[Congressional Record Volume 147, Number 171 (Tuesday, December 11, 2001)]
[House]
[Pages H9193-H9195]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        SMALL BUSINESS INVESTMENT COMPANY AMENDMENTS ACT OF 2001

  Mr. MANZULLO. Mr. Speaker, I move to suspend the rules and concur in 
the Senate amendment to the House amendment to S. 1196, to amend the 
Small Business Investment Act of 1958, and for other purposes.
  The Clerk read as follows:

       Senate Amendment to House Amendment:
       Page 13 of the House engrossed amendment, strike out all 
     after line 8 over to and including line 2 on page 16 and 
     insert:

     SEC. 6. REDUCTION OF FEES.

       (a) Two-Year Reduction of Section 7(a) Fees.--
       (1) Guarantee fees.--Section 7(a)(18) of the Small Business 
     Act (15 U.S.C. 636(a)(18)) is amended by adding at the end 
     the following:
       ``(C) Two-year reduction in fees.--With respect to loans 
     approved during the 2-year period beginning on October 1, 
     2002, the guarantee fee under subparagraph (A) shall be as 
     follows:
       ``(i) A guarantee fee equal to 1 percent of the deferred 
     participation share of a total loan amount that is not more 
     than $150,000.

[[Page H9194]]

       ``(ii) A guarantee fee equal to 2.5 percent of the deferred 
     participation share of a total loan amount that is more than 
     $150,000, but not more than $700,000.
       ``(iii) A guarantee fee equal to 3.5 percent of the 
     deferred participation share of a total loan amount that is 
     more than $700,000.''.
       (2) Annual fees.--Section 7(a)(23)(A) of the Small Business 
     Act (15 U.S.C. 636(a)(23)(A)) is amended by adding at the end 
     the following: ``With respect to loans approved during the 2-
     year period beginning on October 1, 2002, the annual fee 
     assessed and collected under the preceding sentence shall be 
     in an amount equal to 0.25 percent of the outstanding balance 
     of the deferred participation share of the loan.''.
       (b) Reduction of Section 504 Fees.--Section 503 of the 
     Small Business Investment Act of 1958 (15 U.S.C. 697) is 
     amended--
       (1) in subsection (b)(7)(A)--
       (A) by redesignating clauses (i) and (ii) as subclauses (I) 
     and (II), respectively, and moving the margins 2 ems to the 
     right;
       (B) by striking ``not exceed the lesser'' and inserting 
     ``not exceed--
       ``(i) the lesser''; and
       (C) by adding at the end the following:
       ``(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''; and
       (2) by adding at the end the following:
       ``(i) Two-Year Waiver of Fees.--The Administration may not 
     assess or collect any up front guarantee fee with respect to 
     loans made under this title during the 2-year period 
     beginning on October 1, 2002.''.
       (c) Budgetary Treatment of Loans and Financings.--
     Assistance made available under any loan made or approved by 
     the Small Business Administration under section 7(a) of the 
     Small Business Act (15 U.S.C. 636(a)) or financings made 
     under title V of the Small Business Investment Act of 1958 
     (15 U.S.C. 695 et seq.), during the 2-year period beginning 
     on October 1, 2002, shall be treated as separate programs of 
     the Small Business Administration for purposes of the Federal 
     Credit Reform Act of 1990 only.
       (d) Use of Funds.--The amendments made by this section to 
     section 503 of the Small Business Investment Act of 1958, 
     shall be effective only to the extent that funds are made 
     available under appropriations Acts, which funds shall be 
     utilized by the Administrator to offset the cost (as such 
     term is defined in section 502 of the Federal Credit Reform 
     Act of 1990) of such amendments.
       (e) Effective Date.--The amendments made by this section 
     shall become effective on October 1, 2002.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Illinois (Mr. Manzullo) and the gentlewoman from New York (Ms. 
Velazquez) each will control 20 minutes.
  The Chair recognizes the gentleman from Illinois (Mr. Manzullo).


                             General Leave

  Mr. MANZULLO. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous matters on this legislation.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Illinois?
  There was no objection.
  Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the purpose of this bill is to keep venture capital 
flowing to small businesses during this critical time to our Nation's 
economic recovery. The main purpose of S. 1196 is to adjust the fees 
charged to participate in security SBICs from 1 percent to 1.38 
percent. This change is necessary because there is no funding for the 
participating securities SBICs program.
  The other provision of S. 1196 modestly lowers the fees in the other 
main access to capital programs of the SBA, the 7(a) General Business 
Loan Program and the 504 Certified Development Company CDC program.
  Last month the SBA administrator sent me a letter in support of this 
and revitalized the 7(a) and 504 programs. Mr. Speaker, the text of 
that letter is as follows:

                           U.S. Small Business Administration,

                                Washington, DC, November 27, 2001.
     The Hon. Donald Manzullo,
     Chairman, Committee on Small Business, House of 
         Representatives, Washington, DC.
       Dear Mr. Chairman: The purpose of this letter is to express 
     the U.S. Small Business Administration's (SBA) views on S. 
     1196, the Small Business Investment Company (SBIC) Amendments 
     Act of 2001.
       SBA applauds the Congress on passing the President's 
     proposed legislation that enables the SBIC Participating 
     Securities Program to flourish and expand without additional 
     discretionary appropriations. SBA also applauds the Congress 
     for including the technical amendments that were included in 
     the President's proposal to further enhance the program.
       SBA agrees with the concept that we must revitalize the 
     7(a) and 504 programs. Over the past several years the number 
     of loans to women, Hispanic, African American, and veteran 
     small business owners has either decreased or remained 
     relatively flat. Furthermore, these groups receive a low 
     percentage of the loans, with women receiving 21 percent, 
     Hispanics 8 percent, African Americans 4 percent, and 
     veterans 11 percent. More than 60 percent of the loans made 
     to women, Hispanics and African Americans, the fastest 
     growing small business population, are less than $150,000. In 
     addition, most businesses are started with less than 
     $150,000. Yet the legislation fails to specifically target 
     fee reduction in 7(a) loans of $150,000 or less.
       SBA feels very strongly that because of limited resources, 
     and the statistics set forth above, that fee reductions 
     should be targeted to those small businesses seeking loans 
     under $150,000.
       The Office of Management and Budget advises that there is 
     no objection from the standpoint of the President's program 
     to the submission of these views for the consideration of 
     Congress.
       SBA welcomes the opportunity to work with Congress to 
     revitalize the 7(a) and 504 programs for the benefit of small 
     businesses.
           Sincerely,
                                                Hector V. Barreto,
                                                    Administrator.

  Mr. Barreto suggested that any fee reduction should be weighted to 
smaller loan borrowers and I agree. That is why I concur with the 
Senate's action that makes a few changes to House Amendment 7(a) 
Program.
  I rise in support of S. 1196 and concur with the Senate to House 
amendment and I urge my colleagues to support these needed changes to 
these SBA programs.
  Mr. Speaker, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  (Ms. VELAZQUEZ asked and was given permission to revise and extend 
her remarks.)
  Ms. VELAZQUEZ. Mr. Speaker, I rise in strong support of S. 1196, the 
Small Business Technical Correction Act of 2001. This legislation will 
make much needed improvement here to the Small Business Investment 
Company Program, the Small Business Administration's General Loan 
Program, and the Certified Development Company Program to ensure that 
they are able to meet the new challenges facing this Nation's small 
businesses.
  Mr. Speaker, recent reports reflect that the economy is heading into 
a recession and small businesses now more than ever need access to 
capital at an affordable rate. Surveys of senior loan officers have 
reported tightening of credit. No one sector of the economy is hurt 
more by this restriction than small business. Today, through changes to 
the SBIC program, we will expand the programs size and volume to 
include an entirely new array of opportunities for small business to 
receive equity investment.
  The SBIC program has invested nearly $15 billion in more than 90,000 
small businesses. And more importantly, $600 million in businesses in 
low and moderate income areas throughout the Nation. Thanks to the SBIC 
program, such successes like Intel, FedEx, America Online and Staples 
launched themselves into the universe of Fortune 500 companies.
  While this does raise the fees on the SBIC program, it also puts the 
program on a footing where no Federal subsidies are going to be 
required. This has created some concern that these changes will put 
equity investment out of reach for many small business. To offset this 
we have included a reduction in the fee of the SBA general loan 
program. This will bring some equity into a program that has according 
to Congressional Budget Office estimates overcharged both lenders and 
small businesses by at least a billion dollars.
  Today with the passage of S. 1196 we will make the SBA 7(a) loan 
program more accessible and affordable to small businesses by 
drastically reducing the cost of the program. These changes will 
immediately free up millions of dollars for more lending spuring much 
needed economic revitalization. I strongly encourage my colleagues to 
support this legislation.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Illinois (Mr. Davis).
  Mr. DAVIS of Illinois. Mr. Speaker, I thank the gentlewoman for 
yielding me time.
  Mr. Speaker, I rise in support of S. 1196, the Small Business 
Investment Company Amendments Act. This legislation achieves a number 
of objectives for small businesses in their goal of obtaining ready 
sources of growth capital. This program is a true investment partner 
for entrepreneurs providing critical equity capital to new and existing 
companies.

[[Page H9195]]

  Indeed, SBICs have invested nearly $15 billion in long term debt and 
equity capital to more than 90,000 small businesses. At the same time, 
they have provided growth and startup capital totalling more than $600 
million to businesses in low and moderate income areas throughout the 
Nation.
  After 10 years of solid economic growth, America has entered an 
economic downturn. For the first time in a decade, the economic 
indicators benchmark showing where we are and where we are going have 
gone down. Job losses in technology and manufacturing have risen 
dramatically and corporate bankruptcies were nearly double what they 
were last year. Consumer confidence hit its lowest point in over a 
decade. Even though the U.S. stock market saw a significant gain in the 
last 10 years, however, the bottom has virtually fallen out as a result 
of the events of September 11.
  Now every industry has taken a huge hit as profits and employment 
figures head into a free fall. Part of the solution for this problem is 
for Congress and the President to implement a sound and fair fiscal 
policy that will provide an economic stimulus for the general public 
and small businesses. Since small businesses account for 99 percent of 
America's employers, it can play a vital role in bringing America out 
of this economic downturn.
  To help American small businesses survive this economic downturn, the 
small business administration must engage all available resources in 
facilitating entrepreneurship development, provide low and no interest 
loans and more technical assistance programs to small businesses. S. 
1196 is one approach that can assist the small business administration, 
and I urge all of my colleagues to support S. 1196.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume. Mr. Speaker, this has been a long process and I want to thank 
my staff, particularly Mr. Michael Day, and Mr. Manzullo's staff for 
their tremendous effort in getting this bill done.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. MANZULLO. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Illinois (Mr. Manzullo) that the House suspend the rules 
and concur in the Senate amendment to the House amendment to S.1196.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the Senate amendment to the House 
amendment was concurred in.
  A motion to reconsider was laid on the table.

                          ____________________