I 
111TH CONGRESS 
1ST SESSION H. R. 3684 
To amend the Small Business Investment Act of 1958 to improve the New 
Markets Venture Capital Program and to establish an Angel Investment 
Program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 30, 2009 
Mr. SESTAK introduced the following bill; which was referred to the 
Committee on Small Business 
A BILL 
To amend the Small Business Investment Act of 1958 to 
improve the New Markets Venture Capital Program and 
to establish an Angel Investment Program, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘American Small Business Innovation Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—NEW MARKETS VENTURE CAPITAL PROGRAM 
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Sec. 101. Expansion of New Markets Venture Capital Program. 
Sec. 102. Improved nationwide distribution. 
Sec. 103. Increased investment in small manufacturers. 
Sec. 104. Updating definition of low-income geographic area. 
Sec. 105. Study on availability of equity capital. 
Sec. 106. Expanding operational assistance to conditionally approved compa-
nies. 
Sec. 107. Streamlined application for New Markets Venture Capital Program. 
Sec. 108. Elimination of matching requirement. 
Sec. 109. Simplified formula for operational assistance grants. 
Sec. 110. Authorization of appropriations. 
TITLE II—ANGEL INVESTMENT PROGRAM 
Sec. 201. Establishment of Angel Investment Program. 
TITLE I—NEW MARKETS 
VENTURE CAPITAL PROGRAM 
SEC. 101. EXPANSION OF NEW MARKETS VENTURE CAPITAL 
PROGRAM. 
(a) ADMINISTRATION PARTICIPATION REQUIRED.— 
Section 353 of the Small Business Investment Act of 1958 
(15 U.S.C. 689b) is amended by striking ‘‘under which 
the Administrator may’’ and inserting ‘‘under which the 
Administrator shall’’. 
(b) REPORT TO CONGRESS.—Not later than 1 year 
after the date of the enactment of this Act, the Adminis-
trator of the Small Business Administration shall submit 
to Congress a report evaluating the success of the expan-
sion of the New Markets Venture Capital Program under 
this section. 
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SEC. 102. IMPROVED NATIONWIDE DISTRIBUTION. 
Section 354 of the Small Business Investment Act 
of 1958 (15 U.S.C. 689c) is amended by adding at the 
end the following: 
‘‘(f) GEOGRAPHIC EXPANSION.—From among com-
panies submitting applications under subsection (b), the 
Administrator shall consider the selection criteria and na-
tionwide distribution under subsection (c) and shall, to the 
maximum extent practicable, approve at least one com-
pany from each geographic region of the Small Business 
Administration.’’. 
SEC. 103. INCREASED INVESTMENT IN SMALL MANUFAC-
TURERS. 
Section 354(d)(1) of the Small Business Investment 
Act of 1958 (15 U.S.C. 689c(d)(1)) is amended— 
(1) by striking ‘‘Each’’ and inserting the fol-
lowing: 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), each’’; and 
(2) by adding at the end the following: 
‘‘(B) SMALL MANUFACTURER INVESTMENT 
CAPITAL
REQUIREMENTS.—Each conditionally 
approved company engaged primarily in devel-
opment of and investment in small manufactur-
ers shall raise not less than $3,000,000 of pri-
vate capital or binding capital commitments 
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from one or more investors (other than agencies 
or departments of the Federal Government) 
who meet criteria established by the Adminis-
trator.’’. 
SEC. 104. UPDATING DEFINITION OF LOW-INCOME GEO-
GRAPHIC AREA. 
Section 351 of the Small Business Investment Act 
of 1958 (15 U.S.C. 689) is amended— 
(1) by striking paragraphs (2) and (3); 
(2) by inserting after paragraph (1) the fol-
lowing: 
‘‘(2) LOW-INCOME
GEOGRAPHIC
AREA.—The 
term ‘low-income geographic area’ has the same 
meaning given the term ‘low-income community’ in 
section 45D(e) of the Internal Revenue Code of 
1986 (26 U.S.C. 45D(e)).’’; and 
(3) by redesignating paragraphs (4) through 
(8) as paragraphs (3) through (7), respectively. 
