[104th Congress Public Law 36]
[From the U.S. Government Printing Office]


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[DOCID: f:publ36.104]


[[Page 109 STAT. 294]]

Public Law 104-36
104th Congress

                                 An Act


 
To amend the Small Business Act and the Small Business Investment Act of 
   1958 to reduce the cost to the Federal Government of guaranteeing 
 certain loans and debentures, and for other purposes. <<NOTE: Oct. 12, 
                           1995 -  [S. 895]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Small Business 
Lending Enhancement Act of 1995.>> 

SECTION 1. SHORT TITLE. <<NOTE: 15 USC 631 note.>> 

    This Act may be cited as the ``Small Business Lending Enhancement 
Act of 1995''.

SEC. 2. REDUCED LEVEL OF PARTICIPATION IN GUARANTEED LOANS.

    Section 7(a)(2) of the Small Business Act (15 U.S.C. 636(a)(2)) is 
amended to read as follows:
            ``(2) Level of participation in guaranteed loans.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), in an agreement to participate in a 
                loan on a deferred basis under this subsection 
                (including a loan made under the Preferred Lenders 
                Program), such participation by the Administration shall 
                be equal to--
                          ``(i) 75 percent of the balance of the 
                      financing outstanding at the time of disbursement 
                      of the loan, if such balance exceeds $100,000; or
                          ``(ii) 80 percent of the balance of the 
                      financing outstanding at the time of disbursement 
                      of the loan, if such balance is less than or equal 
                      to $100,000.
                    ``(B) Reduced participation upon request.--
                          ``(i) In general.--The guarantee percentage 
                      specified by subparagraph (A) for any loan under 
                      this subsection may be reduced upon the request of 
                      the participating lender.
                          ``(ii) Prohibition.--The Administration shall 
                      not use the guarantee percentage requested by a 
                      participating lender under clause (i) as a 
                      criterion for establishing priorities in approving 
                      loan guarantee requests under this subsection.
                    ``(C) Interest rate under preferred lenders 
                program.--
                          ``(i) In general.--The maximum interest rate 
                      for a loan guaranteed under the Preferred Lenders 
                      Program shall not exceed the maximum interest 
                      rate, as determined by the Administration, 
                      applicable to other loans guaranteed under this 
                      subsection.
                          ``(ii) Preferred lenders program defined.--For 
                      purposes of this subparagraph, the term `Preferred

[[Page 109 STAT. 296]]

                      Lenders Program' means any program established by 
                      the Administrator, as authorized under the proviso 
                      in section 5(b)(7), under which a written 
                      agreement between the lender and the 
                      Administration delegates to the lender--
                                    ``(I) complete authority to make and 
                                close loans with a guarantee from the 
                                Administration without obtaining the 
                                prior specific approval of the 
                                Administration; and
                                    ``(II) authority to service and 
                                liquidate such loans.''.

SEC. 3. GUARANTEE FEES.

    (a) Amount of Fees.--Section 7(a)(18) of the Small Business Act (15 
U.S.C. 636(a)(18)) is amended to read as follows:
            ``(18) Guarantee fees.--
                    ``(A) In general.--With respect to each loan 
                guaranteed under this subsection (other than a loan that 
                is repayable in 1 year or less), the Administration 
                shall collect a guarantee fee, which shall be payable by 
                the participating lender and may be charged to the 
                borrower, in an amount equal to the sum of--
                          ``(i) 3 percent of the amount of the deferred 
                      participation share of the loan that is less than 
                      or equal to $250,000;
                          ``(ii) if the deferred participation share of 
                      the loan exceeds $250,000, 3.5 percent of the 
                      difference between--
                                    ``(I) $500,000 or the total deferred 
                                participation share of the loan, 
                                whichever is less; and
                                    ``(II) $250,000; and
                          ``(iii) if the deferred participation share of 
                      the loan exceeds $500,000, 3.875 percent of the 
                      difference between--
                                    ``(I) the total deferred 
                                participation share of the loan; and
                                    ``(II) $500,000.
                    ``(B) Exception for certain loans.--Notwithstanding 
                subparagraph (A), if the total deferred participation 
                share of a loan guaranteed under this subsection is less 
                than or equal to $80,000, the guarantee fee collected 
                under subparagraph (A) shall be in an amount equal to 2 
                percent of the total deferred participation share of the 
                loan.''.

