[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5663 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 5663

     To provide for community renewal and new markets initiatives.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 14, 2000

  Mr. Talent (for himself and Ms. Velazquez) introduced the following 
      bill; which was referred to the Committee on Small Business

_______________________________________________________________________

                                 A BILL


 
     To provide for community renewal and new markets initiatives.

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

SECTION 1. NEW MARKETS VENTURE CAPITAL PROGRAM.

    (a) Short Title.--This section may be cited as the ``New Markets 
Venture Capital Program Act of 2000''.
    (b) New Markets Venture Capital Program.--Title III of the Small 
Business Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended--
            (1) in the heading for the title, by striking ``SMALL 
        BUSINESS INVESTMENT COMPANIES'' and inserting ``INVESTMENT 
        DIVISION PROGRAMS'';
            (2) by inserting before the heading for section 301 the 
        following:

            ``Part A--Small Business Investment Companies'';

        and
            (3) by adding at the end the following:

             ``Part B--New Markets Venture Capital Program

``SEC. 351. DEFINITIONS.

    ``In this part, the following definitions apply:
            ``(1) Developmental venture capital.--The term 
        `developmental venture capital' means capital in the form of 
        equity capital investments in businesses made with a primary 
        objective of fostering economic development in low-income 
        geographic areas. For the purposes of this paragraph, the term 
        `equity capital' has the same meaning given such term in 
        section 303(g)(4).
            ``(2) Low-income individual.--The term `low-income 
        individual' means an individual whose income (adjusted for 
        family size) does not exceed--
                    ``(A) for metropolitan areas, 80 percent of the 
                area median income; and
                    ``(B) for nonmetropolitan areas, the greater of--
                            ``(i) 80 percent of the area median income; 
                        or
                            ``(ii) 80 percent of the statewide 
                        nonmetropolitan area median income.
            ``(3) Low-income geographic area.--the term `low-income 
        geographic area' means--
                    ``(A) any population census tract (or in the case 
                of an area that is not tracted for population census 
                tracts, the equivalent county division, as defined by 
                the Bureau of the Census of the Department of Commerce 
                for purposes of defining poverty areas), if--
                            ``(i) the poverty rate for that census 
                        tract is not less than 20 percent;
                            ``(ii) in the case of a tract--
                                    ``(I) that is located within a 
                                metropolitan area, 50 percent or more 
                                of the households in that census tract 
                                have an income equal to less than 60 
                                percent of the area median gross 
                                income; or
                                    ``(II) that is not located within a 
                                metropolitan area, the median household 
                                income for such tract does not exceed 
                                80 percent of the statewide median 
                                household income; or
                            ``(iii) as determined by the Administrator 
                        based on objective criteria, a substantial 
                        population of low-income individuals reside, an 
                        inadequate access to investment capital exists, 
                        or other indications of economic distress exist 
                        in that census tract; or
                    ``(B) any area located within--
                            ``(i) a HUBZone (as defined in section 3(p) 
                        of the Small Business Act and the implementing 
                        regulations issued under that section);
                            ``(ii) an urban empowerment zone or urban 
                        enterprise community (as designated by the 
                        Secretary of Housing and Urban Development); or
                            ``(iii) a rural empowerment zone or rural 
                        enterprise community (as designated by the 
                        Secretary of Agriculture).
            ``(4) New markets venture capital company.--The term `New 
        Markets Venture Capital company' means a company that--
                    ``(A) has been granted final approval by the 
                Administrator under section 354(e); and
                    ``(B) has entered into a participation agreement 
                with the Administrator.
            ``(5) Operational assistance.--The term `operational 
        assistance' means management, marketing, and other technical 
        assistance that assists a small business concern with business 
        development.
            ``(6) Participation agreement.--The term `participation 
        agreement' means an agreement, between the Administrator and a 
        company granted final approval under section 354(e), that--
                    ``(A) details the company's operating plan and 
                investment criteria; and
                    ``(B) requires the company to make investments in 
                smaller enterprises at least 80 percent of which are 
                located in low-income geographic areas.
            ``(7) Specialized small business investment company.--The 
        term `specialized small business investment company' means any 
        small business investment company that--
                    ``(A) invests solely in small business concerns 
                that contribute to a well-balanced national economy by 
                facilitating ownership in such concerns by persons 
                whose participation in the free enterprise system is 
                hampered because of social or economic disadvantages;
                    ``(B) is organized or chartered under State 
                business or nonprofit corporations statutes, or formed 
                as a limited partnership; and
                    ``(C) was licensed under section 301(d), as in 
                effect before September 30, 1996.
            ``(8) State.--The term `State' means such of the several 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the 
        Commonwealth of the Northern Mariana Islands, and any other 
        commonwealth, territory, or possession of the United States.

