[Congressional Record Volume 154, Number 176 (Wednesday, November 19, 2008)]
[Senate]
[Pages S10663-S10670]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE:
  S. 3705. A bill to amend the Small Business Act and the Small 
Business Investment Act of 1958 to stop the small business credit 
crunch, and for other purposes; to the Committee on Finance.
  Ms. SNOWE. Mr. President, I rise today to introduce the 10 Steps for 
a Main Street Economic Recovery Act of 2008, a measure that will take 
dramatic action to finance the growth of our Nation's small businesses, 
which represent 99.7 percent of all employers and create approximately 
75 percent of net jobs each year. Our country faces a financial crisis 
of unprecedented severity that is choking off economic growth and small 
business survival by denying all businesses, but especially small 
firms, access to the capital they need.
  As Ranking Member of the Senate Committee on Small Business and 
Entrepreneurship, it has long been my goal to expand access to capital 
for small businesses. One of the most valuable assets for realizing 
this goal are the Small Business Administration's, SBA's, core lending 
programs, including the 7(a) and 504 programs. Historically, when 
credit to small businesses has contracted, as is presently the case, 
banks have turned to the SBA in order to make loans to small business 
owners. Yet, regrettably, during these arduous economic times--we are 
not only seeing a significant drop in the amount of business loans made 
but we are also seeing credit lines completely shut down and commercial 
loans canceled.
  Our current economic downturn is drastically more dangerous than any 
threat to our financial system in decades. Banks are tightening their 
lending standards without a similar increase in the volume of SBA 
guaranteed loans to small businesses, creating a domino effect on small 
businesses' job creation ability. The Federal Reserve's November 2008 
Quarterly Loan Officer Survey finds that, in the last quarter, 75 
percent of banks state that they have tightened their lending standards 
for small firms. Not surprisingly, lending in the SBA's 7(a) and 504 
programs have declined dramatically. Over the past year, lending in the 
7(a) program has decreased by 55 percent while loan volume in the 504 
program is down 36 percent. Since the U.S. financial market turmoil 
began in September, overall SBA lending is down by 50 percent from the 
previous year.
  This is why I am introducing the 10 Steps for a Main Street Economic 
Recovery Act, which, as its title indicates, contains a series of 10 
achievable, commonsense steps that could be implemented immediately to 
help thaw out frozen credit markets so that small businesses--both in 
Maine and across the country--can continue to be the driving force of 
our Nation's economy. All of the provisions included in my legislation 
would directly address the credit crunch small firms are facing and 
help them get the capital necessary to finance business growth.
  First, my bill would improve the Small Business Administration's 
flagship lending program, the 7(a) program, by increasing the amount of 
financing, from $2 million to $3 million, that small firms can secure; 
allowing small firms to refinance their 7(a) loans if they can get 
better terms with another lender; and simplifying procedures for the 
loan poolers who bundle SBA loans in a secondary market that will 
generate additional liquidity for small firms and banks.
  As a second step, my bill would directly expand small firms' access 
to credit by making the SBA's Community Express lending program 
permanent. This year, as credit has contracted, demand for the SBA's 
Community Express program has increased dramatically. But, because this 
is a pilot program, its ability to meet this loan demand has been 
severely restricted, forcing lenders to turn borrowers away who qualify 
for Community Express loans.
  My legislation also seeks to bring in new and rural lenders, and 
teach them how to make SBA loans, by establishing an online loan 
underwriting guide to walk lenders through the process. This would 
increase the number of banks making SBA loans, from rural Maine to 
small towns in California, and ultimately promote small business 
owners' overall access to capital.
  As a third step, my bill would improve the SBA's 504 loan program by 
raising the loan limit from $2 million to $3 million. It would also 
permit borrowers to refinance some existing debts into a 504 loan, and 
expands the 504 program's ability to finance projects in low-income 
communities.
  Fourth, the 10 Steps for a Main Street Economic Recovery Act would 
rectify the current lack of liquidity in the 504 program by providing a 
new short-term guarantee on the first loans in the 504 loan package in 
order to encourage investors to buy these securities. Currently, 
without such a guarantee, investors are not purchasing the first loans 
in the 504 loan package. This is preventing Community Development 
Companies, CDCs, from making new 504 loans to small firms. The cost of 
this guarantee will be fully covered by participating 504 lenders. Once 
enacted into law, this temporary guarantee, which would expire at the 
end of fiscal year 2010, would increase investor confidence, encourage 
them to buy 504 investments and resurrect demand for 504 loans.

  Fifth, my legislation contains large, temporary fee reductions to 
defray the cost of borrowing for small business owners and SBA lenders. 
My proposal would reduce overall fees for 7(a) and 504 lenders and 
borrowers by $510 million dollars, a hefty sum considering that the 
SBA's fiscal year 2008 budget was only $663 million. When small firms 
lack access to capital, they are unable to buy new inventory, finance 
new expansions, or often even cover their payrolls. During these 
troubled times, the SBA should do everything within its power, 
including lowering lending fees, to help ensure that small

[[Page S10666]]

