II

104TH CONGRESS

2D SESSION S. 1784

To amend the Small Business Investment Act of 1958, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

MAY 20, 1996

Mr. BOND introduced the following bill; which was read twice and referred to

the Committee on Small Business

A BILL

To amend the Small Business Investment Act of 1958, and

for other purposes.

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; INCORPORATED DEFINITIONS.

4 This Act may be cited as the ‘‘Small Business Invest5 ment Company Improvement Act of 1996’’.

6 SEC. 2. DEFINITIONS.

7 (a) SMALL BUSINESS CONCERN.—Section 103(5) of

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

9 662(5)) is amended by inserting before the semicolon the

10 following: ‘‘, except that, for purposes of this Act, an in-
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1 vestment by a venture capital firm, investment company

2 (including a small business investment company) employee

3 welfare benefit plan or pension plan, or trust, foundation,

4 or endowment that is exempt from Federal income tax5 ation—

6 ‘‘(A) shall not cause a business concern to be

7 deemed not independently owned and operated;

8 ‘‘(B) shall be disregarded in determining wheth9 er a business concern satisfies size standards estab10 lished pursuant to section 3(a)(2) of the Small Busi11 ness Act; and

12 ‘‘(C) shall be disregarded in determining wheth13 er a small business concern is a smaller enterprise’’.

14 (b) PRIVATE CAPITAL.—Section 103(9) of the Small

15 Business Investment Act of 1958 (15 U.S.C. 662(9)) is

16 amended to read as follows:

17 ‘‘(9) the term ‘private capital’—

18 ‘‘(A) means the sum of—

19 ‘‘(i) the paid-in capital and paid-in

20 surplus of a corporate licensee, the contrib21 uted capital of the partners of a partner22 ship licensee, or the equity investment of

23 the members of a limited liability company

24 licensee; and
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1 ‘‘(ii) unfunded binding commitments,

2 from investors that meet criteria estab3 lished by the Administrator, to contribute

4 capital to the licensee; provided that such

5 unfunded commitments may be counted as

6 private capital for purposes of approval by

7 the Administrator of any request for lever8 age, but leverage shall not be funded based

9 on such commitments; and

10 ‘‘(B) does not include any—

11 ‘‘(i) funds borrowed by a licensee from

12 any source;

13 ‘‘(ii) funds obtained through the issu14 ance of leverage; or

15 ‘‘(iii) funds obtained directly or indi16 rectly from any Federal, State, or local

17 government, or any government agency or

18 instrumentality, except for—

19 ‘‘(I) funds invested by an em20 ployee welfare benefit plan or pension

21 plan; and

22 ‘‘(II) any qualified nonprivate

23 funds (if the investors of the qualified

24 nonprivate funds do not control, di25 rectly or indirectly, the management,
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1 board of directors, general partners,

2 or members of the licensee);’’.

3 (c) NEW DEFINITIONS.—Section 103 of the Small

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

5 amended by striking paragraph (10) and inserting the fol6 lowing:

7 ‘‘(10) the term ‘leverage’ includes—

8 ‘‘(A) debentures purchased or guaranteed

9 by the Administration;

10 ‘‘(B) participating securities purchased or

11 guaranteed by the Administration; and

12 ‘‘(C) preferred securities outstanding as of

13 October 1, 1995;

14 ‘‘(11) the term ‘third party debt’ means any in15 debtedness for borrowed money, other than indebt16 edness owed to the Administration;

17 ‘‘(12) the term ‘smaller enterprise’ means any

18 small business concern that, together with its affili19 ates—

20 ‘‘(A) has—

21 ‘‘(i) a net financial worth of not more

22 than $6,000,000, as of the date on which

23 assistance is provided under this Act to

24 that business concern; and
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1 ‘‘(ii) an average net income for the 2-

