[Congressional Record Volume 154, Number 155 (Saturday, September 27, 2008)]
[House]
[Pages H10224-H10228]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           SMALL BUSINESS FINANCING IMPROVEMENTS ACT OF 2008

  Ms. VELAZQUEZ. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 7175) to amend the Small Business Act to improve the section 
7(a) lending program, and for other purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 7175

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Financing Improvements Act of 2008''.
       (b) Table of Contents.--

Sec. 1. Short title; table of contents.

                       TITLE I--7(A) LOAN PROGRAM

Sec. 101. Loan pooling.
Sec. 102. Alternative size standard.

                       TITLE II--504 CDC PROGRAM

Sec. 201. Definitions.
Sec. 202. Eligibility of development companies to be designated as 
              certified development companies.
Sec. 203. Definition of rural areas.
Sec. 204. Businesses in low-income areas.
Sec. 205. Combinations of certain goals.
Sec. 206. Refinancing.
Sec. 207. Additional equity injections.
Sec. 208. Loan liquidations.
Sec. 209. Closing costs.
Sec. 210. Uniform leasing policy.

          TITLE III--SMALL BUSINESS INVESTMENT COMPANY PROGRAM

Sec. 301. Simplified maximum leverage limits.
Sec. 302. Simplified aggregate investment limitations.

                       TITLE I--7(A) LOAN PROGRAM

     SEC. 101. LOAN POOLING.

       Section 5(g)(1) of the Small Business Act (15 U.S.C. 
     634(g)(1)) is amended--
       (1) by inserting ``(A)'' before ``The Administration'';
       (2) by striking the colon and all that follows and 
     inserting a period; and
       (3) by adding at the end the following:
       ``(B) A trust certificate issued under subparagraph (A) 
     shall be based on, and backed by, a trust or pool approved by 
     the Administrator and composed solely of the guaranteed 
     portion of such loans.
       ``(C) The interest rate on a trust certificate issued under 
     subparagraph (A) shall be either--
       ``(i) the lowest interest rate on any individual loan in 
     the pool; or
       ``(ii) the weighted average interest rate of all loans in 
     the pool, subject to such limited variations in loan 
     characteristics as the Administrator determines appropriate 
     to enhance marketability of the pool certificates.''.

     SEC. 102. ALTERNATIVE SIZE STANDARD.

       Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) 
     is amended by adding at the end the following:
       ``(5) Optional size standard.--
       ``(A) In general.--The Administrator shall establish an 
     optional size standard for business loan applicants under 
     section 7(a) and development company loan applicants under 
     title V of the Small Business Investment Act of 1958, which 
     uses maximum tangible net worth and average net income as an 
     alternative to the use of industry standards.
       ``(B) Interim rule.--Until the date on which the optional 
     size standards established under subparagraph (A) are in 
     effect, the alternative size standard in section 121.301(b) 
     of title 13, Code of Federal Regulations, or any successor 
     thereto, may be used by business loan applicants under 
     section 7(a) and development company loan applicants under 
     title V of the Small Business Investment Act of 1958.''.

                       TITLE II--504 CDC PROGRAM

     SEC. 201. DEFINITIONS.

       Section 103(6) of the Small Business Investment Act of 1958 
     (15 U.S.C. 662(6)) is amended to read as follows:
       ``(6) the term `development company' means an entity 
     incorporated under State law with the authority to promote 
     and assist the growth and development of small-business 
     concerns in the areas in which it is authorized to operate by 
     the Administration, and the term `certified development 
     company' means a development company which the Administration 
     has determined meets the criteria of section 506;''.

     SEC. 202. ELIGIBILITY OF DEVELOPMENT COMPANIES TO BE 
                   DESIGNATED AS CERTIFIED DEVELOPMENT COMPANIES.

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

     ``SEC. 506. CERTIFIED DEVELOPMENT COMPANIES.

