An Act to amend the Small Business Act and Small Business Investment Act of 1958 to provide additional assistance under such Acts, to create a pollution control financing program for small business, and for other purposes.
PL 94-305 (S.2498), enacted 06/04/1976

PUBLIC LAW 94-305—JUNE 4, 1976 
90 STAT. 663 
Public Law 94-305 
94th Congress 
An Act 
To amend the Small Business Act and Small Business Investment Act of 1958 
to provide additional assistance under such Acts, to create a pollution control 
financing program for small business, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States 
of Amenca 
in Congress 
assembled, 
T I T L E I—SMALL B U S I N E S S D E V E L O P M E N T 
TRANSFER OF DISASTER RELIEF AUTHORITY 
SEC. 101. The President shall undertake a comprehensive review 
of all Federal disaster loan authorities and shall make a report to the 
Congress, not later than December 1,1976, containing such recommen-
dations and legislative proposals, including possible consolidation of 
Federal disaster loan authorities, as may be demonstrated to be ne<jes-
saiy and appropriate to assure the most effective and efficient delivery 
of disaster relief. Such study shall give particular emphasis to alle-
viating any extraordinary burden the management of Federal disaster 
loan programs may impose on an agency. 
June 4. 1976 
[S. 2498] 
Small Business 
Act and Small 
Business 
Investment Act of 
1958, 
amendments. 
Report to 
Congress. 
15 use 636 
note. 
Definitions. 
15 use 694-1. 
POLLUTION CONTROL 
SEC. 102. Part A of title I V of the Small Business Investment Act 
of 1958 is amended by adding at the end thereof the following new 
sections: 
"SEC. 404. (a) For purposes of this section, the term— 
"(1) 'pollution control facilities' means such property (both 
real and personal) as the Administration in its discretion deter-
mines is likely to help prevent, reduce, abate, or control noise, air 
or water pollution or contamination by removing, altering, dis-
posing or storing pollutants, contaminants, wastes, or heat, and 
such property (both real and personal) as the Administration 
determines will be used for the collection, storage, treatment, 
utilization, processing, or final disposal of solid or liquid waste. 
"(2) 'person' includes corporations, companies, associations, 
firms, partnerships, societies, joint stock companies. States, terri-
tories, and possessions of the United States, or subdivisions of 
any of the foregoing, and the District of Columbia, as well as 
individuals. 
"(3) 'qualified contract' means a lease, sublease, loan agree-
ment, installment sales contract, or similar instrument, entered 
into between a small business concern and any person. 
"(b) The Administration may, whenever it determines that small Guarantees, 
business concerns are or are likely to be at an operational or 
financing 
disadvantage with other business concerns with respect to the planning, 
design, or installation of pollution control facilities, or the obtaining 
of financing therefor (including financing by means of revenue bonds 
issued by States, political subdivisions thereof, or other public bodies), 
guarantee the payment of rentals or other amounts due under qualified 
90 STAT. 664 
PUBLIC LAW 94-305—JUNE 4, 1976 
Fees. 
Periodic review. 
contracts. Any such guarantee may be made or effected either directly 
or in cooperation with any qualified surety company or other qualified 
company through a participation agreement with such company. The 
foregoing powers shall be subject, however, to the following restric-
tions and limitations: 
"(1) Notwithstanding any other law, rule, or regulation or 
fiscal policy to the contrary, the guarantee authorized in the case 
of pollution control facilities or property may be issued when 
such property is acquired by the use of proceeds from industrial 
revenue bonds which provide the holders interest which is exempt 
from Federal income tax. 
"(2) Any such guarantee shall be for the full amount of the 
payments due under such qualified contract and shall be a full 
faith and credit obligation of the United States. 
" (3) No guarantee shall be issued by the Administration unless 
the Administration determines that there exists a reasonable 
expectation that the small business concern in behalf of which 
the guarantee is issued will perform the covenants and conditions 
of the qualified contract. 
