Sec. 112. Changes to the 7(a) loan guaranty program for recovery sector business concerns
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Section 7(a) of the Small Business Act ( 15 U.S.C. 636(a) ), as amended by section 106 of this Act, is amended by adding at the end the following: In this paragraph— the term covered loan means a loan made under this paragraph; the term covered population census tract means a population census tract for which— in the case of a tract that is not located within a metropolitan area, the median income does not exceed 80 percent of the statewide (or, with respect to a possession or territory of the United States, the possession- or territory-wide) median family income; or in the case of a tract that is located within a metropolitan area, the median family income does not exceed 80 percent of the greater of the statewide (or, with respect to a possession or territory of the United States, the possession- or territory-wide) median family income and the metropolitan area median family income; the term covered seasonal employer means a small business concern that— is a seasonal employer, as defined in paragraph (36); and during the preceding calendar year— had gross receipts as described in paragraph (36)(A)(xiii)(II); and employed not more than 250 employees during not fewer than 5 months out of that year; the term eligible entity — means any small business concern that— except with respect to a covered seasonal employer, employs not more than 500 employees; except as provided in subitems (BB), (CC), and (DD), had gross receipts during the first or second quarter in 2020 that are less than 50 percent of the gross receipts of the business concern during the same quarter in 2019; if the small business concern was not in business during the first or second quarter of 2019, but was in business during the third and fourth quarter of 2019, had gross receipts during the first or second quarter of 2020 that are less than 50 percent of the amount of the gross receipts of the small business concern during the third or fourth quarter of 2019; if the small business concern was not in business during the first, second, or third quarter of 2019, but was in business during the fourth quarter of 2019, had gross receipts during the first or second quarter of 2020 that are less than 50 percent of the amount of the gross receipts of the small business concern during the fourth quarter of 2019; or if the small business concern was not in business during the first or second quarter of 2020, had gross receipts during any 2-month period during 2020 that are less than 50 percent of the amount of the gross receipts of the small business concern during any other 2-month period during 2020; and is a covered seasonal employer seeking a covered loan of not more than $1,000,000; or is a small business concern the principal place of business of which is in, and not less than 50 percent of the total gross income of which is derived from the active conduct of the business concern within, a small business low-income census tract; and does not include— an entity described in paragraph (37)(A)(vi)(II); any entity that received a loan under paragraph (37); or any entity that received a loan under paragraph
(36)after the date of enactment of this paragraph; and the term small business low-income census tract — means— a covered population census tract for which the poverty rate is not less than 20 percent; or an area— that is not tracted as a population census tract; for which the poverty rate in the equivalent county division (as defined by the Bureau of the Census) is not less than 20 percent; and for which the median income in the equivalent county division (as defined by the Bureau of the Census) does not exceed 80 percent of the statewide (or, with respect to a possession or territory of the United States, the possession- or territory-wide) median income; and does not include any area or population census tract with a median family income that is not less than 120 percent of the median family income in the United States, according to the most recent American Communities Survey data from the Bureau of the Census. Except as otherwise provided in this paragraph, the Administrator may guarantee covered loans made to eligible entities— under the same terms, conditions, and processes as a loan made under this subsection; and to meet working capital needs, acquire fixed assets, or refinance existing indebtedness while recovering from the COVID–19 pandemic. The maximum amount of a covered loan made to an eligible entity shall be the lesser of— $10,000,000; or the amount equal to 200 percent of the average annual receipts of the eligible entity. An eligible entity may only receive 1 covered loan. The maximum aggregate loan amount of loans guaranteed under this subsection that are approved for an eligible entity (including any affiliates) within 90 days of approval of another loan under this subsection for the eligible entity (including any affiliates) shall not exceed $10,000,000. An eligible entity desiring a covered loan shall submit an application not later than December 31, 2020. With respect to a covered loan— in lieu of the fee otherwise applicable under paragraph (23)(A), the Administrator shall collect no fee; and in lieu of the fee otherwise applicable under paragraph (18)(A), the Administrator shall collect no fee. In order to receive a covered loan, an eligible entity shall not be required to show that the eligible entity is unable to obtain credit elsewhere. A covered loan shall— have a maturity of 20 years; and bear an interest rate of equal to the sum of— the Secured Overnight Financing Rate in effect for each of the days in the relevant quarter that interest is charged, as compiled and released by the Federal Reserve Bank of New York; and 300 basis points. In an agreement to participate in a covered loan on a deferred basis, the participation by the Administration shall be 100 percent of the covered loan. The Administrator shall pay the amount of interest that is owed on a covered loan in regular servicing status for the maturity of the loan such that the interest rate paid by the eligible entity is, at all times, equal to a rate of 1 percent. The Administrator shall— begin making payments under subclause
(I)not later than 30 days after the date on which the first such payment is due; and make payments without regard to the payment deferral described in clause (iv). Any payment made by the Administrator under subclause
(I)shall be applied to the covered loan such that the eligible entity is relieved of the obligation to pay that amount. No payment of principal or interest shall be due on a covered loan for the first 2 years of the covered loan. After the 2-year deferral period under subclause (I), the Administrator may grant not more than an additional 2 years of principal deferral to the eligible entity if the eligible entity is certified by the Administrator and the Secretary as economically distressed based on publicly available criteria established by the Administrator. Notwithstanding any other provision of this subsection, for a covered loan, the Administrator shall not approve any increase in loan amount or change in guaranty percentage, interest rate, interest accrual method, or maturity, except for such changes as may be necessary for prepayment and the deferment of payment under clause (v). An eligible entity shall not use the proceeds of a covered loan to refinance any loan made under subsection (b). In order to increase the liquidity of the secondary market for covered loans, the Administrator shall, not later than 60 days after the date of enactment of this paragraph, substantially reduce barriers to the sale of covered loans on the secondary market. In order to increase access to and the equitable distribution of covered loans, the Administrator shall establish a process by which a lender approved to make loans under paragraph
(36)may make covered loans. The Administrator shall reimburse a lender authorized to make a covered loan in an amount that is— 3 percent of the principal amount of the financing of the covered loan up to $350,000; and 1 percent of the principal amount of the financing of the covered loan above $350,000, if applicable. The Administrator shall, to the maximum extent practicable, allow a lender approved to make covered loans to use existing program guidance and standard operating procedures for loans made under this subsection. .
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Sec. 112
Changes to the 7(a) loan guaranty program for recovery sector business concerns
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