[Congressional Record Volume 141, Number 135 (Friday, August 11, 1995)]
[Senate]
[Pages S12514-S12517]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           THE SMALL BUSINESS LENDING ENHANCEMENT ACT OF 1995

  Mr. DOLE. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of calendar No. 166, S. 895.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       A bill (S. 895) to amend the Small Business Act to reduce 
     the level of participation by the Small Business 
     Administration in certain loans guaranteed by the 
     Administration, and for other purposes, which had been 
     reported from the Committee on Small Business, with an 
     amendment to strike all after the enacting clause and 
     inserting in lieu thereof the following:
     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Lending 
     Enhancement Act of 1995''.

     SEC. 2. REDUCED LEVEL OF PARTICIPATION IN GUARANTEED LOANS.

       Section 7(a)(2) of the Small Business Act (15 U.S.C. 
     636(a)(2)) is amended to read as follows:
       ``(2) Level of participation in guaranteed loans.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in an agreement to participate in a loan on a deferred basis 
     under this subsection (including a loan made under the 
     Preferred Lenders Program), such participation by the 
     Administration shall be equal to--
       ``(i) 75 percent of the balance of the financing 
     outstanding at the time of disbursement of the loan, if such 
     balance exceeds $100,000; or
       ``(ii) 80 percent of the balance of the financing 
     outstanding at the time of disbursement of the loan, if such 
     balance is less than or equal to $100,000.
       ``(B) Reduced participation upon request.--
       ``(i) In general.--The guarantee percentage specified by 
     subparagraph (A) for any 

[[Page S 12515]]
     loan under this subsection may be reduced upon the request of the 
     participating lender.
       ``(ii) Prohibition.--The Administration shall not use the 
     guarantee percentage requested by a participating lender 
     under clause (i) as a criterion for establishing priorities 
     in approving loan guarantee requests under this subsection.
       ``(C) Interest rate under preferred lenders program.--
       ``(i) In general.--The maximum interest rate for a loan 
     guaranteed under the Preferred Lenders Program shall not 
     exceed the maximum interest rate, as determined by the 
     Administration, applicable to other loans guaranteed under 
     this subsection.
       ``(ii) Preferred lenders program defined.--For purposes of 
     this subparagraph, the term `Preferred Lenders Program' means 
     any program established by the Administrator, as authorized 
     under the proviso in section 5(b)(7), under which a written 
     agreement between the lender and the Administration delegates 
     to the lender--
       ``(I) complete authority to make and close loans with a 
     guarantee from the Administration without obtaining the prior 
     specific approval of the Administration; and
       ``(II) authority to service and liquidate such loans.''.

     SEC. 3. GUARANTEE FEES.

       (a) Amount of Fees.--Section 7(a)(18) of the Small Business 
     Act (15 U.S.C. 636(a)(18)) is amended to read as follows:
       ``(18) Guarantee fees.--
       ``(A) In general.--With respect to each loan guaranteed 
     under this subsection (other than a loan that is repayable in 
     1 year or less),
      the Administration shall collect a guarantee fee, which 
     shall be payable by the participating lender and may be 
     charged to the borrower, in an amount equal to the sum 
     of--
       ``(i) 2.5 percent of the amount of the deferred 
     participation share of the loan that is less than or equal to 
     $250,000;
       ``(ii) if the deferred participation share of the loan 
     exceeds $250,000, 3 percent of the difference between--
       ``(I) $500,000 or the total deferred participation share of 
     the loan, whichever is less; and
       ``(II) $250,000; and
       ``(iii) if the deferred participation share of the loan 
     exceeds $500,000, 3.5 percent of the difference between--
       ``(I) $750,000 or the total deferred participation share of 
     the loan, whichever is less; and
       ``(II) $500,000.
       ``(B) Exception for certain loans.--Notwithstanding 
     subparagraph (A), if the total deferred participation share 
     of a loan guaranteed under this subsection is less than or 
     equal to $80,000, the guarantee fee collected under 
     subparagraph (A) shall be in an amount equal to 2 percent of 
     the total deferred participation share of the loan.
       ``(C) Discretionary increase.--Notwithstanding 
     subparagraphs (A) and (B), during the 90-day period beginning 
     on the first day of any fiscal year, the Administration may 
     increase the guarantee fee collected under this paragraph by 
     an amount not to exceed 0.375 percent of the total deferred 
     participation share of the loan, if the Administration--
       ``(i) determines that such action is necessary to meet 
     projected borrower demand for loans under this subsection 
     during that fiscal year, based on the subsidy cost of the 
     loan program under this subsection and amounts provided in 
     advance for such program in appropriations Acts; and
       ``(ii) not less than 15 days prior to imposing any such 
     increase, notifies the Committees on Small Business of the 
     Senate and the House of Representatives of the determination 
     made under clause (i).''.
       (b) Repeal of Provisions Allowing Retention of Fees by 
     Lenders.--Section 7(a)(19) of the Small Business Act (15 
     U.S.C. 636(a)(19)) is amended--
       (1) in subparagraph (B)--
       (A) by striking ``shall (i) develop'' and inserting ``shall 
     develop''; and
       (B) by striking ``, and (ii)'' and all that follows through 
     the end of the subparagraph and inserting a period; and
       (2) by striking subparagraph (C).

