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(2) an assessment of whether surety companies 
and small business concerns could benefit from an 
alternative funding structure; and 
(3) an assessment of whether permissible pre-
mium rates for surety companies participating in the 
program should be placed on parity with the rates 
authorized by appropriate State insurance regulators 
and how such a change would affect the program 
under the current funding framework. 
(b) REPORT.—Not later than 180 days after the date 
of the enactment of this Act, the Administrator shall sub-
mit to Congress a report on the results of the study. 
SEC. 402. PREFERRED SURETY BOND PROGRAM. 
(a) PROGRAM REQUIRED.—Part B (15 U.S.C. 694a 
et seq.) of title IV of the Small Business Investment Act 
of 1958 is amended by adding at the end the following: 
‘‘SEC. 413. PREFERRED SURETY BOND PROGRAM. 
‘‘(a) PROGRAM REQUIRED.—The Administrator shall 
carry out a program, to be known as the Preferred Surety 
Bond Program, under which the Administration, by a 
written agreement between the surety and the Administra-
tion, delegates to the surety complete authority to issue, 
monitor, and service bonds subject to guaranty from the 
Administration without obtaining the specific approval of 
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the Administration. Bonds made under the program shall 
carry a 70 percent guaranty. 
‘‘(b) TERM.—The term of a delegation of authority 
under such an agreement shall not exceed 2 years. 
‘‘(c) RENEWAL.—Such an agreement may be renewed 
one or more times, each such renewal providing one addi-
tional term. Before each renewal, the Administrator shall 
review the surety’s bonds, policies, and procedures for 
compliance with relevant rules and regulations. 
‘‘(d) 
APPLICATION.—The 
Administrator 
shall 
promptly act upon an application from a surety to partici-
pate in the program, in accordance with criteria and pro-
cedures established in regulations pursuant to section 
411(d). 
‘‘(e) REDUCTION OR TERMINATION OF PARTICIPA-
TION.—The Administrator is authorized to reduce the al-
lotment of bond guarantee authority or terminate the par-
ticipation of a surety in the program based on the rate 
of participation of such surety during the 4 most recent 
fiscal year quarters compared to the median rate of par-
ticipation by the other sureties in the program.’’. 
(b) CONFORMING AMENDMENTS.—Section 411 of the 
Small Business Investment Act of 1958 (15 U.S.C. 694b) 
is amended— 
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(1) in subsection (a), by striking paragraphs 
(3), (4), and (5); 
(2) in subsection (b)(2), by striking ‘‘the au-
thority of subsection (a)(3)’’ and inserting ‘‘the au-
thority of section 413’’; 
(3) in subsection (c)— 
(A) by striking paragraph (1); and 
(B) 
by 
redesignating 
paragraphs 
(2) 
through (4) as (1) through (3), respectively; 
and 
(4) in subsection (g)(3), by striking ‘‘the au-
thority of paragraph (3) of subsection (a)’’ and in-
serting ‘‘the authority of section 413’’. 
SEC. 403. DENIAL OF LIABILITY. 
Section 411 of the Small Business Investment Act 
of 1958 (15 U.S.C. 694b) is amended by adding at the 
end the following: 
‘‘(k) For bonds made or executed with the prior ap-
proval of the Administration, the Administration shall not 
deny liability to a surety based upon information that was 
provided as part of the guaranty application.’’. 
SEC. 404. INCREASING THE BOND THRESHOLD. 
Section 411(a) of the Small Business Investment Act 
of 1958 (15 U.S.C. 694b(a)) is amended by striking 
‘‘$2,000,000’’ and inserting ‘‘$3,000,000’’. 
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SEC. 405. FEES. 
Section 411 of the Small Business Investment Act 
of 1958 (15 U.S.C. 694b) is amended by adding at the 
end the following: 
‘‘(l) To the extent that amounts are made available 
to the Administrator for the purpose of fee contributions, 
the Administrator shall use such funds to offset fees estab-
lished and assessed under this section. Each fee contribu-
tion shall be effective for one fiscal quarter and shall be 
adjusted as necessary to ensure that amounts made avail-
able are fully used.’’. 
TITLE V—VENTURE CAPITAL 
INVESTMENT STANDARDS 
SEC. 501. DETERMINING WHETHER BUSINESS CONCERN IS 
INDEPENDENTLY OWNED AND OPERATED. 
Section 3(a) of the Small Business Act (15 U.S.C. 
632(a)) is amended by adding at the end the following: 
‘‘(5) NON-AFFILIATION OF VENTURE CAPITAL 
FROM
CONSIDERATION
OF
SMALL
BUSINESS
CON-
CERN.—For purposes of determining whether a 
small business concern is independently owned and 
operated under paragraph (1) or meets the small 
business size standards instituted under paragraph 
(2), the Administrator shall not consider a business 
concern to be affiliated with a venture capital oper-
ating company (or with any other business that the 
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venture capital operating company has financed) 
if— 
‘‘(A) the venture capital operating com-
pany does not own 50 percent or more of the 
business concern; and 
‘‘(B) employees of the venture capital oper-
ating company do not constitute a majority of 
the board of directors of the business concern. 
‘‘(6) DEFINITION OF ‘INDEPENDENTLY OWNED 
AND OPERATED’.—For purposes of this section, a 
business concern shall be deemed to be ‘independ-
ently owned and operated’ if— 
‘‘(A) it is owned in majority part by one or 
more natural persons or venture capital oper-
ating companies; 
‘‘(B) there is no single venture capital op-
erating company that owns 50 percent or more 
of the business concern; and 
‘‘(C) there is no single venture capital op-
erating company the employees of which con-
stitute a majority of the board of directors of 
the business concern. 
‘‘(7) DEFINITION OF ‘VENTURE CAPITAL OPER-
ATING COMPANY’.—For purposes of this section, the 
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term ‘venture capital operating company’ means a 
business concern— 
‘‘(A) that— 
‘‘(i) is a Venture Capital Operating 
Company, as that term is defined in regu-
lations promulgated by the Secretary of 
Labor; or 
‘‘(ii) is an entity that— 
‘‘(I) is registered under the In-
vestment Company Act of 1940 (15 
U.S.C. 80a–51 et seq.); 
‘‘(II) is an investment company, 
as defined in section 3(c)(14) of such 
Act (15 U.S.C. 80a–3(c)(14)), which 
is not registered under such Act be-
cause it is beneficially owned by less 
than 100 persons; or 
‘‘(III) is a nonprofit organization 
affiliated with, or serving as a patent 
and licensing organization for, a uni-
versity or other institution of higher 
education and that invests primarily 
in small business concerns; and 
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