"(c) The Administration shall fix a uniform annual fee for any 
guarantee issued under this section which shall be payable at such 
time and under such conditions as may be prescribed by the Adminis-
trator, The fee shall be set at an amount which the Administration 
deems reasonable and necessary and shall be subject to periodic review 
in order that the lowest fee that experience under the program shows 
to be justified will be placed into effect. In no case shall such amount 
exceed 3i/^ per centum per annum of the minimum annual guaranteed 
rental payable under any qualified contract guaranteed imder this 
section. The Administration may also fix such uniform fees for the 
processing of applications for guarantees under this section as the 
Administrator determines are reasonable and necessary to pav the 
administrative expenses that are incurred in connection therewith, 
"(d) In connection with the guarantee of rentals under any qualified 
contract pursuant to authority conferred by this section, the Admin-
istrator may require, in order to minimize the financial risk assumed 
under such guarantee— 
"(1) that the lessee pay an amount, not to exceed one-fourth 
of the average annual payments for which a guarantee is issued 
under this section, which shall be held in escrow and shall be 
available (A) to meet rental charges accruing in any month for 
which the lessee is in default, or (B) if no default occurs during 
the term of the qualified contract, for application (with accrued 
interest) toward final payments of rental charges under the quali-
fied contract; 
"(2) that upon occurrence of a default under the qualified 
contract, the lessor shall, as a condition precedent to enforcing any 
claim under the qualified contract guarantee, utilize the entire 
period, for which there are funds available in escrow for payment 
of rentals, in reasonable diligent efforts to eliminate or minimize 
losses, by releasing the property covered by the qualified contract 
to another qualified lessee, and no claim shall be made or paid 
under the guarantee until such effort has been made and such 
escrow funds have been exhausted; 
"(3) that any guarantor of the qualified contract will become a 
successor of the lessor for the purpose of collecting from a lessee 
in default rentals which are in arrears and with respect to which 
the lessor has received payment under a guarantee made pursuant 
to this section; and 
PUBLIC LAW 94-305—JUNE 4, 1976 
90 STAT. 665 
"(4) such other provisions, not inconsistent with the purposes 
of this section as the Administrator may in his discretion require. 
"(e) Any guarantee issued under this section may be assigned with 
the permission of the Administration by the person to whom the pay-
ments under qualified contracts are due. 
"(f) Section 402 shall apply to the administration of this section. 
"SEC. 405. There is hereby created within the Treasury a separate 
fund for guarantees which shall be available to the Administrator 
without fiscal year limitations as a revolving fund for the purposes of 
section 404. There are authorized to be appropriated to the fund from 
time to time such amounts not to exceed $15,000,000 to provide capital 
for the fund. All amounts received by the Administrator, including 
any moneys, property, or assets derived by him from his operations in 
connection with section 404 shall be deposited in the fund. All expenses 
and payments pursuant to operations of the Administrator under 
section 404 shall be paid from the fund. From time to time, and at 
least at the close of each fiscal year, the Administrator shall pay from 
the fund into the Treasury as miscellaneous receipts interest at a rate 
determined by the Secretary of the Treasury on the cumulative amount 
of appropriations available as capital to the fund, less the average 
undisbursed cash balance in the fund during the year. The rate of 
such interest shall be determined by the Secretary of the Treasury, 
and shall not be less than a rate determined by taking into considera-
tion the average market yield during the month preceding each fiscal 
year on outstanding marketable obligations of the United States with 
remaining periods to maturity comparable to the average maturity 
of guarantees from the fund. Moneys in the fund not needed for the 
payment of current operating expenses or for the payment of claims 
arising under section 404 may be invested in bonds or other obliga-
tions of, or bonds or other obligations guaranteed as to principal and 
interest by, the United States; except that moneys provided as capital 
for the fund shall not be so invested.". 