``SEC. 352. PURPOSES.

    ``The purposes of the New Markets Venture Capital Program 
established under this part are--
            ``(1) to promote economic development and the creation of 
        wealth and job opportunities in low-income geographic areas and 
        among individuals living in such areas by encouraging 
        developmental venture capital investments in smaller 
        enterprises primarily located in such areas; and
            ``(2) to establish a developmental venture capital program, 
        with the mission of addressing the unmet equity investment 
        needs of small enterprises located in low-income geographic 
        areas, to be administered by the Administrator--
                    ``(A) to enter into participation agreements with 
                New Markets Venture Capital companies;
                    ``(B) to guarantee debentures of New Markets 
                Venture Capital companies to enable each such company 
                to make developmental venture capital investments in 
                smaller enterprises in low-income geographic areas; and
                    ``(C) to make grants to New Markets Venture Capital 
                companies, and to other entities, for the purpose of 
                providing operational assistance to smaller enterprises 
                financed, or expected to be financed, by such 
                companies.

``SEC. 353. ESTABLISHMENT.

    ``In accordance with this part, the Administrator shall establish a 
New Markets Venture Capital Program, under which the Administrator 
may--
            ``(1) enter into participation agreements with companies 
        granted final approval under section 354(e) for the purposes 
        set forth in section 352;
            ``(2) guarantee the debentures issued by New Markets 
        Venture Capital companies as provided in section 355; and
            ``(3) make grants to New Markets Venture Capital companies, 
        and to other entities, under section 358.

``SEC. 354. SELECTION OF NEW MARKETS VENTURE CAPITAL COMPANIES.

