[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3567 Referred in Senate (RFS)]

  1st Session
                                H. R. 3567


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 28, 2007

  Received; read twice and referred to the Committee on Small Business 
                          and Entrepreneurship

_______________________________________________________________________

                                 AN ACT


 
     To amend the Small Business Investment Act of 1958 to expand 
   opportunities for investments in small businesses, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Business 
Investment Expansion Act of 2007''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
           TITLE I--SMALL BUSINESS INVESTMENT COMPANY PROGRAM

Sec. 101. Simplified maximum leverage limits.
Sec. 102. Increased investments in women-owned and socially 
                            disadvantaged small businesses.
Sec. 103. Increased investments in smaller enterprises.
Sec. 104. Increased investments in small businesses creating new 
                            technologies, manufactured goods, or 
                            materials or providing services to reduce 
                            carbon emissions in the United States, 
                            reduce the use of non-renewable resources, 
                            minimize environmental impact, and relate 
                            people with the natural environment.
Sec. 105. Simplified aggregate investment limitations.
             TITLE II--NEW MARKETS VENTURE CAPITAL PROGRAM

Sec. 201. Expansion of New Markets Venture Capital Program.
Sec. 202. Improved nationwide distribution.
Sec. 203. Increased investment in small manufacturers.
Sec. 204. Updating definition of low-income geographic area.
Sec. 205. Study on availability of equity capital.
Sec. 206. Expanding operational assistance to conditionally approved 
                            companies.
Sec. 207. Streamlined application for New Markets Venture Capital 
                            Program.
Sec. 208. Elimination of matching requirement.
Sec. 209. Simplified formula for operational assistance grants.
Sec. 210. Authorization of appropriations and dedication to small 
                            manufacturing.
                  TITLE III--ANGEL INVESTMENT PROGRAM

Sec. 301. Establishment of Angel Investment Program.
                     TITLE IV--SURETY BOND PROGRAM

Sec. 401. Study and report.
Sec. 402. Preferred Surety Bond Program.
Sec. 403. Denial of liability.
Sec. 404. Increasing the bond threshold.
Sec. 405. Fees.
             TITLE V--VENTURE CAPITAL INVESTMENT STANDARDS

Sec. 501. Determining whether business concern is independently owned 
                            and operated.
                         TITLE VI--REGULATIONS

Sec. 601. Regulations.

           TITLE I--SMALL BUSINESS INVESTMENT COMPANY PROGRAM

SEC. 101. SIMPLIFIED MAXIMUM LEVERAGE LIMITS.

    Section 303(b) of the Small Business Investment Act of 1958 (15 
U.S.C. 683(b)) is amended--
            (1) by amending paragraph (2) to read as follows:
            ``(2) Maximum leverage.--
                    ``(A) In general.--The maximum amount of 
                outstanding leverage made available to any one company 
                licensed under section 301(c) of this Act may not 
                exceed the lesser of--
                            ``(i) 300 percent of such company's private 
                        capital; or
                            ``(ii) $150,000,000.
                    ``(B) Multiple licenses under common control.--The 
                maximum amount of outstanding leverage made available 
                to two or more companies licensed under section 301(c) 
                of this Act that are commonly controlled (as determined 
                by the Administrator) and not under capital impairment 
                may not exceed $225,000,000.''; and
            (2) by striking paragraph (4).

SEC. 102. INCREASED INVESTMENTS IN WOMEN-OWNED AND SOCIALLY 
              DISADVANTAGED SMALL BUSINESSES.

    Section 303(b)(2) of the Small Business Investment Act of 1958 (15 
U.S.C. 683(b)(2)), as amended by section 101, is further amended by 
adding at the end the following:
                    ``(C) Increased investments in women-owned and 
                socially disadvantaged small businesses.--The limits 
                provided in subparagraphs (A)(ii) and (B) shall be 
                $175,000,000 and $250,000,000, respectively, for any 
                company that certifies in writing that not less than 50 
                percent of the company's aggregate dollar amount of 
                investments will be made in small businesses that prior 
                to the investment are--
                            ``(i) majority owned by one or more--
                                    ``(I) socially or economically 
                                disadvantaged individuals (as defined 
                                by Administrator);
                                    ``(II) veterans of the Armed 
                                Forces; or
                                    ``(III) current or former members 
                                of the National Guard or Reserve; or
                            ``(ii) located in a low-income geographic 
                        area (as defined in section 351).''.

