15 U.S.C. § 695 — State development companies

Page 1134 TITLE 15—COMMERCE AND TRADE § 694c REGULATIONS Pub. L. 100–590, title II, § 205, Nov. 3, 1988, 102 Stat. 3009, provided that: ‘‘The Administration shall promul- gate final regulations to implement the amendments made by this title [amending this section and section 694c of this title] not later than one hundred and eighty days after the date of the enactment of this Act [Nov. 3, 1988].’’ SMALL BUSINESS ACCESS TO SURETY BONDING SURVEY Pub. L. 102–366, title III, subtitle A, Sept. 4, 1992, 106 Stat. 1002–1005, known as the Small Business Access to Surety Bonding Survey Act of 1992, directed Comp- troller General to conduct a comprehensive survey of business firms, from a statistically valid sample of business firms developed from the most recent list of construction firms maintained by Dun and Bradstreet Company and using a questionnaire with specifically designated questions, to obtain data on the experiences of such firms, and especially the experiences of small business concerns, in obtaining surety bonds from cor- porate surety firms and to submit a report to Congress, not later than 18 months after Sept. 4, 1992, which re- port was to contain a summary of responses of business firms to the survey and a description of any trends found by Comptroller General in such responses, which specific information on responses and trends of small business concerns, small business concerns owned and controlled by women, and small business concerns owned and controlled by socially and economically dis- advantaged individuals. EVALUATION OF PREFERRED SURETY BOND GUARANTEE PROGRAM; REPORT Pub. L. 100–590, title II, § 206, Nov. 3, 1988, 102 Stat. 3009, as amended by Pub. L. 101–574, title II, § 216(b), Nov. 15, 1990, 104 Stat. 2823, directed Comptroller Gen- eral, not later than 3 years after Nov. 3, 1988, to trans- mit a report to Congress evaluating the preferred sur- ety bond guarantee program, with such report to be transmitted not later than Mar. 1, 1994, and cover the period Oct. 1, 1990, through Sept. 30, 1993. § 694c. Revolving fund for surety bond guaran- tees (a) There is created within the Treasury a sep- arate fund for guarantees which shall be avail- able to the Administrator without fiscal year limitation as a revolving fund for the purposes of this part. All amounts received by the Admin- istrator, including any moneys, property, or as- sets derived by him from his operations in con- nection with this part, shall be deposited in the fund. All expenses and payments, excluding ad- ministrative expenses, pursuant to operations of the Administrator under this part shall be paid from the fund. (b) Such sums as may be appropriated to the Fund to carry out the programs authorized by this part shall be without fiscal year limitation. (Pub. L. 85–699, title IV, § 412, as added Pub. L. 93–386, § 6(a)(4), Aug. 23, 1974, 88 Stat. 747; amend- ed Pub. L. 94–305, title I, § 113, June 4, 1976, 90 Stat. 667; Pub. L. 95–14, § 4, Mar. 24, 1977, 91 Stat. 25; Pub. L. 95–89, title I, § 105, Aug. 4, 1977, 91 Stat. 556; Pub. L. 96–302, title I, § 111, July 2, 1980, 94 Stat. 837; Pub. L. 100–590, title II, § 208, Nov. 3, 1988, 102 Stat. 3009.) Editorial Notes AMENDMENTS 1988—Pub. L. 100–590 designated existing provisions as subsec. (a) and added subsec. (b). 1980—Pub. L. 96–302 repealed investment of idle funds provision, which is covered in section 694–2 of this title. 1977—Pub. L. 95–89 prohibited payment of administra- tive expenses from the fund and deleted provisions which authorized: a $110,000,000 appropriation of capital for the fund; and payment during the fiscal year into the Treasury as miscellaneous receipts, from the fund, of interest on the cumulative amount of appropriations available as capital to the fund less the average undisbursed cash balance in the fund during the year. Pub. L. 95–14 substituted ‘‘$110,000,000’’ for ‘‘$56,500,000’’. 1976—Pub. L. 94–305 substituted ‘‘$56,500,000’’ for ‘‘$35,000,000’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–590 effective on expiration of 180 days after Nov. 3, 1988, see section 209 of Pub. L. 100–590, set out as an Effective and Termination Dates of 1988 Amendment note under section 694b of this title. EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–302 effective Oct. 1, 1980, see section 507 of Pub. L. 96–302, set out as a note under section 631 of this title. EFFECTIVE DATE OF 1977 AMENDMENT Amendment by Pub. L. 95–89 effective Oct. 1, 1977, see section 106 of Pub. L. 95–89, set out as a note under sec- tion 633 of this title. SUBCHAPTER V—LOANS TO STATE AND LOCAL DEVELOPMENT COMPANIES § 695. State development companies (a) Congressional finding and declaration of pur- pose The Congress hereby finds and declares that the purpose of this subchapter is