II 

Calendar No. 542 

114TH CONGRESS 

2D SESSION S. 1870 

To amend the Small Business Act to require the Administrator of the Small 

Business Administration to carry out a pilot program on issuing grants 

to eligible veterans to start or acquire qualifying businesses, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 27, 2015 

Mr. MORAN (for himself, Mr. TESTER, Mrs. CAPITO, and Mr. COONS) introduced the following bill; which was read twice and referred to the Committee on Small Business and Entrepreneurship 

JUNE 29, 2016 

Reported by Mr. VITTER, with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

A BILL 

To amend the Small Business Act to require the Administrator of the Small Business Administration to carry 

out a pilot program on issuing grants to eligible veterans 

to start or acquire qualifying businesses, 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, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Veterans Entrepre3 neurial Transition Act of 2015’’ or the ‘‘VET Act of 

4 2015’’. 

5 SEC. 2. VETERANS SMALL BUSINESS ENTREPRENEURSHIP 

6 PILOT PROGRAM. 

7 Section 32 of the Small Business Act (15 U.S.C. 

8 657b) is amended by adding at the end the following: 

9 ‘‘(g) VETERANS SMALL BUSINESS ENTREPRENEUR10 SHIP PILOT PROGRAM.— 

11 ‘‘(1) PILOT PROGRAM REQUIRED.— 

12 ‘‘(A) IN GENERAL.—Not later than 90 

13 days after the date of enactment of this sub14 section, the Administrator, in consultation with 

15 the Advisory Committee and the Secretary of 

16 Veterans Affairs, shall begin carrying out a 

17 pilot program to assess the feasibility and ad18 visability of making grants to eligible veterans 

19 to start or acquire a qualifying business enter20 prise. 

21 ‘‘(B) PROMOTION OF EFFICIENCY.—In 

22 carrying out the pilot program, the Adminis23 trator shall ensure, to the maximum extent 

24 practicable, that the pilot program promotes ef25 ficiency, accountability, and competition. 


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1 ‘‘(C) LIST OF CATEGORIES OF BUSINESS

2 ENTERPRISES.—The Administrator, in con3 sultation with the Advisory Committee, shall by 

4 rule establish a list of categories of business en5 terprises that the Administrator determines to 

6 be qualifying business enterprises for purposes 

7 of the pilot program, which shall include— 

8 ‘‘(i) a small business concern; 

9 ‘‘(ii) a franchise business enterprise; 

10 and 

11 ‘‘(iii) any other category of business 

12 enterprise that the Administrator, in con13 sultation with the Advisory Committee, de14 termines is appropriate and in accordance 

15 with the purposes of the pilot program. 

16 ‘‘(D) NUMBER OF GRANTS.—Under the 

17 pilot program, the Administrator may make 

18 grants in accordance with paragraph (4) to not 

19 more than 250 eligible veterans to start or ac20 quire a qualifying business enterprise. 

21 ‘‘(E) GEOGRAPHIC DIVERSITY.—In making 

22 grants under the pilot program, the Adminis23 trator shall ensure geographic diversity among 

24 the veterans who receive the grants. 


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1 ‘‘(F) DURATION.—The Administrator shall 

2 carry out the pilot program during the 3-year 

3 period beginning on the date on which the Ad4 ministrator begins carrying out the pilot pro5 gram. 

6 ‘‘(2) APPLICATION.— 

7 ‘‘(A) IN GENERAL.—An eligible veteran de8 siring a grant under the pilot program shall 

9 submit an application— 

10 ‘‘(i) to the Administrator in the form 

11 and containing the information as the Ad12 ministrator may require, including the in13 formation described in subparagraph (B); 

14 and 

15 ‘‘(ii) not later than 1 year before the 

16 date on which the pilot program terminates 

17 under paragraph (1)(F). 

18 ‘‘(B) DOCUMENTATION REQUIREMENTS.— 

19 The Administrator, in considering an applica20 tion from an eligible veteran for a grant under 

21 the pilot program, may not approve the applica22 tion unless the application includes the fol23 lowing: 

24 ‘‘(i) A description of the use of the 

25 grant amount, including an identification 


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1 and description of the qualifying business 

2 enterprise. 

3 ‘‘(ii) A description of the expected re4 turn on investment resulting from the 

5 grant amounts. 

6 ‘‘(iii) A certification that the eligible 

7 veteran applying for the grant— 

8 ‘‘(I) shall complete the education 

9 and training relevant to the ownership 

10 and operation of the qualifying busi11 ness enterprise described in para12 graphs (3)(A) and (3)(B); and 

13 ‘‘(II) understands that the eligi14 ble veteran may not receive amounts 

15 under a grant under the pilot pro16 gram until after the eligible veteran 

17 has completed the required education 

18 and training relevant to the ownership 

19 and operation of the qualifying busi20 ness enterprise described in para21 graphs (3)(A) and (3)(B). 

22 ‘‘(iv) Such certifications as the Ad23 ministrator, in consultation with the Advi24 sory Committee, shall by rule require, in25 cluding— 


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1 ‘‘(I) for a business enterprise in 

2 operation on the date of the applica3 tion, evidence that the Administrator, 

4 in consultation with the Advisory 

5 Committee, determines appropriate 

6 of— 

7 ‘‘(aa) good standing; 

8 ‘‘(bb) profitable operation; 

9 and 

10 ‘‘(cc) guarantees relating to 

11 the purchase of the enterprise; 

12 ‘‘(II) for a franchise business en13 terprise, evidence that the Adminis14 trator, in consultation with the Advi15 sory Committee, determines appro16 priate of— 

17 ‘‘(aa) compliance with appli18 cable State and Federal laws on 

19 franchises; and 

20 ‘‘(bb) training in conforma21 tion with the industry standard; 

22 and 

23 ‘‘(III) for a startup, or an enter24 prise that is otherwise not in oper25 ation at the time of the application, a 


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1 proposal for the operation of that en2 terprise that leads to profitable oper3 ation within a reasonable timeframe. 