SEC, 103. Section 403 of the Small Business Investment Act of 1958 
(15 U.S.C. 694) is amended bj striking out "this part" wherever it 
appears therein and by inserting in lieu thereof "section 401". 
15 use 693. 
Fund. 
Establishment. 
15 use 694-2. 
Ante, p. 663. 
Appropriation 
authorization. 
Interest. 
SMALL BUSINESS INVESTMENT COMPANY LEVERAGE 
SEC. 104. (a) Section 303(b) (1) of the Small Business Investment 
Act of 1958 is amended— 
(1) by striking out "200" and inserting in lieu thereof "300"; 
and 
(2) by striking out "$15,000,000" and inserting in lieu thereof 
"$35,000,000". 
(b) Section 303(b) (2) of such Act is amended— 
(1) by striking out "300" and inserting in lieu thereof "400"; 
and 
(2) by striking out "$20,000,000" and inserting in lieu thereof 
"$35,000,000". 
(c) Section 303(c) of such Act is amended— 
(1) by striking out "300" in clause (2) (iii) and inserting in 
lieu thereof "400"; and 
(2) by striking out "200" where it appears in clauses (2) (iii) 
and (4) and inserting in lieu thereof "300". 
15 use 683. 
90 STAT. 666 
PUBLIC LAW 94-305—JUNE 4, 1976 
Repeal. 
15 use 685. 
SMALL BUSINESS INVESTMENT COMPANY GUARANTEES 
SEC. 105. The last sentence of section 305(b) of the Small Business 
Investment Act of 1958 is repealed. 
L I C E N S I N G O P NONCORPORATE SMALL BUSINESS INVESTMENT COMPANIES 
SEC. 106. (a) Section 103 of the Small Business Investment Act of 
15 use 662. 
1958 is amended by striking out "and" at the end of clause (6) and 
inserting in lieu thereof a semicolon, by striking out the period at the 
end of clause (7) and inserting in lieu thereof a semicolon and "and", 
and by adding at the end the following: 
"Articles." 
"(8) the term 'articles' means articles of incorporation for an 
incorporated body and means the functional equivalent or other 
similar documents specified by the Administrator for other busi-
IIGSS c n t i t i G s " 
15 use 681. 
(b) Section 301 (a) of such Act is amended— 
(1) by striking the comma and inserting "or a limited part-
nership" after "incorporated body"; 
(2) by inserting "or otherwise existing" after "chartered"; 
(3) by inserting "or partners" after "shareholders"; and 
(4) by striking the words "of incorporation". 
(c) Section 301(b) of such Act is amended by striking the words 
"of incorporation". 
(d) Section 301(c) of such Act is amended by striking the words 
"of incorporation" wherever they appear therein. 
15 use 682. 
(e) Section 302(a) of such Act is amended by striking the words 
"of incorporation". 
15 use 687(1. 
(f) Section 312 of such Act is amended— 
(1) by inserting "or partners" after "shareholders"; and 
(2) by striking "or shareholders" wherever it appears therein 
and by inserting "shareholder, or partner". 
REPEAL OF 50 PERCENT LIMITATION ON BANK INVESTMENT 
SEC 107. Section 302(b) of the Small Business Investment Act of 
15 use 682. 
1958 is amended by striking out all that follows "upon the making of 
that acquisition", and inserting in lieu thereof the following: "the 
aggregate amount of shares in small business investment companies 
then held by the bank would exceed 5 percent of its capital surplus.". 
LOANS FOR PLANT ACQUISITION 
SEC. 108, (a) Section 502 of the Small Business Investment Act of 
15 use 696. 
1958 is amended by inserting "acquisition," after "plant". 
15 use 636. 
(b) Section 7(a) (4) (C) of the Small Business Act is amended to 
read as follows: " (C) no such loans including renewals and extensions 
thereof may be made for a period or periods exceeding ten years, 
except that such portion of a loan made for the purpose of acquiring 
real property or constructing facilities may have a maturity of twenty 
years plus such additional period as is estimated may be required to 
complete such construction.". 
