[House Report 117-327]
[From the U.S. Government Publishing Office]
117th Congress } { Report
HOUSE OF REPRESENTATIVES
2nd Session } { 117-327
======================================================================
COVID-19 EIDL FRAUD STATUTE OF LIMITATIONS ACT OF
2022
_______
May 17, 2022.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Ms. Velazquez, from the Committee on Small Business, submitted the
following
R E P O R T
[To accompany H.R. 7334]
The Committee on Small Business, to whom was referred the
bill (H.R. 7334) to extend the statute of limitations for fraud
by borrowers under certain COVID-19 economic injury disaster
loan programs of the Small Business Administration, and for
other purposes, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
CONTENTS
Page
I. Purpose and Bill Summary.........................................1
II. Background and Need for Legislation..............................2
III. Hearings.........................................................3
IV. Committee Consideration..........................................3
V. Committee Votes..................................................3
VI. Section-by-Section for H.R. 7334.................................4
VII. Congressional Budget Cost Estimate...............................4
VIII.New Budget Authority, Entitlement Authority, and Tax Expenditures4
IX. Committee Oversight Findings and Recommendations.................4
X. Statement of General Performance Goals and Objectives............4
XI. Duplication of Federal Programs..................................4
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits.........................................................5
XIII.Federal Mandates Statement.......................................5
XIV. Federal Advisory Committee Statement.............................5
XV. Applicability to Legislative Branch..............................5
XVI. Changes in Existing Law Made by the Bill, as Reported............5
I. Purpose and Bill Summary
The purpose of H.R. 7334, the ``COVID-19 EIDL Fraud Statute
of Limitations Act of 2022'', is to establish a statute of
limitations of ten years for COVID-19 Economic Injury Disaster
Loan (EIDL) fraud cases.
II. Background and Need for Legislation
H.R. 7334 was introduced by Ranking Member Blaine
Luetkemeyer (R-MO) and Chairwoman Nydia M. Velazquez (D-NY) on
March 31, 2022.
The Small Business Administration's (SBA) disaster
assistance for businesses is mostly in the form of loans to
help businesses repair and replace damaged property and provide
financial assistance to businesses that suffered economic loss
due to a natural disaster. SBA's Economic Injury Disaster Loans
(EIDLs) provide up to $2 million for working capital (including
fixed debts, payroll, accounts payable, and other bills that
cannot be paid because of the disaster's impact) to help small
businesses, small agricultural cooperatives, small businesses
engaged in aquaculture, and most private, nonprofit
organizations meet their financial obligations and operating
expenses that cannot be met as a direct result of the disaster
(regardless if there has been physical damage to the business).
While the outbreak of COVID-19 was impacting small
businesses in some parts of the country as early as January,
SBA was slow in issuing the county-by-county disaster
declarations that allow small businesses to apply for EIDLs. On
March 6, 2020, Congress passed the Coronavirus Preparedness and
Response Supplemental Appropriations Act, 2020, which deemed
the COVID-19 outbreak a declarable disaster under the Small
Business Act and provided SBA with an additional $20 million
for disaster assistance administrative expenses. The measure
also permitted SBA to issue disaster declarations that make
EIDLs available to eligible small businesses. On March 16,
2020, the Administrator began issuing such declarations in
response to states seeking SBA disaster assistance. New
criteria issued by SBA relaxed eligibility requirements for
states/territories, requiring a certification that at least
five small businesses within the state/territory suffered
substantial economic injury, regardless of where the businesses
are located. By March 21, 2020, the SBA had issued disaster
declarations for all 50 states and 3 territories.
On March 27, 2020, Congress passed the Coronavirus Aid,
Relief, and Economic Security (CARES) Act, which provided $10
billion for Emergency EIDL grants, a new SBA program that would
provide advance payments of up to $10,000 that would not need
to be repaid, even if borrowers are later denied disaster
loans. According to the law, borrowers must request the
advances in the applications, and SBA must disburse the
advances within three days. To get the money into the hands of
borrowers swiftly, the law streamlines the process for loan
approvals and disbursals. Furthermore, the American Rescue Plan
Act of 2021 provided an additional $15 billion for the Targeted
EIDL Advances and directed SBA to address any potential funding
shortfalls in the first 28 days after enactment to ensure that
remaining eligible businesses can access the $10,000 grant. The
American Rescue Plan Act also directed SBA to make any
remaining funding available for supplemental grants to
``severely impacted'' small businesses that suffered a loss of
at least 50 percent, are located in a low-income census tract
as defined by section 45D(e) of the Internal Revenue Code and
have ten employees or fewer. On October 15, 2021, SBA's Office
of Inspector General (OIG) published a report on the top
management and performance challenges facing SBA in fiscal year
2022, which included the COVID EIDL program's susceptibility to
fraud as a top challenge. Specifically, the management and
performance challenges report cited previous OIG reports that
identified $78.1 billion in potentially fraudulent loans and
grants to ineligible entities, as well as $6.7 billion in loans
and grants related to identity theft allegations. On March 1,
2022, in his State of the Union address, President Biden
announced the appointment of a DOJ Special Prosecutor for
COVID-19 Pandemic Fraud as part of an ongoing Administration-
wide effort to punish pandemic-related fraud, including COVID
EIDL fraud. Accordingly, by extending the statute of
limitations for COVID EIDL fraud to ten years, this legislation
gives prosecutors more time to bring pandemic fraudsters to
justice.
III. Hearings
In the 117th Congress, the Committee has spent a
significant amount of time examining fraud within SBA's
pandemic relief programs and evaluating policy options to
curtail fraud within those programs. On April 20, 2021, the
Committee held a hearing where Members heard an update on SBA's
Pandemic Response Programs--which included PPP and COVID EIDL--
from SBA's Office of Inspector General (OIG) and the Government
Accountability Office. During the hearing, Mr. Hannibal
``Mike'' Ware, Inspector General, testified that fraud
investigations related to these programs will be a decades-long
effort due to the performance of these loans within SBA's
portfolios and the statute of limitations on fraud.
On January 12, 2022, the Committee held a hearing with the
OIG where Members reviewed the OIG's semiannual report to
Congress and its report on SBA's top management and performance
challenges in fiscal year 2022. Part of the hearing focused on
OIG's efforts to combat fraud within the PPP and COVID EIDL
program. At the hearing, Mr. Ware mentioned that a significant
portion of COVID EIDLs will come due for payment near the end
of fiscal year 2024, which will be a key moment to realize the
true scope of fraud related with the program. The billions of
dollars of potential fraud associated with the PPP and COVID
EIDL program, as mentioned in the two hearings above,
highlights the need to extend the statute of limitations to
allow the federal government to continue investigating and
prosecuting bad actors.
IV. Committee Consideration
The Committee on Small Business met in open session, with a
quorum being present, on May 11, 2022, and ordered H.R. 7334
reported to the House of Representatives. During the markup, no
amendments were offered.
V. Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report legislation and amendments
thereto. The Committee voted by voice vote to favorably report
H.R. 7334 to the House at 10:30 a.m.
VI. Section-by-Section for H.R. 7334
Section 1. Short title
This Act may be cited as the ``COVID-19 EIDL Fraud Statute
of Limitations Act of 2022''.
Section 2. Extension of statute of limitations for certain COVID-19
Economic Injury Disaster Loan programs
This section establishes a 10-year statute of limitations
for fraud related to COVID-19 EIDLs, EIDL Advances, and
Targeted EIDL Advances.
VII. Congressional Budget Cost Estimate
The Committee has requested but not received a cost
estimate from the Director of the Congressional Budget Office.
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives and section 308(a) of the
Congressional Budget Act of 1974, the Committee provides the
following opinion and estimate with respect to new budget
authority, entitlement authority, and tax expenditures. While
the Committee has not received an estimate of new budget
authority contained in the cost estimate prepared by the
Director of the Congressional Budget Office pursuant to Sec.
402 of the Congressional Budget Act of 1974, the Committee does
not believe that there will be any additional costs
attributable to this legislation.
IX. Committee Oversight Findings and Recommendations
In accordance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the oversight findings and recommendations of the Committee on
Small Business with respect to the subject matter contained in
H.R. 7334 are incorporated into the descriptive portions of
this report.
X. Statement of General Performance Goals and Objectives
With respect to the requirements of clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives, the
performance goals and objectives of H.R. 7334 are to improve
accountability for COVID-19 EIDL fraud by ensuring prosecutors
have a ten-year statute of limitations to bring fraud charges.
XI. Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, no provision of H.R. 7334 is known to
be duplicative of another Federal program, including any
program that was included in a report to Congress pursuant to
section 21 of Public Law 111-139 or the most recent Catalog of
Federal Domestic Assistance.
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee finds that the bill
does not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits as defined in clause 9(e),
9(f), or 9(g) of rule XXI of the Rules of the House of
Representatives.
XIII. Federal Mandates Statement
An estimate of Federal mandates prepared by the Director of
the Congressional Budget Office pursuant to section 423 of the
Unfunded Mandates Reform Act was not made available to the
Committee in time for the filing of this report. The Chairwoman
of the Committee shall cause such estimate to be printed in the
Congressional Record upon its receipt by the Committee.
XIV. Federal Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
XV. Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
XVI. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, as shown as follows: existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
Sec. 7. (a) Loans to Small Business Concerns; Allowable
Purposes; Qualified Business; Restrictions and Limitations.--
The Administration is empowered to the extent and in such
amounts as provided in advance in appropriation Acts to make
loans for plant acquisition, construction, conversion, or
expansion, including the acquisition of land, material,
supplies, equipment, and working capital, and to make loans to
any qualified small business concern, including those owned by
qualified Indian tribes, for purposes of this Act. Such
financings may be made either directly or in cooperation with
banks or other financial institutions through agreements to
participate on an immediate or deferred (guaranteed) basis.
These powers shall be subject, however, to the following
restrictions, limitations, and provisions:
(1) In general.--
(A) Credit elsewhere.--
(i) In general.--The Administrator
has the authority to direct, and
conduct oversight for, the methods by
which lenders determine whether a
borrower is able to obtain credit
elsewhere. No financial assistance
shall be extended pursuant to this
subsection if the applicant can obtain
credit elsewhere. No immediate
participation may be purchased unless
it is shown that a deferred
participation is not available; and no
direct financing may be made unless it
is shown that a participation is not
available.
(ii) Liquidity.--On and after October
1, 2015, the Administrator may not
guarantee a loan under this subsection
if the lender determines that the
borrower is unable to obtain credit
elsewhere solely because the liquidity
of the lender depends upon the
guaranteed portion of the loan being
sold on the secondary market.
(B) Background checks.--Prior to the approval
of any loan made pursuant to this subsection,
or section 503 of the Small Business Investment
Act of 1958, the Administrator may verify the
applicant's criminal background, or lack
thereof, through the best available means,
including, if possible, use of the National
Crime Information Center computer system at the
Federal Bureau of Investigation.
(C) Lending limits of lenders.--On and after
October 1, 2015, the Administrator may not
guarantee a loan under this subsection if the
sole purpose for requesting the guarantee is to
allow the lender to exceed the legal lending
limit of the lender.
(2) Level of participation in guaranteed loans.--
(A) In general.--Except as provided in
subparagraphs (B), (D), (E), and (F), in an
agreement to participate in a loan on a
deferred basis under this subsection (including
a loan made under the Preferred Lenders
Program), such participation by the
Administration shall be equal to--
(i) 75 percent of the balance of the
financing outstanding at the time of
disbursement of the loan, if such
balance exceeds $150,000; or
(ii) 85 percent of the balance of the
financing outstanding at the time of
disbursement of the loan, if such
balance is less than or equal to
$150,000.
(B) Reduced participation upon request.--
(i) In general.--The guarantee
percentage specified by subparagraph
(A) for any loan under this subsection
may be reduced upon the request of the
participating lender.
(ii) Prohibition.--The Administration
shall not use the guarantee percentage
requested by a participating lender
under clause (i) as a criterion for
establishing priorities in approving
loan guarantee requests under this
subsection.
(C) Interest rate under preferred lenders
program.--
(i) In general.--The maximum interest
rate for a loan guaranteed under the
Preferred Lenders Program shall not
exceed the maximum interest rate, as
determined by the Administration,
applicable to other loans guaranteed
under this subsection.
(ii) Export-import bank lenders.--Any
lender that is participating in the
Delegated Authority Lender Program of
the Export-Import Bank of the United
States (or any successor to the
Program) shall be eligible to
participate in the Preferred Lenders
Program.
(iii) Preferred lenders program
defined.--For purposes of this
subparagraph, the term ``Preferred
Lenders Program'' means any program
established by the Administrator, as
authorized under the proviso in section
5(b)(7), under which a written
agreement between the lender and the
Administration delegates to the
lender--
(I) complete authority to
make and close loans with a
guarantee from the
Administration without
obtaining the prior specific
approval of the Administration;
and
(II) complete authority to
service and liquidate such
loans without obtaining the
prior specific approval of the
Administration for routine
servicing and liquidation
activities, but shall not take
any actions creating an actual
or apparent conflict of
interest.
(D) Participation under export working
capital program.--In an agreement to
participate in a loan on a deferred basis under
the Export Working Capital Program established
pursuant to paragraph (14)(A), such
participation by the Administration shall be 90
percent.
(E) Participation in international trade
loan.--In an agreement to participate in a loan
on a deferred basis under paragraph (16), the
participation by the Administration may not
exceed 90 percent.
(F) Participation in the paycheck protection
program.--In an agreement to participate in a
loan on a deferred basis under paragraph (36),
the participation by the Administration shall
be 100 percent.
(3) No loan shall be made under this subsection--
(A) if the total amount outstanding and
committed (by participation or otherwise) to
the borrower from the business loan and
investment fund established by this Act would
exceed $3,750,000 (or if the gross loan amount
would exceed $5,000,000), except as provided in
subparagraph (B);
(B) if the total amount outstanding and
committed (on a deferred basis) solely for the
purposes provided in paragraph (16) to the
borrower from the business loan and investment
fund established by this Act would exceed
$4,500,000 (or if the gross loan amount would
exceed $5,000,000), of which not more than
$4,000,000 may be used for working capital,
supplies, or financings under section 7(a)(14)
for export purposes; and
(C) if effected either directly or in
cooperation with banks or other lending
institutions through agreements to participate
on an immediate basis if the amount would
exceed $350,000.
(4) Interest rates and prepayment charges.--
(A) Interest rates.--Notwithstanding the
provisions of the constitution of any State or
the laws of any State limiting the rate or
amount of interest which may be charged, taken,
received, or reserved, the maximum legal rate
of interest on any financing made on a deferred
basis pursuant to this subsection shall not
exceed a rate prescribed by the Administration,
and the rate of interest for the
Administration's share of any direct or
immediate participation loan shall not exceed
the current average market yield on outstanding
marketable obligations of the United States
with remaining periods to maturity comparable
to the average maturities of such loans and
adjusted to the nearest one-eighth of 1 per
centum, and an additional amount as determined
by the Administration, but not to exceed 1 per
centum per annum: Provided, That for those
loans to assist any public or private
organization for the handicapped or to assist
any handicapped individual as provided in
paragraph (10) of this subsection, the interest
rate shall be 3 per centum per annum.
(B) Payment of accrued interest.--
(i) In general.--Any bank or other
lending institution making a claim for
payment on the guaranteed portion of a
loan made under this subsection shall
be paid the accrued interest due on the
loan from the earliest date of default
to the date of payment of the claim at
a rate not to exceed the rate of
interest on the loan on the date of
default, minus one percent.
(ii) Loans sold on secondary
market.--If a loan described in clause
(i) is sold on the secondary market,
the amount of interest paid to a bank
or other lending institution described
in that clause from the earliest date
of default to the date of payment of
the claim shall be no more than the
agreed upon rate, minus one percent.
(iii) Applicability.--Clauses (i) and
(ii) shall not apply to loans made on
or after October 1, 2000.
(C) Prepayment charges.--
(i) In general.--A borrower who
prepays any loan guaranteed under this
subsection shall remit to the
Administration a subsidy recoupment fee
calculated in accordance with clause
(ii) if--
(I) the loan is for a term of
not less than 15 years;
(II) the prepayment is
voluntary;
(III) the amount of
prepayment in any calendar year
is more than 25 percent of the
outstanding balance of the
loan; and
(IV) the prepayment is made
within the first 3 years after
disbursement of the loan
proceeds.
(ii) Subsidy recoupment fee.--The
subsidy recoupment fee charged under
clause (i) shall be--
(I) 5 percent of the amount
of prepayment, if the borrower
prepays during the first year
after disbursement;
(II) 3 percent of the amount
of prepayment, if the borrower
prepays during the second year
after disbursement; and
(III) 1 percent of the amount
of prepayment, if the borrower
prepays during the third year
after disbursement.
(5) No such loans including renewals and extensions
thereof may be made for a period or periods exceeding
twenty-five years, except that such portion of a loan
made for the purpose of acquiring real property or
constructing, converting, or expanding facilities may
have a maturity of twenty-five years plus such
additional period as is estimated may be required to
complete such construction, conversion, or expansion.
(6) All loans made under this subsection shall be of
such sound value or so secured as reasonably to assure
repayment: Provided, however, That--
(A) for loans to assist any public or private
organization or to assist any handicapped
individual as provided in paragraph (10) of
this subsection any reasonable doubt shall be
resolved in favor of the applicant;
(B) recognizing that greater risk may be
associated with loans for energy measures as
provided in paragraph (12) of this subsection,
factors in determining ``sound value'' shall
include, but not be limited to, quality of the
product or service; technical qualifications of
the applicant or his employees; sales
projections; and the financial status of the
business concern: Provided further, That such
status need not be as sound as that required
for general loans under this subsection; and
On that portion of the loan used to refinance existing
indebtedness held by a bank or other lending
institution, the Administration shall limit the amount
of deferred participation to 80 per centum of the
amount of the loan at the time of disbursement:
Provided further, That any authority conferred by this
subparagraph on the Administration shall be exercised
solely by the Administration and shall not be delegated
to other than Administration personnel.
(7)(A) In general.--The Administrator may defer
payments on the principal and interest of such loans
for a grace period and use such other methods as it
deems necessary and appropriate to assure the
successful establishment and operation of such concern.
(B) Deferral requirements.--With respect to a
deferral provided under this paragraph, the
Administrator may allow lenders under this
subsection--
(i) to provide full payment deferment
relief (including payment of principal
and interest) for a period of not more
than 1 year; and
(ii) to provide an additional
deferment period if the borrower
provides documentation justifying such
additional deferment.
(C) Secondary market.--
(i) In general.--Except as provided
in clause (ii), if an investor declines
to approve a deferral or additional
deferment requested by a lender under
subparagraph (B), the Administrator
shall exercise the authority to
purchase the loan so that the borrower
may receive full payment deferment
relief (including payment of principal
and interest) or an additional
deferment as described in subparagraph
(B).
(ii) Exception.--If, in a fiscal
year, the Administrator determines that
the cost of implementing clause (i) is
greater than zero, the Administrator
shall not implement that clause.
(8) The Administration may make loans under this
subsection to small business concerns owned and
controlled by disabled veterans (as defined in section
4211(3) of title 38, United States Code).
(9) The Administration may provide loans under this
subsection to finance residential or commercial
construction or rehabilitation for sale: Provided,
however, That such loans shall not be used primarily
for the acquisition of land.
(10) The Administration may provide guaranteed loans
under this subsection to assist any public or private
organization for the handicapped or to assist any
handicapped individual, including service-disabled
veterans, in establishing, acquiring, or operating a
small business concern.
(11) The Administration may provide loans under this
subsection to any small business concern, or to any
qualified person seeking to establish such a concern
when it determines that such loan will further the
policies established in section 2(c) of this Act, with
particular emphasis on the preservation or
establishment of small business concerns located in
urban or rural areas with high proportions of
unemployed or low-income individuals or owned by low-
income individuals.
(12)(A) The Administration may provide loans under
this subsection to assist any small business concern,
including start up, to enable such concern to design
architecturally or engineer, manufacture, distribute,
market, install, or service energy measures: Provided,
however, That such loan proceeds shall not be used
primarily for research and development.
(b) The Administration may provide deferred participation
loans under this subsection to finance the planning, design, or
installation of pollution control facilities for the purposes
set forth in section 404 of the Small Business Investment Act
of 1958. Notwithstanding the limitation expressed in paragraph
(3) of this subsection, a loan made under this paragraph may
not result in a total amount outstanding and committed to a
borrower from the business loan and investment fund of more
than $1,000,000.
(13) The Administration may provide financing under
this subsection to State and local development
companies for the purposes of, and subject to the
restrictions in, title V of the Small Business
Investment Act of 1958.
(14) Export working capital program.--
(A) In general.--The Administrator may
provide extensions of credit, standby letters
of credit, revolving lines of credit for export
purposes, and other financing to enable small
business concerns, including small business
export trading companies and small business
export management companies, to develop foreign
markets. A bank or participating lending
institution may establish the rate of interest
on such financings as may be legal and
reasonable.
(B) Terms.--
(i) Loan amount.--The Administrator
may not guarantee a loan under this
paragraph of more than $5,000,000.
(ii) Fees.--
(I) In general.--For a loan
under this paragraph, the
Administrator shall collect the
fee assessed under paragraph
(23) not more frequently than
once each year.
(II) Untapped credit.--The
Administrator may not assess a
fee on capital that is not
accessed by the small business
concern.
(C) Considerations.--When considering loan or
guarantee applications, the Administration
shall give weight to export-related benefits,
including opening new markets for United States
goods and services abroad and encouraging the
involvement of small businesses, including
agricultural concerns, in the export market.
(D) Marketing.--The Administrator shall
aggressively market its export financing
program to small businesses.
(15)(A) The Administration may guarantee loans under
this subsection--
(i) to qualified employee trusts with respect
to a small business concern for the purpose of
purchasing, and for any transaction costs
associated with purchasing, stock of the
concern under a plan approved by the
Administrator which, when carried out, results
in the qualified employee trust owning at least
51 per centum of the stock of the concern; and
(ii) to a small business concern under a plan
approved by the Administrator, if the proceeds
from the loan are only used to make a loan to a
qualified employee trust, and for any
transaction costs associated with making that
loan, that results in the qualified employee
trust owning at least 51 percent of the small
business concern.
(B) The plan requiring the Administrator's approval
under subparagraph (A) shall be submitted to the
Administration by the trustee of such trust or by the
small business concern with its application for the
guarantee. Such plan shall include an agreement with
the Administrator which is binding on such trust and on
the small business concern and which provides that--
(i) not later than the date the loan
guaranteed under subparagraph (A) is repaid (or
as soon thereafter as is consistent with the
requirements of section 401(a) of the Internal
Revenue Code of 1954), at least 51 per centum
of the total stock of such concern shall be
allocated to the accounts of at least 51 per
centum of the employees of such concern who are
entitled to share in such allocation,
(ii) there will be periodic reviews of the
role in the management of such concern of
employees to whose accounts stock is allocated,
(iii) there will be adequate management to
assure management expertise and continuity, and
(iv) with respect to a loan made to a trust,
or to a cooperative in accordance with
paragraph (35)--
(I) a seller of the small business
concern may remain involved as an
officer, director, or key employee of
the small business concern when a
qualified employee trust or cooperative
has acquired 100 percent of ownership
of the small business concern; and
(II) any seller of the small business
concern who remains as an owner of the
small business concern, regardless of
the percentage of ownership interest,
shall be required to provide a personal
guarantee by the Administration.
(C) In determining whether to guarantee any loan
under this paragraph, the individual business
experience or personal assets of employee-owners shall
not be used as criteria, except inasmuch as certain
employee-owners may assume managerial responsibilities,
in which case business experience may be considered.
(D) For purposes of this paragraph, a corporation
which is controlled by any other person shall be
treated as a small business concern if such corporation
would, after the plan described in subparagraph (B) is
carried out, be treated as a small business concern.
(E) The Administration shall compile a separate list
of applications for assistance under this paragraph,
indicating which applications were accepted and which
were denied, and shall report periodically to the
Congress on the status of employee-owned firms assisted
by the Administration, which shall include--
(i) the total number of loans made to
employee-owned business concerns that were
guaranteed by the Administrator under section
7(a) of the Small Business Act (15 U.S.C.
636(a)) or section 502 of the Small Business
Investment Act of 1958 (15 U.S.C. 696),
including the number of loans made--
(I) to small business concerns owned
and controlled by socially and
economically disadvantaged individuals;
and
(II) to cooperatives;
(ii) the total number of financings made to
employee-owned business concerns by companies
licensed under section 301(c) of the Small
Business Investment Act of 1958 (15 U.S.C.
696(c)), including the number of financings
made--
(I) to small business concerns owned
and controlled by socially and
economically disadvantaged individuals;
and
(II) to cooperatives; and
(iii) any outreach and educational activities
conducted by the Administration with respect to
employee-owned business concerns.
(F) A small business concern that makes a loan to a
qualified employee trust under subparagraph (A)(ii) is
not required to contain the same terms and conditions
as the loan made to the small business concern that is
guaranteed by the Administration under such
subparagraph.
(G) With respect to a loan made to a qualified
employee trust under this paragraph, or to a
cooperative in accordance with paragraph (35), the
Administrator may, as deemed appropriate, elect to not
require any mandatory equity to be provided by the
qualified employee trust or cooperative to make the
loan.
(16) International trade.--
(A) In general.--If the Administrator
determines that a loan guaranteed under this
subsection will allow an eligible small
business concern that is engaged in or
adversely affected by international trade to
improve its competitive position, the
Administrator may make such loan to assist such
concern--
(i) in the financing of the
acquisition, construction, renovation,
modernization, improvement, or
expansion of productive facilities or
equipment to be used in the United
States in the production of goods and
services involved in international
trade;
(ii) in the refinancing of existing
indebtedness that is not structured
with reasonable terms and conditions,
including any debt that qualifies for
refinancing under any other provision
of this subsection; or
(iii) by providing working capital.
(B) Security.--
(i) In general.--Except as provided
in clause (ii), each loan made under
this paragraph shall be secured by a
first lien position or first mortgage
on the property or equipment financed
by the loan or on other assets of the
small business concern.
(ii) Exception.--A loan under this
paragraph may be secured by a second
lien position on the property or
equipment financed by the loan or on
other assets of the small business
concern, if the Administrator
determines the lien provides adequate
assurance of the payment of the loan.
(C) Engaged in international trade.--For
purposes of this paragraph, a small business
concern is engaged in international trade if,
as determined by the Administrator, the small
business concern is in a position to expand
existing export markets or develop new export
markets.
(D) Adversely affected by international
trade.--For purposes of this paragraph, a small
business concern is adversely affected by
international trade if, as determined by the
Administrator, the small business concern--
(i) is confronting increased
competition with foreign firms in the
relevant market; and
(ii) is injured by such competition.
(E) Findings by certain federal agencies.--
For purposes of subparagraph (D)(ii) the
Administrator shall accept any finding of
injury by the International Trade Commission or
any finding of injury by the Secretary of
Commerce pursuant to chapter 3 of title II of
the Trade Act of 1974.
(F) List of export finance lenders.--
(i) Publication of list required.--
The Administrator shall publish an
annual list of the banks and
participating lending institutions
that, during the 1-year period ending
on the date of publication of the list,
have made loans guaranteed by the
Administration under--
(I) this paragraph;
(II) paragraph (14); or
(III) paragraph (34).
