[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3739 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3739

   To amend title V of the Small Business Investment Act of 1958 to 
 provide for improved long-term financing to small business concerns, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 7, 2009

 Mr. Buchanan introduced the following bill; which was referred to the 
                      Committee on Small Business

_______________________________________________________________________

                                 A BILL


 
   To amend title V of the Small Business Investment Act of 1958 to 
 provide for improved long-term financing 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 ``Job Creation and Economic 
Development Through CDC Modernization Act of 2009''.

                      TITLE I--GENERAL PROVISIONS

SEC. 101. PROGRAM LEVELS.

    Section 20 of the Small Business Act is amended by adding the 
following new subsection after subsection (e):
    ``(f) Program Levels.--
            ``(1) Fiscal year 2010.--For financings authorized by 
        section 7(a)(13) of this Act and title V of the Small Business 
        Investment Act of 1958, the Administrator is authorized to make 
        $9,000,000,000 in guarantees of debentures for fiscal year 
        2010.
            ``(2) Fiscal year 2011.--For financings authorized by 
        section 7(a)(13) of this Act and title V of the Small Business 
        Investment Act of 1958, the Administrator is authorized to make 
        $10,000,000,000 in guarantees of debentures for fiscal year 
        2011.''.

SEC. 102. DEFINITIONS.

    Section 103 of the Small Business Investment Act of 1958 (5 U.S.C. 
662) is amended as follows:
            (1) By amending paragraph (6) to read as follows:
            ``(6) the term `development company' means any corporation 
        organized in order promote economic development and the growth 
        of small business concerns and includes companies chartered 
        under a special State law authorizing them to operate on a 
        statewide basis;''.
            (2) By striking ``and'' at the end of paragraph (18), by 
        striking the period at the end of paragraph (19) and inserting 
        a semicolon, and by adding at the end the following new 
        paragraphs:
            ``(20) the term `certified development company' means a 
        development company that the Administrator has determined meets 
        the criteria set forth in section 501;
            ``(21) the term `local governmental entity' means--
                    ``(A) a State or a political subdivision of a 
                State, or
                    ``(B) a combination of political subdivisions 
                which--
                            ``(i) has been formed to promote economic 
                        or community development;
                            ``(ii) is composed of representatives of 
                        the State or a political subdivision acting in 
                        their official capacity; and
                            ``(iii) include an area in an adjacent 
                        State if it is part of a local economic area, a 
                        rural area or has a population determined by 
                        the Administrator to be insufficient to support 
                        the formation of a separate development 
                        company;
                such term includes entities meeting the requirements of 
                clauses (i) through (iii), such as, but not limited to, 
                a council of governments, regional development 
                corporation, regional planning commission, or economic 
                development district;
            ``(22) the term `member' means any person authorized to 
        vote for a director of a corporation or the dissolution or 
        merger of a company. For purposes of this definition, a 
        shareholder of a for-profit corporation shall be considered a 
        member;
            ``(23) the terms `rural' and `rural area' shall have the 
        same meaning as those terms are given in section 1991(a)(13)(A) 
        of title 7, United States Code; and
            ``(24) the term `small manufacturer' means a small business 
        concern--
                    ``(A) the primary business of which is classified 
                in sector 31, 32, or 33 of the North American 
                Industrial Classification System; and
                    ``(B) all of the production facilities of which are 
                located in the United States.''.

               TITLE II--CERTIFIED DEVELOPMENT COMPANIES

SEC. 201. CERTIFIED DEVELOPMENT COMPANIES.

    Section 501 of the Small Business Investment Act of 1958 (15 U.S.C. 
695) is amended to read as follows:

``SEC. 501. CERTIFIED DEVELOPMENT COMPANIES.

    ``(a) Certified Development Company Debenture Authority.--Only 
development companies certified by the Administrator shall have the 
authority to issue debentures under this Act.
    ``(b) Certification Standards.--A development company shall be 
certified for the purposes of issuing debentures if the Administrator 
determines that it meets each of the following criteria:
            ``(1) Small concern.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C) of paragraph (2), the company, 
                including its affiliates, shall have no more than 200 
                employees.
                    ``(B) Control.--Except as provided in paragraph (2) 
                (B) or (C) the company shall not be under the control 
                of any other concern.
                    ``(C) Not for profit.--The development company is 
                organized as a not-for-profit corporation.
            ``(2) Exceptions.--
                    ``(A) For profit status.--If a development company 
                was chartered as a for-profit corporation and issued 
                debentures prior to January 1, 1987, the company shall 
                not be required to change its status to not-for-profit 
                in order to be certified.
                    ``(B) Affiliation grandfather.--Any company that 
                was authorized by the Administrator to issue debentures 
                before December 31, 2005, shall be eligible for 
                certification without regard to its status as part of, 
                or its affiliation with, any other not-for-profit 
                corporation or local governmental entity unless that 
                not-for-profit corporation or local governmental entity 
                is another entity that issues debentures under this 
                title.
                    ``(C) Affiliation with local governmental 
                entities.--Any company that was organized after the 
                date of enactment of the Job Creation and Economic 
                Development through CDC Modernization Act of 2009 shall 
                be eligible for certification without regard to its 
                status as part of or affiliation with any local 
                governmental entity.
            ``(3) Good standing.--A development company shall be in 
        good standing and comply with all laws, in every State in which 
        it is incorporated or authorized to conduct business.
            ``(4) Membership.--
                    ``(A) In general.--The development company shall 
                have at least 25 members.
                    ``(B) Voting rights.--No member shall control more 
                than 10 percent of the total voting power in the 
                development company.
                    ``(C) Residence.--Members must be residents of the 
                State in which the development company is chartered or 
                authorized to do business.
                    ``(D) Diversity.--The development company must have 
                at least one member from each of the following:
                            ``(i) A local governmental entity.
                            ``(ii) A financial institution subject to 
                        regulation by a Federal organization belonging 
                        to the Federal Financial Institutions 
                        Examination Council and provides long-term 
                        fixed asset financing in the commercial market.
                            ``(iii) A not-for-profit organization, 
                        other than a development company, that is 
                        dedicated to promoting economic growth.
                            ``(iv) A for-profit businesses, other than 
                        a financial institution described in clause 
                        (ii).
                    ``(E) Employment status.--Membership in a 
                development company shall not be predicated on 
                employment status and an individual who retired from or 
                was terminated (for reasons other than fraud or the 
                commission of a crime) from an entity described in 
                subparagraph (D) shall be deemed to be from the 
                organization described in that subparagraph.
            ``(5) Board of directors.--
                    ``(A) In general.--The development company's board 
                consists of members and each director receives a 
                majority vote of the members unless the development 
                company is a for-profit corporation in which case the 
                board need not consist entirely of members.
                    ``(B) Board representation.--There shall be at 
                least one director from not fewer than 3 of the 4 types 
                of organizations specified in paragraph (4)(D) but no 
                single type of organization shall have more than 50 
                percent representation on the board of the development 
                company. If the development company is a for-profit 
                corporation, financial institution representatives may 
                make up more than 50 percent of the board.
                    ``(C) Affiliated entity representation 
                restrictions.--A development company that is described 
                in subsection (b)(1)(C) of this section may have any or 
                all of its board members appointed by entities 
                affiliated with the company and may include common 
                members who also serve on the affiliate's board of 
                directors if the appointment of board members was 
                exercised by an affiliate prior to December 31, 2005.
                    ``(D) Special rule for certain development 
                companies.--The board of directors for any development 
                company issuing debentures before December 31, 2005, 
                and incorporated under a State law requiring, or which 
                is interpreted by the State's legal department as 
                imposing specific requirements on, the number and 
                selection of members, board members, or both, and the 
                rights and privileges conferred by such State law, may 
                adhere to such provisions.
            ``(6) Professional management and staff.--
                    ``(A) In general.--The development company shall 
                have full-time independent professional management, 
                including a chief executive officer to manage the daily 
                operations and a full-time professional staff qualified 
                to carry out the functions authorized under this title.
                    ``(B) Utilization of staff from affiliated 
                entities.--A development company shall not be denied 
                certification under this section if its chief executive 
                or full-time professional staff is from an affiliated 
                entity as described in subsection (b)(1)(C).
                    ``(C) Staff under contract.--The Administrator 
                shall not deny certification to a development company 
                that contracts for its full time staff if one of the 
                following conditions is met:
                            ``(i) The development company is located in 
                        a rural area, obtains its staff through 
                        contract from another development company that 
                        is certified by the Administrator and that 
                        development company operates in the same or a 
                        contiguous State.
                            ``(ii) The development company had issued 
                        debentures under this title prior to December 
                        31, 2005, and had contracted with a for-profit 
                        business concern to provide staffing and 
                        management services.
    ``(c) Applications.--
            ``(1) Development companies issuing debentures before 
        september 30, 2009.--
                    ``(A) Short form application.--(i) For any 
                development company that issued debentures pursuant to 
                this title before September 30, 2009, the Administrator 
                shall develop, after an opportunity for notice and 
                comment, no later than 90 days after the date of 
                enactment of the Job Creation and Economic Development 
                Through CDC Modernization Act of 2009, a short-form 
                application that contains sufficient information for 
                the Administrator to determine that the development 
                company currently meets the standards set forth in 
                subsection (b). In developing such application, the 
                Administrator shall be required to limit the amount of 
                paperwork necessary to determine whether the 
                development company meets the standards for 
                certification and may limit the application to the 
                filing of reports previously submitted to the 
                Administrator.
                    ``(ii) For those companies that obtain staff 
                through contracts, the application shall include a copy 
                of the contract.
                    ``(B) Certification decision.--(i) The 
                Administrator shall certify the development company if 
                the application demonstrates that the applicant meets 
                the standards in subsection (b). The decision to 
                certify or not approve the request for certification 
                shall be made within 7 business days from the date the 
                initial submission of the application is received by 
                the Administrator. If the Administrator takes no action 
                to approve or disapprove within 7 business days, the 
                application for certification is deemed approved and no 
                further action is required by the Administrator or the 
                development company to obtain certification. If the 
                Administrator disapproves the application, the 
                Administrator shall provide in writing within 3 
                business days the reasons for the disapproval. If such 
                document is not provided within the time specified, the 
                application is deemed approved and no further action is 
                required by the Administrator or the development 
                company to obtain certification.
                    ``(ii) For those development companies that submit 
                contracts under subparagraph (A)(ii), the Administrator 
                is limited in rejecting the application only if the 
                Administrator finds that the entity servicing the 
                applicant is no longer able to provide the employees or 
                services needed by the applicant to perform the 
                functions that would be authorized under this title.
                    ``(C) Application resubmittal.--If the 
                Administrator disapproves the application for 
                certification and provides a written statement as set 
                forth in subparagraph (B), the development company may 
                file a new application limited solely to the address 
                the concerns of the Administrator and the certification 
                procedures set forth in subparagraph (B) shall 
                recommence.
                    ``(D) Appeals.--If the Administrator disapproves an 
                application in accordance with the procedures of 
                subparagraphs (B) or (C), the applicant may, within 10 
                calendar days after receipt of the disapproval, appeal 
                such disapproval. The Administrator shall conduct a 
                hearing to determine such appeal pursuant to sections 
                554, 556, and 557 of title 5, United States Code, and 
                shall issue a decision not later than 45 days after the 
                appeal is filed. The decision on appeal shall 
                constitute final agency action for purposes of chapter 
                7, title 5 United States Code.
                    ``(E) Grandfathering.--
                            ``(i) In general.--For the period 2 years 
                        after date of enactment of the Job Creation and 
                        Economic Development through CDC Modernization 
                        Act of 2009, any development company that was 
                        issuing debentures on or before the date set 
                        forth in this clause (i) shall be deemed to be 
                        a certified development company.
                            ``(ii) Completion of application process.--
                        The procedures set forth in this paragraph for 
                        determining certification shall apply to any 
                        development company meeting the qualifications 
                        of clause (i).
                            ``(iii) Effect of denial.--The denial or 
                        rejection of an application for certification 
                        as set forth in this subsection shall have no 
                        affect on the ability of a development company 
                        meeting the qualifications in clause (i) from 
                        continuing to issue debentures during the 
                        entire two-year period established in that 
                        clause.
                            ``(iv) Failure to obtain certification.--
                        Any development company that fails to obtain 
                        certification in accordance with the procedures 
                        set forth in this paragraph during the period 
                        set forth in clause (i) shall be considered to 
                        be a new development company and the procedures 
                        of paragraph (2) shall apply. The authority to 
                        issue debentures shall cease for any 
                        development company covered by this 
                        subparagraph that has failed to obtain 
                        certification from the Administrator during the 
                        time period set forth in clause (i).
                    ``(F) Automatic qualification provision.--If the 
                Administrator fails to implement the certification 
                process set forth in this paragraph, any development 
                company that was issuing debentures before September 
                30, 2009, pursuant to this title shall be considered 
                certified until such time as the Administrator develops 
                the certification procedures set forth in this 
                paragraph.
                    ``(G) Savings clause.--Any action taken by a 
                development company or the Administrator pursuant to 
                this paragraph shall have no impact on any guarantee of 
                a debenture issued prior to the date of enactment of 
                the Job Creation and Economic Development Through CDC 
                Modernization Act of 2009.
            ``(2) Application process for new development companies.--
                    ``(A) In general.--For any development company that 
                has not issued debentures prior to September 30, 2009, 
                the Administrator shall develop no later than 180 days 
                after the date of enactment of the Job Creation and 
                Economic Development Through CDC Modernization Act of 
                2009, after an opportunity for notice and comment, an 
                application form for certification that provides the 
                Administrator with sufficient information to insure 
                that the applicant meets the standards set forth in 
                subsection (b). The Administrator shall certify such 
                development company or reject the application within 60 
                calendar days from the date the initial submission was 
                received by the Administrator. If the Administrator 
                rejects the application, the Administrator shall 
                provide in writing within 7 business days after the 
                decision, the reason for rejecting the application.
                    ``(B) Appeals.--A development company shall be able 
                to appeal the disapproval of an application under the 
                procedures set forth in paragraph (1)(D).''.

