An original bill to provide authorizations for the Small Business Administration, and for other purposes.
PL 96-302 (S.2698), enacted 07/02/1980

PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 833 
Public Law 96-302 
96th Congress 
An Act 
To provide authorizations for the Small Business Administration, and for other 
July 2, 1980— 
purposes. 
[S. 2698] 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
Small Business 
Administration, 
TITLE I-AUTHORIZATIONS AND MISCELLANEOUS 
authorizations. 
AMENDMENTS 
PART A—PROGRAM LEVELS AND AUTHORIZATIONS 
SEC. 101. Section 20 of the Small Business Act is amended by adding 15 USC 631 note, 
at the end thereof the following new subsections: 
"(h) The following program levels are authorized for fiscal year 
1981: 
"(1) For the programs authorized by section 7(a) of this Act, the 15 USC 636, 
Administration is authorized to make $300,000,000 in direct and 
P^*' P- ^52. 
immediate participation loans, and $4,000,000,000 in deferred 
participation loans. 
"(2) For the programs authorized by section 7(h) of this Act, the 
Administration is authorized to make $25,000,000 in direct and 
immediate participation loans and $12,000,000 in guaranteed 
loans. 
"(3) For the programs authorized by section 7(i) of this Act, the 
Administration is authorized to make $76,000,000 in direct and 
immediate participation loans and $90,000,000 in guaranteed 
loans. 
"(4) For the programs authorized by section 7(1) of this Act, the 
Administration is authorized to make $45,000,000 in direct and 
immediate participation loans and $33,000,000 in guaranteed 
loans. 
"(5) For the programs authorized by sections 501, 502, and 503 
of the Small Business Investment Act of 1958, the Administra- 
15 USC 695, 696, 
tion is authorized to make $55,000,000 in direct and immediate ^^^' P- ^^'^• 
participation loans and $115,000,000 in guaranteed loans and 
guarantees of debentures. 
"(6) For the programs authorized by title III of the Small 
Business Investment Act of 1958, the Administration is author- 15 USC 681. 
ized to make $42,000,000 in direct purchase of debentures and 
preferred securities, and to make $228,000,000 in guarantees of 
debentures. 
"(7) For the programs authorized in part B of title IV of the 
Small Business Investment Act of 1958, the Administration is 15 USC 694a. 
authorized to enter into guarantees not to exceed $2,530,000,000. 
"(8) For the programs authorized by sections 7(b)(3) through 
7(b)(9) and 7(g) of this Act, the Administration is authorized to 15 USC 636, 
enter into $110,000,000 in loans, guarantees, and other obliga- P^^*' P- ^^^• 
tions or commitments. 
94 STAT. 834 
PUBLIC LAW 96-302—JULY 2, 1980 
"(9) For the programs authorized by sections 404 and 405 of the 
15 use 694-1, 
Small Business Investment Act of 1958, the Administration is 
"^^" 
authorized to enter into guarantees not to exceed $110,000,000. 
"(10) There are hereby authorized to be appropriated such 
sums as may be necessary and appropriate for the carrying out of 
the provisions and purposes, including administrative expenses, 
93 Stat. 118. 
of sections IQo) and 7(g) of this Act; and there are authorized to be 
15 y^^cSf' 
transferred from the disaster loan revolving fund such sums as 
pos, p. 4d. 
jjj^y jjg necessary and appropriate for such administrative 
expenses. 
Salaries and 
"(i) There are authorized to be appropriated to the Administration 
expenses. 
f^j. gg^j^Q y^^^ jggj^ $1,187,000,000. Of such sum, $865,000,000 shall be 
available for the purpose of carrying out the programs referred to in 
subsection (h), paragraphs (1) through (6); $76,000,000 shall be availa-
ble for the purpose of canying out the provisions of section 412 of the 
15 use 694c, 
Small Business Investment Act of 1958; $4,000,000 shall be available 
post, p. 837. 
fQj. ^jjg purpose of carrying out the provisions of section 403 of the 
15 use 694. 
Small Business Investment Act of 1958; and $242,000,000 shall be 
available for salaries and expenses of the Administration of which 
amount— 
"(1) $13,200,000 shall be available for procurement and techni-
cal assistance; of which amount not less than $2,000,000 shall be 
available for technical assistance, and of this amount not less 
than $629,000 shall be used to pay for the continued development 
of a procurement automated source system, and not less than 
$825,000 shall be used to develop and maintain technology 
assistance centers which shall have direct or indirect access to a 
minimum of thirty technology data banks to define the technol-
ogy problems or needs of smedl businesses by searching technol-
ogy data banks or other sources to locate, obtain, and interpret 
the appropriate technology for such small businesses and not 
more than $200,000 shall be available for a study the purpose of 
which shall be to define and describe the forest products industry 
and, in particular, to define and describe that portion of the 
forest products industry which consists of small businesses, to 
identify the trends and conditions affecting the survival of small 
businesses as a viable portion of the forest products industry, and 
to propose actions and programs to assist and promote a broadly 
based, nonconcentrated, healthy forest products industry. 
"(2) $23,100,000 shall be available for management assistance, 
of which amount not less than $880,000 shall be used to sustain 
the small business export development program and to employ 
not less than seventeen staff people for the Office of Interna-
tional Trade, ten of whom shall serve as export development 
specialists, with each of the Administration s regional offices 
being assigned one such specialist. 
"(3) $8,800,000 shall be available for economic research and 
analysis and advocacy, of which amount not less than $2,200,000 
shall be used to employ at least sixty-nine staff people for the 
Office of the Chief Counsel for Advocacy to carry out research 
90 Stat. 663. 
and those functions prescribed by Public Law 94-305; not less 
than $1,650,000 shall be used to develop an external small 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 835 
business data bank and small business index; and not less than 
$1,650,000 shall be used for research. 
"(4) $27,500,000 shall be available for the Office of Minority 
Small 
Business 
and 
Capital 
Ownership 
Development, 
$12,414,000 of which shall be used to carry out those functions, 
including administrative expenses, prescribed by section 7(j) of 
this Act. 
15 use 636. 
"(5) $9,900,000 shall be available for program evaluation and 
data management with priority given to the development of an 
automated internal Administration management data base, to 
the enhancement of the Administration's document tracking 
system, to the installation of terminals in Administration field 
offices, and to the development of an indicative small business 
data base comprised of names and addresses and related informa-
tion, of which amount not less than $1,100,000 shall be used to 
pay for development of such indicative small business data base. 
"(6) $20,000,000 shall be available for matching grants to small 
business development centers, and an additional $550,000 shall 
be available for the administration of the small business develop-
ment center program. 
"(j) The Administrator may transfer no more than 10 percent of Funding 
each of the total levels for salaries and expenses authorized in transfers. 
paragraphs (1) through (6) of section 20(i) of this Act: Provided, 
however, That no level authorized in such paragraphs may be 
increased more than 20 percent by any such transfers. 
"(k) The following program levels are authorized for each of fiscal 
years 1982, 1983, and 1984: 
"(1) For the programs authorized by section 7(a) of this Act, the 15 USC 636, 
Administration is authorized to make $330,000,000 in direct and P°^^' P- 8^2. 
immediate participation loans, and $4,400,000,000 in deferred 
participation loans. 
"(2) For the programs authorized by section 7(h) of this Act, the 
Administration is authorized to make $28,000,000 in direct and 
immediate participation loans, and $14,000,000 in guaranteed 
loans. 
"(3) For the programs authorized by section 7(i) of this Act, the 
Administration is authorized to make $83,000,000 in direct and 
immediate participation loans, and $99,000,000 in guaranteed 
loans. 
