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[Senate Report 114-422]
[From the U.S. Government Publishing Office]

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                                                     Calendar No. 510
114th Congress      }                           {            Report
                                 SENATE
 2d Session         }                           {             114-422

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  THE NATIONAL GUARD AND RESERVE ENTREPRENEURSHIP SUPPORT ACT OF 2016

                                _______
                                

               December 20, 2016.--Ordered to be printed

   Filed, under authority of the order of the Senate of December 10 
                  (legislative day, December 9), 2016

                                _______
                                

Mr. Vitter, from the Committee on Small Business and Entrepreneurship, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 3009]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 3009) to support entrepreneurs 
serving in the National Guard and Reserve, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.

                            I. INTRODUCTION

    The National Guard and Reserve Entrepreneurship Support Act 
of 2016 (S. 3009) was introduced by Senators Shaheen and Leahy 
on May 26, 2016. Senators Ayotte and Coons co-sponsored this 
legislation. At the markup of the bill, the bill was approved 
unanimously in a roll call vote.

              II. HISTORY (PURPOSE & NEED FOR LEGISLATION)

    According to the Department of Veterans Affairs, there are 
currently an estimated 21.6 million veterans, in addition to 
over one million reservists in America. Since 2001, the United 
States has conducted major military operations that 
dramatically increased the operations tempo of the military 
services, which have required the large-scale mobilization of 
reservists and continues to rely heavily on reserve components. 
At the time of this report, there were 24,893 total National 
Guard and reserve personnel who have been activated, including 
both units and individual augmentees.
    Starting, growing or maintaining a small business is a 
challenging endeavor, and veterans and active duty service 
members often face unique challenges and barriers due to their 
service to our country. According to a 2005 report and 
subsequent testimony provided by the Congressional Budget 
Office, many reservists lost income, or experienced economic 
harm to their business, as a result of deployments. Financial 
assistance through loans or grants and access to 
entrepreneurial development programs are key solutions to 
addressing these challenges, and leveling the playing field for 
veterans, reservists and National Guard members.
    The Committee first addressed this issue in the 106th 
Congress, when it established the Military Reservist Economic 
Injury Disaster Loan program. In the 110th Congress, the 
Committee made it a priority to once again address the 
challenges facing veterans and reservist entrepreneurs, and to 
ensure that federal agencies were committed to helping 
America's veterans and reservists succeed in business and the 
private sector during and after their service to our country.

                                Reports

    On October 30, 2003, Chair Snowe formally requested that 
the Congressional Budget Office analyze the impact of reserve 
component call-ups on small businesses and examine the 
potential costs and effectiveness of options to alleviate 
hardships without weakening our national defense. In response 
to her letter, in May 2005 the Congressional Budget Office 
issued a report entitled, ``The Effects of Reserve Call-Ups on 
Civilian Employers.'' The report found that the Department of 
Defense had dramatically increased its reliance on the reserve 
forces, and that activations can create vacancies that firms 
would not otherwise have had, and that uncertainty about the 
timing and duration of call-ups may also have an effect. The 
report concluded the impact of call-ups was found to be 
greatest when the reservist is an essential employee, the 
business relies on employees with highly specialized skills, 
and the reservist is self-employed. On May 17, 2007, the 
Congressional Budget Office testified before the Commission on 
the National Guard and Reserves on the findings of the report.
    On March 28, 2007, Chairman Kerry issued a report, entitled 
``The State of Veteran and Reservist Entrepreneurship,'' which 
outlined the obstacles facing veteran and reservist 
entrepreneurs and included specific recommendations for 
supporting veterans and reservists in small business. The 
report found that many recently discharged veterans were 
experiencing higher rates of unemployment and that a smaller 
percentage of small business loans were going to veterans. The 
report also found that many reservists were experiencing high 
rates of income loss during deployment, and included 
recommendations for increased oversight of federal contracting 
and new steps to increase contracting opportunities for service 
disabled veterans.
    On August 15, 2008, as required by the Military Reservists 
and Veteran Small Business Reauthorization and Opportunity Act 
of 2008 (P.L. 110-186), the Government Accountability Office 
issued a report entitled, ``Military Personnel: Improvements 
Needed to Increase Effectiveness of DOD's Programs to Promote 
Positive Working Relationships between Reservists and Their 
Employers.'' The Government Accountability Office was unable to 
determine the impact of increased call-ups following September 
11, 2001, due to the absence of data. The report recommended 
that the Department of Defense establish an annual performance 
plan that develops and facilitates the implementation of 
performance measures, conduct regular and recurring follow-up 
activities to maintain positive working relationships with 
employers, and develop initiatives to perform outreach to small 
businesses that employ reservists.

