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HR 2614 EAS

In the Senate of the United States,

June 14, 2000.

Resolved, That the bill from the House of Representatives (H.R. 2614) entitled `An Act to amend the Small Business Investment Act to make improvements to the certified development company program, and for other purposes.', do pass with the following

AMENDMENT:

Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE.

This Act may be cited as the `Certified Development Company Program Improvements Act of 2000'.

SEC. 2. WOMEN-OWNED BUSINESSES.

Section 501(d)(3)(C) of the Small Business Investment Act of 1958 (15 U.S.C. 695(d)(3)(C)) is amended by inserting before the comma `or women-owned business development'.

SEC. 3. MAXIMUM DEBENTURE SIZE.

Section 502(2) of the Small Business Investment Act of 1958 (15 U.S.C. 696(2)) is amended to read as follows:

`(2) LOAN LIMITS- Loans made by the Administration under this section shall be limited to $1,000,000 for each such identifiable small business concern, other than loans meeting the criteria specified in section 501(d)(3), which shall be limited to $1,300,000 for each such identifiable small business concern.'.

SEC. 4. FEES.

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

`(f) EFFECTIVE DATE- The fees authorized by subsections (b) and (d) shall apply to any financing approved by the Administration during the period beginning on October 1, 1996 and ending on September 30, 2003.'.

SEC. 5. PREMIER CERTIFIED LENDERS PROGRAM.

Section 217(b) of the Small Business Administration Reauthorization and Amendments Act of 1994 (15 U.S.C. 697e note) is repealed.

SEC. 6. SALE OF CERTAIN DEFAULTED LOANS.

Section 508 of the Small Business Investment Act of 1958 (15 U.S.C. 697e) is amended--

(1) in subsection (a), by striking `On a pilot program basis, the' and inserting `The';

(2) by redesignating subsections (d) though (i) as subsections (e) though (j), respectively;

(3) in subsection (f) (as redesignated by paragraph (2)), by striking `subsection (f)' and inserting `subsection (g)';

(4) in subsection (h) (as redesignated by paragraph (2)), by striking `subsection (f)' and inserting `subsection (g)'; and

(5) by inserting after subsection (c) the following:

`(d) SALE OF CERTAIN DEFAULTED LOANS-

`(1) NOTICE-

`(A) IN GENERAL- If, upon default in repayment, the Administration acquires a loan guaranteed under this section and identifies such loan for inclusion in a bulk asset sale of defaulted or repurchased loans or other financings, the Administration shall give prior notice thereof to any certified development company that has a contingent liability under this section.

`(B) TIMING- The notice required by subparagraph (A) shall be given to the certified development company as soon as possible after the financing is identified, but not later than 90 days before the date on which the Administration first makes any record on such financing available for examination by prospective purchasers prior to its offering in a package of loans for bulk sale.

`(2) LIMITATIONS- The Administration may not offer any loan described in paragraph (1)(A) as part of a bulk sale, unless the Administration--

`(A) provides prospective purchasers with the opportunity to examine the records of the Administration with respect to such loan; and

`(B) provides the notice required by paragraph (1).'.

SEC. 7. LOAN LIQUIDATION.

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

`SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS.

`(a) DELEGATION OF AUTHORITY- In accordance with this section, the Administration shall delegate to any qualified State or local development company (as defined in section 503(e)) that meets the eligibility requirements of subsection (b)(1) of this section the authority to foreclose and liquidate, or to otherwise treat in accordance with this section, defaulted loans in its portfolio that are funded with the proceeds of debentures guaranteed by the Administration under section 503.

`(b) ELIGIBILITY FOR DELEGATION-

`(1) REQUIREMENTS- A qualified State or local development company shall be eligible for a delegation of authority under subsection (a) if--

`(A) the company--

`(i) has participated in the loan liquidation pilot program established by the Small Business Programs Improvement Act of 1996 (15 U.S.C. 695 note), as in effect on the day before the date of issuance of final regulations by the Administration implementing this section;

`(ii) is participating in the Premier Certified Lenders Program under section 508; or

`(iii) during the 3 fiscal years immediately prior to seeking such a delegation, has made an average of not fewer than 10 loans per year that are funded with the proceeds of debentures guaranteed under section 503; and

`(B) the company--

`(i) has 1 or more employees--

`(I) with not less than 2 years of substantive, decision-making experience in administering the liquidation and workout of problem loans secured in a manner substantially similar to loans funded with the proceeds of debentures guaranteed under section 503; and

`(II) who have completed a training program on loan liquidation developed by the Administration in conjunction with qualified State and local development companies that meet the requirements of this paragraph; or

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

`(2) CONFIRMATION- On request, the Administration shall examine the qualifications of any company described in subsection (a) to determine if such company is eligible for the delegation of authority under this section. If the Administration determines that a company is not eligible, the Administration shall provide the company with the reasons for such ineligibility.

