[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2231 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
1st Session
S. 2231
To amend the Small Business Investment Act of 1958 to improve the loan
guaranty program, enhance the ability of small manufacturers to access
affordable capital, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 24, 2021
Ms. Klobuchar (for herself, Mr. Young, Mr. Booker, and Mr. Rubio)
introduced the following bill; which was read twice and referred to the
Committee on Small Business and Entrepreneurship
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to improve the loan
guaranty program, enhance the ability of small manufacturers to access
affordable capital, 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.
This Act may be cited as the ``504 Modernization and Small
Manufacturer Enhancement Act of 2021''.
SEC. 2. ADDITIONS TO POLICY GOALS FOR THE DEVELOPMENT COMPANY PROGRAM.
Section 501(d)(3) of the Small Business Investment Act of 1958 (15
U.S.C. 695(d)(3)) is amended--
(1) by redesignating subparagraphs (A) through (L) as
subparagraphs (B) through (M), respectively;
(2) by inserting before subparagraph (B) (as so
redesignated) the following:
``(A) workforce development through work-based or
work-integrated training, which shall be satisfied by
demonstrating that a small business concern that is a
subject of the project has--
``(i) a documented in-house training
program, the duration of which is not shorter
than 12 weeks; or
``(ii) entered into a contract with an
entity--
``(I) to provide trained applicants
for any open position of employment at
the small business concern; and
``(II) that ensures that any
applicant provided to the small
business concern under subclause (I)
has undergone not fewer than 12 weeks
of training that is relevant to the
open position described in that
subclause,'';
(3) by amending subparagraph (D) (as so redesignated) to
read as follows:
``(D) expansion of minority-owned, employee-owned,
or women-owned business development,'';
(4) in subparagraph (L) (as so redesignated), by striking
``producers, or'' and inserting ``producers,'';
(5) in subparagraph (M) (as so redesignated), by striking
the period at the end and inserting a comma;
(6) by inserting after subparagraph (M) (as so
redesignated) the following new subparagraphs:
``(N) enhanced ability for small business concerns
to reduce costs by using energy efficient products and
generating renewable energy,
``(O) aid revitalizing of any area for which a
disaster has been declared or determined under
subparagraph (A), (B), (C), or (E) of section 7(b)(2)
of the Small Business Act, or
``(P) expansion of small business concerns with 10
or fewer employees.''; and
(7) in the flush text following subparagraph (P), as added
by paragraph (6), by striking ``subparagraphs (J) and (K)'' and
inserting ``subparagraphs (K) and (L)''.
SEC. 3. INCREASE IN LOAN AMOUNTS FOR MANUFACTURING LOANS.
Section 502 of the Small Business Investment Act of 1958 (15 U.S.C.
696) is amended--
(1) in the matter preceding paragraph (1), by striking
``The Administration'' and inserting the following:
``(a) In General.--The Administration''; and
(2) in subsection (a), as so designated--
(A) in paragraph (2)(A)--
(i) in the matter preceding clause (i), by
striking ``section'' and inserting
``subsection''; and
(ii) in clause (iii), by striking
``$5,500,000'' and inserting ``$6,500,000'';
and
(B) in paragraph (3)(A), by striking ``this
section'' and inserting ``this subsection''.
SEC. 4. IMPROVEMENTS TO 504 LOAN CLOSING PROCEDURE.
Title V of the Small Business Investment Act of 1958 (15 U.S.C. 695
et seq.) is amended--
(1) in section 502, as amended by section 3, by adding at
the end the following new subsections:
``(b) Closing.--
``(1) Authority of certain development companies.--An
accredited lender certified company may take any of the
following actions to facilitate the closing of a loan made
under subsection (a):
``(A) Reallocate the cost of the project with
respect to which the loan is made in an amount that is
not more than 10 percent of the overall cost of the
project.
``(B) Correct any name that is applicable to the
loan, including the name of any borrower, guarantor,
eligible passive company described in subparagraph
(C)(i), and operating company described in subparagraph
(C)(ii).
``(C) Form any of the following to receive proceeds
of the loan:
``(i) An eligible passive company that
complies with section 120.111 of title 13, Code
of Federal Regulations, or any successor
regulation.
``(ii) If an eligible passive company is
formed under clause (i), an operating company
with respect to that eligible passive company.
``(D) Correct the address of any property with
respect to which the loan is made.
``(E) Correct the name of any interim lender or
third-party lender.
``(F) Change any third-party lender or interim
lender if that lender is a financial institution that
is regulated by the Federal Government or a State
government.
``(G) Make a guarantor a co-borrower or a co-
borrower a guarantor.
``(H) Add a guarantor that does not change
ownership with respect to the loan.
``(I) Reduce the amount of standby debt before the
closing as a result of regularly scheduled payments.
``(J) Reduce the cost of the project with respect
to which the loan is made.