firms have access to the credit they require.
  Sixth, as small firms are being turned away from banks and are 
seeking credit through micro-lending organizations, my legislation 
recognizes that the credit crunch has increased the demand for SBA 
microloans. It dedicates $25 million so that SBA microloan providers 
can make additional loans and cover the costs of technical assistance 
associated with these microloans.
  As a seventh step, my bill would raise the maximum amount of 
government guaranteed capital a Small Business Investment Company, 
SBIC, can control, from $130.6 million to $150 million for a single 
SBIC and $225 million for a group of SBICs. This will enable SBICs to 
have additional funds to invest in start-up small businesses, which 
will be critical in driving economic recovery.
  Eighth, this legislation would direct the SBA to develop a nationwide 
advertising strategy to direct small firms to SBA lenders, and 
dedicates $5 million to pay for this strategy. Today, many local and 
community banks have credit they can extend to small firms. 
Unfortunately, many small businesses hear that there is a credit crunch 
and erroneously believe that no other lenders have financing options 
available. This vital advertising will guide small firms to find the 
available resources they need through SBA lenders.
  As a ninth step, my legislation recognizes that taxes 
disproportionately impact small firms' bottom lines. It would provide 
tax breaks that will spur small business growth by extending the 
increased $250,000 small business expensing limit through 2009. This 
will provide small businesses with incentives to invest in plants and 
equipment by reducing their cost of capital. Additionally, the bill 
would provide small firms with an immediate capital injection by 
allowing them to carryback their 2008 or 2009 net operating losses for 
5 years and provide business owners with a longer period over which to 
offset current losses. These measures will help small companies sustain 
operations and continue to employ workers.
  Finally, this legislation would clarify that 7(a) and 504 loans are 
eligible for the Treasury Department's Troubled Asset Relief Program, 
TARP. I have sent a letter, with Senator Kerry, directing the U.S. 
Treasury Department to immediately purchase illiquid 7(a) and 504 
securities from the secondary market in order to free these markets up 
and once again create liquidity for small businesses. Though the 
Treasury already has this authority under the TARP, this provision 
would clarify that authority so the Treasury can act promptly and 
decisively to address the credit crunch's impact on small firms.
  In developing this bill, my office reached out to a host of small 
businesses and lenders, and consulted with the National Association of 
Development Companies and National Association of Guaranteed Government 
Lenders.
  Given the dimensions of what is occurring in our economy, the SBA and 
the Administration must do everything possible to help credit worthy 
small businesses secure the loans they need to innovate, access new 
markets, hire new employees, and grow. Today, as banks are raising 
their credit requirements in order to avoid risk, it is becoming more 
and more difficult for small businesses to qualify for loans. The SBA's 
lending programs are critical to small businesses in this endeavor.
  By implementing the vital provisions contained in the 10 Steps for a 
Main Street Economic Recovery Act, we can increase the opportunities 
for our Nation's small businesses to not only survive during this 
downturn, but to be a catalyst for turning around and reinvigorating 
our economy. I encourage my colleagues to join me in supporting the 10 
Steps for a Main Street Recovery Act.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3705

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

     SECTION 1. SHORT TITLE; DEFINITIONS.

       (a) Short Title.--This Act may be cited as the ``10 Steps 
     for a Main Street Economic Recovery Act of 2008''.
       (b) Definitions.--In this Act--
       (1) the term ``Administration'' means the Small Business 
     Administration;
       (2) the term ``Administrator'' means the Administrator of 
     the Small Business Administration; and
       (3) the term ``small business concern'' has the same 
     meaning as in section 3 of the Small Business Act (15 U.S.C. 
     632).

     SEC. 2. 7(A) LOANS.

       (a) Maximum Loan Amount.--Section 7(a)(3)(A) of the Small 
     Business Act (15 U.S.C. 636(a)(3)(A)) is amended by striking 
     ``$1,500,000 (or if the gross loan amount would exceed 
     $2,000,000'' and inserting ``$2,500,000 (or if the gross loan 
     amount would exceed $3,000,000''.
       (b) Refinancing Existing Loans.--
       (1) In general.--Section 7(a) of the Small Business Act (15 
     U.S.C. 636) is amended by adding at the end the following:
       ``(34) Refinancing existing loans.--A borrower that has 
     received a loan under this subsection may refinance the 
     balance of the loan by applying for a loan from the lender 
     that made the original loan or with another lender.''.
       (2) Technical amendment.--Section 7(a) of the Small 
     Business Act (15 U.S.C. 636(a)) is amended by striking ``(32) 
     Increased'' and inserting ``(33) Increased''.
       (c) 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 (15 
     U.S.C. 695 et seq.) that uses maximum tangible net worth and 
     average net income as an alternative to the industry size 
     standard.
       ``(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).''.
       (d) Flexibility for Pooling of Large Loans.--Section 
     5(g)(1) of the Small Business Act (15 U.S.C. 634(g)(1)) is 
     amended by--
       (1) inserting ``(A)'' after ``(1)'';
       (2) striking the colon and inserting a period;
       (3) striking ``Provided'' and all that follows through 
     ``certificates'' and inserting the following:
       ``(B) A trust certificate issued under this paragraph''; 
     and
       (4) adding at the end the following:
       ``(C) For a loan of more than $500,000 that has been 
     guaranteed by the Administrator under this Act, the 
     Administrator shall, on the request of a loan pool assembler, 
     divide the amount of such loan into individual guarantees, no 
     1 of which may exceed $500,000. Not more than 1 portion of a 
     loan that has been divided under this subparagraph shall be 
     included in the same pool. Portions of more than 1 loan 
     divided under this subparagraph may be included in the same 
     pool.
       ``(D) A lender that makes or services a loan guaranteed 
     under section 7(a) may purchase or hold all or any part of a 
     loan pool that includes a loan made or serviced by the 
     lender.
       ``(E) A purchase or holding by a lender described in 
     subparagraph (D) shall not affect the guarantee under section 
     7(a) of a loan in a pool.''.

     SEC. 3. COMMUNITY EXPRESS AND RURAL LENDING.

       (a) Community Express Program Established.--Section 7(a) of 
     the Small Business Act (15 U.S.C. 636(a)), as amended by this 
     Act, is amended by adding at the end the following:
       ``(35) Community express program.--
       ``(A) Definitions.--In this paragraph--
       ``(i) the term `community express program' means the loan 
     program under this paragraph;
       ``(ii) the term `eligible small business concern' means--

       ``(I) a small business concern owned and controlled by 
     women, as defined in section 29(a)(3);
       ``(II) a small business concern owned by a qualified Indian 
     tribe;
       ``(III) a small business concern owned and controlled by a 
     socially or economically disadvantaged individual, as 
     determined by the Administrator;
       ``(IV) a small business concern owned and controlled by 
     veterans;
       ``(V) a small business concern owned and controlled by a 
     member of a reserve component of the Armed Forces, as defined 
     in section 101 of title 10, United States Code;
       ``(VI) a small business concern located in an area that the 
     Administrator determines to be a low-income or moderate-
     income area;
       ``(VII) a HUBZone small business concern; and
       ``(VIII) a small business concern located in a special 
     market initiative;

       ``(iii) the term `qualified private lender' means a private 
     lender that meets such requirements as the Administrator 
     shall establish; and
       ``(iv) the term `special market initiative' means a 
     community, market, or industry designated by the Director of 
     a district office of the Administration for economic 
     development purposes.

