H. R. 68

One Hundred Sixth Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Wednesday,

the sixth day of January, one thousand nine hundred and ninety-nine

An Act

To amend section 20 of the Small Business Act and make technical corrections

in title III of the Small Business Investment Act.

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 ‘‘Small Business Investment

Improvement Act of 1999’’.

SEC. 2. SBIC PROGRAM.

(a) IN GENERAL.—Section 308(i)(2) of the Small Business Investment Act of 1958 (15 U.S.C. 687(i)(2)) is amended by adding at

the end the following: ‘‘In this paragraph, the term ‘interest’

includes only the maximum mandatory sum, expressed in dollars

or as a percentage rate, that is payable with respect to the business

loan amount received by the small business concern, and does

not include the value, if any, of contingent obligations, including

warrants, royalty, or conversion rights, granting the small business

investment company an ownership interest in the equity or

increased future revenue of the small business concern receiving

the business loan.’’.

(b) FUNDING LEVELS.—Section 20 of the Small Business Act

(15 U.S.C. 631 note) is amended—

(1) in subsection (d)(1)(C)(i), by striking ‘‘$800,000,000’’ and inserting ‘‘$1,200,000,000’’; and (2) in subsection (e)(1)(C)(i), by striking ‘‘$900,000,000’’ and inserting ‘‘$1,500,000,000’’.

(c) DEFINITIONS.— (1) SMALL BUSINESS CONCERN.—Section 103(5) of the Small

Business Investment Act of 1958 (15 U.S.C. 662(5)) is

amended—

(A) by redesignating subparagraphs (A) through (C)

as clauses (i) through (iii), and indenting appropriately;

(B) in clause (iii), as redesignated, by adding ‘‘and’’

at the end;

(C) by striking ‘‘purposes of this Act, an investment’’

and inserting the following: ‘‘purposes of this Act—

‘‘(A) an investment’’; and

(D) by adding at the end the following:

‘‘(B) in determining whether a business concern satisfies net income standards established pursuant to section

3(a)(2) of the Small Business Act, if the business concern

is not required by law to pay Federal income taxes at

the enterprise level, but is required to pass income through
H. R. 68—2

to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of

the business concern shall be determined by allowing a

deduction in an amount equal to the sum of—

‘‘(i) if the business concern is not required by law

to pay State (and local, if any) income taxes at the

enterprise level, the net income (determined without

regard to this subparagraph), multiplied by the marginal State income tax rate (or by the combined State

and local income tax rates, as applicable) that would

have applied if the business concern were a corporation; and

‘‘(ii) the net income (so determined) less any deduction for State (and local) income taxes calculated under

clause (i), multiplied by the marginal Federal income

tax rate that would have applied if the business concern were a corporation;’’.

(2) SMALLER ENTERPRISE.—Section 103(12)(A)(ii) of the

Small Business Investment Act of 1958 (15 U.S.C.

662(12)(A)(ii)) is amended by inserting before the semicolon

at the end the following: ‘‘except that, for purposes of this

clause, if the business concern is not required by law to pay

Federal income taxes at the enterprise level, but is required

to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern,

the net income of the business concern shall be determined

by allowing a deduction in an amount equal to the sum of—

‘‘(I) if the business concern is not required

by law to pay State (and local, if any) income

taxes at the enterprise level, the net income (determined without regard to this clause), multiplied

by the marginal State income tax rate (or by the

combined State and local income tax rates, as

applicable) that would have applied if the business

concern were a corporation; and

‘‘(II) the net income (so determined) less any

deduction for State (and local) income taxes calculated under subclause (I), multiplied by the marginal Federal income tax rate that would have

applied if the business concern were a corporation’’.

(d) TECHNICAL CORRECTIONS.—

(1) REPEAL.—Section 303(g) of the Small Business Investment Act of 1958 (15 U.S.C. 683(g)) is amended by striking

paragraph (13).

(2) ISSUANCE OF GUARANTEES AND TRUST CERTIFICATES.—

Section 320 of the Small Business Investment Act of 1958

(15 U.S.C. 687m) is amended by striking ‘‘6’’ and inserting

‘‘12’’.

(3) ELIMINATION OF TABLE OF CONTENTS.—Section 101 of

the Small Business Investment Act of 1958 (15 U.S.C. 661

note) is amended to read as follows:
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‘‘SEC. 101. SHORT TITLE.

‘‘This Act may be cited as the ‘Small Business Investment

Act of 1958’.’’.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.