[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 46 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 46
To establish a small business and domestic production recovery
investment facility, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 24 (legislative day, January 3), 2023
Mr. Rubio (for himself and Mr. Risch) introduced the following bill;
which was read twice and referred to the Committee on Small Business
and Entrepreneurship
_______________________________________________________________________
A BILL
To establish a small business and domestic production recovery
investment facility, 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 ``American Innovation and
Manufacturing Act''.
SEC. 2. SMALL BUSINESS INVESTMENT COMPANY PROGRAM.
(a) In General.--Part A of title III of the Small Business
Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended--
(1) in section 302(a) (15 U.S.C. 682(a))--
(A) in paragraph (1)--
(i) in subparagraph (A), by striking ``or''
at the end;
(ii) in subparagraph (B), by striking the
period at the end and inserting ``; or''; and
(iii) by adding at the end the following:
``(C) $20,000,000, adjusted every 5 years for
inflation, with respect to each licensee authorized or
seeking authority to sell bonds to the Administration
as a participating investment company under section
321.''; and
(2) by adding at the end the following:
``SEC. 321. SMALL BUSINESS AND DOMESTIC PRODUCTION RECOVERY INVESTMENT
FACILITY.
``(a) Definitions.--In this section:
``(1) Eligible small business concern.--The term `eligible
small business concern'--
``(A) means a small business concern that is a
manufacturing business that is assigned a North
American Industry Classification System code beginning
with 31, 32, or 33 at the time at which the small
business concern receives an investment from a
participating investment company under the facility;
and
``(B) does not include an entity described in
section 7(a)(37)(A)(iv)(III) of the Small Business Act
(15 U.S.C. 636(a)(37)(A)(iv)(III)).
``(2) Facility.--The term `facility' means the facility
established under subsection (b).
``(3) Fund.--The term `Fund' means the fund established
under subsection (h).
``(4) Participating investment company.--The term
`participating investment company' means a small business
investment company approved under subsection (d) to participate
in the facility.
``(5) Protege investment company.--The term `protege
investment company' means a small business investment company
that--
``(A) is majority managed by new, inexperienced, or
otherwise underrepresented fund managers; and
``(B) elects and is selected by the Administration
to participate in the pathway-protege program under
subsection (g).
``(6) Small business concern.--The term `small business
concern' has the meaning given the term in section 3(a) of the
Small Business Act (15 U.S.C. 632(a)).
``(b) Establishment.--
``(1) Facility.--The Administrator shall establish and
carry out a facility to increase resiliency in the
manufacturing supply chain of eligible small business concerns
by providing financial assistance to participating investment
companies that facilitate equity financings to eligible small
business concerns in accordance with this section.
``(2) Administration of facility.--The facility shall be
administered by the Administrator acting through the Associate
Administrator described in section 201.
``(c) Applications.--
``(1) In general.--Any small business investment company
may submit to the Administrator an application to participate
in the facility.
``(2) Requirements for application.--An application to
participate in the facility shall include the following:
``(A) A business plan describing how the applicant
intends to make successful equity investments in
eligible small business concerns.
``(B) Information regarding the relevant investment
qualifications and backgrounds of the individuals
responsible for the management of the applicant.
``(C) A description of the extent to which the
applicant meets the selection criteria under subsection
(d)(2).
``(3) Exceptions to application for new licensees.--Not
later than 90 days after the date of enactment of this section,
the Administrator shall reduce requirements for applicants
applying to operate as a participating investment company under
this section in order to encourage the participation of new
small business investment companies in the facility under this
section, which may include the requirements established under
part 107 of title 13, Code of Federal Regulations, or any
successor regulation, relating to--
``(A) the approval of initial management expenses;
``(B) the management ownership diversity
requirement;
``(C) the disclosure of general compensatory
practices and fee structures; or
``(D) any other requirement that the Administrator
determines to be an obstacle to achieving the purposes
described in this paragraph.
``(d) Selection of Participating Investment Companies.--
``(1) Determination.--
``(A) In general.--Except as provided in paragraph
(3), not later than 60 days after the date on which the
Administrator receives an application under subsection
(c), the Administrator shall--
``(i) make a final determination to approve
or disapprove such applicant to participate in
the facility; and
``(ii) transmit the determination to the
applicant in writing.
``(B) Commitment amount.--Except as provided in
paragraph (3), at the time of approval of an applicant,
the Administrator shall make a determination of the
amount of the commitment that may be awarded to the
applicant under this section.