[[Page S10667]]

       ``(B) Loans of $150,000 or less.--
       ``(i) Authorization.--The Administrator may guarantee 
     timely payment of principal and interest, as scheduled, on a 
     loan of not more than $150,000 issued by a qualified private 
     lender to a small business concern.
       ``(ii) Guarantee percentage.--The Administrator may 
     guarantee not more than 85 percent of the amount of a loan 
     under this subparagraph.
       ``(C) Loans of more than $150,000.--
       ``(i) Authorization.--The Administrator may guarantee 
     timely payment of principal and interest, as scheduled, on a 
     loan of more than $150,000 and not more than $300,000 issued 
     by a qualified private lender to an eligible small business 
     concern under this subparagraph.
       ``(ii) Guarantee percentage.--The Administrator may 
     guarantee not more than 75 percent of a loan the amount of a 
     loan under this subparagraph.
       ``(D) Qualified private lender requirements.--
       ``(i) Technical assistance.--A qualified private lender 
     shall--

       ``(I) ensure that appropriate technical assistance is 
     provided to each borrower that receives a loan under the 
     community express program from the qualified private lender;
       ``(II) encourage a borrower that receives a loan under the 
     community express program from the qualified private lender 
     to use the business development programs of the 
     Administration for technical assistance; and
       ``(III) to the extent practicable, use the loan process to 
     work with a borrower that receives a loan under the community 
     express program from the qualified private lender, in order 
     to--

       ``(aa) develop a business plan, if appropriate;
       ``(bb) assess the strengths and weaknesses of the borrower 
     in management and other relevant areas; and
       ``(cc) provide technical assistance to address any assessed 
     weaknesses of the borrower.
       ``(ii) Collateral policy.--

       ``(I) In general.--The Administrator shall establish a 
     policy relating to collateral for loans under the community 
     express program, which shall permit a qualified private 
     lender to make a loan of not more than $15,000 without 
     collateral.
       ``(II) Limitation.--The policy established by the 
     Administrator may not limit the ability of a qualified 
     private lender to follow any internal procedure of the lender 
     related to collateral.

       ``(iii) Equity of borrowers.--Each qualified private lender 
     shall verify that a borrower receiving a loan under the 
     community express program has an equity stake of at least 10 
     percent in the business concern.
       ``(iv) Financial statements.--Each qualified private lender 
     shall obtain a financial statement from a borrower before 
     making a loan under the community express program.
       ``(v) Sale of loans.--A qualified private lender may not 
     sell more than 80 percent of the total dollar value of the 
     loans made by the qualified private lender under the 
     community express program to another person or entity.
       ``(E) Simplification of rules.--The Administrator shall 
     review the regulations and procedures relating to the 
     community express program to ensure that such regulations and 
     procedures are simple and clear and do not create barriers to 
     participation in the program.
       ``(F) Notice and comment.--The Administrator shall 
     establish policies relating to the community express 
     program--
       ``(i) after notice and the opportunity for comment; and
       ``(ii) not later than 1 year after the date of enactment of 
     this paragraph.''.
       (b) Rural Lender and New Lender Outreach Program.--Section 
     7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended 
     by this Act, is amended by adding at the end the following:
       ``(36) Rural lender and new lender outreach program.--
       ``(A) Definitions.--In this paragraph--
       ``(i) the term `new lender' means a lender that has not 
     made more than 20 loans guaranteed by the Administrator 
     during the 3-year period ending on the date on which the 
     applicable loan is submitted (including a lender that has not 
     made a loan guaranteed by the Administration);
       ``(ii) the term `rural area' has the meaning given that 
     term in subsection (m); and
       ``(iii) the term `rural lender' means a lender that--

       ``(I) is located in a rural area; and
       ``(II) made not more than 20 loans guaranteed by the 
     Administration during the 3-year period ending on the date on 
     which the applicable loan application is submitted (including 
     a lender that has not made a loan guaranteed by the 
     Administration).

       ``(B) Program.--The Administrator shall carry out a rural 
     lender and new lender outreach program, under which the 
     Administrator may guarantee timely payment of principal and 
     interest, as scheduled, on a loan to a small business concern 
     of not more than $500,000 made by a rural lender or a new 
     lender.
       ``(C) Loan processing.--
       ``(i) In general.--The Administrator shall establish, for 
     loans guaranteed under this paragraph--

       ``(I) streamlined application and documentation 
     requirements; and
       ``(II) minimum credit standards necessary to provide for a 
     reasonable assurance of repayment, in accordance with 
     paragraph (6).

       ``(ii) New lender training and certification.--The 
     Administrator may guarantee a loan made by a new lender under 
     this paragraph if the Administrator--

       ``(I) provides the new lender with training described in 
     subparagraph (D); and
       ``(II) determines that the new lender meets minimum 
     standards for program knowledge, borrower eligibility, and 
     underwriting standards.