SEC. 202. CERTIFIED DEVELOPMENT COMPANY; OPERATIONAL REQUIREMENTS.

    (a) Operational Requirements.--Section 502 of the Small Business 
Investment Act of 1958 (15 U.S.C. 696) is amended to read as follows:

``SEC. 502. OPERATIONAL REQUIREMENTS FOR CERTIFIED DEVELOPMENT 
              COMPANIES.

    ``(a) Maintenance of Standards for Certification.--Any company 
certified pursuant to section 501 shall continue to comply with the 
requirements of that section to remain certified. The Administrator 
shall develop a reporting form, which to the extent possible, 
incorporates other documents and reports already kept by certified 
development companies, demonstrating their continued compliance. The 
form shall be developed in a manner that the estimated time for 
completion shall take no more than 2 hours.
    ``(b) Ethics and Conflict of Interests.--A certified development 
company, its officers, employees, and contractors shall act ethically 
and avoid activities which constitute a conflict of interest or appear 
to constitute a conflict of interest. For purposes of this subsection, 
conduct that is unethical includes, but is not limited to, the actions 
specified in section 120.140 of title 13, Code of Federal Regulations 
as in effect on January 1, 2009.
            ``(1) By associates.--An associate may not be an officer, 
        director, or manager of more than 1 certified development 
        company. The term `associate' shall have the same meaning given 
        the term `Associate of a CDC' in section 120.10 of title 13, 
        Code of Federal Regulations, as in effect on January 1, 2009. 
        For the purposes of this subsection, 10 percent shall be 
        substituted wherever section 120.10 of title 13, Code of 
        Federal Regulation uses 20 percent.
            ``(2) By entities.--Except as provided in sections 
        501(b)(5) and 501(b)(6), no person, sole proprietorship, 
        partnership, or corporation shall control or have managerial 
        control of more than one certified development company. Control 
        means any of the following:
                    ``(A) The ability to appoint or remove members of 
                the company or member of its board of directors.
                    ``(B) The ability to modify or approve rate or fee 
                changes affecting revenues of the certified 
                development.
                    ``(C) The ability to veto, overrule, or modify 
                decisions of the certified development company's body.
                    ``(D) The ability to, either directly or 
                contractually, to appoint, hire, reassign, or dismiss 
                those managers and employees responsible for the daily 
                operations of the certified development company.
                    ``(E) The ability to access the certified 
                development company's resources or amend its budget.
                    ``(F) The ability to control another certified 
                development company pursuant to provisions in a 
                contract.
    ``(c) Meetings.--The board of directors of the certified 
development company shall meet on a regular basis to make policy 
decisions for the company.
    ``(d) Loan Committees.--The board of directors of a certified 
development company may use a loan committee to process loans in the 
State in which it operates as well as adjacent local economic areas. 
Members of the loan committee shall be residents of the certified 
development company's state of operation or the adjacent local economic 
area. Such loan committees shall meet on a periodic basis as set forth 
by the board of directors.
    ``(e) Prohibited Conflict in Project Loans.--
            ``(1) In general.--Certified development companies shall 
        not recommend or approve a guarantee of a debenture that will 
        be collateralized by property being constructed or acquired on 
        which an institution, as provided in section 508(c)(1)(A), will 
        have a first lien position.
            ``(2) Exception.--The prohibition in paragraph (1) shall 
        not apply to any certified development company that was 
        affiliated with or part of any entity that took a first lien 
        position between October 1, 2003, and September 30, 2005.
    ``(f) Affiliation With Lenders Operating Under Section 7 of the 
Small Business Act.--
            ``(1) Prohibition.--No certified development company may 
        invest in, or be an affiliate of, a lender who participates in 
        the loan programs authorized in sections 7(a) and 7(c) of the 
        Small Business Act (15 U.S.C. 636).
            ``(2) Exception.--The prohibition in paragraph (1) shall 
        not apply to any certified development company that is 
        affiliated with an entity authorized by the Administrator to 
        operate under section 7(a) of the Small Business Act if such 
        affiliation occurred on or before November 6, 2003.
            ``(3) Credit union affiliation.--A certified development 
        company shall not lose its status due an affiliation with an 
        institution regulated by the National Credit Union 
        Administration if the development company was affiliated with 
        such an institution prior to January 1, 2007.
    ``(g) Servicing and Packaging Guaranteed Loans.--A certified 
development company is authorized to prepare applications for loans 
under sections 7(a) or 7(c) of the Small Business Act (15 U.S.C. 636), 
to service such loans, and to charge a reasonable fee for servicing 
such loans.
    ``(h) Use of Excess Funds.--Any funds generated by a certified 
development company from the issuance of debentures under this title, 
the sale of debentures in the private secondary market, or fees 
described in subsection (g) that remain unexpended after payment of 
staff, operating, and overhead expenses shall be used by the certified 
development company for--
            ``(1) operating reserves;
            ``(2) expanding the area in which the certified development 
        company operates through the methods authorized in section 505 
        (relating to multi-State operation);
            ``(3) investment in other community and local economic 
        development activity or community development primarily in the 
        State from which such funds were generated; or
            ``(4) investment in small business investment companies 
        subject to the limitations in subsection (i).
    ``(i) Limitations With Respect to Small Business Investment 
Companies.--A certified development company shall not--
            ``(1) invest excess funds in a small business investment 
        company that the Administrator determines to be capitally 
        impaired as set forth in section 107.1830 of title 13, Code of 
        Federal Regulation, as in effect on January 1, 2009, or any 
        successor regulation to that regulation, but may maintain its 
        investment in such company if such investment was made prior to 
        the determination of capital impairment; and
            ``(2) provide a debenture under this title to a small 
        business concern that has financing with a small business 
        investment company in which the certified development company 
        has invested excess funds.
    ``(j) Economic Development Activities.--A company certified 
pursuant to this section shall carry out each of the following economic 
development activities that create or preserve jobs in urban and rural 
areas:
            ``(1) The company shall provide long-term financing to 
        small business concerns through debentures described in section 
        506.
            ``(2) The company shall operate any other program to assist 
        small business concerns or communities that promote local 
        economic development and job creation or preservation.
    ``(k) Restrictions on Assistance.--
            ``(1) In general.--After the date of enactment of the Job 
        Creation and Economic Development Through CDC Modernization Act 
        of 2009, no certified development company may accept funding 
        from any source, including any Federal agency (as that term is 
        defined in section 551 of title 5, United States Code) if the 
        source imposes--
                    ``(A) conditions on the types of small business 
                concerns that a certified development company may 
                provide assistance to under this title; or
                    ``(B) conditions or requirements, directly or 
                indirectly, upon any small business concern receiving 
                assistance under this title.
            ``(2) Exception.--The conditions of subparagraphs (A) and 
        (B) of paragraph (1) shall not apply if the source provides all 
        of the financing that will be provided by the certified 
        development company to the small business concern, provided 
        further that any conditions or restrictions are limited solely 
        to the financing provided by the source of funding.
    ``(l) Revocation and Suspension.--The Administrator may suspend or 
revoke a certified development company's status if the Administrator 
determines, after a hearing on the record as set forth in section 554, 
556, and 557 of title 5, United States Code, that the certified 
development company no longer--
            ``(1) meets the eligibility criteria established under 
        section 501;
            ``(2) satisfies the operational standards in this section; 
        or
            ``(3) complies with the Administrator's rules, regulations, 
        or provisions of law.
    ``(m) Effect of Suspension or Revocation.--A suspension or 
revocation under subsection (l) shall not affect any outstanding 
debenture guarantee.''.

SEC. 203. ACCREDITED LENDERS PROGRAM.

    Section 503 of the Small Business Investment of 1958 (15 U.S.C. 
697) is amended to read as follows:

``SEC. 503. ACCREDITED LENDERS PROGRAM.