4 ‘‘(v) A certification that the eligible 

5 veteran applying for the grant understands 

6 that the eligible veteran may not receive 

7 amounts under the grant until after the 

8 business plan of the eligible veteran has 

9 been approved under the procedures de10 scribed in paragraph (3)(C)(ii). 

11 ‘‘(vi) A certification that the eligible 

12 veteran— 

13 ‘‘(I) has been truthful about the 

14 employment status of the eligible vet15 eran; and 

16 ‘‘(II) understands that the eligi17 ble veteran will be prohibited from 

18 participating in the pilot program if 

19 the certification described in subclause 

20 (I) is determined to be untrue. 

21 ‘‘(C) GROUP APPLICATIONS.—The Admin22 istrator may authorize a group of eligible vet23 erans to apply as a group under the pilot pro24 gram. The group shall be treated as a single eli25 gible veteran under the pilot program, except 


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1 that the maximum amount of the grant shall be 

2 calculated by multiplying the maximum amount 

3 under paragraph (4)(A) by the number of mem4 bers of the group. 

5 ‘‘(3) ENTREPRENEURSHIP TRAINING.— 

6 ‘‘(A) IN GENERAL.—Each eligible veteran 

7 receiving a grant under the pilot program shall 

8 complete an entrepreneurship readiness pro9 gram approved by the Administrator that is de10 signed to prepare the eligible veteran for, and 

11 lead to the immediate subsequent ownership 

12 and management by the eligible veteran of, a 

13 qualifying business enterprise. 

14 ‘‘(B) APPROVED PROGRAMS.—An approved 

15 program described in subparagraph (A) may in16 clude a program— 

17 ‘‘(i) available through a small business 

18 development center; 

19 ‘‘(ii) approved by the Administrator 

20 for entrepreneurship training; 

21 ‘‘(iii) approved by the Secretary of 

22 Veterans Affairs for entrepreneurship 

23 training; 


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1 ‘‘(iv) available through the Transition 

2 Assistance Program of the Department of 

3 Defense; 

4 ‘‘(v) available through a women’s 

5 business center, as described in section 29; 

6 ‘‘(vi) available through a Veterans 

7 Business Outreach Center, as described in 

8 subsection (d); 

9 ‘‘(vii) available through the SCORE 

10 program authorized by section 8(b)(1); or 

11 ‘‘(viii) approved by the Administrator, 

12 in consultation with the Advisory Com13 mittee, as appropriate because of the ex14 pertise the program offers relating to a 

15 certain type of business enterprise. 

16 ‘‘(C) BUSINESS PLAN.— 

17 ‘‘(i) CONTENTS.—An eligible veteran 

18 receiving a grant under the pilot program 

19 shall prepare a business plan, which shall 

20 include— 

21 ‘‘(I) a description of how the 

22 qualifying business enterprise will 

23 achieve profitable operation within a 

24 reasonable timeframe; 

25 ‘‘(II) an assessment of relevant— 


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1 ‘‘(aa) economic indicators; 

2 ‘‘(bb) consumer data; 

3 ‘‘(cc) production and sales 

4 data; and 

5 ‘‘(dd) market or industry 

6 analysis; and 

7 ‘‘(III) other information that the 

8 Administrator, in consultation with 

9 the Advisory Committee, determines is 

10 appropriate. 

11 ‘‘(ii) APPROVAL PROCEDURE.— 

12 ‘‘(I) APPROVAL BY ADVISOR.—If 

13 an advisor approves the business plan 

14 prepared by the eligible veteran, the 

15 Associate Administrator for Veterans 

16 Business Development of the Adminis17 tration— 

18 ‘‘(aa) shall review the busi19 ness plan; and 

20 ‘‘(bb) may reverse the ap21 proval of the business plan and 

22 require that the eligible veteran 

23 continue to consult with the advi24 sor to develop and resubmit the 

25 business plan. 


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1 ‘‘(II) DISAPPROVAL BY ADVI2 SOR.—If an advisor does not approve 

3 the business plan prepared by an eli4 gible veteran, the Associate Adminis5 trator for Veterans Business Develop6 ment of the Administration, upon ap7 peal by the eligible veteran, may re8 verse the decision of the advisor and 

9 approve the business plan. 

10 ‘‘(4) GRANT TERMS AND CONDITIONS.— 

11 ‘‘(A) MAXIMUM GRANT AMOUNT AND ADDI12 TIONAL ASSISTANCE.— 

13 ‘‘(i) IN GENERAL.—Subject to para14 graph (2)(C), the maximum amount that 

15 an eligible veteran may receive under the 

16 pilot program shall not exceed an amount 

17 equal to the sum of— 

18 ‘‘(I) the maximum grant amount 

19 specified in clause (ii); 

20 ‘‘(II) the amount equal to the 

21 product obtained by multiplying— 

22 ‘‘(aa) the amount of addi23 tional assistance to which the eli24 gible veteran is entitled under 

25 clause (iii)(II); by 


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1 ‘‘(bb) the number of months 

2 that the eligible veteran partici3 pates in the pilot program; and 

4 ‘‘(III) the amount of training as5 sistance received by the eligible vet6 eran in clause (iv). 

7 ‘‘(ii) MAXIMUM GRANT AMOUNT.—The 

8 maximum grant amount specified in this 

9 clause is the following: 

10 ‘‘(I) In the case of an eligible vet11 eran entitled to educational assistance 

12 under chapter 33 of title 38, United 

13 States Code, the amount equal to the 

14 product obtained by multiplying— 

15 ‘‘(aa) the number of months 

16 of educational assistance to 

17 which the eligible veteran is enti18 tled on the date that the eligible 

19 veteran submits an application; 

20 by 

21 ‘‘(bb) the pro rata monthly 

22 rate of the amount that the eligi23 ble veteran is entitled to under 

24 paragraph (1)(A)(ii)(II) of sec25 tion 3313(c) of that title, subject 


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1 to paragraphs (2) through (7) of 

2 that section. 