2 year period preceding the date on which

3 assistance is provided under this Act to

4 that business concern, of not more than

5 $2,000,000, after Federal income taxes

6 (excluding any carryover losses); or

7 ‘‘(B) satisfies the standard industrial clas8 sification size standards established by the Ad9 ministration for the industry in which the small

10 business concern is primarily engaged;

11 ‘‘(13) the term ‘qualified nonprivate funds’

12 means any—

13 ‘‘(A) funds directly or indirectly invested in

14 any applicant or licensee on or before August

15 16, 1982, by any Federal agency, other than

16 the Administration, under a provision of law ex17 plicitly mandating the inclusion of those funds

18 in the definition of the term ‘private capital’;

19 ‘‘(B) funds directly or indirectly invested

20 in any applicant or licensee by any Federal

21 agency under a provision of law enacted after

22 September 4, 1992, explicitly mandating the in23 clusion of those funds in the definition of the

24 term ‘private capital’; and
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1 ‘‘(C) funds invested in any applicant or li2 censee by one or more State or local govern3 ment entities (including any guarantee extended

4 by those entities) in an aggregate amount that

5 does not exceed—

6 ‘‘(i) 33 percent of the private capital

7 of the applicant or licensee if such funds

8 were invested before June 30, 1996; or

9 ‘‘(ii) 20 percent of the private capital

10 of the applicant or licensee if such funds

11 were invested on or after June 30, 1996;

12 ‘‘(14) the terms ‘employee welfare benefit plan’

13 and ‘pension plan’ have the same meanings as in

14 section 3 of the Employee Retirement Income Secu15 rity Act of 1974, and are intended to include—

16 ‘‘(A) public and private pension or retire17 ment plans subject to such Act; and

18 ‘‘(B) similar plans not covered by such Act

19 that have been established and that are main20 tained by the Federal Government or any State

21 or political subdivision, or any agency or instru22 mentality thereof, for the benefit of employees;

23 ‘‘(15) the term ‘member’ means, with respect to

24 a licensee that is a limited liability company, a hold25 er of an ownership interest or a person otherwise ad-
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1 mitted to membership in the limited liability com2 pany; and

3 ‘‘(16) the term ‘limited liability company’

4 means a business entity that is organized and oper5 ating in accordance with a State limited liability

6 company statute approved by the Administration.’’.

7 SEC. 3. ORGANIZATION OF SMALL BUSINESS INVESTMENT

8 COMPANIES.

9 (a) LIMITED LIABILITY COMPANIES.—Section

10 301(a) of the Small Business Investment Act of 1958 (15

11 U.S.C. 681(a)) is amended in the first sentence, by strik12 ing ‘‘body or’’ and inserting ‘‘body, a limited liability com13 pany, or’’.

14 (b) ISSUANCE OF LICENSE.—Section 301(c) of the

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

16 681(c)) is amended to read as follows:

17 ‘‘(c) ISSUANCE OF LICENSE.—

18 ‘‘(1) SUBMISSION OF APPLICATION.—Each ap19 plicant for a license to operate as a small business

20 investment company under this Act shall submit to

21 the Administrator an application, in a form and in22 cluding such documentation as may be prescribed by

23 the Administrator.

24 ‘‘(2) PROCEDURES.—
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1 ‘‘(A) STATUS.—Not later than 90 days

2 after the initial receipt by the Administrator of

3 an application under this subsection, the Ad4 ministrator shall provide the applicant with a

5 written report detailing the status of the appli6 cation and any requirements remaining for

7 completion of the application.

8 ‘‘(B) APPROVAL OR DISAPPROVAL.—With9 in a reasonable time after receiving a completed

10 application submitted in accordance with this

11 subsection and in accordance with such require12 ments as the Administrator may prescribe by

13 regulation, the Administrator shall—

14 ‘‘(i) approve the application and issue

15 a license for such operation to the appli16 cant if the requirements of this section are

17 satisfied; or

18 ‘‘(ii) disapprove the application and

19 notify the applicant in writing of the dis20 approval.

