Summary: H.R.4111 — 102nd Congress (1991-1992)All Information (Except Text)

Bill summaries are authored by CRS.

Shown Here:
House agreed to Senate amendment with amendment (08/11/1992)

Small Business Credit and Business Opportunity Enhancement Act of 1992 - Title I: Improved Access to Credit - Subtitle A: Section 7(A) Guaranteed Loan Program - Small Business Credit Crunch Relief Act of 1992 - Amends the Small Business Act to limit the amount of deferred participation loans authorized by such Act to the net amount of loan principal which is guaranteed by the Small Business Administration (SBA) (not including any amount which is not guaranteed). Declares that such loans are available for a national program, but restricts to ten percent of annual authorizations SBA use of such funds for special or pilot programs directed to identified sectors of the small business community or to specific geographic regions.

Authorizes deferred participation loans and other financings in FY 1992 through 1994, including general business loans, pollution control loan guarantees, and development company loans and debenture guarantees.

Directs the Administrator of the SBA, when practicable, to: (1) accord preference to small business concerns which use or purchase equipment and supplies produced in the United States; and (2) encourage small business concerns receiving such assistance to purchase such equipment and supplies.

Subtitle B: Microloan Demonstration Program Amendments - Microlending Expansion Act of 1992 - Directs the Administrator, in selecting intermediaries to participate in the microloan demonstration program, to give priority to those applicants that provide loans in amounts averaging no more than $7,500.

Sets the interest rate of microloans at 1.25 percent below the rate determined by the Secretary of the Treasury for obligations of the United States. Provides for an interest rate of two percentage points below such rate for loans made by the SBA to an intermediary that makes loans to small businesses and entrepreneurs averaging no more than $7,500.

Applies such interest rates to all loans made to intermediaries on or after October 28, 1991.

Revises conditions for grants to intermediaries for providing marketing, management, and technical assistance to small businesses to authorize such intermediaries to receive grants of up to 25 percent of the total outstanding balance of loans. Requires intermediaries to contribute an amount equal to 25 percent (currently, one-half) of the amount of the grant from non-Federal sources. Makes intermediaries that have a portfolio of loans averaging no more than $7,500 eligible to receive additional grants equal to five percent of the total outstanding balance of loans.

Raises from two to six the amount of annual technical assistance grants allowed to be made annually by the SBA.

Revises the interest rates on microloans to prohibit the maximum rate of interest from exceeding the interest rate applicable to a loan made to an intermediary by the SBA as follows: (1) for loans of more than $7,500 made by an intermediary to a small business or entrepreneur by 7.75 percentage points; and (2) for such loans in amounts of more than $7,500 by more than 8.5 percentage points.

Increases from 35 to 60 the maximum amount of microloan programs to be funded in the first year of the program (from 25 to 50, in the second year). Raises from two to four the maximum number of programs awarded to any one State in the first two years of the program and prohibits the awarding of more than two programs in any year thereafter. Increases the dollar amounts to be provided for such programs.

Authorizes appropriations.

Repeals provisions of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1992 that concern the microloan program.

Title II: Amendments to the Small Business Act and Related Acts - Subtitle A: Small Business Competitiveness Demonstration Program - Amends the Small Business Competitiveness Demonstration Program Act of 1988 to extend the Small Business Competitiveness Demonstration Program, the Alternative Program for Clothing and Textiles, and the program to expand small business participation in dredging through September 30, 1996.

Directs the Administrator for Federal Procurement Policy to implement a system to collect data on the participation of small businesses as other than prime contractors. Requires such system to be used to collect data regarding contracts for architectural and engineering services. Provides that such subcontracts awarded to small businesses shall be counted towards determining whether the small business participation goal has been attained by certain Federal agencies.

Bars restricted competitions with respect to the industry group of architectural and engineering services (if the rate of small business exceeds 35 percent) until the improvements to the collection of data regarding prime contracts and subcontracts have been implemented.

Requires the Department of the Army to make an effort to award at least 20 percent of the aggregate value of all suitable contracts for dredging to small businesses in FY 1993 and thereafter. States that the total value of contracts to be performed exclusively through the use of dustpan or seagoing hopper dredges is deemed unsuitable for performance by small businesses and is to be excluded in calculating whether small business participation rates have been attained.

