II 

109TH CONGRESS 

1ST SESSION S. 138 

To make improvements to the microenterprise programs administered by 

the Small Business Administration. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 24, 2005 

Mr. KERRY (for himself and Mr. BINGAMAN) introduced the following bill; 

which was read twice and referred to the Committee on Small Business 

and Entrepreneurship 

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);’’; 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: ‘‘; or 

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

12 less than 3 years experience making 

13 microloans to startup, newly established, or 

14 growing small business concerns; and 

15 ‘‘(C) has at least 1 year experience pro16 viding, as an integral part of its microloan pro17 gram, intensive marketing, management, and 

18 technical assistance to its borrowers.’’. 

19 (b) CONFORMING CHANGE IN AVERAGE SMALLER

20 LOAN SIZE.—Section 7(m)(3)(F)(iii) of the Small Busi21 ness Act (15 U.S.C. 636(m)(3)(F)(iii)) is amended by 

22 striking ‘‘$7,500’’ and inserting ‘‘$10,000’’. 

23 (c) LIMITATION ON THIRD PARTY TECHNICAL AS24 SISTANCE.—Section 7(m)(4)(E)(ii) of the Small Business 

25 Act (15 U.S.C. 636(m)(4)(E)(ii)) is amended— 
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1 (1) by striking ‘‘TECHNICAL ASSISTANCE’’ and 

2 inserting ‘‘THIRD PARTY TECHNICAL ASSISTANCE’’; 

3 and 

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

5 percent’’. 

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

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

8 amended by striking ‘‘short-term’’. 

9 (e) REPORT ON TRANSFERRED AMOUNTS.—Section 

10 7(m)(9)(B) of the Small Business Act (15 U.S.C. 

11 636(m)(9)(B)) is amended— 

12 (1) by striking ‘‘The Administration’’ and in13 serting the following: 

14 ‘‘(i) IN GENERAL.—The Administra15 tion’’; 

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

17 and 

18 (3) by adding at the end the following: 

19 ‘‘(ii) REPORT.—The Administration 

20 shall report, in its annual budget request 

21 and performance plan to Congress, on the 

22 performance by the Administration of the 

23 requirements of clause (i).’’. 
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1 (f) ACCURATE SUBSIDY MODEL.—Section 7(m) of 

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

3 by adding at the end the following: 

4 ‘‘(14) IMPROVED SUBSIDY MODEL.—The Ad5 ministrator shall develop a subsidy model for the 

6 microloan program under this subsection, to be used 

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

8 than the subsidy model in effect on the day before 

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

10 (g) INCREASED FLEXIBILITY FOR PROVIDING TECH11 NICAL ASSISTANCE TO POTENTIAL BORROWERS.—Section 

12 7(m)(4)(E)(i) of the Small Business Act (15 U.S.C. 

13 636(m)(4)(E)(i)) is amended by striking ‘‘25 percent’’ and 

14 inserting ‘‘30 percent’’. 

15 SEC. 3. PRIME REAUTHORIZATION AND TRANSFER TO THE 

16 SMALL BUSINESS ACT. 

17 (a) PROGRAM REAUTHORIZATION.—Subtitle C of 

18 title I of the Riegle Community Development and Regu19 latory Improvement Act of 1994 (15 U.S.C. 6901 note) 

20 is amended to read as follows: 

21 ‘‘SEC. 37. PROGRAM FOR INVESTMENT IN MICROENTRE22 PRENEURS. 

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

24 following definitions shall apply: 
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1 ‘‘(1) ADMINISTRATION.—The term ‘Administra2 tion’ means the Small Business Administration. 

3 ‘‘(2) ADMINISTRATOR.—The term ‘Adminis4 trator’ means the Administrator of the Small Busi5 ness Administration. 

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

7 ‘capacity building services’ means services provided 

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

9 of becoming, a microenterprise development organi10 zation or program, for the purpose of enhancing its 

11 ability to provide training and services to disadvan12 taged entrepreneurs. 

13 ‘‘(4) COLLABORATIVE.—The term ‘collabo14 rative’ means 2 or more nonprofit entities that agree 

15 to act jointly as a qualified organization under this 

16 section. 

17 ‘‘(5) DISADVANTAGED ENTREPRENEUR.—The 

18 term ‘disadvantaged entrepreneur’ means a micro19 entrepreneur that— 

20 ‘‘(A) is a low-income person; 

21 ‘‘(B) is a very low-income person; or 

22 ‘‘(C) lacks adequate access to capital or 

23 other resources essential for business success, 

24 or is economically disadvantaged, as determined 

25 by the Administrator. 
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1 ‘‘(6) DISADVANTAGED NATIVE AMERICAN EN2 TREPRENEUR.—The term ‘disadvantaged Native 

3 American entrepreneur’ means a disadvantaged en4 trepreneur who is also a member of an Indian Tribe. 

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

6 has the same meaning as in section 4(a) of the In7 dian Self-Determination and Education Assistance 

8 Act. 

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

10 means a private, nonprofit entity that seeks to serve 

11 microenterprise development organizations and pro12 grams, as authorized under subsection (d). 