to foster eco- nomic 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 pro- gram 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 develop- ment company which bear interest at such rate, and contain such other terms, as the Adminis- tration 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 Administra- tion under this section from any one State de- velopment company shall not exceed the total amount borrowed by it from all other sources. Funds advanced to a State development com- pany 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 Admin- istrator. (d) Eligibility for assistance In order to qualify for assistance under this subchapter, the development company must Page 1135 TITLE 15—COMMERCE AND TRADE § 695 demonstrate that the project to be funded is di- rected toward at least one of the following eco- nomic development objectives— (1) the creation of job opportunities within two years of the completion of the project or the preservation or retention of jobs attrib- utable to the project; (2) improving the economy of the locality, such as stimulating other business develop- ment 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 devel- opment or women-owned business develop- ment, (D) rural development, (E) expansion of small business concerns owned and controlled by veterans, as defined in section 632(q) of this title, especially serv- ice-disabled veterans, as defined in such sec- tion 632(q) of this title, (F) enhanced economic competition, in- cluding the advancement of technology, plan retooling, conversion to robotics, or com- petition with imports, (G) changes necessitated by Federal budg- et cutbacks, including defense related indus- tries, (H) business restructuring arising from Federally mandated standards or policies af- fecting the environment or the safety and health of employees, (I) reduction of energy consumption by at least 10 percent, (J) increased use of sustainable design, in- cluding designs that reduce the use of green- house gas emitting fossil fuels, or low-im- pact design to produce buildings that reduce the use of non-renewable resources and mini- mize environmental impact, (K) plant, equipment and process upgrades of renewable energy sources such as the small-scale production of energy for indi- vidual buildings or communities consump- tion, commonly known as micropower, or re- newable fuels producers including biodiesel and ethanol producers, or (L) reduction of rates of unemployment in labor surplus areas, as such areas are deter- mined by the Secretary of Labor. In subparagraphs (J) and (K), terms have the meanings given those terms under the Leader- ship in Energy and Environmental Design (LEED) standard for green building certifi- cation, as determined by the Administrator. 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 de- veloped by the Administration if the overall portfolio of the development company meets or exceeds such job creation or retention criteria. (e) Creation or retention of jobs (1) A project meets the objective set forth in subsection (d)(1) if the project creates or retains one job for every $65,000 guaranteed by the Ad- ministration, except that the amount is $100,000 in the case of a project of a small manufacturer. (2) Paragraph (1) does not apply to a project for which eligibility is based on the objectives set forth in paragraph (2) or (3) of subsection (d), if the development company’s portfolio of out- standing debentures creates or retains one job for every $65,000 guaranteed by the Administra- tion. (3) For projects in Alaska, Hawaii, State-des- ignated enterprise zones, empowerment zones and enterprise communities, labor surplus areas, as determined by the Secretary of Labor, and for other areas designated by the Administrator, the development company’s portfolio may aver- age not more than $75,000 per job created or re- tained. (4) Loans for projects of small manufacturers shall be excluded from calculations under para- graph (2) or (3). (5) Under regulations prescribed by the Admin- istrator, the Administrator may waive, on a case-by-case basis or by regulation, any require- ment of this subsection (other than paragraph (4)). With respect to any waiver the Adminis- trator is prohibited from adopting a dollar amount that is lower than the amounts set forth in paragraphs (1), (2), and (3). (6) As used in this subsection, the term ‘‘small manufacturer’’ means a small business con- cern— (A) the primary business of which is classi- fied in sector 31, 32, or 33 of the North Amer- ican Industrial Classification System; and (B) all of the production facilities of which are located in the United States. (Pub. L. 85–699, title V, § 501, Aug. 21, 1958, 72 Stat. 696; Pub. L. 100–590, title I, § 115(a), (b)(1), Nov. 3, 1988, 102 Stat. 2997; Pub. L. 101–574, title II, § 214(a), (b), Nov. 15, 1990, 104 Stat. 2821; Pub. L. 106–50, title IV, § 405, Aug. 17, 1999, 113 Stat. 246; Pub. L. 106–554, § 1(a)(9) [title III, § 302], Dec. 21, 2000, 114 Stat. 2763, 2763A–684; Pub. L. 108–447, div. K, title I, § 105, Dec. 8, 2004, 118 Stat. 3444; Pub. L. 110–140, title XII, § 1204(a), Dec. 19, 2007, 121 Stat. 1772; Pub. L. 111–5, div. A, title V, § 504(b), Feb. 17, 2009, 123 Stat. 156; Pub. L. 111–240, title I, § 1132, Sept. 27, 2010, 124 Stat. 2514.) Editorial Notes REFERENCES IN TEXT For definition of ‘‘this chapter’’, referred to in sub- sec. (b), see References in Text note set out under sec- tion 661 of this title. AMENDMENTS 2010—Subsec. (d)(3)(L). Pub. L. 111–240 added subpar. (L). 