[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3684 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3684

 To amend the Small Business Investment Act of 1958 to improve the New 
 Markets Venture Capital Program and to establish an Angel Investment 
                    Program, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 30, 2009

  Mr. Sestak introduced the following bill; which was referred to the 
                      Committee on Small Business

_______________________________________________________________________

                                 A BILL


 
 To amend the Small Business Investment Act of 1958 to improve the New 
 Markets Venture Capital Program and to establish an Angel Investment 
                    Program, 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 ``American Small 
Business Innovation Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
              TITLE I--NEW MARKETS VENTURE CAPITAL PROGRAM

Sec. 101. Expansion of New Markets Venture Capital Program.
Sec. 102. Improved nationwide distribution.
Sec. 103. Increased investment in small manufacturers.
Sec. 104. Updating definition of low-income geographic area.
Sec. 105. Study on availability of equity capital.
Sec. 106. Expanding operational assistance to conditionally approved 
                            companies.
Sec. 107. Streamlined application for New Markets Venture Capital 
                            Program.
Sec. 108. Elimination of matching requirement.
Sec. 109. Simplified formula for operational assistance grants.
Sec. 110. Authorization of appropriations.
                   TITLE II--ANGEL INVESTMENT PROGRAM

Sec. 201. Establishment of Angel Investment Program.

              TITLE I--NEW MARKETS VENTURE CAPITAL PROGRAM

SEC. 101. 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. 102. 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. 103. 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. 104. 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 
        paragraphs (3) through (7), respectively.

SEC. 105. 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. 106. 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. 689g(a)) is amended by adding at the end the following:
            ``(6) Grants to conditionally approved companies.--
                    ``(A) In general.--Subject to subparagraphs (B), 
                (C), and (D), 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 this paragraph 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 this paragraph and 
                receives final approval under section 354(e), the 
                Administrator shall deduct the amount of the grant 
                under this 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(4) 
of the Small Business Investment Act of 1958, as so redesignated by 
section 104 of this Act, 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. 107. STREAMLINED APPLICATION FOR NEW MARKETS VENTURE CAPITAL 
              PROGRAM.

    Not later than 60 days after the date of the enactment of this Act, 
the Administrator of the Small Business Administration shall prescribe 
standard documents for the 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. 108. 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. 109. 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. 110. AUTHORIZATION OF APPROPRIATIONS.

    Section 368(a) of the Small Business Investment Act of 1958 (15 
U.S.C. 689q(a)) is amended by striking ``fiscal years 2001 through 
2006'' and inserting ``fiscal years 2010 through 2012''.

                   TITLE II--ANGEL INVESTMENT PROGRAM

SEC. 201. ESTABLISHMENT OF ANGEL INVESTMENT PROGRAM.

    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:

                   ``PART D--ANGEL INVESTMENT PROGRAM

``SEC. 399A. OFFICE OF ANGEL INVESTMENT.

    ``(a) Establishment.--There is established, in the Small Business 
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 Administrator, 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 
        399C.
            ``(3) Administer the Federal Angel Network under section 
        399D.
            ``(4) Administer the grant program for the development of 
        angel groups under section 399E.
            ``(5) Perform such other duties consistent with this 
        section as the Administrator shall prescribe.

``SEC. 399B. DEFINITIONS.

    ``In this part:
            ``(1) The term `angel group' means a group including 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 section 230.501 of title 17, Code 
                of Federal Regulations); and
                    ``(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 the Small Business 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 the Small Business Act (15 U.S.C. 
        637(a)(4)(A)).

``SEC. 399C. 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 business concerns in the 
communities of such groups.
    ``(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 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 from a source other 
than the Federal Government that is equal to or greater than 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 established 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 such fund.
            ``(3) Use of deposits.--Deposits in such fund shall be 
        available for the purpose of providing financing under this 
        section in the amounts specified in annual appropriations Acts 
        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 2010;
            ``(2) $20,000,000 for fiscal year 2011; and
            ``(3) $20,000,000 for fiscal year 2012.

``SEC. 399D. FEDERAL ANGEL NETWORK.

    ``(a) In General.--Subject to the succeeding provisions of this 
section, the Director 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 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. 399E. GRANT PROGRAM FOR DEVELOPMENT OF ANGEL GROUPS.

    ``(a) In General.--The Director 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 2010 through 2012.''.
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