II
Calendar No. 645
105TH CONGRESS
2D SESSION
H. R. 3412
[Report No. 105–347]
To amend and make technical corrections in title III of the Small Business
Investment Act.
IN THE SENATE OF THE UNITED STATES
MARCH 25, 1998
Received; read twice and referred to the Committee on Small Business
SEPTEMBER 25, 1998
Reported by Mr. BOND, with an amendment and an amendment to the title
[Strike out all after the enacting clause and insert the part printed in italic]
AN ACT
To amend and make technical corrections in title III of
the Small Business Investment Act.
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 ‘‘Small Business Invest-
ment Company Technical Corrections Act of 1998’’.
SEC. 2. TECHNICAL CORRECTIONS.
Title III of the Small Business Investment Act of
1958 (15 U.S.C. 661) is amended—
(1) in section 303(g) (15 U.S.C. 683(g)), by
striking subparagraph (13);
(2) in section 308 (15 U.S.C. 687) by adding
at the end the following:
‘‘(j) For the purposes of sections 304 and 305, in
a case in which an incorporated or unincorporated busi-
ness is not required by law to pay Federal income taxes
at the enterprise level but is required to pass income
through to its shareholders or partners, an eligible small
business or smaller enterprise may be determined by com-
puting the after-tax income of such business by deducting
from the net income an amount equal to the net income
multiplied by the combined marginal Federal and State
income tax rate for corporations.’’; and
(3) in section 320 (15 U.S.C. 687m), by strik-
ing ‘‘6’’ and inserting ‘‘12’’.
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Year 2000 Readiness and Small Business Programs Re-
structuring and Reform Act of 1998’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—SMALL BUSINESS YEAR 2000 READINESS
Sec. 101. Findings.
Sec. 102. Year 2000 computer problem loan guarantee program.
Sec. 103. Pilot program requirements.
Sec. 104. Section 7(a) loan program.
TITLE II—SMALL BUSINESS PROGRAM RESTRUCTURING AND
REFORM
Sec. 201. Women’s business center program.
Sec. 202. SBIR program.
Sec. 203. SBIC program.
Sec. 204. Certified development company program.
Sec. 205. Small business Federal contract set-asides.
Sec. 206. Assistance for veterans.
Sec. 207. Section 7(a) loan program.
Sec. 208. Disaster mitigation pilot program.
Sec. 209. Microloan program.
Sec. 210. Real estate appraisals.
Sec. 211. Community development venture capital demonstration program.
Sec. 212. Technical amendments.
TITLE III—SMALL BUSINESS ENVIRONMENTAL ASSISTANCE PILOT
PROGRAM
Sec. 301. Pilot program.
TITLE I—SMALL BUSINESS YEAR
2000 READINESS
SEC. 101. FINDINGS.
Congress finds that—
(1) the failure of many computer programs to
recognize the Year 2000 will have extreme negative fi-
nancial consequences in the Year 2000 and in subse-
quent years for both large and small businesses;
(2) small businesses are well behind larger busi-
nesses in implementing corrective changes to their
automated systems—85 percent of businesses with 200
employees or less have not commenced inventorying
the changes they must make to their automated sys-
tems to avoid Year 2000 problems;
(3) many small businesses do not have access to
capital to fix mission critical automated systems; and
(4) the failure of a large number of small busi-
nesses will have a highly detrimental effect on the
economy in the Year 2000 and in subsequent years.
SEC. 102. YEAR 2000 COMPUTER PROBLEM LOAN GUARAN-
TEE PROGRAM.
