§ 697e. — Premier Certified Lenders Program.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC697e]
TITLE 15--COMMERCE AND TRADE
CHAPTER 14B--SMALL BUSINESS INVESTMENT PROGRAM
SUBCHAPTER V--LOANS TO STATE AND LOCAL DEVELOPMENT COMPANIES
Sec. 697e. Premier Certified Lenders Program
(a) Establishment
The Administration may establish a Premier Certified Lenders Program
for certified development companies that meet the requirements of
subsection (b) of this section.
(b) Requirements
(1) Application
To be eligible to participate in the Premier Certified Lenders
Program established under subsection (a) of this section, a
certified development company shall prepare and submit to the
Administration an application at such time, in such manner, and
containing such information as the Administration may require.
(2) Designation
The Administration may designate a certified development company
as a premier certified lender--
(A) if the company is an active certified development
company in good standing and has been an active participant in
the accredited lenders program during the entire 12-month period
preceding the date on which the company submits an application
under paragraph (1), except that the Administration may waive
this requirement if the company is qualified to participate in
the accredited lenders program;
(B) if the company has a history of--
(i) submitting to the Administration adequately analyzed
debenture guarantee application packages; and
(ii) of properly closing section 504 [15 U.S.C. 697a]
loans and servicing its loan portfolio;
(C) if the company agrees to assume and to reimburse the
Administration for 10 percent of any loss sustained by the
Administration as a result of default by the company in the
payment of principal or interest on a debenture issued by such
company and guaranteed by the Administration under this section;
and
(D) the Administrator determines, with respect to the
company, that the loss reserve established in accordance with
subsection (c)(2) of this section is sufficient for the company
to meet its obligations to protect the Federal Government from
risk of loss.
(3) Applicability of criteria after designation
The Administrator may revoke the designation of a certified
development company as a premier certified lender under this section
at any time, if the Administrator determines that the certified
development company does not meet any requirement described in
subparagraphs (A) through (D) of paragraph (2).
(c) Loss reserve
(1) Establishment
A company designated as a premier certified lender shall
establish a loss reserve for financing approved pursuant to this
section.
(2) Amount
The amount of each loss reserve established under paragraph (1)
shall be 10 percent of the amount of the company's exposure, as
determined under subsection (b)(2)(C) of this section.
(3) Assets
Each loss reserve established under paragraph (1) shall be
comprised of--
(A) segregated funds on deposit in an account or accounts
with a federally insured depository institution or institutions
selected by the company, subject to a collateral assignment in
favor of, and in a format acceptable to, the Administration;
(B) irrevocable letter or letters of credit, with a
collateral assignment in favor of, and a commercially reasonable
format acceptable to, the Administration; or
(C) any combination of the assets described in subparagraphs
(A) and (B).
(4) Contributions
The company shall make contributions to the loss reserve, either
cash or letters of credit as provided above, in the following
amounts and at the following intervals:
(A) 50 percent when a debenture is closed.
(B) 25 percent additional not later than 1 year after a
debenture is closed.
(C) 25 percent additional not later than 2 years after a
debenture is closed.
(5) Replenishment
If a loss has been sustained by the Administration, any portion
of the loss reserve, and other funds provided by the premier company
as necessary, may be used to reimburse the Administration for the
premier company's 10 percent share of the loss as provided in
subsection (b)(2)(C) of this section. If the company utilizes the
reserve, within 30 days it shall replace an equivalent amount of
funds.
(6) Disbursements
The Administration shall allow the certified development company
to withdraw from the loss reserve amounts attributable to any
debenture that has been repaid.
(d) Sale of certain defaulted loans
(1) Notice
If, upon default in repayment, the Administration acquires a
loan guaranteed under this section and identifies such loan for
inclusion in a bulk asset sale of defaulted or repurchased loans or
other financings, it shall give prior notice thereof to any
certified development company which has a contingent liability under
this section. The notice shall be given to the company as soon as
possible after the financing is identified, but not less than 90
days before the date the Administration first makes any records on
such financing available for examination by prospective purchasers
prior to its offering in a package of loans for bulk sale.
(2) Limitations
The Administration shall not offer any loan described in
paragraph (1) as part of a bulk sale unless it--
(A) provides prospective purchasers with the opportunity to
examine the Administration's records with respect to such loan;
and
(B) provides the notice required by paragraph (1).
(e) Loan approval authority
(1) In general
Notwithstanding section 697(b)(6) of this title, and subject to
such terms and conditions as the Administration may establish, the
Administration may permit a company designated as a premier
certified lender under this section to approve, authorize, close,
service, foreclose, litigate (except that the Administration may
monitor the conduct of any such litigation to which a premier
certified lender is a party), and liquidate loans that are funded
with the proceeds of a debenture issued by such company and may
authorize the guarantee of such debenture.