    ``(a) Establishment.--A certified development company may apply for 
status to become an accredited certified development company if it 
meets the operational standards of section 502 and the criteria in 
subsection (b).
            ``(1) Application.--The Administrator shall, after 
        opportunity for notice and comment, develop an application for 
        certified development companies seeking to become accredited 
        certified development companies.
            ``(2) Processing of application.--The Administrator shall 
        make a determination within 30 days after a complete 
        application has been filed by the certified development 
        company.
            ``(3) Reapplication.--If the Administrator rejects the 
        application, the Administrator shall provide in writing the 
        reasons for the rejection. Any certified development company 
        may reapply which will recommence the processing time limits 
        set forth in paragraph (2), and such reapplication shall be 
        limited to addressing the reasons for rejection. If the 
        Administrator rejects a second application, that shall be 
        considered final agency action for purposes of Chapter 7 of 
        title 5, United States Code.
    ``(b) Standards for Accredited Certified Development Company 
Program.--The Administrator shall designate a certified development 
company as accredited if it meets the following standards:
            ``(1) has been a certified development company for not less 
        than the preceding 12 months and has issued debentures as 
        authorized under this title during that time period;
            ``(2) has well-trained, qualified personnel who are 
        knowledgeable in the lending policies and procedures for 
        certified development companies;
            ``(3) has the ability to process, close, and service the 
        loan issued under this title;
            ``(4) has a loss rate on the company's debentures that is 
        reasonable and acceptable to the Administrator;
            ``(5) has a history of submitting to the Administrator 
        complete and accurate debenture guaranty application packages; 
        and
            ``(6) has the ability to serve small business credit needs 
        for financing plant and equipment as a certified development 
        company.
    ``(c) Expedited Processing of Guarantee Applications.--The 
Administrator shall develop an expedited procedure for processing a 
guarantee application or servicing action submitted by an accredited 
certified development company. For purposes of this subsection, an 
expedited procedure is one that takes at least two business days less 
than the processing performed for certified development companies that 
have not been accredited.
    ``(d) Suspension or Revocation of Accredited Status.--The 
Administrator may suspend or revoke a certified development company's 
accredited status if the Administrator determines, after a hearing on 
the record as set forth in section 554, 556, and 557 of title 5, United 
States Code, that the certified development company no longer meets the 
eligibility criteria established under this section (which shall not 
include a time limit on the term of the certified development company's 
accredited status) or failed to adhere to the Administrator's rules, 
regulations, or is violating some other provision of law. Such 
suspension or revocation shall have no effect on the development 
company's status as certified.
    ``(e) Effect of Suspension or Revocation on Existing Guarantees.--A 
suspension or revocation of accredited status shall not affect any 
outstanding debenture guarantee.
    ``(f) Grandfather Provision.--Any certified development company 
that was accredited by the date of enactment of the Job Creation and 
Economic Development Through CDC Modernization Act shall remain 
accredited for 24 months after that date. If the certified development 
company does not have an application for accreditation approved by the 
Administrator within the 24 months, its accreditation standard shall 
lapse.
    ``(g) Automatic Qualification.--
            ``(1) In general.--Until the Administrator develops 
        procedures for granting accredited status, any certified 
        development company that was accredited as of the date of 
        enactment of the Job Creation and Economic Development through 
        CDC Modernization Act of 2009 shall be deemed to be accredited.
            ``(2) Applications.--Any certified development company that 
        satisfies the provision of paragraph (1) shall have 24 months 
        in which to submit the application established by this section 
        for accredited status.
            ``(3) Effect while application pending.--The denial or 
        rejection of an application for accredited status as set forth 
        in this section shall have no affect on the ability of a 
        development company that meets the standard set forth in 
        paragraph (1) from maintaining its status during the 24 months 
        specified in this subsection.
    ``(h) Promulgation of Accrediting Standards.--The Administrator 
shall develop standards for accrediting, suspension and revocation 
under the program established by this section only after notice and an 
opportunity for comment as set forth in section 553(b) of title 5, 
United States Code. After the development of such standards, the 
Administrator shall publish such standards in the Code of Federal 
Regulations.
    ``(i) Rule of Construction.--Any reference to the term `accredited 
lender' in any provision of law enacted, or any regulation adopted, 
prior to the enactment of the Job Creation and Economic Development 
Through CDC Modernization Act of 2009 shall be deemed to be a reference 
to the term `accredited certified development company'.''.

SEC. 204. PREMIER CERTIFIED LENDER PROGRAM.

    Section 504 of the Small Business Investment Act of 1958 (15 U.S.C. 
697a) is amended to read as follows:

``SEC. 504. PREMIER CERTIFIED LENDER PROGRAM.

    ``(a) Establishment.--A certified development company accredited 
under section 503 may apply for status to become a premier certified 
development company.
            ``(1) Application.--The Administrator shall, after 
        opportunity for notice and comment, develop an application for 
        accredited certified development companies seeking to become 
        premier certified development companies.
            ``(2) Processing of application.--The Administrator shall 
        make a determination within 60 days after a complete 
        application has been filed by an accredited certified 
        development company.
            ``(3) Reapplication.--If the Administrator rejects the 
        application, the Administrator shall provide in writing the 
        reasons for the rejection. Any accredited certified development 
        company may reapply which will recommence the processing time 
        limits set forth in paragraph (2), and such reapplication shall 
        be limited to addressing the reasons for rejection. If the 
        Administrator rejects a second application, that shall be 
        considered final agency action for purposes of chapter 7 of 
        title 5, United States Code.
    ``(b) Standards for Obtaining Premier Certified Development Company 
Status.--The Administrator shall designate an accredited certified 
development company as a premier certified development company if the 
application submitted pursuant to subsection (a) demonstrates that the 
accredited certified development company meets the following standards:
            ``(1) Has been an accredited certified development company 
        for at least 12 months.
            ``(2) Has submitted to the Administrator adequately 
        analyzed debenture guarantee applications.
            ``(3) Has closed, in a proper manner following the 
        Administrator regulations, loans under this title.
            ``(4) Has serviced its loan portfolio in accordance with 
        the standards set by the Administrator.
            ``(5) Has established a loan loss reserve established in 
        accordance with this section that the Administrator determines 
        is sufficient to meet its obligations to protect the Federal 
        Government from the risk of loss on each debenture guaranteed 
        under this section.
            ``(6) Has agreed, as part of the application and in order 
        to protect the Federal Government against the risk of loss, to 
        the following:
                    ``(A) on account of a debenture, the proceeds of 
                which were used to fund a loan approved prior to the 
                date of enactment of the Job Creation and Economic 
                Development through CDC Modernization Act of 2009, 
                agrees to reimburse the Administrator for 10 percent of 
                any loss sustained by the Administrator as a result of 
                a default by the company in the payment of principal or 
                interest on a debenture issued by such company and 
                guaranteed by the Administrator;
                    ``(B) on account of a debenture, the proceeds of 
                which were used to fund a loan approved prior to the 
                date of enactment of the Job Creation and Economic 
                Development through CDC Modernization Act of 2009 and 
                which were issued during the period in which the 
                company had made a selection pursuant to section 
                508(c)(7) of the Small Business Investment Act of 1958, 
                as in effect on the day before such date of enactment, 
                agrees to reimburse the Administrator for 15 percent of 
                any loss sustained by the Administrator as a result of 
                a default by the company in the payment of principal or 
                interest on a debenture issued by such company and 
                guaranteed by the Administrator; or
                    ``(C) on account of a debenture, the proceeds of 
                which are used to fund a loan approved on or after the 
                date of enactment of the Job Creation and Economic 
                Development through CDC Modernization Act of 2009, upon 
                closing, pay to the Administrator a one-time 
                participation fee in the amount equal to the higher of 
                the following:
                            ``(i) 0.25 percent of the amount of the 
                        debenture.
                            ``(ii) A percent of the amount of the 
                        debenture equal to 10 percent of the amount of 
                        the company's historic loss rate on debentures 
                        guaranteed under this section as determined by 
                        the Administrator. The rate specified by this 
                        clause shall be determined annually based upon 
                        the company's loan losses as of close of 
                        business on June 30th and notice of the 
                        determination shall be provided to each company 
                        not later than August 31. Such rate shall be 
                        applicable to loans approved during the fiscal 
                        year commencing after the determination is made 
                        and shall expire and have no further 
                        application after the end of such fiscal year. 
                        If no timely determination has been made prior 
                        to the commencement of a fiscal year, including 
                        the year of enactment of the Job Creation and 
                        Economic Development through CDC Modernization 
                        Act of 2009, one may be made after the 
                        commencement and it shall be applicable to 
                        loans approved during the balance of such 
                        fiscal year commencing 30 days after 
                        notification to the development company 
                        involved.
    ``(c) Suspension or Revocation of Premier Status.--The 
Administrator may suspend or revoke an accredited certified development 
company's premier status if the Administrator determines, after a 
hearing on the record as set forth in section 554, 556, and 557 of 
title 5, United States Code, that the accredited certified development 
company no longer meets the eligibility criteria for premier status as 
established under this section or failed to adhere to the 
Administrator's rules, regulations, or is violating some other 
provision of law. Such revocation or suspension shall have no effect on 
its status as an accredited certified development company.
    ``(d) Loan Loss Reserve.--
            ``(1) Assets.--Each loan loss reserve maintained by the 
        premier certified development company for loans made pursuant 
        to the authority in subsection (g)(1) shall be comprised of--
                    ``(A) segregated funds on deposit in an account or 
                accounts with a federally insured depository 
                institution or institutions selected by the company, 
                subject to a collateral assignment in favor of, and in 
                a format acceptable to, the Administrator that shall 
                amount to 10 percent of the company's exposure as 
                determined pursuant to subsection (b)(6);
                    ``(B) irrevocable letter or letters of credit, with 
                a collateral assignment in favor of, and a commercially 
                reasonable format acceptable to, the Administrator; or
                    ``(C) any combination of the assets described in 
                subparagraphs (A) and (B).
            ``(2) Contributions.--The company shall make contributions 
        to the loss reserve, either cash or letters of credit as 
        provided above, in the following amounts and at the following 
        intervals:
                    ``(A) 50 percent when a debenture is closed.
                    ``(B) 25 percent additional not later than 1 year 
                after a debenture is closed.
                    ``(C) 25 percent additional not later than 2 years 
                after a debenture is closed.
            ``(3) Replenishment.--If a loss has been sustained by the 
        Administrator, any portion of the loss reserve, and other funds 
        provided by the premier certified development company as 
        necessary, may be used to reimburse the Administrator for the 
        premier certified development company's share of the loss as 
        provided for in subsection (b)(6). If the premier certified 
        development company utilizes the reserve, it shall, within 30 
        calendar days, replace an equivalent amount of funds.
            ``(4) Disbursements.--
                    ``(A) In general.--The Administrator shall allow 
                the premier certified development company to withdraw 
                from the loss reserve amounts attributable to any 
                debenture that has been repaid.
                    ``(B) Reduction.--The Administrator shall allow the 
                premier certified development to withdraw from the loss 
                reserve such amounts as are in excess of 1 percent of 
                the aggregate outstanding balances of debentures to 
                which such loss reserve relates. The reduction 
                authorized by this subparagraph shall not apply with 
                respect to any debenture before 100 percent of the 
                contribution described in paragraph (2) with respect to 
                such debenture has been made.
                    ``(C) Rule of construction.--The provision 
                contained in subparagraph (B) shall be read as if 
                enacted prior to a date 2 years and 90 days after the 
                date of enactment of the Job Creation and Economic 
                Development through CDC Modernization Act of 2009.
    ``(e) Bureau of Premier Certified Development Company Lender 
Oversight.--
            ``(1) In general.--There is hereby established a Bureau of 
        Premier Certified Development Company Lender Oversight in the 
        Office of Lender Oversight at the United States Small Business 
        Administration which shall have responsibility and capability 
        for carrying out oversight of premier certified development 
        companies and such other responsibilities as the Administrator 
        designates.
            ``(2) Annual review.--The Bureau established in paragraph 
        (1) annually shall review the financing made by each premier 
        certified development company. Such review shall include the 
        premier certified development company's credit decisions and 
        general compliance with the eligibility requirements for each 
        financing approved as a result of its status as a premier 
        certified development company.
            ``(3) Random audits.--The Bureau shall develop and 
        implement a method for sampling the debentures issued by 
        premier certified development companies. Such sampling shall be 
        similar to the random file audits of development companies that 
        utilize the Abridged Submission Method described in chapter 4 
        of subpart C of Standard Operating Procedure 50 10 (5)(A) as 
        was in effect on March 2, 2009.
            ``(4) Review of lenders providing senior financing.--
                    ``(A) Calculation of loan loss rate.--The Bureau 
                shall periodically calculate the loss rate of all 
                debentures approved under this section and shall 
                calculate a loss rate on the basis of the total 
                debentures attributable to projects approved by premier 
                certified development companies in which each lender is 
                a participating lender.
                    ``(B) Notification.--If the Bureau determines that 
                the loss rate on debentures involving an individual 
                lender exceeds the average for all debentures approved 
                under this section, it shall advise the Administrator.
            ``(5) Use of reviews and audits.--The Administrator shall 
        consider the findings under paragraphs (2), (3), and (4) in 
        carrying out the responsibilities under subsection (h).
    ``(f) Sale of Certain Defaulted Loans.--
            ``(1) Notice.--If, upon default in repayment, the 
        Administrator acquires a debenture issued by a premier 
        certified development company and identifies such loan for 
        inclusion in a bulk asset sale of defaulted or repurchased 
        loans or other financing, it shall give prior notice thereof to 
        any premier certified development company which has a 
        contingent liability under this section. The notice shall be 
        given to the premier certified development company as soon as 
        possible after the financing is identified, but not less than 
        90 days before the date the Administrator first makes any 
        records on such financing available for examination by 
        prospective purchasers prior to its offering in a package of 
        loans for bulk sale.
            ``(2) Limitations.--The Administrator shall not offer any 
        loan described in paragraph (1) as part of a bulk sale unless 
        it--
                    ``(A) provides prospective purchasers with the 
                opportunity to examine the Small Business 
                Administration's records with respect to such loan; and
                    ``(B) provides the notice required by paragraph 
                (1).
    ``(g) Loan Approval Authority.--
            ``(1) In general.--A premier certified development company 
        may, under conditions determined by the Administrator in 
        regulations published in the Code of Federal Regulations, issue 
        guarantees on debentures, approve, authorize, close, service, 
        foreclose, litigate (except that the Administrator may monitor 
        conduct of any such litigation), and liquidate loans that are 
        funded with proceeds of a debenture issued by a premier 
        certified development company unless the Administrator advises 
        the company that loans involving a specific institutional 
        lender are to be submitted to the Administrator for further 
        consideration, and approval by the Administrator.
            ``(2) Program goals.--Each premier certified development 
        company shall establish a goal of processing no less than 50 
        percent of the applications for assistance under this title 
        that the premier certified development company receives. 
        Failure to meet this goal shall have no affect on the company's 
        status as a premier certified development company under this 
        section.
            ``(3) Scope of review.--The approval of a loan and 
        guarantee of a debenture by a premier certified development 
        company shall be subject to final approval as to the 
        eligibility of any guarantee by the Administrator as set forth 
        in section 506, but such final approval shall not include 
        review of decisions by the premier certified development 
        company involving creditworthiness, loan closing, or compliance 
        with legal requirements imposed by law or regulation.
    ``(h) Suspension or Revocation.--The Administrator may suspend or 
revoke an accredited certified development company's premier status if 
the Administrator determines, after a hearing on the record as set 
forth in section 554, 556, and 557 of title 5, United States Code, that 
the accredited certified development company no longer meets the 
eligibility criteria established under this section, fails to maintain 
adequate loan loss reserves mandated in this section even if it meets 
the other eligibility requirements for premier status, or violates the 
Administrator's rules, regulations, or some other provision of law. The 
Administrator shall consider the review of the premier certified 
development company conducted pursuant to subsection (e) in determining 
whether to suspend or revoke an accredited development company's 
premier status. Such suspension or revocation shall have no effect on 
the development company's status as an accredited certified development 
company.
    ``(i) Effect of Suspension or Revocation.--A suspension or 
revocation of premier status shall not affect any outstanding debenture 
guarantee.
    ``(j) Rule of Construction.--Any reference to the term `premier 
certified lender' or `PCL' in legislation enacted, or regulations 
adopted, prior to the enactment of the Job Creation and Economic 
Development Through CDC Modernization Act of 2009 shall be deemed to be 
a reference to the term `premier certified development company'.''.

