IB 
Union Calendar No. 249
108TH CONGRESS 
2D SESSION 
H.R. 2802
[Report No. 108–325, Part I] 
To reauthorize the Small Business Act and the Small Business Investment 
Act of 1958, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 21, 2003
Mr. MANZULLO (for himself and Ms. VELA´ZQUEZ) introduced the following 
bill; which was referred to the Committee on Small Business 
OCTOBER 21, 2003
Reported with an amendment and referred to the Committee on Government 
Reform for a period ending not later than October 31, 2003, for consider-
ation of such provisions of the bill and amendment as fall within the ju-
risdiction of that committee pursuant to clause 1(h), rule X 
[Strike out all after the enacting clause and insert the part printed in italic] 
OCTOBER 31, 2003
Referral to the Committee on Government Reform extended for a period 
ending not later than November 7, 2003
NOVEMBER 7, 2003
Referral to the Committee on Government Reform extended for a period 
ending not later than November 21, 2003
NOVEMBER 21, 2003
Referral to the Committee on Government Reform extended for a period 
ending not later than January 31, 2004
JANUARY 31, 2004
Referral to the Committee on Government Reform extended for a period 
ending not later than March 2, 2004
MARCH 2, 2004
Referral to the Committee on Government Reform extended for a period 
ending not later than March 8, 2004
MARCH 8, 2004
Additional sponsor: Mr. BEREUTER
MARCH 8, 2004
Committee on Government Reform discharged; committed to the Committee 
of the Whole House on the State of the Union and ordered to be printed 
[For text of introduced bill, see copy of bill as introduced on July 21, 2003] 
A BILL 
To reauthorize the Small Business Act and the Small 
Business Investment Act of 1958, 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; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Small Business Reauthorization and Manufacturing Revi-
talization Act of 2003’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows:
Sec. 1. Short title; table of contents. 
TITLE I—SMALL BUSINESS INVESTMENT ACT OF 1958 
AMENDMENTS AND RELATED PROVISIONS 
Sec. 101. State defined. 
Sec. 102. Small manufacturer defined. 
Sec. 103. Maximum participating securities rate. 
Sec. 104. Maximum leverage for buying operations. 
Sec. 105. Maximum aggregate amount of leverage. 
Sec. 106. Investments in smaller enterprises. 
Sec. 107. Actions of Administrator with respect to capital impairment. 
Sec. 108. Conditions for distribution. 
Sec. 109. Modification of aggregate limitation.
Sec. 110. Notice and comment rulemaking. 
Sec. 111. Low-income geographic area definition. 
Sec. 112. Unmet equity investment needs of certain small manufacturers. 
Sec. 113. Participation agreement requirement. 
Sec. 114. Final approval requirement. 
Sec. 115. Conditionally approved companies. 
Sec. 116. Applications for new markets venture capital companies. 
Sec. 117. Authorization of appropriations. 
Sec. 118. Repeal of lease guarantee authority. 
Sec. 119. Amendment of congressional findings relating to State development 
companies. 
Sec. 120. Qualification of State development companies. 
Sec. 121. Job requirements; definition. 
Sec. 122. Small business concern loan limitations. 
Sec. 123. Approval requirement. 
Sec. 124. Effective date for termination of certain fees. 
Sec. 125. Accredited lenders program. 
Sec. 126. Premier certified lenders program. 
Sec. 127. Foreclosure and liquidation of loans. 
Sec. 128. Additions to title V. 
Sec. 129. Regulations to carry out amendments to loan program. 
Sec. 130. Conforming amendments. 
Sec. 131. Development company affiliates. 
TITLE II—SMALL BUSINESS ACT AMENDMENTS AND RELATED 
PROVISIONS. 
Sec. 201. Short title. 
Sec. 202. Findings; statements of policy. 
Sec. 203. Definitions. 
Sec. 204. Small Business Administration. 
Sec. 205. Financial management. 
Sec. 206. Organization and staff. 
Sec. 207. Loan programs. 
Sec. 208. Government contract and business development assistance for small 
business concerns, etc. 
Sec. 209. Training and assistance. 
Sec. 210. Contracting assistance; etc. 
Sec. 211. Authorization of appropriations; etc. 
Sec. 212. Small business development centers. 
Sec. 213. Assignment of employees of the Office of International Trade. 
Sec. 214. Supervisory and enforcement authority for small business lending com-
panies. 
Sec. 215. Reauthorization of Paul D. Coverdell drug-free workplace program. 
Sec. 216. Women’s business center program. 
Sec. 217. HUBZone program. 
Sec. 218. Other repeals and reorganizations. 
Sec. 219. Rules of construction. 
TITLE III—OTHER PROVISIONS 
Sec. 301. Report regarding national database of small manufacturers. 
Sec. 302. Workforce transformation plan. 
Sec. 303. Repeal of certain provisions of the Disaster Relief Act of 1970. 
Sec. 304. Regulations on size standards of franchisees.
Sec. 305. Temporary small business development center assistance to Indian tribe 
members, Native Alaskans, and Native Hawaiians. 
Sec. 306. Temporary small business development center assistance for vocational 
and technical entrepreneurship development. 
Sec. 307. Very small business concern contract data collection. 
Sec. 308. Very small business concern pilot program for competition award to 
home-based business. 
Sec. 309. Socially and economically disadvantaged business. 
Sec. 310. Study and report on effectiveness of aggregate limitations on amount 
of assistance to any single enterprise. 
Sec. 311. Study and report on coordination of new markets venture capital pro-
gram with new markets tax credit program. 
Sec. 312. Study and report on premier certified lenders program. 
Sec. 313. Data collection capabilities. 
Sec. 314. Resubmission of disaster loan applications for businesses affected by 
September 11, 2001, terrorist attacks. 
Sec. 315. National small business incubator program. 
Sec. 316. Report regarding effects of sale of disaster loans on borrowers. 
Sec. 317. Suspension and extension of certain disaster loans related to the ter-
rorist attacks of September 11, 2001. 
Sec. 318. Definitions.
TITLE I—SMALL BUSINESS IN-
VESTMENT 
ACT 
OF 
1958 
AMENDMENTS AND RELATED 
PROVISIONS 
SEC. 101. STATE DEFINED. 
Paragraph (4) of section 103 of the Small Business 
Investment Act of 1958 (15 U.S.C. 662) is amended to read 
as follows: 
‘‘(4) the term ‘State’ has the meaning given such 
term in section 3 of the Small Business Act;’’. 
SEC. 102. SMALL MANUFACTURER DEFINED. 
Section 103 of the Small Business Investment Act of 
1958 (15 U.S.C. 662) is amended—
(1) in paragraph (16), by striking ‘‘and’’ after 
the semicolon at the end;
(2) in paragraph (17), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following new para-
graph: 
‘‘(18) the term ‘‘small manufacturer’’ has the 
meaning given that term in section 3 of the Small 
Business Act (15 U.S.C. 632).’’.
SEC. 103. MAXIMUM PARTICIPATING SECURITIES RATE. 
Section 303(g)(2) of the Small Business Investment 
Act of 1958 (15 U.S.C. 683(g)(2)) is amended by striking 
‘‘1.38 percent’’ and inserting ‘‘1.7 percent’’. 
SEC. 104. MAXIMUM LEVERAGE FOR BUYING OPERATIONS. 
Section 303(b)(2) of the Small Business Investment 
Act of 1958 (15 U.S.C. 683(b)(2)) is amended by striking 
subparagraphs (A) and (B) and inserting the following new 
subparagraphs: 
‘‘(A) IN GENERAL.—The outstanding lever-
age made available to a licensee under section 
301(c) shall not exceed 300 percent of private 
capital, up to a maximum of $115,000,000, ex-
cept that the maximum shall be $150,000,000 if 
the licensee certifies in writing that more than 
50 percent of its aggregate dollar amount of 
financings are in small manufacturers.
‘‘(B) 
COMMONLY
CONTROLLED
LICENS-
EES.—
‘‘(i) In the case of 2 or more licensees 
that are commonly controlled (as deter-
mined by the Administrator), upon applica-
tion to the Administrator, the outstanding 
leverage made available shall not exceed 
$150,000,000, except that the maximum 
shall be $185,000,000 if the licensees certify 
in writing that more than 50 percent of 
their aggregate dollar amount of financings 
are in small manufacturers. The Adminis-
trator shall have 10 business days to ap-
prove or disapprove an application under 
the preceding sentence. Approval or dis-
approval is final agency action for purposes 
of chapter 7 of title 5, United States Code. 
‘‘(ii) Not later than 120 days after the 
enactment of this subparagraph, the Admin-
istrator shall prescribe regulations pro-
viding standards and conditions for in-
creases in leverage, including the standards 
for determining common control of licensees. 
‘‘(iii) Until regulations are prescribed 
under clause (ii), the Administrator shall
approve the application of each commonly 
controlled licensee under the definition of 
common control in section 107.50 of title 
13, Code of Federal Regulations, as in effect 
on January 1, 2003.’’. 
SEC. 105. MAXIMUM AGGREGATE AMOUNT OF LEVERAGE. 
Section 303(b) of the Small Business Investment Act 
of 1958 (15 U.S.C. 683(b)) is amended by striking para-
graph (4). 
SEC. 106. INVESTMENTS IN SMALLER ENTERPRISES. 
Sections 303(d) of the Small Business Investment Act 
of 1958 (15 U.S.C. 683(d)) is amended to read as follows: 
‘‘(d) INVESTMENTS IN SMALLER ENTERPRISES.—As a 
condition of approval of an application for leverage, the Ad-
ministrator shall require a licensee to certify in writing 
that not less than 25 percent of the licensee’s aggregate dol-
lar amount of financings will be provided to smaller enter-
prises.’’. 
SEC. 107. ACTIONS OF ADMINISTRATOR WITH RESPECT TO 
CAPITAL IMPAIRMENT. 
Section 303(e) of the Small Business Investment Act 
of 1958 (15 U.S.C. 683(e)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph 
(1);
(2) by striking the period at the end of para-
graph (2) and inserting ‘‘; and’’; and 
(3) by adding at the end the following new para-
graphs: 
‘‘(3) shall not, for reasons of capital impairment, 
restrict the operations of the licensee or direct the use 
of the licensee’s capital to any purpose other than the 
purposes for which the license was granted; and 
‘‘(4) notwithstanding paragraph (3), may take 
action to restrict the operations of, or liquidate a li-
censee for failure to comply with any other provision 
of the law or regulation promulgated pursuant to this 
Act.’’. 
SEC. 108. CONDITIONS FOR DISTRIBUTION. 
Sections 303(g)(9) of the Small Business Investment 
Act of 1958 (15 U.S.C. 683(g)(9)) is amended to read as 
follows: 
‘‘(9)(A) Subject to subparagraphs (B), (C), and 
(D), after making distributions under paragraph (8), 
a company with outstanding participating securities 
may distribute the balance of income to its investors, 
if there are no accumulated and unpaid prioritized 
payments. 
