Title: Emerging Business Encouragement Act of 2018
Policy area: Commerce

Summary:
Emerging Business Encouragement Act of 2018
This bill directs the Small Business Administration (SBA) to establish criteria and procedures for small businesses to be designated as emerging business enterprises. The bill provides for various benefits to such enterprises, such as by authorizing the SBA to waive various loan fees, and requires federal agencies to award at least 3% of contracts in each fiscal year to such enterprises.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6565 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 6565

To amend the Small Business Act to provide for contracting preferences 
  and other benefits for emerging business enterprises, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 26, 2018

Mr. Carson of Indiana introduced the following bill; which was referred 
                   to the Committee on Small Business

_______________________________________________________________________

                                 A BILL


 
To amend the Small Business Act to provide for contracting preferences 
  and other benefits for emerging business enterprises, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Emerging Business Encouragement Act 
of 2018''.

SEC. 2. EMERGING BUSINESS ENTERPRISES.

    (a) Designation.--Section 3 of the Small Business Act (15 U.S.C. 
632) is amended by adding at the end the following:
    ``(dd) Emerging Business Enterprises.--
            ``(1) In general.--Not later than the date that is one year 
        after the date of enactment of this paragraph, for each 
        industry category for which the Administrator established a 
        size standard under this subsection, the Administrator shall by 
        rule establish procedures for designating a small business 
        concern in that industry category as an emerging business 
        enterprise. Such procedures shall include the criteria under 
        paragraph (2), and a process for appealing decisions of the 
        Administrator on designations. Such a designation shall expire 
        on the date that the small business concern is no longer in 
        compliance with such criteria, except that--
                    ``(A) in the case of an emerging business 
                enterprise that receives a designation as such but 
                which existed as a business entity prior to such 
                designation, the designation shall not expire by reason 
                of the emerging business enterprise being more than 5 
                years old; instead, the designation shall expire on the 
                date that is 5 years after the date of the designation; 
                and
                    ``(B) if the emerging business enterprise exceeds 
                the size limitation described in the criterion under 
                paragraph (2)(A) following designation as an emerging 
                business enterprise, the designation shall expire only 
                if the size is 50 percent or more of the maximum size 
                of a small business concern within that industry 
                category.
        The rulemaking under this paragraph shall include a procedure 
        for self-certification as an emerging business enterprise, for 
        annual submission of documentation establishing eligibility for 
        designation as an emerging business enterprise, and for 
        periodic audits by the Administrator, or by State or local 
        entities designated by the Administrator, of emerging business 
        enterprises based on such documentation.
            ``(2) Criteria for designation.--The Administrator shall 
        establish criteria for designation of an emerging business 
        enterprise, which shall include the following:
                    ``(A) Number of employees.--That the small business 
                concern employs, in the Administrator's determination a 
                number of employees that is less than the larger of--
                            ``(i) not more than 10 percent of the 
                        number of employees that a small business 
                        concern within that industry category may 
                        employ, if that small business concern is so 
                        classified by reason of a size standard under 
                        section 3(a) pertaining to the number of 
                        employees of the concern; or
                            ``(ii) 25 employees.
                    ``(B) Age of business.--That the small business 
                concern is not more than 5 years old, beginning on the 
                date on which the business was first registered.
                    ``(C) Salary requirements.--That the small business 
                concern does not, in the Administrator's determination, 
                pay to an individual who owns any part of the concern 
                or who is in a management position a salary greater 
                than 200 percent of the mean annual salary for Managers 
                of Companies and Enterprises or the equivalent from the 
                most recent Employment and Wage Estimates developed by 
                the Secretary of Labor.
            ``(3) Public notification.--The Administrator shall take 
        appropriate action to publicize the establishment of the 
        procedures for designations under this paragraph, including by 
        conducting outreach to eligible small business concerns.
            ``(4) Contractor training.--The Administrator shall provide 
        for training regarding Federal procurement on an Internet Web 
        site of the Administrator, which shall be available to the 
        public at no charge.''.
    (b) Contracting Preference.--Section 15(g)(2) of the Small Business 
Act (15 U.S.C. (g)(2)) is amended by adding at the end the following:
                    ``(G) Emerging business enterprises.--
                            ``(i) In general.--The head of each Federal 
                        agency shall, after consultation with the 
                        Administrator, establish goals for 
                        participation by emerging business enterprises 
                        designated under section 3(a)(6) in not less 
                        than 3 percent of all contracts, including 
                        prime contracts and subcontracts, for each 
                        fiscal year. The head of the agency may give 
