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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7560 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 7560
To amend the Small Business Act to codify the Community Advantage Loan
Program, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 6, 2024
Ms. Chu (for herself and Ms. Velazquez) introduced the following bill;
which was referred to the Committee on Small Business
_______________________________________________________________________
A BILL
To amend the Small Business Act to codify the Community Advantage Loan
Program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Community Advantage Loan Program Act
of 2024''.
SEC. 2. COMMUNITY ADVANTAGE LOAN PROGRAM.
(a) Establishment of Community Advantage Loan Program.--Section
7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended by adding
at the end the following:
``(38) Community advantage loan program.--
``(A) Purposes.--The purposes of the Community
Advantage Loan Program are--
``(i) to create a mission-oriented loan
guarantee program;
``(ii) to increase lending to small
business concerns in underserved and rural
markets, including to new businesses;
``(iii) to ensure that the program under
this subsection expands inclusion and more
broadly meets congressional intent to reach
borrowers who are unable to get credit
elsewhere on reasonable terms and conditions;
``(iv) to help underserved small business
concerns become bankable by utilizing the small
dollar financing and business support
experience of mission-oriented lenders;
``(v) to allow certain mission-oriented
lenders, primarily financial intermediaries
focused on economic development in underserved
markets, access to guarantees for loans under
this subsection and provide management and
technical assistance to small business concerns
as needed; and
``(vi) to assist covered institutions with
providing business support services and
technical assistance to small business
concerns, when needed.
``(B) Definitions.--In this paragraph:
``(i) Community advantage network
partner.--The term `Community Advantage Network
Partner'--
``(I) means a nonprofit, mission-
oriented organization that acts as a
Referral Agent to covered institutions
in order to expand the reach of the
program to small business concerns in
underserved markets; and
``(II) does not include a covered
institution making loans under the
program.
``(ii) Covered institution.--The term
`covered institution' means an entity that--
``(I) is--
``(aa) a development
company, as defined in section
103 of the Small Business
Investment Act of 1958 (15
U.S.C. 662), participating in
the program established under
title V of such Act (15 U.S.C.
695 et seq.);
``(bb) a nonprofit
intermediary, as defined in
subsection (m)(11),
participating in the microloan
program under subsection (m);
``(cc) a non-Federally
regulated entity certified as a
community development financial
institution by the Community
Development Financial
Institutions Fund established
under section 104(a) of the
Community Development Banking
and Financial Institutions Act
of 1994 (12 U.S.C. 4703(a)); or
``(dd) an eligible
intermediary, as defined in
subsection (l)(1),
participating in the small
business intermediary lending
program established under
subsection (l)(2);
``(II) has approved and disbursed
10 similarly sized loans during the 24-
month period preceding the date on
which such entity submits an
application to participate in the
program; and
``(III) is servicing, as of the
date on which such entity begins
participation in the program, not less
than 10 similarly sized loans (other
than a loan described in subclause
(II)) to small business concerns in the
portfolio of the entity.
``(iii) Existing business.--The term
`existing business' means a small business
concern that has been in existence for not less
than 2 years on the date on which a loan is
made to such small business concern under the
program.
``(iv) Low- or moderate-income community.--
The term `low- or moderate-income community'
means a census tract designated as low-income
or moderate-income by the Financial
Institutions Examination Council on a public
website of the Council.
``(v) New business.--The term `new
business' means a small business concern that
has been in existence for not more than 2 years
on the date on which a loan is made to such
small business concern under the program.
``(vi) Program.--The term `program' means
the Community Advantage Loan Program
established under subparagraph (C).
``(vii) Referral agent.--The term `Referral
Agent' has the meaning given the term in
section 103.1(f) of title 13, Code of Federal
Regulations, or any successor regulation.
``(viii) Rural area.--The term `rural area'
means any county that the Bureau of the Census
has defined as mostly rural or completely rural
in the most recent decennial census.
``(ix) State.--The term `State' means each
of the several States, the District of
Columbia, and each territory of the United
States.
``(x) Small business concern in underserved
markets.--The term `small business concern in
underserved markets' means a small business
concern--
``(I) that is located in--
``(aa) a low- or moderate-
income community;
``(bb) a HUBZone, as that
term is defined in section
31(b);
``(cc) a rural area;
``(dd) a community that has
been designated as an
empowerment zone or enterprise
community under section 1391 of
the Internal Revenue Code of
1986;
``(ee) a community that has
been designated as a qualified
opportunity zone under section
1400Z-1 of the Internal Revenue
Code of 1986; or
``(ff) a community that has
been designated as a promise
zone by the Secretary of
Housing and Urban Development;
``(II) for which more than 50
percent of the employees reside in a
low- or moderate-income community;
``(III) that is a new business;
``(IV) that is owned and controlled
by one or more veterans or spouses of
veterans;
``(V) that is located in any area
for which a disaster declaration or
determination described in subparagraph
(A), (B), (C), or (E) of subsection
(b)(2) has been made that has not
terminated more than 2 years before the
date on which a loan is made to the
small business concern under the
program, except--
``(aa) in the case of a
disaster that is not a major
disaster described in
subsection (b)(2)(A), the
Administrator may extend such
period; and
``(bb) in the case of major
disaster described in
subsection (b)(2)(A), that
period shall be 5 years;
``(VI) that is owned and controlled
by a member of an Indian Tribe
individually identified (including
parenthetically) in the most recent
list published pursuant to section 104
of the Federally Recognized Indian
Tribe List Act of 1994 (25 U.S.C.
