110 STAT. 3009-743 PUBLIC LAW 104-208—SEPT. 30, 1996 "(3) ADEQUACY.— In addition to the requirements of paragraph (1), the Administrator shall— "(A) determine whether the private capital of each licensee is adequate to assure a reasonable prospect that the licensee will be operated soundly and profitably, and managed actively and prudently in accordance with its articles; and "(B) determine that the licensee will be able". (2) EXEMPTION FOR CERTAIN LICENSEES.— Section 302(a) (15 U.S.C. 682(a)) is amended by adding at the end the following new paragraph: "(4) EXEMPTION FROM CAPITAL REQUIREMENTS. — The Administrator may, in the discretion of the Administrator, approve leverage for any licensee licensed under subsection (c) or (d) of section 301 before the date of enactment of the Small Business Program Improvement Act of 1996 that does not meet the capital requirements of paragraph (1), if— "(A) the licensee certifies in writing that not less than 50 percent of the aggregate dollar amount of its financings after the date of enactment of the Small Business Program Improvement Act of 1996 will be provided to smaller enterprises; and "(B) the Administrator determines that such action would not create or otherwise contribute to an unreasonable risk of default or loss to the United States Government.". (3) DIVERSIFICATION OF OWNERSHIP. — Section 302(c) (15 U.S.C. 682(c)) is amended to read as follows: "(c) DIVERSIFICATION OF OWNERSHIP. —The Administrator shall ensure that the management of each licensee licensed after the date of enactment of the Small Business Program Improvement Act of 1996 is sufficiently diversified from and unaffiliated with the ownership of the licensee in a manner that ensures independence and objectivity in the financial management and oversight of the investments and operations of the licensee.". (d) BORROWING.— (1) DEBENTURES.— Section 303(b) (15 U.S.C. 683(b)) is amended in the first sentence, by striking "(but only and all that follows through "terms)". (2) THIRD PARTY DEBT. —Section 303(c) (15 U.S.C. 683(c)) is amended to read as follows: "(c) THIRD PARTY DEBT. — The Administrator— "(1) shall not permit a licensee having outstanding leverage to incur third party debt that would create or contribute to an unreasonable risk of default or loss to the Federal Government; and "(2) shall permit such licensees to incur third party debt only on such terms and subject to such conditions as may be established by the Administrator, by regulation or otherwise.". (3) REQUIREMENT TO FINANCE SMALLER ENTERPRISES.—Section 303(d) (15 U.S.C. 683(d)) is amended to read as follows: "(d) REQUIREMENT TO FINANCE SMALLER ENTERPRISES. —The Administrator shall require each licensee, as a condition of approval of an application for leverage, to certify in writing that not less tjian 20 percent of the aggregate dollar amount of the financings of the licensee will be provided to smaller enterprises.". (4) CAPITAL IMPAIRMENT REQUIREMENTS.—
�
