[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2308 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2308

 To assist in the development of microenterprises and microenterprise 
                                lending.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 27, 1993

   Mrs. Collins of Illinois introduced the following bill; which was 
   referred jointly to the Committees on Ways and Means and Banking, 
                       Finance and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
 To assist in the development of microenterprises and microenterprise 
                                lending.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Microenterprise Opportunity 
Expansion Act''.

SEC. 2. PUBLIC ASSISTANCE PROVISIONS.

    (a) Business Assets Excluded From Resources and Income.--
            (1) AFDC.--
                    (A) Exclusion from resources.--Section 402(a)(7)(B) 
                of the Social Security Act (42 U.S.C. 602(a)(8)(A)) is 
                amended--
                            (i) by striking ``or'' at the end of clause 
                        (iii); and
                            (ii) by inserting before the semicolon the 
                        following: ``, or (v) any asset of the family 
                        which is primarily used for business purposes 
                        in a business owned, in whole or in part, by an 
                        individual eligible for aid under any State 
                        plan approved under this part; and''.
                    (B) Exclusion from income.--Section 402(a)(8)(A) of 
                such Act (42 U.S.C. 602(a)(8)(A)) is amended--
                            (i) by striking ``and'' at the end of 
                        clause (vii); and
                            (ii) by inserting after clause (viii) the 
                        following:
                    ``(ix) shall disregard from the income of any 
                child, relative, or other individual specified in 
                clause (ii) any asset which is primarily used for 
                business purposes in a business owned, in whole or in 
                part, by an individual eligible for aid under any State 
                plan approved under this part; and''.
            (2) SSI.--
                    (A) Exclusion from income.--Section 1612(b) of such 
                Act (42 U.S.C. 1382a(b)) is amended--
                            (i) by striking ``and'' at the end of 
                        paragraph (17);
                            (ii) in paragraph (18), by striking the 
                        period and inserting ``; and''; and
                            (iii) by adding at the end the following:
            ``(19) any asset of such individual (or such spouse) which 
        is primarily used for business purposes in a business owned, in 
        whole or in part, by an individual eligible for aid under any 
        State plan approved under part A of title IV.''.
                    (B) Exclusion from resources.--Section 1613(a) of 
                such Act (42 U.S.C. 1382b(a)) is amended--
                            (i) by striking ``and'' at the end of 
                        paragraph (9);
                            (ii) in paragraph (10), by striking the 
                        period and inserting ``; and''; and
                            (iii) by inserting after paragraph (10) the 
                        following:
            ``(11) any asset of (including any amount received as a 
        loan by) such individual (or such spouse) which is primarily 
        used for business purposes in a business owned, in whole or in 
        part, by an individual eligible for aid under any State plan 
        approved under part A of title IV.''.
    (b) Public Assistance Benefits Extended for Persons With Income 
From or Resources in a Microenterprise.--
            (1) AFDC and medicaid.--Section 402(a) of such Act (42 
        U.S.C. 602(a)) is amended by inserting after paragraph (28) the 
        following:
            ``(29) notwithstanding paragraphs (7) and (8), provide 
        that, during the 2-year period beginning on the first day any 
        member of a family eligible for benefits under the State plan 
        sells any good or service as part of operating a commercial 
        enterprise with 5 or fewer employees, which is owned in whole 
        or in part by such family member, all income of such family 
        member attributable to the enterprise and all resources in 
        which such family member has a beneficial interest used 
        primarily in the enterprise shall be disregarded in determining 
        the amount of aid to which the family is entitled under the 
        State plan;''.
            (2) SSI and medicaid.--
                    (A) Exclusion from income.--Section 1612(b) of such 
                Act (42 U.S.C. 1382a(b)), as amended by subsection 
                (a)(2)(A) of this section, is amended--
                            (i) by striking ``and'' at the end of 
                        paragraph (18);
                            (ii) in paragraph (19), by striking the 
                        period and inserting ``; and''; and
                            (iii) by adding at the end the following:
            ``(20) during the 2-year period beginning on the first day 
        such individual (or such spouse) sells any good or service as 
        part of operating a commercial enterprise with 5 or fewer 
        employees, which is owned in whole or in part by such 
        individual (or such spouse), all income of such individual (or 
        such spouse) attributable to the enterprise.''.
                    (B) Exclusion from resources.--Section 1613(a) of 
                such Act (42 U.S.C. 1382b(a)), as amended by subsection 
                (a)(2)(B) of this section, is amended--
                            (i) by striking ``and'' at the end of 
                        paragraph (10);
                            (ii) in paragraph (11), by striking the 
                        period and inserting ``; and''; and
                            (iii) by inserting after paragraph (11) the 
                        following:
            ``(12) during the 2-year period beginning on the first day 
        such individual (or such spouse) sells any good or service as 
        part of operating a commercial enterprise with 5 or fewer 
        employees, which is owned in whole or in part by such 
        individual (or such spouse), all resources of such individual 
        (or such spouse) that are used primarily in the enterprise.''.