SEC. 205. MULTI STATE OPERATIONS.

    Section 505 of the Small Business Investment Act of 1958 (15 U.S.C. 
697b) is amended to read as follows:

``SEC. 505. MULTI STATE OPERATIONS.

    ``(a) Authorization.--The Administrator shall permit an accredited 
or premier certified development company to make loans or issue 
debentures in any State that is contiguous to the State of 
incorporation of that company only if the company--
            ``(1) has members, from each of the States in which it 
        operates with not fewer than 25 members who reside in such 
        States;
            ``(2) has a board of directors that contains not fewer than 
        2 members from each State in which the company makes loans and 
        issues debentures and are residents of that State;
            ``(3) maintains a separate loan committee to process loans 
        in each expansion State and the members of the loan committee 
        are solely residents of the expansion State; and
            ``(4) files an application developed by the Administrator 
        which provides--
                    ``(A) notice of the intention to make loans in 
                multiple States;
                    ``(B) specifies the States in which the company 
                intends to make loans;
                    ``(C) a list of members in each expansion State; 
                and
                    ``(D) a detailed statement on how the company will 
                comply with the requirements of this subsection.
    ``(b) Loan Committees.--The requirements of paragraph (3) of 
subsection (a) shall not require a development company to establish a 
loan committee in its State of incorporation or in a local economic 
area outside the State of incorporation unless such area is part of an 
expansion State.
    ``(c) Review.--
            ``(1) In general.--The Administrator shall review each 
        application for expansion under subsection (a), but such review 
        shall be limited to that information needed to determine 
        whether the company will comply with the requirements of 
        subsection (a).
            ``(2) Deadline for decision.--The Administrator shall make 
        a decision on each application under subsection (a) within 15 
        calendar days after the receipt of the application. If no such 
        decision is granted, the application is deemed to be approved 
        and no further action is required by the applicant or the 
        Administrator for the company to expand into the States 
        specified in the application.
            ``(3) Application resubmittal.--If the Administrator 
        rejects the application for expansion, the Administrator shall 
        provide in writing the reasons for denial within 10 calendar 
        days of the decision. The applicant then may resubmit the 
        application but the review of such resubmitted applications 
        will be limited only to the areas in which the Administrator 
        found the original application deficient. The deadlines in 
        paragraph (2) shall apply to resubmitted applications.
            ``(4) Appeal.--If a resubmitted application is denied, the 
        applicant may, within 10 calendar days after receipt of the 
        disapproval, appeal such disapproval. The Administrator shall 
        conduct a hearing to determine such appeal pursuant to sections 
        554, 556, and 557 of title 5, United States Code, and shall 
        issue a decisions not later than 45 days after the appeal is 
        filed. The decision on appeal shall constitute final agency 
        action for purposes of chapter 7, title 5 United States Code.
    ``(d) Failure To Develop Application.--If the Administrator fails 
to develop an application as required in subsection (a)(4) within 60 
days of the enactment of Job Creation and Economic Development Through 
CDC Modernization Act of 2009, an accredited or premier certified 
development company only need submit the information required in 
subsection (a) to the Administrator to be deemed eligible to commence 
operations authorized by this section. Such eligibility shall not be 
terminated if the Administrator develops an application after the 60-
day period set forth in this subsection.
    ``(e) Aggregate Accounting.--An accredited or premier certified 
development company authorized to operate in multiple States pursuant 
to this section may maintain an aggregate accounting of all revenue and 
expenses of the company for purposes of this title.
    ``(f) Local Job Creation Requirements.--
            ``(1) In general.--Any company making loans in multiple 
        States as authorized in this section shall not count jobs 
        created or retained in one State towards any applicable job 
        creation or retention requirements mandated by this title in 
        another State.
            ``(2) Applicability.--Any company operating under the 
        authority of this section shall be required to meet any job 
        creation or retention requirement of this title on the date 
        that is 2 years after the certified development company closed 
        its first loan in its new State of operation.
    ``(g) Contiguous States.--For the purposes of this section, the 
States of Alaska and Hawaii shall be deemed to be contiguous to any 
State abutting the Pacific Ocean. Territories of the United States 
located in the Pacific Ocean shall be deemed to be contiguous to any 
State abutting the Pacific Ocean, including Alaska and Hawaii, and 
territories of the United States located in the Caribbean Sea shall be 
deemed contiguous to any State abutting the Gulf of Mexico.
    ``(h) Exemption for Local Economic Areas.--Except as provided in 
subsection (a)(3) with respect to loan committees, any certified, 
accredited, or premier development company or applicant operating in a 
local economic development area that crosses the border of another 
State shall not be considered to be operating under the provisions of 
this section and shall not be required to comply with the requirements 
of this section for multi-State operation.''.

SEC. 206. GUARANTY OF DEBENTURES.

    Section 506 of the Small Business Investment Act of 1958 (15 U.S.C. 
697c) is amended to read as follows:

``SEC. 506. GUARANTY OF DEBENTURES.