3 ‘‘(II) In the case of an eligible 

4 veteran entitled to educational assist5 ance under chapter 30 of title 38, 

6 United States Code, the amount equal 

7 to the product obtained by multi8 plying— 

9 ‘‘(aa) the number of months 

10 of educational assistance to 

11 which the eligible veteran is enti12 tled on the date that the eligible 

13 veteran submits an application; 

14 by 

15 ‘‘(bb) the rate in effect 

16 under section 3015(a)(1) of that 

17 title. 

18 ‘‘(iii) ADDITIONAL ASSISTANCE.— 

19 ‘‘(I) PERIOD OF ELIGIBILITY.— 

20 An eligible veteran shall receive the 

21 amount described in subclause (II) for 

22 each month that the eligible veteran 

23 participates in the pilot program. 

24 ‘‘(II) AMOUNT.—The amount of 

25 the additional assistance specified in 


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1 this subclause is an amount, paid to 

2 the eligible veteran on a monthly 

3 basis, equal to the product obtained 

4 by multiplying— 

5 ‘‘(aa) the monthly amount of 

6 the basic allowance for housing 

7 payable under section 403 of title 

8 37, United States Code, for a 

9 member with dependents in pay 

10 grade E–5 residing in the mili11 tary housing area that encom12 passes all or the majority portion 

13 of the ZIP code area in which is 

14 located the residence of the eligi15 ble veteran (similar to the cal16 culation made under section 

17 3313(c)(1)(B)(i)(I) of title 38, 

18 United States Code); by— 

19 ‘‘(bb)(AA) in the case of an 

20 eligible veteran who, as of the 

21 date on which the eligible veteran 

22 applies for a grant under this 

23 subsection, has no employment 

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1 gible veteran seeks a grant under 

2 this subsection, 1; or 

3 ‘‘(BB) in the case of an eli4 gible veteran who is not described 

5 in subitem (AA), 0.5. 

6 ‘‘(iv) TRAINING ASSISTANCE.—Upon 

7 application by an eligible veteran receiving 

8 a grant under the pilot program, the Ad9 ministrator may pay for the cost, if appli10 cable, of an approved program described in 

11 paragraph (3)(B)(viii). 

12 ‘‘(B) DISBURSEMENT.—The amount of a 

13 grant made under the pilot program shall be 

14 disbursed to an eligible veteran— 

15 ‘‘(i) in installments, in accordance 

16 with the procedures described in subpara17 graph (C); 

18 ‘‘(ii) only after the eligible veteran 

19 presents documentation proving that the 

20 eligible veteran has completed the required 

21 entrepreneurship training described in 

22 paragraphs (3)(A) and (3)(B); and 

23 ‘‘(iii) only after the business plan of 

24 the eligible veteran has been approved 


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1 under the procedures described in para2 graph (3)(C)(ii). 

3 ‘‘(C) INSTALLMENT PAYMENTS.—The 

4 amount described in subparagraph (A)(ii) shall 

5 be paid to the eligible veteran in installments on 

6 a pro rata basis with each installment being 

7 paid to the eligible veteran— 

8 ‘‘(i) not earlier than 3 months after 

9 the date of the payment of the most recent 

10 installment to the eligible veteran; 

11 ‘‘(ii) not later than 12 months after 

12 the date of the payment of the most recent 

13 installment to the eligible veteran; and 

14 ‘‘(iii) only after the eligible veteran 

15 has met milestones established in the busi16 ness plan of the eligible veteran. 

17 ‘‘(5) USE OF GRANT AMOUNTS.—An eligible 

18 veteran who receives a grant under the pilot pro19 gram may use the amount of the grant— 

20 ‘‘(A) in accordance with the limitations 

21 that the Administrator, in consultation with the 

22 Advisory Committee, may by rule establish; and 

23 ‘‘(B) for purposes related to starting or ac24 quiring a qualifying business enterprise that the 

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1 sory Committee, determines are appropriate, in2 cluding— 

3 ‘‘(i) purchasing goods or services nec4 essary for the creation or operation of a 

5 qualifying business enterprise; 

6 ‘‘(ii) funding a project that is directed 

7 toward any economic development objective 

8 described under section 501(d) of the 

9 Small Business Investment Act of 1958 

10 (15 U.S.C. 695(d)); and 

11 ‘‘(iii) acquiring a qualifying business 

12 enterprise. 

13 ‘‘(6) REPORT.— 

14 ‘‘(A) IN GENERAL.—Not later than 2 years 

15 after the date on which the pilot program is 

16 commenced, the Administrator shall submit to 

17 the Committee on Small Business and Entre18 preneurship and the Committee on Veterans’ 

19 Affairs of the Senate and the Committee on 

20 Small Business and the Committee on Vet21 erans’ Affairs of the House of Representatives 

22 a report analyzing the feasibility and effective23 ness of the pilot program. 

24 ‘‘(B) CONTENTS.—The report submitted 

25 under subparagraph (A) shall include— 


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1 ‘‘(i) an assessment of the pilot pro2 gram; 

3 ‘‘(ii) a survey containing— 

4 ‘‘(I) the number of grantees 

5 under the pilot program; and 

6 ‘‘(II) the number of the grantees 

7 under the pilot program that partici8 pated in each of the training pro9 grams described in subparagraphs (A) 

10 and (B) of paragraph (3); 

11 ‘‘(iii) recommendations regarding 

12 whether any aspect of the pilot program 

13 should be made a permanent authority, 

14 and, if so, the means to ensure— 

15 ‘‘(I) geographic and demographic 

16 diversity among the eligible veterans 

17 who receive the grants under the per18 manent authority; and 

19 ‘‘(II) diversity in the types of 

20 qualifying business enterprises for 

21 which eligible veterans may receive 

22 grants under the pilot program; 

23 ‘‘(iv) an assessment regarding wheth24 er the grants distributed under the pilot 

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1 stallments or with a one-time, lump sum 

2 payment; 

3 ‘‘(v) an assessment of the additional 

4 assistance made available under the pilot 

5 program, including the accountability sur6 rounding the availability of additional as7 sistance; 

8 ‘‘(vi) an analysis of the procedures for 

9 approving a business plan and a rec10 ommendation regarding ways, if necessary, 

11 to improve the procedures; and 

12 ‘‘(vii) a recommendation regarding 

13 ways, if necessary, to improve the account14 ability of advisors. 

