I 
110TH CONGRESS 
1ST SESSION H. R. 2803 
To amend the Small Business Investment Act of 1958 to establish the 
Angel Investment Program. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 21, 2007 
Ms. VELA´ZQUEZ (for herself, Ms. BEAN, Mr. BRALEY of Iowa, and Ms. 
CLARKE) introduced the following bill; which was referred to the Com-
mittee on Small Business, and in addition to the Committee on Ways and 
Means, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To amend the Small Business Investment Act of 1958 to 
establish the Angel Investment Program. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Angels Nurture Grow-
ing Entrepreneurs into Long-term Successes (ANGELS) 
Act’’. 
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SEC. 2. ESTABLISHMENT OF ANGEL INVESTMENT PRO-
GRAM. 
(a) ESTABLISHMENT.—Title III of the Small Busi-
ness Investment Act of 1958 (15 U.S.C. 681 et seq.) is 
amended by adding at the end the following new part: 
‘‘PART C—ANGEL INVESTMENT PROGRAM 
‘‘SEC. 380. OFFICE OF ANGEL INVESTMENT. 
‘‘(a) ESTABLISHMENT.—There is established, in the 
Investment Division of the Small Business Administra-
tion, the Office of Angel Investment. 
‘‘(b) DIRECTOR.—The head of the Office of Angel In-
vestment is the Director of Angel Investment. 
‘‘(c) DUTIES.—Subject to the direction of the Sec-
retary, the Director shall perform the following functions: 
‘‘(1) Provide support for the development of 
angel investment opportunities for small business 
concerns. 
‘‘(2) Administer the Angel Finance Program 
under section 381 of this Act. 
‘‘(3) Administer the Federal Angel Network 
under section 382 of this Act. 
‘‘(4) Administer the grant program for the de-
velopment of angel groups under section 383 of this 
Act. 
‘‘(5) Perform such other duties consistent with 
this section as the Administrator shall prescribe. 
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‘‘SEC. 381. ANGEL FINANCE PROGRAM. 
‘‘(a) IN GENERAL.—The Director of Angel Invest-
ment shall establish and carry out a program, to be known 
as the Angel Finance Program, to provide financing to 
approved angel 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 of 
Angel Investment at such time and containing such 
information and assurances as the Director may re-
quire. 
‘‘(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; and 
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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. 
‘‘(d) LIMITATION ON AMOUNT.—No angel group re-
ceiving financing under this section shall receive more 
than $2,000,000. 
‘‘(e) 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. 
‘‘(f) GEOGRAPHIC 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. 
‘‘(g) 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 that is equal to or greater 
than the amount of financing received under this section 
from a source other than the Federal Government that 
is equal to the amount of the financing provided under 
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this section that the angel group invests in that small busi-
ness concern. 
‘‘(h) 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 profit that is equal 
to the percentage of the total amount invested by the angel 
group that consisted of financing received under this sec-
tion. 
‘‘(i) ANGEL INVESTMENT FUND.— 
‘‘(1) ESTABLISHMENT.—There is in the Treas-
ury a fund to be known as the Angel Investment 
Fund. 
‘‘(2) 
DEPOSIT
OF
CERTAIN
AMOUNTS.— 
Amounts collected under subsection (h) shall be de-
posited in the fund. 
‘‘(3) USE OF DEPOSITS.—Deposits in the fund 
shall be available for the purpose of providing fi-
nancing under this section in the amounts specified 
in annual appropriation laws without regard to fiscal 
year limitations. 
‘‘(j) DEFINITIONS.—In this section: 
‘‘(1) The term ‘small business concern owned 
and controlled by veterans’ has the meaning given 
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that term under section 3(q)(3) of the Small Busi-
ness Act (15 U.S.C. 632(q)(3)). 
‘‘(2) The term ‘small business concern owned 
and controlled by women’ has the meaning given 
that term under section 8(d)(3)(D) of such Act (15 
U.S.C. 637(d)(3)(D)). 