     SEC. 4. ESTABLISHMENT OF ANNUAL FEE.

       (a) In General.--Section 7(a) of the Small Business Act (15 
     U.S.C. 636(a)) is amended by adding at the end the following 
     new paragraph:
       ``(23) Annual fee.--
       ``(A) In general.--With respect to each loan guaranteed 
     under this subsection, the Administration shall, in 
     accordance with such terms and procedures as the 
     Administration shall establish by regulation, assess and 
     collect an annual fee in an amount equal to 0.5 percent of 
     the outstanding balance of the deferred participation share 
     of the loan.
       ``(B) Payer.--The annual fee assessed under subparagraph 
     (A) shall be payable by the
      participating lender and shall not be charged to the 
     borrower.''.
       (b) Conforming Amendment.--Section 5(g)(4)(A) of the Small 
     Business Act (15 U.S.C. 634(g)(4)(A)) is amended--
       (1) by striking the first sentence and inserting the 
     following: ``The Administration may collect a fee for any 
     loan guarantee sold into the secondary market under 
     subsection (f) in an amount equal to not more than 50 percent 
     of the portion of the sale price that exceeds 110 percent of 
     the outstanding principal amount of the portion of the loan 
     guaranteed by the Administration.''; and
       (2) by striking ``fees'' each place such term appears and 
     inserting ``fee''.

     SEC. 5. NOTIFICATION REQUIREMENT.

       (a) In General.--Section 7(a) of the Small Business Act (15 
     U.S.C. 636(a)) is amended by adding at the end the following 
     new paragraph:
       ``(24) Notification requirement.--The Administration shall 
     notify the Committees on Small Business of the Senate and the 
     House of Representatives not later than 15 days before making 
     any significant policy or administrative change affecting the 
     operation of the loan program under this subsection.''.

     SEC. 6. DEVELOPMENT COMPANY DEBENTURES.

       Section 503(b) of the Small Business Investment Act of 1958 
     (15 U.S.C. 697(b)) is amended--
       (1) in paragraph (5), by striking ``and'' at the end;
       (2) in paragraph (6), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(7) with respect to each loan made from the proceeds of 
     such debenture, the Administration--
       ``(A) assesses and collects a fee, which shall be payable 
     by the borrower, in an amount equal to 0.0625 percent per 
     year of the outstanding balance 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 Administration of making 
     guarantees under subsection (a).''.