15 ‘‘(7) NO EFFECT ON TIME LIMITATION FOR USE

16 OF ENTITLEMENT TO EDUCATIONAL ASSISTANCE.— 

17 Nothing in this subsection shall be construed to 

18 modify any time limitation or period during which 

19 an individual is entitled to educational assistance 

20 under chapter 30 or 33 of title 38, United States 

21 Code. 

22 ‘‘(8) DEFINITIONS.—In this subsection: 

23 ‘‘(A) ADVISOR.—The term ‘advisor’ means 

24 a person— 


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1 ‘‘(i) affiliated with an entrepreneur2 ship or training and curricula program de3 scribed in paragraphs (3)(A) and (3)(B); 

4 ‘‘(ii) who may assist an eligible vet5 eran with the preparation and approval of 

6 a business plan; and 

7 ‘‘(iii) who is approved to serve as an 

8 advisor by the Administrator, in consulta9 tion with the Advisory Committee. 

10 ‘‘(B) ADVISORY COMMITTEE.—The term 

11 ‘Advisory Committee’ means the Advisory Com12 mittee on Veterans Business Affairs established 

13 under section 203 of the Veterans Entrepre14 neurship and Small Business Development Act 

15 of 1999 (15 U.S.C. 657b note). 

16 ‘‘(C) BUSINESS PLAN.—The term ‘business 

17 plan’ means a plan prepared by an eligible vet18 eran for the operation of a qualifying business 

19 enterprise that shall be— 

20 ‘‘(i) prepared— 

21 ‘‘(I) while the eligible veteran 

22 participates in an approved training 

23 program described in paragraphs 

24 (3)(A) and (3)(B); and 


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1 ‘‘(II) with the assistance of an 

2 advisor; and 

3 ‘‘(ii) consistent with the guidelines 

4 and recommendations provided by the 

5 Business Plan Tool of the Administration. 

6 ‘‘(D) ELIGIBLE VETERAN.—The term ‘eli7 gible veteran’ means an individual who— 

8 ‘‘(i) is— 

9 ‘‘(I) a veteran; or 

10 ‘‘(II) a member of the Armed 

11 Forces who— 

12 ‘‘(aa) is currently retiring or 

13 separating from the Armed 

14 Forces and has a service ap15 proved retirement or separation 

16 packet; or 

17 ‘‘(bb) has last been honor18 ably discharged from active duty 

19 service in the Armed Forces; 

20 ‘‘(ii) has completed not less than— 

21 ‘‘(I) 36 months of active duty 

22 service in the Armed Forces (other 

23 than active duty service for training); 

24 or 


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1 ‘‘(II) 24 months of active duty 

2 service in the Armed Forces (other 

3 than active duty service for training) 

4 before being discharged or separated 

5 for a service-connected disability, as 

6 that term is defined in section 101 of 

7 title 38, United States Code; and 

8 ‘‘(iii) is entitled to educational assist9 ance under chapter 30 or 33 of title 38, 

10 United States Code. 

11 ‘‘(E) FRANCHISE BUSINESS ENTER12 PRISE.—The term ‘franchise business enter13 prise’ means any continuing commercial rela14 tionship or arrangement, regardless of the title 

15 given the relationship or arrangement, under 

16 which the terms of the offer or contract specify, 

17 or the franchise seller promises or represents, 

18 orally or in writing, that— 

19 ‘‘(i) the franchisee will obtain the 

20 right to— 

21 ‘‘(I) operate a business that is 

22 identified or associated with the trade23 mark of the franchisor; or 

24 ‘‘(II) offer, sell, or distribute 

25 goods, services, or commodities that 


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1 are identified or associated with the 

2 trademark of the franchisor; 

3 ‘‘(ii) the franchisor may— 

4 ‘‘(I) exert, or has authority to 

5 exert, a significant degree of control 

6 over the method of operation of the 

7 franchisee; or 

8 ‘‘(II) provide significant assist9 ance in the method of operation of the 

10 franchisee; and 

11 ‘‘(iii) as a condition of obtaining or 

12 commencing operation of the franchise 

13 business enterprise, the franchisee makes a 

14 required payment or commits to make a 

15 required payment to the franchisor or the 

16 affiliate of the franchisor. 

17 ‘‘(F) FRANCHISEE.—The term ‘franchisee’ 

18 means any person who is granted a franchise 

19 business enterprise. 

20 ‘‘(G) FRANCHISOR.—The term 

21 ‘franchisor’— 

22 ‘‘(i) means any person who grants a 

23 franchise business enterprise and partici24 pates in the franchise relationship; and 

25 ‘‘(ii) includes subfranchisors. 


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1 ‘‘(H) PILOT PROGRAM.—The term ‘pilot 

2 program’ means the pilot program established 

3 under paragraph (1)(A). 

4 ‘‘(I) QUALIFYING BUSINESS ENTER5 PRISE.—The term ‘qualifying business enter6 prise’ means a business included in the list of 

7 categories of business enterprises established 

8 under paragraph (1)(C). 

9 ‘‘(J) STARTUP.—The term ‘startup’ means 

10 a business enterprise that— 

11 ‘‘(i) is not yet in existence; or 

12 ‘‘(ii) has been in existence for not 

13 more than 5 years. 

14 ‘‘(K) SUBFRANCHISOR.—The term 

15 ‘subfranchisor’ means a person who functions 

16 as a franchisor by engaging in both pre-sale ac17 tivities and post-sale performance.’’. 

