[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2717 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 2717
To amend the Small Business Act to spur entrepreneurial ecosystems in
underserved communities.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 28, 2019
Mr. Cardin introduced the following bill; which was read twice and
referred to the Committee on Small Business and Entrepreneurship
_______________________________________________________________________
A BILL
To amend the Small Business Act to spur entrepreneurial ecosystems in
underserved communities.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ushering Progress by Leveraging
Innovation and Future Technology Act of 2019'' or the ``UPLIFT Act of
2019''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Studies have found that incubators, accelerators, and
other similar models are effective at increasing revenues, the
number of employees, and the likelihood that the business
venture will be successful for participants.
(2) According to the Kauffman Foundation--
(A) minority-owned and women-owned businesses are
half as likely to employ people than nonminority-owned
and men-owned businesses; and
(B) if minorities started businesses at the same
rate as nonminorities, approximately 9,500,000 jobs
would be added to the United States economy.
(3) The Kauffman Foundation also found that the percentage
of startups in rural communities has dropped from 20 percent in
the 1980s to 12.2 percent.
(4) According to the Martin Prosperity Institute, less than
1 percent of all venture capital funding goes to businesses
located in rural areas.
(5) According to PitchBook, around 2 percent of all venture
capital funding goes to businesses with women founders.
(6) According to Crunchbase, less than 3 percent of all
venture capital funding goes to businesses with Black and
Hispanic founders.
(7) Historically Black colleges and universities, minority-
serving institutions, and community colleges are anchor
institutions that serve populations that tend to be
underrepresented in entrepreneurship, particularly in high-
growth sectors.
SEC. 3. PURPOSES.
The purposes of the Innovation Centers Program established under
section 49 of the Small Business Act, as added by this Act, are to--
(1) spur economic growth in underserved communities by
creating good paying jobs and pathways to prosperity;
(2) increase prospects for success for small business
concerns in underserved communities, which often suffer from
higher business failure rates than the national average;
(3) help create a pipeline for small business concerns in
underserved and rural markets into high-growth sectors, where
they are generally underrepresented;
(4) help address the multi-decade decline in the rate of
new business creation;
(5) close the gaps that underserved small business concerns
often have in terms of revenue and number of employees, which
represent lost opportunity for the economy; and
(6) encourage collaboration between the Small Business
Administration and institutions of higher learning that serve
low-income and minority communities.
SEC. 4. INNOVATION CENTERS PROGRAM.
(a) In General.--The Small Business Act (15 U.S.C. 631 et seq.) is
amended--
(1) by redesignating section 49 as section 50; and
(2) by inserting after section 48 the following:
``SEC. 49. INNOVATION CENTERS PROGRAM.
``(a) Definitions.--In this section:
``(1) Accelerator.--The term `accelerator' means an
organization--
``(A) that--
``(i) works with a startup or growing small
business concern for a predetermined period;
and
``(ii) provides mentorship and instruction
to scale businesses; and
``(B) that may--
``(i) provide, but is not exclusively
designed to provide, seed investment in
exchange for a small amount of equity; and
``(ii) offer startup capital or the
opportunity to raise capital from outside
investors.
``(2) Federally recognized area of economic distress.--The
term `federally recognized area of economic distress' means--
``(A) a HUBZone; or
``(B) an area that has been designated as--
``(i) an empowerment zone under section
1391 of the Internal Revenue Code of 1986;
``(ii) a Promise Zone by the Secretary of
Housing and Urban Development; or
``(iii) a low-income neighborhood or
moderate-income neighborhood for purposes of
the Community Reinvestment Act of 1977 (12
U.S.C. 2901 et seq.).
``(3) Growing; newly established; startup.--The terms
`growing', `newly established', and `startup', with respect to
a small business concern, mean growing, newly established, and
startup, respectively, within the meaning given those terms
under section 7(m).
``(4) Incubator.--The term `incubator' means an
organization--
``(A) that--
``(i) tends to work with startup and newly
established small business concerns; and
``(ii) provides mentorship to startup and
newly established small business concerns; and
``(B) that may--
``(i) provide a co-working environment or a
month-to-month lease program; and
``(ii) work with a startup or newly
established small business concern for a
predetermined period or an open-ended period.
``(5) Individuals with a disability.--The term `individuals
with a disability' means more than one individual with a
disability, as defined in section 3 of the Americans with
Disabilities Act of 1990 (42 U.S.C. 12102).
``(6) Eligible entity.--The term `eligible entity' means--
``(A) an institution described in any of paragraphs
(1) through (7) of section 371(a) of the Higher
Education Act of 1965 (20 U.S.C. 1067q(a)); or
``(B) a junior or community college, as defined in
section 312 of the Higher Education Act of 1965 (20
U.S.C. 1058).
