This compilation includes
PL 110‑246, approved 6/18/08.
SMALL BUSINESS ACT
(Public Law 85‑536, as amended)
§ 1. This Act may be cited as the “Small Business Act.”
§ 2. (a) The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured. The preservation and expansion of such competition is basic not only to the economic well‑being but to the security of this Nation. Such security and well‑being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small‑business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation.
(b) (1) It is the declared policy of the Congress that the Federal Government, through the Small Business Administration, acting in cooperation with the Department of Commerce and other relevant State and Federal agencies, should aid and assist small businesses, as defined under this Act, to increase their ability to compete in international markets by—
(A) enhancing their ability to export;
(B) facilitating technology transfers;
(C) enhancing their ability to compete effectively and efficiently against imports;
(D) increasing the access of small businesses to long‑term capital for the purchase of new plant and equipment used in the production of goods and services involved in international trade;
(E) disseminating information concerning State, Federal, and private programs and initiatives to enhance the ability of small businesses to compete in international markets; and
(F) ensuring that the interests of small businesses are adequately represented in bilateral and multilateral trade negotiations.
(2) The Congress recognizes that the Department of Commerce is the principal Federal agency for trade development and export promotion and that the Department of Commerce and the Small Business Administration work together to advance joint interests. It is the purpose of this Act to enhance, not alter, their respective roles.
(c) It is the declared policy of the Congress that the Government, through the Small Business Administration, should aid and assist small business concerns which are engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries; and the financial assistance programs authorized by this Act are also to be used to assist such concerns.
(d) (1) The assistance programs authorized by sections 7(i) and 7(j) of this Act are to be utilized to assist in the establishment, preservation, and strengthening of small business concerns and improve the managerial skills employed in such enterprises, with special attention to small business concerns (1) located in urban or rural areas with high proportions of unemployed or low‑income individuals; or (2) owned by low‑income individuals; and to mobilize for these objectives private as well as public managerial skills and resources.
(2) (A) With respect to the programs authorized by section 7(j) of this Act, the Congress finds—
(i) that ownership and control of productive capital is concentrated in the economy of the United States and certain groups, therefore, own and control little productive capital;
(ii) that certain groups in the
(iii) that the broadening of small business ownership among groups that presently own and control little productive capital is essential to provide for the well‑being of this Nation by promoting their increased participation in the free enterprise system of the United States;
(iv) that such development of business ownership among groups that presently own and control little productive capital will be greatly facilitated through the creation of a small business ownership development program, which shall provide services, including, but not limited to, financial, management, and technical assistance.
(v) that the power to let Federal contracts pursuant to section 8(a) of the Small Business Act can be an effective procurement assistance tool for development of business ownership among groups that own and control little productive capital; and
(vi) that the procurement authority under section 8(a) of the Small Business Act shall be used only as a tool for developing business ownership among groups that own and control little productive capital.
(B) It is therefore the purpose of the programs authorized by section 7(j) of this Act to—
(i) foster business ownership and development by individuals in groups that own and control little productive capital; and
(ii) promote the competitive viability of such firms in the marketplace by creating a small business and capital ownership development program to provide such available financial, technical, and management assistance as may be necessary.
(e) Further, it is the declared policy of the Congress that the Government should aid and assist victims of floods and other catastrophes, and small‑business concerns which are displaced as a result of federally aided construction programs.
(f) (1) With respect to the Administration’s business development programs the Congress finds—
(A) that the opportunity for full participation in our free enterprise system by socially and economically disadvantaged persons is essential if we are to obtain social and economic equality for such persons and improve the functioning of our national economy;
(B) that many such persons are socially disadvantaged because of their identification as members of certain groups that have suffered the effects of discriminatory practices or similar invidious circumstances over which they have no control;
(C) that such groups include, but are not limited to, Black Americans, Hispanic Americans, Native Americans, Indian tribes, Asian Pacific Americans, Native Hawaiian Organizations, and other minorities;
(D) that it is in the national interest to expeditiously ameliorate the conditions of socially and economically disadvantaged groups;
(E) that such conditions can be improved by providing the maximum practicable opportunity for the development of small business concerns owned by members of socially and economically disadvantaged groups;
(F) that such development can be materially advanced through the procurement by the United States of articles, equipment, supplies, services, materials, and construction work from such concerns; and
(G) that such procurements also benefit the
(2) It is, therefore, the purpose of section 8(a) to—
(A) promote the business development of small business concerns owned and controlled by socially and economically disadvantaged individuals so that such concerns can compete on an equal basis in the American economy;
(B) promote the competitive viability of such concerns in the marketplace by providing such available contract, financial, technical, and management assistance as may be necessary; and
(C) clarify and expand the program for the
procurement by the
(g) In administering the disaster loan program authorized by section 7 of this Act, to the maximum extent possible, the Administration shall provide assistance and counseling to disaster victims in filing applications, providing information relevant to loan processing, and in loan closing and prompt disbursement of loan proceeds and shall give the disaster program a high priority in allocating funds for administrative expenses.
(h) (1) With respect to the programs and activities authorized by this Act, the Congress finds that—
(A) women owned business has become a major contributor to the American economy by providing goods and services, revenues, and jobs;
(B) over the past two decades there have been substantial gains in the social and economic status of women as they have sought economic equality and independence;
(C) despite such progress, women, as a group, are subjected to discrimination in entrepreneurial endeavors due to their gender;
(D) such discrimination takes many overt and subtle forms adversely impacting the ability to raise or secure capital, to acquire managerial talents, and to capture market opportunities;
(E) it is in the national interest to expeditiously remove discriminatory barriers to the creation and development of small business concerns owned and controlled by women;
(F) the removal of such barriers is essential to provide a fair opportunity for full participation in the free enterprise system by women and to further increase the economic vitality of the Nation;
(G) increased numbers of small business concerns owned and controlled by women will directly benefit the United States Government by expanding the potential number of suppliers of goods and services to the Government; and
(H) programs and activities designed to assist small business concerns owned and controlled by women must be implemented in such a way as to remove such discriminatory barriers while not adversely affecting the rights of socially and economically disadvantaged individuals.
(2) It is, therefore, the purpose of those programs and activities conducted under the authority of this Act that assist women entrepreneurs to—
(A) vigorously promote the legitimate interests of small business concerns owned and controlled by women;
(B) remove, insofar as possible, the discriminatory barriers that are encountered by women in accessing capital and other factors of production; and
(C) require that the Government engage in a systematic and sustained effort to identify, define and analyze those discriminatory barriers facing women and that such effort directly involve the participation of women business owners in the public/private sector partnership.
(i) PROHIBITION ON THE USE OF FUNDS FOR INDIVIDUALS NOT LAWFULLY WITHIN THE UNITED STATES.—None of the funds made available pursuant to this Act may be used to provide any direct benefit or assistance to any individual in the United States if the Administrator or the official to which the funds are made available receives notification that the individual is not lawfully within the United States.
(j) CONTRACT BUNDLING.—In complying with the statement of congressional policy expressed in subsection (a), relating to fostering the participation of small business concerns in the contracting opportunities of the Government, each Federal agency, to the maximum extent practicable, shall—
(1) comply with congressional intent to foster the participation of small business concerns as prime contractors, subcontractors, and suppliers;
(2) structure its contracting requirements to facilitate competition by and among small business concerns, taking all reasonable steps to eliminate obstacles to their participation; and
(3) avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors.
§ 3 (a) (1) For the purposes of this Act, a small‑business concern, including but not limited to enterprises that are engaged in the business of production of food and fiber, ranching and raising of livestock, aquaculture, and all other farming and agricultural related industries, shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation: Provided, That notwithstanding any other provision of law, an agricultural enterprise shall be deemed to be a small business concern if it (including its affiliates) has annual receipts not in excess of $750,000.
(2) ESTABLISHMENT OF SIZE STANDARDS.—
(A) IN GENERAL.—In addition to the criteria specified in paragraph (1), the Administrator may specify detailed definitions or standards by which a business concern may be determined to be a small business concern for the purposes of this Act or any other Act.
(B) ADDITIONAL CRITERIA.—The standards described in paragraph (1) may utilize number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors.
(C) REQUIREMENTS.—Unless specifically authorized by statute, no Federal department or agency may prescribe a size standard for categorizing a business concern as a small business concern, unless such proposed size standard—
(i) is proposed after an opportunity for public notice and comment;
(ii) provides for determining—
(I) the size of a manufacturing concern as measured by the manufacturing concern's average employment based upon employment during each of the manufacturing concern's pay periods for the preceding 12 months;
(II) the size of a business concern providing services on the basis of the annual average gross receipts of the business concern over a period of not less than 3 years;
(III) the size of other business concerns on the basis of data over a period of not less than 3 years; or
(IV) other appropriate factors; and
(iii) is approved by the Administrator.
(3) When establishing or approving any size standard pursuant to paragraph (2), the Administrator shall ensure that the size standard varies from industry to industry to the extent necessary to reflect the differing characteristics of the various industries and consider other factors deemed to be relevant by the Administrator.
(4) EXCLUSION OF CERTAIN SECURITY EXPENSES FROM CONSIDERATION FOR PURPOSE OF SMALL BUSINESS SIZE STANDARDS.—
(A) DETERMINATION REQUIRED.—Not later than 30 days after the date of enactment of this paragraph, the Administrator shall review the application of size standards established pursuant to paragraph (2) to small business concerns that are performing contracts in qualified areas and determine whether it would be fair and appropriate to exclude from consideration in the average annual gross receipts of such small business concerns any payments made to such small business concerns by Federal agencies to reimburse such small business concerns for the cost of subcontracts entered for the sole purpose of providing security services in a qualified area.
(B) ACTION REQUIRED.—not later than 60 days after the date of enactment of this paragraph, the Administrator shall either—
(i) initiate an adjustment to the size standards, as described in subparagraph (A), if the Administrator determines that such an adjustment would be fair and appropriate; or
(ii) provide a report to the Committee on Small Business Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives explaining in detail the basis for the determination by the Administrator that such an adjustment would not be fair and appropriate.
(C) QUALIFIED AREAS.—In this paragraph, the term “qualified area” means—
(i)
(ii)
(iii) any foreign country which included a combat zone, as that term is defined in section 112(c)(2) of the Internal Revenue Code of 1986, at the time of performance of the relevant Federal contract or subcontract.
(b) for purposes of this Act, any reference to an agency or department of the United States, and the term “Federal agency,” shall have the meaning given the term “agency” by section 551(1) of title 5, United States Code, but does not include the United States Postal Service or the Government Accountability Office.
(c) (1) For purposes of this Act, a qualified employee trust shall be eligible for any loan guarantee under section 7(a) with respect to a small business concern on the same basis as if such trust were the same legal entity as such concern.
(2) For purposes of this Act, the term “qualified employee trust” means, with respect to a small business concern, a trust—
(A) which forms part of an employee stock ownership plan (as defined in section 4975(e)(7) of the Internal Revenue Code of 1954)—
(i) which is maintained by such concern, and
(ii) which provides that each participant in the plan is entitled to direct the plan as to the manner in which voting rights under qualifying employer securities (as defined in section 4975(e)(8) of such Code) which are allocated to the account of such participant are to be exercised with respect to a corporate matter which (by law or charter) must be decided by a majority vote of outstanding common shares voted; and
(B) in the case of any loan guarantee under section 7(a), the trustee of which enters into an agreement with the Administrator which is binding on the trust and on such small business concern and which provides that—
(i) the loan guaranteed under section 7(a) shall be used solely for the purchase of qualifying employer securities of such concern,
(ii) all funds acquired by the concern in such purchase shall be used by such concern solely for the purposes for which such loan was guaranteed,
(iii) such concern will provide such funds as may be necessary for the timely repayment of such loan, and the property of such concern shall be available as security for repayment of such loan, and
(iv) all qualifying employer securities acquired by such trust in such purchase shall be allocated to the accounts of participants in such plan who are entitled to share in such allocation, and each participant has a nonforfeitable right, not later than the date such loan is repaid, to all such qualifying employer securities which are so allocated to the participant's account.
(3) Under regulations which may be prescribed by the Administrator, a trust may be treated as a qualified employee trust with respect to a small business concern if—
(A) the trust is maintained by an employee organization which represents at least 51 percent of the employees of such concern, and
(B) such concern maintains a plan—
(i) which is an employee benefit plan which is designed to invest primarily in qualifying employer securities (as defined in section 4975(e)(8) of the Internal Revenue Code of 1954),
(ii) which provides that each participant in the plan is entitled to direct the plan as to the manner in which voting rights under qualifying employer securities which are allocated to the account of such participant are to be exercised with respect to a corporate matter which (by law or charter) must be decided by a majority vote of the outstanding common shares voted,
(iii) which provides that each participant who is entitled to distribution from the plan has a right, in the case of qualifying employer securities which are not readily tradable on an established market, to require that the concern repurchase such securities under a fair valuation formula, and
(iv) which meets such other requirements (similar to requirements applicable to employee stock ownership plans as defined in section 4975(e)(7) of the Internal Revenue Code of 1954) as the Administrator may prescribe, and
(C) in the case of a loan guarantee under section 7(a), such organization enters into an agreement with the Administration which is described in paragraph (2)(B).
(d) For purposes of section 7 of this Act, the term “qualified Indian tribe” means an Indian tribe as defined in section 4(a) of the Indian Self-Determination and Education Assistance Act, which owns and controls 100 per centum of a small business concern.
(e) For purposes of section 7 of this Act, the term “public or private organization for the handicapped” means one—
(1) which is organized under the laws of the United States or of any State, operated in the interest of handicapped individuals, the net income of which does not inure in whole or in part to the benefit of any shareholder or other individual;
(2) which complies with any applicable occupational health and safety standard prescribed by the Secretary of Labor; and
(3) which, in the production of commodities and in the provision of services during any fiscal year in which it received financial assistance under this subsection, employs handicapped individuals for not less than 75 per centum of the man‑hours required for the production or provision of the commodities or services.
(f) For purposes of section 7 of this Act, the term “handicapped individual” means an individual—
(1) who has a physical, mental, or emotional impairment, defect, ailment, disease, or disability of a permanent nature which in any way limits the selection of any type of employment for which the person would otherwise be qualified or qualifiable; or
(2) who is a service-disabled veteran.
(g) For purposes of section 7 of this Act, the term “energy measures” includes—
(1) solar thermal energy equipment which is either of the active type based upon mechanically forced energy transfer or of the passive type based on convective, conductive, or radiant energy transfer or some combination of these types;
(2) photovoltaic cells and related equipment;
(3) a product or service the primary purpose of which is conservation of energy through devices or techniques which increase the energy efficiency of existing equipment, methods of operation, or systems which use fossil fuels, and which is on the Energy Conservation Measures list of the Secretary of Energy or which the Administrator determines to be consistent with the intent of this subsection;
(4) equipment the primary purpose of which is production of energy from wood, biological waste, grain or other biomass source of energy;
(5) equipment the primary purpose of which is industrial cogeneration of energy, district heating, or production of energy from industrial waste;
(6) hydroelectric power equipment;
(7) wind energy conversion equipment; and
(8) engineering, architectural, consulting, or other professional services which are necessary or appropriate to aid citizens in using any of the measures described in paragraph (1) through (7).
(h) For purposes of this Act, the term “credit elsewhere” means the availability of credit from non‑Federal sources on reasonable terms and conditions taking into consideration the prevailing rates and terms in the community in or near where the concern transacts business, or the homeowner resides, for similar purposes and periods of time.
(i) For purposes of section 7 of this Act, the term “homeowners” includes owners and lessees of residential property and also includes personal property.
(j) For the purposes of this Act, the term “small agricultural cooperative” means an association (corporate or otherwise) acting pursuant to the provisions of the Agricultural Marketing Act (12 U.S.C. 1141(j), whose size does not exceed the size standard established by the Administration for other similar agricultural small business concerns. In determining such size, the Administration shall regard the association as a business concern and shall not include the income or employees of any member shareholder of such cooperative.
(k) (1) For the purposes of this Act, the term “disaster” means a sudden event which causes severe damage including, but not limited to, floods, hurricanes, tornadoes, earthquakes, fires, explosions, volcanoes, windstorms, landslides or mudslides, tidal waves, commercial fishery failures or fishery resource disasters (as determined by the Secretary of Commerce under section 308(b) of the Interjurisdictional Fisheries Act of 1986), ocean conditions resulting in the closure of customary fishing waters, riots, civil disorders or other catastrophes, except it does not include economic dislocations.
(2) For purposes of section 7(b)(2), the term “disaster” includes—
(A) drought;
(B) below average water levels in the Great Lakes, or on any body of water in the United States that supports commerce by small business concerns; and
(C) ice storms and blizzards.
(l) For purposes of this Act—
(1) The term “computer crime” means—
(A) any crime committed against a small business concern by means of the use of a computer; and
(B) any crime involving the illegal use of, or tampering with, a computer owned or utilized by a small business concern.
(m) For purposes of this Act, the term “simplified acquisition threshold” has the meaning given such term in section 4(11) of the Office of Federal Procurement Policy Act (41 USC 403(11)).
(n) For the purposes of this Act, a small business concern is a small business concern owned and controlled by women if—
(1) at least 51 percent of small business concern is owned by one or more women or, in the case of any publicly owned business at least 51 percent of the stock of which is owned by one or more women; and
(2) the management and daily business operations of the business are controlled by one or more women.
(o) DEFINITIONS OF BUNDLING OF CONTRACT REQUIREMENTS AND RELATED TERMS.—In this Act:
(1) BUNDLED CONTRACT.—The term “bundled contract” means a contract that is entered into to meet requirements that are consolidated in a bundling of contract requirements.
(2) BUNDLING OF CONTRACT REQUIREMENTS.—The term “bundling of contract requirements” means consolidating 2 or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small-business concern due to—
(A) the diversity, size, or specialized nature of the elements of the performance specified;
(B) the aggregate dollar value of the anticipated award;
(C) the geographical dispersion of the contract performance sites; or
(D) any combination of the factors described in subparagraphs (A), (B), and (C).
(3) SEPARATE SMALL CONTRACT.—The term “separate smaller contract,” with respect to a bundling of contract requirements, means a contract that has been performed by 1 or more small business concerns or was suitable for award to 1 or more small business concerns.
(p) DEFINITIONS RELATING TO HUBZONES.—In this Act:
(1) HISTORICALLY UNDERUTILIZED BUSINESS ZONE.—The term “historically underutilized business zone” means any area located within 1 or more—
(A) qualified census tracts;
(B) qualified nonmetropolitan counties;
(C) lands within the external boundaries of an Indian reservation;
(D) redesignated areas; or
(E) base closure areas.
(2) HUBZONE.—The term “HUBZone” means a historically underutilized business zone.