‘‘(B) Amounts received by the Administration 
under this paragraph and paragraph 8 shall be ap-
plied first as prepayment of the principal amount of 
the outstanding participating securities or debentures 
of the company at the time of such distribution and 
then to the allocation under paragraph (11). 
‘‘(C) Distributions under this paragraph shall be 
made to private investors and to the Administration 
in the ratio of private capital to leverage as of the 
day before the distribution until the outstanding par-
ticipating securities or debentures of the company are 
paid in full, after which any remaining distributions 
under this paragraph shall be made to private inves-
tors and to the Administration in the ratio that is 
provided for the allocation of profits in paragraph 
(11). 
‘‘(D) The Administrator shall prescribe such reg-
ulations as are required to assure that management 
fees for the company are not unreasonably reduced 
due to a reduction in combined capital as a result of 
distributions made under this paragraph.’’. 
SEC. 109. MODIFICATION OF AGGREGATE LIMITATION. 
Section 306(a) of the Small Business Investment Act 
of 1958 (15 U.S.C. 686(a)) is amended by inserting ‘‘(and 
not including any obligations or securities issued under sec-
tion 7(a) of the Small Business Act or title V of this Act)’’ 
after ‘‘under the provisions of this title’’.
SEC. 110. NOTICE AND COMMENT RULEMAKING. 
Section 308(c) of the Small Business Investment Act 
of 1958 (15 U.S.C. 687) is amended by adding at the end 
the following: ‘‘Any rules or regulations issued under this 
Act, other than those relating to agency management or per-
sonnel, shall be issued pursuant to section 553(b) of title 
5, United States Code.’’.
SEC. 111. LOW-INCOME GEOGRAPHIC AREA DEFINITION. 
(a) IN GENERAL.—Section 351(3)(A)(ii)(I) of the 
Small Business Investment Act of 1958 (15 U.S.C. 
689(3)(A)(ii)(I)) is amended by striking ‘‘50 percent’’ and
all that follows through the end and inserting ‘‘the median 
family income in that tract does not exceed 80 percent of 
the greater of statewide median family income or the metro-
politan area median family income; or’’. 
(b) APPLICATION OF AMENDED DEFINITION.—The def-
inition of low-income geographic area in section 351(3) of 
the Small Business Investment Act of 1958 (15 U.S.C. 
689(3)), as amended by subsection (a), shall apply to pri-
vate capital raised under section 354(d)(1) of the Small 
Business Investment Act of 1958 (15 U.S.C. 689c(d)(1)) be-
fore, on, or after the effective date of the amendment made 
by subsection (a).
SEC. 112. UNMET EQUITY INVESTMENT NEEDS OF CERTAIN 
SMALL MANUFACTURERS. 
Section 352(2) of the Small Business Investment Act 
of 1958 (15 U.S.C. 689a(2)) is amended by inserting after 
‘‘small enterprises’’ the following: ‘‘and small manufactur-
ers’’. 
SEC. 113. PARTICIPATION AGREEMENT REQUIREMENT. 
Section 353(1) of the Small Business Investment Act 
of 1958 (15 U.S.C. 689b(1)) is amended by inserting after 
‘‘section 352’’ the following: ‘‘(with at least one such agree-
ment to be with a company engaged primarily in develop-
ment of and investment in small manufacturers)’’. 
SEC. 114. FINAL APPROVAL REQUIREMENT. 
Section 354(d) of the Small Business Investment Act 
of 1958 (15 U.S.C. 689c(d)) is amended, in the matter be-
fore paragraph (1), by striking ‘‘a period of time, not to 
exceed 2 years,’’ and inserting ‘‘2 years’’. 
SEC. 115. CONDITIONALLY APPROVED COMPANIES. 
Section 358(a) of the Small Business Investment Act 
of 1958 (15 U.S.C. 689(a)) is amended by adding at the 
end the following new paragraphs: 
‘‘(6) GRANTS TO CONDITIONALLY APPROVED COM-
PANIES.—Upon the request of a company condi-
tionally-approved under section 354(c), the Adminis-
trator shall provide up to $50,000 in grant assistance
for establishment of an operational assistance pro-
gram under this title. 
‘‘(7) REPAYMENT.—If a company receives a 
grant under paragraph (6) and does not enter into a 
participation agreement for final approval, the com-
pany shall repay the amount of the grant to the Ad-
ministrator. 
‘‘(8) DEDUCTION.—If a company receives a 
grant under paragraph (6) and receives final ap-
proval under section 354(e), the Administrator shall 
deduct the amount of the grant under that paragraph 
from the total grant amount that the company re-
ceives for operational assistance.’’. 
SEC. 116. APPLICATIONS FOR NEW MARKETS VENTURE CAP-
ITAL COMPANIES. 
Not later than 60 days after the date of the enactment 
of this section, the Administrator shall prescribe standard 
documents for final New Markets Venture Capital Company 
approval application under section 354(e) of the Small 
Business Investment Act of 1958 (15 U.S.C. 689c(e)). The 
Administrator shall assure that the standard documents 
shall be designed to substantially reduce the cost burden of 
the application process on the companies involved.
SEC. 117. AUTHORIZATION OF APPROPRIATIONS. 
Section 368(a) of the Small Business Investment Act 
of 1958 (15 U.S.C. 689q(a)) is amended—
(1) in the matter before paragraph (1) by strik-
ing ‘‘fiscal years 2001 through 2006’’ and inserting 
‘‘fiscal years 2004 and 2005’’; 
(2) 
in 
paragraph 
(1), 
by 
striking 
‘‘$150,000,000’’ and inserting ‘‘$75,000,000’’; and 
(3) in paragraph (2), by striking ‘‘$30,000,000’’ 
and inserting ‘‘$15,000,000’’. 
SEC. 118. REPEAL OF LEASE GUARANTEE AUTHORITY. 
(a) REPEAL.—Sections 401, 402, and 404 of the Small 
Business Investment Act of 1958 (15 U.S.C. 692, 693, and 
694-1) are hereby repealed. 
(b) APPLICATION TO OUTSTANDING GUARANTEES.—
The repeals made by subsection (a) shall not affect the 
rights, powers, duties, or obligations of the Administrator 
or any other person with respect to any guarantee made 
under section 401 or 404 of the Small Business Investment 
Act of 1958 on or before the date of the enactment of this 
Act. 
SEC. 119. AMENDMENT OF CONGRESSIONAL FINDINGS RE-
LATING TO STATE DEVELOPMENT COMPA-
NIES. 
Section 501(a) of the Small Business Investment Act 
of 1958 (15 U.S.C. 695(a)) is amended by striking ‘‘pur-
pose’’ and all that follows through ‘‘areas’’ and inserting 
the following: ‘‘purposes of this title are to foster economic 
development and create or preserve job opportunities in both 
urban and rural areas, and to enhance the ability of Amer-
ica’s small manufacturers to expand’’. 
SEC. 120. QUALIFICATION OF STATE DEVELOPMENT COM-
PANIES. 
Section 501(d) of the Small Business Investment Act 
of 1958 (15 U.S.C. 695(d)) is amended—
(1) in paragraph (2), by inserting after ‘‘area,’’ 
the following: ‘‘increasing the productive capacity of 
small manufacturers,’’; 
(2) in paragraph (3) by striking subparagraph 
(D) and inserting the following:
‘‘(D) development in a community with a 
population of less than 50,000 that is not located 
within a standard metropolitan statistical 
area,’’; and 
(3) by striking the sentence beginning ‘‘If eligi-
bility’’ after subparagraph (H) of paragraph (3). 
SEC. 121. JOB REQUIREMENTS; DEFINITION. 
Section 501 of the Small Business Investment Act of 
1958 (15 U.S.C. 695) is amended by adding at the end the 
following new subsection:
‘‘(e)(1) A project meets the objective set forth in sub-
section (d)(1) if the project creates or retains one job for 
every $50,000 guaranteed by the Administration, except 
that the amount is $100,000 in the case of a project of a 
small manufacturer. 
‘‘(2) Paragraph (1) does not apply to a project for 
which eligibility is based on the objectives set forth in para-
graph (2) or (3) of subsection (d), if the development com-
pany’s portfolio of outstanding debentures creates or retains 
one job for every $50,000 guaranteed by the Administration. 
‘‘(3) For projects in Alaska, Hawaii, State-designated 
enterprise zones, empowerment zones and enterprise com-
munities, labor surplus areas, as determined by the Sec-
retary of Labor, and for other areas designated by the Ad-
ministrator, the development company’s portfolio may aver-
age not more than $75,000 per job created or retained. 
‘‘(4) Loans for projects of small manufacturers shall 
be excluded from calculations under paragraph (2) or (3). 
‘‘(5) Under regulations prescribed by the Adminis-
trator, the Administrator may waive any requirement of 
this subsection (other than paragraph (4)).’’. 
SEC. 122. SMALL BUSINESS CONCERN LOAN LIMITATIONS. 
Section 502(2) of the Small Business Investment Act 
of 1958 (15 U.S.C. 696(2)) is amended—
(1) by striking ‘‘$1,000,000’’ and inserting 
‘‘$2,000,000’’; 
(2) by striking ‘‘$1,300,000’’ and inserting 
‘‘$2,500,000’’; and 
(3) by inserting after ‘‘small business concern’’ 
the last place it appears the following: ‘‘and loans to 
small manufacturers shall be limited to $4,000,000 
and loans under this section shall not be limited by 
reason of any loan guaranteed by the Administration 
under section 7(a) of the Small Business Act (15 
U.S.C. 636(a))’’. 
SEC. 123. APPROVAL REQUIREMENT. 
Section 503(b) of the Small Business Investment Act 
of 1958 (15 U.S.C. 697(b)) is amended by striking para-
graph (6) and inserting the following: 
‘‘(6) except as provided in section 508, the Ad-
ministration approves each loan to be made from 
such proceeds in accordance with section 512, (but 
such approval shall not require a small business in-
vestment company licensed under title III of this Act 
to guarantee a loan without regard to its ownership 
percentage of the borrower); and’’.
SEC. 124. EFFECTIVE DATE FOR TERMINATION OF CERTAIN 
FEES. 
Section 503(f) of the Small Business Investment Act 
of 1958 (15 U.S.C. 697(f)) is amended by striking ‘‘2003’’ 
and inserting ‘‘2005’’. 
SEC. 125. ACCREDITED LENDERS PROGRAM. 
Section 507 of the Small Business Investment Act of 
1958 (15 U.S.C. 697d) is amended—
(1) in subsection (b)(1), by inserting ‘‘and’’ after 
the semicolon at the end; 
(2) in subsection (b), by striking paragraphs (2) 
through (6) and inserting the following: 
‘‘(2) has a loan default rate, as determined by 
the Bureau of Premier Certified Lenders Program 
Oversight, that is—
‘‘(A) less than the national average; 
‘‘(B) one percent higher than the national 
average, if at least 20 percent of the development 
company’s portfolio is for projects in areas re-
ferred to in section 501(e)(3); or 
‘‘(C) two percent higher than the national 
average, if at least 30 percent of the development 
company’s portfolio is for projects of small man-
ufacturers.’’; 
(3) by striking subsection (c); and
(4) in subsection (d)(1), by striking ‘‘that—’’ 
and all that follows through the end and inserting: 
‘‘that the development company has not continued to 
meet the requirements of subsection (b).’’.
