I 

109TH CONGRESS 

1ST SESSION H. R. 2640 

To make improvements to the microenterprise programs administered by 

the Small Business Administration. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 25, 2005 

Mr. RUSH introduced the following bill; which was referred to the Committee 

on Small Business, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each 

case for consideration of such provisions as fall within the jurisdiction of 

the committee concerned 

A BILL 

To make improvements to the microenterprise programs 

administered by the Small Business Administration. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘SBA Microenterprise 

5 Improvements Act’’. 

6 SEC. 2. MICROLOAN PROGRAM IMPROVEMENTS. 

7 (a) INTERMEDIARY ELIGIBILITY REQUIREMENTS.— 

8 Section 7(m)(2) of the Small Business Act (15 U.S.C. 

9 636(m)(2)) is amended— 
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1 (1) in subparagraph (A)—by striking ‘‘in para2 graph (10); and’’ and inserting ‘‘of the term ‘inter3 mediary’ under paragraph (11)(A);’’; and 

4 (2) in subparagraph (B)— 

5 (A) by striking ‘‘(B) has at least’’ and in6 serting the following: 

7 ‘‘(B) has— 

8 ‘‘(i) at least’’; and 

9 (B) by striking the period at the end and 

10 inserting the following: 

11 ‘‘; or 

12 ‘‘(ii) a full-time employee who has not 

13 less than 3 years experience making 

14 microloans to startup, newly established, or 

15 growing small business concerns; and 

16 ‘‘(C) has at least 1 year experience pro17 viding, as an integral part of its microloan pro18 gram, intensive marketing, management, and 

19 technical assistance to its borrowers.’’. 

20 (b) CONFORMING CHANGE IN AVERAGE SMALLER

21 LOAN SIZE.—Section 7(m)(3)(F)(iii) of the Small Busi22 ness Act (15 U.S.C. 636(m)(3)(F)(iii)) is amended by 

23 striking ‘‘$7,500’’ and inserting ‘‘$10,000’’. 
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1 (c) LIMITATION ON THIRD PARTY TECHNICAL AS2 SISTANCE.—Section 7(m)(4)(E)(ii) of the Small Business 

3 Act (15 U.S.C. 636(m)(4)(E)(ii)) is amended— 

4 (1) by striking ‘‘TECHNICAL ASSISTANCE’’ in 

5 the heading and inserting ‘‘THIRD PARTY TECH6 NICAL ASSISTANCE’’; and 

7 (2) by striking ‘‘25 percent’’ and inserting ‘‘30 

8 percent’’. 

9 (d) LOAN TERMS.—Section 7(m)(1)(B)(i) of the 

10 Small Business Act (15 U.S.C. 636(m)(1)(B)(i)) is 

11 amended by striking ‘‘short-term,’’. 

12 (e) REPORT ON TRANSFERRED AMOUNTS.—Section 

13 7(m)(9)(B) of the Small Business Act (15 U.S.C. 

14 636(m)(9)(B)) is amended— 

15 (1) by striking ‘‘The Administration’’ and in16 serting the following: 

17 ‘‘(i) IN GENERAL.—The Administra18 tion’’; 

19 (2) by striking the period after ‘‘financing’’; 

20 and 

21 (3) by adding at the end the following new 

22 clause: 

23 ‘‘(ii) REPORT.—The Administration 

24 shall report, in its annual budget request 

25 and performance plan to Congress, on the 
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1 performance by the Administration of the 

2 requirements of clause (i).’’. 

3 (f) ACCURATE SUBSIDY MODEL.—Section 7(m) of 

4 the Small Business Act (15 U.S.C. 636(m)) is amended 

5 by adding at the end the following new paragraph: 

6 ‘‘(14) IMPROVED SUBSIDY MODEL.—The Ad7 ministrator shall develop a subsidy model for the 

8 microloan program under this subsection, to be used 

9 in the fiscal year 2006 budget, that is more accurate 

10 than the subsidy model in effect on the day before 

11 the date of enactment of this paragraph.’’. 

12 (g) INCREASED FLEXIBILITY FOR PROVIDING TECH13 NICAL ASSISTANCE TO POTENTIAL BORROWERS.—Section 

14 7(m)(4)(E)(i) of the Small Business Act (15 U.S.C. 

15 636(m)(4)(E)(i)) is amended by striking ‘‘25 percent’’ and 

16 inserting ‘‘30 percent’’. 

