[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3717 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 3717
To establish a MicroCap small business investment company designation,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 25, 2023
Mr. Neguse (for himself and Mrs. Kim of California) introduced the
following bill; which was referred to the Committee on Small Business
_______________________________________________________________________
A BILL
To establish a MicroCap small business investment company designation,
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 ``MicroCap Small Business Investing
Act of 2023''.
SEC. 2. MICROCAP SMALL BUSINESS INVESTMENT COMPANY DESIGNATION.
(a) In General.--Title III of the Small Business Investment Act of
1958 (15 U.S.C. 681 et seq.) is amended--
(1) in section 301(c), by adding at the end the following:
``(5) Microcap small business investment company license.--
``(A) In general.--Notwithstanding any other
provision of law, the Administrator may approve an
application and issue not more than 10 licenses
annually under this subsection with respect to any
applicant--
``(i) that would otherwise be issued a
license under this subsection, except that the
management of the applicant does not satisfy
the qualification requirements under paragraph
(3)(A)(ii) to the extent that such requirements
relate to investment experience and track
record, including any such requirements further
set forth in section 107.305 of title 13, Code
of Federal Regulations, or any successor
regulation;
``(ii) for which the fund managers have--
``(I) a documented record of
successful business experience;
``(II) a record of business
management success; or
``(III) knowledge in the particular
industry or business in which the
investment strategy is being pursued;
and
``(iii) that, in addition to any other
requirement applicable to the applicant under
this title or the rules issued to carry out
this title (including section 121.301(c)(2) of
title 13, Code of Federal Regulations, or any
successor regulation), will make not less than
25 percent of its investments in--
``(I) low-income communities, as
that term is defined in section 45D(e)
of the Internal Revenue Code of 1986;
``(II) a community that has been
designated as a qualified opportunity
zone under section 1400Z-1 of the
Internal Revenue Code of 1986;
``(III) businesses primarily
engaged in research and development;
``(IV) manufacturers;
``(V) businesses primarily owned or
controlled by individuals in
underserved communities before
receiving capital from the applicant;
and
``(VI) rural areas, as that term is
defined by the Bureau of the Census.
``(B) Priority; streamlined process.--With respect
to an application for a license pursuant to this
paragraph, the Administrator shall--
``(i) give priority to an applicant for
such a license that is located in an
underlicensed State; and
``(ii) establish a streamlined process for
applicants submitting such an application.
``(C) Timing for issuance of license.--
Notwithstanding paragraph (2), with respect to an
application for a license submitted to the
Administrator pursuant to this paragraph, the
Administrator shall--
``(i) not later than 60 days after the date
on which the application is submitted to the
Administrator, process and provide complete
feedback with respect to any pre-license
application requirements applicable to the
applicant;
``(ii) not restrict the submission of any
application materials; and
``(iii) not later than 90 days after the
date on which the application is submitted to
the Administrator--
``(I) approve the application and
issue a license for such operation to
the applicant, if the requirements for
the license are satisfied; or
``(II) based upon facts in the
record--
``(aa) disapprove the
application; and
``(bb) provide the
applicant with--
``(AA) a clear,
written explanation of
the reason for the
disapproval; and
``(BB) a chance to
remedy any issues with
the application and
immediately reapply,
with technical
assistance provided as
needed and a new
determination made by
the Administrator not
later than 30 days
after the date on which
the applicant re-
submits the
application.
``(D) Leverage.--A company licensed pursuant to
this paragraph shall--
``(i) not be eligible to receive leverage
in an amount that is more than $25,000,000; and
``(ii) access leverage in an amount that is
not more than 100 percent of the private
capital of the applicant.
``(E) Investment committee.--
``(i) In general.--Each company licensed
pursuant to this paragraph shall have not fewer
than 2 independent members on the investment
committee of the company in a manner that
complies with the following requirements:
``(I) The independent members of
the investment committee are or have
been licensed managers of small
business investment companies within
the preceding 10-year period.
``(II) No small business investment
company described in subclause (I) may
adversely affected by the relationship
of the independent members of the
investment committee with the company
licensed pursuant to this paragraph.
``(III) The independent members of
the investment committee are required
to approve each investment made by the
company.
``(IV) The independent members of
the investment committee shall not be
paid a management fee, but may receive
paid expenses and a portion of any
carried interest.
``(ii) Leverage limits.--Any leverage
associated with a company licensed pursuant to
this paragraph shall not be counted toward the
leverage limits of the independent members of
the investment committee of the company under
this title.''; and
(2) in section 303(d) (15 U.S.C. 683(d)), by inserting
``(or, with respect to a company licensed under section
301(c)(5), 50 percent)'' after ``25 percent''.
(b) SBA Requirements.--
(1) Definitions.--In this subsection--
(A) the term ``Administrator'' means the
Administrator of the Small Business Administration; and
(B) the term ``covered company'' means an entity
that is licensed to operate as a small business
investment company pursuant to paragraph (5) of section
301(c) of the Small Business Investment Act of 1958 (15
U.S.C. 681(c)), as added by subsection (a).
(2) Rules.--Not later than 90 days after the date of
enactment of this Act, the Administrator shall issue rules to
carry out this section and the amendments made by this section.
(3) Annual report.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter, the
Administrator shall publicly publish a report that details, for
the year covered by the report--
(A) the number of covered companies licensed by the
Administrator;
(B) the industries in which covered companies have
invested;
(C) the geographic locations of covered companies;
and
(D) the aggregate performance of covered companies.
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