concerns by persons whose participation in the
free enterprise system is hampered because of
social or economic disadvantages;
‘‘(B) is organized or chartered under State
business or nonprofit corporations statutes, or
formed as a limited partnership; and
‘‘(C) was licensed under section 301(d), as
in effect before September 30, 1996.
‘‘(8) STATE.—The term ‘State’ means such of
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands,
Guam, American Samoa, the Commonwealth of the
Northern Mariana Islands, and any other common-
wealth, territory, or possession of the United States.
‘‘SEC. 352. PURPOSES.
‘‘The purposes of the New Markets Venture Capital
Program established under this part are—
‘‘(1) to promote economic development and the
creation of wealth and job opportunities in low-in-
come geographic areas and among individuals living
in such areas by encouraging developmental venture
capital investments in smaller enterprises primarily
located in such areas; and
‘‘(2) to establish a developmental venture cap-
ital program, with the mission of addressing the
unmet equity investment needs of small enterprises
located in low-income geographic areas, to be admin-
istered by the Administrator—
‘‘(A) to enter into participation agreements
with New Markets Venture Capital companies;
‘‘(B) to guarantee debentures of New Mar-
kets Venture Capital companies to enable each
such company to make developmental venture
capital investments in smaller enterprises in
low-income geographic areas; and
‘‘(C) to make grants to New Markets Ven-
ture Capital companies, and to other entities,
for the purpose of providing operational assist-
ance to smaller enterprises financed, or ex-
pected to be financed, by such companies.
‘‘SEC. 353. ESTABLISHMENT.
‘‘In accordance with this part, the Administrator
shall establish a New Markets Venture Capital Program,
under which the Administrator may—
‘‘(1) enter into participation agreements with
companies granted final approval under section
354(e) for the purposes set forth in section 352;
‘‘(2) guarantee the debentures issued by New
Markets Venture Capital companies as provided in
section 355; and
‘‘(3) make grants to New Markets Venture
Capital companies, and to other entities, under sec-
tion 358.
‘‘SEC. 354. SELECTION OF NEW MARKETS VENTURE CAP-
ITAL COMPANIES.
‘‘(a) ELIGIBILITY.—A company shall be eligible to
apply to participate, as a New Markets Venture Capital
company, in the program established under this part if—
‘‘(1) the company is a newly formed for-profit
entity or a newly formed for-profit subsidiary of an
existing entity;
‘‘(2) the company has a management team with
experience in community development financing or
relevant venture capital financing; and
‘‘(3) the company has a primary objective of
economic development of low-income geographic
areas.
‘‘(b) APPLICATION.—To participate, as a New Mar-
kets Venture Capital company, in the program established
under this part a company meeting the eligibility require-
ments set forth in subsection (a) shall submit an applica-
tion to the Administrator that includes—
‘‘(1) a business plan describing how the com-
pany intends to make successful developmental ven-
ture capital investments in identified low-income ge-
ographic areas;
‘‘(2) information regarding the community de-
velopment finance or relevant venture capital quali-
fications and general reputation of the company’s
management;
‘‘(3) a description of how the company intends
to work with community organizations and to seek
to address the unmet capital needs of the commu-
nities served;
‘‘(4) a proposal describing how the company in-
tends to use the grant funds provided under this
part to provide operational assistance to smaller en-
terprises financed by the company, including infor-
mation regarding whether the company intends to
use licensed professionals, when necessary, on the
company’s staff or from an outside entity;
‘‘(5) with respect to binding commitments to be
made to the company under this part, an estimate
of the ratio of cash to in-kind contributions;
‘‘(6) a description of the criteria to be used to
evaluate whether and to what extent the company
meets the objectives of the program established
under this part;
‘‘(7) information regarding the management
and financial strength of any parent firm, affiliated
firm, or any other firm essential to the success of
the company’s business plan; and
‘‘(8) such other information as the Adminis-
trator may require.
‘‘(c) CONDITIONAL APPROVAL.—
‘‘(1) IN
GENERAL.—From among companies
submitting applications under subsection (b), the
Administrator shall, in accordance with this sub-
section, conditionally approval companies to partici-
pate in the New Markets Venture Capital Program.
‘‘(2) SELECTION CRITERIA.—In selecting com-
panies under paragraph (1), the Administrator shall
consider the following:
‘‘(A) The likelihood that the company will
meet the goal of its business plan.
‘‘(B) The experience and background of
the company’s management team.
‘‘(C) The need for developmental venture
capital investments in the geographic areas in
which the company intends to invest.
‘‘(D) The extent to which the company will
concentrate its activities on serving the geo-
graphic areas in which it intends to invest.
‘‘(E) The likelihood that the company will
be able to satisfy the conditions under sub-
section (d).
‘‘(F) The extent to which the activities
proposed by the company will expand economic
opportunities in the geographic areas in which
the company intends to invest.
‘‘(G) The strength of the company’s pro-
posal to provide operational assistance under
this part as the proposal relates to the ability
of the applicant to meet applicable cash require-
ments and properly utilize in-kind contribu-
tions, including the use of resources for the
services of licensed professionals, when nec-
essary, whether provided by persons on the
company’s staff or by persons outside of the
company.