                        preference in making contract awards to such 
                        emerging business enterprises and shall make 
                        consistent efforts to annually expand 
                        participation by emerging business enterprises 
                        from each industry category in procurement 
                        contracts of the agency.
                            ``(ii) Reports.--
                                    ``(I) Reports from agencies.--At 
                                the conclusion of each fiscal year, the 
                                head of each Federal agency shall 
                                report to the Administrator on the 
                                extent of participation by emerging 
                                business enterprises in procurement 
                                contracts of such agency. Such reports 
                                shall contain appropriate 
                                justifications for failure to meet the 
                                goals established under this 
                                subparagraph.
                                    ``(II) Reports to congress.--The 
                                Administrator shall annually compile 
                                and analyze the reports submitted by 
                                the individual agencies pursuant to 
                                subclause (I) and shall submit to the 
                                President and the Committee on Small 
                                Business and Entrepreneurship of the 
                                Senate and the Committee on Small 
                                Business of the House of 
                                Representatives the compilation and 
                                analysis, which shall include the 
                                following:
                                            ``(aa) The goals in effect 
                                        for each agency and the 
                                        agency's performance in 
                                        attaining such goals.
                                            ``(bb) An analysis of any 
                                        failure to achieve individual 
                                        agency goals and the actions 
                                        planned by such agency (and 
                                        approved by the Administrator) 
                                        to achieve the goals in the 
                                        succeeding fiscal year.
                                            ``(cc) The total number and 
                                        dollar value of prime contracts 
                                        and subcontracts awarded to 
                                        emerging business enterprises.
                                    ``(III) Annual presidential report 
                                on the state of small business.--The 
                                President shall include the information 
                                required by subclause (II) in each 
                                annual report to the Congress on the 
                                state of small business prepared 
                                pursuant to section 303(a) of the Small 
                                Business Economic Policy Act of 1980 
                                (15 U.S.C. 631b(a)).''.
    (c) Fee Waivers.--Section 7(a) of the Small Business Act (15 U.S.C. 
636(a)) is amended by adding at the end the following:
            ``(35) Fee waivers.--In the case of any loan under this 
        section to an emerging business enterprise, the Administrator 
        may waive the collection of any fee associated with the 
        origination or guarantee of such a loan, unless--
                    ``(A) in the case of a fiscal year, the President's 
                budget for the upcoming fiscal year, submitted to 
                Congress pursuant to section 1105(a) of title 31, 
                United States Code, includes a cost for the program 
                established under this subsection that is above zero; 
                and
                    ``(B) no adverse effect on the waivers provided 
                under paragraph (31)(G) or (33)(E)(ii).
            ``(36) Emerging business enterprises.--
                    ``(A) Reports.--On the date that is one year after 
                the end of the first fiscal year for which a loan is 
                first guaranteed under this subsection, and annually 
                thereafter, each lender making a loan guaranteed under 
                this section shall report to the Administrator the 
                total number of loans made under such section during 
                the preceding fiscal year, the total amount loaned, and 
                the number of waivers under paragraph (35) provided.
                    ``(B) Verification.--A lender making a loan 
                guaranteed under this section shall verify the status 
                of a business concern as an emerging business 
                enterprise before issuing a loan. The Administrator 
                shall ensure that applications submitted under this 
                section are required to include sufficient 
                documentation to ensure that a lender can verify such 
                status.
                    ``(C) Sanction.--If a business concern has received 
                a loan under this subsection and that business concern 
                has fraudulently misrepresented its status as an 
                emerging business enterprise, that business concern 
                shall repay the amount of the loan to the lender (from 
                which amount the lender shall repay the amount of any 
                guarantee paid on the loan), and shall in addition pay 
                a fine in an amount determined by the Administrator.''.

SEC. 3. SELF-CERTIFICATION.

    Not later than 180 days after the date of enactment of this Act, 
the Administrator shall by rule establish a process for initial self-
certification of emerging business enterprises for purposes of 
participation in Federal contracts, and eligibility for Express Loans 
under section 7(a)(31)(G) of the Small Business Act or other loans 
under section 7(a) of such Act.
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