[Congressional Record Volume 153, Number 99 (Tuesday, June 19, 2007)]
[Senate]
[Pages S7905-S7907]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself and Ms. Snowe):
  S. 1663. A bill to amend the Small Business Investment Act of 1958 to 
reauthorize the New Markets Venture Capital Program, and for other 
purposes; to the Committee on Small Business and Entrepreneurship.
  Mr. KERRY. Mr. President, in addition to introducing a bill to 
reauthorize the Small Business Investment Company, SBIC, program, 
Senator Snowe and I are introducing a bill to extend the New Markets 
Venture Capital, NMVC, program. The Securing Equity for the Economic 
Development of Low Income Areas Act of 2007, or the SEED Act, is 
important to states like Massachusetts and Maine.
  Both of our States are home to pioneers in the field of development 
venture capital, which uses the discipline of traditional venture 
investing to focus on economic development in low-income areas. We know 
the benefits of this type of investment and believe the model should be 
expanded to other parts of the country.
  Our support is not new. In my case, I was the sponsor of the 
Community Development and Venture Capital Act of 1999, which created 
the New Markets Venture Capital program. Its purpose was to stimulate 
economic development through public-private partnerships that invest 
venture capital in smaller businesses located in impoverished rural and 
urban areas or that employ low-income people.
  Both innovative and fiscally sound, this program was built on two of 
the Small Business Administration's most popular programs. It developed 
a financial structure similar to that of the successful Small Business 
Investment Company, SBIC, program, mentioned earlier, while also 
incorporating a technical assistance component similar to that of SBA's 
microloan program.
  However, unlike the SBIC program, which focuses on small businesses 
with high-growth potential, the New Markets Venture Capital program 
focuses on small businesses that show promise of both financial and 
social returns--what is referred to as a ``double bottom line.'' These 
businesses have special needs, and they tend to want intensive, ongoing 
financial, management and marketing assistance, be higher risk, and 
need longer periods to pay back money than SBIC investments. However, 
they more than balance out the equation by providing good, stable jobs 
and creating wealth in our neediest communities.
  Unfortunately, the program expired in 2006, and it has been operating 
under temporary authority since then. The SEED Act seeks to 
reauthorize, expand, and improve this important program.
  First, the bill will reauthorize the program for the next 3 years 
until 2010, making it possible for the SBA to license up to 20 more New 
Markets Venture Capital funds. Those funds will have the potential to 
invest $250 million in small businesses in low-income areas, by 
leveraging $150 million in debentures. Building on experiences with 
this program and the Rural Business Investment Company Program, which 
proved the matching requirement unreasonable and inefficient, the bill 
changes the operational assistance grants so that firms can get up to 
$1 million in funding in order to provide the companies they invest in 
with management assistance services. This support is absolutely 
necessary to make their business a success. Also important to making 
future funds successful, we have clarified that new markets venture 
capital companies have two years to raise their private capital. The 
committee has been troubled by the Agency's interpretation of the NMVC 
statute, which they viewed as giving SBA the authority to choose how 
much time it can give conditionally approved NMVCs to raise private-
sector matching money. The chosen time frames were unreasonable and not 
what Congress intended. This bill clarifies that they get the full 2 
years to raise the money. The bill also establishes an office of new 
markets venture capital so that there are resources devoted to its 
management and oversight, something lacking in past years. And to try 
to expand the reach of development capital in other parts of the 
country, the bill requires the SBA, to the extent practicable, to try 
and license funds in each of the Agency's ten regions, so that there is 
diversity. And it requires the SBA, to the extent practicable, to try 
and license a fund that focuses on investments in small manufacturers, 
as a way to help stem the loss of manufacturing in this country.
  On behalf of the Nation's small businesses and entrepreneurs, I urge 
my colleagues to support this important legislation. Mr. President, I 
ask that the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

[[Page S7906]]

                                S. 1663

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Securing Equity for the 
     Economic Development of Low Income Areas Act of 2007'' or the 
     ``SEED Act''.

     SEC. 2. DEFINITIONS.

       In this Act--
       (1) the terms ``Administration'' and ``Administrator'' mean 
     the Small Business Administration and the Administrator 
     thereof, respectively;
       (2) the term ``low-income geographic area'' has the same 
     meaning as in section 351 of the Small Business Investment 
     Act of 1958 (15 U.S.C. 689), as amended by this Act;
       (3) the term ``New Markets Venture Capital company'' has 
     the same meaning as in section 351 of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689); and
       (4) the term ``New Markets Venture Capital Program'' means 
     the program under part B of title III of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689 et seq.).

     SEC. 3. DIVERSIFICATION OF NEW MARKETS VENTURE CAPITAL 
                   PROGRAM.