(3) HUBZONE SMALL BUSINESS CONCERN.—The term “HUBZone small business concern” means—
(A) a small business concern that is at least
51 percent owned and controlled by
(B) a small business concern that is—
(i) an Alaska Native Corporation owned and controlled by Natives (as determined pursuant to section 29(e)(1) of the Alaska Native Claims Settlement Act (43 U.S.C. 1626(e)(1))); or
(ii) a direct or indirect subsidiary corporation, joint venture, or partnership of an Alaska Native Corporation qualifying pursuant to section 29(e)(1) of the Alaska Native Claims Settlement Act (43 U.S.C. 1626(e)(1)), if that subsidiary, joint venture, or partnership is owned and controlled by Natives (as determined pursuant to section 29(e)(2) of the Alaska Native Claims Settlement Act (43 U.S.C. 1626(e)(2)));
(C) a small business concern—
(i) that is wholly owned by 1 or more Indian tribal governments, or by a corporation that is wholly owned by 1 or more Indian tribal governments; or
(ii) that is owned in part by 1 or more Indian tribal governments, or by a corporation that is wholly owned by 1 or more Indian tribal governments, if all other owners are either United States citizens or small business concerns;
(D) a small business concern that is—
(i) wholly owned by a community development corporation that has received financial assistance under Part 1 of Subchapter A of the Community Economic Development Act of 1981 (41 U.S.C. 9805 et seq.); or
(ii) owned in part by 1 or more community development corporations, if all other owners are either United States citizens or small business concerns; or
(E) a small business concern that is—
(i) a small agricultural cooperative
organized or incorporated in the
(ii) wholly owned by 1 or more small
agricultural cooperatives organized or incorporated in the
(iii) owned in part by 1 or more small
agricultural cooperatives organized or incorporated in the
(4) QUALIFIED AREAS—
(A) QUALIFIED CENSUS TRACT.—The term “qualified census tract” has the meaning given that term in section 42(d)(5)(C)(ii) of the Internal Revenue Code of 1986.
(B) QUALIFIED NONMETROPOLITAN COUNTY.—The term “qualified nonmetropolitan county” means any county—
(i) that was not located in a metropolitan statistical area (as defined in section 143(k)(2)(B) of the Internal Revenue Code of 1986) at the time of the most recent census taken for purposes of selecting qualified census tracts under section 42(d)(5)(C)(ii) of the Internal Revenue Code of 1986; and
(ii) in which—
(I) the median household income is less than 80 percent of the nonmetropolitan State median household income, based on the most recent data available from the Bureau of the Census of the Department of Commerce;
(II) the unemployment rate is not less than 140 percent of the average unemployment rate for the United States or for the State in which such county is located, whichever is less, based on the most recent data available from the Secretary of Labor; or
(III) there is located a difficult development area, as designated by the Secretary of Housing and Urban Development in accordance with section 42(d)(5)(C)(iii) of the Internal Revenue Code of 1986, within Alaska, Hawaii, or any territory or possession of the United States outside the 48 contiguous States.
(C) REDESIGNATED AREA.—The term “redesignated area” means any census tract that ceases to be qualified under subparagraph (A) and any nonmetropolitan county that ceases to be qualified under subparagraph (B), except that a census tract or a nonmetropolitan county may be a “redesignated area” only until the later of—
(i) the date on which the Census Bureau publicly releases the first results from the 2010 decennial census; or
(ii) 3 years after the date on which the census tract or nonmetropolitan county ceased to be so qualified.
(D) BASE CLOSURE AREA.—The term “base closure area” means lands within the external boundaries of a military installation that were closed through a privatization process under the authority of—
(i) the Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of division B of Public Law 101-510; 10 U.S.C. 2687 note);
(ii) title II of the Defense Authorization Amendments and Base Closure and Realignment Act (Public Law 100-526; 10 U.S.C. 2687 note);
(iii) section 2687 of title 10, United States Code; or
(iv) any other provision of law authorizing or directing the Secretary of Defense or the Secretary of a military department to dispose of real property at the military installation for purposes relating to base closures of [sic] redevelopment, while retaining the authority to enter into a leaseback of all or a portion of the property for military use.
(5) QUALIFIED HUBZONE SMALL BUSINESS CONCERN—
(A) IN GENERAL.—A HUBZone small business concern is “qualified,” if—
(i) the small business concern has certified in writing to the Administrator (or the Administrator otherwise determines, based on information submitted to the Administrator by the small business concern, or based on certification procedures, which shall be established by the Administration by regulation) that—
(I) it is a HUBZone small business concern—
(aa) pursuant to subparagraph (A), (B), (C), (D) or (E) of paragraph (3), and that its principal office is located in a HUBZone and not fewer than 35 percent of its employees reside in a HUBZone; or
(bb) pursuant to paragraph (3)(C), and not fewer than 35 percent of its employees engaged in performing a contract awarded to the small business concern on the basis of a preference provided under section 31(b) reside within any Indian reservation governed by 1 or more of the tribal government owners, or reside within any HUBZone adjoining any such Indian reservation;
(II) the small business concern will attempt to maintain the applicable employment percentage under subclause (I) during the performance of any contract awarded to the small business concern on the basis of a preference provided under section 31(b); and
(III) with respect to any subcontract entered into by the small business concern pursuant to a contract awarded to the small business concern under section 31, the small business concern will ensure that—
(aa) in the case of a contract for services (except construction), not less than 50 percent of the cost of contract performance incurred for personnel will be expended for its employees or for employees of other HUBZone small business concerns;
(bb) in the case of a contract for procurement of supplies (other than procurement from a regular dealer in such supplies), not less than 50 percent of the cost of manufacturing the supplies (not including the cost of materials) will be incurred in connection with the performance of the contract in a HUBZone by 1 or more HUBZone small business concerns;
(cc) in the case of a contract for the procurement by the Secretary of Agriculture of agricultural commodities, none of the commodity being procured will be obtained by the prime contractor through a subcontractor for the purchase of the commodity in substantially the final form in which it is to be supplied to the Government; and
(ii) no certification made or information provided by the small business concern under clause (i) has been, in accordance with the procedures established under section 31(c)(1)—
(I) successfully challenged by an interested party; or
(II) otherwise determined by the Administrator to be materially false.
(B) CHANGE IN PERCENTAGES.—The Administrator may utilize a percentage other than the percentage specified in under [sic] item (aa) or (bb) of subparagraph (A)(i)(III), if the Administrator determines that such action is necessary to reflect conventional industry practices among small business concerns that are below the numerical size standard for businesses in that industry category.
(C) CONSTRUCTION AND OTHER CONTRACTS.—The Administrator shall promulgate final regulations imposing requirements that are similar to those specified in items (aa) and (bb) of subparagraph (A)(i)(III) on contracts for general and specialty construction, and on contracts for any other industry category that would not otherwise be subject to those requirements. The percentage applicable to any such requirement shall be determined in accordance with subparagraph (B).
(D) LIST OF QUALIFIED SMALL BUSINESS CONCERNS.—The Administrator shall establish and maintain a list of qualified HUBZone small business concerns, which list shall, to the extent practicable—
(i) once the Administrator has made the certification required by subparagraph (A)(i) regarding a qualified HUBZone small business concern and has determined that subparagraph (A)(ii) does not apply to that concern, include the name, address, and type of business with respect to each such small business concern;
(ii) be updated by the Administrator not less than annually; and
(iii) be provided upon request to any Federal agency or other entity.
(6) NATIVE AMERICAN SMALL BUSINESS CONCERNS.—
(A) ALASKA NATIVE CORPORATION.—The term “Alaska Native Corporation” has the same meaning as the term “Native Corporation” in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602).
(B) ALASKA NATIVE VILLAGE.—The term “Alaska Native Village” has the same meaning as the term “Native village” in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602).
(C) INDIAN RESERVATION.—The term “Indian reservation”—
(i) has the same meaning as the term “Indian country” in section 1151 of title 18, United States Code, except that such term does not include—
(I) any lands that are located within a State in which a tribe did not exercise governmental jurisdiction on the date of enactment of this paragraph, unless that tribe is recognized after that date of enactment by either an Act of Congress or pursuant to regulations of the Secretary of the Interior for the administrative recognition that an Indian group exists as an Indian tribe (part 83 of title 25, Code of Federal Regulations); and
(II) lands taken into trust or acquired by an Indian tribe after the date of enactment of this paragraph if such lands are not located within the external boundaries of an Indian reservation or former reservation or are not contiguous to the lands held in trust or restricted status on that date of enactment; and
(ii) in the State of
(I) are within the jurisdictional areas of an Oklahoma Indian tribe (as determined by the Secretary of the Interior); and
(II) are recognized by the Secretary of the Interior as eligible for trust land status under part 151 of title 25, Code of Federal Regulations (as in effect on the date of enactment of this paragraph).
(7) AGRICULTURAL COMMODITY.—The term “agricultural commodity” has the same meaning as in section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602).
(q) DEFINITIONS RELATING TO VETERANS.—In this Act, the following definitions apply:
(1) SERVICE-DISABLED VETERAN.—The term “service-disabled veteran” means a veteran with a disability that is service-connected (as defined in section 101(16) of title 38, United States Code).
(2) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY SERVICE-DISABLED VETERANS.—The term “small business concern owned and controlled by service-disabled veterans” means a small business concern—
(A) not less than 51 percent of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service-disabled veterans; and
(B) the management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran.
(3) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY VETERANS.—The term “small business concern owned and controlled by veterans” means a small business concern—
(A) not less than 51 percent of which is owned by one or more veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and
(B) the management and daily business operations of which are controlled by one or more veterans.
(4) VETERAN.—The term “veteran” has the meaning given the term in section 101(2) of title 38, United States Code.
(5) RELIEF FROM TIME LIMITATIONS.—
(A) IN GENERAL.—Any time limitation on any qualification, certification, or period of participation imposed under this Act on any program that is available to small business concerns shall be extended for a small business concern that—
(i) is owned and controlled by—
(I) a veteran who was called or ordered to active duty under a provision of law specified in section 101(a)(13)(B) of title 10, United States Code, on or after September 11, 2001; or
(II) a service-disabled veteran who became such a veteran due to an injury or illness incurred or aggravated in the active military, naval, or air service during a period of active duty pursuant to a call or order to active duty under a provision of law referred to in subclause (I) on or after September 11, 2001; and
(ii) was subject to the time limitation during such period of active duty.
(B) DURATION.—Upon submission of proper documentation to the Administrator, the extension of a time limitation under subparagraph (A) shall be equal to the period of time that such veteran who owned or controlled such a concern was on active duty as described in that subparagraph.
(C) EXCEPTION FOR PROGRAMS SUBJECT TO FEDERAL CREDIT REFORM ACT OF 1990—The provisions of subparagraphs (A) and (B) shall not apply to any programs subject to the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
(r) DEFINITIONS RELATING TO SMALL BUSINESS LENDING COMPANIES.—As used in section 23 of this Act:
(1) SMALL BUSINESS LENDING COMPANY.—The term “small business lending company” means a business concern that is authorized by the Administrator to make loans pursuant to section 7(a) and whose lending activities are not subject to regulation by any Federal or State regulatory agency.
(2) NON-FEDERALLY REGULATED SBA LENDER.—The term “non-Federally regulated SBA lender” means a business concern if—
(A) such concern is authorized by the Administrator to make loans under section 7;
(B) such concern is subject to regulation by a State; and
(C) the lending activities of such concern are not regulated by any Federal banking authority.
(s) MAJOR DISASTER.—In this Act, the term “major disaster” has the meaning given that term in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122).
§ 4. (a) In order to carry out the policies of
this Act there is hereby created an agency under the name “Small Business
Administration” (herein referred to as the Administration), which
Administration shall be under the general direction and supervision of the
President and shall not be affiliated with or be within any other agency or
department of the Federal Government. The principal office of the
Administration shall be located in the
(b) (1) The management of the Administration shall be vested in an Administrator who shall be appointed from civilian life by the President, by and with the advice and consent of the Senate, and who shall be a person of outstanding qualifications known to be familiar and sympathetic with small‑business needs and problems. The Administrator shall not engage in any other business, vocation, or employment than that of serving as Administrator. In carrying out the programs administered by the Small Business Administration including its lending and guaranteeing functions, the Administrator shall not discriminate on the basis of sex or marital status against any person or small business concern applying for or receiving assistance from the Small Business Administration, and the Small Business Administration shall give special consideration to veterans of the Armed Forces of the United States and their survivors or dependents. The President also may appoint a Deputy Administrator, by and with the advice and consent of the Senate. The Administrator is authorized to appoint five Associate Administrators (including the Associate Administrator specified in section 201 of the Small Business Investment Act of 1958) to assist in the execution of the functions vested in the Administration. One of the Associate Administrators shall be designated at the time of his appointment as the Associate Administrator for Minority Small Business and Capital Ownership Development who shall be an employee in the competitive service or in the Senior Executive Service and a career appointee and shall be responsible to the Administrator for the formulation and execution of the policies and programs under sections 7(j) and 8(a) of this Act which provide assistance to minority small business concerns. The Deputy Administrator shall be Acting Administrator of the Administration during the absence or disability of the Administrator or in the event of a vacancy in the office of the Administrator.
(2) The Administrator also shall be responsible for—
(A) establishing and maintaining an external small business economic data base for the purpose of providing the Congress and the Administration information on the economic condition and the expansion or contraction of the small business sector. To that end, the Administrator shall publish on a regular basis national small business economic indices and, to the extent feasible, regional small business economic indices, which shall include, but need not be limited to, data on—
(i) employment, layoffs, and new hires;
(ii) number of business establishments and the types of such establishments such as sole proprietorships, corporations, and partnerships;
(iii) number of business formations and failures;
(iv) sales and new orders;
(v) back orders;
(vi) investment in plant and equipment;
(vii) changes in inventory and rate of inventory turnover;
(viii) sources and amounts of capital investment, including debt, equity, and internally generated funds;
(ix) debt to equity ratios;
(x) exports;
(xi) number and dollar amount of mergers and acquisitions by size of acquiring and acquired firm; and
(xii) concentration ratios; and
(B) publishing annually a report giving a comparative analysis and interpretation of the historical trends of the small business sector as reflected by the data acquired pursuant to subparagraph (A) of this subsection.
(3) RISK MANAGEMENT DATABASE.—
(A) ESTABLISHMENT.—The Administration shall establish, within the management system for the loan programs authorized by subsections (a) and (b) of section 7 of this Act and title V of the Small Business Investment Act of 1958, a management information system that will generate a database capable of providing timely and accurate information in order to identify loan underwriting, collections, recovery, and liquidation problems.
(B) INFORMATION TO BE MAINTAINED.—In addition to such other information as the Administration considers appropriate, the database established under subparagraph (A) shall, with respect to each loan program described in subparagraph (A), include information relating to—
(i) the identity of the institution making the guaranteed loan or issuing the debenture;
(ii) the identity of the borrower;
(iii) the total dollar amount of the loan or debenture;
(iv) the total dollar amount of government exposure in each loan;
(v) the district of the Administration in which the borrower has its principal office;
(vi) the principal line of business of the borrower, as identified by Standard Industrial Classification Code (or any successor to that system);
(vii) the delinquency rate for each program (including number of instances and days overdue);
(viii) the number and amount of repurchases, losses, and recoveries in each program;
(ix) the number of deferrals or forbearances in each program (including days and number of instances);
(x) comparisons on the basis of loan program, lender, Administration district and region, for all the data elements maintained; and
(xi) underwriting characteristics of each loan that has entered into default, including term, amount and type of collateral, loan-to-value and other actual and projected ratios, line of business, credit history, and type of loan.
(C) DEADLINE FOR OPERATIONAL CAPABILITY.—The database established under subparagraph (A) shall—
(i) be operational not later than June 30, 1997; and
(ii) capture data beginning on the first day of the second quarter of fiscal year 1997 beginning after such date and thereafter.
(4) (A) The Administrator shall establish a small business computer security and education program to—
(i) provide small business concerns information regarding—
(I) utilization and management of computer technology;
(II) computer crimes committed against small business concerns; and
(III) security for computers owned or utilized by small business concerns;
(ii) provide for periodic forums for small business concerns to improve their knowledge of the matters described in clause (i); and
(iii) provide training opportunities to educate small business users on computer security techniques.
(B) The Administrator, after consultation
with the Director of the
(c) (1) There are hereby established in the Treasury the following revolving funds: (A) a disaster loan fund which shall be available for financing functions performed under sections 5(e), 7(b)(1), 7(b)(2), 7(b)(3), 7(b)(4), and 7(d)(2) of this Act; and (B) a business loan and investment fund which shall be available for financing functions performed under sections 5(g), 7(a), and 8(a) of this Act, and titles III, IV and V of the Small Business Investment Act of 1958.
(2) All repayments of loans and debentures, payments of interest and other receipts arising out of transactions heretofore or hereafter entered into by the Administration (A) pursuant to sections 5(e), 7(b)(1), 7(b)(2), 7(b)(3), 7(b)(4), 7(b)(5), 7(b)(6), 7(b)(7), 7(b)(8), 7(d)(2), and 7(g) of this Act shall be paid into a disaster loan fund; and (B) pursuant to sections 5(g), 7(a), 7(h), 7(i), 7(l), 7(m), and 8(a) of this Act, and titles III, IV and V of the Small Business Investment Act of 1958, shall be paid into the business loan and investment fund.
(3) Unexpended balances of appropriations made to the fund pursuant to this subsection, as in effect immediately prior to the effective date of this paragraph, shall be allocated, together with related assets and liabilities, to the funds established by paragraph (1) in such amounts as the Administrator shall determine.
(4) The Administration shall submit to the Committees on Appropriations, Senate Select Committee on Small Business, and the Committee on Small Business of the House of Representatives, as soon as possible after the beginning of each calendar quarter, a full and complete report on the status of each of the funds established by paragraph (1). Business‑type budgets for each of the funds established by paragraph (1) shall be prepared, transmitted to the Committees on Appropriations, the Senate Select Committee on Small Business and the Committee on Small Business of the House of Representatives and considered, and enacted in the manner prescribed by law (Sections 102, 103 and 104 of the Government Corporation Control Act (31 USC 847‑849)) for wholly owned Government corporations.
(5) (A) The
Administration is authorized to make and issue notes to the Secretary of the
Treasury for the purpose of obtaining funds necessary for discharging
obligations under the revolving funds created by section 4(c)(1) of this Act
and for authorized expenditures out of the funds. Such notes shall be in such form and
denominations and have such maturities and be subject to such terms and
conditions as may be prescribed by the Administration with the approval of the
Secretary of the Treasury. Such notes shall bear interest at a rate fixed by
the Secretary of the Treasury, taking into consideration the current average
market yield of outstanding marketable obligations of the
(B) (i) Moneys in the funds established in subsection (c)(1) not needed for current operations may be paid into miscellaneous receipts of the Treasury.
(ii) Following the close of each fiscal year, the Administration shall pay into the miscellaneous receipts of the United States Treasury the actual interest that the Administration collects during that fiscal year on all financings made under this Act.
(C) Except on those loan disbursements on which interest is paid under subsection (B)(ii), the Administration shall pay into miscellaneous receipts of the Treasury, following the close of each fiscal year, interest received by the Administration on financing functions performed under this Act and titles III and V of the Small Business Investment Act of l958 providing the capital used to perform such functions originated from appropriated funds. Such payments shall be treated by the Department of the Treasury as interest income, not as retirement of indebtedness.
(D) There are authorized to be appropriated, in any fiscal year, such sums as may be necessary for losses and interest subsidies incurred by the funds established by subsection (c)(l), but not previously reimbursed.
(d) There is hereby created the Loan Policy Board of the Small Business Administration, which shall consist of the following members, all ex officio. The Administrator, as Chairman, the Secretary of the Treasury, and the Secretary of Commerce. Either of the said Secretaries may designate an officer of his Department, who has been appointed by the President by and with the advice and consent of the Senate, to act in his stead as a member of the Loan Policy Board with respect to any matter or matters. The Loan Policy Board shall establish general policies (particularly with reference to the public interest involved in the granting and denial of applications for financial assistance by the Administration and with reference to the coordination of the functions of the Administration with other activities and policies of the Government), which shall govern the granting and denial of applications for financial assistance by the Administration.
