[Congressional Record Volume 144, Number 134 (Wednesday, September 30, 1998)]
[Senate]
[Pages S11196-S11209]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   YEAR 2000 READINESS AND SMALL BUSINESS PROGRAMS RESTRUCTURING AND 
                           REFORM ACT OF 1998

  Mr. SHELBY. Mr. President, I ask unanimous consent that the Senate 
now proceed to the consideration of Calendar No. 645, H.R. 3412.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       A bill (H.R. 3412) to amend and make technical corrections 
     in title III of the Small Business Investment Act.

  There being no objection, the Senate proceeded to consider the 
bill which had been reported from the Committee on Small Business, with 
an amendment to strike all after the enacting clause and inserting in 
lieu thereof the following:

[[Page S11197]]

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Year 2000 
     Readiness and Small Business Programs Restructuring and 
     Reform Act of 1998''.
       (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 YEAR 2000 READINESS

Sec. 101. Findings.
Sec. 102. Year 2000 computer problem loan guarantee program.
Sec. 103. Pilot program requirements.
Sec. 104. Section 7(a) loan program.

       TITLE II--SMALL BUSINESS PROGRAM RESTRUCTURING AND REFORM

Sec. 201. Women's business center program.
Sec. 202. SBIR program.
Sec. 203. SBIC program.
Sec. 204. Certified development company program.
Sec. 205. Small business Federal contract set-asides.
Sec. 206. Assistance for veterans.
Sec. 207. Section 7(a) loan program.
Sec. 208. Disaster mitigation pilot program.
Sec. 209. Microloan program.
Sec. 210. Real estate appraisals.
Sec. 211. Community development venture capital demonstration program.
Sec. 212. Technical amendments.

    TITLE III--SMALL BUSINESS ENVIRONMENTAL ASSISTANCE PILOT PROGRAM

Sec. 301. Pilot program.
              TITLE I--SMALL BUSINESS YEAR 2000 READINESS

     SEC. 101. FINDINGS.

       Congress finds that--
       (1) the failure of many computer programs to recognize the 
     Year 2000 will have extreme negative financial consequences 
     in the Year 2000 and in subsequent years for both large and 
     small businesses;
       (2) small businesses are well behind larger businesses in 
     implementing corrective changes to their automated systems--
     85 percent of businesses with 200 employees or less have not 
     commenced inventorying the changes they must make to their 
     automated systems to avoid Year 2000 problems;
       (3) many small businesses do not have access to capital to 
     fix mission critical automated systems; and
       (4) the failure of a large number of small businesses will 
     have a highly detrimental effect on the economy in the Year 
     2000 and in subsequent years.

     SEC. 102. YEAR 2000 COMPUTER PROBLEM LOAN GUARANTEE PROGRAM.

       (a) Program Established.--Section 7(a) of the Small 
     Business Act (15 U.S.C. 636(a)) is amended by adding at the 
     end the following:
       ``(27) Year 2000 computer problem pilot program.--
       ``(A) Definitions.--In this paragraph--
       ``(i) the term `eligible lender' means any lender 
     designated by the Administration as eligible to participate 
     in--

       ``(I) the Preferred Lenders Program authorized by the 
     proviso in section 5(b)(7); or
       ``(II) the Certified Lenders Program authorized in 
     paragraph (19); and

       ``(ii) the term `Year 2000 computer problem' means, with 
     respect to information technology, any problem that prevents 
     the information technology from accurately processing, 
     calculating, comparing, or sequencing date or time data--

       ``(I) from, into, or between--

       ``(aa) the 20th or 21st centuries; or
       ``(bb) the years 1999 and 2000; or

       ``(II) with regard to leap year calculations.

       ``(B) Establishment of program.--The Administration shall--
       ``(i) establish a pilot loan guarantee program, under which 
     the Administration shall guarantee loans made by eligible 
     lenders to small business concerns in accordance with this 
     subsection; and
       ``(ii) notify each eligible lender of the establishment of 
     the program under this paragraph.
       ``(C) Use of funds.--A small business concern that receives 
     a loan guaranteed under this paragraph shall use the proceeds 
     of the loan solely to address the Year 2000 computer problems 
     of that small business concern, including the repair or 
     acquisition of information technology systems and other 
     automated systems.
       ``(D) Maximum amount.--The total amount of a loan made to a 
     small business concern and guaranteed under this paragraph 
     shall not exceed $50,000.
       ``(E) Guarantee limit.--The guarantee percentage of a loan 
     guaranteed under this paragraph shall not exceed 50 percent 
     of the balance of the financing outstanding at the time of 
     disbursement of the loan.
       ``(F) Report.--The Administration shall annually submit to 
     the Committees on Small Business of the House of 
     Representatives and the Senate a report on the results of the 
     program under this paragraph, which shall include information 
     relating to--
       ``(i) the number and amount of loans guaranteed under this 
     paragraph;
       ``(ii) whether the loans guaranteed were made to repair or 
     replace information technology and other automated systems; 
     and
       ``(iii) the number of eligible lenders participating in the 
     program.''.
       (b) Regulations.--
       (1) In general.--Not later than 60 days after the date of 
     enactment of this Act, the Administrator of the Small 
     Business Administration shall implement the program under 
     section 7(a)(27) of the Small Business Act, as added by this 
     section.
       (2) Requirements.--Except to the extent inconsistent this 
     section or section 7(a)(27) of the Small Business Act, as 
     added by this section, in carrying out paragraph (1), the 
     Administrator shall ensure that the requirements governing 
     the program under section 7(a)(27) of the Small Business Act, 
     as added by this section, are substantially similar to the 
     requirements governing the FA$TRAK pilot program of the Small 
     Business Administration, or any successor program or pilot 
     program to that pilot program.
       (c) Repeal.--Effective on October 1, 2001, this section and 
     the amendment made by this section are repealed.

     SEC. 103. PILOT PROGRAM REQUIREMENTS.

       Section 7(a)(25) of the Small Business Act (15 U.S.C. 
     636(a)(25)) is amended by adding at the end the following:
       ``(D) Notification of change.--Not later than 30 days prior 
     to initiating any pilot program or making any change in a 
     pilot program under this subsection that may affect the 
     subsidy rate estimates for the loan program under this 
     subsection, the Administration shall notify the Committees 
     on Small Business of the House of Representatives and the 
     Senate, which notification shall include--
       ``(i) a description of the proposed change; and
       ``(ii) an explanation, which shall be developed by the 
     Administration in consultation with the Director of the 
     Office of Management and Budget, of the estimated effect that 
     the change will have on the subsidy rate.
       ``(E) Report on pilot programs.--The Administration shall 
     annually submit to the Committees on Small Business of the 
     House of Representatives and the Senate a report on each 
     pilot program under this subsection, which report shall 
     include information relating to--
       ``(i) the number and amount of loans made under the pilot 
     program;
       ``(ii) the number of lenders participating in the pilot 
     program; and
       ``(iii) the default rate, delinquency rate, and recovery 
     rate for loans under each pilot program, as compared to those 
     rates for other loan programs under this subsection.''.

     SEC. 104. SECTION 7(A) LOAN PROGRAM.

       Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) 
     is amended, in the first sentence, by inserting ``and to 
     assist small business concerns in meeting technology 
     requirements for the Year 2000,'' after ``and working 
     capital,''.
       TITLE II--SMALL BUSINESS PROGRAM RESTRUCTURING AND REFORM

     SEC. 201. WOMEN'S BUSINESS CENTER PROGRAM.

       (a) Findings.--Congress finds that--
       (1) with small business concerns owned and controlled by 
     women being created at a rapid rate in the United States, 
     there is a need to increase the authorization level for the 
     women's business center program under section 29 of the Small 
     Business Act (15 U.S.C. 656) in order to establish additional 
     women's business center sites throughout the Nation that 
     focus on entrepreneurial training programs for women; and
       (2) increased funding for the women's business center 
     program will ensure that--
       (A) new women's business center sites can be established to 
     reach women located in geographic areas not presently served 
     by an existing women's business center without jeopardizing 
     the full funding of existing women's business centers for the 
     term prescribed by law; and
       (B) the Small Business Administration achieves the goal of 
     establishing at least 1 sustainable women's business center 
     in each State.
       (b) Authorization of Appropriations.--
       (1) In general.--Section 29(k)(1) of the Small Business Act 
     (15 U.S.C. 656(k)(1)) is amended to read as follows:
       ``(1) Authorization.--There is authorized to be 
     appropriated to carry out this section, $12,000,000 for 
     fiscal year 1999 and each fiscal year thereafter.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect on October 1, 1998.
       (c) Terms of Assistance.--
       (1) In general.--Section 308(b) of the Small Business 
     Reauthorization Act of 1997 (15 U.S.C. 656 note) is amended--
       (A) by striking ``(b)'' and all that follows through 
     ``paragraph (2), any organization'' and inserting the 
     following:
       ``(b) Applicability.--Any organization''; and
       (B) by striking paragraph (2).
       (2) Effective date.--The amendment made by this subsection 
     shall take effect as if included in the enactment of the 
     Small Business Reauthorization Act of 1997.
       (d) General Accounting Office Reporting Requirements.--
       (1) Baseline report.--Not later than October 31, 1999, the 
     Comptroller General of the United States shall--
       (A) conduct a review of the administration of the women's 
     business center program under section 29 of the Small 
     Business Act (15 U.S.C. 656) by the Office of Women's 
     Business Ownership of the Small Business Administration, 
     which shall include an analysis of--
       (i) the operation of the women's business center program by 
     the Administration;
       (ii) the efforts of the Administration to meet the 
     legislative objectives established for the program;
       (iii) the oversight role of the Administration of the 
     operations of women's business centers;
       (iv) the training and assistance provided by centers 
     receiving funding from the Administration as compared to the 
     activities of the centers that no longer receive funding from 
     the Administration;
       (v) the degree to which--

       (I) the Administration has taken the actions necessary to 
     ensure that the annual report submitted by the Administrator 
     under 29(j) of the Small Business Act (15 U.S.C. 656(j)) 
     meets the requirements of that section; and
       (II) the annual report submitted by the Administrator under 
     29(j) of the Small Business Act (15 U.S.C. 656(j)) meets the 
     requirements of that section; and

[[Page S11198]]

       (vi) any other matters that the Comptroller General 
     determines to be appropriate in consultation with and as 
     directed by the Committees on Small Business of the Senate 
     and House of Representatives; and
       (B) submit to the Committees on Small Business of the 
     Senate and House of Representatives a report describing the 
     results of the review under subparagraph (A).
       (2) Followup report.--Not later than October 31, 2002, the 
     Comptroller General of the United States shall--
       (A) conduct a review of any changes, during the period 
     beginning on the date on which the report is submitted under 
     paragraph (1)(B) and ending on the date on which the report 
     is submitted under subparagraph (B) of this paragraph, in the 
     administration of the women's business center program under 
     section 29 of the Small Business Act (15 U.S.C. 656) by the 
     Office of Women's Business Ownership of the Small Business 
     Administration, which shall include an analysis of any 
     changes during that period in--
       (i) the operation of the women's business center program by 
     the Administration;
       (ii) the efforts of the Administration to meet the 
     legislative objectives established for the program;
       (iii) the oversight role of the Administration of the 
     operations of women's business centers;
       (iv) the training and assistance provided by centers 
     receiving funding from the Administration as compared to the 
     activities of the centers that no longer receive funding from 
     the Administration;
       (v) the degree to which--

       (I) the Administration has taken the actions necessary to 
     ensure that the annual report submitted by the Administrator 
     under 29(j) of the Small Business Act (15 U.S.C. 656(j)) 
     meets the requirements of that section; and
       (II) the annual report submitted by the Administrator under 
     29(j) of the Small Business Act (15 U.S.C. 656(j)) meets the 
     requirements of that section; and

       (vi) any other matters that the Comptroller General 
     determines to be appropriate in consultation with and as 
     directed by the Committees on Small Business of the Senate 
     and House of Representatives; and
       (B) submit to the Committees on Small Business of the 
     Senate and House of Representatives a report describing the 
     results of the review under subparagraph (A).

     SEC. 202. SBIR PROGRAM.

       (a) Assistive Technology.--Section 9(c) of the Small 
     Business Act (15 U.S.C. 638(c)) is amended by adding at the 
     end the following: ``In order to carry out the purposes of 
     this section, the Administration shall, to the maximum extent 
     practicable, encourage Federal agencies to fund programs for 
     the research and development of assistive and universally 
     designed technology that is designed to result in the 
     availability of new products for individuals with 
     disabilities (as defined in section 3 of the Americans with 
     Disabilities Act of 1990 (42 U.S.C. 12102)).''.
       (b) Federal Agency Expenditures for the SBIR Program.--
     Section 9(f)(1) of the Small Business Act (15 U.S.C. 
     638(f)(1)) is amended by adding at the end the following: 
     ``Notwithstanding any other provision of law, any rule, 
     regulation, or order promulgated by the Director of the 
     Office of Management and Budget relating to the definition of 
     the term `extramural budget' in subsection (e)(1) shall, 
     except with respect to the Federal agencies specifically 
     identified in that subsection, apply uniformly to all 
     departments and agencies of the Federal Government that are 
     subject to the requirements of this section.''.
       (c) Implementation of Outreach Authorities.--Existing 
     procurement outreach activities of the Federal Government, 
     including, but not limited to, electronic commerce resource 
     centers and procurement technical assistance centers, shall 
     conduct program outreach activities for the Small Business 
     Innovation Research program using funds that are otherwise 
     available for such existing procurement outreach activities.
       (d) Repeal of Termination Provision.--Section 9 of the 
     Small Business Act (15 U.S.C. 638) is amended by striking 
     subsection (m) and inserting the following:
       ``(m) [Reserved].''.

