§ 692. Authority of Administration to guarantee payment of rentals by small business concerns under leases of commercial and industrial property

Statutory text

Nonavailability of guarantees from other sources; participation with qualified sureties

The Administration may, whenever it determines such action to be necessary or desirable, and upon such terms and conditions as it may prescribe, guarantee the payment of rentals under leases of commercial and industrial property entered into by small business concerns to enable such concerns to obtain such leases. Any such guarantee may be made or effected either directly or in cooperation with any qualified surety company or other qualified company through a participation agreement with such company. The foregoing powers shall be subject, however, to the following restrictions and limitations:

No guarantee shall be issued by the Administration (A) if a guarantee meeting the requirements of the applicant is otherwise available on reasonable terms, and (B) unless the Administration determines that there exists a reasonable expectation that the small business concern in behalf of which the guarantee is issued will perform the covenants and conditions of the lease.

The Administration shall, to the greatest extent practicable, exercise the powers conferred by this section in cooperation with qualified surety or other companies on a participation basis.

Uniform annual fee; processing fees

The Administration shall fix a uniform annual fee for its share of any guarantee under this section which shall be payable in advance at such time as may be prescribed by the Administrator. The amount of any such fee shall be determined in accordance with sound actuarial practices and procedures, to the extent practicable, but in no case shall such amount exceed, on the Administration’s share of any guarantee made under this part, 2½ per centum per annum of the minimum annual guaranteed rental payable under any guaranteed lease: Provided, That the Administration shall fix the lowest fee that experience under the program established hereby has shown to be justified. The Administration may also fix such uniform fees for the processing of applications for guarantees under this section as the Administrator determines are reasonable and necessary to pay the administrative expenses that are incurred in connection therewith.

Escrow; default; additional discretionary provisions

In connection with the guarantee of rentals under any lease pursuant to authority conferred by this section, the Administrator may require, in order to minimize the financial risk assumed under such guarantee—

that the lessee pay an amount, not to exceed one-fourth of the minimum guaranteed annual rental required under the lease, which shall be held in escrow and shall be available (A) to meet rental charges accruing in any month for which the lessee is in default, or (B) if no default occurs during the term of the lease, for application (with accrued interest) toward final payments of rental charges under the lease;

that upon occurrence of a default under the lease, the lessor shall, as a condition precedent to enforcing any claim under the lease guarantee, utilize the entire period, for which there are funds available in escrow for payment of rentals, in reasonably diligent efforts to eliminate or minimize losses, by releasing the commercial or industrial property covered by the lease to another qualified tenant, and no claim shall be made or paid under the guarantee until such effort has been made and such escrow funds have been exhausted;

that any guarantor of the lease will become a successor of the lessor for the purpose of collecting from a lessee in default rentals which are in arrears and with respect to which the lessor has received payment under a guarantee made pursuant to this section; and

