Small Business Lending Fund amendments

(a)

In general

Subtitle A of title IV of the Small Business Jobs Act of 2010 is amended— (1)in section 4102— (A)in paragraph (8)— (i)in subparagraph (A), by adding and at the end; (ii)by striking subparagraph (B); and (iii)by redesignating subparagraph (C) as subparagraph (B). (B)in paragraph (11)— (i)in subparagraph (C), by striking and at the end; (ii)in subparagraph (D), by striking the period at the end and inserting ; and; and (iii)by adding at the end the following new subparagraph:

(D)any small business lending company that has total assets of equal to or less than $10,000,000,000.

;

(C)in paragraph (18)(A)— (i)by inserting after such lending the following: is made to a small business and; and (ii)by adding at the end the following new clause:

(v)Nonowner-occupied commercial real estate loans.

; and

(D)by adding at the end the following new paragraphs:

(20)

Small business

The term small business has the meaning given the term small business concern under section 3 of the Small Business Act (15 U.S.C. 632). (21)

Small business lending company

The term small business lending company has the meaning given such term under section 3(r)(1) of the Small Business Act (15 U.S.C. 632(r)(1)).

;

(2)in section 4103— (A)in subsection (b)— (i)in paragraph (1), by striking the period at the end and inserting the following: , and, notwithstanding other provisions of Federal law, such debt instruments issued by an eligible institution organized in mutual form or that has made a valid election to be taxed under subchapter S of chapter 1 of the Internal Revenue Code of 1986 shall be included as a component of tier 1 capital.; and (ii)in paragraph (4), by amending subparagraph (B) to read as follows:

(B)

Eligible standards

The Secretary, in consultation with the Community Development Financial Institutions Fund, shall develop eligibility criteria to determine the financial ability of a CDLF to participate in the Program and repay the investment. Such criteria may include net asset ratio to total assets, ratio of loan loss reserves to loans and leases 90 days or more delinquent (including loans sold with full recourse), positive net income measured on a 3-year rolling average, operating liquidity ratio, ratio of loans and leases 90 days or more delinquent (including loans sold with full recourse) to total equity plus loan loss reserves, or any other measures deemed appropriate. In addition, CDLFs participating in the Program shall submit audited financial statements to the Secretary, have a clean audit opinion, and have at least three years of operating experience.

;

(B)in subsection (d)— (i)in paragraph (1)(F), by striking 5 percent and inserting 10 percent; (ii)in paragraph (5), by adding at the end the following new subparagraphs:

(J)

Incentives contingent on an increase in the number of loans made

For any quarter during the first 4½-year period following the date on which an eligible institution receives a capital investment under the Program, other than the first such quarter, in which the institution’s change in the amount of small business lending relative to the baseline is positive, if the number of loans made by the institution does not increase by 2.5 percent for each 2.5 percent increase of small business lending, then the rate at which dividends and interest shall be payable during the following quarter on preferred stock or other financial instruments issued to the Treasury by the eligible institution shall be— (i)5 percent, if such quarter is within the 2-year period following the date on which the eligible institution receives the capital investment under the Program; or (ii)7 percent, if such quarter is after such 2-year period. (K)

Alternative computation

An eligible institution may choose to compute their small business lending amount by computing the amount of small business lending, as if the definition of such term did not require that the loans comprising such lending be made to small business. Any eligible institution choosing to compute their small business lending in this manner shall certify that all lending included by the institution for purposes of computing the increase in lending under this paragraph was made to small businesses.

; and

(iii)in paragraph (8)— (I)by amending the heading to read as follows:

Outreach to minorities, women, veterans, and Indian Tribes

; (II)in subparagraph (B), by striking and at the end; (III)in subparagraph (C), by striking the period at the end and inserting ; and; and (IV)by adding at the end the following new subparagraph:

(D)represent or work with or are members of Indian Tribes.

; and

(C)by adding at the end the following new subsection:

(e)

Notification to customers

Any eligible institution receiving funds under the Program shall— (1)disclose on every applicable loan transaction that the loan is being made possible by the Program; and (2)if such institution has an established internet website, such institution shall make available on its internet website— (A)the written reports made by the Secretary pursuant to paragraphs (1) and (2) of section 4107(b)(3); and (B)a statement that the institution, as a participant in the Program, is seeking to make small business loans to qualified borrowers and may not discriminate on the basis of any factor prohibited under the Equal Credit Opportunity Act, including the race, color, religion, national origin, sex, marital status, or age.

;

(3)in section 4105— (A)in paragraph (8), by striking and at the end; (B)in paragraph (9), by striking the period at the end and inserting ; and; and (C)by adding at the end the following new paragraph:

(10)increasing the availability of credit for small businesses operating on Tribal trust lands or other Indian areas.

;

(4)by redesignating section 4113 as section 4114; and (5)by inserting after section 4112 the following new section:

4113.

Temporary amortization authority

(a)

Purpose

The purpose of this section is to address the ongoing effects of the financial crisis on small businesses by providing temporary authority to amortize losses or write-downs in order to increase the availability of credit for small businesses. (b)

In general

For purposes of capital calculation under the Financial Institutions Examination Council’s Consolidated Reports of Condition, an eligible institution may choose to amortize any loss or write-down, on a quarterly straight line basis over a period determined under subsection (c), beginning with the month in which such loss or write-down occurs, resulting from the application of FASB Statement 114 or 144 to— (1)other real estate owned (as defined under section 34.81 of title 12, Code of Federal Regulation), or (2)an impaired loan secured by real estate,

provided that the institution discloses the difference in the amount of the institution’s capital, when calculated taking into account the temporary amortization, from the amount of the institution’s capital when calculated without taking into account the temporary amortization on the Financial Institutions Examination Council’s Consolidated Reports of Condition.

(c)

Amortization requirements

During the initial 2-year period referred to in section 4103(d)(5), an eligible institution’s amortization period shall be adjusted to reflect the following schedule based on the institution’s change in the amount of small business lending relative to the baseline: (1)If the amount of small business lending has increased by less than 2.5 percent, the amortization period shall be 6 years. (2)If the amount of small business lending has increased by 2.5 percent or greater, but by less than 5.0 percent, the amortization period shall be 7 years. (3)If the amount of small business lending has increased by 5.0 percent or greater, but by less than 7.5 percent, the amortization period shall be 8 years. (4)If the amount of small business lending has increased by 7.5 percent or greater, but by less than 10.0 percent, the amortization period shall be 9 years. (5)If the amount of small business lending has increased by 10 percent or greater, the amortization period shall be 10 years. (d)

Minimum underwriting standards

The appropriate Federal banking agency for an eligible institution that chooses to amortize any loss or write-down as permitted under subsection (b) shall, within 60 days of the date of the enactment of this title, issue regulations defining minimum underwriting standards that must be used for loans made by the eligible institution. (e)

Effective date

The provisions of this section shall apply to loan origination that occurred on or after January 1, 2003, and before January 1, 2008.

(b)

Technical amendment

The table of contents for the Small Business Jobs Act of 2010 is amended by striking the item related to section 4113 and inserting the following new items:

4113. Temporary amortization authority.

4114. Sense of Congress.