(ii) Availability of list.--The
Administrator shall--
(I) post the list published
under clause (i) on the website
of the Administration; and
(II) make the list published
under clause (i) available,
upon request, at each district
office of the Administration.
(17) The Administration shall authorize lending
institutions and other entities in addition to banks to
make loans authorized under this subsection.
(18) Guarantee fees.--
(A) In general.--With respect to each loan
guaranteed under this subsection (other than a
loan that is repayable in 1 year or less), the
Administration shall collect a guarantee fee,
which shall be payable by the participating
lender, and may be charged to the borrower, as
follows:
(i) A guarantee fee not to exceed 2
percent of the deferred participation
share of a total loan amount that is
not more than $150,000.
(ii) A guarantee fee not to exceed 3
percent of the deferred participation
share of a total loan amount that is
more than $150,000, but not more than
$700,000.
(iii) A guarantee fee not to exceed
3.5 percent of the deferred
participation share of a total loan
amount that is more than $700,000.
(iv) In addition to the fee under
clause (iii), a guarantee fee equal to
0.25 percent of any portion of the
deferred participation share that is
more than $1,000,000.
(B) Retention of certain fees.--Lenders
participating in the programs established under
this subsection may retain not more than 25
percent of a fee collected under subparagraph
(A)(i).
(19)(A) In addition to the Preferred Lenders Program
authorized by the proviso in section 5(b)(7), the
Administration is authorized to establish a Certified
Lenders Program for lenders who establish their
knowledge of Administration laws and regulations
concerning the guaranteed loan program and their
proficiency in program requirements. The designation of
a lender as a certified lender shall be suspended or
revoked at any time that the Administration determines
that the lender is not adhering to its rules and
regulations or that the loss experience of the lender
is excessive as compared to other lenders, but such
suspension or revocation shall not affect any
outstanding guarantee.
(B) In order to encourage all lending institutions
and other entities making loans authorized under this
subsection to provide loans of $50,000 or less in
guarantees to eligible small business loan applicants,
the Administration shall develop and allow
participating lenders to solely utilize a uniform and
simplified loan form for such loans.
(C) Authority to liquidate loans.--
(i) In general.--The Administrator
may permit lenders participating in the
Certified Lenders Program to liquidate
loans made with a guarantee from the
Administration pursuant to a
liquidation plan approved by the
Administrator.
(ii) Automatic approval.--If the
Administrator does not approve or deny
a request for approval of a liquidation
plan within 10 business days of the
date on which the request is made (or
with respect to any routine liquidation
activity under such a plan, within 5
business days) such request shall be
deemed to be approved.
(20)(A) The Administration is empowered to make loans
either directly or in cooperation with banks or other
financial institutions through agreements to
participate on an immediate or deferred (guaranteed)
basis to small business concerns eligible for
assistance under subsection (j)(10) and section 8(a).
Such assistance may be provided only if the
Administration determines that--
(i) the type and amount of such assistance
requested by such concern is not otherwise
available on reasonable terms from other
sources;
(ii) with such assistance such concern has a
reasonable prospect for operating soundly and
profitably within a reasonable period of time;
(iii) the proceeds of such assistance will be
used within a reasonable time for plant
construction, conversion, or expansion,
including the acquisition of equipment,
facilities, machinery, supplies, or material or
to supply such concern with working capital to
be used in the manufacture of articles,
equipment, supplies, or material for defense or
civilian production or as may be necessary to
insure a well-balanced national economy; and
(iv) such assistance is of such sound value
as reasonably to assure that the terms under
which it is provided will not be breached by
the small business concern.
(B)(i) No loan shall be made under this paragraph if
the total amount outstanding and committed (by
participation or otherwise) to the borrower would
exceed $750,000.
(ii) Subject to the provisions of clause (i), in
agreements to participate in loans on a deferred
(guaranteed) basis, participation by the Administration
shall be not less than 85 per centum of the balance of
the financing outstanding at the time of disbursement.
(iii) The rate of interest on financings made on a
deferred (guaranteed) basis shall be legal and
reasonable.
(iv) Financings made pursuant to this paragraph shall
be subject to the following limitations:
(I) No immediate participation may be
purchased unless it is shown that a deferred
participation is not available.
(II) No direct financing may be made unless
it is shown that a participation is
unavailable.
(C) A direct loan or the Administration's share of an
immediate participation loan made pursuant to this
paragraph shall be any secured debt instrument--
(i) that is subordinated by its terms to all
other borrowings of the issuer;
(ii) the rate of interest on which shall not
exceed the current average market yield on
outstanding marketable obligations of the
United States with remaining periods to
maturity comparable to the average maturities
of such loan and adjusted to the nearest one-
eighth of 1 per centum;
(iii) the term of which is not more than
twenty-five years; and
(iv) the principal on which is amortized at
such rate as may be deemed appropriate by the
Administration, and the interest on which is
payable not less often than annually.
(21)(A) The Administration may make loans on a guaranteed
basis under the authority of this subsection--
(i) to a small business concern that has been (or can
reasonably be expected to be) detrimentally affected
by--
(I) the closure (or substantial reduction) of
a Department of Defense installation; or
(II) the termination (or substantial
reduction) of a Department of Defense program
on which such small business was a prime
contractor or subcontractor (or supplier) at
any tier; or
(ii) to a qualified individual or a veteran seeking
to establish (or acquire) and operate a small business
concern.
(B) Recognizing that greater risk may be associated with a
loan to a small business concern described in subparagraph
(A)(i), any reasonable doubts concerning the firm's proposed
business plan for transition to nondefense-related markets
shall be resolved in favor of the loan applicant when making
any determination regarding the sound value of the proposed
loan in accordance with paragraph (6).
(C) Loans pursuant to this paragraph shall be authorized in
such amounts as provided in advance in appropriation Acts for
the purposes of loans under this paragraph.
(D) For purposes of this paragraph a qualified individual
is--
(i) a member of the Armed Forces of the United
States, honorably discharged from active duty
involuntarily or pursuant to a program providing
bonuses or other inducements to encourage voluntary
separation or early retirement;
(ii) a civilian employee of the Department of Defense
involuntarily separated from Federal service or retired
pursuant to a program offering inducements to encourage
early retirement; or
(iii) an employee of a prime contractor,
subcontractor, or supplier at any tier of a Department
of Defense program whose employment is involuntarily
terminated (or voluntarily terminated pursuant to a
program offering inducements to encourage voluntary
separation or early retirement) due to the termination
(or substantial reduction) of a Department of Defense
program.
(E) Job creation and community benefit.--In providing
assistance under this paragraph, the Administration
shall develop procedures to ensure, to the maximum
extent practicable, that such assistance is used for
projects that--
(i) have the greatest potential for--
(I) creating new jobs for individuals
whose employment is involuntarily
terminated due to reductions in Federal
defense expenditures; or
(II) preventing the loss of jobs by
employees of small business concerns
described in subparagraph (A)(i); and
(ii) have substantial potential for
stimulating new economic activity in
communities most affected by reductions in
Federal defense expenditures.
(22) The Administration is authorized to permit
participating lenders to impose and collect a
reasonable penalty fee on late payments of loans
guaranteed under this subsection in an amount not to
exceed 5 percent of the monthly loan payment per month
plus interest.
(23) Yearly fee.--
(A) In general.--With respect to each loan
approved under this subsection, the
Administration shall assess, collect, and
retain a fee, not to exceed 0.55 percent per
year of the outstanding balance of the deferred
participation share of the loan, in an amount
established once annually by the Administration
in the Administration's annual budget request
to Congress, as necessary to reduce to zero the
cost to the Administration of making guarantees
under this subsection. As used in this
paragraph, the term ``cost'' has the meaning
given that term in section 502 of the Federal
Credit Reform Act of 1990 (2 U.S.C. 661a).
(B) Payer.--The yearly fee assessed under
subparagraph (A) shall be payable by the
participating lender and shall not be charged
to the borrower.
(C) Lowering of borrower fees.--If the
Administration determines that fees paid by
lenders and by small business borrowers for
guarantees under this subsection may be
reduced, consistent with reducing to zero the
cost to the Administration of making such
guarantees--
(i) the Administration shall first
consider reducing fees paid by small
business borrowers under clauses (i)
through (iii) of paragraph (18)(A), to
the maximum extent possible; and
(ii) fees paid by small business
borrowers shall not be increased above
the levels in effect on the date of
enactment of this subparagraph.
(24) Notification requirement.--The Administration
shall notify the Committees on Small Business of the
Senate and the House of Representatives not later than
15 days before making any significant policy or
administrative change affecting the operation of the
loan program under this subsection.
(25) Limitation on conducting pilot projects.--
(A) In general.--Not more than 10 percent of
the total number of loans guaranteed in any
fiscal year under this subsection may be
awarded as part of a pilot program which is
commenced by the Administrator on or after
October 1, 1996.
(B) Pilot program defined.--In this
paragraph, the term ``pilot program'' means any
lending program initiative, project,
innovation, or other activity not specifically
authorized by law.
(C) Low documentation loan program.--The
Administrator may carry out the low
documentation loan program for loans of
$100,000 or less only through lenders with
significant experience in making small business
loans. Not later than 90 days after the date of
enactment of this subsection, the Administrator
shall promulgate regulations defining the
experience necessary for participation as a
lender in the low documentation loan program.
(26) Calculation of subsidy rate.--All fees,
interest, and profits received and retained by the
Administration under this subsection shall be included
in the calculations made by the Director of the Office
of Management and Budget to offset the cost (as that
term is defined in section 502 of the Federal Credit
Reform Act of 1990) to the Administration of purchasing
and guaranteeing loans under this Act.
(28) Leasing.--In addition to such other lease
arrangements as may be authorized by the
Administration, a borrower may permanently lease to one
or more tenants not more than 20 percent of any
property constructed with the proceeds of a loan
guaranteed under this subsection, if the borrower
permanently occupies and uses not less than 60 percent
of the total business space in the property.
(29) Real estate appraisals.--
(A) In general.--With respect to a loan under
this subsection that is secured by commercial
real property, an appraisal of such property by
a State licensed or certified appraiser--
(i) shall be required by the
Administration in connection with any
such loan, if such loan is in an amount
greater than the Federal banking
regulator appraisal threshold; or
(ii) may be required by the
Administration or the lender in
connection with any such loan, if such
loan is in an amount equal to or less
than the Federal banking regulator
appraisal threshold, if such appraisal
is necessary for appropriate evaluation
of creditworthiness.
(B) Federal banking regulator appraisal
threshold defined.--For purposes of this
paragraph, the term ``Federal banking regulator
appraisal threshold'' means the lesser of the
threshold amounts set by the Board of Governors
of the Federal Reserve System, the Comptroller
of the Currency, and the Federal Deposit
Insurance Corporation for when a federally
related transaction that is a commercial real
estate transaction requires an appraisal
prepared by a State licensed or certified
appraiser.
(30) Ownership requirements.--Ownership requirements
to determine the eligibility of a small business
concern that applies for assistance under any credit
program under this Act shall be determined without
regard to any ownership interest of a spouse arising
solely from the application of the community property
laws of a State for purposes of determining marital
interests.
(31) Express loans.--
(A) Definitions.--As used in this paragraph:
(i) The term ``disaster area'' means
the area for which the President has
declared a major disaster, during the
5-year period beginning on the date of
the declaration.
(ii) The term ``express lender''
means any lender authorized by the
Administration to participate in the
Express Loan Program.
(iii) The term ``express loan'' means
any loan made pursuant to this
paragraph in which a lender utilizes to
the maximum extent practicable its own
loan analyses, procedures, and
documentation.
(iv) The term ``Express Loan
Program'' means the program for express
loans established by the Administration
under paragraph (25)(B), as in
existence on April 5, 2004, with a
guaranty rate of not more than 50
percent.
(B) Restriction to express lender.--The
authority to make an express loan shall be
limited to those lenders deemed qualified to
make such loans by the Administration.
Designation as an express lender for purposes
of making an express loan shall not prohibit
such lender from taking any other action
authorized by the Administration for that
lender pursuant to this subsection.
(C) Grandfathering of existing lenders.--Any
express lender shall retain such designation
unless the Administration determines that the
express lender has violated the law or
regulations promulgated by the Administration
or modifies the requirements to be an express
lender and the lender no longer satisfies those
requirements.
(D) Maximum loan amount.--The maximum loan
amount under the Express Loan Program is
$500,000.
(E) Option to participate.--Except as
otherwise provided in this paragraph, the
Administration shall take no regulatory,
policy, or administrative action, without
regard to whether such action requires
notification pursuant to paragraph (24), that
has the effect of requiring a lender to make an
express loan pursuant to subparagraph (D).
(F) Express loans for renewable energy and
energy efficiency.--
(i) Definitions.--In this
subparagraph--
(I) the term ``biomass''--
(aa) means any
organic material that
is available on a
renewable or recurring
basis, including--
(AA)
agricultural
crops;
(BB) trees
grown for
energy
production;
(CC) wood
waste and wood
residues;
(DD) plants
(including
aquatic plants
and grasses);
(EE)
residues;
(FF) fibers;
(GG) animal
wastes and
other waste
materials; and
(HH) fats,
oils, and
greases
(including
recycled fats,
oils, and
greases); and
(bb) does not
include--
(AA) paper
that is
commonly
recycled; or
(BB)
unsegregated
solid waste;
(II) the term ``energy
efficiency project'' means the
installation or upgrading of
equipment that results in a
significant reduction in energy
usage; and
(III) the term ``renewable
energy system'' means a system
of energy derived from--
(aa) a wind, solar,
biomass (including
biodiesel), or
geothermal source; or
(bb) hydrogen derived
from biomass or water
using an energy source
described in item (aa).
(ii) Loans.--The Administrator may
make a loan under the Express Loan
Program for the purpose of--
(I) purchasing a renewable
energy system; or
(II) carrying out an energy
efficiency project for a small
business concern.
(G) Guarantee fee waiver for veterans.--
(i) Guarantee fee waiver.--The
Administrator may not collect a
guarantee fee described in paragraph
(18) in connection with a loan made
under this paragraph to a veteran or
spouse of a veteran on or after October
1, 2015.
(ii) Definition.--In this
subparagraph, the term ``veteran or
spouse of a veteran'' means--
(I) a veteran, as defined in
section 3(q)(4);
(II) an individual who is
eligible to participate in the
Transition Assistance Program
established under section 1144
of title 10, United States
Code;
(III) a member of a reserve
component of the Armed Forces
named in section 10101 of title
10, United States Code;
(IV) the spouse of an
individual described in
subclause (I), (II), or (III);
or
(V) the surviving spouse (as
defined in section 101 of title
38, United States Code) of an
individual described in
subclause (I), (II), or (III)
who died while serving on
active duty or as a result of a
disability that is service-
connected (as defined in such
section).
(H) Recovery opportunity loans.--
(i) In general.--The Administrator
may guarantee an express loan to a
small business concern located in a
disaster area in accordance with this
subparagraph.
(ii) Maximums.--For a loan guaranteed
under clause (i)--
(I) the maximum loan amount
is $150,000; and
(II) the guarantee rate shall
be not more than 85 percent.
(iii) Overall cap.--A loan guaranteed
under clause (i) shall not be counted
in determining the amount of loans made
to a borrower for purposes of
subparagraph (D).
(iv) Operations.--A small business
concern receiving a loan guaranteed
under clause (i) shall certify that the
small business concern was in operation
on the date on which the applicable
major disaster occurred as a condition
of receiving the loan.
(v) Repayment ability.--A loan
guaranteed under clause (i) may only be
made to a small business concern that
demonstrates, to the satisfaction of
the Administrator, sufficient capacity
to repay the loan.
(vi) Timing of payment of
guarantees.--
(I) In general.--Not later
than 90 days after the date on
which a request for purchase is
filed with the Administrator,
the Administrator shall
determine whether to pay the
guaranteed portion of the loan.
(II) Recapture.--
Notwithstanding any other
provision of law, unless there
is a subsequent finding of
fraud by a court of competent
jurisdiction relating to a loan
guaranteed under clause (i), on
and after the date that is 6
months after the date on which
the Administrator determines to
pay the guaranteed portion of
the loan, the Administrator may
not attempt to recapture the
paid guarantee.
(vii) Fees.--
(I) In general.--Unless the
Administrator has waived the
guarantee fee that would
otherwise be collected by the
Administrator under paragraph
(18) for a loan guaranteed
under clause (i), and except as
provided in subclause (II), the
guarantee fee for the loan
shall be equal to the guarantee
fee that the Administrator
would collect if the guarantee
rate for the loan was 50
percent.
(II) Exception.--Subclause
(I) shall not apply if the cost
of carrying out the program
under this subsection in a
fiscal year is more than zero
and such cost is directly
attributable to the cost of
guaranteeing loans under clause
(i).
(viii) Rules.--Not later than 270
days after the date of enactment of
this subparagraph, the Administrator
shall promulgate rules to carry out
this subparagraph.
(32) Loans for energy efficient technologies.--
(A) Definitions.--In this paragraph--
(i) the term ``cost'' has the meaning
given that term in section 502 of the
Federal Credit Reform Act of 1990 (2
U.S.C. 661a);
(ii) the term ``covered energy
efficiency loan'' means a loan--
(I) made under this
subsection; and
(II) the proceeds of which
are used to purchase energy
efficient designs, equipment,
or fixtures, or to reduce the
energy consumption of the
borrower by 10 percent or more;
and
(iii) the term ``pilot program''
means the pilot program established
under subparagraph (B)
(B) Establishment.--The Administrator shall
establish and carry out a pilot program under
which the Administrator shall reduce the fees
for covered energy efficiency loans.
(C) Duration.--The pilot program shall
terminate at the end of the second full fiscal
year after the date that the Administrator
establishes the pilot program.
(D) Maximum participation.--A covered energy
efficiency loan shall include the maximum
participation levels by the Administrator
permitted for loans made under this subsection.
(E) Fees.--
(i) In general.--The fee on a covered
energy efficiency loan shall be equal
to 50 percent of the fee otherwise
applicable to that loan under paragraph
(18).
(ii) Waiver.--The Administrator may
waive clause (i) for a fiscal year if--
(I) for the fiscal year
before that fiscal year, the
annual rate of default of
covered energy efficiency loans
exceeds that of loans made
under this subsection that are
not covered energy efficiency
loans;
(II) the cost to the
Administration of making loans
under this subsection is
greater than zero and such cost
is directly attributable to the
cost of making covered energy
efficiency loans; and
(III) no additional sources
of revenue authority are
available to reduce the cost of
making loans under this
subsection to zero.
(iii) Effect of waiver.--If the
Administrator waives the reduction of
fees under clause (ii), the
Administrator--
(I) shall not assess or
collect fees in an amount
greater than necessary to
ensure that the cost of the
program under this subsection
is not greater than zero; and
(II) shall reinstate the fee
reductions under clause (i)
when the conditions in clause
(ii) no longer apply.
(iv) No increase of fees.--The
Administrator shall not increase the
fees under paragraph (18) on loans made
under this subsection that are not
covered energy efficiency loans as a
direct result of the pilot program.
(F) GAO report.--
(i) In general.--Not later than 1
year after the date that the pilot
program terminates, the Comptroller
General of the United States shall
submit to the Committee on Small
Business of the House of
Representatives and the Committee on
Small Business and Entrepreneurship of
the Senate a report on the pilot
program.
(ii) Contents.--The report submitted
under clause (i) shall include--
(I) the number of covered
energy efficiency loans for
which fees were reduced under
the pilot program;
(II) a description of the
energy efficiency savings with
the pilot program;
(III) a description of the
impact of the pilot program on
the program under this
subsection;
(IV) an evaluation of the
efficacy and potential fraud
and abuse of the pilot program;
and
(V) recommendations for
improving the pilot program.
(33) Increased veteran participation program.--
(A) Definitions.--In this paragraph--
(i) the term ``cost'' has the meaning
given that term in section 502 of the
Federal Credit Reform Act of 1990 (2
U.S.C. 661a);
(ii) the term ``pilot program'' means
the pilot program established under
subparagraph (B); and
(iii) the term ``veteran
participation loan'' means a loan made
under this subsection to a small
business concern owned and controlled
by veterans of the Armed Forces or
members of the reserve components of
the Armed Forces.
(B) Establishment.--The Administrator shall
establish and carry out a pilot program under
which the Administrator shall reduce the fees
for veteran participation loans.
(C) Duration.--The pilot program shall
terminate at the end of the second full fiscal
year after the date that the Administrator
establishes the pilot program.
(D) Maximum participation.--A veteran
participation loan shall include the maximum
participation levels by the Administrator
permitted for loans made under this subsection.
(E) Fees.--
(i) In general.--The fee on a veteran
participation loan shall be equal to 50
percent of the fee otherwise applicable
to that loan under paragraph (18).
(ii) Waiver.--The Administrator may
waive clause (i) for a fiscal year if--
(I) for the fiscal year
before that fiscal year, the
annual estimated rate of
default of veteran
participation loans exceeds
that of loans made under this
subsection that are not veteran
participation loans;
(II) the cost to the
Administration of making loans
under this subsection is
greater than zero and such cost
is directly attributable to the
cost of making veteran
participation loans; and
(III) no additional sources
of revenue authority are
available to reduce the cost of
making loans under this
subsection to zero.
(iii) Effect of waiver.--If the
Administrator waives the reduction of
fees under clause (ii), the
Administrator--
(I) shall not assess or
collect fees in an amount
greater than necessary to
ensure that the cost of the
program under this subsection
is not greater than zero; and
(II) shall reinstate the fee
reductions under clause (i)
when the conditions in clause
(ii) no longer apply.
(iv) No increase of fees.--The
Administrator shall not increase the
fees under paragraph (18) on loans made
under this subsection that are not
veteran participation loans as a direct
result of the pilot program.
(F) GAO report.--
(i) In general.--Not later than 1
year after the date that the pilot
program terminates, the Comptroller
General of the United States shall
submit to the Committee on Small
Business of the House of
Representatives and the Committee on
Small Business and Entrepreneurship of
the Senate a report on the pilot
program.
(ii) Contents.--The report submitted
under clause (i) shall include--
(I) the number of veteran
participation loans for which
fees were reduced under the
pilot program;
(II) a description of the
impact of the pilot program on
the program under this
subsection;
(III) an evaluation of the
efficacy and potential fraud
and abuse of the pilot program;
and
(IV) recommendations for
improving the pilot program.
(34) Export express program.--
(A) Definitions.--In this paragraph--
(i) the term ``export development
activity'' includes--
(I) obtaining a standby
letter of credit when required
as a bid bond, performance
bond, or advance payment
guarantee;
(II) participation in a trade
show that takes place outside
the United States;
(III) translation of product
brochures or catalogues for use
in markets outside the United
States;
(IV) obtaining a general line
of credit for export purposes;
(V) performing a service
contract from buyers located
outside the United States;
(VI) obtaining transaction-
specific financing associated
with completing export orders;
(VII) purchasing real estate
or equipment to be used in the
production of goods or services
for export;
(VIII) providing term loans
or other financing to enable a
small business concern,
including an export trading
company and an export
management company, to develop
a market outside the United
States; and
(IX) acquiring, constructing,
renovating, modernizing,
improving, or expanding a
production facility or
equipment to be used in the
United States in the production
of goods or services for
export; and
(ii) the term ``express loan'' means
a loan in which a lender uses to the
maximum extent practicable the loan
analyses, procedures, and documentation
of the lender to provide expedited
processing of the loan application.
(B) Authority.--The Administrator may
guarantee the timely payment of an express loan
to a small business concern made for an export
development activity.
(C) Level of participation.--
(i) Maximum amount.--The maximum
amount of an express loan guaranteed
under this paragraph shall be $500,000.
(ii) Percentage.--For an express loan
guaranteed under this paragraph, the
Administrator shall guarantee--
(I) 90 percent of a loan that
is not more than $350,000; and
(II) 75 percent of a loan
that is more than $350,000 and
not more than $500,000.
(35) Loans to cooperatives.--
(A) Definition.--In this paragraph, the term
``cooperative'' means an entity that is
determined to be a cooperative by the
Administrator, in accordance with applicable
Federal and State laws and regulation.
(B) Authority.--The Administration shall
guarantee loans made to a cooperative for the
purpose described in paragraph (15).
(36) Paycheck protection program.--
(A) Definitions.--In this paragraph--
(i) the terms ``appropriate Federal
banking agency'' and ``insured
depository institution'' have the
meanings given those terms in section 3
of the Federal Deposit Insurance Act
(12 U.S.C. 1813);
(ii) the term ``covered loan'' means
a loan made under this paragraph during
the covered period;
(iii) the term ``covered period''
means the period beginning on February
15, 2020 and ending on June 30, 2021;
(iv) the term ``eligible recipient''
means an individual or entity that is
eligible to receive a covered loan;
(v) the term ``eligible self-employed
individual'' has the meaning given the
term in section 7002(b) of the Families
First Coronavirus Response Act (Public
Law 116-127);
(vi) the term ``insured credit
union'' has the meaning given the term
in section 101 of the Federal Credit
Union Act (12 U.S.C. 1752);
(vii) the term ``nonprofit
organization'' means an organization
that is described in section 501(c)(3)
of the Internal Revenue Code of 1986
and that is exempt from taxation under
section 501(a) of such Code;
(viii) the term ``payroll costs''--
(I) means--
(aa) the sum of
payments of any
compensation with
respect to employees
that is a--
(AA) salary,
wage,
commission, or
similar
compensation;
(BB) payment
of cash tip or
equivalent;
(CC) payment
for vacation,
parental,
family,
medical, or
sick leave;
(DD)
allowance for
dismissal or
separation;
(EE) payment
required for
the provisions
of group health
care or group
life,
disability,
vision, or
dental
insurance
benefits,
including
insurance
premiums;
(FF) payment
of any
retirement
benefit; or
(GG) payment
of State or
local tax
assessed on the
compensation of
employees; and
(bb) the sum of
payments of any
compensation to or
income of a sole
proprietor or
independent contractor
that is a wage,
commission, income, net
earnings from self-
employment, or similar
compensation and that
is in an amount that is
not more than $100,000
on an annualized basis,
as prorated for the
period during which the
payments are made or
the obligation to make
the payments is
incurred; and
(II) shall not include--
(aa) the compensation
of an individual
employee in excess of
$100,000 on an
annualized basis, as
prorated for theperiod
during which the
compensation is paid or
the obligationto pay
the compensation is
incurred;
(bb) taxes imposed or
withheld under chapters
21, 22, or 24 of the
Internal Revenue Code
of 1986 during the
applicable period;
(cc) any compensation
of an employee whose
principal place of
residence is outside of
the United States;
(dd) qualified sick
leave wages for which a
credit is allowed under
section 7001 of the
Families First
Coronavirus Response
Act (Public Law 116-
127); or
(ee) qualified family
leave wages for which a
credit is allowed under
section 7003 of the
Families First
Coronavirus Response
Act (Public Law 116-
127);
(ix) the term ``veterans
organization'' means an organization
that is described in section 501(c)(19)
of the Internal Revenue Code that is
exempt from taxation under section
501(a) of such Code;
(x) the term ``community development
financial institution'' has the meaning
given the term in section 103 of the
Riegle Community Development and
Regulatory Improvement Act of 1994 (12
U.S.C. 4702));
(xi) the term ``community financial
institutions'' means--
(I) a community development
financial institution;
(II) a minority depository
institution, as defined in
section 308 of the Financial
Institutions Reform, Recovery,
and Enforcement Act of 1989 (12
U.S.C. 1463 note);
(III) a development company
that is certified under title V
of the Small Business
Investment Act of 1958 (15
U.S.C. 695 et seq.); and
(IV) an intermediary, as
defined in section 7(m)(11);
(xii) the term ``credit union'' means
a State credit union or a Federal
credit union, as those terms are
defined, respectively, in section 101
of the Federal Credit Union Act (12
U.S.C. 1752);
(xiii) the term ``seasonal employer''
means an eligible recipient that--
(I) does not operate for more
than 7 months in any calendar
year; or
(II) during the preceding
calendar year, had gross
receipts for any 6 months of
that year that were not more
than 33.33 percent of the gross
receipts of the employer for
the other 6 months of that
year;
(xiv) the term ``housing
cooperative'' means a cooperative
housing corporation (as defined in
section 216(b) of the Internal Revenue
Code of 1986) that employs not more
than 300 employees;
(xv) the term ``destination marketing
organization'' means a nonprofit entity
that is--
(I) an organization described
in section 501(c) of the
Internal Revenue Code of 1986
and exempt from tax under
section 501(a) of such Code; or
(II) a State, or a political
subdivision of a State
(including any instrumentality
of such entities)--
(aa) engaged in
marketing and promoting
communities and
facilities to
businesses and leisure
travelers through a
range of activities,
including--
(AA)
assisting with
the location of
meeting and
convention
sites;
(BB)
providing
travel
information on
area
attractions,
lodging
accommodations,
and
restaurants;
(CC)
providing maps;
and
(DD)
organizing
group tours of
local
historical,
recreational,
and cultural
attractions; or
(bb) that is engaged
in, and derives the
majority of the
operating budget of the
entity from revenue
attributable to,
providing live events;
(xvi) the terms ``exchange'',
``issuer'', and ``security'' have the
meanings given those terms in section
3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)); and
(xvii) the term ``additional covered
nonprofit entity''--
(I) means an organization
described in any paragraph of
section 501(c) of the Internal
Revenue Code of 1986, other
than paragraph (3), (4), (6),
or (19), and exempt from tax
under section 501(a) of such
Code; and
(II) does not include any
entity that, if the entity were
a business concern, would be
described in section 120.110 of
title 13, Code of Federal
Regulations (or in any
successor regulation or other
related guidance or rule that
may be issued by the
Administrator) other than a
business concern described in
paragraph (a) or (k) of such
section.