  The PRESIDING OFFICER. Is there objection to the immediate 
consideration of the bill?
  There being no objection, the Senate proceeded to consider the bill.
  Mr. BOND. Mr. President, I rise today in support of S. 895, the Small 
Business Lending Enhancement Act of 1995. This bill will increase the 
availability of business loans under the Small Business 
Administration's 7(a) Guaranteed Business Loan Program to meet the 
growing borrowing demand from the small business community. If S. 895 
is enacted, the 7(a) program will be able to expand to provide over $10 
billion in small business loans--the largest loan program in SBA's 42 
year history.
  As many of us know, the popularity of SBA's 7(a) loan program has one 
unfortunate consequence. Administrator Phil Lader has notified all 
members of the Committee on Small Business that this popular guaranteed 
loan program will run out of money by September 1 of this year.
  When I introduced S. 895 in early June, I believed the bill provided 
the tools necessary to put the 7(a) program on an even keel for the 
remainder of this fiscal year and for fiscal year 1996. I am pleased to 
report that there was great interest in the bill among the members of 
the Committee on Small business. As the result of my colleagues' 
support and the hard work by their staffs, we have created an amended 
version of S. 895 that builds on the initial bill.
  In particular, I want to recognize the support and cooperation I have 
received from my good friend from Arkansas, the ranking minority 
member, Senator Bumpers. He and his staff worked very closely with us 
in crafting the bill before the Senate today. In addition, I am very 
pleased that Senators Burns, Snowe, and Wellstone also have agreed to 
be cosponsors.
  The Small Business Lending Enhancement Act of 1995 will provide a 
much-needed expansion of the 7(a) loan program. S. 895 will lower the 
credit subsidy rate for the 7(a) loan program from 2.74 to 1.29 
percent, a 54 percent reduction in the subsidy rate. This change has a 
significant impact on the volume of loans that can be made to small 
businesses. In fiscal year 1995, $214 million was needed to support a 
loan program of $7.8 billion. Under S. 895, in fiscal year 1996, only 
$133 million needs to be appropriated to support $10.5 billion in 
loans, reduction of 39 percent with a 35-percent increase in loan 
volume.
  To help fund the 7(a) program, S. 895 imposes a modest increase in 
guarantee fees paid by the borrower, except that the guarantee fee for 
LowDoc Loans is not increased. In addition, an annual fee of 50 basis 
points, one-half of 1 percent of the outstanding guaranteed portion of 
the loan, will be paid by the lender to SBA.
  For the first time, the bill gives the Administrator of SBA the 
discretion to lower the credit subsidy rate still further--to 1.09 
percent. He would exercise this discretionary authority if estimated 
borrowing demand is so high to require an increase in the availability 
of SBA guaranteed business loans. When the subsidy rate is lowered, the 


[[Page S 12516]]
total loan authorization amount increases without a corresponding 
increase in appropriations.
  Some of my colleagues on the committee are very interested in
   expanding the Preferred Lenders Program under the 7(a) loan program. 
I support their goal. S. 895 includes a provision to raise the 
guaranteed percentage rate for preferred loans from 70 percent to 75 
percent. All other loans, except for those under the LowDoc program, 
also will carry a 75 percent guarantee. This change eliminates the 
disparity that exists under the current 7(a) program where preferred 
loans carry only a 70 percent guarantee and all other loans have 
guarantees ranging from 90 percent to 75 percent. This has deterred 
preferred lenders from maximizing use of the Preferred Lenders Program, 
and S. 895 will correct this inequity.

