[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2411 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 2411
To amend the Small Business Investment Act of 1958 to establish the
Scale-Up Manufacturing Investment Company (``SUMIC'') Program.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 23, 2025
Mr. Booker introduced the following bill; which was read twice and
referred to the Committee on Small Business and Entrepreneurship
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to establish the
Scale-Up Manufacturing Investment Company (``SUMIC'') Program.
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 ``Scale-Up Manufacturing Investment
Company Act of 2025''.
SEC. 2. FINDINGS.
Congress finds that--
(1) the strength of the United States manufacturing sector
is critical to the economy and the global competitiveness of
the United States;
(2) United States manufacturers support 17,600,000 jobs in
the United States and account for 12 percent of the gross
domestic product of the United States;
(3) access to capital is essential to growth and innovation
in the manufacturing sector;
(4) small, emerging manufacturers face unique challenges
scaling commercial production in the United States, driving
many young manufacturers to other countries;
(5) structural barriers exist in the United States that
prevent key investments in first-commercial manufacturing
facilities;
(6) a healthy manufacturing sector is essential to
innovation economy of the United States, providing three-
quarters of all private sector research and development,
employing nearly two-thirds of all research and development
workers, and producing the majority of all patents issued;
(7) technology-intensive manufacturing small businesses,
some of which may be start-ups, with the potential to anchor
the next generation of manufacturing production where they
locate, face special challenges in accessing the capital to
move from idea to prototype and into commercial production;
(8) already more capital intensive than software or
services start-ups, manufacturing start-ups and small
businesses face a ``second and wider valley of death'' when it
comes to raising the capital to scale up for commercial
production because of their capital intensity and novel
technology;
(9) a number of countries, including China, South Korea,
Germany, and Japan, provide publicly funded incentives to
attract these firms, recognizing that despite the risks, the
long-term benefits of establishing leadership in emerging
technology areas are large;
(10) a study of manufacturing technology-intensive start-
ups licensed by the Massachusetts Institute of Technology found
that almost all that scaled up into commercial production did
so overseas largely because of this far more attractive capital
and investment environment for manufacturing start-ups, which
is a huge loss for the future of manufacturing in the United
States;
(11) if the United States loses the first generation of
production for a new technology or manufacturing process,
history suggests that it is an uphill battle once lost to
reclaim that capability here given the unique learning and
know-how acquired during the building of that first factory;
and
(12) to ensure that manufacturing technologies invented in
the United States are ultimately made in the United States will
require addressing the unique capital access challenges faced
by these technology-intensive manufacturing start-ups.
SEC. 3. SCALE-UP MANUFACTURING INVESTMENT PROGRAM.
(a) In General.--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:
``PART D--SCALE-UP MANUFACTURING INVESTMENT COMPANY PROGRAM
``SEC. 399A. DEFINITIONS.
``In this part--
``(1) the term `Associate Administrator' means the
Associate Administrator described in section 201;
``(2) the term `Council' means the Scale-Up Manufacturing
Investment Company Credit Council that may be established under
section 399K;
``(3) the term `participating investment fund' means a
privately managed investment fund licensed under section 399C
to operate under the program;
``(4) the term `private capital' has the meaning given the
term in section 103(9);
``(5) the term `program' means the scale-up manufacturing
investment company program established under section 399B;
``(6) the term `qualifying manufacturing project' means an
investment in a small and emerging manufacturer for the
purposes of building first commercial production facilities,
novel manufacturing capabilities, or the introduction into
production of emerging manufacturing technologies;
``(7) the term `small and emerging manufacturer' means any
advanced manufacturer that does not exceed the size standard
established by the Administrator for the applicable North
American Industry Classification System code under section 3 of
the Small Business Act (15 U.S.C. 632); and
``(8) the term `small business concern owned and controlled
by socially and economically disadvantaged individuals' has the
meaning given the term in section 8(d)(3)(C) of the Small
Business Act (15 U.S.C. 637(d)(3)(C)).
``SEC. 399B. ESTABLISHMENT.
``(a) In General.--The Administrator shall establish and carry out
a scale-up manufacturing investment company program under which the
Administrator shall provide leverage to participating investment funds
to support debt and equity investments in qualifying manufacturing
projects of small and emerging manufacturers in the United States.
