H.R. 5554 (111th): Small Business Assistance and Relief Act of 2010

111th Congress, 2009–2010. Text as of Jun 17, 2010 (Introduced).

Status & Summary | PDF | Source: GPO

I

111th CONGRESS

2d Session

H. R. 5554

IN THE HOUSE OF REPRESENTATIVES

June 17, 2010

(for himself, Mrs. Biggert, Ms. Ginny Brown-Waite of Florida, Mr. Dent, Mr. Gerlach, Mr. Lance, Mr. LaTourette, and Mr. Lee of New York) introduced the following bill; which was referred to the Committee on Small Business, and in addition to the Committees on Ways and Means, Appropriations, Energy and Commerce, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To provide tax relief for, ease the regulatory burden on, and provide expanded access to credit to small businesses, and for other purposes.

1.

Short title

This Act may be cited as the Small Business Assistance and Relief Act of 2010.

I

Findings

101.

Findings

Congress finds the following:

(1)

The U.S. unemployment rate was 9.7 percent in May 2010.

(2)

Small businesses have generated 64 percent of net new jobs over the past 15 years.

(3)

Very small firms with fewer than 20 employees annually spend 45 percent more per employee than larger firms to comply with Federal regulations.

(4)

Small firms spend four and a half times as much per employee than larger firms to comply with environmental regulations.

(5)

Small firms spend 67 percent more per employee on tax compliance than their larger counterparts.

II

Sense of Congress

201.

Sense of Congress

It is the sense of Congress that—

(1)

assistance should be made available to assist credit-worthy small businesses who cannot obtain lending in the current environment;

(2)

the too big to fail doctrine is no longer acceptable;

(3)

reforming Fannie Mae and Freddie Mac should be a top priority for Congress; and

(4)

the Inspector General for Treasury should investigate the role that the Department of the Treasury has in decisions by community banks to invest in GSE stock.

III

Tax Relief

301.

Tax relief

(a)

Extension of certain tax provisions

The Secretary of the Treasury or the delegate of the Secretary shall treat as extended, with respect to any taxpayer that is a small business concern (as such term is defined in section 3(a) of the Small Business Act (15 U.S.C. 632(a)), until at least December 31, 2011, each of the following tax provisions, as identified by the Secretary:

(1)

The 5-year net operating loss carryback.

(2)

The 15-year recovery period for qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.

(3)

Bonus/Accelerated Depreciation.

(4)

Enhanced section 179 expensing limits.

(5)

Current tax law treatment of carried interest.

(6)

Current tax law treatment of financial transactions.

(b)

Extension of research credit; alternative simplified research credit increased and made permanent

(1)

Extension of credit

(A)

In general

Subparagraph (B) of section 41(h)(1) of the Internal Revenue Code of 1986 is amended by striking December 31, 2009 and inserting December 31, 2010.

(B)

Conforming amendment

Subparagraph (D) of section 45C(b)(1) of such Code is amended by striking December 31, 2009 and inserting December 31, 2010.

(C)

Effective date

The amendments made by this paragraph shall apply to amounts paid or incurred after December 31, 2009.

(2)

Alternative simplified research credit increased and made permanent

(A)

Increased credit

Subparagraph (A) of section 41(c)(5) of such Code (relating to election of alternative simplified credit) is amended by striking 14 percent (12 percent in the case of taxable years ending before January 1, 2009) and inserting 20 percent.

(B)

Credit made permanent

(i)

In general

Subsection (h) of section 41 of such Code is amended by redesignating the paragraph (2) relating to computation of taxable year in which credit terminates as paragraph (4) and by inserting before such paragraph the following new paragraph:

(3)

Termination not to apply to alternative simplified credit

Paragraph (1) shall not apply to the credit determined under subsection (c)(5).

.

(ii)

Conforming amendment

Paragraph (4) of section 41(h) of such Code, as redesignated by subparagraph (A), is amended to read as follows:

(4)

Computation for taxable year in which credit terminates

In the case of any taxable year with respect to which this section applies to a number of days which is less than the total number of days in such taxable year, the amount determined under subsection (c)(1)(B) with respect to such taxable year shall be the amount which bears the same ratio to such amount (determined without regard to this paragraph) as the number of days in such taxable year to which this section applies bears to the total number of days in such taxable year.

.

(C)

Effective date

The amendment made by this paragraph shall apply to taxable years ending after December 31, 2008.

(c)

Increase in amount allowed as deduction for start-Up expenditures

(1)

In General

Subsection (b) of section 195 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

(3)

Special Rule for Taxable Years Beginning in 2009, 2010, or 2011

In the case of a taxable year beginning in 2009, 2010, or 2011, paragraph (1)(A)(ii) shall be applied—

(A)

by substituting $20,000 for $5,000; and

(B)

by substituting $75,000 for $50,000.

.

(2)

Effective Date

The amendments made by this subsection shall apply to amounts paid or incurred in taxable years beginning after the date of the enactment of this Act.

(d)

Temporary exclusion of 100 percent of gain on certain small business stock

(1)

In general

Subsection (a) of section 1202 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(4)

Special 100 percent exclusion

In the case of qualified small business stock acquired after March 15, 2010, and before January 1, 2012—

(A)

paragraph (1) shall be applied by substituting 100 percent for 50 percent,

(B)

paragraph (2) shall not apply, and

(C)

paragraph (7) of section 57(a) shall not apply.

.

(2)

Conforming amendments

Paragraph (3) of section 1202(a) of such Code is amended—

(A)

by striking after the date of the enactment of this paragraph and before January 1, 2011 and inserting after February 17, 2009, and before March 16, 2010; and

(B)

by striking Special rules for 2009 and 2010 in the heading and inserting Special 75 percent exclusion.

(3)

Effective date

The amendments made by this section shall apply to stock acquired after March 15, 2010.

IV

Ease Regulatory Burden

401.

Ease Regulatory Burden

(a)

In general

The Administrator, acting through the Chief Counsel of the Office of Advocacy of the Small Business Administration, is authorized to provide such support as may be necessary with regard to any Federal regulation to ensure that a small business concern is not required to expend more than a total of 200 man-hours annually on applications, filings, petitions, or other paperwork submitted to Federal departments or agencies.

(b)

Commonly required information form

Support provided under subsection (a) shall include the establishment of a form on the public Internet Web site of the Administrator, by means of which a small business concern may provide to the Administrator information that the Administrator determines to be frequently required as part of any applications, filings, petitions, or other paperwork described in subsection (a). The Administrator shall use information so provided to assist in the expedited completion of such applications, filings, petitions, or other paperwork.

(c)

GAO report

The Comptroller General of the United States shall conduct a study of each regulation of each Federal agency or department to determine the burden that such regulation imposes on small business concerns. The Comptroller General shall submit a report containing information on such burden to the Administrator not later than the date that is 9 months after the date of enactment of this Act.

(d)

SBA recommendations

Not later than 6 months after receiving the report under subsection (c), the Administrator shall publish and maintain on the public Internet Web site of the Administrator recommendations on how to reduce the burden imposed by such regulation on small business concerns.

(e)

Reduction of paperwork

In carrying out any program under the Small Business Act or the Small Business Investment Act of 1958, the Administrator, acting through the Chief Counsel of the Office of Advocacy in the Small Business Administration, shall take any actions the Administrator determines appropriate to reduce the amount of paperwork (including any application, filing, or petition) that a small business concern may be required to complete by any Federal department or agency. Such steps shall include providing for the replacement of such paperwork with electronic or telephone filing or reporting.

V

Expand Access to Credit/Lending

501.

Short title; table of contents

(a)

Short title

This title may be cited as the Small Business Financing and Investment Act of 2010.

(b)

Table of contents

The table of contents for this title is as follows:

Sec. 501. Short title; table of contents.

Subtitle A—Small business lending enhancements

Sec. 511. Small lender outreach program.

Sec. 512. Rural lending outreach program.

Sec. 513. Community Express Program made permanent.

Sec. 514. Increased veteran participation program made permanent.

Sec. 515. Leasing policy.

Sec. 516. National lender training program.

Sec. 517. Applications for repurchase of loans.

Sec. 518. Alternative size standard.

Sec. 519. Pilot program authority.

Sec. 520. Loans to cooperatives.

Sec. 521. Capital backstop program.

Sec. 522. Loans to finance goodwill.

Sec. 523. Appellate process and ombudsman.

Sec. 524. Extension of recovery and relief loan benefits.

Sec. 525. Reduced documentation for business stabilization loans.

Sec. 526. Expanded eligibility for business stabilization loans.

Sec. 527. Increased amount of business stabilization loans.

Sec. 528. Extension of business stabilization loans.

Sec. 529. Study and report on business stabilization loans.

Sec. 530. Delayed repayment for small business concerns in areas with high unemployment.

Sec. 531. SBA secondary market lending authority made permanent.

Sec. 532. SBA secondary market lending authority expanded.

Sec. 533. Increased loan limits.

Sec. 534. Real estate appraisals.

Sec. 535. Additional support for Express Loan Program.

Sec. 536. Loans used to purchase unoccupied manufacturing centers or equipment.

Sec. 537. 100 percent guarantee for small business concerns owned and controlled by veterans.

Sec. 538. Deferred repayment for certain small business concerns.

Sec. 539. Authorization of appropriations.

Subtitle B—CDC Economic Development Loan Program

Chapter 1—General Provisions

Sec. 541. Program levels.

Sec. 542. Definitions.

Chapter 2—Certified Development Companies

Sec. 551. Certified development companies.

Sec. 552. Certified development company; operational requirements.

Sec. 553. Accredited lenders program.

Sec. 554. Premier certified lender program.

Sec. 555. Multi-State operations.

Sec. 556. Guaranty of debentures.

Sec. 557. Economic development through debentures.

Sec. 558. Project funding requirements.

Sec. 559. Private debenture sales and pooling of debentures.

Sec. 560. Foreclosure and liquidation of loans.

Sec. 561. Reports and regulations.

Sec. 562. Program name.

Chapter 3—Miscellaneous

Sec. 571. Report on standard operating procedures.

Sec. 572. Alternative size standard.

Subtitle C—Microlending expansion

Sec. 581. Microloan credit building initiative.

Sec. 582. Flexible credit terms.

Sec. 583. Increased program participation.

Sec. 584. Increased limit on intermediary borrowing.

Sec. 585. Expanded borrower education assistance.

Sec. 586. Young Entrepreneurs program.

Sec. 587. Interest rates and loan size.

Sec. 588. Reporting requirement.

Sec. 589. Surplus interest rate subsidy for businesses.

Sec. 590. Authorization of appropriations.

Subtitle D—Small business investment company modernization

Sec. 591. Increased investment from States.

Sec. 592. Expedited licensing for experienced applicants.

Sec. 593. Revised leverage limitations for successful SBICs.

Sec. 594. Consistency for cost control.

Sec. 595. Investment in veteran-owned small businesses.

Sec. 596. Tangible net worth.

Sec. 597. Development of agency record.

Sec. 598. Program levels.

Subtitle E—Investment in small manufacturers and renewable energy small businesses

Chapter 1—Enhanced New Markets Venture Capital Program

Sec. 601. Expansion of New Markets Venture Capital Program.

Sec. 602. Improved nationwide distribution.

Sec. 603. Increased investment in small business concerns engaged primarily in manufacturing.

Sec. 604. Expanded uses for operational assistance in manufacturing.

Sec. 605. Updating definition of low-income geographic area.

Sec. 606. Expanding operational assistance to conditionally approved companies.

Sec. 607. Limitation on time for final approval.

Sec. 608. Streamlined application for New Markets Venture Capital Program.

Sec. 609. Elimination of matching requirement.

Sec. 610. Simplified formula for operational assistance grants.

Sec. 611. Financing with respect to veterans.

Sec. 612. Authorization of appropriations and enhanced allocation for small manufacturing.

Chapter 2—Expanded investment in small business renewable energy

Sec. 621. Expanded investment in renewable energy.

Sec. 622. Renewable Energy Capital Investment Program made permanent.

Sec. 623. Expanded eligibility for small businesses.

Sec. 624. Expanded uses for operational assistance in manufacturing and small businesses.

Sec. 625. Expansion of Renewable Energy Capital Investment Program.

Sec. 626. Simplified fee structure to expedite implementation.

Sec. 627. Increased operational assistance grants.

Sec. 628. Authorizations of appropriations.

Subtitle F—Small business health information technology financing program

Sec. 631. Small business health information technology financing program.

Subtitle G—Small business early-Stage investment program

Sec. 641. Small business early-stage investment program.

Sec. 642. Prohibitions on earmarks.

Subtitle H—SBA disaster program reform

Sec. 651. Revised collateral requirements.

Sec. 652. Increased limits.

Sec. 653. Revised repayment terms.

Sec. 654. Revised disbursement process.

Sec. 655. Grant program.

Sec. 656. Regional disaster working groups.

Sec. 657. Outreach grants for loan applicant assistance.

Sec. 658. Homeowners impacted by toxic drywall.

Sec. 659. Authorization of appropriations.

Subtitle I—Regulations

Sec. 661. Regulations.

Subtitle J—Temporary employee services franchises

Sec. 671. Temporary employee services franchises.

Subtitle K—Study on private sector lending

Sec. 681. Study on private sector lending.

Subtitle L—Study on increases in certain caps

Sec. 691. Study on increases in certain caps.

Subtitle M—Rural outreach

Sec. 701. Rural outreach.

Subtitle N—Study relating to medical technology

Sec. 711. Study relating to medical technology.

Subtitle O—Study on additional credit risk factors

Sec. 721. Study on additional credit risk factors.

A

Small business lending enhancements

511.

Small lender outreach program

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended by adding at the end the following:

(34)

Small lender outreach program

The Administrator shall establish and carry out a program to provide support to regional, district, and branch offices of the Administration to assist small lenders, who do not participate in the Preferred Lenders Program, to participate in the programs under this subsection.

.

512.

Rural lending outreach program

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by adding at the end the following:

(35)

Rural lending outreach program

(A)

In general

The Administrator shall establish and carry out a rural lending outreach program (hereinafter referred to in this paragraph as the program) to provide loans under this subsection in accordance with this paragraph.

(B)

Maximum participation

A loan under the program shall include the maximum participation levels by the Administrator permitted for loans made under this subsection.

(C)

Maximum loan amount

The maximum amount of a loan under the program shall be $250,000.

(D)

Use of rural lenders

The program shall be carried out through lenders located in a rural area (as such term is defined under subsection (m)(11)(C)) or, if a small business concern located in a rural area does not have a lender located within 30 miles of the principal place of business of such concern, through any lender chosen by such concern that provides loans under this subsection.

(E)

Time for approval

The Administrator shall approve or disapprove a loan under the program within 36 hours.

(F)

Documentation

The program shall use abbreviated application and documentation requirements.

(G)

Credit standards

Minimum credit standards, as the Administrator considers necessary to limit the rate of default on loans made under the program, shall apply.

.

513.

Community Express Program made permanent

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by adding at the end the following:

(36)

Community Express Program

(A)

In general

The Administrator shall carry out a Community Express Program to provide loans under this subsection in accordance with this paragraph.

(B)

Requirements

For a loan made under the Community Express Program, the following shall apply:

(i)

The loan shall be in an amount not exceeding $250,000.

(ii)

The loan shall be made to a small business concern the majority ownership interest of which is directly held by individuals the Administrator determines are, without regard to the geographic location of such individuals, women, members of qualified Indian tribes, socially or economically disadvantaged individuals, veterans, or members of the reserve components of the Armed Forces.

(iii)

The loan shall comply with the collateral policy of the Administration.

(iv)

The loan shall include terms requiring the lender to provide, at the expense of the lender, technical assistance to the borrower through the lender or a third-party provider.

(v)

The Administrator shall approve or disapprove the loan within 36 hours.

.

514.

Increased veteran participation program made permanent

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended—

(1)

by redesignating the second paragraph (32), as added by section 208 of the Military Reservist and Veteran Small Business Reauthorization and Opportunity Act of 2008 (Public Law 110–186; 122 Stat. 631), as paragraph (33); and

(2)

in paragraph (33), as so redesignated by paragraph (1) of this section—

(A)

by striking pilot program each place it appears and inserting program;

(B)

by striking subparagraphs (C) and (F); and

(C)

by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively.

515.

Leasing policy

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by striking paragraph (28) and inserting the following:

(28)

Leasing

If a loan under this subsection is used to acquire or construct a facility, the assisted small business concern—

(A)

shall permanently occupy and use not less than 50 percent of the space in such facility; and

(B)

may, on a temporary or permanent basis, lease to others not more than 50 percent of the space in such facility.

.

516.

National lender training program

(a)

In general

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by adding at the end the following:

(37)

National lender training program

(A)

In general

The Administrator shall establish and carry out, through the regional offices of the Administration, a lender training program for new and existing lenders under this subsection with respect to the lending systems, policies, and procedures of the Administration.

(B)

Fees

The Administrator shall charge a fee for the program established under subparagraph (A) to reduce the cost of such program to zero.

(C)

Limitation

The program established under subparagraph (A) may not be carried out by contract with a nongovernmental entity.

.

(b)

Participation

An entity may not be permitted to participate in any program under the Small Business Act (15 U.S.C. 631 et seq.) or the Small Business Investment Act of 1958 (15 U.S.C. 661 et seq.) that is established or amended under this Act, as a lending or investment entity or as an agent of the Small Business Administration, unless such entity satisfies at least one of the following:

(1)

The entity has as the primary mission of the entity the financing or development of small business concerns.

(2)

The entity is primarily engaged in the business of banking, investing, or entrepreneurial development and does not engage in activities which are not incidental to the business of banking, investing, or entrepreneurial development.

517.

Applications for repurchase of loans

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by adding at the end the following:

(38)

Applications for repurchase of loans

(A)

In general

Not later than 45 days after the date of the receipt of a claim from a lender for proper payment of the guaranteed portion of a loan under this subsection due to default, the Administrator shall make a final determination with respect to the approval or denial of such claim.

(B)

Late determinations

If the Administrator does not make a final determination under subparagraph (A) in the time period specified in such subparagraph, the claim shall be approved and paid promptly.

(C)

If the lender demonstrates, with respect to a claim for payment described in subparagraph (A), that it followed the applicable requirements of the National Lender Training Program as established under paragraph (37) of this section, the Administrator shall pay the claim unless the Administrator has clear and convincing evidence demonstrating that the lender failed to comply with regulatory requirements established by the Administrator.

.

518.

Alternative size standard

(a)

In general

Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) is amended by adding at the end the following:

(5)

In addition to any other size standard under this subsection, the Administrator shall establish and permit a lender making a loan under section 7(a) to use an alternative size standard. The alternative size standard shall be based on factors including the maximum tangible net worth and average net income of a business concern.

.

(b)

Applicability

Until the Administrator establishes under section 3(a)(5) of the Small Business Act, as added by subsection (a) of this section, an alternative size standard for use by a lender making a loan under section 7(a) of such Act, the alternative size standard in section 121.301(b) of title 13, Code of Federal Regulations, shall apply in such a case.

519.

Pilot program authority

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by striking paragraph (25) and inserting the following:

(25)

Limitation on conducting pilot projects

(A)

Limitation on number

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.

(B)

Dollar limitations

(i)

In general

With respect to any pilot program under this subsection established on or after the date of the enactment of the Small Business Financing and Investment Act of 2010, no loan shall be made under such program if such loan would result in the total amount of loans made during a fiscal year under all such programs to be in excess of 5 percent of the total amount of loans guaranteed in such fiscal year under this subsection.

(ii)

Certain pre-existing programs

With respect to any pilot program under this subsection established before the date of the enactment of the Small Business Financing and Investment Act of 2010, no loan shall be made under such program if such loan would result in the total amount of loans made during a fiscal year under all such programs to be in excess of 10 percent of the total amount of loans guaranteed in such fiscal year under this subsection.

(C)

Expiration

(i)

In general

Except as provided in clause (iii), the duration of any pilot program under this subsection may not exceed 3 years.

(ii)

Designation as new program

For purposes of this subparagraph, a pilot program shall not be treated as a new pilot program solely on the basis of a modification or change in the pilot program, including the change of its name.

