[Congressional Record Volume 169, Number 129 (Wednesday, July 26, 2023)]
[Senate]
[Pages S3687-S3695]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1068. Mr. CARDIN submitted an amendment intended to be proposed by
him to the bill S. 2226, to authorize appropriations for fiscal year
2024 for military activities of the Department of Defense, for military
construction, and for defense activities of the Department of Energy,
to prescribe military personnel strengths for such fiscal year, and for
other purposes; which was ordered to lie on the table; as follows:
At the end, add the following:
DIVISION I--SMALL BUSINESS MATTERS
SEC. 11001. DEFINITIONS.
In this division:
(1) Administration.--The term ``Administration'' means the
Small Business Administration.
(2) Administrator.--The term ``Administrator'' means the
Administrator of the Administration.
(3) Small business concern.--The term ``small business
concern'' has the meaning given the term in section 3 of the
Small Business Act (15 U.S.C. 632).
TITLE LXIX--COMMUNITY ADVANTAGE LOAN PROGRAM AND SMALL BUSINESS LENDING
COMPANIES
Subtitle A--Community Advantage Loan Program Act of 2023
SEC. 11101. SHORT TITLE.
This subtitle may be cited as the ``Community Advantage
Loan Program Act of 2023''.
SEC. 11102. COMMUNITY ADVANTAGE LOAN PROGRAM.
(a) In General.--Section 7(a) of the Small Business Act (15
U.S.C. 636(a)) is amended by adding at the end the following:
``(38) Community advantage loan program.--
``(A) Purposes.--The purposes of the Community Advantage
Loan Program are--
``(i) to create a mission-oriented loan guarantee program;
``(ii) to increase lending to small business concerns in
underserved and rural markets, including to new businesses;
``(iii) to ensure that the program under this subsection
expands inclusion and more broadly meets congressional intent
to reach borrowers who are unable to get credit elsewhere on
reasonable terms and conditions;
``(iv) to help underserved small business concerns become
bankable by utilizing the small dollar financing and business
support experience of mission-oriented lenders;
``(v) to allow certain mission-oriented lenders, primarily
financial intermediaries focused on economic development in
underserved markets, access to guarantees for loans under
this subsection (referred to in this paragraph as `7(a)
loans') and provide management and technical assistance to
small business concerns as needed; and
``(vi) to assist covered institutions with providing
business support services and technical assistance to small
business concerns, when needed.
``(B) Definitions.--In this paragraph:
``(i) Community advantage network partner.--The term
`Community Advantage Network Partner'--
``(I) means a nonprofit, mission-oriented organization that
acts as a Referral Agent to covered institutions in order to
expand the reach of the program to small business concerns in
underserved markets; and
``(II) does not include a covered institution making loans
under the program.
``(ii) Covered institution.--The term `covered institution'
means an entity that--
``(I) is--
``(aa) a development company, as defined in section 103 of
the Small Business Investment Act of 1958 (15 U.S.C. 662),
participating in the 504 Loan Guaranty program established
under title V of that Act (15 U.S.C. 695 et seq.);
``(bb) a nonprofit intermediary, as defined in subsection
(m)(11), participating in the microloan program under
subsection (m);
``(cc) a non-Federally regulated entity certified as a
community development financial institution by the Community
Development Financial Institutions Fund established under
section 104(a) of the Community Development Banking and
Financial Institutions Act of 1994 (12 U.S.C. 4703(a)); or
``(dd) an eligible intermediary, as defined in subsection
(l)(1), participating in the small business intermediary
lending program established under subsection (l)(2); and
``(II) has approved and disbursed 10 similarly sized loans
in the preceding 24-month period and is servicing not less
than 10 similarly sized loans to small business concerns in
the portfolio of the entity.
``(iii) Existing business.--The term `existing business'
means a small business concern that has been in existence for
not less than 2 years on the date on which a loan is made to
the small business concern under the program.
``(iv) New business.--The term `new business' means a small
business concern that has been in existence for not more than
2 years on the date on which a loan is made to the small
business concern under the program.
``(v) Program.--The term `program' means the Community
Advantage Loan Program established under subparagraph (C).
``(vi) Referral agent.--The term `Referral Agent' has the
meaning given the term in section 103.1(f) of title 13, Code
of Federal Regulations, or any successor regulation.
``(vii) Rural area.--The term `rural area' means any county
that the Bureau of the Census has defined as mostly rural or
completely rural in the most recent decennial census.
``(viii) Small business concern in an underserved market.--
The term `small business concern in an underserved market'
means a small business concern--
``(I) that is located in--
``(aa) a low- to moderate-income community;
``(bb) a HUBZone, as that term is defined in section 31(b);
``(cc) a rural area;
``(dd) a community that has been designated as an
empowerment zone or enterprise community under section 1391
of the Internal Revenue Code of 1986;
``(ee) a community that has been designated as a qualified
opportunity zone under section 1400Z-1 of the Internal
Revenue Code of 1986; or
``(ff) a community that has been designated as a promise
zone by the Secretary of Housing and Urban Development;
``(II) for which more than 50 percent of the employees
reside in a low- or moderate-income community;
``(III) that is a new business; or
``(IV) that is owned and controlled by veterans or spouses
of veterans.