SEC. 103. INCREASED INVESTMENTS IN SMALLER ENTERPRISES.

    Section 303 of the Small Business Investment Act of 1958 (15 U.S.C. 
683) is amended by striking subsection (d) and inserting the following:
    ``(d) Increased Investments in Smaller Enterprises.--The 
Administrator shall require each licensee, as a condition of an 
application for leverage, to certify in writing that not less than 25 
percent of the licensee's aggregate dollar amount of financings will be 
provide to smaller enterprises (as defined in section 103(12)).''.

SEC. 104. INCREASED INVESTMENTS IN SMALL BUSINESSES CREATING NEW 
              TECHNOLOGIES, MANUFACTURED GOODS, OR MATERIALS OR 
              PROVIDING SERVICES TO REDUCE CARBON EMISSIONS IN THE 
              UNITED STATES, REDUCE THE USE OF NON-RENEWABLE RESOURCES, 
              MINIMIZE ENVIRONMENTAL IMPACT, AND RELATE PEOPLE WITH THE 
              NATURAL ENVIRONMENT.

    Section 303 of the Small Business Investment Act of 1958 (15 U.S.C. 
683), as amended by this Act, is further amended by adding at the end 
the following:
    ``(k) Increased Investments in Small Businesses.--The Administrator 
shall give consideration to investments in small businesses that are 
creating new technologies, manufactured goods, or materials, or 
providing services to reduce carbon emissions in the United States, 
reduce the use of non-renewable resources, minimize environmental 
impact, and relate people with the natural environment.''.

SEC. 105. SIMPLIFIED AGGREGATE INVESTMENT LIMITATIONS.

    Section 306(a) of the Small Business Investment Act of 1958 (15 
U.S.C. 686(a)) is amended to read as follows:
    ``(a) If any small business investment company has obtained 
financing from the Administration and such financing remains 
outstanding, the aggregate amount of securities acquired and for which 
commitments may be issued by such company under the provisions of this 
title for any single enterprise shall not, without the approval of the 
Administration, exceed 10 percent of the sum of--
            ``(1) the private capital of such company; and
            ``(2) the total amount of leverage projected by the company 
        in the company's business plan that was approved by the 
        Administration at the time of the grant of the company's 
        license.''.

             TITLE II--NEW MARKETS VENTURE CAPITAL PROGRAM

SEC. 201. EXPANSION OF NEW MARKETS VENTURE CAPITAL PROGRAM.

    (a) Administration Participation Required.--Section 353 of the 
Small Business Investment Act of 1958 (15 U.S.C. 689b) is amended by 
striking ``under which the Administrator may'' and inserting ``under 
which the Administrator shall''.
    (b) Report to Congress.--Not later than 1 year after the date of 
the enactment of this Act, the Administrator of the Small Business 
Administration shall submit to Congress a report evaluating the success 
of the expansion of the New Markets Venture Capital Program under this 
section.

SEC. 202. IMPROVED NATIONWIDE DISTRIBUTION.

    Section 354 of the Small Business Investment Act of 1958 (15 U.S.C. 
689c) is amended by adding at the end the following:
    ``(f) Geographic Expansion.--From among companies submitting 
applications under subsection (b), the Administrator shall consider the 
selection criteria and nationwide distribution under subsection (c) and 
shall, to the maximum extent practicable, approve at least one company 
from each geographic region of the Small Business Administration.''.

SEC. 203. INCREASED INVESTMENT IN SMALL MANUFACTURERS.

    Section 354(d)(1) of the Small Business Investment Act of 1958 (15 
U.S.C. 689c(d)(1)) is amended--
            (1) by striking ``Each'' and inserting the following:
                    ``(A) In general.--Except as provided in 
                subparagraph (B), each''; and
            (2) by adding at the end the following:
                    ``(B) Small manufacturer investment capital 
                requirements.--Each conditionally approved company 
                engaged primarily in development of and investment in 
                small manufacturers shall raise not less than 
                $3,000,000 of private capital or binding capital 
                commitments from one or more investors (other than 
                agencies or departments of the Federal Government) who 
                meet criteria established by the Administrator.''.