E C O N O M I C OPPORTUNITY LOAN LIMIT 
15 use 636. 
SEC. 109. Section 7(i) of the Small Business Act is amended by 
striking from paragraphs (1) and (3) thereof the figure "$50,000" and 
inserting in lieu thereof the figure "$100,000". 
PUBLIC LAW 94-305—JUNE 4, 1976 
90 STAT. 667 
DEVELOPMENT COMPANY LOAN LIMIT 
SEC. 110. Section 502(3) of the Small Business Investment Act of 
1958 is amended by striking out "$350,000" and inserting in lieu thereof 15 USC 696 
"$500,000". 
REGULAR BUSINESS LOAN LIMIT 
SEC. 111. Section 7(a)(4) (A) of the Small Business Act is amended 15 USC 636. 
by striking out "$350,000" and by inserting in lieu thereof "$500,000: 
Provided^ That no such loan made or effected either directly or in coop-
eration with banks or other lending institutions through agreements to 
participate on an immediate basis shall exceed $350,000". 
FARMING AND AGRICULTURE RELATED INDUSTRIES 
SEC. 112. (a) Section 2 of the Small Business Act (15 U.S.C. 631) 
is amended by redesignating subsections (b) and (c) as (c) and (d), 
respectively, and by inserting immediately after subsection (a) the 
following new subsection: 
"(b) It is the declared policy of the Congress that the Government, 
through the Small Business Administrationj should aid and assist 
small business concerns which are engaged in the production of food 
and fiber, ranching, and raising of livestock, aquaculture, and all other 
farming and agricultural related industries; and the financial assist-
ance programs authorized by this Act are also to be used to assist 
such concerns.". 
(b) The first sentence of section 3 of the Small Business Act (15 
U.S.C. 632) is amended by inserting after "concern" the following: 
", including but not limited to enterprises that are engaged in the busi-
ness of production of food and fiber, ranching and raising of livestock, 
aquaculture, and 
all other 
farming 
and agricultural 
related 
(c) Section 7(a) (1) of the Small Business Act (15 U.S.C. 636(a) 
(1)) is amended by inserting "from non-Federal sources" immedi-
ately before the period at the end thereof. 
(d)_ Section 7(b) (4) of the Small Business Act (15 U.S.C. 636(b) 
(4)) is amended by striking out the proviso. 
(e) Section 18 of the Small Business Act (15 U.S.C. 647) is amended 
by inserting after "Federal Government" the following: ", except 
to those enterprises engaged in the production of food and fiber, 
ranching, and raising of livestock, aquaculture, and all other farming 
and agricultural related industries,". 
INCREASE AUTHORIZED CAPITAL OF SURETY BOND GUARANTEES 
SEC. 113. Section 412 of the Small Business Investment Act of 1958 15 USC 694c. 
is amended by striking out "$35,000,000" and inserting in lieu thereof 
"$56,500,000"". 
INTEREST RATE 
SEC. 114. Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) 
is amended by striking from the first paragraph following paragraph 
(8) of such section 7(b) the following: "Notwithstanding the provi-
sions of any other law, and except as otherwise provided in this sub-
section, the interest rate on the Administration's share of any loan 
90 STAT. 668 
PUBLIC LAW 94-305~JUNE 4, 1976 
made under this subsection shall not exceed 3 per centum per annum, 
except that in the case of a loan made pursuant to paragraph (3), 
(5), (6), (7), or (8), the rate of interest on the Administration's 
share of such loan shall not be more than the higher of (A) 2% per 
centum per annum; or (B) the average annual interest rate on all 
interest-bearing obligations of the United States then forming a part 
of the public debt as computed at the end of the fiscal year next pre-
ceding the date of the loan and adjusted to the nearest one-eighth of 1 
per centum plus one-quarter of 1 per centum per annum.", and insert-
ing in lieu thereof the following: "Notwithstanding the provisions of 
any other law, the interest rate on the Administration's share of any 
loan made under subsection (b) shall not exceed the average annual 
interest rate on all interest-bearing obligations of the United States 
, 
then forming a part of the public debt as computed at the end of the 
fiscal year next preceding the date of the loan and adjusted to the near-
est one-eighth of 1 per centum plus one-quarter of 1 per centum: Pro-
vided^ however^ That the interest rate for loans made under para-
graphs (1) and (2) hereof shall not exceed the rate of interest which 
is in effect at the time of the occurrence of the disaster.". 
