)For a loan of more than $500,000 that has been guaranteed by the Administrator under this Act, the Administrator shall, on the request of a loan pool assembler, divide the amount of such loan into individual guarantees, no 1 of which may exceed $500,000. Not more than 1 portion of a loan that has been divided under this subparagraph shall be included in the same pool. Portions of more than 1 loan divided under this subparagraph may be included in the same pool. (D)A lender that makes or services a loan guaranteed under section 7(a) may purchase or hold all or any part of a loan pool that includes a loan made or serviced by the lender. (E)A purchase or holding by a lender described in subparagraph (D) shall not affect the guarantee under section 7(a) of a loan in a pool. .

3.

Community express and rural lending

(a)

Community Express Program Established

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is amended by adding at the end the following: (35)

Community express program

(A)

Definitions

In this paragraph— (i)the term community express program means the loan program under this paragraph; (ii)the term eligible small business concern means— (I)a small business concern owned and controlled by women, as defined in section 29(a)(3); (II)a small business concern owned by a qualified Indian tribe; (III)a small business concern owned and controlled by a socially or economically disadvantaged individual, as determined by the Administrator; (IV)a small business concern owned and controlled by veterans; (V)a small business concern owned and controlled by a member of a reserve component of the Armed Forces, as defined in section 101 of title 10, United States Code; (VI)a small business concern located in an area that the Administrator determines to be a low-income or moderate-income area; (VII)a HUBZone small business concern; and (VIII)a small business concern located in a special market initiative; (iii)the term qualified private lender means a private lender that meets such requirements as the Administrator shall establish; and (iv)the term special market initiative means a community, market, or industry designated by the Director of a district office of the Administration for economic development purposes. (B)

Loans of $150,000 or less

(i)

Authorization

The Administrator may guarantee timely payment of principal and interest, as scheduled, on a loan of not more than $150,000 issued by a qualified private lender to a small business concern. (ii)

Guarantee percentage

The Administrator may guarantee not more than 85 percent of the amount of a loan under this subparagraph. (C)

Loans of more than $150,000

(i)

Authorization

The Administrator may guarantee timely payment of principal and interest, as scheduled, on a loan of more than $150,000 and not more than $300,000 issued by a qualified private lender to an eligible small business concern under this subparagraph. (ii)

Guarantee percentage

The Administrator may guarantee not more than 75 percent of a loan the amount of a loan under this subparagraph. (D)

Qualified private lender requirements

(i)

Technical assistance

A qualified private lender shall— (I)ensure that appropriate technical assistance is provided to each borrower that receives a loan under the community express program from the qualified private lender; (II)encourage a borrower that receives a loan under the community express program from the qualified private lender to use the business development programs of the Administration for technical assistance; and (III)to the extent practicable, use the loan process to work with a borrower that receives a loan under the community express program from the qualified private lender, in order to— (aa)develop a business plan, if appropriate; (bb)assess the strengths and weaknesses of the borrower in management and other relevant areas; and (cc)provide technical assistance to address any assessed weaknesses of the borrower. (ii)

Collateral policy

(I)

In general

The Administrator shall establish a policy relating to collateral for loans under the community express program, which shall permit a qualified private lender to make a loan of not more than $15,000 without collateral. (II)

Limitation

The policy established by the Administrator may not limit the ability of a qualified private lender to follow any internal procedure of the lender related to collateral. (iii)

Equity of borrowers

Each qualified private lender shall verify that a borrower receiving a loan under the community express program has an equity stake of at least 10 percent in the business concern. (iv)

Financial statements

Each qualified private lender shall obtain a financial statement from a borrower before making a loan under the community express program. (v)

Sale of loans

A qualified private lender may not sell more than 80 percent of the total dollar value of the loans made by the qualified private lender under the community express program to another person or entity. (E)

Simplification of rules

The Administrator shall review the regulations and procedures relating to the community express program to ensure that such regulations and procedures are simple and clear and do not create barriers to participation in the program. (F)

