Home > 106th Congressional Public Laws > Pub.L. 106-009 To amend section 20 of the Small Business Act and make technical corrections in title III of the Small Business Investment Act. <> ...

Pub.L. 106-009 To amend section 20 of the Small Business Act and make technical corrections in title III of the Small Business Investment Act. <> ...

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[[Page 113 STAT. 13]]

Public Law 106-8
106th Congress

                                 An Act

    To provide for a loan guarantee program to address the Year 2000 
      computer problems of small business concerns, and for other 
              purposes. <<NOTE: Apr. 2, 1999 -  [S. 314]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Small Business 
Year 2000 Readiness Act.>> 

SECTION 1. SHORT TITLE. <<NOTE: 15 USC 631 note.>> 

    This Act may be cited as the ``Small Business Year 2000 Readiness 

SEC. 2. FINDINGS. <<NOTE: 15 USC 636 note.>> 

    Congress finds that--
            (1) the failure of many computer programs to recognize the 
        Year 2000 may have extreme negative financial consequences in 
        the Year 2000, and in subsequent years for both large and small 
            (2) small businesses are well behind larger businesses in 
        implementing corrective changes to their automated systems;
            (3) many small businesses do not have access to capital to 
        fix mission critical automated systems, which could result in 
        severe financial distress or failure for small businesses; and
            (4) the failure of a large number of small businesses due to 
        the Year 2000 computer problem would have a highly detrimental 
        effect on the economy in the Year 2000 and in subsequent years.


    (a) Program Established.--Section 7(a) of the Small Business Act (15 
U.S.C. 636(a)) is amended by adding at the end the following:
            ``(27) Year 2000 computer problem program.--
                    ``(A) Definitions.--In this paragraph--
                          ``(i) the term `eligible lender' means any 
                      lender designated by the Administration as 
                      eligible to participate in the general business 
                      loan program under this subsection; and
                          ``(ii) the term `Year 2000 computer problem' 
                      means, with respect to information technology, and 
                      embedded systems, any problem that adversely 
                      effects the processing (including calculating, 
                      comparing, sequencing, displaying, or storing), 
                      transmitting, or receiving of date-dependent 
                                    ``(I) from, into, or between--
                                            ``(aa) the 20th or 21st 
                                        centuries; or

[[Page 113 STAT. 14]]

                                            ``(bb) the years 1999 and 
                                        2000; or
                                    ``(II) with regard to leap year 
                    ``(B) Establishment of program.--The Administration 
                          ``(i) establish a loan guarantee program, 
                      under which the Administration may, during the 
                      period beginning on the date of enactment of this 
                      paragraph and ending on December 31, 2000, 
                      guarantee loans made by eligible lenders to small 
                      business concerns in accordance with this 
                      paragraph; and
                          ``(ii) <<NOTE: Notification.>>  notify each 
                      eligible lender of the establishment of the 
                      program under this paragraph, and otherwise take 
                      such actions as may be necessary to aggressively 
                      market the program under this paragraph.
                    ``(C) Use of funds.--A small business concern that 
                receives a loan guaranteed under this paragraph shall 
                only use the proceeds of the loan to--
                          ``(i) address the Year 2000 computer problems 
                      of that small business concern, including the 
                      repair and acquisition of information technology 
                      systems, the purchase and repair of software, the 
                      purchase of consulting and other third party 
                      services, and related expenses; and
                          ``(ii) provide relief for a substantial 
                      economic injury incurred by the small business 
                      concern as a direct result of the Year 2000 
                      computer problems of the small business concern or 
                      of any other entity (including any service 
                      provider or supplier of the small business 
                      concern), if such economic injury has not been 
                      compensated for by insurance or otherwise.
                    ``(D) Loan amounts.--
                          ``(i) In general.--Notwithstanding paragraph 
                      (3)(A) and subject to clause (ii) of this 
                      subparagraph, a loan may be made to a borrower 
                      under this paragraph even if the total amount 
                      outstanding and committed (by participation or 
                      otherwise) to the borrower from the business loan 
                      and investment fund, the business guaranty loan 
                      financing account, and the business direct loan 
                      financing account would thereby exceed $750,000.
                          ``(ii) Exception.--A loan may not be made to a 
                      borrower under this paragraph if the total amount 
                      outstanding and committed (by participation or 
                      otherwise) to the borrower from the business loan 
                      and investment fund, the business guaranty loan 
                      financing account, and the business direct loan 
                      financing account would thereby exceed $1,000,000.
                    ``(E) Administration participation.--Notwithstanding 
                paragraph (2)(A), in an agreement to participate in a 
                loan under this paragraph, participation by the 
                Administration shall not exceed--
                          ``(i) 85 percent of the balance of the 
                      financing outstanding at the time of disbursement 
                      of the loan, if the balance exceeds $100,000;
                          ``(ii) 90 percent of the balance of the 
                      financing outstanding at the time of disbursement 
                      of the loan, if the balance is less than or equal 
                      to $100,000; and

