II

Calendar No. 759

106TH CONGRESS

2D SESSION S. 1594

[Report No. 106–383]

To amend the Small Business Act and Small Business Investment Act of

1958.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 16, 2000

Mr. KERRY (for himself, Mr. WELLSTONE, Mr. BINGAMAN, Mr. SARBANES,

Mr. LEVIN, Mr. CLELAND, Mr. LIEBERMAN, Mr. ROBB, Mr. AKAKA, Ms.

LANDRIEU, Mr. EDWARDS, and Mr. DASCHLE) introduced the following

bill; which was read twice and referred to the Committee on Small Business

AUGUST 25, 2000

Reported under authority of the order of the Senate of July 26, 2000, by Mr.

BOND, 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 and Small Business

Investment Act of 1958.

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; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Community Development and Venture Capital Act of

4 1999’’.

5 (b) TABLE OF CONTENTS.—The table of contents for

6 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—NEW MARKETS VENTURE CAPITAL PROGRAM

Sec. 101. New Markets Venture Capital Program.

Sec. 102. Bankruptcy exemption for NMVC companies.

Sec. 103. Federal savings associations.

TITLE II—COMMUNITY DEVELOPMENT VENTURE CAPITAL

ASSISTANCE

Sec. 201. Short title.

Sec. 202. Findings and purposes.

Sec. 203. Community development venture capital activities.

TITLE III—BUSINESS LINC

Sec. 301. Grants authorized.

Sec. 302. Regulations.

7 TITLE I—NEW MARKETS

8 VENTURE CAPITAL PROGRAM

9 SEC. 101. NEW MARKETS VENTURE CAPITAL PROGRAM.

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

11 Investment Act of 1958 (15 U.S.C. 661 et seq.) is

12 amended—

13 (1) by striking the title designation and heading

14 and inserting the following:
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1 ‘‘TITLE III—INVESTMENT

2 DIVISION PROGRAMS

3 ‘‘PART A—SMALL BUSINESS INVESTMENT

4 COMPANIES’’;

5 and

6 (2) by adding at the end the following:

7 ‘‘PART B—NEW MARKETS VENTURE CAPITAL

8 PROGRAM

9 ‘‘SEC. 351. DEFINITIONS.

10 ‘‘In this part—

11 ‘‘(1) the term ‘eligible company’ means a com12 pany that—

13 ‘‘(A) is a newly formed for-profit entity,

14 which may be a newly formed for-profit sub15 sidiary of an existing entity; and

16 ‘‘(B) has a management team with experi17 ence in community development financing or

18 relevant venture capital financing;

19 ‘‘(2) the term ‘low-income individual’ means an

20 individual whose income (adjusted for family size)

21 does not exceed—

22 ‘‘(A) for metropolitan areas, 80 percent of

23 the area median income; and

24 ‘‘(B) for nonmetropolitan areas, the great25 er of—
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1 ‘‘(i) 80 percent of the area median in2 come; or

3 ‘‘(ii) 80 percent of the statewide non4 metropolitan area median income;

5 ‘‘(3) the term ‘low- or moderate-income geog6 raphy’ means—

7 ‘‘(A) any population census tract (or in the

8 case of an area that is not tracted for popu9 lation census tracts, the equivalent county divi10 sion, as defined by the Bureau of the Census of

11 the Department of Commerce for purposes of

12 defining poverty areas) if—

13 ‘‘(i) the poverty rate for such census

14 tract is not less than 20 percent; or

15 ‘‘(ii)(I) in the case of a tract located

16 within a metropolitan area, the median

17 family income for such tract does not ex18 ceed the greater of 80 percent of the state19 wide median family income or 80 percent

20 of the metropolitan area median family in21 come; or

22 ‘‘(II) in the case of a tract not located

23 within a metropolitan area, the median

24 family income for such tract does not ex-
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1 ceed 80 percent of the statewide median

2 family income; or

3 ‘‘(B) any area located within—

4 ‘‘(i) a HUBZone (as defined in sec5 tion 3(p) of the Small Business Act and

6 the implementing regulations issued under

7 that section);

8 ‘‘(ii) an urban empowerment zone or

9 urban enterprise community (as designated

10 by the Secretary of Housing and Urban

11 Development); or

12 ‘‘(iii) a rural empowerment zone or

13 rural enterprise community (as designated

14 by the Secretary of Agriculture);

15 ‘‘(4) the terms ‘new markets venture capital

16 company’ and ‘NMVC company’ mean a company

17 that has been designated as a new markets venture

18 capital company by the Administrator under section

19 354(d);

20 ‘‘(5) the term ‘participation agreement’ means

21 an agreement between the Administrator and an

22 NMVC company that furthers the purposes set forth

23 in section 352, detailing the operating plan and in24 vestment criteria of the company and requiring that
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1 not less than 80 percent of the investments of the

2 company be made in smaller enterprises—

3 ‘‘(A) that are located in 1 or more low- or

4 moderate-income geographies or 1 or more tar5 geted population areas; or

6 ‘‘(B) not less than 35 percent of the em7 ployees of which—

8 ‘‘(i) reside or will reside in a low- or

9 moderate-income geography or a targeted

10 population area; or

11 ‘‘(ii) are or will be low-income individ12 uals;

13 ‘‘(6) the term ‘targeted population’ means an

14 identifiable group of individuals, including an Indian

15 tribe, as determined by the Administrator, who are

16 low-income individuals; and

17 ‘‘(7) the term ‘targeted population area’ means

18 an identifiable geographic area, as determined by the

19 Administrator, containing a concentration of 1 or

20 more targeted populations.

21 ‘‘SEC. 352. PURPOSES.

22 ‘‘The purposes of this part are—

23 ‘‘(1) to encourage venture capital investment in

24 smaller enterprises located within urban and rural

25 areas;
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1 ‘‘(2) to promote the creation of wealth, eco2 nomic development, and job opportunities in low3 and moderate-income geographies and for targeted

4 populations; and

5 ‘‘(3) to establish a venture capital program,

6 which shall be administered by the Administrator—

7 ‘‘(A) to make grants to NMVC companies

8 for the purpose of providing marketing, man9 agement, and technical assistance to smaller en10 terprises financed, or expected to be financed,

11 by such companies; and

12 ‘‘(B) to guarantee debentures issued by

13 NMVC companies to enable such companies to

14 make venture capital investments in smaller en15 terprises within urban and rural areas.

16 ‘‘SEC. 353. PROGRAM ESTABLISHMENT.

17 ‘‘There is established a New Markets Venture Capital

18 Program, under which the Administrator is authorized

19 to—

20 ‘‘(1) make grants to NMVC companies, as pro21 vided in section 355; and

22 ‘‘(2) guarantee debentures issued by NMVC

23 companies, as provided in section 356.
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1 ‘‘SEC. 354. APPROVAL OF NMVC COMPANIES.

2 ‘‘(a) APPLICATIONS.—In order to be eligible to par3 ticipate in the program under this part as an NMVC com4 pany, an eligible company shall submit to the Adminis5 trator an application, within such period of time as the

6 Administrator shall establish, which shall include—

7 ‘‘(1) a business plan that describes the manner

8 and geographic areas in which the applicant will

9 make successful venture capital investments in

10 smaller enterprises described in subparagraphs (A)

11 and (B) of section 351(5) and provide marketing,

12 management, and technical assistance to those en13 terprises;

14 ‘‘(2) the qualifications and general business

15 reputation of the management of the applicant, spe16 cifically addressing—

17 ‘‘(A) the experience of the management in

18 making venture capital investments in smaller

19 enterprises described in subparagraphs (A) and

20 (B) of section 351(5); and

21 ‘‘(B) the success of those investments in

22 terms of business growth, jobs created, and

23 such other factors as the Administrator may re24 quire; and
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1 ‘‘(3) a description of the manner in which the

2 applicant will interface with community organiza3 tions;

4 ‘‘(4) a proposal describing the manner in which

5 grant amounts made available under this part would

6 provide marketing, management, and technical as7 sistance to smaller enterprises expected to be fi8 nanced by the applicant;

9 ‘‘(5) proposed criteria by which to evaluate the

10 performance of the applicant in meeting program ob11 jectives;

12 ‘‘(6) the management and financial strength of

13 any parent or affiliated firm, or any firm essential

14 to the success of the business plan of the applicant;

15 and

16 ‘‘(7) such other information as the Adminis17 trator may require.

18 ‘‘(b) CRITERIA FOR CONDITIONAL APPROVAL.—

19 Upon receipt of an application submitted under subsection

20 (a), the Administrator shall review the application and

21 make a determination regarding whether to grant condi22 tional approval to the applicant to operate as an NMVC

23 company during the time period described in subsection

24 (c), based on—
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1 ‘‘(1) the geographic area and employment char2 acteristics of the smaller enterprises in which the

3 proposed investments of the NMVC company will be

4 made (in order to promote investment nationwide);

5 ‘‘(2) the likelihood that the applicant will meet

6 the goals of the business plan of the applicant;

7 ‘‘(3) the experience and background of the com8 pany’s management team;

9 ‘‘(4) the need for equity investments within the

10 proposed investment areas;

11 ‘‘(5) the extent to which the applicant will con12 centrate its activities on serving its investment

13 areas;

14 ‘‘(6) the likelihood that the applicant will be

15 able to satisfy the requirements of subsection (c);

16 ‘‘(7) the extent to which the proposed activities

17 will expand economic opportunities within the invest18 ment areas; and

19 ‘‘(8) such other factors as the Administrator

20 determines to be appropriate.

