H. R. 68
One Hundred Sixth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Wednesday,
the sixth day of January, one thousand nine hundred and ninety-nine
An Act
To amend section 20 of the Small Business Act and make technical corrections
in title III of the Small Business Investment Act.
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 ‘‘Small Business Investment
Improvement Act of 1999’’.
SEC. 2. SBIC PROGRAM.
(a) IN GENERAL.—Section 308(i)(2) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 687(i)(2)) is amended by adding at
the end the following: ‘‘In this paragraph, the term ‘interest’
includes only the maximum mandatory sum, expressed in dollars
or as a percentage rate, that is payable with respect to the business
loan amount received by the small business concern, and does
not include the value, if any, of contingent obligations, including
warrants, royalty, or conversion rights, granting the small business
investment company an ownership interest in the equity or
increased future revenue of the small business concern receiving
the business loan.’’.
(b) FUNDING LEVELS.—Section 20 of the Small Business Act
(15 U.S.C. 631 note) is amended—
(1) in subsection (d)(1)(C)(i), by striking ‘‘$800,000,000’’ and
inserting ‘‘$1,200,000,000’’; and
(2) in subsection (e)(1)(C)(i), by striking ‘‘$900,000,000’’ and
inserting ‘‘$1,500,000,000’’.
(c) DEFINITIONS.—
(1) SMALL BUSINESS CONCERN.—Section 103(5) of the Small
Business Investment Act of 1958 (15 U.S.C. 662(5)) is
amended—
(A) by redesignating subparagraphs (A) through (C)
as clauses (i) through (iii), and indenting appropriately;
(B) in clause (iii), as redesignated, by adding ‘‘and’’
at the end;
(C) by striking ‘‘purposes of this Act, an investment’’
and inserting the following: ‘‘purposes of this Act—
‘‘(A) an investment’’; and
(D) by adding at the end the following:
‘‘(B) in determining whether a business concern satis-
fies net income standards established pursuant to section
3(a)(2) of the Small Business Act, if the business concern
is not required by law to pay Federal income taxes at
the enterprise level, but is required to pass income through
H. R. 68—2
to the shareholders, partners, beneficiaries, or other equi-
table owners of the business concern, the net income of
the business concern shall be determined by allowing a
deduction in an amount equal to the sum of—
‘‘(i) if the business concern is not required by law
to pay State (and local, if any) income taxes at the
enterprise level, the net income (determined without
regard to this subparagraph), multiplied by the mar-
ginal State income tax rate (or by the combined State
and local income tax rates, as applicable) that would
have applied if the business concern were a corpora-
tion; and
‘‘(ii) the net income (so determined) less any deduc-
tion for State (and local) income taxes calculated under
clause (i), multiplied by the marginal Federal income
tax rate that would have applied if the business con-
cern were a corporation;’’.
(2) SMALLER
ENTERPRISE.—Section 103(12)(A)(ii) of the
Small 
Business 
Investment 
Act 
of 
1958 
(15 
U.S.C.
662(12)(A)(ii)) is amended by inserting before the semicolon
at the end the following: ‘‘except that, for purposes of this
clause, if the business concern is not required by law to pay
Federal income taxes at the enterprise level, but is required
to pass income through to the shareholders, partners, bene-
ficiaries, or other equitable owners of the business concern,
the net income of the business concern shall be determined
by allowing a deduction in an amount equal to the sum of—
‘‘(I) if the business concern is not required
by law to pay State (and local, if any) income
taxes at the enterprise level, the net income (deter-
mined without regard to this clause), multiplied
by the marginal State income tax rate (or by the
combined State and local income tax rates, as
applicable) that would have applied if the business
concern were a corporation; and
‘‘(II) the net income (so determined) less any
deduction for State (and local) income taxes cal-
culated under subclause (I), multiplied by the mar-
ginal Federal income tax rate that would have
applied if the business concern were a corporation’’.
(d) TECHNICAL CORRECTIONS.—
(1) REPEAL.—Section 303(g) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 683(g)) is amended by striking
paragraph (13).
(2) ISSUANCE OF GUARANTEES AND TRUST CERTIFICATES.—
Section 320 of the Small Business Investment Act of 1958
(15 U.S.C. 687m) is amended by striking ‘‘6’’ and inserting
‘‘12’’.
(3) ELIMINATION OF TABLE OF CONTENTS.—Section 101 of
the Small Business Investment Act of 1958 (15 U.S.C. 661
note) is amended to read as follows:
H. R. 68—3
‘‘SEC. 101. SHORT TITLE.
‘‘This Act may be cited as the ‘Small Business Investment
Act of 1958’.’’.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.