(B) Paycheck protection loans.--Except as
otherwise provided in this paragraph, the
Administrator may guarantee covered loans under
the same terms, conditions, and processes as a
loan made under this subsection.
(C) Registration of loans.--Not later than 15
days after the date on which a loan is made
under this paragraph, the Administration shall
register the loan using the TIN (as defined in
section 7701 of the Internal Revenue Code of
1986) assigned to the borrower.
(D) Increased eligibility for certain small
businesses and organizations.--
(i) In general.--During the covered
period, in addition to small business
concerns, any business concern,
nonprofit organization, housing
cooperative, veterans organization, or
Tribal business concern described in
section 31(b)(2)(C) shall be eligible
to receive a covered loan if the
business concern, nonprofit
organization, housing cooperative,
veterans organization, or Tribal
business concern employs not more than
the greater of--
(I) 500 employees; or
(II) if applicable, the size
standard in number of employees
established by the
Administration for the industry
in which the business concern,
nonprofit organization, housing
cooperative, veterans
organization, or Tribal
business concern operates.
(ii) Inclusion of sole proprietors,
independent contractors, and eligible
self-employed individuals.--
(I) In general.--During the
covered period, individuals who
operate under a sole
proprietorship or as an
independent contractor and
eligible self-employed
individuals shall be eligible
to receive a covered loan.
(II) Documentation.--An
eligible self-employed
individual, independent
contractor, or sole
proprietorship seeking a
covered loan shall submit such
documentation as determined
necessary by the Administrator
and the Secretary, to establish
the applicant as eligible.
(iii) Business concerns with more
than 1 physical location.--
(I) In general.--During the
covered period, any business
concern that employs not more
than 500 employees per physical
location of the business
concern and that is assigned a
North American Industry
Classification System code
beginning with 72 at the time
of disbursal shall be eligible
to receive a covered loan.
(II) Eligibility of news
organizations.--
(aa) Definition.--In
this subclause, the
term ``included
business concern''
means a business
concern, including any
station which
broadcasts pursuant to
a license granted by
the Federal
Communications
Commission under title
III of the
Communications Act of
1934 (47 U.S.C. 301 et
seq.) without regard
for whether such a
station is a concern as
defined in section
121.105 of title 13,
Code of Federal
Regulations, or any
successor thereto--
(AA) that
employs not
more than 500
employees, or
the size
standard
established by
the
Administrator
for the North
American
Industry
Classification
System code
applicable to
the business
concern, per
physical
location of
such business
concern; or
(BB) any
nonprofit
organization or
any
organization
otherwise
subject to
section
511(a)(2)(B) of
the Internal
Revenue Code of
1986 that is a
public
broadcasting
entity (as
defined in
section 397(11)
of the
Communications
Act of 1934 (47
U.S.C.
397(11))).
(bb) Eligibility.--
During the covered
period, an included
business concern shall
be eligible to receive
a covered loan if--
(AA) the
included
business
concern is
majority owned
or controlled
by a business
concern that is
assigned a
North American
Industry
Classification
System code
beginning with
511110 or 5151
or, with
respect to a
public
broadcasting
entity (as
defined in
section 397(11)
of the
Communications
Act of 1934 (47
U.S.C.
397(11))), has
a trade or
business that
falls under
such a code;
and
(BB) the
included
business
concern makes a
good faith
certification
that proceeds
of the loan
will be used to
support
expenses at the
component of
the included
business
concern that
produces or
distributes
locally focused
or emergency
information.
(III) Eligibility of certain
organizations.--Subject to the
provisions in this
subparagraph, during the
covered period--
(aa) a nonprofit
organization shall be
eligible to receive a
covered loan if the
nonprofit organization
employs not more than
500 employees per
physical location of
the organization; and
(bb) an additional
covered nonprofit
entity and an
organization that, but
for subclauses (I)(dd)
and (II)(dd) of clause
(vii), would be
eligible for a covered
loan under clause (vii)
shall be eligible to
receive a covered loan
if the entity or
organization employs
not more than 300
employees per physical
location of the entity
or organization.
(IV) Eligibility of internet
publishing organizations.--A
business concern or other
organization that was not
eligible to receive a covered
loan the day before the date of
enactment of this subclause, is
assigned a North American
Industry Classification System
code of 519130, certifies in
good faith as an Internet-only
news publisher or Internet-only
periodical publisher, and is
engaged in the collection and
distribution of local or
regional and national news and
information shall be eligible
to receive a covered loan for
the continued provision of
news, information, content, or
emergency information if--
(aa) the business
concern or organization
employs not more than
500 employees, or the
size standard
established by the
Administrator for that
North American Industry
Classification code,
per physical location
of the business concern
or organization; and
(bb) the business
concern or organization
makes a good faith
certification that
proceeds of the loan
will be used to support
expenses at the
component of the
business concern or
organization that
supports local or
regional news.
(iv) Waiver of affiliation rules.--
During the covered period, the
provisions applicable to affiliations
under section 121.103 of title 13, Code
of Federal Regulations, or any
successor regulation, are waived with
respect to eligibility for a covered
loan for--
(I) any business concern with
not more than 500 employees
that, as of the date on which
the covered loan is disbursed,
is assigned a North American
Industry Classification System
code beginning with 72;
(II) any business concern
operating as a franchise that
is assigned a franchise
identifier code by the
Administration;
(III) any business concern
that receives financial
assistance from a company
licensed under section 301 of
the Small Business Investment
Act of 1958 (15 U.S.C. 681);
(IV)(aa) any business concern
(including any station which
broadcasts pursuant to a
license granted by the Federal
Communications Commission under
title III of the Communications
Act of 1934 (47 U.S.C. 301 et
seq.) without regard for
whether such a station is a
concern as defined in section
121.105 of title 13, Code of
Federal Regulations, or any
successor thereto) that employs
not more than 500 employees, or
the size standard established
by the Administrator for the
North American Industry
Classification System code
applicable to the business
concern, per physical location
of such business concern and is
majority owned or controlled by
a business concern that is
assigned a North American
Industry Classification System
code beginning with 511110 or
5151; or
(bb) any nonprofit
organization that is assigned a
North American Industry
Classification System code
beginning with 5151; and
(V) any business concern or
other organization that was not
eligible to receive a covered
loan the day before the date of
enactment of this subclause, is
assigned a North American
Industry Classification System
code of 519130, certifies in
good faith as an Internet-only
news publisher or Internet-only
periodical publisher, and is
engaged in the collection and
distribution of local or
regional and national news and
information, if the business
concern or organization--
(aa) employs not more
than 500 employees, or
the size standard
established by the
Administrator for that
North American Industry
Classification code,
per physical location
of the business concern
or organization; and
(bb) is majority
owned or controlled by
a business concern or
organization that is
assigned a North
American Industry
Classification System
code of 519130.
(v) Employee.--For purposes of
determining whether a business concern,
nonprofit organization, veterans
organization, or Tribal business
concern described in section
31(b)(2)(C) employs not more than 500
employees under clause (i)(I), or for
purposes of determining the number of
employees of a housing cooperative or a
business concern or organization made
eligible for a loan under this
paragraph under subclause (II), (III),
or (IV) of clause (iii), subclause (IV)
or (V) of clause (iv), clause (vii), or
clause (ix), the term ``employee''
includes individuals employed on a
full-time, part-time, or other basis.
(vi) Affiliation.--The provisions
applicable to affiliations under
section 121.103 of title 13, Code of
Federal Regulations, or any successor
thereto, shall apply with respect to a
nonprofit organization and, a housing
cooperative, a veterans organization in
the same manner as with respect to a
small business concern.
(vii) Eligibility for certain
501(c)(6) organizations.--
(I) In general.--Any
organization that is described
in section 501(c)(6) of the
Internal Revenue Code and that
is exempt from taxation under
section 501(a) of such Code
(excluding professional sports
leagues and organizations with
the purpose of promoting or
participating in a political
campaign or other activity)
shall be eligible to receive a
covered loan if--
(aa) the organization
does not receive more
than 15 percent of its
receipts from lobbying
activities;
(bb) the lobbying
activities of the
organization do not
comprise more than 15
percent of the total
activities of the
organization;
(cc) the cost of the
lobbying activities of
the organization did
not exceed $1,000,000
during the most recent
tax year of the
organization that ended
prior to February 15,
2020; and
(dd) the organization
employs not more than
300 employees.
(II) Destination marketing
organizations.--Any destination
marketing organization shall be
eligible to receive a covered
loan if--
(aa) the destination
marketing organization
does not receive more
than 15 percent of its
receipts from lobbying
activities;
(bb) the lobbying
activities of the
destination marketing
organization do not
comprise more than 15
percent of the total
activities of the
organization;
(cc) the cost of the
lobbying activities of
the destination
marketing organization
did not exceed
$1,000,000 during the
most recent tax year of
the destination
marketing organization
that ended prior to
February 15, 2020; and
(dd) the destination
marketing organization
employs not more than
300 employees; and
(ee) the destination
marketing
organization--
(AA) is
described in
section 501(c)
of the Internal
Revenue Code
and is exempt
from taxation
under section
501(a) of such
Code; or
(BB) is a
quasi-
governmental
entity or is a
political
subdivision of
a State or
local
government,
including any
instrumentality
of those
entities.
(viii) Ineligibility of publicly-
traded entities.--
(I) In general.--Subject to
subclause (II), and
notwithstanding any other
provision of this paragraph, on
and after the date of enactment
of the Economic Aid to Hard-Hit
Small Businesses, Nonprofits,
and Venues Act, an entity that
is an issuer, the securities of
which are listed on an exchange
registered as a national
securities exchange under
section 6 of the Securities
Exchange Act of 1934 (15 U.S.C.
78f), shall be ineligible to
receive a covered loan under
this paragraph.
(II) Rule for affiliated
entities.--With respect to a
business concern made eligible
by subclause (II) or (IV) of
clause (iii) or subclause (IV)
or (V) of clause (iv) of this
subparagraph, the Administrator
shall not consider whether any
affiliated entity, which for
purposes of this subclause
shall include any entity that
owns or controls such business
concern or organization, is an
issuer.
(ix) Eligibility of additional
covered nonprofit entities.--An
additional covered nonprofit entity
shall be eligible to receive a covered
loan if--
(I) the additional covered
nonprofit entity does not
receive more than 15 percent of
its receipts from lobbying
activities;
(II) the lobbying activities
of the additional covered
nonprofit entity do not
comprise more than 15 percent
of the total activities of the
organization;
(III) the cost of the
lobbying activities of the
additional covered nonprofit
entity did not exceed
$1,000,000 during the most
recent tax year of the
additional covered nonprofit
entity that ended prior to
February 15, 2020; and
(IV) the additional covered
nonprofit entity employs not
more than 300 employees.
(E) Maximum loan amount.--Except as provided
in subparagraph (V), during the covered period,
with respect to a covered loan, the maximum
loan amount shall be the lesser of--
(i)(I) the sum of--
(aa) the product obtained by
multiplying--
(AA) the average
total monthly payments
by the applicant for
payroll costs incurred
during the 1-year
period before the date
on which the loan is
made, except thatan
applicant that is a
seasonal employer shall
use the average total
monthly payments for
payroll for any 12-week
period selected by the
seasonal employer
between February 15,
2019, and February 15,
2020; by
(BB) 2.5; and
(bb) the outstanding amount
of a loan under subsection
(b)(2) that was made during the
period beginning on January 31,
2020 and ending on the date on
which covered loans are made
available to be refinanced
under the covered loan; or
(II) if requested by an otherwise
eligible recipient that was not in
business during the period beginning on
February 15, 2019 and ending on June
30, 2019, the sum of--
(aa) the product obtained by
multiplying--
(AA) the average
total monthly payments
by the applicant for
payroll costs incurred
during the period
beginning on January 1,
2020 and ending on
February 29, 2020; by
(BB) 2.5; and
(bb) the outstanding amount
of a loan under subsection
(b)(2) that was made during the
period beginning on January 31,
2020 and ending on the date on
which covered loans are made
available to be refinanced
under the covered loan; or
(ii) $10,000,000.
(F) Allowable uses of covered loans.--
(i) In general.--During the covered
period, an eligible recipient may, in
addition to the allowable uses of a
loan made under this subsection, use
the proceeds of the covered loan for--
(I) payroll costs;
(II) costs related to the
continuation of group health
care benefits during periods of
paid sick, medical, or family
leave, and insurance premiums;
(III) employee salaries,
commissions, or similar
compensations;
(IV) payments of interest on
any mortgage obligation (which
shall not include any
prepayment of or payment of
principal on a mortgage
obligation);
(V) rent (including rent
under a lease agreement);
(VI) utilities;
(VII) interest on any other
debt obligations that were
incurred before the covered
period;
(VIII) covered operations
expenditures, as defined in
section 7A(a);
(IX) covered property damage
costs, as defined in section
7A(a);
(X) covered supplier costs,
as defined in section 7A(a);
and
(XI) covered worker
protection expenditures, as
defined in section 7A(a).
(ii) Delegated authority.--
(I) In general.--For purposes
of making covered loans for the
purposes described in clause
(i), a lender approved to make
loans under this subsection
shall be deemed to have been
delegated authority by the
Administrator to make and
approve covered loans, subject
to the provisions of this
paragraph.
(II) Considerations.--In
evaluating the eligibility of a
borrower for a covered loan
with the terms described in
this paragraph, a lender shall
consider whether the borrower--
(aa) was in operation
on February 15, 2020;
and
(bb)(AA) had
employees for whom the
borrower paid salaries
and payroll taxes; or
(BB) paid independent
contractors, as
reported on a Form
1099-MISC.
(iii) Additional lenders.--The
authority to make loans under this
paragraph shall be extended to
additional lenders determined by the
Administrator and the Secretary of the
Treasury to have the necessary
qualifications to process, close,
disburse and service loans made with
the guarantee of the Administration.
(iv) Refinance.--A loan made under
subsection (b)(2) during the period
beginning on January 31, 2020 and
ending on the date on which covered
loans are made available may be
refinanced as part of a covered loan.
(v) Nonrecourse.--Notwithstanding the
waiver of the personal guarantee
requirement or collateral under
subparagraph (J), the Administrator
shall have no recourse against any
individual shareholder, member, or
partner of an eligible recipient of a
covered loan for nonpayment of any
covered loan, except to the extent that
such shareholder, member, or partner
uses the covered loan proceeds for a
purpose not authorized under clause (i)
or (iv).
(vi) Prohibition.--None of the
proceeds of a covered loan may be used
for--
(I) lobbying activities, as
defined in section 3 of the
Lobbying Disclosure Act of 1995
(2 U.S.C. 1602);
(II) lobbying expenditures
related to a State or local
election; or
(III) expenditures designed
to influence the enactment of
legislation, appropriations,
regulation, administrative
action, or Executive order
proposed or pending before
Congress or any State
government, State legislature,
or local legislature or
legislative body.
(G) Borrower requirements.--
(i) Certification.--An eligible
recipient applying for a covered loan
shall make a good faith certification--
(I) that the uncertainty of
current economic conditions
makes necessary the loan
request to support the ongoing
operations of the eligible
recipient;
(II) acknowledging that funds
will be used to retain workers
and maintain payroll or make
mortgage payments, lease
payments, and utility payments;
(III) that the eligible
recipient does not have an
application pending for a loan
under this subsection for the
same purpose and duplicative of
amounts applied for or received
under a covered loan; and
(IV) during the period
beginning on February 15, 2020
and ending on December 31,
2020, that the eligible
recipient has not received
amounts under this subsection
for the same purpose and
duplicative of amounts applied
for or received under a covered
loan.
(H) Fee waiver.--With respect to a covered
loan--
(i) in lieu of the fee otherwise
applicable under paragraph (23)(A), the
Administrator shall collect no fee; and
(ii) in lieu of the fee otherwise
applicable under paragraph (18)(A), the
Administrator shall collect no fee.
(I) Credit elsewhere.--During the covered
period, the requirement that a small business
concern is unable to obtain credit elsewhere,
as defined in section 3(h), shall not apply to
a covered loan.
(J) Waiver of personal guarantee
requirement.--With respect to a covered loan--
(i) no personal guarantee shall be
required for the covered loan; and
(ii) no collateral shall be required
for the covered loan.
(K) Maturity for loans with remaining balance
after application of forgiveness.--With respect
to a covered loan that has a remaining balance
after reduction based on the loan forgiveness
amount under section 7A--
(i) the remaining balance shall
continue to be guaranteed by the
Administration under this subsection;
and
(ii) the covered loan shall have a
minimum maturity of 5 years and a
maximum maturity of 10 years from the
date on which the borrower applies for
loan forgiveness under that section.
(L) Interest rate requirements.--A covered
loan shall bear an interest rate not to exceed
4 percent, calculated on a non-compounding,
non-adjustable basis.
(M) Loan deferment.--
(i) Definition of impacted
borrower.--
(I) In general.--In this
subparagraph, the term
``impacted borrower'' means an
eligible recipient that--
(aa) is in operation
on February 15, 2020;
and
(bb) has an
application for a
covered loan that is
approved or pending
approval on or after
the date of enactment
of this paragraph.
(II) Presumption.--For
purposes of this subparagraph,
an impacted borrower is
presumed to have been adversely
impacted by COVID-19.
(ii) Deferral.--The Administrator
shall--
(I) consider each eligible
recipient that applies for a
covered loan to be an impacted
borrower; and
(II) require lenders under
this subsection to provide
complete payment deferment
relief for impacted borrowers
with covered loans, including
payment of principal, interest,
and fees, until the date on
which the amount of forgiveness
determined under section 7A is
remitted to the lender.
(iii) Secondary market.--With respect
to a covered loan that is sold on the
secondary market, if an investor
declines to approve a deferral
requested by a lender under clause
(ii), the Administrator shall exercise
the authority to purchase the loan so
that the impacted borrower may receive
a deferral, including payment of
principal, interest, and fees, until
the date on which the amount of
forgiveness determined under section 7A
is remitted to the lender.
(iv) Guidance.--Not later than 30
days after the date of enactment of
this paragraph, the Administrator shall
provide guidance to lenders under this
paragraph on the deferment process
described in this subparagraph.
(v) Rule of construction.--If an
eligible recipient fails to apply for
forgiveness of a covered loan within 10
months after the last day of the
covered period defined in section
7A(a), such eligible recipient shall
make payments of principal, interest,
and fees on such covered loan beginning
on the day that is not earlier than the
date that is 10 months after the last
day of such covered period.
(N) Secondary market sales.--A covered loan
shall be eligible to be sold in the secondary
market consistent with this subsection. The
Administrator may not collect any fee for any
guarantee sold into the secondary market under
this subparagraph.
(O) Regulatory capital requirements.--
(i) Risk weight.--With respect to the
appropriate Federal banking agencies or
the National Credit Union
Administration Board applying capital
requirements under their respective
risk-based capital requirements, a
covered loan shall receive a risk
weight of zero percent.
(ii) Temporary relief from tdr
disclosures.--Notwithstanding any other
provision of law, an insured depository
institution or an insured credit union
that modifies a covered loan in
relation to COVID-19-related
difficulties in a troubled debt
restructuring on or after March 13,
2020, shall not be required to comply
with the Financial Accounting Standards
Board Accounting Standards Codification
Subtopic 310-40 (``Receivables -
Troubled Debt Restructurings by
Creditors'') for purposes of compliance
with the requirements of the Federal
Deposit Insurance Act (12 U.S.C. 1811
et seq.), until such time and under
such circumstances as the appropriate
Federal banking agency or the National
Credit Union Administration Board, as
applicable, determines appropriate.
(P) Reimbursement for processing.--
(i) In general.--The Administrator
shall reimburse a lender authorized to
make a covered loan as follows:
(I) With respect to a covered
loan made during the period
beginning on the date of
enactment of this paragraph and
ending on the day before the
date of enactment of the
Economic Aid to Hard-Hit Small
Businesses, Nonprofits, and
Venues Act, the Administrator
shall reimburse such a lender
at a rate, based on the balance
of the financing outstanding at
the time of disbursement of the
covered loan, of--
(aa) 5 percent for
loans of not more than
$350,000;
(bb) 3 percent for
loans of more than
$350,000 and less than
$2,000,000; and
(cc) 1 percent for
loans of not less than
$2,000,000.
(II) With respect to a
covered loan made on or after
the date of enactment of the
Economic Aid to Hard-Hit Small
Businesses, Nonprofits, and
Venues Act, the Administrator
shall reimburse such a lender--
(aa) for a covered
loan of not more than
$50,000, in an amount
equal to the lesser
of--
(AA) 50
percent of the
balance of the
financing
outstanding at
the time of
disbursement of
the covered
loan; or
(BB) $2,500;
and
(bb) at a rate, based
on the balance of the
financing outstanding
at the time of
disbursement of the
covered loan, of--
(AA) 5
percent for a
covered loan of
more than
$50,000 and not
more than
$350,000;
(BB) 3
percent for a
covered loan of
more than
$350,000 and
less than
$2,000,000; and
(CC) 1
percent for a
covered loan of
not less than
$2,000,000.
(ii) Fee limits.--An agent that
assists an eligible recipient to
prepare an application for a covered
loan may not collect a fee in excess of
the limits established by the
Administrator. If an eligible recipient
has knowingly retained an agent, such
fees shall be paid by the eligible
recipient and may not be paid out of
the proceeds of a covered loan. A
lender shall only be responsible for
paying fees to an agent for services
for which the lender directly contracts
with the agent.
(iii) Timing.--A reimbursement
described in clause (i) shall be made
not later than 5 days after the
reported disbursement of the covered
loan and may not be required to be
repaid by a lender unless the lender is
found guilty of an act of fraud in
connection with the covered loan.
(iv) Sense of the senate.--It is the
sense of the Senate that the
Administrator should issue guidance to
lenders and agents to ensure that the
processing and disbursement of covered
loans prioritizes small business
concerns and entities in underserved
and rural markets, including veterans
and members of the military community,
small business concerns owned and
controlled by socially and economically
disadvantaged individuals (as defined
in section 8(d)(3)(C)), women, and
businesses in operation for less than 2
years.
(Q) Duplication.--Nothing in this paragraph
shall prohibit a recipient of an economic
injury disaster loan made under subsection
(b)(2) during the period beginning on January
31, 2020 and ending on the date on which
covered loans are made available that is for a
purpose other than paying payroll costs and
other obligations described in subparagraph (F)
from receiving assistance under this paragraph.
(R) Waiver of prepayment penalty.--
Notwithstanding any other provision of law,
there shall be no prepayment penalty for any
payment made on a covered loan.
(S) Set-aside for insured depository
institutions, credit unions, and community
financial institutions.--
(i) Insured depository institutions
and credit unions.--In making loan
guarantees under this paragraph after
the date of enactment of this clause,
the Administrator shall guarantee not
less than $30,000,000,000 in loans made
by--
(I) insured depository
institutions with consolidated
assets of not less than
$10,000,000,000 and less than
$50,000,000,000; and
(II) credit unions with
consolidated assets of not less
than $10,000,000,000 and less
than $50,000,000,000.
(ii) Community financial
institutions, small insured depository
institutions, and credit unions.--In
making loan guarantees under this
paragraph after the date of enactment
of this clause, the Administrator shall
guarantee not less than $30,000,000,000
in loans made by--
(I) community financial
institutions;
(II) insured depository
institutions with consolidated
assets of less than
$10,000,000,000; and
(III) credit unions with
consolidated assets of less
than $10,000,000,000.
(T) Requirement for date in operation.--A
business or organization that was not in
operation on February 15, 2020 shall not be
eligible for a loan under this paragraph.
(U) Exclusion of entities receiving shuttered
venue operator grants.--An eligible person or
entity (as defined under of section 24 of the
Economic Aid to Hard-Hit Small Businesses,
Nonprofits, and Venues Act) that receives a
grant under such section 24 shall not be
eligible for a loan under this paragraph.
(V) Calculation of maximum loan amount for
farmers and ranchers.--
(i) Definition.--In this
subparagraph, the term ``covered
recipient'' means an eligible recipient
that--
(I) operates as a sole
proprietorship or as an
independent contractor, or is
an eligible self-employed
individual;
(II) reports farm income or
expenses on a Schedule F (or
any equivalent successor
schedule); and
(III) was in business as of
February 15, 2020.
(ii) No employees.--With respect to
covered recipient without employees,
the maximum covered loan amount shall
be the lesser of--
(I) the sum of--
(aa) the product
obtained by
multiplying--
(AA) the
gross income of
the covered
recipient in
2019, as
reported on a
Schedule F (or
any equivalent
successor
schedule), that
is not more
than $100,000,
divided by 12;
and
(BB) 2.5; and
(bb) the outstanding
amount of a loan under
subsection (b)(2) that
was made during the
period beginning on
January 31, 2020 and
ending on April 3, 2020
that the borrower
intends to refinance
under the covered loan,
not including any
amount of any advance
under the loan that is
not required to be
repaid; or
(II) $2,000,000.