21 ‘‘(c) REQUIREMENTS FOR FINAL APPROVAL.—

22 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

23 each applicant that is granted conditional approval

24 by the Administrator to operate as an NMVC com25 pany under subsection (b), shall, before the expira-
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1 tion of a time period established by the Adminis2 trator not to exceed 24 months, beginning on the

3 date on which such conditional approval is

4 granted—

5 ‘‘(A) raise not less than $5,000,000 of con6 tributed capital or binding capital commitments

7 from 1 or more investors (other than an agency

8 of the Federal Government) that meet criteria

9 established by the Administrator; and

10 ‘‘(B) in order to provide marketing, man11 agement, and technical assistance, have—

12 ‘‘(i) cash or binding commitments for

13 contributions (in cash or in-kind) from 1

14 or more sources other than the Adminis15 tration that meet criteria established by

16 the Administrator, payable or available

17 over a multiyear period acceptable to the

18 Administrator (not to exceed 10 years), in

19 an amount equal to 30 percent of the cap20 ital and commitments raised under sub21 paragraph (A);

22 ‘‘(ii) purchased an annuity from an

23 insurance company acceptable to the Ad24 ministrator, using amounts (other than the

25 amounts raised to satisfy the requirements
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1 of subparagraph (A)) from any source

2 other than the Administration, that would

3 yield cash payments over a multiyear pe4 riod acceptable to the Administrator (not

5 to exceed 10 years), in an amount equal to

6 30 percent of the capital and commitments

7 raised under subparagraph (A); or

8 ‘‘(iii) cash or binding commitments

9 for contributions (in cash or in-kind) of the

10 type described in clause (i) and have pur11 chased an annuity of the type described in

12 clause (ii), that in the aggregate make

13 available, over a multiyear period accept14 able to the Administrator (not to exceed 10

15 years), an amount equal to 30 percent of

16 the capital and commitments raised under

17 subparagraph (A).

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

19 the discretion of the Administrator and based upon

20 a showing of special circumstances and good cause,

21 consider an applicant to have satisfied the require22 ments of paragraph (1)(B) if the applicant has a

23 viable plan that reasonably projects the capacity of

24 the applicant to raise the amount (in cash or in25 kind) required under paragraph (1)(B).
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1 ‘‘(d) GRANT OF FINAL APPROVAL; DESIGNATION.—

2 The Administrator shall, with respect to each applicant

3 conditionally approved to operate as an NMVC company

4 under subsection (b), either—

5 ‘‘(1) grant final approval to the applicant to op6 erate as an NMVC company under this part and

7 designate the applicant as an NMVC company, if

8 the applicant—

9 ‘‘(A) satisfies the requirements of sub10 section (c) on or before the expiration of the

11 time period described in that subsection; and

12 ‘‘(B) enters into a participation agreement

13 with the Administrator; or

14 ‘‘(2) if the applicant fails to satisfy the require15 ments of subsection (c) on or before the expiration

16 of the time period described in that subsection, re17 voke the conditional approval granted under that

18 subsection.

19 ‘‘SEC. 355. TECHNICAL ASSISTANCE GRANTS.

20 ‘‘(a) GRANTS.—

21 ‘‘(1) IN GENERAL.—The Administrator, in ac22 cordance with such terms and conditions as the Ad23 ministrator may require, is authorized to award 1 or

24 more grants to each NMVC company in accordance

25 with this subsection, which shall be used to provide
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1 marketing, management, and technical assistance for

2 the benefit of smaller enterprises financed, or ex3 pected to be financed, by the NMVC company.

4 ‘‘(2) MULTIYEAR GRANTS.—Amounts from a

5 grant awarded under this section shall be paid upon

6 the direction of the Administrator over a multiyear

7 period of not to exceed 10 years.

8 ‘‘(3) GRANT AMOUNT.—

9 ‘‘(A) IN GENERAL.—Subject to subpara10 graph (B), the amount of a grant awarded to

11 an NMVC company under this subsection shall

12 be equal to 30 percent of the amount of capital

13 and commitments raised under section

14 354(c)(1)(A).

15 ‘‘(B) MATCHING REQUIREMENT.—

16 ‘‘(i) IN GENERAL.—Except as pro17 vided in clause (ii), in order to receive

18 funds under a grant awarded under this

19 subsection, an NMVC company shall pro20 vide a matching contribution (in cash or

21 in-kind) from sources other than the Ad22 ministration, in an amount equal to the

23 funds to received.

24 ‘‘(ii) EXCEPTION.—The Administrator

25 may waive in whole or in part the match-
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1 ing requirement of clause (i), if the Admin2 istrator determines that such action is con3 sistent with the purposes set forth in sec4 tion 352 and with protecting the creditor

5 status of the Federal Government as a

6 guarantor of debentures issued by an

7 NMVC company.

8 ‘‘(4) PRO RATA REDUCTIONS.—If the amount

9 made available to carry out this section for a fiscal

10 year is insufficient for the Administrator to award

11 grants in the amounts required under paragraph

12 (3), the Administrator shall make pro rata reduc13 tions in the amounts otherwise payable to each

14 NMVC company under that paragraph.

15 ‘‘(b) SUPPLEMENTAL GRANTS.—

16 ‘‘(1) IN GENERAL.—In addition to any grant

17 under subsection (a), the Administrator, in accord18 ance with such terms and conditions as the Adminis19 trator may require, may make 1 or more supple20 mental grants to an NMVC company, which shall be

21 used to provide additional marketing, management,

22 and technical assistance for the benefit of smaller

23 enterprises financed, or expected to be financed, by

24 the NMVC company.
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1 ‘‘(2) MATCHING REQUIREMENT.—The Adminis2 trator may require, as a condition of any supple3 mental grant made under this subsection, that the

4 NMVC company provide a matching contribution (in

5 cash or in-kind) from 1 or more sources other than

6 the Administrator in an amount equal to the amount

7 of the supplemental grant.

8 ‘‘SEC. 356. DEBENTURES.

9 ‘‘(a) IN GENERAL.—The Administrator is authorized

10 to guarantee the timely payment of principal and interest

11 as scheduled on debentures issued by NMVC companies,

12 in accordance with such terms and conditions the Admin13 istrator determines to be appropriate.

14 ‘‘(b) FULL FAITH AND CREDIT.—The full faith and

15 credit of the United States is pledged to the payment of

16 all amounts that may be required to be paid under any

17 guarantee under this section.

18 ‘‘(c) DEBENTURE REQUIREMENTS.—A debenture

19 guaranteed under this section—

20 ‘‘(1) may be issued for a term of not to exceed

21 15 years;

22 ‘‘(2) shall bear interest at a rate approved by

23 the Administrator; and

24 ‘‘(3) shall contain such other terms and condi25 tions as the Administrator may require.
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1 ‘‘(d) TOTAL FACE VALUE.—The total face amount

2 of debentures issued by an NMVC company and guaran3 teed under this section that may be outstanding at any

4 1 time shall not exceed 150 percent of the contributed cap5 ital of the NMVC company, as determined by the Adminis6 trator. For purposes of this subsection, the contributed

7 capital of an NMVC company includes capital that is

8 deemed to be Federal funds contributed by an investor

9 other than an agency of the Federal Government.

10 ‘‘SEC. 357. ISSUANCE AND GUARANTEE OF TRUST CERTIFI11 CATES.

12 ‘‘(a) IN GENERAL.—The Administrator (or an agent

13 of the Administrator) is authorized to issue trust certifi14 cates representing ownership of all or a fractional part of

15 debentures guaranteed by the Administrator under section

16 356, if such trust certificates are based on and backed

17 by a trust or pool approved by the Administrator and com18 posed solely of debentures guaranteed under section 356.

19 ‘‘(b) GUARANTEE AUTHORITY.—

20 ‘‘(1) IN GENERAL.—The Administrator is au21 thorized to, upon such terms and conditions as the

22 Administrator determines to be appropriate, guar23 antee the timely payment of the principal of and in24 terest on any trust certificate issued under this sec25 tion.
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1 ‘‘(2) LIMITATION.—A guarantee under this sub2 section shall be limited to the extent of the principal

3 of and interest on the guaranteed debentures that

4 compose the trust or pool described in subsection

5 (a).

6 ‘‘(3) REDUCTION.—If a debenture in a trust or

7 pool described in subsection (a) is prepaid, or in the

8 event of default of a debenture, the guarantee of

9 timely payment of principal and interest on the re10 lated trust certificate issued under this section shall

11 be reduced in proportion to the amount of principal

12 and interest that such prepaid debenture represents

13 in that trust or pool.

14 ‘‘(4) ACCRUAL OF INTEREST.—Interest on pre15 paid or defaulted debentures shall accrue and be

16 guaranteed by the Administrator only through the

17 date of payment of the guarantee.

18 ‘‘(5) REDEMPTION OF TRUST CERTIFICATES.—

19 During the term of any trust certificate issued under

20 this subsection, the trust certificate may be called

21 for redemption due to prepayment or default of all

22 debentures in the trust or pool.

23 ‘‘(c) FULL FAITH AND CREDIT.—The full faith and

24 credit of the United States is pledged to the payment of
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1 all amounts that may be required to be paid under any

2 guarantee of a trust certificate issued under this section.

3 ‘‘(d) FEES.—The Administrator shall not collect a fee

4 for any guarantee of a trust certificate issued under this

5 section, except that nothing in this subsection may be con6 strued to preclude an agent of the Administrator from col7 lecting a fee approved by the Administrator for the func8 tions described in subsection (f)(2).

9 ‘‘(e) SUBROGATION.—

10 ‘‘(1) IN GENERAL.—If the Administrator pays a

11 claim under a guarantee issued under this section,

12 the Administration shall be subrogated fully to the

13 rights satisfied by such payment.

14 ‘‘(2) OWNERSHIP RIGHTS.—No Federal, State,

15 or local law shall preclude or limit the exercise by

16 the Administrator of the ownership rights of the Ad17 ministrator in the debentures residing in a trust or

18 pool against which trust certificates are issued under

19 this section.

20 ‘‘(f) CENTRAL REGISTRATION.—

21 ‘‘(1) IN GENERAL.—The Administrator may

22 provide for a central registration of all trust certifi23 cates issued under this section.

24 ‘‘(2) CONTRACTING OUT.—
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1 ‘‘(A) IN GENERAL.—The Administrator

2 may contract with an agent or agents to carry

3 out on behalf of the Administrator the pooling

4 and the central registration functions of this

5 section including, notwithstanding any other

6 provision of law—

7 ‘‘(i) maintenance on behalf of and

8 under the direction of the Administrator of

9 such commercial bank accounts or invest10 ments in obligations of the United States

11 as may be necessary to facilitate trusts or

12 pools backed by debentures guaranteed

13 under this part; and

14 ‘‘(ii) the issuance of trust certificates

15 to facilitate such poolings.

