Sec. 202. Improvements to disaster lending
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Section 7(b) of the Small Business Act ( 15 U.S.C. 636(b) ), as amended by this Act, is further amended— by striking paragraphs (6), (7), (10), (11), and (14); by redesignating paragraphs (8), (9), (12), (13), and
(15)as paragraphs (6), (7), (8),
(9)and (10), respectively; by redesignating paragraph (16), as added by section 203(b), as paragraph (11); by redesignating paragraph (17), as added by section 205(b), as paragraph (12); in paragraph (1)— in subparagraph (A)— by striking (either directly or ; by striking an immediate or and inserting a ; by striking basis) as the Administration and inserting basis as the bank or other lending institution ; by striking That the Administration may and inserting That the bank or other lending institution, in consultation with the borrower, may ; by striking if it determines and inserting if the bank or other lending institution determines ; and in clause (iii), by adding and at the end; in subparagraph (B)— by striking unless the Administration and inserting unless the bank or other lending institution ; and by striking and at the end; and by striking subparagraph (C); in paragraph (2)— by striking (either directly or ; by striking an immediate or and inserting a ; by striking basis) as the Administration and inserting basis as the bank or other lending institution ; by striking if the Administration determines and inserting if the bank or other lending institution determines ; by inserting the Administration determines after disaster and if ; and in the matter following subparagraph (E)— by striking unless the Administration finds and inserting unless the bank or other lending institution finds ; and by striking and the Administrator shall and inserting and the banks or other lending institutions shall ; in paragraph (3)— in subparagraph (B)— by striking (either directly or ; by striking an immediate or and inserting a ; by striking basis) and inserting basis ; and by striking the period at the end and inserting , as determined by the bank or other lending institution. ; in subparagraph (C)— by striking The Administrator may and inserting A bank or other lending institution may ; and by striking by the Administrator and inserting by the bank or other lending institution ; in subparagraph (E)— by striking , either directly or and all that follows through deferred basis, ; and by striking by the Administration, in which case the Administration and inserting by the bank or other lending institution, in which case the bank or other lending institution ; in subparagraph (G)— in clause (i), by striking the Administrator and inserting a bank or other lending institution ; and in clause (ii), by striking The Administrator and inserting The bank or other lending institution ; and in subparagraph (H), by striking The Administrator and inserting A bank or other lending institution ; in paragraph (4)— by striking paragraph
(9)each place it appears and inserting paragraph
(7); and in subparagraph (B)(ii), by striking the Administrator and inserting a bank or other lending institution ; in paragraph (5)— by striking paragraph
(9)and inserting paragraph
(7); and in subparagraph (G), by striking the Administration and inserting banks or other lending institutions ; in subparagraph
(B)of paragraph (6), as so redesignated, by striking The Administrator may, at the discretion of the Administrator and inserting A bank or other lending institution may, at the discretion of the bank or other lending institution ; in subparagraph
(C)of paragraph (7), as so redesignated— in clause (i)— by striking (either directly or ; by striking an immediate or and inserting a ; by striking basis) and inserting basis ; and by striking as the Administrator determines and inserting as the bank or other lending institution determines ; and in clause (ii), by striking the Administrator shall each place it appears and inserting the banks or other lending institutions shall ; in subparagraph
(A)of paragraph (8), as so redesignated— by inserting a chapter of before the Service Corps of Retired Executives ; and by striking any proposed consortium of such individuals or entities and inserting Veteran Business Outreach Centers ; in paragraph (9), as so redesignated, by striking Administrator each place it appears and inserting bank or other lending institution ; by inserting after paragraph (12), as so redesignated, the following new paragraphs: If the Administrator determines that a bank or other lending institution knowingly failed to comply with the underwriting standards for loans guaranteed under this subsection or violated the terms of the standard operating procedure agreement between that bank or other lending institution and the Administration, the Administrator shall take one or more of the following actions: Make loans made by the bank or other lending institution ineligible to receive a guarantee from the Administration under this subsection. Exclude the bank or other lending institution from participating in the Preferred Lender Program for a period of not more than 5 years. The Administrator may not collect a guarantee fee under this subsection. With respect to a loan guaranteed under this subsection, the Administrator shall reimburse the bank or other lending institution making such loan— for a loan in amount that is less than or equal to $50,000, an