(a) PROGRAM ESTABLISHED.—Section 7(a) of the
Small Business Act (15 U.S.C. 636(a)) is amended by add-
ing at the end the following:
‘‘(27) YEAR
2000
COMPUTER
PROBLEM
PILOT
PROGRAM.—
‘‘(A) DEFINITIONS.—In this paragraph—
‘‘(i) the term ‘eligible lender’ means
any lender designated by the Administra-
tion as eligible to participate in—
‘‘(I) the Preferred Lenders Pro-
gram authorized by the proviso in sec-
tion 5(b)(7); or
‘‘(II) the Certified Lenders Pro-
gram authorized in paragraph (19);
and
‘‘(ii) the term ‘Year 2000 computer
problem’ means, with respect to information
technology, any problem that prevents the
information technology from accurately
processing, calculating, comparing, or se-
quencing date or time data—
‘‘(I) from, into, or between—
‘‘(aa) the 20th or 21st cen-
turies; or
‘‘(bb) the years 1999 and
2000; or
‘‘(II) with regard to leap year cal-
culations.
‘‘(B) ESTABLISHMENT OF PROGRAM.—The
Administration shall—
‘‘(i) establish a pilot loan guarantee
program, under which the Administration
shall guarantee loans made by eligible lend-
ers to small business concerns in accordance
with this subsection; and
‘‘(ii) notify each eligible lender of the
establishment of the program under this
paragraph.
‘‘(C) USE
OF
FUNDS.—A small business
concern that receives a loan guaranteed under
this paragraph shall use the proceeds of the loan
solely to address the Year 2000 computer prob-
lems of that small business concern, including
the repair or acquisition of information tech-
nology systems and other automated systems.
‘‘(D) 
MAXIMUM
AMOUNT.—The 
total
amount of a loan made to a small business con-
cern and guaranteed under this paragraph shall
not exceed $50,000.
‘‘(E) GUARANTEE
LIMIT.—The guarantee
percentage of a loan guaranteed under this para-
graph shall not exceed 50 percent of the balance
of the financing outstanding at the time of dis-
bursement of the loan.
‘‘(F) REPORT.—The Administration shall
annually submit to the Committees on Small
Business of the House of Representatives and the
Senate a report on the results of the program
under this paragraph, which shall include infor-
mation relating to—
‘‘(i) the number and amount of loans
guaranteed under this paragraph;
‘‘(ii) whether the loans guaranteed
were made to repair or replace information
technology and other automated systems;
and
‘‘(iii) the number of eligible lenders
participating in the program.’’.
(b) REGULATIONS.—
(1) IN GENERAL.—Not later than 60 days after
the date of enactment of this Act, the Administrator
of the Small Business Administration shall imple-
ment the program under section 7(a)(27) of the Small
Business Act, as added by this section.
(2) REQUIREMENTS.—Except to the extent in-
consistent this section or section 7(a)(27) of the Small
Business Act, as added by this section, in carrying
out paragraph (1), the Administrator shall ensure
that the requirements governing the program under
section 7(a)(27) of the Small Business Act, as added
by this section, are substantially similar to the re-
quirements governing the FA$TRAK pilot program of
the Small Business Administration, or any successor
program or pilot program to that pilot program.
(c) REPEAL.—Effective on October 1, 2001, this section
and the amendment made by this section are repealed.
SEC. 103. PILOT PROGRAM REQUIREMENTS.
Section 7(a)(25) of the Small Business Act (15 U.S.C.
636(a)(25)) is amended by adding at the end the following:
‘‘(D) NOTIFICATION OF CHANGE.—Not later
than 30 days prior to initiating any pilot pro-
gram or making any change in a pilot program
under this subsection that may affect the subsidy
rate estimates for the loan program under this
subsection, the Administration shall notify the
Committees on Small Business of the House of
Representatives and the Senate, which notifica-
tion shall include—
‘‘(i) a description of the proposed
change; and
‘‘(ii) an explanation, which shall be
developed by the Administration in con-
sultation with the Director of the Office of
Management and Budget, of the estimated
effect that the change will have on the sub-
sidy rate.
