On June 10, 2015, the House Committee on Small Business held a markup to consider several bills, including H.R. 2670, the Microloan Modernization Act of 2015, which passed by voice vote.
The bill contains seven sections. Notably, Section 2 provides a waiver of the 25/75 rule. Under the bill, intermediaries would be able to apply to the Administrator for a waiver to the requirements of §7(m)(4)(E)(i). The Administrator would be required to follow notice-and-comment requirements to establish the waiver rule. Section 3 of the Bill increases the microloan intermediary lending limit from $5,000,000 to $6,000,000. Section 4 extends repayment terms for loans to small businesses. For loans made by an intermediary of $10,000 or less, the repayment term shall not be more than 6 years. For loans greater than $10,000, the repayment term shall not be more than 10 years. Section 5 would authorize eligible intermediaries to make short-term lines of credit to small businesses. Section 6 requires the Comptroller General to complete a study on microenterprise participation. Section 7 requires the Chief Counsel for Advocacy of the SBA to submit a report on the economic impact of a mandatory savings requirement on business concerns eligible to participate in the microloan program.
During Markup, Representative Chu (D-CA) submitted two amendments which failed to pass. The first Amendment was to repeal the limitation on certain contracts under the microloan program contained in §7(m)(4)(E) of the Small Business Act. The Amendment would have removed §7(m)(4)(E)(ii), which prohibits an intermediary from expending more than 25 percent of the funds received to enter into third party contracts for technical assistance services. The second Amendment would have amended the restrictions to the participants in the microloan program. Specifically, it would have required that the total amount of new loan funds made available for award in each fiscal year for each state simply be not less than $800,000. The Amendments failed 13:8 and 15:6 respectively.
The Microloan Modernization Act has been sent to the House for Consideration. Click here for the complete text of the Act.