American Innovation and Manufacturing Act

Subjects: Commerce

Summary:  <p><strong>American Innovation and Manufacturing Act </strong></p> <p>This bill establishes within the Small Business Administration a credit facility to provide financial assistance to investment companies that finance small manufacturing businesses. </p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 46 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                 S. 46

    To establish a small business and domestic production recovery 
              investment facility, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 24 (legislative day, January 3), 2023

 Mr. Rubio (for himself and Mr. Risch) introduced the following bill; 
 which was read twice and referred to the Committee on Small Business 
                          and Entrepreneurship

_______________________________________________________________________

                                 A BILL


 
    To establish a small business and domestic production recovery 
              investment facility, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Innovation and 
Manufacturing Act''.

SEC. 2. SMALL BUSINESS INVESTMENT COMPANY PROGRAM.

    (a) In General.--Part A of title III of the Small Business 
Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended--
            (1) in section 302(a) (15 U.S.C. 682(a))--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A), by striking ``or'' 
                        at the end;
                            (ii) in subparagraph (B), by striking the 
                        period at the end and inserting ``; or''; and
                            (iii) by adding at the end the following:
                    ``(C) $20,000,000, adjusted every 5 years for 
                inflation, with respect to each licensee authorized or 
                seeking authority to sell bonds to the Administration 
                as a participating investment company under section 
                321.''; and
            (2) by adding at the end the following:

``SEC. 321. SMALL BUSINESS AND DOMESTIC PRODUCTION RECOVERY INVESTMENT 
              FACILITY.

