II

Calendar No. 22

106TH CONGRESS

1ST SESSION S. 364

[Report No. 106–6]

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

MARCH 2, 1999

Reported by Mr. BOND, without amendment

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’’.
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1 SEC. 2. SBIC PROGRAM.

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

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

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

5 paragraph, the term ‘interest’ includes only the maximum

6 mandatory sum, expressed in dollars or as a percentage

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

8 amount received by the small business concern, and does

9 not include the value, if any, of contingent obligations, in10 cluding warrants, royalty, or conversion rights, granting

11 the small business investment company an ownership in12 terest in the equity or increased future revenue of the

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

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

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

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

17 ‘‘$800,000,000’’ and inserting ‘‘$1,200,000,000’’;

18 and

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

20 ‘‘$900,000,000’’ and inserting ‘‘$1,500,000,000’’.

21 (c) DEFINITIONS.—

22 (1) SMALL BUSINESS CONCERN.—Section

23 103(5) of the Small Business Investment Act of

24 1958 (15 U.S.C. 662(5)) is amended—
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•S 364 RS

1 (A) by redesignating subparagraphs (A)

2 through (C) as clauses (i) through (iii), and in3 denting appropriately;

4 (B) in clause (iii), as redesignated, by add5 ing ‘‘and’’ at the end;

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

7 investment’’ and inserting the following: ‘‘pur8 poses of this Act—

9 ‘‘(A) an investment’’; and

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

11 ‘‘(B) in determining whether a business

12 concern satisfies net income standards estab13 lished pursuant to section 3(a)(2) of the Small

14 Business Act, if the business concern is not re15 quired by law to pay Federal income taxes at

16 the enterprise level, but is required to pass in17 come through to the shareholders, partners,

18 beneficiaries, or other equitable owners of the

19 business concern, the net income of the busi20 ness concern shall be determined by allowing a

21 deduction in an amount equal to the sum of—

22 ‘‘(i) if the business concern is not re23 quired by law to pay State (and local, if

24 any) income taxes at the enterprise level,

25 the net income (determined without regard
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•S 364 RS

1 to this subparagraph), multiplied by the

2 marginal State income tax rate (or by the

3 combined State and local income tax rates,

4 as applicable) that would have applied if

5 the business concern were a corporation;

6 and

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

8 less any deduction for State (and local) in9 come taxes calculated under clause (i),

10 multiplied by the marginal Federal income

11 tax rate that would have applied if the

12 business concern were a corporation;’’.

13 (2) SMALLER ENTERPRISE.—Section

14 103(12)(A)(ii) of the Small Business Investment Act

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

16 inserting before the semicolon at the end the follow17 ing: ‘‘except that, for purposes of this clause, if the

18 business concern is not required by law to pay Fed19 eral income taxes at the enterprise level, but is re20 quired to pass income through to the shareholders,

21 partners, beneficiaries, or other equitable owners of

22 the business concern, the net income of the business

23 concern shall be determined by allowing a deduction

24 in an amount equal to the sum of—
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1 ‘‘(I) if the business concern is

2 not required by law to pay State (and

3 local, if any) income taxes at the en4 terprise level, the net income (deter5 mined without regard to this clause),

6 multiplied by the marginal State in7 come tax rate (or by the combined

8 State and local income tax rates, as

9 applicable) that would have applied if

10 the business concern were a corpora11 tion; and

12 ‘‘(II) the net income (so deter13 mined) less any deduction for State

14 (and local) income taxes calculated

15 under subclause (I), multiplied by the

16 marginal Federal income tax rate that

17 would have applied if the business

18 concern were a corporation’’.

19 (d) TECHNICAL CORRECTIONS.—

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

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

22 683(g)) is amended by striking paragraph (13).

23 (2) ISSUANCE OF GUARANTEES AND TRUST

24 CERTIFICATES.—Section 320 of the Small Business
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1 Investment Act of 1958 (15 U.S.C. 687m) is amend2 ed by striking ‘‘6’’ and inserting ‘‘12’’.

3 (3) ELIMINATION OF TABLE OF CONTENTS.—

4 Section 101 of the Small Business Investment Act

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

6 follows:

7 ‘‘SEC. 101. SHORT TITLE.

8 ‘‘This Act may be cited as the ‘Small Business Invest9 ment Act of 1958’.’’.

Calendar No. 22

106TH CONGRESS

1ST SESSION S. 364

[Report No. 106–6]

A BILL

To improve certain loan programs of the Small

Business Administration, and for other purposes.

MARCH 2, 1999

Reported without amendment