(iii) With employees.--With respect
to a covered recipient with employees,
the maximum covered loan amount shall
be calculated using the formula
described in subparagraph (E), except
that the gross income of the covered
recipient described in clause
(ii)(I)(aa)(AA) of this subparagraph,
as divided by 12, shall be added to the
sum calculated under subparagraph
(E)(i)(I).
(iv) Recalculation.--A lender that
made a covered loan to a covered
recipient before the date of enactment
of this subparagraph may, at the
request of the covered recipient--
(I) recalculate the maximum
loan amount applicable to that
covered loan based on the
formula described in clause
(ii) or (iii), as applicable,
if doing so would result in a
larger covered loan amount; and
(II) provide the covered
recipient with additional
covered loan amounts based on
that recalculation.
(37) Paycheck protection program second draw loans.--
(A) Definitions.--In this paragraph--
(i) the terms ``additional covered
nonprofit entity'',``eligible self-
employed individual'', ``housing
cooperative'', ``nonprofit
organization'', ``payroll costs'',
``seasonal employer'', and ``veterans
organization'' have the meanings given
those terms in paragraph (36), except
that ``eligible entity'' shall be
substituted for ``eligible recipient''
each place it appears in the
definitions of those terms;
(ii) the term ``covered loan'' means
a loan made under this paragraph;
(iii) the terms ``covered mortgage
obligation'', ``covered operating
expenditure'', ``covered property
damage cost'', ``covered rent
obligation'', ``covered supplier
cost'', ``covered utility payment'',
and ``covered worker protection
expenditure'' have the meanings given
those terms in section 7A(a);
(iv) the term ``eligible entity''--
(I) means any business
concern, nonprofit
organization, housing
cooperative, veterans
organization, Tribal business
concern, eligible self-employed
individual, sole proprietor,
independent contractor, or
small agricultural cooperative
that--
(aa) employs not more
than 300 employees; and
(bb)(AA) except as
provided in subitems
(BB), (CC), and (DD),
had gross receipts
during the first,
second, third, or, only
with respect to an
application submitted
on or after January 1,
2021, fourth quarter in
2020 that demonstrate
not less than a 25
percent reduction from
the gross receipts of
the entity during the
same quarter in 2019;
(BB) if the entity
was not in business
during the first or
second quarter of 2019,
but was in business
during the third and
fourth quarter of 2019,
had gross receipts
during the first,
second, third, or, only
with respect to an
application submitted
on or after January 1,
2021, fourth quarter of
2020 that demonstrate
not less than a 25
percent reduction from
the gross receipts of
the entity during the
third or fourth quarter
of 2019;
(CC) if the entity
was not in business
during the first,
second, or third
quarter of 2019, but
was in business during
the fourth quarter of
2019, had gross
receipts during the
first, second, third,
or, only with respect
to an application
submitted on or after
January 1, 2021, fourth
quarter of 2020 that
demonstrate not less
than a 25 percent
reduction from the
gross receipts of the
entity during the
fourth quarter of 2019;
or
(DD) if the entity
was not in business
during 2019, but was in
operation on February
15, 2020, had gross
receipts during the
second, third, or, only
with respect to an
application submitted
on or after January 1,
2021, fourth quarter of
2020 that demonstrate
not less than a 25
percent reduction from
the gross receipts of
the entity during the
first quarter of 2020;
(II) includes a business
concern or organization made
eligible for a loan under
paragraph (36) under subclause
(II), (III), or (IV) of clause
(iii), subclause (IV) or (V) of
clause (iv), clause (vii), or
clause (ix) of subparagraph (D)
of paragraph (36) and that
meets the requirements
described in items (aa) and
(bb) of subclause (I); and
(III) does not include--
(aa) any entity that
is a type of business
concern (or would be,
if such entity were a
business concern)
described in section
120.110 of title 13,
Code of Federal
Regulations (or in any
successor regulation or
other related guidance
or rule that may be
issued by the
Administrator) other
than a business concern
described in subsection
(a) or (k) of such
section; or
(bb) any business
concern or entity
primarily engaged in
political or lobbying
activities, which shall
include any entity that
is organized for
research or for
engaging in advocacy in
areas such as public
policy or political
strategy or otherwise
describes itself as a
think tank in any
public documents;
(cc) any business
concern or entity--
(AA) for
which an entity
created in or
organized under
the laws of the
People's
Republic of
China or the
Special
Administrative
Region of Hong
Kong, or that
has significant
operations in
the People's
Republic of
China or the
Special
Administrative
Region of Hong
Kong, owns or
holds, directly
or indirectly,
not less than
20 percent of
the economic
interest of the
business
concern or
entity,
including as
equity shares
or a capital or
profit interest
in a limited
liability
company or
partnership; or
(BB) that
retains, as a
member of the
board of
directors of
the business
concern, a
person who is a
resident of the
People's
Republic of
China;
(dd) any person
required to submit a
registration statement
under section 2 of the
Foreign Agents
Registration Act of
1938 (22 U.S.C. 612);
or
(ee) an eligible
person or entity (as
defined under section
24 of the Economic Aid
to Hard-Hit Small
Businesses, Nonprofits,
and Venues Act) that
receives a grant under
such section 24; and
(v) the term ``Tribal business
concern'' means a Tribal business
concern described in section
31(b)(2)(C).
(B) Loans.--Except as otherwise provided in
this paragraph, the Administrator may guarantee
covered loans to eligible entities under the
same terms, conditions, and processes as a loan
made under paragraph (36).
(C) Maximum loan amount.--
(i) In general.--Except as otherwise
provided in this subparagraph, the
maximum amount of a covered loan made
to an eligible entity is the lesser
of--
(I) the product obtained by
multiplying--
(aa) at the election
of the eligible entity,
the average total
monthly payment for
payroll costs incurred
or paid by the eligible
entity during--
(AA) the 1-
year period
before the date
on which the
loan is made;
or
(BB) calendar
year 2019; by
(bb) 2.5; or
(II) $2,000,000.
(ii) Seasonal employers.--The maximum
amount of a covered loan made to an
eligible entity that is a seasonal
employer is the lesser of--
(I) the product obtained by
multiplying--
(aa) at the election
of the eligible entity,
the average total
monthly payments for
payroll costs incurred
or paid by the eligible
entity for any 12-week
period between February
15, 2019 and February
15, 2020; by
(bb) 2.5; or
(II) $2,000,000.
(iii) New entities.--The maximum
amount of a covered loan made to an
eligible entity that did not exist
during the 1-year period preceding
February 15, 2020 is the lesser of--
(I) the product obtained by
multiplying--
(aa) the quotient
obtained by dividing--
(AA) the sum
of the total
monthly
payments by the
eligible entity
for payroll
costs paid or
incurred by the
eligible entity
as of the date
on which the
eligible entity
applies for the
covered loan;
by
(BB) the
number of
months in which
those payroll
costs were paid
or incurred; by
(bb) 2.5; or
(II) $2,000,000.
(iv) NAICS 72 entities.--The maximum
amount of a covered loan made to an
eligible entity that is assigned a
North American Industry Classification
System code beginning with 72 at the
time of disbursal is the lesser of--
(I) the product obtained by
multiplying--
(aa) at the election
of the eligible entity,
the average total
monthly payment for
payroll costs incurred
or paid by the eligible
entity during--
(AA) the 1-
year period
before the date
on which the
loan is made;
or
(BB) calendar
year 2019; by
(bb) 3.5; or
(II) $2,000,000.
(D) Business concerns with more than 1
physical location.--
(i) In general.--For a business
concern with more than 1 physical
location, the business concern shall be
an eligible entity if the business
concern would be eligible for a loan
under paragraph (36) pursuant to clause
(iii) of subparagraph (D) of such
paragraph, as applied in accordance
with clause (ii) of this subparagraph,
and meets the revenue reduction
requirements described in item (bb) of
subparagraph (A)(iv)(I).
(ii) Size limit.--For purposes of
applying clause (i), the Administrator
shall substitute ``not more than 300
employees'' for ``not more than 500
employees'' in paragraph (36)(D)(iii).
(E) Waiver of affiliation rules.--
(i) In general.--The waiver described
in paragraph (36)(D)(iv) shall apply
for purposes of determining eligibility
under this paragraph.
(ii) Size limit.--For purposes of
applying clause (i), the Administrator
shall substitute ``not more than 300
employees'' for ``not more than 500
employees'' in subclause (I) and (IV)
of paragraph (36)(D)(iv).
(F) Loan number limitation.--An eligible
entity may only receive 1 covered loan.
(G) Exception from certain certification
requirements.--An eligible entity applying for
a covered loan shall not be required to make
the certification described in clause (iii) or
(iv) of paragraph (36)(G).
(H) Fee waiver.--With respect to a covered
loan--
(i) in lieu of the fee otherwise
applicable under paragraph (23)(A), the
Administrator shall collect no fee; and
(ii) in lieu of the fee otherwise
applicable under paragraph (18)(A), the
Administrator shall collect no fee.
(I) Gross receipts and simplified
certification of revenue test.--
(i) Loans of up to $150,000.--For a
covered loan of not more than $150,000,
the eligible entity--
(I) may submit a
certification attesting that
the eligible entity meets the
applicable revenue loss
requirement under subparagraph
(A)(iv)(I)(bb); and
(II) if the eligible entity
submits a certification under
subclause (I), shall, on or
before the date on which the
eligible entity submits an
application for forgiveness
under subparagraph (J), produce
adequate documentation that the
eligible entity met such
revenue loss standard.
(ii) For nonprofit and veterans
organizations.--For purposes of
calculating gross receipts under
subparagraph (A)(iv)(I)(bb) for an
eligible entity that is a nonprofit
organization, a veterans organization,
or an organization described in
subparagraph (A)(iv)(II), gross
receipts means gross receipts within
the meaning of section 6033 of the
Internal Revenue Code of 1986.
(J) Loan forgiveness.--
(i) Definition of covered period.--In
this subparagraph, the term ``covered
period'' has the meaning given that
term in section 7A(a).
(ii) Forgiveness generally.--Except
as otherwise provided in this
subparagraph, an eligible entity shall
be eligible for forgiveness of
indebtedness on a covered loan in the
same manner as an eligible recipient
with respect to a loan made under
paragraph (36) of this section, as
described in section 7A.
(iii) Forgiveness amount.--An
eligible entity shall be eligible for
forgiveness of indebtedness on a
covered loan in an amount equal to the
sum of the following costs incurred or
expenditures made during the covered
period:
(I) Payroll costs, excluding
any payroll costs that are--
(aa) qualified wages,
as defined in
subsection (c)(3) of
section 2301 of the
CARES Act (26 U.S.C.
3111 note), taken into
account in determining
the credit allowed
under such section;
(bb) qualified wages
taken into account in
determining the credit
allowed under
subsection (a) or (d)
of section 303 of the
Taxpayer Certainty and
Disaster Relief Act of
2020; or
(cc) premiums taken
into account in
determining the credit
allowed under section
6432 of the Internal
Revenue Code of 1986.
(II) Any payment of interest
on any covered mortgage
obligation (which shall not
include any prepayment of or
payment of principal on a
covered mortgage obligation).
(III) Any covered operations
expenditure.
(IV) Any covered property
damage cost.
(V) Any payment on any
covered rent obligation.
(VI) Any covered utility
payment.
(VII) Any covered supplier
cost.
(VIII) Any covered worker
protection expenditure.
(iv) Limitation on forgiveness for
all eligible entities.--Subject to any
reductions under section 7A(d), the
forgiveness amount under this
subparagraph shall be equal to the
lesser of--
(I) the amount described in
clause (ii); and
(II) the amount equal to the
quotient obtained by dividing--
(aa) the amount of
the covered loan used
for payroll costs
during the covered
period; and
(bb) 0.60.
(v) Submission of materials for
forgiveness.--For purposes of applying
subsection (l)(1) of section 7A to a
covered loan of not more than $150,000
under this paragraph, an eligible
entity may be required to provide, at
the time of the application for
forgiveness, documentation required to
substantiate revenue loss in accordance
with subparagraph (I).
(K) Lender eligibility.--Except as otherwise
provided in this paragraph, a lender approved
to make loans under paragraph (36) may make
covered loans under the same terms and
conditions as in paragraph (36).
(L) Reimbursement for loan processing and
servicing.--The Administrator shall reimburse a
lender authorized to make a covered loan--
(i) for a covered loan of not more
than $50,000, in an amount equal to the
lesser of--
(I) 50 percent of the balance
of the financing outstanding at
the time of disbursement of the
covered loan; or
(II) $2,500;
(ii) at a rate, based on the balance
of the financing outstanding at the
time of disbursement of the covered
loan, of--
(I) 5 percent for a covered
loan of more than $50,000 and
not more than $350,000; and
(II) 3 percent for a covered
loan of more than $350,000.
(M) Publication of guidance.--Not later than
10 days after the date of enactment of this
paragraph, the Administrator shall issue
guidance addressing barriers to accessing
capital for minority, underserved, veteran, and
women-owned business concerns for the purpose
of ensuring equitable access to covered loans.
(N) Standard operating procedure.--The
Administrator shall, to the maximum extent
practicable, allow a lender approved to make
covered loans to use existing program guidance
and standard operating procedures for loans
made under this subsection.
(O) Supplemental covered loans.--A covered
loan under this paragraph may only be made to
an eligible entity that--
(i) has received a loan under
paragraph (36); and
(ii) on or before the expected date
on which the covered loan under this
paragraph is disbursed to the eligible
entity, has used, or will use, the full
amount of the loan received under
paragraph (36).
(b) Except as to agricultural enterprises as defined in
section 18(b)(1) of this Act, the Administration also is
empowered to the extent and in such amounts as provided in
advance in appropriation Acts--
(1)(A) to make such loans (either directly or in
cooperation with banks or other lending institutions
through agreements to participate on an immediate or
deferred (guaranteed) basis) as the Administration may
determine to be necessary or appropriate to repair,
rehabilitate or replace property, real or personal,
damaged or destroyed by or as a result of natural or
other disasters: Provided, That such damage or
destruction is not compensated for by insurance or
otherwise: And provided further, That the
Administration may increase the amount of the loan by
up to an additional 20 per centum of the aggregate
costs of such damage or destruction (whether or not
compensated for by insurance or otherwise) if it
determines such increase to be necessary or appropriate
in order to protect the damaged or destroyed property
from possible future disasters by taking mitigating
measures, including--
(i) construction of retaining walls and sea
walls;
(ii) grading and contouring land; and
(iii) relocating utilities and modifying
structures, including construction of a safe
room or similar storm shelter designed to
protect property and occupants from tornadoes
or other natural disasters, if such safe room
or similar storm shelter is constructed in
accordance with applicable standards issued by
the Federal Emergency Management Agency;
(B) to refinance any mortgage or other lien against a
totally destroyed or substantially damaged home or
business concern: Provided, That no loan or guarantee
shall be extended unless the Administration finds that
(i) the applicant is not able to obtain credit
elsewhere; (ii) such property is to be repaired,
rehabilitated, or replaced; (iii) the amount refinanced
shall not exceed the amount of physical loss sustained;
and (iv) such amount shall be reduced to the extent
such mortgage or lien is satisfied by insurance or
otherwise; and
(C) during fiscal years 2000 through 2004, to
establish a predisaster mitigation program to make such
loans (either directly or in cooperation with banks or
other lending institutions through agreements to
participate on an immediate or deferred (guaranteed)
basis), as the Administrator may determine to be
necessary or appropriate, to enable small businesses to
use mitigation techniques in support of a formal
mitigation program established by the Federal Emergency
Management Agency, except that no loan or guarantee may
be extended to a small business under this subparagraph
unless the Administration finds that the small business
is otherwise unable to obtain credit for the purposes
described in this subparagraph;
(2) to make such loans (either directly or in
cooperation with banks or other lending institutions
through agreements to participate on an immediate or
deferred (guaranteed) basis) as the Administration may
determine to be necessary or appropriate to any small
business concern, private nonprofit organization, or
small agricultural cooperative located in an area
affected by a disaster, (including drought), with
respect to both farm-related and nonfarm-related small
business concerns, if the Administration determines
that the concern, the organization, or the cooperative
has suffered a substantial economic injury as a result
of such disaster and if such disaster constitutes--
(A) a major disaster, as determined by the
President under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C.
5121 et seq.);
(B) a natural disaster, as determined by the
Secretary of Agriculture pursuant to section
321 of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1961), in which case,
assistance under this paragraph may be provided
to farm-related and nonfarm-related small
business concerns, subject to the other
applicable requirements of this paragraph;
(C) a disaster, as determined by the
Administrator of the Small Business
Administration;
(D) an emergency involving Federal primary
responsibility determined to exist by the
President under the section 501(b) of the
Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5191(b));
or
(E) if no disaster or emergency declaration
has been issued pursuant to subparagraph (A),
(B), (C), or (D), the Governor of a State in
which a disaster or emergency has occurred may
certify to the Small Business Administration
that small business concerns, private nonprofit
organizations, or small agricultural
cooperatives (1) have suffered economic injury
as a result of such disaster or emergency, and
(2) are in need of financial assistance which
is not available on reasonable terms in the
disaster- or emergency-stricken area. Not later
than 30 days after the date of receipt of such
certification by a Governor of a State, the
Administration shall respond in writing to that
Governor on its determination and the reasons
therefore, and may then make such loans as
would have been available under this paragraph
if a disaster or emergency declaration had been
issued.
Provided, That no loan or guarantee shall be extended
pursuant to this paragraph (2) unless the
Administration finds that the applicant is not able to
obtain credit elsewhere: Provided further, That for
purposes of subparagraph (D), the Administrator shall
deem that such an emergency affects each State or
subdivision thereof (including counties), and that each
State or subdivision has sufficient economic damage to
small business concerns to qualify for assistance under
this paragraph and the Administrator shall accept
applications for such assistance immediately.
(3)(A) In this paragraph--
(i) the term ``active service'' has the
meaning given that term in section 101(d)(3) of
title 10, United States Code;
(ii) the term ``essential employee'' means an
individual who is employed by a small business
concern and whose managerial or technical
expertise is critical to the successful day-to-
day operations of that small business concern;
and
(iii) the term ``substantial economic
injury'' means an economic harm to a business
concern that results in the inability of the
business concern--
(I) to meet its obligations as they
mature;
(II) to pay its ordinary and
necessary operating expenses; or
(III) to market, produce, or provide
a product or service ordinarily
marketed, produced, or provided by the
business concern.
(B) The Administration may make such disaster loans
(either directly or in cooperation with banks or other
lending institutions through agreements to participate
on an immediate or deferred basis) to assist a small
business concern that has suffered or that is likely to
suffer substantial economic injury as the result of an
essential employee of such small business concern being
ordered to perform active service for a period of more
than 30 consecutive days.
(C) A small business concern described in
subparagraph (B) shall be eligible to apply for
assistance under this paragraph during the period
beginning on the date on which the essential employee
is ordered to active service and ending on the date
that is 1 year after the date on which such essential
employee is discharged or released from active service.
The Administrator may, when appropriate (as determined
by the Administrator), extend the ending date specified
in the preceding sentence by not more than 1 year.
(D) Any loan or guarantee extended pursuant to this
paragraph shall be made at the same interest rate as
economic injury loans under paragraph (2).
(E) No loan may be made under this paragraph, either
directly or in cooperation with banks or other lending
institutions through agreements to participate on an
immediate or deferred basis, if the total amount
outstanding and committed to the borrower under this
subsection would exceed $1,500,000, unless such
applicant constitutes, or have become due to changed
economic circumstances, a major source of employment in
its surrounding area, as determined by the
Administration, in which case the Administration, in
its discretion, may waive the $1,500,000 limitation.
(F) For purposes of assistance under this paragraph,
no declaration of a disaster area shall be required.
(G)(i) Notwithstanding any other provision of
law, the Administrator may make a loan under
this paragraph of not more than $50,000 without
collateral.
(ii) The Administrator may defer payment of
principal and interest on a loan described in
clause (i) during the longer of--
(I) the 1-year period beginning on
the date of the initial disbursement of
the loan; and
(II) the period during which the
relevant essential employee is on
active service.
(H) The Administrator shall give priority to
any application for a loan under this paragraph
and shall process and make a determination
regarding such applications prior to processing
or making a determination on other loan
applications under this subsection, on a
rolling basis.
(4) Coordination with fema.--
(A) In general.--Notwithstanding any other
provision of law, for any disaster declared
under this subsection or major disaster
(including any major disaster relating to which
the Administrator declares eligibility for
additional disaster assistance under paragraph
(9)), the Administrator, in consultation with
the Administrator of the Federal Emergency
Management Agency, shall ensure, to the maximum
extent practicable, that all application
periods for disaster relief under this Act
correspond with application deadlines
established under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act
(42 U.S.C. 5121 et seq.), or as extended by the
President.
(B) Deadlines.--Notwithstanding any other
provision of law, not later than 10 days before
the closing date of an application period for a
major disaster (including any major disaster
relating to which the Administrator declares
eligibility for additional disaster assistance
under paragraph (9)), the Administrator, in
consultation with the Administrator of the
Federal Emergency Management Agency, 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 that includes--
(i) the deadline for submitting
applications for assistance under this
Act relating to that major disaster;
(ii) information regarding the number
of loan applications and disbursements
processed by the Administrator relating
to that major disaster for each day
during the period beginning on the date
on which that major disaster was
declared and ending on the date of that
report; and
(iii) an estimate of the number of
potential applicants that have not
submitted an application relating to
that major disaster.
(5) Public awareness of disasters.--If a disaster is
declared under this subsection or the Administrator
declares eligibility for additional disaster assistance
under paragraph (9), the Administrator shall make every
effort to communicate through radio, television, print,
and web-based outlets, all relevant information needed
by disaster loan applicants, including--
(A) the date of such declaration;
(B) cities and towns within the area of such
declaration;
(C) loan application deadlines related to
such disaster;
(D) all relevant contact information for
victim services available through the
Administration (including links to small
business development center websites);
(E) links to relevant Federal and State
disaster assistance websites, including links
to websites providing information regarding
assistance available from the Federal Emergency
Management Agency;
(F) information on eligibility criteria for
Administration loan programs, including where
such applications can be found; and
(G) application materials that clearly state
the function of the Administration as the
Federal source of disaster loans for homeowners
and renters.
(6) Authority for qualified private contractors.--
(A) Disaster loan processing.--The
Administrator may enter into an agreement with
a qualified private contractor, as determined
by the Administrator, to process loans under
this subsection in the event of a major
disaster (including any major disaster relating
to which the Administrator declares eligibility
for additional disaster assistance under
paragraph (9)), under which the Administrator
shall pay the contractor a fee for each loan
processed.
(B) Loan loss verification services.--The
Administrator may enter into an agreement with
a qualified lender or loss verification
professional, as determined by the
Administrator, to verify losses for loans under
this subsection in the event of a major
disaster (including any major disaster relating
to which the Administrator declares eligibility
for additional disaster assistance under
paragraph (9)), under which the Administrator
shall pay the lender or verification
professional a fee for each loan for which such
lender or verification professional verifies
losses.
(7) Disaster assistance employees.--
(A) In general.--In carrying out this
section, the Administrator may, where
practicable, ensure that the number of full-
time equivalent employees--
(i) in the Office of the Disaster
Assistance is not fewer than 800; and
(ii) in the Disaster Cadre of the
Administration is not fewer than 1,000.
(B) Report.--In carrying out this subsection,
if the number of full-time employees for either
the Office of Disaster Assistance or the
Disaster Cadre of the Administration is below
the level described in subparagraph (A) for
that office, not later than 21 days after the
date on which that staffing level decreased
below the level described in subparagraph (A),
the Administrator shall submit to the Committee
on Appropriations and the Committee on Small
Business and Entrepreneurship of the Senate and
the Committee on Appropriations and Committee
on Small Business of the House of
Representatives, a report--
(i) detailing staffing levels on that
date;
(ii) requesting, if practicable and
determined appropriate by the
Administrator, additional funds for
additional employees; and
(iii) containing such additional
information, as determined appropriate
by the Administrator.
(8) Increased loan caps.--
(A) Aggregate loan amounts.--Except as
provided in subparagraph (B), and
notwithstanding any other provision of law, the
aggregate loan amount outstanding and committed
to a borrower under this subsection may not
exceed $2,000,000.
(B) Waiver authority.--The Administrator may,
at the discretion of the Administrator,
increase the aggregate loan amount under
subparagraph (A) for loans relating to a
disaster to a level established by the
Administrator, based on appropriate economic
indicators for the region in which that
disaster occurred.
(9) Declaration of eligibility for additional
disaster assistance.--
(A) In general.--If the President declares a
major disaster, the Administrator may declare
eligibility for additional disaster assistance
in accordance with this paragraph.
(B) Threshold.--A major disaster for which
the Administrator declares eligibility for
additional disaster assistance under this
paragraph shall--
(i) have resulted in extraordinary
levels of casualties or damage or
disruption severely affecting the
population (including mass
evacuations), infrastructure,
environment, economy, national morale,
or government functions in an area;
(ii) be comparable to the description
of a catastrophic incident in the
National Response Plan of the
Administration, or any successor
thereto, unless there is no successor
to such plan, in which case this clause
shall have no force or effect; and
(iii) be of such size and scope
that--
(I) the disaster assistance
programs under the other
paragraphs under this
subsection are incapable of
providing adequate and timely
assistance to individuals or
business concerns located
within the disaster area; or
(II) a significant number of
business concerns outside the
disaster area have suffered
disaster-related substantial
economic injury as a result of
the incident.
(C) Additional economic injury disaster loan
assistance.--
(i) In general.--If the Administrator
declares eligibility for additional
disaster assistance under this
paragraph, the Administrator may make
such loans under this subparagraph
(either directly or in cooperation with
banks or other lending institutions
through agreements to participate on an
immediate or deferred basis) as the
Administrator determines appropriate to
eligible small business concerns
located anywhere in the United States.
(ii) Processing time.--
(I) In general.--If the
Administrator determines that
the average processing time for
applications for disaster loans
under this subparagraph
relating to a specific major
disaster is more than 15 days,
the Administrator shall give
priority to the processing of
such applications submitted by
eligible small business
concerns located inside the
disaster area, until the
Administrator determines that
the average processing time for
such applications is not more
than 15 days.
(II) Suspension of
applications from outside
disaster area.--If the
Administrator determines that
the average processing time for
applications for disaster loans
under this subparagraph
relating to a specific major
disaster is more than 30 days,
the Administrator shall suspend
the processing of such
applications submitted by
eligible small business
concerns located outside the
disaster area, until the
Administrator determines that
the average processing time for
such applications is not more
than 15 days.
(iii) Loan terms.--A loan under this
subparagraph shall be made on the same
terms as a loan under paragraph (2).
