SEC. 2. NEW MARKETS VENTURE CAPITAL PROGRAM.
Title III of the Small Business Investment Act of
1958 (15 U.S.C. 681 et seq.) is amended—
(1) in the heading for the title, by striking
‘‘SMALL BUSINESS INVESTMENT COMPA-
NIES’’ and inserting ‘‘INVESTMENT DIVISION
PROGRAMS’’;
(2) by inserting before the heading for section
301 the following:
‘‘PART A—SMALL BUSINESS INVESTMENT COMPANIES’’
; and
(3) by adding at the end the following:
‘‘PART B—NEW MARKETS VENTURE CAPITAL PROGRAM
‘‘SEC. 351. DEFINITIONS.
‘‘In this part, the following definitions apply:
‘‘(1) DEVELOPMENTAL
VENTURE
CAPITAL.—
The term ‘developmental venture capital’ means cap-
ital in the form of equity investments in businesses
made with a primary objective of fostering economic
development in low- or moderate-income geographic
areas.
‘‘(2) LOW- OR MODERATE-INCOME GEOGRAPHIC
AREA.—The term ‘low- or moderate-income geo-
graphic area’ means—
‘‘(A) a census tract, or the equivalent
county division as defined by the Bureau of the
Census for purposes of defining poverty areas,
in which—
‘‘(i) the poverty rate is not less than
20 percent;
‘‘(ii) in the case of a census tract or
division located within a metropolitan area,
the median family income for such tract or
division does not exceed the greater of 80
percent of the statewide median family in-
come or 80 percent of the metropolitan
area median family income; or
‘‘(iii) in the case of a census tract or
division not located within a metropolitan
area, the median family income for such
tract or division does not exceed 80 per-
cent of the statewide median family in-
come; or
‘‘(B) any area located within—
‘‘(i) a historically underutilized busi-
ness zone (HUBZone), as defined in sec-
tion 3(p) of the Small Business Act (15
U.S.C. 632(p));
‘‘(ii) an urban empowerment zone or
an urban enterprise community, as des-
ignated by the Secretary of the Depart-
ment of Housing and Urban Development;
or
‘‘(iii) a rural empowerment zone or a
rural enterprise community, as designated
by the Secretary of the Department of Ag-
riculture.
‘‘(3) NEW MARKETS VENTURE CAPITAL COM-
PANY.—The term ‘New Markets Venture Capital
company’ means a company that—
‘‘(A) has been granted final approval by
the Administration under section 354(e); and
‘‘(B) has entered into a participation
agreement with the Administration.
‘‘(4) OPERATIONAL
ASSISTANCE.—The term
‘operational assistance’ means management, mar-
keting, and other technical assistance that assists a
small business concern with business development.
‘‘(5) PARTICIPATION
AGREEMENT.—The term
‘participation agreement’ means an agreement, be-
tween the Administration and a company granted
final approval under section 354(e), that—
‘‘(A) details the company’s operating plan
and investment criteria; and
‘‘(B) requires the company to make invest-
ments in smaller enterprises at least 80 percent
of which are located in low- or moderate-income
geographic areas.
‘‘(6) SPECIALIZED
SMALL
BUSINESS
INVEST-
MENT COMPANY.—The term ‘specialized small busi-
ness investment company’ means any small business
investment company that—
‘‘(A) invests solely in small business con-
cerns that contribute to a well-balanced na-
tional economy by facilitating ownership in such
concerns by persons whose participation in the
free enterprise system is hampered because of
social or economic disadvantages;
‘‘(B) is organized or chartered under State
business or nonprofit corporations statutes, or
formed as a limited partnership; and
‘‘(C) was licensed under section 301(d), as
in effect before September 30, 1996.
‘‘SEC. 352. PURPOSES.
‘‘The purposes of the New Markets Venture Capital
Program established under this part are—
‘‘(1) to promote economic development and the
creation of wealth and job opportunities in low- or
moderate-income geographic areas and among indi-
viduals living in such areas by encouraging develop-
mental venture capital investments in smaller enter-
prises primarily located in such areas; and
‘‘(2) to establish a developmental venture cap-
ital program, with the mission of addressing the
unmet equity investment needs of small enterprises
located in low- and moderate-income geographic
areas, to be administered by the Administration—
‘‘(A) to enter into participation agreements
with New Markets Venture Capital companies;
‘‘(B) to guarantee debentures of New Mar-
kets Venture Capital companies to enable each
such company to make developmental venture
capital investments in smaller enterprises in
low- or moderate-income geographic areas; and
‘‘(C) to make grants to New Markets Ven-
ture Capital companies, and to other entities,
for the purpose of providing operational assist-
ance to smaller enterprises financed, or ex-
pected to be financed, by such companies.