21 ‘‘(3) MATTERS CONSIDERED.—In reviewing and

22 processing any application under this subsection, the

23 Administrator—

24 ‘‘(A) shall determine whether—
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1 ‘‘(i) the applicant meets the require2 ments of subsections (a) and (c) of section

3 302; and

4 ‘‘(ii) the management of the applicant

5 is qualified and has the knowledge, experi6 ence, and capability necessary to comply

7 with this Act;

8 ‘‘(B) shall take into consideration—

9 ‘‘(i) the need for and availability of fi10 nancing for small business concerns in the

11 geographic area in which the applicant is

12 to commence business;

13 ‘‘(ii) the general business reputation

14 of the owners and management of the ap15 plicant; and

16 ‘‘(iii) the probability of successful op17 erations of the applicant, including ade18 quate profitability and financial soundness;

19 and

20 ‘‘(C) shall not take into consideration any

21 projected shortage or unavailability of leverage.

22 ‘‘(4) EXCEPTION.—

23 ‘‘(A) IN GENERAL.—Notwithstanding any

24 other provision of this Act, the Administrator

25 may, in the discretion of the Administrator and
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1 based on a showing of special circumstances

2 and good cause, approve an application and

3 issue a license under this subsection with re4 spect to any applicant that—

5 ‘‘(i) has private capital of not less

6 than $3,000,000;

7 ‘‘(ii) would otherwise be issued a li8 cense under this subsection, except that

9 the applicant does not satisfy the require10 ments of section 302(a); and

11 ‘‘(iii) has a viable business plan rea12 sonably projecting profitable operations

13 and a reasonable timetable for achieving a

14 level of private capital that satisfies the re15 quirements of section 302(a).

16 ‘‘(B) LEVERAGE.—An applicant licensed

17 pursuant to the exception provided in this para18 graph shall not be eligible to receive leverage as

19 a licensee until the applicant satisfies the re20 quirements of section 302(a).’’.

21 (c) SPECIALIZED SMALL BUSINESS INVESTMENT

22 COMPANIES.—Section 301(d) of the Small Business In23 vestment Act of 1958 (15 U.S.C. 681(d)) is repealed.
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1 SEC. 4. CAPITAL REQUIREMENTS.

2 (a) INCREASED MINIMUM CAPITAL REQUIRE3 MENTS.—Section 302(a) of the Small Business Invest4 ment Act of 1958 (15 U.S.C. 682(a)) is amended by strik5 ing ‘‘(a)’’ and all that follows through ‘‘The Administra6 tion shall also determine the ability of the company,’’ and

7 inserting the following:

8 ‘‘(a) AMOUNT.—

9 ‘‘(1) IN GENERAL.—Except as provided in para10 graph (2), the private capital of each licensee shall

11 be not less than—

12 ‘‘(A) $5,000,000; or

13 ‘‘(B) $10,000,000, with respect to each li14 censee authorized or seeking authority to issue

15 participating securities to be purchased or guar16 anteed by the Administration under this Act.

17 ‘‘(2) EXCEPTION.—The Administrator may, in

18 the discretion of the Administrator and based on a

19 showing of special circumstances and good cause,

20 permit the private capital of a licensee authorized or

21 seeking authorization to issue participating securi22 ties to be purchased or guaranteed by the Adminis23 tration to be less than $10,000,000, but not less

24 than $5,000,000, if the Administrator determines

25 that such action would not create or otherwise con-
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1 tribute to an unreasonable risk of default or loss to

2 the Federal Government.

3 ‘‘(3) ADEQUACY.—In addition to the require4 ments of paragraph (1), the Administrator shall—

5 ‘‘(A) determine whether the private capital

6 of each licensee is adequate to assure a reason7 able prospect that the licensee will be operated

8 soundly and profitably, and managed actively

9 and prudently in accordance with its articles;

10 and

11 ‘‘(B) determine that the licensee will be

12 able’’.