       ``(iii) Approval or disapproval.--For a loan guaranteed 
     under this paragraph, the Administrator shall approve or 
     disapprove the loan in as expedited manner as practicable.
       ``(D) Training.--At regularly scheduled intervals and upon 
     request by a new lender or rural lender the Administrator 
     shall provide training for new lenders and rural lenders on 
     the loan guarantee program under this subsection.''.
       (c) Electronic Online Loan Underwriting Program Guide.--
       (1) Purpose.--The purpose of this subsection is to assist 
     rural lenders and new lenders in making more loans of good 
     underwriting quality to small business concerns.
       (2) Online underwriting guide.--The Administrator shall 
     establish an online underwriting program guide (in this 
     subsection referred to as the ``guide'') to develop the 
     lending capacity of rural lenders and new lenders (as such 
     terms are defined in paragraph (36) of section 7(a) of the 
     Small Business Act (15 U.S.C. 636(a)), as added by this Act).
       (3) Requirements.--The guide--
       (A) is not intended to replace the internal credit scoring 
     and loan approval process of a lender;
       (B) shall demonstrate the steps the Administrator expects a 
     lender to take in making a loan under a program of the 
     Administration;
       (C) shall assist a lender in using the internal credit 
     evaluation processes of the lender to make a loan under a 
     program of the Administration and build the capacity and 
     ability of the lender to make such loans;
       (D) shall provide simple steps to assist a lender that has 
     not made a loan guaranteed by the Administration through the 
     loan application process for a loan under section 7(a) of the 
     Small Business Act (15 U.S.C. 636(a));
       (E) shall include information, guidance, sample 
     documentation, questions and answers, and any other 
     information necessary to guide a lender through the process 
     of making a loan guaranteed by the Administration in a 
     systematic and simple fashion; and
       (F) shall include information relating to--
       (i) loan application and preapproval;
       (ii) loan underwriting;
       (iii) requirements after loan approval;
       (iv) preparation for loan closing;
       (v) closing the loan; and
       (vi) servicing the loan.
       (4) Electronically submitted loans.--The Administrator 
     shall use the guide as a means to increase the number of 
     applications for loan guarantees submitted electronically for 
     approval from rural lenders and new lenders.

     SEC. 4. 504 LOANS.

       (a) Maximum Loan Amounts Under 504 Program.--Section 
     502(2)(A) of the Small Business Investment Act of 1958 (15 
     U.S.C. 696(2)(A)) is amended--
       (1) in clause (i), by striking ``$1,500,000'' and inserting 
     ``$2,250,000'';
       (2) in clause (ii), by striking ``$2,000,000'' and 
     inserting ``$3,000,000''; and
       (3) in clause (iii), by striking ``$4,000,000'' and 
     inserting ``$5,500,000''.
       (b) Businesses in Low-Income Communities.--
       (1) Goals.--Section 501(d)(3)(A) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 695(d)(3)(A)) is amended by 
     inserting after ``business district revitalization,'' the 
     following: ``or expansion of businesses in a low-income 
     community, as defined in section 45D(e) of the Internal 
     Revenue Code of 1986 and implementing regulations,''.
       (2) Additional incentives.--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) Low-income communities.--
       ``(A) Loan amount.--Notwithstanding paragraph (2)(A)(ii), a 
     loan under this section for use in a low-income community 
     described in section 501(d)(3)(A) may not exceed $5,500,000.
       ``(B) Size standards.--For purposes of determining 
     eligibility for a loan under this section for use in a low-
     income community described in section 501(d)(3)(A), the size 
     standards established by the Administrator under section 3 of 
     the Small Business Act (15 U.S.C. 632) shall be increased by 
     25 percent.
       ``(C) Personal liquidity.--
       ``(i) In general.--For any loan under this section for use 
     in a low-income community described in section 501(d)(3)(A), 
     the amount of personal resources of an owner that are 
     excluded from the amount required to be provided to reduce 
     the portion of the project funded by the Administration shall 
     be not less than 25 percent more than that required for other 
     loans under this section.
       ``(ii) Definition.--In this subparagraph, the term `owner' 
     means any person that owns not less than 20 percent of the 
     equity of the small business concern applying for the 
     applicable loan.''.
       (c) Additional Equity Injections.--Section 502(3)(B)(ii) of 
     the Small Business Investment Act of 1958 (15 U.S.C. 
     696(3)(B)(ii)) is amended to read as follows:

[[Page S10668]]

       ``(ii) Funding from institutions.--If a small business 
     concern--

       ``(I) provides the minimum contribution required under 
     subparagraph (C), not less than 50 percent of the total cost 
     of any project financed under clause (i), (ii), or (iii) of 
     subparagraph (C) shall come from the institutions described 
     in subclauses (I), (II), and (III) of clause (i) of this 
     subparagraph; and
       ``(II) provides more than the minimum contribution required 
     under subparagraph (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) of this 
     subparagraph, except that the amount from such institutions 
     may not be reduced to an amount that is less than the amount 
     of the loan made by the Administrator.''.

       (d) Refinancing Under the Local Development Business Loan 
     Program.--Section 502 of the Small Business Investment Act of 
     1958 (15 U.S.C. 696), as amended by this Act, is amended by 
     adding at the end the following:
       ``(8) Permissible debt refinancing.--
       ``(A) In general.--Any financing approved under this title 
     may include a limited amount of debt refinancing.
       ``(B) Expansions.--If the project involves expansion of a 
     small business concern which has existing indebtedness 
     collateralized by fixed assets, any amount of existing 
     indebtedness that does not exceed \1/2\ of the project cost 
     of the expansion may be refinanced and added to the expansion 
     cost, if--
       ``(i) the proceeds of the indebtedness were used to acquire 
     land, including a building situated thereon, to construct a 
     building thereon, or to purchase equipment;
       ``(ii) the borrower has been current on all payments due on 
     the existing debt for not less than 1 year preceding the date 
     of refinancing; and
       ``(iii) the financing under section 504 will provide better 
     terms or rate of interest than exists on the debt at the time 
     of refinancing.''.
       (e) Job Creation Requirements.--Section 501(e) of the Small 
     Business Investment Act of 1958 (15 U.S.C. 695(e)) is 
     amended--
       (1) in paragraph (1), by striking ``$50,000'' and inserting 
     ``$65,000''; and
       (2) in paragraph (2), by striking ``$50,000'' and inserting 
     ``$65,000''.

     SEC. 5. GUARANTEE AND SALE OF BANK FINANCINGS WITH 504 LOAN 
                   PROGRAM.