SEC. 3. UNEMPLOYMENT COMPENSATION FOR INDIVIDUALS STARTING 
              MICROENTERPRISES.

    (a) State Law Requirements.--Subsection (a) of section 3304 of the 
Internal Revenue Code of 1986 (relating to State law requirements) is 
amended by striking ``and'' at the end of paragraph (17), by 
redesignating paragraph (18) as paragraph (19), and by inserting after 
paragraph (17) the following new paragraph:
            ``(18) compensation shall be payable to individuals 
        starting microenterprises as provided in section 3(b) of the 
        Act for microenterprises; and''.
    (b) Payment of Compensation to Individuals Starting 
Microenterprises.--
            (1) In general.--For purposes of section 3304(a)(18) of the 
        Internal Revenue Code of 1986, a State law shall provide that--
                    (A) each individual who is an eligible individual 
                with respect to any benefit year shall be entitled to 
                receive regular or extended unemployment compensation, 
                as the case may be, without regard to any State or 
                Federal requirements relating to availability for work, 
                active search for work, or refusal to accept suitable 
                work, and
                    (B) such individual shall be considered to be 
                unemployed for purposes of the State and Federal laws 
                applicable to unemployment compensation, as long as the 
                individual is actively involved in the ownership and 
                operation of a microenterprise or the preparation of a 
                business plan for the ownership and operation of a 
                microenterprise and is receiving guidance or 
                consultation in starting up or operating a 
                microenterprise from an experienced entrepreneur or 
                provider of technical business assistance.
            (2) Authorization for using unemployment funds to provide 
        startup assistance.--Nothing in section 3304(a)(4) or 3306(f) 
        of the Internal Revenue Code of 1986 or section 303(a)(5) of 
        the Social Security Act shall prevent amounts in a State 
        unemployment fund from being used to provide assistance to 
        eligible individuals in starting microenterprises. The amount 
        of assistance so provided shall be in the form of a lump sum 
        and shall be in lieu of the periodic payments of compensation 
        to which the individual would otherwise have been entitled and 
        shall not exceed the aggregate amount of compensation to which 
        the individual would otherwise have been so entitled.
            (3) Definitions.--For purposes of this section--
                    (A) Eligible individual.--The term ``eligible 
                individual'' means, with respect to any benefit year, 
                an individual who--
                            (i) is eligible to receive regular or 
                        extended compensation under the State law 
                        during such benefit year,
                            (ii) is starting a microenterprise in which 
                        the individual will have an ownership interest, 
                        and
                            (iii) submits a request to the State agency 
                        for compensation under this subsection.
                    (B) Microenterprise.--The term ``microenterprise'' 
                means any unincorporated trade or business with 5 or 
                fewer employees, 1 or more of whom own the enterprise.
                    (C) Other terms.--The terms ``compensation'', 
                ``extended compensation'', ``regular compensation'', 
                ``benefit year'', ``State'', and ``State law'' have the 
                respective meanings given to such terms under section 
                205 of the Federal-State Extended Unemployment 
                Compensation Act of 1970.

SEC. 4. TREATMENT OF MICROENTERPRISE LOANS AND GRANTS BY INSURED 
              DEPOSITORY INSTITUTIONS AS COMMUNITY REINVESTMENT.

