[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 985 Introduced in Senate (IS)]

110th CONGRESS
  1st Session
                                 S. 985

     To establish a pilot program to provide low interest loans to 
 nonprofit, community-based lending intermediaries, to provide midsize 
       loans to small business concerns, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 26, 2007

   Mr. Levin introduced the following bill; which was read twice and 
    referred to the Committee on Small Business and Entrepreneurship

_______________________________________________________________________

                                 A BILL


 
     To establish a pilot program to provide low interest loans to 
 nonprofit, community-based lending intermediaries, to provide midsize 
       loans to small business concerns, 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 Intermediary Lending 
Pilot Program Act of 2007''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Small and emerging businesses, particularly startups 
        and businesses that lack sufficient or conventional collateral, 
        continue to face barriers accessing midsized loans in amounts 
        between $35,000 and $200,000, with affordable terms and 
        conditions.
            (2) Consolidation in the banking industry has resulted in a 
        decrease in the number of small, locally controlled banks with 
        not more than $100,000,000 in assets and has changed the method 
        by which banks make small business credit decisions with--
                    (A) credit scoring techniques replacing 
                relationship-based lending, which often works to the 
                disadvantage of small or startup businesses that do not 
                conform with a bank's standardized credit formulas; and
                    (B) less flexible terms and conditions, which are 
                often necessary for small and emerging businesses.
            (3) In the environment described in paragraphs (1) and (2), 
        nonprofit intermediary lenders, including community development 
        corporations, provide financial resources that supplement the 
        small business lending and investments of a bank by--
                    (A) providing riskier, up front, or subordinated 
                capital;
                    (B) offering flexible terms and underwriting 
                procedures; and
                    (C) providing technical assistance to businesses in 
                order to reduce the transaction costs and risk exposure 
                of banks.
            (4) Several Federal programs, including the Microloan 
        Program under section 7(m) of the Small Business Act (15 U.S.C. 
        636(m)) and the Intermediary Relending Program of the 
        Department of Agriculture, have demonstrated the effectiveness 
        of working through nonprofit intermediaries to address the 
        needs of small business concerns that are unable to access 
        capital through conventional sources.
            (5) More than 1,000 nonprofit intermediary lenders in the 
        United States are--
                    (A) successfully providing financial and technical 
                assistance to small and emerging businesses;
                    (B) working with banks and other lenders to 
                leverage additional capital for their business 
                borrowers; and
                    (C) creating employment opportunities for low 
                income individuals through their lending and business 
                development activities.

SEC. 3. SMALL BUSINESS INTERMEDIARY LENDING PILOT PROGRAM.