16 ‘‘(B) FIDELITY BOND OR INSURANCE RE17 QUIRED.—An agent contracting with the Ad18 ministrator under this paragraph shall be re19 quired to provide a fidelity bond or insurance in

20 such amounts as the Administrator determines

21 to be necessary to fully protect the interests of

22 the Government.

23 ‘‘(3) REGULATION OF BROKERS AND DEAL24 ERS.—The Administrator may regulate brokers and

25 dealers in trust certificates issued under this section.
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1 ‘‘(4) ELECTRONIC REGISTRATION.—Nothing in

2 this subsection may be construed to prohibit the use

3 of a book-entry or other electronic form of registra4 tion for trust certificates issued under this section.

5 ‘‘SEC. 358. FEES.

6 ‘‘Except as provided under section 357(d), the Ad7 ministrator may charge such fees as the Administrator de8 termines to be appropriate with respect to any guarantee

9 issued or grant awarded under this part.

10 ‘‘SEC. 359. BANK PARTICIPATION.

11 ‘‘Any national bank, or any member bank of the Fed12 eral Reserve System or nonmember insured bank to the

13 extent permitted under applicable State law, may invest

14 in any 1 or more NMVC companies, or in any entity estab15 lished to invest solely in NMVC companies, except that

16 in no event shall the total amount of such investments of

17 any such bank exceed 5 percent of the total capital and

18 surplus of the bank.

19 ‘‘SEC. 360. REPORTING REQUIREMENTS.

20 ‘‘Each NMVC company shall provide to the Adminis21 trator such information as the Administrator may request,

22 including reporting on the measurement criteria that the

23 NMVC company proposed in the application submitted

24 under section 354(a).
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1 ‘‘SEC. 361. EXAMINATIONS.

2 ‘‘(a) IN GENERAL.—Each NMVC company shall be

3 subject to examinations made at the direction of the In4 vestment Division of the Administration, which may be

5 conducted with the assistance of a private sector entity

6 that has both the qualifications to conduct and the exper7 tise in conducting such examinations.

8 ‘‘(b) ASSESSMENT OF COSTS.—The cost of such ex9 aminations, including the compensation of the examiners,

10 may in the discretion of the Administrator be assessed

11 against the company examined and when so assessed shall

12 be paid by such company.

13 ‘‘(c) USE OF FEES.—Fees collected under this sec14 tion shall be deposited in the account for salaries and ex15 penses of the Administration and may be used solely to

16 cover the costs of examinations and other program over17 sight activities.

18 ‘‘SEC. 362. INJUNCTIONS AND OTHER ORDERS.

19 ‘‘(a) IN GENERAL.—If, in the judgment of the Ad20 ministrator, an NMVC company or any other person has

21 engaged or is about to engage in any act or practice that

22 constitutes or will constitute a violation of any provision

23 of this Act (or any rule, regulation, or order issued under

24 this Act) or of a participation agreement entered into

25 under this part—
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1 ‘‘(1) the Administrator may make application to

2 the proper district court of the United States or a

3 United States court of any place subject to the juris4 diction of the United States for an order enjoining

5 such act or practice, or for an order enforcing com6 pliance with such provision; and

7 ‘‘(2) such court shall—

8 ‘‘(A) have jurisdiction over such applica9 tion and any ensuing proceedings; and

10 ‘‘(B) upon a showing by the Administrator

11 that such NMVC company or other person has

12 engaged or is about to engage in any such act

13 or practice, grant without bond a permanent or

14 temporary injunction, restraining order, or

15 other appropriate order.

16 ‘‘(b) POWERS OF COURT.—In any proceeding under

17 subsection (a)—

18 ‘‘(1) the court as a court of equity may, to such

19 extent as the court determines to be necessary, take

20 exclusive jurisdiction of the NMVC company and the

21 assets thereof, wherever located; and

22 ‘‘(2) the court shall have jurisdiction in any

23 such proceeding to appoint a trustee or receiver to

24 hold or administer under the direction of the court

25 the assets so possessed.
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1 ‘‘(c) TRUSTEE OR RECEIVER.—The Administrator is

2 authorized to act as trustee or receiver of the NMVC com3 pany. Upon request by the Administrator, the court may

4 appoint the Administrator to act in such capacity unless

5 the court determines such appointment to be inequitable

6 or otherwise inappropriate based on the special cir7 cumstances at issue.

8 ‘‘SEC. 363. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS,

9 DIRECTORS, EMPLOYEES, OR AGENTS;

10 BREACH OF FIDUCIARY DUTY.

11 ‘‘(a) IN GENERAL.—If an NMVC company violates

12 any provision of this Act (or any rule or regulation issued

13 under this Act), or of a participation agreement entered

14 into under this part, by failing to comply with the terms

15 thereof or by engaging in any act or practice that con16 stitutes or will constitute a violation thereof, such violation

17 shall be deemed to be also a violation and an unlawful

18 act on the part of any person who, directly or indirectly,

19 authorizes, orders, participates in, or causes, brings about,

20 counsels, aids, or abets in the commission of any act, prac21 tice, or transaction that constitutes or will constitute, in

22 whole or in part, such violation.

23 ‘‘(b) BREACH OF FIDUCIARY DUTY.—It shall be un24 lawful for any officer, director, employee, agent, or other

25 participant in the management or conduct of the affairs
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1 of an NMVC company to engage in any act or practice,

2 or to omit any act, in breach of the fiduciary duty of such

3 officer, director, employee, agent, or participant, if, as a

4 result thereof, the NMVC company has suffered or is in

5 imminent danger of suffering financial loss or other dam6 age.

7 ‘‘(c) OTHER PROHIBITIONS.—Except with the writ8 ten consent of the Administrator, it shall be unlawful—

9 ‘‘(1) for any person to take office as an officer,

10 director, or employee of an NMVC company, or to

11 become an agent or participant in the conduct of the

12 affairs or management of an NMVC company, if

13 that person—

14 ‘‘(A) has been convicted of a felony, or any

15 other criminal offense involving dishonesty or

16 breach of trust; or

17 ‘‘(B) has been found civilly liable in dam18 ages, or has been permanently or temporarily

19 enjoined by order, judgment, or decree of a

20 court of competent jurisdiction, by reason of

21 any act or practice involving fraud or breach of

22 trust; or

23 ‘‘(2) for any person to continue to serve in any

24 of the above-described capacities, if that person is

25 subsequently—
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1 ‘‘(A) convicted of a felony, or any other

2 criminal offense involving dishonesty or breach

3 of trust; or

4 ‘‘(B) found civilly liable in damages, or is

5 permanently or temporarily enjoined by an

6 order, judgment, or decree of a court of com7 petent jurisdiction, by reason of any act or

8 practice involving fraud or breach of trust.

9 ‘‘(d) NOTICE.—The Administrator may serve upon

10 any officer, director, employee, or other participant in the

11 conduct of the management or other affairs of an NMVC

12 company a written notice of the intention of the Adminis13 trator to remove that person from his or her position

14 whenever, in the opinion of the Administrator, that

15 person—

16 ‘‘(1) has willfully committed any substantial

17 violation of—

18 ‘‘(A) this Act (or any rule, regulation, or

19 order issued under this Act); or

20 ‘‘(B) a participation agreement entered

21 into under this part; or

22 ‘‘(C) a cease-and-desist order that has be23 come final; or

24 ‘‘(2) has willfully committed or engaged in any

25 act, omission, or practice that constitutes a substan-
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1 tial breach of fiduciary duty, and that such violation

2 or such breach of fiduciary duty is one involving per3 sonal dishonesty on the part of such person.

4 ‘‘(e) SUSPENSION OR REMOVAL.—The Administrator

5 may suspend or remove from office any person upon whom

6 the Administrator has served a notice under subsection

7 (d), in accordance with the procedures set forth in section

8 313.

9 ‘‘SEC. 364. REGULATIONS.

10 ‘‘The Administrator may promulgate such regula11 tions as the Administrator determines to be necessary to

12 carry out this part.

13 ‘‘SEC. 365. AUTHORIZATIONS.

14 ‘‘(a) IN GENERAL.—There is authorized to be appro15 priated to the Administration to carry out this part, to

16 remain available until expended—

17 ‘‘(1) such subsidy budget authority as may be

18 necessary to guarantee not more than $100,000,000

19 of debentures; and

20 ‘‘(2) not more than $30,000,000 for technical

21 assistance grants.

22 ‘‘(b) PERIOD OF EFFECTIVENESS.—The authority

23 under subsection (a) shall be in effect during the period

24 beginning on October 1, 2000, and ending on September

25 30, 2005.’’.
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1 (b) CONFORMING AMENDMENT.—Section

2 20(e)(1)(C) of the Small Business Act (15 U.S.C. 631

3 note) is amended by inserting ‘‘part A of’’ before ‘‘title

4 III’’.

5 SEC. 102. BANKRUPTCY EXEMPTION FOR NMVC COMPA6 NIES.

7 Section 109(b)(2) of title 11, United States Code, is

8 amended by inserting after ‘‘homestead association,’’ the

9 following: ‘‘a new markets venture capital company (as de10 fined in section 351 of the Small Business Investment Act

11 of 1958),’’.

12 SEC. 103. FEDERAL SAVINGS ASSOCIATIONS.

13 Section 5(c)(4) of the Home Owners’ Loan Act (12

14 U.S.C. 1464(c)(4)) is amended by adding at the end the

15 following:

16 ‘‘(F) NEW MARKETS VENTURE CAPITAL

17 COMPANIES.—A Federal savings association

18 may invest in stock, obligations, or other securi19 ties of any new markets venture capital com20 pany (as defined in section 351 of the Small

21 Business Investment Act of 1958). A Federal

22 savings association may not make any invest23 ment under this subparagraph if its aggregate

24 outstanding investment under this subpara-
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1 graph would exceed 5 percent of the capital and

2 surplus of such savings association.’’.