SEC. 204. UPDATING DEFINITION OF LOW-INCOME GEOGRAPHIC AREA.

    Section 351 of the Small Business Investment Act of 1958 (15 U.S.C. 
689) is amended--
            (1) by striking paragraphs (2) and (3);
            (2) by inserting after paragraph (1) the following:
            ``(2) Low-income geographic area.--The term `low-income 
        geographic area' has the same meaning given the term `low-
        income community' in section 45D(e) of the Internal Revenue 
        Code of 1986 (26 U.S.C. 45D(e)).''; and
            (3) by redesignating paragraphs (4) through (8) as (3) 
        through (7), respectively.

SEC. 205. STUDY ON AVAILABILITY OF EQUITY CAPITAL.

    (a) Study Required.--Before the expiration of the 180-day period 
that begins on the date of the enactment of this Act, the Chief Counsel 
for Advocacy of the Small Business Administration shall conduct a study 
on the availability of equity capital in low-income urban and rural 
areas.
    (b) Report.--Not later than 90 days after the completion of the 
study under subsection (a) the Administrator of the Small Business 
Administration shall submit to Congress a report containing the 
findings of the study required under subsection (a) and any 
recommendations of the Administrator based on such study.

SEC. 206. EXPANDING OPERATIONAL ASSISTANCE TO CONDITIONALLY APPROVED 
              COMPANIES.

    (a) Operational Assistance Grants to Conditionally Approved 
Companies.--Section 358(a) of the Small Business Investment Act of 1958 
(15 U.S.C. 689(a)) is amended by adding at the end the following new 
paragraph:
            ``(6) Grants to conditionally approved companies.--
                    ``(A) In general.--Subject to subparagraphs (A) and 
                (B), upon the request of a company conditionally-
                approved under section 354(c), the Administrator shall 
                make a grant to the company under this subsection.
                    ``(B) Repayment by companies not approved.--If a 
                company receives a grant under paragraph (6) and does 
                not enter into a participation agreement for final 
                approval, the company shall repay the amount of the 
                grant to the Administrator.
                    ``(C) Deduction from grant to approved company.--If 
                a company receives a grant under paragraph (6) and 
                receives final approval under section 354(e), the 
                Administrator shall deduct the amount of the grant 
                under that paragraph from the total grant amount that 
                the company receives for operational assistance.
                    ``(D) Amount of grant.--No company may receive a 
                grant of more than $50,000 under this paragraph.''.
    (b) Limitation on Time for Final Approval.--Section 354(d) of the 
Small Business Investment Act of 1958 (15 U.S.C. 689c(d)) is amended in 
the matter preceding paragraph (1) by striking ``a period of time, not 
to exceed 2 years,'' and inserting ``2 years''.
    (c) Expanded Definition of Operational Assistance.--Section 351(5) 
of the Small Business Investment Act of 1958 (15 U.S.C. 689(5)) is 
amended by inserting before the period at the end the following: ``, 
including assistance on how to implement energy efficiency and 
sustainable practices that reduce the use of non-renewable resources or 
minimize environmental impact and reduce overall costs and increase 
health of employees''.

SEC. 207. STREAMLINED APPLICATION FOR NEW MARKETS VENTURE CAPITAL 
              PROGRAM.

    Not later than 60 days after the date of the enactment of this 
section, the Administrator of the Small Business Administration shall 
prescribe standard documents for final New Markets Venture Capital 
Company approval application under section 354(e) of the Small Business 
Investment Act of 1958 (15 U.S.C. 689c(e)). The Administrator shall 
assure that the standard documents shall be designed to substantially 
reduce the cost burden of the application process on the companies 
involved.

SEC. 208. ELIMINATION OF MATCHING REQUIREMENT.

    Section 354(d)(2)(A)(i) of the Small Business Investment Act of 
1958 (15 U.S.C. 689c(d)(2)(A)(i)) is amended--
            (1) in subclause (I) by adding ``and'' at the end;
            (2) in subclause (II) by striking ``and'' at the end; and
            (3) by striking subclause (III).

SEC. 209. SIMPLIFIED FORMULA FOR OPERATIONAL ASSISTANCE GRANTS.