2009—Subsec. (e)(1), (2). Pub. L. 111–5, which directed amendment of section 501(e)(1), (2) of the Small Busi- ness Investment Act by substituting ‘‘$65,000’’ for ‘‘$50,000’’, was executed by making the substitution in subsec. (e)(1), (2) of this section, which is section 501 of the Small Business Investment Act of 1958, to reflect the probable intent of Congress. 2007—Subsec. (d)(3). Pub. L. 110–140, § 1204(a)(4), in- serted the following concluding provisions: ‘‘In sub- paragraphs (J) and (K), terms have the meanings given those terms under the Leadership in Energy and Envi- ronmental Design (LEED) standard for green building certification, as determined by the Administrator.’’ Page 1136 TITLE 15—COMMERCE AND TRADE § 696 Subsec. (d)(3)(I) to (K). Pub. L. 110–140, § 1204(a)(1)–(3), added subpars. (I) to (K). 2004—Subsec. (e). Pub. L. 108–447 added subsec. (e). 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 sub- par. (E) and redesignated former subpars. (E) to (G) as (F) to (H), respectively. 1990—Subsec. (a). Pub. L. 101–574, § 214(a), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: ‘‘The Congress hereby finds and de- clares 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 con- cerns through the development company program au- thorized 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 semi- nars 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, § 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. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2007 AMENDMENT Amendment by Pub. L. 110–140 effective on the date that is 1 day after Dec. 19, 2007, see section 1601 of Pub. L. 110–140, set out as an Effective Date note under sec- tion 1824 of Title 2, The Congress. BUDGETARY TREATMENT OF LOANS AND FINANCINGS Assistance made available under any financings made under this subchapter during 2-year period beginning Oct. 1, 2002, to be treated as a separate program of the Small Business Administration for purposes of the Fed- eral Credit Reform Act of 1990 (2 U.S.C. 661 et seq.) only, see section 6(c) of Pub. L. 107–100, set out as a note under section 636 of this title. LOAN LIQUIDATION PILOT PROGRAM Pub. L. 104–208, div. D, title II, § 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 re- ferred 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 accord- ance with this subsection to carry out loan liquida- tions. ‘‘(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 com- pany, the third party lender, or an associate of the third party lender. ‘‘(3) QUALIFICATIONS.—In order to qualify to partici- pate in the pilot program under this section, each de- velopment 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 Admin- istration 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 Busi- ness 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 func- tions, including the acceleration or purchase of com- munity injection funds, subject to such company ob- taining prior written approval from the Adminis- trator before committing the agency to purchase any other indebtedness secured by the property: Provided, That the Administrator shall approve or deny a re- quest 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 re- quest 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 ac- tivity 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 Com- mittees on Small Business of the House of Represent- atives and the Senate [Committee on Small Business of Senate now Committee on Small Business and En- trepreneurship of 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 informa- tion with the same information for liquidation con- ducted 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 imple- mentation.’’ [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 sec- tion 697g of this title, see section 1(a)(9) [title III, § 307(b)] of Pub. L. 106–554, set out as a Regulations note under section 697g of this title.] § 696. Loans for plant acquisition, construction, conversion and expansion The Administration may, in addition to its au- thority under section 695 of this title, make loans for plant acquisition, construction, con-