``(C) Establishment.--There is established a Community
Advantage Loan Program under which the Administration may
guarantee loans closed by covered institutions under this
subsection, with an emphasis on loans made to small business
concerns in underserved markets.
``(D) Program levels.--In fiscal year 2024 and each fiscal
year thereafter, not more than 10 percent of the number of
loans guaranteed under this subsection may be guaranteed
under the program.
``(E) Grandfathering of existing lenders.--Any covered
institution that was licensed by the Administrator as a
Community Advantage small business lending company, or that
participated in the Community Advantage Pilot Program of the
Administration, during the period beginning on May 1, 2023,
and ending on September 30, 2023, and was in good standing
during that period, as determined by the Administration--
``(i) shall be designated as participants in the program;
``(ii) shall not be required to submit an application to
participate in the program; and
``(iii) for the purpose of determining the loan loss
reserve amount of the covered institution, shall have
participation in the Community Advantage Pilot Program
included in the calculation under subparagraph (J).
``(F) Requirement to make loans to underserved markets.--
Not less than 60 percent of loans closed by a covered
institution
[[Page S3688]]
under the program shall consist of loans made to small
business concerns in underserved markets.
``(G) Maximum loan amount; collateral.--
``(i) Maximum loan amount.--
``(I) In general.--Except as provided in subclause (II),
the maximum loan amount for a loan guaranteed under the
program is $350,000.
``(II) Experienced lenders.--
``(aa) In general.--The Administrator may approve not more
than 8 covered institutions (referred to in this subclause as
the `experienced lenders'), each of which has not less than 5
years of experience making loans under the Community
Advantage Pilot Program of the Administration or the program
established under this paragraph, to be eligible to make
loans under this subclause.
``(bb) Maximum loan amount.--Subject to item (dd), an
experienced lender may make a loan guaranteed under the
program in an amount that is not more than $750,000.
``(cc) Participation by the administration.--With respect
to an agreement to participate in a loan made under this
subclause on a deferred basis, the participation by the
Administration shall be--
``(AA) 75 percent of the balance of the financing
outstanding at the time of the disbursement of the loan, if
that balance is more than $350,000;
``(BB) as described in clause (i) of paragraph (2)(G), if
the balance of the financing outstanding at the time of the
disbursement of the loan is as described in that clause; or
``(CC) as described in clause (ii) of paragraph (2)(G), if
the balance of the financing outstanding at the time of the
disbursement of the loan is as described in that clause.
``(dd) Requirements to make loans in certain amounts.--Not
less than 60 percent of loans closed by each experienced
lender under the program shall consist of loans in an amount
that is not more than $350,000.
``(ii) Collateral.--
``(I) In general.--A covered institution shall not be
required to take collateral with respect to a loan guaranteed
under the program if the amount of that loan is not more than
$50,000.
``(II) Policies and procedures of covered institution.--In
determining the amount of collateral required with respect to
a loan guaranteed under the program, a covered institution
may use the collateral policies and procedures of the covered
institution with respect to similarly sized commercial loans
closed by the covered institution that are not guaranteed by
the Administration.
``(H) Interest rates.--The maximum allowable interest rate
prescribed by the Administration on any financing made on a
deferred basis pursuant to the program shall not exceed the
maximum allowable interest rate under sections 120.213 and
120.214 of title 13, Code of Federal Regulations, or any
successor regulations.
``(I) Refinancing of community advantage program loans.--A
loan guaranteed under the program or guaranteed under the
Community Advantage Pilot Program of the Administration may
be refinanced into another 7(a) loan made by a lender that
does not participate in the program.
``(J) Loan loss reserve requirements.--
``(i) Loan loss reserve account for covered institutions.--
A covered institution--
``(I) with not more than 5 years of participation in the
program shall maintain a loan loss reserve account with an
amount equal to 5 percent of the outstanding amount of the
unguaranteed portion of the loan portfolio of the covered
institution under the program; and
``(II) with more than 5 years of participation in the
program shall maintain a loan loss reserve account with an
amount equal to the average repurchase rate of the covered
institution over the preceding 36-month period, except that
such amount shall not be less than 3 percent of the
outstanding amount of the unguaranteed portion of the loan
portfolio of the covered institution under the program.
``(ii) Additional loan loss reserve amount for selling
loans on the secondary market.--In addition to the amount
required in the loan loss reserve account under clause (i), a
covered institution that sells a program loan on the
secondary market shall be required to maintain the following
additional amounts in the loan loss reserve account:
``(I) For a covered institution with less than 5 years of
experience selling program loans on the secondary market, an
amount equal to 3 percent of the guaranteed portion of each
program loan sold on the secondary market.
``(II) For a covered institution with more than 5 years of
experience selling program loans on the secondary market, an
amount equal to the average repurchase rate for loans sold by
the covered institution on the secondary market over the
preceding 36 months, except that such amount shall be not
less than 2 percent of the guaranteed portion of each program
loan sold into the secondary market.
``(iii) Recalculation.--On October 1 of each year, the
Administrator shall recalculate the loan loss reserve
required under clauses (i) and (ii).