``(7) Rural area.--The term `rural area' has the meaning
given that term in section 7(m)(11).
``(8) Socially and economically disadvantaged
individuals.--The term `socially and economically disadvantaged
individual' means a socially and economically disadvantaged
individual within the meaning given that term under section
8(d)(3)(C).
``(b) Establishment.--Not later than 1 year after the date of
enactment of the Ushering Progress by Leveraging Innovation and Future
Technology Act of 2019, the Administrator shall develop and begin
implementing a program (to be known as the `Innovation Centers
Program') to enter into cooperative agreements with eligible entities
under this section.
``(c) Authority.--
``(1) In general.--The Administrator may--
``(A) enter into cooperative agreements to provide
financial assistance to eligible entities to conduct 5-
year projects for the benefit of startup, newly
established, or growing small business concerns; and
``(B) renew a cooperative agreement entered into
under this section for additional 3-year periods, in
accordance with paragraph (3).
``(2) Project requirements.--A project conducted under a
cooperative agreement under this section shall--
``(A) include operating as an accelerator, an
incubator, or any other small business innovation-
focused project as the Administrator approves;
``(B) be carried out in such locations as to
provide maximum accessibility and benefits to the small
business concerns that the project is intended to
serve;
``(C) have a full-time staff, including a full-time
director who shall--
``(i) have the authority to make
expenditures under the budget of the project;
and
``(ii) manage the activities carried out
under the project;
``(D) include the joint provision of programs and
services by the eligible entity and the Administration,
which--
``(i) shall be jointly developed,
negotiated, and agreed upon, with full
participation of both parties, pursuant to an
executed cooperative agreement between the
eligible entity and the Administration; and
``(ii) shall include--
``(I) 1-to-1 individual counseling
as described in section 21(c)(3)(A);
and
``(II) a formal, structured
mentorship program;
``(E) incorporate continuous upgrades and
modifications to the services and programs offered
under the project, as needed to meet the changing and
evolving needs of the business community;
``(F) involve working with underserved groups,
which include--
``(i) women;
``(ii) socially and economically
disadvantaged individuals;
``(iii) veterans;
``(iv) individuals with disabilities; or
``(v) startup, newly established, or
growing small business concerns located in
rural areas;
``(G) not impose or otherwise collect a fee or
other compensation in connection with participation in
the programs and services described in subparagraph
(D)(ii); and
``(H) ensure that small business concerns
participating in the project have access, including
through resource partners, to information concerning
Federal, State, and local regulations that affect small
business concerns.
``(3) Continued funding.--
``(A) In general.--An eligible entity that enters
into an initial cooperative agreement or a renewal of a
cooperative under paragraph (1) may submit an
application for a 3-year renewal of the cooperative
agreement at such time, in such manner, and accompanied
by such information as the Administrator may establish.
``(B) Application and approval criteria.--
``(i) Criteria.--The Administrator shall
develop and publish criteria for the
consideration and approval of applications for
renewals by eligible entities under this
paragraph, which shall take into account the
structure and the stated goals of the project.
``(ii) Notification.--Not later than 60
days after the date of the deadline to submit
applications for each fiscal year, the
Administrator shall approve or deny any
application under this paragraph and notify the
applicant for each such application.
``(C) Priority.--In allocating funds made available
for cooperative agreements under this section, the
Administrator shall give applications under this
paragraph priority over first-time applications for
cooperative agreements under paragraph (1)(A).
``(4) Limit on use of funds.--Amounts received by an
eligible entity under a cooperative agreement under this
section may not be used to provide capital to a participant in
the project carried out under the cooperative agreement.
``(5) Scope of authority.--
``(A) Subject to appropriations.--The authority of
the Administrator to enter into cooperative agreements
under this section shall be in effect for each fiscal
year only to the extent and in the amounts as are
provided in advance in appropriations Acts.
``(B) Suspension, termination, and failure to renew
or extend.--After the Administrator has entered into a
cooperative agreement with an eligible entity under
this section, the Administrator shall not suspend,
terminate, or fail to renew or extend the cooperative
agreement unless the Administrator provides the
eligible entity with written notification setting forth
the reasons therefore and affords the eligible entity
an opportunity for a hearing, appeal, or other
administrative proceeding under chapter 5 of title 5,
United States Code.