       (a) Definitions.--In this section--
       (1) the term ``pool assembler'' means a financial 
     institution that--
       (A) organizes and packages a loan pool by acquiring the 
     guaranteed portion of third party financings guaranteed by 
     the Administrator under subsection (b);
       (B) resells fractional interests in the loan pool to 
     registered holders; and
       (C) directs that the fiscal and transfer agent of the 
     Administrator to issue trust certificates; and
       (2) the term ``third party financing'' means a financing 
     described in section 502(3)(B)(ii) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 696(3)(B)(ii))--
       (A) made on or before the date of enactment of this Act;
       (B) that provides for the payment of interest at a fixed 
     rate or under a variable rate index (plus a spread) based 
     upon Prime rate, a London Interbank Offered Rate (or LIBOR), 
     a Federal Home Loan Bank rate, a United States Treasury rate, 
     or a generally accepted market index rate approved by the 
     Administrator;
       (C) that provides amortized payments with a maturity of not 
     more than 25 years; and
       (D) for which the borrower--
       (i) is current on all payments due on the loan on the date 
     on which the loan is guaranteed under subsection (b); and
       (ii) has not been more than 29 days past due on a payment 
     during the 12-month period ending on the date on which the 
     loan is guaranteed under subsection (b).
       (b) Loan Guarantee.--
       (1) In general.--To the extent amounts are provided in 
     advance in appropriations Acts, and in accordance with this 
     subsection, upon application of a pool assembler who has 
     acquired a third party financing, the Administrator shall 
     guarantee the timely repayment of principal and interest on 
     80 percent of the balance of the third party financing 
     outstanding on the date of the guarantee.
       (2) Lenders.--A lender that made a third party financing 
     guaranteed under paragraph (1)--
       (A) shall--
       (i) agree to hold and service the note issued as part of 
     the third party financing;
       (ii) comply with the reporting and payment remittance 
     requirements of the Administrator; and
       (iii) enter a secondary participation guaranty agreement 
     with the Administrator and the fiscal and transfer agent of 
     the Administrator; and
       (B) may collect and retain all of any applicable prepayment 
     penalties otherwise provided in the event the third party 
     financing is prepaid.
       (3) Guarantee fee.--To cover the costs of guarantees under 
     this subsection and the cost of issuing trust certificates 
     under subsection (c), a lender that made a third party 
     financing guaranteed under paragraph (1) shall pay to the 
     Administrator--
       (A) a one-time fee equal to 1 percent of the net amount of 
     the third party financing guaranteed by the Administration, 
     payable on the date on which the third party financing is 
     guaranteed; and
       (B) a monthly fee on the unpaid balance of the net amount 
     of the third party financing guarantee at the rate of 25 
     basis points per year.
       (4) Maximum amount.--The Administrator may guarantee a 
     total amount of not more than $6,000,000,000 in third party 
     financings under this subsection.
       (5) Termination of authority.--The authority of the 
     Administrator to guarantee a third party financing under this 
     subsection shall terminate on September 30, 2010.
       (6) Appropriation.--In addition to any other amounts 
     appropriated, there are appropriated for the fiscal year 
     ending September 30, 2009, for the ``Business Loans Program 
     Account'' of the Administration, out of any money in the 
     Treasury not otherwise appropriated, $1 for loan subsidies 
     and for loan modifications for guarantees authorized under 
     this subsection, to remain available until expended.
       (c) Trust Certificates.--
       (1) Issuance.--The Administrator may issue a trust 
     certificate representing ownership of all or a fractional 
     part of the guaranteed portion of 1 or more third party 
     financings that have been guaranteed by the Administrator 
     under subsection (b). A trust certificate issued under this 
     subsection shall be based on and backed by a trust or pool 
     approved by the Administrator and composed solely of the 
     entire guaranteed portion of third party financings 
     guaranteed by the Administrator under subsection (b).
       (2) Pooling requirements.--
       (A) Interest rate.--The interest rate on a trust 
     certificate issued under this subsection shall be the 
     weighted average interest rate of all third party financings 
     in the pool. There shall be no limit on the difference 
     between the highest and lowest note interest rates on third 
     party financings forming the pool.
       (B) Maturity.--
       (i) In general.--Each pool may include either--

       (I) third party financings with remaining terms to maturity 
     of 15 years or less; or
       (II) third party financings with remaining terms to 
     maturity of more than 15 years.

       (ii) No other limitations.--Except as provided in clause 
     (i), the Administrator may not limit the difference between 
     the remaining terms to maturity of the third party financings 
     forming a pool.
       (C) Size.--
       (i) In general.--If the amount of the guaranteed portion of 
     any third party financing exceeds $500,000, the Administrator 
     shall, upon request of the pool assembler, divide the amount 
     of the third party financing into individual guarantees no 1 
     of which exceeds $500,000.
       (ii) Divided financings.--Not more than 1 portion of a 
     third party financing that has been divided under this 
     subparagraph shall be included in the same pool. Portions of 
     more than 1 third party financing divided under this 
     subparagraph may be included in the same pool.
       (3) Timely payment.--
       (A) In general.--The Administrator may, upon such terms and 
     conditions as the Administrator determines appropriate, 
     guarantee the timely payment of principal and interest on a 
     trust certificate issued by the Administrator or an agent of 
     the Administrator under this subsection. A guarantee under 
     this paragraph shall be limited to the principal and interest 
     on the guaranteed portions of the third party financings that 
     comprise the trust or pool.
       (B) Prepayment.--If a third party financing in a trust or 
     pool guaranteed under this paragraph is prepaid, either 
     voluntarily or in the event of default, the guarantee of 
     timely payment of principal and interest on the trust 
     certificates shall be reduced in proportion to the amount of 
     principal and interest the prepaid third party financing 
     represents in the trust or pool. Interest on prepaid or 
     defaulted third party financings shall accrue and be 
     guaranteed by the Administrator only through the date of 
     payment on the guarantee. During the term of a trust 
     certificate issued under this subsection, the trust 
     certificate may be called for redemption due to prepayment or 
     default of all third party financings constituting the pool.
       (4) Full faith and credit.--The full faith and credit of 
     the United States is pledged to the payment of all amounts 
     that may be required to be paid under any guarantee of a 
     trust certificate issued by the Administrator or an agent of 
     the Administrator under this subsection.
       (5) Use of agent.--The Administrator shall negotiate an 
     amendment to the contract in effect on the date of enactment 
     of this Act with the agent for fee collection for trust 
     certificates issued under section 5(g) of the Small Business 
     Act (15 U.S.C. 634(g)) to collect the monthly fee under 
     subsection (b)(3)(B) of this section. The agent may receive, 
     as compensation for services, any interest earned on a fee 
     collected under this section while in the control of the 
     agent before the time at which the agent is contractually 
     required to remit the fee to the Administrator.
       (6) Claims.--In the event the Administrator pays a claim 
     under a guarantee issued under this subsection, it shall be 
     subrogated fully to the rights satisfied by such payment.
       (7) Ownership rights.--No State or local law, and no 
     Federal law, shall preclude or limit the exercise by the 
     Administrator of the ownership rights in the portions of 
     third party financings constituting the trust or pool against 
     which a trust certificate is issued under this subsection.