(e) PROHIBITION ON THE PROVISION OF ASSISTANCE.—Notwithstanding any other provision of law, the Administration is prohibited from providing any financial or other assistance to any business concern or other person engaged in the production or distribution of any product or service that has been determined to be obscene by a court of competent jurisdiction.
(f) CERTIFICATION OF COMPLIANCE WITH CHILD SUPPORT OBLIGATIONS.—
(1) IN GENERAL.—For financial assistance approved after the promulgation of final regulations to implement this section, each recipient of financial assistance under this Act, including a recipient of a direct loan or a loan guarantee, shall certify that the recipient is not more than 60 days delinquent under the terms of any—
(A) administrative order;
(B) court order; or
(C) repayment agreement entered into between the recipient and the custodial parent or State agency providing child support enforcement services,
that requires the recipient to pay child support, as such term is defined in section 462(b) of the Social Security Act.
(2) ENFORCEMENT.—Not later than 6 months after the date of enactment of this subsection, the Administration shall promulgate such regulations as may be necessary to enforce compliance with the requirements of this subsection.
(g) GIFTS.—
(1) IN GENERAL.—The Administrator may, for purposes of this Act, the Small Business Investment Act of 1954 [sic; should be 1958], and title IV of the Women’s Business Ownership Act of 1988, solicit, accept, hold, administer, utilize, and dispose of gifts, devises, and bequests of cash, property (including tangible, intangible, real, and personal), subsistence, and services. Notwithstanding any other provision of law, the Administrator may utilize gifts, devises, or bequests for marketing and outreach activities, including the cost of promotional materials and wearing apparel.
(2) AUDITS.—Any gift, devise, or bequest of cash accepted by the Administrator shall be held in a separate account and shall be subject to semi-annual audits by the Inspector General of the Administration who shall report his findings to the Congress.
(3) CONFLICTS OF INTEREST.—No gift, devise, or bequest shall be solicited or accepted under the authority of this subsection if such solicitation or acceptance would, in the determination of the General Counsel, create a conflict of interest.
(4) ACCEPTANCE OF SERVICES AND FACILITIES FOR DISASTER LOAN PROGRAM.—The Administrator may accept the services and facilities of Federal, State, and local agencies and groups, both public and private, and utilize such gratuitous services and facilities as may, from time to time, be necessary, to further the objectives of section 7(b).
(h) CO-SPONSORSHIP OF EVENTS.—
(1) AUTHORIZATION.—The Administrator, after consultation with the General Counsel, may provide assistance for the benefit of small business through Administration-sponsored activities, through cosponsored activities with any eligible entity, or through such other activities that the Administrator determines to be appropriate, including recognition events.
(2) ELIGIBLE ENTITY.—For purposes of this subsection, the term “eligible entity” means any for-profit or not-for-profit entity, any Federal, State, or local government official, or any Federal, State, or local government entity.
(3) PROHIBITION ON ENDORSEMENTS.—The Administrator shall ensure that the Administration and any eligible entities that cosponsor activities receive appropriate recognition for such cosponsorship, and that such recognition does not constitute or imply an endorsement by the Administration of any product or service of such entity.
(4) AUTHORITY TO CHARGE FEES.—Notwithstanding any other provision of law, the Administrator may charge a participant in any activity sponsored or cosponsored by the Administration a minimal fee, and retain and use such fee to cover the costs of such activity.
(5) LIMITED DELEGATION.—The Administrator may not delegate the authority described in this subsection except to the Deputy Administrator, an Associate Administrator, or an Assistant Administrator.
(6) REPORT TO CONGRESS.—The Inspector General of the Administration shall report semi-annually to Congress on the Administrator’s use of authority under this subsection.
(7) RULEMAKING.—Not later than 180 days after the date of enactment of this subsection, the Administrator shall promulgate regulations to carry out the provisions of this subsection.
§ 5 (a) The Administration shall have power to adopt, alter, and use a seal, which shall be judicially noticed. The Administrator is authorized, subject to the civil service and classification laws, to select, employ, appoint, and fix the compensation of such officers, employees, attorneys, and agents as shall be necessary to carry out the provisions of this Act; to define their authority and duties; and to pay the costs of qualification of certain of them as notaries public. The Administration, with the consent of any board, commission, independent establishment or executive department of the Government, may avail itself on a reimbursable or non‑reimbursable basis of the use of information, services, facilities (including any field service thereof), officers, and employees thereof, in carrying out the provisions of this Act.
(b) In the performance of, and with respect to, the functions, powers, and duties vested in him by this Act the Administrator may—
(1) sue and be sued in any court of record of a State having general jurisdiction, or in any United States district court, and jurisdiction is conferred upon such district court to determine such controversies without regard to the amount in controversy; but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Administrator or his property;
(2) under regulations prescribed by him, assign or sell at public or private sale, or otherwise dispose of for cash or credit, in his discretion and upon such terms and conditions and for such consideration as the Administrator shall determine to be reasonable, any evidence of debt, contract, claim, personal property, or security assigned to or held by him in connection with the payment of loans granted under this Act, and to collect or compromise all obligations assigned to or held by him and all legal or equitable rights accruing to him in connection with the payment of such loans until such time as such obligations may be referred to the Attorney General for suit or collection;
(3) deal with, complete, renovate, improve, modernize, insure, or rent, or sell for cash or credit upon such terms and conditions and for such consideration as the Administrator shall determine to be reasonable, any real property conveyed to or otherwise acquired by him in connection with the payment of loans granted under this Act;
(4) pursue to final collection, by way of compromise or otherwise, all claims against third parties assigned to the Administrator in connection with loans made by him. This shall include authority to obtain deficiency judgments or otherwise in the case of mortgages assigned to the Administrator. Section 3709 of the Revised Statutes, as amended (41 U.S.C., sec. 5), shall not be construed to apply to any contract of hazard insurance or to any purchase or contract for services or supplies on account of property obtained by the Administrator as a result of loans made under this Act if the premium therefor or the amount thereof does not exceed $1,000. The power to convey and to execute in the name of the Administrator deeds of conveyance, deeds of release, assignments and satisfactions of mortgages, and any other written instrument relating to real property or any interest therein acquired by the Administrator pursuant to the provisions of this Act may be exercised by the Administrator or by any officer or agent appointed by him without the execution of any express delegation of power or power of attorney. Nothing in this section shall be construed to prevent the Administrator from delegating such power by order or by power of attorney, in his discretion, to any officer or agent he may appoint;
(5) acquire, in any lawful manner, any property (real, personal, or mixed, tangible or intangible), whenever deemed necessary or appropriate to the conduct of the activities authorized in sections 7(a) and 7(b);
(6) make such rules and regulations as he deems necessary to carry out the authority vested in him by or pursuant to this Act;
(7) in addition to any powers, functions, privileges and immunities otherwise vested in him, take any and all actions (including the procurement of the services of attorneys by contract in any office where an attorney or attorneys are not or cannot be economically employed full time to render such services) when he determines such actions are necessary or desirable in making, servicing, compromising, modifying, liquidating, or otherwise dealing with or realizing on loans made under the provisions of this Act: Provided, That with respect to deferred participation loans, the Administrator may, in the discretion of and pursuant to regulations promulgated by the Administrator, authorize participating lending institutions to take actions relating to loan servicing on behalf of the Administrator, including determining eligibility and creditworthiness and loan monitoring, collection, and liquidation;
(8) pay the transportation expenses and per diem in lieu of subsistence expenses, in accordance with the Travel Expense Act of 1949, for travel of any person employed by the Administration to render temporary services not in excess of six months in connection with any disaster referred to in section 7(b) from place of appointment to, and while at, the disaster area and any other temporary posts of duty and return upon completion of the assignment: Provided That the Administrator may extend the six-month limitation for an additional six months if the Administrator determines the extension is necessary to continue efficient disaster loan making activities;
(9) accept the services and facilities of Federal, State, and local agencies and groups, both public and private, and utilize such gratuitous services and facilities as may, from time to time, be necessary, to further the objectives of section 7(b);
(10) upon purchase by the Administration of any deferred participation entered into under section 7 of this Act, continue to charge a rate of interest not to exceed that initially charged by the participating institution on the amount so purchased for the remaining term of the indebtedness;
(11) make such investigations as he deems
necessary to determine whether a recipient of or participant in any assistance
under this Act or any other person has engaged or is about to engage in any
acts or practices which constitute or will constitute a violation of any
provision of this Act, or of any rule or regulation under this Act, or of any
order issued under this Act. The Administration
shall permit any person to file with it a statement in writing, under oath or
otherwise as the Administration shall determine, as to all the facts and
circumstances concerning the matter to be investigated. For the purpose of any investigation, the
Administration is empowered to administer oaths and affirmations, subpena [sic]
witnesses, compel their attendance, take evidence, and require the production
of any books, papers, and documents which are relevant to the inquiry. Such attendance of witnesses and the
production of any such records may be required from any place in the
(12) impose, retain, and use only those fees which are specifically authorized by law or which are in effect on September 30, 1994, and in the amounts and at the rates in effect on such date, except that the Administrator may, subject to approval in appropriations Acts, impose, retain, and utilize, additional fees—
(A) not to exceed $100 for each loan servicing action (other than a loan assumption) requested after disbursement of the loan, including any substitution of collateral, release or substitution of a guarantor, reamortization, or similar action;
(B) not to exceed $300 for loan assumptions;
(C) not to exceed 1 percent of the amount of requested financings under title III of the Small Business Investment Act of 1958 for which the applicant requests a commitment from the Administration for funding during the following year; and
(D) to recover the direct, incremental cost involved in the production and dissemination of compilations of information produced by the Administration under the authority of this Act and the Small Business Investment Act of 1958;
(13) collect, retain and utilize, subject to approval in appropriations Acts, any amounts collected by fiscal transfer agents and not used by such agent as payment of the cost of loan pooling or debenture servicing operations, except that amounts collected under this paragraph and paragraph (12) shall be utilized solely to facilitate the administration of the program that generated the excess amounts; and
(14) require any lender authorized to make loans under section 7 of this Act to pay examination and review fees, which shall be deposited in the account for salaries and expenses of the Administration, and shall be available for the costs of examinations, reviews, and other lender oversight activities.
(c) To such extent as he finds necessary to carry out the provisions of this Act, the Administrator is authorized to procure the temporary (not in excess of one year) or intermittent services of experts or consultants or organizations thereof, including stenographic reporting services, by contract or appointment, and in such cases such services shall be without regard to the civil‑service and classification laws and, except in the case of stenographic reporting services by organizations, without regard to section 3709 of the Revised Statutes, as amended (41 U.S.C., § 5). Any individual so employed may be compensated at a rate not in excess of the daily equivalent of the highest rate payable under section 5332 of title 5, United States Code, including traveltime, and, while such individual is away from his or her home or regular place of business, he or she may be allowed travel expenses (including per diem in lieu of subsistence) as authorized by section 5703 of title 5, United States Code.
(d) Section 3648 of the Revised Statutes (31 U.S.C. 529) shall not apply to prepayments of rentals made by the Administration on safety deposit boxes used by the Administration for the safeguarding of instruments held as security for loans or for the safeguarding of other documents.
(e) (1) Subject to the requirements and conditions contained in this subsection, upon application by a small business concern which is the recipient of a loan made under this Act, the Administration may undertake the small business concern's obligation to make the required payments under such loan or may suspend such obligation if the loan was a direct loan made by the Administration. While such payments are being made by the Administration pursuant to the undertaking of such obligation or while such obligation is suspended, no such payment with respect to the loan may be required from the small business concern.
(2) The Administration may undertake or suspend for a period of not to exceed 5 years any small business concern's obligation under this subsection only if—
(A) without such undertaking or suspension of the obligation, the small business concern would, in the sole discretion of the Administration, become insolvent or remain insolvent;
(B) with the undertaking or suspension of the obligation, the small business concern would, in the sole discretion of the Administration, become or remain a viable small business entity; and
(C) the small business concern executes an agreement in writing satisfactory to the Administration as provided by paragraph (4).
(3) Notwithstanding the provisions of sections 7(a)(4)(C) and 7(i)(l) of this Act, the Administration may extend the maturity of any loan on which the Administration undertakes or suspends the obligation pursuant to this subsection for a corresponding period of time.
(4) (A) Prior to the undertaking or suspension by the Administration of any small business concern's obligation under this subsection, the Administration, consistent with the purposes sought to be achieved herein, shall require the small business concern to agree in writing to repay to it the aggregate amount of the payments which were required under the loan during the period for which such obligation was undertaken or suspended, either—
(i) by periodic payments not less in amount or less frequently falling due than those which were due under the loan during such period, or
(ii) pursuant to a repayment schedule agreed upon by the Administration and the small business concern, or
(iii) by a combination of the payments described in clause (i) and clause (ii).
(B) In addition to requiring the small business concern to execute the agreement described in subparagraph (A), the Administration shall, prior to the undertaking or suspension of the obligation, take such action, and require the small business concern to take such action as the Administration deems appropriate in the circumstances, including the provision of such security as the Administration deems necessary or appropriate to insure that the rights and interests of the lender (Small Business Administration or participant) will be safeguarded adequately during or after the period in which such obligation is so undertaken or suspended.
(5) The term “required payments” with respect to any loan means payments of principal and interest under the loan.
(f) (1) The guaranteed portion of any loan made pursuant this Act may be sold by the lender, and by any subsequent holder, consistent with regulations on such sales as the Administration shall establish, subject to the following limitations:
(A) prior to the Administration's approval of the sale, or upon any subsequent resale, of any loan guaranteed by the Administration, if the lender certifies that such loan has been properly closed and that the lender has substantially complied with the provisions of the guarantee agreement and the regulations of the Administration, the Administration shall review and approve only materials not previously approved;
(B) all fees due the Administration on a guaranteed loan shall have been paid in full prior to any sale; and
(C) each loan, except each loan made under section 7(a)(14), shall have been fully disbursed to the borrower prior to any sale.
(2) After a loan is sold in the secondary market, the lender shall remain obligated under its guarantee agreement with the Administration, and shall continue to service the loan in a manner consistent with the terms and conditions of such agreement.
(3) The Administration shall develop such procedures as are necessary for the facilitation, administration, and promotion of secondary market operations, and for assessing the increase of small business access to capital at reasonable rates and terms as a result of secondary market operations. Beginning on March 31, 1997, the sale of the unguaranteed portion of any loan made under section 7(a) shall not be permitted until a final regulation that applies uniformly to both depository institutions and other lenders is promulgated by the Administration setting forth the terms and conditions under which such sales can be permitted, including maintenance of appropriate reserve requirements and other safeguards to protect the safety and soundness of the program.
(4) Nothing in this subsection or subsection (g) of this section shall be interpreted to impede or extinguish the right of the borrower or the successor in interest to such borrower to prepay (in whole or in part) any loan made pursuant to section 7(a) of this Act, the guaranteed portion of which may be included in such trust or pool, or to impede or extinguish the rights of any party pursuant to section 7(a)(6)(C) or subsection (e) of this section.
(g) (1) The Administration is authorized to issue trust certificates representing ownership of all or a fractional part of the guaranteed portion of one or more loans which have been guaranteed by the Administration under this Act, or under section 502 of the Small Business Investment Act of 1958 (15 U.S.C. 660): Provided, That such trust certificates shall be based on and backed by a trust or pool approved by the Administration and composed solely of the entire guaranteed portion of such loans.
(2) The Administration 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 Administration or its agent for purposes of this subsection. Such guarantee shall be limited to the extent of principal and interest on the guaranteed portions of loans which compose the trust or pool. In the event that a loan 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 loan represents in the trust or pool. Interest on prepaid or defaulted loans shall accrue and be guaranteed by the Administration 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 loans constituting the pool.
(3) The full faith and credit of the
(4) (A) The Administration may collect a fee for any loan guarantee sold into the secondary market under subsection (f) in an amount equal to not more than 50 percent of the portion of the sale price that exceeds 110 percent of the outstanding principal amount of the portion of the loan guaranteed by the Administration. Any such fee imposed by the Administration shall be collected by the Administration or by the agent which carries out on behalf of the Administration the central registration functions required by subsection (h) of this section and shall be paid to the Administration and used solely to reduce the subsidy on loans guaranteed under section 7(a) of this Act: Provided, That such fee shall not be charged to the borrower whose loan is guaranteed: and Provided further, That nothing herein shall preclude any agent of the Administration from collecting a fee approved by the Administration for the functions described in subsection (h)(2).
(B) The Administration is authorized to impose and collect, either directly or through a fiscal and transfer agent, a reasonable penalty on late payments of the fee authorized under subparagraph (A) in an amount not to exceed 5 percent of such fee per month plus interest.
(C) The Administration may contract with an agent to carry out, on behalf of the Administration, the assessment and collection of the annual fee established under section 7(a)(23). The agent may receive, as compensation for services, any interest earned on the fee while in the control of the agent before the time at which the agent is contractually required to remit the fee to the Administration.
(5) (A) In the event the Administration pays a claim under a guarantee issued under this subsection, it shall be subrogated fully to the rights satisfied by such payment.
(B) No State or local law, and no Federal law, shall preclude or limit the exercise by the Administration of its ownership rights in the portions of loans constituting the trust or pool against which the trust certificates are issued.
(h) (1) Upon the adoption of final rules and regulations, the Administration shall—
(A) provide for a central registration of all loans and trust certificates sold pursuant to subsections (f) and (g) of this section;
(B) contract with an agent to carry out on behalf of the Administration the central registration functions of this section and the issuance of trust certificates to facilitate pooling. Such agent shall provide a fidelity bond or insurance in such amounts as the Administration determines to be necessary to fully protect the interest of the Government;
(C) prior to any sale, require the seller to disclose to a purchaser of the guaranteed portion of a loan guaranteed under this Act and to the purchaser of a trust certificate issued pursuant to subsection (g), information on terms, conditions, and yield of such instrument. As used in this paragraph, if the instrument being sold is a loan, the term “seller” does not include (A) an entity which made the loan or (B) any individual or entity which sells three or fewer guaranteed loans per year; and
(D) have the authority to regulate brokers and dealers in guaranteed loans and trust certificates sold pursuant to subsections (f) and (g) of this section.
(2) The agent described in paragraph (1)(B) may be compensated through any of the fees assessed under this section and any interest earned on any funds collected by the agent while such funds are in the control of the agent and before the time at which the agent is contractually required to transfer such funds to the Administration or to the holders of the trust certificates, as appropriate.
(3) Nothing in this subsection shall prohibit the utilization of a book-entry or other electronic form of registration for trust certificates. The Administration may, with the consent of the Secretary of the Treasury, use the book-entry system of the Federal Reserve System.
§ 6. (a) All
moneys of the Administration not otherwise employed may be deposited with the
Treasury of the
(b) The Administrator shall contribute to the employees’ compensation fund, on the basis of annual billings as determined by the Secretary of Labor, for the benefit payments made from such fund on account of employees engaged in carrying out functions financed by the revolving fund established by section 4(c) of this Act. The annual billings shall also include a statement of the fair portion of the cost of the administration of such fund, which shall be paid by the Administrator into the Treasury as miscellaneous receipts.