(2) Scope of review
The approval of a loan by a premier certified lender shall be
subject to final approval as to eligibility of any guarantee by the
Administration pursuant to section 697(a) of this title, but such
final approval shall not include review of decisions by the lender
involving creditworthiness, loan closing, or compliance with legal
requirements imposed by law or regulation.
(f) Review
After the issuance and sale of debentures under this section, the
Administration, at intervals not greater than 12 months, shall review
the financings made by each premier certified lender. The review shall
include the lender's credit decisions and general compliance with the
eligibility requirements for each financing approved under the program
authorized under this section. The Administration shall consider the
findings of the review in carrying out its responsibilities under
subsection (g) of this section, but such review shall not affect any
outstanding debenture guarantee.
(g) Suspension or revocation
The designation of a certified development company as a premier
certified lender may be suspended or revoked if the Administration
determines that the company--
(1) has not continued to meet the criteria for eligibility under
subsection (b) of this section;
(2) has not established or maintained the loss reserve required
under subsection (c) of this section;
(3) is failing to adhere to the Administration's rules and
regulations; or
(4) is violating any other applicable provision of law.
(h) Effect of suspension or revocation
A suspension or revocation under subsection (g) of this section
shall not affect any outstanding debenture guarantee.
(i) Program goals
Each certified development company participating in the program
under this section shall establish a goal of processing a minimum of not
less than 50 percent of the loan applications for assistance under
section 697a of this title pursuant to the program authorized under this
section.
(j) Report
Not later than 1 year after October 22, 1994, and annually
thereafter, the Administration shall report to the Committees on Small
Business of the Senate and the House of Representatives on the
implementation of this section. Each report shall include--
(1) the number of certified development companies designated as
premier certified lenders;
(2) the debenture guarantee volume of such companies;
(3) a comparison of the loss rate for premier certified lenders
to the loss rate for accredited and other lenders, specifically
comparing default rates and recovery rates on liquidations; and
(4) such other information as the Administration deems
appropriate.
(Pub. L. 85-699, title V, Sec. 508, as added and amended Pub. L. 103-
403, title II, Sec. 217, Oct. 22, 1994, 108 Stat. 4185; Pub. L. 105-135,
title II, Sec. 223(a), Dec. 2, 1997, 111 Stat. 2604; Pub. L. 106-554,
Sec. 1(a)(9) [title III, Secs. 305, 306], Dec. 21, 2000, 114 Stat. 2763,
2763A-685.)
Codification
October 22, 1994, referred to in subsec. (j), was in the original
``the date of enactment of this Act'', which was translated as meaning
the date of enactment of Pub. L. 103-403, which enacted this section, to
reflect the probable intent of Congress.
Amendments
2000--Pub. L. 106-554, Sec. 1(a)(9) [title III, Sec. 305], repealed
Pub. L. 103-403, Sec. 217(b). See 1994 Amendment note below.
Subsec. (a). Pub. L. 106-554, Sec. 1(a)(9) [title III, Sec. 306(1)],
substituted ``The'' for ``On a pilot program basis, the''.
Subsecs. (d), (e). Pub. L. 106-554, Sec. 1(a)(9) [title III,
Sec. 306(2), (5)], added heading and text of subsec. (d) and
redesignated former subsec. (d) as (e). Former subsec. (e) redesignated
(f).
Subsec. (f). Pub. L. 106-554, Sec. 1(a)(9) [title III, Sec. 306(2),
(3)], redesignated subsec. (e) as (f) and substituted ``subsection (g)''
for ``subsection (f)''. Former subsec. (f) redesignated (g).
Subsec. (g). Pub. L. 106-554, Sec. 1(a)(9) [title III, Sec. 306(2)],
redesignated subsec. (f) as (g). Former subsec. (g) redesignated (h).
Subsec. (h). Pub. L. 106-554, Sec. 1(a)(9) [title III, Sec. 306(2),
(4)], redesignated subsec. (g) as (h) and substituted ``subsection (g)''
for ``subsection (f)''. Former subsec. (h) redesignated (i).
Subsecs. (i), (j). Pub. L. 106-554, Sec. 1(a)(9) [title III,
Sec. 306(2)], redesignated subsecs. (h) and (i) as (i) and (j),
respectively.
1997--Subsec. (a). Pub. L. 105-135, Sec. 223(a)(1), struck out ``not
more than 15'' before ``certified development companies''.