(D) Definitions.--In this paragraph--
(i) the term ``disaster area'' means
the area for which the applicable major
disaster was declared;
(ii) the term ``disaster-related
substantial economic injury'' means
economic harm to a business concern
that results in the inability of the
business concern to--
(I) meet its obligations as
it matures;
(II) meet its ordinary and
necessary operating expenses;
or
(III) market, produce, or
provide a product or service
ordinarily marketed, produced,
or provided by the business
concern because the business
concern relies on materials
from the disaster area or sells
or markets in the disaster
area; and
(iii) the term ``eligible small
business concern'' means a small
business concern--
(I) that has suffered
disaster-related substantial
economic injury as a result of
the applicable major disaster;
and
(II)(aa) for which not less
than 25 percent of the market
share of that small business
concern is from business
transacted in the disaster
area;
(bb) for which not less than
25 percent of an input into a
production process of that
small business concern is from
the disaster area; or
(cc) that relies on a
provider located in the
disaster area for a service
that is not readily available
elsewhere.
(10) Reducing closing and disbursement delays.--The
Administrator shall provide a clear and concise
notification on all application materials for loans
made under this subsection and on relevant websites
notifying an applicant that the applicant may submit
all documentation necessary for the approval of the
loan at the time of application and that failure to
submit all documentation could delay the approval and
disbursement of the loan.
(11) Increasing transparency in loan approvals.--The
Administrator shall establish and implement clear,
written policies and procedures for analyzing the
ability of a loan applicant to repay a loan made under
this subsection.
(12) Additional awards to small business development
centers, women's business centers, and score for
disaster recovery.--
(A) In general.--The Administration may
provide financial assistance to a small
business development center, a women's business
center described in section 29, the Service
Corps of Retired Executives, or any proposed
consortium of such individuals or entities to
spur disaster recovery and growth of small
business concerns located in an area for which
the President has declared a major disaster.
(B) Form of financial assistance.--Financial
assistance provided under this paragraph shall
be in the form of a grant, contract, or
cooperative agreement.
(C) No matching funds required.--Matching
funds shall not be required for any grant,
contract, or cooperative agreement under this
paragraph.
(D) Requirements.--A recipient of financial
assistance under this paragraph shall provide
counseling, training, and other related
services, such as promoting long-term
resiliency, to small business concerns and
entrepreneurs impacted by a major disaster.
(E) Performance.--
(i) In general.--The Administrator,
in cooperation with the recipients of
financial assistance under this
paragraph, shall establish metrics and
goals for performance of grants,
contracts, and cooperative agreements
under this paragraph, which shall
include recovery of sales, recovery of
employment, reestablishment of business
premises, and establishment of new
small business concerns.
(ii) Use of estimates.--The
Administrator shall base the goals and
metrics for performance established
under clause (i), in part, on the
estimates of disaster impact prepared
by the Office of Disaster Assistance
for purposes of estimating loan-making
requirements.
(F) Term.--
(i) In general.--The term of any
grant, contract, or cooperative
agreement under this paragraph shall be
for not more than 2 years.
(ii) Extension.--The Administrator
may make 1 extension of a grant,
contract, or cooperative agreement
under this paragraph for a period of
not more than 1 year, upon a showing of
good cause and need for the extension.
(G) Exemption from other program
requirements.--Financial assistance provided
under this paragraph is in addition to, and
wholly separate from, any other form of
assistance provided by the Administrator under
this Act.
(H) Competitive basis.--The Administration
shall award financial assistance under this
paragraph on a competitive basis.
(13) Supplemental assistance for contractor
malfeasance.--
(A) In general.--If a contractor or other
person engages in malfeasance in connection
with repairs to, rehabilitation of, or
replacement of real or personal property
relating to which a loan was made under this
subsection and the malfeasance results in
substantial economic damage to the recipient of
the loan or substantial risks to health or
safety, upon receiving documentation of the
substantial economic damage or the substantial
risk to health and safety from an independent
loss verifier, and subject to subparagraph (B),
the Administrator may increase the amount of
the loan under this subsection, as necessary
for the cost of repairs, rehabilitation, or
replacement needed to address the cause of the
economic damage or health or safety risk.
(B) Requirements.--The Administrator may only
increase the amount of a loan under
subparagraph (A) upon receiving an appropriate
certification from the borrower and person
performing the mitigation attesting to the
reasonableness of the mitigation costs and an
assignment of any proceeds received from the
person engaging in the malfeasance. The
assignment of proceeds recovered from the
person engaging in the malfeasance shall be
equal to the amount of the loan under this
section. Any mitigation activities shall be
subject to audit and independent verification
of completeness and cost reasonableness.
(14) Business recovery centers.--
(A) In general.--The Administrator, acting
through the district offices of the
Administration, shall identify locations that
may be used as recovery centers by the
Administration in the event of a disaster
declared under this subsection or a major
disaster.
(B) Requirements for identification.--Each
district office of the Administration shall--
(i) identify a location described in
subparagraph (A) in each county,
parish, or similar unit of general
local government in the area served by
the district office; and
(ii) ensure that the locations
identified under subparagraph (A) may
be used as a recovery center without
cost to the Government, to the extent
practicable.
(15) Increased oversight of economic injury disaster
loans.--The Administrator shall increase oversight of
entities receiving loans under paragraph (2), and may
consider--
(A) scheduled site visits to ensure borrower
eligibility and compliance with requirements
established by the Administrator; and
(B) reviews of the use of the loan proceeds
by an entity described in paragraph (2) to
ensure compliance with requirements established
by the Administrator.
(16) Statute of limitations.--Notwithstanding any
other provision of law, any criminal charge or civil
enforcement action alleging that a borrower engaged in
fraud with respect to a loan made under this subsection
in response to COVID-19 during the covered period (as
defined in section 1110(a) of the CARES Act) shall be
filed not later than 10 years after the offense was
committed.
No loan under this subsection, including renewals and
extensions thereof, may be made for a period or periods
exceeding thirty years: Provided, That the Administrator may
consent to a suspension in the payment of principal and
interest charges on, and to an extension in the maturity of,
the Federal share of any loan under this subsection for a
period not to exceed five years, if (A) the borrower under such
loan is a homeowner or a small business concern, (B) the loan
was made to enable (i) such homeowner to repair or replace his
home, or (ii) such concern to repair or replace plant or
equipment which was damaged or destroyed as the result of a
disaster meeting the requirements of clause (A) or (B) of
paragraph (2) of this subsection, and (C) the Administrator
determines such action is necessary to avoid severe financial
hardship: Provided further, That the provisions of paragraph
(1) of subsection (d) of this section shall not be applicable
to any such loan having a maturity in excess of twenty years.
Notwithstanding any other provision of law, and except as
provided in subsection (d), the interest rate on the
Administration's share of any loan made under subsection (b),
shall not exceed the average annual interest rate on all
interest-bearing obligations of the United States then forming
a part of the public debt as computed at the end of the fiscal
year next preceding the date of the loan and adjusted to the
nearest one-eight of 1 per centum plus one-quarter of 1 per
centum: Provided, however, That the interest rate for loans
made under paragraphs (1) and (2) hereof shall not exceed the
rate of interest which is in effect at the time of the
occurrence of the disaster. In agreements to participate in
loans on a deferred basis under this subsection, such
participation by the Administration shall not be in excess of
90 per centum of the balance of the loan outstanding at the
time of disbursement. Notwithstanding any other provision of
law, the interest rate on the Administration's share of any
loan made pursuant to paragraph (1) of this subsection to
repair or replace a primary residence and/or replace or repair
damaged or destroyed personal property, less the amount of
compensation by insurance or otherwise, with respect to a
disaster occurring on or after July 1, 1976, and prior to
October 1, 1978, shall be: 1 per centum on the amount of such
loan not exceeding $10,000, and 3 per centum on the amount of
such loan over $10,000 but not exceeding $40,000. The interest
rate on the Administration's share of the first $250,000 of all
other loans made pursuant to paragraph (1) of this subsection,
with respect to a disaster occurring on or after July 1, 1976,
and prior to October 1, 1978, shall be 3 per centum. All
repayments of principal on the Administration's share of any
loan made under the above provisions shall first be applied to
reduce the principal sum of such loan which bears interest at
the lower rates provided in this paragraph. The principal
amount of any loan made pursuant to paragraph (1) in connection
with a disaster which occurs on or after April 1, 1977, but
prior to January 1, 1978, may be increased by such amount, but
not more than $2,000, as the Administration determines to be
reasonable in light of the amount and nature of loss, damage,
or injury sustained in order to finance the installation of
insulation in the property which was lost, damaged, or injured,
if the uninsured, damaged portion of the property is 10 per
centum or more of the market value of the property at the time
of the disaster. No later than June 1, 1978, the Administration
shall prepare and transmit to the Select Committee on Small
Business of the Senate, the Committee on Small Business of the
House of Representatives, and the Committee of the Senate and
House of Representatives having jurisdiction over measures
relating to energy conservation, a report on its activities
under this paragraph, including therein an evaluation of the
effect of such activities on encouraging the installation of
insulation in property which is repaired or replaced after a
disaster which is subject to this paragraph, and its
recommendations with respect to the continuation, modification,
or termination of such activities.
In the administration of the disaster loan program under
paragraphs (1) and (2) of this subsection, in the case of
property loss or damage or injury resulting from a major
disaster as determined by the President or a disaster as
determined by the Administrator which occurs on or after
January 1, 1971, and prior to July 1, 1973, the Small Business
Administration, to the extent such loss or damage or injury is
not compensated for by insurance or otherwise--
(A) may make any loan for repair, rehabilitation, or
replacement of property damaged or destroyed without
regard to whether the required financial assistance is
otherwise available from private sources;
(B) may, in the case of the total destruction or
substantial property damage of a home or business
concern, refinance any mortgage or other liens
outstanding against the destroyed or damaged property
if such project is to be repaired, rehabilitated, or
replaced, except that (1) in the case of a business
concern, the amount refinanced shall not exceed the
amount of the physical loss sustained, and (2) in the
case of a home, the amount of each monthly payment of
principal and interest on the loan after refinancing
under this clause shall be not less than the amount of
each such payment made prior to such refinancing;
(C) may, in the case of a loan made under clause (A)
or a mortgage or other lien refinanced under clause (B)
in connection with the destruction of, or substantial
damage to, property owned and used as a residence by an
individual who by reason of retirement, disability, or
other similar circumstances relies for support on
survivor, disability, or retirement benefits under a
pension, insurance, or other program, consent to the
suspension of the payments of the principal of that
loan, mortgage, or lien during the lifetime of that
individual and his souse for so long as the
Administration determines that making such payments
would constitute a substantial hardship;
(D) shall, notwithstanding the provisions of any
other law and upon presentation by the applicant of
proof of loss or damage or injury and a bona fide
estimate of cost of repair, rehabilitation, or
replacement, cancel the principal of any loan made to
cover a loss or damage or injury resulting from such
disaster, except that--
(i) with respect to a loan made in connection
with a disaster occurring on or after January
1, 1971 but prior to January 1, 1972, the total
amount so canceled shall not exceed $2,500, and
the interest on the balance of the loan shall
be at a rate of 3 per centum per annum; and
(ii) with respect to a loan made in
connection with a disaster occurring on or
after January 1, 1972 but prior to July 1,
1973, the total amount so canceled shall not
exceed $5,000, and the interest on the balance
of the loan shall be at a rate of 1 per centum
per annum.
With respect to any loan referred to in clause (D) which is
outstanding on the date of enactment of this paragraph, the
Administrator shall--
(i) make sure change in the interest rate on the
balance of such loan as is required under that clause
effective as of such date of enactment; and
(ii) in applying the limitation set forth in that
clause with respect to the total amount of such loan
which may be canceled, consider as part of the amount
so canceled any part of such loan which was previously
canceled pursuant to section 231 of the Disaster Relief
Act of 1970.
Whoever wrongfully misapplies the proceeds of a loan obtained
under this subsection shall be civilly liable to the
Administrator in an amount equal to one-and-one-half times the
original principal amount of the loan.
(E) A State grant made on or prior to July 1, 1979,
shall not be considered compensation for the purpose of
applying the provisions of section 312(a) of the
Disaster Relief and Emergency Assistance Act to a
disaster loan under paragraph (1) (2)of this
subsection.
(c) Private Disaster Loans.--
(1) Definitions.--In this subsection--
(A) the term ``disaster area'' means any area
for which the President declared a major
disaster relating to which the Administrator
declares eligibility for additional disaster
assistance under subsection (b)(9), during the
period of that major disaster declaration;
(B) the term ``eligible individual'' means an
individual who is eligible for disaster
assistance under subsection (b)(1) relating to
a major disaster relating to which the
Administrator declares eligibility for
additional disaster assistance under subsection
(b)(9);
(C) the term ``eligible small business
concern'' means a business concern that is--
(i) a small business concern, as
defined under this Act; or
(ii) a small business concern, as
defined in section 103 of the Small
Business Investment Act of 1958;
(D) the term ``preferred lender'' means a
lender participating in the Preferred Lender
Program;
(E) the term ``Preferred Lender Program'' has
the meaning given that term in subsection
(a)(2)(C)(ii); and
(F) the term ``qualified private lender''
means any privately-owned bank or other lending
institution that--
(i) is not a preferred lender; and
(ii) the Administrator determines
meets the criteria established under
paragraph (10).
(2) Program required.--The Administrator shall carry
out a program, to be known as the Private Disaster
Assistance program, under which the Administration may
guarantee timely payment of principal and interest, as
scheduled, on any loan made to an eligible small
business concern located in a disaster area and to an
eligible individual.
(3) Use of loans.--A loan guaranteed by the
Administrator under this subsection may be used for any
purpose authorized under subsection (b).
(4) Online applications.--
(A) Establishment.--The Administrator may
establish, directly or through an agreement
with another entity, an online application
process for loans guaranteed under this
subsection.
(B) Other federal assistance.--The
Administrator may coordinate with the head of
any other appropriate Federal agency so that
any application submitted through an online
application process established under this
paragraph may be considered for any other
Federal assistance program for disaster relief.
(C) Consultation.--In establishing an online
application process under this paragraph, the
Administrator shall consult with appropriate
persons from the public and private sectors,
including private lenders.
(5) Maximum amounts.--
(A) Guarantee percentage.--The Administrator
may guarantee not more than 85 percent of a
loan under this subsection.
(B) Loan amount.--The maximum amount of a
loan guaranteed under this subsection shall be
$2,000,000.
(6) Terms and conditions.--A loan guaranteed under
this subsection shall be made under the same terms and
conditions as a loan under subsection (b).
(7) Lenders.--
(A) In general.--A loan guaranteed under this
subsection made to--
(i) a qualified individual may be
made by a preferred lender; and
(ii) a qualified small business
concern may be made by a qualified
private lender or by a preferred lender
that also makes loans to qualified
individuals.
(B) Compliance.--If the Administrator
determines that a preferred lender knowingly
failed to comply with the underwriting
standards for loans guaranteed under this
subsection or violated the terms of the
standard operating procedure agreement between
that preferred lender and the Administration,
the Administrator shall do 1 or more of the
following:
(i) Exclude the preferred lender from
participating in the program under this
subsection.
(ii) Exclude the preferred lender
from participating in the Preferred
Lender Program for a period of not more
than 5 years.
(8) Fees.--
(A) In general.--The Administrator may not
collect a guarantee fee under this subsection.
(B) Origination fee.--The Administrator may
pay a qualified private lender or preferred
lender an origination fee for a loan guaranteed
under this subsection in an amount agreed upon
in advance between the qualified private lender
or preferred lender and the Administrator.
(9) Documentation.--A qualified private lender or
preferred lender may use its own loan documentation for
a loan guaranteed by the Administrator under this
subsection, to the extent authorized by the
Administrator. The ability of a lender to use its own
loan documentation for a loan guaranteed under this
subsection shall not be considered part of the criteria
for becoming a qualified private lender under the
regulations promulgated under paragraph (10).
(10) Implementation regulations.--
(A) In general.--Not later than 1 year after
the date of enactment of the Small Business
Disaster Response and Loan Improvements Act of
2008, the Administrator shall issue final
regulations establishing permanent criteria for
qualified private lenders.
(B) Report to congress.--Not later than 6
months after the date of enactment of the Small
Business Disaster Response and Loan
Improvements Act of 2008, the Administrator
shall submit a report on the progress of the
regulations required by subparagraph (A) to the
Committee on Small Business and
Entrepreneurship of the Senate and the
Committee on Small Business of the House of
Representatives.
(11) Authorization of appropriations.--
(A) In general.--Amounts necessary to carry
out this subsection shall be made available
from amounts appropriated to the Administration
to carry out subsection (b).
(B) Authority to reduce interest rates and
other terms and conditions.--Funds appropriated
to the Administration to carry out this
subsection, may be used by the Administrator to
meet the loan terms and conditions specified in
paragraph (6).
(12) Purchase of loans.--The Administrator may enter
into an agreement with a qualified private lender or
preferred lender to purchase any loan guaranteed under
this subsection.
(d)(1) The Administration may further extend the maturity of
or renew any loan made pursuant to this section, or any loan
transferred to the Administration pursuant to Reorganization
Plan Numbered 2 of 1954, or Reorganization Plan Numbered 1 of
1957, for additional periods not to exceed ten years beyond the
period stated therein, if such extension or renewal will aid in
the orderly liquidation of such loan.
(2) During any period in which principal and interest
charges are suspended on the Federal share of any loan,
as provided in subsection (b), the Administrator shall,
upon the request of any person, firm, or corporation
having a participation in such loan, purchase such
participation, or assume the obligation of the
borrower, for the balance of such period, to make
principal and interest payments on the non-Federal
share of such loan: Provided, That no such payments
shall be made by the Administrator in behalf of any
borrower unless (i) the Administrator determines that
such action is necessary in order to avoid a default,
and (ii) the borrower agrees to make payments to the
Administration in an agreegate amount equal to the
amount paid in its behalf by the Administrator, in such
manner and at such time (during or after the term of
the loan) as the Administrator shall determine having
due regard to the purposes sought to be achieved by
this paragraph.
(3) With respect to a disaster occurring on or after
October 1, 1978, and prior the effective date of this
Act, on the Administration's share of loans made
pursuant to paragraph (1) of subsection (b)--
(A) if the loan proceeds are to
repair or replace a primary residence
and/or repair or replace damaged or
destroyed personal property, the
interest rate shall be 3 percent on the
first $55,000 of such loan;
(B) if the loan proceeds are to
repair or replace property damaged or
destroyed and if the applicant is a
business concern which is unable to
obtain sufficient credit elsewhere, the
interest rate shall be as determined by
the Administration, but not in excess
of 5 percent per annum; and
(C) if the loan proceeds are to repair or
replace property damaged or destroyed and if
the applicant is a business concern which is
able to obtain sufficient credit elsewhere, the
interest rate shall not exceed the current
average market yield on outstanding marketable
obligations of the United States with remaining
periods to maturity comparable to the average
maturities of such loans and adjusted to the
nearest one-eight of 1 percent, and an
additional amount as determined by the
Administration, but not to exceed 1 percent:
Provided, That three years after such loan is
fully disbursed and every two years thereafter
for the term of the loan, if the Administration
determines that the borrower is able to obtain
a loan from one-Federal sources at reasonable
rates and terms for loans of similar purposes
and periods of time, the borrower shall, upon
request by the Administration, apply for and
accept such a loan in sufficient amount to
repay the Administration: Provided further,
That no loan under subsection (b)(1) shall be
made, either directly or in cooperation with
banks or other lending institutions through
agreements to participate on an immediate or
deferred basis, if the total amount outstanding
and committed to the borrower under such
subsection would exceed $500,000 for each
disaster, unless an applicant constitutes a
major source of employment in an area suffering
a disaster, in which case the Administration,
in its discretion, may waive the $500,000
limitation.
(4) Notwithstanding the provisions of any other law,
the interest rate on the Federal share of any loan made
under subsection (b) shall be--
(A) in the case of a homeowner unable to
secure credit elsewhere, the rate prescribed by
the Administration but not more than one-half
the rate determined by the Secretary of the
Treasury taking into consideration the current
average market yield on outstanding marketable
obligations of the United States with remaining
periods to maturity comparable to the average
maturities of such loans plus an additional
charge of not to exceed 1 per centum per annum
as determined by the Administrator, and
adjusted to the nearest one-eight of 1 per
centum but not to exceed 8 per centum per
annum;
(B) in the case of a homeowner able to secure
credit elsewhere, the rate prescribed by the
Administration but not more than the rate
determined by the Secretary of the Treasury
taking into consideration the current average
market yield on outstanding marketable
obligations of the United States with remaining
periods to maturity comparable to the average
maturities of such loans plus an additional
charge of not to exceed 1 per centum per annum
as determined by the Administrator, and
adjusted to the nearest one-eighth of 1 per
centum;
(C) in the case of a business concern unable
to obtain credit elsewhere, not to exceed 8 per
centum per annum;
(D) in the case of a business concern able to
obtain credit elsewhere, the rate prescribed by
the Administration but not in excess of the
rate prevailing in private market for similar
loans and not more than the rate prescribed by
the Administration as the maximum interest rate
for deferred participation (guaranteed) loans
under section 7(a) of this Act. Loans under
this subparagraph shall be limited to a maximum
term of three years.
(5) Notwithstanding the provisions of any other law,
the interest rate on the Federal share of any loan made
under subsection (b)(1) and (b)(2) on account of a
disaster commencing on or after October 1, 1982, shall
be--
(A) in the case of a homeowner unable to
secure credit elsewhere, the rate prescribed by
the Administration but not more than one-half
the rate determined by the Secretary of the
Treasury taking into consideration the current
average market yield on outstanding marketable
obligations of the United States with remaining
periods to maturity comparable to the average
maturities of such loan plus an additional
charge of not to exceed 1 per centum per annum
as determined by the Administrator, and
adjusted to the nearest one-eighth of 1 per
centum, but not to exceed 4 per centum per
annum;
(B) in the case of a homeowner, able to
secure credit elsewhere, the rate prescribed by
the Administration but not more than the rate
determined by the Secretary of the Treasury
taking into consideration the current average
market yield on outstanding marketable
obligations of the United States with remaining
periods to maturity comparable to the average
maturities of such loans plus an additional
charge of not to exceed 1 per centum per annum
as determined by the Administrator, and
adjusted to the nearest one-eighth of 1 per
centum, but not to exceed 8 per centum per
annum;
(C) in the case of a business, private
nonprofit organization, or other concern,
including agricultural cooperatives, unable to
obtain credit elsewhere, not to exceed 4 per
centum per annum;
(D) in the case of a business concern able to
obtain credit elsewhere, the rate prescribed by
the Administration but not in excess of the
lowest of (i) the rate prevailing in the
private market for similar loans, (ii) the rate
prescribed by the Administration as the maximum
interest rate for deferred participation
(guaranteed) loans under section 7(a) of this
Act, or (iii) 8 per centum per annum. Loans
under this subparagraph shall be limited to a
maximum term of 7 years.
(6) Notwithstanding the provisions of any other law,
such loans, subject to the reductions required by
subparagraphs (A) and (B) of paragraph 7(b)(1), shall
be in amounts equal to 100 per centum of loss. The
interest rate for loans made under paragraphs 7(b)(1)
and (2), as determined pursuant to paragraph (5), shall
be the rate of interest which is in effect on the date
of the disaster commenced: Provided, That no loan under
paragraphs 7(b) (1) and (2) shall be made, either
directly or in cooperation with banks or other lending
institutions through agreements to participate on an
immediate or deferred (guaranteed) basis, if the total
amount outstanding and committed to the borrower under
subsection 7(b) would exceed $500,000 for each disaster
unless an applicant constitutes a major source of
employment in an area suffering a disaster, in which
case the Administration, in its discretion, may waive
the $500,000 limitation: Provided further, That the
Administration, subject to the reductions required by
subparagraphs (A) and (B) of paragraph 7(b)(1), shall
not reduce the amount of eligibility for any homeowner
on account of loss of real estate to less than $100,000
for each disaster nor for any homeowner or lessee on
account of loss of personal property to less than
$20,000 for each disaster, such sums being in addition
to any eligible refinancing: Provided further, That the
Administration shall not require collateral for loans
of $25,000 or less (or such higher amount as the
Administrator determines appropriate in the event of a
disaster) which are made under paragraph (1) of
subsection (b): Provided further, That the
Administrator, in obtaining the best available
collateral for a loan of not more than $200,000 under
paragraph (1) or (2) of subsection (b) relating to
damage to or destruction of the property of, or
economic injury to, a small business concern, shall not
require the owner of the small business concern to use
the primary residence of the owner as collateral if the
Administrator determines that the owner has other
assets of equal quality and with a value equal to or
greater than the amount of the loan that could be used
as collateral for the loan: Provided further, That
nothing in the preceding proviso may be construed to
reduce the amount of collateral required by the
Administrator in connection with a loan described in
the preceding proviso or to modify the standards used
to evaluate the quality (rather than the type) of such
collateral. Employees of concerns sharing a common
business premises shall be aggregated in determining
``major source of employment'' status for nonprofit
applicants owning such premises.
With respect to any loan which is outstanding on the date of
enactment of this paragraph and which was made on account of a
disaster commencing on or after October 1, 1982, the
Administrator shall made such change in the interest rate on
the balance of such loan as is required herein effective as of
the date of enactment.
=======================================================================
[Note: Effective on November 25, 2022, section 2102(b) of
Public Law 114-88 (as amended) provides for amendments to the
third proviso of section 7(d)(6). Upon such date, paragraph (6)
will read as follows:]
(6) Notwithstanding the provisions of any other law,
such loans, subject to the reductions required by
subparagraphs (A) and (B) of paragraph 7(b)(1), shall
be in amounts equal to 100 per centum of loss. The
interest rate for loans made under paragraphs 7(b)(1)
and (2), as determined pursuant to paragraph (5), shall
be the rate of interest which is in effect on the date
of the disaster commenced: Provided, That no loan under
paragraphs 7(b) (1) and (2) shall be made, either
directly or in cooperation with banks or other lending
institutions through agreements to participate on an
immediate or deferred (guaranteed) basis, if the total
amount outstanding and committed to the borrower under
subsection 7(b) would exceed $500,000 for each disaster
unless an applicant constitutes a major source of
employment in an area suffering a disaster, in which
case the Administration, in its discretion, may waive
the $500,000 limitation: Provided further, That the
Administration, subject to the reductions required by
subparagraphs (A) and (B) of paragraph 7(b)(1), shall
not reduce the amount of eligibility for any homeowner
on account of loss of real estate to less than $100,000
for each disaster nor for any homeowner or lessee on
account of loss of personal property to less than
$20,000 for each disaster, such sums being in addition
to any eligible refinancing: Provided further, That the
Administration shall not require collateral for loans
of $14,000 or less (or such higher amount as the
Administrator determines appropriate in the event of a
major disaster) which are made under paragraph (1) of
subsection (b): Provided further, That the
Administrator, in obtaining the best available
collateral for a loan of not more than $200,000 under
paragraph (1) or (2) of subsection (b) relating to
damage to or destruction of the property of, or
economic injury to, a small business concern, shall not
require the owner of the small business concern to use
the primary residence of the owner as collateral if the
Administrator determines that the owner has other
assets of equal quality and with a value equal to or
greater than the amount of the loan that could be used
as collateral for the loan: Provided further, That
nothing in the preceding proviso may be construed to
reduce the amount of collateral required by the
Administrator in connection with a loan described in
the preceding proviso or to modify the standards used
to evaluate the quality (rather than the type) of such
collateral. Employees of concerns sharing a common
business premises shall be aggregated in determining
``major source of employment'' status for nonprofit
applicants owning such premises.