13 ‘‘(9) LOW-INCOME PERSON.—The term ‘low-in14 come person’ means having an income, adjusted for 

15 family size, of not more than— 

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

17 the area median income; and 

18 ‘‘(B) for nonmetropolitan areas, the great19 er of— 

20 ‘‘(i) 80 percent of the area median in21 come; or 

22 ‘‘(ii) 80 percent of the statewide non23 metropolitan area median income. 
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1 ‘‘(10) MICROENTREPRENEUR.—The term 

2 ‘microentrepreneur’ means the owner or developer of 

3 a microenterprise. 

4 ‘‘(11) MICROENTERPRISE.—The term ‘micro5 enterprise’ means a sole proprietorship, partnership, 

6 or corporation that— 

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

8 ‘‘(B) generally lacks access to conventional 

9 loans, equity, or other banking services. 

10 ‘‘(12) MICROENTERPRISE DEVELOPMENT ORGA11 NIZATION OR PROGRAM.—The term ‘microenterprise 

12 development organization or program’ means a non13 profit entity, or a program administered by such an 

14 entity, including community development corpora15 tions or other nonprofit development organizations 

16 and social service organizations, that provides serv17 ices to disadvantaged entrepreneurs. 

18 ‘‘(13) TRAINING AND TECHNICAL ASSIST19 ANCE.—The term ‘training and technical assistance’ 

20 means services and support provided to disadvan21 taged entrepreneurs, such as assistance for the pur22 pose of enhancing business planning, marketing, 

23 management, financial management skills, and as24 sistance for the purpose of accessing financial serv25 ices. 
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1 ‘‘(14) VERY LOW-INCOME PERSON.—The term 

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

3 adjusted for family size, of not more than 150 per4 cent of the poverty line (as defined in section 673(2) 

5 of the Community Services Block Grant Act (42 

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

7 that section). 

8 ‘‘(b) ESTABLISHMENT OF PROGRAM.—The Adminis9 trator shall establish a microenterprise technical assist10 ance and capacity building grant program to provide as11 sistance from the Administration in the form of grants 

12 to qualified organizations in accordance with this section. 

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

14 shall use grants made under this section— 

15 ‘‘(1) to provide training and technical assist16 ance to disadvantaged entrepreneurs; 

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

18 services to microenterprise development organiza19 tions and programs and groups of such organiza20 tions to assist such organizations and programs in 

21 developing microenterprise training and services; 

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

23 best practices in the field of microenterprise and 

24 technical assistance programs for disadvantaged en25 trepreneurs; 
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1 ‘‘(4) to provide training and technical assist2 ance to disadvantaged Native American entre3 preneurs and prospective entrepreneurs; and 

4 ‘‘(5) for such other activities as the Adminis5 trator determines are consistent with the purposes of 

6 this section. 

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

8 eligibility for assistance under this section, a qualified or9 ganization shall be— 

10 ‘‘(1) a nonprofit microenterprise development 

11 organization or program (or a group or collaborative 

12 thereof) that has a demonstrated record of delivering 

13 microenterprise services to disadvantaged entre14 preneurs; 

15 ‘‘(2) an intermediary; 

16 ‘‘(3) a microenterprise development organiza17 tion or program that is accountable to a local com18 munity, working in conjunction with a State or local 

19 government or Indian tribe; or 

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

21 Indian tribe can certify that no private organization 

22 or program referred to in this subsection exists with23 in its jurisdiction. 

24 ‘‘(e) ALLOCATION OF ASSISTANCE; SUBGRANTS.— 

25 ‘‘(1) ALLOCATION OF ASSISTANCE.— 
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1 ‘‘(A) IN GENERAL.—The Administrator 

2 shall allocate assistance from the Administra3 tion under this section to ensure that— 

4 ‘‘(i) activities described in subsection 

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

6 percent of amounts made available for 

7 such assistance; and 

8 ‘‘(ii) activities described in subsection 

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

10 percent of amounts made available for 

11 such assistance. 

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

13 No single person may receive more than 10 per14 cent of the total funds appropriated under this 

15 section in a single fiscal year. 

16 ‘‘(2) TARGETED ASSISTANCE.—The Adminis17 trator shall ensure that not less than 50 percent of 

18 the grants made under this section are used to ben19 efit very low-income persons, including those resid20 ing on Indian reservations. 

21 ‘‘(3) SUBGRANTS AUTHORIZED.— 

22 ‘‘(A) IN GENERAL.—A qualified organiza23 tion receiving assistance under this section may 

24 provide grants using that assistance to qualified 

25 small and emerging microenterprise organiza-
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1 tions and programs, subject to such rules and 

2 regulations as the Administrator determines to 

3 be appropriate. 