Subsec. (b)(2). Pub. L. 105-135, Sec. 223(a)(2)(A)(i), struck out
``if such company'' after ``premier certified lender'' in introductory
provisions.
Subsec. (b)(2)(A), (B). Pub. L. 105-135, Sec. 223(a)(2)(A)(ii),
added subpars. (A) and (B) and struck out former subpars. (A) and (B)
which read as follows:
``(A) has been an active participant in the accredited lenders
program during the 12-month period preceding the date on which the
company submits an application under paragraph (1), except that, prior
to January 1, 1996, the Administration may waive this requirement if the
company is qualified to participate in the accredited lenders program;
``(B) has a history of submitting to the Administration adequately
analyzed debenture guarantee application packages; and''.
Subsec. (b)(2)(C). Pub. L. 105-135, Sec. 223(a)(2)(A)(iii), inserted
``if the company'' before ``agrees to assume'' and substituted ``; and''
for period at end.
Subsec. (b)(2)(D). Pub. L. 105-135, Sec. 223(a)(2)(A)(iv), added
subpar. (D).
Subsec. (b)(3). Pub. L. 105-135, Sec. 223(a)(2)(B), added par. (3).
Subsec. (c). Pub. L. 105-135, Sec. 223(a)(3), added subsec. (c) and
struck out heading and text of former subsec. (c). Text read as follows:
``(1) Establishment.--A company designated as a premier certified
lender shall establish a loss reserve for financings approved pursuant
to this section.
``(2) Amount.--The amount of the loss reserve shall be based upon
the greater of--
``(A) the historic loss rate on debentures issued by such
company; or
``(B) 10 percent of the amount of the company's exposure as
determined under subsection (b)(2)(C) of this section.
``(3) Assets.--The loss reserve shall be comprised of segregated
assets of the company which shall be securitized in favor of the
Administration.
``(4) Contributions.--The company shall make contributions to the
loss reserve in the following amounts and at the following intervals:
``(A) 50 percent when a debenture is closed.
``(B) 25 percent not later than 1 year after a debenture is
closed.
``(C) 25 percent not later than 2 years after a debenture is
closed.''
Subsec. (d)(1). Pub. L. 105-135, Sec. 223(a)(4), substituted ``to
approve, authorize, close, service, foreclose, litigate (except that the
Administration may monitor the conduct of any such litigation to which a
premier certified lender is a party), and liquidate loans'' for ``to
approve loans''.
Subsec. (f). Pub. L. 105-135, Sec. 223(a)(5), substituted
``certified development company'' for ``State or local development
company'' in introductory provisions.
Subsec. (g). Pub. L. 105-135, Sec. 223(a)(6), substituted
``revocation'' for ``designation'' in heading.
Subsec. (h). Pub. L. 105-135, Sec. 223(a)(7), added subsec. (h) and
struck out heading and text of former subsec. (h). Text read as follows:
``Not later than 180 days after October 22, 1994, the Administration
shall promulgate regulations to carry out this section.''
Subsec. (i)(3). Pub. L. 105-135, Sec. 223(a)(8), substituted ``other
lenders, specifically comparing default rates and recovery rates on
liquidations'' for ``other lenders''.
1994--Pub. L. 103-403, Sec. 217(b), which directed repeal of this
section effective Oct. 1, 2000, and was repealed by section 1(a)(9)
[title III, Sec. 305] of Pub. L. 106-554, was not executed to reflect
the probable intent of Congress and the amendments to this section by
section 1(a)(9) [title III, Sec. 306] of Pub. L. 106-554. See
Termination Date note below.
Effective Date of 1997 Amendment
Amendment by Pub. L. 105-135 effective Oct. 1, 1997, see section 3
of Pub. L. 105-135, set out as a note under section 631 of this title.
Termination Date
Section 217(b) of Pub. L. 103-403, as amended by Pub. L. 105-135,
title II, Sec. 223(c), Dec. 2, 1997, 111 Stat. 2606, which provided that
this section was to be repealed effective Oct. 1, 2000, was repealed by
Pub. L. 106-554, Sec. 1(a)(9) [title III, Sec. 305], Dec. 21, 2000, 114
Stat. 2763, 2763A-685.
Regulations
Section 223(b) of Pub. L. 105-135 provided that: ``The Administrator
shall--
``(1) not later than 150 days after the date of enactment of
this Act [Dec. 2, 1997], promulgate regulations to carry out the
amendments made by subsection (a) [amending this section]; and
``(2) not later than 180 days after the date of enactment of
this Act, issue program guidelines and fully implement the
amendments made by subsection (a).''
Section Referred to in Other Sections
This section is referred to in section 697g of this title.