17 SEC. 3. PRIME REAUTHORIZATION AND TRANSFER TO THE 

18 SMALL BUSINESS ACT. 

19 (a) PROGRAM REAUTHORIZATION.—Subtitle C of 

20 title I of the Riegle Community Development and Regu21 latory Improvement Act of 1994 (15 U.S.C. 6901 note) 

22 is amended to read as follows: 
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1 ‘‘SEC. 37. PROGRAM FOR INVESTMENT IN MICROENTRE2 PRENEURS. 

3 ‘‘(a) DEFINITIONS.—For purposes of this section, the 

4 following definitions shall apply: 

5 ‘‘(1) ADMINISTRATION.—The term ‘Administra6 tion’ means the Small Business Administration. 

7 ‘‘(2) ADMINISTRATOR.—The term ‘Adminis8 trator’ means the Administrator of the Small Busi9 ness Administration. 

10 ‘‘(3) CAPACITY BUILDING SERVICES.—The term 

11 ‘capacity building services’ means services provided 

12 to an organization that is, or that is in the process 

13 of becoming, a microenterprise development organi14 zation or program, for the purpose of enhancing its 

15 ability to provide training and services to disadvan16 taged entrepreneurs. 

17 ‘‘(4) COLLABORATIVE.—The term ‘collabo18 rative’ means 2 or more nonprofit entities that agree 

19 to act jointly as a qualified organization under this 

20 section. 

21 ‘‘(5) DISADVANTAGED ENTREPRENEUR.—The 

22 term ‘disadvantaged entrepreneur’ means a micro23 entrepreneur that— 

24 ‘‘(A) is a low-income person; 

25 ‘‘(B) is a very low-income person; or 
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1 ‘‘(C) lacks adequate access to capital or 

2 other resources essential for business success, 

3 or is economically disadvantaged, as determined 

4 by the Administrator. 

5 ‘‘(6) DISADVANTAGED NATIVE AMERICAN EN6 TREPRENEUR.—The term ‘disadvantaged Native 

7 American entrepreneur’ means a disadvantaged en8 trepreneur who is also a member of an Indian Tribe. 

9 ‘‘(7) INDIAN TRIBE.—The term ‘Indian tribe’ 

10 has the same meaning as in section 4(a) of the In11 dian Self-Determination and Education Assistance 

12 Act. 

13 ‘‘(8) INTERMEDIARY.—The term ‘intermediary’ 

14 means a private, nonprofit entity that seeks to serve 

15 microenterprise development organizations and pro16 grams, as authorized under subsection (d). 

17 ‘‘(9) LOW-INCOME PERSON.—The term ‘low-in18 come person’ means having an income, adjusted for 

19 family size, of not more than— 

20 ‘‘(A) for metropolitan areas, 80 percent of 

21 the area median income; and 

22 ‘‘(B) for nonmetropolitan areas, the great23 er of— 

24 ‘‘(i) 80 percent of the area median in25 come; or 
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1 ‘‘(ii) 80 percent of the statewide non2 metropolitan area median income. 

3 ‘‘(10) MICROENTREPRENEUR.—The term 

4 ‘microentrepreneur’ means the owner or developer of 

5 a microenterprise. 

6 ‘‘(11) MICROENTERPRISE.—The term ‘micro7 enterprise’ means a sole proprietorship, partnership, 

8 or corporation that— 

9 ‘‘(A) has fewer than 5 employees; and 

10 ‘‘(B) generally lacks access to conventional 

11 loans, equity, or other banking services. 

12 ‘‘(12) MICROENTERPRISE DEVELOPMENT ORGA13 NIZATION OR PROGRAM.—The term ‘microenterprise 

14 development organization or program’ means a non15 profit entity, or a program administered by such an 

16 entity, including community development corpora17 tions or other nonprofit development organizations 

18 and social service organizations, that provides serv19 ices to disadvantaged entrepreneurs. 

20 ‘‘(13) TRAINING AND TECHNICAL ASSIST21 ANCE.—The term ‘training and technical assistance’ 

22 means services and support provided to disadvan23 taged entrepreneurs, such as assistance for the pur24 pose of enhancing business planning, marketing, 

25 management, financial management skills, and as-
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1 sistance for the purpose of accessing financial serv2 ices. 

3 ‘‘(14) VERY LOW-INCOME PERSON.—The term 

4 ‘very low-income person’ means having an income, 

5 adjusted for family size, of not more than 150 per6 cent of the poverty line (as defined in section 673(2) 

7 of the Community Services Block Grant Act (42 

8 U.S.C. 9902(2)), including any revision required by 

9 that section). 