SEC. 105. STUDY ON AVAILABILITY OF EQUITY CAPITAL. 
(a) STUDY REQUIRED.—Before the expiration of the 
180-day period that begins on the date of the enactment 
of this Act, the Chief Counsel for Advocacy of the Small 
Business Administration shall conduct a study on the 
availability of equity capital in low-income urban and rural 
areas. 
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(b) REPORT.—Not later than 90 days after the com-
pletion of the study under subsection (a), the Adminis-
trator of the Small Business Administration shall submit 
to Congress a report containing the findings of the study 
required under subsection (a) and any recommendations 
of the Administrator based on such study. 
SEC. 106. EXPANDING OPERATIONAL ASSISTANCE TO CON-
DITIONALLY APPROVED COMPANIES. 
(a) OPERATIONAL ASSISTANCE GRANTS TO CONDI-
TIONALLY APPROVED COMPANIES.—Section 358(a) of the 
Small Business Investment Act of 1958 (15 U.S.C. 
689g(a)) is amended by adding at the end the following: 
‘‘(6) GRANTS
TO
CONDITIONALLY
APPROVED 
COMPANIES.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B), (C), and (D), upon the request of 
a company conditionally approved under section 
354(c), the Administrator shall make a grant to 
the company under this subsection. 
‘‘(B) REPAYMENT BY COMPANIES NOT AP-
PROVED.—If a company receives a grant under 
this paragraph and does not enter into a par-
ticipation agreement for final approval, the 
company shall repay the amount of the grant to 
the Administrator. 
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‘‘(C) DEDUCTION
FROM
GRANT
TO
AP-
PROVED
COMPANY.—If a company receives a 
grant under this paragraph and receives final 
approval under section 354(e), the Adminis-
trator shall deduct the amount of the grant 
under this paragraph from the total grant 
amount that the company receives for oper-
ational assistance. 
‘‘(D) AMOUNT
OF
GRANT.—No company 
may receive a grant of more than $50,000 
under this paragraph.’’. 
(b) LIMITATION ON TIME FOR FINAL APPROVAL.— 
Section 354(d) of the Small Business Investment Act of 
1958 (15 U.S.C. 689c(d)) is amended in the matter pre-
ceding paragraph (1) by striking ‘‘a period of time, not 
to exceed 2 years,’’ and inserting ‘‘2 years’’. 
(c) EXPANDED DEFINITION OF OPERATIONAL AS-
SISTANCE.—Section 351(4) of the Small Business Invest-
ment Act of 1958, as so redesignated by section 104 of 
this Act, is amended by inserting before the period at the 
end the following: ‘‘, including assistance on how to imple-
ment energy efficiency and sustainable practices that re-
duce the use of non-renewable resources or minimize envi-
ronmental impact and reduce overall costs and increase 
health of employees’’. 
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SEC. 107. STREAMLINED APPLICATION FOR NEW MARKETS 
VENTURE CAPITAL PROGRAM. 
Not later than 60 days after the date of the enact-
ment of this Act, the Administrator of the Small Business 
Administration shall prescribe standard documents for the 
final New Markets Venture Capital company approval ap-
plication under section 354(e) of the Small Business In-
vestment Act of 1958 (15 U.S.C. 689c(e)). The Adminis-
trator shall assure that the standard documents shall be 
designed to substantially reduce the cost burden of the ap-
plication process on the companies involved. 
SEC. 108. ELIMINATION OF MATCHING REQUIREMENT. 
Section 354(d)(2)(A)(i) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 689c(d)(2)(A)(i)) is amend-
ed— 
(1) in subclause (I) by adding ‘‘and’’ at the 
end; 
(2) in subclause (II) by striking ‘‘and’’ at the 
end; and 
(3) by striking subclause (III). 
SEC. 109. SIMPLIFIED FORMULA FOR OPERATIONAL AS-
SISTANCE GRANTS. 
