                        TITLE 19--CUSTOMS DUTIES
 
                      CHAPTER 12--TRADE ACT OF 1974
 
     SUBCHAPTER II--RELIEF FROM INJURY CAUSED BY IMPORT COMPETITION
 
                 Part 3--Adjustment Assistance for Firms
 
Sec. 2345. Conditions for financial assistance


(a) Unavailability of firm's resources; reasonable assurance of 
        repayment

    No financial assistance shall be provided under this part unless the 
Secretary determines--
        (1) that the funds required are not available from the firm's 
    own resources; and
        (2) that there is reasonable assurance of repayment of the loan.

(b) Interest rates

    (1) The rate of interest on direct loans made under this part shall 
be--
        (A) a rate determined by the Secretary of the Treasury taking 
    into consideration the current average market yield on outstanding 
    marketable obligations of the United States with remaining periods 
    of maturity that are comparable to the average maturities of such 
    loans, adjusted to the nearest one-eighth of 1 percent, plus
        (B) an amount adequate in the judgment of the Secretary of 
    Commerce to cover administrative costs and probable losses under the 
    program.

    (2) The Secretary may not guarantee any loan under this part if--
        (A) the rate of interest on either the portion to be guaranteed, 
    or the portion not to be guaranteed, is determined by the Secretary 
    to be excessive when compared with other loans bearing Federal 
    guarantees and subject to similar terms and conditions, and
        (B) the interest on the loan is exempt from Federal income 
    taxation under section 103 of title 26.

(c) Maturity of loans

    The Secretary shall make no loan or guarantee of a loan under 
section 2344(b)(1) of this title having a maturity in excess of 25 years 
or the useful life of the fixed assets (whichever period is shorter), 
including renewals and extensions; and shall make no loan or guarantee 
of a loan under section 2344(b)(2) of this title having a maturity in 
excess of 10 years, including extensions and renewals. Such limitations 
on maturities shall not, however, apply--
        (1) to securities or obligations received by the Secretary as 
    claimant in bankruptcy or equitable reorganization, or as creditor 
    in other proceedings attendant upon insolvency of the obligor, or
        (2) to an extension or renewal for an additional period not 
    exceeding 10 years, if the Secretary determines that such extension 
    or renewal is reasonably necessary for the orderly liquidation or 
    servicing of the loan.

(d) Priority for small firms; servicing of loans

    (1) In making guarantees of loans, and in making direct loans, the 
Secretary shall give priority to firms which are small within the 
meaning of the Small Business Act [15 U.S.C. 631 et seq.] (and 
regulations promulgated thereunder).
    (2) For any direct loan made, or any loan guaranteed, under the 
authority of this part, the Secretary may enter into arrangements for 
the servicing, including foreclosure, of such loans or evidences of 
indebtedness on terms which are reasonable and which protect the 
financial interests of the United States.

(e) Loan guarantee conditions

    The following conditions apply with respect to any loan guaranteed 
under this part:
        (1) No guarantee may be made for an amount which exceeds 90 
    percent of the outstanding balance of the unpaid principal and 
    interest on the loan.
        (2) The loan may be evidenced by multiple obligations for the 
    guaranteed and nonguaranteed portions of the loan.
        (3) The guarantee agreement shall be conclusive evidence of the 
    eligibility of any obligation guaranteed thereunder for such 
    guarantee, and the validity of any guarantee agreement shall be 
    incontestable, except for fraud or misrepresentation by the holder.

(f) Operating reserves

    The Secretary shall maintain operating reserves with respect to 
anticipated claims under guarantees made under this part. Such reserves 
shall be considered to constitute obligations for purposes of sections 
1108(c) and (d), 1501, and 1502(a) of title 31.

(g) Fees to lenders which make loan guarantees

    The Secretary may charge a fee to a lender which makes a loan 
guaranteed under this part in such amount as is necessary to cover the 
cost of administration of such guarantee.

(h) Maximum aggregate amount of outstanding guaranteed or direct loans

    (1) The aggregate amount of loans made to any firm which are 
guaranteed under this part and which are outstanding at any time shall 
not exceed $3,000,000.
    (2) The aggregate amount of direct loans made to any firm under this 
part which are outstanding at any time shall not exceed $1,000,000.