    ``(a) Definitions.--In this section:
            ``(1) Eligible small business concern.--The term `eligible 
        small business concern'--
                    ``(A) means a small business concern that is a 
                manufacturing business that is assigned a North 
                American Industry Classification System code beginning 
                with 31, 32, or 33 at the time at which the small 
                business concern receives an investment from a 
                participating investment company under the facility; 
                and
                    ``(B) does not include an entity described in 
                section 7(a)(37)(A)(iv)(III) of the Small Business Act 
                (15 U.S.C. 636(a)(37)(A)(iv)(III)).
            ``(2) Facility.--The term `facility' means the facility 
        established under subsection (b).
            ``(3) Fund.--The term `Fund' means the fund established 
        under subsection (h).
            ``(4) Participating investment company.--The term 
        `participating investment company' means a small business 
        investment company approved under subsection (d) to participate 
        in the facility.
            ``(5) Protege investment company.--The term `protege 
        investment company' means a small business investment company 
        that--
                    ``(A) is majority managed by new, inexperienced, or 
                otherwise underrepresented fund managers; and
                    ``(B) elects and is selected by the Administration 
                to participate in the pathway-protege program under 
                subsection (g).
            ``(6) Small business concern.--The term `small business 
        concern' has the meaning given the term in section 3(a) of the 
        Small Business Act (15 U.S.C. 632(a)).
    ``(b) Establishment.--
            ``(1) Facility.--The Administrator shall establish and 
        carry out a facility to increase resiliency in the 
        manufacturing supply chain of eligible small business concerns 
        by providing financial assistance to participating investment 
        companies that facilitate equity financings to eligible small 
        business concerns in accordance with this section.
            ``(2) Administration of facility.--The facility shall be 
        administered by the Administrator acting through the Associate 
        Administrator described in section 201.
    ``(c) Applications.--
            ``(1) In general.--Any small business investment company 
        may submit to the Administrator an application to participate 
        in the facility.
            ``(2) Requirements for application.--An application to 
        participate in the facility shall include the following:
                    ``(A) A business plan describing how the applicant 
                intends to make successful equity investments in 
                eligible small business concerns.
                    ``(B) Information regarding the relevant investment 
                qualifications and backgrounds of the individuals 
                responsible for the management of the applicant.
                    ``(C) A description of the extent to which the 
                applicant meets the selection criteria under subsection 
                (d)(2).
            ``(3) Exceptions to application for new licensees.--Not 
        later than 90 days after the date of enactment of this section, 
        the Administrator shall reduce requirements for applicants 
        applying to operate as a participating investment company under 
        this section in order to encourage the participation of new 
        small business investment companies in the facility under this 
        section, which may include the requirements established under 
        part 107 of title 13, Code of Federal Regulations, or any 
        successor regulation, relating to--
                    ``(A) the approval of initial management expenses;
                    ``(B) the management ownership diversity 
                requirement;
                    ``(C) the disclosure of general compensatory 
                practices and fee structures; or
                    ``(D) any other requirement that the Administrator 
                determines to be an obstacle to achieving the purposes 
                described in this paragraph.
    ``(d) Selection of Participating Investment Companies.--
            ``(1) Determination.--
                    ``(A) In general.--Except as provided in paragraph 
                (3), not later than 60 days after the date on which the 
                Administrator receives an application under subsection 
                (c), the Administrator shall--
                            ``(i) make a final determination to approve 
                        or disapprove such applicant to participate in 
                        the facility; and
                            ``(ii) transmit the determination to the 
                        applicant in writing.
                    ``(B) Commitment amount.--Except as provided in 
                paragraph (3), at the time of approval of an applicant, 
                the Administrator shall make a determination of the 
                amount of the commitment that may be awarded to the 
                applicant under this section.
            ``(2) Selection criteria.--In making a determination under 
        paragraph (1), the Administrator shall consider--
                    ``(A) the probability that the investment strategy 
                of the applicant will successfully repay any financial 
                assistance provided by the Administration, including 
                the probability of a return significantly in excess 
                thereof;
                    ``(B) the probability that the investments made by 
                the applicant will--
                            ``(i) provide capital to eligible small 
                        business concerns; or
                            ``(ii) create or preserve jobs in the 
                        United States;
                    ``(C) the probability that the applicant will meet 
                the objectives in the business plan of the applicant, 
                including the financial goals, and, if applicable, the 
                pathway-protege program in accordance with subsection 
                (g); and
                    ``(D) the probability that the applicant will 
                assist eligible small business concerns in achieving 
                profitability.
            ``(3) Approval of participating investment companies.--
                    ``(A) Provisional approval.--
                            ``(i) In general.--Notwithstanding 
                        paragraph (1), with respect to an application 
                        submitted by an applicant to operate as a 
                        participating investment company under this 
                        section, the Administrator may provide 
                        provisional approval for the applicant in lieu 
                        of a final determination of approval and 
                        determination of the amount of the commitment 