    ``(a) Eligibility.--A company shall be eligible to apply to 
participate, as a New Markets Venture Capital company, in the program 
established under this part if--
            ``(1) the company is a newly formed for-profit entity or a 
        newly formed for-profit subsidiary of an existing entity;
            ``(2) the company has a management team with experience in 
        community development financing or relevant venture capital 
        financing; and
            ``(3) the company has a primary objective of economic 
        development of low-income geographic areas.
    ``(b) Application.--To participate, as a New Markets Venture 
Capital company, in the program established under this part a company 
meeting the eligibility requirements set forth in subsection (a) shall 
submit an application to the Administrator that includes--
            ``(1) a business plan describing how the company intends to 
        make successful developmental venture capital investments in 
        identified low-income geographic areas;
            ``(2) information regarding the community development 
        finance or relevant venture capital qualifications and general 
        reputation of the company's management;
            ``(3) a description of how the company intends to work with 
        community organizations and to seek to address the unmet 
        capital needs of the communities served;
            ``(4) a proposal describing how the company intends to use 
        the grant funds provided under this part to provide operational 
        assistance to smaller enterprises financed by the company, 
        including information regarding whether the company intends to 
        use licensed professionals, when necessary, on the company's 
        staff or from an outside entity;
            ``(5) with respect to binding commitments to be made to the 
        company under this part, an estimate of the ratio of cash to 
        in-kind contributions;
            ``(6) a description of the criteria to be used to evaluate 
        whether and to what extent the company meets the objectives of 
        the program established under this part;
            ``(7) information regarding the management and financial 
        strength of any parent firm, affiliated firm, or any other firm 
        essential to the success of the company's business plan; and
            ``(8) such other information as the Administrator may 
        require.
    ``(c) Conditional Approval.--
            ``(1) In general.--From among companies submitting 
        applications under subsection (b), the Administrator shall, in 
        accordance with this subsection, conditionally approval 
        companies to participate in the New Markets Venture Capital 
        Program.
            ``(2) Selection criteria.--In selecting companies under 
        paragraph (1), the Administrator shall consider the following:
                    ``(A) The likelihood that the company will meet the 
                goal of its business plan.
                    ``(B) The experience and background of the 
                company's management team.
                    ``(C) The need for developmental venture capital 
                investments in the geographic areas in which the 
                company intends to invest.
                    ``(D) The extent to which the company will 
                concentrate its activities on serving the geographic 
                areas in which it intends to invest.
                    ``(E) The likelihood that the company will be able 
                to satisfy the conditions under subsection (d).
                    ``(F) The extent to which the activities proposed 
                by the company will expand economic opportunities in 
                the geographic areas in which the company intends to 
                invest.
                    ``(G) The strength of the company's proposal to 
                provide operational assistance under this part as the 
                proposal relates to the ability of the applicant to 
                meet applicable cash requirements and properly utilize 
                in-kind contributions, including the use of resources 
                for the services of licensed professionals, when 
                necessary, whether provided by persons on the company's 
                staff or by persons outside of the company.
                    ``(H) Any other factors deemed appropriate by the 
                Administrator.
            ``(3) Nationwide distribution.--The Administrator shall 
        select companies under paragraph (1) in such a way that 
        promotes investment nationwide.
    ``(d) Requirements To Be Met for Final Approval.--The Administrator 
shall grant each conditionally approved company a period of time, not 
to exceed 2 years, to satisfy the following requirements:
            ``(1) Capital requirement.--Each conditionally approved 
        company shall raise not less than $5,000,000 of private capital 
        or binding capital commitments from one or more investors 
        (other than agencies or departments of the Federal Government) 
        who met criteria established by the Administrator.
            ``(2) Nonadministration resources for operational 
        assistance.--
                    ``(A) In general.--In order to provide operational 
                assistance to smaller enterprises expected to be 
                financed by the company, each conditionally approved 
                company--
                            ``(i) shall have binding commitments (for 
                        contribution in cash or in kind)--
                                    ``(I) from any sources other than 
                                the Small Business Administration that 
                                meet criteria established by the 
                                Administrator;
                                    ``(II) payable or available over a 
                                multiyear period acceptable to the 
                                Administrator (not to exceed 10 years); 
                                and
                                    ``(III) in an amount not less than 
                                30 percent of the total amount of 
                                capital and commitments raised under 
                                paragraph (1);
                            ``(ii) shall have purchased an annuity--
                                    ``(I) from an insurance company 
                                acceptable to the Administrator;
                                    ``(II) using funds (other than the 
                                funds raised under paragraph (1)), from 
                                any source other than the 
                                Administrator; and
                                    ``(III) that yields cash payments 
                                over a multiyear period acceptable to 
                                the Administrator (not to exceed 10 
                                years) in an amount not less than 30 
                                percent of the total amount of capital 
                                and commitments raised under paragraph 
                                (1); or
                            ``(iii) shall have binding commitments (for 
                        contributions in cash or in kind) of the type 
                        described in clause (i) and shall have 
                        purchased an annuity of the type described in 
                        clause (ii), which in the aggregate make 
                        available, over a multiyear period acceptable 
                        to the Administrator (not to exceed 10 years), 
                        an amount not less than 30 percent of the total 
                        amount of capital and commitments raised under 
                        paragraph (1).
                    ``(B) Exception.--The Administrator may, in the 
                discretion of the Administrator and based upon a 
                showing of special circumstances and good cause, 
                consider an applicant to have satisfied the 
                requirements of subparagraph (A) if the applicant has--
                            ``(i) a viable plan that reasonably 
                        projects the capacity of the applicant to raise 
                        the amount (in cash or in-kind) required under 
                        subparagraph (A); and
                            ``(ii) binding commitments in an amount 
                        equal to not less than 20 percent of the total 
                        amount required under paragraph (A).
                    ``(C) Limitation.--In order to comply with the 
                requirements of subparagraphs (A) and (B), the total 
                amount of a company's in-kind contributions may not 
                exceed 50 percent of the company's total contributions.
    ``(e) Final Approval; Designation.--The Administrator shall, with 
respect to each applicant conditionally approved to operate as a New 
Markets Venture Capital company under subsection (c), either--
            ``(1) grant final approval to the applicant to operate as a 
        New Markets Venture Capital company under this part and 
        designate the applicant as such a company, if the applicant--
                    ``(A) satisfies the requirements of subsection (d) 
                on or before the expiration of the time period 
                described in that subsection; and
                    ``(B) enters into a participation agreement with 
                the Administrator; or
            ``(2) if the applicant fails to satisfy the requirements of 
        subsection (d) on or before the expiration of the time period 
        described in that subsection, revoke the conditional approval 
        granted under that subsection.