     SEC. 203. SBIC PROGRAM.

       (a) In General.--Section 308(i)(2) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 687(i)(2)) is amended by 
     adding at the end the following: ``In this paragraph, the 
     term `interest' includes only the maximum mandatory sum, 
     expressed in dollars or as a percentage rate, that is payable 
     with respect to the business loan amount received by the 
     small business concern, and does not include the value, if 
     any, of contingent obligations, including warrants, royalty, 
     or conversion rights, granting the small business investment 
     company an ownership interest in the equity or future revenue 
     of the small business concern receiving the business loan.''.
       (b) Funding Levels.--Section 20 of the Small Business Act 
     (15 U.S.C. 631 note) is amended--
       (1) in subsection (d)(1)(C)(i), by striking 
     ``$800,000,000'' and inserting ``$1,000,000,000''; and
       (2) in subsection (e)(1)(C)(i), by striking 
     ``$900,000,000'' and inserting ``$1,200,000,000''.
       (c) Technical Corrections.--Title III of the Small Business 
     Investment Act of 1958 (15 U.S.C. 661 et seq.) is amended--
       (1) in section 303(g) (15 U.S.C. 683(g)), by striking 
     paragraph (13);
       (2) in section 308 (15 U.S.C. 687) by adding at the end the 
     following:
       ``(j) For the purposes of sections 304 and 305, in any case 
     in which an incorporated or unincorporated business is not 
     required by law to pay Federal income taxes at the enterprise 
     level, but is required to pass income through to its 
     shareholders or partners, an eligible small business or 
     smaller enterprise may be determined by computing the after-
     tax income of such business by deducting from the net income 
     an amount equal to the net income multiplied by the combined 
     marginal Federal and State income tax rate for 
     corporations.''; and
       (3) in section 320 (15 U.S.C. 687m), by striking ``6'' and 
     inserting ``12''.

     SEC. 204. CERTIFIED DEVELOPMENT COMPANY PROGRAM.

       (a) Liquidation and Foreclosure.--Title V of the Small 
     Business Investment Act of 1958 (15 U.S.C. 695 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS.

       ``(a) In General.--The Administration shall authorize 
     qualified State and local development companies (as defined 
     in section 503(e)) that meet the requirements of subsection 
     (b) to foreclose and liquidate loans in their portfolios that 
     are funded with the proceeds of debentures guaranteed by the 
     Administration under section 503.
       ``(b) Requirements.--The requirements of this subsection 
     are that--
       ``(1) the qualified State or local development company--
       ``(A) participated in the loan liquidation pilot program 
     established by section 204 of the Small Business Programs 
     Improvement Act of 1996 (15 U.S.C. 695 note), as in effect on 
     the day before the promulgation of final regulations by the 
     Administration implementing this section;
       ``(B) is participating in the Premier Certified Lenders 
     Program under section 508; or
       ``(C) is participating in the Accredited Lenders Program 
     under section 507 and meets the requirements of paragraph 
     (2)(B); or
       ``(2)(A) during the 3 most recent fiscal years, the 
     qualified State or local development company has made an 
     average of not less than 10 loans per year that are funded 
     with the proceeds of debentures guaranteed under section 503; 
     and
       ``(B) 1 or more of the employees of the qualified State or 
     local development company have--
       ``(i) not less than 2 years of substantive, decision-making 
     experience in administering the liquidation and workout of 
     problem loans secured in a manner substantially similar to 
     loans funded with the proceeds of debentures guaranteed under 
     section 503; and
       ``(ii) completed a training program on loan liquidation 
     developed by the Administration in conjunction with qualified 
     State and local development companies that meet the 
     requirements of this subsection.
       ``(c) Authority of Development Companies.--
       ``(1) In general.--Each qualified State or local 
     development company authorized to foreclose and liquidate 
     loans under this section shall, with respect to any loan 
     described in subsection (a) in the portfolio of the 
     development company that is in default--
       ``(A) perform all liquidation and foreclosure functions, 
     including the purchase of any other indebtedness secured by 
     the property securing the loan, in a reasonable and sound 
     manner and according to commercially accepted practices, 
     pursuant to a liquidation plan, which shall be approved in 
     advance by the Administration in accordance with paragraph 
     (2)(A);
       ``(B) litigate any matter relating to the performance of 
     the functions described in subparagraph (A), except that the 
     Administration may--
       ``(i) assume the defense or prosecution of any case if--

       ``(I) the outcome of the litigation may adversely affect 
     the Administration's management of the loan program 
     established under section 502; or
       ``(II) the Administration is entitled to legal remedies not 
     available for a qualified State or local development company 
     and such remedies will benefit either the Administration or 
     the qualified State or local development company in such 
     litigation; or

       ``(ii) oversee the conduct of any such litigation to which 
     the qualified State or local development company is a party; 
     and
       ``(C) take other appropriate actions to mitigate loan 
     losses in lieu of total liquidation or foreclosure, including 
     restructuring the loan, which such actions shall be in 
     accordance with prudent loan servicing practices and pursuant 
     to a workout plan, which shall be approved in advance by the 
     Administration in accordance with paragraph (2)(C).
       ``(2) Administration approval.--
       ``(A) Liquidation plan.--
       ``(i) In general.--In carrying out paragraph (1), a 
     qualified State or local development company shall submit to 
     the Administration a proposed liquidation plan.
       ``(ii) Timing.--Any request under this subparagraph shall 
     be approved or denied by the Administration not later than 15 
     business days after the date on which the request is received 
     by the Administration. If the Administration does not approve 
     or deny a request for approval of a liquidation plan before 
     the expiration of the 15-business day period beginning on 
     the date on which the request is received by the 
     Administration, the Administration shall notify the 
     qualified State or local development company, in writing, 
     of the specific concerns of the Administration within that 
     15-business day period.
       ``(iii) Routine actions.--A routine action under a 
     liquidation plan approved in accordance with this 
     subparagraph shall not require additional approval by the 
     Administration.
       ``(B) Purchase of indebtedness.--
       ``(i) In general.--In carrying out paragraph (1)(A), a 
     qualified State or local development company shall submit to 
     the Administration a request for written approval from the 
     Administration before committing the Administration to 
     purchase any other indebtedness secured by the property 
     securing the loan at issue.

[[Page S11199]]

       ``(ii) Timing.--Any request under this subparagraph shall 
     be approved or denied by the Administration not later than 15 
     business days after the date on which the request is received 
     by the Administration. If the Administration does not approve 
     or deny a request for purchase of indebtedness before the 
     expiration of the 15-business day period beginning on the 
     date on which the request is received by the Administration, 
     the Administration shall notify the qualified State or local 
     development company, in writing, of the specific concerns of 
     the Administration within that 15-business day period.
       ``(C) Workout plan.--
       ``(i) In general.--In carrying out paragraph (1)(C), a 
     qualified State or local development company may submit to 
     the Administration a proposed workout plan.
       ``(ii) Timing.--Any request under this subparagraph shall 
     be approved or denied by the Administration not later than 15 
     business days after the date on which the request is received 
     by the Administration. If the Administration does not approve 
     or deny a request for approval of a proposed workout plan 
     before the expiration of the 15-business day period beginning 
     on the date on which the request is received by the 
     Administration, the Administration shall notify the qualified 
     State or local development company, in writing, of the 
     specific concerns of the Administration within that 15-
     business day period.
       ``(D) Compromise of indebtedness.--In carrying out 
     paragraph (1)(A), a qualified State or local development 
     company may--
       ``(i) consider an offer made by an obligor to compromise 
     the debt for less than the full amount owing; and
       ``(ii) pursuant to such an offer, release any obligor or 
     other party contingently liable, if--

       ``(I) the State or local development company submits to the 
     Administration a written request for that release; and
       ``(II) the Administration approves the request.

       ``(3) Conflict of interest.--A qualified State or local 
     development company that is liquidating or foreclosing a loan 
     under this section shall not take any action that would 
     result in an actual or apparent conflict of interest between 
     the qualified State or local development company, or any 
     employee thereof, and any third party lender, associate of a 
     third party lender, or any other person participating in any 
     manner in the liquidation or foreclosure of the loan.
       ``(d) Suspension or Revocation of Authority.--The authority 
     of a qualified State or local development company to 
     foreclose and liquidate loans under this section may be 
     suspended or revoked by the Administration, if the 
     Administration determines that the qualified State or local 
     development company--
       ``(1) does not meet the requirements of subsection (b);
       ``(2) has failed to adhere to any applicable rule or 
     regulation of the Administration, or has violated any other 
     applicable provision of law; or
       ``(3) fails to comply with any reporting requirement that 
     may be established by the Administration relating to the 
     liquidation and foreclosure of loans.
       ``(e) Report.--
       ``(1) In general.--Based on information provided by the 
     qualified State and local development companies and the 
     Administration, the Administration shall annually submit to 
     the Committees on Small Business of the House of 
     Representatives and the Senate a report on the results of the 
     delegation of authority to qualified State and local 
     development companies to liquidate and foreclose loans under 
     this section.
       ``(2) Information included.--Each report under this 
     paragraph shall include the following information:
       ``(A) With respect to each qualified State or local 
     development company authorized to foreclose and liquidate 
     loans under this section, and in the aggregate, for each loan 
     foreclosed or liquidated by the qualified State or local 
     development company, or for which loan losses were otherwise 
     mitigated by the qualified State or local development company 
     pursuant to a workout plan under this section--
       ``(i) the total cost of each project financed with the 
     loan;
       ``(ii) the total original dollar amount guaranteed by the 
     Administration;
       ``(iii) the total dollar amount of the loan at the time 
     transferred into liquidation, foreclosure, or mitigation;
       ``(iv) the total dollar losses resulting from the 
     liquidation, foreclosure, or mitigation; and
       ``(v) the total recoveries resulting from the liquidation, 
     foreclosure, or mitigation, both as a percentage of the 
     amount guaranteed and the total cost of the project financed.
       ``(B) A comparison between--
       ``(i) the information described in clauses (i) through (v) 
     of subparagraph (A) with respect to loans foreclosed and 
     liquidated, or for which loan losses were otherwise mitigated 
     pursuant to a workout plan, by qualified State and local 
     development companies under this section during the 12-month 
     period preceding the date on which the report is submitted; 
     and
       ``(ii) the same information with respect to loans 
     foreclosed and liquidated by the Administration during that 
     period.
       ``(C) The number of times that the Administration has 
     failed to approve or deny a request for written approval of a 
     liquidation plan, purchase of indebtedness, or workout plan 
     within the time periods described in subparagraphs (A), (B), 
     and (C) of subsection (c)(2).''.
       (b) Regulations.--
       (1) In general.--Not later than 150 days after the date of 
     enactment of this Act, the Administrator of the Small 
     Business Administration shall promulgate such regulations as 
     may be necessary to carry out section 510 of the Small 
     Business Investment Act of 1958, as added by subsection (a) 
     of this section.
       (2) Elimination of pilot program.--Effective on the date on 
     which final regulations are promulgated under paragraph (1), 
     section 204 of the Small Business Programs Improvement Act of 
     1996 (15 U.S.C. 695 note) is repealed.
       (c) Public Policy Goals.--Section 501(d)(3)(C) of the Small 
     Business Investment Act of 1958 (15 U.S.C. 695(d)(3)(C)) is 
     amended by inserting ``or women-owned business development'' 
     before the comma.

     SEC. 205. SMALL BUSINESS FEDERAL CONTRACT SET-ASIDES.

       Section 15(h) of the Small Business Act (15 U.S.C. 644(h)) 
     is amended--
       (1) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively;
       (2) by inserting after paragraph (1) the following:
       ``(2)(A) Not later than 180 days after the last day of each 
     fiscal year, based on the reports submitted under paragraph 
     (1) for that fiscal year, the Administration shall submit to 
     the Committees on Small Business of the House of 
     Representatives and the Senate a report, which shall 
     include--
       ``(i) the information required by paragraph (3);
       ``(ii) a detailed description of the procurement data that 
     is included in the reports submitted under paragraph (1) for 
     that fiscal year, which shall identify--
       ``(I) any data on contracts from Federal agencies that is 
     excluded from those reports, accompanied by an explanation 
     for such exclusion; and
       ``(II) each Federal agency that has submitted a report that 
     deviates from the requirements of paragraphs (3) and (4), 
     accompanied by an explanation of the reasons for each such 
     deviation;
       ``(iii) a detailed description of any change in statistical 
     methodology used by any Federal agency that is reflected in 
     any statistic in the report submitted under paragraph (1) for 
     that fiscal year, including any inclusion or exclusion of the 
     value of any contracts or types of contracts in any statistic 
     represented by the Federal agency in the report submitted 
     under paragraph (1) as the total value of contracts or 
     subcontracts awarded by the Federal agency or as the total 
     value of contracts or subcontracts awarded to small business 
     concerns; and
       ``(iv) with respect to each change in statistical 
     methodology by a Federal agency described in clause (iii), a 
     separate calculation (which shall be provided to the 
     Administration by the Federal agency) of the total value of 
     contracts for that fiscal year, using the statistical 
     methodology used by the Federal agency during each of the 2 
     preceding fiscal years.
       ``(B)(i) Not less than 45 days before issuing any waiver or 
     permissive letter allowing any Federal agency or group of 
     agencies to make any change in statistical methodology 
     described in subparagraph (A)(iii), the Administration shall 
     submit to the Committees on Small Business of the House of 
     Representatives and the Senate, and to the Chief Counsel for 
     Advocacy of the Administration, a copy of that waiver or 
     letter.
       ``(ii) Not later than 30 days after the submission of a 
     waiver or letter under clause (i), the Chief Counsel for 
     Advocacy of the Administration shall submit to the Committees 
     on Small Business of the House of Representatives and the 
     Senate, and to each affected Federal agency, the written 
     comments of the Chief Counsel regarding the appropriateness 
     of the decision of the Administration to issue the waiver or 
     letter.''; and
       (3) in paragraph (4), as redesignated, by striking 
     ``paragraph (2)'' and inserting ``paragraphs (2) and (3)''.