``(2) Fees.--The Administrator shall--
``(A) issue a rule regarding the amount of a
closing fee that may be financed in a debenture that is
issued by a certified development company to make one
or more loans to small business concerns, the proceeds
of which are used by that concern for the purposes
described in subsection (a), except that such amount
shall be not less than $3,500; and
``(B) periodically update the rule issued under
subparagraph (A).
``(3) No adverse change and financial statement.--Before
the closing with respect to a loan made under subsection (a),
the borrower and any operating company shall--
``(A) make the certification required under section
120.892 of title 13, Code of Federal Regulations, or
any successor regulation; and
``(B) submit to the certified development company a
financial statement that is not more than 180 days old,
which the company shall certify not later than 120 days
before the date on which the certified development
company issues a debenture with respect to the project
to which the loan relates.
``(c) Accredited Lender Certified Company Defined.--In this
section, the term `accredited lender certified company' means a
certified development company that meets the requirements under section
507(b), including a certified development company that the
Administration has designated as an accredited lender under such
section 507(b).''; and
(2) by adding at the end the following new section:
``SEC. 511. CLOSING AND OVERSIGHT.
``(a) SBA District Counsels.--Beginning on the date of enactment of
this section, with respect to the program established under this title,
district counsels of the Administration shall be subject to the same
requirements, and shall have the same authority and responsibilities,
as in effect with respect to that program on the day before the date of
enactment of this section, except that--
``(1) the Office of Credit Risk Management of the
Administration shall have the responsibility for all duties
relating to conducting file reviews of loans made under this
title; and
``(2) district counsels of the Administration shall not
have any responsibility relating to the review of closing
packages with respect to a loan made under this title.
``(b) Designated Attorneys.--For the purposes of this title, the
following provisions and requirements shall apply with respect to a
designated attorney of a certified development company:
``(1) A designated attorney that meets the requirements
determined under paragraph (2) shall be responsible for
certifying documents relating to the closing of a loan
described in this title.
``(2) The Administrator may determine any continuing
education requirements that the designated attorney shall be
required to satisfy in order to be permitted to close a loan
made under this title.
``(3) If, as of the date of enactment of this section, a
certified development company does not have a designated
attorney, during the 270-day period beginning on that date of
enactment, the certified development company may identify such
an attorney, subject to the approval of the Administrator.''.
SEC. 5. CERTIFIED DEVELOPMENT COMPANY LOANS FOR SMALL MANUFACTURERS.
(a) Contribution Requirement.--Section 502(a)(3)(C) of the Small
Business Investment Act of 1958, as designated by section 3, is
amended--
(1) by redesignating clauses (i), (ii), (iii), and (iv) as
subclauses (I), (II), (III), and (IV), respectively, and
adjusting the margins of such subclauses accordingly;
(2) by inserting before subclause (I), as so redesignated,
the following:
``(i) for a small business concern that is
not a small manufacturer (as defined in section
501(e)(7))--'';
(3) in subclause (III), as so redesignated, by striking
``clauses (i) and (ii)'' and inserting ``subclauses (I) and
(II)'';
(4) in subclause (IV) as so redesignated, by striking the
period and the end and inserting ``; or''; and
(5) by adding at the end the following:
``(ii) for a small manufacturer (as defined
in section 501(e)(7))--
``(I) at least 5 percent of the
total cost of the project financed, if
the small business concern has been in
operation for a period of 2 years or
less;
``(II) at least 5 percent of the
total cost of the project financed, if
the project involves a limited or
single purpose building or structure;
``(III) at least 10 percent of the
total cost of the project financed if
the project involves both of the
conditions set forth in subclauses (I)
and (II); or
``(IV) at least 5 percent of the
total cost of the project financed, in
all other circumstances, at the
discretion of the development
company.''.
(b) Creation or Retention of Jobs Requirement.--Section 501(e) of
the Small Business Investment Act of 1958 (15 U.S.C. 695(e)) is
amended--
(1) in paragraph (1), by striking ``creates or retains''
and all that follows through the period at the end and
inserting ``creates or retains 1 job for every $75,000
guaranteed by the Administration, except that the amount is
$150,000 in the case of a project of a small manufacturer.'';
(2) in paragraph (2), by striking ``creates or retains''
and all that follows through the period at the end and
inserting ``creates or retains 1 job for every $75,000
guaranteed by the Administration, except that the amount is
$150,000 in the case of a project of a small manufacturer.'';
(3) by redesignating paragraph (6) as paragraph (7); and
(4) by inserting after paragraph (5) the following:
``(6) For a loan for a project directed toward the creation of job
opportunities under subsection (d)(1), the Administrator shall publish
on the website of the Administration the number of jobs created or
retained under the project as of the date that is 2 years after the
completion (as determined based on information provided by the
development company) of the project.''.
(c) Collateral Requirements.--Section 502(a)(3)(E)(i) of the Small
Business Investment Act of 1958, as designated by section 3, is amended
by adding at the end the following: ``Additional collateral shall not
be required in the case of a small manufacturer (as defined in section
501(e)(7)).''.