`(c) SCOPE OF DELEGATED AUTHORITY-

`(1) IN GENERAL- Each qualified State or local development company to which the Administration delegates authority under subsection (a) may, with respect to any loan described in subsection (a)--

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

`(B) litigate any matter relating to the performance of the functions described in subparagraph (A), except that the Administration may--

`(i) defend or bring any claim if--

`(I) the outcome of the litigation may adversely affect management by the Administration of the loan program established under section 502; or

`(II) the Administration is entitled to legal remedies not available to a qualified State or local development company, and such remedies will benefit either the Administration or the qualified State or local development company; or

`(ii) oversee the conduct of any such litigation; and

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

`(2) ADMINISTRATION APPROVAL-

`(A) LIQUIDATION PLAN-

`(i) IN GENERAL- Before carrying out functions described in paragraph (1)(A), a qualified State or local development company shall submit to the Administration a proposed liquidation plan.

`(ii) ADMINISTRATION ACTION ON PLAN-

`(I) TIMING- Not later than 15 business days after a liquidation plan is received by the Administration under clause (i), the Administration shall approve or reject the plan.

`(II) NOTICE OF NO DECISION- With respect to any liquidation plan that cannot be approved or denied within the 15-day period required by subclause (I), the Administration shall, during such period, provide notice in accordance with subparagraph (E) to the company that submitted the plan.

`(iii) ROUTINE ACTIONS- In carrying out functions described in paragraph (1)(A), a qualified State or local development company may undertake any routine action not addressed in a liquidation plan without obtaining additional approval from the Administration.

`(B) PURCHASE OF INDEBTEDNESS-

`(i) IN GENERAL- In carrying out functions described in paragraph (1)(A), a qualified State or local development company shall submit to the Administration a request for written approval before committing the Administration to the purchase of any other indebtedness secured by the property securing a defaulted loan.

`(ii) ADMINISTRATION ACTION ON REQUEST-

`(I) TIMING- Not later than 15 business days after receiving a request under clause (i), the Administration shall approve or deny the request.

`(II) NOTICE OF NO DECISION- With respect to any request that cannot be approved or denied within the 15-day period required by subclause (I), the Administration shall, during such period, provide notice in accordance with subparagraph (E) to the company that submitted the request.

`(C) WORKOUT PLAN-

`(i) IN GENERAL- In carrying out functions described in paragraph (1)(C), a qualified State or local development company shall submit to the Administration a proposed workout plan.

`(ii) ADMINISTRATION ACTION ON PLAN-

`(I) TIMING- Not later than 15 business days after a workout plan is received by the Administration under clause (i), the Administration shall approve or reject the plan.

`(II) NOTICE OF NO DECISION- With respect to any workout plan that cannot be approved or denied within the 15-day period required by subclause (I), the Administration shall, during such period, provide notice in accordance with subparagraph (E) to the company that submitted the plan.

`(D) COMPROMISE OF INDEBTEDNESS- In carrying out functions described in paragraph (1)(A), a qualified State or local development company may--

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

`(ii) pursuant to such an offer, release any obligor or other party contingently liable, if the company secures the written approval of the Administration.

`(E) CONTENTS OF NOTICE OF NO DECISION- Any notice provided by the Administration under subparagraph (A)(ii)(II), (B)(ii)(II), or (C)(ii)(II)--

`(i) shall be in writing;

`(ii) shall state the specific reason for the inability of the Administration to act on the subject plan or request;

`(iii) shall include an estimate of the additional time required by the Administration to act on the plan or request; and

`(iv) if the Administration cannot act because insufficient information or documentation was provided by the company submitting the plan or request, shall specify the nature of such additional information or documentation.

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

`(d) SUSPENSION OR REVOCATION OF AUTHORITY- The Administration may revoke or suspend a delegation of authority under this section to any qualified State or local development company, if the Administration determines that the company--

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

`(2) has violated any applicable rule or regulation of the Administration or any other applicable provision of law; or

`(3) has failed to comply with any reporting requirement that may be established by the Administration relating to carrying out functions described in subsection (c)(1).

`(e) REPORT-

`(1) IN GENERAL- Based on information provided by qualified State and local development companies and the Administration, the Administration shall annually submit to the Committees on Small Business of the House of Representatives and the Senate a report on the results of delegation of authority under this section.