"(4) For the programs authorized by section 7(1) of this Act, the 
Administration is authorized to make $45,000,000 in direct and 
immediate participation loans, and $37,000,000 in guaranteed 
loans. 
"(5) For the programs authorized by sections 501, 502, and 503 
of the Small Business Investment Act of 1958, the Administra- 15 USC 695, 696, 
tion is authorized to make $61,000,000 in direct and immediate 
P°^*' P- ^^'^• 
participation loans, and $125,000,000 in guaranteed loans and 
guarantees of debentures. 
"(6) For the programs authorized by title III of the Small 
Business Investment Act of 1958, the Administration is author- 15 USC 681. 
ized to make $47,000,000 in direct purchases of debentures and 
preferred securities and to make $251,000,000 in guarantees of 
debentures. 
"(7) For the programs authorized by part B of title IV of the 
Small Business Investment Act of 1958, the Administration is 15 USC 694a. 
authorized to enter into guarantees not to exceed $2,780,000,000. 
94 STAT. 836 
PUBLIC LAW 96-302—JULY 2, 1980 
"(8) For the programs authorized by sections 7(b)(3) through 
15 use 636, 
7(b)(9) and 7(g) of this Act, the Administration is authorized to 
P°^^' P- 8^2- 
enter into $121,000,000 in loans, guarantees, and other obliga-
tions or commitments. 
"(9) For the programs authorized in sections 404 and 405 of the 
15 use 694-1, 
Small Business Investment Act of 1958, the Administration is 
authorized to enter into guarantees not to exceed $125,000,000. 
"(10) There are hereby authorized to be appropriated such 
sums as may be necessary and appropriate for the carrying out of 
the provisions and purposes, including administrative expenses 
93 Stat. 118. 
of sections 7(b) and 7(g), of this Act; and there are authorized to be 
^^ y^^^fl' 
transferred from the disaster loan revolving funds such sums as 
P°^ '^- 
may be necessary and appropriate for such administrative 
expenses. 
"(1) There are authorized to be appropriated to the Administration 
for fiscal year 1982, $1,375,000,000, and an identical amount for each 
of fiscal years 1983 and 1984. Of such sum, $1,022,000,000 shall be 
available for the purpose of carrying out the programs referred to in 
subsection (k), paragraph (1) through (6); $83,000,000 shall be availa-
ble for the purpose of carrying out the provisions of section 412 of the 
15 use 694c, 
Small Business Investment Act of 1958; $4,000,000 shall be available 
post, p. 837. 
fQj. ^YiQ purpose of carrying out the provisions of section 403 of the 
15 use 694. 
Small Business Investment Act of 1958; and $266,000,000 shall be 
available for salaries and expenses of the Administration of which 
amount— 
"(1) $14,520,000 shall be available for procurement and techni-
cal assistance; of which amount not less than $2,100,000 shall be 
available for technical assistance, and of this amount not less 
than $692,000 shall be used to pay for the continued development 
of a procurement automated source system, and not less than 
$907,500 shall be used to develop and maintain technology 
assistance centers which shall have direct or indirect access to a 
minimum of thirty technology data banks to define the technol-
ogy problems or needs of small businesses by searching technol-
ogy data banks or other sources to locate, obtain and interpret 
the appropriate technology for such small businesses. 
"(2) $25,400,000 shall be available for management assistance 
of which amount not less than $968,000 shall be used to sustain 
the small business export development program and to employ 
not less than seventeen staff people for the Office of Internation-
al Trade, ten of whom shall serve as export development special-
ists with each of the Administration's regional offices being 
assigned one such specialist. 
"(3) $9,680,000 shall be available for economic research and 
analysis and advocacy, of which amount not less than $2,420,000 
shall be used to employ at least sixty-nine staff people for the 
Office of the Chief Counsel for Advocacy to carry out research 
90 Stat. 663. 
and those functions prescribed by Public Law 94-305; not less 
than $1,815,000 shall be used to develop an external small 
business data bank and small business index; and not less than 
$1,815,000 shall be used for research. 
"(4) $30,250,000 shall be available for the Office of Minority 
Small 
Business 
and 
Capital 
Ownership 
Development, 
$13,655,000 of which shall be used to carry out those functions, 
including administrative expenses, prescribed by section 7(j) of 
15 use 636. 
this Act. 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 837 
"(5) $10,900,000 shall be available for program evaluation and 
data management with priority given to the development of an 
automated internal Administration management data base, to 
the enhancement of the Administration's document tracking 
system, to the installation of terminals in Administration field 
offices, and to the development of an indicative small business 
data base comprised of names and addresses and related informa-
tion, of which amount not less than $1,210,000 shall be used to 
pay for development of such indicative small business data base, 
"(m) The Administrator may transfer no more than 10 percent of 
each of the total levels for salaries and expenses authorized in 
paragraphs (1) through (5) of section 20(1) of this Act: Provided, 
however, That no level authorized in such paragraphs may be 
increased more than 20 percent by any such transfers.". 
PART B—MISCELXANEOUS AND TECHNICAL AMENDMENTS 
SEC. 110. Section 20(a) of the Small Business Act is amended to read 15 USC 631 note, 
as follows: "For fiscal years 1981, 1982, 1983 and 1984 there are 
hereby authorized to be appropriated such sums as may be necessary 
and appropriate to carry out the provisions and purposes of this Act 
other than those for which appropriations are specifically authorized. 
For fiscal year 1985 and every year thereafter, there are hereby 
authorized to be appropriated such sums as may be necessary and 
appropriate to carry out the provisions and purposes of this Act other 
than those for which appropriations are specifically authorized. All 
appropriations whether specifically or generally authorized shall 
remain available until expended.". 
INVESTMENT OF IDLE FUNDS 
SEC. Ill, The last sentence of section 412 of the Small Business 
Investment Act of 1958 is repealed. 
15 USC 694c. 
SEC. 112. Section 405 of the Small Business Investment Act of 1958 15 USC 694-2. 
is amended by adding at the end thereof the following: "Moneys in 
the fund not needed for the payment of current operating expenses or 
for the payment of claims arising under this part may be invested in 
bonds or other obligations of, or bonds or other obligations guaran-
teed as to principal and interest by, the United States; except that 
moneys provided as capital for the fund shall not be so invested.". 
DEVELOPMENT COMPANY DEBENTURES 
SEC. 113. (a) Title V of the Small Business Investment Act of 1958 is 
amended by adding at the end thereof the following new section: 
"DEVELOPMENT COMPANY DEBENTURES 
"SEC. 503. (a)(1) Except as provided in subsection (b), the Adminis- Guarantees, 
tration may guarantee the timely payment of all principal and 15 USC 697. 
interest as scheduled on any debenture issued by any qualified State 
or local development company. 
"(2) Such guarantees may be made on such terms and conditions as 
the Administration may by regulation determine to be appropriate. 
"(3) The full faith and credit of the United States is pledged to the 
payment of aU amounts guaranteed under this subsection. 
"(4) Any debenture issued by any State or local development 
company with respect to which a guarantee is made under this 
94 STAT. 838 
PUBLIC LAW 96-302—JULY 2, 1980 
15 u s e 696. 
15 u s e 683. 
Administrative 
expenses, 
additional 
charge. 
"Qualified State 
or local develop-
ment company." 
subsection, may be subordinated by the Administration to any other 
debenture, promissory note, or other debt or obligation of such 
company. 