18 SECTION 1. SHORT TITLE. 

19 This Act may be cited as the ‘‘Veterans Entrepre20 neurial Transition Act of 2016’’ or the ‘‘VET Act of 2016’’. 

21 SEC. 2. VETERANS SMALL BUSINESS ENTREPRENEURSHIP 

22 PILOT PROGRAM. 

23 Section 32 of the Small Business Act (15 U.S.C. 657b) 

24 is amended by adding at the end the following: 


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1 ‘‘(g) VETERANS SMALL BUSINESS ENTREPRENEUR2 SHIP PILOT PROGRAM.— 

3 ‘‘(1) PILOT PROGRAM REQUIRED.— 

4 ‘‘(A) IN GENERAL.—Not later than 90 days 

5 after the date of enactment of this subsection, the 

6 Administrator, in consultation with the Advisory 

7 Committee and the Secretary of Veterans Affairs, 

8 shall begin carrying out a pilot program to as9 sess the feasibility and advisability of making 

10 grants to eligible veterans to start or acquire a 

11 qualifying business enterprise. 

12 ‘‘(B) PROMOTION OF EFFICIENCY.—In car13 rying out the pilot program, the Administrator 

14 shall ensure, to the maximum extent practicable, 

15 that the pilot program promotes efficiency, ac16 countability, and competition. 

17 ‘‘(C) LIST OF CATEGORIES OF BUSINESS

18 ENTERPRISES.—The Administrator, in consulta19 tion with the Advisory Committee, shall by rule 

20 establish a list of categories of business enter21 prises that the Administrator determines to be 

22 qualifying business enterprises for purposes of 

23 the pilot program, which shall include— 

24 ‘‘(i) a small business concern; 


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1 ‘‘(ii) a franchise business enterprise; 

2 and 

3 ‘‘(iii) any other category of business 

4 enterprise that the Administrator, in con5 sultation with the Advisory Committee, de6 termines is appropriate and in accordance 

7 with the purposes of the pilot program. 

8 ‘‘(D) NUMBER OF GRANTS.—Under the pilot 

9 program, the Administrator may make grants in 

10 accordance with paragraph (4) to not more than 

11 250 eligible veterans to start or acquire a quali12 fying business enterprise. 

13 ‘‘(E) GEOGRAPHIC DIVERSITY.—In making 

14 grants under the pilot program, the Adminis15 trator shall ensure geographic diversity among 

16 the veterans who receive the grants. 

17 ‘‘(F) DURATION.—The Administrator shall 

18 carry out the pilot program during the 3-year 

19 period beginning on the date on which the Ad20 ministrator begins carrying out the pilot pro21 gram. 

22 ‘‘(2) APPLICATION.— 

23 ‘‘(A) IN GENERAL.—An eligible veteran de24 siring a grant under the pilot program shall sub25 mit an application— 


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1 ‘‘(i) to the Administrator in the form 

2 and containing the information the Admin3 istrator may require, including the infor4 mation described in subparagraph (B); and 

5 ‘‘(ii) not later than 1 year before the 

6 date on which the pilot program terminates 

7 under paragraph (1)(F). 

8 ‘‘(B) DOCUMENTATION REQUIREMENTS.— 

9 The Administrator, in considering an applica10 tion from an eligible veteran for a grant under 

11 the pilot program, may not approve the applica12 tion unless the application includes the fol13 lowing: 

14 ‘‘(i) A description of the use of the 

15 grant amount, including an identification 

16 and description of the qualifying business 

17 enterprise. 

18 ‘‘(ii) A description of the expected re19 turn on investment resulting from the grant 

20 amounts. 

21 ‘‘(iii) A certification that the eligible 

22 veteran applying for the grant— 

23 ‘‘(I) shall complete the education 

24 and training relevant to the ownership 

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1 ness enterprise described in paragraphs 

2 (3)(A) and (3)(B); and 

3 ‘‘(II) understands that the eligible 

4 veteran may not receive amounts 

5 under a grant under the pilot program 

6 until after the eligible veteran has com7 pleted the required education and 

8 training relevant to the ownership and 

9 operation of the qualifying business en10 terprise described in paragraphs (3)(A) 

11 and (3)(B). 

12 ‘‘(iv) Such certifications as the Admin13 istrator, in consultation with the Advisory 

14 Committee, shall by rule require, includ15 ing— 

16 ‘‘(I) for a business enterprise in 

17 operation on the date of the applica18 tion, evidence that the Administrator, 

19 in consultation with the Advisory 

20 Committee, determines appropriate 

21 of— 

22 ‘‘(aa) good standing; 

23 ‘‘(bb) profitable operation; 

24 and 


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1 ‘‘(cc) guarantees relating to 

2 the purchase of the enterprise; 

3 ‘‘(II) for a franchise business en4 terprise, evidence that the Adminis5 trator, in consultation with the Advi6 sory Committee, determines appro7 priate of— 

8 ‘‘(aa) compliance with appli9 cable State and Federal laws on 

10 franchises; and 

11 ‘‘(bb) training in confirma12 tion with the industry standard; 

13 and 

14 ‘‘(III) for a startup, or an enter15 prise that is otherwise not in operation 

16 at the time of the application, a pro17 posal for the operation of that enter18 prise that leads to profitable operation 

19 within a reasonable time frame. 

20 ‘‘(v) A certification that the eligible 

21 veteran applying for the grant understands 

22 that the eligible veteran may not receive 

23 amounts under the grant until after the 

24 business plan of the eligible veteran has 


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1 been approved under the procedures de2 scribed in paragraph (3)(C)(ii). 

3 ‘‘(vi) A certification that the eligible 

4 veteran— 

5 ‘‘(I) has been truthful about the 

6 employment status of the eligible vet7 eran; and 

8 ‘‘(II) understands that the eligible 

9 veteran will be prohibited from partici10 pating in the pilot program if the cer11 tification described in subclause (I) is 

12 determined to be untrue. 

13 ‘‘(C) GROUP APPLICATIONS.—The Adminis14 trator may authorize a group of eligible veterans 

15 to apply as a group under the pilot program. 

16 The group shall be treated as a single eligible 

17 veteran under the pilot program, except that the 

18 maximum amount of the grant shall be cal19 culated by multiplying the maximum amount 

20 under paragraph (4)(A) by the number of mem21 bers of the group. 