§ 7. (a) LOANS TO SMALL BUSINESS CONCERNS; ALLOWABLE PURPOSES; QUALIFIED BUSINESS; RESTRICTIONS AND LIMITATIONS.—The Administration is empowered to the extent and in such amounts as provided in advance in appropriation Acts to make loans for plant acquisition, construction, conversion, or expansion, including the acquisition of land, material, supplies, equipment, and working capital, and to make loans to any qualified small business concern, including those owned by qualified Indian tribes, for purposes of this Act. Such financings may be made either directly or in cooperation with banks or other financial institutions through agreements to participate on an immediate or deferred (guaranteed) basis. These powers shall be subject, however, to the following restrictions, limitations, and provisions:
(1) IN GENERAL.—
(A) CREDIT ELSEWHERE.—No financial assistance shall be extended pursuant to this subsection if the applicant can obtain credit elsewhere. No immediate participation may be purchased unless it is shown that a deferred participation is not available; and no direct financing may be made unless it is shown that a participation is not available.
(B) BACKGROUND CHECKS.—Prior to the approval of any loan made pursuant to this subsection, or section 503 of the Small Business Investment Act of 1958, the Administrator may verify the applicant’s criminal background, or lack thereof, through the best available means, including, if possible, use of the National Crime Information Center computer system at the Federal Bureau of Investigation.
(2) LEVEL OF PARTICIPATION IN GUARANTEED LOANS.—
(A) IN GENERAL.—Except as provided in subparagraph (B), in an agreement to participate in a loan on a deferred basis under this subsection (including a loan made under the Preferred Lenders Program), such participation by the Administration shall be equal to—
(i) 75 percent of the balance of the financing outstanding at the time of disbursement of the loan, if such balance exceeds $150,000; or
(ii) 85 percent of the balance of the financing outstanding at the time of disbursement of the loan, if such balance is less than or equal to $150,000.
(B) REDUCED PARTICIPATION UPON REQUEST.—
(i) IN GENERAL.—The guarantee percentage specified by subparagraph (A) for any loan under this subsection may be reduced upon the request of the participating lender.
(ii) PROHIBITION.—The Administration shall not use the guarantee percentage requested by a participating lender under clause (i) as a criterion for establishing priorities in approving loan guarantee requests under this subsection.
(C) INTEREST RATE UNDER PREFERRED LENDERS PROGRAM.—
(i) IN GENERAL.—The maximum interest rate for a loan guaranteed under the Preferred Lenders Program shall not exceed the maximum interest rate, as determined by the Administration, applicable to other loans guaranteed under this subsection.
(ii) PREFERRED LENDERS PROGRAM DEFINED.—For purposes of this subparagraph, the term “Preferred Lenders Program” means any program established by the Administrator, as authorized under the proviso in section 5(b)(7), under which a written agreement between the lender and the Administration delegates to the lender—
(I) complete authority to make and close loans with a guarantee from the Administration without obtaining the prior specific approval of the Administration; and
(II) complete authority to service and liquidate such loans without obtaining the prior specific approval of the Administration for routine servicing and liquidation activities, but shall not take any actions creating an actual or apparent conflict of interest.
(D) PARTICIPATION UNDER EXPORT WORKING CAPITAL PROGRAM.—Notwithstanding subparagraph (A), in an agreement to participate in a loan on a deferred basis under the Export Working Capital Program established pursuant to paragraph (14)(A), such participation by the Administration shall not exceed 90 percent.
(3) No loan shall be made under this subsection—
(A) if the total amount outstanding and committed (by participation or otherwise) to the borrower from the business loan and investment fund established by this Act would exceed $1,500,000 (or if the gross loan amount would exceed $2,000,000), except as provided in subparagraph (B);
(B) if the total amount outstanding and committed (on a deferred basis) solely for the purposes provided in paragraph (16) to the borrower from the business loan and investment fund established by this Act would exceed $1,750,000, of which not more than $1,250,000 may be used for working capital, supplies or financings under section 7(a)(14) for export purposes; and
(C) if effected either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate basis if the amount would exceed $350,000.
(4) INTEREST RATES AND PREPAYMENT CHARGES.—
(A) INTEREST RATES.—Notwithstanding the provisions of the constitution of any State or the laws of any State limiting the rate or amount of interest which may be charged, taken, received, or reserved, the maximum legal rate of interest on any financing made on a deferred basis pursuant to this subsection shall not exceed a rate prescribed by the Administration, and the rate of interest for the Administration's share of any direct or immediate participation loan shall not exceed the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans and adjusted to the nearest one‑eighth of 1 per centum, and an additional amount as determined by the Administration, but not to exceed 1 per centum per annum: Provided, That for those loans to assist any public or private organization for the handicapped or to assist any handicapped individual as provided in paragraph (10) of this subsection, the interest rate shall be 3 per centum per annum.
(B) PAYMENT OF ACCRUED INTEREST.—
(i) IN GENERAL.—Any bank or other lending institution making a claim for payment on the guaranteed portion of a loan made under this subsection shall be paid the accrued interest due on the loan from the earliest date of default to the date of payment of the claim at a rate not to exceed the rate of interest on the loan on the date of default, minus one percent.
(ii) LOANS SOLD ON SECONDARY MARKET.—If a loan described in clause (i) is sold on the secondary market, the amount of interest paid to a bank or other lending institution described in that clause from the earliest date of default to the date of payment of the claim shall be no more than the agreed upon rate, minus one percent.
(iii) APPLICABILITY.—Clauses (i) and (ii) shall
not apply to loans made on or after
(C) PREPAYMENT CHARGES.—
(i) IN GENERAL.—A borrower who prepays any loan guaranteed under this subsection shall remit to the Administration a subsidy recoupment fee calculated in accordance with clause (ii) if—
(I) the loan is for a term of not less than 15 years;
(II) the prepayment is voluntary;
(III) the amount of prepayment in any calendar year is more than 25 percent of the outstanding balance of the loan; and
(IV) the prepayment is made within the first 3 years after disbursement of the loan proceeds.
(ii) SUBSIDY RECOUPMENT FEE.—The subsidy recoupment fee charged under clause (i) shall be—
(I) 5 percent of the amount of prepayment, if the borrower repays during the first year after disbursement;
(II) 3 percent of the amount of prepayment, if the borrower prepays during the second year after disbursement; and
(III) 1 percent of the amount of prepayment, if the borrower prepays during the third year after disbursement.
(5) No such loans including renewals and extensions thereof may be made for a period or periods exceeding twenty-five years, except that such portion of a loan made for the purpose of acquiring real property or constructing, converting, or expanding facilities may have a maturity of twenty‑five years plus such additional period as is estimated may be required to complete such construction, conversion, or expansion.
(6) All loans made under this subsection shall be of such sound value or so secured as reasonably to assure repayment: Provided, however, That—
(A) for loans to assist any public or private organization or to assist any handicapped individual as provided in paragraph (10) of this subsection any reasonable doubt shall be resolved in favor of the applicant;
(B) recognizing that greater risk may be associated with loans for energy measures as provided in paragraph (12) of this subsection, factors in determining “sound value” shall include, but not be limited to, quality of the product or service; technical qualifications of the applicant or his employees; sales projections; and the financial status of the business concern: Provided further, That such status need not be as sound as that required for general loans under this subsection; and [sic]
(C) [Repealed]
On that portion of the loan used to refinance existing indebtedness held by a bank or other lending institution, the Administration shall limit the amount of deferred participation to 80 per centum of the amount of the loan at the time of disbursement: Provided further, That any authority conferred by this subparagraph on the Administration shall be exercised solely by the Administration and shall not be delegated to other than Administration personnel.
(7) The Administration may defer payments on the principal of such loans for a grace period and use such other methods as it deems necessary and appropriate to assure the successful establishment and operation of such concern.
(8) The Administration may make loans under this subsection to small business concerns owned and controlled by disabled veterans (as defined in section 4211(3) of title 38, United States Code).
(9) The Administration may provide loans under this subsection to finance residential or commercial construction or rehabilitation for sale: Provided, however, That such loans shall not be used primarily for the acquisition of land.
(10) The Administration may provide guaranteed loans under this subsection to assist any public or private organization for the handicapped or to assist any handicapped individual, including service-disabled veterans, in establishing, acquiring, or operating a small business concern.
(11) The Administration may provide loans under this subsection to any small business concern, or to any qualified person seeking to establish such a concern when it determines that such loan will further the policies established in section 2(c) of this Act, with particular emphasis on the preservation or establishment of small business concerns located in urban or rural areas with high proportions of unemployed or low‑income individuals or owned by low‑income individuals.
(12) (A) The Administration may provide loans under this subsection to assist any small business concern, including start up, to enable such concern to design architecturally or engineer, manufacture, distribute, market, install, or service energy measures: Provided, however, That such loan proceeds shall not be used primarily for research and development.
(B) The Administration may provide deferred participation loans under this subsection to finance the planning, design, or installation of pollution control facilities for the purposes set forth in section 404 of the Small Business Investment Act of 1958. Notwith-standing the limitation expressed in paragraph (3) of this subsection, a loan made under this paragraph may not result in a total amount outstanding and committed to a borrower from the business loan and investment fund of more than $1,000,000.
(13) The Administration may provide financings under this subsection to State and local development companies for the purposes of, and subject to the restrictions in, title V of the Small Business Investment Act of 1958.
(14) (A) The Administration may provide extensions of credit, standby letters of credit, revolving lines of credit for export purposes and other financing to enable small business concerns, including small business export trading companies and small business export management companies, to develop foreign markets. A bank or participating lending institution may establish the rate of interest on extensions and revolving lines of credit as may be legal and reasonable.
(B) When considering loan or guarantee
applications, the Administration shall give weight to export‑related
benefits, including opening new markets for
(C) The Administration shall aggressively market its export financing program to small businesses.
(15) (A) The Administration may guarantee loans under this subsection to qualified employee trusts with respect to a small business concern for the purpose of purchasing stock of the concern under a plan approved by the Administrator which, when carried out, results in the qualified employee trust owning at least 51 per centum of the stock of the concern.
(B) The plan requiring the Administrator's approval under subparagraph (A) shall be submitted to the Administration by the trustee of such trust with its application for the guarantee. Such plan shall include an agreement with the Administrator which is binding on such trust and on the small business concern and which provides that—
[26 USC 401].
(i) not later than the date the loan
guaranteed under subparagraph (A) is repaid (or as soon thereafter as is
consistent with the requirements of section 401(a) of the Internal Revenue Code
of 1954), at least 51 per centum of the total stock of such concern shall be
allocated to the accounts of at least 51 per centum of the employees of such
concern who are entitled to share in such allocation,
(ii) there will be periodic reviews of the role in the management of such concern of employees to whose accounts stock is allocated, and
(iii) there will be adequate management to assure management expertise and continuity.
(C) In determining whether to guarantee any loan under this paragraph, the individual business experience or personal assets of employee‑owners shall not be used as criteria, except inasmuch as certain employee‑owners may assume managerial responsibilities, in which case business experience may be considered.
(D) For purposes of this paragraph, a corporation which is controlled by any other person shall be treated as a small business concern if such corporation would, after the plan described in subparagraph (B) is carried out, be treated as a small business concern.
(E) The Administration shall compile a separate list of applications for assistance under this paragraph, indicating which applications were accepted and which were denied, and shall report periodically to the Congress on the status of employee‑owned firms assisted by the Administration.
(16) INTERNATIONAL TRADE.—
(A) IN GENERAL.—If the Administrator determines that a loan guaranteed under this subsection will allow an eligible small business concern that is engaged in or adversely affected by international trade to improve its competitive position, the Administrator may make such loan to assist such concern in—
(i) the financing of the acquisition, construction, renovation, modernization, improvement, or expansion of productive facilities or equipment to be used in the United States in the production of goods and services involved in international trade; or
(ii) the refinancing of existing indebtedness that is not structured with reasonable terms and conditions.
(B) SECURITY.—Each loan made under this paragraph shall be secured by a first lien position or first mortgage on the property or equipment financed by the loan or on other assets of the small business concern.
(C) ENGAGED IN INTERNATIONAL TRADE.—For purposes of this paragraph, a small business concern is engaged in international trade if, as determined by the Administrator, the small business concern is in a position to expand existing export markets or develop new export markets.
(D) ADVERSELY AFFECTED BY INTERNATIONAL TRADE.—For purposes of this paragraph, a small business concern is adversely affected by international trade if, as determined by the Administrator, the small business concern—
(i) is confronting increased competition with foreign firms in the relevant market; and
(ii) is injured by such competition.
(E) FINDINGS BY CERTAIN FEDERAL AGENCIES.—For purposes of subparagraph (D)(ii) the Administrator shall accept any finding of injury by the International Trade Commission or any finding of injury by the Secretary of Commerce pursuant to chapter 3 of title II of the Trade Act of 1974.
(17) The Administration shall authorize lending institutions and other entities in addition to banks to make loans authorized under this subsection.
(18) GUARANTEE FEES.—
(A) IN GENERAL.—With respect to each loan guaranteed under this subsection (other than a loan that is repayable in 1 year or less), the Administration shall collect a guarantee fee, which shall be payable by the participating lender, and may be charged to the borrower, as follows:
(i) A guarantee fee not to exceed 2 percent of the deferred participation share of a total loan amount that is not more than $150,000.
(ii) A guarantee fee not to exceed 3 percent of the deferred participation share of a total loan amount that is more than $150,000, but not more than $700,000.
(iii) A guarantee fee not to exceed 3.5 percent of the deferred participation share of a total loan amount that is more than $700,000.
(iv) In addition to the fee under clause (iii), a guarantee fee equal to 0.25 percent of any portion of the deferred participation share that is more than $1,000,000.
(B) RETENTION OF CERTAIN FEES.—Lenders participating in the programs established under this subsection may retain not more than 25 percent of a fee collected under subparagraph (A)(i).
(C) [Deleted.]
(19) (A) In addition to the Preferred Lenders Program authorized by the proviso in section 5(b)(7), the Administration is authorized to establish a Certified Lenders Program for lenders who establish their knowledge of Administration laws and regulations concerning the guaranteed loan program and their proficiency in program requirements. The designation of a lender as a certified lender shall be suspended or revoked at any time that the Administration determines that the lender is not adhering to its rules and regulations or that the loss experience of the lender is excessive as compared to other lenders, but such suspension or revocation shall not affect any outstanding guarantee.
(B) In order to encourage all lending institutions and other entities making loans authorized under this subsection to provide loans of $50,000 or less in guarantees to eligible small business loan applicants, the Administration shall develop and allow participating lenders to solely utilize a uniform and simplified loan form for such loans.
(C) Authority to liquidate loans.—
(i) IN GENERAL.—The Administrator may permit lenders participating in the Certified Lenders Program to liquidate loans made with a guarantee from the Administration pursuant to a liquidation plan approved by the Administrator.
(ii) Automatic approval.—If the Administrator does not approve or deny a request for approval of a liquidation plan within 10 business days of the date on which the request is made (or with respect to any routine liquidation activity under such a plan, within 5 business days) such request shall be deemed to be approved.
(20) (A) The Administration is empowered to make loans either directly or in cooperation with banks or other financial institutions through agreements to participate on an immediate or deferred (guaranteed) basis to small business concerns eligible for assistance under subsection (j)(10) and section 8(a). Such assistance may be provided only if the Administration determines that—
(i) the type and amount of such assistance requested by such concern is not otherwise available on reasonable terms from other sources;
(ii) with such assistance such concern has a reasonable prospect for operating soundly and profitably within a reasonable period of time;
(iii) the proceeds of such assistance will be used within a reasonable time for plant construction, conversion, or expansion, including the acquisition of equipment, facilities, machinery, supplies, or material or to supply such concern with working capital to be used in the manufacture of articles, equipment, supplies, or material for defense or civilian production or as may be necessary to insure a well‑balanced national economy; and
(iv) such assistance is of such sound value as reasonably to assure that the terms under which it is provided will not be breached by the small business concern.
(B) (i) No loan shall be made under this paragraph if the total amount outstanding and committed (by participation or otherwise) to the borrower would exceed $750,000.
(ii) Subject to the provisions of clause (i), in agreements to participate in loans on a deferred (guaranteed) basis, participation by the Administration shall be not less than 85 per centum of the balance of the financing outstanding at the time of disbursement.
(iii) The rate of interest on financings made on a deferred (guaranteed) basis shall be legal and reasonable.
(iv) Financings made pursuant to this paragraph shall be subject to the following limitations:
(I) No immediate participation may be purchased unless it is shown that a deferred participation is not available.
(II) No direct financing may be made unless it is shown that a participation is unavailable.
(C) A direct loan or the Administration's share of an immediate participation loan made pursuant to this paragraph shall be any secured debt instrument—
(i) that is subordinated by its terms to all other borrowings of the issuer;
(ii) the rate of interest on which shall not exceed the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loan and adjusted to the nearest one‑eighth of 1 per centum;
(iii) the term of which is not more than twenty‑five years; and
(iv) the principal on which amortized at such rate as may be deemed appropriate by the Administration, and the interest on which is payable not less often than annually.
(21) (A) The Administration may make loans on a guaranteed basis under the authority of this subsection—
(i) to a small business concern that has been (or can reasonably be expected to be) detrimentally affected by—
(I) the closure (or substantial reduction) of a Department of Defense installation; or
(II) the termination (or substantial reduction) of a Department of Defense program on which such small business was a prime contractor or subcontractor (or supplier) at any tier; or
(ii) to a qualified individual or a veteran seeking to establish (or acquire) and operate a small business concern.
(B) Recognizing that greater risk may be associated with a loan to a small business concern described in subparagraph (A)(i), any reasonable doubts concerning the firm's proposed business plan for transition to nondefense-related markets shall be resolved in favor of the loan applicant when making any determination regarding the sound value of the proposed loan in accordance with paragraph (6).
(C) Loans pursuant to this paragraph shall be authorized in such amounts as provided in advance in appropriation Acts for the purposes of loans under this paragraph.
(D) For purposes of this paragraph a qualified individual is—
(i) a member of the Armed Forces of the
(ii) an employee of a prime contractor, subcontractor, or supplier at any tier of a Department of Defense program whose employment is involuntarily terminated (or voluntarily terminated pursuant to a program offering inducements to encourage voluntary separation or early retirement) due to the termination (or substantial reduction) of a Department of Defense program.
(E) JOB CREATION AND COMMUNITY BENEFIT.—In providing assistance under this paragraph, the Administration shall develop procedures to ensure, to the maximum extent practicable, that such assistance is used for projects that—
(i) have the greatest potential for—
(I) creating new jobs for individuals whose employment is involuntarily terminated due to reductions in Federal defense expenditures; or
(II) preventing the loss of jobs by employees of small business concerns described in subparagraph (A)(i); and
(ii) have substantial potential for stimulating new economic activity in communities most affected by reductions in Federal defense expenditures.
(22) The Administration is authorized to permit participating lenders to impose and collect a reasonable penalty fee on late payments of loans guaranteed under this subsection in an amount not to exceed 5 percent of the monthly loan payment per month plus interest.
(23) YEARLY FEE.—
(A) IN GENERAL.—With respect to each loan approved under this subsection, the Administration shall assess, collect, and retain a fee, not to exceed 0.55 percent per year of the outstanding balance of the deferred participation share of the loan, in an amount established once annually by the Administration in the Administration’s annual budget request to Congress, as necessary to reduce to zero the cost to the Administration of making guarantees under this subsection. As used in this paragraph, the term “cost” has the meaning given that term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a).