(iii)

Existing programs

With respect to any pilot program in existence on the date of the enactment of the Small Business Financing and Investment Act of 2010, such program may continue in effect for a period not exceeding 3 years after such date without regard to the duration of such program before such date.

(D)

Regulations

(i)

In general

With respect to each pilot program under this subsection, including each pilot program in existence on the date of the enactment of the Small Business Financing and Investment Act of 2010, the Administrator shall—

(I)

issue regulations for such program after providing notice in the Federal Register and an opportunity for comment; and

(II)

ensure that such regulations are published in the Code of Federal Regulations.

(ii)

Pilot programs established after date of enactment

With respect to any pilot program established after the date of the enactment of the Small Business Financing and Investment Act of 2010, such program shall not take effect until the requirements under this subparagraph are satisfied.

(E)

Repeal of authority to waive certain rules

(i)

In general

Notwithstanding section 120.3 of title 13, Code of Federal Regulations, the Administrator may not from time to time suspend, modify, or waive rules for a limited period of time to test new programs or ideas with respect to this subsection, unless such suspension, modification, or waiver is explicitly authorized by Act of Congress.

(ii)

Existing pilot programs

Nothing under clause (i) may be construed to affect a pilot program in existence on the date of the enactment of the Small Business Financing and Investment Act of 2010.

(F)

Pilot program

For purposes of this paragraph, the term pilot program means any lending program initiative, project, innovation, or other activity not specifically authorized by Act of Congress.

.

520.

Loans to cooperatives

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by adding at the end the following:

(39)

Cooperatives

The Administration may provide loans under this subsection to any cooperative that—

(A)

is not organized as a tax-exempt entity;

(B)

is engaged in a legal business activity;

(C)

obtains financial benefits for the cooperative and for the members of such cooperative; and

(D)

is eligible under applicable size standards of the Administration, including that any business entity that is a member of such cooperative is eligible under applicable size standards of the Administration.

.

521.

Capital backstop program

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by adding at the end the following:

(40)

Capital backstop program

(A)

In general

The Administrator shall establish a process under which a small business concern may submit an application to the Administrator for the purpose of securing a loan under this subsection. With respect to such application, the Administrator shall collect all information necessary to determine the creditworthiness and repayment ability of an applicant and shall determine if such application meets the eligibility and credit standards that a lender would be required to apply to approve a loan under this subsection.

(B)

Participation of lenders

(i)

In general

The Administrator shall establish a process under which the Administrator makes available to lenders each loan application submitted and determined to meet basic eligibility and credit standards under subparagraph (A) for the purpose of such lenders originating, underwriting, closing, and servicing the loan for which the applicant applied.

(ii)

Eligibility

Lenders are eligible to receive a loan application described in clause (i) if they participate in the programs established under this subsection.

(iii)

Local lenders

The Administrator shall first make available a loan application described in clause (i) to lenders within 100 miles of the principal office of the loan applicant.

(iv)

Preferred lenders

If a lender described in clause (iii) does not agree to originate, underwrite, close, and service the loan applied for within 5 business days of receiving a loan application described in clause (i), the Administrator shall subsequently make available such loan application to lenders in the Preferred Lenders Program under paragraph (2)(C)(ii) of this subsection.

(v)

Authority of Administration to lend

If a lender described in clauses (iii) or (iv) does not agree to originate, underwrite, close, and service the loan applied for within 10 business days of receiving a loan application described in clause (i), the Administrator shall originate, underwrite, close, and service such loan.

(C)

Asset sales

The Administrator shall offer to sell loans made by the Administrator under this paragraph. Such sales shall be made through the semi-annual public solicitation (in the Federal Register and in other media) of offers to purchase. The Administrator may contract with vendors for due diligence, asset valuation, and other services related to such sales. The Administrator may not sell any loan under this subparagraph for less than 90 percent of the net present value of the loan, as determined and certified by a qualified third party.

(D)

Loans not sold

The Administrator shall maintain and service loans made by the Administrator under this paragraph that are not sold through the asset sales under this paragraph.

(E)

Effective dates

This paragraph shall have effect on each date during the period beginning on the date of enactment of this paragraph and ending on September 30, 2011, and on any other date after such period if—

(i)

such date occurs during a period that—

(I)

begins on the date the Bureau of Economic Analysis, or any successor organization, makes a determination that the gross domestic product of the United States has decreased for three consecutive quarters; and

(II)

ends on the date the Bureau of Economic Analysis, or any successor organization, makes a determination that the gross domestic product of the United States has increased for two consecutive quarters; and

(ii)

the number of loans provided under this subsection prior to such date in the fiscal year including such date is at least 30 percent less than the number of such loans provided prior to the same point in the previous fiscal year.

(F)

Implementation

The Administrator shall establish a group of at least 250 individuals available to carry out activities under this paragraph on any date on which this paragraph has effect under subparagraph (E). The Administrator shall provide to such group the training necessary to carry out activities under this paragraph. The Administrator shall ensure that each individual in such group with loan application evaluation and underwriting responsibilities has at least 2 years experience with respect to such responsibilities.

(G)

Application of other law

Nothing in this paragraph shall be construed to exempt any activity of the Administrator under this paragraph from the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).

(H)

Authorization of appropriations

(i)

Program levels

The Administrator is authorized to make loans under this paragraph in an amount that is equal to half the amount authorized for loans under this subsection other than loans under this paragraph.

(ii)

Authorization of appropriations

In addition to amounts made available to carry out this subsection, there are authorized to be appropriated such sums as may be necessary to carry out this paragraph.

.

522.

Loans to finance goodwill

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by adding at the end the following:

(41)

Goodwill

The Administrator may not apply an application, processing, or approval standard to a loan for the purpose of financing goodwill under this subsection, unless such standard applies to all loans under this subsection.

.

523.

Appellate process and ombudsman

The Small Business Act (15 U.S.C. 631 et seq.) is amended—

(1)

by redesignating section 44 as section 45; and

(2)

by inserting after section 43 the following:

44.

Appellate process and ombudsman

(a)

Appellate process

(1)

In general

Not later than 270 days after the date of the enactment of the Small Business Financing and Investment Act of 2010, the Administrator shall establish an independent appellate process within the Administration. The process shall be available to review material determinations made by the Administration that affect a lender or investment company that participates or is applying to participate in a program administered by the Administration.

(2)

Review process

In establishing the independent appellate process under paragraph (1), the Administrator shall ensure that—

(A)

any appeal of a material determination by the Administration is heard and resulting recommendations are provided expeditiously; and

(B)

appropriate safeguards exist for protecting the appellant from retaliation by Administration employees.

(3)

Comment period

Not later than 180 days after the date of the enactment of the Small Business Financing and Investment Act of 2010, the Administrator shall provide an opportunity for notice and comment on proposed guidelines for the establishment of an independent appellate process under this section.

(b)

Agency Ombudsman

(1)

Establishment

Not later than 180 days after the date of the enactment of the Small Business Financing and Investment Act of 2010, the Administrator shall appoint an ombudsman.

(2)

Duties

The ombudsman appointed in accordance with paragraph (1) shall—

(A)

act as a liaison between the Administration and any lender or investment company that participates or is applying to participate in a program administered by the Administration with respect to a problem such entity may have in dealing with the Administration resulting from a material determination made by the Administration; and

(B)

ensure that safeguards exist to encourage complainants to come forward and preserve confidentiality.

(c)

Other authority

An individual carrying out the independent appellate process established under subsection (a) or the position of ombudsman established under subsection (b) is authorized to—

(1)

examine records and documents relating to a matter under review pursuant to such subsections; and

(2)

initiate the review of a matter under such subsections if such individual believes that Administration procedures have not been followed as intended with respect to such matter, without regard to whether an appeal or complaint has been made.

(d)

Limitations

(1)

In general

An individual carrying out the independent appellate process established under subsection (a) or the position of ombudsman established under subsection (b) may not, as a result of the authority provided under this section—

(A)

make, change, or set aside a law, policy, or administrative decision;

(B)

make binding decisions or determine rights;

(C)

directly compel an entity to implement the recommendations of such individual; or

(D)

accept jurisdiction over an issue that is pending in a legal forum.

(2)

Rule of construction

Activities carried out under this section may not be construed—

(A)

as a formal investigation, formal hearing, or binding decision;

(B)

as limiting any remedy or right of appeal;

(C)

as affecting any procedure concerning grievances, appeals, or administrative matters under law; or

(D)

as a substitute for an administrative or judicial proceeding.

(e)

Report

Not later than one year after the date of the enactment of the Small Business Financing and Investment Act of 2010 and annually thereafter, the Administrator 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 describing and providing the status of appeals made under subsection (a) and complaints made under subsection (b).

(f)

Definitions

In this section, the following apply:

(1)

Material determination

The term material determination includes determinations relating to—

(A)

applications for payment relating to a loan guarantee; and

(B)

the ability of an entity to participate in an Administration loan or investing program.

(2)

Independent appellate process

The term independent appellate process means a review by an Administration official who does not directly or indirectly report to the Administration official who made the material determination under review.

.

524.

Extension of recovery and relief loan benefits

(a)

Fee reductions

Section 501 of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended—

(1)

in subsection (a) by striking September 30, 2010 and inserting September 30, 2011; and

(2)

in subsection (c) by repealing paragraph (2).

(b)

Economic stimulus lending program for small businesses

Section 502(f) of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended by striking the date 12 months after the date of enactment of this Act and inserting September 30, 2011.

525.

Reduced documentation for business stabilization loans

Section 506(a) of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended by adding at the end the following: The Administrator shall give priority under such program to small business concerns in a city with an unemployment rate that is at least 125 percent of the unemployment rate of the State that includes such city. In carrying out such program, the Administrator shall establish and utilize a one-page application for loans under this section and shall authorize lenders to utilize the same documentation and procedural requirements for loans under this section as such lenders utilize for other loans of a similar size and type..

526.

Expanded eligibility for business stabilization loans

Section 506(c) of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended by striking but shall not include and all that follows through enactment of this Act.

527.

Increased amount of business stabilization loans

Section 506(d) of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended by striking $35,000 and inserting $50,000 (except as provided under subsection (l)).

528.

Extension of business stabilization loans

Section 506(j) of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended by striking September 30, 2010 and inserting September 30, 2011.

529.

Study and report on business stabilization loans

(a)

Study

The Administrator of the Small Business Administration shall conduct a study on the business stabilization program established under section 506 of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5), including—

(1)

how the program has been implemented;

(2)

the amount of time involved in processing applications;

(3)

the volume of applications received and the effect on application processing;

(4)

impediments to participation in the program by small business concerns and lenders;

(5)

courses of action that might expedite action by the Administrator on applications;

(6)

courses of action that might expand participation by such concerns and lenders; and

(7)

a cost benefit analysis with regard to changes to the program, including—

(A)

increases in loan limits;

(B)

expanding eligibility requirements;

(C)

changes to interest rates to lenders; and

(D)

any other change the Administrator determines appropriate.

(b)

Report

Not later than 90 days after the date of enactment of this Act, the Administrator of the Small Business Administration shall submit to Congress a report that includes—

(1)

the results of the study under subsection (a); and

(2)

recommendations on how to change the program—

(A)

to expand participation by small business concerns and lenders; and

(B)

to decrease the amount of time involved in processing applications.

(c)

Outreach

In conducting the study under subsection (a) and preparing the report under subsection (b), the Administrator of the Small Business Administration shall meet with and solicit the views of relevant stakeholders, including lenders.

530.

Delayed repayment for small business concerns in areas with high unemployment

Section 506 of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended by adding at the end the following:

(l)

Small business concerns in areas with high unemployment

(1)

Increase loan limits

Notwithstanding subsection (d), a loan made under this section to a small business concern in what the Administrator determines to be an area with high unemployment may not exceed $75,000.

(2)

Delayed repayment

Notwithstanding subsection (g), repayment for a loan made under this section after the date of the enactment of the Small Business Financing and Investment Act of 2010 to a small business concern described in paragraph (1) shall not begin until 18 months after the final disbursement of funds is made.

.

531.

SBA secondary market lending authority made permanent

Section 509 of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended—

(1)

by striking subsection (e); and

(2)

by redesignating subsections (f), (h), and (i) as subsections (e), (f), and (g), respectively.

532.

SBA secondary market lending authority expanded

Section 509 of title V of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5), as amended by this Act, is further amended—

(1)

in subsection (c)(1) by adding at the end the following: Such process shall include the designation of each lender participating in a program under section 7(a) of the Small Business Act as a Systematically Important Secondary Market Broker-Dealer for purposes of this section.; and

(2)

in subsection (e), as so redesignated by section 530 of this Act, by adding at the end the following: To the extent that the cost of an elimination or reduction of fees is offset by appropriations, the Administrator shall in lieu of the fee otherwise applicable under this subsection collect no fee or reduce fees to the maximum extent possible..

533.

Increased loan limits

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended—

(1)

in paragraph (2)(A)—

(A)

in clause (i)—

(i)

by inserting after $150,000 the following: and is less than or equal to $2,000,000; and

(ii)

by striking or at the end;

(B)

in clause (ii) by striking the period at the end and inserting ; or; and

(C)

by adding at the end the following:

(iii)

50 percent of the balance of the financing outstanding at the time of disbursement of the loan, if such balance exceeds $2,000,000.

; and

(2)

in paragraph (3)(A) by striking $2,000,000 and inserting $3,000,000.

534.

Real estate appraisals

Section 7(a)(29) of the Small Business Act (15 U.S.C. 636(a)(29)) is amended—

(1)

in the matter preceding subparagraph (A) by striking a State licensed or certified appraiser and inserting an appraiser licensed or certified by the State in which such property is located;

(2)

in subparagraph (A) by striking $250,000 and inserting $400,000; and

(3)

in subparagraph (B) by striking $250,000 and inserting $400,000.

535.

Additional support for Express Loan Program

Section 7(a)(18)(B) of the Small Business Act (15 U.S.C. 636(a)(18)(B)) is amended by adding after under subparagraph (A)(i) the following: , except that a lender making a loan under paragraph (31) may not retain any percentage of a fee collected under such subparagraph.

536.

Loans used to purchase unoccupied manufacturing centers or equipment

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended by adding at the end the following:

(42)

Loans used to purchase unoccupied manufacturing centers or equipment

The Administration may provide loans under this subsection for the purchase of what the Administrator determines to be unoccupied manufacturing centers or equipment.

.

537.

100 percent guarantee for small business concerns owned and controlled by veterans

Section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as amended by this Act, is further amended—

(1)

in paragraph (3)(A) by striking the semicolon at the end and inserting the following: or in paragraph (42);; and

(2)

by adding at the end the following:

(42)

100 percent guarantee for small business concerns owned and controlled by veterans

Notwithstanding paragraph (2), in an agreement to participate in a loan on a deferred basis under this subsection with respect to a small business concern owned and controlled by veterans, participation by the Administrator may be equal to 100 percent. The total amount outstanding and committed (by participation or otherwise) with respect to a loan to such a small business concern from the business loan and investment fund established by this Act may not exceed $3,000,000.

.

538.

Deferred repayment for certain small business concerns

Section 7(a)(7) of the Small Business Act (15 U.S.C. 636(a)(7)) is amended by adding at the end the following: If a small business concern classified in sector 23 of the North American Industry Classification System receives a loan under this subsection after the date of the enactment of the Small Business Financing and Investment Act of 2010, such concern may defer repayment on such loan for a period of not more than 12 months beginning on the date that such concern receives the final disbursement of such loan..

539.

Authorization of appropriations

Section 20 of the Small Business Act (15 U.S.C. 631 note) is amended by inserting after subsection (e) the following:

(f)

Fiscal years 2010 and 2011 with respect to section 7(a)

(1)

Program levels

For the programs authorized by this Act, in each of fiscal years 2010 and 2011 commitments for general business loans authorized under section 7(a) may not exceed $20,000,000,000.

(2)

Authorization of appropriations

There are authorized to be appropriated such sums as may be necessary to carry out paragraph (1).

.

B

CDC Economic Development Loan Program

1

General Provisions

541.

Program levels

Section 20 of the Small Business Act (15 U.S.C. 631 note), as amended by this Act, is further amended by inserting after subsection (f) the following:

(g)

Program levels with respect to CDC Economic Development Loan Program

(1)

Fiscal year 2010

For financings authorized by section 7(a)(13) of this Act and title V of the Small Business Investment Act of 1958, the Administrator is authorized to make $9,000,000,000 in guarantees of debentures for fiscal year 2010.

(2)

Fiscal year 2011

For financings authorized by section 7(a)(13) of this Act and title V of the Small Business Investment Act of 1958, the Administrator is authorized to make $10,000,000,000 in guarantees of debentures for fiscal year 2011.

.

542.

Definitions

Section 103 of the Small Business Investment Act of 1958 (5 U.S.C. 662) is amended as follows:

(1)

By amending paragraph (6) to read as follows:

(6)

the term development company means any corporation organized in order to promote economic development and the growth of small business concerns and includes companies chartered under a special State law authorizing them to operate on a statewide basis;

.

(2)

By striking and at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting a semicolon, and by adding at the end the following new paragraphs:

(20)

the term certified development company means a development company that the Administrator has determined meets the criteria set forth in section 501;

(21)

the term local governmental entity means—

(A)

a State or a political subdivision of a State; or

(B)

a combination of political subdivisions which—

(i)

has been formed to promote economic or community development;

(ii)

is composed of representatives of the State or a political subdivision acting in their official capacity; and

(iii)

includes an area in an adjacent State if it is part of a local economic area, a rural area, or has a population determined by the Administrator to be insufficient to support the formation of a separate development company;

such term includes entities meeting the requirements of clauses (i) through (iii), such as, but not limited to, a council of governments, regional development corporation, regional planning commission, or economic development district;
(22)

the term member means any person authorized to vote for a director of a corporation or the dissolution or merger of a company (for purposes of this definition, a shareholder of a for-profit corporation shall be considered a member);

(23)

the terms rural and rural area shall have the same meaning as those terms are given in section 1991(a)(13)(A) of title 7, United States Code; and

(24)

the term small manufacturer means a small business concern—

(A)

the primary business of which is classified in sector 31, 32, or 33 of the North American Industrial Classification System; and

(B)

all of the production facilities of which are located in the United States.

.

2

Certified Development Companies

551.

Certified development companies

Section 501 of the Small Business Investment Act of 1958 (15 U.S.C. 695) is amended to read as follows:

501.

Certified development companies

(a)

Certified development company debenture authority

Only development companies certified by the Administrator shall have the authority to issue debentures under this Act.

(b)

Certification standards

A development company shall be certified for the purposes of issuing debentures if the Administrator determines that it meets each of the following criteria:

(1)

Small concern

(A)

In general

Except as provided in subparagraph (C) of paragraph (2), the company, including its affiliates, shall have no more than 200 employees.

(B)

Control

Except as provided in paragraph (2) (B) or (C) the company shall not be under the control of any other concern.

(C)

Not for profit

The development company is organized as a not-for-profit corporation.

(2)

Exceptions

(A)

For profit status

If a development company was chartered as a for-profit corporation and issued debentures prior to January 1, 1987, the company shall not be required to change its status to not-for-profit in order to be certified.

(B)

Affiliation grandfather

Any company that was authorized by the Administrator to issue debentures before December 31, 2005, shall be eligible for certification without regard to its status as part of, or its affiliation with, any other not-for-profit corporation or local governmental entity unless that not-for-profit corporation or local governmental entity is another entity that issues debentures under this title.

(C)

Affiliation with local governmental entities

Any company that was organized after the date of enactment of the Small Business Financing and Investment Act of 2010 shall be eligible for certification without regard to its status as part of or affiliation with any local governmental entity.

(3)

Good standing

A development company shall be in good standing and comply with all laws, in every State in which it is incorporated or authorized to conduct business.

(4)

Membership

(A)

In general

The development company shall have at least 25 members.

(B)

Voting rights

No member shall control more than 10 percent of the total voting power in the development company.

(C)

Residence

Members must be residents of the State in which the development company is chartered or authorized to do business.

(D)

Diversity

The development company must have at least one member from each of the following:

(i)

A local governmental entity.