‘‘(3) The term ‘socially and economically dis-
advantaged small business concern’ has the meaning 
given that term under section 8(a)(4)(A) of such Act 
(15 U.S.C. 637(a)(4)(A)). 
‘‘(k) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to carry out this section— 
‘‘(1) $25,000,000 for fiscal year 2008; 
‘‘(2) $50,000,000 for fiscal year 2009; and 
‘‘(3) $75,000,000 for fiscal year 2010. 
‘‘SEC. 382. FEDERAL ANGEL NETWORK. 
‘‘(a) IN GENERAL.—Subject to the succeeding provi-
sions of this subsection, the Director of the Office of Angel 
Investment shall establish and maintain a searchable data-
base, to be known as the Federal Angel Network, to assist 
small business 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; 
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‘‘(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. 
‘‘(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 such informa-
tion concerning an angel investor if that investor 
contacts the Director to request that such informa-
tion be excluded from the Network. 
‘‘(d) AVAILABILITY.—The Director shall make the 
Federal Angel Network available on the Internet website 
of the Administration. 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to carry out this section 
$1,000,000, to remain available until expended. 
‘‘SEC. 383. GRANT PROGRAM FOR DEVELOPMENT OF ANGEL 
GROUPS. 
‘‘(a) IN GENERAL.—The Director of the Office of 
Angel Investment shall establish and carry out a grant 
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program to make grants to eligible entities for the develop-
ment of new or existing angel groups and to increase 
awareness and education about angel investing. 
‘‘(b) ELIGIBLE ENTITIES.—In this section, the term 
‘eligible entity’ means— 
‘‘(1) a State or unit of local government; 
‘‘(2) a nonprofit organization; 
‘‘(3) a state mutual benefit corporation; 
‘‘(4) a Small Business Development Center es-
tablished pursuant to section 21 of the Small Busi-
ness Act (15 U.S.C. 648); or 
‘‘(5) a women’s business center established pur-
suant to section 29 of the Small Business Act (15 
U.S.C. 656). 
‘‘(c) APPLICATION.—To receive a grant under this 
section, an eligible entity shall submit an application that 
contains— 
‘‘(1) a proposal describing how the grant would 
be used; and 
‘‘(2) any other information or assurances as the 
Director may require. 
‘‘(d) REPORT.—Not later than 3 years after the date 
on which an eligible entity receives a grant under this sec-
tion, such eligible entity shall submit a report to the Ad-
ministrator describing the use of grant funds and evalu-
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ating the success of the angel group developed using the 
grant funds. 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to carry out this section 
$1,500,000, for each of fiscal years 2008 through 2010. 
‘‘SEC. 384. DEFINITIONS. 
‘‘In this part: 
‘‘(a) The term ‘angel group’ means two or more angel 
investors organized for the purpose of making investments 
in local or regional small business concerns that— 
‘‘(1) consists primarily of angel investors; 
‘‘(2) requires angel investors to be accredited 
investors; and 
‘‘(3) actively involves the angel investors in 
evaluating and making decisions about making in-
vestments. 
‘‘(b) The term ‘angel investor’ means an individual 
who— 
‘‘(1) on the basis of such factors as financial 
sophistication, income, net worth, knowledge, and 
experience in financial matters, or amount of assets 
under management, qualifies as an accredited inves-
tor under rules and regulations prescribed by the 
Commissioner of the Securities and Exchange Com-
mission; and 
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‘‘(2) provides capital to or makes investments 
in a small business concern.’’. 
SEC. 3. TAX CREDIT FOR SMALL BUSINESS INVESTMENT. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25D the following new 
section: 
‘‘SEC. 25E. SMALL BUSINESS INVESTMENT. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by this chapter an amount equal to 20 percent of the 
amount paid or incurred for qualified small business in-
vestments during the taxable year. 