amount equal to the lesser of— 50 percent of the balance of the financing outstanding at the time of disbursement of such loan; or $2,500; for a loan in an amount that is greater than $50,000 and not greater than $350,000, an amount equal to five percent of the financing outstanding at the time of disbursement of such loan; or for a loan in an amount that is greater than or equal to $350,000, an amount equal to three percent of the financing outstanding at the time of disbursement of such loan. A bank or other lending institution may use its own loan documentation for a loan guaranteed by the Administrator under this subsection. The Administrator may enter into an agreement with a bank or other lending institution to purchase any loan guaranteed under this subsection. The Administrator shall issue rules for the facilitation, administration, and promotion of the sale of loans guaranteed under this subsection in the secondary market in the same manner as loans made or guaranteed under subsection (a). The rules issued under clause
(i)shall provide that paragraphs (1)(A)(ii) and (4)(B)(ii) of subsection
(a)shall apply with respect loans guaranteed under this subsection in the same manner as such paragraphs apply to loans made or guaranteed under subsection (a). In agreements to participate in loans on a deferred basis under this subsection, such participation by the Administration shall be equal to 95 percent of the balance of the financing outstanding at the time of disbursement of the loan. Loans guaranteed under this subsection in an amount greater than $25,000 shall be secured to the extent possible, as determined by the bank or other lending institution. A bank or lending institution may not decline a loan based on a lack of collateral, but such bank or lending institution may require real estate owned by the borrower as collateral. A bank or lending institution may also take a lien on any residential property of the borrower with respect to which the loan to be secured by such lien is made. In this subsection, the terms bank or other lending institution means a lender authorized by the Administration to participate as a lender under subsection (a), other than a small business lending company or a non-Federally regulated lender (as such terms are defined in section 3(r)). ; and in the flush left matter at the end— by striking the Administrator may consent and inserting the bank or other lending institution may consent ; by striking the Administrator determines and inserting the bank or other lending institution determines ; and by striking In agreements to participate and all that follows through to a disaster loan under paragraph
(2)of this subsection. . Section 7(c) of the Small Business Act ( 15 U.S.C. 636(c) ) is repealed. Section 7 of the Small Business Act ( 15 U.S.C. 636 ) is amended— in subsection (d)— in paragraph (1)— by inserting (except a loan under subsection
(b)after to this section ; and by adding at the end The bank or other lending institution that made a loan under subsection
(b)may further extend the maturity of or renew such loan for additional periods not to exceed ten years beyond the period stated therein, if such extension or renewal will aid in the orderly liquidation of such loan. ; in paragraph (2), by striking person, firm, or corporation and inserting bank or other lending institution ; in paragraph (6)— by striking , either directly or ; by striking on an immediate or deferred (guaranteed) basis, and inserting a deferred (guaranteed) basis ; by striking in which case the Administration and inserting in which case the bank or other lending institution that made such loan ; by striking That the Administration shall not require and inserting That the banks or other lending institutions shall not require ; by striking (or such higher amount as the Administrator determines appropriate in the event of a disaster) ; by striking That the Administrator, in obtaining and inserting That the bank or other lending institution, in obtaining ; and by striking if the Administrator determines and inserting if the bank or other lending institution determines ; and by striking paragraph (8); in subsection (f)(1), by striking the Administrator and inserting the bank or other lending institution making such a loan ; and in subsection (g), by striking the Administrator shall and inserting neither the Administrator nor a bank or other lending institution may . The Small Business Act ( 15 U.S.C. 631 ) is amended— in section 4(c)(2), by striking , (7(b)(7), 7(b)(8) ; and in section 40(b), by striking 7(b)(9) and inserting 7(b)(7) . Section 42 of the Small Business Act ( 15 U.S.C. 657n ) is repealed. Not later than 120 days after the date of the enactment of this Act, the Administrator shall issue rules for making loans under section 7(b) of the Small Business Act ( 15 U.S.C. 636(b) ), as amended by this section. The amendments made by subsections (a), (b), (c), and
(d)shall take effect on the date that is three years after the date of the enactment of this Act. During the period beginning on the date the Administrator issues the rules required under subsection
(f)and ending three years after the date of the enactment of this Act, loans may be made under section 7(b) of the Small Business Act ( 15 U.S.C. 636(b) ) as if the amendments made by subsections (a), (b), (c), and
(d)were in effect.
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