13 (b) EXEMPTION FOR CERTAIN LICENSEES.—Section

14 302(a) of the Small Business Investment Act of 1958 (15

15 U.S.C. 682(a)) is amended by adding at the end the fol16 lowing new paragraph:

17 ‘‘(4) EXEMPTION FROM CAPITAL REQUIRE18 MENTS.—

19 ‘‘(A) AUTHORITY TO EXEMPT.—The Ad20 ministrator may, in the discretion of the Ad21 ministrator, exempt from the capital require22 ments in paragraph (1) any licensee licensed

23 under subsection (c) or (d) of section 301 be24 fore the date of enactment of the Small Busi-
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1 ness Investment Company Improvement Act of

2 1996, if—

3 ‘‘(i) the private capital of the licensee

4 is not less than $2,500,000;

5 ‘‘(ii) the licensee certifies in writing

6 that not less than 50 percent of the aggre7 gate dollar amount of its financings after

8 the date of enactment of the Small Busi9 ness Investment Company Improvement

10 Act of 1996 will be provided to smaller en11 terprises; and

12 ‘‘(iii) the Administrator determines

13 that the licensee—

14 ‘‘(I) has a record of profitable

15 operations; and

16 ‘‘(II) has not committed any seri17 ous or continuing violation of any ap18 plicable provision of Federal or State

19 law or regulation.

20 ‘‘(B) REDUCTION OF PRIVATE CAPITAL RE21 QUIREMENT.—If the Administrator determines

22 that such action would not create or otherwise

23 contribute to an unreasonable risk of default or

24 loss to the United States Government, the Ad25 ministrator, in the discretion of the Adminis-
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1 trator and based on a showing of special cir2 cumstances and good cause, may reduce the

3 private capital requirement under subparagraph

4 (A)(i) with respect to any licensee.’’.

5 (c) DIVERSIFICATION OF OWNERSHIP.—Section

6 302(c) of the Small Business Investment Act of 1958 (15

7 U.S.C. 682(c)) is amended to read as follows:

8 ‘‘(c) DIVERSIFICATION OF OWNERSHIP.—The Ad9 ministrator shall ensure that the management of each li10 censee licensed after the date of enactment of the Small

11 Business Investment Company Improvement Act of 1996

12 is sufficiently diversified from and unaffiliated with the

13 ownership of the licensee in a manner that ensures inde14 pendence and objectivity in the financial management and

15 oversight of the investments and operations of the li16 censee.’’.

17 SEC. 5. BORROWING.

18 (a) DEBENTURES.—Section 303(b) of the Small

19 Business Investment Act of 1958 (15 U.S.C. 683(b)) is

20 amended in the first sentence, by striking ‘‘(but only’’ and

21 all that follows through ‘‘terms)’’.

22 (b) THIRD PARTY DEBT.—Section 303(c) of the

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

24 683(c)) is amended to read as follows:

25 ‘‘(c) THIRD PARTY DEBT.—The Administrator—
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1 ‘‘(1) shall not permit a licensee having out2 standing leverage to incur third party debt that

3 would create or contribute to an unreasonable risk

4 of default or loss to the Federal Government; and

5 ‘‘(2) shall permit such licensees to incur third

6 party debt only on such terms and subject to such

7 conditions as may be established by the Adminis8 trator, by regulation or otherwise.’’.

9 (c) REQUIREMENT TO FINANCE SMALLER ENTER10 PRISES.—Section 303(d) of the Small Business Invest11 ment Act of 1958 (15 U.S.C. 683(d)) is amended to read

12 as follows:

13 ‘‘(d) REQUIREMENT TO FINANCE SMALLER ENTER14 PRISES.—The Administrator shall require each licensee,

15 as a condition of approval of an application for leverage,

16 to certify in writing that not less than 20 percent of the

17 aggregate dollar amount of the financings of the licensee

18 will be provided to smaller enterprises.’’.