"(b) No guarantee may be made with respect to any debenture 
under subsection (a) unless— 
"(1) such debenture is issued for the purpose of making one or 
more loans to small business concerns, the proceeds of which 
shall be used by such concern for the purposes set forth in section 
502; 
"(2) necessary funds for making such loans are not available to 
such company from private sources on reasonable terms; 
"(3) the interest rate on such debenture is not less than the rate 
of interest determined by the Secretary of the Treasury for 
purposes of section 303(b); 
"(4) the aggregate amount of such debenture does not exceed 
the amount of loans to be made from the proceeds of such 
debenture (other than any excess attributable to the administra-
tive costs of such loans); 
"(5) the amount of any loan to be made from such proceeds does 
not exceed an amount equal to 50 percent of the cost of the 
project with respect to which such loan is made; and 
"(6) the Administration approves each loan to be made from 
such proceeds. 
"(c) The Administration may impose an additional charge for 
administrative expenses with respect to each debenture for which 
payment of principal and interest is guaranteed under subsection (a). 
"(d) For purposes of this section, the term 'qualified State or local 
development company' means any State or local development com-
pany which, as determined by the Administration, has— 
"(1) a full-time professional staff; 
"(2) professional management ability (including adequate 
accounting, legal, and business-servicing abilities); and 
"(3) a board of directors, or membership, which meets on a 
regular basis to make management decisions for such company, 
including decisions relating to the making and servicing of loans 
by such company.". 
(b) The table of contents of the Small Business Investment Act of 
1958 is amended by inserting after the item relating to section 502 the 
following new item: 
"Sec. 503. Development company debentures.". 
REGULAR BUSINESS LOAN REFORM 
15 use 634. 
SEC. 114. Section 5(b)(7) of the Small Business Act is amended to 
read as follows: 
"(7) in addition to any powers, functions, privileges and immu-
nities otherwise vested in him, take any and all actions (includ-
ing the procurement of the services of attorneys by contract in 
any office where an attorney or attorneys are not or cannot be 
economically employed full time to render such services) when 
he determines such actions are necessary or desirable in making, 
servicing, compromising, modifying, liquidating, or otherwise 
dealing with or realizing on loans made under the provisions of 
this Act: Provided, That nothing herein shall be construed as 
authorizing the Administrator to contract or otherwise delegate 
his responsibility for loan servicing to other than Administration 
personnel, but with respect to deferred participation loans he 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 839 
may authorize participating lending institutions, in his discre-
tion pursuant to regulations promulgated by him, to take such 
actions on his behalf, including, but not limited to the determina-
tion of eligibility and creditworthiness, and loan monitoring, 
collection and liquidation;". 
SURETY BOND GUARANTEE 
SEC. 115. Section 411(c) of the Small Business Investment Act of 
1958 is amended to read as follows: 
"(c) Any guarantee or agreement to indemnify under this section 
shall obligate the Administration to pay to the surety a sum not to 
exceed (1) in the case of a breach of contract, 90 percent of the loss 
incurred and paid by the surety as the result of the breach; or (2) in a 
case in which (b) applies, the amount determined under (b).". 
15 u s e 694b. 
PROCUREMENT SYSTEMS 
SEC. 116. Section 15(c) of the Small Business Act is amended to read 
as follows: 
"(c)(1) During fiscal years 1981, 1982, and 1983, public and private 
not-for-profit organizations eligible for assistance under section 7(h) 
of this Act shall be eligible to participate in programs authorized 
under this section in an aggregate amount not to exceed $100,000,000 
for each such year: Provided, That the Administrator shall monitor 
and evaluate such participation and in any case where the Adminis-
trator and the Executive Director of the Committee for the Purchase 
from the Blind and Severely Handicapped find that the participation 
of such organizations has or may cause severe economic injury to for-
profit small businesses, the Administrator shall and is hereby author-
ized to direct and require every agency and department having 
procurement powers to take such actions as the Administrator and 
the Executive Director of the Committee for the Purchase from the 
Blind and Severely Handicapped may deem appropriate to alleviate 
the economic injury sustained or likely to be sustained by such for-
profit small businesses. 
"(2) The Administration shall, not later than January 1, 1982, 
prepare and transmit to the Senate Select Committee on Small 
Business and the Committee on Small Business of the House of 
Representatives, a report on the impact of contracts awarded to such 
organizations on for-profit small businesses.". 
SEC. 117. (a) The first sentence of section 15(d) of the Small Business 
Act is amended by inserting "small business" before "concerns". 
(b) Subsections (e) and (f) of section 15 of such Act are amended to 
read as follows: 
"(e) In carrying out small business set-aside programs, depart-
ments, agencies, and instrumentalities of the executive branch shall 
award contracts, and encourage the placement of subcontracts for 
procurement to the following in the manner and in the order stated: 
"(1) concerns which are small business concerns and which are 
located in labor surplus areas, on the basis of a total set-aside; 
"(2) concerns which are small business concerns, on the basis of 
a total set-aside; 
"(3) concerns which are small business concerns and which are 
located in a labor surplus area, on the basis of a partial set-aside; 
"(4) concerns which are small business concerns, on the basis of 
a partial set-aside. 
15 u s e 644. 
15 u s e 636. 
Participating 
organizations, 
monitoring 
and evaluation. 
Contract impact, 
report to 
congressional 
committees. 
15 u s e 644. 
Contract award, 
priorities. 
94 STAT. 840 
PUBLIC LAW 96-302—JULY 2, 1980 
"(f) After priority is given to the small business concerns specified 
in subsection (e), priority shall also be given to the awarding of 
contracts and the placement of subcontracts, on the basis of a total 
set-aside, to concerns which— 
"(1) are not eligible under subsection (e); 
"(2) are not small business concerns; and 
"(3) will perform a substantial proportion of the production on 
those contracts and subcontracts within areas of concentrated 
unemplojnnent or underemployment or within labor surplus 
areas.". 
ASIAN PACIFIC AMERICANS 
15 use 631. 
SEC. 118. (a) Section 2(eXl)(C) of the Small Business Act is amended 
by inserting "Asian Pacific Americans," after "Native Americans,". 
(b) The last sentence of subparagraph (C) of the clause contained in 
15 use 637. 
section 8(dX3) of the Small Business Act is amended by inserting 
"Asian Pacific Americans," after "Native Americans,". 
Applicability. 
(cXl) The amendment made by subsection (a) shall apply as if 
15 use 631 note, included in the amendment made by section 201 of the Act entitled 
"An Act to amend the Small Business Act and the Small Business 
Investment Act of 1958", approved October 24, 1978 (Public Law 
15 use 631. 
95-507). 
Applicability. 
(2) The amendment made by subsection (b) shall apply as if 
15 use 637 note, included in the amendment made by section 211 of 
the Act so entitled. 
15 u s e 637. 
"
^ 
DISASTER LOAN INTEREST RATES 
?t fisf' 6'lfi 
^^^' ^^^' ^^^ Section 7(c) of the Small Business Act is amended by 
5 ut)C bib. 
striking the period at the end and inserting in lieu thereof "; and" 
and by adding the following new paragraph: 
"(C) if the loan proceeds are to repair or replace property 
damaged or destroyed and if the applicant is a business concern 
which is able to obtain sufficient credit elsewhere, the interest 
rate shall not exceed the current average market yield on 
outstanding marketable obligations of the United States with 
remaining periods to maturity comparable to the average matu-
rities of such loans and adjusted to the nearest one-eighth of 1 
percent, and an additional amount as determined by the Admin-
istration, but not to exceed 1 percent: Provided, That three years 
after such loan is fully disbursed and every two years thereaf-
ter for the term of the loan, if the Administration determines 
that the borrower is able to obtain a loan from non-Federal 
sources at reasonable rates and terms for loans of similar 
purposes and periods of time, the borrower shall, upon request by 
the Administration, apply for and accept such a loan in sufficient 
amount to repay the Administration: Provided further. That no 
loan under subsection (bXD shall be made, either directly or in 
cooperation with banks or other lending institutions through 
agreements to participate on an immediate or deferred b£isis, if 
the total amount outstanding and committed to the borrower 
under such subsection would exceed $500,000 for each disaster, 
unless an applicant constitutes a major source of employment in 
an area suffering a disaster, in which case the Administration, in 
its discretion, may waive the $500,000 limitation.". 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 841 
(b) Section 7(c) of the Small Business Act is further amended by 
striking "October 1, 1982" and inserting in lieu thereof "October 1, 
1983". 
