Funding for organizations that support startup businesses

The Small Business Act (15 U.S.C. 631 et seq.) is amended— (1)by redesignating section 47 (15 U.S.C. 631 note) as section 48; and (2)by inserting after section 46 the following:

47.

Funding for organizations that support startup businesses

(a)

Definitions

In this section— (1)the term accelerator means an organization that— (A)frequently provides, but is not exclusively designed to provide, seed investment in exchange for a small amount of equity; (B)works with a startup for a predetermined amount of time; (C)provides mentorship and instruction to scale businesses; or (D)offers startup capital or the opportunity to raise capital from outside investors; (2)the term eligible entity means an organization— (A)that is located in the United States; (B)the primary purpose of which is to support new small business concerns; and (C)that is often classified as an accelerator; (3)the term new small business concern means a small business concern that has been in operation for not more than 5 years; (4)the term small business concern owned and controlled by socially and economically disadvantaged individuals has the meaning given the term in section 8(d)(3)(C); and (5)the term State means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States. (b)

Funding

(1)

In general

Not later than 1 year after the date of enactment of this section, the Administrator shall develop and begin implementing a program to award cash prizes or grants of not more than $50,000 to eligible entities to support new small business concerns. (2)

Use of funds

A prize or grant under this section— (A)may be used for construction costs, space acquisition, and programmatic purposes; and (B)may not be used to provide capital or professional services to new small business concerns directly or through the subaward of funds. (3)

Disbursal of funds

In disbursing funds under this section, the Administrator may use incremental or scheduled payments. (c)

Application

(1)

In general

An eligible entity desiring a prize or grant under this section shall demonstrate that the eligible entity will use the prize or grant to provide assistance to not less than 10 new small business concerns per year. (2)

Requirements

In soliciting applications and awarding prizes or grants to eligible entities under this section, the Administrator shall employ a streamlined and inclusive approach that— (A)widely publicizes funding opportunities to a broad audience; (B)utilizes an easily accessible submission process or platform; (C)does not mandate the use of forms, detailed budgets, supporting documentation, or written submissions or impose other burdensome requirements; (D)focuses on solution-based approaches and results-based outcomes; (E)encourages innovation; and (F)allows proposals or pitches to be presented using various formats or media. (d)

Criteria

The Administrator shall establish criteria for a prize or grant under this section that shall give priority to eligible entities that are providing or plan to provide to new small business concerns— (1)office, manufacturing, or warehouse space, including appropriate operations infrastructure; (2)access to capital either directly from the eligible entity (using amounts other than the amounts provided under the prize or grant) or through guidance and contacts for acquiring capital from outside investors; (3)access to professional services either directly from the eligible entity (using amounts other than the amounts provided under the prize or grant) or through guidance and contacts for acquiring professional services, including accounting and legal services; or (4)a formal structured mentorship or developmental program that assists new small business concerns with building business skills and competencies. (e)

Considerations in choosing recipients

In determining whether to award a prize or grant under this section to an eligible entity, the Administrator shall take into account— (1)for eligible entities that have in operation a program to support new small business concerns, the record of the eligible entity in assisting new small business concerns, including, for each of the 3 full years before the date on which the eligible entity applies for a prize or grant under this section— (A)the retention rate of new small business concerns in the program of the eligible entity; (B)the average period of participation by new small business concerns in the program of the eligible entity; (C)the total, average, and median capital raised by new small business concerns participating in the program of the eligible entity; and (D)the total, average, and median number of employees of new small business concerns participating in the program of the eligible entity; (2)for all eligible entities— (A)the number of new small business concerns assisted or anticipated to be assisted by the eligible entity; (B)the number of new small business concerns applying or anticipated to apply for assistance from the eligible entity; (C)whether the program of the eligible entity provides or would provide assistance to individuals in gender, racial, or ethnic groups underrepresented by existing programs to assist new small business concerns; and (D)other metrics determined appropriate by the Administrator; (3)the need in the geographic area to be served by the program to be carried out using the prize or grant for additional assistance for new small business concerns, if the area has sufficient population density, as determined by the Administrator; (4)the level of experience of the entrepreneurial leadership of the eligible entity; (5)the ability of the eligible entity to use and leverage local strengths, including human resources, infrastructure, and educational institutions; and (6)the desire to promote diversity in entrepreneurship by ensuring that not less than 50 percent of prizes or grants shall be awarded annually to— (A)accelerators located in geographically underserved areas; or (B)accelerators serving— (i)Native Americans; (ii)small business concerns owned and controlled by socially and economically disadvantaged individuals; (iii)individuals participating in the Transition Assistance Program of the Department of Defense; (iv)individuals who— (I)served on active duty in any branch of the Armed Forces, including the National Guard and Reserves; and (II)were discharged or released from such service under conditions other than dishonorable; (v)individuals with disabilities; (vi)women; and (vii)formerly incarcerated individuals. (f)