    Section 358(a)(4)(A) of the Small Business Investment Act of 1958 
(15 U.S.C. 689g(a)(4)(A)) is amended--
            (1) by striking ``shall be equal to'' and all that follows 
        through the period at the end and by inserting ``shall be equal 
        to the lesser of--''; and
            (2) by adding at the end the following:
                            ``(i) 10 percent of the resources (in cash 
                        or in kind) raised by the company under section 
                        354(d)(2); or
                            ``(ii) $1,000,000.''.

SEC. 210. AUTHORIZATION OF APPROPRIATIONS AND DEDICATION TO SMALL 
              MANUFACTURING.

    Section 368(a) of the Small Business Investment Act of 1958 (15 
U.S.C. 689q(a)) is amended--
            (1) by striking ``fiscal years 2001 through 2006'' and 
        inserting ``fiscal years 2008 through 2010'';
            (2) in paragraph (1)--
                    (A) by striking ``$150,000,000'' and inserting 
                ``$30,000,000''; and
                    (B) by inserting before the period at the end the 
                following: ``, of which not less than one-quarter shall 
                be used to guarantee debentures of companies engaged 
                primarily in development of and investment in small 
                manufacturers''; and
            (3) in paragraph (2)--
                    (A) by striking ``$30,000,000'' and inserting 
                ``$5,000,000''; and
                    (B) by inserting before the period at the end the 
                following: ``, of which not less than one-quarter shall 
                be used to make grants to companies engaged primarily 
                in development of and investment in small 
                manufacturers''.

                  TITLE III--ANGEL INVESTMENT PROGRAM

SEC. 301. ESTABLISHMENT OF ANGEL INVESTMENT PROGRAM.

    (a) Establishment.--Title III of the Small Business Investment Act 
of 1958 (15 U.S.C. 681 et seq.) is amended by adding at the end the 
following new part:

                   ``PART C--ANGEL INVESTMENT PROGRAM

``SEC. 380. OFFICE OF ANGEL INVESTMENT.

    ``(a) Establishment.--There is established, in the Investment 
Division of the Small Business Administration, the Office of Angel 
Investment.
    ``(b) Director.--The head of the Office of Angel Investment is the 
Director of Angel Investment.
    ``(c) Duties.--Subject to the direction of the Secretary, the 
Director shall perform the following functions:
            ``(1) Provide support for the development of angel 
        investment opportunities for small business concerns.
            ``(2) Administer the Angel Investment Program under section 
        382 of this Act.
            ``(3) Administer the Federal Angel Network under section 
        383 of this Act.
            ``(4) Administer the grant program for the development of 
        angel groups under section 384 of this Act.
            ``(5) Perform such other duties consistent with this 
        section as the Administrator shall prescribe.

``SEC. 381. DEFINITIONS.

    ``In this part:
            ``(1) The term `angel group' means 10 or more angel 
        investors organized for the purpose of making investments in 
        local or regional small business concerns that--
                    ``(A) consists primarily of angel investors;
                    ``(B) requires angel investors to be accredited 
                investors; and
                    ``(C) actively involves the angel investors in 
                evaluating and making decisions about making 
                investments.
            ``(2) The term `angel investor' means an individual who--
                    ``(A) qualifies as an accredited investor (as that 
                term is defined under Rule 501 of Regulation D of the 
                Securities and Exchange Commission (17 CFR 230.501));
                    ``(B) provides capital to or makes investments in a 
                small business concern.
            ``(3) The term `small business concern owned and controlled 
        by veterans' has the meaning given that term under section 
        3(q)(3) of the Small Business Act (15 U.S.C. 632(q)(3)).
            ``(4) The term `small business concern owned and controlled 
        by women' has the meaning given that term under section 
        8(d)(3)(D) of such Act (15 U.S.C. 637(d)(3)(D)).
            ``(5) The term `socially and economically disadvantaged 
        small business concern' has the meaning given that term under 
        section 8(a)(4)(A) of such Act (15 U.S.C. 637(a)(4)(A)).

``SEC. 382. ANGEL INVESTMENT PROGRAM.