22 ‘‘(3) ENTREPRENEURSHIP TRAINING.— 

23 ‘‘(A) IN GENERAL.—Each eligible veteran 

24 receiving a grant under the pilot program shall 

25 complete an entrepreneurship readiness program 


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1 approved by the Administrator that is designed 

2 to prepare the eligible veteran for, and lead to 

3 the immediate subsequent ownership and man4 agement by the eligible veteran of, a qualifying 

5 business enterprise. 

6 ‘‘(B) APPROVED PROGRAMS.—An approved 

7 program described in subparagraph (A) may in8 clude a program— 

9 ‘‘(i) available through a small business 

10 development center; 

11 ‘‘(ii) approved by the Administrator 

12 for entrepreneurship training; 

13 ‘‘(iii) approved by the Secretary of Vet14 erans Affairs for entrepreneurship training; 

15 ‘‘(iv) available through the Transition 

16 Assistance Program of the Department of 

17 Defense; 

18 ‘‘(v) available through a women’s busi19 ness center, as described in section 29; 

20 ‘‘(vi) available through a Veterans 

21 Business Outreach Center, as described in 

22 subsection (d); 

23 ‘‘(vii) available through the SCORE 

24 program authorized by section 8(b)(1); or 


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1 ‘‘(viii) approved by the Administrator, 

2 in consultation with the Advisory Com3 mittee, as appropriate because of the exper4 tise the program offers relating to a certain 

5 type of business enterprise. 

6 ‘‘(C) BUSINESS PLAN.— 

7 ‘‘(i) CONTENTS.—An eligible veteran 

8 receiving a grant under the pilot program 

9 shall prepare a business plan, which shall 

10 include— 

11 ‘‘(I) a description of how the 

12 qualifying business enterprise will 

13 achieve profitable operation within a 

14 reasonable time frame; 

15 ‘‘(II) an assessment of relevant— 

16 ‘‘(aa) economic indicators; 

17 ‘‘(bb) consumer data; 

18 ‘‘(cc) production and sales 

19 data; and 

20 ‘‘(dd) market or industry 

21 analysis; and 

22 ‘‘(III) other information that the 

23 Administrator, in consultation with 

24 the Advisory Committee, determines is 

25 appropriate. 


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1 ‘‘(ii) APPROVAL PROCEDURE.— 

2 ‘‘(I) APPROVAL BY ADVISOR.—If 

3 an advisor approves the business plan 

4 prepared by the eligible veteran, the 

5 Associate Administrator for Veterans 

6 Business Development of the Adminis7 tration— 

8 ‘‘(aa) shall review the busi9 ness plan; and 

10 ‘‘(bb) may reverse the ap11 proval of the business plan and 

12 require that the eligible veteran 

13 continue to consult with the advi14 sor to develop and resubmit the 

15 business plan. 

16 ‘‘(II) DISAPPROVAL BY ADVI17 SOR.—If an advisor does not approve 

18 the business plan prepared by an eligi19 ble veteran, the Associate Adminis20 trator for Veterans Business Develop21 ment of the Administration, upon ap22 peal by the eligible veteran, may re23 verse the decision of the advisor and 

24 approve the business plan. 

25 ‘‘(4) GRANT TERMS AND CONDITIONS.— 


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1 ‘‘(A) MAXIMUM GRANT AMOUNT AND ADDI2 TIONAL ASSISTANCE.— 

3 ‘‘(i) IN GENERAL.—Subject to para4 graph (2)(C), the maximum amount that 

5 an eligible veteran may receive under the 

6 pilot program shall not exceed an amount 

7 equal to the sum of— 

8 ‘‘(I) the maximum grant amount 

9 specified in clause (ii); 

10 ‘‘(II) the amount equal to the 

11 product obtained by multiplying— 

12 ‘‘(aa) the amount of addi13 tional assistance to which the eli14 gible veteran is entitled under 

15 clause (iii)(II); by 

16 ‘‘(bb) the number of months 

17 that the eligible veteran partici18 pates in the pilot program; and 

19 ‘‘(III) the amount of training as20 sistance received by the eligible veteran 

21 under clause (iv). 

22 ‘‘(ii) MAXIMUM GRANT AMOUNT.—The 

23 maximum grant amount specified in this 

24 clause is the following: 


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1 ‘‘(I) In the case of an eligible vet2 eran entitled to educational assistance 

3 under chapter 33 of title 38, United 

4 States Code, the amount equal to the 

5 product obtained by multiplying— 

6 ‘‘(aa) the number of months 

7 of educational assistance to which 

8 the eligible veteran is entitled on 

9 the date that the eligible veteran 

10 submits an application; by 

11 ‘‘(bb) the pro rata monthly 

12 rate of the amount that the eligi13 ble veteran is entitled to under 

14 paragraph (1)(A)(ii)(II) of section 

15 3313(c) of that title, subject to 

16 paragraphs (2) through (7) of that 

17 section. 

18 ‘‘(II) In the case of an eligible vet19 eran entitled to educational assistance 

20 under chapter 30 of title 38, United 

21 States Code, the amount equal to the 

22 product obtained by multiplying— 

23 ‘‘(aa) the number of months 

24 of educational assistance to which 

25 the eligible veteran is entitled on 


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1 the date that the eligible veteran 

2 submits an application; by 

3 ‘‘(bb) the rate in effect under 

4 section 3015(a)(1) of that title. 

5 ‘‘(iii) ADDITIONAL ASSISTANCE.— 

6 ‘‘(I) PERIOD OF ELIGIBILITY.—An 

7 eligible veteran shall receive the 

8 amount described in subclause (II) for 

9 each month that the eligible veteran 

10 participates in the pilot program. 

11 ‘‘(II) AMOUNT.—The amount of 

12 the additional assistance specified in 

13 this subclause is an amount, paid to 

14 the eligible veteran on a monthly basis, 

15 equal to the product obtained by multi16 plying— 

17 ‘‘(aa) the monthly amount of 

18 the basic allowance for housing 

19 payable under section 403 of title 

20 37, United States Code, for a 

21 member with dependents in pay 

22 grade E-5 residing in the military 

23 housing area that encompasses all 

24 or the majority portion of the ZIP 

25 code area in which is located the 


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1 residence of the eligible veteran 

2 (similar to the calculation made 

3 under section 3313(c)(1)(B)(i)(I) 

4 of title 38, United States Code); 

5 by— 

6 ‘‘(bb)(AA) in the case of an 

7 eligible veteran who, as of the date 

8 on which the eligible veteran ap9 plies for a grant under this sub10 section, has no employment other 

11 than the qualifying business en12 terprise for which the eligible vet13 eran seeks a grant under this sub14 section, 1; or 

15 ‘‘(BB) in the case of an eligi16 ble veteran who is not described in 

17 subitem (AA), 0.5. 