19 (d) CAPITAL IMPAIRMENT REQUIREMENTS.—Section

20 303(e) of the Small Business Investment Act of 1958 (15

21 U.S.C. 683(e)) is amended to read as follows:

22 ‘‘(e) CAPITAL IMPAIRMENT.—Before approving any

23 application for leverage submitted by a licensee under this

24 Act, the Administrator—
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1 ‘‘(1) shall determine that the private capital of

2 the licensee meets the requirements of section

3 302(a); and

4 ‘‘(2) shall determine, taking into account the

5 nature of the assets of the licensee, the amount and

6 terms of any third party debt owed by such licensee,

7 and any other factors determined to be relevant by

8 the Administrator, that the private capital of the li9 censee has not been impaired to such an extent that

10 the issuance of additional leverage would create or

11 otherwise contribute to an unreasonable risk of de12 fault or loss to the Federal Government.’’.

13 (e) EQUITY INVESTMENT REQUIREMENT.—Section

14 303(g)(4) of the Small Business Investment Act of 1958

15 (15 U.S.C. 683(g)(4)) is amended by striking ‘‘and main16 tain’’.

17 (f) FEES.—Section 303 of the Small Business Invest18 ment Act of 1958 (15 U.S.C. 683) is amended—

19 (1) in subsection (b), in the fifth sentence, by

20 striking ‘‘1 per centum,’’ and all that follows before

21 the period at the end of the sentence and inserting

22 the following: ‘‘1 percent, plus an additional charge

23 of .50 percent per annum which shall be paid to and

24 retained by the Administration’’;
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1 (2) in subsection (g)(2), by striking ‘‘1 per cen2 tum,’’ and all that follows before the period at the

3 end of the paragraph and inserting the following: ‘‘1

4 percent, plus an additional charge of .50 percent per

5 annum which shall be paid to and retained by the

6 Administration’’; and

7 (3) by adding at the end the following new sub8 sections:

9 ‘‘(i) LEVERAGE FEE.—With respect to leverage

10 granted by the Administration to a licensee, the Adminis11 tration shall collect from the licensee a nonrefundable fee

12 in an amount equal to 3 percent of the face amount of

13 leverage granted to the licensee, payable upon the earlier

14 of the date of entry into any commitment for such leverage

15 or the date on which the leverage is drawn by the licensee.

16 ‘‘(j) CALCULATION OF SUBSIDY RATE.—All fees, in17 terest, and profits received and retained by the Adminis18 tration under this section shall be included in the calcula19 tions made by the Director of the Office of Management

20 and Budget to offset the cost (as that term is defined in

21 section 502 of the Federal Credit Reform Act of 1990)

22 to the Administration of purchasing and guaranteeing de23 bentures and participating securities under this Act.’’.
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1 SEC. 6. LIABILITY OF THE UNITED STATES.

2 Section 308(e) of the Small Business Investment Act

3 of 1958 (15 U.S.C. 687(e)) is amended by striking ‘‘Noth4 ing’’ and inserting ‘‘Except as expressly provided other5 wise in this Act, nothing’’.

6 SEC. 7. EXAMINATIONS; VALUATIONS.

7 (a) EXAMINATIONS.—Section 310(b) of the Small

8 Business Investment Act of 1958 (15 U.S.C. 687b(b)) is

9 amended in the first sentence by inserting ‘‘which may be

10 conducted with the assistance of a private sector entity

11 that has both the qualifications to conduct and expertise

12 in conducting such examinations,’’ after ‘‘Investment Divi13 sion of the Administration,’’.

