,,ii #aafth ,,congress #ast ,session ,s4 #bcfa ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #ca1 #bjai ,mr4 ,cardin introduced the following bill2 which was read twice and referred to the ,committee on ,small ,business and ,entrepreneurship ,a ,,bill ,to amend the ,small ,business ,act to increase lending to underserved borrowers through the largest loan program of the ,small ,business ,administration1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,closing the ,credit ,gap ,act4 #b4 ,community ,advantage ,loan ,program ,section #g7;a7 of the ,small ,business ,act 7#ae ,u4,s4,c4 #fcf7;a77 is amended by adding at the end the following3 7#cf7 ,community ,advantage ,loan ,program 7,a7 ,purposes ,the purposes of the ,community ,advantage ,loan ,program are-- 7i7 to create a mission-oriented loan guarantee program that builds on the demonstrated success of the ,community ,advantage ,pilot ,program of the ,administration1 as established in #bjaa1 to reach more underserved small business concerns2 7ii7 to increase lending to small business concerns in underserved and rural markets1 including veterans and members of the military community1 small business concerns owned and controlled by socially and economically disadvantaged individuals1 women1 and startups2 7iii7 to ensure that the program under this subsection 7in this paragraph referred to as the #g7;a7 loan program7 is more inclusive and more broadly meets congressional intent to reach borrowers who are unable to get credit elsewhere on reasonable terms and conditions2 7iv7 to help underserved small business concerns become bankable by utilizing the small-dollar financing and business support experience of mission-oriented lenders2 7v7 to allow certain mission-oriented lenders1 primarily nonprofit financial intermediaries focused on economic development in underserved markets1 access to guarantees for loans under this subsection 7in this paragraph referred to as #g7;a7 loans7 of not more than #cej1jjj and provide management and technical assistance to small business concerns as needed2 7vi7 to provide certainty for the lending partners that make loans under this subsection and to attract new lenders2 and 7vii7 to encourage collaboration between mission-oriented and conventional lenders under this subsection in order to support underserved small business concerns4 7,b7 ,definitions ,in this paragraph-- 7i7 the term covered institution means-- 7,i7 a development company1 as defined in section #ajc of the ,small ,business ,investment ,act of #aieh 7#ae ,u4,s4,c4 #ffb71 participating in the #ejd ,loan ,guaranty program established under title ,v of such ,act 7#ae ,u4,s4,c4 #fie et seq472 7,,ii7 a nonprofit intermediary1 as defined in subsection 7m77#aa71 participating in the microloan program under subsection 7m72 7,,iii7 a non-,federally regulated entity certified as a community development financial institution by the ,community ,development ,financial ,institutions ,fund established under section #ajd7;a7 of the ,riegle ,community ,development and ,regulatory ,improvement ,act of #aiid 7#ab ,u4,s4,c4 #dgjc7;a772 and 7,,iv7 an eligible intermediary1 as defined in subsection 7l77#a71 participating in the ,intermediary ,lending ,pilot ,program established under subsection 7l77#b72 7ii7 the term existing business means a small business concern that has been in existence for not less than #b years on the date on which a loan is made to the small business concern under the program2 7iii7 the term new business means a small business concern that has been existence for not more than #b years on the date on which a loan is made to the small business concern under the program2 7iv7 the term program means the ,community ,advantage ,loan ,program established under subparagraph 7,c72 7v7 the term ,reservist means a member of a reserve component of the ,armed ,forces named in section #ajaja of title #aj1 ,united ,states ,code2 7vi7 the term rural area means any county that the ,bureau of the ,census has defined as mostly rural or completely rural in the most recent decennial census2 7vii7 the term service-connected has the meaning given the term in section #aja7af7 of title #ch1 ,united ,states ,code2 7viii7 the term small business concern in an underserved market means a small business concern-- 7,i7 that is located in-- 7aa7 a low- to moderate-income community2 7bb7 a ,h,u,b,zone2 7cc7 a community that has been designated as an empowerment zone or an enterprise community under section #acia of the ,internal ,revenue ,code of #aihf2 7dd7 a community that has been designated as a promise zone by the ,secretary of ,housing and ,urban ,development2 7ee7 a community that has been designated as a qualified opportunity zone under section #adjj,z-#a of the ,internal ,revenue ,code of #aihf2 or 7ff7 a rural area2 7,,ii7 for which more than #ej percent of the employees reside in a low- or moderate-income community2 7,,iii7 that is a startup or new business2 7,,iv7 owned and controlled by socially and economically disadvantaged individuals1 including ,black ,americans1 ,hispanic ,americans1 ,native ,americans1 ,asian ,pacific ,americans1 and other minorities2 7,v7 owned and controlled by women2 7,,vi7 owned and controlled by veterans2 7,,vii7 owned and controlled by service-disabled veterans2 7,,viii7 not less than #ea percent owned and controlled by #a or more-- 7aa7 members of the ,armed ,forces participating in the ,transition ,assistance ,program of the ,department of ,defense2 7bb7 ,reservists2 7cc7 spouses of veterans1 members of the ,armed ,forces1 or ,reservists2 or 7dd7 surviving spouses of veterans who died on active duty or as a result of a service-connected disability2 or 7,,ix7 that is eligible to receive a veterans advantage loan2 7ix7 the term small business concern owned and controlled by socially and economically disadvantaged individuals has the meaning given the term in section #h7;d77#c77;,c72 7x7 the term startup means a business that has not yet opened2 and 7xi7 the term veterans advantage loan means a loan made to a small business concern under this subsection that is eligible for a waiver of the guarantee fee under paragraph 7#ah7 or the yearly fee under paragraph 7#bc7 because the small business concern is a concern described in subclause 7,,vi71 7,,vii71 or 7,,viii7 of clause 7viii74 7,c7 ,establishment ,there is established a ,community ,advantage ,loan ,program under which the ,administration may guarantee loans made by covered institutions under this subsection1 including loans made to small business concerns in underserved markets4 7,d7 ,program levels ,in each of fiscal years #bjbj1 #bjba1 #bjbb1 #bjbc1 and #bjbd1 not more than #aj percent of the number of loans guaranteed under this subsection may be guaranteed under the program4 7,e7 ,new lenders 7i7 ,fiscal years #bjbj and #bjba ,in each of fiscal years #bjbj and #bjba-- 7,i7 not more than #aej covered institutions shall participate in the program2 and 7,,ii7 the ,administrator shall allow for new applicants and give priority to applications submitted by any covered institution that is located in an area with insufficient or no lending under the program4 7ii7 ,fiscal years #bjbb1 #bjbc1 and #bjbd 7,i7 ,in general ,in each of fiscal years #bjbb1 #bjbc1 and #bjbd-- 7aa7 except as provided in subclause 7,,ii71 not more than #age covered institutions shall participate in the program2 and 7bb7 the ,administrator shall allow for new applicants and give priority to applications submitted by any covered institution that is located in an area with insufficient or no lending under the program4 7,,ii7 ,exception for fiscal year #bjbd ,in fiscal year #bjbd1 not more than #bjj covered institutions may participate in the program if-- 7aa7 after reviewing the report under subparagraph 7,m77iii71 the ,administrator determines that not more than #bjj covered institutions may participate in the program2 7bb7 the ,administrator notifies ,congress in writing of the determination of the ,administrator under item 7aa72 and 7cc7 not later than ,july #cj1 #bjbc1 the ,administrator notifies the public of the determination of the ,administrator under item 7aa74 7,f7 ,grandfathering of existing lenders ,any covered institution that participated in the ,community ,advantage ,pilot ,program of the ,administration and is in good standing on the day before the date of enactment of this paragraph-- 7i7 shall retain designation in the program2 and 7ii7 shall not be required to submit an application to participate in the program4 7,g7 ,requirement to make loans to underserved markets ,not less than #fj percent of loans made by a covered institution under the program shall consist of loans made to small business concerns in underserved markets4 7,h7 ,maximum loan amount 7i7 ,in general ,except as provided in clause 7ii71 the maximum loan amount for a loan guaranteed under the program is #bej1jjj4 7ii7 ,exception 7,i7 ,in general ,the ,administration may1 in the discretion of the ,administration1 approve a guarantee of a loan under the program that is more than #bej1jjj and not more than #cej1jjj4 7,,ii7 ,notification ,not later than #b days after receiving a request for an exception to the maximum loan amount established under clause 7i71 the ,administration shall-- 7aa7 review the request2 and 7bb7 provide a decision regarding the request to the covered institution making the loan4 7,i7 ,interest rates 7i7 ,in general ,except as provided in clause 7ii71 the maximum allowable interest rate prescribed by the ,administration on any financing made on a deferred basis pursuant to the program shall not exceed the maximum allowable interest rate in effect on ,september #a1 #bjah4 7ii7 ,modification ,the ,administration shall not modify the maximum allowable interest rate described in clause 7i7 unless the ,administration provides the public with an opportunity to comment for a period of not less than #ahj days before implementing the modified interest rate4 7,j7 ,training and technical assistance ,the ,administration-- 7i7 shall in person and online1 provide upfront and ongoing training and technical assistance for covered institutions making loans under the program in order to support prudent lending standards and improve the interface between