(i) Preference for firms having employee stock ownership plans

    (1) When considering whether to grant a direct loan or to guarantee 
a loan to a corporation which is otherwise certified under section 2341 
of this title, the Secretary shall give preference to a corporation 
which agrees with respect to such loan to fulfill the following 
requirements--
        (A) 25 percent of the principal amount of the loan is paid by 
    the lender to a qualified trust established under an employee stock 
    ownership plan established and maintained by the recipient 
    corporation, by a parent or subsidiary of such corporation, or by 
    several corporations including the recipient corporation,
        (B) the employee stock ownership plan meets the requirements of 
    this subsection, and
        (C) the agreement among the recipient corporation, the lender, 
    and the qualified trust relating to the loan meets the requirements 
    of this section.

    (2) An employee stock ownership plan does not meet the requirements 
of this subsection unless the governing instrument of the plan provides 
that--
        (A) the amount of the loan paid under paragraph (1)(A) to the 
    qualified trust will be used to purchase qualified employer 
    securities,
        (B) the qualified trust will repay to the lender the amount of 
    such loan, together with the interest thereon, out of amounts 
    contributed to the trust by the recipient corporation, and
        (C) from time to time, as the qualified trust repays such 
    amount, the trust will allocate qualified employer securities among 
    the individual accounts of participants and their beneficiaries in 
    accordance with the provisions of paragraph (4).

    (3) The agreement among the recipient corporation, the lender, and 
the qualified trust does not meet the requirements of this subsection 
unless--
        (A) it is unconditionally enforceable by any party against the 
    others, jointly and severally,
        (B) it provides that the liability of the qualified trust to 
    repay loan amounts paid to the qualified trust may not, at any time, 
    exceed an amount equal to the amount of contributions required under 
    paragraph (2)(B) which are actually received by such trust,
        (C) it provides that amounts received by the recipient 
    corporation from the qualified trust for qualified employer 
    securities purchased for the purpose of this subsection will be used 
    exclusively by the recipient corporation for those purposes for 
    which it may use that portion of the loan paid directly to it by the 
    lender,
        (D) it provides that the recipient corporation may not reduce 
    the amount of its equity capital during the one year period 
    beginning on the date on which the qualified trust purchases 
    qualified employer securities for purposes of this subsection, and
        (E) it provides that the recipient corporation will make 
    contributions to the qualified trust of not less than such amounts 
    as are necessary for such trust to meet its obligation to make 
    repayments of principal and interest on the amount of the loan 
    received by the trust without regard to whether such contributions 
    are deductible by the corporation under section 404 of title 26 and 
    without regard to any other amounts the recipient corporation is 
    obligated under law to contribute to or under the employee stock 
    ownership plan.

    (4) At the close of each plan year, an employee stock ownership plan 
shall allocate to the accounts of participating employees that portion 
of the qualified employer securities the cost of which bears 
substantially the same ratio to the cost of all the qualified employer 
securities purchased under paragraph (2)(A) of this subsection as the 
amount of the loan principal and interest repaid by the qualified trust 
during that year bears to the total amount of the loan principal and 
interest payable by such trust during the term of such loan. Qualified 
employer securities allocated to the individual account of a participant 
during one plan year must bear substantially the same proportion to the 
amount of all such securities allocated to all participants in the plan 
as the amount of compensation paid to such participant bears to the 
total amount of compensation paid to all such participants during that 
year.
    (5) For purposes of this subsection, the term--
        (A) ``employee stock ownership plan'' means a plan described in 
    section 4975(e)(7) of title 26,
        (B) ``qualified trust'' means a trust established under an 
    employee stock ownership plan and meeting the requirements of title 
    I of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 
    1001 et seq.] and section 401 of title 26,
        (C) ``qualified employer securities'' means common stock issued 
    by the recipient corporation or by a parent or subsidiary of such 
    corporation with voting power and dividend rights no less favorable 
    than the voting power and dividend rights on other common stock 
    issued by the issuing corporation and with voting power being 
    exercised by the participants in the employee stock ownership plan 
    after it is allocated to their plan accounts, and
        (D) ``equity capital'' means, with respect to the recipient 
    corporation, the sum of its money and other property (in an amount 
    equal to the adjusted basis of such property but disregarding 
    adjustments made on account of depreciation or amortization made 
    during the period described in paragraph (3)(D)), less the amount of 
    its indebtedness.