[[Page S10669]]

       (8) Central registration.--The Administrator--
       (A) shall provide for a central registration of all trust 
     certificates issued under this subsection;
       (B) shall negotiate an amendment to the contract in effect 
     on the date of enactment of this Act with the agent for 
     central registration of trust certificates issued pursuant to 
     section 5(h) of the Small Business Act (15 U.S.C. 634(h)) to 
     carry out on behalf of the Administrator the central 
     registration functions under this subsection and the issuance 
     of trust certificates to facilitate pooling, under which--
       (i) the agent may be compensated through any of the fees 
     collected under this section and any interest earned on any 
     funds collected by the agent while such funds are in the 
     control of the agent and before the time at which the agent 
     is contractually required to transfer such funds to the 
     Administrator or to the holders of the trust certificates, as 
     appropriate; and
       (ii) the agent shall provide a fidelity bond or insurance 
     in such amounts as the Administrator determines to be 
     necessary to fully protect the interest of the Government; 
     and
       (C) may--
       (i) use a book-entry or other electronic form of 
     registration for trust certificates issued under this 
     subsection; and
       (ii) with the consent of the Secretary of the Treasury, use 
     the book-entry system of the Federal Reserve System.
       (9) Sale.--The Administrator shall, before any sale of a 
     trust certificate issued under this subsection, require the 
     seller to disclose to the purchaser of the trust certificate 
     information on the terms, conditions, and yield of such 
     instrument.
       (10) Brokers and dealers.--The Administrator may issue 
     regulations relating to the brokering of and dealing in trust 
     certificates sold under this subsection.
       (11) Termination of authority.--The authority of the 
     Administrator to issue trust certificates under this 
     subsection shall terminate on September 30, 2010.
       (d) Implementation.--Not later than 30 days after the date 
     of enactment of this Act, the Administrator shall issue 
     interim final regulations to carry out this section.
       (e) Lender Purchase Eligibility.--
       (1) In general.--A lender that made or services a loan 
     guaranteed under section 7(a) of the Small Business Act (15 
     U.S.C. 636(a)) or a third party financing guaranteed under 
     subsection (b) of this section may purchase and hold all or 
     any part of a loan pool which includes a loan or third party 
     financing made or serviced by the lender.
       (2) No effect on guarantee.--A purchase described in 
     subparagraph (A) shall not affect the guarantee of a loan or 
     third party financing in a pool.

     SEC. 6. EMERGENCY SHORT TERM FEE REDUCTIONS.

       (a) Lender Oversight Fees.--
       (1) Temporary reduction in fees.--
       (A) In general.--To the extent amounts are provided in 
     advance in appropriations Acts, the Administrator shall, in 
     lieu of the fee otherwise applicable under section 5(b)(14) 
     of the Small Business Act (15 U.S.C. 634(b)(14)), collect no 
     fee.
       (B) Authorization of appropriations.--There are authorized 
     to be appropriated for salaries and expenses of the 
     Administration relating to examinations, reviews, and other 
     lender oversight activities relating to loans under section 7 
     of the Small Business Act (15 U.S.C. 636)--
       (i) $10,000,000 for each of fiscal years 2009 and 2010; and
       (ii) such sums as may be necessary for each fiscal year 
     thereafter.
       (2) Report on making fees contingent on performance.--Not 
     later than 6 months after the date of enactment of this Act, 
     the Administrator, in consultation with lenders that have 
     made loans guaranteed under section 7 of the Small Business 
     Act (15 U.S.C. 636), shall submit to the Committee on Small 
     Business and Entrepreneurship of the Senate and the Committee 
     on Small Business of the House of Representatives a report 
     regarding the feasibility of assessing annual fees under 
     section 7(a)(23)(A) of the Small Business Act (15 U.S.C. 
     636(a)(23)(A)) in an amount that is contingent on the 
     performance of the lender, including consideration of the 
     meeting the requirement under section 7(a)(1) of that Act (15 
     U.S.C. 636(a)(1)) of providing credit to applicants than 
     cannot obtain credit elsewhere. The report under this 
     paragraph may include proposed legislation.
       (b) Fee Reductions.--
       (1) New 7(a) lender defined.--In this subsection the term 
     ``new 7(a) lender'' means a lender that has not made more 
     than 20 loans guaranteed by the Administrator under section 
     7(a) of the Small Business Act (15 U.S.C. 636(a)) during the 
     3-year period ending on the date on which the Administrator 
     determines the fee under section 7(a)(23)(A) of that Act (15 
     U.S.C. 636(a)(23)(A)) for the lender.
       (2) 7(a) loan fee reductions.--
       (A) In general.--For fiscal years 2009 and 2010, and to the 
     extent the cost of such reduction in fees is offset by 
     appropriations, with respect to each loan guaranteed under 
     section 7(a) of Small Business Act (15 U.S.C. 636(a))--
       (i) the Administrator shall, in lieu of the fee otherwise 
     applicable under section 7(a)(23)(A) of the Small Business 
     Act (15 U.S.C. 636(a)(23)(A)), collect an annual fee in an 
     amount equal to--

