I 
118TH CONGRESS 
1ST SESSION H. R. 3717 
To establish a MicroCap small business investment company designation, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 25, 2023 
Mr. NEGUSE (for himself and Mrs. KIM of California) introduced the following 
bill; which was referred to the Committee on Small Business 
A BILL 
To establish a MicroCap small business investment company 
designation, 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. 
This Act may be cited as the ‘‘MicroCap Small Busi-
ness Investing Act of 2023’’. 
SEC. 2. MICROCAP SMALL BUSINESS INVESTMENT COM-
PANY DESIGNATION. 
(a) IN GENERAL.—Title III of the Small Business 
Investment Act of 1958 (15 U.S.C. 681 et seq.) is amend-
ed— 
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(1) in section 301(c), by adding at the end the 
following: 
‘‘(5) MICROCAP SMALL BUSINESS INVESTMENT 
COMPANY LICENSE.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of law, the Administrator may 
approve an application and issue not more than 
10 licenses annually under this subsection with 
respect to any applicant— 
‘‘(i) that would otherwise be issued a 
license under this subsection, except that 
the management of the applicant does not 
satisfy 
the 
qualification 
requirements 
under paragraph (3)(A)(ii) to the extent 
that such requirements relate to invest-
ment experience and track record, includ-
ing any such requirements further set 
forth in section 107.305 of title 13, Code 
of Federal Regulations, or any successor 
regulation; 
‘‘(ii) for which the fund managers 
have— 
‘‘(I) a documented record of suc-
cessful business experience; 
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‘‘(II) a record of business man-
agement success; or 
‘‘(III) knowledge in the par-
ticular industry or business in which 
the investment strategy is being pur-
sued; and 
‘‘(iii) that, in addition to any other re-
quirement applicable to the applicant 
under this title or the rules issued to carry 
out 
this 
title 
(including 
section 
121.301(c)(2) of title 13, Code of Federal 
Regulations, or any successor regulation), 
will make not less than 25 percent of its 
investments in— 
‘‘(I) low-income communities, as 
that term is defined in section 45D(e) 
of the Internal Revenue Code of 1986; 
‘‘(II) a community that has been 
designated as a qualified opportunity 
zone under section 1400Z–1 of the In-
ternal Revenue Code of 1986; 
‘‘(III) businesses primarily en-
gaged in research and development; 
‘‘(IV) manufacturers; 
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‘‘(V) businesses primarily owned 
or controlled by individuals in under-
served communities before receiving 
capital from the applicant; and 
‘‘(VI) rural areas, as that term is 
defined by the Bureau of the Census. 
‘‘(B) PRIORITY; STREAMLINED PROCESS.— 
With respect to an application for a license pur-
suant to this paragraph, the Administrator 
shall— 
‘‘(i) give priority to an applicant for 
such a license that is located in an under-
licensed State; and 
‘‘(ii) establish a streamlined process 
for applicants submitting such an applica-
tion. 
‘‘(C) TIMING
FOR
ISSUANCE
OF
LI-
CENSE.—Notwithstanding paragraph (2), with 
respect to an application for a license submitted 
to the Administrator pursuant to this para-
graph, the Administrator shall— 
‘‘(i) not later than 60 days after the 
date on which the application is submitted 
to the Administrator, process and provide 
complete feedback with respect to any pre- 
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license application requirements applicable 
to the applicant; 
‘‘(ii) not restrict the submission of 
any application materials; and 
‘‘(iii) not later than 90 days after the 
date on which the application is submitted 
to the Administrator— 
‘‘(I) approve the application and 
issue a license for such operation to 
the applicant, if the requirements for 
the license are satisfied; or 
‘‘(II) based upon facts in the 
record— 
‘‘(aa) disapprove the appli-
cation; and 
‘‘(bb) provide the applicant 
with— 
‘‘(AA) a clear, written 
explanation of the reason for 
the disapproval; and 
‘‘(BB) a chance to rem-
edy any issues with the ap-
plication and immediately 
reapply, with technical as-
sistance provided as needed 
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and a new determination 
made by the Administrator 
not later than 30 days after 
the date on which the appli-
cant re-submits the applica-
tion. 
‘‘(D) LEVERAGE.—A company licensed 
pursuant to this paragraph shall— 
‘‘(i) not be eligible to receive leverage 
in 
an 
amount 
that 
is 
more 
than 
$25,000,000; and 
‘‘(ii) access leverage in an amount 
that is not more than 100 percent of the 
private capital of the applicant. 
‘‘(E) INVESTMENT COMMITTEE.— 
‘‘(i) IN GENERAL.—Each company li-
censed pursuant to this paragraph shall 
have not fewer than 2 independent mem-
bers on the investment committee of the 
company in a manner that complies with 
the following requirements: 
‘‘(I) The independent members of 
the investment committee are or have 
been licensed managers of small busi-
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ness investment companies within the 
preceding 10-year period. 
‘‘(II) No small business invest-
ment company described in subclause 
(I) may adversely affected by the rela-
tionship of the independent members 
of the investment committee with the 
company licensed pursuant to this 
paragraph. 
‘‘(III) The independent members 
of the investment committee are re-
quired to approve each investment 
made by the company. 
‘‘(IV) The independent members 
of the investment committee shall not 
be paid a management fee, but may 
receive paid expenses and a portion of 
any carried interest. 
‘‘(ii) LEVERAGE LIMITS.—Any lever-
age associated with a company licensed 
pursuant to this paragraph shall not be 
counted toward the leverage limits of the 
independent members of the investment 
committee of the company under this 
title.’’; and 
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(2) in section 303(d) (15 U.S.C. 683(d)), by in-
serting ‘‘(or, with respect to a company licensed 
under section 301(c)(5), 50 percent)’’ after ‘‘25 per-
cent’’. 
(b) SBA REQUIREMENTS.— 
(1) DEFINITIONS.—In this subsection— 
(A) the term ‘‘Administrator’’ means the 
Administrator of the Small Business Adminis-
tration; and 
(B) the term ‘‘covered company’’ means an 
entity that is licensed to operate as a small 
business investment company pursuant to para-
graph (5) of section 301(c) of the Small Busi-
ness Investment Act of 1958 (15 U.S.C. 
681(c)), as added by subsection (a). 
(2) RULES.—Not later than 90 days after the 
date of enactment of this Act, the Administrator 
shall issue rules to carry out this section and the 
amendments made by this section. 
(3) ANNUAL REPORT.—Not later than 1 year 
after the date of enactment of this Act, and annually 
thereafter, the Administrator shall publicly publish a 
report that details, for the year covered by the re-
port— 
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(A) the number of covered companies li-
censed by the Administrator; 
(B) the industries in which covered compa-
nies have invested; 
(C) the geographic locations of covered 
companies; and 
(D) the aggregate performance of covered 
companies. 
Æ 
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