     SEC. 206. ASSISTANCE FOR VETERANS.

       (a) Definitions.--Section 3 of the Small Business Act (15 
     U.S.C. 632) is amended by adding at the end the following:
       ``(q) Definitions Relating to Veterans.--In this Act:
       ``(1) Service-disabled veteran.--The term `service-disabled 
     veteran' means a veteran with a disability that is service-
     connected (as defined in section 101(16) of title 38, United 
     States Code).
       ``(2) Small business concern owned and controlled by 
     service-disabled veterans.--The term `small business concern 
     owned and controlled by service-disabled veterans' means a 
     small business concern--
       ``(A) not less than 51 percent of which is owned by 1 or 
     more service-disabled veterans or, in the case of any 
     publicly owned business, not less than 51 percent of the 
     stock of which is owned by 1 or more service-disabled 
     veterans; and
       ``(B) the management and daily business operations of which 
     are controlled by 1 or more service-disabled veterans.
       ``(3) Small business concern owned and controlled by 
     veterans.--The term `small business concern owned and 
     controlled by veterans' means a small business concern--
       ``(A) not less than 51 percent of which is owned by 1 or 
     more veterans or, in the case of any publicly owned business, 
     not less than 51 percent of the stock of which is owned by 1 
     or more veterans; and
       ``(B) the management and daily business operations of which 
     are controlled by 1 or more veterans.
       ``(4) Veteran.--The term `veteran' has the meaning given 
     the term in section 101(2) of title 38, United States 
     Code.''.
       (b) Office of Veterans Business Development.--
       (1) Associate administrator for veterans business 
     development.--Section 4(b)(1) of the Small Business Act (15 
     U.S.C. 633(b)(1)) is amended--
       (A) in the fifth sentence, by striking ``four'' and 
     inserting ``5''; and

[[Page S11200]]

       (B) by inserting after the fifth sentence the following: 
     ``One shall be the Associate Administrator for Veterans 
     Business Development, who shall administer the Office of 
     Veterans Business Development established under section 
     32.''.
       (2) Establishment of office.--The Small Business Act (15 
     U.S.C. 631 et seq.) is amended--
       (A) by redesignating section 32 as section 33; and
       (B) by inserting after section 31 the following:

     ``SEC. 32. VETERANS PROGRAMS.

       ``(a) Office of Veterans Business Development.--
       ``(1) Establishment.--There is established in the 
     Administration an Office of Veterans Business Development, 
     which shall be administered by the Associate Administrator 
     for Veterans Business Development (in this section referred 
     to as the `Associate Administrator') appointed under section 
     4(b)(1).
       ``(2) Associate administrator for veterans business 
     development.--The Associate Administrator shall be--
       ``(A) a career appointee in the competitive service or in 
     the Senior Executive Service; and
       ``(B) responsible for the formulation and execution of the 
     policies and programs of the Administration that provide 
     assistance to small business concerns owned and controlled by 
     veterans and small business concerns owned and controlled by 
     service-disabled veterans.
       ``(b) Advisory Committee on Veterans Business Affairs.--
       ``(1) In general.--There is established an advisory 
     committee to be known as the Advisory Committee on Veterans 
     Business Affairs (in this subsection referred to as the 
     `Committee'), which shall serve as an independent source of 
     advice and policy recommendations to the Administrator 
     (through the Associate Administrator), to Congress, and to 
     the President.
       ``(2) Membership.--
       ``(A) In general.--The Committee shall be composed of 15 
     members, each of whom shall be appointed by the 
     Administrator, of whom--
       ``(i) 8 shall be veterans who are owners of small business 
     concerns; and
       ``(ii) 7 shall be representatives of national veterans 
     service organizations.
       ``(B) Political affiliation.--Not more than 8 members of 
     the Committee shall be of the same political party as the 
     President.
       ``(C) Prohibition on federal employment.--No member of the 
     Committee may be an officer or employee of the Federal 
     Government. If any member of the Committee commences 
     employment as an officer or employee of the Federal 
     Government after the date on which the member is appointed to 
     the Committee, the member may continue to serve as a member 
     of the Committee for not more than 30 days after the date on 
     which the member commences employment as such an officer or 
     employee.
       ``(D) Service term.--Each member of the Committee shall 
     serve for a term of 3 years.
       ``(E) Vacancies.--Not later than 30 days after the date on 
     which a vacancy in the membership of the Committee occurs, 
     the vacancy be filled in the same manner as the original 
     appointment.
       ``(F) Chairperson.--The Committee shall select a 
     Chairperson from among the members of the Committee. Any 
     vacancy in the office of the Chairperson of the Committee 
     shall be filled by the Committee at the first meeting of the 
     Committee following the date on which the vacancy occurs.
       ``(G) Initial appointments.--Not later than 60 days after 
     the date of enactment of this Act, the Administrator shall 
     appoint the initial members of the Committee.
       ``(3) Duties.--The Committee shall--
       ``(A) review, coordinate, and monitor plans and programs 
     developed in the public and private sectors, that affect the 
     ability of veteran-owned business enterprises to obtain 
     capital and credit;
       ``(B) promote and assist in the development of business 
     information and surveys relating to veterans;
       ``(C) monitor and promote the plans, programs, and 
     operations of the departments and agencies of the Federal 
     Government that may contribute to the establishment and 
     growth of veteran's business enterprises;
       ``(D) develop and promote new initiatives, policies, 
     programs, and plans designed to foster veteran's business 
     enterprises; and
       ``(E) advise and assist in the design of a comprehensive 
     plan, which shall be updated annually, for joint public-
     private sector efforts to facilitate growth and development 
     of veteran's business enterprises.
       ``(4) Powers.--
       ``(A) Hearings.--The Committee may hold such hearings, sit 
     and act at such times and places, take such testimony, and 
     receive such evidence as the Committee considers advisable to 
     carry out the duties of the Committee under this subsection.
       ``(B) Information from federal agencies.--The Committee may 
     secure directly from any department or agency of the Federal 
     Government such information as the Committee considers to be 
     necessary to carry out the duties of the Committee under this 
     subsection. Upon request of the Chairperson of the Committee, 
     the head of such department or agency shall furnish such 
     information to the Committee.
       ``(C) Postal services.--The Committee may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.
       ``(D) Gifts.--The Committee may accept, use, and dispose of 
     gifts or donations of services or property.
       ``(5) Meetings.--
       ``(A) In general.--The Committee shall meet not less than 
     biannually at the call of the Chairperson, and otherwise upon 
     the request of the Administrator.
       ``(B) Location.--Each meeting of the full Committee shall 
     be held at the headquarters of the Administration located in 
     Washington, District of Columbia. The Administrator shall 
     provide suitable meeting facilities and such administrative 
     support as may be necessary for each meeting of the 
     Committee.
       ``(6) Personnel matters.--
       ``(A) No compensation.--Members of the Committee shall 
     serve without compensation for their services to the 
     Committee.
       ``(B) Travel expenses.--The members of the Committee shall 
     be reimbursed for travel and subsistence expenses in the same 
     manner and to the same extent as members of advisory boards 
     and committees under section 8(b)(13).
       ``(c) Score Program.--The Administrator shall enter into a 
     memorandum of understanding with the Service Core of Retired 
     Executives (in this subsection referred to as `SCORE') 
     participating in the program under section 8(b)(1)(B) for--
       ``(1) the appointment by SCORE in its national office of a 
     National Veterans Business Coordinator, whose exclusive 
     duties shall be those relating to veterans' business matters, 
     and who shall be responsible for the establishment and 
     administration of a program to provide entrepreneurial 
     counseling and training to veterans through the chapters of 
     SCORE throughout the United States;
       ``(2) the establishment and maintenance of a toll-free 
     telephone number and an Internet website to provide access 
     for veterans to information about the entrepreneurial 
     services available to veterans through SCORE; and
       ``(3) the collection of statistics concerning services 
     provided by SCORE to veterans and service-disabled veterans 
     and the inclusion of those statistics in each annual report 
     published by the Administrator under section 4(b)(2)(B).
       ``(d) Annual Report.--Beginning on March 31, 2000, and on 
     March 31 of each year thereafter, the Administrator shall 
     submit to the Committees on Small Business of the House of 
     Representative and the Senate a report on the needs of small 
     business concerns owned by controlled by veterans and small 
     business concerns owned and controlled by service-disabled 
     veterans, which shall include--
       ``(1) the availability of programs of the Administration 
     for and the degree of utilization of those programs by those 
     small business concerns during the 12-month period preceding 
     the date on which the report is submitted;
       ``(2) the percentage and dollar value of Federal contracts 
     awarded to those small business concerns during the 12-month 
     period preceding the date on which the report is submitted; 
     and
       ``(3) proposed methods to improve delivery of all Federal 
     programs and services that could benefit those small business 
     concerns.
       ``(e) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $2,500,000 for 
     each fiscal year.''.
       (c) Office of Advocacy.--Section 202 of Public Law 94-305 
     (15 U.S.C. 634b) is amended--
       (1) in paragraph (10), by striking ``and'' at the end;
       (2) in paragraph (11), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(12) evaluate the efforts of each Federal agency and of 
     private industry to assist small business concerns owned and 
     controlled by veterans and small business concerns owned and 
     controlled by service-disabled veterans, and make appropriate 
     recommendations to the Administrator and to Congress in order 
     to promote the establishment and growth of those small 
     business concerns.''.
       (d) Microloan Program.--Section 7(m)(1)(A)(i) of the Small 
     Business Act (15 U.S.C. 636(m)(1)(A)(i)) is amended by 
     striking ``low-income, and'' and inserting ``low-income 
     individuals, veterans,''.

     SEC. 207. SECTION 7(A) LOAN PROGRAM.

       Section 7(a)(4) of the Small Business Act (15 U.S.C. 
     636(a)(4)) is amended--
       (1) by striking ``(4)'' and all that follows through 
     ``Notwithstanding'' and inserting the following:
       ``(4) Interest rates.--Notwithstanding''; and
       (2) by striking subparagraph (B).

     SEC. 208. DISASTER MITIGATION PILOT PROGRAM.

       (a) In General.--Section 7(b)(1) of the Small Business Act 
     (15 U.S.C. 636(b)(1)) is amended--
       (1) in subparagraph (B), by adding ``and'' at the end; and
       (2) by adding at the end the following:
       ``(C) during fiscal years 1999 through 2003, to establish a 
     pre-disaster mitigation program to make such loans (either 
     directly or in cooperation with banks or other lending 
     institutions through agreements to participate on an 
     immediate or deferred (guaranteed) basis), as the 
     Administrator may determine to be necessary or appropriate, 
     to enable small businesses to install mitigation devices or 
     to take preventive measures to protect against disasters, in 
     support of a formal mitigation program established by the 
     Federal Emergency Management Agency, except that no loan or 
     guarantee shall be extended to a small business under this 
     subparagraph unless the Administration finds that the small 
     business is otherwise unable to obtain credit for the 
     purposes described in this subparagraph;''.
       (b) Authorization of Appropriations.--Section 20 of the 
     Small Business Act (15 U.S.C. 631 note) is amended by adding 
     at the end the following:
       ``(f) Disaster Mitigation Pilot Program.--The following 
     program levels are authorized for loans under section 
     7(b)(1)(C):
       ``(1) $15,000,000 for fiscal year 1999.
       ``(2) $15,000,000 for fiscal year 2000.
       ``(3) $15,000,000 for fiscal year 2001.
       ``(4) $15,000,000 for fiscal year 2002.
       ``(5) $15,000,000 for fiscal year 2003.''.
       (c) Evaluation.--On January 31, 2001, the Administrator of 
     the Small Business Administration shall submit to the 
     Committees on Small Business of the House of Representatives 
     and

[[Page S11201]]

     the Senate a report on the effectiveness of the pilot program 
     authorized by section 7(b)(1)(C) of the Small Business Act 
     (15 U.S.C. 636(b)(1)(C)), as added by subsection (a) of this 
     subsection, which report shall include--
       (1) information relating to--
       (A) the areas served under the pilot program;
       (B) the number and dollar value of loans made under the 
     pilot program; and
       (C) the estimated savings to the Federal Government 
     resulting from the pilot program; and
       (2) other such information as the Administrator determines 
     to be appropriate in evaluating the pilot program.

     SEC. 209. MICROLOAN PROGRAM.