Notice and comment

The Administrator shall establish policies relating to the community express program— (i)after notice and the opportunity for comment; and (ii)not later than 1 year after the date of enactment of this paragraph. . (b)

Rural Lender and New Lender Outreach Program

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is amended by adding at the end the following: (36)

Rural lender and new lender outreach program

(A)

Definitions

In this paragraph— (i)the term new lender means a lender that has not made more than 20 loans guaranteed by the Administrator during the 3-year period ending on the date on which the applicable loan is submitted (including a lender that has not made a loan guaranteed by the Administration); (ii)the term rural area has the meaning given that term in subsection (m); and (iii)the term rural lender means a lender that— (I)is located in a rural area; and (II)made not more than 20 loans guaranteed by the Administration during the 3-year period ending on the date on which the applicable loan application is submitted (including a lender that has not made a loan guaranteed by the Administration). (B)

Program

The Administrator shall carry out a rural lender and new lender outreach program, under which the Administrator may guarantee timely payment of principal and interest, as scheduled, on a loan to a small business concern of not more than $500,000 made by a rural lender or a new lender. (C)

Loan processing

(i)

In general

The Administrator shall establish, for loans guaranteed under this paragraph— (I)streamlined application and documentation requirements; and (II)minimum credit standards necessary to provide for a reasonable assurance of repayment, in accordance with paragraph (6). (ii)

New lender training and certification

The Administrator may guarantee a loan made by a new lender under this paragraph if the Administrator— (I)provides the new lender with training described in subparagraph (D); and (II)determines that the new lender meets minimum standards for program knowledge, borrower eligibility, and underwriting standards. (iii)

Approval or disapproval

For a loan guaranteed under this paragraph, the Administrator shall approve or disapprove the loan in as expedited manner as practicable. (D)

Training

At regularly scheduled intervals and upon request by a new lender or rural lender the Administrator shall provide training for new lenders and rural lenders on the loan guarantee program under this subsection. . (c)

Electronic Online Loan Underwriting Program Guide

(1)

Purpose

The purpose of this subsection is to assist rural lenders and new lenders in making more loans of good underwriting quality to small business concerns. (2)

Online underwriting guide

The Administrator shall establish an online underwriting program guide (in this subsection referred to as the guide) to develop the lending capacity of rural lenders and new lenders (as such terms are defined in paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as added by this Act). (3)

Requirements

The guide— (A)is not intended to replace the internal credit scoring and loan approval process of a lender; (B)shall demonstrate the steps the Administrator expects a lender to take in making a loan under a program of the Administration; (C)shall assist a lender in using the internal credit evaluation processes of the lender to make a loan under a program of the Administration and build the capacity and ability of the lender to make such loans; (D)shall provide simple steps to assist a lender that has not made a loan guaranteed by the Administration through the loan application process for a loan under section 7(a) of the Small Business Act (15 U.S.C. 636(a)); (E)shall include information, guidance, sample documentation, questions and answers, and any other information necessary to guide a lender through the process of making a loan guaranteed by the Administration in a systematic and simple fashion; and (F)shall include information relating to— (i)loan application and preapproval; (ii)loan underwriting; (iii)requirements after loan approval; (iv)preparation for loan closing; (v)closing the loan; and (vi)servicing the loan. (4)

Electronically submitted loans

The Administrator shall use the guide as a means to increase the number of applications for loan guarantees submitted electronically for approval from rural lenders and new lenders.

4.

504 loans

(a)

Maximum loan amounts under 504 program

Section 502(2)(A) of the Small Business Investment Act of 1958 (15 U.S.C. 696(2)(A)) is amended— (1)in clause (i), by striking $1,500,000 and inserting $2,250,000; (2)in clause (ii), by striking $2,000,000 and inserting $3,000,000; and (3)in clause (iii), by striking $4,000,000 and inserting $5,500,000. (b)

Businesses in low-income communities

(1)

Goals

Section 501(d)(3)(A) of the Small Business Investment Act of 1958 (15 U.S.C. 695(d)(3)(A)) is amended by inserting after business district revitalization, the following: or expansion of businesses in a low-income community, as defined in section 45D(e) of the Internal Revenue Code of 1986 and implementing regulations,. (2)