‘‘(b) LIMITATION.—With respect to any qualified 
small business investment in any corporation or partner-
ship, the amount paid or incurred by any taxpayer which 
is taken into account under subsection (a) shall not exceed 
$250,000 ($500,000 in the case of a joint return), reduced 
by the amount taken into account under such subsection 
with respect to investments by the taxpayer in such cor-
poration or partnership for all prior taxable years. 
‘‘(c) QUALIFIED SMALL BUSINESS INVESTMENT.— 
For purposes of this section— 
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‘‘(1) IN GENERAL.—The term ‘qualified small 
business investment’ means any small business stock 
and any small business partnership interest. 
‘‘(2) SMALL
BUSINESS
STOCK.—The term 
‘small business stock’ means any stock in a domestic 
corporation acquired by the taxpayer at its original 
issue (directly or through an underwriter) solely in 
exchange for cash, if— 
‘‘(A) such corporation is an eligible small 
business (as defined in section 41(b)(3)(D)(ii)); 
‘‘(B) such corporation is engaged primarily 
in the trade or business of manufacturing, proc-
essing, assembling, or researching and devel-
oping products or in the trade or business of 
agriculture, technology, or life science; 
‘‘(C) such corporation has been in exist-
ence for less than 5 years as of such acquisi-
tion; 
‘‘(D) such corporation has fewer than 75 
employees as of such acquisition; 
‘‘(E) more than 50 percent of the corpora-
tion’s employees perform substantially all of 
their services in the United States as of such 
acquisition; and 
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‘‘(F) such stock is designated by the cor-
poration for purposes of this paragraph. 
For purposes of subparagraph (E), stock shall not 
be treated as designated if such designation would 
result in the aggregate amount which may be taken 
into account under this section with respect to stock 
issued by such corporation to exceed $750,000, tak-
ing into account all taxpayers for all taxable years. 
‘‘(3) SMALL
BUSINESS
PARTNERSHIP
INTER-
EST.—The term ‘small business partnership interest’ 
means any capital or profits interest in a domestic 
partnership acquired by the taxpayer from the part-
nership solely in exchange for cash, if— 
‘‘(A) such partnership is an eligible small 
business (as defined in section 41(b)(3)(D)(ii)); 
‘‘(B) such partnership is engaged primarily 
in the trade or business of manufacturing, proc-
essing, assembling, or researching and devel-
oping products or in the trade or business of 
agriculture, technology, or life science; 
‘‘(C) such partnership has been in exist-
ence for less than 5 years as of such acquisi-
tion; 
‘‘(D) such partnership has fewer than 75 
employees as of such acquisition; 
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‘‘(E) more than 50 percent of the partner-
ship’s employees perform substantially all of 
their services in the United States as of such 
acquisition; and 
‘‘(F) such capital or profits interest is des-
ignated by partnership for purposes of this 
paragraph. 
For purposes of subparagraph (E), a capital or prof-
its interest shall not be treated as designated if such 
designation would result in the aggregate amount 
which may be taken into account under this section 
with respect to interests in such partnership to ex-
ceed $750,000, taking into account all taxpayers for 
all taxable years. 
‘‘(d) CARRYFORWARD OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the limita-
tion imposed by section 26(a) for such taxable year re-
duced by the sum of the credits allowable under this sub-
part (other than this section), such excess shall be carried 
to the succeeding taxable year and added to the credit al-
lowable under this section. Such excess shall not be taken 
into account under this subsection for such succeeding 
taxable year or any taxable year succeeding such year.’’. 
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(b) CLERICAL AMENDMENT.—The table of sections 
of such subpart is amended by inserting after the item 
relating to section 25D the following new item: 
‘‘Sec. 25E. Small business investment.’’. 
(c) REPORT TO CONGRESS.—The Secretary of the 
Treasury shall conduct a study and report to Congress on 
the effectiveness of the credit allowed under section 25E 
of the Internal Revenue Code of 1986 (as added by this 
section), and similar State tax credits, in providing incen-
tives for investment in qualified small businesses. There 
are authorized to be appropriated $500,000 to carry out 
the purposes of this subsection. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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