
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC695]

 
                      TITLE 15--COMMERCE AND TRADE
 
             CHAPTER 14B--SMALL BUSINESS INVESTMENT PROGRAM
 
      SUBCHAPTER V--LOANS TO STATE AND LOCAL DEVELOPMENT COMPANIES
 
Sec. 695. State development companies


(a) Congressional finding and declaration of purpose

    The Congress hereby finds and declares that the purpose of this 
subchapter is to foster economic development and to create or preserve 
job opportunities in both urban and rural areas by providing long-term 
financing for small business concerns through the development company 
program authorized by this subchapter.

(b) Loans; obligations of development companies

    The Administration is authorized to make loans to State development 
companies to assist in carrying out the purposes of this chapter. Any 
funds advanced under this subsection shall be in exchange for 
obligations of the development company which bear interest at such rate, 
and contain such other terms, as the Administration may fix, and funds 
may be so advanced without regard to the use and investment by the 
development company of funds secured by it from other sources.

(c) Maximum loans to development companies

    The total amount of obligations purchased and outstanding at any one 
time by the Administration under this section from any one State 
development company shall not exceed the total amount borrowed by it 
from all other sources. Funds advanced to a State development company 
under this section shall be treated on an equal basis with those funds 
borrowed by such company after August 21, 1958, regardless of source, 
which have the highest priority, except when this requirement is waived 
by the Administrator.

(d) Eligibility for assistance

    In order to qualify for assistance under this subchapter, the 
development company must demonstrate that the project to be funded is 
directed toward at least one of the following economic development 
objectives--
        (1) the creation of job opportunities within two years of the 
    completion of the project or the preservation or retention of jobs 
    attributable to the project;
        (2) improving the economy of the locality, such as stimulating 
    other business development in the community, bringing new income 
    into the area, or assisting the community in diversifying and 
    stabilizing its economy; or
        (3) the achievement of one or more of the following public 
    policy goals:
            (A) business district revitalization,
            (B) expansion of exports,
            (C) expansion of minority business development or women-
        owned business development,
            (D) rural development,
            (E) expansion of small business concerns owned and 
        controlled by veterans, as defined in section 632(q) of this 
        title, especially service-disabled veterans, as defined in such 
        section 632(q) of this title,
            (F) enhanced economic competition, including the advancement 
        of technology, plan retooling, conversion to robotics, or 
        competition with imports,
            (G) changes necessitated by Federal budget cutbacks, 
        including defense related industries, or
            (H) business restructuring arising from Federally mandated 
        standards or policies affecting the environment or the safety 
        and health of employees.

If eligibility is based upon the criteria set forth in paragraph (2) or 
(3), the project need not meet the job creation or job preservation 
criteria developed by the Administration if the overall portfolio of the 
development company meets or exceeds such job creation or retention 
criteria.

(Pub. L. 85-699, title V, Sec. 501, Aug. 21, 1958, 72 Stat. 696; Pub. L. 
100-590, title I, Sec. 115(a), (b)(1), Nov. 3, 1988, 102 Stat. 2997; 
Pub. L. 101-574, title II, Sec. 214(a), (b), Nov. 15, 1990, 104 Stat. 
2821; Pub. L. 106-50, title IV, Sec. 405, Aug. 17, 1999, 113 Stat. 246; 
Pub. L. 106-554, Sec. 1(a)(9) [title III, Sec. 302], Dec. 21, 2000, 114 
Stat. 2763, 2763A-684.)

                       References in Text

    For definition of ``this chapter'', referred to in subsec. (b), see 
References in Text note set out under section 661 of this title.


                               Amendments

    2000--Subsec. (d)(3)(C). Pub. L. 106-554 inserted ``or women-owned 
business development'' before comma at end.
    1999--Subsec. (d)(3)(E)-(H). Pub. L. 106-50 added subpar. (E) and 
redesignated former subpars. (E) to (G) as (F) to (H), respectively.
    1990--Subsec. (a). Pub. L. 101-574, Sec. 214(a), amended subsec. (a) 
generally. Prior to amendment, subsec. (a) read as follows: ``The 
Congress hereby finds and declares that the purpose of this subchapter 
is to foster economic development in both urban and rural areas by 
providing long term financing for small business concerns through the 
development company program authorized by this subchapter. In order to 
carry out this objective, the Administration is hereby directed to place 
greater emphasis on the needs of rural areas and the promotion of the 
development company program in such areas, and is further directed to 
develop a plan for greater outreach of procurement and export trade 
seminars in such areas. As used in this subchapter, the term `rural 
areas' means those localities with populations of less than 20,000.''
    Subsec. (d). Pub. L. 101-574, Sec. 214(b), added subsec. (d).
    1988--Pub. L. 100-590 inserted ``State development companies'' as 
section catchline, added subsec. (a), and redesignated former subsecs. 
(a) and (b) as (b) and (c), respectively.