`(2) CONTENTS- Each report submitted under paragraph (1) shall include--

`(A) with respect to each loan foreclosed or liquidated by a qualified State or local development company under this section, or for which losses were otherwise mitigated by the company pursuant to a workout plan under this section--

`(i) the total cost of the project financed with the loan;

`(ii) the total original dollar amount guaranteed by the Administration;

`(iii) the total dollar amount of the loan at the time of liquidation, foreclosure, or mitigation of loss;

`(iv) the total dollar losses resulting from the liquidation, foreclosure, or mitigation of loss; and

`(v) the total recoveries resulting from the liquidation, foreclosure, or mitigation of loss, both as a percentage of the amount guaranteed and the total cost of the project financed;

`(B) with respect to each qualified State or local development company to which authority is delegated under this section, the totals of each of the amounts described in clauses (i) through (v) of subparagraph (A);

`(C) with respect to all loans subject to foreclosure, liquidation, or mitigation under this section, the totals of each of the amounts described in clauses (i) through (v) of subparagraph (A);

`(D) a comparison between--

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

`(ii) the same information with respect to loans foreclosed and liquidated, or otherwise treated, by the Administration during the same period; and

`(E) the number of times that the Administration has failed to approve or reject a liquidation plan in accordance with subsection (c)(2)(A) or a workout plan in accordance with subsection (c)(2)(C), or to approve or deny a request for purchase of indebtedness under subsection (c)(2)(B), including specific information regarding the reasons for the failure of the Administration and any delay that resulted.'.

(b) REGULATIONS-

(1) IN GENERAL- Not later than 150 days after the date of enactment of this Act, the Administrator shall issue such regulations as may be necessary to carry out section 510 of the Small Business Investment Act of 1958, as added by subsection (a) of this section.

(2) TERMINATION OF PILOT PROGRAM- Effective on the date on which final regulations are issued under paragraph (1), section 204 of the Small Business Programs Improvement Act of 1996 (15 U.S.C. 695 note) is repealed.

SEC. 8. FUNDING LEVELS FOR CERTAIN FINANCINGS UNDER THE SMALL BUSINESS INVESTMENT ACT OF 1958.

Section 20 of the Small Business Act (15 U.S.C. 631 note) is amended by adding at the end the following:

`(g) PROGRAM LEVELS FOR CERTAIN SMALL BUSINESS INVESTMENT ACT OF 1958 FINANCINGS- The following program levels are authorized for financings under section 504 of the Small Business Investment Act of 1958:

`(1) $4,000,000,000 for fiscal year 2001.

`(2) $5,000,000,000 for fiscal year 2002.

`(3) $6,000,000,000 for fiscal year 2003.'.

SEC. 9. TIMELY ACTION ON APPLICATIONS.

(a) AUTOMATIC APPROVAL OF PENDING APPLICATIONS- An application by a State or local development company to expand its operations under title V of the Small Business Investment Act of 1958 into another territory, county, or State that is pending on the date of enactment of this Act and that was submitted to the Administration 12 months or more before that date of enactment shall be deemed to be approved beginning 21 days after that date of enactment, unless the Administration has taken final action to approve or deny the application before the end of that 21-day period.

(b) DEFINITIONS- In this section--

(1) the term `Administration' means the headquarters of the Small Business Administration; and

(2) the term `development company' has the same meaning as in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662).

SEC. 10. USE OF CERTAIN UNOBLIGATED AND UNEXPENDED FUNDS.

(a) TRANSFER OF FUNDS- Notwithstanding any other provision of law, unobligated and unexpended balances of the funds described in subsection (b) are transferred to and made available to the Small Business Administration to fund the costs of guaranteed loans under section 7(a) of the Small Business Act.

(b) SOURCES- Funds described in this subsection are--

(1) funds transferred to the Business Loan Program Account of the Small Business Administration from the Department of Defense under the Department of Defense Appropriations Act, 1995 (Public Law 103-335) and section 507(g) of the Small Business Reauthorization Act of 1997 (15 U.S.C. 636 note) for the DELTA Program under that section 507; and

(2) funds previously made available under the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (110 Stat. 1321 et seq.) and the Omnibus Consolidated Appropriations Act, 1997 (110 Stat. 3009 et seq.) for the microloan guarantee program under section 7(m) of the Small Business Act.

SEC. 11. HUBZONE REDESIGNATED AREAS.

Section 3(p) of the Small Business Act (15 U.S.C. 632(p)) is amended--

(1) in paragraph (1)--

(A) in subparagraph (B), by striking `or' at the end;

(B) in subparagraph (C), by striking the period at the end and inserting `; or'; and

(C) by adding at the end the following:

`(D) redesignated areas.'; and

(2) in paragraph (4), by adding at the end the following:

`(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 for the 3-year period following the date on which the census tract or nonmetropolitan county ceased to be so qualified.'.

Attest:

Secretary.

106th CONGRESS

2d Session

H. R. 2614

AMENDMENT

HR 2614 EAS----2

HR 2614 EAS----3

HR 2614 EAS----4

HR 2614 EAS----5

END

 


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