(c) Section 18 of the Small Business Act is amended by— 
(1) striking the comma after the phrase "agricultural related 
industries" and inserting the following: ": Provided, That prior to 
October 1, 1983, an agricultural enterprise shall not be eligible 
for loan assistance under paragraph (1) of section 7(b) to repair or 
replace property other than residences and/or personal property 
unless it is declined for, or would be declined for, emergency loan 
assistance at substantially similar interest rates from the Farm-
ers Home Administration under subchapter III of the Consoli-
dated Farm and Rural Development Act," and 
(2) striking subsection (b) and inserting in lieu thereof the 
following: 
"(b) As used in this Act— 
"(1) '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; and 
"(2) 'credit elsewhere' means the availability of sufficient 
credit from non-Federal sources at reasonable rates and terms, 
taking into consideration prevailing private rates and terms in 
the community in or near where the concern transacts business 
for similar purposes and periods of time.". 
(d) The amendments made by this section to sections 7(c)(3)(C) and 
18 of the Small Business Act shall not apply to any disaster which 
commenced on or before the effective date of this Act. 
93 Stat. 118. 
15 u s e 636. 
93 Stat. 119. 
15 u s e 647. 
7 u s e 1961. 
"Agricultural 
enterprises." 
"eredit 
elsewhere." 
Applicability. 
15 u s e 636 note. 
Ante, p. 840. 
AMENDMENTS TO CONSOUDATED FARM AND RURAL DEVELOPMENT ACT 
SEC. 120. (a) Section 321 of the Consolidated Farm and Rural 
Development Act is amended by striking out in the first sentence all 
that follows after "with the assistance of such loan" through the end 
of the sentence and inserting in lieu thereof a period. 
(b) Section 324(a) of the Consolidated Farm and Rural Development 
Act is amended by— 
(1) striking out the first sentence and inserting in lieu thereof 
the following: "Loans made or insured under this subtitle shall 
be at rates of interest as follows: 
"(1) with respect to loans or portions of loans up to the amount 
of the applicant's actual loss caused by the disaster, (A) if the 
applicant is unable to obtain sufficient credit elsewhere to 
finance the applicant's actual needs at reasonable rates and 
terms, taking into consideration prevailing private and coopera-
tive rates and terms in the community in or near which the 
applicant resides for loans for similar purposes and periods of 
time, the interest rate shall be a rate prescribed by the Secretary 
not in excess of 5 percent per annum, and (B) if the applicant is 
able to obtain sufficient credit elsewhere, the interest rate shall 
be the rate prescribed by the Secretary, but not in excess of the 
current average market yield on outstanding marketable obliga-
tions of the United States with remaining periods to maturity 
comparable to the average maturities of such loans, plus not to 
exceed 1 percent, as determined by the Secretary, and adjusted to 
the nearest one-eighth of 1 percent: Provided, That the total 
7 u s e 1961. 
Loan interest 
rates. 
7 u s e 1964. 
94 STAT. 842 
PUBLIC LAW 96-302—JULY 2, 1980 
amount outstanding and committed to the borrower under this 
paragraph (1) shall not exceed $500,000 for each disaster; and 
"(2) with respect to loans or portions of loans exceeding the 
amount of actual loss caused by the disaster, the interest rate 
shall be that prevailing in the private market for similar loans, 
as determined by the Secretary."; and 
(2) inserting in the second sentence after "Provided, That" the 
following: "for loans approved under subsection (aXl)(B), three 
years after such loan is made or insured and every two years 
thereafter for the term of the loan, if the Secretary determines 
that the borrower is able to obtain a loan from non-Federal 
sources at reasonable rates and terms for loans of similar 
purposes and periods of time, the borrower shall, upon request by 
the Secretary, apply for and accept such loan in sufficient 
amount to repay the Secretary: Provided further. That". 
BORROWING AUTHORITY FOR SMALL BUSINESS ADMINISTRATION 
REVOLVING FUNDS 
15 use 633. 
SEC. 121. Section 4(cX5) of the Small Business Act is amended to 
read as follows: 
"(5XA) The Administration is authorized to make and issue notes to 
the Secretary of the Treasury for the purpose of obtaining funds 
necessary for discharging obligations under the revolving funds 
created by section 4(cXl) of this Act and for authorized expenditures 
out of the funds. Such notes shall be in such form and denominations 
and have such maturities and be subject to such terms and conditions 
as may be prescribed by the Administration with the approval of the 
Secretary of the Treasury. Such notes shall bear interest at a rate 
fixed by the Secretary of the Treasury, taking into consideration the 
current average market yield of outstanding marketable obligations 
of the United States having maturities comparable to the notes issued 
by the Administration under this paragraph. The Secretary of the 
Treasury is authorized and directed to purcheise any notes of the 
Administration issued hereunder, and, for that purpose, the Secre-
tary of the Treasury is authorized to use as a public debt transaction 
the proceeds from the sale of any securities issued under the Second 
31 use 774. 
Liberty Bond Act, as amended, and the purposes for which such 
securities may be issued under such Act, as amended, are extended to 
include the purchase of notes issued by the Administration. All 
redemptions, purchases, and sales by the Secretary of the Treasury of 
such notes shall be treated as public debt transactions of the United 
States. All borrowing authority contained herein shall be effective 
only to such extent or in such amounts as are provided in advance in 
appropriation Acts. 
"(BXi) Moneys in the funds established in subsection (c)(1) not 
needed for current operations may be paid into miscellaneous 
receipts of the Treasury. 
"(ii) The Administration shall pay into miscellaneous receipts of 
the Treasury, following the close of each fiscal year, interest on the 
average of loan disbursements outstanding throughout the year 
providing such disbursements are made from amounts appropriated 
after October 1, 1980 or are made from repayments of principal of 
loans made from appropriated funds. This interest shall be calculated 
solely on the amount of loan disbursements net of losses at the rate 
provided under subsection (c)(5)(A). 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 843 
"(C) Except on those loan disbursements on which interest is paid 
under subsection (B)(ii), the Administration shall pay into miscella-
neous receipts of the Treasury, following the close of each fiscal year, 
interest received by the Administration on financing functions per-
formed under this Act and titles III and V of the Small Business 
Investment Act of 1958 providing the capital used to perform such 
functions originated from appropriated funds. Such payments shall 
be treated by the Department of the Treasury as interest income, not 
as retirement of indebtedness. 
"(D) There are authorized to be appropriated, in any fiscal year, 
such sums as may be necessary for losses and interest subsidies 
incurred by the funds established by subsection (c)(1), but not previ-
ously reimbursed.". 
ENERGY SHORTAGE LOANS 
SEC. 122. Section 7(b)(8) of the Small Business Act is amended by 
inserting after "energy-producing resources," the following: "includ-
ing, but not limited to, a shortage of coal or other energy-producing 
resource caused by a strike, boycott, or embargo, unless such strike, 
boycott, or embargo is directly against such small business concern,". 
