[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2482 Reported in Senate (RS)]
<DOC>
Calendar No. 158
118th CONGRESS
1st Session
S. 2482
To amend the Small Business Act to authorize the Community Advantage
Loan Program of the Small Business Administration, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 25, 2023
Mr. Cardin, from the Committee on Small Business and Entrepreneurship,
reported the following original bill; which was read twice and placed
on the calendar
_______________________________________________________________________
A BILL
To amend the Small Business Act to authorize the Community Advantage
Loan Program of the Small Business Administration, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Community
Advantage Loan Program Act of 2023''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I--COMMUNITY ADVANTAGE LOAN PROGRAM
Sec. 101. Community Advantage Loan Program.
TITLE II--SMALL BUSINESS LENDING COMPANIES
Sec. 201. Short title.
Sec. 202. Findings.
Sec. 203. Lending criteria.
Sec. 204. Affiliation and franchise directory.
Sec. 205. Loan authorization.
Sec. 206. Oversight of small business lending companies.
Sec. 207. Office of Credit Risk Management.
Sec. 208. Denied loan or loan modification request.
Sec. 209. Direct lending.
Sec. 210. Restriction on refinancing debt.
Sec. 211. GAO study.
SEC. 2. DEFINITIONS.
In this Act:
(1) Administration.--The term ``Administration'' means the
Small Business Administration.
(2) Administrator.--The term ``Administrator'' means the
Administrator of the Administration.
TITLE I--COMMUNITY ADVANTAGE LOAN PROGRAM
SEC. 101. COMMUNITY ADVANTAGE LOAN PROGRAM.
(a) In General.--Section 7(a) of the Small Business Act (15 U.S.C.
636(a)) is amended by adding at the end the following:
``(38) Community advantage loan program.--
``(A) Purposes.--The purposes of the Community
Advantage Loan Program are--
``(i) to create a mission-oriented loan
guarantee program;
``(ii) to increase lending to small
business concerns in underserved and rural
markets, including to new businesses;
``(iii) to ensure that the program under
this subsection expands inclusion and more
broadly meets congressional intent to reach
borrowers who are unable to get credit
elsewhere on reasonable terms and conditions;
``(iv) to help underserved small business
concerns become bankable by utilizing the small
dollar financing and business support
experience of mission-oriented lenders;
``(v) to allow certain mission-oriented
lenders, primarily financial intermediaries
focused on economic development in underserved
markets, access to guarantees for loans under
this subsection (referred to in this paragraph
as `7(a) loans') and provide management and
technical assistance to small business concerns
as needed; and
``(vi) to assist covered institutions with
providing business support services and
technical assistance to small business
concerns, when needed.
``(B) Definitions.--In this paragraph:
``(i) Community advantage network
partner.--The term `Community Advantage Network
Partner'--
``(I) means a nonprofit, mission-
oriented organization that acts as a
Referral Agent to covered institutions
in order to expand the reach of the
program to small business concerns in
underserved markets; and
``(II) does not include a covered
institution making loans under the
program.
``(ii) Covered institution.--The term
`covered institution' means an entity that--
``(I) is--
``(aa) a development
company, as defined in section
103 of the Small Business
Investment Act of 1958 (15
U.S.C. 662), participating in
the 504 Loan Guaranty program
established under title V of
that Act (15 U.S.C. 695 et
seq.);
``(bb) a nonprofit
intermediary, as defined in
subsection (m)(11),
participating in the microloan
program under subsection (m);
``(cc) a non-Federally
regulated entity certified as a
community development financial
institution by the Community
Development Financial
Institutions Fund established
under section 104(a) of the
Community Development Banking
and Financial Institutions Act
of 1994 (12 U.S.C. 4703(a)); or
``(dd) an eligible
intermediary, as defined in
subsection (l)(1),
participating in the small
business intermediary lending
program established under
subsection (l)(2); and
``(II) has approved and disbursed
10 similarly sized loans in the
preceding 24-month period and is
servicing not less than 10 similarly
sized loans to small business concerns
in the portfolio of the entity.
``(iii) Existing business.--The term
`existing business' means a small business
concern that has been in existence for not less
than 2 years on the date on which a loan is
made to the small business concern under the
program.
``(iv) New business.--The term `new
business' means a small business concern that
has been in existence for not more than 2 years
on the date on which a loan is made to the
small business concern under the program.
``(v) Program.--The term `program' means
the Community Advantage Loan Program
established under subparagraph (C).