14 (b) VALUATIONS.—Section 310(d) of the Small Busi15 ness Investment Act of 1958 (15 U.S.C. 687b(d)) is

16 amended to read as follows:

17 ‘‘(d) VALUATIONS.—

18 ‘‘(1) FREQUENCY OF VALUATIONS.—

19 ‘‘(A) IN GENERAL.—Each licensee shall

20 submit to the Administrator a written valuation

21 of the loans and investments of the licensee not

22 less often than semiannually or otherwise upon

23 the request of the Administrator, except that

24 any licensee with no leverage outstanding shall

25 submit such valuations annually, unless the Ad26 ministrator determines otherwise.
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1 ‘‘(B) MATERIAL ADVERSE CHANGES.—Not

2 later than 30 days after the end of a fiscal

3 quarter of a licensee during which a material

4 adverse change in the aggregate valuation of

5 the loans and investments or operations of the

6 licensee occurs, the licensee shall notify the Ad7 ministrator in writing of the nature and extent

8 of that change.

9 ‘‘(C) INDEPENDENT CERTIFICATION.—

10 ‘‘(i) IN GENERAL.—Not less than once

11 during each fiscal year, each licensee shall

12 submit to the Administrator the financial

13 statements of the licensee, audited by an

14 independent certified public accountant ap15 proved by the Administrator.

16 ‘‘(ii) AUDIT REQUIREMENTS.—Each

17 audit conducted under clause (i) shall in18 clude—

19 ‘‘(I) a review of the procedures

20 and documentation used by the li21 censee in preparing the valuations re22 quired by this section; and

23 ‘‘(II) a statement by the inde24 pendent certified public accountant

25 that such valuations were prepared in
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1 conformity with the valuation criteria

2 applicable to the licensee established

3 in accordance with paragraph (2).

4 ‘‘(2) VALUATION CRITERIA.—Each valuation

5 submitted under this subsection shall be prepared by

6 the licensee in accordance with valuation criteria,

7 which shall—

8 ‘‘(A) be established or approved by the Ad9 ministrator; and

10 ‘‘(B) include appropriate safeguards to en11 sure that the noncash assets of a licensee are

12 not overvalued.’’.

13 SEC. 8. TRUSTEE OR RECEIVERSHIP OVER LICENSEES.

14 (a) IN GENERAL.—Section 311 of the Small Business

15 Investment Act of 1958 (15 U.S.C. 687c) is amended by

16 adding at the end the following new subsection:

17 ‘‘(d) APPOINTMENT OF PRINCIPAL RECEIVERS AND

18 AGENTS.—

19 ‘‘(1) IN GENERAL.—Upon appointment as a re20 ceiver, as described in subsection (c), the Adminis21 trator may appoint principal receivers and receiver’s

22 agents.

23 ‘‘(2) COMPENSATION.—A receiver’s agent ap24 pointed under paragraph (1) may be paid—
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1 ‘‘(A) at any time from salaries and expense

2 amounts appropriated for the Administration,

3 and the Administration may be reimbursed for

4 such amounts from amounts recovered from the

5 liquidation of any assets of the licensee at the

6 conclusion of the receivership; or

7 ‘‘(B) from amounts recovered from the liq8 uidation of any assets of the licensee, but only

9 at the conclusion of the receivership.’’.

10 (b) CONTRACTS WITH PRIVATE SECTOR ENTI11 TIES.—

12 (1) IN GENERAL.—Not later than June 30,

13 1997, the Small Business Administration shall enter

14 into one or more contracts or arrangements with pri15 vate sector entities to provide for the orderly liquida16 tion of all licensee assets in liquidation, including as17 sets of licensees in receivership or in trust with re18 spect to which the court has appointed the Adminis19 tration as receiver or trustee under section 311 of

20 the Small Business Investment Act of 1958.

21 (2) DEFINITION.—For purposes of this sub22 section, the term ‘‘licensee’’ has the same meaning

23 as in section 103 of the Small Business Investment

24 Act of 1958.
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1 SEC. 9. BOOK ENTRY REGISTRATION.

2 Subsection 321(f) of the Small Business Investment

3 Act of 1958 (15 U.S.C. 687l) is amended by adding at

4 the end the following new paragraph:

5 ‘‘(5) Nothing in this subsection shall prohibit the uti6 lization of a book entry or other electronic form of reg7 istration for trust certificates.’’.