``(2) Selection criteria.--In making a determination under
paragraph (1), the Administrator shall consider--
``(A) the probability that the investment strategy
of the applicant will successfully repay any financial
assistance provided by the Administration, including
the probability of a return significantly in excess
thereof;
``(B) the probability that the investments made by
the applicant will--
``(i) provide capital to eligible small
business concerns; or
``(ii) create or preserve jobs in the
United States;
``(C) the probability that the applicant will meet
the objectives in the business plan of the applicant,
including the financial goals, and, if applicable, the
pathway-protege program in accordance with subsection
(g); and
``(D) the probability that the applicant will
assist eligible small business concerns in achieving
profitability.
``(3) Approval of participating investment companies.--
``(A) Provisional approval.--
``(i) In general.--Notwithstanding
paragraph (1), with respect to an application
submitted by an applicant to operate as a
participating investment company under this
section, the Administrator may provide
provisional approval for the applicant in lieu
of a final determination of approval and
determination of the amount of the commitment
under that paragraph.
``(ii) Purpose.--The purpose of a
provisional approval under clause (i) is to--
``(I) encourage applications from
investment companies with an investment
mandate from the committed private
market capital of the investment
company that does not conform to the
requirements described in this section
at the time of application;
``(II) allow the applicant to more
effectively raise capital commitments
in the private markets by referencing
the intent of the Administrator to
award the applicant a commitment; and
``(III) allow the applicant to more
precisely request the desired amount of
commitment pending the securing of
capital from private market investors.
``(iii) Limit on period of the time.--The
period between a provisional approval under
clause (i) and the final determination of
approval under paragraph (1) shall not exceed
12 months.
``(e) Commitments and SBIC Bonds.--
``(1) In general.--The Administrator may, out of amounts
available in the Fund, purchase or commit to purchase from a
participating investment company 1 or more accruing bonds that
include equity features as described in this subsection.
``(2) Bond terms.--A bond purchased by the Administrator
from a participating investment company under this subsection
shall have the following terms and conditions:
``(A) Term and interest.--
``(i) In general.--The bond shall be issued
for a term of not less than 15 years and shall
bear interest at a rate determined by the
Administrator of not more than 2 percent.
``(ii) Accrual of interest.--Interest on
the bond shall accrue and shall be payable in
accordance with subparagraph (D).
``(iii) Prepayment.--The bond shall be
prepayable without penalty after the end of the
1-year period beginning on the date on which
the bond was purchased.
``(B) Profits.--
``(i) In general.--The Administration shall
be entitled to receive a share of the profits
net of any profit sharing performance
compensation of the participating investment
company equal to the quotient obtained by
dividing--
``(I) one-third of the commitment
that the participating investment
company is approved for under
subsection (d); by
``(II) the commitment approved
under subsection (d) plus the
regulatory capital of the participating
investment company at the time of
approval under that subsection.
``(ii) Determination of percentage.--The
share to which the Administration is entitled
under clause (i)--
``(I) shall be determined at the
time of approval under subsection (d);
and
``(II) without the approval of the
Administration, shall not be revised,
including to reflect subsequent
distributions of profits, returns of
capital, or repayments of bonds, or
otherwise.
``(C) Profit sharing performance compensation.--
``(i) Receipt by administration.--The
Administration shall receive a share of profits
of not more than 2 percent, which shall be
deposited into the Fund and be available to
make commitments under this subsection.
``(ii) Receipt by managers.--The managers
of the participating investment company may
receive a maximum profit sharing performance
compensation of 25 percent minus the share of
profits paid to the Administration under clause
(i).
``(D) Prohibition on distributions.--No
distributions on capital, including profit
distributions, shall be made by the participating
investment company to the investors or managers of the
participating investment company until the
Administration has received payment of all accrued
interest on the bond committed under this section.
``(E) Repayment of principal.--Except as described
in subparagraph (F), repayments of principal of the
bond of a participating investment company shall be--
``(i) made at the same time as returns of
private capital; and
``(ii) in amounts equal to the pro rata
share of the Administration of the total amount
being repaid or returned at such time.
``(F) Liquidation or default.--Upon any liquidation
event or default, as defined by the Administration, any
unpaid principal or accrued interest on the bond
shall--
``(i) have a priority over all equity of
the participating investment company; and
``(ii) be paid before any return of equity
or any other distributions to the investors or
managers of the participating investment
company.
``(3) Amount of commitments and purchases.--
``(A) Maximum amount.--The maximum amount of
outstanding bonds and commitments to purchase bonds for
any participating investment company under the facility
shall be the lesser of--
``(i) twice the amount of the regulatory
capital of the participating investment
company; or
``(ii) $200,000,000.
