I 
117TH CONGRESS 
1ST SESSION H. R. 5225 
To amend the Small Business Investment Act of 1958 to establish a Micro- 
SBIC program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 10, 2021 
Ms. HOULAHAN introduced the following bill; which was referred to the 
Committee on Small Business 
A BILL 
To amend the Small Business Investment Act of 1958 to 
establish a Micro-SBIC program, 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 ‘‘Micro-SBIC and 
Emerging Managers Program Act of 2021’’. 
SEC. 2. MICRO-SBIC LICENSE. 
Part A of title III of the Small Business Investment 
Act of 1958 (15 U.S.C. 681 et seq.) is amended by adding 
at the end the following new sections: 
VerDate Sep 11 2014 
00:12 Sep 14, 2021
Jkt 019200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
‘‘SEC. 321. MICRO-SBIC LICENSE. 
‘‘(a) ESTABLISHMENT.—The Administrator shall es-
tablish a program to issue Micro-SBIC licenses to appli-
cants for the purpose of making investments in and loans 
to qualified small business concerns. 
‘‘(b) ADMINISTRATION.—To the extent practicable, 
the Administrator shall administer the program estab-
lished under this section in a similar manner to the pro-
gram established under section 301. 
‘‘(c) APPLICATIONS.—An applicant shall submit an 
application to the Administrator at such time, in such 
manner, and containing such information as the Adminis-
trator may require, including— 
‘‘(1) evidence that the applicant holds private 
capital of not less than $5,000,000; and 
‘‘(2) evidence that the management of the ap-
plicant has significant business expertise relevant to 
the applicant’s investment strategy. 
‘‘(d) SELECTION OF MICRO-SBICS.—The Adminis-
trator shall select applicants to be granted a license to op-
erate a Micro-SBIC under this section. 
‘‘(e) GUIDANCE.—The Administrator shall issue 
guidance that encourages the participation of nontradi-
tional applicants by reducing requirements for applicants. 
Such guidance— 
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
‘‘(1) may include the requirements established 
under part 107 of title 13, Code of Federal Regula-
tions; and 
‘‘(2) shall allow applicants who have not pre-
viously managed an investment company to dem-
onstrate significant business expertise relevant to 
the applicant’s investment strategy by reliance upon 
the presence of at least two track record investment 
committee members or participation in the Emerg-
ing Managers Program established under section 
322. 
‘‘(f) PROCEDURES FOR ISSUING LICENSES.— 
‘‘(1) STATUS.—Not later than 90 days after the 
initial receipt by the Administrator of an application 
under this subsection, the Administrator shall pro-
vide the applicant with a written report detailing the 
status of the application and any requirements re-
maining for the completion of the application. 
‘‘(2) APPROVAL OR DISAPPROVAL.—Except as 
provided in paragraph (3) and within a reasonable 
time after providing the report under paragraph (1), 
and in accordance with such requirements as the 
Administrator may provide, the Administrator 
shall— 
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
‘‘(A) approve the application and issue the 
applicant a license to operate as a Micro-SBIC; 
or 
‘‘(B) disapprove the application and notify 
the applicant in writing of the disapproval, in-
cluding reasons for the disapproval. 
‘‘(3) PROVISIONAL APPROVAL.— 
‘‘(A) IN
GENERAL.—The Administrator 
may provide provisional approval to an appli-
cant to— 
‘‘(i) encourage investment company 
applicants with an investment mandate 
from the committed private market capital 
of the investment company that does not 
conform to the requirements relating to 
private capital in subsection (c) at the time 
of application; 
‘‘(ii) allow the applicant to more effec-
tively raise capital commitments from the 
private market by such provisional ap-
proval; and 
‘‘(iii) allow the applicant to more pre-
cisely request the desired amount of lever-
age from the Administrator pending the 
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
securing of capital from private market in-
vestors. 
‘‘(B) LIMITATION.—An applicant provided 
provisional approval under subparagraph (A) 
shall apply for approval under paragraph (2) 
not later than 12 months after being granted 
such provisional approval. 
‘‘(g) MAXIMUM LEVERAGE.— 
‘‘(1) IN GENERAL.—The maximum amount of 
outstanding leverage made available to any one 
Micro-SBIC may not exceed— 
‘‘(A) 50 percent of the private capital of 
such Micro-SBIC, not to exceed $25,000,000; 
or 
‘‘(B) in the case of a Micro-SBIC owned 
by persons that also own a small business in-
vestment company licensed under section 301, 
100 percent of the private capital of such 
Micro-SBIC, not to exceed $50,000,000. 
‘‘(2) INVESTMENTS IN CERTAIN BUSINESS.— 
‘‘(A) IN GENERAL.—In calculating the out-
standing leverage of a Micro-SBIC for purposes 
of subparagraph (A), the Administrator shall 
exclude the amount of the costs basis of any in-
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
vestments made in an entity described in sub-
paragraph (B) in an amount not to exceed— 
‘‘(i) $25,000,000; or 
‘‘(ii) in the case of a Micro-SBIC 
owned by persons that also own a small 
business 
investment 
company 
licensed 
under section 301, $50,000,000. 