  Further reliance on lenders is necessary to reduce future SBA 
overhead and exposure under the business loan guarantee programs. Later 
this year, it is my intention that the committee will undertake an 
indepth study of the 7(a) program. Additional measures may be 
considered, if necessary, to increase further the percentage of 7(a) 
loans originated and administered with the type of substantial lender 
involvement required under the Preferred Lenders Program.
  S. 895 also makes a small adjustment in the credit subsidy rate for 
the 504 Certified Development Program. Earlier this year, the 
Administration recommended that the credit subsidy rate for the 504 
Program be reduced to zero. The Committee on Small Business has some 
concern that taking the credit rate to zero might threaten the success 
of this program. Therefore, S. 895 imposes a modest fee increase on 
borrowers to reduce the credit subsidy rate for the 504 Program to 0.33 
percent from 0.57 percent.
  Mr. President, S. 895 is before the Senate today because we need to 
make adjustments in the credit subsidy rate, which has been mandated by 
the Federal Credit Reform Act of 1990. It is the annual calculation of 
the credit subsidy rate that determines the level of appropriation 
required to support the 7(a) guaranteed loan program. Each year, the 
Office of Management and Budget determines the credit subsidy rate for 
the upcoming year. OMB makes critical assumptions about the future 
performance of 7(a) loans and SBA's liquidation recovery effort. 
Usually, this calculation is made without prior explanation to the 
Committee, even though it has a dramatic impact on the cost the 7(a) 
loan program.
  The current manner in which the credit subsidy rate is calculated and 
the subsidy fund is managed needs a much closer review by the Congress. 
While the Committee on Small Business has accepted the present credit 
subsidy rate calculation for the purposes of determining borrower and 
lender fees under S. 895, the committee intends to enter into a careful 
study of this matter as it considers additional long term reforms for 
SBA's small business finance programs.
  Mr. President, S. 895, the Small Business Lending Enhancement Act of 
1995, is a sound bill. In the upcoming fiscal year, it will make 
commercial loans available to tens of thousands of small businesses, 
who otherwise might not have access to critical business financing. By 
a vote of 18 to 0, S. 895 was unanimously supported by the Committee on 
Small Business. I strongly urge my colleagues to vote for this 
legislation that is so important to small business owners across the 
United States.
  Mr. BUMPERS. Mr. President, I rise in support of S. 895, Senator 
Bond's bill to restructure the Small Business Administration section 
7(a) loan guaranty program. I want to commend the chairman and his 
staff for their work on this, the first reported Small Business bill 
since he became chairman of our committee. I was glad to work with 
Senator Bond on developing a substitute amendment, which is in fact the 
committee amendment to S. 895.
  The thrust of this bill is simple--it reduces the budget subsidy 
scoring for the 7(a) loan guaranty program, which is by far the largest 
SBA economic development program. These loans are made by banks and 
other lenders to qualifying small businesses that would not be able to 
obtain access to credit on similar terms in the private market. The 
long and the short of it is that banks simply do not make long-term 
loans to small businesses. As the committee report points out, this has 
been a fact of life at least since the issue was first studied by the 
Department of Commerce in 1935. That finding was reaffirmed by the 
Federal Reserve in 1952.
  The SBA guaranty--which is only a partial guaranty of the loan--
allows banks to extend the term of a loan for more than the 2 or 3 
years which is typically offered by bankers. Under the 7(a) program, a 
borrower can get a loan term for as long as 20 years, though most loans 
are for a much shorter period. In fact, the average loan term is about 
12 years, with borrowers typically repaying the loans in about 7 years.
  Although borrowers pay a 2-percent guaranty fee to help offset the 
cost of the program, appropriated funds are still required to keep the 
program in business. Under the Credit Reform Act of 1990, the Office of 
Management and Budget divides the amount of appropriated funds by the 
credit subsidy scoring for each program. This equation determines the 
program level for the coming year.
  Popularity and public demand for the 7(a) program has grown 
astronomically over the past few years due to many economic factors. 
During the Bush administration, the 7(a) program grew from slightly 
over $3 billion to almost $6 billion. Congress was hard-pressed to meet 
the increasing demand with concurrent program appropriations. The 
program during that time had a subsidy cost of slightly over 5 percent, 
meaning that $1 billion in loan authority required $50 million in 
appropriated funds. In 1992, demand for the program exhausted funding 
and two supplemental appropriations measures had to be enacted and 
signed by President Bush. This trend continued through 1993, and by 
late spring appropriated funds were exhausted again, closing the 
program down for several weeks.
  Congress has always recognized the economic importance of the
   7(a) program, but it became clear that reliance on emergency 
supplemental funding and traumatic program shutdowns could not continue 
in the long run.

  Shortly after the Clinton administration took office in 1993, the 
Senate Small Business Committee undertook, with the Administration's 
full cooperation, to sharply reduce the cost of SBA 7(a) loans to the 
Treasury while meeting the demands of small business borrowers for 
affordable credit. In the summer of 1993, legislation from our 
committee was enacted and signed by President Clinton, reducing the 
subsidy cost of 7(a) loans from 5.4 percent to 2.2 percent and more 
than doubling the 7(a) program level with the same amount of 
appropriated dollars.
  The effect of this change was dramatic. In 1993, SBA made about $6 
billion in 7(a) loans but required only $342 million in appropriations 
to fund the program. In the current year, almost $8 billion in loans 
will be made with about $200 million in appropriations. I am extremely 
proud of these savings, but they are still not enough to keep the ever-
growing 7(a) program on a sound footing in this era of declining 
Federal spending.
  Finally, a comment about S. 895 and the chairman's work on this bill 
is in order. I did not choose to cosponsor this bill when it was 
introduced because I was concerned that the increases in fees proposed 
for 7(a) borrowers were simply too steep and, in my view, would be too 
high for the program to be workable. Borrowers who are willing to take 
a loan at any price are not likely to be very good borrowers, and I 
felt we were moving dangerously close to that point. The same could be 
said of the administration's ``zero-subsidy'' proposal which was 
considered and not adopted.
  The chairman is to be commended for the flexibility and 
progressiveness he has demonstrated in preparing the committee 
amendment which I was pleased to cosponsor at the markup of this bill. 
The maximum, marginal guaranty fee for borrowers was reduced from the 
original 5 percent to 3.5 percent, with this number being applied only 
to borrowers seeking over $500,000 in financing. Moreover, the smallest 
borrowers--those using the ``low doc'' program for loans under 
$100,000--will face no increased guaranty fees at all. The present 2 
percent guaranty fee will continue to be applied to low doc loans. 

