Page:United States Statutes at Large Volume 94 Part 1.djvu/901

 PUBLIC LAW 96-302—JULY 2, 1980 (5) by guaranteeing loans to qualified employee trusts and similar employee organizations, the Small Business Administration can provide feasible and desirable methods for the transfer of all or part of the ownership of a small business concern to its employees. SEC. 503. (a) The purposes of this title are— (1) to provide that a qualified employee trust shall be eligible for loan guarantees under section 7(a) of the Small Business Act with respect to a small business concern, regardless of the percentage of stock of the concern held by the trust, and (2) to provide in section 505 of this Act authority to address the specific case in which the Small Business Administration guarantees loans under section 7(a) of the Small Business Act for purposes of providing funds to a qualified employee trust (and other employee organizations which are treated as qualified employee trusts) for the purchase, by at least 51 percent of the employees, of at least 51 percent of the stock of a business which is operated for profit and which is— (A) a small business concern, or (B) a corporation which is controlled by another person if, after the plan for the purchase of such corporation is carried out, such corporation would be a small business concern. (b) Nothing in this title shall be construed to prohibit the Small Business Administration from making loan guarantees under section 7(a) of the Small Business Act to qualified employee trusts which own less than 51 percent of the stock of a continuing business. SEC. 504. Section 3 of the Small Business Act is amended by adding at the end thereof the following new subsection: "(c)(1) For purposes of this Act, a qualified employee trust shall be eligible for any loan guarantee under section 7(a) with respect to a small business concern on the same basis as if such trust were the same legal entity as such concern. "(2) For purposes of this Act, the term 'qualified employee trust' means, with respect to a small business concern, a trust— "(A) which forms part of an employee stock ownership plan (as defined in section 4975(e)(7) of the Internal Revenue Code of 1954)— "(i) which is maintained by such concern, and "(ii) which provides that each participant in the plan is entitled to direct the plan as to the manner in which voting rights under qualifying employer securities (as defined in section 4975(e)(8) of such Code) which are allocated to the account of such participant are to be exercised with respect to a corporate matter which (by law or charter) must be decided by a majority vote of outstanding common shares voted; and "(B) in the case of any loan guarantee under section 7(a), the trustee of which enters into an agreement with the Administrator which is binding on the trust and on such small business concern and which provides that— "(i) the loan guaranteed under section 7(a) shall be used solely for the purchase of qualifying employer securities of such concern, "(ii) all funds acquired by the concern in such purchase shall be used by such concern solely for the purposes for which such loan was guaranteed.

94 STAT. 851

Purposes. 15 USC 636 note. 15 USC 636, post, p. 852.

15 USC 632. Loan guarantee eligibility. 15 USC 636, post, p. 852. "Qualified employee trust.' 26 USC 4975.

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