ital company and guaranteed by the Administrator under
this part, if such certificates are based on and backed by
a trust or pool approved by the Administrator and com-
posed solely of guaranteed debentures.
‘‘(b) GUARANTEE.—
‘‘(1) IN
GENERAL.—The Administrator may,
under such terms and conditions as it deems appro-
priate, guarantee the timely payment of the principal
of and interest on trust certificates issued by the
Administrator or its agents for purposes of this sec-
tion.
‘‘(2) LIMITATION.—Each guarantee under this
subsection shall be limited to the extent of principal
and interest on the guaranteed debentures that com-
pose the trust or pool.
‘‘(3) PREPAYMENT OR DEFAULT.—In the event
that a debenture in a trust or pool is prepaid, or in
the event of default of such a debenture, the guar-
antee of timely payment of principal and interest on
the trust certificates shall be reduced in proportion
to the amount of principal and interest such prepaid
debenture represents in the trust or pool. Interest on
prepaid or defaulted debentures shall accrue and be
guaranteed by the Administrator only through the
date of payment of the guarantee. At any time dur-
ing its term, a trust certificate may be called for re-
demption due to prepayment or default of all deben-
tures.
‘‘(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 of a trust certificate issued by
the Administrator or its agents under this section.
‘‘(d) FEES.—The Administrator shall not collect a fee
for any guarantee of a trust certificate under this section,
but any agent of the Administrator may collect a fee ap-
proved by the Administrator for the functions described
in subsection (f )(2).
‘‘(e) SUBROGATION AND OWNERSHIP RIGHTS.—
‘‘(1) SUBROGATION.—In the event the Adminis-
trator pays a claim under a guarantee issued under
this section, it shall be subrogated fully to the rights
satisfied by such payment.
‘‘(2) OWNERSHIP RIGHTS.—No Federal, State,
or local law shall preclude or limit the exercise by
the Administrator of its ownership rights in the de-
bentures residing in a trust or pool against which
trust certificates are issued under this section.
‘‘(f ) MANAGEMENT AND ADMINISTRATION.—
‘‘(1) REGISTRATION.—The Administrator may
provide for a central registration of all trust certifi-
cates issued under this section.
‘‘(2) CONTRACTING OF FUNCTIONS.—
‘‘(A) IN
GENERAL.—The Administrator
may contract with an agent or agents to carry
out on behalf of the Administrator the pooling
and the central registration functions provided
for in this section including, notwithstanding
any other provision of law—
‘‘(i) maintenance, on behalf of and
under the direction of the Administrator,
of such commercial bank accounts or in-
vestments in obligations of the United
States as may be necessary to facilitate the
creation of trusts or pools backed by de-
bentures guaranteed under this part; and
‘‘(ii) the issuance of trust certificates
to facilitate the creation of such trusts or
pools.
‘‘(B) FIDELITY BOND OR INSURANCE RE-
QUIREMENT.—Any agent performing functions
on behalf of the Administrator under this para-
graph shall provide a fidelity bond or insurance
in such amounts as the Administrator deter-
mines to be necessary to fully protect the inter-
ests of the United States.
‘‘(3) REGULATION
OF
BROKERS
AND
DEAL-
ERS.—The Administrator may regulate brokers and
dealers in trust certificates issued under this section.
‘‘(4) ELECTRONIC REGISTRATION.—Nothing in
this subsection may be construed to prohibit the use
of a book-entry or other electronic form of registra-
tion for trust certificates issued under this section.
‘‘SEC. 357. FEES.
‘‘Except as provided in section 356(d), the Adminis-
trator may charge such fees as it deems appropriate with
respect to any guarantee or grant issued under this part.
‘‘SEC. 358. OPERATIONAL ASSISTANCE GRANTS.
‘‘(a) IN GENERAL.—
‘‘(1) AUTHORITY.—In accordance with this sec-
tion, the Administrator may make grants to New
Markets Venture Capital companies and to other en-
tities, as authorized by this part, to provide oper-
ational assistance to smaller enterprises financed, or
expected to be financed, by such companies or other
entities.
‘‘(2) TERMS.—Grants made under this sub-
section shall be made over a multiyear period not to
exceed 10 years, under such other terms as the Ad-
ministrator may require.