``SEC. 355. DEBENTURES.

    ``(a) In General.--The Administrator may guarantee the timely 
payment of principal and interest, as scheduled, on debentures issued 
by any New Markets Venture Capital company.
    ``(b) Terms and Conditions.--The Administrator may make guarantees 
under this section on such terms and conditions as it deems 
appropriate, except that the term of any debenture guaranteed under 
this section shall not exceed 15 years.
    ``(c) Full Faith and Credit of the United States.--The full faith 
and credit of the United States is pledged to pay all amounts that may 
be required to be paid under any guarantee under this part.
    ``(d) Maximum Guarantee.--
            ``(1) In general.--Under this section, the Administrator 
        may guarantee the debentures issued by a New Markets Venture 
        Capital company only to be extent that the total face amount of 
        outstanding guaranteed debentures of such company does not 
        exceed 150 percent of the private capital of the company, as 
        determined by the Administrator.
            ``(2) Treatment of certain federal funds.--For the purposes 
        of paragraph (1), private capital shall include capital that is 
        considered to be Federal funds, if such capital is contributed 
        by an investor other than an agency or department of the 
        Federal Government.

``SEC. 356. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.

    ``(a) Issuance.--The Administrator may issue trust certificates 
representing ownership of all or a fractional part of debentures issued 
by a New Markets Venture Capital company and guaranteed by the 
Administrator under this part, if such certificates are based on and 
backed by a trust or pool approved by the Administrator and composed 
solely of guaranteed debentures.
    ``(b) Guarantee.--
            ``(1) In general.--The Administrator may, under such terms 
        and conditions as it deems appropriate, guarantee the timely 
        payment of the principal of and interest on trust certificates 
        issued by the Administrator or its agents for purposes of this 
        section.
            ``(2) Limitation.--Each guarantee under this subsection 
        shall be limited to the extent of principal and interest on the 
        guaranteed debentures that compose the trust or pool.
            ``(3) Prepayment or default.--In the event that a debenture 
        in a trust or pool is prepaid, or in the event of default of 
        such a debenture, the guarantee of timely payment of principal 
        and interest on the trust certificates shall be reduced in 
        proportion to the amount of principal and interest such prepaid 
        debenture represents in the trust or pool. Interest on prepaid 
        or defaulted debentures shall accrue and be guaranteed by the 
        Administrator only through the date of payment of the 
        guarantee. At any time during its term, a trust certificate may 
        be called for redemption due to prepayment or default of all 
        debentures.
    ``(c) Full Faith and Credit of the United States.--The full faith 
and credit of the United States is pledged to pay all amounts that may 
be required to be paid under any guarantee of a trust certificate 
issued by the Administrator or its agents under this section.
    ``(d) Fees.--The Administrator shall not collect a fee for any 
guarantee of a trust certificate under this section, but any agent of 
the Administrator may collect a fee approved by the Administrator for 
the functions described in subsection (f)(2).
    ``(e) Subrogation and Ownership Rights.--
            ``(1) Subrogation.--In the event the Administrator pays a 
        claim under a guarantee issued under this section, it shall be 
        subrogated fully to the rights satisfied by such payment.
            ``(2) Ownership rights.--No Federal, State, or local law 
        shall preclude or limit the exercise by the Administrator of 
        its ownership rights in the debentures residing in a trust or 
        pool against which trust certificates are issued under this 
        section.
    ``(f) Management and Administration.--
            ``(1) Registration.--The Administrator may provide for a 
        central registration of all trust certificates issued under 
        this section.
            ``(2) Contracting of functions.--
                    ``(A) In general.--The Administrator may contract 
                with an agent or agents to carry out on behalf of the 
                Administrator the pooling and the central registration 
                functions provided for in this section including, 
                notwithstanding any other provision of law--
                            ``(i) maintenance, on behalf of and under 
                        the direction of the Administrator, of such 
                        commercial bank accounts or investments in 
                        obligations of the United States as may be 
                        necessary to facilitate the creation of trusts 
                        or pools backed by debentures guaranteed under 
                        this part; and
                            ``(ii) the issuance of trust certificates 
                        to facilitate the creation of such trusts or 
                        pools.
                    ``(B) Fidelity bond or insurance requirement.--Any 
                agent performing functions on behalf of the 
                Administrator under this paragraph shall provide a 
                fidelity bond or insurance in such amounts as the 
                Administrator determines to be necessary to fully 
                protect the interests of the United States.
            ``(3) Regulation of brokers and dealers.--The Administrator 
        may regulate brokers and dealers in trust certificates issued 
        under this section.
            ``(4) Electronic registration.--Nothing in this subsection 
        may be construed to prohibit the use of a book-entry or other 
        electronic form of registration for trust certificates issued 
        under this section.