10 ‘‘(b) ESTABLISHMENT OF PROGRAM.—The Adminis11 trator shall establish a microenterprise technical assist12 ance and capacity building grant program to provide as13 sistance from the Administration in the form of grants 

14 to qualified organizations in accordance with this section. 

15 ‘‘(c) USES OF ASSISTANCE.—A qualified organization 

16 shall use grants made under this section— 

17 ‘‘(1) to provide training and technical assist18 ance to disadvantaged entrepreneurs; 

19 ‘‘(2) to provide training and capacity building 

20 services to microenterprise development organiza21 tions and programs and groups of such organiza22 tions to assist such organizations and programs in 

23 developing microenterprise training and services; 

24 ‘‘(3) to aid in researching and developing the 

25 best practices in the field of microenterprise and 
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1 technical assistance programs for disadvantaged en2 trepreneurs; 

3 ‘‘(4) to provide training and technical assist4 ance to disadvantaged Native American entre5 preneurs and prospective entrepreneurs; and 

6 ‘‘(5) for such other activities as the Adminis7 trator determines are consistent with the purposes of 

8 this section. 

9 ‘‘(d) QUALIFIED ORGANIZATIONS.—For purposes of 

10 eligibility for assistance under this section, a qualified or11 ganization shall be— 

12 ‘‘(1) a nonprofit microenterprise development 

13 organization or program (or a group or collaborative 

14 thereof) that has a demonstrated record of delivering 

15 microenterprise services to disadvantaged entre16 preneurs; 

17 ‘‘(2) an intermediary; 

18 ‘‘(3) a microenterprise development organiza19 tion or program that is accountable to a local com20 munity, working in conjunction with a State or local 

21 government or Indian tribe; or 

22 ‘‘(4) an Indian tribe acting on its own, if the 

23 Indian tribe can certify that no private organization 

24 or program referred to in this subsection exists with25 in its jurisdiction. 
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1 ‘‘(e) ALLOCATION OF ASSISTANCE; SUBGRANTS.— 

2 ‘‘(1) ALLOCATION OF ASSISTANCE.— 

3 ‘‘(A) IN GENERAL.—The Administrator 

4 shall allocate assistance from the Administra5 tion under this section to ensure that— 

6 ‘‘(i) activities described in subsection 

7 (c)(1) are funded using not less than 75 

8 percent of amounts made available for 

9 such assistance; and 

10 ‘‘(ii) activities described in subsection 

11 (c)(2) are funded using not less than 15 

12 percent of amounts made available for 

13 such assistance. 

14 ‘‘(B) LIMIT ON INDIVIDUAL ASSISTANCE.— 

15 No single person may receive more than 10 per16 cent of the total funds appropriated under this 

17 section in a single fiscal year. 

18 ‘‘(2) TARGETED ASSISTANCE.—The Adminis19 trator shall ensure that not less than 50 percent of 

20 the grants made under this section are used to ben21 efit very low-income persons, including those resid22 ing on Indian reservations. 

23 ‘‘(3) SUBGRANTS AUTHORIZED.— 

24 ‘‘(A) IN GENERAL.—A qualified organiza25 tion receiving assistance under this section may 
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1 provide grants using that assistance to qualified 

2 small and emerging microenterprise organiza3 tions and programs, subject to such rules and 

4 regulations as the Administrator determines to 

5 be appropriate. 

6 ‘‘(B) LIMIT ON ADMINISTRATIVE EX7 PENSES.—Not more than 7.5 percent of assist8 ance received by a qualified organization under 

9 this section may be used for administrative ex10 penses in connection with the making of sub11 grants under subparagraph (A). 

12 ‘‘(4) DIVERSITY.—In making grants under this 

13 section, the Administrator shall ensure that grant 

14 recipients include both large and small microenter15 prise organizations, serving urban, rural, and Indian 

16 tribal communities serving diverse populations. 

17 ‘‘(5) PROHIBITION ON PREFERENTIAL CONSID18 ERATION OF CERTAIN SBA PROGRAM PARTICI19 PANTS.—In making grants under this section, the 

20 Administrator shall ensure that any application 

21 made by a qualified organization that is a partici22 pant in the program established under section 7(m) 

23 of the Small Business Act does not receive pref24 erential consideration over applications from other 
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1 qualified organizations that are not participants in 

2 such program. 

3 ‘‘(f) MATCHING REQUIREMENTS.— 

4 ‘‘(1) IN GENERAL.—Financial assistance under 

5 this section shall be matched with funds from 

6 sources other than the Federal Government on the 

7 basis of not less than 50 percent of each dollar pro8 vided by the Administration. 