       (I) 0.25 percent of the outstanding balance of the deferred 
     participation share of a loan made under section 7(a) of the 
     Small Business Act (15 U.S.C. 636(a)) to a small business 
     concern before the date of enactment of this Act; and
       (II) .20 percent of the outstanding balance of the deferred 
     participation share of a loan made by a new 7(a) lender to a 
     small business concern; and

       (ii) with respect to each loan guaranteed under section 
     7(a) of the Small Business Act (15 U.S.C. 636(a)), the 
     Administrator shall, in lieu of the fee otherwise applicable 
     under section 7(a)(18)(A) of the Small Business Act (15 
     U.S.C. 636(a)(18)(A)), (including any additional fee under 
     clause (iv) of that section 7(a)(18)(A)) collect a guarantee 
     fee in an amount equal to--

       (I) 0.75 percent of the deferred participation share of a 
     total loan amount that is not more than $150,000;
       (II) 2 percent of the deferred participation share of a 
     total loan amount that is more than $150,000, and not more 
     than $700,000; and
       (III) 2.5 percent of the deferred participation share of a 
     total loan amount that is more than $700,000.

       (B) Implementation.--In carrying out this paragraph, the 
     Administrator shall reduce the fees for a loan guaranteed 
     under section 7(a) of the Small Business Act (15 U.S.C. 
     636(a)) to the maximum extent possible, subject to the 
     availability of appropriations.
       (C) Application of fee reductions.--If funds are made 
     available to carry out this paragraph, the Administrator 
     shall reduce the fees under subparagraph (A) for any loan 
     guarantee or project subject to such subparagraph for which 
     the application is pending approval on or after the date of 
     enactment of this Act, until the amount provided for such 
     purpose is expended.
       (D) Authorization of appropriations.--There are authorized 
     to be appropriated to the Administrator for each of fiscal 
     years 2009 and 2010--
       (i) $175,000,000 to carry out subparagraph (A)(i);
       (ii) $75,000,000 to carry out subparagraph (A)(ii).
       (3) 504 loan fee and rate reductions.--
       (A) Fee reductions.--
       (i) Fee reductions.--To the extent the cost of such 
     reduction in fees is offset by appropriations, for any loan 
     guarantee or project for which an application is closed on or 
     after the date of enactment of this Act--

       (I) with respect to an institution described in subclause 
     (I), (II), or (III) of section 502(3)(B)(i) of the Small 
     Business Investment Act of 1958 (15 U.S.C. 696(3)(B)(i)), the 
     Administrator shall, in lieu of the fees otherwise applicable 
     under section 503(d)(2) of the Small Business Investment Act 
     of 1958 (15 U.S.C. 697(d)(2)), collect no fee;
       (II) a development company shall, in lieu of the mandatory 
     0.625 servicing fee under section 120.971(a)(3) of title 13, 
     Code of Federal Regulations, (relating to fees paid by 
     borrowers), or any successor thereto, collect no fee; and
       (III) the Administrator shall, in lieu of the fee otherwise 
     applicable under section 503(d)(3) of the Small Business 
     Investment Act (15 U.S.C. 697(d)(3)), collect no fee.

       (ii) Reimbursement for waived fees.--

       (I) In general.--To the extent the cost of such payments is 
     offset by appropriations, the Administrator shall reimburse 
     each development company that does not collect a servicing 
     fee pursuant to clause (i)(II).
       (II) Amount.--The payment to a development company under 
     subclause (I) shall be in an amount equal to 0.5 percent of 
     the outstanding principal balance of any guaranteed debenture 
     for which the development company does not collect a 
     servicing fee pursuant to clause (i)(II).

       (iii) Authorization of appropriations.--There are 
     authorized to be appropriated to the Administrator for each 
     of fiscal years 2009 and 2010--

       (I) $50,000,000 for the elimination of fees under clause 
     (i)(I);
       (II) $40,000,000 for payments under clause (ii) to offset 
     the elimination of fees under clause (i)(II); and
       (III) $10,000,000 for the elimination of fees under clause 
     (i)(III).

       (B) Rate reduction.--
       (i) In general.--To the extent that the cost of making an 
     interest rate reduction is offset by appropriations, the 
     Administrator shall pay, on behalf of a small business 
     borrower, an amount equal to 100 basis points of the interest 
     rate required to be paid by the borrower on the amount of the 
     guarantee provided under title V of the Small Business 
     Investment Act of 1958 (15 U.S.C. 695 et seq.), if the loan 
     is closed on or after the date of enactment of this Act.
       (ii) Frequency of payment.--The Administrator shall make a 
     payment under clause (i) on a semiannual basis.
       (iii) Method of payment.--The Administrator may use a 
     central servicing agent to make a payment under clause (i).
       (iv) Notice to development company.--The Administrator 
     shall notify a development company that receives a payment 
     under clause (i) when funds are made available for the rate 
     reduction under clause (i).
       (v) Implementation.--A development company that receives a 
     payment under clause (i) shall--

       (I) use the payments solely for the purpose provided; and
       (II) adjust the amount of the monthly payment by the 
     borrower accordingly.

       (vi) Authorization of appropriations.--There is authorized 
     to be appropriated to the Administrator for each of fiscal 
     years 2009

[[Page S10670]]

     and 2010, $150,000,000 for payments made under clause (i).

     SEC. 7. MICROLENDING.

       In addition to any amounts otherwise authorized to be 
     appropriated for such purposes, there are authorized to be 
     appropriated to the Administrator for each of fiscal years 
     2009 and 2010--
       (1) $5,000,000 for direct loans under section 7(m) of the 
     Small Business Act (15 U.S.C. 636(m)); and
       (2) $20,000,000 for grants to intermediaries for marketing, 
     management, and technical assistance under section 7(m)(4) of 
     the Small Business Act (15 U.S.C. 636(m)(4)).

     SEC. 8. SMALL BUSINESS INVESTMENT COMPANIES.