``(d) Criteria.--
``(1) In general.--The Administrator shall--
``(A) establish and rank in terms of relative
importance the criteria the Administrator shall use in
awarding cooperative agreements under this section,
which shall include--
``(i) whether the proposed project will be
located in--
``(I) a federally recognized area
of economic distress;
``(II) a rural area; or
``(III) an area lacking sufficient
entrepreneurial development resources,
as determined by the Administrator; and
``(ii) whether the proposed project
demonstrates a commitment to partner with core
stakeholders working with small business
concerns in the relevant area, including--
``(I) investment and lending
organizations;
``(II) nongovernmental
organizations;
``(III) programs of State and local
governments that are concerned with
aiding small business concerns;
``(IV) Federal agencies; and
``(V) for-profit organizations with
an expertise in small business
innovation;
``(B) make publicly available, including on the
website of the Administration, and state in each
solicitation for applications for cooperative
agreements under this section the selection criteria
and ranking established under subparagraph (A); and
``(C) evaluate and rank applicants for cooperative
agreements under this section in accordance with the
selection criteria and ranking established under
subparagraph (A).
``(2) Contents.--The criteria established under paragraph
(1)(A)--
``(A) for eligible entities that have in operation
an accelerator, incubator, or other small business
innovation-focused project shall include the record of
the eligible entity in assisting growing, newly
established, and startup small business concerns,
including, for each of the 3 full years before the date
on which the eligible entity applies for a cooperative
agreement under this section, or if the accelerator,
incubator, or other small business innovation-focused
project has been in operation for less than 3 years,
for the most recent full year the accelerator,
incubator, or other small business innovation-focused
project was in operation--
``(i) the number and retention rate of
growing, newly established, and startup
business concerns in the program of the
eligible entity;
``(ii) the average period of participation
by growing, newly established, and startup
small business concerns in the program of the
eligible entity;
``(iii) the total and median capital raised
by growing, newly established, and startup
small business concerns participating in the
program of the eligible entity;
``(iv) the number of investments or loans
received by growing, newly established, and
startup small business concerns participating
in the program of the eligible entity; and
``(v) the total and median number of
employees of growing, newly established, and
startup small business concerns participating
in the program of the eligible entity; and
``(B) for all eligible entities--
``(i) shall include whether the eligible
entity--
``(I) indicates the structure and
goals of the project;
``(II) demonstrates ties to the
business community;
``(III) identifies the resources
available for the project;
``(IV) describes the capabilities
of the project, including coordination
with local resource partners and local
or national lending partners of the
Administration;
``(V) addresses the unique business
and economic challenges faced by the
community in which the eligible entity
is located and businesses in that
community; or
``(VI) provides a proposed budget
and plan for use of funds; and
``(ii) may include any other criteria
determined appropriate by the Administrator.
``(e) Program Examination.--
``(1) In general.--The Administrator shall--
``(A) develop and implement an annual programmatic
and financial examination of each project conducted
under this section, under which each eligible entity
entering into a cooperative agreement under this
section shall provide to the Administrator--
``(i) an itemized cost breakdown of actual
expenditures for costs incurred during the
preceding year; and
``(ii) documentation regarding--
``(I) the amount of matching
assistance from non-Federal sources
obtained and expended by the eligible
entity during the preceding year in
order to meet the matching requirement;
and
``(II) with respect to any in-kind
contributions that were used to satisfy
the matching requirement, verification
of the existence and valuation of those
contributions; and
``(B) analyze the results of each examination
conducted under subparagraph (A) and, based on that
analysis, make a determination regarding the
programmatic and financial viability of each eligible
entity.
``(2) Conditions for continued funding.--In determining
whether to continue or renew a cooperative agreement under this
section, the Administrator--
``(A) shall consider the results of the most recent
examination of the project under paragraph (1); and
``(B) may terminate or not renew a cooperative
agreement, if the Administrator determines that the
eligible entity has failed to provide any information
required to be provided (including information provide
for purpose of the annual report by the Administrator
under subsection (m)) or the information provided by
the eligible entity is inadequate.
``(f) Training and Technical Assistance.--The Administrator--
``(1) shall provide in person or online training and
technical assistance to each eligible entity entering into a
cooperative agreement under this section at the beginning of
the participation of the eligible entity in the Innovation
Centers Program in order to build the capacity of the eligible
entity and ensure compliance with procedures established by the
Administrator;
``(2) shall ensure that the training and technical
assistance described in paragraph (1) is provided at no cost or
at a low cost; and
``(3) may enter into a contract to provide the training or
technical assistance described in paragraph (1) with 1 or more
organizations with expertise in the entrepreneurial development
programs of the Administration, innovation, and entrepreneurial
development.
``(g) Coordination.--In carrying out a project under this section,
an eligible entity may coordinate with--
``(1) resource and lending partners of the Administration;
``(2) programs of State and local governments that are
concerned with aiding small business concerns; and
``(3) other Federal agencies, including to provide services
to and assist small business concerns in participating in the
SBIR and STTR programs, as defined in section 9(e).
``(h) Funding Limit.--The amount of financial assistance provided
to an eligible entity under a cooperative agreement entered into under
this section shall be not more than $400,000 during each year.