4 ‘‘(B) LIMIT ON ADMINISTRATIVE EX5 PENSES.—Not more than 7.5 percent of assist6 ance received by a qualified organization under 

7 this section may be used for administrative ex8 penses in connection with the making of sub9 grants under subparagraph (A). 

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

11 section, the Administrator shall ensure that grant 

12 recipients include both large and small microenter13 prise organizations, serving urban, rural, and Indian 

14 tribal communities serving diverse populations. 

15 ‘‘(5) PROHIBITION ON PREFERENTIAL CONSID16 ERATION OF CERTAIN SBA PROGRAM PARTICI17 PANTS.—In making grants under this section, the 

18 Administrator shall ensure that any application 

19 made by a qualified organization that is a partici20 pant in the program established under section 7(m) 

21 of the Small Business Act does not receive pref22 erential consideration over applications from other 

23 qualified organizations that are not participants in 

24 such program. 

25 ‘‘(f) MATCHING REQUIREMENTS.— 
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1 ‘‘(1) IN GENERAL.—Financial assistance under 

2 this section shall be matched with funds from 

3 sources other than the Federal Government on the 

4 basis of not less than 50 percent of each dollar pro5 vided by the Administration. 

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

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

8 resources of a grant recipient from public or private 

9 sources may be used to comply with the matching 

10 requirement in paragraph (1). 

11 ‘‘(3) EXCEPTION.— 

12 ‘‘(A) IN GENERAL.—In the case of an ap13 plicant for assistance under this section with se14 vere constraints on available sources of match15 ing funds, the Administrator may reduce or 

16 eliminate the matching requirements of para17 graph (1). 

18 ‘‘(B) LIMITATION.—Not more than 10 per19 cent of the total funds made available from the 

20 Administration in any fiscal year to carry out 

21 this section may be excepted from the matching 

22 requirements of paragraph (1), as authorized by 

23 subparagraph (A) of this paragraph. 

24 ‘‘(g) APPLICATIONS FOR ASSISTANCE.—An applica25 tion for assistance under this section shall be submitted 
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1 in such form and in accordance with such procedures as 

2 the Administrator shall establish. 

3 ‘‘(h) RECORDKEEPING AND REPORTING.— 

4 ‘‘(1) IN GENERAL.—Each organization that re5 ceives assistance from the Administration in accord6 ance with this section shall— 

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

8 than once in every 18-month period, financial 

9 statements audited by an independent certified 

10 public accountant; 

11 ‘‘(B) submit an annual report to the Ad12 ministration on its activities; and 

13 ‘‘(C) keep such records as may be nec14 essary to disclose the manner in which any as15 sistance under this section is used. 

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

17 access upon request, for the purposes of determining 

18 compliance with this section, to any records of any 

19 organization that receives assistance from the Ad20 ministration in accordance with this section. 

21 ‘‘(3) DATA COLLECTION.—Each organization 

22 that receives assistance from the Administration in 

23 accordance with this section shall collect information 

24 relating to, as applicable— 
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1 ‘‘(A) the number of individuals counseled 

2 or trained; 

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

4 provided; 

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

6 concerns formed; 

7 ‘‘(D) the number of small business con8 cerns expanded; 

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

10 counseled or trained; and 

11 ‘‘(F) the number of very low-income indi12 viduals counseled or trained. 

13 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.— 

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

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

16 each of the fiscal years 2005 through 2007 to carry 

17 out the provisions of this section, which shall remain 

18 available until expended. 

19 ‘‘(2) TRAINING FOR NATIVE AMERICAN ENTRE20 PRENEURS.—In addition to the amount authorized 

21 under subsection (i)(1), there are authorized to be 

22 appropriated to the Administrator $2,000,000 for 

23 each of the fiscal years 2005 through 2007 to carry 

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

25 remain available until expended.’’. 
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1 (b) TRANSFER PROVISIONS.— 

2 (1) SMALL BUSINESS ACT AMENDMENTS.—The 

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

4 amended by redesignating section 37 as section 38. 

5 (2) TRANSFER.—Section 37 of the Riegle Com6 munity Development and Regulatory Improvement 

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

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

9 and inserted after, section 36 of the Small Business 

10 Act. 

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

12 the ‘‘Program for Investment in Microentrepreneurs Act 

13 of 1999’’ or the ‘‘PRIME Act’’ shall be deemed to be ref14 erences to section 37 of the Small Business Act, as added 

15 by this section. 

16 (d) RULE OF CONSTRUCTION.—Nothing in this sec17 tion or the amendments made by this section shall affect 

18 any grant or assistance provided under the Program for 

19 Investment in Microentrepreneurs Act of 1999, before the 

20 date of enactment of this Act, and any such grant or as21 sistance shall be subject to the Program for Investment 

22 in Microentrepreneurs Act of 1999, as in effect on the day 

23 before the date of enactment of this Act. 

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