[[Page 113 STAT. 15]]

                          ``(iii) notwithstanding clauses (i) and (ii), 
                      in any case in which the subject loan is processed 
                      in accordance with the requirements applicable to 
                      the SBAExpress Pilot Program, 50 percent of the 
                      balance outstanding at the time of disbursement of 
                      the loan.
                    ``(F) Periodic reviews.--The Inspector General of 
                the Administration shall periodically review a 
                representative sample of loans guaranteed under this 
                paragraph to mitigate the risk of fraud and ensure the 
                safety and soundness of the loan program.
                    ``(G) Annual report.--The Administration shall 
                annually submit to the Committees on Small Business of 
                the House of Representatives and the Senate a report on 
                the results of the program carried out under this 
                paragraph during the preceding 12-month period, which 
                shall include information relating to--
                          ``(i) the total number of loans guaranteed 
                      under this paragraph;
                          ``(ii) with respect to each loan guaranteed 
                      under this paragraph--
                                    ``(I) the amount of the loan;
                                    ``(II) the geographic location of 
                                the borrower; and
                                    ``(III) whether the loan was made to 
                                repair or replace information technology 
                                and other automated systems or to remedy 
                                an economic injury; and
                          ``(iii) the total number of eligible lenders 
                      participating in the program.''.

    (b) Guidelines.-- <<NOTE: 15 USC 636 note.>> 
            (1) In general.--Not later than 30 days after the date of 
        enactment of this Act, the Administrator of the Small Business 
        Administration shall issue guidelines to carry out the program 
        under section 7(a)(27) of the Small Business Act, as added by 
        this section.
            (2) Requirements.--Except to the extent that it would be 
        inconsistent with this section or section 7(a)(27) of the Small 
        Business Act, as added by this section, the guidelines issued 
        under this subsection shall, with respect to the loan program 
        established under section 7(a)(27) of the Small Business Act, as 
        added by this section--
                    (A) provide maximum flexibility in the establishment 
                of terms and conditions of loans originated under the 
                loan program so that such loans may be structured in a 
                manner that enhances the ability of the applicant to 
                repay the debt;
                    (B) if appropriate to facilitate repayment, 
                establish a moratorium on principal payments under the 
                loan program for up to 1 year beginning on the date of 
                the origination of the loan;
                    (C) provide that any reasonable doubts regarding a 
                loan applicant's ability to service the debt be resolved 
                in favor of the loan applicant; and
                    (D) authorize an eligible lender (as defined in 
                section 7(a)(27)(A) of the Small Business Act, as added 
                by this section) to process a loan under the loan 
                program in accordance with the requirements applicable 
                to loans originated

[[Page 113 STAT. 16]]

                under another loan program established pursuant to 
                section 7(a) of the Small Business Act (including the 
                general business loan program, the Preferred Lender 
                Program, the Certified Lender Program, the Low 
                Documentation Loan Program, and the SBAExpress Pilot 
                Program), if--
                          (i) the eligible lender is eligible to 
                      participate in such other loan program; and
                          (ii) the terms of the loan, including the 
                      principal amount of the loan, are consistent with 
                      the requirements applicable to loans originated 
                      under such other loan program.

    (c) <<NOTE: 15 USC 636 and note.>>  Repeal.--Effective on December 
31, 2000, this section and the amendments made by this section are 

    Approved April 2, 1999.


SENATE REPORTS: No. 106-5 (Comm. on Small Business).
            Mar. 2, considered and passed Senate.
            Mar. 23, considered and passed House.
            Apr. 2, Presidential statement.


Pages: 1

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