Matching nonpublic funding requirement

(1)

In general

An eligible entity receiving a prize or grant under this section shall obtain funds from a private individual or entity (including a for-profit or nonprofit entity) that are— (A)for the same purposes as a prize or grant may be made under this section; (B)used to carry out the program of the eligible entity carried out using the prize or grant under this section; and (C)in an amount that is not to be less than 50 percent of the amount of the prize or grant under this section. (2)

Form of non-Federal share

Not more than 25 percent of the funds obtained under paragraph (1) may be in the form of in-kind contributions. (g)

Consequences of failure To abide by terms and conditions of prize or grant requirements of this section

The Administrator shall notify each eligible entity receiving a prize or grant under this section that failure to abide by the terms and conditions of the prize or grant or the requirements of this section may, in the discretion of the Administrator and in addition to any other civil or criminal consequences, result in the Administrator withholding payments or ordering the eligible entity to return the prize or grant funds. (h)

Annual progress reporting by recipients of prize or grant

Each eligible entity receiving a prize or grant under this section shall submit to the Administrator an annual report on the progress of the program carried out using the amounts received under the prize or grant, including— (1)the number of new small business concerns participating in the program during each of the previous 3 years; (2)the number of new small business concerns applying to participate in the program during each of the previous 3 years; (3)the retention rate of new small business concerns in the program; (4)the average period of participation in the program by new small business concerns; (5)the total, average, and median capital raised by new small business concerns participating in the program; (6)the total, average, and median number of employees of new small business concerns participating in the program; (7)the number of new small business concerns owned and controlled by— (A)Native Americans; (B)socially and economically disadvantaged individuals; (C)individuals participating in the Transition Assistance Program of the Department of Defense; (D)individuals who— (i)served on active duty in any branch of the Armed Forces, including the National Guard and Reserves; and (ii)were discharged or released from such service under conditions other than dishonorable; (E)women; and (F)formerly incarcerated individuals; and (8)other metrics determined appropriate by the Administrator. (i)

Report to congress

The Administrator shall submit to Congress an annual report on the program under this section, which shall include an assessment of the effectiveness of the program, including an assessment based on the metrics listed in subsection (h). (j)

Coordination with other small business administration programs

The Administrator shall take appropriate action to encourage eligible entities receiving a prize or grant under this section to use and incorporate other programs of the Administration, such as small business development centers, small business investment companies, loans under section 7(a), and assistance under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.). (k)

Coordination with the Department of Veterans Affairs

In consultation with the Secretary of Veteran Affairs, the Administrator shall make available outreach materials regarding the opportunities for veterans within the program under this section for distribution and display at local facilities of the Department of Veterans Affairs. (l)

Listing on website

The Administrator shall include a list of eligible entities receiving a prize or grant under this section on the website of the Administration. (m)

Authorization of appropriations

There are authorized to be appropriated to carry out this section $6,000,000 for each of the first 5 fiscal years beginning after the date of enactment of this section.