3 TITLE II—COMMUNITY DEVEL4 OPMENT VENTURE CAPITAL

5 ASSISTANCE

6 SEC. 201. SHORT TITLE.

7 This title may be cited as the ‘‘Community Develop8 ment Venture Capital Capacity Building and Professional

9 Development Act of 1999’’.

10 SEC. 202. FINDINGS.

11 Congress finds that—

12 (1) there is a need for the development and ex13 pansion of organizations that provide private equity

14 capital to smaller businesses in areas in which eq15 uity-type capital is scarce, such as inner cities and

16 rural areas, in order to create and retain jobs for

17 low-income residents of those areas;

18 (2) to invest successfully in smaller businesses,

19 particularly in inner cities and rural areas, requires

20 highly specialized investment and management skills;

21 (3) there is a shortage of professionals who pos22 sess such skills and there are few training grounds

23 for individuals to obtain those skills;

24 (4) providing assistance to organizations that

25 provide specialized technical assistance and training
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1 to individuals and organizations seeking to enter or

2 expand in this segment of the market would stimu3 late small business development and entrepreneur4 ship in economically distressed communities; and

5 (5) assistance from the Federal Government

6 could act as a catalyst to attract investment from

7 the private sector and would help to develop a spe8 cialized venture capital industry focused on creating

9 jobs, increasing business ownership, and generating

10 wealth in low-income communities.

11 SEC. 203. COMMUNITY DEVELOPMENT VENTURE CAPITAL

12 ACTIVITIES.

13 (a) IN GENERAL.—The Small Business Act (15

14 U.S.C. 631 et seq.) is amended—

15 (1) by redesignating section 34 as section 35;

16 and

17 (2) by inserting after section 33 the following:

18 ‘‘SEC. 34. COMMUNITY DEVELOPMENT VENTURE CAPITAL

19 ACTIVITIES.

20 ‘‘(a) DEFINITIONS.—In this section:

21 ‘‘(1) COMMUNITY DEVELOPMENT VENTURE

22 CAPITAL ORGANIZATION.—The term ‘community de23 velopment venture capital organization’ means a pri24 vately-controlled organization that—
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1 ‘‘(A) has a primary mission of promoting

2 community development in low-income commu3 nities, as defined by the Administrator, through

4 investment in private business enterprises; or

5 ‘‘(B) administers or is in the process of es6 tablishing a community development venture

7 capital fund for the purpose of making equity

8 investments in private business enterprises in

9 such communities.

10 ‘‘(2) DEVELOPMENTAL ORGANIZATION.—The

11 term ‘developmental organization’—

12 ‘‘(A) means a public or private entity, in13 cluding a college or university, that provides

14 technical assistance to community development

15 venture capital organizations or that conducts

16 research or training in community development

17 venture capital investment; and

18 ‘‘(B) may include an intermediary organi19 zation.

20 ‘‘(3) INTERMEDIARY ORGANIZATION.—The term

21 ‘intermediary organization’—

22 ‘‘(A) means a private, nonprofit entity that

23 has—

24 ‘‘(i) a primary mission of promoting

25 community development through invest-
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1 ment in private businesses in low-income

2 communities; and

3 ‘‘(ii) significant prior experience in

4 providing technical assistance or financial

5 assistance to community development ven6 ture capital organizations;

7 ‘‘(B) may include community development

8 venture capital organizations.

9 ‘‘(b) AUTHORITY.—In order to promote the develop10 ment of community development venture capital organiza11 tions, the Administrator, may—

12 ‘‘(1) enter into contracts with 1 or more devel13 opmental organizations to carry out training and re14 search activities under subsection (c); and

15 ‘‘(2) make grants in accordance with this

16 section—

17 ‘‘(A) to developmental organizations to

18 carry out training and research activities under

19 subsection (c); and

20 ‘‘(B) to intermediary organizations to pro21 vide intensive marketing, management, and

22 technical assistance and training to community

23 development venture capital organizations

24 under subsection (d).

25 ‘‘(c) TRAINING AND RESEARCH ACTIVITIES.—
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1 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a

2 developmental organization that receives a grant

3 under subsection (b) shall use the funds made avail4 able through the grant for 1 or more of the following

5 training and research activities:

6 ‘‘(A) STRENGTHENING PROFESSIONAL

7 SKILLS.—Creating and operating training pro8 grams to enhance the professional skills for in9 dividuals in community development venture

10 capital organizations or operating private com11 munity development venture capital funds.

12 ‘‘(B) INCREASING INTEREST IN COMMU13 NITY DEVELOPMENT VENTURE CAPITAL.—Cre14 ating and operating a program to select and

15 place students and recent graduates from busi16 ness and related professional schools as interns

17 with community development venture capital or18 ganizations and intermediary organizations for

19 a period of up to 1 year, and to provide sti20 pends for such interns during the internship pe21 riod.

22 ‘‘(C) PROMOTING ‘BEST PRACTICES’.—Or23 ganizing an annual national conference for com24 munity development venture capital organiza25 tions to discuss and share information on the
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1 best practices regarding issues relevant to the

2 creation and operation of community develop3 ment venture capital organizations.

4 ‘‘(D) MOBILIZING ACADEMIC RE5 SOURCES.—Encouraging the formation of 1 or

6 more centers for the study of community devel7 opment venture capital at graduate schools of

8 business and management, providing funding

9 for the development of materials for courses on

10 topics in this area, and providing funding for

11 research on economic, operational, and policy

12 issues relating to community development ven13 ture capital.

14 ‘‘(2) LIMITATION.—The Administrator shall en15 sure that not more than 25 percent of the amount

16 made available to carry out this section is used for

17 activities described in paragraph (1).

18 ‘‘(d) INTENSIVE MARKETING, MANAGEMENT, AND

19 TECHNICAL ASSISTANCE AND TRAINING.—An inter20 mediary organization that receives a grant under sub21 section (b) shall use the funds made available through the

22 grant to provide intensive marketing, management, and

23 technical assistance and training to promote the develop24 ment of community development venture capital organiza25 tions, which assistance may include grants to community
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1 development venture capital organizations for the start up

2 costs and operating support of those organizations.

3 ‘‘(e) MATCHING CONTRIBUTION REQUIREMENT.—

4 The Administrator shall require, as a condition of any

5 grant made to an intermediary organization under this

6 section, that a matching contribution equal to the amount

7 of such grant be provided from sources other than the

8 Federal Government.

9 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

10 is authorized to be appropriated to carry out this section

11 $20,000,000 for fiscal years 2000 through 2003, to re12 main available until expended.’’.

13 (b) REQUIREMENTS.—The Administrator of the

14 Small Business Administration may promulgate such reg15 ulations as may be necessary to carry out section 34 of

16 the Small Business Act, as amended by this section, which

17 regulations may take effect upon issuance.

18 TITLE III—BUSINESS LINC

19 SEC. 301. GRANTS AUTHORIZED.

20 Section 8 of the Small Business Act (15 U.S.C. 637)

21 is amended by adding at the end the following:

22 ‘‘(m) BUSINESS LINC GRANTS.—

23 ‘‘(1) IN GENERAL.—The Administrator may

24 make grants to and enter into cooperative agree-
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1 ments with any coalition of private or public sector

2 participants that—

3 ‘‘(A) expand business-to-business relation4 ships between large and small businesses; and

5 ‘‘(B) provide businesses, directly or indi6 rectly, with online information and a database

7 of companies that are interested in mentorprote

 ́

ge

 ́ 8 programs or community-based, state9 wide, or local business development programs.

10 ‘‘(2) MATCHING REQUIREMENTS.—

11 ‘‘(A) IN GENERAL.—Subject to subpara12 graph (B), the Administrator may make grants

13 to and enter into cooperative agreements with

14 any coalition of private or public sector partici15 pants if the coalition provides a matching

16 amount, either in-kind or in cash, equal to the

17 grant amount.

18 ‘‘(B) WAIVER.—In the best interests of the

19 program, the Administrator may waive the re20 quirements for matching funds to be provided

21 by the coalition.

22 ‘‘(3) AUTHORIZATION OF APPROPRIATIONS.—

23 There is authorized to be appropriated to carry out

24 this subsection $3,000,000 for each of fiscal years
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1 2000 through 2003, to remain available until ex2 pended.’’.

3 SEC. 302. REGULATIONS.

4 The Administrator of the Small Business Administra5 tion may promulgate such regulations as the Administra6 tion determines to be necessary to carry out this title and

7 the amendment made by this title.

8 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

9 (a) SHORT TITLE.—This Act may be cited as the

10 ‘‘Community Development and Venture Capital Act of

11 2000’’.

12 (b) TABLE OF CONTENTS.—The table of contents for

13 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—NEW MARKETS VENTURE CAPITAL PROGRAM

Sec. 101. New Markets Venture Capital Program.

Sec. 102. Bankruptcy exemption for NMVC companies.

Sec. 103. Federal savings associations.

TITLE II—COMMUNITY DEVELOPMENT VENTURE CAPITAL

ASSISTANCE

Sec. 201. Findings.

Sec. 202. Community development venture capital activities.

TITLE III—BUSINESS LINC

Sec. 301. Grants authorized.

Sec. 302. Regulations.
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1 TITLE I—NEW MARKETS

2 VENTURE CAPITAL PROGRAM

3 SEC. 101. NEW MARKETS VENTURE CAPITAL PROGRAM.

4 (a) IN GENERAL.—Title III of the Small Business In5 vestment Act of 1958 (15 U.S.C. 681 et seq.) is amended—

6 (1) by striking the title designation and heading

7 and inserting the following:

8 ‘‘TITLE III—INVESTMENT

9 DIVISION PROGRAMS

10 ‘‘Subtitle A—Small Business

11 Investment Companies’’;

12 and

13 (2) by adding at the end the following:

14 ‘‘Subtitle B—New Markets Venture

15 Capital Program

16 ‘‘SEC. 351. DEFINITIONS.

