[Congressional Record Volume 141, Number 153 (Thursday, September 28, 1995)]
[House]
[Pages H9638-H9639]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




CONFERENCE REPORT ON S. 895, SMALL BUSINESS LENDING ENHANCEMENT ACT OF 
                                  1995

  Mrs. MEYERS of Kansas submitted the following conference report and 
statement on the Senate 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.

                  Conference Report (H. Rept. 104-269)

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendments of the House to the 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, having met, after full and free conference, have 
     agreed to recommend and do recommend to their respective 
     Houses as follows:
       That the Senate recede from its disagreement to the 
     amendment of the House to the text of the bill and agree to 
     the same with an amendment as follows:
       In lieu of the matter proposed to be inserted by the House 
     amendment, insert 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 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) 3 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, 3.5 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, 3.875 percent of the difference between--

       ``(I) the total deferred participation share of the loan; 
     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.''.
       (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.

       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

[[Page H 9639]]

       (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 0.125 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''.

     SEC. 8. APPLICABILITY.

       (a) In General.--Except as provided in subsection (b), the 
     amendments made by this Act do not apply with respect to any 
     loan made or guaranteed under the Small Business Act or the 
     Small Business Investment Act of 1958 before the date of 
     enactment of this Act.
       (b) Exceptions.--The amendments made by this Act apply to a 
     loan made or guaranteed under the Small Business Act or the 
     Small Business Investment Act of 1958 before the date of 
     enactment of this Act, if the loan is refinanced, extended, 
     restructured, or renewed on or after the date of enactment of 
     this Act.
       And the House agree to the same.
       That the Senate recede from its disagreement to the 
     amendment of the House to the title of the bill, and agree to 
     the same.

     Jan Meyers,
     Peter G. Torkildsen,
     Jim Longley,
     John J. LaFalce,
     Glenn Poshard,
                                Managers on the Part of the House.

     Christopher S. Bond,
     Conrad Burns,
     Paul Coverdell,
     Dale Bumpers,
     Sam Nunn,
                               Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

       The managers on the part of the House and the Senate at the 
     conference on the disagreeing votes of the two Houses on the 
     amendments of the House to the 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, submit the 
     following joint statement to the House and the Senate in 
     explanation of the effect of the action agreed upon by the 
     managers and recommended in the accompanying conference 
     report:
       The conference agreement establishes new guarantee levels, 
     program fees, and administrative provisions governing the 
     Small Business Administration's 7(a) Guaranteed Business Loan 
     Program and the 504 Certified Development Company Program.
       The conference agreement lowers the guarantee rate for all 
     7(a) loans to 75%, except for loans of $100,000 or less, 
     which will have a guarantee rate of 80%. As part of this 
     overall change, the guarantee rate for Export Working Capital 
     Program loans will be decreased to be consistent with other 
     7(a) loans. The conferees are aware of efforts by the Small 
     Business Administration to coordinate the features and 
     operations of the Export Working Capital Program with a 
     similar export loan program operated by the Export-Import 
     Bank. The conferees are supportive of the continuing joint 
     efforts of the SBA and Export-Import Bank to encourage and 
     facilitate small business participation in the export 
     marketplace. In establishing the new guarantee rate under the 
     Export Working Capital Program, this legislation should not 
     be interpreted as expressing any intention or expectation 
     that the guarantee rate for the Eximbank program be reduced 
     to the same level. The conferees direct the SBA, in 
     consultation with the Export-Import Bank, to issue a report 
     no later than 120 days after the enactment of this act 
     assessing the impact, if any, of the reduced guarantee rate 
     on the Export Working Capital Program. The report should 
     include a comparison of the SBA program with the working 
     capital guarantee program operated by the Export-Import Bank, 
     and shall include an analysis of the number and size of 
     transactions concluded under the program, both prior to and 
     after enactment of the new guarantee provisions.
       Under the conference agreement, guarantee fees under the 
     7(a) program increase as the size of the loan increases. The 
     conferees are aware of the concern expressed by the Small 
     Business Administration that lenders and borrowers may seek 
     to arrange a number of smaller, related loans in order to 
     avoid the higher guarantee fee applicable to a single, larger 
     loan. The conferees direct the Small Business Administration 
     to implement the guarantee fee structure set forth in the 
     conference agreement with any instructions, definitions rules 
     regulations or guidelines as the SBA may deem necessary in 
     order to prevent avoidance or evasion of these fees, 
     including establishing a reasonable period of time during 
     which related loans will be treated as constituting a single 
     loan for purposes of calculating the guarantee fee.
       The effect of the provisions included in the conference 
     agreement will be to reduce the subsidy rate for the 7(a) 
     loan program and increase the availability of guarantee 
     authority under the program. The conferees direct the SBA, 
     promptly upon enactment of the legislation included in the 
     conference report, to remove the temporary administrative 
     limitations previously implemented by the SBA to limit demand 
     for 7(a) loan guarantees. Any such administrative program 
     changes in the future will be subject to the provisions of 
     Section 5 of the new legislation.

     Jan Meyers,
     Peter G. Torkildsen,
     Jim Longley,
     John J. LaFalce,
     Glenn Poshard,
                                Managers on the Part of the House.

     Christopher S. Bond,
     Conrad Burns,
     Paul Coverdell,
     Dale Bumpers,
     Sam Nunn,
      Managers on the Part of the Senate.

                          ____________________