9 ‘‘(2) SOURCES OF MATCHING FUNDS.—Fees, 

10 grants, gifts, funds from loan sources, and in-kind 

11 resources of a grant recipient from public or private 

12 sources may be used to comply with the matching 

13 requirement in paragraph (1). 

14 ‘‘(3) EXCEPTION.— 

15 ‘‘(A) IN GENERAL.—In the case of an ap16 plicant for assistance under this section with se17 vere constraints on available sources of match18 ing funds, the Administrator may reduce or 

19 eliminate the matching requirements of para20 graph (1). 

21 ‘‘(B) LIMITATION.—Not more than 10 per22 cent of the total funds made available from the 

23 Administration in any fiscal year to carry out 

24 this section may be excepted from the matching 
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1 requirements of paragraph (1), as authorized by 

2 subparagraph (A) of this paragraph. 

3 ‘‘(g) APPLICATIONS FOR ASSISTANCE.—An applica4 tion for assistance under this section shall be submitted 

5 in such form and in accordance with such procedures as 

6 the Administrator shall establish. 

7 ‘‘(h) RECORDKEEPING AND REPORTING.— 

8 ‘‘(1) IN GENERAL.—Each organization that re9 ceives assistance from the Administration in accord10 ance with this section shall— 

11 ‘‘(A) submit to the Administration not less 

12 than once in every 18-month period, financial 

13 statements audited by an independent certified 

14 public accountant; 

15 ‘‘(B) submit an annual report to the Ad16 ministration on its activities; and 

17 ‘‘(C) keep such records as may be nec18 essary to disclose the manner in which any as19 sistance under this section is used. 

20 ‘‘(2) ACCESS.—The Administration shall have 

21 access upon request, for the purposes of determining 

22 compliance with this section, to any records of any 

23 organization that receives assistance from the Ad24 ministration in accordance with this section. 
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1 ‘‘(3) DATA COLLECTION.—Each organization 

2 that receives assistance from the Administration in 

3 accordance with this section shall collect information 

4 relating to, as applicable— 

5 ‘‘(A) the number of individuals counseled 

6 or trained; 

7 ‘‘(B) the number of hours of counseling 

8 provided; 

9 ‘‘(C) the number of startup small business 

10 concerns formed; 

11 ‘‘(D) the number of small business con12 cerns expanded; 

13 ‘‘(E) the number of low-income individuals 

14 counseled or trained; and 

15 ‘‘(F) the number of very low-income indi16 viduals counseled or trained. 

17 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.— 

18 ‘‘(1) IN GENERAL.—There are authorized to be 

19 appropriated to the Administrator $15,000,000 for 

20 each of the fiscal years 2005 through 2007 to carry 

21 out the provisions of this section, which shall remain 

22 available until expended. 

23 ‘‘(2) TRAINING FOR NATIVE AMERICAN ENTRE24 PRENEURS.—In addition to the amount authorized 

25 under subsection (i)(1), there are authorized to be 
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1 appropriated to the Administrator $2,000,000 for 

2 each of the fiscal years 2005 through 2007 to carry 

3 out the provisions of subsection (c)(4), which shall 

4 remain available until expended.’’. 

5 (b) TRANSFER PROVISIONS.— 

6 (1) SMALL BUSINESS ACT AMENDMENTS.—The 

7 Small Business Act (15 U.S.C. 631 et seq.) is 

8 amended by redesignating section 37 as section 38. 

9 (2) TRANSFER.—Section 37 of the Riegle Com10 munity Development and Regulatory Improvement 

11 Act of 1994 (15 U.S.C. 6901 note), as so designated 

12 by subsection (a) of this section, is transferred to, 

13 and inserted after, section 36 of the Small Business 

14 Act. 

15 (c) REFERENCES.—All references in Federal law to 

16 the ‘‘Program for Investment in Microentrepreneurs Act 

17 of 1999’’ or the ‘‘PRIME Act’’ shall be deemed to be ref18 erences to section 37 of the Small Business Act, as added 

19 by this section. 

20 (d) RULE OF CONSTRUCTION.—Nothing in this sec21 tion or the amendments made by this section shall affect 

22 any grant or assistance provided under the Program for 

23 Investment in Microentrepreneurs Act of 1999, before the 

24 date of enactment of this Act, and any such grant or as25 sistance shall be subject to the Program for Investment 
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1 in Microentrepreneurs Act of 1999, as in effect on the day 

2 before the date of enactment of this Act. 

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