(ii)

A financial institution subject to regulation by a Federal organization belonging to the Federal Financial Institutions Examination Council and that provides long-term fixed asset financing in the commercial market.

(iii)

A not-for-profit organization, other than a development company, that is dedicated to promoting economic growth.

(iv)

A for-profit business, other than a financial institution described in clause (ii).

(E)

Employment status

Membership in a development company shall not be predicated on employment status and an individual who retired from or was terminated (for reasons other than fraud or the commission of a crime) from an entity described in subparagraph (D) shall be deemed to be from the organization described in that subparagraph.

(5)

Board of directors

(A)

In general

The development company’s board consists of members and each director receives a majority vote of the members unless the development company is a for-profit corporation in which case the board need not consist entirely of members.

(B)

Board representation

There shall be at least one director from not fewer than 3 of the 4 types of organizations specified in paragraph (4)(D) but no single type of organization shall have more than 50 percent representation on the board of the development company. If the development company is a for-profit corporation, financial institution representatives may make up more than 50 percent of the board.

(C)

Affiliated entity representation restrictions

A development company that is described in paragraph (1)(C) may have any or all of its board members appointed by entities affiliated with the company and may include common members who also serve on the affiliate’s board of directors if the appointment of board members was exercised by an affiliate prior to December 31, 2005.

(D)

Special rule for certain development companies

The board of directors for any development company issuing debentures before December 31, 2005, and incorporated under a State law requiring, or which is interpreted by the State’s legal department as imposing specific requirements on, the number and selection of members, board members, or both, and the rights and privileges conferred by such State law, may adhere to such provisions.

(6)

Professional management and staff

(A)

In general

The development company shall have full-time independent professional management, including a chief executive officer to manage the daily operations and a full-time professional staff qualified to carry out the functions authorized under this title.

(B)

Utilization of staff from affiliated entities

A development company shall not be denied certification under this section if its chief executive or full-time professional staff is from an affiliated entity as described in paragraph (1)(C).

(C)

Staff under contract

The Administrator shall not deny certification to a development company that contracts for its full time staff if one of the following conditions is met:

(i)

The development company is located in a rural area, obtains its staff through contract from another development company that is certified by the Administrator and that development company operates in the same or a contiguous State.

(ii)

The development company had issued debentures under this title prior to December 31, 2005, and had contracted with a for-profit business concern to provide staffing and management services.

(c)

Applications

(1)

Development companies issuing debentures before September 30, 2009

(A)

Short form Application

(i)

For any development company that issued debentures pursuant to this title before September 30, 2009, the Administrator shall develop, after an opportunity for notice and comment, no later than 90 days after the date of enactment of the Small Business Financing and Investment Act of 2010, a short-form application that contains sufficient information for the Administrator to determine that the development company currently meets the standards set forth in subsection (b). In developing such application, the Administrator shall be required to limit the amount of paperwork necessary to determine whether the development company meets the standards for certification and may limit the application to the filing of reports previously submitted to the Administrator.

(ii)

For those companies that obtain staff through contracts, the application shall include a copy of the contract.

(B)

Certification decision

(i)

The Administrator shall certify the development company if the application demonstrates that the applicant meets the standards in subsection (b). The decision to certify or not approve the request for certification shall be made within 7 business days from the date the initial submission of the application is received by the Administrator. If the Administrator takes no action to approve or disapprove within 7 business days, the application for certification is deemed approved and no further action is required by the Administrator or the development company to obtain certification. If the Administrator disapproves the application, the Administrator shall provide in writing within 3 business days the reasons for the disapproval. If such document is not provided within the time specified, the application is deemed approved and no further action is required by the Administrator or the development company to obtain certification.

(ii)

For those development companies that submit contracts under subparagraph (A)(ii), the Administrator is limited in rejecting the application only if the Administrator finds that the entity servicing the applicant is no longer able to provide the employees or services needed by the applicant to perform the functions that would be authorized under this title.

(C)

Application resubmittal

If the Administrator disapproves the application for certification and provides a written statement as set forth in subparagraph (B), the development company may file a new application limited solely to addressing the concerns of the Administrator and the certification procedures set forth in subparagraph (B) shall recommence.

(D)

Appeals

If the Administrator disapproves an application in accordance with the procedures of subparagraphs (B) or (C), the applicant may, within 10 calendar days after receipt of the disapproval, appeal such disapproval. The Administrator shall conduct a hearing to determine such appeal pursuant to sections 554, 556, and 557 of title 5, United States Code, and shall issue a decision not later than 45 days after the appeal is filed. The decision on appeal shall constitute final agency action for purposes of chapter 7 of title 5, United States Code.

(E)

Grandfathering

(i)

In general

For the period 2 years after date of enactment of the Small Business Financing and Investment Act of 2010, any development company that was issuing debentures on or before the date set forth in this clause (i) shall be deemed to be a certified development company.

(ii)

Completion of application process

The procedures set forth in this paragraph for determining certification shall apply to any development company meeting the qualifications of clause (i).

(iii)

Effect of denial

The denial or rejection of an application for certification as set forth in this subsection shall have no effect on the ability of a development company meeting the qualifications in clause (i) from continuing to issue debentures during the entire two-year period established in that clause.

(iv)

Failure to obtain certification

Any development company that fails to obtain certification in accordance with the procedures set forth in this paragraph during the period set forth in clause (i) shall be considered to be a new development company and the procedures of paragraph (2) shall apply. The authority to issue debentures shall cease for any development company covered by this subparagraph that has failed to obtain certification from the Administrator during the time period set forth in clause (i).

(F)

Automatic qualification provision

If the Administrator fails to implement the certification process set forth in this paragraph, any development company that was issuing debentures before September 30, 2009, pursuant to this title shall be considered certified until such time as the Administrator develops the certification procedures set forth in this paragraph.

(G)

Savings clause

Any action taken by a development company or the Administrator pursuant to this paragraph shall have no impact on any guarantee of a debenture issued prior to the date of enactment of the Small Business Financing and Investment Act of 2010.

(2)

Application process for new development companies

(A)

In general

For any development company that has not issued debentures prior to September 30, 2009, the Administrator shall develop no later than 180 days after the date of enactment of the Small Business Financing and Investment Act of 2010, after an opportunity for notice and comment, an application form for certification that provides the Administrator with sufficient information to insure that the applicant meets the standards set forth in subsection (b). The Administrator shall certify such development company or reject the application within 60 calendar days from the date the initial submission was received by the Administrator. If the Administrator rejects the application, the Administrator shall provide in writing within 7 business days after the decision, the reason for rejecting the application.

(B)

Appeals

A development company shall be able to appeal the disapproval of an application under the procedures set forth in paragraph (1)(D).

.

552.

Certified development company; operational requirements

Section 502 of the Small Business Investment Act of 1958 (15 U.S.C. 696) is amended to read as follows:

502.

Operational requirements for certified development companies

(a)

Maintenance of Standards for Certification

Any company certified pursuant to section 501 shall continue to comply with the requirements of that section to remain certified. The Administrator shall develop a reporting form, which to the extent possible, incorporates other documents and reports already kept by certified development companies, demonstrating their continued compliance. The form shall be developed in a manner that the estimated time for completion shall take no more than 2 hours.

(b)

Ethics and conflict of interests

(1)

In general

A certified development company, its officers, employees, and contractors shall act ethically and avoid activities which constitute a conflict of interest or appear to constitute a conflict of interest. For purposes of this subsection, conduct that is unethical includes, but is not limited to, the actions specified in section 120.140 of title 13, Code of Federal Regulations, as in effect on January 1, 2009.

(2)

By associates

An associate may not be an officer, director, or manager of more than 1 certified development company. The term associate shall have the same meaning given the term Associate of a CDC in section 120.10 of title 13, Code of Federal Regulations, as in effect on January 1, 2009. For the purposes of this subsection, 10 percent shall be substituted wherever section 120.10 of title 13, Code of Federal Regulations uses 20 percent.

(3)

By entities

Except as provided in sections 501(b)(5) and 501(b)(6), no person, sole proprietorship, partnership, or corporation shall control or have managerial control of more than one certified development company. Control means any of the following:

(A)

The ability to appoint or remove a member of the company or member of its board of directors.

(B)

The ability to modify or approve rate or fee changes affecting revenues of the certified development company.

(C)

The ability to veto, overrule, or modify decisions of the certified development company’s body.

(D)

The ability, either directly or contractually, to appoint, hire, reassign, or dismiss those managers and employees responsible for the daily operations of the certified development company.

(E)

The ability to access the certified development company’s resources or amend its budget.

(F)

The ability to control another certified development company pursuant to provisions in a contract.

(c)

Meetings

The board of directors of the certified development company shall meet on a regular basis to make policy decisions for the company.

(d)

Loan committees

The board of directors of a certified development company may use a loan committee to process loans in the State in which it operates as well as adjacent local economic areas. Members of the loan committee shall be residents of the certified development company’s State of operation or the adjacent local economic area. Such loan committees shall meet on a periodic basis as set forth by the board of directors.

(e)

Prohibited Conflict in Project Loans

(1)

In general

Certified development companies shall not recommend or approve a guarantee of a debenture that will be collateralized by property being constructed or acquired on which an institution, as provided in section 508(c)(1)(A), will have a first lien position.

(2)

Exception

The prohibition in paragraph (1) shall not apply to any certified development company that was affiliated with or part of any entity that took a first lien position between October 1, 2003, and September 30, 2005.

(f)

Affiliation with lenders operating under section 7 of the Small Business Act

(1)

Prohibition

No certified development company may invest in, or be an affiliate of, a lender who participates in the loan programs authorized in sections 7(a) and 7(c) of the Small Business Act (15 U.S.C. 636(a) and (c)).

(2)

Exception

The prohibition in paragraph (1) shall not apply to any certified development company that is affiliated with an entity authorized by the Administrator to operate under section 7(a) of the Small Business Act if such affiliation occurred on or before November 6, 2003.

(3)

Credit union affiliation

A certified development company shall not lose its status due to an affiliation with an institution regulated by the National Credit Union Administration if the development company was affiliated with such an institution prior to January 1, 2007.

(g)

Servicing and packaging guaranteed loans

A certified development company is authorized to prepare applications for loans under sections 7(a) or 7(c) of the Small Business Act (15 U.S.C. 636(a) or (c)), to service such loans, and to charge a reasonable fee for servicing such loans.

(h)

Use of excess funds

Any funds generated by a certified development company from the issuance of debentures under this title, the sale of debentures in the private secondary market, or fees described in subsection (g) that remain unexpended after payment of staff, operating, and overhead expenses shall be used by the certified development company for—

(1)

operating reserves;

(2)

expanding the area in which the certified development company operates through the methods authorized in section 505 (relating to multi-State operation);

(3)

investment in other community and local economic development activity or community development primarily in the State from which such funds were generated; or

(4)

investment in small business investment companies subject to the limitations in subsection (i).

(i)

Limitations with respect to small business investment companies

A certified development company shall not—

(1)

invest excess funds in a small business investment company that the Administrator determines to be capitally impaired as set forth in section 107.1830 of title 13, Code of Federal Regulations, as in effect on January 1, 2009, or any successor regulation to that regulation, but may maintain its investment in such company if such investment was made prior to the determination of capital impairment; and

(2)

provide a debenture under this title to a small business concern that has financing with a small business investment company in which the certified development company has invested excess funds.

(j)

Economic development activities

A company certified pursuant to this section shall carry out each of the following economic development activities that create or preserve jobs in urban and rural areas:

(1)

The company shall provide long-term financing to small business concerns through debentures described in section 506.

(2)

The company shall operate any other program to assist small business concerns or communities that promote local economic development and job creation or preservation.

(k)

Restrictions on assistance

(1)

In general

After the date of enactment of the Small Business Financing and Investment Act of 2010, no certified development company may accept funding from any source, including any Federal agency (as that term is defined in section 551 of title 5, United States Code) if the source imposes—

(A)

conditions on the types of small business concerns that a certified development company may provide assistance to under this title; or

(B)

conditions or requirements, directly or indirectly, upon any small business concern receiving assistance under this title.

(2)

Exception

The conditions of subparagraphs (A) and (B) of paragraph (1) shall not apply if the source provides all of the financing that will be provided by the certified development company to the small business concern, provided further that any conditions or restrictions are limited solely to the financing provided by the source of funding.

(l)

Revocation and suspension

The Administrator may suspend or revoke a certified development company’s status if the Administrator determines, after a hearing on the record as set forth in sections 554, 556, and 557 of title 5, United States Code, that the certified development company no longer—

(1)

meets the eligibility criteria established under section 501 of this title;

(2)

satisfies the operational standards in this section; or

(3)

complies with the Administrator’s rules, regulations, or provisions of law.

(m)

Effect of suspension or revocation

A suspension or revocation under subsection (l) shall not affect any outstanding debenture guarantee.

.

553.

Accredited lenders program

Section 503 of the Small Business Investment of 1958 (15 U.S.C. 697) is amended to read as follows:

503.

Accredited Lenders Program

(a)

Establishment

(1)

In general

A certified development company may apply for status to become an accredited certified development company if it meets the operational standards of section 502 and the criteria in subsection (b).

(2)

Application

The Administrator shall, after opportunity for notice and comment, develop an application for certified development companies seeking to become accredited certified development companies.

(3)

Processing of Application

The Administrator shall make a determination within 30 days after a complete application has been filed by the certified development company.

(4)

Reapplication

If the Administrator rejects the application, the Administrator shall provide in writing the reasons for the rejection. Any certified development company may reapply which will recommence the processing time limits set forth in paragraph (3), and such reapplication shall be limited to addressing the reasons for rejection. If the Administrator rejects a second application, that shall be considered final agency action for purposes of chapter 7 of title 5, United States Code.

(b)

Standards for accredited certified development company program

The Administrator shall designate a certified development company as accredited if it meets the following standards:

(1)

Has been a certified development company for not less than the preceding 12 months and has issued debentures as authorized under this title during that time period.

(2)

Has well-trained, qualified personnel who are knowledgeable in the lending policies and procedures for certified development companies.

(3)

Has the ability to process, close, and service the loan issued under this title.

(4)

Has a loss rate on the company’s debentures that is reasonable and acceptable to the Administrator.

(5)

Has a history of submitting to the Administrator complete and accurate debenture guaranty application packages.

(6)

Has the ability to serve small business credit needs for financing plant and equipment as a certified development company.

(c)

Expedited processing of guarantee Applications

The Administrator shall develop an expedited procedure for processing a guarantee application or servicing action submitted by an accredited certified development company. For purposes of this subsection, an expedited procedure is one that takes at least two business days less than the processing performed for certified development companies that have not been accredited.

(d)

Suspension or revocation of accredited status

The Administrator may suspend or revoke a certified development company’s accredited status if the Administrator determines, after a hearing on the record as set forth in sections 554, 556, and 557 of title 5, United States Code, that the certified development company no longer meets the eligibility criteria established under this section (which shall not include a time limit on the term of the certified development company’s accredited status) or failed to adhere to the Administrator’s rules, regulations, or is violating some other provision of law. Such suspension or revocation shall have no effect on the development company’s status as certified.

(e)

Effect of suspension or revocation on existing guarantees

A suspension or revocation of accredited status shall not affect any outstanding debenture guarantee.

(f)

Grandfather provision

Any certified development company that was accredited by the date of enactment of the Small Business Financing and Investment Act of 2010 shall remain accredited for 24 months after that date. If the certified development company does not have an application for accreditation approved by the Administrator within the 24 months, its accreditation standard shall lapse.

(g)

Automatic Qualification

(1)

In general

Until the Administrator develops procedures for granting accredited status, any certified development company that was accredited as of the date of enactment of the Small Business Financing and Investment Act of 2010 shall be deemed to be accredited.

(2)

Applications

Any certified development company that satisfies the provision of paragraph (1) shall have 24 months in which to submit the application established by this section for accredited status.

(3)

Effect while application pending

The denial or rejection of an application for accredited status as set forth in this section shall have no effect on the ability of a development company that meets the standard set forth in paragraph (1) from maintaining its status during the 24 months specified in this subsection.

(h)

Promulgation of accrediting standards

The Administrator shall develop standards for accrediting, suspension, and revocation under the program established by this section only after notice and an opportunity for comment as set forth in section 553(b) of title 5, United States Code. After the development of such standards, the Administrator shall publish such standards in the Code of Federal Regulations.

(i)

Rule of construction

Any reference to the term accredited lender in any provision of law enacted, or any regulation adopted, prior to the enactment of the Small Business Financing and Investment Act of 2010 shall be deemed to be a reference to the term accredited certified development company.

.

554.

Premier certified lender program

Section 504 of the Small Business Investment Act of 1958 (15 U.S.C. 697a) is amended to read as follows:

504.

Premier certified lender program

(a)

Establishment

(1)

In general

A certified development company accredited under section 503 may apply for status to become a premier certified development company.

(2)

Application

The Administrator shall, after opportunity for notice and comment, develop an application for accredited certified development companies seeking to become premier certified development companies.

(3)

Processing of Application

The Administrator shall make a determination within 60 days after a complete application has been filed by an accredited certified development company.

(4)

Reapplication

If the Administrator rejects the application, the Administrator shall provide in writing the reasons for the rejection. Any accredited certified development company may reapply which will recommence the processing time limits set forth in paragraph (3), and such reapplication shall be limited to addressing the reasons for rejection. If the Administrator rejects a second application, that shall be considered final agency action for purposes of chapter 7 of title 5, United States Code.

(b)

Standards for obtaining premier certified development company status

The Administrator shall designate an accredited certified development company as a premier certified development company if the application submitted pursuant to subsection (a) demonstrates that the accredited certified development company meets the following standards:

(1)

Has been an accredited certified development company for at least 12 months.

(2)

Has submitted to the Administrator adequately analyzed debenture guarantee applications.

(3)

Has closed, in a proper manner following the Administrator regulations, loans under this title.

(4)

Has serviced its loan portfolio in accordance with the standards set by the Administrator.

(5)

Has established a loan loss reserve established in accordance with this section that the Administrator determines is sufficient to meet its obligations to protect the Federal Government from the risk of loss on each debenture guaranteed under this section.

(6)

Has agreed, as part of the application and in order to protect the Federal Government against the risk of loss, to the following—

(A)

on account of a debenture, the proceeds of which were used to fund a loan approved prior to the date of enactment of the Small Business Financing and Investment Act of 2010, agrees to reimburse the Administrator for 10 percent of any loss sustained by the Administrator as a result of a default by the company in the payment of principal or interest on a debenture issued by such company and guaranteed by the Administrator;

(B)

on account of a debenture, the proceeds of which were used to fund a loan approved prior to the date of enactment of the Small Business Financing and Investment Act of 2010 and which were issued during the period in which the company had made a selection pursuant to section 508(c)(7) of the Small Business Investment Act of 1958, as in effect on the day before such date of enactment, agrees to reimburse the Administrator for 15 percent of any loss sustained by the Administrator as a result of a default by the company in the payment of principal or interest on a debenture issued by such company and guaranteed by the Administrator; or

(C)

on account of a debenture, the proceeds of which are used to fund a loan approved on or after the date of enactment of the Small Business Financing and Investment Act of 2010, upon closing, pay to the Administrator a one-time participation fee in the amount equal to the higher of the following:

(i)

0.25 percent of the amount of the debenture.

(ii)

A percent of the amount of the debenture equal to 10 percent of the amount of the company’s historic loss rate on debentures guaranteed under this section as determined by the Administrator. The rate specified by this clause shall be determined annually based upon the company’s loan losses as of close of business on June 30 and notice of the determination shall be provided to each company not later than August 31. Such rate shall be applicable to loans approved during the fiscal year commencing after the determination is made and shall expire and have no further application after the end of such fiscal year. If no timely determination has been made prior to the commencement of a fiscal year, including the year of enactment of the Small Business Financing and Investment Act of 2010, one may be made after the commencement and it shall be applicable to loans approved during the balance of such fiscal year commencing 30 days after notification to the development company involved.

