H.R. 2451 — Introduced in House

I 113th CONGRESS 1st Session H. R. 2451 IN THE HOUSE OF REPRESENTATIVES June 20, 2013 Ms. Velázquez (for herself, Mr. Payne, Ms. Chu, and Ms. Clarke) introduced the following bill; which was referred to the Committee on Small Business A BILL To direct the Administrator of the Small Business Administration to establish and carry out a direct lending program for small business concerns, and for other purposes. 1. Short title This Act may be cited as the Strengthening Entrepreneurs’ Economic Development Act of 2013. 2. Direct Lending Program for Small Business Concerns (a) Establishment The Administrator of the Small Business Administration shall— (1) establish and carry out a loan program (in this Act referred to as the program); and (2) establish a process under which an eligible small business concern may submit an application to the Administrator for the purpose of securing a loan under the program. (b) Loan amount Each loan made to an eligible small business concern under the program shall be in an amount not to exceed $150,000. (c) Repayment period An eligible small business concern that receives a loan under the program shall repay the loan not later than 6 years after the date on which such loan is disbursed. (d) No prepayment penalty There shall be no prepayment penalty on a loan made under the program. (e) Interest rate The maximum legal rate of interest on any loan made under the program shall not exceed the sum of the rate prescribed by the Administrator pursuant to section 7(a)(4)(A) of the Small Business Act (15 U.S.C. 636(a)(4)(A)) for direct loans plus 5 percent. (f) Borrower fees With respect to each loan made to an eligible small business concern under the program, the Administrator may collect a fee from the borrower using the formula established under section 7(a)(18) of the Small Business Act (15 U.S.C. 636(a)(18)). (g) Underwriting standards Not later than 180 days after the date of enactment of this Act, the Administrator shall issue guidance regarding prudent underwriting standards that must be used for loans made under the program. (h) Lender participation (1) Lenders (A) In general The Administrator shall establish a process under which the Administrator makes available to lenders each loan application submitted for the purpose of such lenders originating, underwriting, closing, and servicing the loan for which the applicant applied. (B) Eligibility Lenders are eligible to receive a loan application described in subparagraph (A) if they participate in the program. (C) Local lenders The Administrator shall first make available a loan application described in subparagraph (A) to lenders within 50 miles of the principal office of the loan applicant. (D) Preferred lenders If a lender described in subparagraph (C) does not agree to originate, underwrite, close, and service the loan applied for within 5 business days of receiving a loan application described in subparagraph (A), the Administrator shall subsequently make available such loan application to lenders in the Preferred Lenders Program under section 7(a)(2)(C)(ii) of the Small Business Act (15 U.S.C. 636(a)(2)(C)(ii)). (E) Authority of administration to lend If a lender described in subparagraphs (C) and (D) does not agree to originate, underwrite, close, and service the loan applied for within 10 business days of receiving a loan application described in subparagraph (A), the Administrator shall, in accordance with the underwriting standards promulgated under subsection (g), consider such loan for origination, underwriting, closing, and servicing by the Administration within 10 business days. (2) Asset sales The Administrator shall offer to sell loans made by the Administrator under the program. Such sales shall be made through the semi-annual public solicitation (in the Federal Register and in other media) of offers to purchase. The Administrator may contract with vendors for due diligence, asset valuation, and other services related to such sales. The Administrator may not sell any loan under the program for less than 90 percent of the net present value of the loan, as determined and certified by a qualified third party. (3) Loans not sold The Administrator shall maintain and service loans made by the Administrator under this paragraph that are not sold through the asset sales under this subsection. (i) Definitions In this Act: (1) Administrator The term Administrator means the Administrator of the Small Business Administration. (2) Eligible small business concern The term eligible small business concern means a small business concern that has less than 20 employees. (3) Small business concern The term small business concern has the same meaning given such term under section 3 of the Small Business Act (15 U.S.C. 632). 3. Fee for high-dollar 7(a) loans Section 7(a) of the Small Business Act is amended— (1) by redesignating paragraphs (31) through (35) as paragraphs (32) through (36); and (2) by inserting the following new paragraph: (31) Fee for high-dollar loans With respect to each loan in excess of $2,000,000 approved under this subsection, the Administration shall assess, collect, and retain a fee not to exceed a certain percentage, as determined by the Administrator, of the outstanding balance of the deferred participation share of the loan, as necessary to reduce to zero the cost to the Administration of making loans under this subsection. As used in the paragraph, the term cost has the meaning given that term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a). .