       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 1 company licensed under 
     section 301(c) may not exceed the lesser of--
       ``(i) 300 percent of the private capital of the company; or
       ``(ii) $150,000,000.
       ``(B) Multiple licenses under common control.--The maximum 
     amount of outstanding leverage made available to 2 or more 
     companies licensed under section 301(c) that are commonly 
     controlled (as determined by the Administrator) and the 
     private capital of which the Administrator determines meets 
     the requirements of subsection (e) may not exceed 
     $225,000,000.''; and
       (2) by striking paragraph (4).

     SEC. 9. EMERGENCY SMALL BUSINESS LENDING ADVERTISING 
                   STRATEGY.

       Section 4 of the Small Business Act (15 U.S.C. 633) is 
     amended by adding at the end the following:
       ``(i) Emergency Small Business Lending Advertising 
     Strategy.--
       ``(1) Purpose.--The purpose of this subsection is to ensure 
     that the Administrator provides information to the owners of 
     small business concerns regarding lenders in their areas that 
     participate in programs of the Administration and that will 
     allow small business concerns to access business capital 
     during a liquidity and capital lending shortage.
       ``(2) Lending advertising strategy.--The Administrator 
     shall develop an emergency small business lending advertising 
     strategy to inform small business concerns located throughout 
     the United States that loans under this Act are available 
     through lenders that participate in programs of the 
     Administration.
       ``(3) Media.--The Administrator shall use print, radio, 
     television, and Internet advertisement, where appropriate, to 
     carry out this subsection.
       ``(4) Effective date.--Not later than 30 days after the 
     date of enactment of this Act, the Administrator shall 
     implement the emergency small business lending advertising 
     strategy.
       ``(5) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection--
       ``(A) $5,000,000 for each of fiscal years 2009 and 2010; 
     and
       ``(B) such sums as may be necessary for each fiscal year 
     thereafter.''.

     SEC. 10. TAX PROVISIONS.

       (a) Extension of Temporary Increase in Limitations on 
     Expensing of Certain Depreciable Business Assets.--
       (1) In general.--Paragraph (7) of section 179(b) of the 
     Internal Revenue Code of 1986 is amended--
       (A) by inserting ``and 2009'' after ``2008'' in the 
     heading, and
       (B) by inserting ``or 2009'' after ``In the case of any 
     taxable year beginning in 2008''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2008.
       (b) Carryback of Certain Net Operating Losses Allowed for 5 
     Years; Temporary Suspension of 90 Percent AMT Limit.--
       (1) In general.--Subparagraph (H) of section 172(b)(1) of 
     the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(H) 5-year carryback of certain losses.--
       ``(i) Taxable years ending during 2001 and 2002.--In the 
     case of a net operating loss for any taxable year ending 
     during 2001 or 2002, subparagraph (A)(i) shall be applied by 
     substituting `5' for `2' and subparagraph (F) shall not 
     apply.
       ``(ii) Taxable years ending during 2008 and 2009.--In the 
     case of a net operating loss with respect to any eligible 
     taxpayer for any taxable year ending during 2008 or 2009--

       ``(I) subparagraph (A)(i) shall be applied by substituting 
     `5' for `2',
       ``(II) subparagraph (E)(ii) shall be applied by 
     substituting `4' for `2', and
       ``(III) subparagraph (F) shall not apply.

       ``(iii) Eligible taxpayer.--For purposes of clause (ii), 
     the term `eligible taxpayer' means a corporation or 
     partnership which meets the gross receipts test of section 
     448(c) (determined by substituting `$10,000,000' for 
     `$5,000,000' and `5-taxable-year period' for `3-taxable-year 
     period') for the taxable year in which the loss arose (or, in 
     the case of a sole proprietorship, which would meet such test 
     if such proprietorship were a corporation.''.
       (2) Temporary suspension of 90 percent limit on certain nol 
     carrybacks and carryovers.--
       (A) In general.--Section 56(d) of the of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new paragraph:
       ``(3) Additional adjustments.--For purposes of paragraph 
     (1)(A), in the case of an eligible taxpayer (as defined in 
     section 172(b)(1)(H)(iii)), the amount described in clause 
     (I) of paragraph (1)(A)(ii) shall be increased by the amount 
     of the net operating loss deduction allowable for the taxable 
     year under section 172 attributable to the sum of--
       ``(A) carrybacks of net operating losses from taxable years 
     ending during 2008 and 2009, and
       ``(B) carryovers of net operating losses to taxable years 
     ending during 2008 or 2009.''.
       (B) Conforming amendment.--Subclause (I) of section 
     56(d)(1)(A)(i) of such Code is amended by inserting ``amount 
     of such'' before ``deduction described in clause (ii)(I)''.
       (3) Anti-abuse rules.--The Secretary of Treasury or the 
     Secretary's designee shall prescribe such rules as are 
     necessary to prevent the abuse of the purposes of the 
     amendments made by this subsection, including anti-stuffing 
     rules, anti-churning rules (including rules relating to sale-
     leasebacks), and rules similar to the rules under section 
     1091 of the Internal Revenue Code of 1986 relating to losses 
     from wash sales.
       (4) Effective dates.--
       (A) Subsection (a).--The amendments made by paragraph (1) 
     shall apply to net operating losses arising in taxable years 
     ending in 2008 or 2009.
       (B) Subsection (b).--The amendments made by paragraph (2) 
     shall apply to taxable years ending after December 31, 2007.

     SEC. 11. TROUBLED ASSETS.

       Section 3(9) of the Emergency Economic Stabilization Act of 
     2008 (division A of Public Law 110-343) is amended--
       (1) in subparagraph (A), by striking ``and'' at the end;
       (2) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (3) by inserting after subparagraph (A) the following:
       ``(B) a trust certificate issued by the Administrator of 
     the Small Business Administration under section 5(g) of the 
     Small Business Act (15 U.S.C. 634(g)), a loan guaranteed by 
     the Small Business Administration under section 7(a) of the 
     Small Business Act (15 U.S.C. 636(a)), and a trust 
     certificate issued under section 505 of the Small Business 
     Investment Act of 1958 (15 U.S.C. 697), including an 
     underlying debenture, the purchase of which the Secretary 
     determines promotes financial market stability; and''.
                                 ______