    ``(a) In General.--The Director of Angel Investment shall establish 
and carry out a program, to be known as the Angel Investment Program, 
to provide financing to approved angel groups for the purpose of 
providing venture capital investment in small businesses in their 
communities.
    ``(b) Eligibility.--To be eligible to receive financing under this 
section, an angel group shall--
            ``(1) have demonstrated experience making investments in 
        local or regional small business concerns;
            ``(2) have established protocols and a due diligence 
        process for determining its investment strategy;
            ``(3) have an established code of ethics; and
            ``(4) submit an application to the Director of Angel 
        Investment at such time and containing such information and 
        assurances as the Director may require.
    ``(c) Use of Funds.--An angel group that receives financing under 
this section shall use the amounts received to make investments in 
small business concerns--
            ``(1) that have been in existence for less than 5 years as 
        of the date on which the investment is made;
            ``(2) that have fewer than 75 employees as of the date on 
        which the investment is made;
            ``(3) more than 50 percent of the employees of which 
        perform substantially all of their services in the United 
        States as of the date on which the investment is made; and
            ``(4) within the geographic area determined by the Director 
        under subsection (e).
    ``(d) Limitation on Amount.--No angel group receiving financing 
under this section shall receive more than $2,000,000.
    ``(e) Limitation on Geographic Area.--For each angel group 
receiving financing under this section, the Director shall determine 
the geographic area in which a small business concern must be located 
to receive an investment from that angel group.
    ``(f) Priority in Providing Financing.--In providing financing 
under this section, the Director shall give priority to angel groups 
that invest in small business concerns owned and controlled by 
veterans, small business concerns owned and controlled by women, and 
socially and economically disadvantaged small business concerns.
    ``(g) Nationwide Distribution of Financing.--In providing financing 
under this section, the Director shall, to the extent practicable, 
provide financing to angel groups that are located in a variety of 
geographic areas.
    ``(h) Matching Requirement.--As a condition of receiving financing 
under this section, the Director shall require that for each small 
business concern in which the angel group receiving such financing 
invests, the angel group shall invest an amount that is equal to or 
greater than the amount of financing received under this section from a 
source other than the Federal Government that is equal to the amount of 
the financing provided under this section that the angel group invests 
in that small business concern.
    ``(i) Repayment of Financing.--As a condition of receiving 
financing under this section, the Director shall require an angel group 
to repay the Director for any investment on which the angel group makes 
a profit an amount equal to the percentage of the returns that is equal 
to the percentage of the total amount invested by the angel group that 
consisted of financing received under this section.
    ``(j) Angel Investment Fund.--
            ``(1) Establishment.--There is in the Treasury a fund to be 
        known as the Angel Investment Fund.
            ``(2) Deposit of certain amounts.--Amounts collected under 
        subsection (i) shall be deposited in the fund.
            ``(3) Use of deposits.--Deposits in the fund shall be 
        available for the purpose of providing financing under this 
        section in the amounts specified in annual appropriation laws 
        without regard to fiscal year limitations.
    ``(k) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section--
            ``(1) $10,000,000 for fiscal year 2008;
            ``(2) $20,000,000 for fiscal year 2009; and
            ``(3) $20,000,000 for fiscal year 2010.

``SEC. 383. FEDERAL ANGEL NETWORK.

    ``(a) In General.--Subject to the succeeding provisions of this 
subsection, the Director of the Office of Angel Investment shall 
establish and maintain a searchable database, to be known as the 
Federal Angel Network, to assist small business concerns in identifying 
angel investors.
    ``(b) Network Contents.--The Federal Angel Network shall include--
            ``(1) a list of the names and addresses of angel groups and 
        angel investors;
            ``(2) information about the types of investments each angel 
        group or angel investor has made; and
            ``(3) information about other public and private resources 
        and registries that provide information about angel groups or 
        angel investors.
    ``(c) Collection of Information.--
            ``(1) In general.--The Director shall collect the 
        information to be contained in the Federal Angel Network and 
        shall ensure that such information is updated regularly.
            ``(2) Request for exclusion of information.--The Director 
        shall not include such information concerning an angel investor 
        if that investor contacts the Director to request that such 
        information be excluded from the Network.
    ``(d) Availability.--The Director shall make the Federal Angel 
Network available on the Internet website of the Administration and 
shall do so in a manner that permits others to download, distribute, 
and use the information contained in the Federal Angel Network.
    ``(e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,000,000, to remain available 
until expended.

``SEC. 384. GRANT PROGRAM FOR DEVELOPMENT OF ANGEL GROUPS.