(c)

Suspension or revocation of premier status

The Administrator may suspend or revoke an accredited certified development company’s premier status if the Administrator determines, after a hearing on the record as set forth in sections 554, 556, and 557 of title 5, United States Code, that the accredited certified development company no longer meets the eligibility criteria for premier status as established under this section or failed to adhere to the Administrator’s rules, regulations, or is violating some other provision of law. Such revocation or suspension shall have no effect on its status as an accredited certified development company.

(d)

Loan loss reserve

(1)

Assets

Each loan loss reserve maintained by the premier certified development company for loans made pursuant to the authority in subsection (g)(1) shall be comprised of—

(A)

segregated funds on deposit in an account or accounts with a federally insured depository institution or institutions selected by the company, subject to a collateral assignment in favor of, and in a format acceptable to, the Administrator that shall amount to 10 percent of the company’s exposure as determined pursuant to subsection (b)(6);

(B)

irrevocable letter or letters of credit, with a collateral assignment in favor of, and a commercially reasonable format acceptable to, the Administrator; or

(C)

any combination of the assets described in subparagraphs (A) and (B).

(2)

Contributions

The company shall make contributions to the loss reserve, either cash or letters of credit as provided above, in the following amounts and at the following intervals:

(A)

50 percent when a debenture is closed.

(B)

25 percent additional not later than 1 year after a debenture is closed.

(C)

25 percent additional not later than 2 years after a debenture is closed.

(3)

Replenishment

If a loss has been sustained by the Administrator, any portion of the loss reserve, and other funds provided by the premier certified development company as necessary, may be used to reimburse the Administrator for the premier certified development company’s share of the loss as provided for in subsection (b)(6). If the premier certified development company utilizes the reserve, it shall, within 30 calendar days, replace an equivalent amount of funds.

(4)

Disbursements

(A)

In general

The Administrator shall allow the premier certified development company to withdraw from the loss reserve amounts attributable to any debenture that has been repaid.

(B)

Reduction

The Administrator shall allow the premier certified development company to withdraw from the loss reserve such amounts as are in excess of 1 percent of the aggregate outstanding balances of debentures to which such loss reserve relates. The reduction authorized by this subparagraph shall not apply with respect to any debenture before 100 percent of the contribution described in paragraph (2) with respect to such debenture has been made.

(5)

Applicability

This subsection shall apply only to a premier certified development company designated as a premier certified development company by the Administrator under this section on or after the date of the enactment of the Small Business Financing and Investment Act of 2010. The loan loss reserve requirements relating to any premier certified development company certified prior to the date of the enactment of such Act shall continue to be governed by regulations in effect on the date of the enactment of such Act.

(e)

Bureau of Premier Certified Development Company Lender Oversight

(1)

In general

There is hereby established a Bureau of Premier Certified Development Company Lender Oversight in the Office of Lender Oversight at the Administration which shall have responsibility and capability for carrying out oversight of premier certified development companies and such other responsibilities as the Administrator designates.

(2)

Annual review

The Bureau established in paragraph (1) annually shall review the financing made by each premier certified development company. Such review shall include the premier certified development company’s credit decisions and general compliance with the eligibility requirements for each financing approved as a result of its status as a premier certified development company.

(3)

Random audits

The Bureau shall develop and implement a method for sampling the debentures issued by premier certified development companies. Such sampling shall be similar to the random file audits of development companies that utilize the Abridged Submission Method described in chapter 4 of subpart C of Standard Operating Procedure 50 10 (5)(A) as was in effect on March 2, 2009.

(4)

Review of lenders providing senior financing

(A)

Calculation of loan loss rate

The Bureau shall periodically calculate the loss rate of all debentures approved under this section and shall calculate a loss rate on the basis of the total debentures attributable to projects approved by premier certified development companies in which each lender is a participating lender.

(B)

Notification

If the Bureau determines that the loss rate on debentures involving an individual lender exceeds the average for all debentures approved under this section, it shall advise the Administrator.

(5)

Use of reviews and audits

The Administrator shall consider the findings under paragraphs (2), (3), and (4) in carrying out the responsibilities under subsection (h).

(f)

Sale of Certain Defaulted Loans

(1)

Notice

If, upon default in repayment, the Administrator acquires a debenture issued by a premier certified development company and identifies such loan for inclusion in a bulk asset sale of defaulted or repurchased loans or other financing, the Administrator shall give prior notice thereof to any premier certified development company which has a contingent liability under this section. The notice shall be given to the premier certified development company as soon as possible after the financing is identified, but not less than 90 days before the date the Administrator first makes any records on such financing available for examination by prospective purchasers prior to its offering in a package of loans for bulk sale.

(2)

Limitations

The Administrator shall not offer any loan described in paragraph (1) as part of a bulk sale unless the Administrator—

(A)

provides prospective purchasers with the opportunity to examine the Administration’s records with respect to such loan; and

(B)

provides the notice required by paragraph (1).

(g)

Loan Approval Authority

(1)

In general

A premier certified development company may, under conditions determined by the Administrator in regulations published in the Code of Federal Regulations, issue guarantees on debentures, approve, authorize, close, service, foreclose, litigate (except that the Administrator may monitor conduct of any such litigation), and liquidate loans that are funded with proceeds of a debenture issued by a premier certified development company unless the Administrator advises the company that loans involving a specific institutional lender are to be submitted to the Administrator for further consideration, and approval by the Administrator.

(2)

Program goals

Each premier certified development company shall establish a goal of processing no less than 50 percent of the applications for assistance under this title that the premier certified development company receives. Failure to meet this goal shall have no affect on the company’s status as a premier certified development company under this section.

(3)

Scope of review

The approval of a loan and guarantee of a debenture by a premier certified development company shall be subject to final approval as to the eligibility of any guarantee by the Administrator as set forth in section 506, but such final approval shall not include review of decisions by the premier certified development company involving creditworthiness, loan closing, or compliance with legal requirements imposed by law or regulation.

(h)

Suspension or revocation

The Administrator may suspend or revoke an accredited certified development company’s premier status if the Administrator determines, after a hearing on the record as set forth in sections 554, 556, and 557 of title 5, United States Code, that the accredited certified development company no longer meets the eligibility criteria established under this section, fails to maintain adequate loan loss reserves mandated in this section even if it meets the other eligibility requirements for premier status, or violates the Administrator’s rules, regulations, or some other provision of law. The Administrator shall consider the review of the premier certified development company conducted pursuant to subsection (e) in determining whether to suspend or revoke an accredited development company’s premier status. Such suspension or revocation shall have no effect on the development company's status as an accredited certified development company.

(i)

Effect of suspension or revocation

A suspension or revocation of premier status shall not affect any outstanding debenture guarantee.

(j)

Rule of construction

Any reference to the term premier certified lender or PCL in legislation enacted, or regulations adopted, prior to the enactment of the Small Business Financing and Investment Act of 2010 shall be deemed to be a reference to the term premier certified development company.

.

555.

Multi-State operations

Section 505 of the Small Business Investment Act of 1958 (15 U.S.C. 697b) is amended to read as follows:

505.

Multi-State operations

(a)

Authorization

The Administrator shall permit an accredited or premier certified development company to make loans or issue debentures in any State that is contiguous to the State of incorporation of that company only if the company—

(1)

has members, from each of the States in which it operates with not fewer than 25 members who reside in such States;

(2)

has a board of directors that contains not fewer than 2 members from each State in which the company makes loans and issues debentures and are residents of that State;

(3)

maintains a separate loan committee to process loans in each expansion State and the members of the loan committee are solely residents of the expansion State; and

(4)

files an application developed by the Administrator which provides—

(A)

notice of the intention to make loans in multiple States;

(B)

a specification of the States in which the company intends to make loans;

(C)

a list of members in each expansion State; and

(D)

a detailed statement on how the company will comply with the requirements of this subsection.

(b)

Loan committees

The requirements of paragraph (3) of subsection (a) shall not require a development company to establish a loan committee in its State of incorporation or in a local economic area outside the State of incorporation unless such area is part of an expansion State.

(c)

Review

(1)

In general

The Administrator shall review each application for expansion under subsection (a), but such review shall be limited to that information needed to determine whether the company will comply with the requirements of subsection (a).

(2)

Deadline for decision

The Administrator shall make a decision on each application under subsection (a) within 15 calendar days after the receipt of the application. If no such decision is granted, the application is deemed to be approved and no further action is required by the applicant or the Administrator for the company to expand into the States specified in the application.

(3)

Application resubmittal

If the Administrator rejects the application for expansion, the Administrator shall provide in writing the reasons for denial within 10 calendar days of the decision. The applicant then may resubmit the application but the review of such resubmitted applications will be limited only to the areas in which the Administrator found the original application deficient. The deadlines in paragraph (2) shall apply to resubmitted applications.

(4)

Appeal

If a resubmitted application is denied, the applicant may, within 10 calendar days after receipt of the disapproval, appeal such disapproval. The Administrator shall conduct a hearing to determine such appeal pursuant to sections 554, 556, and 557 of title 5, United States Code, and shall issue a decision not later than 45 days after the appeal is filed. The decision on appeal shall constitute final agency action for purposes of chapter 7 of title 5, United States Code.

(d)

Failure To develop Application

If the Administrator fails to develop an application as required in subsection (a)(4) within 60 days of the enactment of the Small Business Financing and Investment Act of 2010, an accredited or premier certified development company only need submit the information required in subsection (a) to the Administrator to be deemed eligible to commence operations authorized by this section. Such eligibility shall not be terminated if the Administrator develops an application after the 60-day period set forth in this subsection.

(e)

Aggregate accounting

An accredited or premier certified development company authorized to operate in multiple States pursuant to this section may maintain an aggregate accounting of all revenue and expenses of the company for purposes of this title.

(f)

Local Job Creation Requirements

(1)

In general

Any company making loans in multiple States as authorized in this section shall not count jobs created or retained in one State towards any applicable job creation or retention requirements mandated by this title in another State.

(2)

Applicability

Any company operating under the authority of this section shall be required to meet any job creation or retention requirement of this title on the date that is 2 years after the certified development company closed its first loan in its new State of operation.

(g)

Contiguous states

For the purposes of this section, the States of Alaska and Hawaii shall be deemed to be contiguous to any State abutting the Pacific Ocean. Territories of the United States located in the Pacific Ocean shall be deemed to be contiguous to any State abutting the Pacific Ocean, including Alaska and Hawaii, and territories of the United States located in the Caribbean Sea shall be deemed contiguous to any State abutting the Gulf of Mexico.

(h)

Exemption for local economic areas

Except as provided in subsection (a)(3) with respect to loan committees, any certified, accredited, or premier development company or applicant operating in a local economic development area that crosses the border of another State shall not be considered to be operating under the provisions of this section and shall not be required to comply with the requirements of this section for multi-State operation.

.

556.

Guaranty of debentures

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

506.

Guaranty of debentures

(a)

Authority To guarantee

Except as provided in subsection (c), the Administrator may guarantee the timely payment of all principal and interest as scheduled on any debenture issued by a certified development company.

(b)

Terms and conditions of the guarantee

Such guarantees may be made on such terms and conditions as the Administrator may by regulation, published in the Code of Federal Regulations, determine to be appropriate, except that the Administrator shall not decline to issue such guarantee when the ownership interests of the small business concern and the ownership interests of the property to be financed with the proceeds of the loan made pursuant to subsection (e)(1) are not identical because one or more of the following classes of relatives have an ownership interest in either the small business concern or the property: father, mother, son, daughter, wife, husband, brother, or sister, if the Administrator or his designee has determined on a case-by-case basis that such ownership interest, such guarantee, and the proceeds of such loan, will substantially benefit the small business concern.

(c)

Full faith and credit

The full faith and credit of the United States is pledged to the payment of all amounts guaranteed under this section.

(d)

Subordination

Any debenture issued by a certified development company with respect to which a guarantee is made under this section may be subordinated by the Administrator to any other debenture, promissory note, or other debt or obligation of such company.

(e)

Standards for administrator guarantees

No guarantee may be made with respect to any debenture under this section unless—

(1)

the debenture is issued for the purpose of making one or more loans to small business concerns the proceeds of which shall be used for the purposes set forth in section 507;

(2)

the interest rate on such debentures is not less than the rate of interest determined by the Secretary of the Treasury for purposes of section 303(b);

(3)

the aggregate amount of such debenture does not exceed the amount of the loans to be made from the proceeds of such debenture plus, at the election of the borrower, other amounts attributable to the administrative and closing costs of such loans, except for the attorney fees of the borrower;

(4)

the amount of any loan to be made from such proceeds does not exceed an amount equal to 50 percent of the cost of the project with respect to which such loan is made;

(5)

the Administrator, except to the extent provided in section 504 with respect to premier certified development companies, approves each loan to be made from such proceeds; and

(6)

with respect to each loan made from the proceeds of such debenture, the Administrator—

(A)

assesses and collects a fee, which shall be payable by the borrower, in an amount established annually by the Administration, which amount shall not exceed—

(i)

the lesser of—

(I)

0.9375 percent per year of the outstanding balance of the loan; or

(II)

the minimum amount necessary to reduce the cost (as defined in section 502 of the Federal Credit Reform Act of 1990) to the Administrator of purchasing and guaranteeing debentures under this title to zero; and

(ii)

50 percent of the amount established under clause (i) in the case of a loan made during the 2-year period beginning on October 1, 2002, for the life 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 Administrator of making guarantees under this section.

(f)

Interest rates on commercial loans

Notwithstanding the provisions of the constitution or 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 commercial loan which funds any portion of the cost of the project financed pursuant to this title which is not funded by a debenture guaranteed under this section shall be a rate which is established by the Administrator who shall publish such rate quarterly in, at a minimum, the Federal Register and on the Administration’s website.

(g)

Debenture repayment

Any debenture that is issued under this section shall provide for the payment of principal and interest on a semiannual basis.

(h)

Charges for Administrator’s Expenses

The Administrator may impose an additional charge for administrative expenses with respect to each debenture for which payment of principal and interest is guaranteed under this section. Such administrative expenses may include—

(1)

development company fees for processing, closing, servicing, late payment, or loan assumption;

(2)

agent or trustee fees for central servicing, underwriters, or debenture funding; and

(3)

fees charged by the Administrator for the debenture guaranty and from the certified development company to reduce the subsidy cost.

(i)

Participation fee

The Administrator shall collect a one-time fee in an amount equal to 50 basis points on the total participation in any project of any State or local government, bank, other financial institution, or foundation or not-for-profit institution. Such fee shall be imposed only when the participation of the entity described in the previous sentence will occupy a senior credit position to that of the development company. All proceeds of the fee shall be used to offset the cost (as that term is defined in section 502 of the Credit Reform Act of 1990) to the Administrator of making guarantees under this section.

(j)

Certified development company fee

The Administrator shall collect annually from each development company a fee of 0.125 percent of the outstanding principal balance of any guaranteed debenture authorized by the Administrator after September 30, 1996. Such fee shall be derived from the servicing fees collected by the certified development company pursuant to regulation, and shall not be derived from any additional fees imposed on small business concerns. All proceeds of the fee shall be used to offset the cost (as that term is defined in section 502 of the Credit Reform Act of 1990) to the Administrator of making guarantees under this section.

(k)

Effective date

The fees authorized by this section shall apply to any financing approved under this title on or after October 1, 1996.

(l)

Calculation of subsidy rate

All fees, interest, and profits received and retained by the Administrator under this section 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 Administrator of purchasing and guaranteeing debentures under this title.

(m)

Actions upon default

(1)

Initial actions

Not later than the 45th day after the date on which a payment on a loan funded through a debenture guaranteed under this section is due and not received, the Administrator shall—

(A)

take all necessary steps to bring such loan current; or

(B)

implement a formal written deferral agreement.

(2)

Purchase or acceleration of debenture

Not later than the 65th day after the date on which a payment on a loan described in paragraph (1) is due and not received, and absent a formal written deferral agreement, the Administrator shall take all necessary steps to purchase or accelerate the debenture.

(3)

Prepayment penalties

With respect to the portion of any project derived from funds not provided by a debenture issued by a certified development company or borrower, the Administrator—

(A)

shall negotiate the elimination of any prepayment penalties or late fees on defaulted loans made prior to September 30, 1996;

(B)

shall not pay any prepayment penalty or late fee on the default based purchase of loans issued after September 30, 1996; and

(C)

shall not pay a default interest rate higher than the interest rate on the note prior to the date of default for any project financed after September 30, 1996.

(4)

Collection and servicing

(A)

In general

In the event of the default of any loan and the repurchase of a debenture guaranteed by the Administrator under this title, the Administrator shall continue to delegate to the central servicing agent that was contracted for that service as of January 1, 2009, or successor contractor the authority to collect and disburse all funds or payments received on such defaulted loans, including payments from guarantors or on notes in compromise of the original note. The central servicing agent shall continue to provide an accounting of income and expenses for any such loan on the same basis it does for any other loan issued under this title. The central servicing agent shall make the accounting of income and expenses and reports thereon available as requested by the certified development company that issued the debenture or the Administrator.

(B)

Effective date

The requirements of subparagraph (A) shall become effective 180 days after the date of enactment of the Small Business Financing and Investment Act of 2010.

.

557.

Economic development through debentures

Section 507 of the Small Business Investment Act of 1958 (15 U.S.C. 697d) is amended to read as follows:

507

Economic development and debentures

(a)

In general

A certified development company shall be prohibited from issuing a debenture under this title unless the project funded with the debenture meets one of the following economic development objectives:

(1)

The creation of job opportunities within two years of the completion of the project or the preservation or retention of jobs attributable to the project.

(2)

Improving the economy of the locality, such as stimulating other business development in the community, bringing new income into the area, or assisting the community in diversifying and stabilizing its economy.

(3)

The achievement of one or more of the following public policy goals:

(A)

Business district revitalization or expansion of businesses in low-income communities which would be eligible for a new markets tax credit under section 45D(a) of the Internal Revenue Code of 1986, or implementing regulations issued under that section.

(B)

Expansion of exports.

(C)

Expansion of minority business development or women-owned business development.

(D)

Rural development.

(E)

Expansion of small business concerns owned and controlled by veterans, as defined in section 3(q) of the Small Business Act (15 U.S.C. 632(q)), especially service-disabled veterans, as defined in such section.

(F)

Enhanced economic competition, including the advancement of technology, plan retooling, conversion to robotics, or competition with imports.

(G)

Changes necessitated by Federal budget cutbacks, including defense related industries.

(H)

Business restructuring arising from federally mandated standards or policies affecting the environment or the safety and health of employees.

(I)

Reduction of energy consumption by at least 10 percent.

(J)

Increased use of sustainable design, including designs that reduce the use of greenhouse gas emitting fossil fuels, or low-impact design to produce buildings that reduce the use of nonrenewable resources and minimize environmental impact.

(K)

Plant, equipment, and process upgrades of renewable energy sources such as the small-scale production of energy for individual buildings or communities consumption, commonly known as micropower, or renewable fuels producers including biodiesel and ethanol producers.

(4)

Debt refinancing to the extent permitted by subsection (d).

(b)

Job creation and retention requirements

(1)

In general

A project meets the job creation or retention objective set forth in subsection (a)(1) if the project creates or retains one job for every $65,000 guaranteed by the Administrator, except that the amount shall be $100,000 in the case of a project of a small manufacturer.

(2)

Exceptions

(A)

Paragraph (1) shall not apply to a project for which eligibility is based on the objectives set forth in subsection (a)(2) or (a)(3) if the certified development company’s portfolio of outstanding debentures creates or retains one job for every $65,000 guaranteed by the Administrator.

(B)

For projects in Alaska, Hawaii, State-designated enterprise zones, empowerment zones, enterprise communities, or labor surplus areas designated by the Administrator, the certified development company’s portfolio may average not more than $75,000 per job created or retained.

(C)

Loans for projects of small manufacturers shall be excluded from the calculations in subparagraphs (A) and (B).

(c)

Combination of certain goals

A small business concern that is unconditionally owned by more than 1 individual, or a corporation, the stock of which is owned by more than 1 individual, shall be deemed to have achieved a goal under subsection (a)(3) if a combined ownership share of not less than 51 percent is held by individuals who are in 1 of, or a combination of, the groups described in subparagraphs (C) or (E) of subsection (a)(1).