SEC. 126. PREMIER CERTIFIED LENDERS PROGRAM. 
Section 508 of the Small Business Investment Act of 
1958 (15 U.S.C. 697e) is amended to read as follows: 
‘‘SEC. 508. PREMIER CERTIFIED LENDERS PROGRAM. 
‘‘(a) ESTABLISHMENT.—The Administrator may es-
tablish a Premier Certified Lenders Program for qualified 
State and local development companies that meet the re-
quirements of subsection (b). 
‘‘(b) REQUIREMENTS.—
‘‘(1) APPLICATION.—To be eligible to participate 
in the Premier Certified Lenders Program established 
under subsection (a), a qualified State and local de-
velopment company shall prepare and submit to the 
Administrator an application at such time, in such
manner, and containing such information as the Ad-
ministrator may require. 
‘‘(2) DESIGNATION.—The Administrator may 
designate a qualified State and local development 
company as a premier certified lender—
‘‘(A) if the company is an active qualified 
State and local development company in good
standing and has been an active participant in 
the accredited lenders program during the entire 
12-month period preceding the date on which the 
company submits an application under para-
graph (1), except that the Administrator may 
waive this requirement if the company is quali-
fied to participate in the accredited lenders pro-
gram; 
‘‘(B) if the company has a history of—
‘‘(i) submitting to the Administrator 
adequately analyzed debenture guarantee 
application packages; and 
‘‘(ii) of properly closing section 504 
loans and servicing its loan portfolio; 
‘‘(C) if the company agrees to assume and 
to reimburse the Administration for 10 percent 
of any loss sustained by the Administration as 
a result of default by the company in the pay-
ment of principal or interest on a debenture 
issued by such company and guaranteed by the 
Administrator under this section (15 percent in 
the case of any such loss attributable to a deben-
ture issued by the company during any period 
for which an election is in effect under subsection 
(c)(7) for such company); and
‘‘(D) the Administrator determines, with re-
spect to the company, that the loss reserve estab-
lished in accordance with subsection (c) is suffi-
cient for the company to meet its obligations to 
protect the Federal Government from risk of loss. 
‘‘(3) APPLICABILITY OF CRITERIA AFTER DES-
IGNATION.—The Administrator may revoke the des-
ignation of a qualified State and local development 
company as a premier certified lender under this sec-
tion at any time, if the Administrator determines 
that the qualified State and local development com-
pany does not meet any requirement described in sub-
paragraphs (A) through (D) of paragraph (2). 
‘‘(c) LOSS RESERVE.—
‘‘(1) ESTABLISHMENT.—A company designated 
as a premier certified lender shall establish a loss re-
serve for financing approved pursuant to this section. 
‘‘(2) AMOUNT.—The amount of each loss reserve 
established under paragraph (1) shall be 10 percent of 
the amount of the company’s exposure, as determined 
under subsection (b)(2)(C). 
‘‘(3) ASSETS.—Each loss reserve established 
under paragraph (1) shall be comprised of—
‘‘(A) segregated funds on deposit in an ac-
count or accounts with a federally insured depos-
itory institution or institutions selected by the 
company, subject to a collateral assignment in 
favor of, and in a format acceptable to, the Ad-
ministrator; 
‘‘(B) irrevocable letter or letters of credit, 
with a collateral assignment in favor of, and a 
commercially reasonable format acceptable to, 
the Administrator; or 
‘‘(C) any combination of the assets described 
in subparagraphs (A) and (B). 
‘‘(4) CONTRIBUTIONS.—The company shall make 
contributions to the loss reserve, either cash or letters 
of credit as provided above, in the following amounts 
and at the following intervals: 
‘‘(A) 50 percent when a debenture is closed. 
‘‘(B) 25 percent additional not later than 1 
year after a debenture is closed. 
‘‘(C) 25 percent additional not later than 2 
years after a debenture is closed. 
‘‘(5) REPLENISHMENT.—If a loss has been sus-
tained by the Administration, any portion of the loss 
reserve, and other funds provided by the premier com-
pany as necessary, may be used to reimburse the Ad-
ministrator for the premier company’s 10 percent 
share of the loss as provided in subsection (b)(2)(C).
If the company utilizes the reserve, within 30 days it 
shall replace an equivalent amount of funds. 
‘‘(6) DISBURSEMENTS.—The Administrator shall 
allow the qualified State and local development com-
pany to withdraw from the loss reserve such amounts 
as are in excess of 1 percent of the aggregate out-
standing balances of debentures to which such loss re-
serve relates. The preceding sentence shall not apply 
with respect to any debenture before 100 percent of 
the contribution described in paragraph (4) with re-
spect to such debenture has been made. 
‘‘(7) ALTERNATIVE LOSS RESERVE.—
‘‘(A) ELECTION.—With respect to any eligi-
ble calendar quarter, a qualified high loss reserve 
premier certified lender may elect to have the re-
quirements of this paragraph apply in lieu of the 
requirements of paragraphs (2) and (4) for that 
quarter. 
‘‘(B) CONTRIBUTIONS.—
‘‘(i) 
ORDINARY
RULES
INAPPLI-
CABLE.—Except as provided under clause 
(ii) and paragraph (5), a qualified high loss 
reserve premier certified lender that makes 
the election described in subparagraph (A) 
with respect to a calendar quarter shall not
be required to make contributions to its loss 
reserve during that quarter. 
‘‘(ii) BASED
ON
LOSS.—A qualified 
high loss reserve premier certified lender 
that makes the election described in sub-
paragraph (A) with respect to a calendar 
quarter shall, before the last day of that 
quarter, make such contributions to its loss 
reserve as are necessary to ensure that the 
amount of the loss reserve of the lender—
‘‘(I) is not less than $100,000; 
and 
‘‘(II) is sufficient, as determined 
by a qualified independent auditor, for 
the lender to meet its obligations to
protect the Government from risk of 
loss. 
‘‘(iii) CERTIFICATION.—Before the end 
of a calendar quarter for which an election 
is in effect under subparagraph (A), the 
head of the premier certified lender shall 
submit to the Administrator a certification 
that the loss reserve of the lender is suffi-
cient to meet the lender’s obligation to pro-
tect the Government from risk of loss. The
certification shall be submitted in such form 
and manner as the Administrator may re-
quire and shall be signed by the head of the 
lender and by the auditor making the deter-
mination under clause (ii)(II). 
‘‘(C) DISBURSEMENTS.—
‘‘(i) ORDINARY RULE INAPPLICABLE.—
Paragraph (6) shall not apply with respect 
to any qualified high loss reserve premier 
certified lender for any calendar quarter for 
which an election is in effect under sub-
paragraph (A). 
‘‘(ii) EXCESS FUNDS.—At the end of 
each calendar quarter for which an election 
is in effect under subparagraph (A), the Ad-
ministrator shall allow the qualified high 
loss reserve premier certified lender to with-
draw from its loss reserve the excess of—
‘‘(I) the amount of the loss reserve, 
over 
‘‘(II) the greater of $100,000 or 
the amount which is determined under 
subparagraph (B)(ii) to be sufficient to 
meet the lender’s obligation to protect 
the Government from risk of loss.
‘‘(D) RECONTRIBUTION.—If the require-
ments of this paragraph apply to a qualified 
high loss reserve premier certified lender for a 
calendar quarter and cease to apply to that lend-
er for any subsequent calendar quarter, the lend-
er shall make a contribution to its loss reserve in 
such amount as the Administrator may require, 
except that the amount shall not exceed the 
amount which would result in the total amount 
in the loss reserve being equal to the amount 
which would have been in the loss reserve had 
this paragraph never applied to the lender. The 
Administrator may require that the contribution 
be made as a single payment or as a series of 
payments. 
‘‘(E) RISK
MANAGEMENT.—If a qualified 
high loss reserve premier certified lender fails to 
meet the requirement of subparagraph (F)(iii) 
during any period for which an election is in ef-
fect under subparagraph (A) and the failure con-
tinues for 180 days, the requirements of para-
graphs (2), (4), and (6) shall apply to the lender 
as of the end of the 180-day period and the lend-
er shall make the contribution described in sub-
paragraph (D). The Administrator may waive 
the requirements of this subparagraph. 
‘‘(F) QUALIFIED HIGH LOSS RESERVE PRE-
MIER CERTIFIED LENDER.—The term ‘qualified 
high loss reserve premier certified lender’ means, 
with respect to a calendar year, a premier cer-
tified lender so designated by the Administrator 
for that year. The Administrator shall not des-
ignate a company under the preceding sentence 
unless the Administrator determines that—
‘‘(i) the amount of the loss reserve of 
the company is not less than $100,000; 
‘‘(ii) the company has established and 
is utilizing an appropriate and effective 
process for analyzing the risk of loss associ-
ated with its portfolio of Premier Certified 
Lenders Program loans and for grading 
each Premier Certified Lenders Program 
loan made by the company on the basis of 
the risk of loss associated with such loan; 
and 
‘‘(iii) the company meets or exceeds 4 
or more of the specified risk management 
benchmarks as of the most recent assessment 
by the Administration or the Administrator
has issued a waiver with respect to the re-
quirement of this clause. 
‘‘(G) SPECIFIED RISK MANAGEMENT BENCH-
MARKS.—For purposes of this paragraph, the 
term ‘specified risk management benchmarks’ 
means the following rates, as determined by the 
Administrator: 
‘‘(i) Currency rate. 
‘‘(ii) Delinquency rate. 
‘‘(iii) Default rate. 
‘‘(iv) Liquidation rate. 
‘‘(v) Loss rate. 
‘‘(H) QUALIFIED INDEPENDENT AUDITOR.—
For purpose of this paragraph, the term ‘quali-
fied independent auditor’ means an auditor 
who—
‘‘(i) is compensated by the qualified 
high loss reserve premier certified lender; 
‘‘(ii) is independent of the lender; and 
‘‘(iii) has been approved by the Ad-
ministrator during the preceding year. 
‘‘(I) PREMIER
CERTIFIED
LENDERS
PRO-
GRAM LOAN.—For purposes of this paragraph, 
the term ‘Premier Certified Lenders Program
loan’ means a loan guaranteed under this sec-
tion. 
‘‘(J) ELIGIBLE CALENDAR QUARTER.—For 
purposes of this paragraph, the term ‘eligible cal-
endar quarter’ means—
‘‘(i) the first calendar quarter that be-
gins after the end of the 90-day period be-
ginning with the date of the enactment of 
this paragraph; and 
‘‘(ii) the 7 succeeding calendar quar-
ters. 