17 ‘‘In this subtitle—

18 ‘‘(1) the term ‘eligible company’ means a com19 pany that—

20 ‘‘(A) is a newly formed for-profit entity,

21 which may be a newly formed for-profit sub22 sidiary of an existing entity; and

23 ‘‘(B) has a management team with experi24 ence in community development financing or rel25 evant venture capital financing;
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1 ‘‘(2) the term ‘low-income individual’ means an

2 individual whose income (adjusted for family size)

3 does not exceed—

4 ‘‘(A) for metropolitan areas, 80 percent of

5 the area median income; and

6 ‘‘(B) for nonmetropolitan areas, the greater

7 of—

8 ‘‘(i) 80 percent of the area median in9 come; or

10 ‘‘(ii) 80 percent of the statewide non11 metropolitan area median income;

12 ‘‘(3) the term ‘low-income geographic area’

13 means—

14 ‘‘(A) any population census tract (or in the

15 case of an area that is not tracted for population

16 census tracts, the equivalent county division, as

17 defined by the Bureau of the Census of the De18 partment of Commerce for purposes of defining

19 poverty areas), if—

20 ‘‘(i) the poverty rate for that census

21 tract is not less than 20 percent;

22 ‘‘(ii) in the case of a tract—

23 ‘‘(I) that is located within a met24 ropolitan area, 50 percent or more of

25 the households in that census tract have
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1 an income equal to less than 60 per2 cent of the area median gross income;

3 or

4 ‘‘(II) that is not located within a

5 metropolitan area, the median house6 hold income for such tract does not ex7 ceed 80 percent of the statewide me8 dian household income; or

9 ‘‘(iii) as determined by the Adminis10 trator based on objective criteria, a substan11 tial population of low-income individuals

12 reside, an inadequate access to investment

13 capital exists, or other indications of eco14 nomic distress exist in that census tract; or

15 ‘‘(B) any area located within—

16 ‘‘(i) a HUBZone (as defined in section

17 3(p) of the Small Business Act and the im18 plementing regulations issued under that

19 section);

20 ‘‘(ii) an urban empowerment zone or

21 urban enterprise community (as designated

22 by the Secretary of Housing and Urban De23 velopment); or
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1 ‘‘(iii) a rural empowerment zone or

2 rural enterprise community (as designated

3 by the Secretary of Agriculture);

4 ‘‘(4) the terms ‘new markets venture capital com5 pany’ and ‘NMVC company’ mean a company that

6 has been designated as a new markets venture capital

7 company by the Administrator under section 354(d);

8 ‘‘(5) the term ‘participation agreement’ means

9 an agreement between the Administrator and a com10 pany granted final approval under section 354(d)

11 that—

12 ‘‘(A) details the operating plan and invest13 ment criteria of the company; and

14 ‘‘(B) requires the company to make invest15 ments in smaller enterprises, at least 80 percent

16 of which are located in low-income geographic

17 areas; and

18 ‘‘(6) the term ‘specialized small business invest19 ment company’ means any small business investment

20 company that—

21 ‘‘(A) invests solely in small business con22 cerns that contribute to a well-balanced national

23 economy by facilitating ownership in such con24 cerns by persons whose participation in the free
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1 enterprise system is hampered because of social

2 or economic disadvantages;

3 ‘‘(B) is organized or chartered under State

4 business or nonprofit corporations statutes, or

5 formed as a limited partnership; and

6 ‘‘(C) was licensed under section 301(d), as

7 in effect before September 30, 1996.

8 ‘‘SEC. 352. PURPOSES.

9 ‘‘The purposes of this subtitle are—

10 ‘‘(1) to encourage venture capital investment in

11 smaller enterprises located within urban and rural

12 areas;

13 ‘‘(2) to promote the creation of wealth, economic

14 development, and job opportunities in low-income ge15 ographic areas; and

16 ‘‘(3) to establish a venture capital program,

17 which shall be administered by the Administrator—

18 ‘‘(A) to make grants to NMVC companies

19 and specialized small business investment com20 panies for the purpose of providing marketing,

21 management, and technical assistance to smaller

22 enterprises financed, or expected to be financed,

23 by such companies; and

24 ‘‘(B) to guarantee debentures issued by

25 NMVC companies to enable such companies to
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1 make venture capital investments in smaller en2 terprises within urban and rural areas.

3 ‘‘SEC. 353. PROGRAM ESTABLISHMENT.

4 ‘‘There is established the New Markets Venture Capital

5 Program, under which the Administrator is authorized—

6 ‘‘(1) to make grants to NMVC companies and

7 specialized small business investment companies, as

8 provided in section 355; and

9 ‘‘(2) to guarantee debentures issued by NMVC

10 companies, as provided in section 356.

11 ‘‘SEC. 354. SELECTION OF NMVC COMPANIES.

12 ‘‘(a) APPLICATIONS.—In order to be eligible to partici13 pate in the program under this subtitle as an NMVC com14 pany, an eligible company shall submit to the Adminis15 trator an application, within such period of time as the

16 Administrator shall establish, which shall include—

17 ‘‘(1) a business plan that—

18 ‘‘(A) includes the information referred to in

19 subparagraph (A) of section 351(5); and

20 ‘‘(B) describes the manner and geographic

21 areas in which the applicant will—

22 ‘‘(i) make successful venture capital in23 vestments in smaller enterprises described

24 in subparagraph (B) of section 351(5); and
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1 ‘‘(ii) provide marketing, management,

2 and technical assistance to those enterprises;

3 ‘‘(2) the qualifications and general business rep4 utation of the management of the applicant, specifi5 cally addressing—

6 ‘‘(A) the experience of the management in

7 making venture capital investments in smaller

8 enterprises described in section 351(5)(B); and

9 ‘‘(B) the success of those investments in

10 terms of business growth, jobs created, and such

11 other factors as the Administrator may require;

12 ‘‘(3) a description of the manner in which the

13 applicant will interface with community organiza14 tions;

15 ‘‘(4) a proposal describing the manner in which

16 grant amounts made available under this subtitle

17 would provide marketing, management, and technical

18 assistance to smaller enterprises expected to be fi19 nanced by the applicant;

20 ‘‘(5) proposed criteria by which to evaluate the

21 performance of the applicant in meeting program ob22 jectives;

23 ‘‘(6) the management and financial strength of

24 any parent or affiliated firm, or any firm essential

25 to the success of the business plan of the applicant;
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1 ‘‘(7) with respect to binding commitments to be

2 made to the company under this subtitle, an estimate

3 of the ratio of cash to in-kind contributions; and

4 ‘‘(8) such other information as the Administrator

5 may require.

6 ‘‘(b) CRITERIA FOR CONDITIONAL APPROVAL.—

7 ‘‘(1) IN GENERAL.—Upon receipt of an applica8 tion submitted under subsection (a), the Adminis9 trator shall review the application and make a deter10 mination regarding whether to grant conditional ap11 proval to the applicant to operate as an NMVC com12 pany during the time period described in subsection

13 (c), based on—

14 ‘‘(A) the geographic area and employment

15 characteristics of the smaller enterprises in

16 which the proposed investments of the NMVC

17 company will be made (in order to promote in18 vestment nationwide);

19 ‘‘(B) the likelihood that the applicant will

20 meet the goals of the business plan of the appli21 cant;

22 ‘‘(C) the experience and background of the

23 management team of the company;

24 ‘‘(D) the need for equity or equity-type in25 vestments within the proposed investment areas;
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1 ‘‘(E) the extent to which the applicant will

2 concentrate its activities on serving its invest3 ment areas;

4 ‘‘(F) the likelihood that the applicant will

5 be able to satisfy the requirements of subsection

6 (c);

7 ‘‘(G) the extent to which the proposed ac8 tivities will expand economic opportunities with9 in the investment areas; and

10 ‘‘(H) such other factors as the Adminis11 trator determines to be appropriate.

12 ‘‘(2) NATIONWIDE DISTRIBUTION.—The Adminis13 trator shall select companies under paragraph (1) in

14 such a way that promotes investment nationwide.

15 ‘‘(c) REQUIREMENTS FOR FINAL APPROVAL.—

16 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

17 each applicant that is granted conditional approval

18 by the Administrator to operate as an NMVC com19 pany under subsection (b) shall, before the expiration

20 of a time period established by the Administrator, not

21 to exceed 24 months, beginning on the date on which

22 such conditional approval is granted—

23 ‘‘(A) raise not less than $5,000,000 of con24 tributed capital or binding capital commitments

25 from 1 or more investors (other than an agency
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1 of the Federal Government) that meet criteria es2 tablished by the Administrator; and

3 ‘‘(B) in order to provide marketing, man4 agement, and technical assistance, have—

5 ‘‘(i) cash or binding commitments for

6 contributions (in cash or in-kind) from 1 or

7 more sources other than the Administration

8 that meet criteria established by the Admin9 istrator, payable or available over a

10 multiyear period acceptable to the Adminis11 trator (not to exceed 10 years), in an

12 amount equal to 30 percent of the capital

13 and commitments raised under subpara14 graph (A);

15 ‘‘(ii) purchased an annuity from an

16 insurance company acceptable to the Ad17 ministrator, using amounts (other than the

18 amounts raised to satisfy the requirements

19 of subparagraph (A)) from any source other

20 than the Administration, that would yield

21 cash payments over a multiyear period ac22 ceptable to the Administrator (not to exceed

23 10 years), in an amount equal to 30 percent

24 of the capital and commitments raised

25 under subparagraph (A); or
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1 ‘‘(iii) cash or binding commitments for

2 contributions (in cash or in-kind) of the

3 type described in clause (i) and have pur4 chased an annuity of the type described in

5 clause (ii), that in the aggregate make

6 available, over a multiyear period accept7 able to the Administrator (not to exceed 10

8 years), an amount equal to 30 percent of

9 the capital and commitments raised under

10 subparagraph (A).

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

12 the discretion of the Administrator and based upon a

13 showing of special circumstances and good cause, con14 sider an applicant to have satisfied the requirements

15 of paragraph (1)(B) if the applicant has—

16 ‘‘(A) a viable plan that reasonably projects

17 the capacity of the applicant to raise the amount

18 (in cash or in-kind) required under paragraph

19 (1)(B); and

20 ‘‘(B) binding commitments in an amount

21 equal to not less than 20 percent of the total

22 amount required under paragraph (1)(B).