18 ‘‘(iv) TRAINING ASSISTANCE.—Upon 

19 application by an eligible veteran receiving 

20 a grant under the pilot program, the Ad21 ministrator may pay for the cost, if appli22 cable, of an approved program described in 

23 paragraph (3)(B)(viii). 


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1 ‘‘(B) DISBURSEMENT.—The amount of a 

2 grant made under the pilot program shall be dis3 bursed to an eligible veteran— 

4 ‘‘(i) in installments, in accordance 

5 with the procedures described in subpara6 graph (C); 

7 ‘‘(ii) only after the eligible veteran pre8 sents documentation proving that the eligi9 ble veteran has completed the required en10 trepreneurship training described in para11 graphs (3)(A) and (3)(B); and 

12 ‘‘(iii) only after the business plan of 

13 the eligible veteran has been approved under 

14 the procedures described in paragraph 

15 (3)(C)(ii). 

16 ‘‘(C) INSTALLMENT PAYMENTS.—The 

17 amount described in subparagraph (A)(ii) shall 

18 be paid to the eligible veteran in installments on 

19 a pro rata basis with each installment being 

20 paid to the eligible veteran— 

21 ‘‘(i) not earlier than 3 months after the 

22 date of the payment of the most recent in23 stallment to the eligible veteran; 


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1 ‘‘(ii) not later than 12 months after the 

2 date of the payment of the most recent in3 stallment to the eligible veteran; and 

4 ‘‘(iii) only after the eligible veteran has 

5 met milestones established in the business 

6 plan of the eligible veteran. 

7 ‘‘(5) USE OF GRANT AMOUNTS.—An eligible vet8 eran who receives a grant under the pilot program 

9 may use the amount of the grant— 

10 ‘‘(A) in accordance with the limitations 

11 that the Administrator, in consultation with the 

12 Advisory Committee, may by rule establish; 

13 ‘‘(B) for purposes consistent with the activi14 ties and objectives set forth in the business plan 

15 of the eligible veteran, as described in paragraph 

16 (3)(C); and 

17 ‘‘(C) for purposes related to starting or ac18 quiring a qualifying business enterprise that the 

19 Administrator, in consultation with the Advisory 

20 Committee, determines are appropriate, includ21 ing— 

22 ‘‘(i) purchasing goods or services nec23 essary for the creation or operation of a 

24 qualifying business enterprise; 


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1 ‘‘(ii) funding a project that is directed 

2 toward any economic development objective 

3 described under section 501(d) of the Small 

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

5 695(d)); and 

6 ‘‘(iii) acquiring a qualifying business 

7 enterprise. 

8 ‘‘(6) RESPONSIBILITY OF THE ADMINIS9 TRATOR.—In implementing the pilot program, the 

10 Administrator shall maximize existing relationships 

11 with the public and private sector to— 

12 ‘‘(A) ensure successful outcomes by partici13 pants in the pilot program; and 

14 ‘‘(B) prevent redundancy with existing pub15 lic and private programs. 

16 ‘‘(7) REPORT TO CONGRESSIONAL COMMIT17 TEES.— 

18 ‘‘(A) IN GENERAL.—Not later than 2 years 

19 after the date on which the pilot program is com20 menced, the Administrator shall submit to the 

21 Committee on Small Business and Entrepreneur22 ship and the Committee on Veterans’ Affairs of 

23 the Senate and the Committee on Small Business 

24 and the Committee on Veterans’ Affairs of the 


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1 House of Representatives a report analyzing the 

2 feasibility and effectiveness of the pilot program. 

3 ‘‘(B) CONTENTS.—The report submitted 

4 under subparagraph (A) shall include— 

5 ‘‘(i) an assessment of the pilot pro6 gram; 

7 ‘‘(ii) a survey containing— 

8 ‘‘(I) the number of grantees under 

9 the pilot program; and 

10 ‘‘(II) the number of the grantees 

11 under the pilot program that partici12 pated in each of the training programs 

13 described in subparagraphs (A) and 

14 (B) of paragraph (3); 

15 ‘‘(iii) recommendations regarding 

16 whether any aspect of the pilot program 

17 should be made a permanent authority, 

18 and, if so, the means to ensure— 

19 ‘‘(I) geographic and demographic 

20 diversity among the eligible veterans 

21 who receive the grants under the per22 manent authority; and 

23 ‘‘(II) diversity in the types of 

24 qualifying business enterprises for 


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1 which eligible veterans may receive 

2 grants under the pilot program; 

3 ‘‘(iv) an assessment regarding whether 

4 the grants distributed under the pilot pro5 gram should continue to be made in install6 ments or with a 1-time, lump sum pay7 ment; 

8 ‘‘(v) an assessment of the additional 

9 assistance made available under the pilot 

10 program, including the accountability sur11 rounding the availability of additional as12 sistance; 

13 ‘‘(vi) an analysis of the procedures for 

14 approving a business plan and a rec15 ommendation regarding ways, if necessary, 

16 to improve the procedures; and 

17 ‘‘(vii) a recommendation regarding 

18 ways, if necessary, to improve the account19 ability of advisors. 