       ``(a) Authority To Issue Debentures.--A development company 
     may issue debentures pursuant to this Act if the 
     Administration certifies that the company meets the following 
     criteria:
       ``(1) Size.--The development company is required to be a 
     small concern with fewer than 500 employees and not under the 
     control of any entity which does not meet the 
     Administration's size standards as a small business, except 
     that any development company which was certified by the 
     Administration prior to December 31, 2005 may continue to 
     issue debentures.
       ``(2) Purpose.--The primary purpose of the development 
     company is to benefit the community by fostering economic 
     development to create and preserve jobs and stimulate private 
     investment.
       ``(3) Primary function.--The primary function of the 
     development company is to accomplish its purpose by providing 
     long term financing to small businesses by the utilization of 
     the Certified Development

[[Page H10225]]

     Company Economic Development Loan Program. It may also 
     provide or support such other local economic development 
     activities to assist the community.
       ``(4) Non-profit status.--The development company is a non-
     profit corporation, except that a development company 
     certified by the Administration prior to January 1, 1987, may 
     retain its status as a for-profit corporation.
       ``(5) Good standing.--The development company is in good 
     standing in its State of incorporation and in any other State 
     in which it conducts business, and is in compliance with all 
     laws, including taxation requirements, in its State of 
     incorporation and in any other State in which it conducts 
     business.
       ``(6) Membership.--The development company should have at 
     least 25 members (or stockholders if the corporation is a 
     for-profit entity), none of whom may own or control more than 
     20 percent of the company's voting membership, consisting of 
     representation from each of the following groups (none of 
     which are in a position to control the development company): 
     --
       ``(A) Government organizations that are responsible for 
     economic development.
       ``(B) Financial institutions that provide commercial long 
     term fixed asset financing.
       ``(C) Community organizations that are dedicated to 
     economic development.
       ``(D) Businesses.
       ``(7) Board of directors.--The development company has a 
     board of directors that--
       ``(A) is elected from the membership by the members;
       ``(B) should represent at least 3 of the 4 groups 
     enumerated in subsection (a)(6) with no group is in a 
     position to control the company; and
       ``(C) meets on a regular basis to make policy decisions for 
     such company.
       ``(8) Professional management and staff.--The development 
     company has full-time professional management, including a 
     chief executive officer to manage daily operations, and a 
     full-time professional staff qualified to market the 
     Certified Development Company Economic Development Loan 
     Program and handle all aspects of loan approval and 
     servicing, including liquidation, if appropriate. The 
     development company is required to be independently managed 
     and operated to pursue its economic development mission and 
     to employ its chief executive officer directly, with the 
     following exceptions:
       ``(A) A development company may be an affiliate of another 
     local non-profit service corporation (specifically excluding 
     another development company) whose mission is to support 
     economic development in the area in which the development 
     company operates. In such a case:
       ``(i) The development company may satisfy the requirement 
     for full-time professional staff by contracting with a local 
     non-profit service corporation (or one of its non-profit 
     affiliates), or a governmental or quasi-governmental agency, 
     to provide the required staffing.
       ``(ii) The development company and the local non-profit 
     service corporation may have partially common boards of 
     directors.
       ``(B) A development company in a rural area (as defined in 
     section 501(f)) shall be deemed to have satisfied the 
     requirements of a full-time professional staff and 
     professional management ability if it contracts with another 
     certified development company which has such staff and 
     management ability and which is located in the same general 
     area to provide such services.
       ``(C) A development company that has been certified by the 
     Administration as of December 31, 2005, and that has 
     contracted with a for-profit company to provide services as 
     of such date may continue to do so.
       ``(b) Area of Operations.--The Administration shall specify 
     the area in which an applicant is certified to provide 
     assistance to small businesses under this title, which may 
     not initially exceed its State of incorporation unless it 