[[Page S 12517]]
Both of these steps represent common sense and fairness, two virtues 
which I wish were more abundant in this Congress.
  I urge Senators to support S. 895 and the committee amendment.
                           Amendment No. 2426

  Mr. DOLE. Mr. President, I send an amendment to the desk on behalf of 
Senator Nunn.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Kansas [Mr. Dole], for Mr. Nunn, proposes 
     an amendment numbered 2426.

  Mr. DOLE. Mr. President, I ask unanimous consent that the reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       To amend the Committee substitute; on page 14, add the 
     following new section.

     ``SEC. 7 PILOT PREFERRED SURETY BOND GUARANTEE PROGRAM 
                   EXTENSION.

       Section 207 of the Small Business Administration 
     Reauthorization and Amendment Act of 1988 (15 U.S.C. 694b 
     note) is amended by striking ``September 30, 1995'' and 
     inserting ``September 30, 1997.''
  Mr. DOLE. Mr. President, I ask unanimous consent that the amendment 
be agreed to; that the committee amendment, as amended, be agreed to; 
that the bill then be deemed read the third time and passed; that the 
motion to reconsider be laid upon the table; and that any statements 
relating to the bill be placed at the appropriate place in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  So the bill (S. 895), as amended, was deemed read the third time and 
passed, as follows:
                                 S. 895

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Lending 
     Enhancement Act of 1995''.

     SEC. 2. REDUCED LEVEL OF PARTICIPATION IN GUARANTEED LOANS.

       Section 7(a)(2) of the Small Business Act (15 U.S.C. 
     636(a)(2)) is amended to read as follows:
       ``(2) Level of participation in guaranteed loans.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in an agreement to participate in a loan on a deferred basis 
     under this subsection (including a loan made under the 
     Preferred Lenders Program), such participation by the 
     Administration shall be equal to--
       ``(i) 75 percent of the balance of the financing 
     outstanding at the time of disbursement of the loan, if such 
     balance exceeds $100,000; or
       ``(ii) 80 percent of the balance of the financing 
     outstanding at the time of disbursement of the loan, if such 
     balance is less than or equal to $100,000.
       ``(B) Reduced participation upon request.--
       ``(i) In general.--The guarantee percentage specified by 
     subparagraph (A) for any loan under this subsection may be 
     reduced upon the request of the participating lender.
       ``(ii) Prohibition.--The Administration shall not use the 
     guarantee percentage requested by a participating lender 
     under clause (i) as a criterion for establishing priorities 
     in approving loan guarantee requests under this subsection.
       ``(C) Interest rate under preferred lenders program.--
       ``(i) In general.--The maximum interest rate for a loan 
     guaranteed under the Preferred Lenders Program shall not 
     exceed the maximum interest rate, as determined by the 
     Administration, applicable to other loans guaranteed under 
     this subsection.
       ``(ii) Preferred lenders program defined.--For purposes of 
     this subparagraph, the term `Preferred Lenders Program' means 
     any program established by the Administrator, as authorized 
     under the proviso in section 5(b)(7), under which a written 
     agreement between the lender and the Administration delegates 
     to the lender--

       ``(I) complete authority to make and close loans with a 
     guarantee from the Administration without obtaining the prior 
     specific approval of the Administration; and
       ``(II) authority to service and liquidate such loans.''.

     SEC. 3. GUARANTEE FEES.

       (a) Amount of Fees.--Section 7(a)(18) of the Small Business 
     Act (15 U.S.C. 636(a)(18)) is amended to read as follows:
       ``(18) Guarantee fees.--
       ``(A) In general.--With respect to each loan guaranteed 
     under this subsection (other than a loan that is repayable in 
     1 year or less), the Administration shall collect a guarantee 
     fee, which shall be payable by the participating lender and 
     may be charged to the borrower, in an amount equal to the sum 
     of--
       ``(i) 2.5 percent of the amount of the deferred 
     participation share of the loan that is less than or equal to 
     $250,000;
       ``(ii) if the deferred participation share of the loan 
     exceeds $250,000, 3 percent of the difference between--

       ``(I) $500,000 or the total deferred participation share of 
     the loan, whichever is less; and
       ``(II) $250,000; and

       ``(iii) if the deferred participation share of the loan 
     exceeds $500,000, 3.5 percent of the difference between--

       ``(I) $750,000 or the total deferred participation share of 
     the loan, whichever is less; and
       ``(II) $500,000.