``(vi) Referral agent.--The term `Referral
Agent' has the meaning given the term in
section 103.1(f) of title 13, Code of Federal
Regulations, or any successor regulation.
``(vii) Rural area.--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 census.
``(viii) Small business concern in an
underserved market.--The term `small business
concern in an underserved market' means a small
business concern--
``(I) that is located in--
``(aa) a low- to moderate-
income community;
``(bb) a HUBZone, as that
term is defined in section
31(b);
``(cc) a rural area;
``(dd) a community that has
been designated as an
empowerment zone or enterprise
community under section 1391 of
the Internal Revenue Code of
1986;
``(ee) a community that has
been designated as a qualified
opportunity zone under section
1400Z-1 of the Internal Revenue
Code of 1986; or
``(ff) a community that has
been designated as a promise
zone by the Secretary of
Housing and Urban Development;
``(II) for which more than 50
percent of the employees reside in a
low- or moderate-income community;
``(III) that is a new business; or
``(IV) that is owned and controlled
by veterans or spouses of veterans.
``(C) Establishment.--There is established a
Community Advantage Loan Program under which the
Administration may guarantee loans closed by covered
institutions under this subsection, with an emphasis on
loans made to small business concerns in underserved
markets.
``(D) Program levels.--In fiscal year 2024 and each
fiscal year thereafter, not more than 10 percent of the
number of loans guaranteed under this subsection may be
guaranteed under the program.
``(E) Grandfathering of existing lenders.--Any
covered institution that was licensed by the
Administrator as a Community Advantage small business
lending company, or that participated in the Community
Advantage Pilot Program of the Administration, during
the period beginning on May 1, 2023, and ending on
September 30, 2023, and was in good standing during
that period, as determined by the Administration--
``(i) shall be designated as participants
in the program;
``(ii) shall not be required to submit an
application to participate in the program; and
``(iii) for the purpose of determining the
loan loss reserve amount of the covered
institution, shall have participation in the
Community Advantage Pilot Program included in
the calculation under subparagraph (J).
``(F) Requirement to make loans to underserved
markets.--Not less than 60 percent of loans closed by a
covered institution under the program shall consist of
loans made to small business concerns in underserved
markets.
``(G) Maximum loan amount; collateral.--
``(i) Maximum loan amount.--
``(I) In general.--Except as
provided in subclause (II), the maximum
loan amount for a loan guaranteed under
the program is $350,000.
``(II) Experienced lenders.--
``(aa) In general.--The
Administrator may approve not
more than 8 covered
institutions (referred to in
this subclause as the
`experienced lenders'), each of
which has not less than 5 years
of experience making loans
under the Community Advantage
Pilot Program of the
Administration or the program
established under this
paragraph, to be eligible to
make loans under this
subclause.
``(bb) Maximum loan
amount.--Subject to item (dd),
an experienced lender may make
a loan guaranteed under the
program in an amount that is
not more than $750,000.
``(cc) Participation by the
administration.--With respect
to an agreement to participate
in a loan made under this
subclause on a deferred basis,
the participation by the
Administration shall be--
``(AA) 75 percent
of the balance of the
financing outstanding
at the time of the
disbursement of the
loan, if that balance
is more than $350,000;
``(BB) as described
in clause (i) of
paragraph (2)(G), if
the balance of the
financing outstanding
at the time of the
disbursement of the
loan is as described in
that clause; or
``(CC) as described
in clause (ii) of
paragraph (2)(G), if
the balance of the
financing outstanding
at the time of the
disbursement of the
loan is as described in
that clause.
``(dd) Requirements to make
loans in certain amounts.--Not
less than 60 percent of loans
closed by each experienced
lender under the program shall
consist of loans in an amount
that is not more than $350,000.
``(ii) Collateral.--
``(I) In general.--A covered
institution shall not be required to
take collateral with respect to a loan
guaranteed under the program if the
amount of that loan is not more than
$50,000.
``(II) Policies and procedures of
covered institution.--In determining
the amount of collateral required with
respect to a loan guaranteed under the
program, a covered institution may use
the collateral policies and procedures
of the covered institution with respect
to similarly sized commercial loans
closed by the covered institution that
are not guaranteed by the
Administration.
``(H) Interest rates.--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 under sections 120.213 and 120.214 of title 13,
Code of Federal Regulations, or any successor
regulations.
``(I) Refinancing of community advantage program
loans.--A loan guaranteed under the program