Emerging Business Encouragement Act of 2014

Summary: Emerging Business Encouragement Act of 2014 - Amends the Small Business Act to direct the Administrator of the Small Business Administration (SBA), for each industry category for which the Administrator established a size standard, to establish procedures, by rule, for designating a small business in that industry category as an emerging business enterprise (EBE). Requires the procedures to include specified criteria and a process for appealing the Administrator's decisions on designations. Requires the designation to expire when the small business is no longer in compliance with the criteria, except that:  in the case of an EBE which existed as a business entity before its EBE designation, the designation shall not expire until five years after it was made; and if the EBE exceeds the required size limitation its designation shall expire only if the size is 50% or more of the maximum size of a small business within that industry category.  Directs the Administrator to establish criteria for designation of an EBE, including:  a maximum number of employees determined according to a certain formula, an age of not more than five years, and a specified salary limitation for any individual who owns any part of the small business or who is in a management position.  Requires the head of each federal agency to establish goals for participation by the designated EBEs in at least 5% of all contracts, including prime contracts and subcontracts, for each fiscal year. Authorizes the Administrator to make a loan to a designated EBE under the SBA Express Loan Program, but only in accordance with specified terms. Requires the Administrator, by rule, to establish a process for initial self-certification of EBEs for purposes of participation in federal contracts and eligibility for the Express Loans.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Emerging Business Encouragement Act 
of 2014''.

SEC. 2. EMERGING BUSINESS ENTERPRISES.