``(K) Training.--The Administration--
``(i) shall provide accessible upfront and ongoing training
for covered institutions making loans under the program to
support program compliance and improve the interface between
the covered institutions and the Administration, which shall
include--
``(I) guidance for following the regulations of the
Administration; and
``(II) guidance specific to mission-oriented lending that
is intended to help lenders effectively reach and support
small business concerns in underserved markets, including
management and technical assistance delivery;
``(ii) may enter into a contract to provide the training
described in clause (i) with an organization--
``(I) with expertise in lending under this subsection; and
``(II) primarily specializing in--
``(aa) mission-oriented lending; and
``(bb) lending to small business concerns in underserved
markets; and
``(iii) shall provide training for the employees and
contractors of the Administration that regularly engage with
covered institutions or borrowers under the program.
``(L) Community advantage outreach and education.--The
Administrator--
``(i) shall develop and implement a program to promote to,
conduct outreach to, and educate prospective covered
institutions about the program; and
``(ii) may enter into a contract with 1 or more nonprofit
organizations experienced in working with and training
mission-oriented lenders to provide the promotion, outreach,
and education described in clause (i).
``(M) Community advantage network partner participation.--
``(i) In general.--A covered institution that uses a
Community Advantage Network Partner shall abide by policies
and procedures of the Administration concerning the use of
Referral Agent fees permitted by the Administration and
disclosure of those fees.
``(ii) Payment of fees.--Notwithstanding any other
provision of law, all fees described in clause (i) shall be
paid by the covered institution to the Community Advantage
Network Partner upon disbursement of the applicable program
loan.
``(N) Delegated authority.--A covered institution is not
eligible to receive delegated authority from the
Administration under the program until the covered
institution has satisfied the following applicable
requirements:
``(i) For a covered institution actively participating in
the Community Advantage Pilot Program of the Administration,
as of the day before the date of enactment of this
paragraph--
``(I) the covered institution has approved and fully
disbursed not fewer than 10 loans under that Pilot Program;
and
``(II) the Administration has evaluated the ability of the
covered institution to fulfill program requirements.
``(ii) For any covered institution not described in clause
(i)--
``(I) the covered institution has approved and fully
disbursed not fewer than 20 loans under the program; and
``(II) the Administration has evaluated the ability of the
covered institution to fulfill program requirements.
``(O) Reporting.--
``(i) Weekly reports.--
``(I) In general.--The Administration shall report on the
website of the Administration, as part of the weekly reports
on lending approvals under this subsection--
``(aa) on and after the date of enactment of this
paragraph, the number and dollar amount of loans guaranteed
under the Community Advantage Pilot Program of the
Administration; and
``(bb) on and after the date on which the Administration
begins to approve loans under the program, the number and
dollar amount of loans guaranteed under the program.
``(II) Separate accounting.--The number and dollar amount
of loans reported in a weekly report under subclause (I) for
loans guaranteed under the Community Advantage Pilot Program
of the Administration and under the program shall include a
breakdown by the demographic information of the owners of the
small business concerns, by whether the small business
concern is a new business or an existing business, and by
whether the small business concern is located in an urban or
rural area, and broken down by--
``(aa) loans of not more than $50,000;
``(bb) loans of more than $50,000 and not more than
$150,000;
``(cc) loans of more than $150,000 and not more than
$250,000;
``(dd) loans of more than $250,000 and not more than
$350,000; and
``(ee) loans of more than $350,000 and not more than
$750,000.
``(ii) Annual reports.--
``(I) In general.--For each fiscal year in which the
program is in effect, the Administration shall submit to the
Committee on Small Business and Entrepreneurship of the
Senate and the Committee on Small Business of the House of
Representatives, and make publicly available on the internet,
information about loans provided under the program and under
the Community Advantage Pilot Program of the Administration.
``(II) Contents.--Each report submitted and made publicly
available under subclause (I) shall include--
``(aa) the number and dollar amounts of loans provided to
small business concerns under the program, including a
breakdown by--
``(AA) the demographic information of the owners of the
small business concern;
``(BB) whether the small business concern is located in an
urban or rural area; and
``(CC) whether the small business concern is an existing
business or a new business, as
[[Page S3689]]
provided in the weekly reports on lending approvals under
this subsection;
``(bb) the proportion of loans described in item (aa)
compared to--
``(AA) other 7(a) loans of any amount;
``(BB) other 7(a) loans of similar amounts;
``(CC) express loans provided under paragraph (31) of
similar amounts; and
``(DD) other 7(a) loans of similar amounts provided to
small business concerns in underserved markets;
``(cc) the number and dollar amounts of loans provided to
small business concerns under each category described in
subitems (AA), (BB), and (CC) of item (aa), which shall be
broken down by--
``(AA) loans of not more than $50,000;
``(BB) loans of more than $50,000 and not more than
$150,000;
``(CC) loans of more than $150,000 and not more than
$250,000;
``(DD) loans of more than $250,000 and not more than
$350,000; and
``(EE) loans of more than $350,000 and not more than
$750,000;
``(dd) the number and dollar amounts of loans provided to
small business concerns under the program by State, and the
jobs created or retained within each State; and
``(ee) a list of covered institutions participating in the
program and the Community Advantage Pilot Program of the
Administration, including--
``(AA) the name, location, and contact information, such as
the website and telephone number, of each covered
institution; and
``(BB) a breakdown by the number and dollar amount of the
loans approved for small business concerns.