‘‘(K) REGULATIONS.—Not later than 60 
days after the date of the enactment of this para-
graph, the Administrator shall publish in the 
Federal Register and transmit to the Congress 
regulations to carry out this paragraph. Such 
regulations shall include provisions relating to—
‘‘(i) the approval of auditors under 
subparagraph (H); and 
‘‘(ii) the designation of qualified high 
loss reserve premier certified lenders under 
subparagraph (F), including the determina-
tion of whether a process for analyzing risk 
of loss is appropriate and effective for pur-
poses of subparagraph (F)(ii).
‘‘(8) BUREAU OF PREMIER CERTIFIED LENDERS 
PROGRAM OVERSIGHT.—
‘‘(A) ESTABLISHMENT.—There is hereby es-
tablished in the Administration a bureau to be 
known as the Bureau of Premier Certified Lend-
ers Program Oversight, within the Office of 
Lender Oversight established pursuant to section 
6 of the Small Business Act. 
‘‘(B) PURPOSE.—The Bureau shall carry 
out such functions under this subsection as the 
Administrator may designate. The functions of 
the Bureau under the preceding sentence may 
not be delegated to a district director or any 
other employee assigned to a district office or re-
gional office established by the Administrator 
under section 4 of the Small Business Act (15 
U.S.C. 633). 
‘‘(C) DEADLINE.—Not later than 90 days 
after the date of the enactment of this para-
graph—
‘‘(i) the Administrator shall ensure 
that the Bureau is prepared to carry out the 
functions designated under subparagraph 
(B), and
‘‘(ii) the Inspector General of the Ad-
ministration shall report to the Congress on 
the preparedness of the Bureau to carry out 
such functions. 
‘‘(D) If the Administrator does not comply 
with subparagraph (C)(i), the certifications re-
quired under this section shall be deemed ap-
proved until the date of compliance. Certifi-
cations so deemed approved shall continue in ef-
fect notwithstanding any later compliance with 
that subparagraph.
‘‘(d) SALE OF CERTAIN DEFAULTED LOANS.—
‘‘(1) NOTICE.—If, upon default in repayment, 
the Administrator acquires a loan guaranteed under 
this section and identifies such loan for inclusion in 
a bulk asset sale of defaulted or repurchased loans or 
other financings, it shall give prior notice thereof to 
any qualified State and local development company 
which has a contingent liability under this section. 
The notice shall be given to the company as soon as 
possible after the financing is identified, but not less 
than 90 days before the date the Administrator first 
makes any records on such financing available for ex-
amination by prospective purchasers prior to its of-
fering in a package of loans for bulk sale.
‘‘(2) LIMITATIONS.—The Administrator shall not 
offer any loan described in paragraph (1) as part of 
a bulk sale unless it—
‘‘(A) provides prospective purchasers with 
the opportunity to examine the Administrator’s 
records with respect to such loan; and 
‘‘(B) provides the notice required by para-
graph (1). 
‘‘(e) LOAN APPROVAL AUTHORITY.—
‘‘(1) IN
GENERAL.—Notwithstanding section 
503(b)(6), and subject to such terms and conditions as 
the Administrator may establish, the Administrator 
may permit a company designated as a premier cer-
tified lender under this section to approve, authorize, 
close, service, foreclose, litigate (except that the Ad-
ministrator may monitor the conduct of any such liti-
gation to which a premier certified lender is a party), 
and liquidate loans that are funded with the proceeds 
of a debenture issued by such company and may au-
thorize the guarantee of such debenture. 
‘‘(2) SCOPE OF REVIEW.—The approval of a loan 
by a premier certified lender shall be subject to final 
approval as to eligibility of any guarantee by the Ad-
ministrator pursuant to section 503(a), but such final 
approval shall not include review of decisions by the
lender involving creditworthiness, loan closing, or 
compliance with legal requirements imposed by law 
or regulation. 
‘‘(f) REVIEW.—After the issuance and sale of deben-
tures under this section, the Administrator, at intervals not 
greater than 12 months, shall review the financings made 
by each premier certified lender. The review shall include 
the lender’s credit decisions and general compliance with 
the eligibility requirements for each financing approved 
under the program authorized under this section. The Ad-
ministrator shall consider the findings of the review in car-
rying out its responsibilities under subsection (g), but such 
review shall not affect any outstanding debenture guar-
antee. 
‘‘(g) SUSPENSION OR REVOCATION.—The designation 
of a qualified State and local development company as a 
premier certified lender may be suspended or revoked if the 
Administrator determines that the company—
‘‘(1) has not continued to meet the criteria for 
eligibility under subsection (b); 
‘‘(2) has not established or maintained the loss 
reserve required under subsection (c); 
‘‘(3) is failing to adhere to the Administrator’s 
rules and regulations; or
‘‘(4) is violating any other applicable provision 
of law. 
‘‘(h) EFFECT OF SUSPENSION OR REVOCATION.—A 
suspension or revocation under subsection (g) shall not af-
fect any outstanding debenture guarantee. 
‘‘(i) PROGRAM GOALS.—Each qualified State and 
local development company participating in the program 
under this section shall establish a goal of processing a min-
imum of not less than 50 percent of the loan applications 
for assistance under section 504 pursuant to the program 
authorized under this section. 
‘‘(j) REPORT.—The Administrator shall annually re-
port to the Committee on Small Business of the House of 
Representatives and the Committee on Small Business and 
Entrepreneurship of the Senate on the implementation of 
this section. Each report shall include—
‘‘(1) the number of qualified State and local de-
velopment companies designated as premier certified 
lenders;
‘‘(2) the debenture guarantee volume of such 
companies; 
‘‘(3) a comparison of the loss rate for premier 
certified lenders to the loss rate for accredited and 
other lenders, specifically comparing default rates and 
recovery rates on liquidations; and
‘‘(4) such other information as the Administrator 
deems appropriate.’’. 
(b) EFFECTIVE DATE.—Section 508(c)(6) of the Small 
Business Investment Act of 1958 (as amended by subsection 
(a)) shall apply to withdrawals after the end of the 90-day 
period beginning on the date of the enactment of this Act. 
SEC. 127. FORECLOSURE AND LIQUIDATION OF LOANS. 
Section 510 of the Small Business Investment Act of 
1958 (15 U.S.C. 697g) is amended—
(1) in subsection (a), by striking ‘‘that meets the 
eligibility requirements of subsection (b)(1)’’; and 
(2) by striking subsection (b) and all that follows 
through the end of such section and inserting the fol-
lowing new subsections: 
‘‘(b) ELECTION BY QUALIFIED STATE OR LOCAL DE-
VELOPMENT COMPANY.—
‘‘(1) A qualified State or local development com-
pany shall be eligible for the delegation of authority 
under subsection (a) if such company elects to accept 
such delegation during the 90-day period beginning 
on the date of the enactment of this subsection. 
‘‘(2) One year after the date of the initial elec-
tion, and annually thereafter by a date specified by 
the Administrator, a qualified State or local develop-
ment company may make a new election to accept the 
delegation under subsection (a). 
‘‘(3) An election under this subsection shall 
apply to all loans in the portfolio involved. An elec-
tion made in a subsequent year does not terminate 
any foreclosure or liquidation under a previous elec-
tion. 
‘‘(c) SCOPE OF DELEGATED AUTHORITY.—
‘‘(1) Each qualified State or local development 
company that makes an election under subsection (b) 
shall perform all functions related to liquidation and 
foreclosure without obtaining prior approval of the 
Administrator. 
‘‘(2) Not later than 5 calendar days after exer-
cising delegated authority with respect to a specific 
loan, the qualified State or local development com-
pany shall report to the Administrator the actions 
that the company proposes to take with respect to the 
loan. 
‘‘(3) The Administrator may prohibit an action 
proposed under paragraph (2) by so notifying the 
company in writing. The notification shall state the 
reasons for the prohibition, including a detailed ex-
planation of how the proposed actions—
‘‘(A) will have a serious adverse effect on 
management of the Administration’s activities 
under this title; or 
‘‘(B) will affect the legal rights of the Ad-
ministration or other agencies or instrumental-
ities of the United States. 
‘‘(4) A prohibition under paragraph (3) shall 
apply only to the loan involved and shall not affect 
any other delegation. 
‘‘(d) PURCHASE
OF
INDEBTEDNESS.—A qualified 
State or local development company may not commit the 
Administration to the purchase of additional indebtedness 
secured by property that is the subject of a defaulted loan 
without the written approval of the Administrator. The Ad-
ministrator shall have 7 calendar days in which to act on 
a request for approval for such an additional purchase. Ac-
tion by the Administrator under this subsection shall have 
no other effect on the delegation of authority exercised by 
the qualified State or local development company. 
‘‘(e) FORECLOSURE AND LIQUIDATION BY ADMINIS-
TRATOR.—
‘‘(1) The Administrator shall issue contracts to 
foreclose or liquidate loans made during any year for 
which a qualified State or local development company 
did not make an election under subsection (b).
‘‘(2) In awarding contracts under this sub-
section, the Administrator shall not consolidate con-
tract requirements that relate to more than one quali-
fied State or local development company unless the 
Administrator determines that such consolidation will 
achieve—
‘‘(A) a reduction in cost of not less than 10 
percent; or 
‘‘(B) an increase in the recovered amount of 
not less than 10 percent. 
‘‘(3) In awarding contracts under this section, 
the Administrator shall consider the experience and 
expertise of the offeror regarding the conduct of simi-
lar foreclosure and liquidation of indebtedness, the 
bankruptcy laws of the United States, valuation of 
property, and successful litigation. 
‘‘(4) Reimbursement to contractors under this 
subsection shall be based on recovery of their costs (in-
cluding salaries, expenses, and overhead) and a con-
tingent fee, with respect to each loan which is subject 
to the contract, as follows: 
‘‘(A) In the case of recovery of at least 50 
percent of outstanding amount of such loan, a 
contingent fee equal to 5 percent of the recovery.
‘‘(B) In the case of recovery of at least 75 
percent of such amount, a contingent fee equal to 
10 percent of the recovery.’’. 
SEC. 128. ADDITIONS TO TITLE V. 
Title V of the Small Business Investment Act of 1958 
(15 U.S.C. 695 et seq.) is amended by adding at the end 
the following new sections: 
‘‘SEC. 511. SHORT FORM APPLICATION. 
‘‘(a) IN GENERAL.—Not later than 120 days after the 
date of the enactment of this section, the Administrator 
shall prescribe—
‘‘(1) a low documentation loan application form 
for use in making loans under section 502 for guar-
antees of not more than $500,000; and 
‘‘(2) for all other loans made under section 502, 
a short form application form that reduces the 
amount of information needed to process the loan by 
30 percent from the size of the loan application in ef-
fect on January 1, 2003.