(d)

Composition of the project

(1)

In general

The projects described in this section shall include, but not be limited to, plant acquisition, construction, conversion, expansion (including the acquisition of land), equipment and related project costs, or to acquire the stock of a corporation (as long as the value of the loan for the acquisition of the stock does not exceed the fixed asset value attributable to such assets as would be eligible for financing under subsection (a)).

(2)

Debt refinancing

Any financing approved under this title may include a limited amount of debt refinancing if the project involves the expansion of a small business concern.

(3)

Limitation

The amount of the existing indebtedness may be refinanced and added to the expansion cost if—

(A)

the existing indebtedness does not exceed 50 percent of the project cost of the expansion;

(B)

the proceeds of the indebtedness were used to acquire land, including a building situated thereon, to construct a building thereon, or to purchase equipment;

(C)

the existing indebtedness is collateralized by fixed assets;

(D)

the existing indebtedness was incurred for the benefit of the small business concern;

(E)

the financing under this title will be used only for refinancing existing indebtedness or costs relating to the project financed under this title;

(F)

the financing under this title will provide a substantial benefit to the borrower when prepayment penalties, financing fees, and other financing costs are accounted for;

(G)

the borrower has been current on all payments due on the existing debt for not less than 1 year preceding the date of refinancing; and

(H)

the financing under this title will provide better terms or rate of interest than the existing indebtedness at the time of refinancing.

(e)

Definition

For purposes of subparagraphs (J) and (K) of subsection (a)(3), the terms included have the meanings given those terms under the Leadership in Energy and Environmental Design (more generally referred to as LEED) standard for green building certification, as determined by the Administrator through regulation to be published in the Code of Federal Regulations.

.

558.

Project funding requirements

Section 508 of the Small Business Investment Act of 1958 (15 U.S.C. 697e) is amended to read as follows:

508.

Project Funding requirements

(a)

In general

Any project described in section 507 must meet the funding standards set forth in this section.

(b)

Size of debenture

The Administrator shall only be permitted to guarantee debenture issued by a certified development company up to the following amounts:

(1)

$3,000,000 for any project of a small business concern.

(2)

$4,000,000 for any project that meets the public policy goals set forth in section 507(a)(3).

(3)

$4,000,000 for any project to be located in a low-income community as that term is described in section 507(a)(3)(A).

(4)

$8,000,000 for each project of a small manufacturer.

(5)

$8,000,000 for each project that reduces the borrower’s energy consumption by at least 10 percent.

(6)

$8,000,000 for each project that generates renewable energy or renewable fuels, such as, but not limited to, biodiesel or ethanol production.

(7)

$10,000,000 for each project for a small business concern that constitutes a major source of employment as that term is used in section 7(b)(3)(E) of the Small Business Act (15 U.S.C. 636(b)(3)(E)).

(c)

Funding from Sources other than Debentures Issued by Certified Development Companies

(1)

In general

Any project financed pursuant to this title must have the following contributions from parties other than the debenture issued by the certified development company:

(A)

Funding from institutions

If a small business concern provides—

(i)

the minimum contribution required by subparagraph (B), not less than 50 percent of the total cost of any project financed shall come from State or local governments, banks or other financial institutions, or foundations or other not-for-profit institutions; and

(ii)

more than the minimum contribution required under subparagraph (B), any excess contribution may be used to reduce the amount required from institutions described in clause (i), except that the amount provided by such institution may not be reduced to an amount that is less than the amount of the loan made by the Administrator.

(B)

Funding from small business concerns

The small business concern (or its owners, stockholders, or affiliates) that will have a project financed pursuant to this title shall provide—

(i)

at least 15 percent of the total cost of the project financed if the small business concern has been in operation for a period of 2 years or less;

(ii)

at least 15 percent of the total cost of the project financed if the project involves construction of a limited or single purposed building or structure;

(iii)

at least 20 percent of the total cost of the project financed if the project involves both of the conditions in clauses (i) and (ii); or

(iv)

at least 10 percent of the total cost of the project financed and not covered by clauses (i), (ii), or (iii), at the discretion of the certified development company.

(2)

Seller financing

Seller-provided financing may be used to meet the requirements of paragraph (1)(B), if the seller subordinates the interest of the seller in the property to the debenture guaranteed by the Administrator.

(3)

Collateralization

(A)

In general

The collateral provided by the small business concern shall generally include a subordinate lien position on the property being financed under this title, and is only one of the factors to be evaluated in the credit determination. Additional collateral shall be required only if the Administrator determines, on a case-by-case basis, that additional security is necessary to protect the interest of the Government.

(B)

Appraisals

With respect to commercial real property provided by the small business concern as collateral, an appraisal of the property by a State licensed or certified appraiser—

(i)

shall be required by the Administrator before disbursement of the loan if the estimated value of that property is more than $400,000; or

(ii)

may be required by the Administrator or the lender before disbursement of the loan if the estimated value of that property is $400,000 or less, and such appraisal is necessary for appropriate evaluation of creditworthiness.

(C)

Adjustment

The Administrator shall periodically adjust the amount under subparagraph (B) to account for the effects of inflation, provided that no such adjustment shall be less than $50,000.

(4)

Limitation on leasing

(A)

If the project funded under this section includes the acquisition of a facility or the construction of a new facility, the small business concern—

(i)

shall permanently occupy and use not less than 50 percent of the project property; and

(ii)

may, on a temporary or permanent basis, lease to others not more than 50 percent of the project property.

(B)

For purposes of this paragraph, the term project property means—

(i)

the building and any exterior areas used in connection with the building or a part thereof and includes all of the parcels of real property included in the project in the aggregate; and

(ii)

occupancy and use of the project property by the operating company shall be deemed to be occupancy and use by the small business concern that received funding under this section.

(d)

Regulations

(1)

The Administrator shall promulgate regulations, after notice and comment, to implement the provisions of this section within 60 days after enactment of the Small Business Financing and Investment Act of 2010. The Administrator may limit the comment period to 15 days to meet this deadline.

(2)

If the Administrator fails to promulgate the regulations as provided in paragraph (1), all leases entered into, absent clear and convincing evidence of fraud, shall be deemed to be in compliance with the limitations on leasing in this subparagraph for purposes of honoring the guarantee on the debenture issued by the certified development company.

(3)

Any regulation of the Administrator or interpretation of any regulation by the Administrator or the Office of Hearings and Appeals that restricts the use of proceeds for leased projects that was in effect on the date of enactment of the Small Business Financing and Investment Act of 2010 shall hereby cease to apply.

(4)

Any interpretation of the leasing provisions issued by the Administrator prior to the issuance of regulations required by paragraph (1) shall be considered null and void and may be not be used in any court of competent jurisdiction, be it Federal or State court, to dishonor any guarantee of a debenture issued by a certified development company for a project funded pursuant to this section.

(e)

Ownership calculation

Ownership requirements to determine the eligibility of a small business concern that applies for funding under this title 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.

(f)

Combination financing

Financing under this title may be provided to a borrower in the maximum amount provided in this section, and a loan guarantee under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) may be provided to the same borrower in the maximum amount provided in section 7(a)(3)(A) of such Act, to the extent that the borrower otherwise qualifies for such assistance.

(g)

Rules for Debentures Funding Projects in Low-Income Areas

(1)

Size standards

For purposes of determining the size of a small business concern seeking funds for a project described in subsection (b)(3), the size standard promulgated by the Administrator in section 121.201 of title 13, Code of Federal Regulations, as in effect on January, 1, 2009, or any successor regulation, shall be increased by 25 percent.

(2)

Personal liquidity

(A)

In general

The amount of personal resources of an owner for a project described in subsection (b)(3) that are excluded from the amount required to reduce the portion of the project funded by the Administrator shall be not less than 25 percent more than that required for funding of any other project described in subsection (b).

(B)

Definition

For purposes of subparagraph (A), the term owner means any person that owns not less than 20 percent of the equity or has not less than 20 percent of the voting rights (in the case of a small business organized as a partnership) of a small business concern seeking funds under this section.

(h)

Applicability of credit elsewhere and personal resources regulations

Except as provided in subsection (c)(1)(B) with respect to project funding, the Administrator shall be prohibited from applying the regulations set forth in sections 120.101 and 120.102 of title 13, Code of Federal Regulations, as in effect on January 1, 2009, or any successor regulation that applies a credit elsewhere or personal resources test to any application for a loan under this title pending or filed after the date of enactment of the Small Business Financing and Investment Act of 2010.

.

559.

Private debenture sales and pooling of debentures

Section 509 of the Small Business Investment Act of 1958 (15 U.S.C. 697f) is amended to read as follows:

509.

Private debenture sales and pooling of debentures

(a)

Private debenture sales

Notwithstanding any other law, rule, or regulation, the Administrator shall sell to investors, either publicly or by private placement, debentures issued by certified development companies pursuant to this title for the full amount of the program levels authorized in each fiscal year and if there is not authorization of a level, the amount of debentures actually issued.

(b)

Federal financing bank

Nothing in any provision of law shall be construed to authorize the Federal Financing Bank to acquire—

(1)

any obligation the payment of principal or interest on which at any time has been guaranteed in whole or in part under this title and which is being sold pursuant to the provisions of this section;

(2)

any obligation which is an interest in any obligation which is an interest in any obligation described in paragraph (1); or

(3)

any obligation which is secured by, or substantially all of the value of which is attributable to, any obligation described in paragraph (1) or (2).

(c)

Pooling of Debentures

(1)

In general

The Administrator is authorized to issue trust certificates representing ownership of all or a fractional part of debentures issued by certified development companies and guaranteed under this title if such trust certificates are based on and backed by a trust or pool approved by the Administrator and composed solely of guaranteed debentures.

(2)

Guarantee of trust certificates

The Administrator is authorized, upon such terms and conditions as are deemed appropriate, to guarantee the timely payment of the principal of and interest on trust certificates issued by the Administrator or its agent for purposes of this section. Such guarantee shall be limited to the extent of principal and interest on the guaranteed debentures which compose the trust or pool. In the event that a debenture in such trust or pool is prepaid, either voluntarily or in the event of default, the guarantee of timely payment of principal and interest on the trust certificates shall be reduced in proportion to the amount of principal and interest such prepaid debenture represents in the trust or pool. Interest on prepaid or defaulted debentures shall accrue and be guaranteed by the Administrator only through the date of payment on the guarantee. During the term of the trust certificate, it may be called for redemption due to prepayment or default of all debentures constituting the pool.

(3)

Full faith and credit

The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guarantee of such trust certificates issued by the Administrator or its agent pursuant to this section.

(4)

Prohibition on guarantee fee for pools

The Administrator shall not collect any fee for any guarantee under this section, provided that nothing herein shall preclude any agent of the Administrator from collecting a fee approved by the Administrator for the functions performed in paragraph (6)(F).

(5)

Subrogation

(A)

In general

In the event the Administrator pays a claim under a guarantee issued under this section, it shall be subrogated fully to the rights satisfied by such payment.

(B)

Administrator exercise of rights

No Federal, State, or local law shall preclude or limit the exercise by the Administrator of its ownership rights in the debentures constituting the trust or pool against which the trust certificates are issued.

(6)

Central Registration

(A)

In general

The Administrator shall provide for a central registration of all trust certificates sold pursuant to this section.

(B)

Contract

The Administrator shall contract with an agent to carry out on behalf of the Administrator the central registration functions of this section and the issuance of trust certificates to facilitate pooling.

(C)

Bond

The Administrator shall require the contractor to provide a fidelity bond or insurance in such amounts as is deemed necessary to fully protect the interests of the Government.

(D)

Disclosure requirements

The Administrator shall, prior to any sale, require the seller to disclose to a purchaser of a trust certificate issued pursuant to this section, information on terms, conditions, and yield of such instruments.

(E)

Authority to regulate

The Administrator shall have the authority to regulate brokers and dealers in trust certificates sold pursuant to this section.

(F)

Book entry permitted

Nothing in this paragraph shall prohibit the utilization of a book-entry or other electronic form of registration for trust certificates.

.

560.

Foreclosure and liquidation of loans

Section 510 of the Small Business Investment Act of 1958 (15 U.S.C. 697g) is amended to read as follows:

510.

Foreclosure and liquidation of loans

(a)

Delegation of authority

In accordance with this section, the Administrator shall delegate to any certified development company that meets the eligibility requirements of subsection (b)(1), the authority to foreclose and liquidate, or to otherwise treat in accordance with this section, defaulted loans in its portfolio that are funded with the proceeds of debentures guaranteed by the Administrator pursuant to this title.

(b)

Eligibility for delegation

(1)

Requirements

A certified development company shall be eligible for a delegation of authority under subsection (a) if—

(A)

the certified development company—

(i)

has participated in the loan liquidation pilot program established by the Small Business Programs Improvement Act of 1996 (15 U.S.C. 695 note), before the enactment of the Small Business Financing and Investment Act of 2010;

(ii)

is an accredited or premier certified development company; or

(iii)

during the 3 fiscal years immediately prior to seeking such a delegation, has made an average of not less than 10 loans per year that are funded with the proceeds of debentures guaranteed under this title; and

(B)

the certified development company—

(i)

has one or more employees—

(I)

with not less than 2 years of substantive, decisionmaking experience in administering the liquidation and workout of problem loans secured in a manner substantially similar to loans funded with the proceeds of debentures guaranteed under this title; and

(II)

who have completed a training program on loan liquidation developed by the Administrator in conjunction with a certified development company that meet the requirements of this paragraph; or

(ii)

submits to the Administrator documentation demonstrating that the company has contracted with a qualified third party to perform any liquidation activities and secures the approval of the contract by the Administrator with respect to the qualifications of the contractor and the terms and conditions of liquidation activities.

(2)

Confirmation

On the request, the Administrator shall examine the qualifications of any certified development company described in subsection (a) to determine if such company is eligible for the delegation of authority under this section. If the Administrator determines that a company is not eligible, the Administrator shall provide the company, in writing, with the reasons for such ineligibility. The certified development company shall be entitled to request delegated authority and the Administrator shall review the request only to address whether the certified development company has rectified the reasons for the Administrator’s original determination of ineligibility.

(c)

Scope of Delegated Authority

(1)

In general

Each certified development company to which the Administrator delegates authority under subsection (a) may with respect to any loan described in subsection (a)—

(A)

perform all liquidation and foreclosure functions, including the purchase in accordance with this subsection of any other indebtedness secured by the property securing the loan, in a reasonable and sound manner according to commercially accepted practices, pursuant to a liquidation plan approved in advance by the Administrator under paragraph (2)(A);

(B)

litigate any matter relating to the performance of the functions described in subparagraph (A), except that the Administrator may—

(i)

defend or bring any claim if—

(I)

the outcome of the litigation may adversely affect the Administrator’s management of the program established under this title; or

(II)

the Administrator is entitled to legal remedies not available to a certified development company and such remedies will benefit either the Administrator or the certified development company; and

(ii)

oversee the conduct of any such litigation; and

(C)

take other appropriate actions to mitigate loan losses in lieu of total liquidation or foreclosures, including the restructuring of a loan in accordance with prudent loan servicing practices and pursuant to a workout plan approved in advance by the Administrator under paragraph (2).

(2)

Administrator approval of plans

(A)

Certified development company submission of plans

Before carrying out functions described in paragraph (1)(A) or (1)(C), the certified development company shall submit to the Administrator a proposed liquidation plan, any proposal for the Administrator to the purchase of any other indebtedness secured by the property securing a defaulted loan, or a workout plan or any combination thereof.

(B)

Administrator approval procedures

(i)

Timing

Not later than 15 business days after the plans described in subparagraph (A) are received by the Administrator, the Administrator shall approve or reject the plan.

(ii)

Notice of no decision

With respect to any plan that cannot be approved or denied within the 15-day period required by clause (i), the Administrator shall within such period provide in accordance with subparagraph (E) notice to the company that submitted the plan.

(C)

Routine actions

In carrying out the functions described in paragraph (1)(A), a certified development company may undertake routine actions not addressed in a liquidation or workout plan without obtaining additional approval from the Administrator.

(D)

Compromise of indebtedness

In carrying out functions described in paragraph (1)(A), a certified development company may—

(i)

consider an offer made by an obligor to compromise the debt for less than the full amount owing; and

(ii)

pursuant to such offer, release any obligor or other party contingently liable, if the company secures the written approval of the Administrator.

(E)

Contents of notice of no decision

Any notice provided by the Administrator pursuant to subparagraph (B)(ii) shall—

(i)

be in writing stating the specific reasons for which the Administrator was unable to act on the request submitted pursuant to subparagraph (A);

(ii)

provide an estimate of the additional time needed for the Administrator to reach a decision on the request; and

(iii)

specify any additional information or documentation that the Administrator needs to make a decision but was not provided in the plan submitted by the certified development company.

(3)

Conflict of interest

In carrying out functions described in paragraph (1), a certified development company shall take no action that would result in an actual or apparent conflict of interest between the company (or any employee of the company) and any third-party lender, associate of a third-party lender, or any other person participating in a liquidation, foreclosure, or loss mitigation action.

(d)

Suspension or Revocation of Authority

(1)

In general

The Administrator may revoke or suspend a delegation of authority under this section to a certified development company if the Administrator determines that the company—

(A)

does not meet the requirements of subsection (b)(1);

(B)

violated any applicable law or rule or regulation of the Administrator that in the estimation of the Administrator requires revocation; or

(C)

fails to comply with any reporting that may be established by the Administrator relating to the establishment of eligibility in subsection (b)(1) or carrying out the functions described in subsection (c)(1).

(2)

Written notice

The Administrator shall provide in writing detailed reason why the delegation of authority was suspended or revoked.

(e)

Participation in liquidation

(1)

In general

(A)

Contract with qualified third party

A certified development company which elects not to apply for authority to foreclose and liquidate defaulted loans under this section, or which the Administrator determines to be ineligible for such authority, shall contract with a qualified third party to perform foreclosure and liquidation of defaulted loans in its portfolio.

(B)

Contract approval

The contract entered into by the certified development company specified in subparagraph (A) shall be contingent upon approval by the Administrator with respect to the qualifications of the contractor and the terms and conditions of liquidation activities. The Administrator shall not unreasonably withhold such approval.

(C)

Notification of rejection

If the Administrator rejects the contract, the Administrator shall provide a notice to the certified development company, in writing, explaining the reasons for such rejection within ten business days after submission of the contract.

(D)

Resubmittal

The certified development company shall be permitted to resubmit the contract and the Administrator’s review of any such resubmittal shall be limited to insufficiencies described in the notification of rejection.

(E)

Regulations

The Administrator shall promulgate regulations, after notice and opportunity for comment, adopting standards for the approval of qualified third-party contractors within 90 days after the date of enactment of the Small Business Financing and Investment Act of 2010.

(F)

Failure to promulgate regulations

If the Administrator fails to promulgate such regulations, any contract for liquidation entered into by a certified development company under this subsection shall be considered valid for the purposes of this subsection and subsection (f).

(G)

Effect of administrator’s promulgation of regulations

If the Administrator promulgates regulations after the deadline specified in subparagraph (E), those regulations shall not have any retroactive application with respect to contracts that are described in subparagraph (F).

(2)

Commencement

This subsection shall not require any certified development company to liquidate defaulted loans until the Administrator implements a system to compensate and reimburse certified development companies for liquidation of any defaulted loans.

(f)

Compensation and Reimbursement

(1)

Reimbursement of expenses

The Administrator shall reimburse each certified development company for all expenses paid by such company as part of the foreclosure and liquidation activities taken to carry out this section, if the expenses—

(A)

were—

(i)

approved in advance by the Administrator, either specifically in a plan submitted pursuant to subsection (c) or generally, such as, but not limited to, actions approved by the Administrator in regulations or other interpretative issuances; or

(ii)

incurred by the development company on an emergency basis without prior approval from the Administrator, if the Administrator determines that the expenses were reasonable and appropriate; and

(B)

are submitted by the certified development company to the Administrator not later than 3 years after the date the expense was incurred or the bill therefore is submitted to the certified development company, whichever is later.

(2)

Alternative reimbursement

As an alternative to the procedure in paragraph (1), a certified development company may elect to obtain reimbursement for all such expenses from the proceeds of any collateral provided by the borrower that was liquidated by the certified development company if the expenses comply with the requirements of paragraph (1). Within 6 months of the reimbursement, the certified development company shall provide the Administrator with the same information and documentation it would be required to submit to obtain payment from the Administrator.