23 ‘‘(d) GRANT OF FINAL APPROVAL; DESIGNATION.—The

24 Administrator shall, with respect to each applicant condi-
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1 tionally approved to operate as an NMVC company under

2 subsection (b), either—

3 ‘‘(1) grant final approval to the applicant to op4 erate as an NMVC company under this subtitle and

5 designate the applicant as an NMVC company, if the

6 applicant—

7 ‘‘(A) satisfies the requirements of subsection

8 (c) on or before the expiration of the time period

9 described in that subsection; and

10 ‘‘(B) enters into a participation agreement

11 with the Administrator; or

12 ‘‘(2) if the applicant fails to satisfy the require13 ments of subsection (c) on or before the expiration of

14 the time period described in that subsection, revoke

15 the conditional approval granted under subsection

16 (b).

17 ‘‘SEC. 355. TECHNICAL ASSISTANCE GRANTS.

18 ‘‘(a) GRANTS.—

19 ‘‘(1) GRANTS TO NMVC’S.—

20 ‘‘(A) IN GENERAL.—The Administrator, in

21 accordance with such terms and conditions as

22 the Administrator may require, is authorized to

23 award 1 or more grants to each NMVC company,

24 which shall be used to provide marketing, man25 agement, and technical assistance for the benefit
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1 of smaller enterprises financed, or expected to be

2 financed, by the NMVC company.

3 ‘‘(B) GRANT AMOUNT.—Subject to subpara4 graph (C), the amount of a grant awarded to an

5 NMVC company under this subsection shall be

6 equal to 30 percent of the amount of capital and

7 commitments raised under section 354(c)(1)(A).

8 ‘‘(C) MATCHING REQUIREMENT.—In order

9 to receive funds under a grant awarded under

10 this subsection, an NMVC company shall provide

11 a matching contribution (in cash or in-kind)

12 from sources other than the Administration, in

13 an amount equal to the funds to be received.

14 ‘‘(2) GRANTS TO SPECIALIZED SMALL BUSINESS

15 INVESTMENT COMPANIES.—

16 ‘‘(A) AUTHORITY.—In accordance with this

17 section, the Administrator may make grants to

18 specialized small business investment companies

19 to provide marketing, management, and tech20 nical assistance to smaller enterprises, if the

21 smaller enterprise is financed, or expected to be

22 financed, by such companies after the effective

23 date of the Community Development and Ven24 ture Capital Act of 2000.
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1 ‘‘(B) USE OF FUNDS.—The proceeds of a

2 grant made under this paragraph may be used

3 by the company receiving such grant only to

4 provide marketing, management, and technical

5 assistance in connection with one or more equity

6 or equity-type investments (made with capital

7 raised after the effective date of the Community

8 Development and Venture Capital Act of 2000)

9 in one or more smaller enterprises located in

10 low-income geographic areas.

11 ‘‘(C) SUBMISSION OF PLANS.—A specialized

12 small business investment company shall be eli13 gible for a grant under this section only if the

14 company submits to the Administrator, in such

15 form and manner as the Administrator may re16 quire, a plan for use of the grant.

17 ‘‘(D) GRANT AMOUNT.—Subject to subpara18 graph (E), the amount of a grant awarded to a

19 specialized small business investment company

20 under this subsection shall be equal to not more

21 than 30 percent of the investments of the special22 ized small business investment company de23 scribed in subparagraph (B).

24 ‘‘(E) MATCHING REQUIREMENT.—In order

25 to receive funds under a grant awarded under
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1 this subsection, a specialized small business in2 vestment company shall provide a matching con3 tribution (in cash or in-kind) from sources other

4 than the Administration, in an amount equal to

5 the funds to be received.

6 ‘‘(3) MULTIYEAR GRANTS.—Amounts from a

7 grant awarded under this section shall be paid upon

8 the direction of the Administrator over a multiyear

9 period of not to exceed 10 years.

10 ‘‘(4) PRO RATA REDUCTIONS.—If the amount

11 made available to carry out this section for a fiscal

12 year is insufficient for the Administrator to award

13 grants in the amounts required under paragraphs (1)

14 and (2), the Administrator may make pro rata reduc15 tions in the amounts otherwise payable to each NMVC

16 company or specialized small business investment

17 company under those paragraphs.

18 ‘‘(b) SUPPLEMENTAL GRANTS.—

19 ‘‘(1) IN GENERAL.—In addition to any grant

20 under subsection (a), the Administrator, in accord21 ance with such terms and conditions as the Adminis22 trator may require, may make 1 or more supple23 mental grants to an NMVC company or specialized

24 small business investment company, which shall be

25 used to provide additional marketing, management,
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1 and technical assistance for the benefit of smaller en2 terprises financed, or expected to be financed, by the

3 NMVC company or the specialized small business in4 vestment company, as applicable.

5 ‘‘(2) MATCHING REQUIREMENT.—The Adminis6 trator may require, as a condition of any supple7 mental grant made under this subsection, that the

8 NMVC company or the specialized small business in9 vestment company, as applicable, provide a matching

10 contribution (in cash or in-kind) from 1 or more

11 sources other than the Administration in an amount

12 equal to the amount of the supplemental grant.

13 ‘‘(c) LIMITATION.—No part of any grant made avail14 able under this section may be used for any purpose other

15 than to provide marketing, management, and technical as16 sistance to smaller enterprises financed, or expected to be

17 financed, by an NMVC company or a specialized small

18 business investment company, as applicable.

19 ‘‘SEC. 356. DEBENTURES.

20 ‘‘(a) IN GENERAL.—The Administrator is authorized

21 to fully and unconditionally guarantee the timely payment

22 of principal and interest on debentures issued by NMVC

23 companies, in accordance with such terms and conditions

24 as the Administrator determines to be appropriate.
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1 ‘‘(b) FULL FAITH AND CREDIT.—The full faith and

2 credit of the United States is pledged to the payment of

3 all amounts that may be required to be paid under any

4 guarantee under this section.

5 ‘‘(c) DEBENTURE REQUIREMENTS.—A debenture guar6 anteed under this section—

7 ‘‘(1) may be issued for a term of not to exceed

8 15 years;

9 ‘‘(2) shall bear interest at a rate approved by the

10 Administrator;

11 ‘‘(3) shall be subject to a requirement that not

12 less than 25 percent of the proceeds of the debenture

13 shall be invested in smaller enterprises located in

14 HUBZones (as defined in section 3(p) of the Small

15 Business Act (15 U.S.C. 632(p)); and

16 ‘‘(4) shall contain such other terms and condi17 tions as the Administrator may require.

18 ‘‘(d) TOTAL FACE VALUE.—

19 ‘‘(1) IN GENERAL.—The total face amount of de20 bentures issued by an NMVC company and guaran21 teed under this section that may be outstanding at

22 any one time shall not exceed 150 percent of the con23 tributed capital of the NMVC company, as determined

24 by the Administrator.
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1 ‘‘(2) CONTRIBUTED CAPITAL.—For purposes of

2 this subsection, the contributed capital of an NMVC

3 company includes capital that is deemed to be Fed4 eral funds contributed by an investor other than an

5 agency of the Federal Government.

6 ‘‘SEC. 357. ISSUANCE AND GUARANTEE OF TRUST CERTIFI7 CATES.

8 ‘‘(a) IN GENERAL.—The Administrator (or an agent

9 of the Administrator) is authorized to cause a trust to issue

10 trust certificates representing ownership of all or a frac11 tional part of debentures guaranteed by the Administrator

12 under section 356, if such trust certificates are based on

13 and backed by a trust or pool approved by the Adminis14 trator and composed solely of debentures guaranteed under

15 section 356.

16 ‘‘(b) GUARANTEE AUTHORITY.—

17 ‘‘(1) IN GENERAL.—The Administrator is au18 thorized, upon such terms and conditions as the Ad19 ministrator determines to be appropriate, to fully and

20 unconditionally guarantee the timely payment of the

21 principal of and interest on any trust certificate

22 issued under this section.

23 ‘‘(2) REDUCTION.—If a debenture in a trust or

24 pool described in subsection (a) is prepaid, or in the

25 event of default of a debenture, the guarantee of time-
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1 ly payment of principal and interest on the related

2 trust certificate issued under this section shall be re3 duced in proportion to the corresponding payment

4 amount of principal and interest on the trust certifi5 cates, provided that the guarantee of timely payment

6 of principal and interest on the trust certificates after

7 such reduction shall remain full and unconditional.

8 ‘‘(3) ACCRUAL OF INTEREST.—Interest on pre9 paid or defaulted debentures shall accrue and be guar10 anteed by the Administrator only through the date of

11 payment of the guarantee.

12 ‘‘(4) REDEMPTION OF TRUST CERTIFICATES.—

13 During the term of any trust certificate issued under

14 this subsection, the trust certificate may be called for

15 redemption due to prepayment or default of all deben16 tures in the trust or pool.

17 ‘‘(c) FULL FAITH AND CREDIT.—The full faith and

18 credit of the United States is pledged to the payment of

19 all amounts that may be required to be paid under any

20 guarantee of a trust certificate issued under this section.

21 ‘‘(d) FEES.—The Administrator shall not collect a fee

22 for any guarantee of a trust certificate issued under this

23 section, except that nothing in this subsection may be con24 strued to preclude an agent of the Administrator from col-
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1 lecting a fee approved by the Administrator for the func2 tions described in subsection (f)(2).

3 ‘‘(e) SUBROGATION.—

4 ‘‘(1) IN GENERAL.—If the Administrator pays a

5 claim under a guarantee issued under this section, the

6 Administration shall be subrogated fully to the rights

7 satisfied by such payment.

8 ‘‘(2) OWNERSHIP RIGHTS.—No Federal, State, or

9 local law shall preclude or limit the exercise by the

10 Administrator of the ownership rights of the Adminis11 trator in the debentures residing in a trust or pool

12 against which trust certificates are issued under this

13 section.

