Text: H.R.6055 — 111th Congress (2009-2010)All Information (Except Text)

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Introduced in House (07/30/2010)

2d Session
H. R. 6055

To support and strengthen small businesses manufacturing in America, and for other purposes.


July 30, 2010

Mr. Murphy of Connecticut (for himself and Mr. Ryan of Ohio) introduced the following bill; which was referred to the Committee on Financial Services


To support and strengthen small businesses manufacturing in America, 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 “Accounts Receivable Insurance Program Act”.

SEC. 2. Findings.

Congress finds the following:

(1) Small manufacturers are hurt much more than their larger competitors when delays in payments of accounts receivable occur. These small firms hold millions of dollars in outstanding receivables. Especially in an economic slowdown, many larger firms delay payments to their downstream suppliers causing disruptions in the domestic industrial supply chain, creating a greater need to insure payment on terms.

(2) As the number and size of accounts receivables outstanding increases, these businesses have fewer resources to buy raw materials, hire workers, and access adequate lines of credit. Small manufacturers and their creditors need additional assurance that customers will pay their accounts on reasonable terms.

(3) Failure of payment to downstream suppliers in a reasonable amount of time has had a significant negative impact on the cash flow of small suppliers. The moment a lender sees that a supplier is involved in a financially troubled industry such as the auto industry, they move the supplier into a high risk category or will not extend credit. Government guaranteed account receivables insurance would allow the middle-market companies access to credit lines they need to continue day-to-day operations.

SEC. 3. Definitions.

For the purpose of this Act the following definitions apply:

(1) FINANCIAL INSTITUTION.—The term “financial institution” means an establishment engaged in financial transactions (transactions involving the creation, liquidation, or change in ownership of financial assets) and/or in facilitating financial transactions.

(2) INSURANCE INSTITUTION.—The term “insurance institution” means an establishment that is primarily engaged in one of the following:

(A) Underwriting (assuming the risk, assigning premiums, and so forth) annuities and insurance policies.

(B) Facilitating such underwriting by selling insurance policies, and by providing other insurance and employee-benefit related services.

(3) GUARANTEE.—The term “guarantee” has the same meaning as is given the term “loan guarantee” in section 502(3) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a(3)).

(4) SECRETARY.—The term “Secretary” means the Secretary of the Treasury.

SEC. 4. Accounts receivable insurance.

(a) Establishment of program.—There is established within the Department of the Treasury a government-backed private accounts receivable insurance program to assist small manufacturers in the underwriting and guarantee of payment on terms through the insurance of their accounts receivable.

(b) Terms and conditions.—

(1) GUARANTEE.—The Secretary shall, to the extent amounts are made available under subsection (c), insure accounts receivable underwritten by financial or insurance institutions for small manufacturing businesses.


(A) A small manufacturing business shall submit an application to a financial or insurance institution for participation in the program established under this section at such time, in such manner, and accompanied by such information as the Secretary may require.

(B) A financial or insurance institution shall not deny an application solely based on a small manufacturing business’s lack of short term positive cash flow or solely on the nature of their customers’ industry classification.

(3) DEFAULT.—If a small manufacturing business defaults on any portion of an obligation guaranteed under paragraph (1)—

(A) the financial or insurance institution shall have the right to demand payment of the unpaid amount from the Secretary in exchange for payment of a fee equal to .5 percent of such amount; and

(B) within such period as the Secretary shall specify, the Secretary shall pay to the financial or insurance institution the remaining balance of the obligation, unless the Secretary determines that such small business or institution has not taken reasonable steps to seek collection of such obligation in a reasonably timely manner, which steps shall include—

(i) exhausting all efforts to enforce all terms and penalties set forth in the underlying contract;

(ii) making successive efforts by registered mail or other similar method on a regular schedule; and

(iii) pursuing legal action.

(4) LIMITATION.—A financial or insurance institution shall not be eligible for a guarantee under paragraph (1) if such institution insured the accounts receivable of a small manufacturing business for less than 80 percent of the value of such accounts receivable insured.

(c) Funding.—Funding as may be necessary, not to exceed $500,000,000, for the cost of guarantees under this section shall be available to the Secretary, without further appropriation or fiscal year limitation, for the costs of such program. All funds received by the Secretary in connection with purchases made pursuant to paragraph (1), including interest payments, dividend payments, and proceeds from the sale of any financial instrument, shall be paid into the general fund of the Treasury for reduction of the public debt.

(d) Sunset.—The Secretary may not enter into any contracts or agreements with financial institutions to make any guarantees under this section after December 31, 2011, or on the date that is 1 year after the date of the enactment of this Act, whichever is later.

(e) Regulations.—Not later than 90 days after the date of the enactment of this Act, the Secretary shall issue regulations to carry out the purposes of this section.