       (a) In General.--Section 7(m) of the Small Business Act (15 
     U.S.C. 636(m)) is amended--
       (1) in paragraph (7)--
       (A) by striking ``(7)'' and all that follows through 
     ``During the program'' and inserting the following:
       ``(7) Program funding for microloans.--During the 
     program''; and
       (B) by striking subparagraph (B); and
       (2) in paragraph (8)--
       (A) by inserting ``and providing funding to 
     intermediaries'' after ``program applicants''; and
       (B) by inserting ``and provide funding to'' after ``shall 
     select''.
       (b) Loan Loss Reserve.--Section 7(m)(3)(D) of the Small 
     Business Act (15 U.S.C. 636(m)(3)(D)) is amended--
       (1) in the first sentence, by striking ``The 
     Administrator'' and inserting the following:
       ``(i) In general.--The Administrator''; and
       (2) by striking the second sentence and inserting the 
     following:
       ``(ii) Level of loan loss reserve fund.--

       ``(I) In general.--Subject to subclause (II), the 
     Administration shall require the loan loss reserve fund to be 
     maintained at a level equal to not more than 15 percent of 
     the outstanding balance of the microloans owed to the 
     intermediary.
       ``(II) Reduction of loan loss reserve requirement.--After 
     the initial 5 years of an intermediary's participation in the 
     program under this subsection, upon the initial request of 
     the intermediary made at any time after that period, the 
     Administrator shall annually conduct a review of the average 
     annual loss rate of the intermediary and, if the intermediary 
     demonstrates to the satisfaction of the Administrator that 
     the average annual loss rate for the intermediary during the 
     preceding 5-year period is less than 15 percent, and the 
     Administrator determines that no other factor exists that is 
     likely to impair the ability of the intermediary to repay all 
     obligations owed to the Administration under this subsection, 
     the Administrator shall reduce that annual loan loss reserve 
     requirement to reflect the actual average annual loss rate 
     for that intermediary during that period, except that in no 
     case shall the loan loss reserve requirement for an 
     intermediary be reduced to less than 10 percent of the 
     outstanding balance of the microloans owed to the 
     intermediary.''.

     SEC. 210. REAL ESTATE APPRAISALS.

       (a) Small Business Investment Act of 1958.--Section 502(3) 
     of the Small Business Investment Act of 1958 (15 U.S.C. 
     696(3)) is amended by adding at the end the following:
       ``(F) Real estate appraisals.--
       ``(i) Loans exceeding $250,000.--Notwithstanding any other 
     provision of law, if a loan under this section involves the 
     use of more than $250,000 of the loan proceeds for a real 
     estate transaction, prior to disbursement of the loan, the 
     Administrator shall require an appraisal of the real estate 
     by a State licensed or certified appraiser.
       ``(ii) Loans of $250,000 or less.--Notwithstanding any 
     other provision of law, if a loan under this subsection 
     involves the use of $250,000 or less of the loan proceeds for 
     a real estate transaction, prior to disbursement of the loan, 
     the participating lender may, in accordance with the policy 
     of the participating lender with respect to loans made 
     without a government guarantee, require an appraisal of the 
     real estate by a State licensed or certified appraiser.
       ``(iii) Definition.--In this subparagraph, the term `real 
     estate transaction' includes the acquisition or construction 
     of land or a building and any improvement to land or to a 
     building.''.
       (b) Small Business Act.--Section 7(a) of the Small Business 
     Act (15 U.S.C. 636(a)) is amended by adding at the end the 
     following:
       ``(27) Real estate appraisals.--
       ``(A) Loans exceeding $250,000.--Notwithstanding any other 
     provision of law, if a loan guaranteed under this subsection 
     involves the use of more than $250,000 of the loan proceeds 
     for a real estate transaction, prior to disbursement of the 
     loan, the Administrator shall require an appraisal of the 
     real estate by a State licensed or certified appraiser.
       ``(B) Loans of $250,000 or less.--Notwithstanding any other 
     provision of law, if a loan guaranteed under this subsection 
     involves the use of $250,000 or less of the loan proceeds for 
     a real estate transaction, prior to disbursement of the loan, 
     the participating lender may, in accordance with the policy 
     of the participating lender with respect to loans made 
     without a government guarantee, require an appraisal of the 
     real estate by a State licensed or certified appraiser.
       ``(C) Definition.--In this paragraph, the term `real estate 
     transaction' includes the acquisition or construction of land 
     or a building and any improvement to land or to a 
     building.''.

     SEC. 211. COMMUNITY DEVELOPMENT VENTURE CAPITAL DEMONSTRATION 
                   PROGRAM.

       (a) Findings.--Congress finds that--
       (1) there is a need for the development and expansion of 
     organizations that provide private equity capital to smaller 
     businesses in areas in which equity-type capital is scarce, 
     such as inner cities and rural areas, in order to create and 
     retain jobs for low-income residents of those areas;
       (2) to invest successfully in smaller businesses, 
     particularly in inner cities and rural areas, requires highly 
     specialized investment and management skills;
       (3) there is a shortage of professionals who possess such 
     skills and there are few training grounds for individuals to 
     obtain those skills;
       (4) providing assistance to organizations that provide 
     specialized technical assistance and training to individuals 
     and organizations seeking to enter or expand in this segment 
     of the market would stimulate small business development and 
     entrepreneurship in economically distressed communities; and
       (5) assistance from the Federal Government could act as a 
     catalyst to attract investment from the private sector and 
     would help to develop a specialized venture capital industry 
     focused on creating jobs, increasing business ownership, and 
     generating wealth in low-income communities.
       (b) Community Development Venture Capital Activities.--The 
     Small Business Act (15 U.S.C. 631 et seq.) is amended--
       (1) by redesignating section 33 (as redesignated by section 
     206(b)(2) of this Act) as section 34; and
       (2) by inserting after section 32 (as added by section 
     206(b)(2) of this Act) the following:

     ``SEC. 33. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES.

       ``(a) Definitions.--In this section:
       ``(1) Community development venture capital organization.--
     The term `community development venture capital organization' 
     means a privately-controlled organization that--
       ``(A) has a primary mission of promoting community 
     development in low-income communities, as defined by the 
     Administrator, through investment in private business 
     enterprises; or
       ``(B) administers or is in the process of establishing a 
     community development venture capital fund for the purpose of 
     making equity investments in private business enterprises in 
     such communities.
       ``(2) Developmental organization.--The term `developmental 
     organization'--
       ``(A) means a public or private entity, including a college 
     or university, that provides technical assistance to 
     community development venture capital organizations or that 
     conducts research or training in community development 
     venture capital investment; and
       ``(B) may include an intermediary organization.
       ``(3) Intermediary organization.--The term `intermediary 
     organization'--
       ``(A) means a private, nonprofit entity that has--
       ``(i) a primary mission of promoting community development 
     through investment in private businesses in low-income 
     communities; and
       ``(ii) significant prior experience in providing technical 
     assistance or financial assistance to community development 
     venture capital organizations;
       ``(B) may include community development venture capital 
     organizations.
       ``(b) Authority.--In order to promote the development of 
     community development venture capital organizations, the 
     Administrator, may--
       ``(1) enter into contracts with 1 or more developmental 
     organizations to carry out training and research activities 
     under subsection (c); and
       ``(2) make grants in accordance with this section--
       ``(A) to developmental organizations to carry out training 
     and research activities under subsection (c); and
       ``(B) to intermediary organizations to provide intensive 
     marketing, management, and technical assistance and training 
     to community development venture capital organizations under 
     subsection (d).
       ``(c) Training and Research Activities.--
       ``(1) In general.--Subject to paragraph (2), a 
     developmental organization that receives a grant under 
     subsection (b) shall use the funds made available through the 
     grant for 1 or more of the following training and research 
     activities:
       ``(A) Strengthening professional skills.--Creating and 
     operating training programs to enhance the professional 
     skills for individuals in community development venture 
     capital organizations or operating private community 
     development venture capital funds.
       ``(B) Increasing interest in community development venture 
     capital.--Creating and operating a program to select and 
     place students and recent graduates from business and related 
     professional schools as interns with community development 
     venture capital organizations and intermediary organizations 
     for a period of up to 1 year, and to provide stipends for 
     such interns during the internship period.
       ``(C) Promoting `best practices'.--Organizing an annual 
     national conference for community development venture capital 
     organizations to discuss and share information on the best 
     practices regarding issues relevant to the creation and 
     operation of community development venture capital 
     organizations.
       ``(D) Mobilizing academic resources.--Encouraging the 
     formation of 1 or more centers for the study of community 
     development venture capital at graduate schools of business 
     and management; providing funding for the development of 
     materials for courses on topics in this area; and providing 
     funding for research on economic, operational, and policy 
     issues relating to community development venture capital.
       ``(2) Limitation.--The Administrator shall ensure that not 
     more than 25 percent of the amount made available to carry 
     out this section is used for activities described in 
     paragraph (1).
       ``(d) Intensive Marketing, Management, and Technical 
     Assistance and Training.--An intermediary organization that 
     receives a grant

[[Page S11202]]

     under subsection (b) shall use the funds made available 
     through the grant to provide intensive marketing, management, 
     and technical assistance and training to promote the 
     development of community development venture capital 
     organizations, which assistance may include grants to 
     community development venture capital organizations for the 
     start up costs and operating support of those organizations.
       ``(e) Matching Requirement.--The Administrator shall 
     require, as a condition of any grant made to an intermediary 
     organization under this section, that a matching amount equal 
     to the amount of such grant be provided from sources other 
     than the Federal Government.
       ``(f) Requirements.--The Administrator may promulgate such 
     regulations as may be necessary to carry out this section, 
     which regulations may take effect upon issuance.
       ``(g) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section a total of 
     $20,000,000 for fiscal years 1999 through 2002.''.

     SEC. 212. TECHNICAL AMENDMENTS.

       (a) Small Business Act.--Section 3(p) of the Small Business 
     Act (15 U.S.C. 632(p)) is amended--
       (1) in paragraph (1)(A), by inserting ``located in a 
     metropolitan statistical area (as defined in section 
     143(k)(2)(B) of the Internal Revenue Code of 1986)'' before 
     the semicolon;
       (2) in paragraph (3)(B), by striking ``; or'' at the end 
     and inserting a period; and
       (3) in paragraph (4)--
       (A) in subparagraph (A), by striking ``(I)''; and
       (B) in subparagraph (B)--
       (i) in clause (ii), by striking ``(ii)'' and inserting 
     ``(II)''; and
       (ii) in clause (i), by striking ``Department of Commerce'' 
     and all that follows through ``median household'' and 
     inserting the following: ``Department of Commerce, is not 
     located in a metropolitan statistical area (as defined in 
     section 143(k)(2)(B) of the Internal Revenue Code of 1986); 
     and
       ``(ii)(I) in which the median household''.
       (b) Small Business Investment Act of 1958.--Section 101 of 
     the Small Business Investment Act of 1958 (15 U.S.C. 661 
     note) is amended by striking the table of contents.
    TITLE III--SMALL BUSINESS ENVIRONMENTAL ASSISTANCE PILOT PROGRAM

     SEC. 301. PILOT PROGRAM.

       The Small Business Act (15 U.S.C. 637 et seq.) is amended 
     by inserting after section 21A the following:

     ``SEC. 21B. SMALL BUSINESS ENVIRONMENTAL ASSISTANCE PILOT 
                   PROGRAM.

       ``(a) Definitions.--In this section:
       ``(1) Advisory committee.--The term `Advisory Committee' 
     means the Advisory Committee on Small Business Environmental 
     Assistance Programs established under subsection (b).
       ``(2) Advocacy chair.--The term `Advocacy Chair' means the 
     Chair of Small Business Advocacy of the Environmental 
     Protection Agency.
       ``(3) Assistant administrator.--The term `Assistant 
     Administrator' means the Assistant Administrator for Small 
     Business Development Centers of the Administration.
       ``(4) Chief counsel.--The term `Chief Counsel' means the 
     Chief Counsel of the Office of Advocacy of the 
     Administration.
       ``(5) EPA administrator.--The term `EPA Administrator' 
     means the Administrator of the Environmental Protection 
     Agency.
       ``(6) Participating small business development center.--The 
     term `participating small business development center' means 
     a small business development center selected under subsection 
     (c) to participate in the demonstration program under this 
     section.
       ``(7) Small business development center.--The term `small 
     business development center'--
       ``(A) means a small business development center established 
     pursuant to section 21; and
       ``(B) includes a consortium of 2 or more small business 
     development centers.
       ``(b) Advisory Committee on Small Business Environmental 
     Assistance Programs.--
       ``(1) In general.--There is established an advisory 
     committee to be known as the Advisory Committee on Small 
     Business Environmental Assistance Programs which shall 
     provide advice and recommendations to the Administration, the 
     EPA Administrator, and Congress on the manner in which to 
     enhance existing programs designed to improve the 
     environmental performance of small businesses.
       ``(2) Membership.--
       ``(A) In general.--The Advisory Committee shall be composed 
     of the following members:
       ``(i) 1 member shall be the Chief Counsel, who shall serve 
     as the Chairperson of the Advisory Committee.
       ``(ii) 1 member shall be the Assistant Administrator.
       ``(iii) 1 member shall be the Advocacy Chair.
       ``(iv) Not more than 15 additional members, each of whom 
     shall be appointed by the Chief Counsel after consultation 
     with the Assistant Administrator and the Advocacy Chair, of 
     whom--

       ``(I) not more than 7 members shall be representatives of 
     small business concerns or trade associations of small 
     business concerns;
       ``(II) not more than 4 members shall be representatives of 
     small business development centers selected by the Assistant 
     Administrator; and
       ``(III) not more than 4 members shall be representatives of 
     small business technical assistance programs selected by the 
     EPA Administrator.