‘‘(3) GRANTS TO SPECIALIZED SMALL BUSINESS
INVESTMENT COMPANIES.—
‘‘(A) AUTHORITY.—In accordance with
this section, the Administrator may make
grants to specialized small business investment
companies to provide operational assistance to
smaller enterprises financed, or expected to be
financed, by such companies after the effective
date of the New Markets Venture Capital Pro-
gram Act of 2000.
‘‘(B) USE OF FUNDS.—The proceeds of a
grant made under this paragraph may be used
by the company receiving such grant only to
provide operational assistance in connection
with an equity investment (made with capital
raised after the effective date of the New Mar-
kets Venture Capital Program Act of 2000) in
a business located in a low-income geographic
area.
‘‘(C) SUBMISSION OF PLANS.—A special-
ized small business investment company shall
be eligible for a grant under this section only if
the company submits to the Administrator, in
such form and manner as the Administrator
may require, a plan for use of the grant.
‘‘(4) GRANT AMOUNT.—
‘‘(A) NEW
MARKETS
VENTURE
CAPITAL
COMPANIES.—The amount of a grant made
under this subsection to a New Markets Ven-
ture Capital company shall be equal to the re-
sources (in cash or in kind) raised by the com-
pany under section 354(d)(2).
‘‘(B) OTHER ENTITIES.—The amount of a
grant made under this subsection to any entity
other than a New Markets Venture Capital
company shall be equal to the resources (in
cash or in kind) raised by the entity in accord-
ance with the requirements applicable to New
Market Venture Capital companies set forth in
section 354(d)(2).
‘‘(5) PRO RATA REDUCTIONS.—If the amount
made available to carry out this section is insuffi-
cient for the Administrator to provide grants in the
amounts provided for in paragraph (4), the Adminis-
trator shall make pro rata reductions in the amounts
otherwise payable to each company and entity under
such paragraph.
‘‘(b) SUPPLEMENTAL GRANTS.—
‘‘(1) IN
GENERAL.—The Administrator may
make supplemental grants to New Markets Venture
Capital companies and to other entities, as author-
ized by this part under such terms as the Adminis-
trator may require, to provide additional operational
assistance to smaller enterprises financed, or ex-
pected to be financed, by the companies.
‘‘(2) MATCHING REQUIREMENT.—The Adminis-
trator may require, as a condition of any supple-
mental grant made under this subsection, that the
company or entity receiving the grant provide from
resources (in a cash or in kind), other then those
provided by the Administrator, a matching contribu-
tion equal to the amount of the supplemental grant.
‘‘(c) LIMITATION.—None of the assistance made
available under this section may be used for any overhead
or general and administrative expense of a New Markets
Venture Capital company or a specialized small business
investment company.
‘‘SEC. 359. BANK PARTICIPATION.
‘‘(a) IN GENERAL.—Except as provided in subsection
(b), any national bank, any member bank of the Federal
Reserve System, and (to the extent permitted under appli-
cable State law) any insured bank that is not a member
of such system, may invest in any New Markets Venture
Capital company, or in any entity established to invest
solely in New Markets Venture Capital companies.
‘‘(b) LIMITATION.—No bank described in subsection
(a) may make investments described in such subsection
that are greater than 5 percent of the capital and surplus
of the bank.
‘‘SEC. 360. FEDERAL FINANCING BANK.
‘‘Section 318 shall not apply to any debenture issued
by a New Markets Venture Capital company under this
part.
‘‘SEC. 361. REPORTING REQUIREMENT.
‘‘Each New Markets Venture Capital company that
participates in the program established under this part
shall provide to the Administrator such information as the
Administrator may require, including—
‘‘(1) information related to the measurement
criteria that the company proposed in its program
application; and
‘‘(2) in each case in which the company under
this part makes an investment in, or a loan or grant
to, a business that is not located in a low-income ge-
ographic area, a report on the number and percent-
age of employees of the business who reside in such
areas.
‘‘SEC. 362. EXAMINATIONS.
‘‘(a) IN GENERAL.—Each New Markets Venture
Capital company that participates in the program estab-
lished under this part shall be subject to examinations
made at the direction of the Investment Division of the
Small Business Administration in accordance with this
section.