    (b) Repeal of Provisions Allowing Retention of Fees by Lenders.--
Section 7(a)(19) of the Small Business Act (15 U.S.C. 636(a)(19)) is 
amended--
            (1) in subparagraph (B)--
                    (A) by striking ``shall (i) develop'' and inserting 
                ``shall develop''; and
                    (B) by striking ``, and (ii)'' and all that follows 
                through the end of the subparagraph and inserting a 
                period; and
            (2) by striking subparagraph (C).

SEC. 4. ESTABLISHMENT OF ANNUAL FEE.

    (a) In General.--Section 7(a) of the Small Business Act (15 U.S.C. 
636(a)) is amended by adding at the end the following new paragraph:
            ``(23) Annual fee.--

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                    ``(A) <<NOTE: Regulations.>>  In general.--With 
                respect to each loan guaranteed under this subsection, 
                the Administration shall, in accordance with such terms 
                and procedures as the Administration shall establish by 
                regulation, assess and collect an annual fee in an 
                amount equal to 0.5 percent of the outstanding balance 
                of the deferred participation share of the loan.
                    ``(B) Payer.--The annual fee assessed under 
                subparagraph (A) shall be payable by the participating 
                lender and shall not be charged to the borrower.''.

    (b) Conforming Amendment.--Section 5(g)(4)(A) of the Small Business 
Act (15 U.S.C. 634(g)(4)(A)) is amended--
            (1) by striking the first sentence and inserting the 
        following: ``The Administration may collect a fee for any loan 
        guarantee sold into the secondary market under subsection (f) in 
        an amount equal to not more than 50 percent of the portion of 
        the sale price that exceeds 110 percent of the outstanding 
        principal amount of the portion of the loan guaranteed by the 
        Administration.''; and
            (2) by striking ``fees'' each place such term appears and 
        inserting ``fee''.

SEC. 5. NOTIFICATION REQUIREMENT.

    Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended 
by adding at the end the following new paragraph:
            ``(24) Notification requirement.--The Administration shall 
        notify the Committees on Small Business of the Senate and the 
        House of Representatives not later than 15 days before making 
        any significant policy or administrative change affecting the 
        operation of the loan program under this subsection.''.

SEC. 6. DEVELOPMENT COMPANY DEBENTURES.

    Section 503(b) of the Small Business Investment Act of 1958 (15 
U.S.C. 697(b)) is amended--
            (1) in paragraph (5), by striking ``and'' at the end;
            (2) in paragraph (6), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(7) with respect to each loan made from the proceeds of 
        such debenture, the Administration--
                    ``(A) assesses and collects a fee, which shall be 
                payable by the borrower, in an amount equal to 0.125 
                percent per year of the outstanding balance of the loan; 
                and
                    ``(B) uses the proceeds of such fee to offset the 
                cost (as such term is defined in section 502 of the 
                Federal Credit Reform Act of 1990) to the Administration 
                of making guarantees under subsection (a).''.

SEC. 7. PILOT PREFERRED SURETY BOND GUARANTEE PROGRAM EXTENSION.

    Section 207 of the Small Business Administration Reauthorization and 
Amendment Act of 1988 (15 U.S.C. 694b note) is amended by striking 
``September 30, 1995'' and inserting ``September 30, 1997''.

SEC. 8. APPLICABILITY. <<NOTE: 15 USC 634 note.>> 

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this Act do not apply with respect to any

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loan made or guaranteed under the Small Business Act or the Small 
Business Investment Act of 1958 before the date of enactment of this 
Act.
    (b) Exceptions.--The amendments made by this Act apply to a loan 
made or guaranteed under the Small Business Act or the Small Business 
Investment Act of 1958 before the date of enactment of this Act, if the 
loan is refinanced, extended, restructured, or renewed on or after the 
date of enactment of this Act.

    Approved October 12, 1995.

LEGISLATIVE HISTORY--S. 895 (H.R. 2150):
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HOUSE REPORTS: Nos. 104-239 accompanying H.R. 2150 (Comm. on Small 
Business) and 104-269 (Comm. of Conference).
SENATE REPORTS: No. 104-129 (Comm. on Small Business).
CONGRESSIONAL RECORD, Vol. 141 (1995):
            Aug. 11, considered and passed Senate.
            Sept. 12, H.R. 2150 considered and passed House; S. 895, 
                amended, passed in lieu.
            Sept. 28, Senate agreed to conference report.
            Sept. 29, House agreed to conference report.

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