With respect to any loan which is outstanding on the date of
enactment of this paragraph and which was made on account of a
disaster commencing on or after October 1, 1982, the
Administrator shall made such change in the interest rate on
the balance of such loan as is required herein effective as of
the date of enactment.
=======================================================================
(7) The Administration shall not withhold disaster assistance
pursuant to this paragraph to nurseries who are victims of
drought disasters. As used in section 7(b)(2) the term ``an
area affected by a disaster'' includes any county, or county
contiguous thereto, determined to be a disaster by the
President, the Secretary of Agriculture or the Administrator of
the Small Business Administration.
(8) Disaster loans for superstorm sandy.--
(A) In general.--Notwithstanding any other
provision of law, and subject to the same
requirements and procedures that are used to
make loans pursuant to subsection (b), a small
business concern, homeowner, nonprofit entity,
or renter that was located within an area and
during the time period with respect to which a
major disaster was declared by the President
under section 401 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act
(42 U.S.C. 5170) by reason of Superstorm Sandy
may apply to the Administrator--
(i) for a loan to repair,
rehabilitate, or replace property
damaged or destroyed by reason of
Superstorm Sandy; or
(ii) if such a small business concern
has suffered substantial economic
injury by reason of Superstorm Sandy,
for a loan to assist such a small
business concern.
(B) Timing.--The Administrator shall select
loan recipients and make available loans for a
period of not less than 1 year after the date
on which the Administrator carries out this
authority.
(C) Inspector general review.--Not later than
6 months after the date on which the
Administrator begins carrying out this
authority, the Inspector General of the
Administration shall initiate a review of the
controls for ensuring applicant eligibility for
loans made under this paragraph.
(e) The Administration shall not fund any Small Business
Development Center or any variation thereof, except as
authorized in section 21 of this Act.
(f) Additional Requirements for 7(b) Loans.--
(1) Increased deferment authorized.--
(A) In general.--In making loans under
subsection (b), the Administrator may provide,
to the person receiving the loan, an option to
defer repayment on the loan.
(B) Period.--The period of a deferment under
subparagraph (A) may not exceed 4 years.
(g) Net Earnings Clauses Prohibited for 7(b) Loans.--In
making loans under subsection (b), the Administrator shall not
require the borrower to pay any non-amortized amount for the
first five years after repayment begins.
(e) [RESERVED].
(f) [RESERVED].
(h)(1) The Administration also is empowered, where other
financial assistance is not available on reasonable terms, to
make such loans (either directly or in cooperation with Banks
or other lending institutions through agreements to participate
on an immediate or deferred basis) as the Administration may
determine to be necessary or appropriate--
(A) to assist any public or private organization--
(i) which is organized under the laws of the
United States or of any State, operated in the
interest of handicapped individuals, the net
income of which does not inure in whole or in
part to the benefit of any shareholder or other
individual;
(ii) which complies with any applicable
occupational health and safety standard
prescribed by the Secretary of Labor; and
(iii) which, in the production of commodities
and in the provision of services during any
fiscal year in which it receives financial
assistance under this subsection, employs
handicapped individuals for not less than 75
per centum of the man-hours required for the
production or provision of the commodities or
services; or
(B) to assist any handicapped individual in
establishing, acquiring, or operating a small business
concern.
(2) The Administration's share of any loan made under this
subsection shall not exceed $350,000, nor may any such loan be
made if the total amount outstanding and committed (by
participation or otherwise) to the borrower from the business
loan and investment fund established by section 4(c)(1)(B) of
this Act would exceed $350,000. In agreements to participate in
loans on a deferred basis under this subsection, the
Administration's participation may total 100 per centum of the
balance of the loan at the time of disbursement. The
Administration's share of any loan made under this subsection
shall bear interest at the rate of 3 per centum per annum. The
maximum term of any such loan, including extensions and
renewals thereof, may not exceed fifteen years. All loans made
under this subsection shall be of such sound value or so
secured as reasonably to assure repayment: Provided, however,
That any reasonable doubt shall be resolved in favor of the
applicant.
(3) For purposes of this subsection, the term ``handicapped
individual'' means a person who has a physical, mental, or
emotional impairment, defect, ailment, disease, or disability
of a permanent nature which in any way limits the selection of
any type of employment for which the person would otherwise be
qualified or qualifiable.
(i)(1) The Administration also is empowered to make,
participate (on an immediate basis) in, or guarantee loans,
repayable in not more than fifteen years, to any small business
concern, or to any qualified person seeking to establish such a
concern, when it determines that such loans will further the
policies established in section 2(b) of this Act, with
particular emphasis on the preservation or establishment of
small business concerns located in urban or rural areas with
high proportions of unemployed or low-income individuals, or
owned by low-income individuals: Provided, however, That no
such loans shall be made, participated in, or guaranteed if the
total of such Federal assistance to a single borrower
outstanding at any one time would exceed $100,000. The
Administration may defer payments on the principal of such
loans for a grace period and use such other methods as it deems
necessary and appropriate to assure the successful
establishment and operation of such concern. The Administration
may, in its discretion, as a condition of such financial
assistance, require that the borrower take steps to improve his
management skills by participating in a management training
program approved by the Administration: Provided, however, That
any management training program so approved must be of
sufficient scope and duration to provide reasonable opportunity
for the individuals served to develop entrepreneurial and
managerial self-sufficiency.
(2) The Administration shall encourage, as far as possible,
the participation of the private business community in the
program of assistance to such concerns, and shall seek to
stimulate new private lending activities to such concerns
through the use of the loan guarantees, participations in
loans, and pooling arrangements authorized by this subsection.
(3) To insure an equitable distribution between urban and
rural areas for loans between $3,500 and $100,000 made under
this subsection, the Administration is authorized to use the
agencies and agreements and delegations developed under title
III of the Economic Opportunity Act of 1964, as amended, as it
shall determine necessary.
(4) The Administration shall provide for the continuing
evaluation of programs under this subsection, including full
information on the location, income characteristics, and types
of businesses and individuals assisted, and on new private
lending activity stimulated, and the results of such evaluation
together with recommendations shall be included in the report
required by section 10(a) of this Act.
(5) Loans made pursuant to this subsection (including
immediate participation in and guarantees of such loans) shall
have such terms and conditions as the Administration shall
determine, subject to the following limitations--
(A) there is reasonable assurance of repayment of the
loan;
(B) the financial assistance is not otherwise
available on reasonable terms from private sources or
other Federal, State, or local programs;
(C) the amount of the loan, together with other funds
available, is adequate to assure completion of the
project or achievement of the purposes for which the
loan is made;
(D) the loan bears interest at a rate not less than
(i) a rate determined by the Secretary of the Treasury,
taking into consideration the average market yield on
outstanding Treasury obligations of comparable
maturity, plus (ii) such additional charge, if any,
toward covering other costs of the program as the
Administration may determine to be consistent with its
purposes: Provided, however, That the rate of interest
charged on loans made in redevelopment areas designated
under the Public Works and Economic Development Act of
1965 (42 U.S.C. 3108 et seq.) shall not exceed the rate
currently applicable to new loans made under section
201 of that Act (42 U.S.C. 3142); and
(E) fees not in excess of amounts necessary to cover
administrative expenses and probable losses may be
required on loan guarantees.
(6) The Administration shall take such steps as may be
necessary to insure that, in any fiscal year, at least 50 per
centum of the amounts loaned or guaranteed pursuant to this
subsection are allotted to small business concerns located in
urban areas identified by the Administration as having high
concentrations of unemployed or low-income individuals or to
small business concerns owned by low-income individuals. The
Administration shall define the meaning of low income as it
applies to owners of small business concerns eligible to be
assisted under this subsection.
(7) No financial assistance shall be extended pursuant to
this subsection when the Administration determines that the
assistance will be used in relocating establishments from one
area to another if such relocation would result in an increase
in unemployment in the area of original location.
(j)(1) the Administration shall provide financial assistance
to public or private organizations to pay all or part of the
cost of projects designated to provide technical or management
assistance to individuals or enterprises eligible for
assistance under sections 7(i), 7(j)(10), and 8(a) of this Act,
with special attention to small businesses located in areas of
high concentration of unemployed or low-income individuals, to
small businesses eligible to receive contracts pursuant to
section 8(a) of this Act.
(2) Financial assistance under this subsection may be
provided for projects, including, but not limited to--
(A) planning and research, including feasibility
studies and market research;
(B) the identification and development of new
business opportunities;
(C) the furnishing of centralized services with
regard to public services and Federal Government
programs including programs authorized under sections
7(i), (7)(j)(10), and 8(a) of this Act;
(D) the establishment and strengthening of business
service agencies, including trade associations and
cooperative; and
(E) the furnishing of business counseling, management
training, and legal and other related services, with
special emphasis on the development of management
training programs using the resources of the business
community, including the development of management
training opportunities in existing business, and with
emphasis in all cases upon providing management
training of sufficient scope and duration to develop
entrepreneurial and managerial self-sufficiency on the
part of the individuals served.
(3) The Administration shall encourage the placement of
subcontracts by businesses with small business concerns located
in area of high concentration of unemployed or low-income
individuals, with small businesses owned by low-income
individuals, and with small businesses eligible to receive
contracts pursuant to section 8(a) of this Act. The
Administration may provide incentives and assistance to such
businesses that will aid in the training and upgrading of
potential subcontractors or other small business concerns
eligible for assistance under section 7(i), 7(j), and 8(a), of
this Act.
(4) The Administration shall give preference to projects
which promote the ownership, participation in ownership, or
management of small businesses owned by low-income individuals
and small businesses eligible to receive contracts pursuant to
section 8(a) of this Act.
(5) The financial assistance authorized for projects under
this subsection includes assistance advanced by grant,
agreement, or contract.
(6) The Administration is authorized to make payments under
grants and contracts entered into under this subsection in lump
sum or installments, and in advance or by way of reimbursement,
and in the case of grants, with necessary adjustments on
account of overpayments or underpayments.
(7) To the extent feasible, services under this subsection
shall be provided in a location which is easily accessible to
the individuals and small business concerns served.
(9) The Administration shall take such steps as may be
necessary and appropriate, in coordination and cooperation with
the heads of other Federal departments and agencies, to insure
that contracts, subcontracts, and deposits made by the Federal
Government or with programs aided with Federal funds are placed
in such way as to further the purposes of sections 7(i), 7(j),
and 8(a) of this Act.
(10) There is established with the Administration a small
business and capital ownership development program (hereinafter
referred to as the ``Program'') which shall provide assistance
exclusively for small business concerns eligible to receive
contracts pursuant to section 8(a) of this Act. The program,
and all other services and activities authorized under section
7(j) and 8(a) of this Act, shall be managed by the Associate
Administrator for Minority Small Business and Capital Ownership
Development under the supervision of, and responsible to, the
Administrator.
(A) The Program shall--
(i) assist small business concerns
participating in the Program (either through
public or private organizations) to develop and
maintain comprehensive business plans which set
forth the Program Participant's specific
business targets, objectives, and goals
developed and maintained in conformity with
subparagraph (D).
(ii) provide for such other nonfinancial
services as deemed necessary for the
establishment, preservation, and growth of
small business concerns participating in the
Program, including but not limited to (I) loan
packaging, (II) financing counseling, (III)
accounting and bookkeeping assistance, (IV)
marketing assistance, and (V) management
assistance;
(iii) assist small business concerns
participating in the Program to obtain equity
and debt financing;
(iv) establish regular performance monitoring
and reporting systems for small business
concerns participating in the Program to assure
compliance with their business plans;
(v) analyze and report the causes of success
and failure of small business concerns
participating in the Program; and
(vi) provide assistance necessary to help
small business concerns participating in the
Program to procure surety bonds, with such
assistance including, but not limited to, (I)
the preparation of application forms required
to receive a surety bond, (II) special
management and technical assistance designed to
meet the specific needs of small business
concerns participating in the Program and which
have received or are applying to receive a
surety bond, and (III) guarantee from the
Administration pursuant to title IV, part B of
the Small Business Investment Act of 1958.
(B) Small business concerns eligible to receive
contracts pursuant to section 8(a) of this Act shall
participate in the Program.
(C)(i) A small business concern participating in any
program or activity conducted under the authority of
this paragraph or eligible for the award of contracts
pursuant to section 8(a) on September 1, 1988, shall be
permitted continued participation and eligibility in
such program or activity for a period of time which is
the greater of--
(I) 9 years less the number of years since
the award of its first contract pursuant to
section 8(a); or
(II) its original fixed program participation
term (plus any extension thereof) assigned
prior to the effective date of this paragraph
plus eighteen months.
(ii) Nothing contained in this subparagraph shall be
deemed to prevent the Administration from instituting a
termination or graduation pursuant to subparagraph (F)
or (H) for issues unrelated to the expiration of any
time period limitation.
(D)(i) Promptly after certification under paragraph
(11) a Program Participant shall submit a business plan
(hereinafter referred to as the plan'') as described in
clause (ii) of this subparagraph for review by the
Business Opportunity Specialist assigned to assist such
Program Participant. The plan may be a revision of a
preliminary business plan submitted by the Program
Participant or required by the Administration as a part
of the application for certification under this section
and shall be designed to result in the Program
Participant eliminating the conditions or circumstances
upon which the Administration determined eligibility
pursuant to section 8(a)(6). Such plan, and subsequent
modifications submitted under clause (iii) of this
subparagraph, shall be approved by the business
opportunity specialist prior to the Program Participant
being eligible for award of a contract pursuant to
section 8(a).
(ii) The plans submitted under this
subparagraph shall include the following:
(I) An analysis of market potential,
competitive environment, and other
business analyses estimating the
Program Participant's prospects for
profitable operations during the term
of program participation and after
graduation.
(II) An analysis of the Program
Participant's strengths and weaknesses
with particular attention to correcting
any financial, managerial, technical,
or personnel conditions which are
likely to impede the small business
concern from receiving contracts other
than those awarded under section 8(a).
(III) Specific targets, objectives,
and goals, for the business development
of the Program Participant during the
next and succeeding years utilizing the
results of the analyses conducted
pursuant to subclauses (I) and (II).
(IV) A transition management plan
outlining specific steps to assure
profitable business operations after
graduation (to be incorporated into the
Program Participant's plan during the
first year of the transitional stage of
Program participation).
(V) Estimates of contract awards
pursuant to section 8(a) and from other
sources, which the Program Participant
will require to meet the specific
targets, objectives, and goals for the
years covered by its plan. The
estimates established shall be
consistent with the provisions of
subparagraph (I) and section 8(a).
(iii) Each Program Participant shall annually
review its currently approved plan with its
Business Opportunity Specialist and modify such
plan as may be appropriate. Any modified plan
shall be submitted to the Administration for
approval. The currently approved plan shall be
considered valid until such time as a modified
plan is approved by the Business Opportunity
Specialist. Annual reviews pertaining to years
in the transitional stage of program
participation shall require, as appropriate, a
written verification that such Program
Participant has complied with the requirements
of subparagraph (I) relating to attaining
business activity from sources other than
contracts awarded pursuant to section 8(a).
(iv) Each Program Participant shall annually
forecast its needs for contract awards under
section 8(a) for the next program year and the
succeeding program year during the review of
its business plan, conducted pursuant to clause
(iii). Such forecast shall be known as the
section 8(a) contract support level and shall
be included in the Program Participant's
business plan. Such forecast shall include--
(I) the aggregate dollar value of
contract support to be sought on a
noncompetitive basis under section
8(a), reflecting compliance with the
requirements of subparagraph (I)
relating to attaining business activity
from sources other than contracts
awarded pursuant to section 8(a),
(II) the types of contract
opportunities being sought, identified
by Standard Industrial Classification
(SIC) Code or otherwise,
(III) an estimate of the dollar value
of contract support to be sought on a
competitive basis, and
(IV) such other information as may be
requested by the Business Opportunity
Specialist to provide effective
business development assistance to the
Program Participant.
(E) A small business concern participating in the
program conducted under the authority of this paragraph
and eligible for the award of contracts pursuant to
section 8(a) shall be denied all such assistance if
such concern--
(i) voluntarily elects not to continue
participation;
(ii) completes the period of Program
participation as prescribed by paragraph (15);
(iii) is terminated pursuant to a termination
proceeding conducted in accordance with section
8(a)(9); or
(iv) is graduated pursuant to a graduation
proceeding conducted in accordance with section
8(a)(9).
(F) For the purposes of section and 8(a), the terms
``terminated'' or ``termination'' means the total
denial or suspension of assistance under this paragraph
or under section 8(a) prior to the graduation of the
participating small business concern or prior to the
expiration of the maximum program participation in
term. An action for termination shall be based upon
good cause, including--
(i) the failure by such concern to maintain
its eligibility for Program participation;
(ii) the failure of the concern to engage in
business practices that will promote its
competitiveness within a reasonable period of
time as evidenced by, among other indicators, a
pattern of unjustified delinquent performance
or terminations for default with respect to
contracts awarded under the authority of
section 8(a);
(iii) a demonstrated pattern of failing to
make required submissions or responses to the
Administration in a timely manner;
(iv) the willful violation of any rule or
regulation of the Administration pertaining to
material issues;
(v) the debarment of the concern or its
disadvantaged owners by any agency pursuant to
subpart 9.4 of title 48, Code of Federal
Regulations (or any successor regulation); or
(vi) the conviction of the disadvantaged
owner or an officer of the concern for any
offense indicating a lack of business integrity
including any conviction for embezzlement,
theft, forgery, bribery, falsification or
violation of section 16. For purposes of this
clause, no termination action shall be taken
with respect to a disadvantaged owner solely
because of the conviction of an officer of the
concern (who is other than a disadvantaged
owner) unless such owner conspired with,
abetted, or otherwise knowingly acquiesced in
the activity or omission that was the basis of
such officer's conviction.
(G) The Director of the Division may initiate a
termination proceeding by recommending such action to
the Associate Administrator for Minority Small Business
and Capital Ownership Development. Whenever the
Associate Administrator, or a designee of such officer,
determines such termination is appropriate, within 15
days after making such a determination the Program
Participant shall be provided a written notice of
intent to terminate, specifying the reasons for such
action. No Program Participant shall be terminated from
the Program pursuant to subparagraph (F) without first
being afforded an opportunity for a hearing in
accordance with section 8(a)(9).
(H) For the purposes of sections 7(j) and 8(a) the
term ``graduated'' or ``graduation'' means that the
Program Participant is recognized as successfully
completing the program by substantially achieving the
targets, objectives, and goals contained in the
concern's business plan thereby demonstrating its
ability to compete in the marketplace without
assistance under this section or section 8(a).
(I)(i) During the developmental stage of its
participation in the Program, a Program Participant
shall take all reasonable efforts within its control to
attain the targets contained in its business plan for
contracts awarded other than pursuant to section 8(a)
(hereinafter referred to as ``business activity
targets.''). Such efforts shall be made a part of the
business plan and shall be sufficient in scope and
duration to satisfy the Administration that the Program
Participant will engage a reasonable marketing strategy
that will maximize its potential to achieve its
business activity targets.
(ii) During the transitional stage of the Program a
Program Participant shall be subject to regulations
regarding business activity targets that are
promulgated by the Administration pursuant to clause
(iii);
(iii) The regulations referred to in clause (ii)
shall:
(I) establish business activity targets
applicable to Program Participants during the
fifth year and each succeeding year of Program
Participation; such targets, for such period of
time, shall reflect a reasonably consistent
increase in contracts awarded other than
pursuant to section 8(a), expressed as a
percentage of total sales; when promulgating
business activity targets the Administration
may establish modified targets for Program
Participants that have participated in the
Program for a period of longer than four years
on the effective date of this subparagraph;
(II) require a Program Participant to attain
its business activity targets;
(III) provide that, before the receipt of any
contract to be awarded pursuant to section
8(a), the Program Participant (if it is in the
transitional stage) must certify that it has
complied with the regulations promulgated
pursuant to subclause (II), or that it is in
compliance with such remedial measures as may
have been ordered pursuant to regulations
issued under subclause (V);
(IV) require the Administration to review
each Program Participant's performance
regarding attainment of business activity
targets during periodic reviews of such
Participant's business plan; and
(V) authorize the Administration to take
appropriate remedial measures with respect to a
Program Participant that has failed to attain a
required business activity target for the
purpose of reducing such Participant's
dependence on contracts awarded pursuant to
section 8(a); such remedial actions may
include, but are not limited to assisting the
Program Participant to expand the dollar volume
of its competitive business activity or
limiting the dollar volume of contracts awarded
to the Program Participant pursuant to section
8(a); except for actions that would constitute
a termination, remedial measures taken pursuant
to this subclause shall not be reviewable
pursuant to section 8(a)(9).
(J)(i) The Administration shall conduct an evaluation
of a Program Participant's eligibility for continued
participation in the Program whenever it receives
specific and credible information alleging that such
Program Participant no longer meets the requirements
for Program eligibility. Upon making a finding that a
Program Participant is no longer eligible, the
Administration shall initiate a termination proceeding
in accordance with subparagraph (F). A Program
Participant's eligibility for award of any contract
under the authority of section 8(a) may be suspended
pursuant to subpart 9.4 of title 48, Code of Federal
Regulations (or any successor regulation).
(ii)(I) Except as authorized by subclauses (II) or
(III), no award shall be made pursuant to section 8(a)
to a concern other than a small business concern.
(II) In determining the size of a small business
concern owned by a socially and economically
disadvantaged Indian tribe (or a wholly owned business
entity of such tribe), each firm's size shall be
independently determined without regard to its
affiliation with the tribe, any entity of the tribal
government, or any other business enterprise owned by
the tribe, unless the Administrator determines that one
or more such tribally owned business concerns have
obtained, or are likely to obtain, a substantial unfair
competitive advantage within an industry category.
(III) Any joint venture established under the
authority of section 602(b) of Public Law 100-656, the
``Business Opportunity Development Reform Act of
1988'', shall be eligible for award of a contract
pursuant to section 8(a).
(11)(A) The Associate Administrator for Minority Small
Business and Capital Ownership Development shall be responsible
for coordinating and formulating policies relating to Federal
assistance to small business concerns eligible for assistance
under section 7(i) of this Act and small business concerns
eligible to receive contracts pursuant to section 8(a) of this
Act.
(B)(i) Except as provided in clause (iii), no
individual who was determined pursuant to section 8(a)
to be socially and economically disadvantaged before
the effective date of this subparagraph shall be
permitted to assert such disadvantage with respect to
any other concern making application for certification
after such effective date.
(ii) Except as provided in clause (iii), any
individual upon whom eligibility is based
pursuant to section 8(a)(4) shall be permitted
to assert such eligibility for only one small
business concern.
(iii) A socially and economically
disadvantaged Indian tribe may own more than
one small business concern eligible for
assistance pursuant to section 7(j)(10) and
section 8(a) if--
(I) the Indian tribe does not own
another firm in the same industry which
has been determined to be eligible to
receive contracts under this program,
and
(II) the individuals responsible for
the management and daily operations of
the concern do not manage more than two
Program Participants.
(C) No concern, previously eligible for the award of
contracts pursuant to section 8(a), shall be subsequently
recertified for program participation if its prior
participation in the program was concluded for any of the
reasons described in paragraph (10)(E).
(D) A concern eligible for the award of contracts pursuant to
this subsection shall remain eligible for such contracts if
there is a transfer of ownership and control (as defined
pursuant to section 8(a)(4)) to individuals who are determined
to be socially and economically disadvantaged pursuant to
section 8(a). In the event of such a transfer, the concern, if
not terminated or graduated, shall be eligible for a period of
continued participation in the program not to exceed the time
limitations prescribed in paragraph (15).
(E) There is established a Division of Program Certification
and Eligibility (hereinafter referred to in this paragraph as
the Division'') that shall be made part of the Office of
Minority Small Business and Capital Ownership Development. The
Division shall be headed by a Director who shall report
directly to the Associate Administrator for Minority Small
Business and Capital Ownership Development. The Division shall
establish field offices within such regional offices of the
Administration as may be necessary to perform efficiently its
functions and responsibilities.
(F) Subject to the provisions of section 8(a)(9), the
functions and responsibility of the Division are to--
(i) receive, review and evaluate applications for
certification pursuant to paragraphs (4), (5), (6) and
(7) of section 8(a);
(ii) advise each program applicant within 15 days
after the receipt of an application as to whether such
application is complete and suitable for evaluation
and, if not, what matters must be rectified;
(iii) render recommendations on such applications to
the Associate Administrator for Minority Small Business
and Capital Ownership Development;
(iv) review and evaluate financial statements and
other submissions from concerns participating in the
program established by paragraph (10) to ascertain
continued eligibility to receive subcontracts pursuant
to section 8(a);
(v) make a request for the initiation of termination
or graduation proceedings, as appropriate, to the
Associate Administrator for Minority Small Business and
Capital Ownership Development;
(vi) make recommendations to the Associate
Administrator for Minority Small Business and Capital
Ownership Development concerning protests from
applicants that have been denied program admission;
(vii) decide protests regarding the status of a
concern as a disadvantaged concern for purposes of any
program or activity conducted under the authority of
subsection (d) of section 8, or any other provision of
Federal law that references such subsection for a
definition of program eligibility; and
(viii) implement such policy directives as may be
issued by the Associate Administrator for Minority
Small Business and Capital Ownership Development
pursuant to subparagraph (I) regarding, among other
things, the geographic distribution of concerns to be
admitted to the program and the industrial make-up of
such concerns.
(G) An applicant shall not be denied admission into the
program established by paragraph (10) due solely to a
determination by the Division that specific contract
opportunities are unavailable to assist in the development of
such concern unless--
(i) the Government has not previously procured and is
unlikely to procure the types of products or services
offered by the concern; or
(ii) the purchases of such products or services by
the Federal Government will not be in quantities
sufficient to support the developmental needs of the
applicant and other Program Participants providing the
same or similar items or services.
(H) Not later than 90 days after receipt of a
completed application for Program certification, the
Associate Administrator for Minority Small Business and
Capital Ownership Development shall certify a small
business concern as a Program Participant or shall deny
such application.
(I) Thirty days before the conclusion of each fiscal year,
the Director of the Division shall review all concerns that
have been admitted into the Program during the preceding 12-
month period. The review shall ascertain the number of
entrants, their geographic distribution and industrial
classification. The Director shall also estimate the expected
growth of the Program during the next fiscal year and the
number of additional Business Opportunity Specialists, if any,
that will be needed to meet the anticipated demand for the
Program. The findings and conclusions of the Director shall be
reported to the Associate Administrator for Minority Small
Business and Capital Ownership Development by September 30 of
each year. Based on such report and such additional data as may
be relevant, the Associate Administrator shall, by October 31
of each year, issue policy and program directives applicable to
such fiscal year that--
(i) establish priorities for the solicitation of
program applications from underrepresented regions and
industry categories;
(ii) assign staffing levels and allocate other
program resources as necessary to meet program needs;
and
(iii) establish priorities in the processing and
admission of new Program Participants as may be
necessary to achieve an equitable geographic
distribution of concerns and a distribution of concerns
across all industry categories in proportions needed to
increase significantly contract awards to small
business concerns owned and controlled by socially and
economically disadvantaged individuals. When
considering such increase the Administration shall give
due consideration to those industrial categories where
Federal purchases have been substantial but where the
participation rate of such concerns has been limited.