the covered institutions and the ,administration2 7ii7 shall ensure that the training and technical assistance described in clause 7i7 is provided for free or at a low-cost2 and 7iii7 may enter into a contract to provide the training or technical assistance described in clause 7i7 with an organization with expertise in lending under this subsection1 mission-oriented lending1 and lending to underserved markets4 7,k7 ,delegated authority ,a covered institution is not eligible to receive delegated authority from the ,administration under the program until the covered institution makes not less than #g loans under the program4 7,l7 ,regulations 7i7 ,in general ,not later than #ahj days after the date of enactment of this paragraph and in accordance with the notice and comment procedures under section #eec of title #e1 ,united ,states ,code1 the ,administrator shall promulgate regulations to carry out the program1 which shall be substantially similar to the ,community ,advantage ,pilot ,program of the ,administration1 as in effect on ,september #a1 #bjah1 and shall-- 7,i7 outline the requirements for participation by covered institutions in the program2 7,,ii7 define performance metrics for covered institutions participating in the program for the first time1 which are required to be met in order to continue participating in the program2 7,,iii7 determine the credit score of a small business concern under which the ,administration is required to underwrite a loan provided to the small business concern under the program and the loan may not be made using the delegated authority of a covered institution2 7,,iv7 require each covered institution that sells loans made under the program on the secondary market to establish a loan loss reserve fund1 which-- 7aa7 with respect to covered institutions in good standing1 including the covered institutions described in subparagraph 7,f71 shall be maintained at a level equal to #c percent of the outstanding guaranteed portion of the loans2 and 7bb7 with respect to any other covered institution1 shall be maintained at a level equal to #e percent of the outstanding guaranteed portion of the loans2 and 7,v7 allow the ,administrator to require additional amounts to be deposited into a loan loss reserve fund established by a covered institution under subclause 7,,iv7 based on the risk characteristics or performance of the covered institution and the loan portfolio of the covered institution4 7ii7 ,pilot program 7,i7 ,reversion ,beginning on the date of enactment of this paragraph and ending on the day before the date on which the regulations promulgated by the ,administrator under clause 7i7 take effect1 the ,administrator may only carry out the ,community ,advantage ,pilot ,program of the ,administration based on applicable program guidelines1 requirements1 and other policy in effect on ,september #a1 #bjah1 except that the definition of underserved market shall include-- 7aa7 a community and an area described in items 7ee7 and 7ff71 respectively1 of subparagraph 7,b77viii77,i72 and 7bb7 small business concerns described in subclauses 7,,iv7 and 7,v7 of subparagraph 7,b77viii74 7,,ii7 ,termination ,beginning on the date on which the regulations promulgated by the ,administrator under clause 7i7 take effect1 the ,administrator may not carry out the ,community ,advantage ,pilot ,program of the ,administration4 7,m7 ,reporting 7i7 ,weekly reports 7,i7 ,in general ,the ,administration shall report on the website of the ,administration1 as part of the weekly reports on lending approvals under this subsection-- 7aa7 on and after the date of enactment of this paragraph until the date on which the regulations promulgated under subparagraph 7,l77i7 take effect1 the number and dollar amount of loans guaranteed under the ,community ,advantage ,pilot ,program of the ,administration2 and 7bb7 on and after the date on which the ,administration begins to approve loans under the program1 the number and dollar amount of loans guaranteed under the program4 7,,ii7 ,separate accounting ,the number and dollar amount of loans reported in a weekly report under subclause 7,i7 for loans guaranteed under the ,community ,advantage ,pilot ,program of the ,administration and under the program shall include a breakdown by the categories of race1 ethnicity1 and gender of the owners of the small business concerns4 7ii7 ,annual reports 7,i7 ,in general ,for each of the first #e fiscal years in which the program is in effect1 the ,administration shall submit to the ,committee on ,small ,business and ,entrepreneurship of the ,senate and the ,committee on ,small ,business of the ,house of ,representatives1 and make publicly available on the internet1 information about loans provided under the program and under the ,community ,advantage ,pilot ,program of the ,administration4 7,,ii7 ,contents ,each report submitted and made publicly available under subclause 7,i7 shall include-- 7aa7 the number and dollar amounts of loans provided to small business concerns under the program and under the ,community ,advantage ,pilot ,program of the ,administration1 including a breakdown by-- 