    (a) In General.--Section 804 of the Community Reinvestment Act of 
1977 (12 U.S.C. 2903) is amended--
            (1) by striking ``Sec. 804. In connection with'' and 
        inserting ``(a) In General.--In connection with''; and
            (2) by adding at the end the following new subsections:
    ``(b) Microenterprise Loans.--
            ``(1) Treatment of loans and grants.--The following amounts 
        shall be treated as an investment in a regulated financial 
        institution's community for purposes of subsection (a):
                    ``(A) The amount of any loan described in paragraph 
                (2)(A) made by the regulated financial institution 
                directly to a microenterprise, if the loan is made in 
                accordance with the requirements of subsection (c).
                    ``(B) The amount of any grant or donation made by 
                the regulated financial institution to any 
                microenterprise intermediary to meet operating costs of 
                the intermediary, including the costs associated with 
                training, technical assistance, and other support 
                services provided by the intermediary to 
                microenterprises.
                    ``(C) The amount of any regulated financial 
                institution's investment in a revolving fund 
                established by the institution for loans to 
                microenterprise intermediaries for lending to 
                microenterprises if--
                            ``(i) the amount of the investment in the 
                        revolving fund is equal to or greater than the 
                        amount which is equal to 0.05 percent of the 
                        assets of the institution;
                            ``(ii) the regulated financial 
                        institution--
                                    ``(I) makes grants or donations 
                                described in subparagraph (B) to 
                                microenterprise intermediaries the 
                                total amount of which equals or exceeds 
                                the amount which is equal to 15 percent 
                                of the amount required to be invested 
                                in the revolving fund under clause (i); 
                                or
                                    ``(II) provides financial services, 
                                including the establishment and 
                                maintenance of a transaction account, 
                                for a microenterprise (or any 
                                individual who controls the 
                                microenterprise) who receives a 
                                microenterprise loan from a 
                                microenterprise intermediary, at 
                                preferential or reduced rates which are 
                                at least as favorable to the 
                                microenterprise as the rates offered 
                                for such services to the institution's 
                                most preferred commercial customers; 
                                and
                            ``(iii) loans from the revolving fund may 
                        be made only to microenterprise intermediaries 
                        who agree to use the proceeds of the loan to 
                        make microenterprise loans in accordance with 
                        the requirements of subsection (c).
            ``(2) Microenterprise loan.--For purposes of this 
        subsection and subsection (c), the term `microenterprise 
        loan'--
                    ``(A) means a loan--
                            ``(i) to a commercial enterprise with 5 or 
                        fewer employees, 1 or more of whom own the 
                        enterprise;
                            ``(ii) in amounts not less than $100 and 
                        not more than $10,000;
                            ``(iii) the interest rate on which is 
                        comparable to the interest rate charged on 
                        secured commercial loans offered by the 
                        regulated financial institution to the 
                        institution's most preferred commercial 
                        customers;
                            ``(iv) which--
                                    ``(I) is not secured by collateral; 
                                or
                                    ``(II) is secured by collateral the 
                                value of which, as a percentage of the 
                                amount of the loan, is substantially 
                                less than the percentage generally 
                                required by the institution for 
                                commercial loans; and
                            ``(v) the terms of which may permit the 
                        deferral of principal or interest payments 
                        otherwise due under such terms; and
                    ``(B) includes a loan to a microenterprise 
                intermediary the proceeds of which will be used by the 
                intermediary for making loans described in subparagraph 
                (A).
    ``(c) Criteria for Microenterprise Loans.--
            ``(1) In general.--A microenterprise loan meets the 
        requirements of this subsection if the loan is made in 
        accordance with the following criteria:
                    ``(A) In considering any loan to a microenterprise, 
                the lender takes into account--
                            ``(i) the creditworthiness of any person 
                        who controls the microenterprise in lieu of the 
                        creditworthiness of the enterprise;
                            ``(ii) in the case of a microenterprise 
                        which is a startup business, whether the 
                        microenterprise is soundly conceived; and
                            ``(iii) the need of the microenterprise for 
                        expansion capital.
                    ``(B) The lender accepts as collateral for the loan 
                a security interest in any personal property of any 
                person who controls the microenterprise which consists 
                of consumer or household goods.
                    ``(C) The lender does not require collateral or a 
                secured interest for more than 50 percent of the face 
                amount of the loan.
                    ``(D) The loans are made in amounts not less than 
                $100 and not more than $10,000 to persons who would not 
                otherwise qualify for a commercial loan.
                    ``(E) The lender provides technical assistance, 
                training, and counseling in business practices, such as 
                accounting, marketing, management, sales, financial 
                practices, and general business practices, and closely 
                monitors the microenterprise during the period the loan 
                is outstanding, including the enterprise's loan 
                repayment performance.
            ``(2) Lender defined.--For purposes of paragraph (1), the 
        term `lender' means--
                    ``(A) in the case of a microenterprise loan by a 
                regulated financial institution to a microenterprise, 
                the regulated financial institution; and
                    ``(B) in the case of a microenterprise loan by a 
                microenterprise intermediary to a microenterprise, the 
                microenterprise intermediary.''.
    (b) Clerical Amendment.--Section 804 of the Community Reinvestment 
Act of 1977 (12 U.S.C. 2903) is amended by inserting before subsection 
(a) (as so designated by subsection (a)(1) of this section) the 
following new heading:

