II 

118TH CONGRESS 

1ST SESSION S. 1157 

To establish a MicroCap small business investment company designation, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 30, 2023 

Mr. HICKENLOOPER (for himself, Mr. RISCH, and Ms. CORTEZ MASTO) introduced the following bill; which was read twice and referred to the Committee on Small Business and Entrepreneurship 

A BILL 

To establish a MicroCap small business investment company 

designation, 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 ‘‘MicroCap Small Busi5 ness Investing Act of 2023’’. 

6 SEC. 2. MICROCAP SMALL BUSINESS INVESTMENT COM7 PANY DESIGNATION. 

8 (a) IN GENERAL.—Title III of the Small Business 

9 Investment Act of 1958 (15 U.S.C. 681 et seq.) is amend10 ed— 


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1 (1) in section 301(c) (15 U.S.C. 681(c)), by 

2 adding at the end the following: 

3 ‘‘(5) MICROCAP SMALL BUSINESS INVESTMENT

4 COMPANY LICENSE.— 

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

6 other provision of law, the Administrator may 

7 approve an application and issue not more than 

8 10 licenses annually under this subsection with 

9 respect to any applicant— 

10 ‘‘(i) that would otherwise be issued a 

11 license under this subsection, except that 

12 the management of the applicant does not 

13 satisfy the qualification requirements 

14 under paragraph (3)(A)(ii) to the extent 

15 that such requirements relate to invest16 ment experience and track record, includ17 ing any such requirements further set 

18 forth in section 107.305 of title 13, Code 

19 of Federal Regulations, or any successor 

20 regulation; 

21 ‘‘(ii) for which the fund managers 

22 have— 

23 ‘‘(I) a documented record of suc24 cessful business experience; 


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1 ‘‘(II) a record of business man2 agement success; or 

3 ‘‘(III) knowledge in the par4 ticular industry or business in which 

5 the investment strategy is being pur6 sued; and 

7 ‘‘(iii) that, in addition to any other re8 quirement applicable to the applicant 

9 under this title or the rules issued to carry 

10 out this title (including section 

11 121.301(c)(2) of title 13, Code of Federal 

12 Regulations, or any successor regulation), 

13 will make not less than 25 percent of its 

14 investments in— 

15 ‘‘(I) low-income communities, as 

16 that term is defined in section 45D(e) 

17 of the Internal Revenue Code of 1986; 

18 ‘‘(II) a community that has been 

19 designated as a qualified opportunity 

20 zone under section 1400Z–1 of the In21 ternal Revenue Code of 1986; 

22 ‘‘(III) businesses primarily en23 gaged in research and development; 

24 ‘‘(IV) manufacturers; 


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1 ‘‘(V) businesses primarily owned 

2 or controlled by individuals in under3 served communities before receiving 

4 capital from the applicant; and 

5 ‘‘(VI) rural areas, as that term is 

6 defined by the Bureau of the Census. 

7 ‘‘(B) PRIORITY; STREAMLINED PROCESS.— 

8 With respect to an application for a license pur9 suant to this paragraph, the Administrator 

10 shall— 

11 ‘‘(i) give priority to an applicant for 

12 such a license that is located in an under13 licensed State; and 

14 ‘‘(ii) establish a streamlined process 

15 for applicants submitting such an applica16 tion. 

17 ‘‘(C) TIMING FOR ISSUANCE OF LI18 CENSE.—Notwithstanding paragraph (2), with 

19 respect to an application for a license submitted 

20 to the Administrator pursuant to this para21 graph, the Administrator shall— 

22 ‘‘(i) not later than 60 days after the 

23 date on which the application is submitted 

24 to the Administrator, process and provide 

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1 license application requirements applicable 

2 to the applicant; 

3 ‘‘(ii) not restrict the submission of 

4 any application materials; and 

5 ‘‘(iii) not later than 90 days after the 

6 date on which the application is submitted 

7 to the Administrator— 

8 ‘‘(I) approve the application and 

9 issue a license for such operation to 

10 the applicant, if the requirements for 

11 the license are satisfied; or 

12 ‘‘(II) based upon facts in the 

13 record— 

14 ‘‘(aa) disapprove the appli15 cation; and 

16 ‘‘(bb) provide the applicant 

17 with— 

18 ‘‘(AA) a clear, written 

19 explanation of the reason for 

20 the disapproval; and 

21 ‘‘(BB) a chance to rem22 edy any issues with the ap23 plication and immediately 

24 reapply, with technical as25 sistance provided as needed 


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1 and a new determination 

2 made by the Administrator 

3 not later than 30 days after 

4 the date on which the appli5 cant re-submits the applica6 tion. 

7 ‘‘(D) LEVERAGE.—A company licensed 

8 pursuant to this paragraph shall— 

9 ‘‘(i) not be eligible to receive leverage 

10 in an amount that is more than 

11 $25,000,000; and 

12 ‘‘(ii) access leverage in an amount 

13 that is not more than 100 percent of the 

14 private capital of the applicant. 

15 ‘‘(E) INVESTMENT COMMITTEE.— 

16 ‘‘(i) IN GENERAL.—Each company li17 censed pursuant to this paragraph shall 

18 have not fewer than 2 independent mem19 bers on the investment committee of the 

20 company in a manner that complies with 

21 the following requirements: 

22 ‘‘(I) The independent members of 

23 the investment committee are or have 

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1 ness investment companies within the 

2 preceding 10-year period. 

3 ‘‘(II) No small business invest4 ment company described in subclause 

5 (I) may be adversely affected by the 

6 relationship of the independent mem7 bers of the investment committee with 

8 the company licensed pursuant to this 

9 paragraph. 

10 ‘‘(III) The independent members 

11 of the investment committee are re12 quired to approve each investment 

13 made by the company. 

14 ‘‘(IV) The independent members 

15 of the investment committee shall not 

16 be paid a management fee, but may 

17 receive paid expenses and a portion of 

18 any carried interest. 

19 ‘‘(ii) LEVERAGE LIMITS.—Any lever20 age associated with a company licensed 

21 pursuant to this paragraph shall not be 

22 counted toward the leverage limits of the 

23 independent members of the investment 

24 committee of the company under this 

25 title.’’; and 


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1 (2) in section 303(d) (15 U.S.C. 683(d)), by in2 serting ‘‘(or, with respect to a company licensed 

3 under section 301(c)(5), 50 percent)’’ after ‘‘25 per4 cent’’. 

5 (b) SBA REQUIREMENTS.— 

6 (1) DEFINITIONS.—In this subsection— 

7 (A) the term ‘‘Administrator’’ means the 

8 Administrator of the Small Business Adminis9 tration; and 

10 (B) the term ‘‘covered company’’ means an 

11 entity that is licensed to operate as a small 

12 business investment company pursuant to para13 graph (5) of section 301(c) of the Small Busi14 ness Investment Act of 1958 (15 U.S.C. 

15 681(c)), as added by subsection (a). 

16 (2) RULES.—Not later than 90 days after the 

17 date of enactment of this Act, the Administrator 

18 shall issue rules to carry out this section and the 

19 amendments made by this section. 

20 (3) ANNUAL REPORT.—Not later than 1 year 

21 after the date of enactment of this Act, and annually 

22 thereafter, the Administrator shall publicly publish a 

23 report that details, for the year covered by the re24 port— 


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1 (A) the number of covered companies li2 censed by the Administrator; 

3 (B) the industries in which covered compa4 nies have invested; 

5 (C) the geographic locations of covered 

6 companies; and 

7 (D) the aggregate performance of covered 

8 companies. 

Æ 


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