                        under that paragraph.
                            ``(ii) Purpose.--The purpose of a 
                        provisional approval under clause (i) is to--
                                    ``(I) encourage applications from 
                                investment companies with an investment 
                                mandate from the committed private 
                                market capital of the investment 
                                company that does not conform to the 
                                requirements described in this section 
                                at the time of application;
                                    ``(II) allow the applicant to more 
                                effectively raise capital commitments 
                                in the private markets by referencing 
                                the intent of the Administrator to 
                                award the applicant a commitment; and
                                    ``(III) allow the applicant to more 
                                precisely request the desired amount of 
                                commitment pending the securing of 
                                capital from private market investors.
                            ``(iii) Limit on period of the time.--The 
                        period between a provisional approval under 
                        clause (i) and the final determination of 
                        approval under paragraph (1) shall not exceed 
                        12 months.
    ``(e) Commitments and SBIC Bonds.--
            ``(1) In general.--The Administrator may, out of amounts 
        available in the Fund, purchase or commit to purchase from a 
        participating investment company 1 or more accruing bonds that 
        include equity features as described in this subsection.
            ``(2) Bond terms.--A bond purchased by the Administrator 
        from a participating investment company under this subsection 
        shall have the following terms and conditions:
                    ``(A) Term and interest.--
                            ``(i) In general.--The bond shall be issued 
                        for a term of not less than 15 years and shall 
                        bear interest at a rate determined by the 
                        Administrator of not more than 2 percent.
                            ``(ii) Accrual of interest.--Interest on 
                        the bond shall accrue and shall be payable in 
                        accordance with subparagraph (D).
                            ``(iii) Prepayment.--The bond shall be 
                        prepayable without penalty after the end of the 
                        1-year period beginning on the date on which 
                        the bond was purchased.
                    ``(B) Profits.--
                            ``(i) In general.--The Administration shall 
                        be entitled to receive a share of the profits 
                        net of any profit sharing performance 
                        compensation of the participating investment 
                        company equal to the quotient obtained by 
                        dividing--
                                    ``(I) one-third of the commitment 
                                that the participating investment 
                                company is approved for under 
                                subsection (d); by
                                    ``(II) the commitment approved 
                                under subsection (d) plus the 
                                regulatory capital of the participating 
                                investment company at the time of 
                                approval under that subsection.
                            ``(ii) Determination of percentage.--The 
                        share to which the Administration is entitled 
                        under clause (i)--
                                    ``(I) shall be determined at the 
                                time of approval under subsection (d); 
                                and
                                    ``(II) without the approval of the 
                                Administration, shall not be revised, 
                                including to reflect subsequent 
                                distributions of profits, returns of 
                                capital, or repayments of bonds, or 
                                otherwise.
                    ``(C) Profit sharing performance compensation.--
                            ``(i) Receipt by administration.--The 
                        Administration shall receive a share of profits 
                        of not more than 2 percent, which shall be 
                        deposited into the Fund and be available to 
                        make commitments under this subsection.
                            ``(ii) Receipt by managers.--The managers 
                        of the participating investment company may 
                        receive a maximum profit sharing performance 
                        compensation of 25 percent minus the share of 
                        profits paid to the Administration under clause 
                        (i).
                    ``(D) Prohibition on distributions.--No 
                distributions on capital, including profit 
                distributions, shall be made by the participating 
                investment company to the investors or managers of the 
                participating investment company until the 
                Administration has received payment of all accrued 
                interest on the bond committed under this section.
                    ``(E) Repayment of principal.--Except as described 
                in subparagraph (F), repayments of principal of the 
                bond of a participating investment company shall be--
                            ``(i) made at the same time as returns of 
                        private capital; and
                            ``(ii) in amounts equal to the pro rata 
                        share of the Administration of the total amount 
                        being repaid or returned at such time.
                    ``(F) Liquidation or default.--Upon any liquidation 
                event or default, as defined by the Administration, any 
                unpaid principal or accrued interest on the bond 
                shall--
                            ``(i) have a priority over all equity of 
                        the participating investment company; and
                            ``(ii) be paid before any return of equity 
                        or any other distributions to the investors or 
                        managers of the participating investment 
                        company.
            ``(3) Amount of commitments and purchases.--
                    ``(A) Maximum amount.--The maximum amount of 
                outstanding bonds and commitments to purchase bonds for 
                any participating investment company under the facility 