‘‘SEC. 353. ESTABLISHMENT.
‘‘In accordance with this part, the Administration
shall establish a New Markets Venture Capital Program,
under which the Administration may—
‘‘(1) enter into participation agreements with
companies granted final approval under section
354(e) for the purposes set forth in section 352;
‘‘(2) guarantee the debentures issued by New
Markets Venture Capital companies as provided in
section 355; and
‘‘(3) make grants to New Markets Venture
Capital companies, and to other entities, under sec-
tion 358.
‘‘SEC. 354. SELECTION OF NEW MARKETS VENTURE CAP-
ITAL COMPANIES.
‘‘(a) ELIGIBILITY.—A company shall be eligible to
apply to participate, as a New Markets Venture Capital
company, in the program established under this part if—
‘‘(1) the company is a newly formed for-profit
entity or a newly formed for-profit subsidiary of an
existing entity;
‘‘(2) the company has a management team with
experience in community development financing or
relevant venture capital financing; and
‘‘(3) the company has a primary objective of
economic development of low- or moderate-income
geographic areas.
‘‘(b) APPLICATION.—To participate, as a New Mar-
kets Venture Capital company, in the program established
under this part a company meeting the eligibility require-
ments set forth in subsection (a) shall submit an applica-
tion to the Administration that includes—
‘‘(1) a business plan describing how the com-
pany intends to make successful developmental ven-
ture capital investments in identified low- or mod-
erate-income geographic areas;
‘‘(2) information regarding the community de-
velopment finance or relevant venture capital quali-
fications and general reputation of the company’s
management;
‘‘(3) a description of how the company intends
to work with community organizations and to seek
to address the unmet capital needs of the commu-
nities served;
‘‘(4) a proposal describing how the company
will use the grant funds provided under this part to
provide operational assistance to smaller enterprises
financed by the company, including information re-
garding whether the company will use licensed pro-
fessionals, where applicable, on the company’s staff
or from an outside entity;
‘‘(5) with respect to binding commitments to be
made to the company under this part, an estimate
of the ratio of cash to in-kind contributions;
‘‘(6) a description of the criteria to be used to
evaluate whether and to what extent the company
meets the objectives of the program established
under this part;
‘‘(7) information regarding the management
and financial strength of any parent firm, affiliated
firm, or any other firm essential to the success of
the company’s business plan; and
‘‘(8) such other information as the Administra-
tion may require.
‘‘(c) CONDITIONAL APPROVAL.—
‘‘(1) IN
GENERAL.—From among companies
submitting applications under subsection (b), the
Administration shall, in accordance with this sub-
section, conditionally approve companies to partici-
pate in the New Markets Venture Capital Program.
‘‘(2) SELECTION CRITERIA.—In selecting com-
panies under paragraph (1), the Administration
shall consider the following:
‘‘(A) The likelihood that the company will
meet the goals of its business plan.
‘‘(B) The experience and background of
the company’s management team.
‘‘(C) The need for developmental venture
capital investments in the geographic areas in
which the company intends to invest.
‘‘(D) The extent to which the company will
concentrate its activities on serving the geo-
graphic areas in which it intends to invest.
‘‘(E) The likelihood that the company will
be able to satisfy the conditions under sub-
section (d).
‘‘(F) The extent to which the activities
proposed by the company will expand economic
opportunities in the geographic areas in which
the company intends to invest.
‘‘(G) The strength of the company’s pro-
posal to provide operational assistance under
this part as the proposal relates to the ability
of the applicant to meet applicable cash require-
ments and properly utilize in-kind contribu-
tions, including the use of resources for the
services of licensed professionals whether pro-
vided by persons on the company’s staff or by
persons outside of the company.
‘‘(H) Any other factors deemed appro-
priate by the Administration.
‘‘(3) NATIONWIDE DISTRIBUTION.—The Admin-
istration shall select companies under paragraph (1)
in such a way that promotes investment nationwide.
‘‘(d) REQUIREMENTS TO BE MET FOR FINAL AP-
PROVAL.—The Administration shall grant each condi-
tionally approved company a period of time, not to exceed
2 years, to satisfy the following requirements:
‘‘(1) CAPITAL
REQUIREMENT.—Each condi-
tionally approved company must raise not less than
$5,000,000 of private capital or binding capital com-
mitments from 1 or more investors (other than
agencies or departments of the Federal Government)
who meet criteria established by the Administration.