‘‘(b) USE OF DEVELOPMENT COMPANY FORMS.—If the 
Administrator does not comply with paragraph (1) or (2) 
of subsection (a), a qualified State or local development 
company may use its own forms until the Administrator 
prescribes the form involved.
‘‘SEC. 512. CENTRALIZED DEVELOPMENT COMPANY LOAN 
PROCESSING. 
‘‘(a) ESTABLISHMENT.—
‘‘(1) Not later than 180 days after the date of the 
enactment of this section, the Administrator shall, 
using already appropriated funds and fees paid by 
qualified State and local development companies, es-
tablish two centers for approving loans under section 
502, except as otherwise provided in section 508. 
‘‘(2) The loan centers may not be located in the 
same Federal Region. One center shall be located in 
Region 1, 2, 3, 4, or 5, and one center shall be located 
in Region 6, 7, 8, 9, or 10. 
‘‘(3) The Administrator is authorized to locate 
the centers with its existing LowDoc Loan Applica-
tion Centers in Hazard, KY and Sacramento, CA, but 
employees who review applications for loans under 
section 502 shall not review applications for loan 
guarantees under section 7 of the Small Business Act 
(15 U.S.C. 636).
‘‘(4) If the Administrator does not establish the 
centers required by paragraph (1), the qualified State 
and local development companies shall have the au-
thority to approve or deny applications without the 
consent of the Administrator. 
‘‘(b) TIMING.—
‘‘(1)(A) From the date on which a loan applica-
tion is received at a center established under sub-
section (a), the Administration shall have 5 business 
days to approve or deny the application. 
‘‘(B) Not later than one business day after the 
date on which an application is received, the Admin-
istration shall notify the applicant and the qualified 
State or local development company in writing that 
the application was received and was either complete 
or incomplete. The notification shall specify the date 
and time at which the application was received. If the 
application is incomplete, the notification shall speci-
fy the material needed to make the application com-
plete. 
‘‘(C) The Administration may return an appli-
cation for incompleteness not more than 3 times after 
which the applicant may use forms developed by the 
qualified State or local development company. 
‘‘(2) An accredited lender designated under sec-
tion 507 shall have the authority to approve or deny 
a loan application if the Administration does not act 
within 5 business days from the date a complete ap-
plication is received by the center. Notwithstanding 
any other law, a qualified State or local development 
company that is not designated as an accredited or
premier certified lender shall have the authority to 
approve or deny a loan if the Administration does 
not make a decision within 20 business days. 
‘‘(c) APPEAL OF DENIAL.—
‘‘(1) An applicant shall have the right to appeal 
a denial to the Regional Administrator for the region 
in which the qualified State or local development 
company is headquartered. Not later than 3 business 
days after receipt, the Regional Administrator shall 
either concur with the denial or approve the loan. 
‘‘(2) If the Regional Administrator denies the 
loan, the applicant shall have the right of appeal to 
the Deputy Administrator. Not later than 3 business 
days after receipt, the Deputy Administrator shall ei-
ther concur with the denial by the Regional Adminis-
trator or approve the loan. 
‘‘(3) The decision of the Deputy Administrator 
shall constitute final agency action for purposes of 
chapter 7 of title 5, United States Code. 
‘‘SEC. 513. REPORTS. 
‘‘The Administrator shall report on the performance 
of the loans made under this title on a semi-annual basis 
to the Committee on Small Business of the House of Rep-
resentatives and the Committee on Small Business and En-
trepreneurship of the Senate. Such report shall include the 
currency and default rates.’’. 
SEC. 129. REGULATIONS TO CARRY OUT AMENDMENTS TO 
LOAN PROGRAM. 
(a) ISSUANCE.—Except as otherwise provided in title 
I, the Administrator shall, not later than 90 days after the 
date of the enactment of this Act, prescribe such regulations 
as are necessary to carry out the provisions of this Act that 
relate to title V of the Small Business Investment Act of 
1958 and shall provide a minimum of 30 days notice and 
comment with respect to such regulations. 
(b) TEMPORARY
PROHIBITION
ON
OTHER
RULE-
MAKING.—During the period beginning on the date of the 
enactment of this Act and ending on the date that is 1 year 
after the date on which the centralized loan processing cen-
ters described in section 512 of the Small Business Invest-
ment Act of 1958 begin operations, the Administration shall
not begin or conclude any rulemaking to modify the pro-
gram established by title V of such Act unless such rule-
making is necessary to carry out the provisions of this Act 
described in subsection (a). 
SEC. 130. CONFORMING AMENDMENTS. 
Section 503(c)(1) and section 503(e)(2) of the Small 
Business Investment Act of 1958 (15 U.S.C. 697(c)(1) and
697(e)(2)) are each amended by striking ‘‘certified’’ and in-
serting ‘‘qualified State or local’’.
SEC. 131. DEVELOPMENT COMPANY AFFILIATES. 
Section 501 of the Small Business Investment Act of 
1958 (15 U.S.C. 695(e)), as amended by section 121, is fur-
ther amended by adding at the end the following new sub-
section: 
‘‘(f) DEVELOPMENT COMPANY AFFILIATES.—
‘‘(1) IN GENERAL.—The Administrator shall per-
mit a qualified State development company under 
this section and section 502 to affiliate with a lender 
authorized to make loans under section 7(a) of the 
Small Business Act (15 U.S.C. 636(a)) if—
‘‘(A) the affiliate is a qualified State devel-
opment company under this section or section 
502; 
‘‘(B) the affiliate is chartered by a special 
Act of the State legislature for purposes of eco-
nomic development and job creation through in-
vestment of public and private capital, without 
regard to any return on the expected capital; or 
‘‘(C) the affiliate is a business development 
company chartered by the State with the pri-
mary purpose of economic development through 
small business financing programs.
‘‘(2) SPECIAL RULE.—An affiliate that meets a 
criterion under subparagraph (A), (B), or (C) of 
paragraph (1) is not required to have a full-time 
manager if the qualified State development company 
has management in common with the affiliate.’’.
TITLE II—SMALL BUSINESS ACT 
AMENDMENTS AND RELATED 
PROVISIONS. 
SEC. 201. SHORT TITLE. 
This title may be cited as the ‘‘Small Business Amend-
ments Act of 2003’’. 
SEC. 202. FINDINGS; STATEMENTS OF POLICY. 
Section 2 of the Small Business Act (15 U.S.C. 631) 
is amended to read as follows: 
‘‘SEC. 2. FINDINGS; STATEMENTS OF POLICY. 
‘‘(a) AID, COUNSEL, ASSISTANCE, ETC., TO SMALL 
BUSINESS CONCERNS.—The essence of the American eco-
nomic system of private enterprise is free competition. The 
preservation and expansion of such competition is basic not 
only to the economic well-being but to the security of this 
Nation. Such security and well-being cannot be realized un-
less the actual and potential capacity of small business, in-
cluding small manufacturers, is encouraged and developed. 
It is the declared policy of the Congress that the Government 
should aid, counsel, assist, and protect, insofar as is pos-
sible, the interests of small business concerns, including 
small manufacturers, in order to preserve free competitive 
enterprise, to insure that a fair proportion of the total pur-
chases and contracts or subcontracts for manufactured 
goods, and property and services for the Government (in-
cluding but not limited to contracts or subcontracts for 
maintenance, repair, and construction) be placed with 
small business concerns, to insure that a fair proportion 
of the total sales of Government property be made to such 
concerns, and to maintain and strengthen the overall econ-
omy of the Nation. 
‘‘(b) ASSISTANCE TO COMPETE
IN INTERNATIONAL 
MARKETS.—
‘‘(1) It is the declared policy of the Congress that 
the Federal Government, through the Small Business 
Administration, acting in cooperation with the De-
partment of Commerce and other relevant State and 
Federal agencies, should aid and assist small business 
concerns and small manufacturers to increase their 
ability to compete in international markets by—
‘‘(A) enhancing their ability to export; 
‘‘(B) facilitating technology transfers; 
‘‘(C) enhancing their ability to compete ef-
fectively and efficiently against imports;
‘‘(D) increasing the access of small business 
concerns to long-term capital for the purchase of 
new plant and equipment used in the production 
of goods and services involved in international 
trade; 
‘‘(E) disseminating information concerning 
State, Federal, and private programs and initia-
tives to enhance the ability of small business con-
cerns to compete in international markets; 
‘‘(F) ensuring that the interests of small 
business concerns are adequately represented in 
bilateral and multilateral trade negotiations; 
and 
‘‘(G) improving the economic health of 
small manufacturers through reduction in unnec-
essary regulation and improvements in the pro-
curement process that will enhance the ability of 
small manufacturers to compete against foreign 
manufacturers. 
‘‘(2) The Congress recognizes that the Depart-
ment of Commerce is the principal Federal agency for 
trade development, export promotion, and manufac-
turing assistance, and that the Department of Com-
merce and the Small Business Administration work
together to advance joint interests. It is the purpose 
of this Act to enhance, not alter, their respective roles. 
‘‘(c) AID
FOR AGRICULTURALLY RELATED INDUS-
TRIES; FINANCIAL ASSISTANCE.—It is the declared policy 
of the Congress that the Government, through the Small 
Business Administration, should provide aid and assist-
ance, including the financial assistance authorized by this 
Act, to small business concerns which are engaged in the 
production of food and fiber, ranching, and raising of live-
stock, aquaculture, and all other farming and agricultural 
related industries. 
‘‘(d) USE OF ASSISTANCE PROGRAMS TO ESTABLISH, 
PRESERVE, AND STRENGTHEN SMALL BUSINESS CON-
CERNS.—
‘‘(1) The assistance programs authorized by sec-
tions 7(i), 8(a), and 8(b) should be utilized to assist 
in the establishment, preservation, and strengthening 
of small business concerns and the improvement of the 
managerial skills employed in such concerns, with 
special attention to small business concerns—
‘‘(A) located in urban or rural areas with 
high proportions of unemployed or low-income 
individuals; and 
‘‘(B) owned by low-income individuals.
‘‘(2) With respect to the programs authorized by 
section 8(a), the Congress finds—
‘‘(A) that ownership and control of produc-
tive capital is concentrated in the economy of the 
United States and certain groups, therefore, own 
and control little productive capital; 
‘‘(B) that certain groups in the United 
States own and control little productive capital 
because they have limited opportunities for small 
business ownership; 
‘‘(C) that the broadening of small business 
ownership among groups that presently own and 
control little productive capital is essential to 
provide for the well-being of this Nation by pro-
moting their increased participation in the free 
enterprise system of the United States; 
‘‘(D) that such development of business own-
ership among groups that presently own and 
control little productive capital will be greatly 
facilitated through the creation of a small busi-
ness ownership development program, which 
shall provide services, including, but not limited 
to, financial, management, and technical assist-
ance;
‘‘(E) that the power to let Federal contracts 
pursuant to section 8(a) can be an effective pro-
curement assistance tool for development of busi-
ness ownership, including ownership of small 
manufacturers, among groups that own and con-
trol little productive capital; and 
‘‘(F) that the procurement authority under 
section 8(a) shall be used only as a tool for devel-
oping business ownership among groups that 
own and control little productive capital. 