     proposes to operate in a local economic area which is 
     required to include part of its State of incorporation and 
     may include adjacent areas within several States. After a 
     development company has demonstrated its ability to provide 
     assistance in its area of operations, it may request the 
     Administration to be allowed to operate in one or more 
     additional States as a multi-state certified development 
     company if it satisfies the following criteria:
       ``(1) Each additional State is contiguous to the State of 
     incorporation, except the States of Alaska and Hawaii shall 
     be deemed to be contiguous to any State abutting the Pacific 
     ocean.
       ``(2) It demonstrates its proficiency in making and 
     servicing loans under the Certified Development Company 
     Economic Development Loan Program by--
       ``(A) requesting and receiving designation as an accredited 
     lender under section 507 or a premier certified lender under 
     section 508; and
       ``(B) meeting or exceeding performance standards 
     established by the Administration.
       ``(3) The development company adds to the membership of its 
     State of incorporation additional membership from each 
     additional State and the added membership meets the 
     requirements of subsection (a)(6).
       ``(4) The development company adds at least one member to 
     its board of directors in the State of incorporation, 
     providing that added member was selected by the membership of 
     the development company.
       ``(5) The company meets such other criteria or complies 
     with such conditions as the Administration deems appropriate.
       ``(c) Processing of Expansion Applications.--The 
     Administration shall respond to the request of a certified 
     development company for certification as a multi-state 
     company on an expedited basis within 30 days of receipt of a 
     completed application if the application demonstrates that 
     the development company meets the requirements of subsection 
     (b)(1) through (b)(4).
       ``(d) Use of Funds Limited to State Where Generated.--Any 
     funds generated by a not-for-profit development company from 
     making loans under the Certified Development Company Economic 
     Development Loan Program which remain after payment of staff, 
     operating and overhead expenses shall be retained by the 
     development company as a reserve for future operations, for 
     expanding its area of operations in a local economic area as 
     authorized by the Administration, or for investment in other 
     local economic development activity in the State from which 
     the funds were generated.
       ``(e) Ethical Requirements.--
       ``(1) In general.--Certified development companies, their 
     officers, employees and other staff, shall at all times act 
     ethically and avoid activities which constitute a conflict of 
     interest or appear to constitute a conflict of interest. No 
     one may serve as an officer, director or chief executive 
     officer of more than one certified development company.
       ``(2) Prohibited conflict in project loans.--As part of a 
     project under the Certified Development Company Economic 
     Development Loan Program, no certified development company 
     may recommend or approve a guarantee of a debenture by the 
     Administration that is collateralized by a subordinated lien 
     position on the property being constructed or acquired and 
     also provide, or be affiliated with a corporation or other 
     entity, for-profit or non-profit, which provides, financing 
     collateralized by a prior lien on the same property. Upon 
     approval by the Administrator, abusiness development company 
     that was participating as a first mortgage lender, either 
     directly or through an affiliate, for the Certified 
     Development Company Economic Development Loan Program in 
     either fiscal years 2004 or 2005 may continue to do so.
       ``(3) Other economic development activities.--Operation of 
     multiple programs to assist small business concerns in order 
     for a certified development company to carry out its economic 
     development mission shall not be deemed a conflict of 
     interest, but notwithstanding any other provision of law, no 
     development company may accept funding from any source, 
     including but not limited to any department or agency of the 
     United States Government--
       ``(A) if such funding includes any conditions, priorities 
     or restrictions upon the types of small businesses to which 
     they may provide financial assistance under this title; or
       ``(B) if it includes any conditions or imposes any 
     requirements, directly or indirectly, upon any recipient of 
     assistance under this title unless the department or agency 
     also provides all of the financial assistance to be delivered 
     by the development company to the small business and such 
     conditions, priorities or restrictions are limited solely to 
     the financial assistance so provided.''.