(3)

Regulations

The Administrator shall promulgate regulations, after notice and comment to carry out the provisions of paragraphs (1) and (2). If the Administrator does not promulgate such regulations within one year, certified development companies shall be authorized, notwithstanding the requirements of subsection (e)(2), to liquidate defaulted loans and such costs and expenses incurred, absent clear and convincing evidence of fraud, shall be deemed to be approved.

(4)

Compensation for results

(A)

Development

In regulations promulgated pursuant to paragraph (3), the Administrator also shall develop a schedule of compensation that provides monetary incentives for certified development companies in order to increase recoveries on defaulted loans.

(B)

Criteria

The schedule shall—

(i)

be based on a percentage of the net amount recovered, but shall not exceed a maximum amount; and

(ii)

not apply to any foreclosure which is conducted under a contract between a certified development company and a qualified third party to perform the foreclosure and liquidation.

(C)

Payment

The Administrator shall transmit the compensation provided herein to the development company from the proceeds of liquidated collateral, unless the Administrator utilizes another source for funds, within 30 days from the date when the liquidation case has been closed and documentation received.

.

561.

Reports and regulations

Title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) is amended by adding at the end the following:

511.

Reports

(a)

Premier certified development companies

The Administrator shall report annually to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate on the implementation of section 504. Each report shall include—

(1)

the number of premier certified development companies;

(2)

the debenture volume of each premier certified development company;

(3)

a comparison of the loss rate for premier certified development companies to the loss rate for accredited or certified development companies; and

(4)

such other information as the Administrator deems appropriate.

(b)

Reports on Liquidation and Foreclosures

(1)

In general

Based on information provided by certified development companies and the Administrator, the Administrator shall submit annually to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report on the results of delegation of authority under section 510.

(2)

Contents

Each report submitted under paragraph (1) shall include the following information:

(A)

With respect to each loan foreclosed or liquidated by a certified development company, or for which losses were otherwise mitigated by pursuant to a workout plan—

(i)

the total cost of the project financed with the loan;

(ii)

the total original dollar amount guaranteed by the Administration;

(iii)

the total dollar amount of the loan at the time of liquidation, foreclosure, or mitigation of loss;

(iv)

the total dollar losses resulting from the liquidation, foreclosure, or mitigation of loss; and

(v)

the total recoveries resulting from the liquidation, foreclosure, or mitigation of loss, both as a percentage of the amount guaranteed and the total cost of the project financed.

(B)

With respect to each certified development company to which authority is delegated under section 510, the totals of each of the amounts described in clauses (i) through (v) of subparagraph (A).

(C)

With respect to each certified development company that contracts with a qualified third-party contractor pursuant to section 510(e), the total of each of the amounts described in clauses (i) through (v) of subparagraph (A).

(D)

With respect to all loans subject to foreclosure, liquidation, or mitigation under section 510, the totals of each of the amounts described in clauses (i) through (v) of subparagraph (A).

(E)

A comparison between—

(i)

the information provided under subparagraph (D) with respect to the 12-month period preceding the date on which the report is submitted; and

(ii)

the same information with respect to loans foreclosed and liquidated, or otherwise treated, by the Administrator during the same period.

(F)

The number of times that the Administrator has failed to approve or reject a liquidation plan, workout plan, request to purchase indebtedness, or failed to approve a third-party contractor under section 510, including specific information regarding the reasons for the Administrator’s failure and any delays that resulted.

(c)

Reports on Combination Financing

Not later than 90 days after the date of enactment of the Small Business Financing and Investment Act of 2010, and annually thereafter, the Administrator shall submit a report to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives that—

(1)

includes the number of small business concerns that have financing under both section 7(a) of the Small Business Act (15 U.S.C. 636(a)) and title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) during the year before the year of that report; and

(2)

describes the total amount and general performance of the financing described in paragraph (1).

(d)

Report on Other Economic Development Activity

The Administrator shall compile and submit to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate on an annual basis, commencing in the year that the Small Business Financing and Investment Act of 2010 is enacted, a report that describes the economic and community development activities, other than loan making under this title, of each certified development company during the prior fiscal year. The Administrator may contract with another party, including non-governmental entities, to collect information or otherwise assist in the preparation of the report required by this subsection.

512.

Promulgation of regulations under this title

(a)

Deadlines for implementing regulations

Except as expressly provided elsewhere in the Small Business Financing and Investment Act of 2010, the Administrator shall promulgate regulations under this title, after providing notice and the opportunity for comment, within 180 days after the date of enactment of that Act.

(b)

Notice and comment requirements in general

Except as otherwise provided elsewhere in this title, the Administrator shall provide, after the date of enactment of the Small Business Financing and Investment Act of 2010, notice of any proposed change to a regulation implementing this title (whether in existence on the date of enactment of the Small Business Financing and Investment Act of 2010 or subsequently adopted), publish such notification in the Federal Register, and provide a comment period of not less than 60 days.

.

562.

Program name

Title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.), as amended by this Act, is further amended by adding at the end the following:

513

Program name

(a)

In general

The program created by this title shall be referred to as the CDC Economic Development Loan Program.

(b)

Modification of materials used

Not later than 60 days after the date of enactment of the Small Business Financing and Investment Act of 2010, the Administrator shall modify all documents and websites to conform to the name change made by this section.

.

3

Miscellaneous

571.

Report on standard operating procedures

(a)

Report

The Administrator of the Small Business Administration 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 within 180 days after enactment of this Act identifying each Standard Operating Procedure issued after January 1, 1996, that relates to the operation of a development company (in any manner) under title V of the Small Business Investment Act of 1958, that is still in effect on the date of enactment of this Act, and the regulation codified in title 13 of the Code of Federal Regulations that authorizes the issuance of the Standard Operating Procedure and separately identifies the regulation that the Standard Operating Procedure purports to interpret.

(b)

Inapplicability

If the Administrator fails to complete the report by the time specified in subsection (a), the Administrator shall, unless there is clear and convincing evidence of fraud, honor the terms and conditions of any debenture to the entity that issued the debenture pursuant to title V of the Small Business Investment Act of 1958 without regard to whether the entity complied with any of the Standard Operating Procedures described in subsection (a) until such time as the Administrator submits the report required under subsection (a).

(c)

Definition

For purposes of this section, the term Standard Operating Procedure has the meaning given that term in section 120.10 of title 13, Code of Federal Regulations, as in effect on January 1, 2009, and includes any reference to the acronym SOP.

572.

Alternative size standard

(a)

Review and study

(1)

In general

The Administrator of the Small Business Administration shall study and review the optional size standard set forth in section 121.301(b) of title 13, Code of Federal Regulations, as in effect on January 1, 2009, for eligibility of a small business concern for financing under title V of the Small Business Investment Act of 1958.

(2)

Contents

The review shall analyze whether the alternative size standard includes the business concerns defined in section 3(a)(1) of the Small Business Act and what, if any, regulatory changes are needed in the alternative size standard.

(3)

Submission to Congress

The Administrator shall submit its study and conclusions within 180 days after the date of enactment of the Small Business Financing and Investment Act of 2010 to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives.

(b)

Issuance of regulations

Any changes in the optional size standard described in subsection (a)(1) shall be promulgated within 180 days of the submission of the report to committees referred to in paragraph (3) of subsection (a).

(c)

Interim alternative size standard

Until the Administrator promulgates regulations either readopting the size standard referred to in subsection (a)(1) or adopts a new alternative size standard, the alternative size standard shall be a maximum tangible net worth of not more than $15,000,000 and an average net income after the payment of Federal taxes (but excluding any carryover losses) for the preceding two fiscal years not more than $5,000,000.

C

Microlending expansion

581.

Microloan credit building initiative

Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) is amended by adding at the end the following:

(14)

Credit reporting information

The Administrator shall establish a process, for use by an intermediary making a loan to a borrower under this subsection, under which the intermediary shall provide to the major credit reporting agencies the information about the borrower, both positive and negative, that is relevant to credit reporting, such as the payment activity of the borrower on the loan. Such process shall allow an intermediary the option of providing information to the major credit reporting agencies through the Administration or independently.

.

582.

Flexible credit terms

Section 7(m) of the Small Business Act (15 U.S.C. 636(m)), as amended by this Act, is further amended—

(1)

in paragraph (1)(B)(i) by striking short-term,;

(2)

in paragraph (6)(A) by striking short-term,; and

(3)

in paragraph (11)(B) by striking short-term,.

583.

Increased program participation

Section 7(m)(2) of the Small Business Act (15 U.S.C. 636(m)(2)) is amended—

(1)

in subparagraph (A) by striking paragraph (10) and inserting paragraph (11); and

(2)

by amending subparagraph (B) to read as follows:

(B)

has—

(i)

at least—

(I)

1 year of experience making microloans to startup, newly established, or growing small business concerns; or

(II)

1 full-time employee who has not less than 3 years of experience making microloans to startup, newly established, or growing small business concerns; and

(ii)

at least—

(I)

1 year of experience providing, as an integral part of its microloan program, intensive marketing, management, and technical assistance to its borrowers; or

(II)

1 full-time employee who has not less than 1 year of experience providing intensive marketing, management, and technical assistance to borrowers.

.

584.

Increased limit on intermediary borrowing

Section 7(m)(3)(C) of the Small Business Act (15 U.S.C. 636(m)(3)(C)) is amended—

(1)

by striking $750,000 and inserting $1,000,000;

(2)

by striking $3,500,000 and inserting $7,000,000; and

(3)

by adding at the end the following: The Administrator may treat the amount of $7,000,000 in this subparagraph as if such amount is $10,000,000 if the Administrator determines, with respect to an intermediary, that such treatment is appropriate..

585.

Expanded borrower education assistance

Section 7(m)(4)(E) of the Small Business Act (15 U.S.C. 636(m)(4)(E)) is amended—

(1)

in clause (i) by striking 25 percent and inserting 35 percent; and

(2)

in clause (ii) by striking 25 percent and inserting 35 percent.

586.

Young Entrepreneurs program

Section 7(m)(4) of the Small Business Act (15 U.S.C. 636(m)(4)) is amended by adding at the end the following:

(G)

Young Entrepreneurs program

(i)

In general

An intermediary that receives a grant under paragraph (1)(B)(ii) may establish a program for the geographic area served by such intermediary that provides to young entrepreneurs technical assistance regarding the following:

(I)

Establishing or operating a small business concern in the geographic area served by the intermediary.

(II)

Acquiring or securing financing to carry out the activities described in subclause (I).

(ii)

Young entrepreneur defined

For purposes of this subparagraph, a young entrepreneur is an individual who—

(I)

is 25 years of age or younger; and

(II)

has resided in the geographic area served by the intermediary for not less than 2 years.

(iii)

Good faith effort requirement

If a young entrepreneur who receives technical assistance under this subparagraph from an intermediary establishes or operates a small business concern, the young entrepreneur shall make a good faith effort to establish or operate such concern in the geographic area served by the intermediary.

(iv)

Deferred repayment

If a small business concern established or operated by a young entrepreneur receives a loan under this subsection, such concern may defer repayment on such loan for a period of not more than 6 months beginning on the date that such concern receives the final disbursement of such loan.

.

587.

Interest rates and loan size

Section 7(m) of the Small Business Act (15 U.S.C. 636(m)), as amended by this Act, is further amended—

(1)

in paragraph (3)(F)(iii) by striking $7,500 and inserting $10,000;

(2)

in paragraph (6)(C)(i) by striking $7,500 and inserting $10,000; and

(3)

in paragraph (6)(C)(ii) by striking $7,500 and inserting $10,000.

588.

Reporting requirement

Section 7(m) of the Small Business Act (15 U.S.C. 636(m)), as amended by this Act, is further amended by adding at the end the following:

(15)

Reporting requirement

Not later than 90 days after the end of each fiscal year, the Administrator 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 that includes, with respect to such fiscal year of the microloan program, the following:

(A)

The names and locations of each intermediary that received funds to make microloans or provide marketing, management, and technical assistance.

(B)

The amounts of each loan and each grant provided to each such intermediary in such fiscal year and in prior fiscal years.

(C)

A description of the contributions from non-Federal sources of each such intermediary.

(D)

The number and amounts of microloans made by each such intermediary to all borrowers and to each of the following:

(i)

Women entrepreneurs and business owners.

(ii)

Low-income entrepreneurs and business owners.

(iii)

Veteran entrepreneurs and business owners.

(iv)

Disabled entrepreneurs and business owners.

(v)

Minority entrepreneurs and business owners.

(E)

A description of the marketing, management, and technical assistance provided by each such intermediary to all borrowers and to each of the following:

(i)

Women entrepreneurs and business owners.

(ii)

Low-income entrepreneurs and business owners.

(iii)

Veteran entrepreneurs and business owners.

(iv)

Disabled entrepreneurs and business owners.

(v)

Minority entrepreneurs and business owners.

(F)

The number of jobs created and retained as a result of microloans and marketing, management, and technical assistance provided by each such intermediary.

(G)

The repayment history of each such intermediary.

(H)

The number of businesses that achieved success after receipt of a microloan.

.

589.

Surplus interest rate subsidy for businesses

Section 7(m) of the Small Business Act (15 U.S.C. 636(m)), as amended by this Act, is further amended by adding at the end the following:

(16)

Interest assistance

The Administrator is authorized to make grants to intermediaries for the purposes of reducing interest rates charged to borrowers that receive financing under this subsection.

.

590.

Authorization of appropriations

Section 20 of the Small Business Act (15 U.S.C. 631 note), as amended by this Act, is further amended by inserting after subsection (g) the following:

(h)

Fiscal years 2010 and 2011 with respect to section 7(m)

(1)

Program levels

For the programs authorized by this Act, the Administration is authorized to make during each of fiscal years 2010 and 2011—

(A)

$80,000,000 in technical assistance grants, as provided in section 7(m); and

(B)

$110,000,000 in direct loans, as provided in section 7(m).

(C)

$10,000,000 in interest assistance grants, as provided in section 7(m)(16).

(2)

Authorization of appropriations

There is authorized to be appropriated such sums as may be necessary to carry out paragraph (1).

.

D

Small business investment company modernization

591.

Increased investment from States

Section 103(13)(C) of the Small Business Investment Act of 1958 (15 U.S.C. 662(13)(C)) is amended by striking 33 percent and inserting 45 percent.

592.

Expedited licensing for experienced applicants

Section 301 of the Small Business Investment Act of 1958 (15 U.S.C. 681) is amended by inserting after subsection (c) the following:

(d)

Licenses for experienced applicants

(1)

In general

Notwithstanding any other provision of this section, not later than 60 days after the initial receipt by the Administrator of any request (which shall be deemed to be the application) for a license to operate as a small business investment company under this Act, the Administrator shall approve the request and issue such license if each of the following requirements is satisfied:

(A)

At least 50 percent of the principal managers of the applicant consist of at least two-thirds of the principal managers of a small business investment company that has been licensed under this Act.

(B)

The licensed small business investment company specified under subparagraph (A) has operated under such license for at least 3 years prior to the receipt of the request specified in this paragraph.

(C)

The licensed small business investment company specified under subparagraph (A)—

(i)

either has invested at least 70 percent of its private capital and drawn at least 50 percent of its projected leverage at the time of the receipt of the request specified in this paragraph or reserved for investment and expenses or some combination of both at least 70 percent of its private capital in the one-year period prior to the date on which the application referred to in this paragraph was received by the Administrator;

(ii)

has maintained 6 consecutive quarters of profitable net investment income; and

(iii)

has made at least 3 exits from investments in small businesses that have realized profits from those respective investments.

(D)

The applicant submits to the Administrator, in writing, an application consisting of all of the following:

(i)

A certification, in the form prescribed by the Administrator, that such applicant satisfies the requirements of this subsection and that all information contained in the application is true and complete.

(ii)

A copy of the organizational documents of the applicant.

(iii)

A copy of the operating plan of the applicant demonstrating that at least 50 percent of the amount of the planned investments of the applicant will be in the same or substantially similar investment stage and use the same or substantially similar type of investment instruments as the investments of the licensed small business investment company specified under subparagraph (A).

(iv)

A certification, in a form prescribed by the Administrator, that the applicant satisfies the requirements of subsections (a) and (c) of section 302 of this Act.

(E)

The applicant is in good standing as set forth in paragraph (2).

(F)

The applicant pays all fees prescribed by the Administrator under subsection (e).

(2)

Good standing

For purposes of this subsection, an applicant is in good standing if—

(A)

a licensed leveraged or non-leveraged small business investment company specified under paragraph (1)(A) is actively operating under this Act on the date of the initial receipt of the application by the Administrator to which this subsection applies;

(B)

no principal manager of the applicant has been found liable in a civil action for fraud if the Administrator makes a reasonable determination based on evidence in the agency record that such liability has a material adverse effect on the ability of the applicant to perform obligations required by a license issued pursuant to this Act; and

(C)

no principal manager is under investigation by a governmental agency or authority for, is under indictment for, or has been convicted of a felony for a violation of Federal or State securities laws, fraud, or another criminal violation if such investigation, indictment, or conviction has a material adverse effect on the ability of the applicant to perform obligations under a license issued under this Act.

(3)

Limitation

(A)

In general

The Administrator may remove an application from the approval process under this subsection if the Administrator determines based on evidence in the agency record that the approval of the license would present an unacceptable risk to the Federal Government.

(B)

In writing

Such determination shall be made in writing and provided to the applicant no later than 10 calendar days after such determination is made. Failure to provide this determination to the applicant shall be deemed to be a permanent waiver of the Administrator’s authority to remove an application pursuant to this subsection.

(C)

Non-delegability

The Administrator may rely on agency personnel to collect data or other material relevant to establishing a record, but the decision to remove the application may not be delegated by the Administrator to any subordinate personnel in the agency.

(4)

Notice and opportunity to cure non-conformance

(A)

Notice of non-conformance

Except for a determination made pursuant to paragraph (3), the Administrator shall provide an applicant described in paragraph (1) within 60 days after receipt of the application a written notice and description of any nonconformance with any requirement of this subsection based on evidence in the agency record.

(B)

Opportunity to cure

The applicant shall have 30 days following the receipt of notice of nonconformance or the receipt of removal as set forth in paragraph (3) to cure such nonconformance.

(C)

Failure to provide notice

Failure to provide the notice within the time limit set forth in subparagraph (A) shall be deemed to be acceptance by the Administrator of the applicant’s conformance with the requirements of this subsection.

(5)

Background reviews

The Administrator shall ensure that a timely background check of the principal managers of each applicant is completed with respect to paragraphs (2)(B) and (2)(C).

(6)

Fees

The Administrator may charge an applicant additional fees for carrying out the background reviews mandated by paragraph (5). Such fees shall not exceed $10,000.

(7)

Effect of non-qualification

The failure of an applicant to qualify for expedited licensure under this subsection shall have no effect on an existing license or the ability for the applicant or any of its individual managers to apply for or receive a license to operate a small business investment company under the procedures established elsewhere in this Act or its implementing regulations.

(8)

Regulations

The Administrator shall develop forms and promulgate regulations to implement this subsection after providing an opportunity for notice and comment. Regulations promulgated pursuant to this paragraph shall be published in the Code of Federal Regulations.

.

593.

Revised leverage limitations for successful SBICs

(a)

Maximum leverage

Section 303(b)(2) of the Small Business Investment Act of 1958 (15 U.S.C. 683(b)(2)) is amended by striking so much of paragraph (2) as precedes subparagraph (C) and inserting the following:

(2)

Maximum leverage

(A)

In general

(i)

The maximum amount of outstanding leverage made available to any one company licensed under section 301(c) of this Act may not exceed the lesser of—

(I)

300 percent of such company’s private capital; or

(II)

$150,000,000.

(ii)

In applying clause (i)(I) in the case of a debenture licensee which is in good standing without the imposition of additional regulatory standards and whose financings at cost are comprised of at least 50 percent of loans and debt securities, such licensee may be leveraged as follows:

(I)

The first one-third of private capital to 300 percent.