``(III) Timing.--An annual report required under this
clause shall--
``(aa) be submitted and made publicly available not later
than December 1 of each year; and
``(bb) cover the lending activity for the fiscal year that
ended on September 30 of that same year.
``(P) GAO report.--Not later than 5 years after the date of
enactment of this paragraph, the Comptroller General of the
United States shall submit to the Administrator, the
Committee on Small Business and Entrepreneurship of the
Senate, and the Committee on Small Business of the House of
Representatives a report--
``(i) assessing--
``(I) the extent to which the program fulfills the
requirements of this paragraph; and
``(II) the performance of covered institutions
participating in the program; and
``(ii) providing recommendations on the administration of
the program and the findings under subclauses (I) and (II) of
clause (i).
``(Q) Regulations.--
``(i) In general.--Not later than 180 days after the date
of enactment of this paragraph, the Administrator shall
promulgate regulations governing the program, including
metrics for lender performance, metrics of success and
benchmarks of the program, and criteria for appropriate
management and technical assistance.
``(ii) Updates.--The Administrator shall consult the report
submitted under subparagraph (P) and, not later than 180 days
after the date on which the Comptroller General of the United
States submits the report, promulgate any necessary changes
to existing regulations of the Administration based on the
recommendations contained in the report.''.
(b) Participation.--Section 7(a)(2) of the Small Business
Act (15 U.S.C. 636(a)(2)) is amended--
(1) in subparagraph (A), in the matter preceding clause
(i), by striking ``and (F)'' and inserting ``(F), and (G)'';
and
(2) by adding at the end the following:
``(G) Participation in the community advantage loan
program.--Subject to subparagraph (G)(i)(II)(cc) of paragraph
(38), in an agreement to participate in a loan on a deferred
basis under that paragraph, the participation by the
Administration shall be--
``(i) 80 percent of the balance of the financing
outstanding at the time of the disbursement of the loan, if
that balance is more than $150,000 and not more than
$350,000; or
``(ii) 90 percent of the balance of the financing
outstanding at the time of the disbursement of the loan, if
that balance is not more than $150,000.''.
Subtitle B--Modernizing SBA's Loan Programs Act of 2023
SEC. 11111. SHORT TITLE.
This subtitle may be cited as the ``Modernizing SBA's
Business Loan Programs Act of 2023''.
SEC. 11112. FINDINGS.
Congress finds that--
(1) in 1982, the Administration placed a moratorium on
licensing new small business lending companies because the
Administration lacked the resources to effectively service
and supervise additional small business lending companies;
(2) according to the Office of the Inspector General of the
Administration, the reduction in staff in the Office of
Credit Risk Management of the Administration from 42 full-
time employees to 29 full-time employees could affect the
fiscal year 2023 goals of the Administration for oversight
reviews;
(3) the Administration has finalized a rulemaking to lift
the moratorium on the licensing new small business lending
companies and establish a new Community Advantage small
business lending company license, and there is no cap on the
number of small business lending companies licenses that
could be issued by the Administration;
(4) the increased costs and fees for an existing Community
Advantage lender in the Community Advantage Pilot Program of
the Administration to obtain and maintain a Community
Advantage small business lending company license could be
cost prohibitive for a majority of current Community
Advantage lenders to transition to a Community Advantage
small business lending company;
(5) on May 1, 2023, the Administration announced that the
Community Advantage Pilot Program would sunset on September
30, 2023, and the authority of a Community Advantage lender
to make loans under section 7(a) of the Small Business Act
(15 U.S.C. 636(a)) under the pilot program will terminate;
(6) the Administration does not have adequate resources to
issue either more than 3 new small business lending company
licenses or new Community Advantage small business lending
company licenses, as the Office of Credit Risk Management
does not have the capacity to assume additional oversight
responsibilities; and
(7) in order to increase small dollar lending in
underserved areas, the Community Advantage Pilot Program
should be made permanent, giving lenders certainty to
continue to make loans under section 7(a) of the Small
Business Act (15 U.S.C. 636(a)).
SEC. 11113. LENDING CRITERIA.
(a) 7(a) Loans.--Section 7(a)(1) of the Small Business Act
(15 U.S.C. 636(a)(1)) is amended by adding at the end the
following:
``(D) Underwriting requirements.--
``(i) In general.--With respect to a loan guaranteed under
this subsection--
``(I) the applicant (including an operating company) shall
be creditworthy;
``(II) the loan must be so sound as to reasonably assure
repayment; and
``(III) subject to the approval of the Administrator, the
Director of the Office of Credit Risk Management may require
additional criteria.
``(ii) Lending criteria for loans of $350,000 or more.--
With respect to a loan guaranteed under this section that is
not less than $350,000, the Administration and lenders shall,
as applicable, consider the following:
``(I) Credit history of the applicant (and the operating
company, if applicable), and the associates and guarantors of
the applicant.
``(II) Experience and depth of management.
``(III) Strength of the business.
``(IV) Past earnings, projected cash flow, and future
prospects.