(B) PAYER.—The yearly fee assessed under subparagraph (A) shall be payable by the participating lender and shall not be charged to the borrower.
(C) LOWERING OF BORROWER FEES.—If the Administration determines that fees paid by lenders and by small business borrowers for guarantees under this subsection may be reduced, consistent with reducing to zero the cost to the Administration of making such guarantees—
(i) the Administration shall first consider reducing fees paid by small business borrowers under clauses (i) through (iii) of paragraph (18)(A), to the maximum extent possible; and
(ii) fees paid by small business borrowers shall not be increased above the levels in effect on the date of enactment of this subparagraph.
(24) NOTIFICATION REQUIREMENT.—The Administration shall notify the Committees on Small Business of the Senate and the House of Representatives not later than 15 days before making any significant policy or administrative change affecting the operation of the loan program under this subsection.
(25) LIMITATION ON CONDUCTING PILOT PROJECTS.—
(A) IN GENERAL.—Not more than 10 percent of the total number of loans guaranteed in any fiscal year under this subsection may be awarded as part of a pilot program which is commenced by the Administrator on or after October 1, 1996.
(B) PILOT PROGRAM DEFINED.—In this paragraph, the term “pilot program” means any lending program initiative, project, innovation, or other activity not specifically authorized by law.
(C) LOW DOCUMENTATION LOAN PROGRAM.—The Administrator may carry out the low documentation loan program for loans of $100,000 or less only through lenders with significant experience in making small business loans. Not later than 90 days after the date of enactment of this subsection, the Administrator shall promulgate regulations defining the experience necessary for participation as a lender in the low documentation loan program.
(26) CALCULATION OF SUBSIDY RATE.—All fees, interest, and profits received and retained by the Administration under this subsection shall be included in the calculations made by the Director of the Office of Management and Budget to offset the cost (as that term is defined in section 502 of the Federal Credit Reform Act of 1990) to the Administration of purchasing and guaranteeing loans under this Act.
(27) [Repealed].
(28) LEASING.—In addition to such other lease arrangements as may be authorized by the Administration, a borrower may permanently lease to one or more tenants not more than 20 percent of any property constructed with the proceeds of a loan guaranteed under this subsection, if the borrower permanently occupies and uses not less than 60 percent of the total business space in the property.
(29) REAL ESTATE APPRAISALS.—With respect to a loan under this subsection that is secured by commercial real property, an appraisal of such property by a State licensed or certified appraiser—
(A) shall be required by the Administration in connection with any such loan for more than $250,000; or
(B) may be required by the Administration or the lender in connection with any such loan for $250,000 or less, if such appraisal is necessary for appropriate evaluation of creditworthiness.
(30) OWNERSHIP REQUIREMENTS.—Ownership requirements to determine the eligibility of a small business concern that applies for assistance under any credit program under this Act shall be determined without regard to any ownership interest of a spouse arising solely from the application of the community property laws of a State for purposes of determining marital interests.
(31) EXPRESS LOANS.
(A) DEFINITIONS.—As used in this paragraph:
(i) The term “express lender” means any lender authorized by the Administration to participate in the Express Loan Program.
(ii) The term “express loan” means any loan made pursuant to this paragraph in which a lender utilizes to the maximum extent practicable its own loan analyses, procedures, and documentation.
(iii) The term “Express Loan Program” means the program for express loans established by the Administration under paragraph (25)(B), as in existence on April 5, 2004, with a guaranty rate of not more than 50 percent.
(B) RESTRICTION TO EXPRESS LENDER.—The authority to make an express loan shall be limited to those lenders deemed qualified to make such loans by the Administration. Designation as an express lender for purposes of making an express loan shall not prohibit such lender from taking any other action authorized by the Administration for that lender pursuant to this subsection.
(C) GRANDFATHERING OF EXISTING LENDERS.—Any express lender shall retain such designation unless the Administration determines that the express lender has violated the law or regulations promulgated by the Administration or modifies the requirements to be an express lender and the lender no longer satisfies those requirements.
(D) MAXIMUM LOAN AMOUNT.—The maximum loan amount under the Express Loan Program is $350,000.
(E) OPTION TO PARTICIPATE.—Except as otherwise provided in this paragraph, the Administration shall take no regulatory, policy, or administrative action, without regard to whether such action requires notification pursuant to paragraph (24), that has the effect of requiring a lender to make an express loan pursuant to subparagraph (D).
(F) EXPRESS LOANS FOR RENEWABLE ENERGY AND ENERGY EFFICIENCY.—
(i) DEFINITIONS.—In this subparagraph—
(I) the term “biomass”—
(aa) means any organic material that is available on a renewable or recurring basis, including—
(AA) agricultural crops;
(BB) trees grown for energy production;
(CC) wood waste and wood residues;
(DD) plants (including aquatic plants and grasses);
(EE) residues;
(FF) fibers;
(GG) animal wastes and other waste materials; and
(HH) fats, oils, and greases (including recycled fats, oils, and greases); and
(bb) does not include—
(AA) paper that is commonly recycled; or
(BB) unsegregated solid waste;
(II) the term “energy efficiency project” means the installation or upgrading of equipment that results in a significant reduction in energy usage; and
(III) the term “renewable energy system” means a system of energy derived from—
(aa) a wind, solar, biomass (including biodiesel), or geothermal source; or
(bb) hydrogen derived from biomass or water using an energy source described in item (aa).
(ii) LOANS.—The Administrator may make a loan under the Express Loan Program for the purpose of—
(I) purchasing a renewable energy system; or
(II) carrying out an energy efficiency project for a small business concern.
(32) LOANS FOR ENERGY EFFICIENT TECHNOLOGIES.—
(A) DEFINITIONS.—In this paragraph—
(i) the term “cost” has the meaning given that term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a);
(ii) the term “covered energy efficiency loan” means a loan—
(I) made under this subsection; and
(II) the proceeds of which are used to purchase energy efficient designs, equipment, or fixtures, or to reduce the energy consumption of the borrower by 10 percent or more; and
(iii) the term “pilot program” means the pilot program established under subparagraph (B).
(B) ESTABLISHMENT.—The Administrator shall establish and carry out a pilot program under which the Administrator shall reduce the fees for covered energy efficiency loans.
(C) DURATION.—The pilot program shall terminate at the end of the second full fiscal year after the date that the Administrator establishes the pilot program.
(D) MAXIMUM PARTICIPATION.—A covered energy efficiency loan shall include the maximum participation levels by the Administrator permitted for loans made under this subsection.
(E) FEES.—
(i) IN GENERAL.—The fee on a covered energy efficiency loan shall be equal to 50 percent of the fee otherwise applicable to that loan under paragraph (18).
(ii) WAIVER.—The Administrator may waive clause (i) for a fiscal year if—
(I) for the fiscal year before that fiscal year, the annual rate of default of covered energy efficiency loans exceeds that of loans made under this subsection that are not covered energy efficiency loans;
(II) the cost to the Administration of making loans under this subsection is greater than zero and such cost is directly attributable to the cost of making covered energy efficiency loans; and
(III) no additional sources of revenue authority are available to reduce the cost of making loans under this subsection to zero.
(iii) EFFECT OF WAIVER.—If the Administrator waives the reduction of fees under clause (ii), the Administrator—
(I) shall not assess or collect fees in an amount greater than necessary to ensure that the cost of the program under this subsection is not greater than zero; and
(II) shall reinstate the fee reductions under clause (i) when the conditions in clause (ii) no longer apply.
(iv) NO INCREASE OF FEES.—The Administrator shall not increase the fees under paragraph (18) on loans made under this subsection that are not covered energy efficiency loans as a direct result of the pilot program.
(F) GAO REPORT.—
(i) IN GENERAL.—Not later than 1 year after the date that the pilot program terminates, the Comptroller General of the United States shall submit to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate a report on the pilot program.
(ii) CONTENTS.—The report submitted under clause (i) shall include—
(I) the number of covered energy efficiency loans for which fees were reduced under the pilot program;
(II) a description of the energy efficiency savings with the pilot program;
(III) a description of the impact of the pilot program on the program under this subsection;
(IV) an evaluation of the efficacy and potential fraud and abuse of the pilot program; and
(V) recommendations for improving the pilot program.
(32) INCREASED VETERAN PARTICIPATION PROGRAM.—
(A) DEFINITIONS.—In this paragraph—
(i) the term “cost” has the meaning given that term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a);
(ii) the term “pilot program” means the pilot program established under subparagraph (B): and
(iii) the term “veteran participation loan” means a loan made under this subsection to a small business concern owned and controlled by veterans of the Armed Forces or members of the reserve components of the Armed Forces.
(B) ESTABLISHMENT.—The Administrator shall establish and carry out a pilot program under which the Administrator shall reduce the fees for veteran participation loans.
(C) DURATION.—The pilot program shall terminate at the end of the second full fiscal year after the date that the Administrator establishes the pilot program.
(D) MAXIMUM PARTICIPATION.—A veteran participation loan shall include the maximum participation levels by the Administrator permitted for loans made under this subsection.
(E) FEES.—
(i) IN GENERAL.—The fee on a veteran participation loan shall be equal to 50 percent of the fee otherwise applicable to that loan under paragraph (18).
(ii) WAIVER.—The Administrator may waive clause (i) for a fiscal year if—
(I) for the fiscal year before that fiscal year, the annual estimated rate of default of veteran participation loans exceeds that of loans made under this subsection that are not veteran participation loans;
(II) the cost to the Administration of making loans under this subsection is greater than zero and such cost is directly attributable to the cost of making veteran participation loans; and
(III) no additional sources of revenue authority are available to reduce the cost of making loans under this subsection to zero.
(iii) EFFECT OF WAIVER.—If the Administrator waives the reduction of fees under clause (ii), the Administrator—
(I) shall not assess or collect fees in an amount greater than necessary to ensure that the cost of the program under this subsection is not greater than zero; and
(II) shall reinstate the fee reductions under clause (i) when the conditions in clause (ii) no longer apply.
(iv) NO INCREASE OF FEES.—the Administrator shall not increase the fees under paragraph (18) on loans made under this subsection that are not veteran participation loans as a direct result of the pilot program.
(F) GAO REPORT.—
(i) IN GENERAL.—Not later than 1 year after the date that the pilot program terminates, the Comptroller General of the United States shall submit to the Committee on Small Business of the House of Representatives and the Committee on Small business and Entrepreneurship of the Senate a report on the pilot program.
(ii) CONTENTS.—The report submitted under clause (i) shall include—
(I) the number of veteran participation loans for which fees were reduced under the pilot program;
(II) a description of the impact of the pilot program on the program under this subsection;
(III) an evaluation of the efficacy and potential fraud and abuse of the pilot program; and
(IV) recommendations for improving the pilot program.
(b) Except as to agricultural enterprises as defined in section 18(b)(1) of this Act, the Administration also is empowered to the extent and in such amounts as provided in advance in appropriation Acts—
(1) (A) to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred (guaranteed) basis as the Administration may determine to be necessary or appropriate to repair, rehabilitate or replace property, real or personal, damaged or destroyed by or as a result of natural or other disasters,: Provided, That such damage or destruction is not compensated for by insurance or otherwise: And provided further, That the Administration may increase the amount of the loan by up to an additional 20 per centum of the aggregate costs of such damage or destruction (whether or not compensated for by insurance or otherwise) if it determines such increase to be necessary or appropriate in order to protect the damaged or destroyed property from possible future disasters by taking mitigating measures, including, but not limited to, construction of retaining walls and sea walls, grading and contouring land, relocating utilities and modifying structures;
(B) to refinance any mortgage or other lien against a totally destroyed or substantially damaged home or business concern: Provided, That no loan or guarantee shall be extended unless the Administration finds that (i) the applicant is not able to obtain credit elsewhere; (ii) such property is to be repaired, rehabilitated, or replaced; (iii) the amount refinanced shall not exceed the amount of physical loss sustained; and (iv) such amount shall be reduced to the extent such mortgage or lien is satisfied by insurance or otherwise; and
(C) during fiscal years 2000 through 2004, to establish a predisaster mitigation program to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred (guaranteed) basis), as the Administrator may determine to be necessary or appropriate, to enable small businesses to use mitigation techniques in support of a formal mitigation program established by the Federal Emergency Management Agency, except that no loan or guarantee may be extended to a small business under this subparagraph unless the Administration finds that the small business is otherwise unable to obtain credit for the purposes described in this subparagraph;
(2) to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred (guaranteed) basis as the Administration may determine to be necessary or appropriate) to any small business concern, private nonprofit organization or small agricultural cooperative located in an area affected by a disaster, (including drought), with respect to both farm-related and nonfarm-related small business concerns, if the Administration determines that the concern, the organization or the cooperative has suffered a substantial economic injury as a result of such disaster and if such disaster constitutes—
(A) a major disaster, as determined by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act; or
(B) a natural disaster, as determined by the Secretary of Agriculture pursuant to the Consolidated Farmers Home Administration Act of 1961 (7 U.S.C. 1961); or
(C) a disaster, as determined by the Administrator of the Small Business Administration; or
(D) if no disaster declaration has been issued pursuant to subparagraph (A), (B), or (C), the Governor of a State in which a disaster has occurred may certify to the Small Business Administration that small business concerns, private nonprofit organizations or small agricultural cooperatives (1) have suffered economic injury as a result of such disaster, and (2) are in need of financial assistance which is not available on reasonable terms in the disaster stricken area. Not later than 30 days after the date of receipt of such certification by a Governor of a State, the Administration shall respond in writing to that Governor on its determination and the reasons therefore, and may then make such loans as would have been available under this paragraph if a disaster declaration had been issued.
Provided, That no loan or guarantee shall be extended pursuant to this paragraph (2) unless the Administration finds that the applicant is not able to obtain credit elsewhere.
(3) (A) In this paragraph—
(i) the term “essential employee” means an individual who is employed by a small business concern and whose managerial or technical expertise is critical to the successful day-to-day operations of that small business concern;
(ii) the term “period of military conflict” has the meaning given the term in subsection (n)(1); and
(iii) the term “substantial economic injury” means an economic harm to a business concern that results in the inability of the business concern—
(I) to meet its obligations as they mature;
(II) to pay its ordinary and necessary operating expenses; or
(III) to market, produce, or provide a product or service ordinarily marketed, produced, or provided by the business concern.
(B) The Administration may make such disaster loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis) to assist a small business concern that has suffered or that is likely to suffer substantial economic injury as the result of an essential employee of such small business concern being ordered to active military duty during a period of military conflict.
(C) A small business concern described in subparagraph (B) shall be eligible to apply for assistance under this paragraph during the period beginning on the date on which the essential employee is ordered to active duty and ending on the date that is 1 year after the date on which such essential employee is discharged or released from active duty. The Administrator may, when appropriate (as determined by the Administrator), extend the ending date specified in the preceding sentence by not more than 1 year.
(D) Any loan or guarantee extended pursuant to this paragraph shall be made at the same interest rate as economic injury loans under paragraph (2).
(E) No loan may be made under this paragraph, either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis, if the total amount outstanding and committed to the borrower under this subsection would exceed $1,500,000, unless such applicant constitutes, or have become due to changed circumstances, a major source of employment in its surrounding area, as determined by the Administration, in which case the Administration, in its discretion, may waive the $1,500,000 limitation.
(F) For purposes of assistance under this paragraph, no declaration of a disaster area shall be required.
(G) (i) Notwithstanding any other provision of law, the Administrator make a loan under this paragraph of not more than $50,000 without collateral.
(ii) The Administrator may defer payment of principal and interest on a loan described in clause (i) during the longer of—
(I) the 1-year period beginning on the date of the initial disbursement of the loan; and
(II) the period during which the relevant essential employee is on active duty.
(H) The Administrator shall give priority to any application for a loan under this paragraph and shall process and make a determination regarding such applications prior to processing or making a determination on other loan applications under this subsection, on a rolling basis.
(4) COORDINATION
WITH FEMA.—
(A) IN GENERAL.—Notwithstanding any other
provision of law, for any disaster declared under this subsection or major
disaster (including any major disaster relating to which the Administrator
declares eligibility for additional disaster assistance under paragraph (9)),
the Administrator, in consultation with the Administrator of the Federal Emergency
Management Agency, shall ensure, to the maximum extent practicable, that all
application periods for disaster relief under this Act correspond with
application deadlines established under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5121 et seq.), or as extended by the
President.
(B) DEADLINES.—Notwithstanding any other
provision of law, not later than 10 days before the closing date of an application
period for a major disaster (including any major disaster relating to which the
Administrator declares eligibility for additional disaster assistance under
paragraph (9)), the Administrator, in consultation with the Administrator of
the Federal Emergency Management Agency, shall submit to the Committee on Small
Business and Entrepreneurship of the Senate and the Committee on Small Business
of the House of Representatives a report that includes—
(i) the deadline for submitting
applications for assistance under this Act relating to that major disaster;
(ii)
information regarding the number of
loan applications and disbursements processed by the Administrator relating to
that major disaster for each day during the period beginning on the date on which
that major disaster was declared and ending on the date of that report; and
(iii)
an estimate of the number of
potential applicants that have not submitted an application relating to that
major disaster.
(5)
PUBLIC AWARENESS OF DISASTERS.—If a
disaster is declared under this subsection or the Administrator declares
eligibility for additional disaster assistance under paragraph (9), the
Administrator shall make every effort to communicate through radio, television,
print, and web-based outlets, all relevant information needed by disaster loan
applicants, including—
(A)
the date of such declaration;
(B)
cities and towns within the area of
such declaration;
(C)
loan application deadlines related
to such disaster;
(D)
all relevant contact information for
victim services available through the Administration (including links to small
business development center websites);
(E)
links to relevant Federal and State
disaster assistance websites, including links to websites providing information
regarding assistance available from the Federal Emergency Management Agency;
(F)
information on eligibility criteria
for Administration loan programs, including where such applications can be
found; and
(G) application materials that clearly state the function of the Administration as the Federal source of disaster loans for homeowners and renters.
(6) AUTHORITY
FOR QUALIFIED PRIVATE CONTRACTORS.—
(A)
DISASTER LOAN PROCESSING.—The
Administrator may enter into an agreement with a qualified private contractor, as
determined by the Administrator, to process loans under this subsection in the
event of a major disaster (including any major disaster relating to which the
Administrator declares eligibility for additional disaster assistance under
paragraph (9)), under which the Administrator shall pay the contractor a fee
for each loan processed.
(B) LOAN LOSS VERIFICATION SERVICES.—The Administrator may enter into an agreement with a qualified lender or loss verification professional, as determined by the Administrator, to verify losses for loans under this subsection in the event of a major disaster (including any major disaster relating to which the Administrator declares eligibility for additional disaster assistance under paragraph (9)), under which the Administrator shall pay the lender or verification professional a fee for each loan for which such lender or verification professional verifies losses.
(7) DISASTER
ASSISTANCE EMPLOYEES.—
(A)
IN GENERAL.—In carrying out this
section, the Administrator may, where practicable, ensure that the number of
full-time equivalent employees—
(i)
in the Office of the Disaster
Assistance is not fewer than 800; and
(ii)
in the Disaster Cadre of the
Administration is not fewer than 1,000.
