
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC692]

 
                      TITLE 15--COMMERCE AND TRADE
 
             CHAPTER 14B--SMALL BUSINESS INVESTMENT PROGRAM
 
                       SUBCHAPTER IV-A--GUARANTEES
 
Part A--Commercial or Industrial Lease and Qualified Contract Guarantees
 
Sec. 692. Authority of Administration to guarantee payment of 
        rentals by small business concerns under leases of commercial 
        and industrial property
        

(a) Nonavailability of guarantees from other sources; participation with 
        qualified sureties

    The Administration may, whenever it determines such action to be 
necessary or desirable, and upon such terms and conditions as it may 
prescribe, guarantee the payment of rentals under leases of commercial 
and industrial property entered into by small business concerns to 
enable such concerns to obtain such leases. Any such guarantee may be 
made or effected either directly or in cooperation with any qualified 
surety company or other qualified company through a participation 
agreement with such company. The foregoing powers shall be subject, 
however, to the following restrictions and limitations:
        (1) No guarantee shall be issued by the Administration (A) if a 
    guarantee meeting the requirements of the applicant is otherwise 
    available on reasonable terms, and (B) unless the Administration 
    determines that there exists a reasonable expectation that the small 
    business concern in behalf of which the guarantee is issued will 
    perform the covenants and conditions of the lease.
        (2) The Administration shall, to the greatest extent 
    practicable, exercise the powers conferred by this section in 
    cooperation with qualified surety or other companies on a 
    participation basis.

(b) Uniform annual fee; processing fees

    The Administration shall fix a uniform annual fee for its share of 
any guarantee under this section which shall be payable in advance at 
such time as may be prescribed by the Administrator. The amount of any 
such fee shall be determined in accordance with sound actuarial 
practices and procedures, to the extent practicable, but in no case 
shall such amount exceed, on the Administration's share of any guarantee 
made under this part, 2\1/2\ per centum per annum of the minimum annual 
guaranteed rental payable under any guaranteed lease: Provided, That the 
Administration shall fix the lowest fee that experience under the 
program established hereby has shown to be justified. The Administration 
may also fix such uniform fees for the processing of applications for 
guarantees under this section as the Administrator determines are 
reasonable and necessary to pay the administrative expenses that are 
incurred in connection therewith.

(c) Escrow; default; additional discretionary provisions

    In connection with the guarantee of rentals under any lease pursuant 
to authority conferred by this section, the Administrator may require, 
in order to minimize the financial risk assumed under such guarantee--
        (1) that the lessee pay an amount, not to exceed one-fourth of 
    the minimum guaranteed annual rental required under the lease, which 
    shall be held in escrow and shall be available (A) to meet rental 
    charges accruing in any month for which the lessee is in default, or 
    (B) if no default occurs during the term of the lease, for 
    application (with accrued interest) toward final payments of rental 
    charges under the lease;
        (2) that upon occurrence of a default under the lease, the 
    lessor shall, as a condition precedent to enforcing any claim under 
    the lease guarantee, utilize the entire period, for which there are 
    funds available in escrow for payment of rentals, in reasonably 
    diligent efforts to eliminate or minimize losses, by releasing the 
    commercial or industrial property covered by the lease to another 
    qualified tenant, and no claim shall be made or paid under the 
    guarantee until such effort has been made and such escrow funds have 
    been exhausted;
        (3) that any guarantor of the lease will become a successor of 
    the lessor for the purpose of collecting from a lessee in default 
    rentals which are in arrears and with respect to which the lessor 
    has received payment under a guarantee made pursuant to this 
    section; and
        (4) such other provisions, not inconsistent with the purposes of 
    this part, as the Administrator may in his discretion require.

(Pub. L. 85-699, title IV, Sec. 401, as added Pub. L. 89-117, title III, 
Sec. 316(a), Aug. 10, 1965, 79 Stat. 482; amended Pub. L. 90-104, title 
II, Sec. 209, Oct. 11, 1967, 81 Stat. 271; Pub. L. 91-609, title IX, 
Sec. 911(a)(2), Dec. 31, 1970, 84 Stat. 1812.)


                               Amendments

    1970--Subsecs. (b), (c)(4). Pub. L. 91-609 substituted ``part'' for 
``title''.
    1967--Subsec. (a). Pub. L. 90-104 struck out from introductory text 
``that are (1) eligible for loans under section 636(b)(3) of this title, 
or (2) eligible for loans under subchapter IV of chapter 34 of Title 
42,'' after ``small business concerns''.


                    Effective Date of 1967 Amendment

    Amendment by Pub. L. 90-104 effective 90 days after Oct. 11, 1967, 
see section 211 of Pub. L. 90-104, set out as a note under section 681 
of this title.