(Pub. L. 93-618, title II, Sec. 255, Jan. 3, 1975, 88 Stat. 2031; Pub. 
L. 97-35, title XXV, Sec. 2523, Aug. 13, 1981, 95 Stat. 891; Pub. L. 98-
120, Sec. 4(a), Oct. 12, 1983, 97 Stat. 809; Pub. L. 99-514, Sec. 2, 
Oct. 22, 1986, 100 Stat. 2095.)

                       References in Text

    The Small Business Act, referred to in subsec. (d)(1), is Pub. L. 
85-536, July 18, 1958, 72 Stat. 384, as amended, which is classified 
generally to chapter 14A (Sec. 631 et seq.) of Title 15, Commerce and 
Trade. For complete classification of this Act to the Code, see Short 
Title note set out under section 631 of Title 15 and Tables.
    The Employee Retirement Income Security Act of 1974, referred to in 
subsec. (i)(5)(B), is Pub. L. 93-406, Sept. 2, 1974, 88 Stat. 829, as 
amended. Title I of the Employee Retirement Income Security Act of 1974 
is classified generally to subchapter I (Sec. 1001 et seq.) of chapter 
18 of Title 29, Labor. For complete classification of this Act to the 
Code, see Short Title note set out under section 1001 of Title 29 and 
Tables.

                          Codification

    In subsec. (f), ``sections 1108(c) and (d), 1501, and 1502(a) of 
title 31'' substituted for ``section 1311 of the Supplemental 
Appropriation Act, 1955 (31 U.S.C. 200)'' on authority of Pub. L. 97-
258, Sec. 4(b), Sept. 13, 1982, 96 Stat. 1067, the first section of 
which enacted Title 31, Money and Finance.


                               Amendments

    1986--Subsecs. (b)(2)(B), (i)(3)(E), (5)(A), (B). Pub. L. 99-514 
substituted ``Internal Revenue Code of 1986'' for ``Internal Revenue 
Code of 1954'', which for purposes of codification was translated as 
``title 26'' thus requiring no change in text.
    1983--Subsec. (i). Pub. L. 98-120 added subsec. (i).
    1981--Subsec. (b). Pub. L. 97-35, Sec. 2523(1), amended subsec. (b) 
generally, substituting provisions limiting the maximum rate of interest 
on loans guaranteed under this part on the basis of comparison with 
other Federally guarantee loans for provisions limiting the maximum 
interest rate on the basis of 15 U.S.C. 636(a) and inserting provisions 
prohibiting the guarantee of loans if the interest is tax exempt.
    Subsec. (c). Pub. L. 97-35, Sec. 2523(2), inserted references to 
section 2344 of this title, alternative limitation of useful life of 
asset, and prohibition of guarantees in excess of 10 years in provisions 
preceding par. (1) and inserted ``or servicing'' in par. (2).
    Subsec. (d). Pub. L. 97-35, Sec. 2523(3), designated existing 
provisions as par. (1) and added par. (2).
    Subsec. (e). Pub. L. 97-35, Sec. 2523(4), substituted provisions 
respecting conditions applicable to loan guarantees for provisions 
relating to percentage maximum on loan guarantees which are covered in 
par. (1).


                    Effective Date of 1983 Amendment

    Section 4(b) of Pub. L. 98-120 provided that: ``The amendment made 
by subsection (a) [amending this section] shall become effective on the 
date of the enactment of this Act [Oct. 12, 1983].''


                    Effective Date of 1981 Amendment

    Amendment by Pub. L. 97-35 effective Aug. 13, 1981, except as 
otherwise provided with respect to applications for adjustment 
assistance, see section 2529 of Pub. L. 97-35, set out as a note under 
section 2343 of this title.


                            Termination Date

    No technical assistance to be provided under this part after Sept. 
30, 2001, see section 285 of Pub. L. 93-618, as amended, set out as a 
note preceding section 2271 of this title.