``(V) Ability to repay the loan with earnings from the
business of the applicant.
``(VI) Sufficient invested equity to operate on a sound
financial basis.
``(VII) Potential for long-term success.
``(VIII) Nature and value of collateral (although
inadequate collateral may not be the sole reason for denial
of a loan application).
``(IX) The effect any affiliate of the applicant may have
on the ultimate repayment ability of the applicant.
``(iii) Lending criteria for loans of less than $350,000.--
With respect to a loan guaranteed under this section that is
less than $350,000--
``(I) lenders shall use appropriate and generally
acceptable commercial credit analysis processes and
procedures consistent with those used for similarly-sized
commercial loans that are not guaranteed by the
Administration;
``(II) the Administration and lenders may use a business
credit scoring model; and
``(III) the Administration and lenders shall, as
applicable, consider--
``(aa) the credit score or credit history of the applicant
(and the operating company, if applicable), and the
associates and guarantors of the applicant;
``(bb) the earnings or cash flow of the applicant;
``(cc) any equity or collateral of the applicant; and
``(dd) the effect any affiliates of the applicant may have
on the ultimate repayment ability of the applicant.''.
(b) 504/CDC Loans.--Section 502 of the Small Business
Investment Act of 1958 (15 U.S.C. 696) is amended by adding
at the end the following:
``(8) Underwriting requirements.--
``(A) In general.--With respect to a loan made under this
section--
``(i) the applicant (including an operating company) shall
be creditworthy; and
``(ii) the loan must be so sound as to reasonably assure
repayment.
``(B) Lending criteria.--With respect to a loan made under
this section--
``(i) lenders and certified development companies shall use
appropriate and generally acceptable commercial credit
analysis processes and procedures consistent with those used
for similarly-sized commercial loans that are not guaranteed
by the Administration;
``(ii) the Administration, lenders, and certified
development companies may use a business credit scoring
model; and
``(iii) the Administration, lenders, and certified
development companies shall, as applicable, consider--
``(I) the credit score or credit history of the applicant
(and the operating company, if applicable), and the
associates and guarantors of the applicant;
``(II) the earnings or cash flow of the applicant; and
``(III) any equity or collateral of the applicant.''.
[[Page S3690]]
SEC. 11114. AFFILIATION AND FRANCHISE DIRECTORY.
(a) Affiliation Principles.--
(1) Business loans.--Section 7(a)(1) of the Small Business
Act (15 U.S.C. 636(a)(1)), as amended by this subtitle, is
amended by adding at the end the following:
``(E) Affiliation principles.--Affiliation under any of the
circumstances described below is sufficient to establish
affiliation for applicants for a loan guaranteed under this
subsection:
``(i) Affiliation based on ownership.--
``(I) In general.--For determining affiliation based on
equity ownership, a concern is an affiliate of an individual,
concern, or entity that owns or has the power to control more
than 50 percent of the voting equity of the concern.
``(II) Other officers.--If no individual, concern, or
entity is found to control a concern under subclause (I), the
Administrator shall deem the board of directors, president,
or chief executive officer (or other officers, managing
members, or partners who control the management of the
concern) to be in control of the concern.
``(III) Minority shareholder.--The Administrator shall deem
a minority shareholder of a concern to be in control of the
concern if that individual or entity has the ability, under
the charter, by-laws, or shareholder agreement of the
concern, to prevent a quorum or otherwise block action by the
board of directors or shareholders of the concern.
``(ii) Affiliation arising under stock options, convertible
securities, and agreements to merge.--
``(I) In general.--In determining the size of a concern,
the Administrator shall--
``(aa) consider stock options, convertible securities, and
agreements to merge (including agreements in principle) to
have a present effect on the power to control a concern; and
``(bb) treat options, convertible securities, and
agreements described in item (aa) as though the rights
granted have been exercised.
``(II) Agreements to open or continue negotiations.--An
agreement to open or continue negotiations towards the
possibility of a merger or a sale of stock at some later date
is not considered an `agreement in principle' and is not
given present effect.
``(III) Conditions precedent.--Stock options, convertible
securities, and agreements that are subject to conditions
precedent that are incapable of fulfillment, speculative,
conjectural, or unenforceable under State or Federal law, or
where the probability of the transaction (or exercise of the
rights) occurring is shown to be extremely remote, are not
given present effect.
``(IV) Termination of control.--
``(aa) In general.--An individual, concern, or other entity
that controls 1 or more other concerns cannot use stock
options, convertible securities, or agreements to appear to
terminate such control before actually doing so.
``(bb) Divesting.--The Administrator shall not give present
effect to the ability of an individual, concern, or other
entity to divest all or part of their ownership interest in a
concern in order to avoid a finding of affiliation.
``(iii) Affiliation based on management.--Affiliation
arises where--
``(I) the chief executive officer or president of the
applicant concern (or other officers, managing members, or
partners who control the management of the concern) also
controls the management of 1 or more other concerns;
``(II) a single individual, concern, or entity that
controls the board of directors or management of 1 concern
also controls the board of directors or management of 1 of
more other concerns; or
``(III) a single individual, concern, or entity controls
the management of the applicant concern through a management
agreement.