(12)(A) The Administration shall segment the Capital
Ownership Development Program into two stages: a developmental
stage; and a transitional stage.
(B) The developmental stage of program participation shall be
designed to assist the concern in its effort to overcome its
economic disadvantage by providing such assistance as may be
necessary and appropriate to access its markets and to
strengthen its financial and managerial skills.
(C) The transitional stage of program participation shall be
designed to overcome, insofar as practicable, the remaining
elements of economic disadvantage and to prepare such concern
for graduation from the program.
(13) A Program Participant, if otherwise eligible, shall be
qualified to receive the following assistance during the stages
of program participation specified in paragraph 12:
(A) Contract support pursuant to section 8(a).
(B) Financial assistance pursuant to section
7(a)(20).
(C) A maximum of two exemptions from the requirements
of section 1(a) of the Act entitled ``An Act providing
conditions for the purchase of supplies and the making
of contracts by the United States, and for other
purposes'', approved June 30, 1936 (49 Stat. 2036),
which exemptions shall apply only to contracts awarded
pursuant to section (8)(a) and shall only be used to
allow for contingent agreements by a small business
concern to acquire the machinery, equipment,
facilities, or labor needed to perform such contracts.
No exemption shall be made pursuant to this
subparagraph if the contract to which it pertains has
an anticipated value in excess of $10,000,000. This
subparagraph shall cease to be effective on October 1,
1992.
(D) A maximum of five exemptions from the
requirements of the Act entitled ``An Act requiring
contracts for the construction, alteration and repair
of any public building or public work of the United
States to be accompanied by a performance bond
protecting the United States and by an additional bond
for the protection of persons furnishing material and
labor for the construction, alteration, or repair of
said public buildings or public works'', approved
August 24, 1935 (49 Stat. 793), which exemptions shall
apply only to contracts awarded pursuant to section
8(a), except that, such exemptions may be granted under
this subparagraph only if--
(i) the Administration finds that such
concern is unable to obtain the requisite bond
or bonds from a surety and that no surety is
willing to issue a bond subject to the
guarantee provision of title IV of the Small
Business Investment Act of 1958 (15 U.S.C. 692
et seq.);
(ii) the Administration and the agency
providing the contracting opportunity have
provided for the protection of persons
furnishing materials or labor to the Program
Participant by arranging for the direct
disbursement of funds due to such persons by
the procuring agency or through any bank the
deposits of which are insured by the Federal
Deposit Insurance Corporation; and
(iii) the contract to which it pertains does
not exceed $3,000,000 in amount. This
subparagraph shall cease to be effective on
October 1, 1994.
(E) Financial assistance whereby the Administration
may purchase in whole or in part, and on behalf of such
concerns, skills training or upgrading for employees or
potential employees of such concerns. Such assistance
may be made without regard to section 18(a). Assistance
may be made by direct payment to the training provider
or by reimbursing the Program Participant or the
Participant's employee, if such reimbursement is found
to be reasonable and appropriate. For purposes of this
subparagraph the term ``training provider'' shall mean
an institution of higher education, a community or
vocational college, or an institution eligible to
provide skills training or upgrading under title I of
the Workforce Innovation and Opportunity Act. The
Administration shall, in consultation with the
Secretary of Labor, promulgate rules and regulations to
implement this subparagraph that establish acceptable
training and upgrading performance standards and
provide for such monitoring or audit requirements as
may be necessary to ensure the integrity of the
training effort. No financial assistance shall be
granted under the subparagraph unless the Administrator
determines that--
(i) such concern has documented that it has
first explored the use of existing cost-free or
cost-subsidized training programs offered by
public and private sector agencies working with
programs of employment and training and
economic development;
(ii) no more than five employees or potential
employees of such concern are recipients of any
benefits under this subparagraph at any one
time;
(iii) no more than $2,500 shall be made
available for any one employee or potential
employee;
(iv) the length of training or upgrading
financed by this subparagraph shall be no less
than one month nor more than six months;
(v) such concern has given adequate assurance
it will employ the trainee or upgraded employee
for at least six months after the training or
upgrading financed by this subparagraph has
been completed and each trainee or upgraded
employee has provided a similar assurance to
remain within the employ of such concern for
such period; if such concern, trainee, or
upgraded employee breaches this agreement, the
Administration shall be entitled to and shall
make diligent efforts to obtain from the
violating party the repayment of all funds
expended on behalf of the violating party, such
repayment shall be made to the Administration
together with such interest and costs of
collection as may be reasonable; the violating
party shall be barred from receiving any
further assistance under this subparagraph;
(vi) the training to be financed may take
place either at such concern's facilities or at
those of the training provider; and
(vii) such concern will maintain such records
as the Administration deems appropriate to
ensure that the provisions of this paragraph
and any other applicable law have not been
violated.
(F)(i) The transfer of technology or surplus property
owned by the United States to such a concern.
Activities designed to effect such transfer shall be
developed in cooperation with the heads of Federal
agencies and shall include the transfer by grant,
license, or sale of such technology or property to such
a concern. Such property may be transferred to Program
Participants on a priority basis. Technology or
property transferred under this subparagraph shall be
used by the concern during the normal conduct of its
business operation and shall not be sold or transferred
to any other party (other than the Government) during
such concern's term of participation in the Program and
for one year thereafter.
(ii)(I) In this clause--
(aa) the term ``covered period''
means the 2-year period beginning on
the date on which the President
declared the applicable major disaster;
and
(bb) the term ``disaster area'' means
the area for which the President has
declared a major disaster, during the
covered period.
(II) The Administrator may transfer
technology or surplus property under clause (i)
on a priority basis to a small business concern
located in a disaster area if--
(aa) the small business concern meets
the requirements for such a transfer,
without regard to whether the small
business concern is a Program
Participant; and
(bb) for a small business concern
that is a Program Participant, on and
after the date on which the President
declared the applicable major disaster,
the small business concern has not
received property under this
subparagraph on the basis of the status
of the small business concern as a
Program Participant.
(III) For any transfer of property under this
clause to a small business concern, the terms
and conditions shall be the same as a transfer
to a Program Participant, except that the small
business concern shall agree not to sell or
transfer the property to any party other than
the Federal Government during the covered
period.
(IV) A small business concern that receives a
transfer of property under this clause may not
receive a transfer of property under clause (i)
during the covered period.
(V) If a small business concern sells or
transfers property in violation of the
agreement described in subclause (III), the
Administrator may initiate proceedings to
prohibit the small business concern from
receiving a transfer of property under this
clause or clause (i), in addition to any other
remedy available to the Administrator.
(iii)(I) In this clause, the term ``covered
period''means--
(aa) in the case of a Puerto Rico
business, the period beginning on
August 13, 2018, and ending on the date
on which the Oversight Board
established under section 2121 of title
48 terminates; and
(bb) in the case of a covered
territory business, the period
beginning on the date of the enactment
of this item and ending on the date
that is 4 years after such date of
enactment.
(II) The Administrator may transfer technology or
surplus property under clause (i) to a Puerto Rico
business or a covered territory business if either such
business meets the requirements for such a transfer,
without regard to whether either such business is a
Program Participant.
(G) Training assistance whereby the Administration
shall conduct training sessions to assist individuals
and enterprises eligible to receive contracts under
section 8(a) in the development of business principles
and strategies to enhance their ability to successfully
compete for contracts in the marketplace.
(H) Joint ventures, leader-follower arrangements, and
teaming agreements between the Program Participant and
other Program Participants and other business concerns
with respect to contracting opportunities for the
research, development, full-scale engineering or
production of major systems. Such activities shall be
undertaken on the basis of programs developed by the
agency responsible for the procurement of the major
system, with the assistance of the Administration.
(I) Transitional management business planning
training and technical assistance.
(J) Program Participants in the developmental stage
of Program participation shall be eligible for the
assistance provided by subparagraphs (A), (B), (C),
(D), (E), (F), and (G).
(14) Program Participants in the transitional stage of
Program participation shall be eligible for the assistance
provided by subparagraphs (A), (B), (F), (G), (H), and (I) of
paragraph (13).
(15) Subject to the provisions of paragraph (10)(C), a small
business concern may receive developmental assistance under the
Program and contracts under section 8(a) for a total period of
not longer than nine years, measured from the date of its
certification under the authority of such section, of which--
(A) no more than four years may be spent in the
developmental stage of Program Participation; and
(B) no more than five years may be spent in the
transitional stage of Program Participation.
(16)(A) The Administrator shall develop and implement a
process for the systematic collection of data on the operations
of the Program established pursuant to paragraph (10).
(B) Not later than April 30 of each year, the Administrator
shall submit a report to the Congress on the Program that shall
include the following:
(i) The average personal net worth of individuals who
own and control concerns that were initially certified
for participation in the Program during the immediately
preceding fiscal year. The Administrator shall also
indicate the dollar distribution of net worths, at
$50,000 increments, of all such individuals found to be
socially and economically disadvantaged. For the first
report required pursuant to this paragraph the
Administrator shall also provide the data specified in
the preceding sentence for all eligible individuals in
the Program as of the effective date of this paragraph.
(ii) A description and estimate of the benefits and
costs that have accrued to the economy and the
Government in the immediately preceding fiscal year due
to the operations of those business concerns that were
performing contracts awarded pursuant to section 8(a).
(iii) A compilation and evaluation of those business
concerns that have exited the Program during the
immediately preceding three fiscal years. Such
compilation and evaluation shall detail the number of
concerns actively engaged in business operations, those
that have ceased or substantially curtailed such
operations, including the reasons for such actions, and
those concerns that have been acquired by other firms
or organizations owned and controlled by other than
socially and economically disadvantaged individuals.
For those businesses that have continued operations
after they exited from the Program, the Administrator
shall also separately detail the benefits and costs
that have accrued to the economy during the immediately
preceding fiscal year due to the operations of such
concerns.
(iv) A listing of all participants in the Program
during the preceding fiscal year identifying, by State
and by Region, for each firm: the name of the concern,
the race or ethnicity, and gender of the disadvantaged
owners, the dollar value of all contracts received in
the preceding year, the dollar amount of advance
payments received by each concern pursuant to contracts
awarded under section 8(a), and a description including
(if appropriate) an estimate of the dollar value of all
benefits received pursuant to paragraphs (13) and (14)
and section 7(a)(20) during such year.
(v) The total dollar value of contracts and options
awarded during the preceding fiscal year pursuant to
section 8(a) and such amount expressed as a percentage
of total sales of (I) all firms participating in the
Program during such year; and (II) of firms in each of
the nine years of program participation.
(vi) A description of such additional resources or
program authorities as may be required to provide the
types of services needed over the next two-year period
to service the expected portfolio of firms certified
pursuant to section 8(a).
(vii) The total dollar value of contracts and options
awarded pursuant to section 8(a), at such dollar
increments as the Administrator deems appropriate, for
each four digit standard industrial classification code
under which such contracts and options were classified.
(C) The first report required by subparagraph (B) shall
pertain to fiscal year 1990.
(k) In carrying out its functions under subsections 7(i),
7(j), and 8(a) of this Act, the Administration is authorized--
(1) to utilize, with their consent, the services and
facilities of Federal agencies without reimbursement,
and, with the consent of any State or political
subdivision of a State, accept and utilize the services
and facilities of such State or subdivision without
reimbursement;
(2) to accept, in the name of the Administration, and
employ or dispose of in furtherance of the purposes of
this Act, any money or property, real, personal, or
mixed, tangible, or intangible, received by gift,
device, bequest, or otherwise;
(3) to accept voluntary and uncompensated services,
notwithstanding the provisions of section 3679(b) of
the Revised Statutes (31 U.S.C. 655(b)); and
(4) to employ experts and consultants or
organizations thereof as authorized by section 15 of
the Administrative Expenses Act of 1946 (5 U.S.C. 55a),
except that no individual may be employed under the
authority of this subsection for more than one hundred
days in any fiscal year; to compensate individuals so
employed at rates not in excess of the daily equivalent
of the highest rate payable under section 5332 of title
5, United States Code, including traveltime; and to
allow them, while away from their homes or regular
places of business, travel expenses (including per diem
in lieu of subsistence) a authorized by section 5 of
such Act (5 U.S.C. 73b-2) for persons in the Government
service employed intermittently, while so employed:
Provided, however, That contracts for such employment
may be renewed annually.
(l) Small Business Intermediary Lending Pilot Program.--
(1) Definitions.--In this subsection--
(A) the term ``eligible intermediary''--
(i) means a private, nonprofit entity
that--
(I) seeks or has been awarded
a loan from the Administrator
to make loans to small business
concerns under this subsection;
and
(II) has not less than 1 year
of experience making loans to
startup, newly established, or
growing small business
concerns; and
(ii) includes--
(I) a private, nonprofit
community development
corporation;
(II) a consortium of private,
nonprofit organizations or
nonprofit community development
corporations; and
(III) an agency of or
nonprofit entity established by
a Native American Tribal
Government; and
(B) the term ``Program'' means the small
business intermediary lending pilot program
established under paragraph (2).
(2) Establishment.--There is established a 3-year
small business intermediary lending pilot program,
under which the Administrator may make direct loans to
eligible intermediaries, for the purpose of making
loans to startup, newly established, and growing small
business concerns.
(3) Purposes.--The purposes of the Program are--
(A) to assist small business concerns in
areas suffering from a lack of credit due to
poor economic conditions or changes in the
financial market; and
(B) to establish a loan program under which
the Administrator may provide loans to eligible
intermediaries to enable the eligible
intermediaries to provide loans to startup,
newly established, and growing small business
concerns for working capital, real estate, or
the acquisition of materials, supplies, or
equipment.
(4) Loans to eligible intermediaries.--
(A) Application.--Each eligible intermediary
desiring a loan under this subsection shall
submit an application to the Administrator that
describes--
(i) the type of small business
concerns to be assisted;
(ii) the size and range of loans to
be made;
(iii) the interest rate and terms of
loans to be made;
(iv) the geographic area to be served
and the economic, poverty, and
unemployment characteristics of the
area;
(v) the status of small business
concerns in the area to be served and
an analysis of the availability of
credit; and
(vi) the qualifications of the
applicant to carry out this subsection.
(B) Loan limits.--No loan may be made to an
eligible intermediary under this subsection if
the total amount outstanding and committed to
the eligible intermediary by the Administrator
would, as a result of such loan, exceed
$1,000,000 during the participation of the
eligible intermediary in the Program.
(C) Loan duration.--Loans made by the
Administrator under this subsection shall be
for a term of 20 years.
(D) Applicable interest rates.--Loans made by
the Administrator to an eligible intermediary
under the Program shall bear an annual interest
rate equal to 1.00 percent.
(E) Fees; collateral.--The Administrator may
not charge any fees or require collateral with
respect to any loan made to an eligible
intermediary under this subsection.
(F) Delayed payments.--The Administrator
shall not require the repayment of principal or
interest on a loan made to an eligible
intermediary under the Program during the 2-
year period beginning on the date of the
initial disbursement of funds under that loan.
(G) Maximum participants and amounts.--During
each of fiscal years 2011, 2012, and 2013, the
Administrator may make loans under the
Program--
(i) to not more than 20 eligible
intermediaries; and
(ii) in a total amount of not more
than $20,000,000.
(5) Loans to small business concerns.--
(A) In general.--The Administrator, through
an eligible intermediary, shall make loans to
startup, newly established, and growing small
business concerns for working capital, real
estate, and the acquisition of materials,
supplies, furniture, fixtures, and equipment.
(B) Maximum loan.--An eligible intermediary
may not make a loan under this subsection of
more than $200,000 to any 1 small business
concern.
(C) Applicable interest rates.--A loan made
by an eligible intermediary to a small business
concern under this subsection, may have a fixed
or a variable interest rate, and shall bear an
interest rate specified by the eligible
intermediary in the application of the eligible
intermediary for a loan under this subsection.
(D) Review restrictions.--The Administrator
may not review individual loans made by an
eligible intermediary to a small business
concern before approval of the loan by the
eligible intermediary.
(6) Termination.--The authority of the Administrator
to make loans under the Program shall terminate 3 years
after the date of enactment of the Small Business Job
Creation and Access to Capital Act of 2010.
(m) Microloan Program.--
(1)(A) Purposes.--The purposes of the Microloan
Program are--
(i) to assist women, low-income, veteran
(within the meaning of such term under section
3(q)), and minority entrepreneurs and business
owners and other individuals possessing the
capability to operate successful business
concerns;
(ii) to assist small business concerns in
those areas suffering from a lack of credit due
to economic downturns;
(iii) to establish a microloan program to be
administered by the Small Business
Administration--
(I) to make loans to eligible
intermediaries to enable such
intermediaries to provide small-scale
loans, particularly loans in amounts
averaging not more than $10,000, to
startup, newly established, or growing
small business concerns for working
capital or the acquisition of
materials, supplies, or equipment;
(II) to make grants to eligible
intermediaries that, together with non-
Federal matching funds, will enable
such intermediaries to provide
intensive marketing, management, and
technical assistance to microloan
borrowers;
(III) to make grants to eligible
nonprofit entities that, together with
non-Federal matching funds, will enable
such entities to provide intensive
marketing, management, and technical
assistance to assist low-income
entrepreneurs and other low-income
individuals obtain private sector
financing for their businesses, with or
without loan guarantees; and
(IV) to report to the Committees on
Small Business of the Senate and the
House of Representatives on the
effectiveness of the microloan program
and the advisability and feasibility of
implementing such a program nationwide;
and
(iv) to establish a welfare-to-work microloan
initiative, which shall be administered by the
Administration, in order to test the
feasibility of supplementing the technical
assistance grants provided under clauses (ii)
and (iii) of subparagraph (B) to individuals
who are receiving assistance under the State
program funded under part A of title IV of the
Social Security Act (42 U.S.C. 601 et seq.), or
under any comparable State funded means tested
program of assistance for low-income
individuals, in order to adequately assist
those individuals in--
(I) establishing small businesses;
and
(II) eliminating their dependence on
that assistance.
(B) Establishment.--There is established a microloan
program, under which the Administration may--
(i) make direct loans to eligible
intermediaries, as provided under paragraph
(3), for the purpose of making short-term,
fixed interest rate microloans to startup,
newly established, and growing small business
concerns under paragraph (6);
(ii) in conjunction with such loans and
subject to the requirements of paragraph (4),
make grants to such intermediaries for the
purpose of providing intensive marketing,
management, and technical assistance to small
business concerns that are borrowers under this
subsection; and
(iii) subject to the requirements of
paragraph (5), make grants to nonprofit
entities for the purpose of providing
marketing, management, and technical assistance
to low-income individuals seeking to start or
enlarge their own businesses, if such
assistance includes working with the grant
recipient to secure loans in amounts not to
exceed $50,000 from private sector lending
institutions, with or without a loan guarantee
from the nonprofit entity.
(2) Eligibility for participation.--An intermediary
shall be eligible to receive loans and grants under
subparagraphs (B)(i) and (B)(ii) of paragraph (1) if
it--
(A) meets the definition in paragraph (10);
and
(B) has at least 1 year of experience making
microloans to startup, newly established, or
growing small business concerns and providing,
as an integral part of its microloan program,
intensive marketing, management, and technical
assistance to its borrowers.
(3) Loans to intermediaries.--
(A) Intermediary applications.--(i) In
general.--As part of its application for a
loan, each intermediary shall submit a
description to the Administration of--
(I) the type of businesses to be
assisted;
(II) the size and range of loans to
be made;
(III) the geographic area to be
served and its economic, proverty, and
unemployment characteristics;
(IV) the status of small business
concerns in the area to be served and
an analysis of their credit and
technical assistance needs;
(V) any marketing, management, and
technical assistance to be provided in
connection with a loan made under this
subsection;
(VI) the local economic credit
markets, including the costs associated
with obtaining credit locally;
(VII) the qualifications of the
applicant to carry out the purpose of
this subsection; and
(VIII) any plan to involve other
technical assistance providers (such as
counselors from the Service Corps of
Retired Executives or small business
development centers) or private sector
lenders in assisting selected business
concerns.
(ii) Selection of intermediaries.--In
selecting intermediaries to participate in the
program established under this subsection, the
Administration shall give priority to those
applicants that provide loans in amounts
averaging not more than $10,000.
(B) Intermediary contribution.--As a
condition of any loan made to an intermediary
under subparagraph (B)(i) of paragraph (1), the
Administrator shall require the intermediary to
contribute not less than 15 percent of the loan
amount in cash from non-Federal sources.
(C) Loan limits.--Notwithstanding subsection
(a)(3), no loan shall be made under this
subsection if the total amount outstanding and
committed to one intermediary (excluding
outstanding grants) from the business loan and
investment fund established by this Act would,
as a result of such loan, exceed $750,000 in
the first year of such intermediary's
participation in the program, $7,000,000 (in
the aggregate) in the remaining years of the
intermediary's participation in the program,
and $3,000,000 in any of those remaining years.
(D)(i) In general.--The Administrator shall,
by regulation, require each intermediary to
establish a loan loss reserve fund, and to
maintain such reserve fund until all
obligations owed to the Administration under
this subsection are repaid.
(ii) Level of loan loss reserve fund.--
(I) In general.--Subject to subclause
(III), the Administrator shall require
the loan loss reserve fund of an
intermediary to be maintained at a
level equal to 15 percent of the
outstanding balance of the notes
receivable owed to the intermediary.
(II) Review of loan loss reserve.--
After the initial 5 years of an
intermediary's participation in the
program authorized by this subsection,
the Administrator shall, at the request
of the intermediary, conduct a review
of the annual loss rate of the
intermediary. Any intermediary in
operation under this subsection prior
to October 1, 1994, that requests a
reduction in its loan loss reserve
shall be reviewed based on the most
recent 5-year period preceding the
request.
(III) Reduction of loan loss
reserve.--Subject to the requirements
of clause IV, the Administrator may
reduce the annual loan loss reserve
requirement of an intermediary to
reflect the actual average loan loss
rate for the intermediary during the
preceding 5-year period, except that in
no case shall the loan loss reserve be
reduced to less than 10 percent of the
outstanding balance of the notes
receivable owed to the intermediary.
(IV) Requirements.--The Administrator
may reduce the annual loan loss reserve
requirement of an intermediary only if
the intermediary demonstrates to the
satisfaction of the Administrator
that--
(aa) the average annual loss
rate for the intermediary
during the preceding 5-year
period is less than 15 percent;
and
(bb) that no other factors
exist that may impair the
ability of the intermediary to
repay all obligations owed to
the Administration under this
subsection.
(E) Unavailability of comparable credit.--An
intermediary may make a loan under this
subsection of more than $20,000 to a small
business concern only if such small business
concern demonstrates that it is unable to
obtain credit elsewhere at comparable interest
rates and that it has good prospects for
success. In no case shall an intermediary make
a loan under this subsection of more than
$50,000, or have outstanding or committed to
any 1 borrower more than $50,000.
(F) Loan duration; interest rates.--
(i) Loan duration.--Loans made by the
Administration under this subsection
shall be for a term of 10 years.
(ii) Applicable interest rates.--
Except as provided in clause (iii),
loans made by the Administration under
this subsection to an intermediary
shall bear an interest rate equal to
1.25 percentage points below the rate
determined by the Secretary of the
Treasury for obligations of the United
States with a period of maturity of 5
years, adjusted to the nearest one-
eighth of 1 percent.
(iii) Rates applicable to certain
small loans.--Loans made by the
Administration to an intermediary that
makes loans to small business concerns
and entrepreneurs averaging not more
than $7,500, shall bear an interest
rate that is 2 percentage points below
the rate determined by the Secretary of
the Treasury for obligations of the
United States with a period of maturity
of 5 years, adjusted to the nearest
one-eighth of 1 percent.
(iv) Rates applicable to multiple
sites or offices.--The interest rate
prescribed in clause (ii) or (iii)
shall apply to each separate loan-
making site or office of 1 intermediary
only if such site or office meets the
requirements of that clause.
(v) Rate basis.--The applicable rate
of interest under this paragraph
shall--
(I) be applied retroactively
for the first year of an
intermediary's participation in
the program, based upon the
actual lending practices of the
intermediary as determined by
the Administration prior to the
end of such year; and
(II) be based in the second
and subsequent years of an
intermediary's participation in
the program, upon the actual
lending practices of the
intermediary during the term of
the intermediary's
participation in the program.
(vii) Covered intermediaries.--The
interest rates prescribed in this
subparagraph shall apply to all loans
made to intermediaries under this
subsection on or after October 28,
1991.
(G) Delayed payments.--The Administration
shall not require repayment of interest or
principal of a loan made to an intermediary
under this subsection during the first year of
the loan.
(H) Fees; collateral.--Except as provided in
subparagraphs (B) and (D), the Administration
shall not charge any fees or require collateral
other than an assignment of the notes
receivable of the microloans with respect to
any loan made to an intermediary under this
subsection.
(4) Marketing, management and technical assistance
grants to intermediaries.--Grants made in accordance
with subparagraph (B)(ii) of paragraph (1) shall be
subject to the following requirements:
(A) Grant amounts.--Except as otherwise
provided in subparagraphs (C) and (G) and
subject to subparagraph (B), each intermediary
that receives a loan under subparagraph (B)(i)
of paragraph (1) shall be eligible to receive a
grant to provide marketing, management, and
technical assistance to small business concerns
that are borrowers under this subsection.
Except as provided in subparagraphs (C) and
(G), each intermediary meeting the requirements
of subparagraph (B) may receive a grant of not
more than 25 percent of the total outstanding
balance of loans made to it under this
subsection.
(B) Contribution.--As a condition of a grant
made under subparagraph (A), the Administrator
shall require the intermediary to contribute an
amount equal to 25 percent of the amount of the
grant, obtained solely from non-Federal
sources. In addition to cash or other direct
funding, the contribution may include indirect
costs or in-kind contributions paid for under
non-Federal programs.
(C) Additional technical assistance grants
for making certain loans.--
(i) In general.--In addition to
grants made under subparagraph (A) or
(G), each intermediary shall be
eligible to receive a grant equal to 5
percent of the total outstanding
balance of loans made to the
intermediary under this subsection if--
(I) the intermediary provides
not less than 25 percent of its
loans to small business
concerns located in or owned by
1 or more residents of an
economically distressed area;
or
(II) the intermediary has a
portfolio of loans made under
this subsection--
(aa) that averages
not more than $10,000
during the period of
the intermediary's
participation in the
program; or
(bb) of which not
less than 25 percent is
serving rural areas
during the period of
the intermediary's
participation in the
program.
(ii) Purposes.--A grant awarded under
clause (i) may be used to provide
marketing, management, and technical
assistance to small business concerns
that are borrowers under this
subsection.
(iii) Contribution exception.--The
contribution requirements in
subparagraph (B) do not apply to grants
made under this subparagraph.
(D) Eligibility for multiple sites or
offices.--The eligibility for a grant described
in subparagraph (A), or (C) shall be determined
separately for each loan-making site or office
of 1 intermediary.
(E) Assistance to certain small business
concerns.--
(i) In general.--Each intermediary
may expend an amount not to exceed 50
percent of the grant funds received
under paragraph (1)(B)(ii) to provide
information and technical assistance to
small business concerns that are
prospective borrowers under this
subsection.
