[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5225 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5225
To amend the Small Business Investment Act of 1958 to establish a
Micro-SBIC program, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 10, 2021
Ms. Houlahan introduced the following bill; which was referred to the
Committee on Small Business
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to establish a
Micro-SBIC program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Micro-SBIC and Emerging Managers
Program Act of 2021''.
SEC. 2. MICRO-SBIC LICENSE.
Part A of title III of the Small Business Investment Act of 1958
(15 U.S.C. 681 et seq.) is amended by adding at the end the following
new sections:
``SEC. 321. MICRO-SBIC LICENSE.
``(a) Establishment.--The Administrator shall establish a program
to issue Micro-SBIC licenses to applicants for the purpose of making
investments in and loans to qualified small business concerns.
``(b) Administration.--To the extent practicable, the Administrator
shall administer the program established under this section in a
similar manner to the program established under section 301.
``(c) Applications.--An applicant shall submit an application to
the Administrator at such time, in such manner, and containing such
information as the Administrator may require, including--
``(1) evidence that the applicant holds private capital of
not less than $5,000,000; and
``(2) evidence that the management of the applicant has
significant business expertise relevant to the applicant's
investment strategy.
``(d) Selection of Micro-SBICs.--The Administrator shall select
applicants to be granted a license to operate a Micro-SBIC under this
section.
``(e) Guidance.--The Administrator shall issue guidance that
encourages the participation of nontraditional applicants by reducing
requirements for applicants. Such guidance--
``(1) may include the requirements established under part
107 of title 13, Code of Federal Regulations; and
``(2) shall allow applicants who have not previously
managed an investment company to demonstrate significant
business expertise relevant to the applicant's investment
strategy by reliance upon the presence of at least two track
record investment committee members or participation in the
Emerging Managers Program established under section 322.
``(f) Procedures for Issuing Licenses.--
``(1) Status.--Not later than 90 days after the initial
receipt by the Administrator of an application under this
subsection, the Administrator shall provide the applicant with
a written report detailing the status of the application and
any requirements remaining for the completion of the
application.
``(2) Approval or disapproval.--Except as provided in
paragraph (3) and within a reasonable time after providing the
report under paragraph (1), and in accordance with such
requirements as the Administrator may provide, the
Administrator shall--
``(A) approve the application and issue the
applicant a license to operate as a Micro-SBIC; or
``(B) disapprove the application and notify the
applicant in writing of the disapproval, including
reasons for the disapproval.
``(3) Provisional approval.--
``(A) In general.--The Administrator may provide
provisional approval to an applicant to--
``(i) encourage investment company
applicants with an investment mandate from the
committed private market capital of the
investment company that does not conform to the
requirements relating to private capital in
subsection (c) at the time of application;
``(ii) allow the applicant to more
effectively raise capital commitments from the
private market by such provisional approval;
and
``(iii) allow the applicant to more
precisely request the desired amount of
leverage from the Administrator pending the
securing of capital from private market
investors.
``(B) Limitation.--An applicant provided
provisional approval under subparagraph (A) shall apply
for approval under paragraph (2) not later than 12
months after being granted such provisional approval.
``(g) Maximum Leverage.--
``(1) In general.--The maximum amount of outstanding
leverage made available to any one Micro-SBIC may not exceed--
``(A) 50 percent of the private capital of such
Micro-SBIC, not to exceed $25,000,000; or
``(B) in the case of a Micro-SBIC owned by persons
that also own a small business investment company
licensed under section 301, 100 percent of the private
capital of such Micro-SBIC, not to exceed $50,000,000.
``(2) Investments in certain business.--
``(A) In general.--In calculating the outstanding
leverage of a Micro-SBIC for purposes of subparagraph
(A), the Administrator shall exclude the amount of the
costs basis of any investments made in an entity
described in subparagraph (B) in an amount not to
exceed--
``(i) $25,000,000; or
``(ii) in the case of a Micro-SBIC owned by
persons that also own a small business
investment company licensed under section 301,
$50,000,000.