Directs a contracting officer, prior to restricting a solicitation for a dredging contract for exclusive competition among small businesses, to determine that each offeror is a responsible source and can demonstrate the capability to obtain specialized dredging equipment to perform the required work.

Subtitle B: Defense Economic Transition Assistance - Amends the Small Business Act to authorize the SBA to make loans to: (1) a small business concern that has been detrimentally affected by the closure or reduction of a Department of Defense (DOD) installation or the termination or substantial reduction of a DOD program on which such business was a prime contractor, subcontractor, or supplier at any tier; or (2) a qualified individual seeking to establish and operate a small business.

Defines a "qualified individual" as: (1) a member of the armed forces discharged from active duty involuntarily or pursuant to a program providing inducements to encourage voluntary separation or early retirement; (2) a civilian employee of DOD involuntarily separated from Federal service or retired pursuant to such a program; or (3) an employee of a prime contractor, subcontractor, or supplier at any tier of a DOD program whose employment is involuntarily terminated or voluntarily terminated pursuant to an inducement program due to the termination of the DOD program.

Includes within the services provided by a small business development center the assisting of small businesses in implementing strategic business plans to respond to the planned closure or reduction of a DOD facility or to projected reductions in such firms' business base due to termination of a DOD program or contract.

Subtitle C: Small Business Administration Management - Authorizes the SBA Administrator to specify additional definitions or standards by which a business concern is to be recognized as a small business concern. Bars the heads of Federal agencies from prescribing size standards unless such standards meet specified criteria and are approved by the Administrator.

Authorizes small business development centers to form an association to pursue matters of common concern. Requires the Administrator, if more than a majority of such centers are members of such an association, to consult with the association and develop documents concerning the operation of the center program.

Directs the SBA to conduct a National Seminar on Small Business Exports in Buffalo, New York, in connection with the Wold University Games during July 1993, to develop recommendations to stimulate exports from small companies.

Authorizes and directs the Administrator to take such actions in the awarding of contracts to assure the continued long-term viability of the secondary markets in loans, debentures, or other SBA-guaranteed securities.

Subtitle D: Technical Amendments - Makes technical amendments to the Business Opportunity Development Reform Act of 1988 and the Small Business Act.

Title III: Studies and Resolutions - Subtitle A: Access to Surety Bonding - Small Business Access to Surety Bonding Survey Act of 1992 - Directs the Comptroller General to conduct a survey of business firms to obtain data on the experiences of such firms, especially the experiences of small businesses, in obtaining surety bonds from corporate surety firms. Lists required contents of the questionnaire.

Subtitle B: Small Business Loan Secondary Market Study - Directs the Secretary of the Treasury, the Director of the Congressional Budget Office, and the Chairman of the Securities and Exchange Commission to study and report to the Congress on the potential benefits of, and the legal, regulatory, and market-based barriers to, developing a secondary market for loans to small businesses.

Subtitle C: Contract Bundling Study - Requires the SBA Administrator, acting through the Associate Administrator for Procurement Assistance, to study and report to the House and Senate Small Business Committees regarding the impact of "contract bundling" on the participation of small business concerns in the Federal procurement process.

Defines "contract bundling" as the practice of consolidating multiple procurement requirements into a single large contract solicitation which generally results in a contract opportunity unsuitable for small business concerns due to the diversity and size of the performance requirements and the dollar value of the anticipated award.

Subtitle D: Resolution Regarding Small Business Access to Capital - Expresses the sense of the Congress with respect to credit for, and viability of, small businesses.

Title IV: Small Busines Investment Act Amendments - Small Business Equity Enhancement Act of 1992 - Amends the Small Business Investment Act of 1958 to revise provisions with respect to debentures issued by small business investment companies (SBICs) to specify that: (1) the total amount of debentures and participating securities that may be guaranteed by the Small Business Administration (SBA) and outstanding from an SBIC licensed under the Act shall not exceed 300 percent of the private capital of such SBIC; and (2) in no event shall the aggregate amount of outstanding leverage of any such SBIC which is commonly controlled (as determined by the SBA) exceed $90,000,000, except on a case-by-case-basis as determined by the SBA.

Provides that: (1) nothing under such provisions shall require any such SBIC that on March 31, 1993, has outstanding debentures in excess of 300 percent of its private capital to prepay such excess; and (2) any such SBIC may apply for an additional debenture guarantee or participating security with the proceeds to be used solely to pay the amount due on such maturing debenture, but the maturity date of the new debenture or security shall not be later than September 30, 2002.

