[Congressional Record Volume 167, Number 88 (Thursday, May 20, 2021)]
[Senate]
[Pages S3219-S3221]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1753. Mr. RUBIO (for himself and Mr. Risch) submitted an amendment
intended to be proposed by him to the bill S. 1260, to establish a new
Directorate for Technology and Innovation in the National Science
Foundation, to establish a regional technology hub program, to require
a strategy and report on economic security, science, research,
innovation, manufacturing, and job creation, to establish a critical
supply chain resiliency program, and for
[[Page S3220]]
other purposes; which was ordered to lie on the table; as follows:
At the appropriate place, insert the following:
SEC. ___. SMALL BUSINESS INVESTMENT COMPANY PROGRAM.
(a) In General.--Part A of title III of the Small Business
Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended--
(1) in section 302(a) (15 U.S.C. 682(a))--
(A) in paragraph (1)--
(i) in subparagraph (A), by striking ``or'' at the end;
(ii) in subparagraph (B), by striking the period at the end
and inserting ``; or''; and
(iii) by adding at the end the following:
``(C) $20,000,000, adjusted every 5 years for inflation,
with respect to each licensee authorized or seeking authority
to sell bonds to Administration as a participating investment
company under section 321.''; and
(2) by adding at the end the following:
``SEC. 321. SMALL BUSINESS AND DOMESTIC PRODUCTION RECOVERY
INVESTMENT FACILITY.
``(a) Definitions.--In this section:
``(1) Eligible small business concern.--The term `eligible
small business concern'--
``(A) means a small business concern that is a
manufacturing business that is assigned a North American
Industry Classification System code beginning with 31, 32, or
33 at the time at which the small business concern receives
an investment from a participating investment company under
the facility; and
``(B) does not include an entity described in section
7(a)(37)(A)(iv)(III) of the Small Business Act (15 U.S.C.
636(a)(37)(A)(iv)(III)).
``(2) Facility.--The term `facility' means the facility
established under subsection (b).
``(3) Fund.--The term `Fund' means the fund established
under subsection (h).
``(4) Participating investment company.--The term
`participating investment company' means a small business
investment company approved under subsection (d) to
participate in the facility.
``(5) Protege investment company.--The term `protege
investment company' means a small business investment company
that--
``(A) is majority managed by new, inexperienced, or
otherwise underrepresented fund managers; and
``(B) elects and is selected by the Administration to
participate in the pathway-protege program under subsection
(g).
``(6) Small business concern.--The term `small business
concern' has the meaning given the term in section 3(a) of
the Small Business Act (15 U.S.C. 632(a)).
``(b) Establishment.--
``(1) Facility.--The Administrator shall establish and
carry out a facility to increase resiliency in the
manufacturing supply chain of eligible small business
concerns by providing financial assistance to participating
investment companies that facilitate equity financings to
eligible small business concerns in accordance with this
section.
``(2) Administration of facility.--The facility shall be
administered by the Administrator acting through the
Associate Administrator described in section 201.
``(c) Applications.--
``(1) In general.--Any small business investment company
may submit to the Administrator an application to participate
in the facility.
``(2) Requirements for application.--An application to
participate in the facility shall include the following:
``(A) A business plan describing how the applicant intends
to make successful equity investments in eligible small
business concerns.
``(B) Information regarding the relevant investment
qualifications and backgrounds of the individuals responsible
for the management of the applicant.
``(C) A description of the extent to which the applicant
meets the selection criteria under subsection (d)(2).
``(3) Exceptions to application for new licensees.--Not
later than 90 days after the date of enactment of this
section, the Administrator shall reduce requirements for
applicants applying to operate as a participating investment
company under this section in order to encourage the
participation of new small business investment companies in
the facility under this section, which may include the
requirements established under part 107 of title 13, Code of
Federal Regulations, or any successor regulation, relating
to--
``(A) the approval of initial management expenses;
``(B) the management ownership diversity requirement;
``(C) the disclosure of general compensatory practices and
fee structures; or
``(D) any other requirement that the Administrator
determines to be an obstacle to achieving the purposes
described in this paragraph.
``(d) Selection of Participating Investment Companies.--
``(1) Determination.--
``(A) In general.--Except as provided in paragraph (3), not
later than 60 days after the date on which the Administrator
receives an application under subsection (c), the
Administrator shall--
``(i) make a final determination to approve or disapprove
such applicant to participate in the facility; and
``(ii) transmit the determination to the applicant in
writing.
``(B) Commitment amount.--Except as provided in paragraph
(3), at the time of approval of an applicant, the
Administrator shall make a determination of the amount of the
commitment that may be awarded to the applicant under this
section.