    ``(a) Authority To Guarantee.--Except as provided in subsection 
(c), the Administrator may guarantee the timely payment of all 
principal and interest as scheduled on any debenture issued by a 
certified development company.
    ``(b) Terms and Conditions of the Guarantee.--Such guarantees may 
be made on such terms and conditions as the Administrator may by 
regulation, published in the Code of Federal Regulations, determine to 
be appropriate, except that the Administrator shall not decline to 
issue such guarantee when the ownership interests of the small business 
concern and the ownership interests of the property to be financed with 
the proceeds of the loan made pursuant to subsection (e)(1) are not 
identical because one or more of the following classes of relatives 
have an ownership interest in either the small business concern or the 
property: father, mother, son, daughter, wife, husband, brother, or 
sister, if the Administrator or his designee has determined on a case-
by-case basis that such ownership interest, such guarantee, and the 
proceeds of such loan, will substantially benefit the small business 
concern.
    ``(c) Full Faith and Credit.--The full faith and credit of the 
United States is pledged to the payment of all amounts guaranteed under 
this section.
    ``(d) Subordination.--Any debenture issued by a certified 
development company with respect to which a guarantee is made under 
this section may be subordinated by the Administrator to any other 
debenture, promissory note, or other debt or obligation of such 
company.
    ``(e) Standards for Administrator Guarantees.--No guarantee may be 
made with respect to any debenture under this section unless--
            ``(1) the debenture is issued for the purpose of making one 
        or more loans to small business concerns the proceeds of which 
        shall be used for the purposes set forth in section 507;
            ``(2) the interest rate on such debentures is not less than 
        the rate of interest determined by the Secretary of the 
        Treasury for purposes of section 303(b) of the Small Business 
        Investment Act of 1958;
            ``(3) the aggregate amount of such debenture does not 
        exceed the amount of the loans to be made from the proceeds of 
        such debenture plus, at the election of the borrower, other 
        amounts attributable to the administrative and closing costs of 
        such loans, except for the attorney fees of the borrower;
            ``(4) the amount of any loan to be made from such proceeds 
        does not exceed an amount equal to 50 percent of the cost of 
        the project with respect to which such loan is made;
            ``(5) the Administrator, except to the extent provided in 
        section 504 with respect to premier certified development 
        companies, approves each loan to be made from such proceeds; 
        and
            ``(6) with respect to each loan made from the proceeds of 
        such debenture, the Administrator--
                    ``(A) assesses and collects a fee, which shall be 
                payable by the borrower, in an amount established 
                annually by the Administration, which amount shall not 
                exceed--
                            ``(i) the lesser of--
                                    ``(I) 0.9375 percent per year of 
                                the outstanding balance of the loan; or
                                    ``(II) the minimum amount necessary 
                                to reduce the cost (as defined in 
                                section 502 of the Federal Credit 
                                Reform Act of 1990) to the 
                                Administrator of purchasing and 
                                guaranteeing debentures under this 
                                title to zero; and
                            ``(ii) 50 percent of the amount established 
                        under clause (i) in the case of a loan made 
                        during the 2-year period beginning on October 
                        1, 2002, for the life 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 Administrator 
                of making guarantees under this section.
    ``(f) Interest Rates on Commercial Loans.--Notwithstanding the 
provisions of the constitution or laws of any State limiting the rate 
or amount of interest which may be charged, taken, received, or 
reserved, the maximum legal rate of interest on any commercial loan 
which funds any portion of the cost of the project financed pursuant to 
this title which is not funded by a debenture guaranteed under this 
section shall be a rate which is established by the Administrator who 
shall publish such rate quarterly in, at a minimum, the Federal 
Register and on the Administration's website.
    ``(g) Debenture Repayment.--Any debenture that is issued under this 
section shall provide for the payment of principal and interest on a 
semiannual basis.
    ``(h) Charges for Administrator's Expenses.--The Administrator may 
impose an additional charge for administrative expenses with respect to 
each debenture for which payment of principal and interest is 
guaranteed under this section. Such administrative expenses may 
include--
            ``(1) development company fees for processing, closing, 
        servicing, late payment or loan assumption;
            ``(2) agent or trustee fees for central servicing, 
        underwriters, or debenture funding; and
            ``(3) fees charged by the Administrator for the debenture 
        guaranty and from the certified development company to reduce 
        the subsidy cost.
    ``(i) Participation Fee.--The Administrator shall collect a one-
time fee in an amount equal to 50 basis points on the total 
participation in any project of any State or local government, bank, 
other financial institution, or foundation or not-for-profit 
institution. Such fee shall be imposed only when the participation of 
the entity described in the previous sentence will occupy a senior 
credit position to that of the development company. All proceeds of the 
fee shall be used to offset the cost (as that term is defined in 
section 502 of the Credit Reform Act of 1990) to the Administrator of 
making guarantees under this section.
    ``(j) Certified Development Company Fee.--The Administrator shall 
collect annually from each development company a fee of 0.125 percent 
of the outstanding principal balance of any guaranteed debenture 
authorized by the Administrator after September 30, 1996. Such fee 
shall be derived from the servicing fees collected by the certified 
development company pursuant to regulation, and shall not be derived 
from any additional fees imposed on small business concerns. All 
proceeds of the fee shall be used to offset the cost (as that term is 
defined in section 502 of the Credit Reform Act of 1990) to the 
Administrator of making guarantees under this section.
    ``(k) Effective Date.--The fees authorized by this section shall 
apply to any financing approved under this title on or after October 1, 
1996.
    ``(l) Calculation of Subsidy Rate.--All fees, interest, and profits 
received and retained by the Administrator under this section shall be 
included in the calculations made by the Director of the Office of 
Management and Budget to offset the cost (as that term is defined in 
section 502 of the Federal Credit Reform Act of 1990) to the 
Administrator of purchasing and guaranteeing debentures under this 
title.
    ``(m) Actions Upon Default.--
            ``(1) Initial actions.--Not later than the 45th day after 
        the date on which a payment on a loan funded through a 
        debenture guaranteed under this section is due and not 
        received, the Administrator shall--
                    ``(A) take all necessary steps to bring such loan 
                current; or
                    ``(B) implement a formal written deferral 
                agreement.
            ``(2) Purchase or acceleration of debenture.--Not later 
        than the 65th day after the date on which a payment on a loan 
        described in paragraph (1) is due and not received, and absent 
        a formal written deferral agreement, the Administrator shall 
        take all necessary steps to purchase or accelerate the 
        debenture.
            ``(3) Prepayment penalties.--With respect to the portion of 
        any project derived from funds not provided by a debenture 
        issued by a certified development company or borrower, the 
        Administrator--
                    ``(A) shall negotiate the elimination of any 
                prepayment penalties or late fees on defaulted loans 
                made prior to September 30, 1996;
                    ``(B) shall not pay any prepayment penalty or late 
                fee on the default based purchase of loans issued after 
                September 30, 1996; and
                    ``(C) shall not pay default interest rate higher 
                than the interest rate on the note prior to the date of 
                default for any project financed after September 30, 
                1996.
            ``(4) Collection and servicing.--
                    ``(A) In general.--In the event of the default of 
                any loan and the repurchase of a debenture guaranteed 
                by the Administrator under this title, the 
                Administrator shall continue to delegate to the central 
                servicing agent that was contracted for that service as 
                of January 1, 2009, or successor contractor the 
                authority to collect and disburse all funds or payments 
                received on such defaulted loans, including payments 
                from guarantors or on notes in compromise of the 
                original note. The central servicing agent shall 
                continue to provide an accounting of income and 
                expenses for any such loan on the same basis it does 
                for any other loan issued under this title. The central 
                servicing agent shall make the accounting of income and 
                expenses and reports thereon available as requested by 
                the certified development company that issued the 
                debenture or the Administrator.
                    ``(B) Effective date.--The requirements of 
                subparagraph (A) shall become effective 180 days after 
                the date of enactment of the Job Creation and Economic 
                Development Through CDC Modernization Act of 2009.''.

SEC. 207. ECONOMIC DEVELOPMENT THROUGH DEBENTURES.

    Section 507 of the Small Business Investment Act of 1958 (15 U.S.C. 
697d) is amended to read as follows:

``SEC. 507 ECONOMIC DEVELOPMENT AND DEBENTURES.

    ``(a) In General.--A certified development company shall be 
prohibited from issuing a debenture under this title unless the project 
funded with the debenture meets one of the following economic 
development objectives:
            ``(1) The creation of job opportunities within two years of 
        the completion of the project or the preservation or retention 
        of jobs attributable to the project.
            ``(2) Improving the economy of the locality, such as 
        stimulating other business development in the community, 
        bringing new income into the area, or assisting the community 
        in diversifying and stabilizing its economy.
            ``(3) The achievement of one or more of the following 
        public policy goals:
                    ``(A) Business district revitalization or expansion 
                of businesses in low-income communities which would be 
                eligible for a new markets tax credit under section 
                45(D)(a) of the Internal Revenue Code of 1986, or 
                implementing regulations issued under that section.
                    ``(B) Expansion of exports.
                    ``(C) Expansion of minority business development or 
                women-owned business development.
                    ``(D) Rural development.
                    ``(E) Expansion of small business concerns owned 
                and controlled by veterans, as defined in section 3(q) 
                of the Small Business Act (15 U.S.C. 632(q)), 
                especially service-disabled veterans, as defined in 
                such section 3(q).
                    ``(F) Enhanced economic competition, including the 
                advancement of technology, plan retooling, conversion 
                to robotics, or competition with imports.
                    ``(G) Changes necessitated by Federal budget 
                cutbacks, including defense related industries.
                    ``(H) Business restructuring arising from federally 
                mandated standards or policies affecting the 
                environment or the safety and health of employees.
                    ``(I) Reduction of energy consumption by at least 
                10 percent.
                    ``(J) Increased use of sustainable design, 
                including designs that reduce the use of greenhouse gas 
                emitting fossil fuels, or low-impact design to produce 
                buildings that reduce the use of nonrenewable resources 
                and minimize environmental impact.
                    ``(K) Plant, equipment and process upgrades of 
                renewable energy sources such as the small-scale 
                production of energy for individual buildings or 
                communities consumption, commonly known as micropower, 
                or renewable fuels producers including biodiesel and 
                ethanol producers.
            ``(4) Debt refinancing to the extent permitted by section 
        508(d).
    ``(b) Job Creation and Retention Requirements.--
            ``(1) In general.--A project meets the job creation or 
        retention objective set forth in subsection (a)(1) if the 
        project creates or retains one job for every $65,000 guaranteed 
        by the Administrator, except that the amount shall be $100,000 
        in the case of a project of a small manufacturer.
            ``(2) Exceptions.--
                    ``(A) Paragraph (1) shall not apply to a project 
                for which eligibility is based on the objectives set 
                forth in subsection (a)(2) or (a)(3) if the certified 
                development company's portfolio of outstanding 
                debentures creates or retains one job for every $65,000 
                guaranteed by the Administrator.
                    ``(B) For projects in Alaska, Hawaii, State-
                designated enterprise zones, empowerment zones, 
                enterprise communities, labor surplus areas designated 
                by the Administrator, the certified development 
                company's portfolio may average not more than $75,000 
                per job created or retained.
                    ``(C) Loans for projects of small manufacturers 
                shall be excluded from the calculations in 
                subparagraphs (A) and (B).
    ``(c) Combination of Certain Goals.--A small business concern that 
is unconditionally owned by more than 1 individual, or a corporation, 
the stock of which is owned by more than 1 individual, shall be deemed 
to have achieved a goal under subsection (a)(3) if a combined ownership 
share of not less than 51 percent is held by individuals who are in 1 
of, or a combination of, the groups described in subparagraphs (C) or 
(E) of subsection (a)(1).
    ``(d) Composition of the Project.--
            ``(1) In general.--The projects described in this section 
        shall include, but not be limited to, plant acquisition, 
        construction, conversion, expansion (including the acquisition 
        of land), equipment and related project costs, or to acquire 
        the stock of a corporation (as long as the value of the loan 
        for the acquisition of the stock does not exceed the fixed 
        asset value attributable to such assets as would be eligible 
        for financing under subsection (a).
            ``(2) Debt refinancing.--Any financing approved under this 
        title may include a limited amount of debt refinancing if the 
        project involves the expansion of a small business concern.
            ``(3) Limitation.--The amount of the existing indebtedness 
        may be refinanced and added to the expansion cost if--
                    ``(A) the existing indebtedness does not exceed 50 
                percent of the project cost of the expansion;
                    ``(B) the proceeds of the indebtedness were used to 
                acquire land, including a building situated thereon, to 
                construct a building thereon, or to purchase equipment;
                    ``(C) the existing indebtedness is collateralized 
                by fixed assets;
                    ``(D) the existing indebtedness was incurred for 
                the benefit of the small business concern;
                    ``(E) the financing under this title will be used 
                only for refinancing existing indebtedness or costs 
                relating to the project financed under this title;
                    ``(F) the financing under this title will provide a 
                substantial benefit to the borrower when prepayment 
                penalties, financing fees, and other financing costs 
                are accounted for;
                    ``(G) 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
                    ``(H) the financing under this title will provide 
                better terms or rate of interest than the existing 
                indebtedness at the time of refinancing.
    ``(e) Definition.--For purposes of subparagraphs (J) and (K) of 
subsection (a)(1), the terms included have the meanings given those 
terms under the Leadership in Energy and Environmental Design (more 
generally referred to as LEED) standard for green building 
certification, as determined by the Administrator through regulation to 
be published in the Code of Federal Regulation.''.

SEC. 208. PROJECT FUNDING REQUIREMENTS.

    Section 508 of the Small Business Investment Act of 1958 (15 U.S.C. 
697e) is amended to read as follows:

``SEC. 508. PROJECT FUNDING REQUIREMENTS.