    (a) In General.--Section 7 of the Small Business Act (15 U.S.C. 
636) is amended by inserting after subsection (k) the following:
    ``(l) Small Business Intermediary Lending Program.--
            ``(1) Definitions.--In this subsection--
                    ``(A) the term `intermediary' means a private, 
                nonprofit entity that seeks to borrow, or has borrowed, 
                funds from the Administrator to provide midsize loans 
                to small business concerns under this subsection, 
                including--
                            ``(i) a private, nonprofit community 
                        development corporation;
                            ``(ii) a consortium of private, nonprofit 
                        organizations or nonprofit community 
                        development corporations;
                            ``(iii) a quasi-governmental economic 
                        development entity (such as a planning and 
                        development district), other than a State, 
                        county, or municipal government; and
                            ``(iv) an agency of or nonprofit entity 
                        established by a Native American Tribal 
                        Government;
                    ``(B) the term `midsize loan' means a fixed rate 
                loan of not less than $35,000 and not more than 
                $200,000, made by an intermediary to a startup, newly 
                established, or growing small business concern; and
                    ``(C) the term `Program' means the 3-year small 
                business intermediary lending pilot program established 
                under paragraph (2).
            ``(2) Establishment.--There is established a 3-year small 
        business intermediary lending pilot program, under which the 
        Administrator may provide direct loans to eligible 
        intermediaries, for the purpose of making fixed interest rate 
        midsize loans to startup, newly established, and growing small 
        business concerns.
            ``(3) Purposes.--The purposes of the Program are--
                    ``(A) to assist small business concerns in those 
                areas suffering from a lack of credit due to poor 
                economic conditions;
                    ``(B) to create employment opportunities for low 
                income individuals;
                    ``(C) to establish a midsize loan program under 
                which the Administrator may provide loans to eligible 
                intermediaries to enable such intermediaries to provide 
                midsize loans, particularly loans in amounts averaging 
                not more than $150,000, to startup, newly established, 
                or growing small business concerns for working capital 
                or the acquisition of materials, supplies, or 
                equipment;
                    ``(D) to test the effectiveness of intermediaries--
                            ``(i) as a delivery system for a midsize 
                        loan program; and
                            ``(ii) in addressing the credit needs of 
                        small businesses and leveraging other sources 
                        of credit; and
                    ``(E) to determine the advisability and feasibility 
                of implementing a midsize loan program nationwide.
            ``(4) Eligibility for participation.--An intermediary shall 
        be eligible to receive loans under the Program if that 
        intermediary has not less than 1 year of experience making 
        loans to startup, newly established, or growing small business 
        concerns.
            ``(5) Loans to intermediaries.--
                    ``(A) Application.--Each intermediary desiring a 
                loan under this subsection shall submit an application 
                to the Administrator that describes--
                            ``(i) the type of small business concerns 
                        to be assisted;
                            ``(ii) the size and range of loans to be 
                        made;
                            ``(iii) the geographic area to be served 
                        and its economic, poverty, and unemployment 
                        characteristics;
                            ``(iv) the status of small business 
                        concerns in the area to be served and an 
                        analysis of the availability of credit; and
                            ``(v) the qualifications of the applicant 
                        to carry out this subsection.
                    ``(B) Loan limits.--Notwithstanding subsection 
                (a)(3), no loan may be made to an intermediary under 
                this subsection if the total amount outstanding and 
                committed to the intermediary from the business loan 
                and investment fund established by this Act would, as a 
                result of such loan, exceed $1,000,000 during the 
                participation of the intermediary in the Program.
                    ``(C) Loan duration.--Loans made by the 
                Administrator under this subsection shall be for a 
                maximum term of 20 years.
                    ``(D) Applicable interest rates.--Loans made by the 
                Administrator to an intermediary under the Program 
                shall bear an annual interest rate equal to 1.00 
                percent.
                    ``(E) Fees; collateral.--The Administrator may not 
                charge any fees or require collateral with respect to 
                any loan made to an intermediary under this subsection.
                    ``(F) Leverage.--Any loan to a small business 
                concern under this subsection shall not exceed 75 
                percent of the total cost of the project funded by such 
                loan, with the remaining funds being leveraged from 
                other sources, including--
                            ``(i) banks or credit unions;
                            ``(ii) community development financial 
                        institutions; and
                            ``(iii) other sources with funds available 
                        to the intermediary lender.
                    ``(G) Delayed payments.--The Administrator shall 
                not require the repayment of principal or interest on a 
                loan made to an intermediary under the Program during 
                the 2-year period beginning on the date of the initial 
                disbursement of funds under that loan.
            ``(6) Program funding for midsize loans.--
                    ``(A) Number of participants.--Under the Program, 
                the Administrator may provide loans, on a competitive 
                basis, to not more than 20 intermediaries.
                    ``(B) Equitable distribution of intermediaries.--
                The Administrator shall select and provide funding 
                under the Program to such intermediaries as will ensure 
                geographic diversity and representation of urban and 
                rural communities.
            ``(7) Report to congress.--
                    ``(A) Initial report.--Not later than 30 months 
                after the date of enactment of the Small Business 
                Intermediary Lending Pilot Program Act of 2007, the 
                Administrator shall submit a report containing an 
                evaluation of the effectiveness of the Program to--
                            ``(i) the Committee on Small Business and 
                        Entrepreneurship of the Senate; and
                            ``(ii) the Committee on Small Business of 
                        the House of Representatives.
                    ``(B) Annual report.--Not later than 12 months 
                after the date of enactment of the Small Business 
                Intermediary Lending Pilot Program Act of 2007, and 
                annually thereafter, the Administrator shall submit a 
                report containing an evaluation of the effectiveness of 
                the Program to the Committees described in subparagraph 
                (A).
                    ``(C) Contents.--The reports submitted under 
                subparagraphs (A) and (B) shall include--
                            ``(i) the number and location of the 
                        intermediaries receiving funds to provide 
                        midsize loans under this subsection;
                            ``(ii) the amounts of each loan to an 
                        intermediary under this subsection;
                            ``(iii) the number and amount of midsize 
                        loans made by intermediaries to small business 
                        concerns under this subsection;
                            ``(iv) the repayment history of each 
                        intermediary receiving a loan under this 
                        subsection;
                            ``(v) a description of the loan portfolio 
                        of each intermediary receiving a loan under 
                        this subsection, including the extent to which 
                        it provides midsize loans to small business 
                        concerns in rural and economically depressed 
                        areas;
                            ``(vi) an estimate of the number of low 
                        income individuals who have been employed as a 
                        direct result of the Program; and
                            ``(vii) any recommendations for legislative 
                        changes that would improve the operation of the 
                        Program.''.
    (b) Rulemaking Authority.--Not later than 180 days after the date 
of enactment of this Act, the Administrator shall issue regulations to 
carry out section 7(l) of the Small Business Act, as added by 
subsection (a).
    (c) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated to 
        the Small Business Administration such sums as may be necessary 
        for each of the fiscal years 2008 through 2010 to provide 
        $20,000,000 in loans under section 7(l) of the Small Business 
        Act, as added by subsection (a).
            (2) Availability.--Any amounts appropriated under paragraph 
        (1) shall remain available until expended.
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