‘‘(b) ASSISTANCE OF PRIVATE SECTOR ENTITIES.—
Examinations under this section may be conducted with
the assistance of a private sector entity that has both the
qualifications and the expertise necessary to conduct such
examinations.
‘‘(c) COSTS.—
‘‘(1) ASSESSMENT.—
‘‘(A) IN
GENERAL.—The Administrator
may assess the cost of examinations under this
section, including compensation of the exam-
iners, against the company examined.
‘‘(B) PAYMENT.—Any company against
which the Administrator assesses costs under
this paragraph shall pay such costs.
‘‘(d) DEPOSIT OF FUNDS.—Funds collected under
this section shall be deposited in the account for salaries
and expenses of the Small Business Administration.
‘‘SEC. 363. INJUNCTIONS AND OTHER ORDERS.
‘‘(a) IN GENERAL.—Whenever, in the judgment of
the Administrator, a New Markets Venture Capital com-
pany or any other person has engaged or is about to en-
gage in any acts or practices which constitute or will con-
stitute a violation of any provision of this Act, or of any
rule or regulation under this Act, or of any order issued
under this Act, the Administrator may make application
to the proper district court of the United States or a
United States court of any place subject to the jurisdiction
of the United States for an order enjoining such acts or
practices, or for an order enforcing compliance with such
provision, rule, regulation, or order, and such courts shall
have jurisdiction of such actions and, upon a showing by
the Administrator that such New Markets Venture Capital
company or other person has engaged or is about to en-
gage in any such acts or practices, a permanent or tem-
porary injunction, restraining order, or other order, shall
be granted without bond.
‘‘(b) JURISDICTION.—In any proceeding under sub-
section (a), the court as a court of equity may, to such
extent as it deems necessary, take exclusive jurisdiction
of the New Market Venture Capital company and the as-
sets thereof, wherever located, and the court shall have
jurisdiction in any such proceeding to appoint a trustee
or receiver to hold or administer under the direction of
the court the assets so possessed.
‘‘(c) ADMINISTRATOR AS TRUSTEE OR RECEIVER.—
‘‘(1) AUTHORITY.—The Administrator may act
as trustee or receiver of a New Markets Venture
Capital company.
‘‘(2) Appointment.—Upon request of the Ad-
ministrator, the court may appoint the Adminis-
trator to act as a trustee or receiver of a New Mar-
kets Venture Capital company unless the court
deems such appointment inequitable or otherwise in-
appropriate by reason of the special circumstances
involved.
‘‘SEC. 364. ADDITIONAL PENALTIES FOR NONCOMPLIANCE.
‘‘(a) IN GENERAL.—With respect to any New Mar-
kets Venture Capital company that violates or fails to
comply with any of the provisions of this Act, of any regu-
lation issued under this Act, or of any participation agree-
ment entered into under this Act, the Administrator may
in accordance with this section—
‘‘(1) void the participation agreement between
the Administrator and the company; and
‘‘(2) cause the company to forfeit all of the
rights and privileges derived by the company from
this Act.
‘‘(b) ADJUDICATION OF NONCOMPLIANCE.—
‘‘(1) IN GENERAL.—Before the Administrator
may cause a New Markets Venture Capital company
to forfeit rights or privileges under subsection (a), a
court of the United States of competent jurisdiction
must find that the company committed a violation,
or failed to comply, in a cause of action brought for
that purpose in the district, territory, or other place
subject to the jurisdiction of the United States, in
which the principal office of the company is located.
‘‘(2) PARTIES AUTHORIZED TO FILE CAUSES OF
ACTION.—Each cause of action brought by the
United States under this subsection shall be brought
by the Administrator or by the Attorney General.
‘‘SEC. 365. UNLAWFUL ACTS AND OMISSIONS; BREACH OF
FIDUCIARY DUTY.
‘‘(a) PARTIES DEEMED TO COMMIT A VIOLATION.—
Whenever any New Markets Venture Capital company vio-
lates any provision of this Act, of a regulation issued
under this Act, or of a participation agreement entered
into under this Act, by reason of its failure to comply with
its terms or by reason of its engaging in any act or prac-
tice that constitutes or will constitute a violation thereof,
such violation shall also be deemed to be a violation and
an unlawful act committed by any person who, directly
or indirectly, authorizes, orders, participates in, causes,
brings about, counsels, aids, or abets in the commission
of any acts, practices, or transactions that constitute or
will constitute, in whole or in part, such violation.