                              Legislation

  THE VETERANS ENTREPRENEURSHIP AND SMALL BUSINESS DEVELOPMENT ACT OF 
                                  1999

    On April 29, 1999, Senator Kerry introduced the Military 
Reservists Small Business Relief Act of 1999 (S. 918). The 
Military Reservist Economic Injury Disaster loan program, which 
was in Senator Kerry's bill, became law as part of the Veterans 
Entrepreneurship and Small Business Development Act of 1999 
(P.L. 106-50). The program was intended to aid small businesses 
when an essential employee who was a reservists and National 
Guard member was called to active duty. The program was 
intended to protect service members, and those who employed 
them, from suffering the same financial hardships and ruin that 
devastated the lives of men and women who served in Desert 
Storm. To accomplish this goal, the program authorized the 
Small Business Administration to provide low-interest economic 
injury loans to small businesses that were adversely affected 
when essential employees were called to active duty during a 
time of military conflict.

 THE MILITARY RESERVIST AND VETERAN SMALL BUSINESS REAUTHORIZATION ACT 
                                OF 2007

    On March 28, 2007, in conjunction with the release of the 
aforementioned report, Senator Kerry introduced the Military 
Reservist and Veteran Small Business Reauthorization Act of 
2007 (S. 1005). The bill would have created a new, non-
collateralized loan of up to $100,000 for businesses affected 
by the deployment of a key employee. S. 1005 also would have 
fixed a program designed to provide reservist-dependent 
businesses access to low-interest loans through the SBA's 
disaster loan program by expanding the application period for 
these loans and creating a method of pre-consideration so that 
businesses could apply for and access the capital they needed 
prior to incurring financial hardship. For small reservist-
dependent firms that were unable to take on additional debt, 
the bill would have provided grants of up to $25,000, 
contingent upon the business providing a viable business plan. 
Finally, the bill would have authorized increased resources for 
the SBA's Office of Veterans Business Development. Senator 
Chuck Hagel was the lead cosponsor on the bill, and Senators 
Cardin, Tester, and Mark Pryor also signed on in support.

 THE MILITARY RESERVIST AND VETERAN SMALL BUSINESS REAUTHORIZATION AND 
                        OPPORTUNITY ACT OF 2008

    On July 12, 2007, Chairman Kerry and Ranking Member Snowe 
introduced the Military Reservist and Veteran Small Business 
Reauthorization and Opportunity Act of 2007 (S. 1784). The bill 
improved the Military Reservist Economic Injury Disaster Loan 
program by providing a longer application deadline, creating a 
pre-application loan approval process, expanding outreach and 
technical assistance, and raising the maximum loan amount. It 
also created a loan participation program in which veterans can 
receive 7(a) loans while paying just 50 percent of the fees and 
a grant program to improve Small Business Development Centers' 
outreach to the veteran community. Additionally, it required 
Veteran Business Outreach Centers to increase their 
participation in the Transition Assistance Program, and the 
Office of Veterans Business Development to create and 
disseminate information aimed at informing women veterans about 
the resources available to them. Finally, the bill required a 
GAO report on the needs of service-disabled veterans and how to 
improve relations between employers and reservist employees. 
The bill was based on the provisions of S. 1005 and the 
Veterans Small Business Opportunity Act of 2007 (S. 904), which 
Senator Snowe introduced on March 15, 2007. S. 1784 was 
cosponsored by Senators Hagel, Landrieu, Lieberman, Cantwell, 
and Tester. On October 1, 2007, an amendment modeled on S. 1784 
passed the Senate as part of the 2008 Defense Authorization 
Act, but it was not included in the final version of the bill. 
The text of S. 1784 passed the Senate on December 19, 2007, as 
a substitute amendment to the Military Reservist and Veteran 
Small Business Reauthorization and Opportunity Act of 2008 
(H.R. 4253). The House amended the bill with Senate-House 
compromise language, and this version passed the House on 
January 16, 2008. On January 31, 2008, the bill passed in the 
Senate by unanimous consent, and, on February 14, 2008, the 
bill was signed into law (P.L. 110-186).