5131);
``(VII) that is owned and
controlled by an individual who has
completed a term of imprisonment in a
Federal, State, or local jail, or
prison; or
``(VIII) that is owned and
controlled by an individual with a
disability, as that term is defined in
section 3 of the Americans with
Disabilities Act of 1990 (42 U.S.C.
12102).
``(C) Establishment.--There is established a
Community Advantage Loan Program under which the
Administration may guarantee loans made by covered
institutions under this subsection, with an emphasis on
loans made to small business concerns in underserved
markets.
``(D) Program levels.--In fiscal year 2024 and each
fiscal year thereafter, not more than 10 percent of the
number of loans guaranteed under this subsection may be
guaranteed under the program.
``(E) Grandfathering of existing lenders.--Any
covered institution that was licensed by the
Administrator as a Community Advantage small business
lending company during the period beginning on May 1,
2023, and ending on October 31, 2023, or that
participated in the Community Advantage Pilot Program
of the Administration, and was in good standing, as
determined by the Administration--
``(i) shall be designated as participants
in the program;
``(ii) shall not be required to submit an
application to participate in the program; and
``(iii) for the purpose of determining the
loan loss reserve amount of the covered
institution, shall have participation in the
Community Advantage Pilot Program included in
the calculation under subparagraph (J).
``(F) Requirement to make loans to underserved
markets.--Not less than 60 percent of loans made by a
covered institution under the program shall consist of
loans made to small business concerns in underserved
markets.
``(G) Maximum loan amount; collateral.--
``(i) Maximum loan amount.--
``(I) In general.--Except as
provided in subclause (II), the maximum
loan amount for a loan guaranteed under
the program is $350,000.
``(II) Experienced lenders.--
``(aa) In general.--The
Administrator may select not
more than 8 covered
institutions to be designated
as `experienced lenders' to be
eligible to make loans under
this paragraph. An experienced
lender shall have not less than
5 years of experience making
loans under the Community
Advantage Pilot Program of the
Administration or the program
established under this
paragraph.
``(bb) Maximum loan
amount.--An experienced lender
may make a loan guaranteed
under the program in an amount
that is not more than $750,000,
but not less than 60 percent of
the total number of such loans
made by an experienced lender
shall be in an amount that is
less than or equal to $350,000.
``(cc) Participation by the
administration.--With respect
to an agreement to participate
in a loan made under this
subclause on a deferred basis,
the participation by the
Administration shall be--
``(AA) 75 percent
of the balance of the
financing outstanding
at the time of the
disbursement of the
loan, if that balance
is more than $350,000;
``(BB) as described
in clause (i) of
paragraph (2)(G), if
the balance of the
financing outstanding
at the time of the
disbursement of the
loan is as described in
that clause; or
``(CC) as described
in clause (ii) of
paragraph (2)(G), if
the balance of the
financing outstanding
at the time of the
disbursement of the
loan is as described in
that clause.
``(ii) Collateral.--
``(I) In general.--A covered
institution may not require collateral
with respect to a loan guaranteed under
the program if the amount of that loan
is less than or equal to $50,000.
``(II) Policies and procedures of
covered institution.--In determining
the amount of collateral required with
respect to a loan guaranteed under the
program, a covered institution may use
the collateral policies and procedures
of the covered institution with respect
to similarly sized commercial loans
made by the covered institution that
are not guaranteed by the
Administrator.
``(H) Interest rates.--The maximum allowable
interest rate prescribed by the Administration on any
financing made on a deferred basis pursuant to the
program shall not exceed the maximum allowable interest
rate under sections 120.213 and 120.214 of title 13,
Code of Federal Regulations, or any successor
regulations.
``(I) Refinancing of community advantage program
loans.--A loan guaranteed under the program or
guaranteed under the Community Advantage Pilot Program
of the Administration may be refinanced into another
loan under this subsection that is made by a lender
that does not participate in the program.