‘‘(H) Any other factors deemed appro-
priate by the Administrator.
‘‘(3) NATIONWIDE DISTRIBUTION.—The Admin-
istrator shall select companies under paragraph (1)
in such a way that promotes investment nationwide.
‘‘(d) REQUIREMENTS TO BE MET FOR FINAL AP-
PROVAL.—The Administrator shall grant each condi-
tionally approved company a period of time, not to exceed
2 years, to satisfy the following requirements:
‘‘(1) CAPITAL
REQUIREMENT.—Each condi-
tionally approved company shall raise not less than
$5,000,000 of private capital or binding capital com-
mitments from one or more investors (other than
agencies or departments of the Federal Government)
who met criteria established by the Administrator.
‘‘(2) NONADMINISTRATION
RESOURCES
FOR
OPERATIONAL ASSISTANCE.—
‘‘(A) IN
GENERAL.—In order to provide
operational assistance to smaller enterprises ex-
pected to be financed by the company, each
conditionally approved company—
‘‘(i) shall have binding commitments
(for contribution in cash or in kind)—
‘‘(I) from any sources other than
the Small Business Administration
that meet criteria established by the
Administrator;
‘‘(II) payable or available over a
multiyear period acceptable to the Ad-
ministrator (not to exceed 10 years);
and
‘‘(III) in an amount not less than
30 percent of the total amount of cap-
ital and commitments raised under
paragraph (1);
‘‘(ii) 
shall 
have 
purchased 
an
annuity—
‘‘(I) from an insurance company
acceptable to the Administrator;
‘‘(II) using funds (other than the
funds raised under paragraph (1)),
from any source other than the Ad-
ministrator; and
‘‘(III) that yields cash payments
over a multiyear period acceptable to
the Administrator (not to exceed 10
years) in an amount not less than 30
percent of the total amount of capital
and commitments raised under para-
graph (1); or
‘‘(iii) shall have binding commitments
(for contributions in cash or in kind) of the
type described in clause (i) and shall have
purchased an annuity of the type described
in clause (ii), which in the aggregate make
available, over a multiyear period accept-
able to the Administrator (not to exceed 10
years), an amount not less than 30 percent
of the total amount of capital and commit-
ments raised under paragraph (1).
‘‘(B) 
EXCEPTION.—The 
Administrator
may, in the discretion of the Administrator and
based upon a showing of special circumstances
and good cause, consider an applicant to have
satisfied the requirements of subparagraph (A)
if the applicant has—
‘‘(i) a viable plan that reasonably
projects the capacity of the applicant to
raise the amount (in cash or in-kind) re-
quired under subparagraph (A); and
‘‘(ii) binding commitments in an
amount equal to not less than 20 percent
of the total amount required under para-
graph (A).
‘‘(C) LIMITATION.—In order to comply
with the requirements of subparagraphs (A)
and (B), the total amount of a company’s in-
kind contributions may not exceed 50 percent
of the company’s total contributions.
‘‘(e) FINAL APPROVAL; DESIGNATION.—The Admin-
istrator shall, with respect to each applicant conditionally
approved to operate as a New Markets Venture Capital
company under subsection (c), either—
‘‘(1) grant final approval to the applicant to op-
erate as a New Markets Venture Capital company
under this part and designate the applicant as such
a company, if the applicant—
‘‘(A) satisfies the requirements of sub-
section (d) on or before the expiration of the
time period described in that subsection; and
‘‘(B) enters into a participation agreement
with the Administrator; or
‘‘(2) if the applicant fails to satisfy the require-
ments of subsection (d) on or before the expiration
of the time period described in that subsection, re-
voke the conditional approval granted under that
subsection.
‘‘SEC. 355. DEBENTURES.
‘‘(a) IN GENERAL.—The Administrator may guar-
antee the timely payment of principal and interest, as
scheduled, on debentures issued by any New Markets Ven-
ture Capital company.
‘‘(b) TERMS AND CONDITIONS.—The Administrator
may make guarantees under this section on such terms
and conditions as it deems appropriate, except that the
term of any debenture guaranteed under this section shall
not exceed 15 years.
‘‘(c) FULL FAITH AND CREDIT OF THE UNITED
STATES.—The full faith and credit of the United States
is pledged to pay all amounts that may be required to be
paid under any guarantee under this part.
‘‘(d) MAXIMUM GUARANTEE.—
‘‘(1) IN GENERAL.—Under this section, the Ad-
ministrator may guarantee the debentures issued by
a New Markets Venture Capital company only to be
extent that the total face amount of outstanding
guaranteed debentures of such company does not ex-
ceed 150 percent of the private capital of the com-
pany, as determined by the Administrator.
‘‘(2) 
TREATMENT
OF
CERTAIN
FEDERAL
FUNDS.—For the purposes of paragraph (1), private
capital shall include capital that is considered to be
Federal funds, if such capital is contributed by an
investor other than an agency or department of the
Federal Government.
‘‘SEC. 356. ISSUANCE AND GUARANTEE OF TRUST CERTIFI-
CATES.
‘‘(a) ISSUANCE.—The Administrator may issue trust
certificates representing ownership of all or a fractional
part of debentures issued by a New Markets Venture Cap-