7,,aa7 the gender of the owners of the small business concern2 7,,bb7 the race and ethnicity of the owners of the small business concern2 7,,cc7 whether the small business concern is located in an urban or rural area2 and 7,,dd7 whether the small business concern is a startup1 an existing business1 or a new business1 as provided in the weekly reports on lending approvals under this subsection2 7bb7 the proportion of loans described in item 7aa7 compared to-- 7,,aa7 other #g7;a7 loans of any amount2 7,,bb7 other #g7;a7 loans of similar amounts2 7,,cc7 express loans provided under paragraph 7#ca7 of similar amounts2 and 7,,dd7 other #g7;a7 loans of similar amounts provided to small business concerns in underserved markets2 7cc7 a comparison of the number and dollar amounts of loans provided to small business concerns under the program1 under the ,community ,advantage ,pilot ,program of the ,administration1 and under each category of loans described in item 7bb71 broken down by-- 7,,aa7 loans of not more than #ej1jjj2 7,,bb7 loans of more than #ej1jjj and not more than #aej1jjj2 7,,cc7 loans of more than #aej1jjj and not more than #bej1jjj2 and 7,,dd7 loans of more than #bej1jjj and not more than #cej1jjj2 7dd7 the number and dollar amounts of loans provided to small business concerns under the program and under the ,community ,advantage ,pilot ,program of the ,administration by ,state1 and the jobs created or retained within each ,state2 7ee7 with respect to loans provided to small business concerns under the program and under the ,community ,advantage ,pilot ,program of the ,administration-- 7,,aa7 the performance of the loans provided by each type of covered institution2 7,,bb7 the performance of the loans broken down by loan size2 7,,cc7 the predictive purchase rate of the loans2 7,,dd7 the early default rate of the loans2 7,,ee7 the #ab-month default rate of the loans2 7,,ff7 the cumulative default rate for the loans for the #e-year period preceding the report2 7,,gg7 the charge-off rates of the loans2 7,,hh7 the charge-off rates as a percent of the unpaid principal balance as in table #i of the annual budget submitted by the ,administration2 and 7,,ii7 the purchase rates as a percent of the unpaid principal balance as in table #h of the annual budget submitted by the ,administration2 7ff7 a list of covered institutions participating in the program and the ,community ,advantage ,pilot ,program of the ,administration1 including-- 7,,aa7 the name1 location1 and contact information1 such as the website and telephone number1 of each covered institution2 and 7,,bb7 a breakdown by the number and dollar amount of the loans approved for small business concerns2 and 7gg7 the benchmarks established by the ,community ,advantage ,working ,group under subparagraph 7,n77i74 7,,iii7 ,timing ,an annual report required under this clause shall-- 7aa7 be submitted and made publicly available not later than ,november #ae of each year2 and 7bb7 cover the lending activity for the fiscal year that ended on ,september #cj of that same year4 7iii7 ,,gao report ,not later than #c years after the date of enactment of this paragraph1 the ,comptroller ,general of the ,united ,states shall submit to the ,administrator1 the ,committee on ,small ,business and ,entrepreneurship of the ,senate1 and the ,committee on ,small ,business of the ,house of ,representatives a report-- 7,i7 assessing-- 7aa7 the extent to which the program fulfills the requirements of this paragraph2 and 7bb7 the performance of covered institutions participating in the program2 and 7,,ii7 providing recommendations on the administration of the program and the findings under items 7aa7 and 7bb7 of subclause 7,i74 7,n7 ,working group 7i7 ,in general ,not later than #ij days after the date of enactment of this paragraph1 the ,administrator shall establish a ,community ,advantage ,working ,group1 which shall-- 7,i7 include-- 7aa7 a geographically diverse representation of members from among covered institutions participating in the program2 and 7bb7 representatives from the ,office of ,capital ,access of the ,administration1 including the ,office of ,credit ,risk ,management1 the ,office of ,financial ,assistance1 and the ,office of ,economic ,opportunity2 7,,ii7 develop recommendations on how the ,administration can effectively manage1 support1 and promote the program and the mission of the program2 7,,iii7 establish metrics of success and benchmarks that reflect the mission and population served by covered institutions under the program1 which the ,administration shall use to evaluate the performance of those covered institutions2 and 7,,iv7 institute regular and sustainable systems of communication between the ,administration and covered institutions participating in the program4 7ii7 ,report ,not later than #ahj days after the date of enactment of this paragraph1 the ,administrator 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-- 7,i7 the recommendations of the ,community ,advantage ,working ,group established under clause 7i72 and 7,,ii7 a recommended plan and timeline for implementation of those recommendations4 4