Additional incentives

Section 502 of the Small Business Investment Act of 1958 (15 U.S.C. 696) is amended by adding at the end the following: (7)

Low-income communities

(A)

Loan amount

Notwithstanding paragraph (2)(A)(ii), a loan under this section for use in a low-income community described in section 501(d)(3)(A) may not exceed $5,500,000. (B)

Size standards

For purposes of determining eligibility for a loan under this section for use in a low-income community described in section 501(d)(3)(A), the size standards established by the Administrator under section 3 of the Small Business Act (15 U.S.C. 632) shall be increased by 25 percent. (C)

Personal liquidity

(i)

In general

For any loan under this section for use in a low-income community described in section 501(d)(3)(A), the amount of personal resources of an owner that are excluded from the amount required to be provided to reduce the portion of the project funded by the Administration shall be not less than 25 percent more than that required for other loans under this section. (ii)

Definition

In this subparagraph, the term owner means any person that owns not less than 20 percent of the equity of the small business concern applying for the applicable loan. . (c)

Additional equity injections

Section 502(3)(B)(ii) of the Small Business Investment Act of 1958 (15 U.S.C. 696(3)(B)(ii)) is amended to read as follows: (ii)

Funding from institutions

If a small business concern— (I)provides the minimum contribution required under subparagraph (C), not less than 50 percent of the total cost of any project financed under clause (i), (ii), or (iii) of subparagraph (C) shall come from the institutions described in subclauses (I), (II), and (III) of clause (i) of this subparagraph; and (II)provides more than the minimum contribution required under subparagraph (C), any excess contribution may be used to reduce the amount required from the institutions described in subclauses (I), (II), and (III) of clause (i) of this subparagraph, except that the amount from such institutions may not be reduced to an amount that is less than the amount of the loan made by the Administrator. . (d)

Refinancing under the local development business loan program

Section 502 of the Small Business Investment Act of 1958 (15 U.S.C. 696), as amended by this Act, is amended by adding at the end the following: (8)

Permissible debt refinancing

(A)

In general

Any financing approved under this title may include a limited amount of debt refinancing. (B)

Expansions

If the project involves expansion of a small business concern which has existing indebtedness collateralized by fixed assets, any amount of existing indebtedness that does not exceed 1/2 of the project cost of the expansion may be refinanced and added to the expansion cost, if— (i)the proceeds of the indebtedness were used to acquire land, including a building situated thereon, to construct a building thereon, or to purchase equipment; (ii)the borrower has been current on all payments due on the existing debt for not less than 1 year preceding the date of refinancing; and (iii)the financing under section 504 will provide better terms or rate of interest than exists on the debt at the time of refinancing. . (e)

Job Creation Requirements

Section 501(e) of the Small Business Investment Act of 1958 (15 U.S.C. 695(e)) is amended— (1)in paragraph (1), by striking $50,000 and inserting $65,000; and (2)in paragraph (2), by striking $50,000 and inserting $65,000.

5.

Guarantee and sale of bank financings with 504 loan program

(a)

Definitions

In this section— (1)the term pool assembler means a financial institution that— (A)organizes and packages a loan pool by acquiring the guaranteed portion of third party financings guaranteed by the Administrator under subsection (b); (B)resells fractional interests in the loan pool to registered holders; and (C)directs that the fiscal and transfer agent of the Administrator to issue trust certificates; and (2)the term third party financing means a financing described in section 502(3)(B)(ii) of the Small Business Investment Act of 1958 (15 U.S.C. 696(3)(B)(ii))— (A)made on or before the date of enactment of this Act; (B)that provides for the payment of interest at a fixed rate or under a variable rate index (plus a spread) based upon Prime rate, a London Interbank Offered Rate (or LIBOR), a Federal Home Loan Bank rate, a United States Treasury rate, or a generally accepted market index rate approved by the Administrator; (C)that provides amortized payments with a maturity of not more than 25 years; and (D)for which the borrower— (i)is current on all payments due on the loan on the date on which the loan is guaranteed under subsection (b); and (ii)has not been more than 29 days past due on a payment during the 12-month period ending on the date on which the loan is guaranteed under subsection (b). (b)

