II

106TH CONGRESS

1ST SESSION S. 364

To improve certain loan programs of the Small Business Administration,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 3, 1999

Mr. BOND (for himself, Mr. KERRY, and Mr. LIEBERMAN) introduced the following bill; which was read twice and referred to the Committee on Small

Business

A BILL

To improve certain loan programs of the Small Business

Administration, 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.

4 This Act may be cited as the ‘‘Small Business Invest5 ment Improvement Act of 1999’’.

6 SEC. 2. SBIC PROGRAM.

7 (a) IN GENERAL.—Section 308(i)(2) of the Small

8 Business Investment Act of 1958 (15 U.S.C. 687(i)(2))

9 is amended by adding at the end the following: ‘‘In this

10 paragraph, the term ‘interest’ includes only the maximum
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1 mandatory sum, expressed in dollars or as a percentage

2 rate, that is payable with respect to the business loan

3 amount received by the small business concern, and does

4 not include the value, if any, of contingent obligations, in5 cluding warrants, royalty, or conversion rights, granting

6 the small business investment company an ownership in7 terest in the equity or increased future revenue of the

8 small business concern receiving the business loan.’’.

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

10 Business Act (15 U.S.C. 631 note) is amended—

11 (1) in subsection (d)(1)(C)(i), by striking

12 ‘‘$800,000,000’’ and inserting ‘‘$1,200,000,000’’;

13 and

14 (2) in subsection (e)(1)(C)(i), by striking

15 ‘‘$900,000,000’’ and inserting ‘‘$1,500,000,000’’.

16 (c) DEFINITIONS.—

17 (1) SMALL BUSINESS CONCERN.—Section

18 103(5) of the Small Business Investment Act of

19 1958 (15 U.S.C. 662(5)) is amended—

20 (A) by redesignating subparagraphs (A)

21 through (C) as clauses (i) through (iii), and in22 denting appropriately;

23 (B) in clause (iii), as redesignated, by add24 ing ‘‘and’’ at the end;
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1 (C) by striking ‘‘purposes of this Act, an

2 investment’’ and inserting the following: ‘‘pur3 poses of this Act—

4 ‘‘(A) an investment’’; and

5 (D) by adding at the end the following:

6 ‘‘(B) in determining whether a business

7 concern satisfies net income standards estab8 lished pursuant to section 3(a)(2) of the Small

9 Business Act, if the business concern is not re10 quired by law to pay Federal income taxes at

11 the enterprise level, but is required to pass in12 come through to the shareholders, partners,

13 beneficiaries, or other equitable owners of the

14 business concern, the net income of the busi15 ness concern shall be determined by allowing a

16 deduction in an amount equal to the sum of—

17 ‘‘(i) if the business concern is not re18 quired by law to pay State (and local, if

19 any) income taxes at the enterprise level,

20 the net income (determined without regard

21 to this subparagraph), multiplied by the

22 marginal State income tax rate (or by the

23 combined State and local income tax rates,

24 as applicable) that would have applied if
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1 the business concern were a corporation;

2 and

3 ‘‘(ii) the net income (so determined)

4 less any deduction for State (and local) in5 come taxes calculated under clause (i),

6 multiplied by the marginal Federal income

7 tax rate that would have applied if the

8 business concern were a corporation;’’.

9 (2) SMALLER ENTERPRISE.—Section

10 103(12)(A)(ii) of the Small Business Investment Act

11 of 1958 (15 U.S.C. 662(12)(A)(ii)) is amended by

12 inserting before the semicolon at the end the follow13 ing: ‘‘except that, for purposes of this clause, if the

14 business concern is not required by law to pay Fed15 eral income taxes at the enterprise level, but is re16 quired to pass income through to the shareholders,

17 partners, beneficiaries, or other equitable owners of

18 the business concern, the net income of the business

19 concern shall be determined by allowing a deduction

20 in an amount equal to the sum of—

21 ‘‘(I) if the business concern is

22 not required by law to pay State (and

23 local, if any) income taxes at the en24 terprise level, the net income (deter25 mined without regard to this clause),
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1 multiplied by the marginal State in2 come tax rate (or by the combined

3 State and local income tax rates, as

4 applicable) that would have applied if

5 the business concern were a corpora6 tion; and

7 ‘‘(II) the net income (so deter8 mined) less any deduction for State

9 (and local) income taxes calculated

10 under subclause (I), multiplied by the

11 marginal Federal income tax rate that

12 would have applied if the business

13 concern were a corporation’’.

14 (d) TECHNICAL CORRECTIONS.—

15 (1) REPEAL.—Section 303(g) of the Small

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

17 683(g)) is amended by striking paragraph (13).

18 (2) ISSUANCE OF GUARANTEES AND TRUST

19 CERTIFICATES.—Section 320 of the Small Business

20 Investment Act of 1958 (15 U.S.C. 687m) is amend21 ed by striking ‘‘6’’ and inserting ‘‘12’’.

22 (3) ELIMINATION OF TABLE OF CONTENTS.—

23 Section 101 of the Small Business Investment Act

24 of 1958 (15 U.S.C. 661 note) is amended to read as

25 follows:
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1 ‘‘SEC. 101. SHORT TITLE.

2 ‘‘This Act may be cited as the ‘Small Business Invest3 ment Act of 1958’.’’.

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