    ``(a) In General.--The Director of the Office of Angel Investment 
shall establish and carry out a grant program to make grants to 
eligible entities for the development of new or existing angel groups 
and to increase awareness and education about angel investing.
    ``(b) Eligible Entities.--In this section, the term `eligible 
entity' means--
            ``(1) a State or unit of local government;
            ``(2) a nonprofit organization;
            ``(3) a state mutual benefit corporation;
            ``(4) a Small Business Development Center established 
        pursuant to section 21 of the Small Business Act (15 U.S.C. 
        648); or
            ``(5) a women's business center established pursuant to 
        section 29 of the Small Business Act (15 U.S.C. 656).
    ``(c) Matching Requirement.--The Administrator shall require, as a 
condition of any grant made under this section, that the eligible 
entity receiving the grant provide from resources (in cash or in kind), 
other than those provided by the Administrator or any other Federal 
source, a matching contribution equal to 50 percent of the amount of 
the grant.
    ``(d) Application.--To receive a grant under this section, an 
eligible entity shall submit an application that contains--
            ``(1) a proposal describing how the grant would be used; 
        and
            ``(2) any other information or assurances as the Director 
        may require.
    ``(e) Report.--Not later than 3 years after the date on which an 
eligible entity receives a grant under this section, such eligible 
entity shall submit a report to the Administrator describing the use of 
grant funds and evaluating the success of the angel group developed 
using the grant funds.
    ``(f) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $1,500,000, for each of fiscal 
years 2008 through 2010.''.

                     TITLE IV--SURETY BOND PROGRAM

SEC. 401. STUDY AND REPORT.

    (a) Study.--The Administrator of the Small Business Administration 
shall conduct a study of the current funding structure of the surety 
bond program carried out under part B (15 U.S.C. 694a et seq.) of title 
IV of the Small Business Investment Act of 1958. The study shall 
include--
            (1) an assessment of whether the program's current funding 
        framework and program fees are inhibiting the program's growth;
            (2) an assessment of whether surety companies and small 
        business concerns could benefit from an alternative funding 
        structure; and
            (3) an assessment of whether permissible premium rates for 
        surety companies participating in the program should be placed 
        on parity with the rates authorized by appropriate State 
        insurance regulators and how such a change would affect the 
        program under the current funding framework.
    (b) Report.--Not later than 180 days after the date of the 
enactment of this Act, the Administrator shall submit to Congress a 
report on the results of the study.

SEC. 402. PREFERRED SURETY BOND PROGRAM.

    (a) Program Required.--Part B (15 U.S.C. 694a et seq.) of title IV 
of the Small Business Investment Act of 1958 is amended by adding at 
the end the following:

``SEC. 413. PREFERRED SURETY BOND PROGRAM.

    ``(a) Program Required.--The Administrator shall carry out a 
program, to be known as the Preferred Surety Bond Program, under which 
the Administration, by a written agreement between the surety and the 
Administration, delegates to the surety complete authority to issue, 
monitor, and service bonds subject to guaranty from the Administration 
without obtaining the specific approval of the Administration. Bonds 
made under the program shall carry a 70 percent guaranty.
    ``(b) Term.--The term of a delegation of authority under such an 
agreement shall not exceed 2 years.
    ``(c) Renewal.--Such an agreement may be renewed one or more times, 
each such renewal providing one additional term. Before each renewal, 
the Administrator shall review the surety's bonds, policies, and 
procedures for compliance with relevant rules and regulations.
    ``(d) Application.--The Administrator shall promptly act upon an 
application from a surety to participate in the program, in accordance 
with criteria and procedures established in regulations pursuant to 
section 411(d).
    ``(e) Reduction or Termination of Participation.--The Administrator 
is authorized to reduce the allotment of bond guarantee authority or 
terminate the participation of a surety in the program based on the 
rate of participation of such surety during the 4 most recent fiscal 
year quarters compared to the median rate of participation by the other 
sureties in the program.''.
    (b) Conforming Amendments.--Section 411 of the Small Business 
Investment Act of 1958 (15 U.S.C. 694b) is amended--
            (1) in subsection (a), by striking paragraphs (3), (4), and 
        (5);
            (2) in subsection (b)(2), by striking ``the authority of 
        subsection (a)(3)'' and inserting ``the authority of section 
        413'';
            (3) in subsection (c)--
                    (A) by striking paragraph (1); and
                    (B) by redesignating paragraphs (2) through (4) as 
                (1) through (3), respectively; and
            (4) in subsection (g)(3), by striking ``the authority of 
        paragraph (3) of subsection (a)'' and inserting ``the authority 
        of section 413''.