Loan guarantee

(1)

In general

To the extent amounts are provided in advance in appropriations Acts, and in accordance with this subsection, upon application of a pool assembler who has acquired a third party financing, the Administrator shall guarantee the timely repayment of principal and interest on 80 percent of the balance of the third party financing outstanding on the date of the guarantee. (2)

Lenders

A lender that made a third party financing guaranteed under paragraph (1)— (A)shall— (i)agree to hold and service the note issued as part of the third party financing; (ii)comply with the reporting and payment remittance requirements of the Administrator; and (iii)enter a secondary participation guaranty agreement with the Administrator and the fiscal and transfer agent of the Administrator; and (B)may collect and retain all of any applicable prepayment penalties otherwise provided in the event the third party financing is prepaid. (3)

Guarantee fee

To cover the costs of guarantees under this subsection and the cost of issuing trust certificates under subsection (c), a lender that made a third party financing guaranteed under paragraph (1) shall pay to the Administrator— (A)a one-time fee equal to 1 percent of the net amount of the third party financing guaranteed by the Administration, payable on the date on which the third party financing is guaranteed; and (B)a monthly fee on the unpaid balance of the net amount of the third party financing guarantee at the rate of 25 basis points per year. (4)

Maximum amount

The Administrator may guarantee a total amount of not more than $6,000,000,000 in third party financings under this subsection. (5)

Termination of authority

The authority of the Administrator to guarantee a third party financing under this subsection shall terminate on September 30, 2010. (6)

Appropriation

In addition to any other amounts appropriated, there are appropriated for the fiscal year ending September 30, 2009, for the Business Loans Program Account of the Administration, out of any money in the Treasury not otherwise appropriated, $1 for loan subsidies and for loan modifications for guarantees authorized under this subsection, to remain available until expended. (c)

Trust certificates

(1)

Issuance

The Administrator may issue a trust certificate representing ownership of all or a fractional part of the guaranteed portion of 1 or more third party financings that have been guaranteed by the Administrator under subsection (b). A trust certificate issued under this subsection shall be based on and backed by a trust or pool approved by the Administrator and composed solely of the entire guaranteed portion of third party financings guaranteed by the Administrator under subsection (b). (2)

Pooling requirements

(A)

Interest rate

The interest rate on a trust certificate issued under this subsection shall be the weighted average interest rate of all third party financings in the pool. There shall be no limit on the difference between the highest and lowest note interest rates on third party financings forming the pool. (B)

Maturity

(i)

In general

Each pool may include either— (I)third party financings with remaining terms to maturity of 15 years or less; or (II)third party financings with remaining terms to maturity of more than 15 years. (ii)

No other limitations

Except as provided in clause (i), the Administrator may not limit the difference between the remaining terms to maturity of the third party financings forming a pool. (C)

Size

(i)

In general

If the amount of the guaranteed portion of any third party financing exceeds $500,000, the Administrator shall, upon request of the pool assembler, divide the amount of the third party financing into individual guarantees no 1 of which exceeds $500,000. (ii)

Divided financings

Not more than 1 portion of a third party financing that has been divided under this subparagraph shall be included in the same pool. Portions of more than 1 third party financing divided under this subparagraph may be included in the same pool. (3)

Timely payment

(A)

In general

The Administrator may, upon such terms and conditions as the Administrator determines appropriate, guarantee the timely payment of principal and interest on a trust certificate issued by the Administrator or an agent of the Administrator under this subsection. A guarantee under this paragraph shall be limited to the principal and interest on the guaranteed portions of the third party financings that comprise the trust or pool. (B)