``(b) Administration of Program.--The program shall be administered
by the Administrator acting through the Associate Administrator.
``SEC. 399C. SELECTION OF PARTICIPATING INVESTMENT FUNDS.
``(a) Application for License.--
``(1) Submission of application.--An investment fund
desiring to receive a license to operate under the program
shall submit an application to the Administrator at such time
and in such manner as the Administrator may require.
``(2) Requirement.--An application submitted under
paragraph (1) shall demonstrate that the investment fund--
``(A) has the requisite minimum private capital
raised from investors; and
``(B) committed to operate under the program as of
the date of submission of the application.
``(3) Status.--Not later than 90 days after the date on
which the Administrator receives an application submitted under
paragraph (1), the Administrator shall provide the applicant
with a written report detailing the status of the application
and any requirements remaining for completion of the
application.
``(b) Selection.--
``(1) In general.--Not later than 180 days after the date
on which the Administrator receives an application under
subsection (a), the Administrator shall approve or deny the
application for a license to operate under the program and
notify the applicant of the determination.
``(2) Criteria.--The Administrator shall establish
selection criteria to evaluate applications to operate under
the program, which shall include, at a minimum--
``(A) the proven investment experience of the
investment fund manager;
``(B) the proven, balanced, and positive-investment
track record of a previous investment fund or the
principals and fund performance analysis measured
against benchmarks and peer funds;
``(C) the experience of the investment fund with
investments relating to small manufacturers and
emerging technologies related to advanced
manufacturing;
``(D) an evaluation of the use of leverage by the
investment fund managers in past deals;
``(E) evidence indicating a cohesive and effective
team and team dynamic;
``(F) principals with strong reputations;
``(G) a record of positive realizations and exits
from previous investments in the investment track
record;
``(H) clearly articulated focus, investment thesis,
investment themes, and investment instruments to be
used to capitalize companies; and
``(I) fund structure and economics that reflect
standard practices and industry norms, such as--
``(i) preferred returns to limited
partners;
``(ii) general partner carried interest
allocations, fees and vesting schedules;
``(iii) adequate fund infrastructure and
supporting back office services; and
``(iv) evidence of fund raising traction
and capability.
``(c) Fees.--
``(1) In general.--The Administration shall prescribe fees
to be paid by each applicant for a license to operate as a
participating investment fund under the program.
``(2) Use of amounts.--Fees collected under this
subsection--
``(A) shall be deposited in the account for
salaries and expenses of the Administration; and
``(B) are authorized to be appropriated solely to
cover the costs of licensing examinations.
``SEC. 399D. PROVISION OF LEVERAGE TO PARTICIPATING INVESTMENT FUNDS.
``(a) In General.--Not later than 60 days after the date on which
the Administrator approves and issues a license under section 399C to
operate as a participating investment fund under the program, the
Administrator may provide not more than $1 of leverage for every $1 of
private capital raised by the participating investment fund.
``(b) Maximum Leverage.--The maximum amount of outstanding leverage
made available in any given fiscal year--
``(1) to any participating investment fund may not exceed
$500,000,000; and
``(2) to all participating investment funds in aggregate
may not exceed $1,000,000,000.
``(c) Private Capital Requirement.--
``(1) In general.--The private capital of a participating
investment fund shall be not less than $250,000,000.
``(2) Financial institution investments.--Any national
bank, or any member bank of the Federal Reserve System or
nonmember insured bank to the extent permitted under applicable
State law, may invest in any one or more participating
investment funds, or in any entity established to invest solely
in participating investment funds, except that in no event
shall the total amount of such investments of any such bank
exceed 5 percent of the capital and surplus of the bank.
``(d) Leverage Fee.--The Administrator shall charge and collect a
leverage fee of not more than 5.5 percent and not less than 3 percent
of the face amount of the leverage issued.
``SEC. 399E. BORROWING POWER.
``(a) In General.--Each participating investment fund shall have
the authority to borrow money and issue debentures and preferred
securities, subject to such limitations and regulations as the
Administration may prescribe.