Sets forth a formula for determining the maximum amount of outstanding leverage made available to an SBIC licensed under the Act, to be effective after March 31, 1993.

Authorizes the SBA to guarantee the payment of the redemption price and prioritized payments (includes stock dividends, interest on debentures, or priority returns on preferred limited partnership interests which are paid only to the extent of earnings) on participating securities issued by SBICs licensed pursuant to the Act, and authorizes a trust or pool acting on behalf of the SBA to purchase such securities. Sets forth: (1) restrictions with respect to redemption of, prioritized payments on, and other issues regarding, such securities; and (2) terms and conditions regarding the computation of amounts due the SBA under such securities.

Revises provisions of the Act related to the issuance and guarantee of trust certificates to provide for the redemption, whether voluntary or involuntary, of all participating securities residing in the pool, as well as debentures. Bars any Federal, State, or local law from precluding or limiting the exercise by the SBA of its ownership rights in participating securities residing in a trust or pool against which trust certificates are issued. Directs the SBA to contract with an agent or agents to carry out on behalf of the SBA pooling and central registration functions (currently, with an agent to carry out central registration functions) including maintenance on behalf of and under the direction of the SBA of such commercial bank accounts as necessary to facilitate trusts or pools backed by debentures or participating securities guaranteed under the Act and the issuance of trust certificates to facilitate such pooling.

Amends the Small Business Act to authorize appropriations.

Directs the SBA, prior to licensing and approving any request for financing, to determine the ability of an SBIC to make periodic payments on any debt of the SBIC which is interest bearing, taking into consideration the income which the SBIC anticipates on its contemplated investments, the experience of its owners and managers, its history as an entity, and its financial resources.

Requires each SBIC to adopt written guidelines for determination of the value of its investments. Makes the board of directors of corporations, the general partners of partnerships, and the owners of proprietorships solely responsible for making a good faith determination of the fair market value of the investments made by such SBIC. Requires that such determinations be made and reported to the SBA at least semiannually or at more frequent intervals as the SBA determines appropriate (but any SBIC which does not have outstanding financial assistance under the Act shall be required to make such determinations and reports annually, unless the SBA determines otherwise).

Subjects each SBIC to examinations made by the Investment Division of the SBA (currently, by SBA examiners). Transfers resources related to the examination function under the Act by the Inspector General of the SBA to the SBA's Investment Division.

Specifies that if any SBIC has obtained SBA financing which remains outstanding, the aggregate amount of obligations and securities acquired and for which commitments may be issued by such SBIC under the provisions of the Act for any single enterprise shall not exceed 20 percent of the private capital of such SBIC without SBA approval.

Permits SBICs with outstanding financings (currently, SBICs) to invest funds, subject to specified conditions.

Directs the SBA to: (1) complete a review of regulations intended to provide for the safety and soundness of those SBICs which obtain SBA financing under the Act; and (2) exempt from such regulations, or separately regulate, those SBICs which do not obtain such financing. Sets forth reporting requirements.

Increases minimum capital requirements for SBICs licensed on or after October 1, 1992 (currently, 1979).

Defines "private capital" to mean the private paid-in capital and paid-in surplus of a corporate licensee, or the private partnership capital of an unincorporated licensee, inclusive of any funds invested in the licensee by a public or private pension fund or by a State or local governmental entity (subject to certain restrictions), and unfunded commitments from institutional investors that meet SBA criteria but exclusive of any funds borrowed by the licensee from any source or obtained or derived directly or indirectly from any Federal source.

Directs the SBA to permit those SBICs which have issued debentures pursuant to the Act to charge a maximum rate of interest based upon the coupon rate of interest on the outstanding debentures determined on an annual basis, plus other approved company expenses. Permits SBICs to include in private capital for any purpose funds indirectly obtained from State or local governments.

Amends the Small Business Act to provide that, subject to approval in appropriations Acts, amounts authorized for preferred stock, debentures, or participating securities under the Small Business Investment Act of 1958 may be obligated in one fiscal year and disbursed or guaranteed in the following fiscal year.

Declares that it is congressional intent that in the award of financial assistance under the Small Business Investment Act of 1958 priority be accorded to small business concerns which lease or purchase be accorded to small business concerns which lease or purchase equipment which is produced in the United States.