Prepayment

If a third party financing in a trust or pool guaranteed under this paragraph is prepaid, either voluntarily or in the event of default, the guarantee of timely payment of principal and interest on the trust certificates shall be reduced in proportion to the amount of principal and interest the prepaid third party financing represents in the trust or pool. Interest on prepaid or defaulted third party financings shall accrue and be guaranteed by the Administrator only through the date of payment on the guarantee. During the term of a trust certificate issued under this subsection, the trust certificate may be called for redemption due to prepayment or default of all third party financings constituting the pool. (4)

Full faith and credit

The full faith and credit of the United States is pledged to the payment of all amounts that may be required to be paid under any guarantee of a trust certificate issued by the Administrator or an agent of the Administrator under this subsection. (5)

Use of agent

The Administrator shall negotiate an amendment to the contract in effect on the date of enactment of this Act with the agent for fee collection for trust certificates issued under section 5(g) of the Small Business Act (15 U.S.C. 634(g)) to collect the monthly fee under subsection (b)(3)(B) of this section. The agent may receive, as compensation for services, any interest earned on a fee collected under this section while in the control of the agent before the time at which the agent is contractually required to remit the fee to the Administrator. (6)

Claims

In the event the Administrator pays a claim under a guarantee issued under this subsection, it shall be subrogated fully to the rights satisfied by such payment. (7)

Ownership rights

No State or local law, and no Federal law, shall preclude or limit the exercise by the Administrator of the ownership rights in the portions of third party financings constituting the trust or pool against which a trust certificate is issued under this subsection. (8)

Central registration

The Administrator— (A)shall provide for a central registration of all trust certificates issued under this subsection; (B)shall negotiate an amendment to the contract in effect on the date of enactment of this Act with the agent for central registration of trust certificates issued pursuant to section 5(h) of the Small Business Act (15 U.S.C. 634(h)) to carry out on behalf of the Administrator the central registration functions under this subsection and the issuance of trust certificates to facilitate pooling, under which— (i)the agent may be compensated through any of the fees collected under this section and any interest earned on any funds collected by the agent while such funds are in the control of the agent and before the time at which the agent is contractually required to transfer such funds to the Administrator or to the holders of the trust certificates, as appropriate; and (ii)the agent shall provide a fidelity bond or insurance in such amounts as the Administrator determines to be necessary to fully protect the interest of the Government; and (C)may— (i)use a book-entry or other electronic form of registration for trust certificates issued under this subsection; and (ii)with the consent of the Secretary of the Treasury, use the book-entry system of the Federal Reserve System. (9)

Sale

The Administrator shall, before any sale of a trust certificate issued under this subsection, require the seller to disclose to the purchaser of the trust certificate information on the terms, conditions, and yield of such instrument. (10)

Brokers and dealers

The Administrator may issue regulations relating to the brokering of and dealing in trust certificates sold under this subsection. (11)

Termination of authority

The authority of the Administrator to issue trust certificates under this subsection shall terminate on September 30, 2010. (d)

Implementation

Not later than 30 days after the date of enactment of this Act, the Administrator shall issue interim final regulations to carry out this section. (e)

Lender purchase eligibility

(1)

In general

A lender that made or services a loan guaranteed under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) or a third party financing guaranteed under subsection (b) of this section may purchase and hold all or any part of a loan pool which includes a loan or third party financing made or serviced by the lender. (2)

No effect on guarantee

A purchase described in subparagraph (A) shall not affect the guarantee of a loan or third party financing in a pool.

6.

Emergency short term fee reductions

(a)

Lender oversight fees

(1)

Temporary reduction in fees

(A)

In general

To the extent amounts are provided in advance in appropriations Acts, the Administrator shall, in lieu of the fee otherwise applicable under section 5(b)(14) of the Small Business Act (15 U.S.C. 634(b)(14)), collect no fee. (B)

Authorization of appropriations

There are authorized to be appropriated for salaries and expenses of the Administration relating to examinations, reviews, and other lender oversight activities relating to loans under section 7 of the Small Business Act (15 U.S.C. 636)— (i)$10,000,000 for each of fiscal years 2009 and 2010; and (ii)such sums as may be necessary for each fiscal year thereafter. (2)