‘‘(b) FIDUCIARY DUTIES.—It shall be unlawful for
any officer, director, employee, agent, or other participant
in the management or conduct of the affairs of a New
Markets Venture Capital company to engage in any act
or practice, or to omit any act or practice, in breach of
the person’s fiduciary duty as such officer, director, em-
ployee, agent, or participant if, as a result thereof, the
company suffers or is in imminent danger of suffering fi-
nancial loss or other damage.
‘‘(c) UNLAWFUL ACTS.—Except with the written con-
sent of the Administrator, it shall be unlawful—
‘‘(1) for any person to take office as an officer,
director, or employee of any New Markets Venture
Capital company, or to become an agent or partici-
pant in the conduct of the affairs or management of
such a company, if the person—
‘‘(A) has been convicted of a felony, or any
other criminal offense involving dishonesty or
breach of trust; or
‘‘(B) has been found civilly liable in dam-
ages, or has been permanently or temporarily
enjoined by an order, judgment, or decree of a
court of competent jurisdiction, by reason of
any act or practice involving fraud, or breach of
trust; and
‘‘(2) for any person continue to serve in any of
the capacities described in paragraph (1), if—
‘‘(A) the person is convicted of a felony, or
any other criminal offense involving dishonesty
or breach of trust; or
‘‘(B) the person is found civilly liable in
damages, or is permanently or temporarily en-
joined by an order, judgment, or decree of a
court of competent jurisdiction, by reason of
any act or practice involving fraud or breach of
trust.
‘‘SEC. 366. REMOVAL OR SUSPENSION OF DIRECTORS OR
OFFICERS.
‘‘Using the procedures for removing or suspending a
director or an officer of a licensee set forth in section 313
(to the extent such procedures are not inconsistent with
the requirements of this part), the Administrator may re-
move or suspend any director or officer of any New Mar-
kets Venture Capital company.
‘‘SEC. 367. REGULATIONS.
‘‘The Administrator may issue such regulations as it
deems necessary to carry out the provisions of this part
in accordance with its purposes.
‘‘SEC. 368. AUTHORIZATIONS OF APPROPRIATIONS.
‘‘(a) IN GENERAL.—There are authorized to be ap-
propriated for fiscal years 2001 through 2006, to remain
available until expended, the following sums:
‘‘(1) Such subsidy budget authority as may be
necessary to guarantee $150,000,000 of debentures
under this part.
‘‘(2) $30,000,000 to make grants under this
part.
‘‘(b) FUNDS COLLECTED
FOR EXAMINATIONS.—
Funds deposited under section 362(c)(2) are authorized
to be appropriated only for the costs of examinations
under section 362 and for the costs of other oversight ac-
tivities with respect to the program established under this
part.’’.
(c) CONFORMING AMENDMENT.—Section 20(e)(1)(C)
of the Small Business Act (15 U.S.C. 631 note) is amend-
ed by inserting ‘part A of’ before ‘‘title III’’.
(d) CALCULATION OF MAXIMUM AMOUNT OF SBIC
LEVERAGE.—
(1) MAXIMUM
LEVERAGE.—Section 303(b)(2)
of the Small Business Investment Act of 1958 (15
U.S.C. 683(b)(2)) is amended to read as follows:
‘‘(2) MAXIMUM LEVERAGE.—
‘‘(A) IN
GENERAL.—After March 31,
1993, the maximum amount of outstanding le-
verage made available to a company licensed
under section 301(c) of this Act shall be deter-
mined by the amount of such company’s private
capital—
‘‘(i) if the company has private capital
of not more than $15,000,000, the total
amount of leverage shall not exceed 300
percent of private capital;
‘‘(ii) if the company has private cap-
ital of more than $15,000,000 but not
more than $30,000,000, the total amount
of leverage shall not exceed $45,000,000
plus 200 percent of the amount of private
capital over $15,000,000; and
‘‘(iii) if the company has private cap-
ital of more than $30,000,000, the total
amount of leverage shall not exceed
$75,000,000 plus 100 percent of the
amount of private capital over $30,000,000
but 
not 
to 
exceed 
an 
additional
$15,000,000.