                      III. HEARINGS & ROUNDTABLES

    In the 114th Congress:
    On June 25, 2015 the Committee held a hearing entitled 
``Opening Doors to Economic Opportunity for Our Veterans and 
their Families.'' This hearing focused on SBA sponsored 
programs such as SCORE, SBDCs, and VBOCs and the resources they 
can provide to veterans seeking entrepreneurial ventures.
    In the 113th Congress:
    In June of 2014, the Committee held a hearing entitled 
``From Military Service to Small Business Owner: Supporting 
America's Veteran Entrepreneurs'' was held by the Senate 
Committee on Small Business and Entrepreneurship. This hearing 
discussed legislative proposals the committee was considering 
relating to veterans' entrepreneurship and small business 
ownership. One of the main topics discussed was access to 
capital, and the challenges veteran entrepreneurs face in 
obtaining funding.

                        IV. DESCRIPTION OF BILL

    The National Guard and Reserve Entrepreneurship Support Act 
of 2016 amends the Small Business Act and The Veterans and 
Small Business Development Act of 1999 to include an extension 
of disaster loan assistance to a small business due to an 
essential member of a small business being ordered to deploy as 
part of active military duty, as opposed to during periods of 
conflict. This bill also amends the requirements for deferred 
repayment of principal and interest due on a direct loan. It 
also directs the SBA to give grants and grow relationships with 
private and public sector entities to provide outreach programs 
for spouses of veterans and members of the reserve forces. More 
specifically, it would require the SBA to develop a National 
Guard and Reserve Deployment Support and Business Training 
program that will provide this counseling and assistance to 
support members of the reserves of the armed forces and their 
spouses. The bill would also require the SBA to report 
semiannually to Congress on the number of loans made through 
the Military Reservists Economic Injury Disaster Loan Program.
    The National Guard and Reserve Entrepreneurship Support Act 
of 2016 (S. 3009) updates the current eligibility requirements 
for the Military Reservists Economic Injury Disaster Loan 
(MREIDL) and Repayment Deferral for Active Duty Reservists 
(Repayment Deferral) for their limited use in ``periods of 
conflict'' to ``being ordered to deploy as part of active 
military duty.'' This outdated language has been changed to 
accommodate the increased application of the National Guard for 
missions all around the country and the world. This bill also 
directs the President to submit a semiannual report to the 
committee on the number of MREIDL loans that have been made. 
This report should include the subsidy rate of the disaster 
loan program under section 7(b) of the Small Business Act with 
the loans made under these programs S. 3009 also expands the 
outreach programs for Guard/Reservists to create the National 
Guard and Reserve Deployment Support Business training program. 
This new program will provide training and counseling to 
support the members of the reserve component to our armed 
forces and their spouses. To implement this legislation, the 
administrators may change existing programs and move around 
resources to provide reservists and their spouses with 
redeployment information. This bill also directs the SBA to 
work with the National Guard Bureau and State Adjunct generals 
to collaborate and use the others resources to bring the high 
quality training to the reserve competent on the Armed Forces.