TITLE II—STUDY OF SMALL BUSINESS 
ESTABLISHMENT 
Office of 
SEC. 201. There is established within the Small Business Admin-
Advocacy, 
istration an Office of Advocacy. The management of the Office shall 
15 use 634a. 
]3g vested in a Chief Counsel for Advocacy who shall be appointed 
from civilian life by the President, by and with the advice and consent 
of the Senate. 
STTJDY 
15 use 634b. 
SEC. 202. The primary functions of the Office of Advocacy shall 
be to— 
(1) examine the role of small business in the American econ-
omy and the contribution which small business can make in 
improving competition, encouraging economic and social mobility 
for all citizens, restraining inflation, spurring production, expand-
ing employment opportunities, increasing productivity, promoting 
exports, stimulating innovation and entrepreneurship, and pro-
viding an avenue through which new and untested products and 
services can be brought to the marketplace; 
(2) assess the effectiveness of existing Federal subsidy and 
assistance programs for small business and the desirability of 
reducing the emphasis on such existing programs and increasing 
the emphasis on general assistance programs designed to benefit 
all small businesses; 
(3) measure the direct costs and other effects of government 
regulation on small businesses; and make legislative and non-
legislative proposals for eliminating excessive or unnecessary 
regulations of small businesses; 
(4) determine the impact of the tax structure on small busi-
nesses and make legislative and other proposals for altering the 
tax structure to enable all small businesses to realize their poten-
tial for contributing to the improvement of the Nation's economic 
well-being; 
PUBLIC LAW 94-305—JUNE 4, 1976 
90 STAT. 669 
(5) study the ability of financial markets and institutions to 
meet small business credit needs and determine the impact of 
government demands for credit on small businesses; 
(6) determine financial resource availability and to recommend 
methods for delivery of financial assistance to minority enter-
prises, including methods for securing equity capital, for generat-
ing markets for goods and services, for providing effective 
business education, more effective management and technical 
assistance, and training, and for assistance in complying with 
Federal, State, and local law; 
(7) evaluate the efforts of Federal agencies, business and indus-
try to assist minority enterprises; 
(8) make such other recommendations as may be appropriate 
to assist the development and strengthening of minority and other 
small business enterprises; 
(9) recommend specific measures for creating an environment 
in which all businesses will have the opportunity to complete effec-
tively and expand to their full potential, and to ascertain the 
common reasons, if any, for small business successes and failures; 
and 
^ 
(10) determine the desirability of developing a set of rational, 
objective criteria to be used to define small business, and to develop 
such criteria, if appropriate. 
DUTIES 
SEC. 203. The Office of Advocacy shall also perform the following 15 USC 634c. 
duties on a continuing basis: 
(1) serve as a focal point for the receipt of complaints, criti- 
' 
cisms, and suggestions concerning the policies and activities of 
the Administration and any other Federal agency which affects 
small businesses; 
(2) counsel small businesses on how to resolve questions and 
problems concerning the relationship of the small business to the 
Federal Government; 
(3) develop proposals for changes in the policies and activities 
of any agency of the Federal Government which will better fulfill 
' 
the purposes of the Small Business Act and communicate such 
proposals to the appropriate Federal agencies; 
(4) represent the views and interests of small businesses before 
other Federal agencies whose policies and activities may affect 
small business; and 
(5) enlist the cooperation and assistance of public and private 
agencies, businesses, and other organizations in disseminating 
information about the programs and services provided by the 
Federal Government which are of benefit to small businesses, and 
information on how small businesses can participate in or make 
use of such programs and services. 
