§696. Loans for plant acquisition, construction, conversion and expansion

The Administration may, in addition to its authority under section 695 of this title, make loans for plant acquisition, construction, conversion or expansion, including the acquisition of land, to State and local development companies, and such loans may be made or effected either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis: Provided, however, That the foregoing powers shall be subject to the following restrictions and limitations:

(1) The proceeds of any such loan shall be used solely by such borrower to assist in identifiable small-business concern and for a sound business purpose approved by the Administration.

(2) Loans made by the Administration under this section shall be limited to $750,000 for each such identifiable small-business concern, except loans meeting the criteria specified in section 695(d)(3) of this title shall be limited to $1,000,000 for each such identifiable small business concern.

(3) Any development company assisted under this section must meet criteria established by the Administration, including the extent of participation to be required or amount of paid-in capital to be used in each instance as is determined to be reasonable by the Administration. Community injection funds may be derived, in whole or in part, from-

(A) State or local governments;

(B) banks or other financial institutions;

(C) foundations or other not-for-profit institutions; or

(D) a small business concern (or its owners, stockholders, or affiliates) receiving assistance through bodies authorized under this subchapter.

(4) If the project is to construct a new facility, up to 33 per centum of the total project may be leased, if reasonable projections of growth demonstrate that the assisted small business concern will need additional space within three years and will fully utilize such additional space within ten years.

( Pub. L. 85–699, title V, §502, Aug. 21, 1958, 72 Stat. 697 ; Pub. L. 87–27, §26, May 1, 1961, 75 Stat. 63 ; Pub. L. 87–341, §10, Oct. 3, 1961, 75 Stat. 756 ; Pub. L. 94–305, title I, §§108(a), 110, June 4, 1976, 90 Stat. 666 , 667; Pub. L. 95–507, title I, §112, Oct. 24, 1978, 92 Stat. 1760 ; Pub. L. 97–35, title XIX, §1909, Aug. 13, 1981, 95 Stat. 778 ; Pub. L. 100–418, title VIII, §8007(b), Aug. 23, 1988, 102 Stat. 1561 ; Pub. L. 100–590, title I, §116(a), (b)(1), Nov. 3, 1988, 102 Stat. 2997 , 2998; Pub. L. 101–574, title II, §214(c), Nov. 15, 1990, 104 Stat. 2822 .)

Amendments

1990-Par. (2). Pub. L. 101–574 struck out period at end and inserted ", except loans meeting the criteria specified in section 695(d)(3) of this title shall be limited to $1,000,000 for each such identifiable small business concern."

1988-Pub. L. 100–590, §116(b)(1), inserted "Loans for plant acquisition, construction, conversion, and expansion" as section catchline.

Par. (2). Pub. L. 100–418 substituted "$750,000" for "$500,000".

Par. (4). Pub. L. 100–590, §116(a), added par. (4).

1981-Pars. (1) to (4). Pub. L. 97–35 redesignated pars. (2) to (4) as (1) to (3), respectively. Former par. (1), which provided that all loans made shall be so secured as reasonably to assure repayment and that in agreements to participate in loans on a deferred basis, such participation by the Administration shall not be in excess of 90 per centum of the balance of the loan outstanding at the time of disbursement, was struck out.

Par. (5). Pub. L. 97–35 struck out par. (5) which provided that loans, including extensions and renewals, may be made for a period not exceeding twenty-five years and that an extension may be granted up to ten years, if such extension will aid in the orderly liquidation of the loan, and that the Administration may fix the rate of interest.

1978-Par. (4). Pub. L. 95–507 inserted provisions relating to derivation of community injection funds.

1976-Pub. L. 94–305, §108(a), inserted "acquisition," after "plant" in introductory text.

Par. (3). Pub. L. 94–305, §110, substituted "$500,000" for "$350,000".

1961-Par. (3). Pub. L. 87–341, §10(1), substituted "$350,000" for "$250,000".

Par. (5). Pub. L. 87–341, §10(2), substituted "twenty-five" for "ten" before "years plus such additional period".

Par. (6). Pub. L. 87–27 struck out par. (6) which provided for termination of authority of the Administration to make loans to local development companies after June 30, 1961.

Effective Date of 1981 Amendment

Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see section 1918 of Pub. L. 97–35, set out as a note under section 631 of this title.

Section Referred to in Other Sections

This section is referred to in sections 634, 697, 697d of this title; title 42 section 9815.