420 
(21) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY SO-
CIALLY AND ECONOMICALLY DISADVANTAGED INDIVIDUALS.—The term 
‘‘small business concern owned and controlled by socially and economi-
cally disadvantaged individuals’’ has the meaning given the term in sec-
tion 101102 of this title, except that the exception stated in paragraph 
(19)(B) of this section applies. 
(22) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY VET-
ERANS.—The term ‘‘small business concern owned and controlled by 
veterans’’ has the meaning given the term in section 101102 of this 
title, except that the exception stated in paragraph (19)(B) of this sec-
tion applies. 
(23) SMALL BUSINESS INVESTMENT COMPANY.—The term ‘‘small 
business investment company’’ means a licensee. 
(24) SMALLER ENTERPRISE.— 
(A) IN
GENERAL.—The term ‘‘smaller enterprise’’ means a 
small business concern that, together with its affiliates— 
(i) has— 
(I) a net financial worth of not more than $6,000,000, 
as of the date on which assistance is provided under this 
subtitle to that small business concern; and 
(II) an average net income, for the 2-year period pre-
ceding the date on which assistance is provided under 
this subtitle to that small business concern, of not more 
than $2,000,000, after Federal income taxes (excluding 
any carryover losses); or 
(ii) satisfies the North American Industry Classification 
System size standards established by the Administrator for 
the industry in which the small business concern is primarily 
engaged. 
(B) DETERMINATION OF NET INCOME.—For purposes of sub-
paragraph (A)(i)(II), if a small business concern is not required 
by law to pay Federal income tax at the enterprise level, but is 
required to pass income through to the shareholders, partners, 
beneficiaries, or other equitable owners of the small business con-
cern, the net income of the small business concern shall be deter-
mined by deducting from the gross income of the small business 
concern— 
(i) in the case of a small business concern that is required 
by law to pay State (and local, if any) income taxes at the 
enterprise level, the amount that is equal to the net income 
of the small business concern determined without regard to 
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this clause, multiplied by the marginal Federal income tax 
rate that would apply if the small business concern were a 
corporation; or 
(ii) in the case of a small business concern that is not re-
quired by law to pay State (and local, if any) income taxes 
at the enterprise level, the amount that is equal to the sum 
of— 
(I) the net income of the small business concern deter-
mined without regard to this clause, multiplied by the 
marginal State income tax rate (or by the combined 
State and local income tax rates, as applicable) that 
would apply if the small business concern were a cor-
poration; and 
(II) the net income of the small business concern de-
termined without regard to this clause, less any deduc-
tion for State (and local) income taxes calculated under 
subclause (I), multiplied by the marginal Federal income 
tax rate that would apply if the business concern were 
a corporation. 
(25) SPECIALIZED SMALL BUSINESS INVESTMENT COMPANY.—The 
term ‘‘specialized small business investment company’’ means a com-
pany that— 
(A) invests solely in small business concerns that contribute to 
a well-balanced national economy by facilitating ownership in 
small business concerns by persons whose participation in the free 
enterprise system is hampered because of social or economic dis-
advantages; 
(B) is organized or chartered under a State business or non-
profit corporations statute or formed as a limited partnership; and 
(C) was licensed under subsection (d) of section 301 of the 
Small Business Investment Act of 1958 (15 U.S.C. 681(d)), as in 
effect before September 30, 1996. 
(26) STATE.—The term ‘‘State’’ includes a State, District of Colum-
bia, Puerto Rico, and any other territory (including a possession) of the 
United States. 
§ 301102. Implementation of subtitle 
The Administrator— 
(1) shall carry out this subtitle so as to improve and stimulate the 
national economy in general and the small business segment of the 
economy in particular by establishing a program to stimulate and sup-
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plement the flow of private equity capital and long-term loan funds 
that— 
(A) small business concerns need for the sound financing of 
their business operations and for their growth, expansion, and 
modernization; and 
(B) are not available in adequate supply; and 
(2) in doing so— 
(A) shall ensure the maximum participation of private financing 
sources; 
(B) shall ensure that any financial assistance provided under 
this subtitle does not result in a substantial increase of unemploy-
ment in any area of the country; and 
(C) in the award of financial assistance under this subtitle, 
when practicable, shall accord priority to small business concerns 
that lease or purchase equipment and supplies produced in the 
United States and encourage small business concerns that receive 
assistance under this subtitle to continue to lease or purchase 
equipment and supplies produced in the United States. 
Division B—Investment Programs 
Chapter 303—Small Business Investment 
Company Program 
Sec. 
303101.
Requirements for licensing. 
303102.
Licensing procedure. 
303103.
Financial institution investments. 
303104.
Borrowing power. 
303105.
Equity capital for small business concerns. 
303106.
Long-term loans to small business concerns. 
303107.
Limitation on amount of financing. 
303108.
Cooperation with banks and other investors or lenders. 
303109.
Advisory services; Federal Reserve Banks as depositories or fiscal agents; investment 
of funds. 
303110.
Nonliability of the United States. 
303111.
Certifications of eligibility. 
303112.
Interest rates. 
303113.
Conflicts of interest. 
303114.
Ineligibility of guaranteed obligations for purchase by Federal Financing Bank. 
303115.
Trust certificates. 
303116.
Regulations. 
303117.
Unlawful acts and omissions. 
303118.
Investigations; examinations; valuations. 
303119.
Revocation and suspension of licenses; cease and desist orders. 
303120.
Removal or suspension of, or prohibition of participation by, management officials. 
303121.
Direct civil enforcement actions. 
303122.
Jurisdiction; service of process. 
§ 303101. Requirements for licensing 
(a) IN GENERAL.—To receive or hold a license to operate as a small busi-
ness investment company under this chapter, a company shall meet the re-
quirements of this section. 
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(b) ORGANIZATION.—The company shall be an incorporated body, limited 
liability company, or limited partnership organized and chartered or other-
wise existing under State law solely for the purpose of performing the func-
tions and conducting the activities contemplated under this chapter. 
(c) SUCCESSION.—The company— 
(1) if it is an incorporated body, shall have succession for a period 
of not less than 30 years unless it is sooner dissolved by its share-
holders; and 
(2) if it is a limited partnership, shall have succession for a period 
of not less than 10 years. 
(d) POWERS.—The company shall possess the powers reasonably nec-
essary to perform the functions and conducting the activities contemplated 
under this chapter. 
(e) AREA OF OPERATION.—The area in which the company is to conduct 
its operations, and the establishment of branch offices or agencies (if au-
thorized by the articles), shall be subject to the approval of the Adminis-
trator. 
(f) ARTICLES.— 
(1) IN GENERAL.—The articles of the company shall specify in gen-
eral terms— 
(A) the purposes for which the company is formed; 
(B) the name of the company; 
(C) the area or areas in which its operations are to be carried 
on; 
(D) the place where its principal office is to be located; and 
(E) the amount and classes of its shares of capital stock. 
(2) OTHER PROVISIONS.—The articles of the company may contain 
any other provisions not inconsistent with this chapter that the com-
pany may see fit to adopt for the regulation of its business and the 
conduct of its affairs. 
(3) APPROVAL.—The articles of the company and any amendments 
to the articles adopted from time to time shall be subject to the ap-
proval of the Administrator. 
(g) CAPITAL REQUIREMENTS.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the private 
capital of the company shall be not less than— 
(A) $5,000,000; or 
(B) $10,000,000, with respect to a company that seeks author-
ity to issue participating securities to be purchased or guaranteed 
by the Administrator under this chapter. 
(2) EXCEPTIONS.— 
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