SEC. 403. DENIAL OF LIABILITY.

    Section 411 of the Small Business Investment Act of 1958 (15 U.S.C. 
694b) is amended by adding at the end the following:
    ``(k) For bonds made or executed with the prior approval of the 
Administration, the Administration shall not deny liability to a surety 
based upon information that was provided as part of the guaranty 
application.''.

SEC. 404. INCREASING THE BOND THRESHOLD.

    Section 411(a) of the Small Business Investment Act of 1958 (15 
U.S.C. 694b(a)) is amended by striking ``$2,000,000'' and inserting 
``$3,000,000''.

SEC. 405. FEES.

    Section 411 of the Small Business Investment Act of 1958 (15 U.S.C. 
694b) is amended by adding at the end the following:
    ``(l) To the extent that amounts are made available to the 
Administrator for the purpose of fee contributions, the Administrator 
shall use such funds to offset fees established and assessed under this 
section. Each fee contribution shall be effective for one fiscal 
quarter and shall be adjusted as necessary to ensure that amounts made 
available are fully used.''.

             TITLE V--VENTURE CAPITAL INVESTMENT STANDARDS

SEC. 501. DETERMINING WHETHER BUSINESS CONCERN IS INDEPENDENTLY OWNED 
              AND OPERATED.

    Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) is 
amended by adding at the end the following:
            ``(5) Non-affiliation of venture capital from consideration 
        of small business concern.--For purposes of determining whether 
        a small business concern is independently owned and operated 
        under paragraph (1) or meets the small business size standards 
        instituted under paragraph (2), the Administrator shall not 
        consider a business concern to be affiliated with a venture 
        capital operating company (or with any other business that the 
        venture capital operating company has financed) if--
                    ``(A) the venture capital operating company does 
                not own 50 percent or more of the business concern; and
                    ``(B) employees of the venture capital operating 
                company do not constitute a majority of the board of 
                directors of the business concern.
            ``(6) Definition of `independently owned and operated'.--
        For purposes of this section, a business concern shall be 
        deemed to be `independently owned and operated' if--
                    ``(A) it is owned in majority part by one or more 
                natural persons or venture capital operating companies;
                    ``(B) there is no single venture capital operating 
                company that owns 50 percent or more of the business 
                concern; and
                    ``(C) there is no single venture capital operating 
                company the employees of which constitute a majority of 
                the board of directors of the business concern.
            ``(7) Definition of `venture capital operating company'.--
        For purposes of this section, the term `venture capital 
        operating company' means a business concern--
                    ``(A) that--
                            ``(i) is a Venture Capital Operating 
                        Company, as that term is defined in regulations 
                        promulgated by the Secretary of Labor; or
                            ``(ii) is an entity that--
                                    ``(I) is registered under the 
                                Investment Company Act of 1940 (15 
                                U.S.C. 80a-51 et seq.);
                                    ``(II) is an investment company, as 
                                defined in section 3(c)(14) of such Act 
                                (15 U.S.C. 80a-3(c)(14)), which is not 
                                registered under such Act because it is 
                                beneficially owned by less than 100 
                                persons; or
                                    ``(III) is a nonprofit organization 
                                affiliated with, or serving as a patent 
                                and licensing organization for, a 
                                university or other institution of 
                                higher education and that invests 
                                primarily in small business concerns; 
                                and
                    ``(B) that is not controlled by any business 
                concern that is not a small business concern within the 
                meaning of section 3; and
                    ``(C) that has fewer than 500 employees; and
                    ``(D) that is itself a concern incorporated and 
                domiciled in the United States, or is controlled by a 
                concern that is incorporated and domiciled in the 
                United States.''.

                         TITLE VI--REGULATIONS

SEC. 601. REGULATIONS.

    Not later than 90 days after the date of the enactment of this Act, 
the Administrator shall issue revisions to all existing regulations as 
necessary to ensure their conformity with the amendments made by this 
Act.

            Passed the House of Representatives September 27, 2007.

            Attest:

                                            LORRAINE C. MILLER,

                                                                 Clerk.