    ``(a) In General.--Any project described in section 507 must meet 
the funding standards set forth in this section.
    ``(b) Size of Debenture.--The Administrator shall only be permitted 
to guarantee debenture issued by a certified development company up to 
the following amounts:
            ``(1) $3,000,000 for any project of a small business 
        concern.
            ``(2) $4,000,000 for any project that meets the public 
        policy goals set forth in section 507(a)(3).
            ``(3) $4,000,000 for any project to be located in a low-
        income community as that term is described in section 
        507(a)(3)(A).
            ``(4) $8,000,000 for each project of a small manufacturer.
            ``(5) $8,000,000 for each project that reduces the 
        borrower's energy consumption by at least 10 percent.
            ``(6) $8,000,000 for each project that generates renewable 
        energy or renewable fuels, such as, but not limited to, 
        biodiesel or ethanol production.
            ``(7) $10,000,000 for each project for a small business 
        concern that constitutes a major source of employment as that 
        term is used in section 7(b)(3)(E) of the Small Business Act 
        (15 U.S.C. 636(b)(3)(E)).
    ``(c) Funding From Sources Other Than Debentures Issued by 
Certified Development Companies.--
            ``(1) In general.--Any project financed pursuant to this 
        title must have the following contributions from parties other 
        than the debenture issued by the certified development company:
                    ``(A) Funding from institutions.--
                            ``(i) If a small business concern 
                        provides--
                                    ``(I) the minimum contribution 
                                required by subparagraph (B) not less 
                                than 50 percent of the total cost of 
                                any project financed shall come from 
                                State or local governments, banks or 
                                other financial institutions, or 
                                foundations or other not-for-profit 
                                institutions; and
                                    ``(II) more than the minimum 
                                contribution required under 
                                subparagraph (B), any excess 
                                contribution may be used to reduce the 
                                amount required from institutions in 
                                described in subclause (I), except that 
                                the amount provided by such institution 
                                may not be reduced to an amount that is 
                                less than the amount of the loan made 
                                by the Administrator.
                    ``(B) Funding from small business concerns.--The 
                small business concern (or its owners, stockholders, or 
                affiliates) that will have a project financed pursuant 
                to this title shall provide--
                            ``(i) at least 15 percent of the total cost 
                        of the project financed if the small business 
                        concern has been in operation for a period of 2 
                        years or less;
                            ``(ii) at least 15 percent of the total 
                        cost of the project financed if the project 
                        involves construction of a limited or single 
                        purposed building or structure;
                            ``(iii) at least 20 percent of the total 
                        cost of the project financed if the project 
                        involves both of the conditions in clauses (i) 
                        or (ii); or
                            ``(iv) at least 10 percent of the total 
                        cost of the project financed and not covered by 
                        clauses (i), (ii), or (iii), at the discretion 
                        of the certified development company.
            ``(2) Seller financing.--Seller-provided financing may be 
        used to meet the requirements of paragraph (1)(B), if the 
        seller subordinates the interest of the seller in the property 
        to the debenture guaranteed by the Administrator.
            ``(3) Collateralization.--
                    ``(A) In general.--The collateral provided by the 
                small business concern shall generally include a 
                subordinate lien position on the property being 
                financed under this title, and is only one of the 
                factors to be evaluated in the credit determination. 
                Additional collateral shall be required only if the 
                Administrator determines, on a case-by-case basis, that 
                additional security is necessary to protect the 
                interest of the Government.
                    ``(B) Appraisals.--With respect to commercial real 
                property provided by the small business concern as 
                collateral, an appraisal of the property by a State 
                licensed or certified appraiser--
                            ``(i) shall be required by the 
                        Administrator before disbursement of the loan 
                        if the estimated value of that property is more 
                        than $400,000; or
                            ``(ii) may be required by the Administrator 
                        or the lender before disbursement of the loan 
                        if the estimated value of that property is 
                        $400,000 or less, and such appraisal is 
                        necessary for appropriate evaluation of 
                        creditworthiness.
                    ``(C) Adjustment.--The Administrator shall 
                periodically adjust the amount under subparagraph (B) 
                to account for the effects of inflation, provided that 
                no such adjustment shall be less than $50,000.
            ``(4) Limitation on leasing.--
                    ``(A) If the project funded under this section 
                includes the acquisition of a facility or the 
                construction of a new facility, the small business 
                concern--
                            ``(i) shall permanently occupy and use not 
                        less than 50 percent of the project property; 
                        and
                            ``(ii) may, on a temporary or permanent 
                        basis, lease to others not more than 50 percent 
                        of the project property.
                    ``(B) For purposes of this paragraph, the term 
                `project property' means--
                            ``(i) the building and any exterior areas 
                        used in connection with the building or a part 
                        thereof and includes all of the parcels of real 
                        property included in the project in the 
                        aggregate; and
                            ``(ii) occupancy and use of the project 
                        property by the operating company shall be 
                        deemed to be occupancy and used by the small 
                        business concern that received funding under 
                        this section.
    ``(d) Regulations.--(1) The Administrator shall promulgate 
regulations, after notice and comment, rules to implement the 
provisions of this section within 60 days after enactment of the Job 
Creation and Economic Development Through CDC Modernization Act of 
2009. The Administrator may limit the comment period to 15 days to meet 
this deadline.
    ``(2) If the Administrator fails to promulgate the regulations as 
provided in paragraph (1), all leases entered into, absent clear and 
convincing evidence of fraud, shall be deemed to be in compliance with 
the limitations on leasing in this subparagraph for purposes of 
honoring the guarantee on the debenture issued by the certified 
development company.
    ``(3) Any regulation of the Administrator or interpretation of any 
regulation by the Administrator or the Office of Hearings and Appeals 
that restricts the use of proceeds for leased projects that was in 
effect on the date of enactment of the Job Creation and Economic 
Development Through CDC Modernization Act of 2009 shall hereby cease to 
apply.
    ``(4) Any interpretation of the leasing provisions issued by the 
Administrator prior to the issuance of regulations required by 
paragraph (1) shall be considered null and void and may be not be used 
in any court of competent jurisdiction, be it Federal or State court, 
to dishonor any guarantee of a debenture issued by a certified 
development company for a project funded pursuant to this section.
    ``(e) Ownership Calculation.--Ownership requirements to determine 
the eligibility of a small business concern that applies for funding 
under this title shall be determined without regard to any ownership 
interest of a spouse arising solely from the application of the 
community property laws of a State for purposes of determining marital 
interests.
    ``(f) Combination Financing.--Financing under this title may be 
provided to a borrower in the maximum amount provided in this section, 
and a loan guarantee under section 7(a) of the Small Business Act (15 
U.S.C. 636(a)) may be provided to the same borrower in the maximum 
amount provided in section 7(a)(3)(A) of such Act, to the extent that 
the borrower otherwise qualifies for such assistance.
    ``(g) Rules for Debentures Funding Projects in Low-Income Areas.--
            ``(1) Size standards.--For purposes of determining the size 
        of small business concern seeking funds for a project described 
        in subsection (b)(3), the size standard promulgated by the 
        Administrator in section 121.201 of title 13, Code of Federal 
        Regulations as in effect on January, 1, 2009, or any successor 
        regulation, shall be increased by 25 percent.
            ``(2) Personal liquidity.--
                    ``(A) In general.--The amount of personal resources 
                of an owner for a project described in subsection 
                (b)(3) that are excluded from the amount required to 
                reduce the portion of the project funded by the 
                Administrator shall be not less than 25 percent more 
                than that required for funding of any other project 
                described in subsection (b).
                    ``(B) Definition.--For purposes of subparagraph 
                (A), the term `owner' means any person that owns not 
                less than 20 percent of the equity or has not less than 
                20 percent of the voting rights (in the case of a small 
                business organized as a partnership) of a small 
                business concern seeking funds under this section.
    ``(h) Applicability of Credit Elsewhere and Personal Resources 
Regulations.--Except as provided in subsection (c)(1)(B) with respect 
to project funding, the Administrator shall be prohibited from applying 
the regulations set forth in section 120.101 and 120.102 of title 13, 
Code of Federal Regulation as in effect on January 1, 200,9 or any 
successor regulation that applies a credit elsewhere or personal 
resources test to any application for a loan under this title pending 
or filed after the date of enactment of the Job Creation and Economic 
Development through CDC Modernization Act of 2009.''.

SEC. 209. PRIVATE DEBENTURE SALES AND POOLING OF DEBENTURES.

    Section 509 of the Small Business Investment Act of 1958 (15 U.S.C. 
697f) is amended to read as follows:

``SEC. 509. PRIVATE DEBENTURE SALES AND POOLING OF DEBENTURES.

    ``(a) Private Debenture Sales.--Notwithstanding any other law, 
rule, or regulation, the Administrator shall sell to investors, either 
publicly or by private placement, debentures issued by certified 
development companies pursuant to this title for the full amount of the 
program levels authorized in each fiscal year and if there is not 
authorization of a level, the amount of debentures actually issued.
    ``(b) Federal Financing Bank.--Nothing in any provision of law 
shall be construed to authorize the Federal Financing Bank to acquire--
            ``(1) any obligation the payment of principal or interest 
        on which at any time has been guaranteed in whole or in part 
        under this title and which is being sold pursuant to the 
        provisions of this section;
            ``(2) any obligation which is an interest in any obligation 
        which is an interest in any obligation described in paragraph 
        (1); or
            ``(3) any obligation which is secured by, or substantially 
        all of the value of which is attributable to, any obligation 
        described in paragraph (1) or (2).
    ``(c) Pooling of Debentures.--
            ``(1) In general.--The Administrator is authorized to issue 
        trust certificates representing ownership of all or a 
        fractional part of debentures issued by certified development 
        companies and guaranteed under this title if such trust 
        certificates are based on and backed by a trust or pool 
        approved by the Administrator and composed solely of guaranteed 
        debentures.
            ``(2) Guarantee of trust certificates.--The Administrator 
        is authorized, upon such terms and conditions as are deemed 
        appropriate, to guarantee the timely payment of the principal 
        of and interest on trust certificates issued by the 
        Administrator or its agent for purposes of this section. Such 
        guarantee shall be limited to the extent of principal and 
        interest on the guaranteed debentures which compose the trust 
        or pool. In the event that a debenture in such trust or pool 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 such prepaid debenture represents in 
        the trust or pool. Interest on prepaid or defaulted debentures 
        shall accrue and be guaranteed by the Administrator only 
        through the date of payment on the guarantee. During the term 
        of the trust certificate, it may be called for redemption due 
        to prepayment or default of all debentures constituting the 
        pool.
            ``(3) Full faith and credit.--The full faith and credit of 
        the United States is pledged to the payment of all amounts 
        which may be required to be paid under any guarantee of such 
        trust certificates issued by the Administrator or its agent 
        pursuant to this section.
            ``(4) Prohibition on guarantee fee for pools.--The 
        Administrator shall not collect any fee for any guarantee under 
        this section: provided, that nothing herein shall preclude any 
        agent of the Administrator from collecting a fee approved by 
        the Administrator for the functions performed in paragraph 
        (6)(F).
            ``(5) Subrogation.--
                    ``(A) In general.--In the event the Administrator 
                pays a claim under a guarantee issued under this 
                section, it shall be subrogated fully to the rights 
                satisfied by such payment.
                    ``(B) Administrator exercise of rights.--No 
                Federal, State, or local law shall preclude or limit 
                the exercise by the Administrator of its ownership 
                rights in the debentures constituting the trust or pool 
                against which the trust certificates are issued.
            ``(6) Central registration.--
                    ``(A) In general.--The Administrator shall provide 
                for a central registration of all trust certificates 
                sold pursuant to this section.
                    ``(B) Contract.--The Administrator shall contract 
                with an agent to carry out on behalf of the 
                Administrator the central registration functions of 
                this section and the issuance of trust certificates to 
                facilitate pooling.
                    ``(C) Bond.--The Administrator shall require the 
                contractor to provide a fidelity bond or insurance in 
                such amounts as is deemed necessary to fully protect 
                the interests of the Government.
                    ``(D) Disclosure requirements.--The Administrator 
                shall, prior to any sale, require the seller to 
                disclose to a purchaser of a trust certificate issued 
                pursuant to this section, information on terms, 
                conditions, and yield of such instruments.
                    ``(E) Authority to regulate.--The Administrator 
                shall have the authority to regulate brokers and 
                dealers in trust certificates sold pursuant to this 
                section.
                    ``(F) Book entry permitted.--Nothing in this 
                paragraph shall prohibit the utilization of a book-
                entry or other electronic form of registration for 
                trust certificates.''.