       ``(B) Exception for certain loans.--Notwithstanding 
     subparagraph (A), if the total deferred participation share 
     of a loan guaranteed under this subsection is less than or 
     equal to $80,000, the guarantee fee collected under 
     subparagraph (A) shall be in an amount equal to 2 percent of 
     the total deferred participation share of the loan.
       ``(C) Discretionary increase.--Notwithstanding 
     subparagraphs (A) and (B), during the 90-day period beginning 
     on the first day of any fiscal year, the Administration may 
     increase the guarantee fee collected under this paragraph by 
     an amount not to exceed 0.375 percent of the total deferred 
     participation share of the loan, if the Administration--
       ``(i) determines that such action is necessary to meet 
     projected borrower demand for loans under this subsection 
     during that fiscal year, based on the subsidy cost of the 
     loan program under this subsection and amounts provided in 
     advance for such program in appropriations Acts; and
       ``(ii) not less than 15 days prior to imposing any such 
     increase, notifies the Committees on Small Business of the 
     Senate and the House of Representatives of the determination 
     made under clause (i).''.
       (b) Repeal of Provisions Allowing Retention of Fees by 
     Lenders.--Section 7(a)(19) of the Small Business Act (15 
     U.S.C. 636(a)(19)) is amended--
       (1) in subparagraph (B)--
       (A) by striking ``shall (i) develop'' and inserting ``shall 
     develop''; and
       (B) by striking ``, and (ii)'' and all that follows through 
     the end of the subparagraph and inserting a period; and
       (2) by striking subparagraph (C).

     SEC. 4. ESTABLISHMENT OF ANNUAL FEE.

       (a) In General.--Section 7(a) of the Small Business Act (15 
     U.S.C. 636(a)) is amended by adding at the end the following 
     new paragraph:
       ``(23) Annual fee.--
       ``(A) In general.--With respect to each loan guaranteed 
     under this subsection, the Administration shall, in 
     accordance with such terms and procedures as the 
     Administration shall establish by regulation, assess and 
     collect an annual fee in an amount equal to 0.5 percent of 
     the outstanding balance of the deferred participation share 
     of the loan.
       ``(B) Payer.--The annual fee assessed under subparagraph 
     (A) shall be payable by the participating lender and shall 
     not be charged to the borrower.''.
       (b) Conforming Amendment.--Section 5(g)(4)(A) of the Small 
     Business Act (15 U.S.C. 634(g)(4)(A)) is amended--
       (1) by striking the first sentence and inserting the 
     following: ``The Administration may collect a fee for any 
     loan guarantee sold into the secondary market under 
     subsection (f) in an amount equal to not more than 50 percent 
     of the portion of the sale price that exceeds 110 percent of 
     the outstanding principal amount of the portion of the loan 
     guaranteed by the Administration.''; and
       (2) by striking ``fees'' each place such term appears and 
     inserting ``fee''.

     SEC. 5. NOTIFICATION REQUIREMENT.

       (a) In General.--Section 7(a) of the Small Business Act (15 
     U.S.C. 636(a)) is amended by adding at the end the following 
     new paragraph:
       ``(24) Notification requirement.--The Administration shall 
     notify the Committees on Small Business of the Senate and the 
     House of Representatives not later than 15 days before making 
     any significant policy or administrative change affecting the 
     operation of the loan program under this subsection.''.

     SEC. 6. DEVELOPMENT COMPANY DEBENTURES.

       Section 503(b) of the Small Business Investment Act of 1958 
     (15 U.S.C. 697(b)) is amended--
       (1) in paragraph (5), by striking ``and'' at the end;
       (2) in paragraph (6), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(7) with respect to each loan made from the proceeds of 
     such debenture, the Administration--
       ``(A) assesses and collects a fee, which shall be payable 
     by the borrower, in an amount equal to 0.0625 percent per 
     year of the outstanding balance 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 Administration of making 
     guarantees under subsection (a).''.

     SEC. 7. PILOT PREFERRED SURETY BOND GUARANTEE PROGRAM 
                   EXTENSION.

       Section 207 of the Small Business Administration 
     Reauthorization and Amendment Act of 1988 (15 U.S.C. 694b 
     note) is amended by striking ``September 30, 1995'' and 
     inserting ``September 30, 1997''.

     

                          ____________________