‘‘(B) ADJUSTMENTS.—
‘‘(i) 
IN
GENERAL.—The 
dollar
amounts in clauses (i), (ii), and (iii) of
subparagraph (A) shall be adjusted annu-
ally to reflect increases in the Consumer
Price Index established by the Bureau of
Labor Statistics of the Department of
Labor.
‘‘(ii) 
INITIAL
ADJUSTMENTS.—The
initial adjustments made under this sub-
paragraph after the date of the enactment
of the Small Business Reauthorization Act
of 1937 shall reflect only increases from
March 31, 1993.
‘‘(C) INVESTMENTS IN LOW-INCOME GEO-
GRAPHIC
AREAS.—In 
calculating 
the 
out-
standing leverage of a company for the pur-
poses of subparagraph (A), the Administrator
shall not include the amount of the cost basis
of any equity investment made by the company
in a smaller enterprise located in a low-income
geographic area (as defined in section 351), to
the extent that the total of such amounts does
not exceed 50 percent of the company’s private
capital.’’.
(2) MAXIMUM AGGREGATE LEVERAGE.—Section
303(b)(4) of the Small Business Investment Act of
1958 (15 U.S.C. 683(b)(4)) is amended by adding
at the end the following new subparagraph:
‘‘(D) INVESTMENTS IN LOW-INCOME GEO-
GRAPHIC AREAS.—In calculating the aggregate
outstanding leverage of a company for the pur-
poses of subparagraph (A), the Administrator
shall not include the amount of the cost basis
of any equity investment made by the company
in a smaller enterprise located in a low-income
geographic area (as defined in section 351), to
the extent that the total of such amounts does
not exceed 50 percent of the company’s private
capital.’’.
(e) BANKRUPTCY EXEMPTION FOR NEW MARKETS
VENTURE CAPITAL COMPANIES.—Section 109(b)(2) of
title 11, United States Code, is amended by inserting ‘‘a
New Markets Venture Capital company as defined in sec-
tion 351 of the Small Business Investment Act of 1958,’’
after ‘‘homestead association,’’.
(f ) FEDERAL
SAVINGS
ASSOCIATIONS.—Section
5(c)(4) of the Home Owners’ Loan Act (12 U.S.C.
1464(c)(4)) is amended by adding at the end the fol-
lowing:
‘‘(F) NEW
MARKETS
VENTURE
CAPITAL
COMPANIES.—A Federal savings association
may invest in stock, obligations, or other securi-
ties of any New Markets Venture Capital com-
pany as defined in section 351 of the Small
Business Investment Act of 1958, except that a
Federal savings association may not make any
investment under this subparagraph if its ag-
gregate outstanding investment under this sub-
paragraph would exceed 5 percent of the capital
and surplus of such savings association.’’.
SEC. 2. BUSINESSLINC GRANTS AND COOPERATIVE AGREE-
MENTS.
Section 8 of the Small Business Act (15 U.S.C. 637)
is amended by adding at the end the following:
‘‘(n) BUSINESS GRANTS AND COOPERATIVE AGREE-
MENTS.—
‘‘(1) IN
GENERAL.—In accordance with this
subsection, the Administrator may make grants to
and enter into cooperative agreements with any coa-
lition of private entities, public entities, or any com-
bination of private and public entities—
‘‘(A) to expand business-to-business rela-
tionships between large and small businesses;
and
‘‘(B) to provide businesses, directly or indi-
rectly, with online information and a database
of companies that are interested in mentor-pro-
tege programs or community-based, statewide,
or local business development programs.
‘‘(2) MATCHING
REQUIREMENT.—Subject to
subparagraph (B), the Administrator may make a
grant to a coalition under paragraph (1) only if the
coalition provides for activities described in para-
graph (1)(A) or (1)(B) an amount, either in kind or
in cash, equal to the grant amount.
‘‘(3) AUTHORIZATION
OF
APPROPRIATIONS.—
There is authorized to be appropriated to carry out
this subsection $6,600,000, to remain available until
expended, for each of fiscal years 2001 through
2006.’’.
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