``SEC. 357. FEES.

    ``Except as provided in section 356(d), the Administrator may 
charge such fees as it deems appropriate with respect to any guarantee 
or grant issued under this part.

``SEC. 358. OPERATIONAL ASSISTANCE GRANTS.

    ``(a) In General.--
            ``(1) Authority.--In accordance with this section, the 
        Administrator may make grants to New Markets Venture Capital 
        companies and to other entities, as authorized by this part, to 
        provide operational assistance to smaller enterprises financed, 
        or expected to be financed, by such companies or other 
        entities.
            ``(2) Terms.--Grants made under this subsection shall be 
        made over a multiyear period not to exceed 10 years, under such 
        other terms as the Administrator may require.
            ``(3) Grants to specialized small business investment 
        companies.--
                    ``(A) Authority.--In accordance with this section, 
                the Administrator may make grants to specialized small 
                business investment companies to provide operational 
                assistance to smaller enterprises financed, or expected 
                to be financed, by such companies after the effective 
                date of the New Markets Venture Capital Program Act of 
                2000.
                    ``(B) Use of funds.--The proceeds of a grant made 
                under this paragraph may be used by the company 
                receiving such grant only to provide operational 
                assistance in connection with an equity investment 
                (made with capital raised after the effective date of 
                the New Markets Venture Capital Program Act of 2000) in 
                a business located in a low-income geographic area.
                    ``(C) Submission of plans.--A specialized small 
                business investment company shall be eligible for a 
                grant under this section only if the company submits to 
                the Administrator, in such form and manner as the 
                Administrator may require, a plan for use of the grant.
            ``(4) Grant amount.--
                    ``(A) New markets venture capital companies.--The 
                amount of a grant made under this subsection to a New 
                Markets Venture Capital company shall be equal to the 
                resources (in cash or in kind) raised by the company 
                under section 354(d)(2).
                    ``(B) Other entities.--The amount of a grant made 
                under this subsection to any entity other than a New 
                Markets Venture Capital company shall be equal to the 
                resources (in cash or in kind) raised by the entity in 
                accordance with the requirements applicable to New 
                Market Venture Capital companies set forth in section 
                354(d)(2).
            ``(5) Pro rata reductions.--If the amount made available to 
        carry out this section is insufficient for the Administrator to 
        provide grants in the amounts provided for in paragraph (4), 
        the Administrator shall make pro rata reductions in the amounts 
        otherwise payable to each company and entity under such 
        paragraph.
    ``(b) Supplemental Grants.--
            ``(1) In general.--The Administrator may make supplemental 
        grants to New Markets Venture Capital companies and to other 
        entities, as authorized by this part under such terms as the 
        Administrator may require, to provide additional operational 
        assistance to smaller enterprises financed, or expected to be 
        financed, by the companies.
            ``(2) Matching requirement.--The Administrator may require, 
        as a condition of any supplemental grant made under this 
        subsection, that the company or entity receiving the grant 
        provide from resources (in a cash or in kind), other then those 
        provided by the Administrator, a matching contribution equal to 
        the amount of the supplemental grant.
    ``(c) Limitation.--None of the assistance made available under this 
section may be used for any overhead or general and administrative 
expense of a New Markets Venture Capital company or a specialized small 
business investment company.

``SEC. 359. BANK PARTICIPATION.

    ``(a) In General.--Except as provided in subsection (b), any 
national bank, any member bank of the Federal Reserve System, and (to 
the extent permitted under applicable State law) any insured bank that 
is not a member of such system, may invest in any New Markets Venture 
Capital company, or in any entity established to invest solely in New 
Markets Venture Capital companies.
    ``(b) Limitation.--No bank described in subsection (a) may make 
investments described in such subsection that are greater than 5 
percent of the capital and surplus of the bank.