``(J) Loan loss reserve requirements.--
``(i) Loan loss reserve account for covered
institutions.--A covered institution--
``(I) with not more than 5 years of
participation in the program shall
maintain a loan loss reserve account
with an amount equal to 5 percent of
the outstanding amount of the
unguaranteed portion of the loan
portfolio of the covered institution
under the program; and
``(II) with more than 5 years of
participation in the program shall
maintain a loan loss reserve account
with an amount equal to the average
repurchase rate of the covered
institution over the 36-month period
preceding the most recent recalculation
conducted under clause (iii), except
that such amount shall not be less than
3 percent of the outstanding amount of
the unguaranteed portion of the loan
portfolio of the covered institution
under the program.
``(ii) Additional loan loss reserve amount
for selling loans on the secondary market.--In
addition to the amount required in the loan
loss reserve account under clause (i), a
covered institution that sells a program loan
on the secondary market shall be required to
maintain the following additional amounts in
the loan loss reserve account:
``(I) For a covered institution
with less than 5 years of experience
selling program loans on the secondary
market, an amount equal to 3 percent of
the guaranteed portion of each program
loan sold on the secondary market.
``(II) For a covered institution
with more than 5 years of experience
selling program loans on the secondary
market, an amount equal to the average
repurchase rate for loans sold by the
covered institution on the secondary
market over the 36-month period
preceding the most recent recalculation
conducted under clause (iii), except
that such amount shall be not less than
2 percent of the guaranteed portion of
each program loan sold into the
secondary market.
``(iii) Recalculation.--On October 1 of
each year, the Administrator shall recalculate
the loan loss reserve required under clauses
(i) and (ii).
``(K) Training.--
``(i) In general.--Upon the initial entry
of a covered institution into the program, and
on an ongoing basis, the Administrator shall
provide accessible trainings to support
compliance by the covered institution with
program requirements and to improve
communication between the covered institution
and the Administration. Such trainings shall
include--
``(I) guidance with respect to the
program for following the regulations
of the Administration; and
``(II) guidance for covered
institutions participating in the
program that is intended to help
lenders effectively reach and support
small business concerns in underserved
markets, including management and
technical assistance delivery.
``(ii) Contract.--The Administrator may
enter into a contract to provide any training
described in clause (i) with an organization--
``(I) with expertise in lending
under this subsection; and primarily
specializing in--
``(aa) mission-oriented
lending; and
``(bb) lending to small
business concerns in
underserved markets.
``(iii) Other requirements.--The
Administrator shall provide any training
described in clause (i) for the employees and
contractors of the Administration that
regularly engage with covered institutions or
borrowers under the program.
``(L) Community advantage outreach and education.--
The Administrator--
``(i) shall develop and implement a plan--
``(I) to promote the program to
prospective covered institutions; and
``(II) to conduct outreach and
educate prospective covered
institutions about the program; and
``(ii) may enter into contracts with 1 or
more nonprofit organizations experienced in
working with and training mission-driven
lenders (that are not Community Advantage
Network Partners) to provide the promotion,
outreach, and education described in clause
(i).
``(M) Community advantage network partner
participation.--
``(i) In general.--A covered institution
that uses a Community Advantage Network Partner
shall abide by policies and procedures of the
Administration concerning the use of Referral
Agent fees permitted by the Administration and
disclosure of those fees.
``(ii) Payment of fees.--Notwithstanding
any other provision of law, all fees described
in clause (i) shall be paid by the covered
institution to the Community Advantage Network
Partner upon disbursement of the applicable
program loan.
``(N) Delegated authority.--A covered institution
is not eligible to receive delegated authority from the
Administration under the program until the covered
institution has satisfied the following applicable
requirements:
``(i) For a covered institution actively
participating in the Community Advantage Pilot
Program of the Administration, as of the day
before the date of enactment of this
paragraph--
``(I) the covered institution has
approved and fully disbursed not fewer
than 10 loans under that Pilot Program;
and
``(II) the Administrator has
evaluated the ability of the covered
institution to fulfill program
requirements.
``(ii) For any covered institution not
described in clause (i)--
``(I) the covered institution has
approved and fully disbursed not fewer
than 20 loans under the program; and
``(II) the Administrator has
evaluated the ability of the covered
institution to fulfill program
requirements.
``(O) Reporting.--
``(i) Weekly reports.--
``(I) In general.--The
Administrator shall report on the
website of the Administration, as part
of the weekly reports on lending
approvals under this subsection--
``(aa) on and after the
date of enactment of this
paragraph, the number and
dollar amount of loans
guaranteed under the Community
Advantage Pilot Program of the
Administration; and
``(bb) on and after the
date on which the Administrator
begins to approve loans under
the program, the number and
dollar amount of loans
guaranteed under the program.
