15 U.S.C. § 634 — General powers

(a) Seal; appointment and compensation of personnel; use of other services and facilities. The Administration^* may adopt, change, and use a seal, and courts must officially recognize it. Subject to the civil-service and classification laws, the Administrator^* may select, employ, and appoint the officers, employees, attorneys, and agents needed to carry out this chapter; set their pay; define their authority and duties; and pay the costs of qualifying some of them as notaries public. With the consent of a board, commission, independent establishment, or executive department of the Government, the Administration may use that body's information, services, facilities (including its field service), officers, and employees. The use may be reimbursed or not reimbursed.

(b) Powers of Administrator. In carrying out the functions, powers, and duties given to the Administrator by this chapter, the Administrator may—

(1) Sue and be sued in a court of record of a State with general jurisdiction or in a United States^* district court. A United States district court has jurisdiction to decide these disputes regardless of the amount involved. But no attachment, injunction, garnishment, or similar process, whether temporary or final, may be issued against the Administrator or the Administrator's property.

(2) Under the Administrator's regulations, assign or sell at public or private sale, or otherwise dispose of for cash or credit, any evidence of debt, contract, claim, personal property, or security assigned to or held by the Administrator in connection with paying loans made under this chapter. The Administrator may use the terms, conditions, and consideration the Administrator finds reasonable. The Administrator may collect or compromise all obligations assigned to or held by the Administrator, and all legal or equitable rights that arise in connection with paying those loans, until the obligations can be referred to the Attorney General for suit or collection.

(3) Deal with, complete, renovate, improve, modernize, insure, or rent any real property conveyed to or otherwise acquired by the Administrator in connection with paying loans made under this chapter. The Administrator may also sell that property for cash or credit, using the terms, conditions, and consideration the Administrator finds reasonable.

(4) Seek final collection of all claims against third parties assigned to the Administrator in connection with loans made by the Administrator, whether by compromise or otherwise. This includes authority to obtain deficiency judgments or use other methods for mortgages assigned to the Administrator. Section 6101 of title 41 does not apply to a hazard-insurance contract, or to a purchase or contract for services or supplies for property obtained by the Administrator because of loans made under this chapter, when the premium or amount does not exceed $1,000. The Administrator, or an officer or agent appointed by the Administrator, may sign in the Administrator's name deeds of conveyance, deeds of release, mortgage assignments and satisfactions, and any other written instrument concerning real property or an interest in real property acquired under this chapter. No express delegation of power or power of attorney is required. This does not prevent the Administrator from delegating that power by order or power of attorney to an appointed officer or agent.

(5) Acquire, in any lawful way, any real, personal, or mixed property, whether tangible or intangible, whenever the Administrator considers it necessary or appropriate to conduct the activities authorized in section 636(a) and section 636(b) of this title.

(6) Make the rules and regulations the Administrator considers necessary to carry out the authority given by or under this chapter.

(7) In addition to other powers, functions, privileges, and immunities given to the Administrator, take any action the Administrator decides is necessary or desirable in making, servicing, compromising, modifying, liquidating, or otherwise dealing with or realizing on loans made under this chapter. This includes obtaining attorney services by contract in an office where an attorney cannot be employed full time economically to provide those services. For deferred participation loans, including loans guaranteed under paragraph (15) or (35) of section 636(a) of this title, the Administrator may, at the Administrator's discretion and under the Administrator's regulations, authorize participating lending institutions to service loans for the Administrator. This may include deciding eligibility and creditworthiness and monitoring, collecting, and liquidating loans.

(8) Pay transportation expenses and daily allowances instead of subsistence expenses, under subchapter I of chapter 57 of title 5, for an Administration employee who travels to provide temporary services for no more than six months in connection with a disaster^* described in section 636(b) of this title. The payment may cover travel from the employee's place of appointment to the disaster area, time at that area, other temporary duty posts, and return after the assignment. The Administrator may extend the six-month limit by another six months if the Administrator decides the extension is needed to continue efficient disaster-loan activities.

(9) Accept services and facilities from Federal, State, and local agencies and groups, whether public or private, and use free services and facilities when they are needed from time to time to further the objectives of section 636(b) of this title.

(10) After the Administration purchases a deferred participation entered into under section 636 of this title, continue charging interest on the purchased amount at a rate no higher than the rate initially charged by the participating institution, for the remaining term of the debt.