``SEC. 360. FEDERAL FINANCING BANK.

    ``Section 318 shall not apply to any debenture issued by a New 
Markets Venture Capital company under this part.

``SEC. 361. REPORTING REQUIREMENT.

    ``Each New Markets Venture Capital company that participates in the 
program established under this part shall provide to the Administrator 
such information as the Administrator may require, including--
            ``(1) information related to the measurement criteria that 
        the company proposed in its program application; and
            ``(2) in each case in which the company under this part 
        makes an investment in, or a loan or grant to, a business that 
        is not located in a low-income geographic area, a report on the 
        number and percentage of employees of the business who reside 
        in such areas.

``SEC. 362. EXAMINATIONS.

    ``(a) In General.--Each New Markets Venture Capital company that 
participates in the program established under this part shall be 
subject to examinations made at the direction of the Investment 
Division of the Small Business Administration in accordance with this 
section.
    ``(b) Assistance of Private Sector Entities.--Examinations under 
this section may be conducted with the assistance of a private sector 
entity that has both the qualifications and the expertise necessary to 
conduct such examinations.
    ``(c) Costs.--
            ``(1) Assessment.--
                    ``(A) In general.--The Administrator may assess the 
                cost of examinations under this section, including 
                compensation of the examiners, against the company 
                examined.
                    ``(B) Payment.--Any company against which the 
                Administrator assesses costs under this paragraph shall 
                pay such costs.
    ``(d) Deposit of Funds.--Funds collected under this section shall 
be deposited in the account for salaries and expenses of the Small 
Business Administration.

``SEC. 363. INJUNCTIONS AND OTHER ORDERS.

    ``(a) In General.--Whenever, in the judgment of the Administrator, 
a New Markets Venture Capital company or any other person has engaged 
or is about to engage in any acts or practices which constitute or will 
constitute a violation of any provision of this Act, or of any rule or 
regulation under this Act, or of any order issued under this Act, the 
Administrator may make application to the proper district court of the 
United States or a United States court of any place subject to the 
jurisdiction of the United States for an order enjoining such acts or 
practices, or for an order enforcing compliance with such provision, 
rule, regulation, or order, and such courts shall have jurisdiction of 
such actions and, upon a showing by the Administrator that such New 
Markets Venture Capital company or other person has engaged or is about 
to engage in any such acts or practices, a permanent or temporary 
injunction, restraining order, or other order, shall be granted without 
bond.
    ``(b) Jurisdiction.--In any proceeding under subsection (a), the 
court as a court of equity may, to such extent as it deems necessary, 
take exclusive jurisdiction of the New Market Venture Capital company 
and the assets thereof, wherever located, and the court shall have 
jurisdiction in any such proceeding to appoint a trustee or receiver to 
hold or administer under the direction of the court the assets so 
possessed.
    ``(c) Administrator As Trustee or Receiver.--
            ``(1) Authority.--The Administrator may act as trustee or 
        receiver of a New Markets Venture Capital company.
            ``(2) Appointment.--Upon request of the Administrator, the 
        court may appoint the Administrator to act as a trustee or 
        receiver of a New Markets Venture Capital company unless the 
        court deems such appointment inequitable or otherwise 
        inappropriate by reason of the special circumstances involved.

``SEC. 364. ADDITIONAL PENALTIES FOR NONCOMPLIANCE.

    ``(a) In General.--With respect to any New Markets Venture Capital 
company that violates or fails to comply with any of the provisions of 
this Act, of any regulation issued under this Act, or of any 
participation agreement entered into under this Act, the Administrator 
may in accordance with this section--
            ``(1) void the participation agreement between the 
        Administrator and the company; and
            ``(2) cause the company to forfeit all of the rights and 
        privileges derived by the company from this Act.
    ``(b) Adjudication of Noncompliance.--
            ``(1) In general.--Before the Administrator may cause a New 
        Markets Venture Capital company to forfeit rights or privileges 
        under subsection (a), a court of the United States of competent 
        jurisdiction must find that the company committed a violation, 
        or failed to comply, in a cause of action brought for that 
        purpose in the district, territory, or other place subject to 
        the jurisdiction of the United States, in which the principal 
        office of the company is located.
            ``(2) Parties authorized to file causes of action.--Each 
        cause of action brought by the United States under this 
        subsection shall be brought by the Administrator or by the 
        Attorney General.