‘‘(3) It is therefore the purpose of the programs 
authorized by section 8(a) to—
‘‘(A) foster business ownership and develop-
ment by individuals in groups that own and 
control little productive capital; and 
‘‘(B) promote the competitive viability of 
such firms in the marketplace by creating a 
small business and capital ownership develop-
ment program to provide such available finan-
cial, technical, and management assistance as 
may be necessary. 
‘‘(e) PARTICIPATION IN FREE ENTERPRISE SYSTEM BY 
SOCIALLY
AND
ECONOMICALLY
DISADVANTAGED
PER-
SONS.—
‘‘(1) With respect to the business development 
programs carried out by the Administrator, the Con-
gress finds—
‘‘(A) that the opportunity for full participa-
tion in our free enterprise system by socially and 
economically disadvantaged individuals is essen-
tial if we are to obtain social and economic 
equality for such individuals and improve the 
functioning of our national economy; 
‘‘(B) that many such individuals are so-
cially disadvantaged because of their identifica-
tion as members of certain groups that have suf-
fered the effects of discriminatory practices or 
similar invidious circumstances over which they 
have no control; 
‘‘(C) that such groups include, but are not 
limited to, Black Americans, Hispanic Ameri-
cans, Native Americans, Asian Pacific Ameri-
cans, Native Hawaiian Organizations, and other 
minorities; 
‘‘(D) that it is in the national interest to 
expeditiously ameliorate the conditions of so-
cially and economically disadvantaged groups; 
‘‘(E) that such conditions can be improved 
by providing the maximum practicable oppor-
tunity for the development of small business con-
cerns and small manufacturers owned by mem-
bers of socially and economically disadvantaged 
groups; 
‘‘(F) that such development can be materi-
ally advanced through the procurement by the 
United States of articles, equipment, supplies, 
services, materials, and construction work from 
small business concerns and small manufactur-
ers; and 
‘‘(G) that such procurements also benefit the 
United States by encouraging the expansion of 
suppliers for such procurements, thereby encour-
aging competition among such suppliers and 
promoting economy in such procurements. 
‘‘(2) It is therefore the purpose of section 8(a) 
to—
‘‘(A) promote the business development of 
small business concerns and small manufacturers 
owned and controlled by socially and economi-
cally disadvantaged individuals so that such 
concerns can compete on an equal basis in the 
American economy; 
‘‘(B) promote the competitive viability of 
such concerns in the marketplace by providing
such available contract, financial, technical, and 
management assistance as may be necessary; and 
‘‘(C) clarify and expand the program for 
the procurement by the United States of articles, 
supplies, services, materials, and construction 
work from small business concerns and small 
manufacturers owned by socially and economi-
cally disadvantaged individuals. 
‘‘(f) ASSISTANCE TO DISASTER VICTIMS UNDER DIS-
ASTER LOAN PROGRAM.—In administering the disaster 
loan program authorized by section 7, the Administrator 
should—
‘‘(1) provide assistance and counseling to dis-
aster victims in filing applications; 
‘‘(2) provide information relevant to loan proc-
essing and loan closing; 
‘‘(3) promptly disburse loan proceeds; and 
‘‘(4) give the disaster program a high priority in 
allocating funds for administrative expenses. 
‘‘(g) ASSISTANCE TO WOMEN OWNED BUSINESS.—
‘‘(1) With respect to the programs and activities 
authorized by this Act, the Congress finds that—
‘‘(A) women owned business has become a 
major contributor to the American economy by 
providing goods and services, revenues, and jobs;
‘‘(B) over the past two decades there have 
been substantial gains in the social and economic 
status of women as they have sought economic 
equality and independence; 
‘‘(C) despite such progress, women, as a 
group, are subjected to discrimination in entre-
preneurial endeavors due to their gender; 
‘‘(D) such discrimination takes many overt 
and subtle forms adversely affecting the ability 
to raise or secure capital, to acquire managerial 
talents, and to capture market opportunities; 
‘‘(E) it is in the national interest to expedi-
tiously remove discriminatory barriers to the 
creation and development of small business con-
cerns owned and controlled by women; 
‘‘(F) the removal of such barriers is essen-
tial to provide a fair opportunity for full par-
ticipation in the free enterprise system by 
women and to further increase the economic vi-
tality of the Nation; 
‘‘(G) increased numbers of small business 
concerns owned and controlled by women who 
will directly benefit the United States Govern-
ment by expanding the potential number of sup-
pliers of goods and services to the Government; 
and 
‘‘(H) programs and activities designed to 
assist small business concerns owned and con-
trolled by women must be implemented in such 
a way as to remove such discriminatory barriers 
while not adversely affecting the rights of socially 
and economically disadvantaged individuals. 
‘‘(2) It is, therefore, the purpose of those pro-
grams and activities conducted under the authority of 
this Act that assist women entrepreneurs to—
‘‘(A) vigorously promote the legitimate in-
terests of small business concerns owned and con-
trolled by women; 
‘‘(B) remove, insofar as possible, the dis-
criminatory barriers that are encountered by 
women in accessing capital and other factors of 
production; and 
‘‘(C) require that the Government engage in 
a systematic and sustained effort to identify, de-
fine and analyze those discriminatory barriers 
facing women and that such effort directly in-
volve the participation of women business owners 
in the partnership of the public and private sec-
tors.
‘‘(h) CONTRACT BUNDLING.—It is the declared policy 
of the Congress that each Federal agency should—
‘‘(1) comply with congressional intent to foster 
the participation of small business concerns, in the 
following order, as prime contractors, subcontractors, 
and suppliers; 
‘‘(2) structure its contracting requirements to fa-
cilitate competition by and among small business 
concerns, taking all reasonable steps to eliminate ob-
stacles to their participation; and 
‘‘(3) avoid unnecessary and unjustified bundling 
of contract requirements that precludes small business 
participation in procurements as prime contractors. 
‘‘(i) SMALL MANUFACTURERS.—
‘‘(1) With respect to the programs and activities 
authorized by this Act, the Congress finds that—
‘‘(A) the manufacturing sector is a critical 
element of the Nation’s economic security because 
it provides high-paying jobs that support other 
sectors of the economy dominated by small busi-
ness; 
‘‘(B) America’s small manufacturers face 
substantial competition from large manufactur-
ers that source components and equipment from 
business concerns located in other countries with
lower wage rates, fewer regulatory restrictions, 
and beneficial currency policies; 
‘‘(C) it is in the national interest to expedi-
tiously grow America’s small manufacturers; 
and 
‘‘(D) such growth can be achieved through 
better access to capital, improved technical as-
sistance, and increased procurement of manufac-
tured goods by the United States, America’s uni-
versities, and large businesses that would other-
wise source goods overseas. 
‘‘(2) It is therefore, the purpose of those pro-
grams and activities conducted under the authority of 
this Act that assist small manufacturers to—
‘‘(A) vigorously promote the legitimate in-
terests of small manufacturers; 
‘‘(B) remove, insofar as possible, barriers 
that are encountered by small manufacturers in 
accessing capital, obtaining necessary technical 
assistance, and selling goods to the United 
States, America’s universities, and large busi-
nesses that would otherwise source goods over-
seas; 
‘‘(C) require the Administrator to engage in 
a systematic and sustained effort to identify, de-
fine, and analyze the barriers to growth facing 
America’s 
small 
manufacturers, 
recommend 
changes in policy that will reduce those barriers, 
and promote the involvement of America’s small 
manufacturers in the partnership of the public 
and private sectors.’’. 
SEC. 203. DEFINITIONS. 
Section 3 of the Small Business Act (15 U.S.C. 632) 
is amended to read as follows: 
‘‘SEC. 3. DEFINITIONS. 
‘‘(a) SMALL BUSINESS CONCERNS.—
‘‘(1) IN GENERAL.—For the purposes of this Act, 
a small-business concern, including but not limited to 
enterprises that are engaged in the business of produc-
tion of food and fiber, ranching and raising of live-
stock, aquaculture, and all other farming and agricul-
tural related industries, shall be deemed to be one 
which is independently owned and operated and 
which is not dominant in its field of operation. 
‘‘(2) ESTABLISHMENT OF SIZE STANDARDS.—
‘‘(A) IN GENERAL.—In addition to the cri-
teria specified in paragraph (1), the Adminis-
trator may specify detailed definitions or stand-
ards by which a business concern may be deter-
mined to be a small business concern for the pur-
poses of this Act or any other Act. 
‘‘(B) ADDITIONAL
CRITERIA.—The stand-
ards described in paragraph (1) may utilize 
number of employees, dollar volume of business, 
net worth, net income, a combination thereof, or 
other appropriate factors. 
‘‘(C) REQUIREMENTS.—Unless specifically 
authorized by statute, no Federal department or 
agency may prescribe a size standard for catego-
rizing a business concern as a small business 
concern, unless such proposed size standard—
‘‘(i) is proposed after an opportunity 
for public notice and comment; 
‘‘(ii) provides for determining—
‘‘(I) the size of a manufacturing 
concern as measured by the manufac-
turing concern’s average employment 
based upon employment during each of 
the manufacturing concern’s pay peri-
ods for the preceding 12 months; 
‘‘(II) the size of a business concern 
providing services on the basis of the 
annual average gross receipts of the
business concern over a period of not 
less than 3 years; 
‘‘(III) the size of other business 
concerns on the basis of data over a pe-
riod of not less than 3 years; or 
‘‘(IV) other appropriate factors; 
and 
‘‘(iii) is approved by the Adminis-
trator. 
‘‘(D) INDUSTRY
VARIATION.—When estab-
lishing or approving any size standard pursuant 
to this paragraph, the Administrator shall en-
sure that the size standard varies from industry 
to industry to the extent necessary to reflect the 
differing characteristics of the various industries 
and consider other factors deemed to be relevant 
by the Administrator. 
‘‘(3) AGRICULTURAL
ENTERPRISES.—Notwith-
standing paragraphs (1) and (2), an agricultural en-
terprise shall be deemed to be a small business con-
cern if it (including its affiliates) has annual receipts 
not in excess of $750,000. 
‘‘(4) RECERTIFICATIONS.—
‘‘(A) TIMING RESTRICTION.—For purposes 
of determining if a business concern that has
been awarded a contracting opportunity as a 
small business concern is still a small business 
concern, the Administrator shall not require such 
concern to be recertified as a small business con-
cern more frequently than each 5 years, unless 
there has been a change in ownership, control, or 
affiliation, in which case the small business con-
cern shall recertify its status at that time. 
‘‘(B) GROWTH THRESHOLD.—In the case of 
any recertification described in subparagraph 
(A) of a business concern, such concern shall not 
fail to be treated as a small business concern for 
purposes of contracting opportunities awarded 
before the date of such recertification solely be-
cause such concern exceeds—
‘‘(i) the annual receipts standard ap-
plicable to such concern by 20 percent or 
less of such standard; or 
‘‘(ii) the number of employees standard 
applicable to such concern by 5 percent or 
less of such standard. 