``(4) Commitment process.--Commitments by the
Administration to purchase bonds under the facility shall
remain available to be sold by a participating investment
company until the end of the fourth fiscal year following the
year in which the commitment is made, subject to review and
approval by the Administration based on regulatory compliance,
financial status, change in management, deviation from business
plan, and such other limitations as may be determined by the
Administration by regulation or otherwise.
``(5) Commitment conditions.--
``(A) In general.--As a condition of receiving a
commitment under the facility, not less than 50 percent
of amounts invested by the participating investment
company shall be invested in eligible small business
concerns.
``(B) Examinations.--In addition to the matters set
forth in section 310(c), the Administration shall
examine each participating investment company in such
detail so as to determine whether the participating
investment company has complied with the requirements
under this subsection.
``(f) Distributions and Fees.--
``(1) Distribution requirements.--
``(A) Distributions.--As a condition of receiving a
commitment under the facility, a participating
investment company shall make all distributions to the
Administrator in the same form and in a manner as are
made to investors, or otherwise at a time and in a
manner consistent with regulations or policies of the
Administration.
``(B) Allocations.--A participating investment
company shall make allocations of income, gain, loss,
deduction, and credit to the Administrator with respect
to any outstanding bonds as if the Administrator were
an investor.
``(2) Fees.--The Administrator may not charge fees for
participating investment companies other than examination fees
that are consistent with the license of the participating
investment company.
``(3) Bifurcation.--Losses on bonds issued by participating
investment companies shall not be offset by fees or any other
charges on debenture small business investment companies.
``(g) Protege Program.--The Administrator shall establish a
pathway-protege program in which a protege investment company may
receive technical assistance and program support from a participating
investment company on a voluntary basis and without penalty for non-
participation.
``(h) Loss Limiting Fund.--
``(1) In general.--There is established in the Treasury a
fund for making commitments and purchasing bonds with equity
features under the facility and receiving capital returned by
participating investment companies.
``(2) Use of funds.--Amounts appropriated to the Fund or
deposited in the Fund under paragraph (3) shall be available to
the Administrator, without further appropriation, for making
commitments and purchasing bonds under the facility and
expenses and payments, excluding administrative expenses,
relating to the operations of the Administrator under the
facility.
``(3) Depositing of amounts.--
``(A) In general.--All amounts received by the
Administrator from a participating investment company
relating to the facility, including any moneys,
property, or assets derived by the Administrator from
operations in connection with the facility, shall be
deposited in the Fund.
``(B) Period of availability.--Amounts deposited
under subparagraph (A) shall remain available until
expended.
``(i) Application of Other Sections.--To the extent not
inconsistent with requirements under this section, the Administrator
may apply sections 309, 311, 312, 313, and 314 to activities under this
section and an officer, director, employee, agent, or other participant
in a participating investment company shall be subject to the
requirements under such sections.
``(j) Authorization of Appropriations.--There is authorized to be
appropriated for the first fiscal year beginning after the date of
enactment of this part $10,000,000,000 to carry out the facility.
Amounts appropriated pursuant to this subsection shall remain available
until the end of the second fiscal year beginning after the date of
enactment of this section.''.
(b) Approval of Bank-Owned, Non-Leveraged Applicants.--Section
301(c)(2) of the Small Business Investment Act of 1958 (15 U.S.C.
681(c)(2)) is amended--
(1) in subparagraph (B), in the matter preceding clause
(i), by striking ``Within'' and inserting ``Except as provided
in subparagraph (C), within''; and
(2) by adding at the end the following:
``(C) Exception for bank-owned, non-leveraged
applicants.--Notwithstanding subparagraph (B), not
later than 45 days after the date on which the
Administrator receives a completed application
submitted by a bank-owned, non-leveraged applicant in
accordance with this subsection and in accordance with
such requirements as the Administrator may prescribe by
regulation, the Administrator shall--
``(i) review the application in its
entirety; and
``(ii)(I) approve the application and issue
a license for such operation to the applicant
if the requirements of this section are
satisfied; or
``(II) disapprove the application and
notify the applicant in writing of the
disapproval.''.
(c) Electronic Submissions.--Part A of title III of the Small
Business Investment Act of 1958 (15 U.S.C. 681 et seq.), as amended by
subsection (a) of this section, is amended by adding at the end the
following:
``SEC. 322. ELECTRONIC SUBMISSIONS.
``The Administration shall permit any document submitted under this
title, or pursuant to a regulation carrying out this title, to be
submitted electronically, including by permitting an electronic
signature for any signature that is required on such a document.''.
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