                shall be the lesser of--
                            ``(i) twice the amount of the regulatory 
                        capital of the participating investment 
                        company; or
                            ``(ii) $200,000,000.
            ``(4) Commitment process.--Commitments by the 
        Administration to purchase bonds under the facility shall 
        remain available to be sold by a participating investment 
        company until the end of the fourth fiscal year following the 
        year in which the commitment is made, subject to review and 
        approval by the Administration based on regulatory compliance, 
        financial status, change in management, deviation from business 
        plan, and such other limitations as may be determined by the 
        Administration by regulation or otherwise.
            ``(5) Commitment conditions.--
                    ``(A) In general.--As a condition of receiving a 
                commitment under the facility, not less than 50 percent 
                of amounts invested by the participating investment 
                company shall be invested in eligible small business 
                concerns.
                    ``(B) Examinations.--In addition to the matters set 
                forth in section 310(c), the Administration shall 
                examine each participating investment company in such 
                detail so as to determine whether the participating 
                investment company has complied with the requirements 
                under this subsection.
    ``(f) Distributions and Fees.--
            ``(1) Distribution requirements.--
                    ``(A) Distributions.--As a condition of receiving a 
                commitment under the facility, a participating 
                investment company shall make all distributions to the 
                Administrator in the same form and in a manner as are 
                made to investors, or otherwise at a time and in a 
                manner consistent with regulations or policies of the 
                Administration.
                    ``(B) Allocations.--A participating investment 
                company shall make allocations of income, gain, loss, 
                deduction, and credit to the Administrator with respect 
                to any outstanding bonds as if the Administrator were 
                an investor.
            ``(2) Fees.--The Administrator may not charge fees for 
        participating investment companies other than examination fees 
        that are consistent with the license of the participating 
        investment company.
            ``(3) Bifurcation.--Losses on bonds issued by participating 
        investment companies shall not be offset by fees or any other 
        charges on debenture small business investment companies.
    ``(g) Protege Program.--The Administrator shall establish a 
pathway-protege program in which a protege investment company may 
receive technical assistance and program support from a participating 
investment company on a voluntary basis and without penalty for non-
participation.
    ``(h) Loss Limiting Fund.--
            ``(1) In general.--There is established in the Treasury a 
        fund for making commitments and purchasing bonds with equity 
        features under the facility and receiving capital returned by 
        participating investment companies.
            ``(2) Use of funds.--Amounts appropriated to the Fund or 
        deposited in the Fund under paragraph (3) shall be available to 
        the Administrator, without further appropriation, for making 
        commitments and purchasing bonds under the facility and 
        expenses and payments, excluding administrative expenses, 
        relating to the operations of the Administrator under the 
        facility.
            ``(3) Depositing of amounts.--
                    ``(A) In general.--All amounts received by the 
                Administrator from a participating investment company 
                relating to the facility, including any moneys, 
                property, or assets derived by the Administrator from 
                operations in connection with the facility, shall be 
                deposited in the Fund.
                    ``(B) Period of availability.--Amounts deposited 
                under subparagraph (A) shall remain available until 
                expended.
    ``(i) Application of Other Sections.--To the extent not 
inconsistent with requirements under this section, the Administrator 
may apply sections 309, 311, 312, 313, and 314 to activities under this 
section and an officer, director, employee, agent, or other participant 
in a participating investment company shall be subject to the 
requirements under such sections.
    ``(j) Authorization of Appropriations.--There is authorized to be 
appropriated for the first fiscal year beginning after the date of 
enactment of this part $10,000,000,000 to carry out the facility. 
Amounts appropriated pursuant to this subsection shall remain available 
until the end of the second fiscal year beginning after the date of 
enactment of this section.''.
    (b) Approval of Bank-Owned, Non-Leveraged Applicants.--Section 
301(c)(2) of the Small Business Investment Act of 1958 (15 U.S.C. 
681(c)(2)) is amended--
            (1) in subparagraph (B), in the matter preceding clause 
        (i), by striking ``Within'' and inserting ``Except as provided 
        in subparagraph (C), within''; and
            (2) by adding at the end the following:
                    ``(C) Exception for bank-owned, non-leveraged 
                applicants.--Notwithstanding subparagraph (B), not 
                later than 45 days after the date on which the 
                Administrator receives a completed application 
                submitted by a bank-owned, non-leveraged applicant in 
                accordance with this subsection and in accordance with 
                such requirements as the Administrator may prescribe by 
                regulation, the Administrator shall--
                            ``(i) review the application in its 
                        entirety; and
                            ``(ii)(I) approve the application and issue 
                        a license for such operation to the applicant 
                        if the requirements of this section are 
                        satisfied; or
                            ``(II) disapprove the application and 
                        notify the applicant in writing of the 
                        disapproval.''.
    (c) Electronic Submissions.--Part A of title III of the Small 
Business Investment Act of 1958 (15 U.S.C. 681 et seq.), as amended by 
subsection (a) of this section, is amended by adding at the end the 
following:

``SEC. 322. ELECTRONIC SUBMISSIONS.

    ``The Administration shall permit any document submitted under this 
title, or pursuant to a regulation carrying out this title, to be 
submitted electronically, including by permitting an electronic 
signature for any signature that is required on such a document.''.
                                 &lt;all&gt;
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