MICROLOAN DEMONSTRATION PROGRAM AMENDMENTS.

SEC. 113. MICROLOAN DEMONSTRATION PROGRAM AMENDMENTS. (a) In General.—Section 7(m) of the Small Business Act (15 U.S.C. 636(m)) is amended— (1) in paragraph (1)(A)— (A) by amending clause (i) to read as follows: “(i) to assist women, low-income, and minority entrepreneurs and business owners and other such individuals possessing the capability to operate successful business concerns; and (B) in clause (iii)(I), by inserting “, particularly loans in amounts averaging not more than $7,500,” after “small-scale loans”; (2) in paragraph (3)(A)— (A) by striking “As part of” and inserting the following: “(i) In general.—As part of”; 106 STAT. 990 (B) by redesignating clauses (i) through (viii) as subclauses (I) through (VIII), respectively; (C) in subclause (III), as redesignated, by striking “economic and unemployment” and inserting “economic, poverty, and unemployment”; (D) by amending subclause (VIII), as redesignated, to read as follows: “(VIII) any plan to involve other technical assistance providers (such as counselors from the Service Corps of Retired Executives or small business development centers) or private sector lenders in assisting selected business concerns.”; and (E) by adding at the end the following: “(ii) Selection of intermediaries.—In selecting intermediaries to participate in the program established under this subsection, the Administration shall give priority to those applicants that provide loans in amounts averaging not more than $7,500.”; (3) by amending paragraph (3)(F) to read as follows: “(F) Loan duration; interest rates.— “(i) Loan duration.—Loans made by the Administration under this subsection shall be for a term of 10 years. “(ii) Applicable interest rates.—Except as provided in clause (iii), loans made by the Administration under this subsection to an intermediary shall bear an interest rate equal to 1.25 percentage points below the rate determined by the Secretary of the Treasury for obligations of the United States with a period of maturity of 5 years, adjusted to the nearest one-eighth of 1 percent. “(iii) Rates applicable to certain small loans.—Loans made by the Administration to an intermediary that makes loans to small business concerns and entrepreneurs averaging not more than $7,500, shall bear an interest rate that is 2 percentage points below the rate determined by the Secretary of the Treasury for obligations of the United States with a period of maturity of 5 years, adjusted to the nearest one-eighth of 1 percent. “(iv) Rates applicable to multiple sites or offices.—The interest rate prescribed in clause (ii) or (iii) shall apply to each separate loan-making site or office of 1 intermediary only if such site or office meets the requirements of that clause. “(v) Rate basis.—The applicable rate of interest under this paragraph shall— “(I) be applied retroactively for the first year of an intermediary’s participation in the program, based upon the actual lending practices of the intermediary as determined by the Administration prior to the end of such year; and “(II) be based in the second and subsequent years of an intermediary’s participation in the pro-gram, upon the actual lending practices of the intermediary during the term of the intermediary’s participation in the program. 106 STAT. 991 “(vii) Covered intermediaries.—The interest rates prescribed in this subparagraph shall apply to all loans made to intermediaries under this subsection on or after October 28, 1991.”; (4) in paragraph (4)— (A) in subparagraph (A), by striking “Subject to” and inserting “Except as otherwise provided in subparagraph (C) and subject to”; and (B) by striking subparagraph (A) and inserting in lieu thereof: “(A) Grant amounts.—Except as otherwise provided in subparagraph (C) and subject to subparagraph (B), each intermediary that receives a loan under subparagraph (B)(i) of paragraph (1) shall be eligible to receive a grant to provide marketing, management, and technical assistance to small business concerns that are borrowers under this subsection. Except as provided in subparagraph (C), each intermediary meeting the requirements of subparagraph (B) may receive a grant of not more than 25 percent of the total outstanding balance of loans made to it under this subsection.”; (C) in subparagraph (B), by striking “an amount equal to one-half of the amount of the grant” and inserting in lieu thereof “an amount equal to 25 percent of the amount of the grant”; (D) by adding at the end the following: “(C) Additional technical assistance grants for making certain loans.— “(i) In general.—Each intermediary that has a portfolio of loans made under this subsection that averages not more than $7,500 during the period of the intermediary’s participation in the program shall be eligible to receive a grant equal to 5 percent of the total outstanding balance of loans made to the intermediary under this subsection, in addition to grants made under subparagraph (A). “(ii) Purposes.—A grant awarded under clause (i) may be used to provide marketing, management, and technical assistance to small business concerns that are borrowers under this subsection. “(iii) Contribution exception.—The contribution requirements in subparagraph (B) do not apply to grants made under this subparagraph. “(D) Eligibility for multiple sites or offices.—The eligibility for a grant described in subparagraph (A), or (C) shall be determined separately for each loan-making site or office of 1 intermediary.”; (5) in paragraph (5)(A), by striking “2 grants” and inserting “6 grants”; (6) in paragraph (6), by amending subparagraph (C) to read as follows: “(C) Interest limit.—Notwithstanding any provision of the laws of any State or the constitution of any State pertaining to the rate or amount of interest that may be charged, taken, received, or reserved on a loan, the maximum rate of interest to be charged on a microloan funded under this subsection shall not exceed the rate 106 STAT. 992of interest applicable to a loan made to an intermediary by the Administration— “(i) in the case of a loan of more than $7,500 made by the intermediary to a small business concern or entrepreneur by more than 7.75 percentage points; and “(ii) in the case of a loan of not more than $7,500 made by the intermediary to a small business concern or entrepreneur by more than 8.5 percentage points.”; (7) in paragraph (7)— (A) in subparagraph (A), by striking “35 microloan programs” and inserting “60 microloan programs”; (B) in subparagraph (B), by striking “25 additional” and inserting “50 additional”; (C) by amending subparagraph (C)(i) to read as follows: “(i) be awarded more than 4 microloan programs in the first 2 years of the demonstration program nor more than 2 microloan programs in any year there-after;”; (D) in subparagraph (C)(ii), by striking “$1,000,000” and inserting “$1,500,000”; and (E) in subparagraph (C)(iii), by striking “$1,500,000” and inserting “$2,500,000”; (8) by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively; (9) by inserting after paragraph (8) the following: “(9) Technical assistance for intermediaries.— “(A) In general.—The Administration may procure technical assistance for intermediaries participating in the Microloan Demonstration Program to ensure that such intermediaries have the knowledge, skills, and understanding of microlending practices necessary to operate successful microloan programs. “(B) Assistance amount.—The Administration shall transfer 3 percent of its annual appropriation for loans under this subsection to the Administration’s Salaries and Expense Account for the specific purpose of providing 1 or more technical assistance grants to experienced microlending organizations to achieve the purpose set forth in subparagraph (A).”; and (10) in paragraph (11), as redesignated— (A) by amending subparagraph (A) to read as follows: “(A) the term ‘intermediary’ means— “(i) a private, nonprofit entity; “(ii) a nonprofit community development corporation; “(iii) a consortium of private, nonprofit organizations or nonprofit community development corporations; or “(iv) a quasi-governmental economic development entity (such as a planning and development district), other than a State, county, municipal government, or any agency thereof, if— “(I) no application is received from an eligible nonprofit organization; or “(II) the Administration determines that the needs of a region or geographic area are not adequately served by an existing, eligible nonprofit organization that has submitted an application, 106 STAT. 993that seeks to borrow or has borrowed funds from the Administration to make microloans to small business concerns under this subsection;”. (b) Effective Dates.—The amendments made by paragraphs (4) and (5) of subsection (a) shall become effective on October 1, 1992.