``(b) Limitation.--Of the leverage provided by the Administrator to
a participating investment fund under section 399D--
``(1) not less than 70 percent shall be issued as
debentures under subsection (a); and
``(2) not more than 30 percent may be issued as preferred
securities under subsection (a).
``(c) Federal Financing Bank.--The Federal Financing Bank may
acquire a debenture issued by a participating investment fund company
under subsection (a).
``(d) Purchase and Guarantee by SBA.--
``(1) In general.--The Administration may purchase or
guarantee the timely payment of all principal and interest as
scheduled on debentures or preferred securities issued by
participating investment funds under subsection (a), subject to
such limitations and regulations as the Administration may
prescribe.
``(2) Full faith and credit.--The full faith and credit of
the United States is pledged to the payment of all amounts
which may be required to be paid under any guarantee under this
subsection.
``(e) Third-Party Debt.--The Administrator--
``(1) shall not permit a participating investment fund
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 participating investment funds 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.
``(f) Calculation of Subsidy Rate.--All fees, interest, and profits
received and retained by the Administration under this section and
section 399D shall be included in the calculations made by the Director
of the Office of Management and Budget to offset the cost (as that term
is defined in section 502 of the Federal Credit Reform Act of 1990 (2
U.S.C. 661a)) to the Administration of purchasing and guaranteeing
debentures and preferred securities under this Act.
``SEC. 399F. INVESTMENTS IN SMALL BUSINESS CONCERNS.
``(a) In General.--A participating investment fund shall use
leverage received under section 399D to make debt and equity
investments in small and emerging manufacturers to carry out qualifying
manufacturing projects.
``(b) Limitation.--Not more than 50 percent of the amount provided
by a participating investment fund to a small and emerging manufacturer
under subsection (a) for a qualifying manufacturing project shall
consist of leverage provided to the participating investment fund under
the program.
``(c) Portfolio Management.--A single investment made by a
participating investment fund under subsection (a) may not exceed 10
percent of the total capital of the participating investment fund,
which includes private capital and any leverage projected to be
provided to the participating investment fund, if applicable.
``(d) Increased Outreach.--The Administration shall issue policy
directives to provide for enhanced outreach efforts to increase
investments by participating investment funds in--
``(1) a small business concern owned and controlled by
socially and economically disadvantaged individuals; and
``(2) small business concerns owned and controlled by--
``(A) women;
``(B) veterans; or
``(C) individuals with disabilities.
``SEC. 399G. EXAMINATIONS AND VALUATIONS.
``(a) Examinations.--
``(1) In general.--Each participating investment fund shall
be subject to examinations made at the direction of the
Investment Division of the Administration in accordance with
this subsection.
``(2) Assistance of private sector entities.--Examinations
under this subsection may be conducted with the assistance of a
private sector entity that has the qualifications and the
expertise necessary to conduct such examinations.
``(3) Costs.--
``(A) Assessment.--
``(i) In general.--The Administrator may
assess the cost of examinations under this
subsection, including compensation of the
examiners, against the participating investment
fund examined.
``(ii) Payment.--Any participating
investment fund against which the Administrator
assesses costs under subparagraph (A) shall pay
such costs.
``(B) Deposit of funds.--Funds collected under this
subsection--
``(i) shall be deposited in the account for
salaries and expenses of the Administration;
and
``(ii) are authorized to be appropriated
solely to cover the costs of examinations and
other program oversight activities.
``(b) Valuations.--
``(1) Frequency of valuations.--
``(A) In general.--Each participating investment
fund shall submit to the Administrator a written
valuation of the loans and investments of the
participating investment fund not less often than
semiannually or otherwise upon the request of the
Administrator, except that any participating investment
fund with no leverage outstanding shall submit such
valuations annually, unless the Administrator
determines otherwise.
``(B) Material adverse changes.--Not later than 30
days after the end of a fiscal quarter of a
participating investment fund during which a material
adverse change in the aggregate valuation of the loans
and investments or operations of the participating
investment fund occurs, the participating investment
fund shall notify the Administrator in writing of the
nature and extent of that change.
``(C) Independent certification.--
``(i) In general.--Not less than once
during each fiscal year, each participating
investment fund shall submit to the
Administrator the financial statements of the
participating investment fund, audited by an
independent certified public accountant
approved by the Administrator.