‘‘(B) ENTITIES.—An entity described in 
this subparagraph is— 
‘‘(i) a Special Competitive Oppor-
tunity Gap Business (as defined by the Ad-
ministrator); 
‘‘(ii) a small business concern located 
in a HUBZone; 
‘‘(iii) a small business concern located 
in a community that has been designated 
as an empowerment zone or an enterprise 
community under section 1391 of the In-
ternal Revenue Code of 1986; 
‘‘(iv) a small business concern located 
in a community that has been designated 
as a promise zone by the Secretary of 
Housing and Urban Development; or 
‘‘(v) a small business concern located 
in a community that has been designated 
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
as a qualified opportunity zone under sec-
tion 1400Z–1 of the Internal Revenue 
Code of 1986. 
‘‘(3) PORTFOLIO
DIVERSIFICATION.—The Ad-
ministrator shall revise section 107.740 of title 13, 
Code of Federal Regulations, to provide for a higher 
‘overline limit’ for a Micro-SBIC compared to other 
small business investment companies. 
‘‘(h) REPORT.—The Administrator shall include in 
the annual report required under section 10(a) of the 
Small Business Act a description of— 
‘‘(1) the number of applications received under 
this subsection, including the number of applications 
received from applicants the management of which is 
at least majority composed of socially disadvantaged 
individuals or veterans; 
‘‘(2) the number of licenses issued under this 
section, including the number of such licenses issued 
to applicants the management of which is at least 
majority composed of socially disadvantaged individ-
uals or veterans; 
‘‘(3) the number of investments made by Micro- 
SBICs in Special Competitive Opportunity Gap 
Businesses, disaggregated by the type of Special 
Competitive Opportunity Gap Business; and 
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
‘‘(4) the number of investments made by Micro- 
SBICs, disaggregated by debt, debt with equity fea-
tures, and equity only. 
‘‘(i) DEFINITIONS.—In this section: 
‘‘(1) APPLICANT.—The term ‘applicant’ means 
an incorporated body, a limited liability corporation, 
or a limited partnership organized and chartered or 
otherwise existing under State law solely for the pur-
pose of securing a Micro-SBIC license to perform 
the functions and conduct the activities described 
under this section. 
‘‘(2) MANAGEMENT.—The term ‘management’ 
means a general partner of an applicant or member 
of the investment committee of the applicant. 
‘‘(3) MICRO-SBIC.—The term ‘Micro-SBIC’ 
means a company issued a license to operate pursu-
ant to the requirements of this section. 
‘‘(4) MICRO-SBIC LICENSE.—The term ‘Micro- 
SBIC license’ means a license issued to an applicant 
to operate pursuant to the requirements of this sec-
tion. 
‘‘(5) SOCIALLY DISADVANTAGED INDIVIDUAL.— 
The term ‘socially disadvantaged individual’— 
‘‘(A) has the meaning given in section 
8(a)(5) of the Small Business Act; and 
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
‘‘(B) includes an individual who is a 
woman. 
‘‘(6) TRACK RECORD INVESTMENT COMMITTEE 
MEMBER.—The term ‘track record investment com-
mittee member’ means a current or former small 
business investment company or lower-middle mar-
ket private equity fund manager with the knowledge, 
experience, and capability necessary to serve as man-
agement for an applicant. 
‘‘(7) VETERAN.—The term ‘veteran’ has the 
meaning given under section 3(q)(4) of the Small 
Business Act. 
‘‘SEC. 322. EMERGING MANAGERS PROGRAM. 
‘‘(a) ESTABLISHMENT.—The Administrator shall es-
tablish a program to be known as the ‘Emerging Managers 
Program’ under which a covered manager may enter into 
a written agreement approved by the Administrator to 
provide guidance and assistance to an applicant for a 
small business investment company license or a Micro- 
SBIC license that is managed by not less than two individ-
uals who are emerging managers. 
‘‘(b) LEVERAGE.—Leverage made available to a small 
business investment company or Micro-SBIC that is man-
aged by at least two individuals who are emerging man-
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
agers shall not be considered as part of the leverage made 
available to a covered manager. 
‘‘(c) REPORT.—Not later than 5 years after the date 
of enactment of this Act, the Administrator shall submit 
to the Committee on Small Business of the House of Rep-
resentatives and the Committee on Small Business and 
Entrepreneurship of the Senate a report evaluating the 
effectiveness of the Emerging Managers Program estab-
lished under this section, including with respect to increas-
ing the number of applications received by and licenses 
issued to emerging managers. 
‘‘(d) DEFINITIONS.—In this subsection: 
‘‘(1) COVERED MANAGER.—The term ‘covered 
manager’ means— 
‘‘(A) a manager with substantial experi-
ence in operating small business investment 
companies; and 
‘‘(B) as determined by the Administrator, 
a manager of a private equity fund or venture 
fund that is not licensed as a small business in-
vestment company. 
‘‘(2) EMERGING MANAGER.—The term ‘emerg-
ing manager’ means an individual with an invest-
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS
ment record of less than 10 years, or with a focus 
on underserved markets.’’. 
Æ 
VerDate Sep 11 2014 
04:35 Sep 11, 2021
Jkt 019200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6301
E:\BILLS\H5225.IH
H5225
SSpencer on DSK126QN23PROD with BILLS