``SEC. 365. UNLAWFUL ACTS AND OMISSIONS; BREACH OF FIDUCIARY DUTY.

    ``(a) Parties Deemed To Commit a Violation.--Whenever any New 
Markets Venture Capital company violates any provision of this Act, of 
a regulation issued under this Act, or of a participation agreement 
entered into under this Act, by reason of its failure to comply with 
its terms or by reason of its engaging in any act or practice that 
constitutes or will constitute a violation thereof, such violation 
shall also be deemed to be a violation and an unlawful act committed by 
any person who, directly or indirectly, authorizes, orders, 
participates in, causes, brings about, counsels, aids, or abets in the 
commission of any acts, practices, or transactions that constitute or 
will constitute, in whole or in part, such violation.
    ``(b) Fiduciary Duties.--It shall be unlawful for any officer, 
director, employee, agent, or other participant in the management or 
conduct of the affairs of a New Markets Venture Capital company to 
engage in any act or practice, or to omit any act or practice, in 
breach of the person's fiduciary duty as such officer, director, 
employee, agent, or participant if, as a result thereof, the company 
suffers or is in imminent danger of suffering financial loss or other 
damage.
    ``(c) Unlawful Acts.--Except with the written consent of the 
Administrator, it shall be unlawful--
            ``(1) for any person to take office as an officer, 
        director, or employee of any New Markets Venture Capital 
        company, or to become an agent or participant in the conduct of 
        the affairs or management of such a company, if the person--
                    ``(A) has been convicted of a felony, or any other 
                criminal offense involving dishonesty or breach of 
                trust; or
                    ``(B) has been found civilly liable in damages, or 
                has been permanently or temporarily enjoined by an 
                order, judgment, or decree of a court of competent 
                jurisdiction, by reason of any act or practice 
                involving fraud, or breach of trust; and
            ``(2) for any person continue to serve in any of the 
        capacities described in paragraph (1), if--
                    ``(A) the person is convicted of a felony, or any 
                other criminal offense involving dishonesty or breach 
                of trust; or
                    ``(B) the person is found civilly liable in 
                damages, or is permanently or temporarily enjoined by 
                an order, judgment, or decree of a court of competent 
                jurisdiction, by reason of any act or practice 
                involving fraud or breach of trust.

``SEC. 366. REMOVAL OR SUSPENSION OF DIRECTORS OR OFFICERS.

    ``Using the procedures for removing or suspending a director or an 
officer of a licensee set forth in section 313 (to the extent such 
procedures are not inconsistent with the requirements of this part), 
the Administrator may remove or suspend any director or officer of any 
New Markets Venture Capital company.

``SEC. 367. REGULATIONS.

    ``The Administrator may issue such regulations as it deems 
necessary to carry out the provisions of this part in accordance with 
its purposes.