(11) Conduct investigations the Administrator considers necessary to determine whether a recipient or participant in assistance under this chapter, or any other person, has engaged or is about to engage in conduct that violates, or will violate, this chapter, a rule or regulation under it, or an order issued under it. The Administration must allow anyone to submit a written statement, under oath or under another method the Administration chooses, about all facts and circumstances concerning the matter being investigated. For an investigation, the Administration may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require relevant books, papers, and documents. Witnesses and records may be required from anywhere in the United States. If a person, including a recipient or participant, refuses to obey a subpoena, the Administration may ask a United States court where the investigation or proceeding is taking place, or where the person lives or does business, to help require the person's attendance, testimony, and production of records. The court may order the person to appear before the Administration, produce records if ordered, or testify about the matter under investigation. The court may punish failure to obey its order as contempt. Process in such a case may be served in the judicial district where the person lives or wherever the person is found.

(12) Impose, keep, and use only fees specifically authorized by law or already in effect on September 30, 1994, at the amounts and rates in effect on that date. Subject to approval in appropriations Acts, the Administrator may also impose, keep, and use these additional fees:

(A) No more than $100 for each loan-servicing action, other than a loan assumption, requested after the loan is disbursed. This includes substituting collateral, releasing or substituting a guarantor, reamortizing the loan, and similar actions.

(B) No more than $300 for a loan assumption.

(C) No more than 1 percent of the amount of requested financing under title III of the Small Business Investment Act of 1958 (15 U.S.C. 681 et seq.) when the applicant asks the Administration to commit to funding during the following year.

(D) An amount that recovers the direct, additional cost of producing and distributing compilations of information produced by the Administration under this chapter and the Small Business Investment Act of 1958 (15 U.S.C. 661 et seq.).

(13) Collect, keep, and use, subject to approval in appropriations Acts, amounts collected by fiscal transfer agents that the agents did not use to pay the cost of loan-pooling or debenture-servicing operations. Amounts collected under this paragraph and paragraph (12) may be used only to help administer the program that produced the excess amounts.

(14) Require a lender authorized to make loans under section 636 of this title to pay examination and review fees. The fees must be deposited in the Administration's salaries-and-expenses account and may be used for examinations, reviews, and other oversight of lenders.

(c) Procurement of experts and consultants; compensation and expenses. To the extent the Administrator finds necessary to carry out this chapter, the Administrator may obtain temporary services (for no more than one year) or intermittent services from experts, consultants, or organizations of experts or consultants, including stenographic reporting services, by contract or appointment. These services are not subject to the civil-service and classification laws. They are also not subject to section 6101 of title 41, except for stenographic reporting services provided by organizations. An individual employed this way may be paid no more than the daily equivalent of the highest rate allowed under section 5332 of title 5, including travel time. When away from home or the individual's regular place of business, the individual may receive travel expenses, including a daily allowance instead of subsistence expenses, as authorized by section 5703 of title 5.

(d) Safety deposit box rentals. Section 3324(a) and (b) of title 31 does not apply to advance rental payments the Administration makes for safety deposit boxes used to safeguard instruments held as security for loans or other documents.

(e) Undertaking or suspension of payment obligation; period; extension of maturity; repayment agreement; “required payments” defined.

(1) Subject to this subsection's requirements and conditions, when a small business concern^* that received a loan under this chapter applies, the Administration may take over the concern's duty to make the loan's “required payments,” or may suspend that duty if the Administration made the loan directly. While the Administration is making the payments under the takeover, or while the duty is suspended, the small business concern cannot be required to make those loan payments.

(2) The Administration may take over or suspend a small business concern's duty for no more than five years only if—

(A) Without the takeover or suspension, the concern would, in the Administration's sole judgment, become insolvent or remain insolvent;

(B) With the takeover or suspension, the concern would, in the Administration's sole judgment, become or remain a viable small business entity; and

(C) The concern signs a written agreement satisfactory to the Administration as described in paragraph (4).

(3) Despite sections 636(a)(4)(C) and 636(i)(1) of this title, the Administration may extend the maturity of a loan for which it takes over or suspends the payment duty under this subsection for a matching period.

(4)(A) Before taking over or suspending the duty, the Administration must require the concern to agree in writing to repay the total payments that were required under the loan during the takeover or suspension period. Consistent with the purposes of this subsection, the agreement must require repayment either—

(i) Through periodic payments that are no smaller and are due no less often than the payments due under the loan during that period;

(ii) Under a repayment schedule agreed to by the Administration and the concern; or

(iii) Through a combination of the payments in clauses (i) and (ii).

(B) Besides requiring the written agreement in subparagraph (A), before taking over or suspending the duty the Administration must take, and require the concern to take, any action the Administration considers appropriate. This includes providing security the Administration considers necessary or appropriate to adequately protect the lender's rights and interests during and after the period of the takeover or suspension. The lender may be the Small Business Administration or a participant.

(5) “Required payments” means principal and interest payments under a loan. This section defines that term.