``SEC. 804. ASSESSMENT OF RECORD OF MEETING COMMUNITY CREDIT NEEDS.''.

SEC. 5. TREATMENT OF MICROENTERPRISE LOANS OF SAVINGS ASSOCIATIONS AS 
              QUALIFIED THRIFT INVESTMENTS.

    (a) In General.--Section 10(m)(4)(C)(ii) of the Home Owners' Loan 
Act (12 U.S.C. 1467a(m)(4)(C)(ii)) is amended by adding at the end the 
following new subclause:
                                    ``(VII) The aggregate amount of 
                                microenterprise loans held by the 
                                savings association.''.
    (b) Microenterprise Loan Defined.--Section 10(m)(4) of the Home 
Owners' Loan Act (12 U.S.C. 1467a(m)(4)) is amended by adding at the 
end the following new subparagraph:
                    ``(D) Microenterprise loan.--For purposes of this 
                paragraph, the term `microenterprise loan'--
                            ``(i) means a loan--
                                    ``(I) to a commercial enterprise 
                                with 5 or fewer employees, 1 or more of 
                                whom own the enterprise;
                                    ``(II) in amounts not less than 
                                $100 and not more than $10,000; and
                                    ``(III) the interest rate on which 
                                is comparable to the interest rate 
                                charged on secured commercial loans 
                                offered by the savings association to 
                                the association's most preferred 
                                commercial customers;
                                    ``(IV) which is not secured by 
                                collateral or is secured by collateral 
                                the value of which, as a percentage of 
                                the amount of the loan, is 
                                substantially less than the percentage 
                                generally required by the institution 
                                for commercial loans; and
                                    ``(V) the terms of which may permit 
                                the deferral of principal or interest 
                                payments otherwise due under such 
                                terms;
                            ``(ii) includes a loan to a microenterprise 
                        intermediary the proceeds of which will be used 
                        by the intermediary for making loans described 
                        in clause (i); and
                            ``(iii) does not include--
                                    ``(I) any loan to a microenterprise 
                                which does not meet the requirements of 
                                paragraph (8); or
                                    ``(II) any loan to a 
                                microenterprise intermediary which does 
                                not agree to use the proceeds of the 
                                loan to make microenterprise loans in 
                                accordance with the requirements of 
                                paragraph (8).''.
    (c) Criteria for Microenterprise Loans.--Section 10(m) of the Home 
Owners' Loan Act (12 U.S.C. 1467a(m)) is amended by adding at the end 
the following new paragraph:
            ``(8) Criteria for microenterprise loans.--
                    ``(A) In general.--A microenterprise loan meets the 
                requirements of this paragraph only if the savings 
                association makes the microenterprise loan, or the 
                microenterprise intermediary which receives a loan from 
                the association, agrees to use the proceeds of the loan 
                to make microenterprise loans in accordance with the 
                following criteria:
                            ``(i) In considering any loan to a 
                        microenterprise, the lender takes into 
                        account--
                                    ``(I) the creditworthiness of any 
                                person who controls the microenterprise 
                                in lieu of the creditworthiness of the 
                                enterprise;
                                    ``(II) in the case of a 
                                microenterprise which is a startup 
                                business, whether the microenterprise 
                                is soundly conceived; and
                                    ``(III) the need of the 
                                microenterprise for expansion capital.
                            ``(ii) The lender accepts as collateral for 
                        the loan a security interest in any personal 
                        property of any person who controls the 
                        microenterprise which consists of consumer or 
                        household goods.
                            ``(iii) The lender does not require 
                        collateral or a secured interest for more than 
                        50 percent of the face amount of the loan.
                            ``(iv) The loans are made in amounts not 
                        less than $100 and not more than $10,000 to 
                        persons who would not otherwise qualify for a 
                        commercial loan.
                            ``(v) The lender provides technical 
                        assistance, training, and counseling in 
                        business practices, such as accounting, 
                        marketing, management, financial practices, and 
                        general business practices and sales, to the 
                        microenterprise in connection with the loan and 
                        closely monitors the microenterprise, including 
                        the enterprise's loan repayment performance.
                    ``(B) Lender defined.--For purposes of subparagraph 
                (A), the term `lender' means--
                            ``(i) in the case of a microenterprise loan 
                        by a savings association to a microenterprise, 
                        the savings association; and
                            ``(ii) in the case of a microenterprise 
                        loan by a microenterprise intermediary to a 
                        microenterprise, the microenterprise 
                        intermediary.''.

