Small Business Budget Reconciliation and Loan Consolidation/Improvement Act of 1981

(Reported to House from the Committee on Small Business with amendment, H. Rept. 97-150)

Small Business Budget Reconciliation and Loan Consolidation/Improvement Act of 1981 - Amends the Small Business Act to make Small Business Administration (SBA) loans available for plant acquisition, construction, conversion, expansion (including land acquisition), working capital, and to qualified small businesses for purposes of such Act. Removes limitations on the primary use of such loans. Requires the SBA loan guarantee to be: (1) at least 90 percent if bank financing does not exceed $100,000; (2) from 70 to 90 percent if bank financing is between $100,000 and $714,825; and (3) less than 70 percent if bank financing exceeds $714,825.

Authorizes the SBA to add up to one-quarter of one percent to the interest rate on loans (currently one-quarter of one percent is added). Sets the interest rate on loans to handicapped individuals at three percent. Increases the maximum term for loans from ten to 25 years, except for portions used to acquire real property or to construct, convert, or expand facilities. Sets forth factors to be considered in determining if loans are of sound value and secured so as to assure repayment.

Provides that the SBA cannot refuse to make a guaranteed loan to refinance the existing indebtedness of a small business unless: (1) the lender is likely to sustain a loss if such refinancing is not provided; (2) the SBA is likely to sustain the loss which would otherwise be sustained by the lender; and (3) such a refinancing loan would not benefit the small business. Limits the SBA's guarantee on the part of the loan used for refinancing the indebtedness to 80 percent.

Provides that the guarantee fee shall not be paid by a small business receiving such a loan.

Permits the borrower, the lender, and the SBA to elect to have such guaranteed loan provide for an initial period of interest only payments and amortization of the loan principal in equal payments of principal and interest for the remainder of the loan term. Allows the lender to charge a one-time fee of one percent of the total loan amount if such an election is made.

Permits an extension of a loan if: (1) all parties to the loan concur; (2) the aggregate term of the loan does not exceed the maximum term allowed for SBA guaranteed loans; and (3) such an extended loan will be repaid in equal installments of principal and interest (unless the parties elect the special amortization schedule described above). Allows the lender to charge an additional fee of up to one percent of the outstanding amount of the principal if the loan extension exceeds ten years.

Consolidates into a single loan program the SBA's authority to provide: (1) loans for residential or commercial construction or rehabilitation for sale; (2) handicapped assistance loans; (3) economic opportunity loans; (4) loans for energy conservation measures; (5) State and local development company loans; (6) trade adjustment loans; and (7) loans for stock purchases under approved SBA plans by qualified employee trusts.

Requires the SBA to provide detailed information to the President, the President of the Senate, the Speaker, and monthly to the House and Senate Small Business Committees on each type of loan made under the Act.

Authorizes program levels for fiscal years 1982, 1983, and 1984 for: (1) business loans, including handicapped assistance loans, economic opportunity loans, energy conservation loans, and State and local development company loans; (2) small business investment company assistance; (3) the surety bond guarantee program; (4) non-physical disaster loans; and (5) the pollution control guarantees program. Authorizes specified amounts for SBA salaries and expenses with respect to: (1) procurement and technical assistance; (2) management and technical assistance; (3) economic research and analysis and advocacy; (4) the Office of Minority Small Business and Capital Ownership Development; and (5) program evaluation and data management. Authorizes the Administrator to reallocate no more than ten percent of the levels for salaries and expenses. Prohibits the increase of any program level by more than 20 percent through such reallocation.

Requires the SBA to submit to the House and Senate Small Business Committees a report on the aggregate number, dollar value, and default rate for loans made under this Act.

Repeals the separate trade adjustment, handicapped assistance, economic opportunity, solar energy and energy conservation, and water pollution control loan programs. Sets forth sunset provisions and effective dates for this Act.

Specifies the interest rate formula to be used for SBA loans under the consolidate program under this Act beginning in fiscal year 1982.

Authorizes the SBA to make loans to small businesses suffering economic injury because of Federal action. Limits such loans to a maximum of $500,000.

Increases the interest rates on disaster loans, and limits such loans to $100,000 to each borrower for each disaster. Provides that loan amounts shall equal 85 percent of the total damages not covered by insurance. Makes such terms effective as to disasters occurring on or after October 1, 1981.

Directs the SBA to sell notes or certificates for loans to provide funds to carry out the disaster loan programs and other programs at the program levels specified for fiscal years 1982 through 1984 in this Act.

Amends Federal law to restrict awards of costs and fees to the prevailing party in an adversary adjudication conducted by an agency to business owners and individuals who prevail in regulatory or judicial disputes involving over $500 or who are involved in disputes under the Regulatory Flexibility Act with the Federal Government.