‘‘(b) AGENCY.—For purposes of this Act, any reference 
to an agency or department of the United States, and the 
term ‘Federal agency’, shall have the meaning given the 
term ‘agency’ by section 551(1) of title 5, United States
Code, but does not include the United States Postal Service 
or the General Accounting Office. 
‘‘(c) QUALIFIED EMPLOYEE TRUSTS.—For purposes of 
this Act: 
‘‘(1) The term ‘qualified employee trust’ means, 
with respect to a small business concern, a trust—
‘‘(A) which forms part of an employee stock 
ownership plan (as defined in section 4975(e)(7) 
of the Internal Revenue Code of 1986)—
‘‘(i) which is maintained by such con-
cern; and 
‘‘(ii) which provides that each partici-
pant in the plan is entitled to direct the 
plan as to the manner in which voting 
rights under qualifying employer securities 
(as defined in section 4975(e)(8) of such 
Code) which are allocated to the account of 
such participant are to be exercised with re-
spect to a corporate matter which (by law 
or charter) must be decided by a majority 
vote of outstanding common shares voted; 
and 
‘‘(B) in the case of any loan guarantee 
under section 7(a), the trustee of which enters 
into an agreement with the Administrator which
is binding on the trust and on such small busi-
ness concern and which provides that—
‘‘(i) the loan guaranteed under section 
7(a) shall be used solely for the purchase of 
qualifying employer securities of such con-
cern; 
‘‘(ii) all funds acquired by the concern 
in such purchase shall be used by such con-
cern solely for the purposes for which such 
loan was guaranteed; 
‘‘(iii) such concern will provide such 
funds as may be necessary for the timely re-
payment of such loan, and the property of 
such concern shall be available as security 
for repayment of such loan; and 
‘‘(iv) all qualifying employer securities 
acquired by such trust in such purchase 
shall be allocated to the accounts of partici-
pants in such plan who are entitled to share 
in such allocation, and each participant has
a nonforfeitable right, not later than the 
date such loan is repaid, to all such quali-
fying employer securities which are so allo-
cated to the participant’s account.
‘‘(2) Under regulations which may be prescribed 
by the Administrator, a trust may be treated as a 
qualified employee trust with respect to a small busi-
ness concern if—
‘‘(A) the trust is maintained by an em-
ployee organization which represents at least 51 
percent of the employees of such concern; and 
‘‘(B) such concern maintains a plan—
‘‘(i) which is an employee benefit plan 
which is designed to invest primarily in 
qualifying employer securities (as defined 
in section 4975(e)(8) of the Internal Rev-
enue Code of 1986); 
‘‘(ii) which provides that each partici-
pant in the plan is entitled to direct the 
plan as to the manner in which voting 
rights under qualifying employer securities 
which are allocated to the account of such 
participant are to be exercised with respect 
to a corporate matter which (by law or 
charter) must be decided by a majority vote 
of the outstanding common shares voted; 
‘‘(iii) which provides that each partici-
pant who is entitled to distribution from the 
plan has a right, in the case of qualifying
employer securities which are not readily 
tradable on an established market, to re-
quire that the concern repurchase such secu-
rities under a fair valuation formula; and 
‘‘(iv) which meets such other require-
ments (similar to requirements applicable 
to employee stock ownership plans as de-
fined in section 4975(e)(7) of such Code) as 
the Administrator may prescribe; and 
‘‘(C) in the case of a loan guarantee under 
section 7(a), such organization enters into an 
agreement with the Administration which is de-
scribed in paragraph (2)(B). 
‘‘(d) DEFINITIONS RELATING TO INDIAN TRIBES.—
For purposes of this Act: 
‘‘(1) INDIAN TRIBE.—The term ‘Indian tribe’ has 
the meaning given such term in section 4(e) of the In-
dian Self-Determination and Education Assistance 
Act. 
‘‘(2) QUALIFIED
INDIAN
TRIBE.—The term 
‘qualified Indian tribe’ means any Indian tribe that 
owns and controls 100 percent of a small business 
concern, except as otherwise provided in section 8. 
‘‘(e) STATE; UNITED STATES.—For purposes of this 
Act, the terms ‘State’ and ‘United States’ include each of
the several States, the District of Columbia, the Common-
wealth of Puerto Rico, the United States Virgin Islands, 
Guam, American Samoa, and the Commonwealth of the 
Northern Mariana Islands. 
‘‘(f) CONTRACTING OFFICER.—For purposes of this 
Act, the term ‘contracting officer’ has the meaning given 
such term in section 27(f)(5) of the Office of Federal Pro-
curement Policy Act (41 U.S.C. 423(f)(5)). 
‘‘(g) SMALL BUSINESS DEVELOPMENT CENTER.—For 
purposes of this Act, the term ‘small business development 
center’ means any office that provides any portion of the 
services described in section 21 under such section. 
‘‘(h) CREDIT ELSEWHERE.—For purposes of this Act, 
the term ‘credit elsewhere’ means the availability of credit 
from non-Federal sources on reasonable terms and condi-
tions taking into consideration the prevailing rates and 
terms in the community in or near where the concern trans-
acts business, or the homeowner resides, for similar pur-
poses and periods of time. 
‘‘(i) HOMEOWNERS.—For purposes of this Act, the 
term ‘homeowners’ includes owners and lessees of residential 
property and also includes personal property. 
‘‘(j) SMALL AGRICULTURAL COOPERATIVE.—For pur-
poses of this Act, the term ‘small agricultural cooperative’ 
means an association (corporate or otherwise) acting pursu-
ant to the provisions of the Agricultural Marketing Act (12 
U.S.C. 1141j), whose size does not exceed the size standard 
established by the Administrator for other similar agricul-
tural small business concerns. In determining such size, the 
Administrator shall regard the association as a business 
concern and shall not include the income or employees of 
any member shareholder of such cooperative. 
‘‘(k) DISASTER.—For purposes of this Act, the term 
‘disaster’ means a sudden event which causes severe damage 
including floods, hurricanes, tornadoes, earthquakes, fires, 
explosions, volcanoes, windstorms, landslides or mudslides, 
tidal waves, riots, civil disorders, acts of terrorism, or other 
catastrophes. 
‘‘(l) AGRICULTURAL ENTERPRISES.—For purposes of 
this Act, the term ‘agricultural enterprises’ means those 
businesses engaged in the production of food and fiber, 
ranching, and raising of livestock, aquaculture, and all 
other farming and agricultural related industries. 
‘‘(m) SIMPLIFIED ACQUISITION THRESHOLD.—For 
purposes of this Act, the term ‘simplified acquisition thresh-
old’ has the meaning given such term in section 4(11) of 
the Office of Federal Procurement Policy Act (41 U.S.C. 
403(11)). 
‘‘(n) SMALL BUSINESS CONCERN OWNED AND CON-
TROLLED BY WOMEN.—For purposes of this Act, the term
‘small business concern owned and controlled by women’ 
means any small business concern if—
‘‘(1) at least 51 percent of the small business 
concern is owned by one or more women or, in the 
case of any publicly owned business, at least 51 per-
cent of the stock of which is owned by one or more 
women; and 
‘‘(2) the management and daily business oper-
ations of the business are controlled by one or more 
women. 
‘‘(o) DEFINITIONS OF BUNDLING OF CONTRACT RE-
QUIREMENTS AND RELATED TERMS.—For purposes of this 
Act: 
‘‘(1) BUNDLED CONTRACT.—The term ‘bundled 
contract’ means a contract that is entered into to 
meet requirements that are consolidated in a bundling 
of contract requirements without regard to its des-
ignation by the procuring agency or whether a study
of the effects of the solicitation on civilian or military 
personnel has been made. 
‘‘(2) BUNDLING OF CONTRACT REQUIREMENTS.—
The term ‘bundling of contract requirements’ means 
the use of any bundling methodology to satisfy 2 or 
more requirements for goods or services, including 
construction services, that have previously been pro-
vided to, or performed for, the Federal agency under 
2 or more separate contracts lower in cost than the 
total cost of the contract or order for which the offers 
are solicited that is likely to be unsuitable for award 
to a small business concern due to—
‘‘(A) the diversity, size, or specialized na-
ture of the elements of the performance specified; 
‘‘(B) the aggregate dollar value of the an-
ticipated award; 
‘‘(C) the geographical dispersion of the con-
tract performance sites; or 
‘‘(D) any combination of the factors de-
scribed in subparagraphs (A), (B), and (C). 
‘‘(3) BUNDLING METHODOLOGY.—The term ‘bun-
dling methodology’ means—
‘‘(A) a solicitation to obtain offers for a sin-
gle contract or a multiple award contract; 
‘‘(B) a solicitation of offers for the issuance 
of a task or a delivery order under an existing 
single or multiple award contract; or 
‘‘(C) the creation of any new procurement 
requirement that permits a consolidation of con-
tract requirements. 
‘‘(4) SEPARATE SMALLER CONTRACT.—The term 
‘separate smaller contract’, with respect to a bundling
of contract requirements, means a contract that has 
been performed by 1 or more small business concerns 
or was suitable for award to 1 or more small business 
concerns. 
‘‘(p) DEFINITIONS RELATING TO HUBZONES.—For 
purposes of this Act: 
‘‘(1) HISTORICALLY
UNDERUTILIZED
BUSINESS 
ZONE.—The term ‘historically underutilized business 
zone’ means any area located within 1 or more—
‘‘(A) qualified census tracts; 
‘‘(B) qualified nonmetropolitan counties; 
‘‘(C) lands within the external boundaries of 
an Indian reservation; or 
‘‘(D) redesignated areas. 
‘‘(2) HUBZONE.—The term ‘HUBZone’ means a 
historically underutilized business zone. 
‘‘(3) HUBZONE SMALL BUSINESS CONCERN.—
The term ‘HUBZone small business concern’ means—
‘‘(A) a small business concern that is owned 
and controlled by one or more persons, each of 
whom is a United States citizen; 
‘‘(B) a small business concern that is—
‘‘(i) an Alaska Native Corporation 
owned and controlled by Natives (as deter-
mined pursuant to section 29(e)(1) of the
Alaska Native Claims Settlement Act (43 
U.S.C. 1626(e)(1))); or 
‘‘(ii) a direct or indirect subsidiary 
corporation, joint venture, or partnership of 
an Alaska Native Corporation qualifying 
pursuant to section 29(e)(1) of the Alaska 
Native Claims Settlement Act (43 U.S.C. 