     SEC. 203. DEFINITION OF RURAL AREAS.

       Section 501 of the Small Business Investment Act of 1958 
     (15 U.S.C. 695) is amended by adding at the end the following 
     new subsection:
       ``(f) As used in subsection (d)(3)(D), the term `rural' 
     shall include any area other than--
       ``(1) a city or town that has a population greater than 
     50,000 inhabitants; and
       ``(2) the urbanized area contiguous and adjacent to such a 
     city or town.''.

     SEC. 204. BUSINESSES IN LOW-INCOME AREAS.

       Section 501(d)(3) of the Small Business Investment Act of 
     1958 (15 U.S.C. 695(d)(3)) is amended by inserting after 
     ``business district revitalization'' the following: ``or 
     expansion of businesses in low-income communities that would 
     be eligible for new market tax credit investments under 
     section 45D of the Internal Revenue Code of 1986 (26 U.S.C. 
     45D)''.

     SEC. 205. COMBINATIONS OF CERTAIN GOALS.

       Section 501(e) of the Small Business Investment Act of 1958 
     (15 U.S.C. 695(e)) is amended by adding at the end the 
     following:
       ``(7) A small business concern that is unconditionally 
     owned by more than one individual, or a corporation whose 
     stock is owned by more than one individual, is deemed to 
     achieve a public policy goal under subsection (d)(3) if a 
     combined ownership share of at least 51 percent is held by 
     individuals who are in one of the groups listed as public 
     policy goals specified in subsection (d)(3)(C) or 
     (d)(3)(E).''.

     SEC. 206. REFINANCING.

       Section 502 of the Small Business Investment Act of 1958 
     (15 U.S.C. 696) is amended by adding at the end the 
     following:
       ``(7) Permissible debt refinancing.--Any financing approved 
     under this title may also include a limited amount of debt 
     refinancing for debt that was not previously guaranteed by 
     the Administration. If the project involves expansion of a 
     small business which has existing indebtedness collateralized 
     by fixed assets, a limited amount may be refinanced and added 
     to the expansion cost, providing--

[[Page H10226]]

       ``(A) the proceeds of the indebtedness were used to acquire 
     land, including a building situated thereon, to construct a 
     building thereon or to purchase equipment;
       ``(B) the borrower has been current on all payments due on 
     the existing debt for at least the past year; and
       ``(C) the financing under the Certified Development Company 
     Economic Development Loan Program will provide better terms 
     or rate of interest than now exists on the debt.''.

     SEC. 207. ADDITIONAL EQUITY INJECTIONS.

       Clause (ii) of section 502(3)(B) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 696(3)(B)) is amended to 
     read as follows:
       ``(ii) Funding from institutions.--

       ``(I) If a small business concern provides the minimum 
     contribution required under paragraph (C), not less than 50 
     percent of the total cost of any project financed pursuant to 
     clauses (i), (ii), or (iii) of subparagraph (C) shall come 
     from the institutions described in subclauses (I), (II), and 
     (III) of clause (i).
       ``(II) If a small business concern provides more than the 
     minimum contribution required under paragraph (C), any excess 
     contribution may be used to reduce the amount required from 
     the institutions described in subclauses (I), (II), and (III) 
     of clause (i) except that the amount from such institutions 
     may not be reduced to an amount less than the amount of the 
     loan made by the Administration.''.

     SEC. 208. LOAN LIQUIDATIONS.

       Section 510 of the Small Business Investment Act of 1958 
     (15 U.S.C. 697g) is amended--
       (1) by redesignating subsection (e) as subsection (g); and
       (2) by inserting after subsection (d) the following:
       ``(e) Participation.--
       ``(1) Mandatory.--Any certified development company which 
     elects not to apply for authority to foreclose and liquidate 
     defaulted loans under this section or which the 
     Administration 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. The contract shall be contingent upon approval by 
     the Administration with respect to the qualifications of the 
     contractor, the terms and conditions of liquidation 
     activities, and the ability to reimburse such contractor.
       ``(2) Commencement.--The provisions of this subsection 
     shall not require any development company to liquidate 
     defaulted loans until the Administration has adopted and 
     implemented a program to compensate and reimburse development 
     companies as provided under subsection (f).
       ``(f) Compensation and Reimbursement.--
       ``(1) Reimbursement of expenses.--The Administration shall 
     reimburse each certified development company for all expenses 
     paid by such company as part of the foreclosure and 
     liquidation activities if the expenses--
       ``(A) were approved in advance by the Administration either 
     specifically or generally; or
       ``(B) were incurred by the company on an emergency basis 
     without Administration prior approval but which were 
     reasonable and appropriate.
       ``(2) Compensation for results.--The Administration shall 
     develop a schedule to compensate and provide an incentive to 
     qualified State or local development companies which 
     foreclose and liquidate defaulted loans. The schedule shall 
     be based on a percentage of the net amount recovered but 
     shall not exceed a maximum amount. The schedule shall not 
     apply to any foreclosure which is conducted pursuant to a 
     contract between a development company and a qualified third-
     party to perform the foreclosure and liquidation.''.

     SEC. 209. CLOSING COSTS.

       Paragraph (4) of section 503(b) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 697(b)) is amended to read 
     as follows:
       ``(4) the aggregate amount of such debenture does not 
     exceed the amount of loans to be made from the proceeds of 
     such debenture plus, at the election of the borrower under 
     the Certified Development Company Economic Development Loan 
     Program, other amounts attributable to the administrative and 
     closing costs of such loans, except for the borrower's 
     attorney fees;''.