       (a) Selection of Companies in Each Geographic Region.--
     Section 354 of the Small Business Investment Act of 1958 (15 
     U.S.C. 689c) is amended by adding at the end the following:
       ``(f) Geographic Requirement.--In selecting companies to 
     participate as New Markets Venture Capital companies in the 
     program established under this part, the Administrator shall 
     select, to the extent practicable, from among companies 
     submitting applications under subsection (b), at least 1 
     company from each geographic region of the Administration.''.
       (b) Participation in New Markets Venture Capital Program.--
       (1) Administration participation required.--Section 353 of 
     the Small Business Investment Act of 1958 (15 U.S.C. 689b) is 
     amended in the matter preceding paragraph (1), by striking 
     ``under which the Administrator may'' and inserting ``under 
     which the Administrator shall''.
       (2) Small manufacturer participation agreements required.--
     Section 353 of the Small Business Investment Act of 1958 (15 
     U.S.C. 689b) is amended--
       (A) by striking ``In accordance with this part,'' and 
     inserting the following:
       ``(a) In General.--In accordance with this part,'';
       (B) in subsection (a)(1), as so designated by this 
     paragraph, by inserting after ``section 352'' the following: 
     ``(with at least 1 such agreement to be with a company 
     engaged primarily in development of and investment in small 
     manufacturers, to the extent practicable)''; and
       (C) by adding at the end the following:
       ``(b) Rule of Construction.--Subsection (a)(1) shall not be 
     construed to authorize the Administrator to decline to enter 
     into a participation agreement with a company solely on the 
     basis that the company is not engaged primarily in 
     development of and investment in small manufacturers.''.

     SEC. 4. ESTABLISHMENT OF OFFICE OF NEW MARKETS VENTURE 
                   CAPITAL.

       Title II of the Small Business Investment Act of 1958 (15 
     U.S.C. 671) is amended by adding at the end the following:

     ``SEC. 202. OFFICE OF NEW MARKETS VENTURE CAPITAL.

       ``(a) Establishment.--There is established in the 
     Investment Division of the Administration, the Office of New 
     Markets Venture Capital.
       ``(b) Director.--The Office of New Markets Venture Capital 
     shall be headed by a Director, who shall be a career 
     appointee in the Senior Executive Service, as those terms are 
     defined in section 3132 of title 5, United States Code.
       ``(c) Responsibilities of Director.--The responsibilities 
     of the Director of the Office of New Markets Venture Capital 
     include--
       ``(1) to administer the New Markets Venture Capital Program 
     under part B of title III;
       ``(2) to assess, not less frequently than once every 2 
     years, the nature and scope of the New Markets Venture 
     Capital Program and to advise the Administrator on 
     recommended changes to the program, based on such assessment;
       ``(3) to work to expand the number of small business 
     concerns participating in the New Markets Venture Capital 
     Program; and
       ``(4) to encourage investment in small manufacturing.''.

     SEC. 5. LOW-INCOME GEOGRAPHIC AREAS.

       (a) In General.--Section 351 of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689) is amended--
       (1) by striking paragraphs (2) and (3) and inserting the 
     following:
       ``(2) Low-income geographic area.--The term `low-income 
     geographic area' has the meaning given the term `low-income 
     community' in section 45D of the Internal Revenue Code of 
     1986 (relating to the new markets tax credit).''; and
       (2) by redesignating paragraphs (4) through (8) as 
     paragraphs (3) through (7), respectively.
       (b) Application of Amended Definition to Capital 
     Requirement.--The definition of a low-income geographic area 
     in section 351(2) of the Small Business Investment Act of 
     1958, as amended by subsection (a), shall apply to private 
     capital raised under section 354(d)(1) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689c(d)(1)) before, on, or 
     after the date of enactment of this Act.

     SEC. 6. LIMITATION ON TIME FOR FINAL APPROVAL OF COMPANIES.

       Section 354(d) of the Small Business Investment Act of 1958 
     (15 U.S.C. 689c(d)) is amended by striking ``a period of 
     time, not to exceed 2 years,'' and inserting ``2 years''.

     SEC. 7. APPLICATIONS FOR NEW MARKETS VENTURE CAPITAL PROGRAM.

       Not later than 60 days after the date of enactment of this 
     Act, the Administrator shall prescribe standard documents for 
     an application for final approval by a New Markets Venture 
     Capital company under section 354(e) of the Small Business 
     Investment Act of 1958 (15 U.S.C. 689c(e)). The Administrator 
     shall ensure that such documents are designed to 
     substantially reduce the cost burden of the application 
     process on a company making such an application.

     SEC. 8. OPERATIONAL ASSISTANCE GRANTS.