1626(e)(1)), if that subsidiary, joint ven-
ture, or partnership is owned and controlled 
by Natives (as determined pursuant to sec-
tion 29(e)(2)) of the Alaska Native Claims 
Settlement Act (43 U.S.C. 1626(e)(2))); 
‘‘(C) a small business concern—
‘‘(i) that is wholly owned by one or 
more Indian tribal organizations, or by a 
corporation that is wholly owned by one or 
more Indian tribal organizations; or 
‘‘(ii) that is owned in part by one or 
more Indian tribal organizations, or by a 
corporation that is wholly owned by one or 
more Indian tribal organizations, if all 
other owners are either United States citi-
zens or small business concerns; or 
‘‘(D) a small business concern that is—
‘‘(i) wholly owned by a community de-
velopment corporation that has received fi-
nancial assistance under part 1 of sub-
chapter A of the Community Economic De-
velopment Act of 1981 (42 U.S.C. 9805 et 
seq.); or 
‘‘(ii) owned in part by one or more 
community development corporations, if all 
other owners are either United States citi-
zens or small business concerns. 
‘‘(4) QUALIFIED AREAS.—
‘‘(A) QUALIFIED CENSUS TRACT.—The term 
‘qualified census tract’ has the meaning given 
that term in section 42(d)(5)(C)(ii) of the Inter-
nal Revenue Code of 1986. 
‘‘(B) QUALIFIED NONMETROPOLITAN COUN-
TY.—The term ‘qualified nonmetropolitan coun-
ty’ means any county—
‘‘(i) that was not located in a metro-
politan statistical area (as defined in sec-
tion 143(k)(2)(B) of the Internal Revenue 
Code of 1986) at the time of the most recent 
census taken for purposes of selecting quali-
fied 
census 
tracts 
under 
section 
42(d)(5)(C)(ii) of such Code; and
‘‘(ii) in which—
‘‘(I) the median household income 
is less than 80 percent of the nonmetro-
politan State median household in-
come, based on the most recent data 
available from the Bureau of the Cen-
sus of the Department of Commerce; or 
‘‘(II) the unemployment rate is 
not less than 140 percent of the State-
wide average unemployment rate for 
the State in which the county is lo-
cated, based on the most recent data 
available from the Secretary of Labor. 
‘‘(C) REDESIGNATED AREA.—The term ‘re-
designated area’ means any census tract that
ceases to be qualified under subparagraph (A) 
and any nonmetropolitan county that ceases to 
be qualified under subparagraph (B), except that 
a census tract or a nonmetropolitan county may 
be a ‘redesignated area’ only for the 3-year pe-
riod following the date on which the census tract 
or nonmetropolitan county ceased to be so quali-
fied. 
‘‘(5) QUALIFIED
HUBZONE
SMALL
BUSINESS 
CONCERN.—
‘‘(A) IN
GENERAL.—The term ‘qualified 
HUBZone small business concern’ means any 
small business concern if the small business con-
cern has certified in writing to the Adminis-
trator (or the Administrator otherwise deter-
mines, based on information submitted to the 
Administrator by the small business concern, or 
based on certification procedures, which shall be 
established by regulation) that—
‘‘(i) it is a HUBZone small business 
concern—
‘‘(I) pursuant to subparagraph 
(A), (B), or (D) of paragraph (3), and 
that its principal office is located in a 
HUBZone and not fewer than 35 per-
cent of its employees reside in a 
HUBZone; or 
‘‘(II) 
pursuant 
to 
paragraph 
(3)(C), and not fewer than 35 percent 
of its employees engaged in performing 
a contract awarded to the small busi-
ness concern on the basis of a pref-
erence provided under section 31(b) re-
side within any Indian reservation 
governed by one or more of the Indian
tribal organization owners, or reside 
within any HUBZone adjoining any 
such Indian reservation; 
‘‘(ii) the small business concern will 
attempt to maintain the applicable employ-
ment percentage under clause (i) during the 
performance of any contract awarded to the 
small business concern on the basis of a 
preference provided under section 31(b); and 
‘‘(iii) with respect to any subcontract 
entered into by the small business concern 
pursuant to a contract awarded to the small 
business concern under section 31, the small 
business concern will ensure that—
‘‘(I) in the case of a contract for 
services (except construction), not less 
than 50 percent of the cost of contract 
performance incurred for personnel 
will be expended for its employees or 
for employees of other HUBZone small 
business concerns; 
‘‘(II) in the case of a contract for 
procurement of supplies (other than 
procurement from a regular dealer in 
such supplies), not less than 50 percent
of the cost of manufacturing the sup-
plies (not including the cost of mate-
rials) will be incurred in connection 
with the performance of the contract in 
a HUBZone by 1 or more HUBZone 
small business concerns; 
‘‘(III) it is a small business con-
cern, the majority of which is owned 
and controlled by one or more individ-
uals determined by the Administrator 
to be economically disadvantaged; and 
‘‘(IV) it has received a site visit 
from a district counsel to verify its eli-
gibility before first responding to a so-
licitation from a Federal agency for 
goods or services under section 31 and 
again before first responding to a solic-
itation from a Federal agency for 
goods or services under section 31 after 
any change in the primary location of 
the concern. 
‘‘(B) SITE VISITS BY DISTRICT COUNSEL.—
A district counsel, not later than 5 days after 
conducting any site visit described in subpara-
graph (A)(iii)(IV), shall make a written certifi-
cation to the district director and general counsel 
regarding the status of the concern as a qualified 
HUBZone small business concern. 
‘‘(C) PROVISION OF FALSE INFORMATION.—
Such term shall not include any small business 
concern if any certification made or information 
provided by such concern under subparagraph 
(A) has been, in accordance with the procedures 
established under section 31(c)(1)—
‘‘(i) successfully challenged by an in-
terested party; or 
‘‘(ii) otherwise determined by the Ad-
ministrator to be materially false. 
‘‘(D) 
PERCENTAGE
ADJUSTMENTS.—The 
Administrator may utilize a percentage other 
than the percentage specified in subclause (I) or 
(II) of subparagraph (A)(iii), if the Adminis-
trator determines that such action is necessary to 
reflect conventional industry practices among 
small business concerns that are below the nu-
merical size standard for businesses in that in-
dustry category, but under no circumstance shall 
such adjustment reduce the percentage below 33 
percent.
‘‘(E) CONSTRUCTION
AND
OTHER
CON-
TRACTS.—The Administrator shall promulgate 
final regulations imposing requirements that are 
similar to those specified in subclauses (I) and 
(II) of subparagraph (A)(iii) on contracts for 
general and specialty construction, and on con-
tracts for any other industry category that would 
not otherwise be subject to those requirements. 
The percentage applicable to any such require-
ment shall be determined in accordance with 
subparagraph (D). 
‘‘(6) NATIVE AMERICAN SMALL BUSINESS CON-
CERNS.—
‘‘(A) ALASKA
NATIVE
CORPORATION.—The 
term ‘Alaska Native Corporation’ has the same 
meaning as the term ‘Native Corporation’ in sec-
tion 3 of the Alaska Native Claims Settlement 
Act (43 U.S.C. 1602). 
‘‘(B) ALASKA NATIVE VILLAGE.—The term 
‘Alaska Native Village’ has the same meaning as 
the term ‘Native village’ in section 3 of the Alas-
ka Native Claims Settlement Act (43 U.S.C. 
1602). 
‘‘(C) INDIAN RESERVATION.—The term ‘In-
dian reservation’—
‘‘(i) has the same meaning as the term 
‘Indian country’ in section 1151 of title 18, 
United States Code, except that such term 
does not include—
‘‘(I) any lands that are located 
within a State in which a tribe did 
not exercise governmental jurisdiction 
on December 21, 2000, unless that tribe 
is recognized after that date by either 
an Act of Congress or pursuant to reg-
ulations of the Secretary of the Inte-
rior; and 
‘‘(II) lands taken into trust or ac-
quired by an Indian tribe after Decem-
ber 21, 2000, if such lands are not lo-
cated within the external boundaries of 
an Indian reservation or former res-
ervation or are not contiguous to the 
lands held in trust or restricted status 
on that date of the enactment; and 
‘‘(ii) in the State of Oklahoma, means 
lands that—
‘‘(I) are within the jurisdictional 
areas of an Oklahoma Indian tribe (as
determined by the Secretary of the In-
terior); and 
‘‘(II) are recognized by the Sec-
retary of the Interior as eligible for 
trust land status under part 151 of 
title 25, Code of Federal Regulations 
(as in effect on December 21, 2000). 
‘‘(D) INDIAN TRIBAL ORGANIZATION.—The 
term ‘Indian tribal organization’ has the mean-
ing given that term in section 4(l) of the Indian 
Self-Determination and Education Assistance 
Act (25 U.S.C. 4506(l)). 
‘‘(q) DEFINITIONS RELATING
TO VETERANS.—For 
purposes of this Act: 
‘‘(1) SERVICE-DISABLED
VETERAN.—The term 
‘service-disabled veteran’ means a veteran with a dis-
ability that is service-connected (as defined in section 
101(16) of title 38, United States Code). 
‘‘(2) SMALL
BUSINESS
CONCERN
OWNED
AND 
CONTROLLED BY SERVICE-DISABLED VETERANS.—The 
term ‘small business concern owned and controlled by 
service-disabled veterans’ means a small business con-
cern—
‘‘(A) not less than 51 percent of which is 
owned by one or more service-disabled veterans
or, in the case of any publicly owned business, 
not less than 51 percent of the stock of which is 
owned by one or more service-disabled veterans; 
and 
‘‘(B) the management and daily business 
operations of which are controlled by one or 
more service-disabled veterans or, in the case of 
a veteran with permanent and severe disability, 
the spouse or permanent caregiver of such vet-
eran. 
‘‘(3) SMALL
BUSINESS
CONCERN
OWNED
AND 
CONTROLLED BY VETERANS.—The term ‘small busi-
ness concern owned and controlled by veterans’ means 
a small business concern—
‘‘(A) not less than 51 percent of which is 
owned by one or more veterans or, in the case of 
any publicly owned business, not less than 51 
percent of the stock of which is owned by one or 
more veterans; and 
‘‘(B) the management and daily business 
operations of which are controlled by one or 
more veterans. 
‘‘(4) VETERAN.—The term ‘veteran’ has the 
meaning given the term in section 101(2) of title 38, 
United States Code.
‘‘(ii) number of business establishments 
and the types of such establishments such as 
sole proprietorships, corporations, and part-
nerships; 
‘‘(iii) number of business formations 
and failures; 
‘‘(iv) sales and new orders; 
‘‘(v) back orders; 
‘‘(vi) investment in plant and equip-
ment; 
‘‘(vii) changes in inventory and rate of 
inventory turnover; 
‘‘(viii) sources and amounts of capital 
investment, including debt, equity, and in-
ternally generated funds; 
‘‘(ix) debt to equity ratios; 
‘‘(x) exports; 
‘‘(xi) number and dollar amount of 
mergers and acquisitions by size of acquir-
ing and acquired firm; and 
‘‘(xii) concentration ratios; and 
‘‘(C) in consultation with the Chief Counsel 
for Advocacy, publish annually a report giving 
a comparative analysis and interpretation of the 
historical trends of the small business sector as