(f) Sale of guaranteed portion of loans by lender or later holder; limits; secondary market.

(1) The lender and any later holder may sell the guaranteed portion of a loan made under this chapter, consistent with the Administration's regulations on these sales. The following limits apply:

(A) Before the Administration approves a sale, or upon a later resale, of a loan guaranteed by the Administration, if the lender certifies that the loan was properly closed and that the lender substantially followed the guarantee agreement and the Administration's regulations, the Administration must review and approve only materials it has not previously approved.

(B) All fees owed to the Administration on a guaranteed loan must be paid in full before any sale.

(C) Each loan, except a loan made under section 636(a)(14) of this title, must be fully disbursed to the borrower before any sale.

(2) After a loan is sold in the secondary market, the lender remains bound by its guarantee agreement with the Administration and must continue servicing the loan consistently with that agreement's terms and conditions.

(3) The Administration must develop procedures needed to facilitate, administer, and promote secondary-market operations and to assess whether those operations increase small businesses' access to capital at reasonable rates and terms. Beginning March 31, 1997, the unguaranteed portion of a loan made under section 636(a) of this title may not be sold until the Administration issues a final regulation that applies uniformly to depository institutions and other lenders. The regulation must state the terms and conditions for allowing those sales, including suitable reserve requirements and other safeguards protecting the program's safety and soundness.

(4) Nothing in this subsection or subsection (g) may be interpreted to block or end the borrower's, or the borrower's successor in interest's, right to prepay all or part of a loan made under section 636(a) of this title, even if its guaranteed portion may be included in a trust or pool. Nothing here may block or end rights under section 636(a)(6)(C) of this title or subsection (e) of this section.

(g) Trust certificates; guarantee of timely principal and interest payments; full faith and credit of the United States; fees; subrogation; dividing loan guarantees.

(1) The Administration may issue trust certificates showing ownership of all or part of the guaranteed portion of one or more loans guaranteed by the Administration under this chapter or under section 696 of this title. The certificates must be based on and backed by a trust or pool approved by the Administration and made up only of the entire guaranteed portions of those loans.

(2) On terms and conditions it considers appropriate, the Administration may guarantee that principal and interest on trust certificates issued by the Administration or its agent for this subsection will be paid on time. The guarantee is limited to the principal and interest on the guaranteed loan portions making up the trust or pool. If a loan in the trust or pool is prepaid voluntarily or because of default, the guarantee of timely principal and interest payments on the certificates is reduced in proportion to the principal and interest represented by that prepaid loan. Interest on prepaid or defaulted loans accrues and is guaranteed only through the date the guarantee is paid. During the certificate's term, the certificate may be called for redemption because all loans in the pool were prepaid or defaulted.

(3) The full faith and credit of the United States is pledged to pay every amount that may have to be paid under a guarantee of trust certificates issued under this subsection by the Administration or its agent.

(4)(A) For a loan guarantee sold in the secondary market under subsection (f), the Administration may collect a fee of no more than 50 percent of the part of the sale price that exceeds 110 percent of the outstanding principal amount of the loan portion guaranteed by the Administration. The Administration or the agent performing the central-registration functions required by subsection (h) must collect the fee and pay it to the Administration. The Administration may use it only to reduce the subsidy on loans guaranteed under section 636(a) of this title. The fee may not be charged to the borrower. An Administration agent may still collect a fee approved by the Administration for the functions described in subsection (h)(2).

(B) The Administration may impose and collect, directly or through a fiscal and transfer agent, a reasonable penalty for late payment of the fee in subparagraph (A). The penalty may not exceed 5 percent of that fee per month, plus interest.

(C) The Administration may contract with an agent to assess and collect the annual fee established under section 636(a)(23) of this title. The agent may be paid for its services with interest earned on the fee while the agent controls it and before the time when the contract requires the agent to send the fee to the Administration.

(5)(A) If the Administration pays a claim under a guarantee issued under this subsection, it is fully substituted to the rights satisfied by that payment.

(B) No State, local, or Federal law may prevent or limit the Administration from exercising its ownership rights in the loan portions making up the trust or pool behind the trust certificates.

(6) If the guaranteed portion of a loan under section 636(a) of this title is more than $500,000, the Administrator must, at a pool assembler's request, divide the guarantee into $500,000 increments and one increment for any remaining amount below $500,000. The purpose is to allow no loan in a pool to exceed $500,000. Only one increment from a divided guarantee may be put in the same pool. Increments from guarantees for different borrowers may be put in the same pool.

(h) Central registration of loans and trust certificates; agent contracts; seller disclosures; regulation of brokers and dealers; electronic registration.