     SEC. 210. UNIFORM LEASING POLICY.

       (a) In General.--Section 502 of the Small Business 
     Investment Act of 1958 (15 U.S.C. 696) is amended
       (1) by striking paragraphs (4) and (5) and inserting the 
     following:
       ``(4) Limitation on leasing.--If the use of a loan under 
     this section includes the acquisition of a facility or the 
     construction of a new facility, the small business concern 
     assisted
       ``(A) shall permanently occupy and use not less than a 
     total of 50 percent of the space in the facility; and
       ``(B) may, on a temporary or permanent basis, lease to 
     others not more than 50 percent of the space in the 
     facility.''; and
       (2) by redesignating paragraph (6) as paragraph (5).
       (b) Policy for 7(a) Loans.--Section 7(a)(28) of the Small 
     Business Act (15 U.S.C. 636(a)(28)) is amended to read as 
     follows:
       ``(28) Limitation on leasing.--If the use of a loan under 
     this subsection includes the acquisition of a facility or the 
     construction of a new facility, the small business concern 
     assisted
       ``(A) shall permanently occupy and use not less than a 
     total of 50 percent of the space in the facility; and
       ``(B) may, on a temporary or permanent basis, lease to 
     others not more than 50 percent of the space in the 
     facility.''.

          TITLE III--SMALL BUSINESS INVESTMENT COMPANY PROGRAM

     SEC. 301. SIMPLIFIED MAXIMUM LEVERAGE LIMITS.

       Section 303(b) of the Small Business Investment Act of 1958 
     (15 U.S.C. 683(b)) is amended--
       (1) by striking paragraph (2) and inserting the following:
       ``(2) Maximum leverage.--
       ``(A) In general.--The maximum amount of outstanding 
     leverage made available to any one company licensed under 
     section 301(c) of this Act may not exceed the lesser of--
       ``(i) 300 percent of such company's private capital; or
       ``(ii) $150,000,000.
       ``(B) Multiple licenses under common control.--The maximum 
     amount of outstanding leverage made available to two or more 
     companies licensed under section 301(c) of this Act that are 
     commonly controlled (as determined by the Administrator) and 
     not under capital impairment may not exceed $225,000,000.''; 
     and
       (2) by striking paragraph (4).

     SEC. 302. SIMPLIFIED AGGREGATE INVESTMENT LIMITATIONS.

       Section 306(a) of the Small Business Investment Act of 1958 
     (15 U.S.C. 686(a)) is amended to read as follows:
       ``(a) Percentage Limitation on Private Capital.--If any 
     small business investment company has obtained financing from 
     the Administration and such financing remains outstanding, 
     the aggregate amount of securities acquired and for which 
     commitments may be issued by such company under the 
     provisions of this title for any single enterprise shall not, 
     without the approval of the Administration, exceed 10 percent 
     of the sum of--
       ``(1) the private capital of such company; and
       ``(2) the total amount of leverage projected by the company 
     in the company's business plan that was approved by the 
     Administration at the time of the grant of the company's 
     license.''.

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


                             General Leave

  Ms. VELAZQUEZ. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days to revise and extend their remarks and to 
include extraneous materials on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from New York?
  There was no objection.

                              {time}  1700

  Ms. VELAZQUEZ. Mr. Speaker, I yield myself as much time as I consume.
  Mr. Speaker, I rise in support of this bill which would help 
entrepreneurs gain access to vital capital. Even before the recent 
troubles on Wall Street began, securing funding was an uphill battle 
for small businesses. Today, it is even more challenging than ever.
  The effects of the current lending slump have been taxing. Liquidity 
challenges have caused lenders to cut lines of credit and recall loans 
to small firms. As these crucial sources of investment dry up, 
entrepreneurs have few places left to turn.
  Venture capital investors, who have historically fueled the startup 
community, are becoming more and more cautious in doing so. At the same 
time, commercial banks have raised the bar for lending criteria on 
interest rates.
  While the Small Business Administration has historically helped 
entrepreneurs during economic downturns, it is also failing to meet 
funding needs. In fact, the Small Business Administration lending is 
down 25 percent this year. Most small businesses rely on some form of 
loans or credit in order to meet their daily needs. Not surprisingly, 
the consequences of today's downturn in funding have had a crippling 
effect on their community.
  The Small Business Financing Improvement Act of 2008 will help in 
small but important ways in part by enhancing the Small Business 
Administration lending programs. For example, it will improve the 
administration's 7(a) initiative, which is its most frequently used 
line of small business credit. It would also ease the flow of 
investments from venture capitalists. This will be particularly helpful 
as venture capital funding has a history of sparking innovation.