(B)
REPORT.—In carrying out this
subsection, if the number of full-time employees for either the Office of
Disaster Assistance or the Disaster Cadre of the Administration is below the
level described in subparagraph (A) for that office, not later than 21 days
after the date on which that staffing level decreased below the level described
in subparagraph (A), the Administrator shall submit to the Committee on
Appropriations and the Committee on Small Business and Entrepreneurship of the Senate
and the Committee on Appropriations and Committee on Small Business of the
House of Representatives, a report—
(i)
detailing staffing levels on that
date;
(ii)
requesting, if practicable and
determined appropriate by the Administrator, additional funds for additional
employees; and
(iii) containing such additional information, as determined appropriate by the Administrator.
(8) INCREASED
LOAN CAPS.—
(A)
AGGREGATE LOAN AMOUNTS.—Except as
provided in subparagraph (B), and notwithstanding any other provision of law,
the aggregate loan amount outstanding and committed to a borrower under this
subsection may not exceed $2,000,000.
(B)
WAIVER AUTHORITY.—The Administrator
may, at the discretion of the Administrator, increase the aggregate loan amount
under subparagraph (A) for loans relating to a disaster to a level established
by the Administrator, based on appropriate economic indicators for the region
in which that disaster occurred.
(9) DECLARATION OF ELIGIBILITY FOR ADDITIONAL
DISASTER ASSISTANCE.—
(A)
IN GENERAL.—If the President
declares a major disaster, the Administrator may declare eligibility for
additional disaster assistance in accordance with this paragraph.
(B)
THRESHOLD.—A major disaster for
which the Administrator declares eligibility for additional disaster assistance
under this paragraph shall—
(i)
have resulted in extraordinary
levels of casualties or damage or disruption severely affecting the population (including
mass evacuations), infrastructure, environment, economy, national morale, or
government functions in an area;
(ii)
be comparable to the description of
a catastrophic incident in the National Response Plan of the Administration, or
any successor thereto, unless there is no successor to such plan, in which case
this clause shall have no force or effect; and
(iii)
be of such size and scope that—
(I)
the disaster assistance programs
under the other paragraphs under this subsection are incapable of providing
adequate and timely assistance to individuals or business concerns located
within the disaster area; or
(II) a significant number of business concerns outside the disaster area have suffered disaster-related substantial economic injury as a result of the incident.
(C) ADDITIONAL
ECONOMIC INJURY DISASTER LOAN ASSISTANCE.—
(i)
IN GENERAL.—If the Administrator
declares eligibility for additional disaster assistance under this paragraph,
the Administrator may make such loans under this subparagraph (either directly
or in cooperation with banks or other lending institutions through agreements
to participate on an immediate or deferred basis) as the Administrator
determines appropriate to eligible small business concerns located anywhere in the
United States.
(ii)
PROCESSING TIME.—
(I)
IN GENERAL.—If the Administrator
determines that the average processing time for applications for disaster loans
under this subparagraph relating to a specific major disaster is more than 15
days, the Administrator shall give priority to the processing of such
applications submitted by eligible small business concerns located inside the disaster
area, until the Administrator determines that the average processing time for
such applications is not more than 15 days.
(II)
SUSPENSION OF APPLICATIONS FROM
OUTSIDE DISASTER AREA.—If the Administrator determines that the average
processing time for applications for disaster loans under this subparagraph relating
to a specific major disaster is more than 30 days, the Administrator shall
suspend the processing of such applications submitted by eligible small
business concerns located outside the disaster area, until the Administrator
determines that the average processing time for such applications is not more
than 15 days.
(iii)
LOAN TERMS.—A loan under this
subparagraph shall be made on the same terms as a loan under paragraph (2).
(D)
DEFINITIONS.—In this paragraph—
(i)
the term “disaster area” means the
area for which the applicable major disaster was declared;
(ii)
the term “disaster-related
substantial economic injury” means economic harm to a business concern that
results in the inability of the business concern to—
(I)
meet its obligations as it matures;
(II)
meet its ordinary and necessary
operating expenses; or
(III)
market, produce, or provide a product
or service ordinarily marketed, produced, or provided by the business concern
because the business concern relies on materials from the disaster area or sells
or markets in the disaster area; and
(iii)
the term “eligible small business
concern” means a small business concern—
(I)
that has suffered disaster-related
substantial economic injury as a result of the applicable major disaster; and
(II) (aa) for
which not less than 25 percent of the market share of that small business
concern is from business transacted in the disaster area;
(bb)
for which not less than 25 percent of
an input into a production process of that small business concern is from the
disaster area; or
(cc) that relies on a provider located in the disaster area for a service that is not readily available elsewhere.
[THE FOLLOWING PARAGRAPHS PRECEDING SUBSECTION 7(c)
APPLY TO THE ENTIRE SUBSECTION 7(b).]
No
loan under this subsection, including renewals and extensions thereof, may be
made for a period or periods exceeding thirty years: Provided, That the Administrator may
consent to a suspension in the payment of principal and interest charges on,
and to an extension in the maturity of, the Federal share of any loan under
this subsection for a period not to exceed five years, if (A) the borrower
under such loan is a homeowner or a small business concern, (B) the loan was
made to enable (i) such homeowner to repair or replace his home, or (ii) such
concern to repair or replace plant or equipment which was damaged or destroyed
as the result of a disaster meeting the requirements of clause (A) or (B) of paragraph (2) of this
subsection, and (C) the Administrator determines such action is necessary to
avoid severe financial hardship: Provided further, That the provisions of paragraph (1) of
subsection (d) of this section shall not be applicable to any such loan having
a maturity in excess of twenty years.
Notwithstanding the provisions of any other law, the interest rate on
the Administration’s share of any loan made under subsection (d), except as
provided in subsection (d), shall not exceed the average annual interest rate
on all interest‑bearing obligations of the United States then forming a
part of the public debt as computed at the end of the fiscal year next
preceding the date of the loan and adjusted to the nearest one‑eighth of
1 per centum plus one‑quarter of 1 per centum: Provided, however, That the interest
rate for loans made under paragraphs (1) and (2) hereof shall not exceed the
rate of interest which is in effect at the time of the occurrence of the
disaster. In agreements to participate
in loans on a deferred basis under this subsection, such participation by the
Administration shall not be in excess of 90 per centum of the balance of the
loan outstanding at the time of disbursement. Notwithstanding any other
provision of law, the interest rate on the Administration’s share of any loan
made pursuant to paragraph (1) of this subsection to repair or replace a
primary residence and/or replace or repair damaged or destroyed personal
property, less the amount of compensation by insurance or otherwise, with
respect to a disaster occurring on or after July 1, 1976, and prior to October
1, 1978, shall be: 1 per centum on the
amount of such loan not exceeding $10,000, and 3 per centum on the amount of
such loan over $10,000 but not exceeding $40,000. The interest rate on the
Administration’s share of the first $250,000 of all other loans made pursuant
to paragraph (1) of this subsection, with respect to a disaster occurring on or
after July 1, 1976, and prior to October 1, 1978, shall be 3 per centum. All repayments of principal on the
Administration’s share of any loan made under the above provisions shall first
be applied to reduce the principal sum of such loan which bears interest at the
lower rates provided in this paragraph.
The principal amount of any loan made pursuant to paragraph (1) in
connection with a disaster which occurs on or after April 1, l977, but prior to
January 1, 1978, may be increased by such amount, but not more than $2,000, as
the Administration determines to be reasonable in light of the amount and
nature of loss, damage, or injury sustained in order to finance the
installation of insulation in the property which was lost, damaged, or injured,
if the uninsured, damaged portion of the property is 10 per centum or more of
the market value of the property at the time of the disaster. Not later than June 1, 1978, the
Administration shall prepare and transmit to the Select Committee on Small
Business of the Senate, the Committee on Small Business of the House of
Representatives, and the Committees of the Senate and House of Representatives having
jurisdiction over measures relating to energy conservation, a report on its
activities under this paragraph, including therein an evaluation of the effect
of such activities on encouraging the installation of insulation in property
which is repaired or replaced after a disaster which is subject to this
paragraph, and its recommendations with respect to the continuation,
modification, or termination of such activities.
In the administration of the disaster loan program under paragraphs (1) and (2) of this subsection, in the case of property loss or damage or injury resulting from a major disaster as determined by the President or a disaster as determined by the Administrator which occurs on or after January 1, 1971, and prior to July 1, 1973, the Small Business Administration, to the extent such loss or damage or injury is not compensated for by insurance or otherwise—
(A) may make any loan for repair, rehabilitation, or replacement of property damaged or destroyed without regard to whether the required financial assistance is otherwise available from private sources;
(B) may, in the case of the total destruction or substantial property damage of a home or business concern, refinance any mortgage or other liens outstanding against the destroyed or damaged property if such property is to be repaired, rehabilitated, or replaced, except that (1) in the case of a business concern, the amount refinanced shall not exceed the amount of the physical loss sustained, and (2) in the case of a home, the amount of each monthly payment of principal and interest on the loan after refinancing under this clause shall be not less than the amount of each such payment made prior to such refinancing;
(C) may, in the case of a loan made under clause (A) or a mortgage or other lien refinanced under clause (B) in connection with the destruction of, or substantial damage to, property owned and used as a residence by an individual who by reason of retirement, disability, or other similar circumstances relies for support on survivor, disability, or retirement benefits under a pension, insurance, or other program, consent to the suspension of the payments of the principal of that loan, mortgage, or lien during the lifetime of that individual and his spouse for so long as the Administration determines that making such payments would constitute a substantial hardship;
(D) shall, notwithstanding the provisions of any other law and upon presentation by the applicant of proof of loss or damage or injury and a bona fide estimate of cost of repair, rehabilitation, or replacement, cancel the principal of any loan made to cover a loss or damage or injury resulting from such disaster, except that—
(i) with respect to a loan made in connection with a disaster occurring on or after January 1, 1971, but prior to January 1, 1972, the total amount so canceled shall not exceed $2,500, and the interest on the balance of the loan shall be at a rate of 3 per centum per annum; and
(ii) with respect to a loan made in connection with a disaster occurring on or after January 1, 1972, but prior to July 1, 1973, the total amount so canceled shall not exceed $5,000, and the interest on the balance of the loan shall be at a rate of 1 per centum per annum.
With respect to any loan referred to in clause (D) which is outstanding on the date of enactment of this paragraph, the Administrator shall—
(i) make such change in the interest rate on the balance of such loan as is required under that clause effective as of such date of enactment; and
(ii) in applying the limitation set forth in that clause with respect to the total amount of such loan which may be canceled, consider as part of the amount so canceled any part of such loan which was previously canceled pursuant to section 231 of the Disaster Relief Act of 1970.
Whoever wrongfully misapplies the proceeds of a loan obtained under this subsection shall be civilly liable to the Administrator in an amount equal to one‑and‑one‑half times the original principal amount of the loan.
(E) A State grant made on or prior to July 1, 1979, shall not be considered compensation for the purpose of applying the provisions of section 312(a) of the Disaster Relief and Emergency Assistance Act to a disaster loan under paragraph (1) or (2) of this subsection.
(c) PRIVATE DISASTER LOANS.—
(1)
DEFINITIONS.—In this subsection—
(A)
the term “disaster area” means any
area for which the President declared a major disaster relating to which the
Administrator declares eligibility for additional disaster assistance under
subsection (b)(9), during the period of that major disaster declaration;
(B)
the term “eligible individual” means
an individual who is eligible for disaster assistance under subsection (b)(1)
relating to a major disaster relating to which the Administrator declares
eligibility for additional disaster assistance under subsection (b)(9);
(C)
the term “eligible small business
concern” means a business concern that is—
(i)
a small business concern, as
defined under this Act; or
(ii)
a small business concern, as
defined in section 103 of the Small Business Investment Act of 1958;
(D)
the term “preferred lender” means a
lender participating in the Preferred Lender Program;
(E)
the term “Preferred Lender Program”’
has the meaning given that term in subsection (a)(2)(C)(ii); and
(F)
the term “qualified private lender”
means any privately-owned bank or other lending institution that—
(i)
is not a preferred lender; and
(ii)
the Administrator determines meets
the criteria established under paragraph (10).
(2)
PROGRAM REQUIRED.—The Administrator
shall carry out a program, to be known as the Private Disaster Assistance program,
under which the Administration may guarantee timely payment of principal and
interest, as scheduled, on any loan made to an eligible small business concern
located in a disaster area and to an eligible individual.
(3)
USE OF LOANS.—A loan guaranteed by
the Administrator under this subsection may be used for any purpose authorized under
subsection (b).
(4)
ONLINE APPLICATIONS.—
(A)
ESTABLISHMENT.—The Administrator may
establish, directly or through an agreement with another entity, an online
application process for loans guaranteed under this subsection.
(B)
OTHER FEDERAL ASSISTANCE.—The
Administrator may coordinate with the head of any other appropriate Federal agency
so that any application submitted through an online application process
established under this paragraph may be considered for any other Federal
assistance program for disaster relief.
(C)
CONSULTATION.—In establishing an
online application process under this paragraph, the Administrator shall
consult with appropriate persons from the public and private sectors, including
private lenders.
(5)
MAXIMUM AMOUNTS.—
(A)
GUARANTEE PERCENTAGE.—The
Administrator may guarantee not more than 85 percent of a loan under this
subsection.
(B)
LOAN AMOUNT.—The maximum amount of a
loan guaranteed under this subsection shall be $2,000,000.
(6) TERMS
AND CONDITIONS.—A loan guaranteed under this subsection shall be made under the
same terms and conditions as a loan under subsection (b).
(7)
LENDERS.—
(A)
IN GENERAL.—A loan guaranteed under
this subsection made to—
(i)
a qualified individual may be made
by a preferred lender; and
(ii)
a qualified small business concern
may be made by a qualified private lender or by a preferred lender that also
makes loans to qualified individuals.
(B)
COMPLIANCE.—If the Administrator
determines that a preferred lender knowingly failed to comply with the underwriting
standards for loans guaranteed under this subsection or violated the terms of
the standard operating procedure agreement between that preferred lender and
the Administration, the Administrator shall do 1 or more of the following:
(i)
Exclude the preferred lender from
participating in the program under this subsection.
(ii)
Exclude the preferred lender from
participating in the Preferred Lender Program for a period of not more than 5
years.
(8)
FEES.—
(A)
IN GENERAL.—The Administrator may
not collect a guarantee fee under this subsection.
(B)
ORIGINATION FEE.—The Administrator
may pay a qualified private lender or preferred lender an origination fee for a
loan guaranteed under this subsection in an amount agreed upon in advance
between the qualified private lender or preferred lender and the Administrator.
(9)
DOCUMENTATION.—A qualified private
lender or preferred lender may use its own loan documentation for a loan guaranteed
by the Administrator under this subsection, to the extent authorized by the
Administrator. The ability of a lender to use its own loan documentation for a
loan guaranteed under this subsection shall not be considered part of the
criteria for becoming a qualified private lender under the regulations
promulgated under paragraph (10).
(10)
IMPLEMENTATION REGULATIONS.—
(A)
IN GENERAL.—Not later than 1 year
after the date of enactment of the Small Business Disaster Response and Loan
Improvements Act of 2008, the Administrator shall issue final regulations
establishing permanent criteria for qualified private lenders.
(B)
REPORT TO CONGRESS.—Not later than 6
months after the date of enactment of the Small Business Disaster Response and
Loan Improvements Act of 2008, the Administrator shall submit a report on the
progress of the regulations required by subparagraph (A) to the Committee on Small
Business and Entrepreneurship of the Senate and the Committee on Small Business
of the House of Representatives.
(11)
AUTHORIZATION OF APPROPRIATIONS.—
(A)
IN GENERAL.—Amounts necessary to
carry out this subsection shall be made available from amounts appropriated to
the Administration to carry out subsection (b).
(B)
AUTHORITY TO REDUCE INTEREST RATES
AND OTHER TERMS AND CONDITIONS.—Funds appropriated to the Administration to
carry out this subsection, may be used by the Administrator to meet the loan
terms and conditions specified in paragraph (6).
(12) PURCHASE OF LOANS.—The Administrator may enter into an agreement with a qualified private lender or preferred lender to purchase any loan guaranteed under this subsection.
(d) (1) The Administration may further extend the maturity of or renew any loan made pursuant to this section, or any loan transferred to the Administration pursuant to Reorganization Plan Numbered 2 of 1954, or Reorganization Plan Numbered 1 of 1957, for additional periods not to exceed ten years beyond the period stated therein, if such extension or renewal will aid in the orderly liquidation of such loan.
(2) During any period in which principal and interest charges are suspended on the Federal share of any loan, as provided in subsection (b), the Administrator shall, upon the request of any person, firm, or corporation having a participation in such loan, purchase such participation, or assume the obligation of the borrower, for the balance of such period, to make principal and interest payments on the non‑Federal share of such loan: Provided, That no such payments shall be made by the Administrator in behalf of any borrower unless (i) the Administrator determines that such action is necessary in order to avoid a default, and (ii) the borrower agrees to make payments to the Administration in an aggregate amount equal to the amount paid in its behalf by the Administrator, in such manner and at such times (during or after the term of the loan) as the Administrator shall determine having due regard to the purposes sought to be achieved by this paragraph.
(3) With respect to a disaster occurring on or after October 1, 1978, and prior to the effective date of this Act, on the Administration's share of loans made pursuant to paragraph (1) of subsection (b)—
Disaster loan interest
rates.
(C) if the loan proceeds are to repair or
replace property damaged or destroyed and if the applicant is a business
concern which is able to obtain sufficient credit elsewhere, the interest rate
shall not exceed the current average market yield on outstanding marketable
obligations of the United States with remaining periods to maturity
comparable
to the average maturities of such loans and adjusted to the nearest one‑eighth
of 1 percent, and an additional amount as determined by the Administration, but
not to exceed 1 percent: Provided,
That three years after such loan is fully disbursed and every two years
thereafter for the term of the loan, if the Administration determines that the
borrower is able to obtain a loan from non‑Federal sources at reasonable
rates and terms for loans of similar purposes and periods of time, the borrower
shall, upon request by the Administration, apply for and accept such a
loan in sufficient amount to repay the Administration: Provided further,
That no loan under subsection (b)(1) shall be made, either directly or in
cooperation with banks or other lending institutions through agreements to
participate on an immediate or deferred basis, if the total amount outstanding
and committed to the borrower under such subsection would exceed $500,000 for
each disaster, unless an applicant constitutes a major source of employment in
an area suffering a disaster, in which case the Administration, in its
discretion, may waive the $500,000 limitation.
(4) Notwithstanding the provisions of any other law, the interest rate on the Federal share of any loan made under subsection (b) shall be—
(A) in the case of a homeowner unable to
secure credit elsewhere, the rate prescribed by the Administration but not more
than one‑half the rate determined by the Secretary of the Treasury taking
into consideration the current average market yield on outstanding marketable
obligations of the United States with remaining periods to maturity comparable
to the average maturities of such loans plus an additional charge of not to
exceed 1 per centum per annum as determined by the Administrator, and adjusted
to the nearest one‑eighth of 1 per centum but not to exceed 8 per centum
per annum;
(B) in the case of a homeowner able to secure
credit elsewhere, the rate prescribed by the Administration but not more than
the rate determined by the Secretary of the Treasury taking into consideration
the current average market yield on outstanding marketable obligations of the
United States with remaining periods to maturity comparable to the average maturities
of such loans plus an additional charge of not to exceed 1 per centum per annum
as determined by the Administrator, and adjusted to the nearest one‑eighth
of 1 per centum;
(C) in the case of a business concern unable
to obtain credit elsewhere, not to exceed 8 per centum per annum;
(D) in the case of a business concern able to
obtain credit elsewhere, the rate prescribed by the Administration but not in
excess of the rate prevailing in private market for similar loans and not more
than the rate prescribed by the Administration as the maximum interest rate for
deferred participation (guaranteed) loans under section 7(a) of this Act. Loans under this subparagraph shall be
limited to a maximum term of three years.