``(iv) Affiliation based on identity of interest.--
``(I) Definition.--In this clause, the term `close
relative' means--
``(aa) a spouse, parent, child, or sibling; and
``(bb) the spouse of any individual described in item (aa).
``(II) Close relatives.--Affiliation arises when there is
an identity of interest between close relatives with
identical or substantially identical business or economic
interests, such as where the close relatives operate concerns
in the same or similar industry in the same geographic area.
``(III) Aggregated interests.--If the Administrator
determines that interests described in subclause (II) should
be aggregated, an individual or firm may rebut that
determination with evidence showing that the interests deemed
to be affiliated are in fact separate.
``(v) Affiliation based on franchise and license
agreements.--
``(I) In general.--The restraints imposed on a franchisee
or licensee by its franchise or license agreement generally
shall not be considered in determining whether the franchisor
or licensor is affiliated with an applicant franchisee or
licensee, if the applicant franchisee or licensee has the
right to profit from its efforts and bears the risk of loss
commensurate with ownership.
``(II) Nature of agreement.--For purposes of subclause (I),
the Administrator shall only consider the franchise or
license agreements of the applicant concern.
``(vi) Determining the concern's size.--In determining the
size of a concern, the Administrator counts the receipts,
employees, or the alternate size standard (if applicable) of
the concern whose size is at issue and all of the domestic
and foreign affiliates of the concern, regardless of whether
the affiliates are organized for profit.
``(vii) Exceptions to affiliation.--The exceptions to
affiliation described in section 121.103(b) of title 13, Code
of Federal Regulations, or any successor regulation, shall
apply.''.
(2) 504/CDC loans.--Section 502 of the Small Business
Investment Act of 1958 (15 U.S.C. 696), as amended by this
subtitle, is amended by adding at the end the following:
``(9) Affiliation principles.--Affiliation under any of the
circumstances described below is sufficient to establish
affiliation for applicants for a loan under this section:
``(A) Affiliation based on ownership.--
``(i) Ownership of another business.--When the applicant
owns more than 50 percent of another business, the applicant
and the other business are affiliated.
``(ii) Ownership by other businesses.--
``(I) In general.--When a business owns more than 50
percent of an applicant, the business that owns the applicant
is affiliated with the applicant.
``(II) Other business owned by owner of applicant.--If a
business entity owner that owns more than 50 percent of an
applicant also owns more than 50 percent of another business
that operates in the same 3-digit North American Industry
Classification System subsector as the applicant, then the
business entity owner, the other business, and the applicant
are all affiliated.
``(iii) Ownership by individuals.--When an individual owns
more than 50 percent of the applicant and the individual also
owns more than 50 percent of another business entity that
operates in the same 3-digit North American Industry
Classification System subsector as the applicant, the
applicant and the individual owner's other business entity
are affiliated.
``(iv) Less than 50 percent.--When an applicant does not
have an owner that owns more than 50 percent of the
applicant, if an owner of 20 percent or more of the applicant
also owns more than 50 percent of another business entity
that operates in the same 3-digit North American Industry
Classification System subsector as the applicant, the
applicant and the owner's other business entity are
affiliated.
``(v) Spouse and minor children.--Ownership interests of
spouses and minor children shall be combined when determining
amount of ownership interest.
``(vi) Percentage of ownership.--When determining the
percentage of ownership that an individual owns in a
business, the Administrator shall consider the pro rata
ownership of entities.
``(B) Affiliation arising under stock options, convertible
securities, and agreements to merge.--
``(i) In general.--The Administrator shall--
``(I) consider stock options, convertible securities, and
agreements to merge (including agreements in principle) to
have a present effect on the ownership of an entity; and
``(II) treat options, convertible securities, and
agreements described in subclause (I) as though the rights
granted have been exercised.
``(ii) Agreements to open or continue negotiations.--An
agreement to open or continue negotiations towards the
possibility of a merger or a sale of stock at some later date
is not considered an `agreement in principle' and is not
given present effect.
``(iii) Conditions precedent.--Stock options, convertible
securities, and agreements that are subject to conditions
precedent that are incapable of fulfillment, speculative,
conjectural, or unenforceable under State or Federal law, or
where the probability of the transaction (or exercise of the
rights) occurring is shown to be extremely remote, are not
given present effect.
``(iv) Ability to divest.--The Administrator shall not give
present effect to individuals', concerns', or other entities'
ability to divest all or part of their ownership interest to
avoid a finding of affiliation.
``(C) Determining the concern's size.--In determining the
size of a concern, the Administrator counts the receipts,
employees, or the alternate size standard (if applicable) of
the concern whose size is at issue and all of the domestic
and foreign affiliates of the concern, regardless of whether
the affiliates are organized for profit.
``(D) Exceptions to affiliation.--The exceptions to
affiliation described in section 121.103(b) of title 13, Code
of Federal Regulations, or any successor regulation, shall
apply.''.
(b) Franchise Directory.--Not later than 30 days after the
date of enactment of this Act, the Administration shall
publish and maintain on the website of the Administration a
Franchise Directory, which shall contain a list that lenders
and certified development companies may use in evaluating
whether a franchise is eligible for financing from the
Administration.
SEC. 11115. LOAN AUTHORIZATION.