(ii) Technical assistance.--An
intermediary may expend not more than
50 percent of the funds received under
paragraph (1)(B)(ii) to enter into
third party contracts for the provision
of technical assistance.
(F) Supplemental grant.--
(i) In general.--The Administration
may accept any funds transferred to the
Administration from other departments
or agencies of the Federal Government
to make grants in accordance with this
subparagraph and section 202(b) of the
Small Business Reauthorization Act of
1997 to participating intermediaries
and technical assistance providers
under paragraph (5), for use in
accordance with clause (iii) to provide
additional technical assistance and
related services to recipients of
assistance under a State program
described in paragraph (1)(A)(iv) at
the time they initially apply for
assistance under this subparagraph.
(ii) Eligible recipients; grant
amounts.--In making grants under this
subparagraph, the Administration may
select, from among participating
intermediaries and technical assistance
providers described in clause (i), not
more than 20 grantees in fiscal year
1998, not more than 25 grantees in
fiscal year 1999, and not more than 30
grantees in fiscal year 2000, each of
whom may receive a grant under this
subparagraph in an amount not to exceed
$200,000 per year.
(iii) Use of grant amounts.--Grants
under this subparagraph--
(I) are in addition to other
grants provided under this
subsection and shall not
require the contribution of
matching amounts as a condition
of eligibility; and
(II) may be used by a
grantee--
(aa) to pay or
reimburse a portion of
child care and
transportation costs of
recipients of
assistance described in
clause (i), to the
extent such costs are
not otherwise paid by
State block grants
under the Child Care
Development Block Grant
Act of 1990 (42 U.S.C.
9858 et seq.) or under
part A of title IV of
the Social Security Act
(42 U.S.C. 601 et
seq.); and
(bb) for marketing,
management, and
technical assistance to
recipients of
assistance described in
clause (i).
(iv) Memorandum of understanding.--
Prior to accepting any transfer of
funds under clause (i) from a
department or agency of the Federal
Government, the Administration shall
enter into a Memorandum of
Understanding with the department or
agency, which shall--
(I) specify the terms and
conditions of the grants under
this subparagraph; and
(II) provide for appropriate
monitoring of expenditures by
each grantee under this
subparagraph and each recipient
of assistance described in
clause (i) who receives
assistance from a grantee under
this subparagraph, in order to
ensure compliance with this
subparagraph by those grantees
and recipients of assistance.
(G) Grant amounts based on appropriations.--
In any fiscal year in which the amount
appropriated to make grants under subparagraph
(A) is sufficient to provide to each
intermediary that receives a loan under
paragraph (1)(B)(i) a grant of not less than 25
percent of the total outstanding balance of
loans made to the intermediary under this
subsection, the Administration shall make a
grant under subparagraph (A) to each
intermediary of not less than 25 percent and
not more than 30 percent of that total
outstanding balance for the intermediary.
(5) Private sector borrowing technical assistance
grants.--Grants made in accordance with subparagraph
(B)(iii) of paragraph (1) shall be subject to the
following requirements:
(A) Grant amounts.--Subject to the
requirements of subparagraph (B), the
Administration may make not more than 55 grants
annually, each in amounts not to exceed
$200,000 for the purposes specified in
subparagraph (B)(iii) of paragraph (1).
(B) Contribution.--As a condition of any
grant made under subparagraph (A), the
Administration shall require the grant
recipient to contribute an amount equal to 20
percent of the amount of the grant, obtained
solely from non-Federal sources. In addition to
cash or other direct funding, the contribution
may include indirect costs or in-kind
contributions paid for under non-Federal
programs.
(6) Loans to small business concerns from eligible
intermediaries.--
(A) In general.--An eligible intermediary
shall make short-term, fixed rate loans to
startup, newly established, and growing small
business concerns from the funds made available
to it under subparagraph (B)(i) of paragraph
(1) for working capital and the acquisition of
materials, supplies, furniture, fixtures, and
equipment.
(B) Portfolio requirement.--To the extent
practicable, each intermediary that operates a
microloan program under this subsection shall
maintain a microloan portfolio with an average
loan size of not more than $15,000.
(C) Interest limit.--Notwithstanding any
provision of the laws of any State or the
constitution of any State pertaining to the
rate or amount of interest that may be charged,
taken, received, or reserved on a loan, the
maximum rate of interest to be charged on a
microloan funded under this subsection shall
not exceed the rate of interest applicable to a
loan made to an intermediary by the
Administration--
(i) in the case of a loan of more
than $7,500 made by the intermediary to
a small business concern or
entrepreneur by more than 7.75
percentage points; and
(ii) in the case of a loan of not
more than $7,500 made by the
intermediary to a small business
concern or entrepreneur by more than
8.5 percentage points.
(D) Review restriction.--The Administration
shall not review individual microloans made by
intermediaries prior to approval.
(E) Establishment of child care or
transportation businesses.--In addition to
other eligible small businesses concerns,
borrowers under any program under this
subsection may include individuals who will use
the loan proceeds to establish for-profit or
nonprofit child care establishments or
businesses providing for-profit transportation
services.
(7) Program funding for microloans.--
(A) Number of participants.--Under the
program authorized by this subsection, the
Administration may fund, on a competitive
basis, not more than 300 intermediaries.
(B) Allocation.--
(i) Minimum allocation.--Subject to
the availability of appropriations, of
the total amount of new loan funds made
available for award under this
subsection in each fiscal year, the
Administration shall make available for
award in each State (including the
District of Columbia, the Commonwealth
of Puerto Rico, the United States
Virgin Islands, Guam, and American
Samoa) an amount equal to the sum of--
(I) the lesser of--
(aa) $800,000; or
(bb) \1/55\ of the
total amount of new
loan funds made
available for award
under this subsection
for that fiscal year;
and
(II) any additional amount,
as determined by the
Administration.
(ii) Redistribution.--If, at the
beginning of the third quarter of a
fiscal year, the Administration
determines that any portion of the
amount made available to carry out this
subsection is unlikely to be made
available under clause (i) during that
fiscal year, the Administration may
make that portion available for award
in any one or more States (including
the District of Columbia, the
Commonwealth of Puerto Rico, the United
States Virgin Islands, Guam, and
American Samoa) without regard to
clause (i).
(8) Equitable distribution of intermediaries.--In
approving microloan program applicants and providing
funding to intermediaries under this subsection, the
Administration shall select and provide funding to such
intermediaries as will ensure appropriate availability
of loans for small businesses in all industries located
throughout each State, particularly those located in
urban and in rural areas.
(9) Grants for management, marketing, technical
assistance, and related services.--
(A) In general.--The Administration may
procure technical assistance for intermediaries
participating in the Microloan Program to
ensure that such intermediaries have the
knowledge, skills, and understanding of
microlending practices necessary to operate
successful microloan programs.
(B) Assistance amount.--The Administration
shall transfer 7 percent of its annual
appropriation for loans and loan guarantees
under this subsection to the Administration's
Salaries and Expense Account for the specific
purpose of providing 1 or more technical
assistance grants to experienced microlending
organizations and national and regional
nonprofit organizations that have demonstrated
experience in providing training support for
microenterprise development and financing. to
achieve the purpose set forth in subparagraph
(A).
(C) Welfare-to-work microloan initiative.--Of
amounts made available to carry out the
welfare-to-work microloan initiative under
paragraph (1)(A)(iv) in any fiscal year, the
Administration may use not more than 5 percent
to provide technical assistance, either
directly or through contractors, to welfare-to-
work microloan initiative grantees, to ensure
that, as grantees, they have the knowledge,
skills, and understanding of microlending and
welfare-to-work transition, and other related
issues, to operate a successful welfare-to-work
microloan initiative.
(10) Report to congress.--On November 1, 1995, the
Administration shall submit to the Committees on Small
Business of the Senate and the House of Representatives
a report, including the Administration's evaluation of
the effectiveness of the first 3\1/2\ years of the
microloan program and the following:
(A) the numbers and locations of the
intermediaries funded to conduct microloan
programs;
(B) the amounts of each loan and each grant
to intermediaries;
(C) a description of the matching
contributions of each intermediary;
(D) the numbers and amounts of microloans
made by the intermediaries to small business
concern borrowers;
(E) the repayment history of each
intermediary;
(F) a description of the loan portfolio of
each intermediary including the extent to which
it provides microloans to small business
concerns in rural areas; and
(G) any recommendations for legislative
changes that would improve program operations.
(11) Definitions.--For purposes of this subsection--
(A) the term ``intermediary'' means--
(i) a private, nonprofit entity;
(ii) a private, nonprofit community
development corporation;
(iii) a consortium of private,
nonprofit organizations or nonprofit
community development corporations;
(iv) a quasi-governmental economic
development entity (such as a planning
and development district), other than a
State, county, municipal government, or
any agency thereof, if--
(I) no application is
received from an eligible
nonprofit organization; or
(II) the Administration
determines that the needs of a
region or geographic area are
not adequately served by an
existing, eligible nonprofit
organization that has submitted
an application; or
(v) an agency of or nonprofit entity
established by a Native American Tribal
Government,
that seeks to borrow or has borrowed funds from
the Administration to make microloans to small
business concerns under this subsection;
(B) the term ``microloan'' means a short-
term, fixed rate loan of not more than $50,000,
made by an intermediary to a startup, newly
established, or growing small business concern;
(C) the term ``rural area'' means any
political subdivision or unincorporated area--
(i) in a nonmetropolitan county (as
defined by the Secretary of
Agriculture) or its equivalent thereof;
or
(ii) in a metropolitan county or its
equivalent that has a resident
population of less than 20,000 if the
Small Business Administration has
determined such political subdivision
or area to be rural.
(D) the term ``economically distressed
area'', as used in paragraph (4), means a
county or equivalent division of local
government of a State in which the small
business concern is located, in which,
according to the most recent data available
from the Bureau of the Census, Department of
Commerce, not less than 40 percent of residents
have an annual income that is at or below the
poverty level.
(12) Deferred participation loan pilot.--In lieu of
making direct loans to intermediaries as authorized in
paragraph (1)(B), during fiscal years 1998 through
2000, the Administration may, on a pilot program basis,
participate on a deferred basis of not less than 90
percent and not more than 100 percent on loans made to
intermediaries by a for-profit or nonprofit entity or
by alliances of such entities, subject to the following
conditions:
(A) Number of loans.--In carrying out this
paragraph, the Administration shall not
participate in providing financing on a
deferred basis to more than 10 intermediaries
in urban areas or more than 10 intermediaries
in rural areas.
(B) Term of loans.--The term of each loan
shall be 10 years. During the first year of the
loan, the intermediary shall not be required to
repay any interest or principal. During the
second through fifth years of the loan, the
intermediary shall be required to pay interest
only. During the sixth through tenth years of
the loan, the intermediary shall be required to
make interest payments and fully amortize the
principal.
(C) Interest rate.--The interest rate on each
loan shall be the rate specified by paragraph
(3)(F) for direct loans.
(13) Evaluation of welfare-to-work microloan
initiative.--On January 31, 1999, and annually
thereafter, the Administration shall submit to the
Committees on Small Business of the House of
Representatives and the Senate a report on any monies
distributed pursuant to paragraph (4)(F).
(n) Repayment Deferred for Active Service Reservists.--
(1) Definitions.--In this subsection:
(A) Active service.--The term ``active
service'' has the meaning given that term in
section 101(d)(3) of title 10, United States
Code.
(B) Eligible reservist.--The term ``eligible
reservist'' means a member of a reserve
component of the Armed Forces ordered to
perform active service for a period of more
than 30 consecutive days.
(C) Essential employee.--The term ``essential
employee'' means an individual who is employed
by a small business concern and whose
managerial or technical expertise is critical
to the successful day-to-day operations of that
small business concern.
(D) Qualified borrower.--The term ``qualified
borrower'' means--
(i) an individual who is an eligible
reservist and who received a direct
loan under subsection (a) or (b) before
being ordered to active service; or
(ii) a small business concern that
received a direct loan under subsection
(a) or (b) before an eligible
reservist, who is an essential
employee, was ordered to active
service.
(2) Deferral of direct loans.--
(A) In general.--The Administration shall,
upon written request, defer repayment of
principal and interest due on a direct loan
made under subsection (a) or (b), if such loan
was incurred by a qualified borrower.
(B) Period of deferral.--The period of
deferral for repayment under this paragraph
shall begin on the date on which the eligible
reservist is ordered to active service and
shall terminate on the date that is 180 days
after the date such eligible reservist is
discharged or released from active service.
(C) Interest rate reduction during
deferral.--Notwithstanding any other provision
of law, during the period of deferral described
in subparagraph (B), the Administration may, in
its discretion, reduce the interest rate on any
loan qualifying for a deferral under this
paragraph.
(3) Deferral of loan guarantees and other
financings.--The Administration shall--
(A) encourage intermediaries participating in
the program under subsection (m) to defer
repayment of a loan made with proceeds made
available under that subsection, if such loan
was incurred by a small business concern that
is eligible to apply for assistance under
subsection (b)(3); and
(B) not later than 30 days after the date of
the enactment of this subsection, establish
guidelines to--
(i) encourage lenders and other
intermediaries to defer repayment of,
or provide other relief relating to,
loan guarantees under subsection (a)
and financings under section 504 of the
Small Business Investment Act of 1958
that were incurred by small business
concerns that are eligible to apply for
assistance under subsection (b)(3), and
loan guarantees provided under
subsection (m) if the intermediary
provides relief to a small business
concern under this paragraph; and
(ii) implement a program to provide
for the deferral of repayment or other
relief to any intermediary providing
relief to a small business borrower
under this paragraph.
* * * * * * *
----------
CARES ACT
* * * * * * *
DIVISION A--KEEPING WORKERS PAID AND EMPLOYED, HEALTH CARE SYSTEM
ENHANCEMENTS, AND ECONOMIC STABILIZATION
TITLE I--KEEPING AMERICAN WORKERS PAID AND EMPLOYED ACT
* * * * * * *
SEC. 1110. EMERGENCY EIDL GRANTS.
(a) Definitions.--In this section--
(1) the term ``covered period'' means the period
beginning on January 31, 2020 and ending on December
31, 2021; and
(2) the term ``eligible entity'' means--
(A) a business with not more than 500
employees;
(B) any individual who operates under a sole
proprietorship, with or without employees, or
as an independent contractor;
(C) a cooperative with not more than 500
employees;
(D) an ESOP (as defined in section 3 of the
Small Business Act (15 U.S.C. 632)) with not
more than 500 employees;
(E) a tribal small business concern, as
described in section 31(b)(2)(C) of the Small
Business Act (15 U.S.C. 657a(b)(2)(C)), with
not more than 500 employees; or
(F) an agricultural enterprise (as defined in
section 18(b) of the Small Business Act (15
U.S.C. 647(b)) with not more than 500
employees.
(b) Eligible Entities.--During the covered period, in
addition to small business concerns, private nonprofit
organizations, and small agricultural cooperatives, an eligible
entity shall be eligible for a loan made under section 7(b)(2)
of the Small Business Act (15 U.S.C. 636(b)(2)).
(c) Terms; Credit Elsewhere.--With respect to a loan made
under section 7(b)(2) of the Small Business Act (15 U.S.C.
636(b)(2)) in response to COVID-19 during the covered period,
the Administrator shall waive--
(1) any rules related the personal guarantee on
advances and loans of not more than $200,000 during the
covered period for all applicants;
(2) the requirement that an applicant needs to be in
business for the 1-year period before the disaster,
except that no waiver may be made for a business that
was not in operation on January 31, 2020; and
(3) the requirement in the flush matter following
subparagraph (E) of section 7(b)(2) of the Small
Business Act (15 U.S.C. 636(b)(2)), as so redesignated
by subsection (f) of this section, that an applicant be
unable to obtain credit elsewhere.
(d) Approval and Ability to Repay for Small Dollar Loans.--
With respect to a loan made under section 7(b)(2) of the Small
Business Act (15 U.S.C. 636(b)(2)) in response to COVID-19
during the covered period, the Administrator may--
(1) approve an applicant--
(A) based solely on the credit score of the
applicant; or
(B) by using alternative appropriate methods
to determine an applicant's ability to repay;
and
(2) use information from the Department of the
Treasury to confirm that--
(A) an applicant is eligible to receive such
a loan; or
(B) the information contained in an
application for such a loan is accurate.
(e) Emergency Grant.--
(1) In general.--
(A) Advances.--During the covered period, an
entity included for eligibility in subsection
(b), including small business concerns, private
nonprofit organizations, and small agricultural
cooperatives, that applies for a loan under
section 7(b)(2) of the Small Business Act (15
U.S.C. 636(b)(2)) in response to COVID-19 may
request that the Administrator provide an
advance that is, subject to paragraph (3), in
the amount requested by such applicant to such
applicant.
(B) Timing.--With respect to each request
submitted to the Administrator under
subparagraph (A), the Administrator shall, not
later than 21 days after the date on which the
Administrator receives the request--
(i) verify whether the entity is an
entity that is eligible for a loan made
under section 7(b)(2) of the Small
Business Act (15 U.S.C. 636(b)(2))
during the covered period, as described
in subsection (b);
(ii) if the Administrator, under
clause (i), verifies that the entity
submitting the request is an entity
that is eligible, as described in that
clause, provide the advance requested
by the entity; and
(iii) with respect to an entity that
the Administrator determines is not
entitled to receive an advance under
this subsection, provide the entity
with a notification explaining why the
Administrator reached that
determination.
(2) Verification.--Before disbursing amounts under
this subsection, the Administrator shall verify that
the applicant is an eligible entity by accepting a
self-certification from the applicant under penalty of
perjury pursuant to section 1746 of title 28 United
States Code.
(3) Amount.--The amount of an advance provided under
this subsection shall be not more than $10,000.
(4) Use of funds.--An advance provided under this
subsection may be used to address any allowable purpose
for a loan made under section 7(b)(2) of the Small
Business Act (15 U.S.C. 636(b)(2)), including--
(A) providing paid sick leave to employees
unable to work due to the direct effect of the
COVID-19;
(B) maintaining payroll to retain employees
during business disruptions or substantial
slowdowns;
(C) meeting increased costs to obtain
materials unavailable from the applicant's
original source due to interrupted supply
chains;
(D) making rent or mortgage payments; and
(E) repaying obligations that cannot be met
due to revenue losses.
(5) Repayment.--An applicant shall not be required to
repay any amounts of an advance provided under this
subsection, even if subsequently denied a loan under
section 7(b)(2) of the Small Business Act (15 U.S.C.
636(b)(2)).
(7) Authorization of appropriations.--There is
authorized to be appropriated to the Administration
$40,000,000,000 to carry out this subsection.
(8) Termination.--The authority to carry out grants
under this subsection shall terminate on December 31,
2021.
(9) Statute of limitations.--Notwithstanding any
other provision of law, any criminal charge or civil
enforcement action alleging that a borrower engaged in
fraud with respect to the use of an advance received
under this subsection shall be filed not later than 10
years after the offense was committed.
(f) Emergencies Involving Federal Primary Responsibility
Qualifying for SBA Assistance.--Section 7(b)(2) of the Small
Business Act (15 U.S.C. 636(b)(2)) is amended--
(1) in subparagraph (A), by striking ``or'' at the
end;
(2) in subparagraph (B), by striking ``or'' at the
end;
(3) in subparagraph (C), by striking ``or'' at the
end;
(4) by redesignating subparagraph (D) as subparagraph
(E);
(5) by inserting after subparagraph (C) the
following:
``(D) an emergency involving Federal primary
responsibility determined to exist by the
President under the section 501(b) of the
Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5191(b));
or''; and
(6) in subparagraph (E), as so redesignated--
(A) by striking ``or (C)'' and inserting
``(C), or (D)'';
(B) by striking ``disaster declaration'' each
place it appears and inserting ``disaster or
emergency declaration'';
(C) by striking ``disaster has occurred'' and
inserting ``disaster or emergency has
occurred'';
(D) by striking ``such disaster'' and
inserting ``such disaster or emergency''; and
(E) by striking ``disaster stricken'' and
inserting ``disaster- or emergency-stricken'';
and
(7) in the flush matter following subparagraph (E),
as so redesignated, by striking the period at the end
and inserting the following: ``: Provided further, That
for purposes of subparagraph (D), the Administrator
shall deem that such an emergency affects each State or
subdivision thereof (including counties), and that each
State or subdivision has sufficient economic damage to
small business concerns to qualify for assistance under
this paragraph and the Administrator shall accept
applications for such assistance immediately.''.
* * * * * * *
----------
ECONOMIC AID TO HARD-HIT SMALL BUSINESSES, NONPROFITS, AND VENUES ACT
* * * * * * *
DIVISION N--ADDITIONAL CORONAVIRUS RESPONSE AND RELIEF
* * * * * * *
TITLE III--CONTINUING THE PAYCHECK PROTECTION PROGRAM AND OTHER SMALL
BUSINESS SUPPORT
* * * * * * *
SEC. 331. TARGETED EIDL ADVANCE FOR SMALL BUSINESS CONTINUITY,
ADAPTATION, AND RESILIENCY.
(a) Definitions.--In this section:
(1) Agricultural enterprise.--The term ``agricultural
enterprise'' has the meaning given the term in section
18(b) of the Small Business Act (15 U.S.C. 647(b)).
(2) Covered entity.--The term ``covered entity''--
(A) means an eligible entity that--
(i) applies for a loan under section
7(b)(2) of the Small Business Act (15
U.S.C. 636(b)(2)) during the covered
period, including before the date of
enactment of this Act;
(ii) is located in a low-income
community;
(iii) has suffered an economic loss
of greater than 30 percent; and
(iv) employs not more than 300
employees; and
(B) except with respect to an entity included
under section 123.300(c) of title 13, Code of
Federal Regulations, or any successor
regulation, does not include an agricultural
enterprise.
(3) Covered period.--The term ``covered period'' has
the meaning given the term in section 1110(a)(1) of the
CARES Act (15 U.S.C. 9009(a)(1)), as amended by section
332 of this Act.
(4) Economic loss.--The term ``economic loss'' means,
with respect to a covered entity--
(A) the amount by which the gross receipts of
the covered entity declined during an 8-week
period between March 2, 2020, and December 31,
2021, relative to a comparable 8-week period
immediately preceding March 2, 2020, or during
2019; or
(B) if the covered entity is a seasonal
business concern, such other amount determined
appropriate by the Administrator.
(5) Eligible entity.--The term ``eligible entity''
means an entity that, during the covered period, is
eligible for a loan made under section 7(b)(2) of the
Small Business Act (15 U.S.C. 636(b)(2)), as described
in section 1110(b) of the CARES Act (15 U.S.C.
9009(b)).
(6) Low-income community.--The term ``low-income
community'' has the meaning given the term in section
45D(e) of the Internal Revenue Code of 1986.
(b) Entitlement to Full Amount.--
(1) In general.--Subject to paragraph (2), a covered
entity, after submitting a request to the Administrator
that the Administrator verifies under subsection (c),
shall receive a total of $10,000 under section 1110(e)
of the CARES Act (15 U.S.C. 9009(e)), without regard to
whether--
(A) the applicable loan for which the covered
entity applies or applied under section 7(b)(2)
of the Small Business Act (15 U.S.C. 636(b)(2))
is or was approved;
(B) the covered entity accepts or accepted
the offer of the Administrator with respect to
an approved loan described in subparagraph (A);
or
(C) the covered entity has previously
received a loan under section 7(a)(36) of the
Small Business Act (15 U.S.C. 636(a)(36)).
(2) Effect of previously received amounts.--
(A) In general.--With respect to a covered
entity that received an emergency grant under
section 1110(e) of the CARES Act (15 U.S.C.
9009(e)) before the date of enactment of this
Act, the amount of the payment that the covered
entity shall receive under this subsection
(after satisfaction of the procedures required
under subparagraph (B)) shall be the difference
between $10,000 and the amount of that
previously received grant.
(B) Procedures.--If the Administrator
receives a request under paragraph (1) from a
covered entity described in subparagraph (A) of
this paragraph, the Administrator shall, not
later than 21 days after the date on which the
Administrator receives the request--
(i) perform the verification required
under subsection (c);
(ii) if the Administrator, under
subsection (c), verifies that the
entity is a covered entity, provide to
the covered entity a payment in the
amount described in subparagraph (A);
and
(iii) with respect to a covered
entity that the Administrator
determines is not entitled to a payment
under this section, provide the covered
entity with a notification explaining
why the Administrator reached that
determination.
(C) Rule of construction.--Nothing in this
paragraph may be construed to require any
entity that received an emergency grant under
section 1110(e) of the CARES Act (15 U.S.C.
9009(e)) before the date of enactment of this
Act to repay any amount of that grant.
(c) Verification.--In carrying out this section, the
Administrator shall require any information, including any tax
records, from an entity submitting a request under subsection
(b) that the Administrator determines to be necessary to verify
that the entity is a covered entity, without regard to whether
the entity has previously submitted such information to the
Administrator.
(d) Order of Processing.--The Administrator shall process and
approve requests for payments under subsection (b) in the order
that the Administrator receives the requests, except that the
Administrator shall give--
(1) first priority to covered entities described in
subsection (b)(2)(A); and
(2) second priority to covered entities that have not
received emergency grants under section 1110(e) of the
CARES Act (15 U.S.C. 9009(e)), as of the date on which
the Administrator receives such a request, because of
the unavailability of funding to carry out such section
1110(e).
(e) Applicability.--In addition to any other restriction
imposed under this section, any eligibility restriction
applicable to a loan made under section 7(b)(2) of the Small
Business Act (15 U.S.C. 636(b)(2)), including any restriction
under section 123.300 or 123.301 of title 13, Code of Federal
Regulations, or any successor regulation, shall apply with
respect to funding provided under this section.
(f) Notification Required.--The Administrator shall provide
notice to each of the following entities stating that the
entity may be eligible for a payment under this section if the
entity satisfies the requirements under clauses (ii), (iii),
and (iv) of subsection (a)(2)(A):
(1) Each entity that received an emergency grant
under section 1110(e) of the CARES Act (15 U.S.C.
9009(e)) before the date of enactment of this Act.
(2) Each entity that, before the date of enactment of
this Act--
(A) applied for a loan under section 7(b)(2)
of the Small Business Act (15 U.S.C.
636(b)(2)); and
(B) did not receive an emergency grant under
section 1110(e) of the CARES Act (15 U.S.C.
9009(e)) because of the unavailability of
funding to carry out such section 1110(e).
(g) Administration.--In carrying out this section, the
Administrator may rely on loan officers and other personnel of
the Office of Disaster Assistance of the Administration and
other resources of the Administration, including contractors of
the Administration.
(h) Authorization of Appropriations.--There are authorized to
be appropriated to the Administrator $20,000,000,000 to carry
out this section--
(1) which shall remain available through December 31,
2021; and
(2) of which $20,000,000 is authorized to be
appropriated to the Inspector General of the
Administration to prevent waste, fraud, and abuse with
respect to funding provided under this section.
(i) Statute of Limitations.--Notwithstanding any other
provision of law, any criminal charge or civil enforcement
action alleging that a borrower engaged in fraud with respect
to the use of any amount received pursuant to this section
shall be filed not later than 10 years after the offense was
committed.
* * * * * * *
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