    (a) Designation.--Section 3 of the Small Business Act (15 U.S.C. 
632) is amended by adding at the end the following:
    ``(dd) Emerging Business Enterprises.--
            ``(1) In general.--Not later than the date that is 1 year 
        after the date of enactment of this paragraph, for each 
        industry category for which the Administrator established a 
        size standard under this subsection, the Administrator shall by 
        rule establish procedures for designating a small business 
        concern in that industry category as an emerging business 
        enterprise. Such procedures shall include the criteria under 
        paragraph (2), and a process for appealing decisions of the 
        Administrator on designations. Such a designation shall expire 
        on the date that the small business concern is no longer in 
        compliance with such criteria, except that--
                    ``(A) in the case of an emerging business 
                enterprise that receives a designation as such but 
                which existed as a business entity prior to such 
                designation, the designation shall not expire by reason 
                of the emerging business enterprise being more than 5 
                years old; instead, the designation shall expire on the 
                date that is 5 years after the date of the designation; 
                and
                    ``(B) if the emerging business enterprise exceeds 
                the size limitation described in the criterion under 
                paragraph (2)(A) following designation as an emerging 
                business enterprise, the designation shall expire only 
                if the size is 50 percent or more of the maximum size 
                of a small business concern within that industry 
                category.
        The rulemaking under this paragraph shall include a procedure 
        for self certification as an emerging business enterprise, for 
        annual submission of documentation establishing eligibility for 
        designation as an emerging business enterprise, and for 
        periodic audits of emerging business enterprises based on such 
        documentation.
            ``(2) Criteria for designation.--The Administrator shall 
        establish criteria for designation of an emerging business 
        enterprise, which shall include the following:
                    ``(A) Number of employees.--That the small business 
                concern employs, in the Administrator's determination a 
                number of employees that is less than the larger of--
                            ``(i) not more than 10 percent of the 
                        number of employees that a small business 
                        concern within that industry category may 
                        employ, if that small business concern is so 
                        classified by reason of a size standard under 
                        section 3(a) pertaining to the number of 
                        employees of the concern; or
                            ``(ii) 25 employees.
                    ``(B) Age of business.--That the small business 
                concern is, in the Administrator's determination, not 
                more than 5 years old.
                    ``(C) Salary requirements.--That the small business 
                concern does not, in the Administrator's determination, 
                pay to an individual who owns any part of the concern 
                or who is in a management position a salary greater 
                than 200 percent of the mean annual salary for Managers 
                of Companies and Enterprises or the equivalent from the 
                most recent Employment and Wage Estimates developed by 
                the Secretary of Labor.
            ``(3) Public notification.--The Administrator shall take 
        appropriate action to publicize the establishment of the 
        procedures for designations under this paragraph, including by 
        conducting outreach to eligible small business concerns.
            ``(4) Contractor training.--The Administrator shall provide 
        for training regarding Federal procurement on an Internet Web 
        site of the Administrator, which shall be available to the 
        public at no charge.''.
    (b) Contracting Preference.--Section 15(g)(2) of the Small Business 
Act (15 U.S.C. (g)(2)) is amended by adding at the end the following:
                    ``(G) Emerging business enterprises.--
                            ``(i) In general.--The head of each Federal 
                        agency shall, after consultation with the 
                        Administrator, establish goals for 
                        participation by emerging business enterprises 
                        designated under section 3(a)(6) in not less 
                        than 5 percent of all contracts, including 
                        prime contracts and subcontracts, for each 
                        fiscal year. The head of the agency may give 
                        preference in making contract awards to such 
                        emerging business enterprises and shall make 
                        consistent efforts to annually expand 
                        participation by emerging business enterprises 
                        from each industry category in procurement 
                        contracts of the agency.
                            ``(ii) Reports.--
                                    ``(I) Reports from agencies.--At 
                                the conclusion of each fiscal year, the 
                                head of each Federal agency shall 
                                report to the Administrator on the 
                                extent of participation by emerging 
                                business enterprises in procurement 
                                contracts of such agency. Such reports 
                                shall contain appropriate 
                                justifications for failure to meet the 
                                goals established under this 
                                subparagraph.
                                    ``(II) Reports to congress.--The 
                                Administrator shall annually compile 
                                and analyze the reports submitted by 
                                the individual agencies pursuant to 
                                subclause (I) and shall submit to the 
                                President and the Committee on Small 
                                Business and Entrepreneurship of the 
                                Senate and the Committee on Small 
                                Business of the House of 
                                Representatives the compilation and 
                                analysis, which shall include the 
                                following:
                                            ``(aa) The goals in effect 
                                        for each agency and the 
                                        agency's performance in 
                                        attaining such goals.
                                            ``(bb) An analysis of any 
                                        failure to achieve individual 
                                        agency goals and the actions 
                                        planned by such agency (and 
                                        approved by the Administrator) 
                                        to achieve the goals in the 
                                        succeeding fiscal year.
                                            ``(cc) The total number and 
                                        dollar value of prime contracts 
                                        and subcontracts awarded to 
                                        emerging business enterprises.
                                    ``(III) Annual presidential report 
                                on the state of small business.--The 
                                President shall include the information 
                                required by subclause (II) in each 
                                annual report to the Congress on the 
                                state of small business prepared 
                                pursuant to section 303(a) of the Small 
                                Business Economic Policy Act of 1980 
                                (15 U.S.C. 631b(a)).''.
    (c) Amendments to SBA Express.--Section 7(a)(31) of the Small 
Business Act (15 U.S.C. 636(a)(31)) is amended by adding at the end the 
following:
                    ``(G) Emerging business enterprises.--
                            ``(i) In general.--The Administrator may 
                        make a loan under the Express Loan Program to 
                        an emerging business enterprise designated 
                        under section 3(dd), except that such loans 
                        shall be made in accordance with the terms of 
                        this subparagraph.
                            ``(ii) Guaranty rate.--The guaranty rate of 
                        such a loan shall be in accordance with the 
                        following:
                                    ``(I) Except as otherwise provided 
                                in this clause, 65 percent.
                                    ``(II) Except as provided in 
                                subclause (III), if, in a report 
                                submitted under clause (iii), the total 
                                number of loans made and the total 
                                amount loaned by a lender is greater by 
                                10 percent than the prior fiscal year, 
                                75 percent.
                                    ``(III) If, in a report submitted 
                                under clause (iii), the total rate of 
                                default on loans issued under 
                                subclauses (I) and (II) is greater by 
                                10 percent than the prior year, 50 
                                percent in the succeeding fiscal year.
                            ``(iii) Reports.--On the date that is 1 
                        year after the end of the first fiscal year for 
                        which a loan is first guaranteed under this 
                        subparagraph, and annually thereafter, each 
                        lender making a loan guaranteed under this 
                        section shall report to the Administrator the 
                        total number of loans made during the preceding 
                        fiscal year, the total amount loaned, and the 
                        default rate for all guaranteed loans.
                            ``(iv) Verification.--A lender making a 
                        loan guaranteed under this section shall verify 
                        the status of a business concern as an emerging 
                        business enterprise before issuing a loan.
                            ``(v) Sanction.--If a business concern has 
                        received a loan under this subparagraph and 
                        that business concern has fraudulently 
                        misrepresented its status as an emerging 
                        business enterprise, that business concern 
                        shall repay the amount of the loan to the 
                        lender (from which amount the lender shall 
                        repay the amount of any guarantee paid on the 
                        loan), and shall in addition pay a fine in an 
                        amount determined by the Administrator.''.

SEC. 3. RULEMAKINGS.

    (a) Self-Certification.--Not later than 180 days after the date of 
enactment of this Act, the Administrator shall by rule establish a 
process for initial self-certification of emerging business enterprises 
for purposes of participation in Federal contracts, and eligibility for 
Express Loans under section 7(a)(31)(G) of the Small Business Act.