14 ‘‘(f) CENTRAL REGISTRATION.—

15 ‘‘(1) IN GENERAL.—The Administrator may pro16 vide for a central registration of all trust certificates

17 issued under this section.

18 ‘‘(2) CONTRACTING OF FUNCTIONS.—

19 ‘‘(A) IN GENERAL.—The Administrator

20 may contract with an agent or agents to carry

21 out on behalf of the Administrator the pooling

22 and the central registration functions referred to

23 in this section, including, notwithstanding any

24 other provision of law—
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1 ‘‘(i) maintenance on behalf of and

2 under the direction of the Administrator of

3 such commercial bank accounts or invest4 ments in obligations of the United States as

5 may be necessary to facilitate trusts or

6 pools backed by debentures guaranteed

7 under this subtitle; and

8 ‘‘(ii) the issuance of trust certificates to

9 facilitate such poolings.

10 ‘‘(B) FIDELITY BOND OR INSURANCE RE11 QUIRED.—An agent contracting with the Admin12 istrator under this paragraph shall be required

13 to provide a fidelity bond or insurance in such

14 amounts as the Administrator determines to be

15 necessary to fully protect the interests of the Gov16 ernment.

17 ‘‘(3) REGULATION OF BROKERS AND DEALERS.—

18 The Administrator may regulate brokers and dealers

19 in trust certificates issued under this section.

20 ‘‘(4) ELECTRONIC REGISTRATION.—Nothing in

21 this subsection may be construed to prohibit the use

22 of a book-entry or other electronic form of registration

23 for trust certificates issued under this section.
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1 ‘‘SEC. 358. FEES.

2 ‘‘Except as provided under section 357(d), the Admin3 istrator may charge such fees as the Administrator deter4 mines to be appropriate with respect to any guarantee

5 issued or grant awarded under this subtitle.

6 ‘‘SEC. 359. BANK PARTICIPATION.

7 ‘‘Any national bank, or any member bank of the Fed8 eral Reserve System or nonmember insured bank, to the ex9 tent permitted under applicable State law, may invest in

10 any 1 or more NMVC companies, or in any entity estab11 lished to invest solely in NMVC companies, except that in

12 no event shall the total amount of such investments of any

13 such bank exceed 5 percent of the total capital and surplus

14 of the bank.

15 ‘‘SEC. 360. FEDERAL FINANCING BANK.

16 ‘‘Section 318 shall not apply to any debenture issued

17 by a NMVC company under this subtitle.

18 ‘‘SEC. 361. REPORTING REQUIREMENTS.

19 ‘‘Each NMVC company shall provide to the Adminis20 trator such information as the Administrator may request,

21 including—

22 ‘‘(1) information related to the measurement cri23 teria that the NMVC company proposed in the appli24 cation submitted under section 354(a);

25 ‘‘(2) documentation on the use of technical as26 sistance grants under this subtitle; and
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1 ‘‘(3) in each case in which the company under

2 this subtitle makes an investment in, or a loan or

3 grant to, a business that is not located in a low-in4 come geographic area, a report on the number and

5 percentage of employees of the business who reside in

6 such areas.

7 ‘‘SEC. 362. EXAMINATIONS.

8 ‘‘(a) IN GENERAL.—Each NMVC company shall be

9 subject to examinations made at the direction of the Invest10 ment Division of the Administration, which may be con11 ducted with the assistance of a private sector entity that

12 has both the qualifications to conduct and the expertise in

13 conducting such examinations.

14 ‘‘(b) ASSESSMENT OF COSTS.—The cost of examina15 tions under subsection (a), including the compensation of

16 the examiners, may, in the discretion of the Administrator,

17 be assessed against the company examined, and when so

18 assessed shall be paid by such company.

19 ‘‘(c) DEPOSIT OF FEES.—Fees collected under this sec20 tion shall be deposited in the account for salaries and ex21 penses of the Administration.

22 ‘‘SEC. 363. INJUNCTIONS AND OTHER ORDERS.

23 ‘‘(a) IN GENERAL.—If, in the judgment of the Admin24 istrator, an NMVC company or any other person has en25 gaged or is about to engage in any act or practice that con-
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1 stitutes or will constitute a violation of any provision of

2 this subtitle (or any rule, regulation, or order issued under

3 this subtitle) or of a participation agreement entered into

4 under this subtitle—

5 ‘‘(1) the Administrator may make application to

6 the proper district court of the United States or a

7 United States court of any place subject to the juris8 diction of the United States for an order enjoining

9 such act or practice, or for an order enforcing compli10 ance with such provision; and

11 ‘‘(2) such court shall—

12 ‘‘(A) have jurisdiction over such application

13 and any ensuing proceedings; and

14 ‘‘(B) upon a showing by the Administrator

15 that such NMVC company or other person has

16 engaged or is about to engage in any such act

17 or practice, grant without bond a permanent or

18 temporary injunction, restraining order, or other

19 appropriate order.

20 ‘‘(b) POWERS OF COURT.—In any proceeding under

21 subsection (a)—

22 ‘‘(1) the court as a court of equity may, to such

23 extent as the court determines to be necessary, take ex24 clusive jurisdiction of the NMVC company and the as25 sets thereof, wherever located; and
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1 ‘‘(2) the court shall have jurisdiction in any such

2 proceeding to appoint a trustee or receiver to hold or

3 administer under the direction of the court the assets

4 so possessed.

5 ‘‘(c) TRUSTEE OR RECEIVER.—The Administrator is

6 authorized to act as trustee or receiver of the NMVC com7 pany referred to in subsection (a). Upon request by the Ad8 ministrator, the court may appoint the Administrator to

9 act in such capacity, unless the court determines such ap10 pointment to be inequitable or otherwise inappropriate

11 based on the special circumstances at issue.

12 ‘‘SEC. 364. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS,

13 DIRECTORS, EMPLOYEES, OR AGENTS;

14 BREACH OF FIDUCIARY DUTY.

15 ‘‘(a) IN GENERAL.—If an NMVC company violates

16 any provision of this subtitle (or any rule or regulation

17 issued under this subtitle), or of a participation agreement

18 entered into under this subtitle, by failing to comply with

19 the terms thereof or by engaging in any act or practice that

20 constitutes or will constitute a violation thereof, such viola21 tion shall be deemed to be also a violation and an unlawful

22 act on the part of any person who, directly or indirectly,

23 authorizes, orders, participates in, or causes, brings about,

24 counsels, aids, or abets in the commission of any act, prac-
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1 tice, or transaction that constitutes or will constitute, in

2 whole or in part, such violation.

3 ‘‘(b) BREACH OF FIDUCIARY DUTY.—It shall be un4 lawful for any officer, director, employee, agent, or other

5 participant in the management or conduct of the affairs

6 of an NMVC company to engage in any act or practice,

7 or to omit any act, in breach of the fiduciary duty of such

8 officer, director, employee, agent, or participant, if, as a

9 result thereof, the NMVC company has suffered or is in im10 minent danger of suffering financial loss or other damage.

11 ‘‘(c) OTHER PROHIBITIONS.—Except with the written

12 consent of the Administrator, it shall be unlawful—

13 ‘‘(1) for any person to take office as an officer,

14 director, or employee of an NMVC company, or to be15 come an agent or participant in the conduct of the af16 fairs or management of an NMVC company, if that

17 person—

18 ‘‘(A) has been convicted of a felony, or any

19 other criminal offense involving dishonesty or

20 breach of trust; or

21 ‘‘(B) has been found civilly liable in dam22 ages, or has been permanently or temporarily en23 joined by order, judgment, or decree of a court

24 of competent jurisdiction, by reason of any act

25 or practice involving fraud or breach of trust; or
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1 ‘‘(2) for any person to continue to serve in any

2 of the capacities described in paragraph (1), if that

3 person is subsequently—

4 ‘‘(A) convicted of a felony, or any other

5 criminal offense involving dishonesty or breach

6 of trust; or

7 ‘‘(B) found civilly liable in damages, or is

8 permanently or temporarily enjoined by an

9 order, judgment, or decree of a court of com10 petent jurisdiction, by reason of any act or prac11 tice involving fraud or breach of trust.

12 ‘‘(d) NOTICE.—The Administrator may serve upon

13 any officer, director, employee, or other participant in the

14 conduct of the management or other affairs of an NMVC

15 company a written notice of the intention of the Adminis16 trator to remove that person from his or her position when17 ever, in the opinion of the Administrator, that person—

18 ‘‘(1) has willfully committed any substantial vio19 lation of—

20 ‘‘(A) this subtitle (or any rule, regulation,

21 or order issued under this subtitle); or

22 ‘‘(B) a participation agreement entered into

23 under this subtitle; or

24 ‘‘(C) a cease-and-desist order that has be25 come final; or
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1 ‘‘(2) has willfully committed or engaged in any

2 act, omission, or practice that constitutes a substan3 tial breach of fiduciary duty, and that such violation

4 or such breach of fiduciary duty is one involving per5 sonal dishonesty on the part of such person.

6 ‘‘(e) SUSPENSION OR REMOVAL.—The Administrator

7 may suspend or remove from office any person upon whom

8 the Administrator has served a notice under subsection (d),

9 in accordance with the procedures set forth in section 313.

10 ‘‘SEC. 365. REGULATIONS.

11 ‘‘The Administrator may promulgate such regulations

12 as the Administrator determines to be necessary to carry

13 out this subtitle.

14 ‘‘SEC. 366. AUTHORIZATIONS.

15 ‘‘(a) IN GENERAL.—There is authorized to be appro16 priated to the Administration, for fiscal years 2000 through

17 2005, to remain available until expended—

18 ‘‘(1) such subsidy budget authority as may be

19 necessary to guarantee $150,000,000 of debentures

20 under this subtitle; and

21 ‘‘(2) $30,000,000 to make grants under this sub22 title.

23 ‘‘(b) FUNDS COLLECTED FOR EXAMINATIONS.—Funds

24 deposited under section 362(c) may be used only for the

25 costs of examinations under section 362 and for the costs
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1 of other oversight activities with respect to the program es2 tablished under this subtitle.’’.