Report on making fees contingent on performance

Not later than 6 months after the date of enactment of this Act, the Administrator, in consultation with lenders that have made loans guaranteed under section 7 of the Small Business Act (15 U.S.C. 636), shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report regarding the feasibility of assessing annual fees under section 7(a)(23)(A) of the Small Business Act (15 U.S.C. 636(a)(23)(A)) in an amount that is contingent on the performance of the lender, including consideration of the meeting the requirement under section 7(a)(1) of that Act (15 U.S.C. 636(a)(1)) of providing credit to applicants than cannot obtain credit elsewhere. The report under this paragraph may include proposed legislation. (b)

Fee reductions

(1)

New 7(a) lender defined

In this subsection the term new 7(a) lender means a lender that has not made more than 20 loans guaranteed by the Administrator under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) during the 3-year period ending on the date on which the Administrator determines the fee under section 7(a)(23)(A) of that Act (15 U.S.C. 636(a)(23)(A)) for the lender. (2)

7(a) Loan Fee Reductions

(A)

In general

For fiscal years 2009 and 2010, and to the extent the cost of such reduction in fees is offset by appropriations, with respect to each loan guaranteed under section 7(a) of Small Business Act (15 U.S.C. 636(a))— (i)the Administrator shall, in lieu of the fee otherwise applicable under section 7(a)(23)(A) of the Small Business Act (15 U.S.C. 636(a)(23)(A)), collect an annual fee in an amount equal to— (I)0.25 percent of the outstanding balance of the deferred participation share of a loan made under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) to a small business concern before the date of enactment of this Act; and (II).20 percent of the outstanding balance of the deferred participation share of a loan made by a new 7(a) lender to a small business concern; and (ii)with respect to each loan guaranteed under section 7(a) of the Small Business Act (15 U.S.C. 636(a)), the Administrator shall, in lieu of the fee otherwise applicable under section 7(a)(18)(A) of the Small Business Act (15 U.S.C. 636(a)(18)(A)), (including any additional fee under clause (iv) of that section 7(a)(18)(A)) collect a guarantee fee in an amount equal to— (I)0.75 percent of the deferred participation share of a total loan amount that is not more than $150,000; (II)2 percent of the deferred participation share of a total loan amount that is more than $150,000, and not more than $700,000; and (III)2.5 percent of the deferred participation share of a total loan amount that is more than $700,000. (B)

Implementation

In carrying out this paragraph, the Administrator shall reduce the fees for a loan guaranteed under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) to the maximum extent possible, subject to the availability of appropriations. (C)

Application of fee reductions

If funds are made available to carry out this paragraph, the Administrator shall reduce the fees under subparagraph (A) for any loan guarantee or project subject to such subparagraph for which the application is pending approval on or after the date of enactment of this Act, until the amount provided for such purpose is expended. (D)

Authorization of appropriations

There are authorized to be appropriated to the Administrator for each of fiscal years 2009 and 2010— (i)$175,000,000 to carry out subparagraph (A)(i); (ii)$75,000,000 to carry out subparagraph (A)(ii). (3)

504 Loan fee and rate reductions

(A)

Fee Reductions

(i)

Fee Reductions

To the extent the cost of such reduction in fees is offset by appropriations, for any loan guarantee or project for which an application is closed on or after the date of enactment of this Act— (I)with respect to an institution described in subclause (I), (II), or (III) of section 502(3)(B)(i) of the Small Business Investment Act of 1958 (15 U.S.C. 696(3)(B)(i)), the Administrator shall, in lieu of the fees otherwise applicable under section 503(d)(2) of the Small Business Investment Act of 1958 (15 U.S.C. 697(d)(2)), collect no fee; (II)a development company shall, in lieu of the mandatory 0.625 servicing fee under section 120.971(a)(3) of title 13, Code of Federal Regulations, (relating to fees paid by borrowers), or any successor thereto, collect no fee; and (III)the Administrator shall, in lieu of the fee otherwise applicable under section 503(d)(3) of the Small Business Investment Act (15 U.S.C. 697(d)(3)), collect no fee. (ii)