       Section 358(a)(4)(A) of the Small Business Investment Act 
     of 1958 (15 U.S.C. 689g(a)(4)(A)) is amended to read as 
     follows:
       ``(A) New markets venture capital companies.--
     Notwithstanding section 354(d)(2), the amount of a grant made 
     under this subsection to a New Markets Venture Capital 
     company shall be equal to the lesser of--
       ``(i) 10 percent of the private capital raised by the 
     company; or
       ``(ii) $1,000,000.''.

     SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

       Section 368(a) of the Small Business Investment Act of 1958 
     (15 U.S.C. 689q(a)) is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``fiscal years 2001 through 2006'' and inserting ``fiscal 
     years 2007 through 2010''; and
       (2) in paragraph (2), by striking ``$30,000,000'' and 
     inserting ``$20,000,000''.

  Ms. SNOWE. Mr. President, as ranking member of the Senate Committee 
on Small Business and Entrepreneurship, I rise today to join with 
Chairman Kerry in introducing the Securing Equity for the Economic 
Development of Low Income Areas Act of 2007, a bill to reauthorize the 
New Markets Venture Capital, NMVC, Program. The NMVC program 
specializes in providing investment dollars to small businesses in 
underserved, low-wealth urban and rural communities.
  Selected by the SBA through a competitive process, NMVC companies are 
privately owned and managed for-profit entities. They use their own 
private capital plus debentures obtained at favorable rates with SBA 
guarantees for investing. In addition, they provide technical 
assistance to the low-income enterprises in which they invest or intend 
to invest, by using private resources matched by the SBA in the form of 
operational assistance grants. While the Consolidated Appropriations 
Act of 2001, which established the program, contemplated 15 NMVC 
companies, unfortunately, only six NMVC companies have received final 
approval.
  Despite the shortfall in the final numbers of approved companies, the 
NMVC program has achieved some remarkable success since Congress 
created it in 2000. According to the Community Development Venture 
Capital Alliance, as of March 31, 2006, the six NMVC companies had 
invested more than $13.4 million of capital into 29 small businesses. 
Not only have the NMVC Companies brought investment dollars to 
underinvested areas, but they have also created or maintained 1,626 
jobs in low-income communities.
  Although the statistics I have just cited pertain to the entire 
Nation, I want to share an example of how the NMVC program has been a 
tremendous benefit to my home State of Maine. In 2003, Mike Cote 
purchased Look's Canning Company in Whiting, ME, which had become one 
of the last of what had been dozens of canneries along Maine's coast. 
After changing the canning company's name to Look's Gourmet Food 
Company, Mike worked with Wiscasset, Maine, based Coastal Enterprises, 
Inc., a New Markets Venture Capital Company, to help grow the business. 
Look's Gourmet Food Company is now thriving by selling all-natural, 
high-quality, shelf-stable seafood products under the ``Bar Harbor T'' 
and ``Atlantic T'' brands all over the country. As Look's took off, it 
was able to create 18 new jobs with benefits in Maine's Washington 
County. That's no small feat for a company doing business in a county 
that had a 9.1 percent unemployment rate in February, the highest in 
Maine and more than double the national average. The bill introduced 
today will go a long way to assisting many low-income communities 
across America.
  Other than reauthorizing the NMVC Program, this bill will make other 
changes to ensure the program is given the full opportunity to achieve 
its full potential. For example, the bill will

[[Page S7907]]

conform the definition of ``low-income geographic area'' used in the 
NMVC program to the definition of a ``low-income community'' as defined 
by the New Markets Tax Credit, NMTC, program. This amendment is 
beneficial because many investors participate in both the NMVC and NMTC 
programs, and a uniform definition between the two programs would 
improve coordination between the two programs. This change would allow 
NMVC companies to invest in businesses that benefit a low-income 
population, as well as businesses located in low-income census tracts. 
This flexibility to serve low income ``targeted populations'' would be 
particularly important for NMVC companies operating in states like 
Maine which have large rural areas with dispersed populations. 
Additionally, the bill ensures that all existing NMVC companies can 
take advantage of the amended targeting for investments made with the 
capital they have already raised.
  The entrepreneurial spirit of our 26 million small businesses dates 
back to our Nation's founding. Small businesses are the cornerstone of 
economic growth and job creation, and it is critical that we support 
the NMVC program that enables aspiring entrepreneurs to obtain the 
crucial financing dollars they need to start and grow their businesses. 
As ranking member of the Senate Committee on Small Business and 
Entrepreneurship, I have long fought to ensure the success and vitality 
of our country's small business sector. An investment in small business 
is an investment in the long-term economic prosperity of America, and I 
encourage my colleagues to support this vital legislation.

                          ____________________