``SEC. 368. AUTHORIZATIONS OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated for 
fiscal years 2001 through 2006, to remain available until expended, the 
following sums:
            ``(1) Such subsidy budget authority as may be necessary to 
        guarantee $150,000,000 of debentures under this part.
            ``(2) $30,000,000 to make grants under this part.
    ``(b) Funds Collected for Examinations.--Funds deposited under 
section 362(c)(2) are authorized to be appropriated only for the costs 
of examinations under section 362 and for the costs of other oversight 
activities with respect to the program established under this part.''.
    (c) Conforming Amendment.--Section 20(e)(1)(C) of the Small 
Business Act (15 U.S.C. 631 note) is amended by inserting `part A of' 
before ``title III''.
    (d) Calculation of Maximum Amount of SBIC Leverage.--
            (1) Maximum leverage.--Section 303(b)(2) of the Small 
        Business Investment Act of 1958 (15 U.S.C. 683(b)(2)) is 
        amended to read as follows:
            ``(2) Maximum leverage.--
                    ``(A) In general.--After March 31, 1993, the 
                maximum amount of outstanding leverage made available 
                to a company licensed under section 301(c) of this Act 
                shall be determined by the amount of such company's 
                private capital--
                            ``(i) if the company has private capital of 
                        not more than $15,000,000, the total amount of 
                        leverage shall not exceed 300 percent of 
                        private capital;
                            ``(ii) if the company has private capital 
                        of more than $15,000,000 but not more than 
                        $30,000,000, the total amount of leverage shall 
                        not exceed $45,000,000 plus 200 percent of the 
                        amount of private capital over $15,000,000; and
                            ``(iii) if the company has private capital 
                        of more than $30,000,000, the total amount of 
                        leverage shall not exceed $75,000,000 plus 100 
                        percent of the amount of private capital over 
                        $30,000,000 but not to exceed an additional 
                        $15,000,000.
                    ``(B) Adjustments.--
                            ``(i) In general.--The dollar amounts in 
                        clauses (i), (ii), and (iii) of subparagraph 
                        (A) shall be adjusted annually to reflect 
                        increases in the Consumer Price Index 
                        established by the Bureau of Labor Statistics 
                        of the Department of Labor.
                            ``(ii) Initial adjustments.--The initial 
                        adjustments made under this subparagraph after 
                        the date of the enactment of the Small Business 
                        Reauthorization Act of 1937 shall reflect only 
                        increases from March 31, 1993.
                    ``(C) Investments in low-income geographic areas.--
                In calculating the outstanding leverage of a company 
                for the purposes of subparagraph (A), the Administrator 
                shall not include the amount of the cost basis of any 
                equity investment made by the company in a smaller 
                enterprise located in a low-income geographic area (as 
                defined in section 351), to the extent that the total 
                of such amounts does not exceed 50 percent of the 
                company's private capital.''.
            (2) Maximum aggregate leverage.--Section 303(b)(4) of the 
        Small Business Investment Act of 1958 (15 U.S.C. 683(b)(4)) is 
        amended by adding at the end the following new subparagraph:
                    ``(D) Investments in low-income geographic areas.--
                In calculating the aggregate outstanding leverage of a 
                company for the purposes of subparagraph (A), the 
                Administrator shall not include the amount of the cost 
                basis of any equity investment made by the company in a 
                smaller enterprise located in a low-income geographic 
                area (as defined in section 351), to the extent that 
                the total of such amounts does not exceed 50 percent of 
                the company's private capital.''.
    (e) Bankruptcy Exemption for New Markets Venture Capital 
Companies.--Section 109(b)(2) of title 11, United States Code, is 
amended by inserting ``a New Markets Venture Capital company as defined 
in section 351 of the Small Business Investment Act of 1958,'' after 
``homestead association,''.
    (f) Federal Savings Associations.--Section 5(c)(4) of the Home 
Owners' Loan Act (12 U.S.C. 1464(c)(4)) is amended by adding at the end 
the following:
                    ``(F) New markets venture capital companies.--A 
                Federal savings association may invest in stock, 
                obligations, or other securities of any New Markets 
                Venture Capital company as defined in section 351 of 
                the Small Business Investment Act of 1958, except that 
                a Federal savings association may not make any 
                investment under this subparagraph if its aggregate 
                outstanding investment under this subparagraph would 
                exceed 5 percent of the capital and surplus of such 
                savings association.''.

SEC. 2. BUSINESSLINC GRANTS AND COOPERATIVE AGREEMENTS.

    Section 8 of the Small Business Act (15 U.S.C. 637) is amended by 
adding at the end the following:
    ``(n) Business Grants and Cooperative Agreements.--
            ``(1) In general.--In accordance with this subsection, the 
        Administrator may make grants to and enter into cooperative 
        agreements with any coalition of private entities, public 
        entities, or any combination of private and public entities--
                    ``(A) to expand business-to-business relationships 
                between large and small businesses; and
                    ``(B) to provide businesses, directly or 
                indirectly, with online information and a database of 
                companies that are interested in mentor-protege 
                programs or community-based, statewide, or local 
                business development programs.
            ``(2) Matching requirement.--Subject to subparagraph (B), 
        the Administrator may make a grant to a coalition under 
        paragraph (1) only if the coalition provides for activities 
        described in paragraph (1)(A) or (1)(B) an amount, either in 
        kind or in cash, equal to the grant amount.
            ``(3) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out this subsection $6,600,000, to 
        remain available until expended, for each of fiscal years 2001 
        through 2006.''.
                                 <all>