‘‘(2) NONADMINISTRATION
RESOURCES
FOR
OPERATIONAL
ASSISTANCE.—In order to provide
operational assistance to smaller enterprises ex-
pected to be financed by the company, each condi-
tionally approved company—
‘‘(A) must have binding commitments (for
contribution in cash or in kind)—
‘‘(i) from any sources other than the
Administration that meet criteria estab-
lished by the Administration;
‘‘(ii) payable or available over a
multiyear period acceptable to the Admin-
istration (not to exceed 10 years); and
‘‘(iii) in an amount not less than 30
percent of the total amount of capital and
commitments raised under paragraph (1);
‘‘(B) must have purchased an annuity—
‘‘(i) from an insurance company ac-
ceptable to the Administration;
‘‘(ii) using funds (other than the
funds raised under paragraph (1)) from
any source other than the Administration;
and
‘‘(iii) that yields cash payments over a
multiyear period acceptable to the Admin-
istration (not to exceed 10 years) in an
amount not less than 30 percent of the
total amount of capital and commitments
raised under paragraph (1); or
‘‘(C) must have binding commitments (for
contributions in cash or in kind) of the type de-
scribed in subparagraph (A) and must have
purchased an annuity of the type described in
subparagraph (B), which in the aggregate make
available, over a multiyear period acceptable to
the Administration (not to exceed 10 years), an
amount not less than 30 percent of the total
amount of capital and commitments raised
under paragraph (1).
‘‘(e) FINAL APPROVAL.—The Administration shall
grant to a company conditionally approved under sub-
section (c) final approval to participate in the program es-
tablished under this part after the company has met the
requirements set forth in subsection (d).
‘‘SEC. 355. DEBENTURES.
‘‘(a) IN GENERAL.—The Administration may guar-
antee the timely payment of principal and interest, as
scheduled, on debentures issued by any New Markets Ven-
ture Capital company.
‘‘(b) TERMS AND CONDITIONS.—The Administration
may make guarantees under this section on such terms
and conditions as it deems appropriate, except that the
term of any debenture guaranteed under this section shall
not exceed 15 years.
‘‘(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 under this part.
‘‘(d) MAXIMUM GUARANTEE.—
‘‘(1) IN GENERAL.—Under this section, the Ad-
ministration may guarantee the debentures issued by
a New Markets Venture Capital company only to the
extent that the total face amount of outstanding
guaranteed debentures of such company does not ex-
ceed 150 percent of the private capital of the com-
pany, as determined by the Administration.
‘‘(2) 
TREATMENT
OF
CERTAIN
FEDERAL
FUNDS.—For the purposes of paragraph (1), private
capital shall include capital that is considered to be
Federal funds, if such capital is contributed by an
investor other than an agency or department of the
Federal Government.
‘‘SEC. 356. ISSUANCE AND GUARANTEE OF TRUST CERTIFI-
CATES.
‘‘(a) ISSUANCE.—The Administration may issue trust
certificates representing ownership of all or a fractional
part of debentures issued by a New Markets Venture Cap-
ital company and guaranteed by the Administration under
this part, if such certificates are based on and backed by
a trust or pool approved by the Administration and com-
posed solely of guaranteed debentures.
‘‘(b) GUARANTEE.—
‘‘(1) IN GENERAL.—The Administration 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
Administration 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 Administration 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 Administration or its agents under this section.
‘‘(d) FEES.—The Administration shall not collect a
fee for any guarantee of a trust certificate under this sec-
tion, but any agent of the Administration may collect a
fee approved by the Administration for the functions de-
scribed in subsection (f)(2).
‘‘(e) SUBROGATION AND OWNERSHIP RIGHTS.—
‘‘(1) SUBROGATION.—In the event the Adminis-
tration 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 Administration 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.—
‘‘(A) IN
GENERAL.—The Administration
may provide for a central registration of all
trust certificates issued under this section.
‘‘(B) FORMS OF REGISTRATION.—Nothing
in this subsection shall prohibit the use of a
book entry or other electronic form of registra-
tion for trust certificates.
‘‘(2) CONTRACTING OF FUNCTIONS.—
‘‘(A) IN
GENERAL.—The Administration
may contract with an agent or agents to carry
out on behalf of the Administration 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 Administration,
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 Administration under this
paragraph shall provide a fidelity bond or insur-
ance in such amounts as the Administration de-
termines to be necessary to fully protect the in-
terests of the United States.
‘‘(3) APPLICABILITY OF THE SECURITIES EX-
CHANGE
ACT
OF 1934.—Notwithstanding section
3(a)(42) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(42)), trust certificates issued under
this section shall not be treated as government secu-
rities for the purposes of that Act.
‘‘SEC. 357. FEES.