‘‘(E) REPORT ON PILOT PROGRAMS.—The
Administration shall annually submit to the
Committees on Small Business of the House of
Representatives and the Senate a report on each
pilot program under this subsection, which re-
port shall include information relating to—
‘‘(i) the number and amount of loans
made under the pilot program;
‘‘(ii) the number of lenders participat-
ing in the pilot program; and
‘‘(iii) the default rate, delinquency
rate, and recovery rate for loans under each
pilot program, as compared to those rates
for other loan programs under this sub-
section.’’.
SEC. 104. SECTION 7(a) LOAN PROGRAM.
Section 7(a) of the Small Business Act (15 U.S.C.
636(a)) is amended, in the first sentence, by inserting ‘‘and
to assist small business concerns in meeting technology re-
quirements for the Year 2000,’’ after ‘‘and working cap-
ital,’’.
TITLE II—SMALL BUSINESS PRO-
GRAM RESTRUCTURING AND
REFORM
SEC. 201. WOMEN’S BUSINESS CENTER PROGRAM.
(a) FINDINGS.—Congress finds that—
(1) with small business concerns owned and con-
trolled by women being created at a rapid rate in the
United States, there is a need to increase the author-
ization level for the women’s business center program
under section 29 of the Small Business Act (15 U.S.C.
656) in order to establish additional women’s business
center sites throughout the Nation that focus on entre-
preneurial training programs for women; and
(2) increased funding for the women’s business
center program will ensure that—
(A) new women’s business center sites can
be established to reach women located in geo-
graphic areas not presently served by an existing
women’s business center without jeopardizing the
full funding of existing women’s business centers
for the term prescribed by law; and
(B) the Small Business Administration
achieves the goal of establishing at least 1 sus-
tainable women’s business center in each State.
(b) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—Section 29(k)(1) of the Small
Business Act (15 U.S.C. 656(k)(1)) is amended to
read as follows:
‘‘(1) AUTHORIZATION.—There is authorized to be
appropriated to carry out this section, $12,000,000
for fiscal year 1999 and each fiscal year thereafter.’’.
(2) EFFECTIVE DATE.—The amendment made by
this subsection shall take effect on October 1, 1998.
(c) TERMS OF ASSISTANCE.—
(1) IN GENERAL.—Section 308(b) of the Small
Business Reauthorization Act of 1997 (15 U.S.C. 656
note) is amended—
(A) by striking ‘‘(b)’’ and all that follows
through ‘‘paragraph (2), any organization’’ and
inserting the following:
‘‘(b) APPLICABILITY.—Any organization’’; and
(B) by striking paragraph (2).
(2) EFFECTIVE DATE.—The amendment made by
this subsection shall take effect as if included in the
enactment of the Small Business Reauthorization Act
of 1997.
(d) GENERAL ACCOUNTING OFFICE REPORTING RE-
QUIREMENTS.—
(1) BASELINE REPORT.—Not later than October
31, 1999, the Comptroller General of the United
States shall—
(A) conduct a review of the administration
of the women’s business center program under
section 29 of the Small Business Act (15 U.S.C.
656) by the Office of Women’s Business Owner-
ship of the Small Business Administration,
which shall include an analysis of—
(i) the operation of the women’s busi-
ness center program by the Administration;
(ii) the efforts of the Administration to
meet the legislative objectives established for
the program;
(iii) the oversight role of the Adminis-
tration of the operations of women’s busi-
ness centers;
(iv) the training and assistance pro-
vided by centers receiving funding from the
Administration as compared to the activi-
ties of the centers that no longer receive
funding from the Administration;
(v) the degree to which—
(I) the Administration has taken
the actions necessary to ensure that the
annual report submitted by the Ad-
ministrator under 29(j) of the Small
Business Act (15 U.S.C. 656(j)) meets
the requirements of that section; and
(II) the annual report submitted
by the Administrator under 29(j) of the
Small Business Act (15 U.S.C. 656(j))
meets the requirements of that section;
and
(vi) any other matters that the Comp-
troller General determines to be appropriate
in consultation with and as directed by the
Committees on Small Business of the Senate
and House of Representatives; and
(B) submit to the Committees on Small
Business of the Senate and House of Representa-
tives a report describing the results of the review
under subparagraph (A).