``(ii) Audit requirements.--Each audit
conducted under clause (i) shall include--
``(I) a review of the procedures
and documentation used by the
participating investment fund in
preparing the valuations required by
this subsection; and
``(II) a statement by the
independent certified public accountant
that such valuations were prepared in
conformity with the valuation criteria
applicable to the participating
investment fund established in
accordance with paragraph (2).
``(2) Valuation criteria.--Each valuation submitted under
this subsection shall be prepared by the participating
investment fund in accordance with valuation criteria, which
shall--
``(A) be established or approved by the
Administrator; and
``(B) include appropriate safeguards to ensure that
the noncash assets of a participating investment fund
are not overvalued.
``SEC. 399H. MISCELLANEOUS.
``The Administrator may take such action as set forth in sections
309, 311, 312, 314, 315, and 316 and an owner (including a member,
partner, or shareholder), officer, director, employee, agent, or other
participant in the management or conduct of the affairs of a
participating investment fund shall be subject to the requirements of
such sections.
``SEC. 399I. VIOLATIONS; REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.
``(a) Violations.--If any participating investment fund violates or
fails to comply with any of the provisions of this part or of
regulations prescribed hereunder, all of its rights, privileges, and
franchises derived therefrom may thereby be forfeited. Before any such
participating investment fund shall be declared dissolved, or its
rights, privileges, and franchises forfeited, any noncompliance with or
violation of this Act shall be determined and adjudged by a court of
the United States of competent jurisdiction in a suit brought for that
purpose in the district, territory, or other place subject to the
jurisdiction of the United States, in which the principal office of
such participating investment fund is located. Any such suit shall be
brought by the United States at the instance of the Administration or
the Attorney General.
``(b) Suspension of Management Officials.--Using the procedures for
removing or suspending a director or an officer of a licensee set forth
in section 313, the Administrator may remove or suspend any management
official of a participating investment fund.
``SEC. 399J. REPORTS.
``Each participating investment fund shall, on a semi-annual basis,
provide to the Administrator such information as the Administrator may
require, including--
``(1) information related to the measurement criteria that
the participating investment fund proposed in the application
for the program;
``(2) information on the use of leverage by the
participating investment fund; and
``(3) in each case in which the participating investment
fund makes an investment in a small business concern that is
not a small business concern owned and controlled by socially
and economically disadvantaged individuals, a report on the
number and percentage of employees of the small business
concern who are socially and economically disadvantaged
individuals.
``SEC. 399K. SCALE-UP MANUFACTURING INVESTMENT COMPANY CREDIT COUNCIL.
``(a) Establishment.--The Administrator may establish a Scale-Up
Manufacturing Investment Company Credit Council, which, if established,
shall consist of 5 members from the private sector with aggregate and
collective experience in technology development, manufacturing
financing, and capital investment.
``(b) Duties.--The Council, if established, shall advise the
Administrator on carrying out the program, which shall include--
``(1) providing advice from time to time on advanced scale-
up manufacturing industries; and
``(2) establishing and conducting an annual briefing
beginning not later than 18 months after the date of enactment
of this section.
``SEC. 399L. REGULATIONS.
``The Administrator may issue such regulations as the Administrator
determines necessary to carry out the provisions of this part in
accordance with its purposes.''.
(b) Bank Holding Company Act of 1956.--Section 13(d)(1)(E) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1851(d)(1)(E)) is amended
by inserting ``investments in 1 or more participating investment funds,
as defined in section 399A of the Small Business Investment Act of
1958,'' before ``or investments''.
(c) Ineligibility for Bankruptcy.--Section 109(b)(2) of title 11,
United States Code, is amended by inserting ``a participating
investment fund as defined in section 399A of the Small Business
Investment Act of 1958,'' before ``credit union''.
(d) Eligibility for CRA Credit.--Section 804 of the Community
Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by adding at the
end the following:
``(e) Investments in Participating Investment Funds.--In assessing
and taking into account, under subsection (a), the record of a
financial institution, the appropriate Federal financial supervisory
agency shall consider, as a factor, investments made in 1 or more
participating investment funds under part D of title III of the Small
Business Investment Act of 1958.''.
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