Section 358(a)(4)(A) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 689g(a)(4)(A)) is amend-
ed— 
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(1) by striking ‘‘shall be equal to’’ and all that 
follows through the period at the end and by insert-
ing ‘‘shall be equal to the lesser of—’’; and 
(2) by adding at the end the following: 
‘‘(i) 10 percent of the resources (in 
cash or in kind) raised by the company 
under section 354(d)(2); or 
‘‘(ii) $1,000,000.’’. 
SEC. 110. AUTHORIZATION OF APPROPRIATIONS. 
Section 368(a) of the Small Business Investment Act 
of 1958 (15 U.S.C. 689q(a)) is amended by striking ‘‘fis-
cal years 2001 through 2006’’ and inserting ‘‘fiscal years 
2010 through 2012’’. 
TITLE II—ANGEL INVESTMENT 
PROGRAM 
SEC. 201. ESTABLISHMENT OF ANGEL INVESTMENT PRO-
GRAM. 
Title III of the Small Business Investment Act of 
1958 (15 U.S.C. 681 et seq.) is amended by adding at 
the end the following: 
‘‘PART D—ANGEL INVESTMENT PROGRAM 
‘‘SEC. 399A. OFFICE OF ANGEL INVESTMENT. 
‘‘(a) ESTABLISHMENT.—There is established, in the 
Small Business Investment Division of the Small Business 
Administration, the Office of Angel Investment. 
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‘‘(C) actively involves the angel investors in 
evaluating and making decisions about making 
investments. 
‘‘(2) The term ‘angel investor’ means an indi-
vidual who— 
‘‘(A) qualifies as an accredited investor (as 
that term is defined under section 230.501 of 
title 17, Code of Federal Regulations); and 
‘‘(B) provides capital to or makes invest-
ments in a small business concern. 
‘‘(3) The term ‘small business concern owned 
and controlled by veterans’ has the meaning given 
that term under section 3(q)(3) of the Small Busi-
ness Act (15 U.S.C. 632(q)(3)). 
‘‘(4) The term ‘small business concern owned 
and controlled by women’ has the meaning given 
that term under section 8(d)(3)(D) of the Small 
Business Act (15 U.S.C. 637(d)(3)(D)). 
‘‘(5) The term ‘socially and economically dis-
advantaged small business concern’ has the meaning 
given that term under section 8(a)(4)(A) of the 
Small Business Act (15 U.S.C. 637(a)(4)(A)). 
‘‘SEC. 399C. ANGEL INVESTMENT PROGRAM. 
‘‘(a) IN GENERAL.—The Director of Angel Invest-
ment shall establish and carry out a program, to be known 
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as the Angel Investment Program, to provide financing to 
approved angel groups for the purpose of providing ven-
ture capital investment in small business concerns in the 
communities of such groups. 
‘‘(b) ELIGIBILITY.—To be eligible to receive financ-
ing under this section, an angel group shall— 
‘‘(1) have demonstrated experience making in-
vestments in local or regional small business con-
cerns; 
‘‘(2) have established protocols and a due dili-
gence process for determining its investment strat-
egy; 
‘‘(3) have an established code of ethics; and 
‘‘(4) submit an application to the Director at 
such time and containing such information and as-
surances as the Director may require. 
‘‘(c) USE OF FUNDS.—An angel group that receives 
financing under this section shall use the amounts received 
to make investments in small business concerns— 
‘‘(1) that have been in existence for less than 
5 years as of the date on which the investment is 
made; 
‘‘(2) that have fewer than 75 employees as of 
the date on which the investment is made; 
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‘‘(3) more than 50 percent of the employees of 
which perform substantially all of their services in 
the United States as of the date on which the invest-
ment is made; and 
‘‘(4) within the geographic area determined by 
the Director under subsection (e). 
‘‘(d) LIMITATION ON AMOUNT.—No angel group re-
ceiving financing under this section shall receive more 
than $2,000,000. 