[[Page H10227]]

  Furthermore, the bill I am proposing today will encourage lending 
from commercial banks. It will also do this by reducing the regulatory 
burden for financiers looking to fund small firms. In light of their 
current reluctance to make small business loans, this will be a 
tremendous incentive for banks to assist entrepreneurs.
  This act will help thousands of small firms maintain and grow their 
companies. It will do this by allowing them to access the funds they 
need to go about their daily business and do everything from meet 
payroll to stock their shelves. Capital is the most basic and essential 
building block for small business ownership. After all, it is what 
allows entrepreneurs to start companies in the first place. For this 
reason, the bill has won full approval from the Small Business 
Administration.
  I should also add that this provision has at one point or another 
been passed in the House.
  Small businesses employ half of this Nation's workforce, and entire 
local economies depend on their success. The bill we're considering 
here today will be an important first step in ensuring that America's 
entrepreneurs can achieve their success. With this in mind, I urge my 
colleagues to support its passage.
  I reserve the balance of my time.
  Mr. CHABOT. Mr. Speaker, I yield myself such time as I may consume.
  Today I rise in support of H.R. 7175, the Small Business Lending 
Improvements Act of 2008. I especially would like to thank Chairwoman 
Velazquez for working in a cooperative and bipartisan manner to bring 
this important bill to the House floor. Once again, she has done so. 
She has been working in such a manner for the last 2 years. I commend 
her for that.
  All of us are aware of the recent turmoil in the financial markets. 
These problems also directly impact America's small businesses. 
Availability of credit is reduced thereby dampening the capacity of 
small businesses to create much-needed jobs. Yet it's not just the 
availability of credit that adversely impacts America's small business 
owners. These people are also ordinary men and women with the same 
concerns about the value of their homes, the safety of their 
investments, the spiking interest rates, and the outlook for the future 
of their children that every American has to be concerned about in 
these uncertain times.
  The bill before us today will not remedy all of these problems, but 
it will make important improvements in the capacity of small businesses 
to obtain needed capital without further adding to the potential 
problems facing our financial sector.
  Although the changes in the bill are modest, they include key 
components of H.R. 1336 that the House overwhelmingly passed back in 
2007. These modifications will increase the availability of credit for 
small businesses and reduce unnecessary paperwork on lenders without 
undermining the scrutiny provided by the Small Business Administration 
of the lenders or borrowers.
  Title I makes very modest changes to the operation of the SBA's core 
7(a) lending program. Nevertheless, these changes will improve the 
liquidity in the small business lending market while making the loans 
available to more small businesses. It's important to note that nothing 
in title I changes the standards under which the SBA guarantees the 
issuance of loans or alters the fact that the program operates without 
any taxpayer subsidy. I want to reiterate that: Operates without any 
taxpayer subsidy.
  I'm most proud of title II of H.R. 7175. It modifies and strengthens 
the loan program operated pursuant to title V of the Small Business 
Investment Act of 1958. Certified development companies, or CDCs, are 
vital to long-term economic and community development in my district 
and throughout the country. CDCs operate to provide long-term fixed-
rate financing for small business concerns who find their financing 
needs cannot be met due to the loan limits of the 7-day loan program. 
And unlike many 7-day lenders, CDCs must be locally based so they have 
a key understanding of the needs of the communities they serve.
  The first thing that title II does is change the name of the program. 
While this may sound minor, it will provide greater recognition to CDCs 
and enable them to better promote their important mission of local 
economic development.
  Section 202 makes important technical changes to the definitions in 
the CDC program, including, most importantly, defining the term 
``certified development company.'' As a corollary, title II eliminates 
the outdated term ``qualified state and local development company'' 
from the Small Business Investment Act of 1958.
  In my estimation, section 203 is the most important provision in the 
bill. It statutorily establishes the procedures by which the SBA 
designates entities as CDCs. The most important requirements of the 
statutory procedures is the mandate that the CDC have local board 
members familiar with the economic development needs of the community. 
Even though the bill authorizes expansion only into neighboring states, 
the CDC must have representatives that understand the local economic 
development needs of the new state of operation.
  Another very important aspect of the bill authorizes the CDCs to 
perform their own liquidations. Under the current process, the SBA 
performs liquidations and only receives about 20 cents on the dollar, a 
wholly inadequate return on guarantees issued by the Federal 
Government.
  By having CDCs with their local expertise performing liquidations, 
the taxpayers will receive a better return on their guarantee, 
something essential given current conditions in the financial markets.
  Title II also makes other changes providing greater financial 
opportunities for small businesses under the CDC program and enhance 
local economic development without placing any undue risk on the 
taxpayer.
  Finally, title III of H.R. 7175 makes some technical changes to the 
operation of the small business investment company program. By making 
it easier to calculate investment limits, SBICs will be better able to 
manage their portfolios thereby increasing the overall value of their 
portfolios without placing the Federal taxpayer at any increased risk.
  Together, all of these changes made will spur economic development, 
which is really one of the key things we need to do at this time.
  For these reasons, I ask my colleagues to support passage of this.
  I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I have no further speakers.
  I reserve my time.
  Mr. CHABOT. Mr. Speaker, I yield 2 minutes to the gentleman from 
Indiana (Mr. Burton).
  Mr. BURTON of Indiana. I thank the gentleman for yielding.
  This appears to be a pretty good bill, but we're not going to help 
small business until we get an energy package that's going to lower the 
price of energy, gasoline, and other forms of energy in this country. 
We're sending $700 billion a year overseas that could be kept here in 
America by drilling here in America and getting energy out of the 
ground here in America creating hundreds of thousands of jobs. That's 
not going to happen. That's not going to happen until we get a good 
energy bill.
  We're asked today to deal with a $700 billion piece of legislation 
that will help keep this country's economy afloat. And I submit to my 
colleagues tonight or today that even if we passed that and we solved 
this problem temporarily, we're going to be right back here if we don't 
deal with the energy crisis.
  This energy crisis is taking money out of everybody's pockets: small 
business, big business, homeowners. If a person has to pay exorbitant 
prices to fill their gas tank to get their kids to and from school and 
to and from work, it's going to hurt them. It's going to hurt them when 
they have to buy groceries that are transported across this country by 
diesel fuel and trucks. And because of that, people's cost of living is 
going up and up and up. And if you don't think that's going to have an 
impact on their ability to pay their home mortgages, you're just not 
thinking straight.
  We have to deal with the energy crisis so people can spend less on 
energy, can have that money for food for their kids, and to get to and 
from school and to and from work and to pay for their home mortgages.

