I 

118TH CONGRESS 

1ST SESSION H. R. 1538 

To amend the Small Business Act to provide for contracting preferences 

and other benefits for emerging business enterprises, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 10, 2023 

Mr. CARSON (for himself, Mr. THOMPSON of Mississippi, Mr. ESPAILLAT, Mr. 

GARCI ́A of Illinois, Ms. SA ́NCHEZ, Ms. GARCIA of Texas, Mr. CASE, and 

Mr. LANDSMAN) introduced the following bill; which was referred to the 

Committee on Small Business 

A BILL 

To amend the Small Business Act to provide for contracting 

preferences and other benefits for emerging business enterprises, 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 ‘‘Emerging Business 

5 Encouragement Act of 2023’’. 

6 SEC. 2. EMERGING BUSINESS ENTERPRISES. 

7 (a) DESIGNATION.—Section 3 of the Small Business 

8 Act (15 U.S.C. 632) is amended by adding at the end the 

9 following: 


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1 ‘‘(gg) EMERGING BUSINESS ENTERPRISE.— 

2 ‘‘(1) IN GENERAL.—In this Act, the term 

3 ‘emerging business enterprise’ means a concern des4 ignated by the Administrator in accordance with this 

5 section. 

6 ‘‘(2) CRITERIA FOR DESIGNATION.—Not later 

7 than 90 days after the date of enactment of this 

8 subsection, the Administrator shall establish criteria 

9 for designation of a small business concern as an 

10 emerging business enterprise which shall include the 

11 following: 

12 ‘‘(A) NUMBER OF EMPLOYEES.—That the 

13 highest number of employees of the concern 

14 during the year preceding the date of applica15 tion is less than the larger of— 

16 ‘‘(i) 10 percent of the number of em17 ployees that a small business concern with18 in that industry category may employ, if 

19 that small business concern is so classified 

20 by reason of a size standard under sub21 section (a) pertaining to the number of 

22 employees of the concern; or 

23 ‘‘(ii) 25 employees. 


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1 ‘‘(B) AGE OF BUSINESS.—That the small 

2 business concern has been in operation for less 

3 than 5 years on the date of application. 

4 ‘‘(C) SALARY REQUIREMENTS.—That the 

5 small business concern does not, in the Admin6 istrator’s determination, pay to an individual 

7 who owns any part of the concern or who is in 

8 a management position a salary greater than 

9 200 percent of the mean annual salary for an 

10 individual in the Managers of Companies and 

11 Enterprises sector (as assigned a North Amer12 ican Industry Classification System code begin13 ning with 55) or the equivalent from the most 

14 recent employment and wage estimates devel15 oped by the Secretary of Labor. 

16 ‘‘(3) DEADLINE.—The Administrator shall com17 plete review of an application for designation as an 

18 emerging business enterprise and either issue or 

19 deny such designation not later than one year of re20 ceipt of such application. 

21 ‘‘(4) TERMINATION OF DESIGNATION.—A des22 ignation as an emerging business enterprise shall 

23 terminate on the date on which the concern is no 

24 longer in compliance with the criteria under para25 graph (2), except that— 


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1 ‘‘(A) with respect to the requirement in 

2 paragraph (2)(A), such designation shall termi3 nate only if the concern employs 50 percent or 

4 more employees than the number of employees 

5 that a small business concern within that indus6 try category may employ; and 

7 ‘‘(B) with respect to the requirement in 

8 paragraph (2)(C), such designation shall termi9 nate only if the concern exceeds such require10 ment and employs not more than 10 percent of 

11 the number of employees that a small business 

12 concern within that industry category may em13 ploy, if that small business concern is so classi14 fied by reason of a size standard under sub15 section (a) pertaining to the number of employ16 ees of the concern. 

17 ‘‘(5) PUBLIC NOTIFICATION.—The Adminis18 trator shall take appropriate action to publicize the 

19 establishment of the procedures for designations 

20 under this paragraph, including by conducting out21 reach to eligible small business concerns. 

22 ‘‘(6) CONTRACTOR TRAINING.—The Adminis23 trator shall provide training on Federal procurement 

24 specifically for emerging business enterprises on an 


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1 Internet website of the Administrator, which shall be 

2 available to the public at no charge.’’. 

3 (b) CONTRACTING PREFERENCE.—Section 15(g)(2) 

4 of the Small Business Act (15 U.S.C. 644(g)(2)) is 

5 amended by adding at the end the following: 

6 ‘‘(G) EMERGING BUSINESS ENTER7 PRISES.— 

8 ‘‘(i) IN GENERAL.—The head of each 

9 Federal agency shall, after consultation 

10 with the Administrator, establish goals for 

11 participation by emerging business enter12 prises in not less than 3 percent of all 

13 prime contracts and subcontracts of such 

14 agency for each fiscal year. 

15 ‘‘(ii) REQUIREMENTS.—The head of a 

16 Federal agency— 

17 ‘‘(I) shall make consistent efforts 

18 to annually expand participation by 

19 emerging business enterprises from 

20 each industry category in contracts of 

21 the agency; and 

22 ‘‘(II) shall, subject to clause (iii), 

23 award a contract to an emerging busi24 ness enterprise if the head of a Fed25 eral agency determines the agency will 


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1 not meet the goals established under 

2 this subparagraph for a fiscal year. 

3 ‘‘(iii) PREFERENCE.—The preference 

4 described in clause (ii)(II) shall take pri5 ority over any preference for procurement 

6 from the procurement list established pur7 suant to section 8503 of title 41, United 

8 States Code, or the Federal Prison Indus9 tries catalog described under section 

10 4124(d) of title 18, United States Code. 