20 ‘‘(8) GAO REPORT.—Not later than 1 year after 

21 the date on which the pilot program terminates, the 

22 Comptroller General of the United States shall submit 

23 to Congress a report that evaluates the pilot program 

24 with respect to— 

25 ‘‘(A) administrative difficulties; 


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1 ‘‘(B) issues of fiscal responsibility; 

2 ‘‘(C) duplication with existing entrepre3 neurship pilot programs in the Federal Govern4 ment; and 

5 ‘‘(D) whether the pilot program is con6 sistent with the Post-9/11 Veterans Educational 

7 Assistance Improvements Act of 2010 (Public 

8 Law 111–377; 124 Stat. 4106). 

9 ‘‘(9) NO EFFECT ON TIME LIMITATION FOR USE

10 OF ENTITLEMENT TO EDUCATIONAL ASSISTANCE.— 

11 Nothing in this subsection shall be construed to mod12 ify any time limitation or period during which an 

13 individual is entitled to educational assistance under 

14 chapter 30 or 33 of title 38, United States Code. 

15 ‘‘(10) DEFINITIONS.—In this subsection: 

16 ‘‘(A) ADVISOR.—The term ‘advisor’ means a 

17 person— 

18 ‘‘(i) affiliated with an entrepreneur19 ship or training and curricula program de20 scribed in paragraphs (3)(A) and (3)(B); 

21 ‘‘(ii) who may assist an eligible vet22 eran with the preparation and approval of 

23 a business plan; and 


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1 ‘‘(iii) who is approved to serve as an 

2 advisor by the Administrator, in consulta3 tion with the Advisory Committee. 

4 ‘‘(B) ADVISORY COMMITTEE.—The term 

5 ‘Advisory Committee’ means the Advisory Com6 mittee on Veterans Business Affairs established 

7 under section 203 of the Veterans Entrepreneur8 ship and Small Business Development Act of 

9 1999 (15 U.S.C. 657b note). 

10 ‘‘(C) BUSINESS PLAN.—The term ‘business 

11 plan’ means a plan prepared by an eligible vet12 eran for the operation of a qualifying business 

13 enterprise that shall be— 

14 ‘‘(i) prepared— 

15 ‘‘(I) while the eligible veteran par16 ticipates in an approved training pro17 gram described in paragraphs (3)(A) 

18 and (3)(B); and 

19 ‘‘(II) with the assistance of an ad20 visor; and 

21 ‘‘(ii) consistent with the guidelines and 

22 recommendations provided by the Business 

23 Plan Tool of the Administration. 

24 ‘‘(D) ELIGIBLE VETERAN.—The term ‘eligi25 ble veteran’ means an individual who— 


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1 ‘‘(i) is— 

2 ‘‘(I) a veteran; or 

3 ‘‘(II) a member of the Armed 

4 Forces who— 

5 ‘‘(aa) is currently retiring or 

6 separating from the Armed Forces 

7 and has a service approved retire8 ment or separation packet; or 

9 ‘‘(bb) has last been honorably 

10 discharged from active duty serv11 ice in the Armed Forces; 

12 ‘‘(ii) has completed not less than— 

13 ‘‘(I) 36 months of active duty 

14 service in the Armed Forces (other 

15 than active duty service for training); 

16 or 

17 ‘‘(II) 24 months of active duty 

18 service in the Armed Forces (other 

19 than active duty service for training) 

20 before being discharged or separated for 

21 a service-connected disability, as that 

22 term is defined in section 101 of title 

23 38, United States Code; and 


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1 ‘‘(iii) is entitled to educational assist2 ance under chapter 30 or 33 of title 38, 

3 United States Code. 

4 ‘‘(E) FRANCHISE BUSINESS ENTERPRISE.— 

5 The term ‘franchise business enterprise’ means 

6 any continuing commercial relationship or ar7 rangement, regardless of the title given the rela8 tionship or arrangement, under which the terms 

9 of the offer or contract specify, or the franchise 

10 seller promises or represents, orally or in writ11 ing, that— 

12 ‘‘(i) the franchisee will obtain the right 

13 to— 

14 ‘‘(I) operate a business that is 

15 identified or associated with the trade16 mark of the franchisor; or 

17 ‘‘(II) offer, sell, or distribute 

18 goods, services, or commodities that are 

19 identified or associated with the trade20 mark of the franchisor; 

21 ‘‘(ii) the franchisor may— 

22 ‘‘(I) exert, or has authority to 

23 exert, a significant degree of control 

24 over the method of operation of the 

25 franchisee; or 


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1 ‘‘(II) provide significant assist2 ance in the method of operation of the 

3 franchisee; and 

4 ‘‘(iii) as a condition of obtaining or 

5 commencing operation of the franchise busi6 ness enterprise, the franchisee makes a re7 quired payment or commits to make a re8 quired payment to the franchisor or the af9 filiate of the franchisor. 

10 ‘‘(F) FRANCHISEE.—The term ‘franchisee’ 

11 means any person who is granted a franchise 

12 business enterprise. 

13 ‘‘(G) FRANCHISOR.—The term 

14 ‘franchisor’— 

15 ‘‘(i) means any person who grants a 

16 franchise business enterprise and partici17 pates in the franchise relationship; and 

18 ‘‘(ii) includes subfranchisors. 

19 ‘‘(H) PILOT PROGRAM.—The term ‘pilot 

20 program’ means the pilot program established 

21 under paragraph (1)(A). 

22 ‘‘(I) QUALIFYING BUSINESS ENTERPRISE.— 

23 The term ‘qualifying business enterprise’ means 

24 a business included in the list of categories of 


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1 business enterprises established under paragraph 

2 (1)(C). 

3 ‘‘(J) STARTUP.—The term ‘startup’ means 

4 a business enterprise that— 

5 ‘‘(i) is not yet in existence; or 

6 ‘‘(ii) has been in existence for not more 

7 than 5 years. 

8 ‘‘(K) SUBFRANCHISOR.—The term 

9 ‘subfranchisor’ means a person who functions as 

10 a franchisor by engaging in both pre-sale activi11 ties and post-sale performance.’’. 


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Calendar No. 542 

114TH CONGRESS 

2D SESSION S. 1870 

A BILL 

To amend the Small Business Act to require the 

qualifying businesses, and for other purposes. grants to eligible veterans to start or acquire tion to carry out a pilot program on issuing Administrator of the Small Business AdministraJUNE 29, 2016 

Reported with an amendment 


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