H. R. 2451
IN THE HOUSE OF REPRESENTATIVES
June 20, 2013
Ms. Velázquez (for herself, Mr. Payne, Ms. Chu, and Ms. Clarke) introduced the following bill; which was referred to the Committee on Small Business
To direct the Administrator of the Small Business Administration to establish and carry out a direct lending program for small business concerns, and for other purposes.
This Act may be cited as the
Strengthening Entrepreneurs’ Economic
Development Act of 2013
Direct Lending Program for Small Business Concerns
The Administrator of the Small Business Administration shall—
carry out a loan program (in this Act referred to as the
establish a process under which an eligible small business concern may submit an application to the Administrator for the purpose of securing a loan under the program.
Each loan made to an eligible small business concern under the program shall be in an amount not to exceed $150,000.
An eligible small business concern that receives a loan under the program shall repay the loan not later than 6 years after the date on which such loan is disbursed.
No prepayment penalty
There shall be no prepayment penalty on a loan made under the program.
The maximum legal rate of interest on any loan made under the program shall not exceed the sum of the rate prescribed by the Administrator pursuant to section 7(a)(4)(A) of the Small Business Act ( 15 U.S.C. 636(a)(4)(A) ) for direct loans plus 5 percent.
With respect to each loan made to an eligible small business concern under the program, the Administrator may collect a fee from the borrower using the formula established under section 7(a)(18) of the Small Business Act ( 15 U.S.C. 636(a)(18) ).
Not later than 180 days after the date of enactment of this Act, the Administrator shall issue guidance regarding prudent underwriting standards that must be used for loans made under the program.
The Administrator shall establish a process under which the Administrator makes available to lenders each loan application submitted for the purpose of such lenders originating, underwriting, closing, and servicing the loan for which the applicant applied.
Lenders are eligible to receive a loan application described in subparagraph (A) if they participate in the program.
The Administrator shall first make available a loan application described in subparagraph (A) to lenders within 50 miles of the principal office of the loan applicant.
If a lender described in subparagraph (C) does not agree to originate, underwrite, close, and service the loan applied for within 5 business days of receiving a loan application described in subparagraph (A), the Administrator shall subsequently make available such loan application to lenders in the Preferred Lenders Program under section 7(a)(2)(C)(ii) of the Small Business Act (15 U.S.C. 636(a)(2)(C)(ii)).
Authority of administration to lend
If a lender described in subparagraphs (C) and (D) does not agree to originate, underwrite, close, and service the loan applied for within 10 business days of receiving a loan application described in subparagraph (A), the Administrator shall, in accordance with the underwriting standards promulgated under subsection (g), consider such loan for origination, underwriting, closing, and servicing by the Administration within 10 business days.
The Administrator shall offer to sell loans made by the Administrator under the program. 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 the program for less than 90 percent of the net present value of the loan, as determined and certified by a qualified third party.
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 subsection.
In this Act:
the Administrator of the Small Business Administration.
Eligible small business concern
eligible small business
concern means a small business concern that has less than 20
Small business concern
small business concern has the
same meaning given such term under
section 3 of the Small Business Act (15
Fee for high-dollar 7(a) loans
Section 7(a) of the Small Business Act is amended—
by redesignating paragraphs (31) through (35) as paragraphs (32) through (36); and
by inserting the following new paragraph:
Fee for high-dollar loans
respect to each loan in excess of $2,000,000 approved under this subsection,
the Administration shall assess, collect, and retain a fee not to exceed a
certain percentage, as determined by the Administrator, of the outstanding
balance of the deferred participation share of the loan, as necessary to reduce
to zero the cost to the Administration of making loans under this subsection.
As used in the paragraph, the term
cost has the meaning given
that term in
section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C.