       ``(B) Service of members.--Each member of the Advisory 
     Committee shall serve for a term of 1 year.
       ``(C) Vacancies.--If a vacancy in the membership of the 
     Advisory Committee occurs, the vacancy shall be filled at the 
     discretion of the Advisory Committee.
       ``(D) Appointments.--Not later than 60 days after the date 
     of enactment of this subsection, the Chief Counsel shall 
     appoint the members of the Advisory Committee.
       ``(3) Duties.--The Advisory Committee shall--
       ``(A) review each program under the jurisdiction of the 
     Administration or the EPA Administrator that is designed to 
     assist the small business concerns in complying with 
     environmental laws and regulations or to enhance the 
     environmental performance of small business concerns, 
     including the programs established under section 21 of this 
     Act, section 213 of the Small Business Regulatory Enforcement 
     Fairness Act of 1996, and section 507 of the Clean Air Act;
       ``(B) develop a strategy to enhance the efficacy of the 
     programs described in subparagraph (A) in assisting small 
     businesses to comply with environmental laws and regulations 
     and improve their environmental performance through such 
     means as--
       ``(i) improved techniques for measuring program 
     achievement;
       ``(ii) innovative compliance assistance demonstration 
     projects; and
       ``(iii) strengthening the capabilities of State and local 
     programs;
       ``(C) develop recommendations regarding the types of pilot 
     programs that would implement the strategy developed under 
     subparagraph (B); and
       ``(D) not later than September 30, 1999, submit to the 
     Administration, the EPA Administrator, and the Committees on 
     Small Business of the House of Representatives and the 
     Senate, a report on the strategy developed under subparagraph 
     (B) and the recommendations developed under subparagraph (C).
       ``(4) Powers.--
       ``(A) Information from federal agencies.--The Advisory 
     Committee may secure directly from any department or agency 
     of the Federal Government such information as the Advisory 
     Committee considers to be necessary to carry out the duties 
     of the Advisory Committee under this subsection. Upon request 
     of the Chairperson of the Advisory Committee, the head of 
     such department or agency shall furnish such information to 
     the Advisory Committee.
       ``(B) Gifts and donations.--The Advisory Committee may 
     accept, use, and dispose of gifts or donations of services or 
     property.
       ``(5) Meetings.--
       ``(A) In general.--The Advisory Committee shall meet not 
     less than twice during fiscal year 1999, and otherwise upon 
     request of the Chief Counsel.
       ``(B) Location.--Each meeting of the Advisory Committee 
     shall be held at the office of the Chief Counsel located in 
     Washington, D.C., or such other location as the Chief Counsel 
     may specify. The Chief Counsel shall provide suitable meeting 
     facilities and such administrative support as may be 
     necessary for each meeting of the Advisory Committee.
       ``(6) Personnel matters.--
       ``(A) No compensation.--Members of the Advisory Committee 
     shall serve without compensation for their services to the 
     Advisory Committee.
       ``(B) Travel expenses.--The members of the Advisory 
     Committee shall be reimbursed for travel and subsistence 
     expenses in the same manner and to the same extent as members 
     of Regional Small Business Regulatory Fairness Boards 
     established under section 30(c).
       ``(C) Independent national assessment.--Not later than 
     March 1, 2003, the Comptroller General of the United States 
     shall submit to the Committees on Small Business of the House 
     of Representatives and the Senate an evaluation of the 
     demonstration program established under this section. The 
     criteria for such evaluation shall be based on the strategy 
     and recommendation in the Advisory Committee report and 
     developed under the direction of the Committees on Small 
     Business of the House of Representatives and the Senate.
       ``(7) Termination.--The Advisory Committee shall terminate 
     on the date on which the report is submitted under subsection 
     (b)(3)(D).
       ``(c) Demonstration Program.--
       ``(1) Notice of program establishment.--Not later than 60 
     days after the date on which the Advisory Committee submits 
     the report under subsection (b)(3)(D), the Administration 
     shall publish in the Federal Register a notice of the 
     demonstration program under this section, which shall include 
     application requirements for small business development 
     centers seeking to participate in the program, including 
     selection criteria based on the strategy and recommendation 
     included in the report of the Advisory Committee under 
     subsection (b)(3)(D).
       ``(2) Applications.--Not later than 60 days after the date 
     on which the notice is published under paragraph (1), each 
     small business development center seeking to participate in 
     the pilot program under this section shall submit to the 
     Administration an application that meets the requirements 
     described in paragraph (1).
       ``(3) Selection of participating small business development 
     centers.--
       ``(A) In general.--Not later than 90 days after the date on 
     which the notice is published under paragraph (1), the 
     Administration shall select, from among applicants under 
     paragraph (2), 10 small business development centers to 
     participate in the demonstration program under this section.
       ``(B) Additional selection criteria.--In carrying out 
     subparagraph (A), the Administration shall--
       ``(i) give highest priority to applicants that--

       ``(I) form a partnership between small business development 
     centers and State small business stationary source technical 
     and compliance assistance programs (established under section 
     507 of the Clean Air Act) or other environmental assistance 
     providers, including trade associations; and
       ``(II) demonstrate a cooperative approach utilizing the 
     relative strengths of each; and

[[Page S11203]]

       ``(ii) to the extent practicable, select 1 small business 
     development center from each region of the United States for 
     which there is a regional office of the Environmental 
     Protection Agency.
       ``(d) Grants to Participating Small Business Development 
     Centers.--
       ``(1) In general.--Not later than 60 days after the date on 
     which the Administration selects a small business development 
     center to receive a grant, the Administration shall make a 
     grant to the participating small business development center.
       ``(2) Grant amount.--
       ``(A) In general.--Subject to subparagraph (B), the total 
     amount made available under this subsection to a 
     participating small business development center for any 
     fiscal year shall be not more than $400,000.
       ``(B) Exception.--Amounts made available to a small 
     business development center by the Administration or another 
     agency to carry out section 21(c)(3)(G) shall not be included 
     in the calculation of maximum funding of a small business 
     development center under subparagraph (A).
       ``(C) No matching requirement.--Notwithstanding section 
     21(a)(4), the Administration shall not require, as a 
     condition of any grant made to a small business development 
     center under this subsection, that a matching amount be 
     provided from sources other than the Federal Government.
       ``(e) Authorization of Appropriations.--
       ``(1) In general.--There is authorized to be appropriated 
     to carry out this section--
       ``(A) $500,000 for fiscal year 1999, which shall be used 
     for direct support and reimbursement for costs of the 
     Advisory Committee; and
       ``(B) $4,000,000 for each of fiscal years 2000 through 
     2003, of which not more than 6 percent may be used for 
     administrative expenses.
       ``(2) Administrative costs.--
       ``(A) In general.--Not more than 6 percent of the amount 
     made available under paragraph (1)(B) in each fiscal year may 
     be used by the Administration for the costs of 
     administration, evaluation, and reporting under this section, 
     which shall include costs associated with the employee 
     designated under subparagraph (B).
       ``(B) Full-time employee.--The Administration shall 
     designate an employee of the Administration to assist in 
     administering the pilot program under this section on a full-
     time basis.''.


                           Amendment No. 3674

   (Purpose: To make an amendment relating to small business Federal 
                          contract set-asides)

  Mr. SHELBY. Mr. President, Senator Bond has an amendment at the desk. 
I ask for its consideration.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Alabama [Mr. Shelby], for Mr. Bond, 
     proposes an amendment numbered 3674.

  The amendment is as follows:
       Strike section 205 of the bill and insert the following:

     SEC. 205. SMALL BUSINESS FEDERAL CONTRACT SET-ASIDES.

       (a) Annual Comprehensive Report.--
       (1) In general.--Section 15(h) of the Small Business Act 
     (15 U.S.C. 644(h)) is amended--
       (A) in paragraph (1)--
       (i) by striking ``At the conclusion of each fiscal year'' 
     inserting ``(A) Not later than April 15 of each year'';
       (ii) in the first sentence, by inserting ``during the 
     fiscal year that ended on September 30 of the preceding 
     year'' before the period; and
       (iii) by adding at the end the following:
       ``(B)(i) Not later than May 15 of each year, the 
     Administration shall submit to the Committees on Small 
     Business of the House of Representatives and the Senate a 
     comprehensive report on the extent of the participation by 
     small business concerns described in subparagraph (A) in 
     procurement contracts during the fiscal year that ended on 
     September 30 of the preceding year. In preparing the report, 
     the Administration shall use the data from the reports 
     submitted to the Administration for that fiscal year under 
     subparagraph (A), and the Federal Procurement Data System.
       ``(ii) Each comprehensive report under this subparagraph 
     shall include a detailed description and qualitative analysis 
     of the procurement data submitted to the Administration under 
     subparagraph (A).
       ``(iii)(I) The description and analysis included under 
     clause (ii) shall include a reconciliation of the apparent 
     differences, if any, between the small business participation 
     levels reported for that fiscal year and the small business 
     participation levels reported for preceding fiscal years, 
     that result from differences in classification or reporting 
     of data under this subsection. In the report, the 
     Administration shall identify the differences in 
     classification or reporting, as the case may be, and set 
     forth the statistics on total dollar values for the later 
     fiscal year as those statistics would have been calculated if 
     the categories of contracts had been classified or otherwise 
     reported without the differences.
       ``(II) The total dollar values referred to in subclause (I) 
     are the total dollar values of prime contracts awarded, total 
     dollar values of subcontracts awarded, and total dollar 
     values of prime contracts and subcontracts awarded to small 
     businesses.'';
       (B) in paragraph (2), by striking ``paragraph (1)'' and 
     inserting ``paragraph (1)(A)''; and
       (C) by adding at the end the following:
       ``(4)(A) The Administration may not issue a waiver or 
     permissive letter authorizing the head of a Federal agency or 
     the heads of any group of Federal agencies to change the 
     statistical methodology used for meeting the reporting 
     requirements of paragraph (1)(A) or (2) unless, when issued, 
     the waiver or permissive letter is accompanied by the 
     comments of the Chief Counsel for Advocacy regarding the 
     appropriateness of the decision of the Administration to 
     issue the waiver or letter.
       ``(B) No waiver or permissive letter referred to in 
     subparagraph (A) shall be effective until--
       ``(i) the Administration submits a copy of the waiver or 
     permissive letter, together with the comments of the Chief 
     Counsel for Advocacy, to the Committees on Small Business of 
     the House of Representatives and the Senate; and
       ``(ii) 30 days have elapsed since the date of the 
     submission to the committees under clause (i).''.
       (2) Inapplicability of content requirement to fiscal year 
     1998 report.--Clause (iii) of subparagraph (B) of section 
     15(h)(1) of the Small Business Act, as added by paragraph 
     (1)(A)(iii) of this subsection, does not apply to the 
     comprehensive report submitted under that subparagraph for 
     fiscal year 1998.
       (b) HUBZone Program.--Section 602(b)(2) of the Small 
     Business Reauthorization Act of 1997 (15 U.S.C. 657a note) is 
     amended--
       (1) in subparagraph (I), by striking ``and'' at the end;
       (2) in subparagraph (J), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(K) the Department of Labor.''.

  Mr. BOND. Mr. President, I rise today in support of H.R. 3412, the 
Year 2000 Readiness and Small Business Programs Restructuring and 
Reform Act of 1998. On September 15, 1998, the Committee on Small 
Business conducted a mark-up of H.R. 3412, a bill making technical 
amendments to the SBIC Program which passed the House of 
Representatives on March 24, 1998, and was referred to the Committee on 
Small Business.
  The Committee approved 18-0 my amendment in the nature of a 
substitute to H.R. 3412, which included the Year 2000 Readiness Act (S. 
2372), the Small Business Restructuring and Reform Act of 1998 (S. 
2407) and portions of Senator Kerry's bill, the Small Business Loan 
Enhancement Act (S. 2448). Prior to approving my substitute amendment, 
the Committee approved seven amendments by unanimous voice votes.


                                title i

  Title I addresses the Committee's concerns about the impact the Year 
2000 computer problem will have on small businesses. Earlier this year, 
the Committee held a hearing on this problem, and the witnesses' 
testimony was alarming. The majority of small businesses that are 
likely to have Y2K computer failures are unprepared. In a study 
conducted by Wells Fargo Bank and the NFIB, there are an estimated 
4,750,000 small employers who will encounter Y2K problems. However, 
only 15 percent of all businesses with under 200 employees have begun 
to inventory the automated systems that may be affected by this 
computer glitch, much less commenced fixing such systems.
  Given the impact that a substantial number of small business failures 
would have on our Nation's economy, the Committee determined that it 
was not only important for small businesses to be aware of the Y2K 
problem, but that they also had to have access to capital to fix such 
problems. H.R. 3412 directs SBA to establish a limited-term loan 
program under the FA$TRAK pilot program that would guarantee 50 percent 
of the principal amount of a loan made by a private lender to assist 
small businesses in correcting Y2K computer problems. The Committee 
adopted an amendment sponsored by Senator Kerry that states that all 
SBA-approved lenders under the 7(a) loan program may also make loans 
for Y2K corrections under the 7(a) loan program.
  Since I became Chairman of the Committee in 1995, the Committee has 
maintained an active role overseeing credit programs at the Small 
Business Administration. To assist the Committee in conducting its 
oversight of these credit programs, H.R. 3412 includes a new provision 
that requires SBA to provide notification to the Senate and House 
Committees on Small Business whenever it initiates or changes a pilot 
program under the 7(a) loan program. Further, SBA is required to report 
annually to the Committees on the status of each pilot program. Such 
report will include the number and amount of

[[Page S11204]]

loans, the number of lenders participating, and the default rate, 
delinquency rate, and recovery rate for loans made under each pilot 
program.


                                title ii

  Title II of the Year 2000 Readiness and Small Business Programs 
Restructuring and Reform Act of 1998 includes improvements in Federal 
Programs that are in great demand by small firms. Just last year, the 
Committee approved a significant increase in the Women's Business 
Center Program. Demands being placed on this program are exceeding last 
year's estimates, and H.R. 3412 increases the annual authorization 
level for grants from $8 million to $12 million. To assist the 
Committee in its oversight role, the bill directs the Comptroller 
General to conduct a baseline study and a follow-up study on the 
management of the Women's Business Center Program by SBA's Office of 
Women's Business Ownership.
  Last year, the Committee approved an increase from 20 percent to 23 
percent in the amount of Federal prime contract dollars that will be 
set aside each year for small businesses. This goal is extremely 
important to the viability of thousands of small firms. Importantly, 
the Federal government is also a big winner, since small businesses 
delivery high quality, competitively priced goods and services.
  The managers' amendment that Senator Kerry and I have offered amends 
a provision in H.R. 3412 that requires SBA to report annually to the 
Senate and House Committees on Small Business on the success of each 
Federal agency in meeting the 23 percent goal. The provision in the 
bill was crafted after the Committee received a report issued in April 
1998 by the Department of Energy's Office of Inspector General that 
indicates that the Department of Energy exploited a change in its 
statistical methodology to inflate its small business contracting 
achievements.
  The managers' amendment refines the provision contained in H.R. 3412 
that was approved unanimously by the Committee on September 15. These 
changes reflect clarifications requested by the Small Business 
Administration, while retaining the bill's key provisions intended to 
discourage the reporting of erroneous or misleading statistics. At 
SBA's request, the managers' amendment provides for use of data from 
the Federal Procurement Data System in preparing reports to the 
Congress on Federal procurement activities.
  The managers' amendment also reduces the burden placed on the Chief 
Counsel for Advocacy for commenting on SBA letters authorizing changes 
in statistical methodology by the reporting agencies. As reported by 
the Committee on Small Business, H.R. 3412 would have allowed such 
letters to take effect 45 days after copies had been transmitted to the 
Senate and House Committee on Small Business. During this time, the 
Chief Counsel would have had 30 days to comment on such letters. The 
Chief Counsel expressed concern to us about being able to meet this 
deadline due to limited staff resources, so the managers' amendment 
changes these deadlines. The Chief Counsel's comments will now be 
included with the initial transmission from SBA notifying the 
Committees and will not be subject to a separate statutory deadline. 
The managers anticipate that this approach will encourage SBA to make 
the Chief Counsel a part of any negotiations leading to the preparation 
of such a letter in the first place.

  The managers' amendment retains three key facets of the Committee-
reported bill, with some simpler language. The Committee continues to 
believe it is appropriate, and consistent with the Chief Counsel's 
other reporting responsibilities, for the Chief Counsel to comment on 
letters authorizing changes in statistical methodology. Second, 
whenever an agency seeks to reclassify contracts so they are not 
included in statistics issued in previous years, or are included as 
part of the calculation of a different statistic, the Committee wants 
this information disclosed. Disclosure is vital so that recipients of 
these statistics will know that they attempt to measure the same thing 
from year to year--and if they do not, how they differ. Finally, the 
Committee continues to require a separate calculation of what the 
reporting year's statistics would have been in the absence of such 
changes. This is intended to remove any incentive for an agency to 
massage its statistics to inflate its small business contracting 
achievements.
  The managers' amendment also makes an adjustment to the HUBZone 
program that was approved last year as part of the Small Business 
Reauthorization Act of 1997 (P.L. 105-135). At the request of SBA, the 
Department of Labor would be added to the list of Federal agencies that 
may participate under the HUBZone Program within the provision limiting 
participation to selected agencies prior to September 30, 2000.
  Title II of H.R. 3412 has other significant provisions to improve 
Federal programs to help small business owners. The following 
highlights the changes:
  The Small Business Innovation Research (SBIR) program is made 
permanent. Since this program was last re-authorized in 1992, its 
success has exceeded our expectations. The bill requires Federal 
agencies to utilize its outreach activities to encourage greater 
participation of small research firms from states that receive few SBIR 
awards.
  The program authorization level for participating securities under 
the Small Business Investment Company (SBIC) Program is increased from 
$800 million to $1 billion in FY 1999; from $900 million to $1.2 
billion in FY 2000. Following the statutory changes in the SBIC Program 
approved by the Committee in 1996, the growth in the program has 
exceeded most estimates.
  The Pilot Liquidation Program under the 504 Certified Development 
Company Program is made permanent.
  A new Office of Veterans Business Development is established at SBA, 
which is directed to provide comprehensive help to veteran-owned small 
businesses. An Advisory Committee on Veterans' Business Affairs 
composed of 15 members is established, and a new position of National 
Veterans' Business Coordinator is created within SCORE.
  Title II also includes amendments that were offered by members of the 
Committee on Small Business. It includes two amendments offered by 
Senator Kerry. The first restructures the loan loss reserve 
requirements under SBA's Microloan Program. His second amendment 
changes SBA's appraisal standards under the 504 and 7(a) loan programs 
to require appraisals of real estate collateral by state-licensed or 
state-certified appraisers only when more than $250,000 of the loan 
proceeds are to be used to acquire, construct or improve real property.
  The Committee approved an amendment included in Title II sponsored by 
Senator Bumpers to strike the cap on the amount of loan funds that a 
single state can receive under the Microloan Program, while ensuring 
equitable funding to Microloan Lender Intermediaries. An amendment 
sponsored by Senator Cleland to establish a pilot disaster mitigation 
loan program at SBA was accepted. And lastly, the Committee approved an 
amendment offered by Senator Wellstone which authorizes a total of $20 
million over four years to create the Community Development Venture 
Capital Demonstration Program at SBA.


                               Title III

  Title III of the Year 2000 Readiness and Small Business Programs 
Restructuring and Reform Act of 1998 incorporates an amendment offered 
by Senator Burns to create the Small Business Environmental Assistance 
Pilot Program at SBA. The purpose of this pilot program is to provide 
technical assistance to small businesses to help them comply with 
environmental regulations. Witnesses have testified before the 
Committee on Small Business about the complexity of environmental 
regulations and the importance of environmental compliance tools 
designed to help small businesses comply with the law and regulations 
administered by the Environmental Protection Agency.
  The Small Business Environmental Assistance Pilot Program has two 
principal sections. The first establishes an Advisory Committee on 
Small Business Environmental Assistance Programs that will review 
existing programs that provide environmental assistance to small 
businesses and chart the course for small business environmental 
compliance assistance. The second section authorizes SBA to establish a 
demonstration grant program based on the

[[Page S11205]]

recommendations and strategy developed by the Advisory Committee. Under 
this program, SBA will make 4-year grants to certain Small Business 
Development Centers to provide environmental compliance assistance to 
small businesses in partnership with existing programs.
  Mr. President, when the Committee on Small Business filed its report 
on S. 3412, the Congressional Budget Office had not completed its 
estimate of the costs associated with the bill. I am now in receipt of 
the CBO analysis of H.R. 3412 and ask unanimous consent that it be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                               Washington, DC, September 28, 1998.
     Hon. Christopher S. Bond,
     Chairman, Committee on Small Business,
     U.S. Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for the H.R. 3412, the 
     Year 2000 Readiness and Small Business Programs Restructuring 
     and Reform Act of 1998.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contacts are Mark 
     Hadley and Kristen Layman (for federal costs), and Marc 
     Nicole (for the state and local impact).
           Sincerely,
                                        June E. O'Neill, Director.
       Enclosure.


               congressional budget office cost estimate

     H.R. 3412--Year 2000 Readiness and Small Business Programs 
         Restructuring and Reform Act of 1998
       Summary: H.R. 3412 would establish three new pilot programs 
     for the Small Business Administration (SBA) and would make a 
     number of changes to existing SBA loan and grant programs. 
     Assuming appropriation of the necessary amounts, CBO 
     estimates that this legislation would result in new 
     discretionary spending of $99 million over the 1999-2003 
     period. Of this total, $66 million is from amounts 
     specifically authorized in the bill for SBA programs--
     primarily for grants and administrative expenses. The 
     remaining $33 million would be primarily for the subsidy 
     costs of the Small Business Investment Company (SBIC) 
     Participating Securities program and the proposed disaster 
     mitigation pilot program.
       H.R. 3412 would also modify the terms of SBA guarantees for 
     existing general business loans. CBO estimates that provision 
     would increase direct spending by $4 million in fiscal year 
     1999. The act also could affect governmental receipts, but 
     CBO estimates that any such changes would be less than 
     $500,000 a year. Because the act would affect direct spending 
     and could affect receipts, pay-as-you-go procedures would 
     apply.
       H.R. 3412 contains no intergovernmental or private-sector 
     mandates as defined in the Unfunded Mandates Reform Act 
     (UMRA). Any costs to state, local or tribal governments 
     resulting from enactment of the bill would be the result of 
     complying with grant conditions.
       Description of the bill's major provisions: Title I would 
     establish a pilot loan program under the SBA general business 
     program to address the year 2000 computer problems of small 
     businesses. It would require that SBA provide annual reports 
     on the pilot program and a detailed annual report on all 
     pilot programs.
       Title II contains a number of changes in small business 
     programs. Provisions with expected budgetary effects are 
     outlined below:
       Section 201 would increase the amount authorized for grants 
     to women's business centers from $8 million a year to $12 
     million a year. It would also clarify certain provisions of 
     the Small Business Innovation Research Program.
       Section 203 would increase the authorized level of the 
     SBIC-Participating Securities program in 1999 and 2000.
       Section 205 would allow qualified community development 
     companies (CDCs) to liquidate loans in their portfolio that 
     SBA has purchased. This section also would eliminate a pilot 
     program that allowed CDCs to liquidate loans and would allow 
     the CDCs to litigate in place of SBA.
       Section 206 would authorize the appropriation of $2.5 
     million each fiscal year to establish an office of veterans 
     business development and an advisory committee on veterans 
     business affairs.
       Section 207 would eliminate a provision of law that allows 
     SBA to pay interest on guaranteed general business loans that 
     have defaulted at a rate 1 percent less than the borrower's 
     interest rate between the time of default and the time SBA 
     purchases the loan.
       Section 208 would establish a disaster mitigation pilot 
     loan program and authorize a program level of $15 million for 
     each year during the 1999-2003 period.
       Section 211 would establish a demonstration program for 
     venture capital in distressed communities.
       Other provisions in title II would not have any significant 
     budgetary impact.
       Title III would establish a pilot program to improve the 
     environmental performance of small businesses and would also 
     establish an advisory committee on small business 
     environmental assistance programs. Finally, title III would 
     authorize the appropriation of $500,000 for 1999 and $4 
     million for each year over the 2000-2003 period.
       Estimated cost to the Federal Government: CBO's estimate of 
     the budgetary impact of implementing H.R. 3412 is shown in 
     Table 1. The table does not include any estimated effects for 
     section 205 because CBO cannot determine whether that section 
     would have any budgetary impact, or what the direction or 
     magnitude of any such impact might be. The costs of this 
     legislation fall within budget functions 370 (commerce and 
     housing credit) and 450 (community and regional development).

 TABLE 1.--ESTIMATED FEDERAL COSTS FOR THE YEAR 2000 READINESS AND SMALL
         BUSINESS PROGRAMS RESTRUCTURING AND REFORM ACT OF 1998
------------------------------------------------------------------------
                                         By fiscal years in millions of
                                                   dollars--
                                      ----------------------------------
                                        1999   2000   2001   2002   2003
------------------------------------------------------------------------
              CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Specified Authorization Level........      7     11     31     11     11
Estimated Authorization Level........      9     11      5      5      4
                                      ----------------------------------
      Total Authorization Level......     16     22     36     16     15
Estimated Outlays....................     12     20     31     20     16
 
                       CHANGES IN DIRECT SPENDING
 
Estimated Budget Authority...........      4      0      0      0      0
Estimated Outlays....................      4      0      0      0      0
------------------------------------------------------------------------

       Basis of estimate: For the purposes of this estimate, CBO 
     assumes that the bill will be enacted in October 1998 (the 
     beginning of fiscal year 1999) and that the necessary amounts 
     will be appropriated for each fiscal year. Outlay estimates 
     are based on historical spending rates for existing or 
     similar programs.
     Spending subject to appropriation
       Specified Authorizations. H.R. 3412 would increase the 
     authorization for grants to women's business centers from $8 
     million to $12 million each year. The act would also 
     establish an Office of Veterans Business Development, a 
     demonstration program for venture capital in distressed 
     communities, and a pilot program to improve the environmental 
     performance of small businesses. Assuming appropriation of 
     the specified amounts, CBO estimates that additional outlays 
     for these programs would total $66 million over the 1999-2003 
     period.
       Estimated Authorization for Loan Programs. H.R. 3412 would 
     make numerous changes to loan programs administered by SBA. 
     The Federal Credit Reform Act of 1990 requires appropriation 
     of the subsidy costs and administrative costs for credit 
     programs. The subsidy cost is the estimated long-term cost to 
     the government of a direct loan or loan guarantee, calculated 
     on a net present value basis and excluding administrative 
     costs.
       Section 203 would increase the authorized program level of 
     the SBIC Participating Securities program from $800 million 
     to $1 billion in 1999 and from $900 million to $1.2 billion 
     in 2000. Based on information from the SBA and on historical 
     data for this program, CBO estimates that the subsidy costs 
     of guarantees for the authorized levels would increase by $11 
     million over the 1999-2003 period. CBO estimates that this 
     provision would not significantly increase the administrative 
     costs of the agency.
       Section 207 would eliminate a provision of law that allows 
     SBA, on defaulted general business loans guaranteed by the 
     agency, to pay 1 percent less than the borrower's interest 
     rate between the time of default and the time SBA purchases 
     the loan. Based on information from SBA and the Office of 
     Management and Budget (OMB), CBO estimates that this 
     provision would increase the subsidy rate by 0.01 percent. 
     That change would slightly increase the cost of guaranteeing 
     each new loan. CBO estimates that H.R. 3412 would increase 
     the cost of guaranteeing the authorized level of $14 billion 
     in loans in fiscal year 1999 from $195 million to $196 
     million, subject to the availability of appropriations. This 
     provision would also affect direct spending by increasing the 
     costs of loans that SBA has already guaranteed (see below).
       Section 208 would authorize a disaster mitigation pilot 
     program to make direct and guaranteed loans to small 
     businesses for preventive measures that would reduce the 
     long-run costs of disasters. To be eligible for a pre-
     disaster mitigation loan, the small business must be unable 
     to obtain loans elsewhere for mitigation purposes. This 
     section would authorize a program level of $15 million each 
     year over fiscal years 1999 through 2003. Based on the 1998 
     subsidy rate for SBA disaster loans, CBO estimates that the 
     subsidy appropriations for these loans and guarantees would 
     total $17 million over the 1999-2003 period. We estimate 
     that the costs of administering the pre-disaster 
     mitigation loan program would total less than $500,000 
     each year.
       Section 205 would authorize qualified community development 
     companies to liquidate loans in their portfolio that SBA has 
     purchased, and would allow CDCs to litigate in place of SBA. 
     CDC loans, also known a section 503 and 504 loans, provide 
     small businesses with long-term, fixed-rate financing for the 
     purchase of land, buildings, and equipment. H.R. 3412 would 
     make permanent the pilot program that allowed CDCs to 
     liquidate such loans. The pilot program has not produced 
     enough information to date to allow CBO to make any 
     determination about the amount the government would recover 
     on defaulted loans if those loans are liquidated by CDCs 
     instead of by SBA
       In addition, it is not clear how expenses associated with 
     liquidation would be paid. The

[[Page S11206]]

     Federal Credit Reform Act stipulates that administrative 
     expenses cannot be paid out of the subsidy for loan programs. 
     but expenses to foreclose, maintain, or liquidate an asset 
     can. Many of the expenses CDCs would incur would be to 
     foreclose, maintain, or liquidate assets. It is not clear 
     whether SBA would have the authority to reimburse CDCs for 
     administrative expenses, including litigation costs.
       Enacting section 205 could change the subsidy rate for 
     previous cohorts of CDC loans or the administrative costs of 
     SBA. However, CBO has no basis for estimating the direction, 
     magnitude, or timing of any such changes. The bill would not 
     affect the subsidy rate for future CDC loans. By law, the 
     Administrator of SBA must adjust an annual fee on 504 loans 
     to produce an estimated subsidy rate of zero at the time 
     loans are guaranteed. If enacting H.R. 3412 changed the costs 
     of future loans, that change would be reflected in fees paid 
     by borrowers, rather than in the appropriation required to 
     fund the authorized loan level.
       H.R. 3412 also would make other technical changes to SBA's 
     loan programs, but CBO estimates that those changes would not 
     have any significant budgetary effect.
       Table 2 summarizes estimated changes in loan levels and 
     subsidy costs assuming appropriation action consistent with 
     H.R. 3412. The increased discretionary spending associated 
     with SBA's loan programs would represent about $25 million of 
     the total cost of implementing H.R. 3412.
       Reports. H.R. 3412 would require SBA and the General 
     Accounting Office to produce numerous reports. Based on 
     historical costs for similar reports and information from the 
     two agencies, CBO estimates that these provisions would 
     increase discretionary spending by less than $500,000 in each 
     year over the 1999-2003 period.

 TABLE 2.--CHANGES IN SBA LOAN LEVELS AND SUBSIDY COSTS UNDER H.R. 3412
                                   \1\
------------------------------------------------------------------------
                                        By fiscal years, in millions of
                                                   dollars--
                                      ----------------------------------
                                        1999   2000   2001   2002   2003
------------------------------------------------------------------------
                    CHANGES IN AUTHORIZED LOAN LEVELS
 
SBIC Participating Securities Loans..    200    300      0      0      0
Disaster Mitigation Pilot Loans......     15     15     15     15     15
 
                           LOAN SUBSIDY COSTS
 
SBIC Participating Securities Loans..  .....  .....  .....  .....  .....
  Estimated Authorization Level......      4      7      0      0      0
  Estimated Outlays..................      3      6      2      0      0
Disaster Mitigation Pilot Loans......  .....  .....  .....  .....  .....
  Estimated Authorization Level......      3      3      3      3      3
  Estimated Outlays..................      2      3      3      3      3
------------------------------------------------------------------------
\1\ Implementing H.R. 3412 also would increase SBA's costs for
  administering loans, but CBO estimates that the changes in
  administrative expenses would be less than $500,000 a year.

     Direct spending
       Loan Programs. Section 207, which would increase the 
     subsidy rate on future general business loans, would also 
     modify the expected cost of the guarantees SBA has provided 
     for existing loans. According to OMB's Circular A-11 
     Preparation and Submission of Budget Estimates: ``If the 
     modification is mandated in legislation, the legislation 
     itself provides the budget authority to incur the subsidy 
     cost obligation (whether explicitly stated or not).'' CBO 
     estimates that enacting this provision would increase direct 
     spending by about $4 million in fiscal year 1999.
       Gifts. Section 206 would establish an advisory committee on 
     veternas business affairs, and section 301 would establish an 
     advisory committee on small business environmental assistance 
     programs. H.R. 3412 would authorize the two advisory 
     committees to accept and use gifts and donations to assist in 
     their work. Donations of money are recorded in the budget as 
     governmental receipts (revenues) and the use of any such 
     amounts under the act would be direct spending, but CBO 
     estimates that any such donations would be less than $500,000 
     a year.
       Pay-as-you-go considerations: The Balanced Budget and 
     Emergency Deficit Control Act sets up pay-as-you-go 
     procedures for legislation affecting direct spending or 
     receipts. CBO estimates that enacting the bill would increase 
     direct spending by $4 million in 1999. The bill could also 
     increase governmental receipts, but any such changes would be 
     less than $500,000 a year.
       Estimated impact on State, local, and tribal governments: 
     H.R. 3412 contains no intergovernmental mandates as defined 
     in UMRA. The bill would establish new programs or modify 
     existing programs that provide grants or contracts to various 
     organizations, including state, local and tribal governments. 
     Any costs to these governments from the requirements of the 
     programs would be incurred voluntarily.
       Estimated impact on the private sector: This act would 
     impose no new private-sector mandates as defined in UMRA.
       Previous CBO estimate: On March 16, 1998, CBO transmitted 
     an estimate for H.R. 3412 as ordered reported by the House 
     Committee on Small Business on March 12, 1998. The House 
     version of H.R. 3412 would make only technical corrections to 
     existing law, and as a result, CBO estimated that it would 
     not have a significant impact on the federal budget.
       Estimate prepared by: Federal Costs: Mark Hadley and 
     Kristen Layman. Impact on State, Local, and Tribal 
     Governments: Marc Nicole.
       Estimate approved by: Robert A Sunshine, Deputy Assistant 
     Director for Budget Analysis.

  Mr. BOND. Mr. President, this is an important bill that will benefit 
thousands of small businesses throughout the United States. I urge my 
colleagues strong support for its final passage.
  Mr. KERRY. Mr. President, we have an opportunity today in the Senate 
to vote for legislation that will help our nation's 23 million small 
businesses.
  On September 15, the Senate Committee on Small Business, made up of 
ten Republicans and eight Democrats, passed a comprehensive small 
business bill, H.R. 3412, that includes all the provisions of my Small 
Business Loan Enhancement Act of 1998. It also includes Senator Bond's 
two bills, the Small Business Programs Restructuring and Reform Act of 
1998 and the Small Business Year 2000 Readiness Act, bills introduced 
by Senators Cleland and Wellstone, and four other amendments.
  This bi-partisan vote was a big step towards final passage of 
legislation that augments the opportunities available to every small 
business owner and helps these entrepreneurs contribute to their 
communities and the economy. In Massachusetts and across the country, 
these are the programs that are working; assisting individuals with the 
tools to successfully manage their own business.
  If enacted, these changes would make a number of improvements to the 
Small Business Administration's lending programs which reduce small 
businesses' costs and paperwork, increase access to capital for women-
owned businesses, and promote small business lending, particularly to 
those small businesses needing loans to meet the challenges of Year 
2000 computer problem. They also build upon successful programs such as 
the Small Business Innovation Research program and the Women's Business 
Centers.
  One of the most important provisions passed revises the loan loss 
reserve requirement (a cash reserve to guarantee that the government is 
paid back if a loan defaults) for microlenders by setting a 15-percent 
ceiling and a 10-percent floor. After a microloan intermediary has 
participated in the SBA Microloan program for five years and 
demonstrated its ability to maintain a healthy loan fund, it can 
request that SBA review and, when appropriate, reduce its loan loss 
reserve from 15 percent to a percentage based on its average loan loss 
rate for the five-year period. The proposed change would continue to 
protect the government's interest in microloans as well as enhance the 
program by freeing up cash which microlenders could reprogram for more 
microloans or technical assistance to small business owners. Based on 
the program's success since it was started six years ago, 36 out of 42 
microlenders would qualify to maintain a loan loss reserve of ten 
percent, rather than 15 percent.
  To reduce unnecessary regulatory burden and costs to small business 
lenders, this legislation raises the requisite appraisal threshold from 
$100,000 to $250,000 for 7(a) guaranteed loans and 504 development 
loans. This is consistent with federal bank regulatory policy in place 
since 1994. After reviewing the legislation, SBA Administrator Aida 
Alvarez sent a statement of Administration Policy, approved by the 
Office of Management and Budget, to Chairman Bond on September 15 
saying it had no objection to making the requisite appraisal threshold 
amount consistent with existing policy. This change is estimated to 
save borrowers on average from $1,000 to $3,000.
  To help small businesses meet the escalating challenges of the Year 
2000 (Y2K) computer problem, this bill specifies that small businesses 
can use 7(a) loans to finance the cost of making their systems and 
computers Y2K-compliant. The Committee complemented this change by also 
approving a loan guarantee pilot program introduced by Senator Bond 
which would allow 7(a) preferred and certified lenders to use their 
paperwork to expedite loans capped at $50,000 to help small businesses 
with Y2K expenses.
  The bill expands SBA's 504 Development Company program to make women-
owned businesses eligible for loans up to $1 million to acquire 
equipment and expand facilities. Currently, 504 loans to women-owned 
businesses are capped at $750,000. The Committee also endorsed a 
provision, based on the Kerry-Cleland Women's Business Centers bill 
introduced earlier this year, which increases annual funding from $8 
million to $12 million for Women's Business Centers.