``(2) Selection criteria.--In making a determination under
paragraph (1), the Administrator shall consider--
``(A) the probability that the investment strategy of the
applicant will successfully repay any financial assistance
provided by the Administration, including the probability of
a return significantly in excess thereof;
``(B) the probability that the investments made by the
applicant will--
``(i) provide capital to eligible small business concerns;
or
``(ii) create or preserve jobs in the United States;
``(C) the probability that the applicant will meet the
objectives in the business plan of the applicant, including
the financial goals, and, if applicable, the pathway-protege
program in accordance with subsection (g); and
``(D) the probability that the applicant will assist
eligible small business concerns in achieving profitability.
``(3) Approval of participating investment companies.--
``(A) Provisional approval.--
``(i) In general.--Notwithstanding paragraph (1), with
respect to an application submitted by an applicant to
operate as a participating investment company under this
section, the Administrator may provide provisional approval
for the applicant in lieu of a final determination of
approval and determination of the amount of the commitment
under that paragraph.
``(ii) Purpose.--The purpose of a provisional approval
under clause (i) is to--
``(I) encourage applications from investment companies with
an investment mandate from the committed private market
capital of the investment company that does not conform to
the requirements described in this section at the time of
application;
``(II) allow the applicant to more effectively raise
capital commitments in the private markets by referencing the
intent of the Administrator to award the applicant a
commitment; and
``(III) allow the applicant to more precisely request the
desired amount of commitment pending the securing of capital
from private market investors.
``(iii) Limit on period of the time.--The period between a
provisional approval under clause (i) and the final
determination of approval under paragraph (1) shall not
exceed 12 months.
``(e) Commitments and SBIC Bonds.--
``(1) In general.--The Administrator may, out of amounts
available in the Fund, purchase or commit to purchase from a
participating investment company 1 or more accruing bonds
that include equity features as described in this subsection.
``(2) Bond terms.--A bond purchased by the Administrator
from a participating investment company under this subsection
shall have the following terms and conditions:
``(A) Term and interest.--
``(i) In general.--The bond shall be issued for a term of
not less than 15 years and shall bear interest at a rate
determined by the Administrator of not more than 2 percent.
``(ii) Accrual of interest.--Interest on the bond shall
accrue and shall be payable in accordance with subparagraph
(D).
``(iii) Prepayment.--The bond shall be prepayable without
penalty after the end of the 1-year period beginning on the
date on which the bond was purchased.
``(B) Profits.--
``(i) In general.--The Administration shall be entitled to
receive a share of the profits net of any profit sharing
performance compensation of the participating investment
company equal to the quotient obtained by dividing--
``(I) one-third of the commitment that the participating
investment company is approved for under subsection (d); by
``(II) the commitment approved under subsection (d) plus
the regulatory capital of the participating investment
company at the time of approval under that subsection.
``(ii) Determination of percentage.--The share to which the
Administration is entitled under clause (i)--
``(I) shall be determined at the time of approval under
subsection (d); and
``(II) without the approval of the Administration, shall
not be revised, including to reflect subsequent distributions
of profits, returns of capital, or repayments of bonds, or
otherwise.
``(C) Profit sharing performance compensation.--
``(i) Receipt by administration.--The Administration shall
receive a share of profits of not more than 2 percent, which
shall be deposited into the Fund and be available to make
commitments under this subsection.
``(ii) Receipt by managers.--The managers of the
participating investment company may receive a maximum profit
sharing performance compensation of 25 percent minus the
share of profits paid to the Administration under clause (i).
``(D) Prohibition on distributions.--No distributions on
capital, including profit distributions, shall be made by the
participating investment company to the investors or managers
of the participating investment company until the
Administration has received payment of all accrued interest
on the bond committed under this section.
``(E) Repayment of principal.--Except as described in
subparagraph (F), repayments of principal of the bond of a
participating investment company shall be--
[[Page S3221]]
``(i) made at the same time as returns of private capital;
and
``(ii) in amounts equal to the pro rata share of the
Administration of the total amount being repaid or returned
at such time.
``(F) Liquidation or default.--Upon any liquidation event
or default, as defined by the Administration, any unpaid
principal or accrued interest on the bond shall--
``(i) have a priority over all equity of the participating
investment company; and
``(ii) be paid before any return of equity or any other
distributions to the investors or managers of the
participating investment company.
``(3) Amount of commitments and purchases.--
``(A) Maximum amount.--The maximum amount of outstanding
bonds and commitments to purchase bonds for any participating
investment company under the facility shall be the lesser
of--
``(i) twice the amount of the regulatory capital of the
participating investment company; or
``(ii) $200,000,000.