11 ‘‘(iv) REPORTS.— 

12 ‘‘(I) REPORTS FROM AGEN13 CIES.—At the conclusion of each fiscal 

14 year, the head of each Federal agency 

15 shall report to the Administrator on 

16 the extent of participation by emerg17 ing business enterprises in procure18 ment contracts of such agency. Such 

19 reports shall contain appropriate jus20 tifications for failure to meet the goals 

21 established under this subparagraph. 

22 ‘‘(II) REPORTS TO CONGRESS.— 

23 The Administrator shall annually 

24 compile and analyze the reports sub25 mitted by agencies pursuant to subVerDate Sep 11 2014 05:56 Mar 29, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1538.IH H1538

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1 clause (I) and shall submit to the 

2 President and the Committee on 

3 Small Business and Entrepreneurship 

4 of the Senate and the Committee on 

5 Small Business of the House of Rep6 resentatives the compilation and anal7 ysis, which shall include the following: 

8 ‘‘(aa) The goals in effect for 

9 each agency and the agency’s 

10 performance in attaining such 

11 goals. 

12 ‘‘(bb) An analysis of any 

13 failure to achieve individual agen14 cy goals and the actions planned 

15 by such agency (that have been 

16 approved by the Administrator) 

17 to achieve the goals in the suc18 ceeding fiscal year. 

19 ‘‘(cc) The total number and 

20 dollar value of prime contracts 

21 and subcontracts awarded to 

22 emerging business enterprises for 

23 each agency. 

24 ‘‘(III) ANNUAL PRESIDENTIAL

25 REPORT ON THE STATE OF SMALL


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1 BUSINESS.—The President shall in2 clude the information required by sub3 clause (II) in each annual report to 

4 the Congress on the state of small 

5 business prepared pursuant to section 

6 303(a) of the Small Business Eco7 nomic Policy Act of 1980 (15 U.S.C. 

8 631b(a)).’’. 

9 (c) FEE WAIVERS.—Section 7(a) of the Small Busi10 ness Act (15 U.S.C. 636(a)) is amended by adding at the 

11 end the following: 

12 ‘‘(38) FEE WAIVERS.—The Administrator may 

13 not collect an origination fee or a guarantee fee de14 scribed in paragraph (18) in connection with a loan 

15 made under this subsection to an emerging business 

16 enterprise, unless— 

17 ‘‘(A) the President’s budget for the upcom18 ing fiscal year, submitted to Congress pursuant 

19 to section 1105(a) of title 31, United States 

20 Code, includes a cost for the program estab21 lished under this paragraph that is above zero; 

22 and 

23 ‘‘(B) the Administrator determines car24 rying out this paragraph will have no adverse 


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1 effect on the waivers provided under paragraph 

2 (31)(G) or (33)(E)(ii) for a fiscal year. 

3 ‘‘(39) EMERGING BUSINESS ENTERPRISES.— 

4 ‘‘(A) REPORTS.—On the date that is 1 

5 year after the end of the first fiscal year for 

6 which a guaranteed loan is made to an emerg7 ing business enterprise under this subsection, 

8 and annually thereafter, each lender making 

9 such a loan shall submit to the Administrator 

10 a report with respect to the preceding fiscal 

11 year on the total number and dollar amount of 

12 such loans made and the number of waivers 

13 issued under paragraph (38). 

14 ‘‘(B) VERIFICATION.—A lender shall verify 

15 with the Administrator the status of a concern 

16 as an emerging business enterprise before mak17 ing a loan guaranteed under this subsection to 

18 such emerging business enterprise. 

19 ‘‘(C) PENALTY.—If a concern received a 

20 loan under this subsection and fraudulently 

21 misrepresented the status of the concern as an 

22 emerging business enterprise, that concern 

23 shall— 

24 ‘‘(i) repay the amount of the loan to 

25 the lender (from which amount the lender 


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1 shall repay the amount of any guarantee 

2 paid on the loan to the Administrator); 

3 and 

4 ‘‘(ii) pay a fine to the Administrator 

5 in an amount determined by the Adminis6 trator.’’. 

7 SEC. 3. RULEMAKING. 

8 (a) IN GENERAL.—Not later 1 year after the date 

9 of enactment of this subsection and for each industry cat10 egory for which the Administrator of the Small Business 

11 Administration established a size standard under section 

12 3(a) of the Small Business Act (15 U.S.C. 632(a)), the 

13 Administrator shall issue a rule— 

14 (1) establishing procedures for designating a 

15 small business concern in each such industry cat16 egory as an emerging business enterprise that in17 clude the criteria under subsection (gg)(3) of section 

18 3 of the Small Business Act (15 U.S.C. 632), as 

19 added by this Act, and a process for appealing des20 ignation decisions of the Administrator; 

21 (2) establishing procedures for certification by 

22 the Administrator as an emerging business enter23 prise; 

24 (3) requiring a small business concern to annu25 ally submit documentation to the Administrator to 


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1 establish eligibility for designation as an emerging 

2 business enterprise; and 

3 (4) establishing compliance requirements for 

4 emerging business enterprises. 

5 (b) DEFINITIONS.—In this section: 

6 (1) SMALL BUSINESS CONCERN.—The term 

7 ‘‘small business concern’’ has the meaning given 

8 under section 3 of the Small Business Act (15 

9 U.S.C. 632). 

10 (2) EMERGING BUSINESS ENTERPRISE.—The 

11 term ‘‘emerging business enterprise’’ has the mean12 ing given under subsection (gg) of section 3 of the 

13 Small Business Act (15 U.S.C. 632), as added by 

14 this Act. 

Æ 


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