(a) 7(a) Loans.--Section 7(a)(1) of the Small Business Act
(15 U.S.C. 636(a)(1)), as amended by this subtitle, is
amended by adding at the end the following:
``(F) Loan authorization.--
``(i) In general.--With respect to a loan made or
guaranteed under this subsection, the Administration shall
issue a written
[[Page S3691]]
agreement providing the terms and conditions under which the
Administration will make or guarantee the loan.
``(ii) Not a contract.--A written agreement issued under
clause (i) is not a contract to make a loan.''.
(b) 504/CDC Loans.--Section 502 of the Small Business
Investment Act of 1958 (15 U.S.C. 696), as amended by this
subtitle, is amended by adding at the end the following:
``(10) Loan authorization.--
``(A) In general.--With respect to a loan made under this
section, the Administration shall issue a written agreement
providing the terms and conditions under which the
Administration will make the loan.
``(B) Not a contract.--A written agreement issued under
subparagraph (A) is not a contract to make a loan.''.
SEC. 11116. OVERSIGHT OF SMALL BUSINESS LENDING COMPANIES.
(a) Definition.--Section 3(r) of the Small Business Act (15
U.S.C. 632(r)) is amended, in the matter preceding paragraph
(1), by striking ``As used in section 23 of this Act'' and
inserting ``In this Act''.
(b) Capital Requirements; Maximum Number.--Section 7(a)(1)
of the Small Business Act (15 U.S.C. 636(a)(1)), as amended
by this subtitle, is amended by adding at the end the
following:
``(G) Additional provisions relating to small business
lending companies.--
``(i) Maximum number.--
``(I) In general.--Not more than 17 small business lending
companies may be authorized to make loans under this
subsection at any time.
``(II) Existing small business lending companies.--
``(aa) In general.--Except as provided in subclause (III),
each of the 14 small business lending companies authorized to
make loans under this subsection as of June 1, 2023 shall
retain such authorization on and after the date of enactment
of this subparagraph.
``(bb) Loss of authorization.--With respect to a lender
that, as of the date of enactment of this subparagraph, is
authorized as a Community Advantage small business lending
company, that lender shall, beginning on that date of
enactment--
``(AA) no longer have that authorization; and
``(BB) be designated as a lender under the Community
Advantage Loan Program established under paragraph (38).
``(III) Transfer or sale.--The Administrator shall have the
discretion to authorize the transfer or sale of a license of
a small business lending company to make loans under this
subsection to another small business lending company.
``(IV) Limitation of delegated authority.--
``(aa) In general.--Notwithstanding paragraph (31), any
small business lending company that the Administration
authorizes after June 1, 2023 to make loans under this
subsection shall be ineligible for delegated authority from
the Administration to process, close, service, and liquidate
certain loans made under this subsection for the 5-year
period beginning on the date on which the Administration
authorizes the small business lending company to make loans
under this subsection.
``(bb) Existing sblcs.--Item (aa) shall not apply with
respect to each of the 14 small business lending companies
authorized to make loans under this subsection as of June 1,
2023.
``(ii) Minimum capital requirements.--
``(I) In general.--Except as provided in subclauses (II)
and (III), to be authorized to make loans under this
subsection, a small business lending company shall comply
with the minimum capital requirements in effect on January 3,
2021.
``(II) Approved on or after january 4, 2021.--Any small
business lending company authorized by the Administration to
make loans under this subsection on or after January 4, 2021,
including in the event of a change of ownership or control,
shall maintain, at a minimum, the greater of--
``(aa) unencumbered paid-in capital and paid-in surplus of
not less than $5,000,000; or
``(bb) an amount equal to 10 percent of the aggregate of
its share of all outstanding loans.
``(III) Requirements on and after january 4, 2024.--On and
after January 4, 2024, each small business lending company
that makes or acquires a loan under this subsection shall
maintain, at a minimum, the greater of--
``(aa) unencumbered paid-in capital and paid-in surplus of
not less than $5,000,000; or
``(bb) an amount equal to 10 percent of the aggregate of
its share of all outstanding loans.
``(iii) Criteria for licensing small business lending
companies.--The Administrator shall use uniform terms for the
licensing of business concerns as small business lending
companies and the participation of those companies in the
programs under this subsection.''.
(c) Annual Stress Testing and Reviews.--Section 23(d) of
the Small Business Act (15 U.S.C. 650(d)) is amended--
(1) in paragraph (1), by inserting ``In general.--'' after
``(1)'';
(2) in paragraph (2), by inserting ``Hearing.--'' after
``(2)'';
(3) by redesignating paragraphs (3) and (4) as paragraphs
(4) and (5), respectively;
(4) by inserting after paragraph (2) the following:
``(3) Special supervisory authorities related to small
business lending companies.--
``(A) Review and revocation of authority.--
``(i) In general.--The Director of the Office of Credit
Risk Management (in this paragraph referred to as the
`Director')--
``(I) may review and revoke the authority of a small
business lending company to make, service, or liquidate
business loans under section 7(a) for performance, excessive
losses, or predatory lending;
``(II) shall review and may revoke the authority of a small
business lending company to make, service, or liquidate
business loans under section 7(a) if--
``(aa) the early default rate for the small business
lending company exceeds the average default rate for all
small business lending companies participating in the loan
program under section 7(a);
``(bb) the small business lending company fails to comply
with the requirements under subparagraph (B); or
``(cc) the Director finds in an audit conducted under
subparagraph (C)(ii) that the small business lending company
is not in compliance with 1 or more of the requirements
described in subparagraph (C); and
``(III) shall revoke the authority of a small business
lending company to make, service, or liquidate business loans
under section 7(a) if the Director has determined the small
business lending company has failed to comply with the
requirements in subclause (II) or (III) of subparagraph
(B)(ii) for 2 or more years in a row.