                           V. COMMITTEE VOTE

    In compliance with rule XXVI(7)(b) of the Standing Rules of 
the Senate, the following vote was recorded on June 8, 2016.
    A motion to adopt the National Guard and Reserve 
Entrepreneurship Act, a bill to support entrepreneurs serving 
in the National Guard and Reserve, and for other purposes, was 
approved favorably by Roll Call vote with the following 
Senators present: Senators Vitter, Risch, Rubio, Paul, Scott, 
Fischer, Gardner, Ernst, Ayotte, Enzi, Shaheen, Cantwell, 
Cardin, Heitkamp, Markey, Booker, Coons, Hirono, and Peters.

                           VI. COST ESTIMATE

    In compliance with rule XXVI(11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts discussed in the 
following letter from the Congressional Budget Office:

                                                     July 27, 2016.
Hon. David Vitter,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3009, the National 
Guard and Reserve Entrepreneurship Support Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

The National Guard and Reserve Enterpreneurship Support Act of 2016

    S. 3009 would modify the eligibility requirements to 
qualify for a loan under the Small Business Administration 
(SBA) disaster loan program and expand certain SBA outreach 
programs. CBO estimates that implementing S. 3009 would have no 
significant effect on the federal budget.
    Under its Disaster Loan program, the SBA provides direct 
loans to certain small businesses including those that suffer 
substantial economic injury because essential employees were 
ordered to active duty during a military conflict. In recent 
years, this type of loan accounted for less than 4 percent of 
the total number of loans dispersed under the program. S. 3009 
would expand the eligibility requirements to permit loan 
assistance when such deployment is not part of a military 
conflict. On the basis of information from the SBA about the 
use of the Disaster Loan program, CBO estimates that the value 
of loans administered by the SBA would increase slightly under 
the bill. CBO estimates that increase would have an 
insignificant effect on the subsidy cost of the Disaster Loan 
program which was $36 million in 2015. (The subsidy cost of a 
federal direct loan is the estimated long-term cost to the 
government calculated on a net-present-value-basis.)
    S. 3009 also would expand the target of certain SBA 
outreach programs that provide training and assistance to 
include the spouses of both veterans and members of the reserve 
component of the armed forces. On the basis of information from 
the SBA about the administrative costs of those programs, CBO 
estimates that implementing those provisions would increase the 
agency's costs but by an insignificant amount because the SBA 
is already expanding its outreach efforts towards those 
individuals.
    Enacting S. 3009 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting S. 3009 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2027.
    S. 3009 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                  VII. EVALUATION OF REGULATORY IMPACT

    In compliance with rule XXVI(11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who utilize the services provided.

                   VIII. SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    This section provides for the title, ``National Guard and 
Reserve Entrepreneurship Support Act of 2015''.

Section 2. Extension of loan assistance and deferral eligibility to 
        reservists beyond periods of military conflict

    This section replaces the existing language of the current 
Small Business Act to allow the Military Reservists Economic 
Injury Disaster Loan (MREIDL) and Repayment Deferral for 
Activity Duty Reservists program to be used for those soldiers 
who are ``being ordered to deploy as part of active military 
duty.'' This change of wording from ``periods of conflict'' 
would allow the SBA and the National Guard to work together 
with less obstacles for their joint effort of providing 
services and training to those national guard personnel. This 
section also directs the President to submit a semiannual 
report to the Senate Small Business and Entrepreneurship and 
the Senate Committee on Appropriations and the House Committee 
on Small Business and the House Committee on Appropriations. 
This report will include the number of loans given out under 
the Military Reservists Economic Injury Disaster Loan program.

Section 3. National Guard and Reserve Deployment and Business Training 
        Program

    This section directs the SBA to make grants and enter into 
contracts and agreements with private and public entities. 
These agreements will help build outreach programs for 
reservists and spouses of our veterans. Through this section, 
the SBA is also directed to establish a National Guard and 
Reserve Deployment Support and Business Training Program to 
provide training and other assistance for our reserve forces 
and their spouses.

                                  [all]
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