SEC. 6. USE OF CDBG ASSISTANCE FOR ADMINISTRATIVE COSTS OF ENTITIES 
              ASSISTING MICROENTERPRISES.

    Section 105(a)(23) of the Housing and Community Development Act of 
1974 (42 U.S.C. 5305(a)(23)) is amended by adding at the end the 
following flush material:
        ``assistance provided to such entities under this paragraph may 
        be used for reasonable administrative and operating costs of 
        such entities related to facilitating economic development 
        through activities under subparagraphs (A) through (C);''.

SEC. 7. ESTABLISHMENT OF MICROENTERPRISE DIVISION IN EACH FEDERAL 
              BANKING AGENCY.

    (a) In General.--Each Federal banking agency (as defined in section 
3(z) of the Federal Deposit Insurance Act) shall establish a division 
to be known as the ``Microenterprise Technical and Operations Office'' 
to promote microenterprises by offering technical assistance, training, 
outreach, and other support to groups and individuals engaged in, or 
desiring to establish, a microenterprise or an institution which offers 
credit or financial services to microenterprises.
    (b) Duties of Microenterprise Division.--The Microenterprise 
Technical and Operations Office of each Federal banking agency shall--
            (1) facilitate the creation and financing of 
        microenterprises by--
                    (A) collecting information relating to 
                microenterprises, including the ownership 
                characteristics of microenterprises and the performance 
                of microenterprises by industry;
                    (B) providing such information without charge to 
                interested persons; and
                    (C) generally serving as a clearinghouse for 
                information relating to microenterprises; and
            (2) monitor and provide assistance to the microenterprise 
        divisions established pursuant to section 34 of the Federal 
        Deposit Insurance Act.
    (c) Microenterprise Defined.--As used in this section, the term 
``microenterprise'' means any commercial enterprise with 5 or fewer 
employees, 1 or more of whom own the enterprise.

SEC. 8. STUDY.

    (a) Availability of Credit for Small Businesses Which Are Larger 
Than Microenterprises.--The Financial Institutions Examination Council 
shall conduct a study before the end of the 2-year period beginning on 
the date of the enactment of this Act, based on the agency's experience 
in administering the microenterprise loan provisions of this Act, and 
the amendments made by this Act, on the best means to make credit 
available for small businesses which--
            (1) do not qualify for microenterprise loans or need credit 
        in larger amounts than is available through microenterprise 
        loans; and
            (2) need credit in smaller amounts than is generally 
        available from financial institutions or the Small Business 
        Administration.
    (b) Recommendations and Report.--The Financial Institutions 
Examination Council shall submit a report to the Congress before the 
end of the 2-year period referred to in subsection (a) containing the 
findings and conclusions of the agency in connection with the study 
conducted pursuant to subsection (a) and such recommendations for 
legislative and administrative action as the agency may determine to be 
appropriate.

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