15 u s e 681, 695. 
Appropriation 
authorization. 
93 Stat. 118. 
15 u s e 636. 
PRODUCT DISASTER LOANS 
SEC. 123. Section 7(b)(4) of the Small Business Act is amended by 
striking "undetermined causes" and inserting in lieu thereof "other 
causes: Provided, That any small business which intentionally adul-
terates its product in order to attempt to establish eligibility under 
this program shall not be eligible for loan assistance hereunder". 
DUPLICATION OF DISASTER BENEFITS 
SEC. 124. Section 7(b) of the Small Business Act is amended by 
adding at the end thereof the following: "(E) A State grant made on or 
prior to July 1, 1979, shall not be considered compensation for the 
purpose of applying the provisions of subsection (b) of section 315 of 
Public Law 93-288 (42 U.S.C. 5155) to a disaster loan under paragraph 
(1), (2), or (4) of this subsection.". 
TITLE II—SMALL BUSINESS DEVELOPMENT CENTERS 
SHORT TITLE 
Small Business 
Development 
Center 
Act of 1980. 
SEC. 201. This title may be cited as the 
ment Center Act of 1980". 
'Small Business Develop- 15 USC 631 note. 
PROGRAM AUTHORIZATION 
SEC. 202. The Small Business Act is amended by redesignating 
section 21 as section 30 and by inserting the following new section: 
"SEC. 21. (a)(1) The Administration is authorized to make grants 
(including contracts and cooperative agreements) to any State gov-
ernment or any agency thereof, any regional entity, any State-
chartered development, credit or finance corporation, any public or 
private institution of higher education, including but not limited to 
any land-grant college or university, any college or school of business, 
engineering, commerce, or agriculture, community college or junior 
college, or to any entity formed by two or more of the above entities 
(herein referred to as 'applicants') to assist in establishing small 
15 USC 631 note. 
Grants, 
recipients 
and purposes. 
15 USC 648. 
94 STAT, 844 
PUBLIC LAW 96-302—JULY 2, 1980 
Non-Federal 
additional 
amount. 
Plan, submittal 
to SBA. 
Review. 
Assistance to 
out-of-State 
businesses. 
Problem-solving 
assistance. 
business development centers and to any such body for: small 
business oriented employment or natural resources development 
programs; studies, research, and counseling concerning the manag-
ing, financing, and operation of small business enterprises; delivery 
or distribution of such services and information; and providing access 
to business analysts who can refer small business concerns to availa-
ble experts. 
"(2) The Administration shall require, as a condition to any grant 
(or amendment or modification thereof) made to an applicant under 
this section, that an additional amount (excluding any fees collected 
from recipients of such assistance) equal to the amount of such grant 
be provided from sources other than the Federal Government: Pro-
vided, That the additional amount shall not include any amount of 
indirect costs or in-kind contributions paid for under any Federal 
program, nor shall such indirect costs or in-kind contributions exceed 
50 percent of the non-Federal additional amount: Provided further. 
That no recipient of funds under this section shall receive a grant 
which would exceed its pro-rata share of a $65,000,000 program based 
upon the population to be served by the small business development 
center as compared to the total population in the United States, or 
$200,000, whichever is greater. 
"(b)(1) During fiscal years 1981,1982, and 1983, financial assistance 
shall not be made available to any applicant if approving such 
assistance would be inconsistent with a plan for the area involved 
which has been adopted by an agency recognized by the State 
government as authorized to do so and approved by the Administra-
tion in accordance with the standards and requirements established 
pursuant to this section, 
"(2) An applicant may apply to participate in the program by 
submitting to the Administration for approval a plan naming those 
authorized in subsection (a) to participate in the program, the 
geographic area to be served, the services that it would provide, the 
method for delivering services, a budget, and any other information 
and assurances the Administration may require to insure that the 
applicant will carry out the activities eligible for assistance. The 
Administration is authorized to approve, conditionally approve or 
reject a plan or combination of plans submitted. In all cases, the 
Administration shall review plans for conformity with the plan 
submitted pursuant to paragraph (1) of this subsection, and with a 
view toward providing small business with the most comprehensive 
and coordinated assistance in the State or part thereof to be served. 
"(3) At the discretion of the Administration, the Administration is 
authorized to permit a small business development center to provide 
advice, information and £issistance, as described in subsection (c), to 
small businesses located outside the State, but only to the extent such 
businesses are located within close geographical proximity to the 
small business 
development 
center, 
as determined 
by 
the 
Administration. 
"(c)(1) Applicants receiving grants under this section shall assist 
small businesses in solving problems concerning operations, manu-
facturing, engineering, technology exchange and development, per-
sonnel administration, marketing, sales, merchandising, finance, 
accounting, business strategy development, and other disciplines 
required for small business growth and expansion, innovation, 
increased productivity, and management improvement, and for 
decreasing industry economic concentrations. 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 845 
"(2) A small business development center shall provide services as 
close as possible to small businesses by providing extension services 
and utilizing satellite locations when necessary. To the extent possi-
ble, it also shall make full use of other Federal and State government 
programs that are concerned with aiding small business. A small 
business development center shall have— 
"(A) a full-time staff, including a staff director to manage the 
program activities; 
"(B) access to business analysts to counsel, assist, and inform 
small business clients; 
"(C) access to technology transfer agents to provide state of art 
technology to small businesses through coupling with national 
and regional technology data sources; 
"(D) access to information specialists to assist in providing 
information searches and referrals to small business; 
"(E) access to part-time professional specialists to conduct 
research or to provide counseling assistance whenever the need 
arises; and 
"(F) access to laboratory and adaptive engineering facilities. 
"(3) Services provided by a small business development center shall 
include, but shall not be limited to— 
"(A) furnishing one-to-one individual counseling to small 
businesses; 
"(B) assisting in technology transfer, research, and coupling 
from existing sources to small businesses; 
"(C) maintaining current information concerning Federal, 
State, and local regulations that affect small businesses and 
counsel small businesses on methods of compliance. Counseling 
and technology development shall be provided when necessary to 
help small businesses find solutions for complying with environ-
mental, energy, health, safety, and other Federal, State, and 
local regulations; 
"(D) coordinating and conducting research into technical and 
general small business problems for which there are no ready 
solutions; 
"(E) providing and maintaining a comprehensive library that 
contains current information and statistical data needed by 
small businesses; 
"(F) maintaining a working relationship and open communica-
tions with the financial and investment communities, legal 
associations, local and regional private consultants, and local 
and regional small business groups and associations in order to 
help address the various needs of the small business community; 
"(G) conducting in-depth surveys for local small business 
groups in order to develop general information regarding the 
local economy and general small business strengths and weak-
nesses in the locality; and 
"(H) maintaining lists of local and regional private consultants 
to whom small businesses can be referred. 
A small business development center shall continue to upgrade and 
modify its services, as needed, in order to meet the changing and 
evolving needs of the small business community. 
"(4) In addition to the methods prescribed in section 21(cX2), a small 
business development center shall utilize and compensate as one of 
its resources qualified small business vendors, including but not 
limited to, private management consultants, private consulting engi-
neers and private testing laboratories, to provide services as 
Development 
center extension 
services. 
Staff and access 
requirements. 
Assistance 
services. 
Qualified small 
business 
vendors. 
94 STAT. 846 
PUBLIC LAW 96-302—JULY 2, 1980 
Laboratory 
assistance. 
National Science 
Foundation and 
innovation 
centers. 
Report to SBA 
and Congress. 
NASA and 
industrial 
application 
centers. 
Report to SBA 
and Congress. 