(5) Notwithstanding the provisions of any other law, the interest rate on the Federal share of any loan made under subsection (b)(1) and (b)(2) on account of a disaster commencing on or after October 1, 1982, shall be—
(A) in the case of a homeowner unable to
secure credit elsewhere, the rate prescribed by the Administration but not more
than one‑half the rate determined by the Secretary of the Treasury taking
into consideration the current average market yield on outstanding marketable
obligations of the United States with remaining periods to maturity comparable
to the average maturities of such loan plus an additional charge of not to
exceed 1 per centum per annum as determined by the Administrator, and adjusted
to the nearest one‑eighth of 1 per centum, but not to exceed 4 per centum
per annum;
(B) in the case of a homeowner able to secure
credit elsewhere, the rate prescribed by the Administration but not more than
the rate determined by the Secretary of the Treasury taking into consideration
the current average market yield on outstanding marketable obligations of the
United States with remaining periods to maturity comparable to the average
maturities of such loans plus an additional charge of not to exceed 1 per
centum per annum as determined by the Administrator; and adjusted to the
nearest one‑eighth of 1 per centum, but not to exceed 8 per centum per
annum;
(C) in the case of a business,
private nonprofit organization, or other concern, including agricultural
cooperatives, unable to obtain credit elsewhere, not to exceed 4 per centum per
annum;
(D) in the case of a business concern able to
obtain credit elsewhere, the rate prescribed by the Administration but not in
excess of the lowest of (i) the rate prevailing in the private market for
similar loans, (ii) the rate prescribed by the Administration as the maximum
interest rate for deferred participation (guaranteed) loans under section 7(a)
of this Act, or (iii) 8 per centum per annum.
Loans under this subparagraph shall be limited to a maximum term of
three years.
(6) Notwithstanding the provisions of any
other law, such loans, subject to the reductions required by subparagraphs (A)
and (B) of paragraph 7(b)(1), shall be in amounts equal to 100 per centum of
loss. The interest rates for loans made
under paragraphs 7(b)(1) and (2), as determined pursuant to paragraph (5),
shall be the rate of interest which is in effect on the date of the disaster
commenced: Provided, That no loan
under paragraphs 7(b)(1) and (2) shall be made, either directly or in cooperation
with banks or other lending institutions through agreements to participate on
an immediate or deferred (guaranteed) basis, if the total amount outstanding
and committed to the borrower under subsection 7(b) would exceed $500,000 for
each disaster unless an applicant constitutes a major source of employment in
an area suffering a disaster, in which case the Administration, in its
discretion, may waive the $500,000 limitation.
Employees of concerns sharing a common business premises shall be
aggregated in determining “major source of employment” status for nonprofit
applicants owning such premises. Provided further, That the
Administration, subject to the reductions required by subparagraphs (A) and (B)
of paragraph 7(b)(1), shall not reduce the amount of eligibility for any
homeowner on account of loss of real estate to less than $100,000 for each
disaster nor for any homeowner or lessee on account of loss of personal
property to less than $20,000 for each disaster, such sums being in addition to
any eligible refinancing: Provided
further, That the Administration
shall not require collateral for loans of $14,000 or less (or
such higher amount as the Administrator determines appropriate in the event of
a major disaster) which are made under paragraph (1) of subsection (b).
With respect
to any loan which is outstanding on the date of enactment of this paragraph and
which was made on account of a disaster commencing on or after October 1, 1982,
the Administrator shall make such change in the interest rate on the balance of
such loan as is required herein effective as of the date of enactment.
(7) The Administration shall not withhold
disaster assistance pursuant to this paragraph to nurseries who are victims of
drought disasters. As used in section 7(b)(2)
the term “an area affected by a disaster” includes any county, or county
contiguous thereto, determined to be a disaster by the President, the Secretary
of Agriculture or the Administrator of the Small Business Administration.
(e) The Administration shall not fund any
Small Business Development Center or any variation thereof, except as
authorized in section 21 of this Act.
(f) ADDITIONAL REQUIREMENTS FOR 7(b) LOANS.—
(1)
INCREASED DEFERMENT AUTHORIZED.—
(A)
IN GENERAL.—In making loans under
subsection (b), the Administrator may provide, to the person receiving the
loan, an option to defer repayment on the loan.
(B) PERIOD.—The period of a deferment under
subparagraph (A) may not exceed 4 years.
(g) NET EARNINGS CLAUSES PROHIBITED FOR 7(b) LOANS.—In making loans under subsection (b), the Administrator shall not require the borrower to pay any non-amortized amount for the first five years after repayment begins.
(h) (1) The Administration also is empowered, where other financial assistance is not available on reasonable terms, to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis) as the Administration may determine to be necessary or appropriate—
(A) to assist any public or private organization—
(i) which is organized under the laws of
the United States or of any State, operated in the interest of handicapped
individuals, the net income of which does not inure in whole or in part to the
benefit of any shareholder or other individual;
(ii) which complies with any applicable
occupational health and safety standard prescribed by the Secretary of Labor;
and
(iii) which, in the production of commodities
and in the provision of services during any fiscal year in which it receives
financial assistance under this subsection, employs handicapped individuals for
not less than 75 per centum of the man‑hours required for the production
or provision of the commodities or services; or
(B) to assist any handicapped individual in
establishing, acquiring, or operating a small business concern.
(2) The Administration's share of any loan
made under this subsection shall not exceed $350,000, nor may any such loan be
made if the total amount outstanding and committed (by participation or
otherwise) to the borrower from the business loan and investment fund
established by section 4(c)(1)(B) of this Act would exceed $350,000. In agreements to participate in loans on a
deferred basis under this subsection, the Administration’s participation may
total 100 per centum of the balance of the loan at the time of
disbursement. The Administration’s share of any
loan made under this subsection shall bear interest at the rate of 3 per centum
per annum. The maximum term of any such
loan, including extensions and renewals thereof, may not exceed fifteen
years. All loans made under this
subsection shall be of such sound value or so secured as reasonably to assure
repayment: Provided, however,
That any reasonable doubt shall be resolved in favor of the applicant.
(3) For purposes of this subsection, the
term “handicapped individual” means a person who has a physical, mental, or
emotional impairment, defect, ailment, disease, or disability of a permanent
nature which in any way limits the selection of any type of employment for
which the person would otherwise be qualified or qualifiable.
(i) (1) The Administration also is empowered to make, participate (on an immediate basis) in, or guarantee loans, repayable in not more than fifteen years, to any small business concern, or to any qualified person seeking to establish such a concern, when it determines that such loans will further the policies established in section 2(b) of this Act, with particular emphasis on the preservation or establishment of small business concerns located in urban or rural areas with high proportions of unemployed or low‑income individuals, or owned by low‑income individuals: Provided, however, That no such loans shall be made, participated in, or guaranteed if the total of such Federal assistance to a single borrower outstanding at any one time would exceed $100,000. The Administration may defer payments on the principal of such loans for a grace period and use such other methods as it deems necessary and appropriate to assure the successful establishment and operation of such concern. The Administration may, in its discretion, as a condition of such financial assistance, require that the borrower take steps to improve his management skills by participating in a management training program approved by the Administration: Provided, however, That any management training program so approved must be of sufficient scope and duration to provide reasonable opportunity for the individuals served to develop entrepreneurial and managerial self‑sufficiency.
(2) The Administration shall encourage, as
far as possible, the participation of the private business community in the
program of assistance to such concerns, and shall seek to stimulate new private
lending activities to such concerns through the use of the loan guarantees,
participations in loans, and pooling arrangements authorized by this
subsection.
(3) To insure an equitable distribution
between urban and rural areas for loans between $3,500 and $100,000 made under
this subsection the Administration is authorized to use the agencies and
agreements and delegations developed under title III of the Economic
Opportunity Act of 1964, as amended, as it shall determine necessary.
(4) The Administration shall provide for the
continuing evaluation of programs under this subsection, including full
information on the location, income characteristics, and types of businesses
and individuals assisted, and on new private lending activity stimulated, and
the results of such evaluation together with recommendations shall be included
in the report required by section 10(a) of this Act.
(5) Loans made pursuant to this subsection (including immediate participation in and guarantees of such loans) shall have such terms and conditions as the Administration shall determine, subject to the following limitations—
(A) there is reasonable assurance of
repayment of the loan;
(B) the financial assistance is not otherwise
available on reasonable terms from private sources or other Federal, State, or
local programs;
(C) the amount of the loan, together with
other funds available, is adequate to assure completion of the project or
achievement of the purposes for which the loan is made;
(D) the loan bears interest at a rate not
less than (i) a rate determined by the Secretary of the Treasury, taking into
consideration the average market yield on outstanding Treasury obligations of
comparable maturity, plus (ii) such additional charge, if any, toward covering
other costs of the program as the Administration may determine to be consistent
with its purposes: Provided, however,
That the rate of interest charged on loans made in redevelopment areas
designated under the Public Works and Economic Development Act of 1965 (42
U.S.C. 3108 et seq.) shall not exceed the rate currently applicable to new
loans made under section 201 of that Act (42 U.S.C. 3141); and
(E) fees not in excess of amounts necessary
to cover administrative expenses and probable losses may be required on loan
guarantees.
(6) The Administration shall take such steps
as may be necessary to insure that, in any fiscal year, at least 50 per centum
of the amounts loaned or guaranteed pursuant to this subsection are allotted to
small business concerns located in urban areas identified by the Administration
as having high concentrations of unemployed or low‑income individuals or
to small business concerns owned by low‑income individuals. The Administration shall define the meaning
of low‑income as it applies to owners of small business concerns eligible
to be assisted under this subsection.
(7) No financial assistance shall be
extended pursuant to this subsection where the Administration determines that
the assistance will be used in relocating establishments from one area to
another if such relocation would result in an increase in unemployment in the
area of original location.
(j) (1) The
Administration shall provide financial assistance to public or private organizations
to pay all or part of the cost of projects designed to provide technical or
management assistance to individuals or enterprises eligible for assistance
under sections 7(i), 7(j)(10), and 8(a) of this Act, with special attention to
small businesses located in areas of high concentration of unemployed or low‑income
individuals, to small businesses eligible to receive contracts pursuant to
section 8(a) of this Act.
(2) Financial assistance under this subsection may be provided for projects, including, but not limited to—
(A) planning and research, including
feasibility studies and market research;
(B) the identification and development of new
business opportunities;
(C) The furnishing of centralized services
with regard to public services and Federal Government programs including
programs authorized under sections 7(i), 7(j)(10), and 8(a) of this Act;
(D) the establishment and strengthening of
business service agencies, including trade associations and cooperatives; and
(E) the furnishing of business counseling,
management training, and legal and other related services, with special
emphasis on the development of management training programs using the resources
of the business community, including the development of management training
opportunities in existing business, and with emphasis in all cases upon
providing management training of sufficient scope and duration to develop
entrepreneurial and managerial self‑sufficiency on the part of the
individuals served.
(3) The Administration shall encourage the
placement of subcontracts by businesses with small business concerns located in
areas of high concentration of unemployed or low‑income individuals, and
with small businesses eligible to receive contracts pursuant to section 8(a) of
this Act. The Administration may provide
incentives and assistance to such businesses that will aid in the training and
upgrading of potential subcontractors or other small business concerns eligible
for assistance under sections 7(i), 7(j), and 8(a) of this Act.
(A) [Repealed].
(B) [Repealed].
(4) The Administration shall give preference
to projects which promote the ownership, participation in ownership, or
management of small businesses owned by low‑ income
individuals and small businesses eligible to receive contracts pursuant to
section 8(a) of this Act.
(5) The financial assistance authorized for
projects under this subsection includes assistance advanced by grant,
agreement, or contract.
(6) The Administration is authorized to make
payments under grants and contracts entered into under this subsection in lump
sum or installments, and in advance or by way of reimbursement, and in the case
of grants, with necessary adjustments on account of overpayments or
underpayments.
(7) To the extent feasible, services under
this subsection shall be provided in a location which is easily accessible to
the individuals and small business concerns served.
(8) [Repealed].
(9) The Administration shall take such steps
as may be necessary and appropriate, in coordination and cooperation with the
heads of other Federal departments and agencies, to insure that contracts,
subcontracts, and deposits made by the Federal Government or with programs
aided with Federal funds are placed in such way as to further the purposes of
sections 7(i), 7(j), and 8(a) of this Act.
(10) There is established within the Administration a small business and capital ownership development program (hereinafter referred to as the “Program”) which shall provide assistance exclusively for small business concerns eligible to receive contracts pursuant to section 8(a) of this Act. The program, and all other services and activities authorized under section 7(j) and 8(a) of this Act, shall be managed by the Associate Administrator for Minority Small Business and Capital Ownership Development under the supervision of, and responsible to, the Administrator.
(A) The program shall—
(i) assist small business concerns participating in the Program (either through public or private organizations) to develop and maintain comprehensive business plans which set forth the Program Participant's specific business targets, objectives, and goals developed and maintained in conformity with subparagraph (D).
(ii) provide for such other nonfinancial services as deemed necessary for the establishment, preservation, and growth of small business concerns participating in the Program, including but not limited to (I) loan packaging, (II) financial counseling, (III) accounting and bookkeeping assistance, (IV) marketing assistance, and (V) management assistance;
(iii) assist small business concerns participating in the Program to obtain equity and debt financing;
(iv) establish regular performance monitoring and reporting systems for small business concerns participating in the Program to assure compliance with their business plans;
(v) analyze and report the causes of success and failure of small business concerns participating in Program; and
(vi) provide assistance necessary to help small business concerns participating in the Program to procure surety bonds, with such assistance including, but not limited to (I) the preparation of application forms required to receive a surety bond, (II) special management and technical assistance designed to meet the specific needs of small business concerns participating in the Program and which have received or are applying to receive a surety bond, and (III) preparation of all forms necessary to receive a surety bond guarantee from the Administration pursuant to title IV, part B of the Small Business Investment Act of l958.
(B) Small business concerns eligible to receive contracts pursuant to section 8(a) of this Act shall participate in the Program.
(C) (i) A small business concern participating in any program or activity conducted under the authority of this paragraph or eligible for the award of contracts pursuant to section 8(a) on September 1, 1988, shall be permitted continued participation and eligibility in such program or activity for a period of time which is the greater of—
(I) 9 years less the number of years since the award of its first contract pursuant to section 8(a); or
(II) its original fixed program participation term (plus any extension thereof) assigned prior to the effective date of this paragraph plus eighteen months.
(ii) Nothing contained in this subparagraph shall be deemed to prevent the Administration from instituting a termination or graduation pursuant to subparagraph (F) or (H) for issues unrelated to the expiration of any time period limitation.
(D) (i) Promptly after certification under paragraph (11) a Program Participant shall submit a business plan (hereinafter referred to as the “plan”) as described in clause (ii) of this subparagraph for review by the Business Opportunity Specialist assigned to assist such Program Participant. The plan may be a revision of a preliminary business plan submitted by the Program Participant or required by the Administration as a part of the application for certification under this section and shall be designed to result in the Program Participant eliminating the conditions or circumstances upon which the Administration determined eligibility pursuant to section 8(a)(6). Such plan, and subsequent modifications submitted under clause (iii) of this subparagraph, shall be approved by the business opportunity specialist prior to the Program Participant being eligible for award of a contract pursuant to section 8(a).
(ii) The plans submitted under this subparagraph shall include the following:
(I) An analysis of market potential, competitive environment, and other business analyses estimating the Program Participant's prospects for profitable operations during the term of program participation and after graduation.
(II) An analysis of the Program Participant's strengths and weaknesses with particular attention to correcting any financial, managerial, technical, or personnel conditions which are likely to impede the small business concern from receiving contracts other than those awarded under section 8(a).
(III) Specific targets, objectives, and goals, for the business development of the Program Participant during the next and succeeding years utilizing the results of the analyses conducted pursuant to subclauses (I) and (II).
(IV) A transition management plan outlining specific steps to assure profitable business operations after graduation (to be incorporated into the Program Participant's plan during the first year of the transitional stage of Program participation.
(V) Estimates of contract awards pursuant to section 8(a) and from other sources, which the Program Participant will require to meet the specific targets, objectives, and goals for the years covered by its plan. The estimates established shall be consistent with the provisions of subparagraph (I) and section 8(a).
(iii) Each Program Participant shall annually review its currently approved plan with its Business Opportunity Specialist and modify such plan as may be appropriate. Any modified plan shall be submitted to the Administration for approval. The currently approved plan shall be considered valid until such time as a modified plan is approved by the Business Opportunity Specialist. Annual reviews pertaining to years in the transitional stage of program participation shall require, as appropriate, a written verification that such Program Participant has complied with the requirements of subparagraph (I) relating to attaining business activity from sources other that contracts awarded pursuant to section 8(a).
(iv) Each Program Participant shall annually forecast its needs for contract awards under section 8(a) for the next program year and the succeeding program year during the review of its business plan, conducted pursuant to clause (iii). Such forecast shall be known as the section 8(a) contract support level and shall be included in the Program Participant's business plan. Such forecast shall include—
(I) the aggregate dollar value of contract support to be sought on a noncompetitive basis under section 8(a), reflecting compliance with the requirements of subparagraph (I) relating to attaining business activity from sources other than contracts awarded pursuant to section 8(a),
(II) the types of contract opportunities being sought, identified by Standard Industrial Classification (SIC) Code or otherwise,
(III) an estimate of the dollar value of contract support to be sought on a competitive basis, and
(IV) such other information as may be requested by the Business Opportunity Specialist to provide effective business development assistance to the Program Participant.
(E) A small business concern participating in the program conducted under the authority of this paragraph and eligible for the award of contracts pursuant to section 8(a) shall be denied all such assistance if such concern—
(i) voluntarily elects not to continue participation;
(ii) completes the period of Program participation as prescribed by paragraph (15);
(iii) is terminated pursuant to a termination proceeding conducted in accordance with section 8(a)(9); or
(iv) is graduated pursuant to a graduation proceeding conducted in accordance with section 8(a)(9).
(F) For purposes of this section and section 8(a), the term “terminated” and the term “termination” means the total denial or suspension of assistance under this paragraph or under section 8(a) prior to the graduation of the participating small business concern or prior to the expiration of the maximum program participation term. An action for termination shall be based upon good cause, including—
(i) the failure by such concern to maintain its eligibility for Program participation;
(ii) the failure of the concern to engage in business practices that will promote its competitiveness within a reasonable period of time as evidenced by, among other indicators, a pattern of unjustified delinquent performance or terminations for default with respect to contracts awarded under the authority of section 8(a);
(iii) a demonstrated pattern of failing to make required submissions or responses to the Administration in a timely manner;
(iv) the willful violation of any rule or regulation of the Administration pertaining to material issues;
(v) the debarment of the concern or its disadvantaged owners by any agency pursuant to subpart 9.4 of title 48, Code of Federal Regulations (or any successor regulation); or
(vi) the conviction of the disadvantaged owner or an officer of the concern for any offense indicating a lack of business integrity including any conviction for embezzlement, theft, forgery, bribery, falsification or violation of section 16. For purposes of this clause, no termination action shall be taken with respect to a disadvantaged owner solely because of the conviction of an officer of the concern (who is other than a disadvantaged owner) unless such owner conspired with, abetted, or otherwise knowingly acquiesced in the activity or omission that was the basis of such officer's conviction.
