Encouraging Small Business Innovation Act

To amend the small business laws to create certain requirements with respect to the SBIR and STTR program, and for other purposes. 1. Short title This Act may be cited as the Encouraging Small Business Innovation Act 2. Inclusion of testing and evaluation for all Federal agencies Section 9(gg) of the Small Business Act ( 15 U.S.C. 638(gg) (1) in the subsection heading, by striking Pilot program Testing, evaluation, and commercialization (2) in paragraph (1), in the matter preceding subparagraph (A), by inserting establish a program to may (3) in paragraph (2)(A), by striking pilot program covered program (4) in paragraph (3), by striking pilot program covered program (5) in paragraph (4), by striking pilot program covered program (6) in paragraph (6), by striking pilot program covered program (7) by striking paragraphs (7) and (8) and inserting the following: (7) Definitions In this subsection— (A) the term covered Federal agency (B) the term covered program . 3. Inclusion of small business investment companies in SBIR and STTR Section 9 of the Small Business Act ( 15 U.S.C. 638 (1) by striking or private equity firm investment private equity firm, or SBIC investment (2) by striking or private equity firms private equity firms, or SBICs (3) in subsection (e)— (A) in paragraph (13)(B), by striking and (B) in paragraph (14), by striking the period at the end and inserting ; and (C) by adding at the end the following: (15) the term SBIC 15 U.S.C. 662 ; and (4) in the heading for subsection (dd), by striking or Private Equity Firms Private Equity Firms, or SBICs 4. Calculation of leverage of small business investment companies that invest in SBIR or STTR participants Section 303(b)(2) of the Small Business Investment Act of 1958 ( 15 U.S.C. 683(b)(2) (E) Investments in SBIR and STTR participants (i) Definitions In this subparagraph— (I) the term cost 2 U.S.C. 661a (II) the term SBIR or STTR participant 15 U.S.C. 638 (ii) Exclusion Subject to clause (iii), in calculating the outstanding leverage of a company for purposes of subparagraph (A), the Administrator shall exclude the amount of any investment made in a SBIR or STTR participant, if such investment is made in the first fiscal year after the date of enactment of this subparagraph or any fiscal year thereafter by a company licensed during the applicable fiscal year. (iii) Limitations (I) Amount of exclusion The amount excluded under clause (i) for a company shall not exceed 33 percent of the private capital of that company. (II) Maximum investment A company shall not make an investment in any 1 SBIR or STTR participant in an amount equal to more than 20 percent of the private capital of that company. (III) Other terms The exclusion of amounts under clause (i) shall be subject to such terms as the Administrator may impose to ensure that there is no cost with respect to purchasing or guaranteeing any debenture involved. . 5. Annual meeting for Federal agencies with a SBIR or STTR program Section 9 of the Small Business Act ( 15 U.S.C. 638 (vv) Annual meeting (1) In general The head of each Federal agency required to have a program under this section (or a designee) and the Administrator (or a designee) shall meet annually to discuss methods— (A) to improve the collection of data under this section; (B) to improve the reporting of data to the Administrator under this section; (C) to make the application processes for programs under this section more efficient; and (D) to increase participation in the programs under this section. (2) Reporting Not later than 60 days after the date on which an annual meeting required under paragraph (1) is held, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business and the Committee on Science, Space, and Technology of the House of Representatives a report on the findings of the meeting and recommendations on how to implement changes to programs under this section. . 6. Increasing participation of underserved populations in the SBIR and STTR programs (a) In general Section 9(mm)(2) of the Small Business Act ( 15 U.S.C. 638(mm)(2) (2) Outreach and technical assistance A Federal agency participating in the program under this subsection shall use a portion of the funds authorized for uses under paragraph (1) to carry out the policy directive required under subsection (j)(2)(F) and to increase the participation of States with respect to which a low level of SBIR awards have historically been awarded. . (b) Conforming amendment Section 9(mm)(6) of the Small Business Act ( 15 U.S.C. 638(mm)(6) paragraph (2)(A) and any use of the waiver authority under paragraph (2)(B) paragraph (2)

Summary: Encouraging Small Business Innovation Act This bill expands and otherwise revises certain requirements for Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs. Specifically, it includes small business investment companies (SBICs) in such programs. SBICs are included as a type of investor whose investment must be considered for various purposes under the programs. The bill requires the Small Business Administration (SBA), when calculating the outstanding leverage of an SBIC, to exclude investments made in SBIR and STTR participants. Under current law, SBICs are subject to a limit on their outstanding leverage. Finally, the bill sets forth provisions to increase participation of states to which a low level of SBIR awards have historically been awarded.