(d) Debt Refinancing.--Section 502(a)(7)(B) of the Small Business
Investment Act of 1958, as designated by section 3, is amended--
(1) in the matter preceding clause (i), by inserting ``(or
in the case of a small manufacturer (as defined in section
501(e)(7)), that does not exceed 100 percent of the project
cost of the expansion)'' after ``cost of the expansion'';
(2) in clause (v), by adding ``and'' at the end;
(3) by striking clause (vi); and
(4) by redesignating clause (vii) as clause (vi).
(e) Amount of Guaranteed Debenture.--Section 503(a) of the Small
Business Investment Act of 1958 (15 U.S.C. 697(a)) is amended by adding
at the end the following:
``(5) Any debenture issued by a State or local development company
to a small manufacturer (as defined in section 501(e)(7)) with respect
to which a guarantee is made under this subsection shall be in an
amount equal to not more than 50 percent of the cost of the project
with respect to which such debenture is issued, without regard to
whether good cause has been shown.''.
SEC. 6. ASSISTANCE FOR SMALL MANUFACTURERS.
Title V of the Small Business Investment Act of 1958 (15 U.S.C. 695
et seq.), as amended by section 4(2), is further amended by adding at
the end the following new section:
``SEC. 512. ASSISTANCE FOR SMALL MANUFACTURERS.
``(a) In General.--The Administrator shall ensure that each
district office of the Administration partners with not less than 1
resource partner to provide training to small business concerns
assigned a North American Industry Classification System code for
manufacturing on obtaining assistance under the program carried out
under this title, including with respect to the application process
under that program and partnering with development companies under this
title.
``(b) Resource Partner Defined.--In this section, the term
`resource partner' means--
``(1) a small business development center (defined in
section 3 of the Small Business Act);
``(2) a women's business center (described under section 29
of such Act);
``(3) a chapter of the Service Corps of Retired Executives
(established under section 8(b)(1)(B) of such Act); and
``(4) a Veteran Business Outreach Center (described under
section 32 of such Act).''.
SEC. 7. LEASING RULES FOR NEW FACILITIES AND EXISTING BUILDINGS.
(a) In General.--Section 502(a) of the Small Business Investment
Act of 1958, as designated by section 3, is amended by striking
paragraphs (4) and (5) and inserting the following new paragraphs:
``(4) New facilities.--
``(A) In general.--With respect to a project to
construct a new facility, an assisted small business
concern may permanently lease not more than 20 percent
of the project if such concern--
``(i) permanently occupies and uses not
less than 60 percent of the project;
``(ii) plans to occupy and use an
additional portion of the project that is not
permanently leased not later than 3 years after
receipt of assistance under this section; and
``(iii) plans to permanently occupy and use
80 percent of the project not later than 10
years after receipt of such assistance.
``(B) Small manufacturers.--With respect to an
assisted small business concern that is a small
manufacturer (as defined in section 501(e)(7)),
subparagraph (A)(i) shall apply with `50 percent'
substituted for `60 percent'.
``(5) Existing buildings.--With respect to a project to
acquire, renovate, or reconstruct an existing building, the
following shall apply:
``(A) Occupancy requirements.--The assisted small
business concern may permanently lease not more than 50
percent of the project if the concern permanently
occupies and uses not less than 50 percent of the
project.
``(B) Exception.--The assisted small business
concern may permanently lease more than 50 percent of
the project if--
``(i) such concern--
``(I) has occupied and used the
existing building for a consecutive 12-
month period before submitting an
application for assistance under this
section;
``(II) agrees to permanently use
less than 50 percent of the existing
building and permanently lease more
than 50 percent for a consecutive 12-
month period after receiving such
assistance; and
``(III) affirms that the existing
building is appropriate for current and
reasonably anticipated needs; and
``(ii) the development company assisting
such project--
``(I) provides written notice to
the Administrator on the date on which
the development company closes the loan
for such project; and
``(II) once each year during the
first 5 years of the loan, and once
every 2 years for the remainder of the
loan--
``(aa) conducts an
examination of the assisted
small business concern to
ensure the concern is not a
real estate development
business; and
``(bb) files with the
Administrator an anti-investor
certification signed by the
development company and the
assisted small business
concern.
``(C) Lease term.--Any residential lease made under
this paragraph shall be for a term of not more than 1
year, and any commercial lease made under this
paragraph shall be for a term of not more than 5
years.''.
(b) Report.--Not later than 5 years after the date of the enactment
of this Act, the Administrator of the Small Business Administration
shall submit to Congress a report analyzing the impact of the
amendments made by this section on access to capital for small business
concerns (as defined under section 3 of the Small Business Act (15
U.S.C. 632)), and recommending whether similar notice, examination, and
certifications requirements should be made to the program established
under section 7(a) of the Small Business Act (15 U.S.C. 636(a)).
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