[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
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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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