``(B) Entities.--An entity described in this
subparagraph is--
``(i) a Special Competitive Opportunity Gap
Business (as defined by the Administrator);
``(ii) a small business concern located in
a HUBZone;
``(iii) a small business concern located in
a community that has been designated as an
empowerment zone or an enterprise community
under section 1391 of the Internal Revenue Code
of 1986;
``(iv) a small business concern located in
a community that has been designated as a
promise zone by the Secretary of Housing and
Urban Development; or
``(v) a small business concern located in a
community that has been designated as a
qualified opportunity zone under section 1400Z-
1 of the Internal Revenue Code of 1986.
``(3) Portfolio diversification.--The Administrator shall
revise section 107.740 of title 13, Code of Federal
Regulations, to provide for a higher `overline limit' for a
Micro-SBIC compared to other small business investment
companies.
``(h) Report.--The Administrator shall include in the annual report
required under section 10(a) of the Small Business Act a description
of--
``(1) the number of applications received under this
subsection, including the number of applications received from
applicants the management of which is at least majority
composed of socially disadvantaged individuals or veterans;
``(2) the number of licenses issued under this section,
including the number of such licenses issued to applicants the
management of which is at least majority composed of socially
disadvantaged individuals or veterans;
``(3) the number of investments made by Micro-SBICs in
Special Competitive Opportunity Gap Businesses, disaggregated
by the type of Special Competitive Opportunity Gap Business;
and
``(4) the number of investments made by Micro-SBICs,
disaggregated by debt, debt with equity features, and equity
only.
``(i) Definitions.--In this section:
``(1) Applicant.--The term `applicant' means an
incorporated body, a limited liability corporation, or a
limited partnership organized and chartered or otherwise
existing under State law solely for the purpose of securing a
Micro-SBIC license to perform the functions and conduct the
activities described under this section.
``(2) Management.--The term `management' means a general
partner of an applicant or member of the investment committee
of the applicant.
``(3) Micro-SBIC.--The term `Micro-SBIC' means a company
issued a license to operate pursuant to the requirements of
this section.
``(4) Micro-SBIC license.--The term `Micro-SBIC license'
means a license issued to an applicant to operate pursuant to
the requirements of this section.
``(5) Socially disadvantaged individual.--The term
`socially disadvantaged individual'--
``(A) has the meaning given in section 8(a)(5) of
the Small Business Act; and
``(B) includes an individual who is a woman.
``(6) Track record investment committee member.--The term
`track record investment committee member' means a current or
former small business investment company or lower-middle market
private equity fund manager with the knowledge, experience, and
capability necessary to serve as management for an applicant.
``(7) Veteran.--The term `veteran' has the meaning given
under section 3(q)(4) of the Small Business Act.
``SEC. 322. EMERGING MANAGERS PROGRAM.
``(a) Establishment.--The Administrator shall establish a program
to be known as the `Emerging Managers Program' under which a covered
manager may enter into a written agreement approved by the
Administrator to provide guidance and assistance to an applicant for a
small business investment company license or a Micro-SBIC license that
is managed by not less than two individuals who are emerging managers.
``(b) Leverage.--Leverage made available to a small business
investment company or Micro-SBIC that is managed by at least two
individuals who are emerging managers shall not be considered as part
of the leverage made available to a covered manager.
``(c) Report.--Not later than 5 years after the date of enactment
of this Act, the Administrator shall submit to the Committee on Small
Business of the House of Representatives and the Committee on Small
Business and Entrepreneurship of the Senate a report evaluating the
effectiveness of the Emerging Managers Program established under this
section, including with respect to increasing the number of
applications received by and licenses issued to emerging managers.
``(d) Definitions.--In this subsection:
``(1) Covered manager.--The term `covered manager' means--
``(A) a manager with substantial experience in
operating small business investment companies; and
``(B) as determined by the Administrator, a manager
of a private equity fund or venture fund that is not
licensed as a small business investment company.
``(2) Emerging manager.--The term `emerging manager' means
an individual with an investment record of less than 10 years,
or with a focus on underserved markets.''.
<all>