Reimbursement for waived fees

(I)

In general

To the extent the cost of such payments is offset by appropriations, the Administrator shall reimburse each development company that does not collect a servicing fee pursuant to clause (i)(II). (II)

Amount

The payment to a development company under subclause (I) shall be in an amount equal to 0.5 percent of the outstanding principal balance of any guaranteed debenture for which the development company does not collect a servicing fee pursuant to clause (i)(II). (iii)

Authorization of Appropriations

There are authorized to be appropriated to the Administrator for each of fiscal years 2009 and 2010— (I)$50,000,000 for the elimination of fees under clause (i)(I); (II)$40,000,000 for payments under clause (ii) to offset the elimination of fees under clause (i)(II); and (III)$10,000,000 for the elimination of fees under clause (i)(III). (B)

Rate Reduction

(i)

In General

To the extent that the cost of making an interest rate reduction is offset by appropriations, the Administrator shall pay, on behalf of a small business borrower, an amount equal to 100 basis points of the interest rate required to be paid by the borrower on the amount of the guarantee provided under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.), if the loan is closed on or after the date of enactment of this Act. (ii)

Frequency of Payment

The Administrator shall make a payment under clause (i) on a semiannual basis. (iii)

Method of payment

The Administrator may use a central servicing agent to make a payment under clause (i). (iv)

Notice to Development Company

The Administrator shall notify a development company that receives a payment under clause (i) when funds are made available for the rate reduction under clause (i). (v)

Implementation

A development company that receives a payment under clause (i) shall— (I)use the payments solely for the purpose provided; and (II)adjust the amount of the monthly payment by the borrower accordingly. (vi)

Authorization of Appropriations

There is authorized to be appropriated to the Administrator for each of fiscal years 2009 and 2010, $150,000,000 for payments made under clause (i).

7.

Microlending

In addition to any amounts otherwise authorized to be appropriated for such purposes, there are authorized to be appropriated to the Administrator for each of fiscal years 2009 and 2010— (1)$5,000,000 for direct loans under section 7(m) of the Small Business Act (15 U.S.C. 636(m)); and (2)$20,000,000 for grants to intermediaries for marketing, management, and technical assistance under section 7(m)(4) of the Small Business Act (15 U.S.C. 636(m)(4)).

8.

Small business investment companies

Section 303(b) of the Small Business Investment Act of 1958 (15 U.S.C. 683(b)) is amended— (1)by striking paragraph (2) and inserting the following: (2)

Maximum leverage

(A)

In general

The maximum amount of outstanding leverage made available to any 1 company licensed under section 301(c) may not exceed the lesser of— (i)300 percent of the private capital of the company; or (ii)$150,000,000. (B)

Multiple licenses under common control

The maximum amount of outstanding leverage made available to 2 or more companies licensed under section 301(c) that are commonly controlled (as determined by the Administrator) and the private capital of which the Administrator determines meets the requirements of subsection (e) may not exceed $225,000,000. ; and (2)by striking paragraph (4).

9.

Emergency Small Business Lending Advertising Strategy

Section 4 of the Small Business Act (15 U.S.C. 633) is amended by adding at the end the following: (i)

Emergency Small Business Lending Advertising Strategy

(1)

Purpose

The purpose of this subsection is to ensure that the Administrator provides information to the owners of small business concerns regarding lenders in their areas that participate in programs of the Administration and that will allow small business concerns to access business capital during a liquidity and capital lending shortage. (2)

Lending Advertising Strategy

The Administrator shall develop an emergency small business lending advertising strategy to inform small business concerns located throughout the United States that loans under this Act are available through lenders that participate in programs of the Administration. (3)

Media

The Administrator shall use print, radio, television, and Internet advertisement, where appropriate, to carry out this subsection. (4)

Effective Date

Not later than 30 days after the date of enactment of this Act, the Administrator shall implement the emergency small business lending advertising strategy. (5)

Authorization of Appropriations

There are authorized to be appropriated to carry out this subsection— (A)$5,000,000 for each of fiscal years 2009 and 2010; and (B)such sums as may be necessary for each fiscal year thereafter. .