STAFF AND POWERS 
SEC. 204. In carrying out the provisions of section 202, after con- 15 USC 634d. 
sultation with and subject to the approval of the Administrator, the 
Chief Counsel for Advocacy may— 
90 STAT. 670 
PUBLIC LAW 94-305—JUNE 4, 1976 
5 use 5101 
et seq., 5331. 
15 use 637. 
(1) employ and fix the compensation of such additional staff 
personnel as is deemed necessary, without regard to the provisions 
of title 5, United States Code, governing appointments in the 
competitive service, and without regard to chapter 51, and sub-
chapter III of chapter 53 of such title relating to classification 
and General Schedule pay rates but at rates not in excess of the 
lowest rate for GS-15 of the General Schedule; 
(2) procure temporary and intermittent services to the same 
extent as is authorized by section 3109 of title 5, United States 
Code; 
(3) consult with experts and authorities in the fields of small 
business investment, venture capital, investment and commercial 
banking and other comparable financial institutions involved in 
the financing of business, and with individuals with regulatory, 
legal, economic, or financial expertise, including members of the 
academic community, and individuals who generally represent 
the public interest; 
(4) utilize the services of the National Advisory Council estab-
lished pursuant to the provisions of section 8(b) (13) of the Small 
Business Act and in accordance with the provisions of such 
statute, also appoint such other advisory boards or committees as 
is reasonably appropriate and necessary to carry out the provi-
sions of this title; and 
(5) hold hearings and sit and act at such times and places as 
he may deem advisable. 
ASSISTANCE OF GOVERNMENT AGENCIES 
15 use 634e. 
SEC. 205. Each department, agency, and instrumentality of the Fed-
eral Government is authorized and directed to furnish to the Chief 
Counsel for Advocacy such reports and other information as he deems 
necessary to carry out his functions under this title. 
Publication. 
15 use 634f. 
Prohibition. 
REPORTS 
SEC. 206. The Chief Counsel may from time to time prepare and 
publish such reports as he deems appropriate. Not later than one year 
after the date of enactment of this title, he shall transmit to the Con-
gress, the President and the Administration, a full report containing 
his findings and specific recommendations with respect to each of the 
functions referred to in section 202, including specific legislative pro-
posals and recommendations for administration or other action. Not 
later than 6 months after the date of enactment of this title, he shall 
prepare and transmit a preliminary report on his activities. The reports 
shall not be submitted to the Office of Management and Budget or to 
any other Federal agency or executive department for any purpose 
prior to transmittal to the Congress and the President. 
PUBLIC LAW 94-305—JUNE 4, 1976 
90 STAT. 671 
AUTHORIZATION 
SEC. 207. There are authorized to be appropriated not to exceed 15 USC 634g. 
$1,000,000 to carry out the provisions of this title. Any sums so appro-
priated shall remain available until expended. 
TECHNICAL AMENDMENT 
SEC. 208. Section 5 (e) of the Small Business Act is hereby repealed. Repeal. 
15 USC 634. 
Approved June 4, 1976. 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 94-519 accompanying H.R. 9056 (Comm. on Small Business) 
and No. 94-1115 (Comm. of Conference). 
SENATE REPORTS: No. 94-420 (Comm. on Banking, Housing and Urban Affairs) and 
No. 94-501 (Comm. on Commerce). 
CONGRESSIONAL RECORD: 
Vol. 121 (1975): Oct. 6, H.R. 9056 considered and passed House. 
Dec. 12, considered and passed Senate. 
Dec. 17, considered and passed House, amended, in lieu of 
H.R. 9056. 
Vol. 122 (1976): May 13, House agreed to conference report. 
May 20, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS: 
Vol. 12, No. 23 (1976): June 4, Presidential statement.