Deputy 
Associate 
Administrator 
for 
Management 
Assistance. 
5 u s e 5101 ef 
seq., 5331. 
44 FR 58671. 
Duties. 
National Small 
Business 
Development 
Center Advisory 
Board, 
establishment. 
described in this subsection to small businesses on behalf of such 
small business development center. 
"(d) Laboratories operated and funded by the Federal Government 
are authorized and directed to cooperate with the Administration in 
developing and establishing programs to support small business 
development centers by making facilities and equipment available; 
providing experiment station capabilities in adaptive engineering; 
providing library and technical information processing capabilities; 
and providing professional staff for consulting. The Administration is 
authorized to reimburse the laboratories for such services. 
"(e) The National Science Foundation and innovation centers 
supported by the National Science Foundation are authorized and 
directed to cooperate with small business development centers par-
ticipating in this program. The National Science Foundation shall 
report annually on the performance of such innovation centers with 
recommendations to the Administration and the Congress on how 
such innovation centers can be strengthened and expanded. The 
National Science Foundation shall include in its report to Congress 
information on the ability of innovation centers to interact with the 
Nation's small business community and recommendations to the 
Administration on continued funding. 
"(f) The National Aeronautics and Space Administration and 
industrial application centers supported by the National Aeronautics 
and Space Administration are authorized and directed to cooperate 
with small business development centers participating in this pro-
gram. The National Aeronautics and Space Administration shall 
report annually on the performance of such industrial application 
centers with recommendations to the Administration and the Con-
gress on how such industrial application centers can be strengthened 
and expanded. The National Aeronautics and Space Administration 
shall include in its report to Congress information on the ability of 
industrial application centers to interact with the Nation's small 
business community and recommendations to the Administration on 
continued funding. 
"(g)(1) The Administrator shall appoint a Deputy Associate Admin-
istrator for Management Assistance who shall report to the Associate 
Administrator for Management Assistance and who shall serve 
without regard to the provisions of title 5, United States Code, 
governing appointments in the competitive service, and without 
regard to chapter 51, and subchapter III of chapter 53 of such title 
relating to classification and General Schedule pay rates, but at a 
rate not less than the rate of GS-17 of the General Schedule. 
"(2) The sole responsibility of the Deputy Associate Administrator 
for Management Assistance shall be to administer the small business 
development center program. Duties of the position shall include, but 
are not limited to, recommending the annual program budget, 
reviewing the annual budgets submitted by each applicant, establish-
ing appropriate funding levels therefore, selecting applicants to 
participate in this program, implementing the provisions of this 
section, maintaining a clearinghouse to provide for the dissemination 
and exchange of information between small business development 
centers and conducting audits of recipients of grants under this 
section. The Deputy Associate Administrator for Management Assist-
ance shall confer with and seek the advice and counsel of the Board in 
carrying out the responsibilities described in this subsection. 
"(h)(1) There is established a National Small Business Develop-
ment Center Advisory Board (herein referred to as 'Board') which 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 847 
shall consist of nine members appointed from civilian life by the 
Administrator and who shall be persons of outstanding qualifications 
known to be familiar and sympathetic with small business needs and 
problems. No more than three members shall be from universities or 
their affiliates and six shall be from small businesses or associations 
representing small businesses. At the time of the appointment of the 
Board, the Administrator shall designate one-third of the members 
and at least one from each category whose term shall end in two years 
from the date of appointment, a second third whose term shall end in 
three years from the date of appointment, and the final third whose 
term shall end in four years from the date of appointment. Succeed-
ing Boards shall have three-year terms, with one-third of the Board 
changing each year. 
"(2) The Board shall elect a Chairman and advise, counsel, and 
confer with the Deputy Associate Administrator for Management 
Assistance in carrying out the duties described in this section. The 
Board shall meet at least quarterly and at the call of the Chairman of 
the Board. Each member of the Board shall be entitled to be 
compensated at the rate not in excess of the per diem equivalent of 
the highest rate of pay for individuals occupying the position under 
GS-18 of the General Schedule for each day engaged in activities of 
the Board and shall be entitled to be reimbursed for expenses as a 
member of the Board. 
"(i)(l) Each small business development center may establish an 
advisory board. 
"(2) Each small business development center advisory board shall 
elect a chairman and advise, counsel, and confer with the director of 
the small business development center on all policy matters pertain-
ing to the operation of the small business development center, 
including who may be eligible to receive assistance from, and how 
local and regional private consultants may participate with the small 
business development center. 
"(j) The Administration, with the advice of the Board, shall estab-
lish a plan for evaluation of the small business development center 
program which may include the retaining of an independent concern 
to conduct such an evaluation. The evaluation shall be both quantita-
tive and qualitative and shall determine— 
"(1) the impact of the small business development center 
program on small businesses, including private consultants, and 
the socio-economic base of the area served; 
"(2) the multidisciplinary resources the small business devel-
opment center program was able to coordinate to assist small 
businesses; and 
"(3) the extent to which various types of small businesses 
engaged in areas such as manufacturing, retailing, wholesaling 
and services have been assisted by the small business develop-
ment center program. 
For the purpose of this evaluation, the Administration is authorized 
to require any small business development center or party receiving 
assistance under this section to furnish it with such information 
annually or otherwise as it deems appropriate. Such evaluation shall 
be completed and submitted to the Senate Select Committee on Small 
Business and the Committee on Small Business of the House of 
Representatives by January 31,1983. 
"(k) The authority to enter into contracts shall be in effect for each 
fiscal year only to the extent or in the amounts as are provided in 
advance in appropriations Acts.". 
Chairman. 
Meetings. 
Compensation. 
44 FR 58671. 
Advisory board. 
Program 
evaluation 
plan. 
Submittal to 
congres-
sional 
committees. 
Contract 
authority. 
79-194 
O—81—pt. 1 
57 : QL3 
94 STAT. 848 
PUBLIC LAW 96-302—JULY 2, 1980 
15 u s e 636. 
Ante, p. 843. 
Repeal. 
Ante, p. 843. 
15 u s e 648 note. 
Small Business 
Economic Policy 
Act of 1980. 
15 u s e 631 note. 
SEC. 203. Section 7(d)(1) of the Small Business Act is amended to 
read as follows: 
"(d)(1) On O
P after October 1, 1980, the Administration shall not 
fund any small business development center or any variation thereof, 
except as authorized in section 21 of this Act: Provided, That in fiscal 
year 1980 nothing in this section or in section 21 shall be deemed to 
affect the operation of any small business development center which 
w£is funded by the Administration prior to October 1,1979: Provided 
further. That no small business development center which was 
funded in fiscal year 1979 may be funded in excess of $300,000 in fiscal 
year 1980.". 
SEC. 204. Sections 201 and 202 of this title are repealed effective 
October 1,1984. 
TITLE III—SMALL BUSINESS ECONOMIC POLICY 
SHORT TITLE 
SEC. 301. This title may be cited as the 
Policy Act of 1980". 
'Small Business Economic 
15 u s e 631a. 
Report to 
eongress. 
15 u s e 631b. 
DECLARATION OF SMALL BUSINESS ECONOMIC POUCY 
SEC. 302. (a) For the purpose of preserving and promoting a 
competitive free enterprise economic system, Congress hereby 
declares that it is the continuing policy and responsibility of the 
Federal Government to use all practical means and to take such 
actions as are necessary, consistent with its needs and obligations and 
other essential considerations of national policy, to implement and 
coordinate all Federal department, agency, and instrumentality 
policies, programs, and activities in order to: foster the economic 
interests of small businesses; insure a competitive economic climate 
conducive to the development, growth and expansion of small busi-
nesses; establish incentives to assure that adequate capital and other 
resources at competitive prices are available to small businesses; 
reduce the concentration of economic resources and expand competi-
tion; and provide an opportunity for entrepreneurship, inventiveness, 
and the creation and growth of small businesses. 