(II)

The second one-third of private capital to 200 percent.

(III)

The last third of private capital to 100 percent.

(iii)

Notwithstanding clause (i), in the case of any company operating as a business development company (as such term is defined under section 2(a)(48) of the Investment Company Act of 1940) or a majority-owned subsidiary of such a company that is in good standing without the imposition of additional regulatory requirements, the maximum amount of outstanding leverage made available to such company shall be $250,000,000.

(B)

Multiple licensees under common control

The maximum amount of outstanding leverage made available to two or more debenture companies licensed under section 301(c) of this Act that are commonly controlled (as determined by the Administrator) and not under capital impairment may not exceed $350,000,000.

.

(b)

Regulations

Section 303(b)(2) of the Small Business Investment Act of 1958 (15 U.S.C. 683(b)(2)), as amended by this Act, is further amended by adding at the end the following:

(E)

Regulations

The Administrator shall promulgate regulations, after notice and opportunity for comment, establishing quantifiable objective criteria under which a licensee’s private capital in its entirety may be leveraged up to 300 percent. Such regulations shall be published in the Code of Federal Regulations.

.

(c)

Investments in low-Income geographic areas

Section 303(b)(2)(C)(ii) of the Small Business Investment Act of 1958 (15 U.S.C. 683(b)(2)(C)(ii)) is amended by striking $250,000,000 in subclause (II) and inserting $400,000,000.

594.

Consistency for cost control

Section 305(c) of the Small Business Investment Act of 1958 (15 U.S.C. 685(c)) is amended by adding at the end the following:

In addition to the foregoing, with respect to a loan made, or debt with equity features acquired, under this section, the minimum coupon rate of interest (cost of money ceiling) imposed by the Administrator shall not be less than 19 percent per annum for a loan or a debt security, except that nothing herein shall alter or affect provisions permitting higher coupon rates of interest (cost of money ceilings) and a company may charge up to an additional 7 percent more than the interest rate set forth in the loan or debt security in the event of a default. For purposes of this subsection a default means the occurrence of any of the following:

(1)

Failure to pay an amount when due.

(2)

Failure to provide in a timely manner material information required under the applicable financing documents.

(3)

Failure to observe any material term, covenant, or other agreement contained in the applicable financing documents.

(4)

A representation, warranty, certification, or statement of fact made by or on behalf of a borrower in any applicable financing document or in any document delivered in connection therewith, that was materially incorrect or misleading when made.

(5)

Any material event of default specified in the applicable financing documents.

.

595.

Investment in veteran-owned small businesses

Section 303(b)(2)(C) of the Small Business Investment Act of 1958 (15 U.S.C. 683(b)(2)(C)) is amended as follows:

(1)

In the heading, by inserting after areas the following: and veterans.

(2)

In clause (i), by inserting after 351) the following: or in a small business concern owned and controlled by veterans (as such term is defined in section 3(q)(3) of the Small Business Act).

(3)

In clause (iii), by inserting after 351) the following: or in small business concerns owned and controlled by veterans (as such term is defined in section 3(q)(3) of the Small Business Act).

596.

Tangible net worth

Section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662), as amended by this Act, is further amended by striking and at the end of paragraph (23), by striking the period at the end of paragraph (24) and inserting ; and, and by adding at the end the following:

(25)

for purposes of the terms small-business concern in paragraph (5) and smaller enterprise in paragraph (12), tangible net worth shall, to the extent used, mean the total net worth of the small business, in accordance with General Accepted Accounting Principles, minus all intangibles in accordance with General Accepted Accounting Principles.

.

597.

Development of agency record

Part A of title III of the Small Business Investment Act of 1958 (15 U.S.C. 681 et seq.), as amended by this Act, is further amended by adding at the end the following:

321.

Agency record for licensing of small business investment companies

(a)

Record

The Associate Administrator for Investment shall establish an agency record of evidence referring or relating to each application for a license to become a small business investment company.

(b)

Written notification

The Administrator shall provide a written explanation of any denial of a license application based upon evidence in the agency record. Absent an order by a Federal or State court of general jurisdiction, access to applications and the agency record shall be limited to the applicant and to the Administrator and subordinate personnel of the Administrator.

.

598.

Program levels

Section 20 of the Small Business Act (15 U.S.C. 631 note), as amended by this Act, is further amended by inserting after subsection (h) the following:

(i)

Part A of title III of the Small Business Investment Act of 1958

(1)

Program levels 2010

For fiscal year 2010, in carrying out the program authorized by part A of title III of the Small Business Investment Act of 1958, the Administrator is authorized to make $5,000,000,000 in guarantees of debentures.

(2)

Program levels 2011

For fiscal year 2011, in carrying out the program authorized by part A of title III of the Small Business Investment Act of 1958, the Administrator is authorized to make $5,500,000,000 in guarantees of debentures.

.

E

Investment in small manufacturers and renewable energy small businesses

1

Enhanced New Markets Venture Capital Program

601.

Expansion of New Markets Venture Capital Program

(a)

Administration participation required

Section 353 of the Small Business Investment Act of 1958 (15 U.S.C. 689b) is amended by striking under which the Administrator may and inserting under which the Administrator shall.

(b)

Report to Congress

Not later than 1 year after the date of the enactment of this Act, the Administrator of the Small Business Administration shall submit to Congress a report describing any expansion of the New Markets Venture Capital Program as a result of this section.

602.

Improved nationwide distribution

Section 354 of the Small Business Investment Act of 1958 (15 U.S.C. 689c) is amended by adding at the end the following:

(f)

Geographic expansion

From among companies submitting applications under subsection (b), the Administrator shall consider the selection criteria and promotion of nationwide distribution under subsection (c) and shall, to the extent practicable, approve at least one company from each geographic region of the Small Business Administration.

.

603.

Increased investment in small business concerns engaged primarily in manufacturing

(a)

Developmental venture capital and participation agreements

Section 351 of the Small Business Investment Act of 1958 (15 U.S.C. 689) is amended—

(1)

in paragraph (1) by inserting after geographic areas the following: or encouraging the growth or continuation of small business concerns located in low-income geographic areas and engaged primarily in manufacturing; and

(2)

in paragraph (6)(B) by inserting after geographic areas the following: or in small business concerns located in low-income geographic areas at least 80 percent of which are engaged primarily in manufacturing.

(b)

Purposes

Section 352(2) of the Small Business Investment Act of 1958 (15 U.S.C. 689a(2)) is amended—

(1)

in the matter preceding subparagraph (A) by inserting after geographic areas the following: and small business concerns located in low-income geographic areas and engaged primarily in manufacturing;

(2)

in subparagraph (B) by inserting after geographic areas the following: or in small business concerns located in low-income geographic areas and engaged primarily in manufacturing; and

(3)

in subparagraph (C) by inserting after smaller enterprises the following: and small business concerns.

(c)

Eligibility, applications, and requirements for final approval

Section 354 of the Small Business Investment Act of 1958 (15 U.S.C. 689c), as amended by this Act, is further amended—

(1)

in subsection (a)(3) by inserting after geographic areas the following: or investing in small business concerns located in low-income geographic areas and engaged primarily in manufacturing;

(2)

in subsection (b)—

(A)

in paragraph (1) by inserting after geographic areas the following: or in small business concerns located in low-income geographic areas and engaged primarily in manufacturing; and

(B)

in paragraph (4) by inserting after smaller enterprises the following: or small business concerns; and

(3)

in subsection (d)—

(A)

in paragraph (1)—

(i)

by striking Each and inserting the following:

(A)

In general

Except as provided in subparagraph (B), each

; and

(ii)

by adding at the end the following:

(B)

Small business concerns engaged primarily in manufacturing

Each conditionally approved company engaged primarily in development of and investment in small business concerns located in low-income geographic areas and engaged primarily in manufacturing shall raise not less than $3,000,000 of private capital or binding capital commitments from one or more investors (other than agencies or departments of the Federal Government) who met criteria established by the Administrator.

; and

(B)

in paragraph (2)(A) by inserting after smaller enterprises the following: or small business concerns.

(d)

Operational assistance grants

Section 358 of the Small Business Investment Act of 1958 (15 U.S.C. 689g) is amended—

(1)

in subsection (a)(1) by inserting after smaller enterprises the following: and small business concerns; and

(2)

in subsection (b)(1) by inserting after smaller enterprises the following: and small business concerns.

604.

Expanded uses for operational assistance in manufacturing

Section 351 of the Small Business Investment Act of 1958 (15 U.S.C. 689), as amended by this Act, is further amended in paragraph (5) by inserting after business development the following: or assistance that assists a small business concern located in a low-income geographic area and engaged primarily in manufacturing with retooling, updating, or replacing machinery or equipment.

605.

Updating definition of low-income geographic area

Section 351 of the Small Business Investment Act of 1958 (15 U.S.C. 689), as amended by this Act, is further amended—

(1)

by striking paragraphs (2) and (3);

(2)

by inserting after paragraph (1) the following:

(2)

Low-income geographic area

The term low-income geographic area has the meaning given the term low-income community in section 45D(e) of the Internal Revenue Code of 1986, except that, without regard to such meaning, such term includes an area that the Administrator determines to be an area with high unemployment.

; and

(3)

by redesignating paragraphs (4) through (8) as paragraphs (3) through (7), respectively.

606.

Expanding operational assistance to conditionally approved companies

Section 358(a) of the Small Business Investment Act of 1958 (15 U.S.C. 689g(a)) is amended by adding at the end the following:

(6)

Grants to conditionally approved companies

(A)

In general

Subject to the provisions of this paragraph, upon the request of a company conditionally approved under section 354(c), the Administrator shall make a grant to the company under this subsection.

(B)

Repayment by companies not approved

If a company receives a grant under this paragraph and does not receive final approval under section 354(e), the company shall repay the amount of the grant to the Administrator.

(C)

Deduction from grant to approved company

If a company receives a grant under this paragraph and receives final approval under section 354(e), the Administrator shall deduct the amount of such grant from the amount of any immediately succeeding grant the company receives for operational assistance.

(D)

Amount of grant

No company may receive a grant of more than $50,000 under this paragraph.

.

607.

Limitation on time for final approval

Section 354(d) of the Small Business Investment Act of 1958 (15 U.S.C. 689c(d)) is amended in the matter preceding paragraph (1) by striking a period of time, not to exceed 2 years, and inserting 2 years.

608.

Streamlined application for New Markets Venture Capital Program

Not later than 60 days after the date of the enactment of this Act, the Administrator of the Small Business Administration shall prescribe standard documents for a New Markets Venture Capital company final approval application under section 354(e) of the Small Business Investment Act of 1958 (15 U.S.C. 689c(e)). The Administrator shall ensure that the standard documents are designed to substantially reduce the cost burden of the application process for companies.

609.

Elimination of matching requirement

Section 354(d)(2)(A)(i) of the Small Business Investment Act of 1958 (15 U.S.C. 689c(d)(2)(A)(i)) is amended—

(1)

in subclause (I) by adding and at the end;

(2)

in subclause (II) by striking and at the end; and

(3)

by striking subclause (III).

610.

Simplified formula for operational assistance grants

Section 358(a)(4)(A) of the Small Business Investment Act of 1958 (15 U.S.C. 689g(a)(4)(A)) is amended—

(1)

by striking shall be equal to and all that follows through the period at the end and inserting shall be equal to the lesser of—; and

(2)

by adding at the end the following:

(i)

10 percent of the resources (in cash or in-kind) raised by the company under section 354(d)(2); or

(ii)

$1,000,000.

.

611.

Financing with respect to veterans

Section 354 of the Small Business Investment Act of 1958 (15 U.S.C. 689c), as amended by this Act, is further amended by adding at the end the following:

(g)

Financing with respect to veterans

A New Markets Venture Capital company shall, to the extent practicable, provide financing to small business concerns owned and controlled by veterans, as defined in section 3(q) of the Small Business Act (15 U.S.C. 632(q)), located in low-income geographic areas.

.

612.

Authorization of appropriations and enhanced allocation for small manufacturing

Section 368(a) of the Small Business Investment Act of 1958 (15 U.S.C. 689q(a)) is amended—

(1)

in the matter preceding paragraph (1) by striking fiscal years 2001 through 2006 and inserting fiscal years 2010 and 2011;

(2)

in paragraph (1)—

(A)

by striking $150,000,000 and inserting $100,000,000; and

(B)

by inserting before the period at the end the following: , of which not less than 50 percent shall be used to guarantee debentures of companies engaged primarily in development of and investment in small business concerns located in low-income geographic areas and engaged primarily in manufacturing; and

(3)

in paragraph (2)—

(A)

by striking $30,000,000 and inserting $20,000,000; and

(B)

by inserting before the period at the end the following: , of which not less than 50 percent shall be used to make grants to companies engaged primarily in development of and investment in small business concerns located in low-income geographic areas and engaged primarily in manufacturing.

2

Expanded investment in small business renewable energy

621.

Expanded investment in renewable energy

Part C of title III of the Small Business Investment Act of 1958 (15 U.S.C. 690 et seq.) is amended—

(1)

in the heading by striking Renewable Fuel Capital Investment and inserting Renewable Energy Capital Investment;

(2)

in the heading of paragraph (4) of section 381 by striking Renewable Fuel Capital Investment and inserting Renewable Energy Capital Investment;

(3)

in the heading of section 384 by striking Renewable Fuel Capital Investment and inserting Renewable Energy Capital Investment; and

(4)

by striking Renewable Fuel Capital Investment each place it appears and inserting Renewable Energy Capital Investment.

622.

Renewable Energy Capital Investment Program made permanent

Part C of title III of the Small Business Investment Act of 1958 (15 U.S.C. 690 et seq.), as amended by this Act, is further amended—

(1)

in the heading by striking Pilot; and

(2)

by striking section 398.

623.

Expanded eligibility for small businesses

Part C of title III of the Small Business Investment Act of 1958 (15 U.S.C. 690 et seq.), as amended by this Act, is further amended by striking smaller enterprises each place it appears and inserting small business concerns.

624.

Expanded uses for operational assistance in manufacturing and small businesses

Section 381(1) of the Small Business Investment Act of 1958 (15 U.S.C. 690(1)) is amended by inserting after business development the following: , assistance that assists a small business concern to reduce energy consumption, or assistance that assists a small business concern engaged primarily in manufacturing with retooling, updating, or replacing machinery or equipment.

625.

Expansion of Renewable Energy Capital Investment Program

(a)

Administration participation required

Section 383 of the Small Business Investment Act of 1958 (15 U.S.C. 690b) is amended by striking under which the Administrator may and inserting under which the Administrator shall.

(b)

Reports to Congress

At quarterly intervals after the date of the enactment of this Act, the Administrator of the Small Business Administration shall submit to Congress a report describing the Administrator’s progress towards the expansion of the Renewable Energy Capital Investment Program as a result of amendments made by this title.

(c)

Regulations

The Administrator of the Small Business Administration shall promulgate such regulations as are necessary to carry out the Renewable Energy Capital Investment Program established pursuant to this title within 180 days after the enactment of this Act.

626.

Simplified fee structure to expedite implementation

Section 387(a) of the Small Business Investment Act of 1958 (15 U.S.C. 690f(a)) is amended by striking or grant.

627.

Increased operational assistance grants

Section 397(a) of the Small Business Investment Act of 1958 (15 U.S.C. 690p(a)) is amended by inserting after and 2009 the following: and $30,000,000 in such grants for each of fiscal years 2010 and 2011.

628.

Authorizations of appropriations

Section 397 of the Small Business Investment Act of 1958 (15 U.S.C. 690p) is amended—

(1)

in the heading by inserting after appropriations the following: and program levels; and

(2)

by adding at the end the following:

(c)

Program levels

For the programs authorized by this part, the Administration is authorized to make $1,000,000,000 in guarantees of debentures for each of fiscal years 2010 and 2011.

.

F

Small business health information technology financing program

631.

Small business health information technology financing program

The Small Business Act (15 U.S.C. 631 et seq.), as amended by this Act, is further amended by redesignating section 45 as section 46 and by inserting the following new section after section 44:

45.

Loan guarantees for health information technology

(a)

Definitions

As used in this section:

(1)

The term health information technology means computer hardware, software, and related technology that supports the meaningful EHR use requirements set forth in section 1848(o)(2)(A) of the Social Security Act (42 U.S.C. 1395w–4(o)(2)(A)) and is purchased by an eligible professional to aid in the provision of health care in a health care setting, including, but not limited to, electronic medical records, and that provides for—

(A)

enhancement of continuity of care for patients through electronic storage, transmission, and exchange of relevant personal health data and information, such that this information is accessible at the times and places where clinical decisions will be or are likely to be made;

(B)

enhancement of communication between patients and health care providers;

(C)

improvement of quality measurement by eligible professionals enabling them to collect, store, measure, and report on the processes and outcomes of individual and population performance and quality of care;

(D)

improvement of evidence-based decision support; or

(E)

enhancement of consumer and patient empowerment.

Such term shall not include information technology whose sole use is financial management, maintenance of inventory of basic supplies, or appointment scheduling.
(2)

The term eligible professional means any of the following:

(A)

A physician (as defined in section 1861(r) of the Social Security Act (42 U.S.C. 1395x(r))).

(B)

A practitioner described in section 1842(b)(18)(C) of that Act.

(C)

A physical or occupational therapist or a qualified speech-language pathologist.

(D)

A qualified audiologist (as defined in section 1861(ll)(3)(B)) of that Act.

(E)

A qualified medical transcriptionist who is either certified by or registered with the Association for Healthcare Documentation Integrity, or a successor association thereto.

(F)

A State-licensed pharmacist.

(G)

A State-licensed supplier of durable medical equipment, prosthetics, orthotics, or supplies.

(H)

A State-licensed, a State-certified, or a nationally accredited home health care provider.

(3)

The term qualified eligible professional means an eligible professional whose office can be classified as a small business concern by the Administrator for purposes of this Act under size standards established under section 3 of this Act.

(4)

The term qualified medical transcriptionist means a specialist in medical language and the healthcare documentation process who interprets and transcribes dictation by physicians and other healthcare professionals to ensure accurate, complete, and consistent documentation of healthcare encounters.

(b)

Loan guarantees for qualified eligible professionals

(1)

In general

Subject to paragraph (2), the Administrator may guarantee up to 90 percent of the amount of a loan made to a qualified eligible professional to be used for the acquisition of health information technology for use in such eligible professional’s medical practice and for the costs associated with the installation of such technology. Except as otherwise provided in this section, the terms and conditions that apply to loans made under section 7(a) of this Act shall apply to loan guarantees made under this section.

(2)

Limitations on guarantee amounts

The maximum amount of loan principal guaranteed under this subsection may not exceed—

(A)

$350,000 with respect to any single qualified eligible professional; and

(B)

$2,000,000 with respect to a single group of affiliated qualified eligible professionals.

(c)

Fees

(1)

The Administrator may impose a guarantee fee on the borrower for the purpose of reducing the cost (as defined in section 502(5) of the Federal Credit Reform Act of 1990) of the guarantee to zero in an amount not to exceed 2 percent of the total guaranteed portion of any loan guaranteed under this section. The Administrator may also impose annual servicing fees on lenders not to exceed 0.5 percent of the outstanding balance of the guarantees on lenders’ books.

(2)

No service fees, processing fees, origination fees, application fees, points, brokerage fees, bonus points, or other fees may be charged to a loan applicant or recipient by a lender in the case of a loan guaranteed under this section.

(d)

Deferral period

Loans guaranteed under this section shall carry a deferral period of not less than 1 year and not more than 3 years. The Administrator shall have the authority to subsidize interest during the deferral period.

(e)

Effective date

No loan may be guaranteed under this section until the meaningful EHR use requirements have been determined by the Secretary of Health and Human Services.

(f)

Sunset

No loan may be guaranteed under this section after the date that is 7 years after meaningful EHR use requirements have been determined by the Secretary of Health and Human Services.

(g)

Authorization of appropriations

There are authorized to be appropriated such sums as are necessary for the cost (as defined in section 502(5) of the Federal Credit Reform Act of 1990) of guaranteeing $10,000,000,000 in loans under this section. The Administrator shall determine such program cost separately and distinctly from other programs operated by the Administrator.