(G) The Director of the Division may initiate a termination proceeding by recommending such action to the Associate Administrator for Minority Small Business and Capital Ownership Development. Whenever the Associate Administrator, or a designee of such officer, determines such termination is appropriate, within 15 days after making such a determination the Program Participant shall be provided a written notice of intent to terminate, specifying the reasons for such action. No Program Participant shall be terminated from the Program pursuant to subparagraph (F) without first being afforded an opportunity for a hearing in accordance with section 8(a)(9).
(H) For the purposes of sections 7(j) and 8(a) the term “graduated” or “graduation” means that the Program Participant is recognized as successfully completing the program by substantially achieving the targets, objectives, and goals contained in the concern's business plan thereby demonstrating its ability to compete in the marketplace without assistance under this section or section 8(a).
(I) (i) During the developmental stage of its participation in the Program, a Program Participant shall take all reasonable efforts within its control to attain the targets contained in its business plan for contracts awarded other than pursuant to section 8(a) (hereinafter referred to as “business activity targets”). Such efforts shall be made a part of the business plan and shall be sufficient in scope and duration to satisfy the Administration that the Program Participant will engage [sic] a reasonable marketing strategy that will maximize its potential to achieve its business activity targets.
(ii) During the transitional stage of the Program a Program Participant shall be subject to regulations regarding business activity targets that are promulgated by the Administration pursuant to clause (iii).
(iii) The regulations referred to in clause (ii) shall:
(I) establish business activity targets applicable to Program Participants during the fifth year and each succeeding year of Program Participation; such targets, for such period of time, shall reflect a reasonably consistent increase in contracts awarded other than pursuant to section 8(a), expressed as a percentage of total sales; when promulgating business activity targets the Administration may establish modified targets for Program Participants that have participated in the Program for a period of longer than four years on the effective date of this subparagraph;
(II) require a Program Participant to attain its business activity targets;
(III) provide that, before the receipt of any contract to be awarded pursuant to section 8(a), the Program Participant (if it is in the transitional stage) must certify that it has complied with the regulations promulgated pursuant to subclause (II), or that it is in compliance with such remedial measures as may have been ordered pursuant to regulations issued under subclause (V);
(IV) require the Administration to review each Program Participant's performance regarding attainment of business activity targets during periodic reviews of such Participant's business plan; and
(V) authorize the Administration to take appropriate remedial measures with respect to a Program Participant that has failed to attain a required business activity target for the purpose of reducing such Participant's dependence on contracts awarded pursuant to section 8(a); such remedial actions may include, but are not limited to assisting the Program Participant to expand the dollar volume of its competitive business activity or limiting the dollar volume of contracts awarded to the Program Participant pursuant to section 8(a); except for actions that would constitute a termination, remedial measures taken pursuant to this subclause shall not be reviewable pursuant to section 8(a)(9).
(J) (i) The Administration shall conduct an evaluation of a Program Participant's eligibility for continued participation in the Program whenever it receives specific and credible information alleging that such Program Participant no longer meets the requirements for Program eligibility. Upon making a finding that a Program Participant is no longer eligible, the Administration shall initiate a termination proceeding in accordance with subparagraph (F). A Program Participant's eligibility for award of any contract under the authority of section 8(a) may be suspended pursuant to subpart 9.4 of title 48, Code of Federal Regulations (or any successor regulation).
(ii) (I) Except as authorized by subclause (II) or (III), no award shall be made pursuant to section 8(a) to other than a small business concern.
(II) In determining the size of a small business concern owned by a socially and economically disadvantaged Indian tribe (or a wholly owned business entity of such tribe), each firm's size shall be independently determined without regard to its affiliation with the tribe, any entity of the tribal government, or any other business enterprise owned by the tribe, unless the Administrator determines that one or more such tribally owned business concerns have obtained, or are likely to obtain, a substantial unfair competitive advantage within an industry category.
(III) Any joint venture established under the authority of section 602(b) of Public Law 100‑656, the “Business Opportunity Development Reform Act of 1988,” shall be eligible for award of a contract pursuant to section 8(a).
(11) (A) The Associate Administrator for Minority Small Business and Capital Ownership Development shall be responsible for coordinating and formulating policies relating to Federal Assistance to small business concerns eligible for assistance under section 7(i) of this Act and small business concerns eligible to receive contracts pursuant to section 8(a) of this Act.
(B) (i) Except as provided in clause (iii), no individual who was determined pursuant to section 8(a) to be socially and economically disadvantaged before the effective date of this subparagraph shall be permitted to assert such disadvantage with respect to any other concern making application for certification after such effective date.
(ii) Except as provided in clause (iii), any individual upon whom eligibility is based pursuant to section 8(a)(4) shall be permitted to assert such eligibility for only one small business concern.
(iii) A socially and economically disadvantaged Indian tribe may own more than one small business concern eligible for assistance pursuant to section 7(j)(10) and section 8(a) if—
(I) the Indian tribe does not own another firm in the same industry which has been determined to be eligible to receive contracts under this program, and
(II) the individuals responsible for the management and daily operations of the concern do not manage more than two Program Participants.
(C) No concern, previously eligible for the award of contracts pursuant to section 8(a), shall be subsequently recertified for program participation if its prior participation in the program was concluded for any of the reasons described in paragraph (10)(E).
(D) A concern eligible for the award of contracts pursuant to this subsection shall remain eligible for such contracts if there is a transfer of ownership and control (as defined pursuant to section 8(a)(4)) to individuals who are determined to be socially and economically disadvantaged pursuant to section 8(a). In the event of such a transfer, the concern, if not terminated or graduated, shall be eligible for a period of continued participation in the program not to exceed the time limitations prescribed in paragraph (15).
(E) There is established a Division of Program Certification and Eligibility (hereinafter referred to in this paragraph as the “Division”) that shall be made part of the Office of Minority Small Business and Capital Ownership Development. The Division shall be headed by a Director who shall report directly to the Associate Administrator for Minority Small Business and Capital Ownership Development. The Division shall establish field offices within such regional offices of the Administration as may be necessary to perform efficiently its functions and responsibilities.
(F) Subject to the provisions of section 8(a)(9), the functions and responsibility of the Division are to—
(i) receive, review and evaluate applications for certification pursuant to paragraphs (4), (5), (6) and (7) of section 8(a);
(ii) advise each program applicant within 15 days after the receipt of an application as to whether such application is complete and suitable for evaluation and, if not, what matters must be rectified;
(iii) render recommendations on such applications to the Associate Administrator for Minority Small Business and Capital Ownership Development;
(iv) review and evaluate financial statements and other submissions from concerns participating in the program established by paragraph (10) to ascertain continued eligibility to receive subcontracts pursuant to section 8(a);
(v) make a request for the initiation of termination or graduation proceedings, as appropriate, to the Associate Administrator for Minority Small Business and Capital Ownership Development;
(vi) make recommendations to the Associate Administrator for Minority Small Business and Capital Ownership Development concerning protests from applicants that have been denied program admission;
(vii) decide protests regarding the status of a concern as a disadvantaged concern for purposes of any program or activity conducted under the authority of subsection (d) of section 8, or any other provision of Federal law that references such subsection for a definition of program eligibility; and
(viii) implement such policy directives as may be issued by the Associate Administrator for Minority Small Business and Capital Ownership Development pursuant to subparagraph (I) regarding, among other things, the geographic distribution of concerns to be admitted to the program and the industrial make‑up of such concerns.
(G) An applicant shall not be denied admission into the program established by paragraph (10) due solely to a determination by the Division that specific contract opportunities are unavailable to assist in the development of such concern unless—
(i) the Government has not previously procured and is unlikely to procure the types of products or services offered by the concern; or
(ii) the purchases of such products or services by the Federal Government will not be in quantities sufficient to support the developmental needs of the applicant and other Program Participants providing the same or similar items or services.
(H) Not later than 90 days after receipt of a completed application for Program certification, the Associate Administrator for Minority Small Business and Capital Ownership Development shall certify a small business concern as a Program Participant or shall deny such application.
(I) Thirty days before the conclusion of each fiscal year, the Director of the Division shall review all concerns that have been admitted into the Program during the preceding 12‑month period. The review shall ascertain the number of entrants, their geographic distribution and industrial classification. The Director shall also estimate the expected growth of the Program during the next fiscal year and the number of additional Business Opportunity Specialists, if any, that will be needed to meet the anticipated demand for the Program. The findings and conclusions of the Director shall be reported to the Associate Administrator for Minority Small Business and Capital Ownership Development by September 30 of each year. Based on such report and such additional data as may be relevant, the Associate Administrator shall, by October 31 of each year, issue policy and program directives applicable to such fiscal year that—
(i) establish priorities for the solicitation of program applications from underrepresented regions and industry categories;
(ii) assign staffing levels and allocate other program resources as necessary to meet program needs; and
(iii) establish priorities in the processing and admission of new Program Participants as may be necessary to achieve an equitable geographic distribution of concerns and a distribution of concerns across all industry categories in proportions needed to increase significantly contract awards to small business concerns owned and controlled by socially and economically disadvantaged individuals. When considering such increase the Administration shall give due consideration to those industrial categories where Federal purchases have been substantial but where the participation rate of such concerns has been limited.
(12) (A) The Administration shall segment the Capital Ownership Development Program into two stages: a developmental stage; and a transitional stage.
(B) The developmental stage of program participation shall be designed to assist the concern in its effort to overcome its economic disadvantage by providing such assistance as may be necessary and appropriate to access its markets and to strengthen its financial and managerial skills.
(C) The transitional stage of program participation shall be designed to overcome, insofar as practicable, the remaining elements of economic disadvantage and to prepare such concern for graduation from the program.
(13) A Program Participant, if otherwise eligible, shall be qualified to receive the following assistance during the stages of program participation specified in paragraph 12:
(A) Contract support pursuant to section 8(a).
(B) Financial assistance pursuant to section 7(a)(20).
(C) A maximum of two exemptions from the requirements of section 1(a) of the Act entitled “An Act providing conditions for the purchase of supplies and the making of contracts by the United States, and for other purposes,” approved June 30, 1936 (49 Stat. 2036), which exemptions shall apply only to contracts awarded pursuant to section 8(a) and shall only be used to allow for contingent agreements by a small business concern to acquire the machinery, equipment, facilities, or labor needed to perform such contracts. No exemption shall be made pursuant to this subparagraph if the contract to which it pertains has an anticipated value in excess of $10,000,000. This subparagraph shall cease to be effective on October 1, 1992.
(D) A maximum of five exemptions from the requirements of the Act entitled “An Act requiring contracts for the construction, alteration and repair of any public building or public work of the United States to be accompanied by a performance bond protecting the United States and by an additional bond for the protection of persons furnishing material and labor for the construction, alteration, or repair of said public buildings or public works,” approved August 24, 1935 (49 Stat. 793), which exemptions shall apply only to contracts awarded pursuant to section 8(a), except that, such exemptions may be granted under this subparagraph only if—
(i) the Administration finds that such concern is unable to obtain the requisite bond or bonds from a surety and that no surety is willing to issue a bond subject to the guarantee provision of title IV of the Small Business Investment Act of 1958 (15 U.S.C. 692 et seq.);
(ii) the Administration and the agency providing the contracting opportunity have provided for the protection of persons furnishing materials or labor to the Program Participant by arranging for the direct disbursement of funds due to such persons by the procuring agency or through any bank the deposits of which are insured by the Federal Deposit Insurance Corporation; and
(iii) the contract to which it pertains does not exceed $3,000,000 in amount. This subparagraph shall cease to be effective on October 1, 1994.
(E) Financial assistance whereby the Administration may purchase in whole or in part, and on behalf of such concerns, skills training or upgrading for employees or potential employees of such concerns. Such assistance may be made without regard to section 18(a). Assistance may be made by direct payment to the training provider or by reimbursing the Program Participant or the Participant's employee, if such reimbursement is found to be reasonable and appropriate. For purposes of this subparagraph the term “training provider” shall mean an institution of higher education, a community or vocational college, or an institution eligible to provide skills training or upgrading under the Job Training Partnership Act or title I of the Workforce Investment Act of 1998. The Administration shall, in consultation with the Secretary of Labor, promulgate rules and regulations to implement this subparagraph that establish acceptable training and upgrading performance standards and provide for such monitoring or audit requirements as may be necessary to ensure the integrity of the training effort. No financial assistance shall be granted under the subparagraph unless the Administrator determines that—
(i) such concern has documented that it has first explored the use of existing cost‑free or cost‑subsidized training programs offered by public and private sector agencies working with programs of employment and training and economic development;
(ii) no more than five employees or potential employees of such concern are recipients of any benefits under this subparagraph at any one time;
(iii) no more than $2,500 shall be made available for any one employee or potential employee;
(iv) the length of training or upgrading financed by this subparagraph shall be no less than one month nor more than six months;
(v) such concern has given adequate assurance it will employ the trainee or upgraded employee for at least six months after the training or upgrading financed by this subparagraph has been completed and each trainee or upgraded employee has provided a similar assurance to remain within the employ of such concern for such period; if such concern, trainee, or upgraded employee breaches this agreement, the Administration shall be entitled to and shall make diligent efforts to obtain from the violating party the repayment of all funds expended on behalf of the violating party, such repayment shall be made to the Administration together with such interest and costs of collection as may be reasonable; the violating party shall be barred from receiving any further assistance under this subparagraph;
(vi) the training to be financed may take place either at such concern's facilities or at those of the training provider; and
(vii) such concern will maintain such records as the Administration deems appropriate to ensure that the provisions of this paragraph and any other applicable law have not been violated.
(F) The transfer of technology or surplus
property owned by the
(G) Training assistance whereby the Administration shall conduct training sessions to assist individuals and enterprises eligible to receive contracts under section 8(a) in the development of business principles and strategies to enhance their ability to successfully compete for contracts in the marketplace.
(H) Joint ventures, leader‑follow arrangements, and teaming agreements between the Program Participant and other Program Participants and other business concerns with respect to contracting opportunities for the research, development, full‑scale engineering or production of major systems. Such activities shall be undertaken on the basis of programs developed by the agency responsible for the procurement of the major system, with the assistance of the Administration.
(I) Transitional management business planning training and technical assistance.
(J) Program Participants in the developmental stage of Program participation shall be eligible for the assistance provided by subparagraphs (A), (B), (C), (D), (E), (F), and (G).
(14) Program Participants in the transitional stage of Program participation shall be eligible for the assistance provided by subparagraphs (A), (B), (F), (G), (H), and (I) of paragraph (13).
(15) Subject to the provisions of paragraph (10)(C), a small business concern may receive developmental assistance under the Program and contracts under section 8(a) for a total period of not longer than nine years, measured from the date of its certification under the authority of such section, of which—
(A) no more than four years may be spent in the developmental stage of Program Participation; and
(B) no more than five years may be spent in the transitional stage of Program Participation.
(16) (A) The Administrator shall develop and implement a process for the systematic collection of data on the operations of the Program established pursuant to paragraph (10).
(B) Not later than April 30 of each year, the Administrator shall submit a report to the Congress on the Program that shall include the following:
(i) The average personal net worth of individuals who own and control concerns that were initially certified for participation in the Program during the immediately preceding fiscal year. The Administrator shall also indicate the dollar distribution of net worths, at $50,000 increments, of all such individuals found to be socially and economically disadvantaged. For the first report required pursuant to this paragraph the Administrator shall also provide the data specified in the preceding sentence for all eligible individuals in the Program as of the effective date of this paragraph.
(ii) A description and estimate of the benefits and costs that have accrued to the economy and the Government in the immediately preceding fiscal year due to the operations of those business concerns that were performing contracts awarded pursuant to section 8(a).
(iii) A compilation and evaluation of those business concerns that have exited the Program during the immediately preceding three fiscal years. Such compilation and evaluation shall detail the number of concerns actively engaged in business operations, those that have ceased or substantially curtailed such operations, including the reasons for such actions, and those concerns that have been acquired by other firms or organizations owned and controlled by other than socially and economically disadvantaged individuals. For those businesses that have continued operations after they exited from the Program, the Administrator shall also separately detail the benefits and costs that have accrued to the economy during the immediately preceding fiscal year due to the operations of such concerns.
(iv) A listing of all participants in the Program during the preceding fiscal year identifying, by State and by Region, for each firm: the name of the concern, the race or ethnicity, and gender of the disadvantaged owners, the dollar value of all contracts received in the preceding year, the dollar amount of advance payments received by each concern pursuant to contracts awarded under section 8(a), and a description including (if appropriate) an estimate of the dollar value of all benefits received pursuant to paragraphs (13) and (14) and section 7(a)(20) during such year.
(v) The total dollar value of contracts and options awarded during the preceding fiscal year pursuant to section 8(a) and such amount expressed as a percentage of total sales of (I) all firms participating in the Program during such year; and (II) of firms in each of the nine years of program participation.
(vi) A description of such additional resources or program authorities as may be required to provide the types of services needed over the next two‑year period to service the expected portfolio of firms certified pursuant to section 8(a).
(vii) The total dollar value of contracts and options awarded pursuant to section 8(a), at such dollar increments as the Administrator deems appropriate, for each four digit standard industrial classification code under which such contracts and options were classified.
(C) The first report required by subparagraph (B) shall pertain to fiscal year 1990.
(k) In carrying out its functions under subsections 7(i), 7(j) and 8(a) of this Act, the Administration is authorized—
(1) to utilize, with their consent, the services and facilities of Federal agencies without reimbursement, and, with the consent of any State or political subdivision of a State, accept and utilize the services and facilities of such State or subdivision without reimbursement;
(2) to accept, in the name of the Administration, and employ or dispose of in furtherance of the purposes of this Act, any money or property, real, personal, or mixed, tangible, or intangible, received by gift, devise, bequest, or otherwise;
(3) to accept voluntary and uncompensated services, notwithstanding the provisions of section 3679(b) of the Revised Statutes (31 U.S.C. 665(b)); and
(4) to employ experts and consultants or organizations thereof as authorized by section 15 of the Administrative Expenses Act of 1946 (5 U.S.C. 55a), except that no individual may be employed under the authority of this subsection for more than one hundred days in any fiscal year; to compensate individuals so employed at rates not in excess of the daily equivalent of the highest rate payable under section 5332 of title 5, United States Code, including traveltime; and to allow them, while away from their homes or regular places of business, travel expenses (including per diem in lieu of subsistence) as authorized by section 5 of such Act (5 U.S.C. 73b‑2) for persons in the Government service employed intermittently, while so employed: Provided, however, that contracts for such employment may be renewed annually.
(l) [RESERVED].
(m) MICROLOAN PROGRAM
(1) (A) PURPOSES. The purposes of the Microloan Program are—
(i) to assist women, low-income, veteran (within the meaning of such term under section 3(q)), and minority entrepreneurs and business owners, and other such individuals possessing the capability to operate successful business concerns; and
(ii) to assist small business concerns in those areas suffering from a lack of credit due to economic downturns;
(iii) to establish a microloan program to be administered by the Small Business Administration—
(I) to make loans to eligible intermediaries to enable such intermediaries to provide small-scale loans, particularly loans in amounts averaging not more than $10,000, to startup, newly established, or growing small business concerns for working capital or the acquisition of materials, supplies, or equipment;
(II)