(b) Congress further declares that the Federal Government is 
committed to a policy of utilizing all reasonable means, consistent 
with the overall economic policy goals of the Nation and the preserva-
tion of the competitive free enterprise system of the Nation, to 
establish private sector incentives that will help assure that adequate 
capital at competitive prices is available to small businesses. To fulfill 
this policy, departments, agencies, and instrumentalities of the 
Federal Government shall use all reasonable means to coordinate, 
create, and sustain policies and programs which promote investment 
in small businesses, including those investments which expand 
employment opportunities and which foster the effective and effi-
cient use of human and natural resources in the economy of the 
Nation. 
STATE OP SMALL BUSINESS 
SEC. 303. (a) The President shall transmit to the Congress not later 
than January 20 of each year a Report on Small Business and 
Competition which shall— 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 849 
(1) examine the current role of small business in the economy 
on an industry-by-industry basis; 
(2) present current and historical data on production, employ-
ment, investment, and other economic variables for small busi-
ness in the economy as a whole and for small business in each 
sector of the economy; 
(3) identify economic trends which will or may affect the small 
business sector and the state of competition; 
(4) examine the effects on small business and competition of 
policies, programs, and activities, including, but not limited to 
the Internal Revenue Code, the Employee Retirement Income 
Security Act, the Securities Act of 1933, and the Securities 
Exchange Act of 1934, and regulations promulgated thereunder; 
identify problems generated by such policies, programs, and 
activities; and recommend legislative and administrative solu-
tions to such problems; and 
(5) recommend a program for carrying out the policy declared 
in section 302 of this Act, together with such recommendations 
for legislation £is he may deem necessary or desirable. 
(b) The President also shall transmit simultaneously as an appen-
dix to such annual report, a report, by agency and department, on the 
total dollar value of all Federal contracts exceeding $10,000 in 
amount and the dollar amount (including the subcontracts thereun-
der in excess of $10,000) awarded to small, minority-owned and 
female-owned businesses. 
(c) The President may transmit from time to time to the Congress 
reports supplementary to the Report on Small Business and Competi-
tion, each of which shall include such supplementary or revised 
recommendations as he may deem necessary or desirable to achieve 
the policy declared in section 302 of this Act. 
(d) The Report on Small Business and Competition and all supple-
mentary reports transmitted under subsections (h) and (c) of this 
section shall, when transmitted to Congress, be referred to the Senate 
Select Committee on Small Business and the Committee on Small 
Business of the House of Representatives. 
TITLE IV—SMALL BUSINESS ECONOMIC RESEARCH AND 
ANALYSIS 
SEC. 401. The Small Business Act is amended by redesignating 
subsection 4(b) as subsection 4(bXl) and inserting thereafter the 15USC633 
following: 
"(2) The Administrator also shall be responsible for— 
"(A) establishing and maintaining an external small business 
economic data base for the purpose of providing the Congress and 
the Administration information on the economic condition and 
the expansion or contraction of the small business sector. To that 
end, the Administrator shall publish on a regular basis national 
small business economic indices and, to the extent feasible, 
regional small business economic indices, which shall include, 
but need not be limited to, data on— 
"(i) employment, layoffs, and new hires; 
"(ii) number of business establishments and the types of 
such establishments such as sole proprietorships, corpora-
tions, and partnerships; 
"(iii) number of business formations and failures; 
"(iv) sales and new orders; 
26 u s e 1 et seq. 
29 u s e 1001 
note, 
15 u s e 77a. 
15 u s e 78a. 
Appendix to 
report, 
transmittal to 
eongress. 
Supplementary 
reports, 
transmittal to 
eongress. 
Referral to con-
gressional 
committees. 
Data base. 
Economic 
indices, 
publication. 
94 STAT. 850 
PUBLIC LAW 96-302—JULY 2, 1980 
Annual report, 
publication. 
44 FR 58671. 
5 u s e 5315. 
Credit-need 
studies, report 
to Clongress. 
Referral to 
congressional 
committees. 
Small Business 
Employee 
Ownership 
Act of 1980. 
15 u s e 631 note. 
Findings and 
declaration. 
15 u s e 636 note. 
"(v) back orders; 
"(vi) investment in plant and equipment; 
"(vii) changes in inventory and rate of inventory turnover; 
"(viii) sources and amounts of capital investment, includ-
ing debt, equity, and internally generated funds; 
"(ix) debt to equity ratios; 
"(x) exports; 
"(xi) number and dollar amount of mergers and acquisi-
tions by size of acquiring and acquired firm; and 
"(xii) concentration ratios; and 
"(B) publishing annually a report giving a comparative analy-
sis and interpretation of the historic£il trends of the small 
business sector as reflected by the data acquired pursuant to 
subparagraph (A) of this subsection.". 
SEC. 402. Section 634d(l) of title 15, United States Code, is amended 
by striking the word "Schedule;" and inserting in lieu thereof 
"Schedule: Provided, however, That not more than ten staff personnel 
at any one time may be employed and compensated at a rate not in 
excess of GS-15, step 10, of the General Schedule;". 
SEC. 403. Section 5315 of title 5 of the United States Code is 
amended by adding the following new paragraph: 
"(128) 
Chief 
Counsel 
for 
Advocacy, 
Small 
Business 
Administration.". 
SEC. 404. In consultation with the Administrator of the Small 
Business Administration and the Bureau of the Census, the Board of 
Governors of the Federal Reserve System, the Comptroller of the 
Currency, and the Federal Deposit Insurance Corporation shall 
conduct such studies of the credit needs of smgdl business as may be 
appropriate to determine the extent to which such needs are being 
met by commercial banks and shall report the results of such studies 
to the Congress by January 1, 1982, together with their views and 
recommendations as to the feasibility and cost of conducting periodic 
sample surveys, by region and nationwide, of the number and dollar 
amount of commercial and industrial loans extended by commercial 
banks to small business. Reports shall, when transmitted to the 
Congress, be referred to the Senate Select Committee on Small 
Business and the Committee on Small Business of the House of 
Representatives. 
TITLE V—EMPLOYEE OWNERSHIP 
SEC. 501. This title may be cited as the "Small Business Employee 
Ownership Act of 1980". 
SEC. 502. The Congress hereby finds and declares that— 
(1) employee ownership of firms provides a means for preserv-
ing jobs and business activity; 
(2) employee ownership of firms provides a means for keeping a 
small business small when it might otherwise be sold to a 
conglomerate or other large enterprise; 
(3) employee ownership of firms provides a means for creating 
a new small business from the sale of a subsidiary of a large 
enterprise; 
(4) unemployment insurance programs, welfare payments, and 
job creation programs are less desirable and more costly for both 
the Government and program beneficiaries than loan guarantee 
programs to maintain employment in firms that would otherwise 
be closed, liquidated, or relocated; and 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 851 
(5) by guaranteeing loans to qualified employee trusts and 
similar employee organizations, the Small Business Administra-
tion can provide feasible and desirable methods for the transfer 
of all or part of the ownership of a small business concern to its 
employees. 