``(ii) Reporting requirement.--If the Director revokes the
authority of a small business lending company to make,
service, or liquidate business loans under section 7(a), the
Director shall report the revocation, along with details and
information describing why that decision was made, to the
Office of the Inspector General of the Administration.
``(B) Annual stress tests.--
``(i) In general.--Each small business lending company
shall--
``(I) conduct an annual stress test of the portfolio of the
small business lending company under section 7(a) in
accordance with the requirements under clause (ii); and
``(II) report to the Director the findings of each annual
stress test conducted under subclause (I).
``(ii) Requirements.--Each stress test conducted under
clause (i) shall comply with the following requirements:
``(I) The small business lending company shall use
financial data as of December 31 of the calendar year prior
to the reporting year.
``(II) The small business lending company shall use the
scenarios provided by the Director, which shall reflect a
minimum of 2 sets of economic and financial conditions,
including baseline and severely adverse scenarios that
incorporate consideration of interest rate risk. The Director
shall provide a description of the scenarios required to be
used by each small business lending company not later than
February 15 of the reporting year.
``(III) The board of directors and senior management of
each small business lending company shall consider the
results of the stress tests conducted under this subsection
in the normal course of business, including capital planning,
assessment of capital adequacy, and risk management practices
of the small business lending company.
``(C) Compliance with bank secrecy act and anti-money
laundering requirements.--
``(i) Definition.--In this subparagraph, the term `Bank
Secrecy Act' means--
``(I) section 21 of the Federal Deposit Insurance Act (12
U.S.C. 1829b);
``(II) chapter 2 of title I of Public Law 91-508 (12 U.S.C.
1951 et seq.); and
``(III) subchapter II of chapter 53 of title 31, United
States Code.
``(ii) Annual reviews.--The Director--
``(I) shall conduct annual reviews to ensure that small
business lending companies are in compliance with the
requirements contained in the regulations issued under clause
(iii); and
``(II) in conducting a review under subclause (I), may not
rely on self-certification by a small business lending
company that the small business lending company is in
compliance with those requirements.
``(iii) Regulations.--Not later than 1 year after the date
of enactment of the Modernizing SBA's Business Loan Programs
Act of 2023, the Administrator shall, in consultation with
other appropriate Federal agencies, issue regulations to
provide a framework to ensure that small business lending
companies are in compliance with the requirements under the
Bank Secrecy Act, including Know Your Customer and anti-money
laundering requirements, and any applicable consumer
protection laws, including the Truth in Lending Act (15
U.S.C. 1601 et seq.), the Equal Credit Opportunity Act (15
U.S.C. 1691 et seq.), and the Gramm-Leach-Bliley Act (Public
Law 106-102; 113 Stat. 1338).'';
(5) in paragraph (4), as so redesignated, by inserting
``Notification.--'' after ``(4)''; and
(6) in paragraph (5), as so redesignated, by inserting
``Delegation.--'' after ``(5)''.
SEC. 11117. OFFICE OF CREDIT RISK MANAGEMENT.
Section 47 of the Small Business Act (15 U.S.C. 657t) is
amended--
(1) in subsection (c)--
(A) in paragraph (1), by inserting before the period at the
end the following: ``with a
[[Page S3692]]
demonstrated career in or outstanding qualifications or
expertise related to finance and financial risk management.
The Director shall report directly to the Administrator'';
and
(B) by adding at the end the following:
``(3) Compensation.--The Administrator shall fix the
compensation of the Director--
``(A) as necessary to carry out the duties of the Office;
and
``(B) in an amount that is not less than the highest rate
of basic pay for the Senior Executive Service under section
5382(b) of title 5, United States Code.''; and
(2) in subsection (h)(2)--
(A) in subparagraph (I), by striking ``and'' at the end;
(B) in subparagraph (J), by striking the period at the end
and inserting a semicolon; and
(C) by adding at the end the following:
``(K) the number of 7(a) lenders that had an early default
rate of more than 3 percent; and
``(L) an analysis of the median and average credit scores
of borrowers relating to early default rates, purchase rates,
and charge offs.''.
SEC. 11118. DENIED LOAN OR LOAN MODIFICATION REQUEST.
(a) 7(a) Loans.--Section 7(a)(1) of the Small Business Act
(15 U.S.C. 636(a)(1)), as amended by this subtitle, is
amended by adding at the end the following:
``(H) Denied loan or loan modification request.--
``(i) Role of administrator.--The Administrator may not
intervene or make a final decision with respect to a request
for reconsideration of a denied loan or loan modification
request made by an applicant or recipient of a loan under
this subsection.
``(ii) