[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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