[[Page S11207]]

  The Committee passed several other important provisions to improve 
the business climate for small business. For the sector of small, high-
tech companies that participate in federal research and development, 
the Committee voted to make the Small Business Innovation Research 
(SBIR) program permanent after 16 years of success. The SBIR program is 
a great example of how government and business can work together to 
advance the cause of both science and our economy. The results have 
been dramatic for small, high-technology companies participating in the 
program. From 1983 to the end of 1996, some 8,000 small, high-
technology firms have received more than 40,000 SBIR research awards, 
totaling $6 billion.
  Massachusetts is the second largest recipient of SBIR awards in the 
nation, receiving $148 million in SBIR research dollars in 1996. 
Knowing the benefits of the SBIR program, I believe we need to find 
ways to make sure the SBIR awards are more equitably distributed 
throughout the country without changing the program's reliance on 
competition. The highly competitive nature of SBIR awards is one of the 
main reasons the program has been so popular and successful.
  A recent SBA study showed that one-third of the states received 85 
percent of all SBIR awards. I joined my colleagues to support Senator 
Carl Levin's amendment to promote the SBIR program in states that 
receive the fewest awards. This amendment directs the ten federal 
agencies that participate in the SBIR program to use their existing 
procurement outreach efforts for SBIR outreach.
  Responding to requests from Veterans Service Organizations to assist 
veterans with entrepreneurial endeavors, I joined my colleagues and 
supported Chairman Bond's bill that, among other things, would increase 
outreach and assessment of opportunities and services for veterans by 
establishing the Office of Veterans Business Development within SBA. I 
am proud that the Committee adopted a version that included my 
suggestion to authorize $2.5 million for this important effort.
  The microloan community has more than just the loan loss reserve 
improvements to applaud in this legislation. Senator Bumpers 
successfully eliminated the cap on the amount of microloan funds a 
single state can receive. The cap has penalized several rural states 
with small populations that have a high demand for microloans. And 
Senator Wellstone won unanimous support for an innovative four-year 
demonstration program to spawn community development venture capital 
organizations nationwide. The purpose of Senator Wellstone's initiative 
is to stimulate and promote small business development and 
entrepreneurship in economically distressed communities.
  The Small Business Investment Company (SBIC) program is vital to our 
fastest growing small companies that have capital needs exceeding the 
caps on SBA's loan program, but are not large enough to be attractive 
to traditional venture capital investors. The demand is clear: Last 
year, participating securities in the SBIC program invested $360 
million in 495 financings. In my state, where we have an impressive 
community of fast-growing companies, particularly in the hi-tech 
industry, there were 140 SBIC financings, worth $145.4 million.
  The Participating Securities component of the SBIC program invests 
principally in the equities of new or expanding businesses. To leverage 
the private capital of participating securities and better serve these 
fast-growing businesses, I supported Senator Lieberman's amendment 
which raises the authorization level for participating securities from 
$800 million to $1 billion in fiscal year 1999 and from $900 million to 
$1.2 billion in fiscal year 2000.
  In response to the increasing costs, loss of businesses and personal 
devastation caused by disasters, the Committee passed Senator Cleland's 
five-year disaster mitigation pilot program. The program, recommended 
by the Administration as part of its Fiscal Year 1999 Budget, would 
allow SBA to make direct loans to small business owners, who can't get 
credit elsewhere and who live in disaster-prone areas, for financing 
preventive measures to protect their businesses against future disaster 
damage. Disaster mitigation is expected to reduce the costs of disaster 
repair by 50 percent for small businesses.
  To help small businesses maneuver the maze of environmental 
regulations, the Committee passed a small business environmental 
assistance pilot program introduced by Senator Burns. Administered 
through existing Small Business Development Centers in ten states, the 
program is designed to help small businesses comply with often complex 
environmental regulations.
  Lastly, in addition to the Committee-reported bill, the Senate today 
will adopt a Bond-Kerry amendment. First, it adds the Department of 
Labor to the SBA's HUBZone program, which Congress enacted last year. 
And second, it amends Section 205 of this bill, H.R. 3412, to improve 
the reporting tools concerning small business set-asides of federal 
contracts.
  Mr. President, I thank my colleagues for their support of small 
businesses and ask unanimous consent that this statement be entered in 
the Record.
 Mr. LEVIN. Mr. President, H.R. 3412, as amended by the Senate 
Small Business Committee, has broad bipartisan support. I am 
particularly pleased that H.R. 3412 makes permanent the Small Business 
Innovation Research Program SBIR, which was originally established in 
1982 and reauthorized and expanded in 1992. This competitive program 
has a well deserved reputation for success and it is fitting that it be 
made permanent.
  H.R. 3412 also addresses a problem pointed out by GAO in its April, 
1998 SBIR report regarding the lack of uniformity in defining the term 
``extramural budget''. GAO found that participating agencies had 
different interpretations of what should be included in their 
extramural research budgets. This is a problem because a participating 
agency's extramural budget is the base from which that agency's SBIR 
funding is calculated. To resolve any discrepancies, H.R. 3412, as 
amended by the Senate Small Business Committee, directs OMB to define 
the term ``extramural budget'' and ensure that it is applied uniformly 
throughout the government.
  Finally, this bill includes a provision I authored which authorizes 
existing procurement outreach programs of the Department of Defense and 
other federal agencies to conduct program outreach efforts for the SBIR 
program out of funds that are already available to them.
  Mr. HARKIN. Mr. President, I would like to thank my colleagues, 
Chairman of the Small Business Committee, Senator Kit Bond, and Ranking 
Member, Senator John Kerry, for their work in moving H.R. 3412 through 
Committee. I would also like to thank Senators Bond and Kerry for 
agreeing to my language requesting a report from the Small Business 
Administration (SBA) on the 7(A) loan program's reporting requirements 
on the subsidy rate. I have heard from a number of community bankers in 
Iowa who have expressed concerns with the monthly reporting 
requirement. Previously, these reports were submitted quarterly. I am 
concerned that small banks, especially small rural banks, lack the loan 
volume or personnel to meet this requirment in a cost effective manner. 
I look forward to reviewing this report and working with my colleagues 
and the SBA in addressing this concern.
  In addition to improvements in popular SBA programs, H.R. 3412 also 
contains a Committee passed amendment, sponsored by Senator Max Cleland 
and cosponsored by myself, which will allow the SBA to conduct a 
disaster mitigation pilot program. It is my hope that this program will 
afford small business owners, particularly in rural areas, the ability 
to invest in their property to help prevent against natural disasters. 
By providing small businesses with the tools to invest in their 
business before disasters strike, property destruction can be avoided 
and insurance claims can be reduced.
 Mr. WELLSTONE. Mr. President, I support H.R. 3412, the ``Year 
2000 Readiness and Small Business Programs Restructuring and Reform Act 
of 1998.'' The bill makes useful reforms to existing Small Business 
Administration (SBA) programs and authorizes certain new initiatives, 
including a community development venture capital demonstration program 
which I proposed during markup in the Small Business Committee. I 
commend Chairman Bond

[[Page S11208]]

for his leadership on the bill, and I thank him for including my 
proposal in it.
  The bill makes permanent SBA's 504 liquidation pilot program, a step 
I strongly support. Minnesota certified development companies with 
proven liquidation and foreclosure capabilities have made use of the 
pilot program, which can help bring costs down and save borrowers from 
higher fees. The bill's adjustments to the loan loss reserve 
requirements in the Microloan program also are appropriate. Requiring a 
loss reserve based on past performance makes sense. This provision will 
continue to protect the government's interest in these loans but will 
allow the majority of microlenders to make more loans or provide more 
technical assistance to borrowers.
  I am especially pleased that my proposal to create a new $20-million, 
four-year demonstration program at the SBA to develop the capacity of 
community development venture capital (CDVC) organizations is part of 
H.R. 3412. I thank Senator Bond again for his support and for working 
with me to get this amendment accepted. I also thank the SBA for 
working with my staff and for providing valuable technical assistance 
in drafting the amendment.
  The CDVC Program is about directing venture capital--equity and 
investment capital--to small businesses with the aim of promoting 
business growth and economic development in poor communities. That's 
what we mean by community development venture capital or CDVC. The 
money the bill authorizes would not be directly invested into small 
businesses; instead, it would go to provide technical assistance to 
organizations that invest in businesses in low-income communities.
  CDVC organizations have been highly successful at producing a 
``double bottom line'' of strong financial returns and significant 
social benefits. CDVC funds create social and financial payoffs because 
they consider the community impact of their investments to be just as 
important as the financial returns to investors. Community development 
venture capitalists target investments to companies that generate good 
jobs--jobs that pay decent wages, jobs with benefits, jobs with 
opportunity to advance. They influence and shape the culture of young 
companies with respect to sustainable development and environmental 
policies. They look to create local entrepreneurial capacity, local 
ownership, local wealth. The ``double bottom line'' philosophy is what 
makes these venture capitalists so unique and their work so promising. 
The goal of the CDVC program is to expand and multiply this very 
meritorious work.
  There are about 30 CDVC funds currently operating in urban and rural 
communities around the country. Northeast Ventures Corporation in 
Duluth, Minnesota, is a good example of a successful and experienced 
CDVC company. Northeast Ventures serves a seven county rural area and 
focuses on creating good jobs in high value-added industries. Northeast 
Ventures targets 50% of the jobs created through its investments to 
women, low-income and structurally unemployed persons. They also 
require portfolio companies to offer employees an opportunity to 
participate in a health care plan in which the employer makes some 
contribution. Partridge River is an example of one of Northeast 
Ventures successful investments. Northeast made an initial investment 
in Partridge River, a locally owned specialized manufacturer of 
precision and wood component parts for furniture and cabinets, in late 
1990. Partridge River uses readily available light-colored woods such 
as aspen, basswood, birch and maples, and has manufacturing customers 
throughout the United States. When the company needed significant 
financing for an upgrade of equipment in 1994, another investor 
purchased Northeast's stake at a significant premium and allowed the 
entrepreneur to maintain majority ownership. Over the course of 
Northeast's involvement, the company added 17 net new employees from 
northeast Minnesota.
  Kentucky Highlands Investment Corporation (KHIC), founded in 1968 in 
London, Kentucky, is one of the oldest and most successful of the CDVC 
organizations. They focus on developing profitable businesses that 
provide job opportunities to residents of Southeast Kentucky. For 
example, KHIC provided over $600,000 in equity financing to a startup 
company that manufactures casements for the retail store industry. That 
company now employs over 125 people who had few prospects for 
employment in their home county. This company would not be located in 
rural Clay County if not for the type of equity investment that KHIC 
made available. Altogether, KHIC has infused about $40 million in 
venture capital in their region, invested in more than 100 companies 
and created over 5,200 jobs.
  The organizations operating CDVC funds have been fortunate in 
attracting talented and dedicated people, but the skills and expertise 
to produce a double bottom line are still relatively scarce. The CDVC 
Demonstration Program allows the most experienced and successful in 
this growing field to teach, advise, and mentor the less experienced, 
the new and emerging community development venture capitalists.
  The CDVC Demonstration Program authorizes $20 million over four 
years. Seventy-five percent or $15 million will be used as grants to 
intermediary organizations--the private, nonprofit organizations with 
the most experience and skill in making venture capital investments in 
poor communities--to provide hands-on technical assistance to the new 
and emerging venture funds springing up in low-income communities 
around the country. In addition to providing technical assistance, 
intermediaries will be able to use the grants to fund the start up and 
operating costs of new CDVC organizations. Grants to intermediaries 
will be matched $1 for $1 with funds raised from non-Federal sources. 
Twenty-five percent or $5 million will be used as grants to 
developmental organizations--public or private firms--to create and 
operate training programs, intern programs, a national conference, and 
academic research and study of community development venture capital.
  I hope that my colleagues in the Senate will support these reforms 
and new initiatives in the name of good jobs, entrepreneurship and 
responsibility to community.
  Mr. CLELAND. Mr. President, I thank the Senator from Massachusetts, 
Senator Kerry and the Senator from Missouri, Mr. Bond, for their 
continuing leadership on behalf of small businesses. The legislation 
before the Senate, S. 3412, contains many important programs that will 
enable small businesses to continue to be a vital part of the nation's 
economy. This omnibus small business legislation is the result of 
bipartisan commitment to a number of worthy goals.
  Today I wish to address specifically two important initiatives that I 
proposed earlier in this session: the disaster mitigation pilot program 
and the Small Business Administration Women's Business Center 
authorization. I am extremely pleased that both are included in this 
bill.
  On June 11, 1998, Senator Kerry and I introduced the S. 2157, the 
Women's Business Center Authorization bill. There was broad bipartisan 
support for this initiative, with seventeen cosponsors. I was 
especially pleased when Senator Bond included an increased 
authorization for women's business centers in the pending bill. Funding 
for these important centers is increased from $8 million to $12 million 
in fiscal year 1999 and thereafter.
  The women's business center legislation, simply stated, recognizes 
the outstanding contributions that women's business centers have made 
to women entrepreneurs across the Nation. These centers are the only 
organization, nationally, which focus exclusively on entrepreneurial 
training for women. Increased funding will allow for new centers and 
subcenters to be established and for continued funding for existing 
centers, including the on-line women's business center. Increased 
funding would achieve the goal of expanding centers to all 50 States.
  On March 26, 1998, I introduced a disaster mitigation pilot program, 
S. 1869. This legislation would permit SBA to establish a pilot program 
(using up to $15 million of existing disaster funds) to provide small 
businesses with low interest, long-term disaster loans to finance 
preventive measures before a disaster hits. In response to the 
increasing costs and personal devastation caused by disasters, the 
Administration has launched an approach to emergency management that 
moves away

[[Page S11209]]

from the current reliance on response and recovery to one that 
emphasizes preparedness. The Federal Emergency Management Agency (FEMA) 
has already established administratively a program to assist disaster-
prone communities, one in every state, in developing strategies to 
avoid the crippling effects of natural disasters. My proposal would 
allow the SBA to begin a pilot program that would be limited to small 
businesses within those communities which are eligible to receive 
disaster loans after a disaster has been declared. Currently, SBA 
disaster loans may only be used to repair or replace existing 
protective devices that are destroyed or damaged by a disaster. In 
connection with repairs, funds may also be used to install new 
mitigation devices that will prevent future damage. My legislation is 
necessary to authorize SBA to establish this pilot program to provide 
mitigation loans prior to the occurrence of a disaster.
  Mr. President, I believe that this disaster mitigation program will 
address two areas of need for our small businesses--reducing the cost 
of recovery from a disaster and reducing future disaster costs for 
small businesses. It also addresses the opportunity for small 
businesses to contract work during a period when market forces haven't 
driven up the prices for these services, thereby ultimately reducing 
the cost of disaster assistance to the taxpayers.
  I thank my colleagues on the Small Business Committee for including 
both of these initiatives, which I think will serve the needs of so 
many, in this bipartisan legislation. I look forward to its prompt 
enactment. Thank you, Mr. President.
  Mr. SHELBY. Mr. President, I ask unanimous consent that the amendment 
be agreed to, the substitute amendment be agreed to, the bill be 
considered read a third time and passed, the amendment to the title be 
agreed to, the title, as amended, be agreed to, the motion to 
reconsider be laid upon the table, and that any statements relating to 
the bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 3674) was agreed to.
  The committee amendment, as amended, was agreed to.
  The bill (H.R. 3412), as amended, was considered read the third time 
and passed.

                          ____________________