Emerging Business Encouragement Act of 2023

Subjects: Commerce


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1538 Introduced in House (IH)]

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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. Garcia of Illinois, Ms. Sanchez, 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.

    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 ``Emerging Business Encouragement Act 
of 2023''.

SEC. 2. EMERGING BUSINESS ENTERPRISES.

    (a) Designation.--Section 3 of the Small Business Act (15 U.S.C. 
632) is amended by adding at the end the following:
    ``(gg) Emerging Business Enterprise.--
            ``(1) In general.--In this Act, the term `emerging business 
        enterprise' means a concern designated by the Administrator in 
        accordance with this section.
            ``(2) Criteria for designation.--Not later than 90 days 
        after the date of enactment of this subsection, the 
        Administrator shall establish criteria for designation of a 
        small business concern as an emerging business enterprise which 
        shall include the following:
                    ``(A) Number of employees.--That the highest number 
                of employees of the concern during the year preceding 
                the date of application is less than the larger of--
                            ``(i) 10 percent of the number of employees 
                        that a small business concern within that 
                        industry category may employ, if that small 
                        business concern is so classified by reason of 
                        a size standard under subsection (a) pertaining 
                        to the number of employees of the concern; or
                            ``(ii) 25 employees.
                    ``(B) Age of business.--That the small business 
                concern has been in operation for less than 5 years on 
                the date of application.
                    ``(C) Salary requirements.--That the small business 
                concern does not, in the Administrator's determination, 
                pay to an individual who owns any part of the concern 
                or who is in a management position a salary greater 
                than 200 percent of the mean annual salary for an 
                individual in the Managers of Companies and Enterprises 
                sector (as assigned a North American Industry 
                Classification System code beginning with 55) or the 
                equivalent from the most recent employment and wage 
                estimates developed by the Secretary of Labor.
            ``(3) Deadline.--The Administrator shall complete review of 
        an application for designation as an emerging business 
        enterprise and either issue or deny such designation not later 
        than one year of receipt of such application.
            ``(4) Termination of designation.--A designation as an 
        emerging business enterprise shall terminate on the date on 
        which the concern is no longer in compliance with the criteria 
        under paragraph (2), except that--
                    ``(A) with respect to the requirement in paragraph 
                (2)(A), such designation shall terminate only if the 
                concern employs 50 percent or more employees than the 
                number of employees that a small business concern 
                within that industry category may employ; and
                    ``(B) with respect to the requirement in paragraph 
                (2)(C), such designation shall terminate only if the 
                concern exceeds such requirement and employs not more 
                than 10 percent of the number of employees that a small 
                business concern within that industry category may 
                employ, if that small business concern is so classified 
                by reason of a size standard under subsection (a) 
                pertaining to the number of employees of the concern.
            ``(5) Public notification.--The Administrator shall take 
        appropriate action to publicize the establishment of the 
        procedures for designations under this paragraph, including by 
        conducting outreach to eligible small business concerns.
            ``(6) Contractor training.--The Administrator shall provide 
        training on Federal procurement specifically for emerging 
        business enterprises on an Internet website of the 
        Administrator, which shall be available to the public at no 
        charge.''.
    (b) Contracting Preference.--Section 15(g)(2) of the Small Business 
Act (15 U.S.C. 644(g)(2)) is amended by adding at the end the 
following:
                    ``(G) Emerging business enterprises.--
                            ``(i) In general.--The head of each Federal 
                        agency shall, after consultation with the 
                        Administrator, establish goals for 
                        participation by emerging business enterprises 
                        in not less than 3 percent of all prime 
                        contracts and subcontracts of such agency for 
                        each fiscal year.
                            ``(ii) Requirements.--The head of a Federal 
                        agency--
                                    ``(I) shall make consistent efforts 
                                to annually expand participation by 
                                emerging business enterprises from each 
                                industry category in contracts of the 
                                agency; and
                                    ``(II) shall, subject to clause 
                                (iii), award a contract to an emerging 
                                business enterprise if the head of a 
                                Federal agency determines the agency 
                                will not meet the goals established 
                                under this subparagraph for a fiscal 
                                year.
                            ``(iii) Preference.--The preference 
                        described in clause (ii)(II) shall take 
                        priority over any preference for procurement 
                        from the procurement list established pursuant 
                        to section 8503 of title 41, United States 
                        Code, or the Federal Prison Industries catalog 
                        described under section 4124(d) of title 18, 
                        United States Code.
                            ``(iv) Reports.--
                                    ``(I) Reports from agencies.--At 
                                the conclusion of each fiscal year, the 
                                head of each Federal agency shall 
                                report to the Administrator on the 
                                extent of participation by emerging 
                                business enterprises in procurement 
                                contracts of such agency. Such reports 
                                shall contain appropriate 
                                justifications for failure to meet the 
                                goals established under this 
                                subparagraph.
                                    ``(II) Reports to congress.--The 
                                Administrator shall annually compile 
                                and analyze the reports submitted by 
                                agencies pursuant to subclause (I) and 
                                shall submit to the President and the 
                                Committee on Small Business and 
                                Entrepreneurship of the Senate and the 
                                Committee on Small Business of the 
                                House of Representatives the 
                                compilation and analysis, which shall 
                                include the following:
                                            ``(aa) The goals in effect 
                                        for each agency and the 
                                        agency's performance in 
                                        attaining such goals.
                                            ``(bb) An analysis of any 
                                        failure to achieve individual 
                                        agency goals and the actions 
                                        planned by such agency (that 
                                        have been approved by the 
                                        Administrator) to achieve the 
                                        goals in the succeeding fiscal 
                                        year.
                                            ``(cc) The total number and 
                                        dollar value of prime contracts 
                                        and subcontracts awarded to 
                                        emerging business enterprises 
                                        for each agency.
                                    ``(III) Annual presidential report 
                                on the state of small business.--The 
                                President shall include the information 
                                required by subclause (II) in each 
                                annual report to the Congress on the 
                                state of small business prepared 
                                pursuant to section 303(a) of the Small 
                                Business Economic Policy Act of 1980 
                                (15 U.S.C. 631b(a)).''.
    (c) Fee Waivers.--Section 7(a) of the Small Business Act (15 U.S.C. 
636(a)) is amended by adding at the end the following:
            ``(38) Fee waivers.--The Administrator may not collect an 
        origination fee or a guarantee fee described in paragraph (18) 
        in connection with a loan made under this subsection to an 
        emerging business enterprise, unless--
                    ``(A) the President's budget for the upcoming 
                fiscal year, submitted to Congress pursuant to section 
                1105(a) of title 31, United States Code, includes a 
                cost for the program established under this paragraph 
                that is above zero; and
                    ``(B) the Administrator determines carrying out 
                this paragraph will have no adverse effect on the 
                waivers provided under paragraph (31)(G) or (33)(E)(ii) 
                for a fiscal year.
            ``(39) Emerging business enterprises.--
                    ``(A) Reports.--On the date that is 1 year after 
                the end of the first fiscal year for which a guaranteed 
                loan is made to an emerging business enterprise under 
                this subsection, and annually thereafter, each lender 
                making such a loan shall submit to the Administrator a 
                report with respect to the preceding fiscal year on the 
                total number and dollar amount of such loans made and 
                the number of waivers issued under paragraph (38).
                    ``(B) Verification.--A lender shall verify with the 
                Administrator the status of a concern as an emerging 
                business enterprise before making a loan guaranteed 
                under this subsection to such emerging business 
                enterprise.
                    ``(C) Penalty.--If a concern received a loan under 
                this subsection and fraudulently misrepresented the 
                status of the concern as an emerging business 
                enterprise, that concern shall--
                            ``(i) repay the amount of the loan to the 
                        lender (from which amount the lender shall 
                        repay the amount of any guarantee paid on the 
                        loan to the Administrator); and
                            ``(ii) pay a fine to the Administrator in 
                        an amount determined by the Administrator.''.