‘‘(e) LIMITATION ON GEOGRAPHIC AREA.—For each 
angel group receiving financing under this section, the Di-
rector shall determine the geographic area in which a 
small business concern must be located to receive an in-
vestment from that angel group. 
‘‘(f) PRIORITY IN PROVIDING FINANCING.—In pro-
viding financing under this section, the Director shall give 
priority to angel groups that invest in small business con-
cerns owned and controlled by veterans, small business 
concerns owned and controlled by women, and socially and 
economically disadvantaged small business concerns. 
‘‘(g) NATIONWIDE DISTRIBUTION OF FINANCING.— 
In providing financing under this section, the Director 
shall, to the extent practicable, provide financing to angel 
groups that are located in a variety of geographic areas. 
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‘‘(h) MATCHING REQUIREMENT.—As a condition of 
receiving financing under this section, the Director shall 
require that for each small business concern in which the 
angel group receiving such financing invests, the angel 
group shall invest an amount from a source other than 
the Federal Government that is equal to or greater than 
the amount of the financing provided under this section 
that the angel group invests in that small business con-
cern. 
‘‘(i) REPAYMENT OF FINANCING.—As a condition of 
receiving financing under this section, the Director shall 
require an angel group to repay the Director for any in-
vestment on which the angel group makes a profit an 
amount equal to the percentage of the returns that is 
equal to the percentage of the total amount invested by 
the angel group that consisted of financing received under 
this section. 
‘‘(j) ANGEL INVESTMENT FUND.— 
‘‘(1) ESTABLISHMENT.—There is established in 
the Treasury a fund to be known as the Angel In-
vestment Fund. 
‘‘(2) 
DEPOSIT
OF
CERTAIN
AMOUNTS.— 
Amounts collected under subsection (i) shall be de-
posited in such fund. 
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‘‘(3) USE OF DEPOSITS.—Deposits in such fund 
shall be available for the purpose of providing fi-
nancing under this section in the amounts specified 
in annual appropriations Acts without regard to fis-
cal year limitations. 
‘‘(k) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to carry out this section— 
‘‘(1) $10,000,000 for fiscal year 2010; 
‘‘(2) $20,000,000 for fiscal year 2011; and 
‘‘(3) $20,000,000 for fiscal year 2012. 
‘‘SEC. 399D. FEDERAL ANGEL NETWORK. 
‘‘(a) IN GENERAL.—Subject to the succeeding provi-
sions of this section, the Director of Angel Investment 
shall establish and maintain a searchable database, to be 
known as the Federal Angel Network, to assist small busi-
ness concerns in identifying angel investors. 
‘‘(b) NETWORK CONTENTS.—The Federal Angel Net-
work shall include— 
‘‘(1) a list of the names and addresses of angel 
groups and angel investors; 
‘‘(2) information about the types of investments 
each angel group or angel investor has made; and 
‘‘(3) information about other public and private 
resources and registries that provide information 
about angel groups or angel investors. 
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‘‘(c) COLLECTION OF INFORMATION.— 
‘‘(1) IN GENERAL.—The Director shall collect 
the information to be contained in the Federal Angel 
Network and shall ensure that such information is 
updated regularly. 
‘‘(2) REQUEST FOR EXCLUSION OF INFORMA-
TION.—The Director shall not include information 
concerning an angel investor if that investor contacts 
the Director to request that such information be ex-
cluded from the Network. 
‘‘(d) AVAILABILITY.—The Director shall make the 
Federal Angel Network available on the Internet website 
of the Administration and shall do so in a manner that 
permits others to download, distribute, and use the infor-
mation contained in the Federal Angel Network. 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to carry out this section 
$1,000,000, to remain available until expended. 
‘‘SEC. 399E. GRANT PROGRAM FOR DEVELOPMENT OF 
ANGEL GROUPS. 
‘‘(a) IN GENERAL.—The Director of Angel Invest-
ment shall establish and carry out a grant program to 
make grants to eligible entities for the development of new 
or existing angel groups and to increase awareness and 
education about angel investing. 
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