SEC. 503. (a) The purposes of this title are— 
(1) to provide that a qualified employee trust shall be eligible 
for loan guarantees under section 7(a) of the Small Business Act 
with respect to a small business concern, regardless of the 
percentage of stock of the concern held by the trust, and 
(2) to provide in section 505 of this Act authority to address the 
specific case in which the Small Business Administration guar-
antees loans under section 7(a) of the Small Business Act for 
purposes of providing funds to a qualified employee trust (and 
other employee organizations which are treated as qualified 
employee trusts) for the purchase, by at least 51 percent of the 
employees, of at least 51 percent of the stock of a business which 
is operated for profit and which is— 
(A) a small business concern, or 
(B) a corporation which is controlled by another person if, 
after the plan for the purchase of such corporation is carried 
out, such corporation would be a small business concern. 
(b) Nothing in this title shall be construed to prohibit the Small 
Business Administration from making loan guarantees under section 
7(a) of the Small Business Act to qualified employee trusts which own 
less than 51 percent of the stock of a continuing business. 
SEC. 504. Section 3 of the Small Business Act is amended by adding 
at the end thereof the following new subsection: 
"(cXD For purposes of this Act, a qualified employee trust shall be 
eligible for any loan guarantee under section 7(a) with respect to a 
small business concern on the same basis as if such trust were the 
same legal entity as such concern. 
"(2) For purposes of this Act, 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 
1954)— 
"(i) which is maintained by such concern, and 
"(ii) which provides that each participant 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 respect 
to a corporate matter which Ot)y 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 Administra-
tor which is binding on the trust and on such small business 
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 concern, 
"(ii) all funds acquired by the concern in such purchase 
shall be used by such concern solely for the purposes for 
which such loan was guaranteed. 
Purposes. 
15 use 636 note. 
15 use 636, 
post, p. 852. 
15 use 632. 
Loan guarantee 
eligibility. 
15 use 636, 
post, p. 852. 
"Qualified 
employee 
trust.' 
26 use 4975. 
94 STAT. 852 
PUBLIC LAW 96-302—JULY 2, 1980 
"(iii) such concern will provide such funds as may be 
necessary for the timely repayment 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 
participants in such plan who are entitled to share in such 
allocation, and each participant h£is a nonforfeitable right, 
not later than the date such loan is repaid, to all such 
qualifying employer securities which are so allocated to the 
participant's account. 
"(3) Under regulations which may be prescribed by the Administra-
tor, a trust may be treated as a qualified employee trust with respect 
to a small business concern if^ 
"(A) the trust is maintained by an employee 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 Revenue Code of 
26 use 4975. 
1954), 
"(ii) which provides that each participant in the plan is 
entitled to direct the plan as to the manner in which voting 
rights under qualifying employer securities which are allo-
cated 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 participant who is entitled 
to distribution from the plan has a right, in the case of 
qualifying employer securities which are not readily trada-
ble on an established market, to require that the concern 
repurchase such securities under a fair valuation formula, 
and 
"(iv) which meets such other requirements (similar to 
requirements applicable to employee stock ownership plans 
as defined in section 4975(e)(7) of the Internal Revenue Code 
of 1954) as the Administrator may prescribe, and 
15 use 636. 
"(C) in the case of a loan guarantee under section 7(a), such 
organization enters into an agreement with the Administration 
which is described in paragraph (2)(B).". 
SEC. 505. Section 7(a) of the Small Business Act is amended by 
adding at the end thereof the following new paragraph: 
Loan guarantee. 
"(8)(A) The Administration may guarantee under subsection (a) a 
loan to a qualified employee trust with respect to a small business 
concern for the purpose of purchasing stock of the concern under a 
plan approved by the Administrator which, when carried out, results 
in the qualified employee trust owning at least 51 percent of the stock 
of the concern. 
PUBLIC LAW 96-302—JULY 2, 1980 
94 STAT. 853 
"(B) The plan requiring the Administrator's approval under sub-
paragraph (A) shall be submitted to the Administration by the 
trustee of such trust with its application for the guarantee. Such plan 
shall include an agreement with the Administrator which is binding 
on such trust and on the small business concern and which provides 
that— 
"(i) not later than the date the loan guaranteed under subpara-
graph (A) is repaid (or as soon thereafter as is consistent with the 
requirements of section 401(a) of the Internal Revenue Code of 
1954), at least 51 percent of the total stock of such concern shall 
be allocated to the accounts of at least 51 percent of the 
employees of such concern who are entitled to share in such 
allocation, 
"(ii) there will be periodic reviews of the role in the manage-
ment of such concern of employees to whose accounts stock is 
allocated, and 
"(iii) there will be adequate management to assure manage-
ment expertise and continuity. 
"(C) In determining whether to guarantee any loan under this 
paragraph, the individual business experience or personal assets of 
employee-owners shall not be used as criteria, except inasmuch as 
certain employee-owners may assume managerial responsibilities, in 
which case business experience may be considered. 
"(D) For purposes of this paragraph, a corporation which is con-
trolled by any other person shall be treated as a small business 
concern if such corporation would, after the plan described in 
subparagraph (B) is carried out, be treated as a small business 
concern. 
"(E) The Administrator shall compile a separate list of applications 
for assistance under this paragraph, indicating which applications 
were accepted and which were denied, and shall report periodically to 
the Congress on the status of employee-owned firms assisted by the 
Administration.''. 
SEC. 506. (a) The Administrator of the Small Business Administra-
tion shall enter into a contract with an independent consultant which 
provides for a study by such consultant of the feasibility of making 
loan guarantees under section 7(a) of the Small Business Act directly 
to the seller of a small business concern in connection with the 
installment sale of such concern. Such study shall include an analysis 
of at least the following: 
(1) the extent and nature of the use of installment sales for the 
sale of small business concerns, 
(2) the ability of the Small Business Administration to make 
credit judgments in connection with installment sales, 
(3) the need for Small Business Administration loan guaran-
tees to facilitate installment sales, 
(4) the willingness of banks and other financial institutions to 
participate in the evaluation of installment sales, and 
(5) the anticipated cost of such a guarantee program in com-
parison to other loan guarantee programs of the Small Business 
Administration. 
Plan, submittal 
to SBA. 
26 u s e 401. 
Periodic review. 
Loan guarantee 
criteria, 
restriction. 
Applications list; 
report to 
Ck)ngress. 
Feasibility study 
by independent 
consultant. 
94 STAT. 854 
PUBLIC LAW 96-302—JULY 2, 1980 
Nothing in this section shall be construed as authorizing the Admin-
istrator to enter into contracts or incur obligations except to such 
extent and in such amounts as are provided in appropriations Acts. 
Feasibility 
(ij) j
y
f
Q
^ i^^gj. ^j^g^jj ^pj.ii 1
^ ;L98I^ ^Yie Administrator of the Small 
transmittal to 
Business Administration shall transmit the findings of such study, 
congressional 
along with his recommendations, to the Senate Select Committee on 
committees. 
Small Business and the Committee on Small Business of the House 
of Representatives. 
Effective date. 
SEC. 507. This Act shall take effect October 1,1980. 
15 u s e 631 note. 
Approved July 2, 1980. 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 96-998 accompanying H.R. 7297 (Comm. on Small Business) 
and No. 96-1087 (Comm. of Conference). 
SENATE REPORT No. 96-703 (Comm. on Small Business). 
CONGRESSIONAL RECORD, Vol. 126 (1980): 
May 28, considered and passed Senate. 
June 3, H.R. 7297 considered and passed House; passage vacated and S. 2698, 
amended, passed in lieu. 
June 17, Senate agreed to conference report. 
June 19, House agreed to conference report; receded from its amendment to 
title of bill. 
[See also the following bills and their accompanying reports: H.R. 7250, H.R. 
7259, H.R. 7288, H.R. 7289, H.R. 7298] 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 16, No. 27: 
July 2, Presidential statement.