SEC. 3. RULEMAKING.

    (a) In General.--Not later 1 year after the date of enactment of 
this subsection and for each industry category for which the 
Administrator of the Small Business Administration established a size 
standard under section 3(a) of the Small Business Act (15 U.S.C. 
632(a)), the Administrator shall issue a rule--
            (1) establishing procedures for designating a small 
        business concern in each such industry category as an emerging 
        business enterprise that include the criteria under subsection 
        (gg)(3) of section 3 of the Small Business Act (15 U.S.C. 632), 
        as added by this Act, and a process for appealing designation 
        decisions of the Administrator;
            (2) establishing procedures for certification by the 
        Administrator as an emerging business enterprise;
            (3) requiring a small business concern to annually submit 
        documentation to the Administrator to establish eligibility for 
        designation as an emerging business enterprise; and
            (4) establishing compliance requirements for emerging 
        business enterprises.
    (b) Definitions.--In this section:
            (1) Small business concern.--The term ``small business 
        concern'' has the meaning given under section 3 of the Small 
        Business Act (15 U.S.C. 632).
            (2) Emerging business enterprise.--The term ``emerging 
        business enterprise'' has the meaning given under subsection 
        (gg) of section 3 of the Small Business Act (15 U.S.C. 632), as 
        added by this Act.
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