INDEMNIFICATION.

SEC 203. INDEMNIFICATION. (a) In General.— Section 411(b) of the Small Business Investment Act of 1958 (15 U.S.C. 694b(b)) is amended— (1) by striking paragraph (3), (2) by striking “; and” and inserting a period at the end of paragraph (2), (3) by redesignating paragraph (2) as paragraph (3), (4) by inserting after paragraph (1) the following new paragraph: “(2) a surety must obtain approval from the Administration prior to making any payments pursuant to this subsection unless the surety is participating under the authority of subsection (a)(3); and”, and (5) by inserting at the end the following new sentence: 5“In no event shall the Administration pay a surety pursuant to this subsection an amount exceeding the guaranteed share of the bond available to such surety pursuant to subsection (a).”. (b) Amount of Indemnification.— Section 411(c) of the Small Business Investment Act of 1958 (15 U.S.C. 694b(c)) is amended to read as follows: “(c) Any guarantee or agreement to indemnify under this section shall obligate the Administration to pay to the surety a sum— “(1) not to exceed 70 per centum of the loss incurred and paid by a surety authorized to issue bonds subject to the Administration’s guarantee under subsection (a)(3) “(2) not to exceed 90 per centum of the loss incurred and paid in the case of a surety requiring the Administration’s specific approval for the issuance of such bond, but in no event may the Administration make any duplicate payment pursuant to subsection (b) or any other subsection; “(3) equal to 90 per centum of the loss incurred and paid in the case of a surety requiring the administration’s specific approval for the issuance of a bond, if— “(A) the total amount of the contract at the time of execution of the bond or bonds is $100,000 or less, or “(B) the bond was issued to a small business concern owned and controlled by socially and economically dis-advantaged individuals as defined by section 8(d) of the Small Business Act; or “(4) determined pursuant to subsection (b), if applicable.”, (c) Limitation of Administration’s Liability.— Section 411(e) of the Small Business Investment Act of 1958 (15 U.S.C. 694b(e)) is amended— 102 STAT. 3009 (1) by striking “or” at the end of paragraph (1), (2) by striking the period at the end of paragraph (2) and inserting a comma, and (3) by adding at the end thereof the following new paragraphs: “(3) the surety has breached a material term or condition of such guarantee agreement, or “(4) the surety has substantially violated the regulations promulgated by the Administration pursuant to subsection (d).”.