such other provisions, not inconsistent with the purposes of this part, as the Administrator may in his discretion require.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1965
Pub. L. 85–699 title IV § 401 · 72 Stat. 689
Enacted · 15 U.S.C. § 692
Pub. L. 85–699, title IV, § 401, as added Pub. L. 89–117, title III, § 316(a), Aug. 10, 1965, 79 Stat. 482
Source evidence
Code source credit
Pub. L. 85–699, title IV, § 401, as added Pub. L. 89–117, title III, § 316(a), Aug. 10, 1965, 79 Stat. 482
Enacted provision · exact public law section
Sec. 401. (a) Prior to July 1, 1961, any investment company or any State development company may, by the vote of the shareholders owning not less than 51 percent of the capital stock of such company, with the approval of the Administration, be converted into a small business investment company under this Act; except that nothing contained herein shall be construed to supersede the laws of any State. (b) In such case the articles of association and organization certificate may be executed by a majority of the directors of the corporation, and the certificate shall declare that the owners of 51 percent of the capital stock have authorized the directors to make such certificate and to change or convert the corporation into a small business investment company. A majority of the directors, after executing the articles of association and the organization certificate, shall have power to execute all other papers and to do whatever may be required to make its organization perfect and complete as a small business investment company. The shares of any such company may continue to be for the same amount each as they were before the conversion, and the directors, regardless of number, may continue to be directors of the corporation until the election of the board of directors is held in accordance with regulations of the Administration. (c) When the Administration has given to such company a certificate that the provisions of this Act have been complied with, such company shall have the same powers and privileges and shall be subject to the same duties, liabilities, and regulations, in all respects, as are prescribed by this Act for companies originally organized as small business investment companies.
1967
Pub. L. 90–104 title II § 209 · 81 Stat. 268
Struck · 15 U.S.C. § 692(a)
Pub. L. 90–104 struck out from introductory text “that are (1) eligible for loans under section 636(b)(3) of this title, or (2) eligible for loans under subchapter IV of chapter 34 of Title 42,” after “small business concerns”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 90–104 struck out from introductory text “that are (1) eligible for loans under section 636(b)(3) of this title, or (2) eligible for loans under subchapter IV of chapter 34 of Title 42,” after “small business concerns”.
Enacted provision · exact public law section
Sec. 209. The first sentence of section 401(a) of the Small Business Lease guarantees. 79 Stat. 482. 15 USC 692. 15 USC 636. Investment Act of 1958 is amended by striking out “that are (1) eligible for loans under section 7(b) (3) of the Small Business Act, or (2) eligible for loans under title IV of the Economic Opportunity Act of 1964,”. 42 USC 2901–2907. Annual report, contents. 80 Stat. 1359. 15 USC 687.
Effective date note
Amendment by Pub. L. 90–104 effective 90 days after Oct. 11, 1967, see section 211 of Pub. L. 90–104, set out as a note under section 681 of this title.
1970
Housing and Urban Development Act of 1970
Pub. L. 91–609 title IX § 911(a)(2) · 84 Stat. 1770
Substituted · 15 U.S.C. § 692(b); 15 U.S.C. § 692(c)(4)
Pub. L. 91–609 substituted “part” for “title”
Source evidence
Code amendment note
Subsecs. (b), (c)(4). Pub. L. 91–609 substituted “part” for “title”.
Enacted provision · exact public law section
(2) by striking out “this title”, wherever it appears in sections 401 and 402, and inserting in lieu thereof “this part”;

3 of 3 references resolved to an enrolled provision

Editorial Notes

Amendments1967–1970 · 2 rounds

1970

Subsecs. (b), (c)(4). Pub. L. 91–609 substituted “part” for “title”.

1967

Subsec. (a). Pub. L. 90–104 struck out from introductory text “that are (1) eligible for loans under section 636(b)(3) of this title, or (2) eligible for loans under subchapter IV of chapter 34 of Title 42,” after “small business concerns”.

Statutory Notes and Related Subsidiaries

Effective Date of 1967 Amendment

Amendment by Pub. L. 90–104 effective 90 days after Oct. 11, 1967, see section 211 of Pub. L. 90–104, set out as a note under section 681 of this title.

Credits

1965–1970 · 3 acts

1965Pub. L. 85–699, title IV, § 401, as added Pub. L. 89–117, title III, § 316(a), Aug. 10, 1965, 79 Stat. 482
1967amended Pub. L. 90–104, title II, § 209, Oct. 11, 1967, 81 Stat. 271
1970Pub. L. 91–609, title IX, § 911(a)(2), Dec. 31, 1970, 84 Stat. 1812.

Show as published

(Pub. L. 85–699, title IV, § 401, as added Pub. L. 89–117, title III, § 316(a), Aug. 10, 1965, 79 Stat. 482; amended Pub. L. 90–104, title II, § 209, Oct. 11, 1967, 81 Stat. 271; Pub. L. 91–609, title IX, § 911(a)(2), Dec. 31, 1970, 84 Stat. 1812.)