``(i) Matching Requirement.--
``(1) In general.--An eligible entity shall contribute
toward the cost of the project carried out under the
cooperative agreement under this section an amount equal to 50
percent of the amount received under the cooperative agreement.
``(2) In-kind contributions.--Not more than 50 percent of
the contribution of an eligible entity under paragraph (1) may
be in the form of in-kind contributions.
``(3) Waiver.--
``(A) In general.--If the Administrator determines
that an eligible entity is unable to meet the
contribution requirement under paragraph (1), the
Administrator may reduce the required contribution.
``(B) Presumption.--An eligible entity shall be
presumed to be unable to meet the contribution
requirement under paragraph (1) if the eligible entity
has--
``(i) long-term debt in an amount that is
less than $10,000,000;
``(ii) an invested market endowment in an
amount that is less than $15,000,000; or
``(iii) total net liquid assets in an
amount that is less than $15,000,000.
``(4) Failure to obtain non-federal funding.--If an
eligible entity fails to obtain the required non-Federal
contribution during any project, or the reduced non-Federal
contribution as determined by the Administrator--
``(A) the eligible entity shall not be eligible
thereafter for any other project for which it is or may
be funded by the Administration; and
``(B) prior to approving assistance for the
eligible entity for any other projects, the
Administrator shall specifically determine whether the
Administrator believes that the eligible entity will be
able to obtain the requisite non-Federal funding and
enter a written finding setting the forth the reasons
for making that determination.
``(5) Rule of construction.--The demonstrated inability of
an eligible entity to meet the contribution requirement under
paragraph (1) shall not disqualify the eligible entity from
entering into a cooperative agreement under this section.
``(j) Contract Authority.--
``(1) In general.--An eligible entity may enter into a
contract with a Federal department or agency to provide
specific assistance to startup, newly established, or growing
small business concerns.
``(2) Performance.--Performance of a contract entered into
under paragraph (1) may not hinder the eligible entity in
carrying out the terms of the cooperative agreement under this
section.
``(3) Exemption from matching requirement.--A contract
entered into under paragraph (1) shall not be subject to the
matching requirement under subsection (i).
``(4) Additional provision.--Notwithstanding any other
provision of law, a contract for assistance under paragraph (1)
shall not be applied to any Federal department or agency's
small business, woman-owned business, or socially and
economically disadvantaged business contracting goal under
section 15(g).
``(k) Privacy Requirements.--
``(1) In general.--An eligible entity may not disclose the
name, address, or telephone number of any individual or small
business concern receiving assistance under this section
without the consent of such individual or small business
concern, unless--
``(A) the Administrator is ordered to make such a
disclosure by a court in any civil or criminal
enforcement action initiated by a Federal or State
agency; or
``(B) the Administrator considers such a disclosure
to be necessary for the purpose of conducting a
financial audit of an eligible entity, but a disclosure
under this subparagraph shall be limited to the
information necessary for such audit.
``(2) Administration use of information.--This subsection
shall not--
``(A) restrict Administration access to program
activity data; or
``(B) prevent the Administration from using client
information (other than the information described in
subparagraph (A)) to conduct client surveys.
``(3) Regulations.--The Administrator shall issue
regulations to establish standards for requiring disclosures
during a financial audit under paragraph (1)(B).
``(l) Publication of Information.--The Administrator shall--
``(1) publish information about the program under this
section online, including--
``(A) on the website of the Administration; and
``(B) on the social media of the Administration;
and
``(2) request that the resource and lending partners of the
Administration and the district offices of the Administration
publicize the program.
``(m) Annual Reporting.--Not later than 1 year after the date on
which the Administrator establishes the program under this section, and
every year thereafter, the Administrator shall submit to Congress a
report on the activities under the program, including--
``(1) the number of startup, newly established, and growing
small business concerns participating in the project carried
out by each eligible entity under a cooperative agreement under
this section (in this paragraph referred to as `participants'),
including a breakdown of the owners of the participants by
race, gender, veteran status, and urban versus rural location;
``(2) the retention rate for participants;
``(3) the total and median amount of capital accessed by
participants, including the type of capital accessed;
``(4) the total and median number of employees of
participants;
``(5) the number and median wage of jobs created by
participants;
``(6) the number of jobs sustained by participants; and
``(7) information regarding such other metrics as the
Administrator determines appropriate.
``(n) Funding.--
``(1) Authorization of appropriations.--There are
authorized to be appropriated such sums as may be necessary to
carry out this section.
``(2) Administrative expenses.--Of the amount made
available to carry out this section for any fiscal year, not
more than 10 percent may be used by the Administrator for
administrative expenses.''.
(b) Regulations.--The Administrator of the Small Business
Administration shall promulgate regulations to carry out section 49 of
the Small Business Act, as added by subsection (a).
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