SEC. 210. FORECLOSURE AND LIQUIDATION OF LOANS.

    Section 510 of the Small Business Investment Act of 1958 (15 U.S.C. 
697g) is amended to read as follows:

``SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS.

    ``(a) Delegation of Authority.--In accordance with this section, 
the Administrator shall delegate to any certified development company 
that meets the eligibility requirements of subsection (b)(1), the 
authority to foreclose and liquidate, or to otherwise treat in 
accordance with this section, defaulted loans in its portfolio that are 
funded with the proceeds of debentures guaranteed by the Administrator 
pursuant to this title.
    ``(b) Eligibility for Delegation.--
            ``(1) Requirements.--A certified development company shall 
        be eligible for a delegation of authority under subsection (a) 
        if--
                    ``(A) the certified development company--
                            ``(i) has participated in the loan 
                        liquidation pilot program established by the 
                        Small Business Programs Improvement Act of 1996 
                        (15 U.S.C. 695 note), before the enactment of 
                        the Job Creation and Economic Development 
                        Through CDC Modernization Act of 2009;
                            ``(ii) is an accredited or premier 
                        certified development company; or
                            ``(iii) during the 3 fiscal years 
                        immediately prior to seeking such a delegation, 
                        has made an average of not less than 10 loans 
                        per year that are funded with the proceeds of 
                        debentures guaranteed under this title; and
                    ``(B) the certified development company--
                            ``(i) has one or more employees--
                                    ``(I) with not less than 2 years of 
                                substantive, decisionmaking experience 
                                in administering the liquidation and 
                                workout of problem loans secured in a 
                                manner substantially similar to loans 
                                funded with the proceeds of debentures 
                                guaranteed under this title; and
                                    ``(II) who have completed a 
                                training program on loan liquidation 
                                developed by the Administrator in 
                                conjunction with a certified 
                                development company that meet the 
                                requirements of this paragraph; or
                            ``(ii) submits to the Administrator 
                        documentation demonstrating that the company 
                        has contracted with a qualified third-party to 
                        perform any liquidation activities and secures 
                        the approval of the contract by the 
                        Administrator with respect to the 
                        qualifications of the contractor and the terms 
                        and conditions of liquidation activities.
            ``(2) Confirmation.--On the request, the Administrator 
        shall examine the qualifications of any certified development 
        company described in subsection (a) to determine if such 
        company is eligible for the delegation of authority under this 
        section. If the Administrator determines that a company is not 
        eligible, the Administrator shall provide the company, in 
        writing, with the reasons for such ineligibility. The certified 
        development company shall be entitled to request delegated 
        authority and the Administrator shall review the request only 
        to address whether the certified development company has 
        rectified the reasons for the Administrator's original 
        determination of ineligibility.
    ``(c) Scope of Delegated Authority.--
            ``(1) In general.--Each certified development company to 
        which the Administrator delegates authority under section (a) 
        may with respect to any loan described in subsection (a)--
                    ``(A) perform all liquidation and foreclosure 
                functions, including the purchase in accordance with 
                this subsection of any other indebtedness secured by 
                the property securing the loan, in a reasonable and 
                sound manner according to commercially accepted 
                practices, pursuant to a liquidation plan approved in 
                advance by the Administrator under paragraph (2)(A);
                    ``(B) litigate any matter relating to the 
                performance of the functions described in subparagraph 
                (A), except that the Administrator may--
                            ``(i) defend or bring any claim if--
                                    ``(I) the outcome of the litigation 
                                may adversely affect the 
                                Administrator's management of the 
                                program established under this title; 
                                or
                                    ``(II) the Administrator is 
                                entitled to legal remedies not 
                                available to a certified development 
                                company and such remedies will benefit 
                                either the Administrator or the 
                                certified development company; and
                            ``(ii) oversee the conduct of any such 
                        litigation; and
                    ``(C) take other appropriate actions to mitigate 
                loan losses in lieu of total liquidation or 
                foreclosures, including the restructuring of a loan in 
                accordance with prudent loan servicing practices and 
                pursuant to a workout plan approved in advance by the 
                Administrator under paragraph (2)(C).
            ``(2) Administrator approval of plans.--
                    ``(A) Certified development company submission of 
                plans.--Before carrying out functions described in 
                paragraph (1)(A) or (1)(C), the certified development 
                company shall submit to the Administrator a proposed 
                liquidation plan, any proposal for the Administrator to 
                the purchase of any other indebtedness secured by the 
                property securing a defaulted loan, or a workout plan 
                or any combination thereof.
                    ``(B) Administrator approval procedures.--
                            ``(i) Timing.--Not late than 15 business 
                        days after the plans described in subparagraph 
                        (A) are received by the Administrator, the 
                        Administrator shall approve or reject the plan.
                            ``(ii) Notice of no decision.--With respect 
                        to any plan that cannot be approved or denied 
                        within the 15-day period required by clause 
                        (i), the Administrator shall within such period 
                        provide in accordance with subparagraph (E) 
                        notice to the company that submitted the plan.
                    ``(C) Routine actions.--In carrying out the 
                functions described in paragraph (1)(A), a certified 
                development company may undertake routine actions not 
                addressed in a liquidation or workout plan without 
                obtaining additional approval from the Administrator.
                    ``(D) Compromise of indebtedness.--In carrying out 
                functions described in paragraph (1)(A), a certified 
                development company may--
                            ``(i) consider an offer made by an obligor 
                        to compromise the debt for less than the full 
                        amount owing; and
                            ``(ii) pursuant to such offer, release any 
                        obligor or other party contingently liable, if 
                        the company secures the written approval of the 
                        Administrator.
                    ``(E) Contents of notice of no decision.--Any 
                notice provided by the Administrator pursuant to 
                subparagraph (B)(ii) shall--
                            ``(i) be in writing stating the specific 
                        reasons for which the Administrator was unable 
                        to act on the request submitted pursuant to 
                        subparagraph (A);
                            ``(ii) provide an estimate of the 
                        additional time needed for the Administrator to 
                        reach a decision on the request; and
                            ``(iii) specify any additional information 
                        or documentation that the Administrator needs 
                        to make a decision but was not provided in the 
                        plan submitted by the certified development 
                        company.
            ``(3) Conflict of interest.--In carrying out functions 
        described in paragraph (1), a certified development company 
        shall take no action that would result in an actual or apparent 
        conflict of interest between the company (or any employee of 
        the company) and any third-party lender, associate of a third-
        party lender, or any other person participating in a 
        liquidation, foreclosure, or loss mitigation action.
    ``(d) Suspension or Revocation of Authority.--
            ``(1) In general.--The Administrator may revoke or suspend 
        a delegation of authority under this section to certified 
        development company if the Administrator determines that the 
        company--
                    ``(A) does not meet the requirements of subsection 
                (b)(1);
                    ``(B) violated any applicable law or rule or 
                regulation of the Administrator that in the estimation 
                of the Administrator requires revocation; or
                    ``(C) fails to comply with any reporting that may 
                be established by the Administrator relating to the 
                establishment of eligibility in subsection (b)(1) or 
                carrying out the functions described in subsection 
                (c)(1).
            ``(2) Written notice.--The Administrator shall provide in 
        writing detailed reason why the delegation of authority was 
        suspended or revoked.
    ``(e) Participation in Liquidation.--
            ``(1) In general.--A certified development company which 
        elects not to apply for authority to foreclose and liquidate 
        defaulted loans under this section, or which the Administrator 
        determines to be ineligible for such authority, shall contract 
        with a qualified third-party to perform foreclosure and 
        liquidation of defaulted loans in its portfolio.
                    ``(A) Contract approval.--The contract entered into 
                by the certified development company specified in 
                paragraph (1) shall be contingent upon approval by the 
                Administrator with respect to the qualifications of the 
                contractor and the terms and conditions of liquidation 
                activities. The Administrator shall not unreasonably 
                withhold such approval.
                    ``(B) Notification of rejection.--If the 
                Administrator rejects the contract, the Administrator 
                shall provide a notice to the certified development 
                company, in writing, explaining the reasons for such 
                rejection within ten business days after submission of 
                the contract.
                    ``(C) Resubmittal.--The certified development 
                company shall be permitted to resubmit the contract and 
                the Administrator's review of any such resubmittal 
                shall be limited to insufficiencies described in the 
                notification of rejection.
                    ``(D) Regulations.--The Administrator shall 
                promulgate regulations, after notice and opportunity 
                for comment, adopting standards for the approval of 
                qualified third-party contractors within 90 days after 
                the date of enactment of the Job Creation and Economic 
                Development Through CDC Modernization Act of 2009.
                    ``(E) Failure to promulgate regulations.--If the 
                Administrator fails to promulgate such regulations, any 
                contract for liquidation entered into by a certified 
                development company under this subsection shall be 
                considered to valid for the purposes of this subsection 
                and subsection (f).
                    ``(F) Effect of administrator's promulgation of 
                regulations.--If the Administrator promulgates 
                regulations after the deadline specified in 
                subparagraph (D), those regulations shall not have any 
                retroactive application with respect to contracts that 
                are described in subparagraph (E).
            ``(2) Commencement.--This subsection shall not require any 
        certified development company to liquidate defaulted loans 
        until the Administrator implements a system to compensate and 
        reimburse certified development companies for liquidation of 
        any defaulted loans.
    ``(f) Compensation and Reimbursement.--
            ``(1) Reimbursement of expenses.--The Administrator shall 
        reimburse each certified development company for all expenses 
        paid by such company as part of the foreclosure and liquidation 
        activities taken to carry out this section, if the expenses--
                    ``(A) were--
                            ``(i) approved in advance by the 
                        Administrator, either specifically in a plan 
                        submitted pursuant to subsection (c) or 
                        generally, such as, but not limited to, actions 
                        approved by the Administrator in regulations or 
                        other interpretative issuances; or
                            ``(ii) incurred by the development company 
                        on an emergency basis without prior approval 
                        from the Administrator, if the Administrator 
                        determines that the expenses were reasonable 
                        and appropriate; and
                    ``(B) are submitted by the certified development 
                company to the Administrator not later than 3 years 
                after the date the expense was incurred or the bill 
                therefore is submitted to the certified development 
                company, whichever is later.
            ``(2) Alternative reimbursement.--As an alternative to the 
        procedure in paragraph (1), a certified development company may 
        elect to obtain reimbursement for all such expenses from the 
        proceeds of any collateral provided by the borrower that was 
        liquidated by the certified development company if the expenses 
        comply with the requirements of paragraph (1). Within 6 months 
        of the reimbursement, the certified development company shall 
        provide the Administrator with the same information and 
        documentation it would be required to submit to obtain payment 
        from the Administrator.
            ``(3) Regulations.--The Administrator shall promulgate 
        regulations, after notice and comment to carry out the 
        provisions of paragraphs (1) and (2). If the Administrator does 
        not promulgate such regulations within one year, certified 
        development companies shall be authorized, notwithstanding the 
        requirements of subsection (e)(2), to liquidate defaulted loans 
        and such costs and expenses incurred, absent clear and 
        convincing evidence of fraud, shall be deemed to be approved.
            ``(4) Compensation for results.--
                    ``(A) Development.--In regulations promulgated 
                pursuant to paragraph (3), the Administrator also shall 
                develop a schedule of compensation that provides 
                monetary incentives for certified development companies 
                in order to increase recoveries on defaulted loans.
                    ``(B) Criteria.--The schedule shall--
                            ``(i) be based on a percentage of the net 
                        amount recovered, but shall not exceed a 
                        maximum amount; and
                            ``(ii) not apply to any foreclosure which 
                        is conducted under a contract between a 
                        certified development company and a qualified 
                        third party to perform the foreclosure and 
                        liquidation.
                    ``(C) Payment.--The Administrator shall transmit 
                the compensation provided herein to the development 
                company from the proceeds of liquidated collateral, 
                unless he utilizes another source for funds, within 30 
                days from the date when the liquidation case has been 
                closed and documentation received.''.

