Small Business Programs Improvement Act of 1996

TABLE OF CONTENTS:

Title I: Amendments to Small Business Act

Title II: Amendments to Small Business Investment Act

Small Business Programs Improvement Act of 1996 - Title I: Amendments to Small Business Act - Amends the Small Business Act (the Act) to direct the Administrator of the Small Business Administration (SBA) to establish a loan risk management data base capable of providing timely and accurate information for identifying loan underwriting, collections, recovery, and liquidation problems. Outlines information to be maintained in such data base. Provides deadlines for data base operational capability.

(Sec. 103) Provides for suspension and revocation of a designation of a certified lender. Allows such lenders to use uniform and simplified loan forms.

Authorizes the Administrator to carry out the low documentation loan program for loans of $100,000 or less only through preferred or certified lenders, or lenders with significant experience making small business loans. Requires the Administrator to promulgate regulations defining the experience necessary for lenders other than preferred or certified lenders. Authorizes lenders participating in the certified lenders program to liquidate loans guaranteed by the SBA, subject to specified approval from the Administrator. Directs the Administrator to establish and monitor annually the subsidy rate for the low documentation loan program independently of other loans authorized by the SBA.

Prohibits more than ten percent of the total small business loans guaranteed by the SBA in a fiscal year from being awarded as part of an SBA pilot program commenced on or after October 1, 1996.

States that the Administrator may not prohibit a lender from securitizing the non-guaranteed portion of any SBA loan. Directs the SBA to require all lenders securitizing such loans, or requesting SBA approval of such securitization, to retain loss exposure of up to ten percent of the amount of the loan, to be applicable uniformly to both depository institutions and other lenders. Provides a loss exposure exception when the Administrator has determined that the lender has otherwise retained an acceptable level of loss exposure.

Limits the service fees to be paid to the lender in the event of SBA payment of a claim under an SBA-guaranteed loan. Provides for appropriate interest payments for banks or other institutions making a claim for payment on such a loan.

Directs the Administrator to: (1) submit to the Senate and House Small Business Committees (small business committees) a detailed plan for consolidating in one or more centralized centers the performance of the various loan servicing functions with respect to SBA-guaranteed loans; and (2) issue a request for proposals regarding the Preferred Lender standard review program.

Requires the Administrator to conduct, through a private contractor, a comprehensive assessment of the performance of SBA small business loan programs, addressing specified matters, including default rates. Requires a report concerning such assessment: (1) from the contractor to the Administrator; and (2) from the Administrator to the small business committees.

Requires a report from the General Accounting Office to the small business committees concerning loans guaranteed under the Preferred Lenders Program or otherwise by the SBA and liquidated by the preferred lenders or the SBA.

(Sec. 104) Amends the SBA disaster loan program to provide a revised interest rate for disasters commencing after October 1, 1996. Directs the Administrator to conduct a demonstration program under which a sample of SBA private sector loans are evaluated to determine the costs and benefits of having the SBA's portfolio of disaster loans serviced under contract rather than directly by SBA employees. Requires interim and final reports from the Administrator to the small business committees with respect to results of such demonstration program.

(Sec. 105) Revises the technical assistance grant and spending limitation requirements under the Microloan Demonstration Program (a program providing grants to women, low-income, and other underprivileged and minority businesses). Directs the Administrator to implement, or submit a detailed report explaining the impediments to the implementation of, a guaranteed microloan pilot program examining any necessary statutory changes required for such program. Prohibits microloan program funding until such report is submitted.

(Sec. 106) Amends the Small Business Development Center Program to: (1) provide that the Associate Administrator for Small Business Development Centers shall be responsible for the management and administration of such program and shall not be subject to the approval or concurrence of SBA officials; (2) replace references to the Deputy Associate Administrator of the Small Business Development Center program and the Deputy Associate Administrator for Management Assistance with references to the Associate Administrator; and (3) prohibit the SBA, after FY 2000, from renewing or extending any cooperative agreement with a center that has not been approved under a certification program. Provides for a waiver of such prohibition by the Associate Administrator when the center is making a good faith effort to obtain certification.

(Sec. 107) Repeals the authority of the SBA to hold seminars to make small businesses aware of opportunities under the small business development center program.

(Sec. 108) Amends the Small Business Competitiveness Demonstration Program Act of 1988 to: (1) extend such Program through FY 2000; (2) revise the establishment and termination dates of a simplified data collection system under such Program; (3) include landscape architecture within the architectural and engineering services covered under the Program; and (4) extend reporting requirements under the Program to conform with the Program's extension.

(Sec. 109) Repeals on September 29, 1996, a provision of the Small Business Guaranteed Credit Enhancement Act of 1993 which was to repeal, on September 30, 1996, provisions of such Act relating to the authority of the SBA to impose secondary marketing fees and to reduce loan guarantee percentages.

(Sec. 110) Extends through FY 1998 the authorization of appropriations for specified small business loan programs under the Act and the Small Business Investment Act of 1958.

(Sec. 111) Provides the SBA level of participation for loans made on a deferred basis under the Export Working Capital Program.

Title II: Amendments to Small Business Investment Act - Amends provisions of the Small Business Investment Act of 1958 relating to the development company debenture program to require that not less than 50 percent of the total cost of plant acquisition, construction, conversion, or expansion projects under such program be derived from State or local governments, banks or other financial institutions, foundations or other nonprofit institutions, or the small business concern receiving assistance through a body authorized under the program. Provides specified requirements with respect to the funding derived from a participating small business concern. Increases the loan guarantee fee authorized to be collected by the SBA for development company debentures. Authorizes the SBA to: (1) impose a one-time participation fee on all participating institutions named above other than a small business concern; and (2) collect annually from each development company a specified percentage of the outstanding balance of any guaranteed debenture authorized by the SBA after September 30, 1996.

(Sec. 203) Provides required actions upon default of a debenture guaranteed by the SBA, including purchase or acceleration of the debenture and prepayment penalties.

(Sec. 204) Directs the Administrator to carry out a loan liquidation pilot program with respect to no less than 15 development companies authorized to make loans and issue debentures under the Act. Authorizes participating development companies, as part of the pilot program, to perform all liquidation and foreclosure functions with respect to loans guaranteed by the SBA, subject to certain prior notification to and approval by the SBA. Outlines SBA authority under the pilot program. Requires a report from the Administrator to the small business committees on the pilot program.

(Sec. 205) Amends a provision of the Act relating to the registration of certificates representing ownership of a portion of one or more SBA-guaranteed small business loans to state that nothing shall prohibit the utilization of a book entry or other electronic form of registration for such certificates. Authorizes the Administrator to use the book-entry system of the Federal Reserve System. Provides identical book-entry authority (without reference to the use of the Federal Reserve System) for certificates sold under the small business investment company program and the development company program.

(Sec. 206) Directs the SBA to act promptly upon an application from a surety to participate in the Preferred Surety Bond Guarantee Program. Authorizes the SBA to reduce the allotment of bond guarantee authority or terminate the participation of a surety in the Program.

(Sec. 207) Expresses the sense of the Congress that the subsidy models prepared by the Office of Management and Budget relative to SBA loan programs overestimate and overemphasize potential and historical losses under such programs. Mandates an independent study to more accurately reflect the budgetary implications of such programs.