‘‘Except as provided in section 356(d), the Adminis-
tration 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 Administration 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-
ministration may require.
‘‘(3) GRANTS TO SPECIALIZED SMALL BUSINESS
INVESTMENT COMPANIES.—
‘‘(A) AUTHORITY.—In accordance with
this section, the Administration 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.—
‘‘(i) IN GENERAL.—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 effec-
tive date of the New Markets Venture Cap-
ital Program Act of 2000) in a business lo-
cated in a low- or moderate-income geo-
graphic area.
‘‘(ii) 
ADDITIONAL
LIMITATION.—
Operational assistance referred to in clause
(i) may not be provided in connection with
more than 1 equity investment.
‘‘(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 with 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 com-
pany shall be equal to the resources (in cash or
in kind) raised by the entity in accordance with
the requirements applicable to New Markets
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 Administration to provide grants in the
amounts provided for in paragraph (4), the Adminis-
tration shall make pro rata reductions in the
amounts otherwise payable to each company and en-
tity under such paragraph.
‘‘(b) SUPPLEMENTAL GRANTS.—
‘‘(1) IN
GENERAL.—The Administration 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-
tration may require, to provide additional oper-
ational assistance to smaller enterprises financed, or
expected to be financed, by the companies.
‘‘(2) MATCHING REQUIREMENT.—The Adminis-
tration 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 cash or in kind), other than those pro-
vided by the Administration, 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 operating
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 REQUIREMENTS.
‘‘Each New Markets Venture Capital company that
participates in the program established under this part
shall provide to the Administration such information as
the Administration 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- or mod-
erate-income geographic area, a report on the num-
ber and percentage 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
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 Administration
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 Administration assesses costs under
this paragraph shall pay such costs.
‘‘(2) DEPOSIT
OF
FUNDS.—Funds collected
under this section shall be deposited in the account
for salaries and expenses of the Administration.
‘‘SEC. 363. INJUNCTIONS AND OTHER ORDERS.
‘‘(a) IN GENERAL.—Whenever, in the judgment of
the Administration, 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 Administration 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 Administration that such New Markets Venture Cap-
ital company or other person has engaged or is about to
engage 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) ADMINISTRATION AS TRUSTEE OR RECEIVER.—
‘‘(1) AUTHORITY.—The Administration may act
as trustee or receiver of a New Markets Venture
Capital company.
‘‘(2) APPOINTMENT.—Upon request of the Ad-
ministration, the court may appoint the Administra-
tion to act as a trustee or receiver of a New Markets
Venture Capital company unless the court deems
such appointment inequitable or otherwise inappro-
priate by reason of the special circumstances in-
volved.
‘‘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 Administration may
in accordance with this section—
‘‘(1) void the participation agreement between
the Administration 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 Administration
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 Administration 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 Administration, 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 Administration may re-
move or suspend any director or officer of any New Mar-
kets Venture Capital company.
‘‘SEC. 367. REGULATIONS.
‘‘The Administration 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.—For fiscal years 2000 through
2005, the Administration is authorized to be appropriated,
to remain available until expended—
‘‘(1) such subsidy budget authority as may be
necessary to guarantee $150,000,000 of debentures
under this part; and
‘‘(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.’’.
SEC. 3. CONFORMING AMENDMENT.
Section 20(e)(1)(C) of the Small Business Act (15
U.S.C 631 note) is amended by inserting ‘‘part A of’’ be-
fore ‘‘title III’’.
SEC. 4. CALCULATION OF MAXIMUM AMOUNT OF SBIC LE-
VERAGE.
(a) 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 ini-
tial adjustments made under this subpara-
graph after the date of enactment of the
Small Business Reauthorization Act of
1997 shall reflect only increases from
March 31, 1993.
‘‘(C) INVESTMENTS
IN
LOW- OR
MOD-
ERATE INCOME 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- or mod-
erate-income geographic area (as defined in sec-
tion 351), to the extent that the total of such
amounts does not exceed 50 percent of the com-
pany’s private capital.’’.
(b) 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- OR
MOD-
ERATE INCOME AREAS.—In calculating the ag-
gregate outstanding leverage of a company for
the purposes of subparagraph (A), the Adminis-
trator 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- or moderate-income geographic area (as
defined in section 351), to the extent that the
total of such amounts does not exceed 50 per-
cent of the company’s private capital.’’.
SEC. 5. BANKRUPTCY EXEMPTION FOR NEW MARKETS VEN-
TURE 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 section 351 of the Small Business
Investment Act of 1958,’’ after ‘‘homestead association,’’.
SEC. 6. 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
following:
‘‘(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.’’.
Æ