3 (b) CONFORMING AMENDMENT.—Section 20(e)(1)(C)

4 of the Small Business Act (15 U.S.C. 631 note) is amended

5 by inserting ‘‘subtitle A of’’ before ‘‘title III’’.

6 (c) CLERICAL AMENDMENT.—Subtitle A of title III of

7 the Small Business Investment Company Act of 1958 (15

8 U.S.C. 681 et seq.), as so designated by this Act, is amended

9 by striking ‘‘this title’’ each place that term appears and

10 inserting ‘‘this subtitle’’.

11 SEC. 102. BANKRUPTCY EXEMPTION FOR NMVC COMPANIES.

12 Section 109(b)(2) of title 11, United States Code, is

13 amended by inserting after ‘‘homestead association,’’ the fol14 lowing: ‘‘a new markets venture capital company (as de15 fined in section 351 of the Small Business Investment Act

16 of 1958),’’.

17 SEC. 103. FEDERAL SAVINGS ASSOCIATIONS.

18 Section 5(c)(4) of the Home Owners’ Loan Act (12

19 U.S.C. 1464(c)(4)) is amended by adding at the end the

20 following:

21 ‘‘(F) NEW MARKETS VENTURE CAPITAL

22 COMPANIES.—A Federal savings association may

23 invest in stock, obligations, or other securities of

24 any new markets venture capital company (as

25 defined in section 351 of the Small Business In-
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1 vestment Act of 1958). A Federal savings asso2 ciation may not make any investment under this

3 subparagraph if its aggregate outstanding invest4 ment under this subparagraph would exceed 5

5 percent of the capital and surplus of such sav6 ings association.’’.

7 TITLE II—COMMUNITY DEVELOP8 MENT VENTURE CAPITAL AS9 SISTANCE

10 SEC. 201. FINDINGS.

11 Congress finds that—

12 (1) there is a need for the development and ex13 pansion of organizations that provide private equity

14 capital to smaller businesses in areas in which eq15 uity-type capital is scarce, such as inner cities and

16 rural areas, in order to create and retain jobs for low17 income residents of those areas;

18 (2) to invest successfully in smaller businesses,

19 particularly in inner cities and rural areas, requires

20 highly specialized investment and management skills;

21 (3) there is a shortage of professionals who pos22 sess such skills and there are few training grounds for

23 individuals to obtain those skills;

24 (4) providing assistance to organizations that

25 provide specialized technical assistance and training
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1 to individuals and organizations seeking to enter or

2 expand in this segment of the market would stimulate

3 small business development and entrepreneurship in

4 economically distressed communities; and

5 (5) assistance from the Federal Government

6 could act as a catalyst to attract investment from the

7 private sector and would help to develop a specialized

8 venture capital industry focused on creating jobs, in9 creasing business ownership, and generating wealth

10 in low-income communities.

11 SEC. 202. COMMUNITY DEVELOPMENT VENTURE CAPITAL

12 ACTIVITIES.

13 (a) IN GENERAL.—The Small Business Act (15 U.S.C.

14 631 et seq.) is amended—

15 (1) by redesignating section 34 as section 35;

16 and

17 (2) by inserting after section 33 the following:

18 ‘‘SEC. 34. COMMUNITY DEVELOPMENT VENTURE CAPITAL

19 ACTIVITIES.

20 ‘‘(a) DEFINITIONS.—In this section, the following defi21 nitions shall apply:

22 ‘‘(1) COMMUNITY DEVELOPMENT VENTURE CAP23 ITAL ORGANIZATION.—The term ‘community develop24 ment venture capital organization’ means a pri25 vately-controlled organization that—
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1 ‘‘(A) has a primary mission of promoting

2 community development in low-income commu3 nities, as defined by the Administrator, through

4 investment in private business enterprises; or

5 ‘‘(B) administers or is in the process of es6 tablishing a community development venture

7 capital fund for the purpose of making equity

8 investments in private business enterprises in

9 such communities.

10 ‘‘(2) DEVELOPMENTAL ORGANIZATION.—The

11 term ‘developmental organization’—

12 ‘‘(A) means a public or private entity, in13 cluding a college or university, that provides

14 technical assistance to community development

15 venture capital organizations or that conducts

16 research or training in community development

17 venture capital investment; and

18 ‘‘(B) may include an intermediary organi19 zation.

20 ‘‘(3) INTERMEDIARY ORGANIZATION.—The term

21 ‘intermediary organization’—

22 ‘‘(A) means a private, nonprofit entity that

23 has—

24 ‘‘(i) a primary mission of promoting

25 community development through investment
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1 in private businesses in low-income commu2 nities; and

3 ‘‘(ii) significant prior experience in

4 providing technical assistance or financial

5 assistance to community development ven6 ture capital organizations; and

7 ‘‘(B) may include community development

8 venture capital organizations.

9 ‘‘(b) AUTHORITY.—In order to promote the develop10 ment of community development venture capital organiza11 tions, the Administrator may—

12 ‘‘(1) enter into contracts with 1 or more develop13 mental organizations to carry out training and re14 search activities under subsection (c); and

15 ‘‘(2) make grants in accordance with this

16 section—

17 ‘‘(A) to developmental organizations to

18 carry out training and research activities under

19 subsection (c); and

20 ‘‘(B) to intermediary organizations to pro21 vide intensive marketing, management, and tech22 nical assistance and training to community de23 velopment venture capital organizations under

24 subsection (d).

25 ‘‘(c) TRAINING AND RESEARCH ACTIVITIES.—
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1 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a

2 developmental organization that receives a grant

3 under subsection (b) shall use the funds made avail4 able through the grant for 1 or more of the following

5 training and research activities:

6 ‘‘(A) STRENGTHENING PROFESSIONAL

7 SKILLS.—Creating and operating training pro8 grams to enhance the professional skills for indi9 viduals in community development venture cap10 ital organizations or operating private commu11 nity development venture capital funds.

12 ‘‘(B) INCREASING INTEREST IN COMMUNITY

13 DEVELOPMENT VENTURE CAPITAL.—Creating

14 and operating a program to select and place stu15 dents and recent graduates from business and re16 lated professional schools as interns with commu17 nity development venture capital organizations

18 and intermediary organizations for a period of

19 up to 1 year, and to provide stipends for such

20 interns during the internship period.

21 ‘‘(C) PROMOTING ‘BEST PRACTICES’.—Orga22 nizing an annual national conference for com23 munity development venture capital organiza24 tions to discuss and share information on the

25 best practices regarding issues relevant to the
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1 creation and operation of community develop2 ment venture capital organizations.

3 ‘‘(D) MOBILIZING ACADEMIC RESOURCES.—

4 Encouraging the formation of 1 or more centers

5 for the study of community development venture

6 capital at graduate schools of business and man7 agement, providing funding for the development

8 of materials for courses on topics in this area,

9 and providing funding for research on economic,

10 operational, and policy issues relating to com11 munity development venture capital.

12 ‘‘(2) LIMITATION.—The Administrator shall en13 sure that not more than 25 percent of the amount

14 made available to carry out this section is used for

15 the activities described in paragraph (1).

16 ‘‘(d) INTENSIVE MARKETING, MANAGEMENT, AND

17 TECHNICAL ASSISTANCE AND TRAINING.—An intermediary

18 organization that receives a grant under subsection (b) shall

19 use the funds made available through the grant to provide

20 intensive marketing, management, and technical assistance

21 and training to promote the development of community de22 velopment venture capital organizations, which assistance

23 may include grants to community development venture cap24 ital organizations for the start up costs and operating sup25 port of those organizations.
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1 ‘‘(e) MATCHING CONTRIBUTION REQUIREMENT.—The

2 Administrator shall require, as a condition of any grant

3 made to an intermediary organization under this section,

4 that a matching contribution equal to the amount of such

5 grant be provided from sources other than the Federal Gov6 ernment.

7 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There is

8 authorized to be appropriated to carry out this section

9 $20,000,000 for fiscal years 2000 through 2005, to remain

10 available until expended.’’.

11 (b) REQUIREMENTS.—The Administrator of the Small

12 Business Administration may promulgate such regulations

13 as may be necessary to carry out section 34 of the Small

14 Business Act, as added by this section, which regulations

15 may take effect upon issuance.

16 TITLE III—BUSINESS LINC

17 SEC. 301. GRANTS AUTHORIZED.

18 Section 8 of the Small Business Act (15 U.S.C. 637)

19 is amended by adding at the end the following:

20 ‘‘(m) BUSINESS LINC GRANTS.—

21 ‘‘(1) IN GENERAL.—The Administrator may

22 make grants to and enter into cooperative agreements

23 with any coalition of private or public sector partici24 pants that—
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1 ‘‘(A) expand business-to-business relation2 ships between large and small businesses; and

3 ‘‘(B) provide businesses, directly or indi4 rectly, with information about companies that

5 are interested in mentor-protegee programs or

6 community-based, state-wide, or local business

7 development programs.

8 ‘‘(2) MATCHING REQUIREMENTS.—

9 ‘‘(A) IN GENERAL.—Subject to subpara10 graph (B), the Administrator may make grants

11 to and enter into cooperative agreements with

12 any coalition of private or public sector partici13 pants if the coalition provides a matching

14 amount, either in-kind or in cash, equal to the

15 grant amount.

16 ‘‘(B) WAIVER.—In the best interests of the

17 program established under this subsection, the

18 Administrator may waive the requirements for

19 matching funds to be provided by the coalition

20 under subparagraph (A).

21 ‘‘(3) AUTHORIZATION OF APPROPRIATIONS.—

22 There is authorized to be appropriated to carry out

23 this subsection $6,600,000 for each of fiscal years

24 2000 through 2005, to remain available until ex25 pended.’’.
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1 SEC. 302. REGULATIONS.

2 The Administrator of the Small Business Administra3 tion may promulgate such regulations as the Administrator

4 determines to be necessary to carry out this Act and the

5 amendment made by this Act.
Calendar No. 759

106TH CONGRESS

2D SESSION S. 1594

[Report No. 106–383]

A BILL

To amend the Small Business Act and Small

Business Investment Act of 1958.

AUGUST 25, 2000

Reported with an amendment