SEC. 211. REPORTS AND REGULATIONS.

    Title V of the Small Business Investment Act of 1958 (15 U.S.C. 661 
and following) is amended by adding at the end the following:

``SEC. 511. REPORTS.

    ``(a) Premier Certified Development Companies.--The Administrator 
shall report annually to the Committee on Small Business of the House 
of Representatives and the Committee on Small Business and 
Entrepreneurship of the Senate on the implementation of section 504. 
Each report shall include--
            ``(1) the number of premier certified development 
        companies;
            ``(2) the debenture volume of each premier certified 
        development company;
            ``(3) a comparison of the loss rate for premier certified 
        development companies to the loss rate for accredited or 
        certified development companies; and
            ``(4) such other information as the Administrator deems 
        appropriate.
    ``(b) Reports on Liquidation and Foreclosures.--
            ``(1) In general.--Based on information provided by 
        certified development companies and the Administrator, the 
        Administrator shall submit annually to the Committee on Small 
        Business and Entrepreneurship of the Senate and the Committee 
        on Small Business of the House of Representatives a report on 
        the results of delegation of authority under section 510.
            ``(2) Contents.--Each report submitted under paragraph (1) 
        shall include the following information:
                    ``(A) With respect to each loan foreclosed or 
                liquidated by a certified development company, or for 
                which losses were otherwise mitigated by pursuant to a 
                workout plan--
                            ``(i) the total cost of the project 
                        financed with the loan;
                            ``(ii) the total original dollar amount 
                        guaranteed by the Administration;
                            ``(iii) the total dollar amount of the loan 
                        at the time of liquidation, foreclosure, or 
                        mitigation of loss;
                            ``(iv) the total dollar losses resulting 
                        from the liquidation, foreclosure, or 
                        mitigation of loss; and
                            ``(v) the total recoveries resulting from 
                        the liquidation, foreclosure, or mitigation of 
                        loss, both as a percentage of the amount 
                        guaranteed and the total cost of the project 
                        financed.
                    ``(B) With respect to each certified development 
                company to which authority is delegated under section 
                510, the totals of each of the amounts described in 
                clauses (i) through (v) of subparagraph (A).
                    ``(C) With respect to each certified development 
                company that contracts with a qualified third-party 
                contractor pursuant to section 510(e), the total of 
                each of the amounts described in clauses (i) through 
                (v) of subparagraph (A).
                    ``(D) With respect to all loans subject to 
                foreclosure, liquidation, or mitigation under section 
                510, the totals of each of the amounts described in 
                clauses (i) through (v) of subparagraph (A).
                    ``(E) A comparison between--
                            ``(i) the information provided under 
                        subparagraph (D) with respect to the 12-month 
                        period preceding the date on which the report 
                        is submitted; and
                            ``(ii) the same information with respect to 
                        loans foreclosed and liquidated, or otherwise 
                        treated, by the Administrator during the same 
                        period.
                    ``(F) The number of times that the Administrator 
                has failed to approve or reject a liquidation plan, 
                workout plan, request to purchase indebtedness, or 
                failed to approve a third-party contractor under 
                section 510, including specific information regarding 
                the reasons for the Administrator's failure and any 
                delays that resulted.
    ``(c) Reports on Combination Financing.--
            ``(1) Reporting requirement.--Not later than 90 days after 
        the date of enactment of the Job Creation and Economic 
        Development Through CDC Modernization Act of 2009, and annually 
        thereafter, the Administrator shall submit a report to the 
        Committee on Small Business and Entrepreneurship of the Senate 
        and the Committee on Small Business of the House of 
        Representatives that--
                    ``(A) includes the number of small business 
                concerns that have financing under both section 7(a) of 
                the Small Business Act (15 U.S.C. 636(a)) and title V 
                of the Small Business Investment Act of 1958 (15 U.S.C. 
                695 et seq.) during the year before the year of that 
                report; and
                    ``(B) describes the total amount and general 
                performance of the financing described in subparagraph 
                (A).
    ``(d) Report on Other Economic Development Activity.--The 
Administrator shall compile and submit to Committee on Small Business 
of the House of Representatives and the Committee on Small Business and 
Entrepreneurship of the Senate on an annual basis, commencing in the 
year that the Job Creation and Economic Development Through CDC 
Modernization Act of 2009 was enacted, a report that describes the 
economic and community development activities, other than loan making 
under this title, of each certified development company during the 
prior fiscal year. The Administrator may contract with another party, 
including non-governmental entities, to collect information or 
otherwise assist in the preparation of the report required by this 
subsection.

``SEC. 512. PROMULGATION OF REGULATIONS UNDER THIS TITLE.

    ``(a) Deadlines for Implementing Regulations.--Except as expressly 
provided elsewhere in the Job Creation and Economic Development Through 
CDC Modernization Act of 2009, the Administrator shall promulgate 
regulations under this title, after providing notice and the 
opportunity for comment, within 180 days after the date of enactment of 
that Act.
    ``(b) Notice and Comment Requirements in General.--Except as 
otherwise provided elsewhere in this title, the Administrator shall 
provide, after the date of enactment of the Job Creation and Economic 
Development Through CDC Modernization Act of 2009, notice of any 
proposed change to a regulation implementing this title V (whether in 
existence on the date of enactment of the Job Creation and Economic 
Development Through CDC Modernization Act of 2009 or subsequently 
adopted), publish such notification in the Federal Register, and 
provide a comment period of not less than 60 days.''.

SEC. 212. PROGRAM NAME.

    Title V of the Small Business Investment Act is amended by adding 
the following new section after section 512:

``SEC. 513 PROGRAM NAME.

    ``(a) In General.--The program created by this title shall be 
referred to as the CDC Economic Development Loan Program.
    ``(b) Modification of Materials Used.--Within 60 days after the 
date of enactment of the Job Creation and Economic Development Through 
CDC Modernization Act of 2009, the Administrator shall modify all 
documents and websites to conform to the name change made by this 
section.''.

                        TITLE III--MISCELLANEOUS

SEC. 301. TERMINATION OF PILOT PROGRAM REGULATION.

    (a) Termination.--Section 120.3 of title 13, Code of Federal 
Regulations, as in effect on January 1, 2009, shall cease to have any 
force and effect as of the date of enactment of this Act, and the 
Administrator is prohibited from adopting a new regulation that 
authorizes the Administrator to waive any regulation for the purpose of 
conducting a pilot program unless such waiver is specifically granted 
by statute.
    (b) Effect on Existing Program.--Subsection (a) shall have no 
effect on any pilot program currently conducted by the Administrator.
    (c) Future Pilot Programs.--Any future pilot program conducted 
under the Administrator's own initiative or pursuant to statutory 
authority granted in the Small Business Investment Act of 1958 or 
section 7 of the Small Business Act must be implemented only after 
notice in the Federal Register and the opportunity for comment.

SEC. 302. REPORT ON STANDARD OPERATING PROCEDURES.

    (a) Report.--The Administrator of the Small Business Administration 
shall submit to the Committee on Small Business of the House of 
Representatives and the Committee on Small Business and 
Entrepreneurship of the Senate a report within 180 days after enactment 
of this Act identifying each ``Standard Operating Procedure'' issued 
after January 1, 1996, that relates to the operation of a development 
company (in any manner) under title V of the Small Business Investment 
Act of 1958, that is still in effect on the date of enactment of this 
Act, and the regulation codified in title 13 of the Code of Federal 
Regulations that authorizes the issuance of the Standard Operating 
Procedure and separately identifies the regulation that the Standard 
Operating Procedure purports to interpret.
    (b) Inapplicability.--If the Administrator fails to complete the 
report by the time specified in subsection (a), the Administrator 
shall, unless there is clear and convincing evidence of fraud, honor 
the terms and conditions of any debenture to the entity that issued the 
debenture pursuant to title V of the Small Business Investment Act of 
1958 without regard to whether the entity complied with any of the 
Standard Operating Procedures described in subsection (a) until such 
time as the Administrator submits the report required under subsection 
(a).
    (c) Definition.--For purposes of this section, the term ``Standard 
Operating Procedure'' has the meaning given that term in section 120.10 
of title 13, Code of Federal Regulations as that was in effect on 
January 1, 2009, and includes any reference to the acronym ``SOP''.

SEC. 303. ALTERNATIVE SIZE STANDARD.

    (a) Review and Study.--
            (1) In general.--The Administrator of the United States 
        Small Business Administration shall study and review the 
        optional size standard set forth in section 121.301(b) of title 
        13, Code of Federal Regulations as was in effect on January 1, 
        2009, for eligibility of a small business concern for financing 
        under title V of the Small Business Investment Act of 1958.
            (2) Contents.--The review shall analyze whether the 
        alternative size standard includes the business concerns 
        defined in section 3(a)(1) of the Small Business Act and what 
        if any regulatory changes are needed in the alternative size 
        standard.
            (3) Submission to congress.--The Administrator shall submit 
        its study and conclusions within 180 days after the date of 
        enactment of the Job Creation and Economic Development through 
        CDC Modernization Act of 2009 to the Committee on Small 
        Business and Entrepreneurship of the Senate and the Committee 
        on Small Business of the House of Representatives.
    (b) Issuance of Regulations.--Any changes in the optional size 
standard described in subsection (a)(1) shall be promulgated within 180 
days of the submission of the report to committes referred to in 
paragraph (3) of subsection (a).
    (c) Interim Alternative Size Standard.--Until the Administrator 
promulgates regulations either readopting the size standard referred to 
in subsection (a)(1) or adopts a new alternative size standard, the 
alternative size standard shall be a maximum tangible net worth of not 
more than $15,000,000 and an average net income after the payment of 
Federal taxes (but excluding any carryover losses) for the preceding 
two fiscal years not more than $5,000,000.
                                 <all>