.

G

Small business early-Stage investment program

641.

Small business early-stage investment program

Title III of the Small Business Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended by adding at the end the following:

D

Small business early-stage investment program

399A.

Establishment of program

The Administrator shall establish and carry out an early-stage investment program (hereinafter referred to in this part as the program) to provide equity investment financing to support early-stage small businesses in targeted industries in accordance with this part.

399B.

Administration of program

The program shall be administered by the Administrator acting through the Associate Administrator described under section 201.

399C.

Applications

(a)

In general

Any incorporated body, limited liability company, or limited partnership organized and chartered or otherwise existing under Federal or State law for the purpose of performing the functions and conducting the activities contemplated under the program and any small business investment company may submit to the Administrator an application to participate in the program.

(b)

Requirements for application

An application to participate in the program shall include the following:

(1)

A business plan describing how the applicant intends to make successful venture capital investments in early-stage small businesses in targeted industries.

(2)

Information regarding the relevant venture capital investment qualifications and backgrounds of the individuals responsible for the management of the applicant.

(3)

A description of the extent to which the applicant meets the selection criteria under section 399D.

(c)

Applications from small business investment companies

The Administrator shall establish an abbreviated application process for small business investment companies that have received a license under section 301 and that are applying to participate in the program. Such abbreviated process shall incorporate a presumption that such small business investment companies satisfactorily meet the selection criteria under paragraphs (3) and (5) of section 399D(b).

399D.

Selection of participating investment companies

(a)

In general

Not later than 90 days after the date on which the Administrator receives an application from an applicant under section 399C, the Administrator shall make a final determination to approve or disapprove such applicant to participate in the program and shall transmit such determination to the applicant in writing.

(b)

Selection criteria

In making a determination under subsection (a), the Administrator shall consider each of the following:

(1)

The likelihood that the applicant will meet the goals specified in the business plan of the applicant.

(2)

The likelihood that the investments of the applicant will create or preserve jobs, both directly and indirectly.

(3)

The character and fitness of the management of the applicant.

(4)

The experience and background of the management of the applicant.

(5)

The extent to which the applicant will concentrate investment activities on early-stage small businesses in targeted industries.

(6)

The likelihood that the applicant will achieve profitability.

(7)

The experience of the management of the applicant with respect to establishing a profitable investment track record.

399E.

Grants

(a)

In general

The Administrator may make one or more grants to a participating investment company.

(b)

Grant amounts

(1)

Non-Federal capital

A grant made to a participating investment company under the program may not be in an amount that exceeds the amount of the capital of such company that is not from a Federal source and that is available for investment on or before the date on which a grant is drawn upon. Such capital may include legally binding commitments with respect to capital for investment.

(2)

Limitation on aggregate amount

The aggregate amount of all grants made to a participating investment company under the program may not exceed $100,000,000.

(c)

Grant process

In making a grant under the program, the Administrator shall commit a grant amount to a participating investment company and the amount of each such commitment shall remain available to be drawn upon by such company—

(1)

for new-named investments during the 5-year period beginning on the date on which each such commitment is first drawn upon; and

(2)

for follow-on investments and management fees during the 10-year period beginning on the date on which each such commitment is first drawn upon, with not more than 2 additional 1-year periods available at the discretion of the Administrator.

399F.

Investments in early-stage small businesses in targeted industries

(a)

In general

As a condition of receiving a grant under the program, a participating investment company shall make all of the investments of such company in small business concerns, of which at least 50 percent shall be early-stage small businesses in targeted industries.

(b)

Evaluation of compliance

With respect to a grant amount committed to a participating investment company under section 399E, the Administrator shall evaluate the compliance of such company with the requirements under this section if such company has drawn upon 50 percent of such commitment.

399G.

Pro rata investment shares

Each investment made by a participating investment company under the program shall be treated as comprised of capital from grants under the program according to the ratio that capital from grants under the program bears to all capital available to such company for investment.

399H.

Grant interest

(a)

Grant Interest

(1)

In general

As a condition of receiving a grant under the program, a participating investment company shall convey a grant interest to the Administrator in accordance with paragraph (2).

(2)

Effect of conveyance

The grant interest conveyed under paragraph (1) shall have all the rights and attributes of other investors attributable to their interests in the participating investment company, but shall not denote control or voting rights to the Administrator. The grant interest shall entitle the Administrator to a pro rata portion of any distributions made by the participating investment company equal to the percentage of capital in the participating investment company that the grant comprises. The Administrator shall receive distributions from the participating investment company at the same times and in the same amounts as any other investor in the company with a similar interest. The investment company shall make allocations of income, gain, loss, deduction, and credit to the Administrator with respect to the grant interest as if the Administrator were an investor.

(b)

Manager profits

As a condition of receiving a grant under the program, the manager profits interest payable to the managers of a participating investment company under the program shall not exceed 20 percent of profits, exclusive of any profits that may accrue as a result of the capital contributions of any such managers with respect to such company. Any excess of this amount, less taxes payable thereon, shall be returned by the managers and paid to the investors and the Administrator in proportion to the capital contributions and grants paid in. No manager profits interest (other than a tax distribution) shall be paid prior to the repayment to the investors and the Administrator of all contributed capital and grants made.

(c)

Distribution requirements

As a condition of receiving a grant under the program, a participating investment company shall make all distributions to all investors in cash and shall make distributions within a reasonable time after exiting investments, including following a public offering or market sale of underlying investments.

399I.

Fund

There is hereby created within the Treasury a separate fund for grants which shall be available to the Administrator subject to annual appropriations as a revolving fund to be used for the purposes of the program. All amounts received by the Administrator, including any moneys, property, or assets derived by the Administrator from operations in connection with the program, shall be deposited in the fund. All expenses and payments, excluding administrative expenses, pursuant to the operations of the Administrator under the program shall be paid from the fund.

399J.

Application of other sections

To the extent not inconsistent with requirements under this part, the Administrator may apply sections 309, 311, 312, 313, and 314 to activities under this part and an officer, director, employee, agent, or other participant in a participating investment company shall be subject to the requirements under such sections.

399K.

Definitions

In this part, the following definitions apply:

(1)

Early-stage small business in a targeted industry

The term early-stage small business in a targeted industry means a small business concern that—

(A)

is domiciled in a State;

(B)

has not generated gross annual sales revenues exceeding $15,000,000 in any of the previous 3 years; and

(C)

is engaged primarily in researching, developing, manufacturing, producing, or bringing to market goods, products, or services with respect to any of the following business sectors:

(i)

Agricultural technology.

(ii)

Energy technology.

(iii)

Environmental technology.

(iv)

Life science.

(v)

Information technology.

(vi)

Digital media.

(vii)

Clean technology.

(viii)

Defense technology.

(ix)

Photonics technology.

(2)

Participating investment company

The term participating investment company means an applicant approved under section 399D to participate in the program.

(3)

Small business concern

The term small business concern has the same meaning given such term under section 3(a) of the Small Business Act (15 U.S.C. 632(a)).

399L.

Authorization of appropriations

There is authorized to be appropriated to carry out the program $200,000,000 for the first full fiscal year beginning after the date of the enactment of this part.

.

642.

Prohibitions on earmarks

None of the funds appropriated for the program established under part D of title III of the Small Business Investment Act of 1958, as added by this title, may be used for a Congressional earmark as defined in clause 9(d) of rule XXI of the Rules of the House of Representatives.

H

SBA disaster program reform

651.

Revised collateral requirements

Section 7 of the Small Business Act (15 U.S.C. 636) is amended—

(1)

by striking (e) [RESERVED]. and (f) [RESERVED].; and

(2)

in subsection (f), as added by section 12068(a)(2) of the Small Business Disaster Response and Loan Improvements Act of 2008 (subtitle B of title XII of the Food, Conservation, and Energy Act of 2008; Public Law 110–246), by adding at the end the following:

(2)

Revised collateral requirements

In making a loan with respect to a business under subsection (b), if the total approved amount of such loan is less than or equal to $250,000, the Administrator may not require the borrower to use the borrower’s home as collateral.

.

652.

Increased limits

Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is amended—

(1)

in paragraph (3)(E) by striking $1,500,000 each place it appears and inserting $3,000,000; and

(2)

in paragraph (8)(A) by striking $2,000,000 and inserting $3,000,000.

653.

Revised repayment terms

Section 7(f) of the Small Business Act (15 U.S.C. 636(f)) is amended by adding at the end the following:

(3)

Revised repayment terms

In making loans under subsection (b), the Administrator—

(A)

may not require repayment to begin until the date that is 12 months after the date on which the final disbursement of approved amounts is made; and

(B)

shall calculate the amount of repayment based solely on the amounts disbursed.

.

654.

Revised disbursement process

Section 7(f) of the Small Business Act (15 U.S.C. 636(f)), as amended by this Act, is further amended by adding at the end the following:

(4)

Revised disbursement process

In making a loan under subsection (b), the Administrator shall disburse loan amounts in accordance with the following:

(A)

If the total amount approved with respect to such loan is less than or equal to $150,000—

(i)

the first disbursement with respect to such loan shall consist of 40 percent of the total loan amount, or a lesser percentage of the total loan amount if the Administrator and the borrower agree on such a lesser percentage;

(ii)

the second disbursement shall consist of 50 percent of the loan amounts that remain after the first disbursement, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of 50 percent of the first disbursement; and

(iii)

the third disbursement shall consist of the loan amounts that remain after the preceding disbursements, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of the first disbursement and 50 percent of the second disbursement.

(B)

If the total amount approved with respect to such loan is more than $150,000 but less than or equal to $500,000—

(i)

the first disbursement with respect to such loan shall consist of 20 percent of the total loan amount, or a lesser percentage of the total loan amount if the Administrator and the borrower agree on such a lesser percentage;

(ii)

the second disbursement shall consist of 30 percent of the loan amounts that remain after the first disbursement, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of 50 percent of the first disbursement;

(iii)

the third disbursement shall consist of 25 percent of the loan amounts that remain after the first and second disbursements, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of the first disbursement and 50 percent of the second disbursement; and

(iv)

the fourth disbursement shall consist of the loan amounts that remain after the preceding disbursements, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of the first and second disbursements and 50 percent of the third disbursement.

(C)

If the total amount approved with respect to such loan is more than $500,000—

(i)

the first disbursement with respect to such loan shall consist of at least $100,000, or a lesser amount if the Administrator and the borrower agree on such a lesser amount; and

(ii)

the number of disbursements after the first, and the amount of each such disbursement, shall be in the discretion of the Administrator, but the amount of each such disbursement shall be at least $100,000.

.

655.

Grant program

Section 7(b) of the Small Business Act (15 U.S.C. 636(b)), as amended by this Act, is further amended by inserting after paragraph (9) the following:

(10)

Grants to disaster-affected small businesses

(A)

In general

If the Administrator declares eligibility for additional disaster assistance under paragraph (9), the Administrator may make a grant, in an amount not exceeding $100,000, to a small business concern that—

(i)

is located in an area affected by the applicable major disaster;

(ii)

submits to the Administrator a certification by the owner of the concern that such owner intends to reestablish the concern in the same county in which the concern was originally located;

(iii)

has applied for, and was rejected for, a conventional disaster assistance loan under this subsection; and

(iv)

was in existence for at least 2 years before the date on which the applicable disaster declaration was made.

(B)

Priority

In making grants under this paragraph, the Administrator shall give priority to a small business concern that the Administrator determines is economically viable but unable to meet short-term financial obligations.

(C)

Program level and authorization of appropriations

(i)

Program level

The Administrator is authorized to make $100,000,000 in grants under this paragraph for each of fiscal years 2010 and 2011.

(ii)

Authorization of appropriations

There are authorized to be appropriated to the Administrator such sums as may be necessary to carry out this paragraph.

.

656.

Regional disaster working groups

Section 40 of the Small Business Act (15 U.S.C. 657l) is amended—

(1)

in subsection (a), in the matter preceding paragraph (1), by striking or and inserting and;

(2)

by redesignating subsection (d) as subsection (e); and

(3)

by inserting after subsection (c) the following:

(d)

Regional disaster working groups

In carrying out the responsibilities pertaining to loan making activities under subsection (a), the Administrator, acting through the regional administrators of the regional offices of the Administration, shall develop a disaster preparedness and response plan for each region of the Administration. Each such plan shall be developed in cooperation with Federal, State, and local emergency response authorities and representatives of businesses located in the region to which such plan applies. Each such plan shall identify and include a plan relating to the 3 disasters, natural or manmade, most likely to occur in the region to which such plan applies.

.

657.

Outreach grants for loan applicant assistance

Section 7(b) of the Small Business Act (15 U.S.C. 636(b)), as amended by this Act, is further amended by inserting after paragraph (10) the following:

(11)

Outreach grants for loan applicant assistance

(A)

In general

From amounts made available for administrative expenses relating to activities under this subsection, the Administrator is authorized to make grants to the following:

(i)

A women’s business center in an area affected by a disaster.

(ii)

A small business development center in an area affected by a disaster.

(iii)

A Veteran Business Outreach Center in an area affected by a disaster.

(iv)

A chamber of commerce in an area affected by a disaster.

(B)

Use of grant

An entity specified under subparagraph (A) shall use a grant received under this paragraph to provide application preparation assistance to applicants for a loan under this subsection.

(C)

Program level

The Administrator is authorized to make $50,000,000 in grants under this paragraph for each of fiscal years 2010 and 2011.

.

658.

Homeowners impacted by toxic drywall

Section 7(b) of the Small Business Act (15 U.S.C. 636(b)), as amended by this Act, is further amended by inserting after paragraph (11) the following:

(12)

Homeowners impacted by toxic drywall

The Administrator may make a loan under this subsection to any homeowner if the primary residence of such homeowner has been adversely impacted by the installation of toxic drywall manufactured in China. A loan under this paragraph may be used only for the repair or replacement of such toxic drywall.

.

659.

Authorization of appropriations

Section 20 of the Small Business Act (15 U.S.C. 631 note), as amended by this Act, is further amended—

(1)

by redesignating subsection (j) as subsection (k); and

(2)

by inserting after subsection (i) the following:

(j)

Fiscal years 2010 and 2011 with respect to section 7(b)

There is authorized to be appropriated such sums as may be necessary for administrative expenses and loans under section 7(b).

.

I

Regulations

661.

Regulations

Except as otherwise provided in this Act or in amendments made by this Act, after an opportunity for notice and comment, but not later than 180 days after the date of the enactment of this Act, the Administrator shall issue regulations to carry out this Act and the amendments made by this Act.

J

Temporary employee services franchises

671.

Temporary employee services franchises

In determining whether a franchisee is affiliated with a franchiser in the temporary employee services industry for the purposes of Small Business Administration lending programs, the Administrator of the Small Business Administration shall—

(1)

continue to apply its historically considered affiliation factors in determining whether a business is affiliated with another business or the franchiser in the temporary staffing industry;

(2)

promulgate such other rules and regulations as necessary to determine affiliation within the temporary employee services industry as the Administrator determines consistent with the Small Business Act; and

(3)

consider the processing of payroll and billing by a franchiser as customary and common practice in the temporary employee services industry that does not provide probative weight on affiliation, to the extent that the temporary staffing personnel are interviewed, hired, trained, assigned, and subject to discharge by the franchisee.

K

Study on private sector lending

681.

Study on private sector lending

(a)

In general

Not later than 90 days after the date of the enactment of this Act, the Administrator of the Small Business Administration 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 that describes lending to small business concerns by the private sector, including the following:

(1)

The total amount of lending to small business concerns by private sector financial institutions during each of fiscal years 2006 through 2009.

(2)

The total amount of lending to small business concerns by the 10 largest private sector financial institutions (as determined by the Administrator in terms of amounts lent during fiscal year 2006) during each of fiscal years 2006 through 2009.

(b)

Coordination

The Administrator of the Small Business Administration shall, if necessary, coordinate with the heads of other Federal departments and agencies to complete the report under subsection (a).

(c)

Small business concerns defined

In this section, the term small business concern has the meaning given such term under section 3(a) of the Small Business Act (15 U.S.C. 632(a)).

L

Study on increases in certain caps

691.

Study on increases in certain caps

Not later than 90 days after the date of enactment of this Act, the Administrator of the Small Business Administration shall submit to Congress a report that describes the anticipated effects of the following potential changes to programs, including whether such changes adequately meet the financing needs of small businesses:

(1)

Increasing—

(A)

the maximum amount of a loan that may be guaranteed under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) to $3,000,000; and

(B)

participation by the Administrator with regard to such a loan.

(2)

Increasing—

(A)

the maximum amount of a debenture that may be guaranteed under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.); and

(B)

the maximum amount of a loan that may be made with the proceeds of such debenture.

(3)

Increasing the maximum amount of a microloan that may be made under section 7(m) of the Small Business Act (15 U.S.C. 636(m)).

M

Rural outreach

701.

Rural outreach

The Small Business Act (15 U.S.C. 631 et seq.), as amended by this Act, is further amended—

(1)

by redesignating section 46 as section 47; and

(2)

by inserting after section 45 the following:

46.

Rural outreach

The Administrator shall ensure that each district office of the Administration that includes a rural area—

(1)

establishes a plan to provide small business concerns in rural areas with information on the financing and investment programs of the Administration of use to such concerns;

(2)

designates an employee of the office as a rural business financing outreach specialist, who is responsible for providing advice concerning the lending and investment programs of the Administration to small business concerns; and

(3)

hosts at least one outreach seminar in a rural area each year to provide information described under paragraph (1) to small business concerns in rural areas.

.

N

Study relating to medical technology

711.

Study relating to medical technology

Not later than one year after the date of the enactment of this Act, the Administrator of the Small Business Administration shall submit to Congress a report describing recommendations for and the feasibility of a program—

(1)

to increase investment in the research, development, and commercialization of medical technology by small business concerns; and

(2)

that is administered in a manner similar to the program under part C of title III of the Small Business Investment Act of 1958 (15 U.S.C. 690 et seq.).

O

Study on additional credit risk factors

721.

Study on additional credit risk factors

(a)

In general

With respect to loans made under programs established or amended under this Act, the Administrator of the Small Business Administration shall conduct a study on whether the failure of such loans to achieve one or more of the public policy goals specified in subsection (b) negatively impacts the ability of businesses receiving such loans to make timely repayment of such loans.

(b)

Public policy goals

The public policy goals referred to in subsection (a) are the provision of adequate access to capital to assist small business concerns with one or more of the following:

(1)

Offsetting the costs to such concerns resulting from the imposition of a surtax on the income of small business owners.

(2)

Offsetting the costs to such concerns resulting from the enactment of a requirement that such concerns offer health care of a minimum acceptable coverage level.

(3)

Offsetting the costs to such concerns resulting from an increase in the marginal tax rates of small business owners.

(4)

Offsetting the reduction in capital available for such concerns resulting from an increase in the tax on capital gains.

(5)

Offsetting the reduction in capital available for such concerns resulting from an increase in the taxes on carried interest.

(6)

Offsetting the increased energy costs for such concerns resulting from the enactment of a cap on carbon dioxide emissions.

(7)

Offsetting the increased costs to such concerns resulting from a change in Federal law that allows unions to be organized through a card check process.

(8)

Offsetting the reduction in capital available for such concerns resulting from new regulations on financial products.

(9)

Offsetting the increased costs to such concerns resulting from the imposition of net neutrality rules on the Internet.

(c)

Use of Study

Not later than 180 days after the date of the enactment of this Act, the Administrator of the Small Business Administration shall submit to Congress a report on the results of the study conducted under subsection (a) and shall use such results to evaluate and adjust, as appropriate, the potential credit risk to the Government through the provision of loans under programs established or amended under this Act.

VI

Offsets

801.

Transfer of unobligated stimulus funds

(a)

Rescission

Effective on the date of the enactment of this Act, any unobligated balances available on such date of funds made available by division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5), other than under the heading ‘‘Federal Highway Administration—Highway Infrastructure Investment’’ in title XII of such division, are rescinded and such provisions are repealed.

(b)

Repeal

The provisions of division B of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5), other than titles I and II of such division, are repealed.

(c)

Transfer of funds

The total amount rescinded by this section shall be deposited in the Federal Treasury.