10.

Tax Provisions

(a)

Extension of temporary increase in limitations on expensing of certain depreciable business assets

(1)

In general

Paragraph (7) of section 179(b) of the Internal Revenue Code of 1986 is amended— (A)by inserting and 2009 after 2008 in the heading, and (B)by inserting or 2009 after In the case of any taxable year beginning in 2008. (2)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after December 31, 2008. (b)

Carryback of certain net operating losses allowed for 5 years; temporary suspension of 90 percent AMT limit

(1)

In general

Subparagraph (H) of section 172(b)(1) of the Internal Revenue Code of 1986 is amended to read as follows: (H)

5-year carryback of certain losses

(i)

Taxable years ending during 2001 and 2002

In the case of a net operating loss for any taxable year ending during 2001 or 2002, subparagraph (A)(i) shall be applied by substituting 5 for 2 and subparagraph (F) shall not apply. (ii)

Taxable years ending during 2008 and 2009

In the case of a net operating loss with respect to any eligible taxpayer for any taxable year ending during 2008 or 2009— (I)subparagraph (A)(i) shall be applied by substituting 5 for 2, (II)subparagraph (E)(ii) shall be applied by substituting 4 for 2, and (III)subparagraph (F) shall not apply. (iii)

Eligible taxpayer

For purposes of clause (ii), the term eligible taxpayer means a corporation or partnership which meets the gross receipts test of section 448(c) (determined by substituting $10,000,000 for $5,000,000 and 5-taxable-year period for 3-taxable-year period) for the taxable year in which the loss arose (or, in the case of a sole proprietorship, which would meet such test if such proprietorship were a corporation. . (2)

Temporary suspension of 90 percent limit on certain NOL carrybacks and carryovers

(A)

In general

Section 56(d) of the of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (3)

Additional adjustments

For purposes of paragraph (1)(A), in the case of an eligible taxpayer (as defined in section 172(b)(1)(H)(iii)), the amount described in clause (I) of paragraph (1)(A)(ii) shall be increased by the amount of the net operating loss deduction allowable for the taxable year under section 172 attributable to the sum of— (A)carrybacks of net operating losses from taxable years ending during 2008 and 2009, and (B)carryovers of net operating losses to taxable years ending during 2008 or 2009. . (B)

Conforming amendment

Subclause (I) of section 56(d)(1)(A)(i) of such Code is amended by inserting amount of such before deduction described in clause (ii)(I). (3)

Anti-abuse rules

The Secretary of Treasury or the Secretary's designee shall prescribe such rules as are necessary to prevent the abuse of the purposes of the amendments made by this subsection, including anti-stuffing rules, anti-churning rules (including rules relating to sale-leasebacks), and rules similar to the rules under section 1091 of the Internal Revenue Code of 1986 relating to losses from wash sales. (4)

Effective dates

(A)

Subsection (a)

The amendments made by paragraph (1) shall apply to net operating losses arising in taxable years ending in 2008 or 2009. (B)

Subsection (b)

The amendments made by paragraph (2) shall apply to taxable years ending after December 31, 2007.

11.

Troubled Assets

Section 3(9) of the Emergency Economic Stabilization Act of 2008 (division A of Public Law 110–343) is amended— (1)in subparagraph (A), by striking and at the end; (2)by redesignating subparagraph (B) as subparagraph (C); and (3)by inserting after subparagraph (A) the following: (B)a trust certificate issued by the Administrator of the Small Business Administration under section 5(g) of the Small Business Act (15 U.S.C. 634(g)), a loan guaranteed by the Small Business Administration under section 7(a) of the Small Business Act (15 U.S.C. 636(a)), and a trust certificate issued under section 505 of the Small Business Investment Act of 1958 (15 U.S.C. 697), including an underlying debenture, the purchase of which the Secretary determines promotes financial market stability; and .