``(4) Commitment process.--Commitments by the
Administration to purchase bonds under the facility shall
remain available to be sold by a participating investment
company until the end of the fourth fiscal year following the
year in which the commitment is made, subject to review and
approval by the Administration based on regulatory
compliance, financial status, change in management, deviation
from business plan, and such other limitations as may be
determined by the Administration by regulation or otherwise.
``(5) Commitment conditions.--
``(A) In general.--As a condition of receiving a commitment
under the facility, not less than 50 percent of amounts
invested by the participating investment company shall be
invested in eligible small business concerns.
``(B) Examinations.--In addition to the matters set forth
in section 310(c), the Administration shall examine each
participating investment company in such detail so as to
determine whether the participating investment company has
complied with the requirements under this subsection.
``(f) Distributions and Fees.--
``(1) Distribution requirements.--
``(A) Distributions.--As a condition of receiving a
commitment under the facility, a participating investment
company shall make all distributions to the Administrator in
the same form and in a manner as are made to investors, or
otherwise at a time and in a manner consistent with
regulations or policies of the Administration.
``(B) Allocations.--A participating investment company
shall make allocations of income, gain, loss, deduction, and
credit to the Administrator with respect to any outstanding
bonds as if the Administrator were an investor.
``(2) Fees.--The Administrator may not charge fees for
participating investment companies other than examination
fees that are consistent with the license of the
participating investment company.
``(3) Bifurcation.--Losses on bonds issued by participating
investment companies shall not be offset by fees or any other
charges on debenture small business investment companies.
``(g) Protege Program.--The Administrator shall establish a
pathway-protege program in which a protege investment company
may receive technical assistance and program support from a
participating investment company on a voluntary basis and
without penalty for non-participation.
``(h) Loss Limiting Fund.--
``(1) In general.--There is established in the Treasury a
fund for making commitments and purchasing bonds with equity
features under the facility and receiving capital returned by
participating investment companies.
``(2) Use of funds.--Amounts appropriated to the Fund or
deposited in the Fund under paragraph (3) shall be available
to the Administrator, without further appropriation, for
making commitments and purchasing bonds under the facility
and expenses and payments, excluding administrative expenses,
relating to the operations of the Administrator under the
facility.
``(3) Depositing of amounts.--
``(A) In general.--All amounts received by the
Administrator from a participating investment company
relating to the facility, including any moneys, property, or
assets derived by the Administrator from operations in
connection with the facility, shall be deposited in the Fund.
``(B) Period of availability.--Amounts deposited under
subparagraph (A) shall remain available until expended.
``(i) Application of Other Sections.--To the extent not
inconsistent with requirements under this section, the
Administrator may apply sections 309, 311, 312, 313, and 314
to activities under this section and an officer, director,
employee, agent, or other participant in a participating
investment company shall be subject to the requirements under
such sections.
``(j) Authorization of Appropriations.--There is authorized
to be appropriated for the first fiscal year beginning after
the date of enactment of this part $10,000,000,000 to carry
out the facility. Amounts appropriated pursuant to this
subsection shall remain available until the end of the second
fiscal year beginning after the date of enactment of this
section.''.
(b) Approval of Bank-Owned, Non-Leveraged Applicants.--
Section 301(c)(2) of the Small Business Investment Act of
1958 (15 U.S.C. 681(c)(2)) is amended--
(1) in subparagraph (B), in the matter preceding clause
(i), by striking ``Within'' and inserting ``Except as
provided in subparagraph (C), within''; and
(2) by adding at the end the following:
``(C) Exception for bank-owned, non-leveraged applicants.--
Notwithstanding subparagraph (B), not later than 45 days
after the date on which the Administrator receives a
completed application submitted by a bank-owned, non-
leveraged applicant in accordance with this subsection and in
accordance with such requirements as the Administrator may
prescribe by regulation, the Administrator shall--
``(i) review the application in its entirety; and
``(ii)(I) approve the application and issue a license for
such operation to the applicant if the requirements of this
section are satisfied; or
``(II) disapprove the application and notify the applicant
in writing of the disapproval.''.
(c) Electronic Submissions.--Part A of title III of the
Small Business Investment Act of 1958 (15 U.S.C. 681 et
seq.), as amended by subsection (a) of this section, is
amended by adding at the end the following:
``SEC. 322. ELECTRONIC SUBMISSIONS.
``The Administration shall permit any document submitted
under this title, or pursuant to a regulation carrying out
this title, to be submitted electronically, including by
permitting an electronic signature for any signature that is
required on such a document.''.
______