8 SEC. 10. TECHNICAL AND CONFORMING AMENDMENTS.

9 The Small Business Investment Act of 1958 (15

10 U.S.C. 661 et seq.) is amended—

11 (1) in section 303—

12 (A) in subsection (a), by striking ‘‘deben13 ture bonds,’’ and inserting ‘‘securities,’’;

14 (B) by striking subsection (f) and inserting

15 the following:

16 ‘‘(f) REDEMPTION OR REPURCHASE OF PREFERRED

17 STOCK.—Notwithstanding any other provision of law—

18 ‘‘(1) the Administrator may allow the issuer of

19 any preferred stock sold to the Administration be20 fore November 1, 1989 to redeem or repurchase

21 such stock, upon the payment to the Administration

22 of an amount less than the par value of such stock,

23 for a repurchase price determined by the Adminis24 trator after consideration of all relevant factors, in25 cluding—

26 ‘‘(A) the market value of the stock;
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1 ‘‘(B) the value of benefits provided and an2 ticipated to accrue to the issuer;

3 ‘‘(C) the amount of dividends paid, ac4 crued, and anticipated; and

5 ‘‘(D) the Administrator’s estimate of any

6 anticipated redemption; and

7 ‘‘(2) any moneys received by the Administration

8 from the repurchase of preferred stock shall be

9 available solely to provide debenture leverage to li10 censees having 50 percent or more in aggregate dol11 lar amount of their financings invested in smaller

12 enterprises.’’; and

13 (C) in subsection (g)(8)—

14 (i) by striking ‘‘partners or sharehold15 ers’’ and inserting ‘‘partners, shareholders,

16 or members’’;

17 (ii) by striking ‘‘partner’s or share18 holder’s’’ and inserting ‘‘partner’s, share19 holder’s, or member’s’’; and

20 (iii) by striking ‘‘partner or share21 holder’’ and inserting ‘‘partner, share22 holder, or member’’;

23 (2) in section 308(h), by striking ‘‘subsection

24 (c) or (d) of section 301’’ each place that term ap25 pears and inserting ‘‘section 301’’;
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1 (3) in section 310(c)(4), by striking ‘‘not less

2 than four years in the case of section 301(d) licens3 ees and in all other cases,’’;

4 (4) in section 312—

5 (A) by striking ‘‘shareholders or partners’’

6 and inserting ‘‘shareholders, partners, or mem7 bers’’; and

8 (B) by striking ‘‘shareholder, or partner’’

9 each place that term appears and inserting

10 ‘‘shareholder, partner, or member’’;

11 (5) by striking sections 317 and 318, and re12 designating sections 319 through 322 as sections

13 317 through 320, respectively;

14 (6) in section 319, as redesignated—

15 (A) in subsection (a), by striking ‘‘, includ16 ing companies operating under the authority of

17 section 301(d),’’; and

18 (B) in subsection (f)(2), by inserting ‘‘or

19 investments in obligations of the United States’’

20 after ‘‘accounts’’;

21 (7) in section 320, as redesignated, by striking

22 ‘‘section 321’’ and inserting ‘‘section 319’’; and

23 (8) in section 509—

24 (A) in subsection (a)(1), by striking the

25 second sentence; and
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1 (B) in subsection (e)(1)(B), by striking

2 ‘‘subsection (c) or (d) of section 301’’ and in3 serting ‘‘section 301’’.

4 SEC. 11. AUTHORIZATION OF APPROPRIATIONS.

5 Section 20(p)(3) of the Small Business Act (15

6 U.S.C. 631 note) is amended by striking subparagraph

7 (B) and inserting the following:

8 ‘‘(B) $300,000,000 in guarantees of de9 bentures; and’’.

10 SEC. 12. EFFECTIVE DATE.

11 This Act and the amendments made by this Act shall

12 become effective on the date of enactment of this Act.

Æ