``(II) Separate accounting.--The
number and dollar amount of loans
reported in a weekly report under
subclause (I) for loans guaranteed
under the Community Advantage Pilot
Program of the Administration and under
the program shall include a breakdown
by the demographic information of the
owners of the small business concerns,
by whether the small business concern
is a new business or an existing
business, and by whether the small
business concern is located in an urban
area or rural area, further
disaggregated by--
``(aa) loans less than or
equal to $50,000;
``(bb) loans greater than
$50,000 and less than or equal
to $150,000;
``(cc) loans greater than
$150,000 and less than or equal
to $250,000;
``(dd) loans greater than
$250,000 and less than or equal
to $350,000; and
``(ee) loans greater than
$350,000 and less than or equal
to $750,000.
``(ii) Annual reports.--
``(I) In general.--For each fiscal
year in which the program is in effect,
the Administration shall submit to the
Committee on Small Business and
Entrepreneurship of the Senate and the
Committee on Small Business of the
House of Representatives, and make
publicly available on the internet,
information about loans provided under
the program and under the Community
Advantage Pilot Program of the
Administration.
``(II) Contents.--Each report
submitted and made publicly available
under subclause (I) shall include--
``(aa) the number and
dollar amounts of loans
provided to small business
concerns under the program,
including a breakdown by--
``(AA) the
demographic information
of the owners of the
small business concern;
``(BB) whether the
small business concern
is located in an urban
area or rural area; and
``(CC) whether the
small business concern
is an existing business
or a new business, as
provided in the weekly
reports on lending
approvals under this
subsection;
``(bb) the proportion of
loans described in item (aa)
compared to--
``(AA) other loans
made under this
subsection of any
amount;
``(BB) other loans
made under this
subsection of similar
amounts;
``(CC) express
loans provided under
paragraph (31) of
similar amounts; and
``(DD) other loans
made under this
subsection of similar
amounts provided to
small business concerns
in underserved markets;
``(cc) a comparison of the
number and dollar amounts of
loans provided to small
business concerns under the
program and under each category
of loans described in item
(aa), broken down by--
``(AA) loans less
than or equal to
$50,000;
``(BB) loans
greater than $50,000
and less than or equal
to $150,000;
``(CC) loans
greater than $150,000
and less than or equal
to $250,000;
``(DD) loans
greater than $250,000
and less than or equal
to $350,000; and
``(EE) loans
greater than $350,000
and less than or equal
to $750,000;
``(dd) the number and
dollar amounts of loans
provided to small business
concerns under the program by
State, and the jobs created or
retained within each State; and
``(ee) a list of covered
institutions participating in
the program and the Community
Advantage Pilot Program of the
Administration, including--
``(AA) the name,
location, and contact
information, such as
the website and
telephone number, of
each covered
institution; and
``(BB) a breakdown
by the number and
dollar amount of the
loans approved for
small business
concerns.
``(III) Timing.--An annual report
required under this clause shall--
``(aa) be submitted and
made publicly available not
later than December 1 of each
year; and
``(bb) cover the lending
activity for the fiscal year
that ended on September 30 of
that same year.
``(P) GAO report.--Not later than 5 years after the
date of the enactment of this paragraph, the
Comptroller General of the United States shall submit
to the Administrator, the Committee on Small Business
and Entrepreneurship of the Senate, and the Committee
on Small Business of the House of Representatives a
report--
``(i) assessing--
``(I) the extent to which the
program fulfills the requirements of
this paragraph; and
``(II) the performance of covered
institutions participating in the
program; and
``(ii) providing recommendations on the
administration of the program and the findings
under subclauses (I) and (II) of clause (i).
``(Q) Regulations.--
``(i) In general.--Not later than 180 days
after the date of enactment of this paragraph,
the Administrator shall issue rules governing
the program, including metrics for lender
performance, metrics of success and benchmarks
of the program, and criteria for appropriate
management and technical assistance.
``(ii) Updates.--The Administrator shall
consult the report submitted under subparagraph
(P) and, not later than 180 days after the date
on which the Comptroller General of the United
States submits such report, amend any existing
rules of the Administration based on the
recommendations contained in such report.''.
(b) Participation.--Section 7(a)(2) of the Small Business Act (15
U.S.C. 636(a)(2)) is amended--
(1) in subparagraph (A), in the matter preceding clause
(i), by striking ``and (F)'' and inserting ``(F), and (G)'';
and
(2) by adding at the end the following:
``(G) Participation in the community advantage loan
program.--Subject to subparagraph (G)(i)(II)(cc) of
paragraph (38), in an agreement to participate in a
loan on a deferred basis under that paragraph, the
participation by the Administration shall be--
``(i) 80 percent of the balance of the
financing outstanding at the time of the
disbursement of the loan, if that balance is
greater than $150,000 and less than or equal to
$350,000; or
``(ii) 90 percent of the balance of the
financing outstanding at the time of the
disbursement of the loan, if that balance is
less than or equal to $150,000.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Small Business.
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