[[Page H10228]]

  I think we have to deal with the crisis that faces us right now. But 
I think all of us ought to be aware that until we solve the energy 
crisis, until we become energy independent or move rapidly in that 
direction, we're going to continue to have problems in the future with 
this economy. This economy cannot stand $4 a gallon gasoline. We just 
can't. And it is going to impact every area of this economy now and in 
the future.
  Even if we pass this so-called bailout bill today or next week or 
tomorrow, whenever we pass it, it's not going to solve the problem 
until we deal with the energy crisis which is an integral part of the 
problems facing America.
  Ms. VELAZQUEZ. Mr. Speaker, I have no further speakers on this side, 
and I'm prepared to close.
  Mr. CHABOT. Mr. Speaker, I yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, let me just say that small businesses are 
the innovators in this country and that for the last 7 years, this 
administration's failed policies have not provided the tools and 
resources for small businesses to be part of the energy solution and 
make this country energy independent.
  We passed H.R. 6 last year. Let's get the White House and the 
administration to implement those provisions that will allow for small 
businesses to be part of innovation in relation to energy independence 
in this country.
  I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Cazayoux). The question is on the motion 
offered by the gentlewoman from New York (Ms. Velazquez) that the House 
suspend the rules and pass the bill, H.R. 7175.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. CHABOT. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.
  The point of no quorum is considered withdrawn.

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