                     Loan Liquidation Pilot Program

    Pub. L. 104-208, div. D, title II, Sec. 204, Sept. 30, 1996, 110 
Stat. 3009-736, provided that:
    ``(a) In General.--The Administrator shall carry out a loan 
liquidation pilot program (in this section referred to as the `pilot 
program') in accordance with the requirements of this section.
    ``(b) Selection of Development Companies.--
        ``(1) In general.--Not later than 90 days after the date of the 
    enactment of this Act [Sept. 30, 1996], the Administrator shall 
    establish a pilot program under which certain development companies 
    authorized to make loans and issue debentures under title V of the 
    Small Business Investment Act of 1958 [15 U.S.C. 695 et seq.] are 
    selected by the Administrator in accordance with this subsection to 
    carry out loan liquidations.
        ``(2) Conflicts of interest.--The development companies selected 
    under paragraph (1) shall agree not to take any action that would 
    create a potential conflict of interest involving the development 
    company, the third party lender, or an associate of the third party 
    lender.
        ``(3) Qualifications.--In order to qualify to participate in the 
    pilot program under this section, each development company shall--
            ``(A) have not less than 6 years of experience in the 
        program established by title V of the Small Business Investment 
        Act of 1958;
            ``(B) have made, during the 6 most recent fiscal years, an 
        average of not less than 10 loans per year through the program 
        established by such title V of the Small Business Investment Act 
        of 1958;
            ``(C) have not less than 2 years of experience in 
        liquidating loans under the authority of a Federal, State, or 
        other lending program; and
            ``(D) meet such other requirements as the Administration may 
        establish.
    ``(c) Authority of Development Companies.--The development companies 
selected under subsection (b) shall, for loans in their portfolio of 
loans made through debentures guaranteed under title V of the Small 
Business Investment Act of 1958 [15 U.S.C. 695 et seq.] that are in 
default after the date of enactment of this Act [Sept. 30, 1996], be 
authorized to--
        ``(1) perform all liquidation and foreclosure functions, 
    including the acceleration or purchase of community injection funds, 
    subject to such company obtaining prior written approval from the 
    Administrator before committing the agency to purchase any other 
    indebtedness secured by the property: Provided, That the 
    Administrator shall approve or deny a request for such purchase 
    within a period of 10 business days; and
        ``(2) liquidate such loans in a reasonable and sound manner and 
    according to commercially accepted practices pursuant to a 
    liquidation plan approved by the administrator in advance of its 
    implementation. If the administrator does not approve or deny a 
    request for approval of a liquidation plan within 10 business days 
    of the date on which the request is made (or with respect to any 
    routine liquidation activity under such a plan, within 5 business 
    days) such request shall be deemed to be approved.
    ``(d) Authority of the Administrator.--In carrying out the pilot 
program, the Administrator shall--
        ``(1) have full authority to rescind the authority granted any 
    development company under this section upon a 10-day written notice 
    stating the reasons for the rescission; and
        ``(2) not later than 90 days after the admission of the 
    development companies specified in subsection (b), implement the 
    pilot program.
    ``(e) Report.--
        ``(1) In general.--The Administrator shall issue a report on the 
    results of the pilot program to the Committees on Small Business of 
    the House of Representatives and the Senate. The report shall 
    include information relating to--
            ``(A) the total dollar amount of each loan and project 
        liquidated;
            ``(B) the total dollar amount guaranteed by the 
        Administration;
            ``(C) total dollar losses;
            ``(D) total recoveries both as percentage of the amount 
        guaranteed and the total cost of the project; and
            ``(E) a comparison of the pilot program information with the 
        same information for liquidation conducted outside the pilot 
        program over the period of time.
        ``(2) Reporting period.--The report shall be based on data from, 
    and issued not later than 90 days after the close of, the first 
    eight 8 [sic] fiscal quarters of the pilot program's operation after 
    the date of implementation.''
    [Section 204 of title II of div. D of Pub. L. 104-208, set out 
above, to cease to have effect beginning on the date on which final 
regulations are issued to carry out section 697g of this title, see 
section 1(a)(9) [title III, Sec. 307(b)] of Pub. L. 106-554, set out as 
a Regulations note under section 697g of this title.]

                  Section Referred to in Other Sections

    This section is referred to in section 696 of this title.