(2) FOLLOWUP REPORT.—Not later than October
31, 2002, the Comptroller General of the United
States shall—
(A) conduct a review of any changes, during
the period beginning on the date on which the re-
port is submitted under paragraph (1)(B) and
ending on the date on which the report is sub-
mitted under subparagraph (B) of this para-
graph, in the administration of the women’s
business center program under section 29 of the
Small Business Act (15 U.S.C. 656) by the Office
of Women’s Business Ownership of the Small
Business Administration, which shall include an
analysis of any changes during that period in—
(i) the operation of the women’s busi-
ness center program by the Administration;
(ii) the efforts of the Administration to
meet the legislative objectives established for
the program;
(iii) the oversight role of the Adminis-
tration of the operations of women’s busi-
ness centers;
(iv) the training and assistance pro-
vided by centers receiving funding from the
Administration as compared to the activi-
ties of the centers that no longer receive
funding from the Administration;
(v) the degree to which—
(I) the Administration has taken
the actions necessary to ensure that the
annual report submitted by the Ad-
ministrator under 29(j) of the Small
Business Act (15 U.S.C. 656(j)) meets
the requirements of that section; and
(II) the annual report submitted
by the Administrator under 29(j) of the
Small Business Act (15 U.S.C. 656(j))
meets the requirements of that section;
and
(vi) any other matters that the Comp-
troller General determines to be appropriate
in consultation with and as directed by the
Committees on Small Business of the Senate
and House of Representatives; and
(B) submit to the Committees on Small
Business of the Senate and House of Representa-
tives a report describing the results of the review
under subparagraph (A).
SEC. 202. SBIR PROGRAM.
(a) ASSISTIVE TECHNOLOGY.—Section 9(c) of the
Small Business Act (15 U.S.C. 638(c)) is amended by add-
ing at the end the following: ‘‘In order to carry out the pur-
poses of this section, the Administration shall, to the maxi-
mum extent practicable, encourage Federal agencies to fund
programs for the research and development of assistive and
universally designed technology that is designed to result
in the availability of new products for individuals with dis-
abilities (as defined in section 3 of the Americans with Dis-
abilities Act of 1990 (42 U.S.C. 12102)).’’.
(b) FEDERAL AGENCY EXPENDITURES FOR THE SBIR
PROGRAM.—Section 9(f)(1) of the Small Business Act (15
U.S.C. 638(f)(1)) is amended by adding at the end the fol-
lowing: ‘‘Notwithstanding any other provision of law, any
rule, regulation, or order promulgated by the Director of
the Office of Management and Budget relating to the defini-
tion of the term ‘extramural budget’ in subsection (e)(1)
shall, except with respect to the Federal agencies specifically
identified in that subsection, apply uniformly to all depart-
ments and agencies of the Federal Government that are sub-
ject to the requirements of this section.’’.
(c) IMPLEMENTATION OF OUTREACH AUTHORITIES.—
Existing procurement outreach activities of the Federal
Government, including, but not limited to, electronic com-
merce resource centers and procurement technical assistance
centers, shall conduct program outreach activities for the
Small Business Innovation Research program using funds
that are otherwise available for such existing procurement
outreach activities.
(d) REPEAL OF TERMINATION PROVISION.—Section 9
of the Small Business Act (15 U.S.C. 638) is amended by
striking subsection (m) and inserting the following:
‘‘(m) [Reserved].’’.
SEC. 203. SBIC PROGRAM.
(a) IN GENERAL.—Section 308(i)(2) of the Small
Business Investment Act of 1958 (15 U.S.C. 687(i)(2)) is
amended by adding at the end the following: ‘‘In this para-
graph, the term ‘interest’ includes only the maximum man-
datory 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 war-