(1) After adopting final rules and regulations, the Administration must—

(A) Provide central registration for all loans and trust certificates sold under subsections (f) and (g);

(B) Contract with an agent to perform the central-registration functions and issue trust certificates to facilitate pooling. The agent must provide a fidelity bond or insurance in the amount the Administration decides is needed to fully protect the Government's interest;

(C) Before a sale, require the seller to disclose to a purchaser of a guaranteed loan portion, and to a purchaser of a trust certificate issued under subsection (g), information about the instrument's terms, conditions, and yield. In this paragraph, when the instrument is a loan, “seller” does not include the entity that made the loan or an individual or entity that sells three or fewer guaranteed loans per year. This section does not otherwise define “seller”; and

(D) Have authority to regulate brokers and dealers in guaranteed loans and trust certificates sold under subsections (f) and (g).

(2) The agent in paragraph (1)(B) may be paid with fees assessed under this section and with interest earned on funds collected by the agent while the agent controls the funds and before the contract requires the agent to transfer them to the Administration or, as appropriate, to trust-certificate holders.

(3) This subsection does not prohibit book-entry or another electronic form of registration for trust certificates. With the Secretary of the Treasury's consent, the Administration may use the Federal Reserve System's book-entry system.

(i) Office of Hearings and Appeals.

(1) Establishment.

(A) Office. An Office of Hearings and Appeals is established in the Administration. It must—

(i) Impartially decide matters about the Administrator's program decisions—

(I) when Congress requires a hearing on the record; or

(II) when the Administrator designates the matter for a hearing by regulation; and

(ii) Include the Administration office that handles requests under section 552 of title 5, commonly called the “Freedom of Information Act,” and keeps records under section 552a of title 5, commonly called the “Privacy Act of 1974.” This section does not define either quoted term.

(B) Jurisdiction.

(i) General rule. Except as provided in clause (ii), the Office must hear appeals of agency actions under or under the authority of this chapter, the Small Business Investment Act of 1958 (15 U.S.C. 661 et seq.), and title 13 of the Code of Federal Regulations. It must also hear other matters the Administrator considers appropriate.

(ii) Exception. The Office may not decide disputes that require a hearing on the record, except disputes involving the small-business programs described in this chapter.

(C) Associate Administrator. The head of the Office is the Chief Hearing Officer appointed under section 633(b)(1) of this title. The Chief Hearing Officer is responsible to the Administrator.

(2) Chief Hearing Officer duties.

(A) General rule. The Chief Hearing Officer must—

(i) Be a career appointee in the Senior Executive Service and an attorney licensed by a State, commonwealth, territory, or possession of the United States, or by the District of Columbia; and

(ii) Be responsible for operating and managing the Office.

(B) Alternative dispute resolution. The Chief Hearing Officer may assign a matter to mediation or another means of “alternative dispute resolution.” This section does not define that term.

(3) Hearing officers.

(A) General rule. The Office must appoint Hearing Officers to perform the duties described in paragraph (1)(A)(i).

(B) Employment conditions. A Hearing Officer appointed under this paragraph—

(i) Must serve in the excepted service as an Administration employee under section 2103 of title 5, under the Chief Hearing Officer's supervision;

(ii) Must be classified in a position to which section 5376 of title 5 applies; and

(iii) Must be paid at a rate no higher than the maximum rate allowed under that section.

(C) Authority and powers. Despite section 556(b) of title 5—

(i) A Hearing Officer may hear cases arising under section 554 of that title;

(ii) A Hearing Officer has the powers described in section 556(c) of that title; and

(iii) The relevant provisions of subchapter II of chapter 5 of that title, except section 556(b), apply to the Hearing Officer.

(D) Treatment of current personnel. An individual serving as a Judge in the Office on the effective date of this subsection, in the position and office designated in section 134.101 of title 13 of the Code of Federal Regulations, is considered qualified to be a Hearing Officer and is redesignated as a Hearing Officer.

(4) Determinations about the status of concerns.

(A) General rule. No later than two days after a final determination that a business concern does not meet the requirements for the status it claims, the concern or the Administrator, as applicable, must update the concern's status in the System for Award Management or any successor system.

(B) Administrator updates. If the concern fails to make the update required by subparagraph (A), the Administrator must make it no later than two days after that failure.

(C) Notice. A concern required to make an update under subparagraph (A) must notify the contracting officer for each contract on which the concern has a pending offer or bid about the determination under subparagraph (A), if the concern in good faith finds that the determination affects its eligibility to perform that contract.

(5) Hearing Officer defined. In this subsection, “Hearing Officer” means an individual appointed or redesignated under this subsection who is an attorney licensed by a State, commonwealth, territory, or possession of the United States, or by the District of Columbia. This section defines that term.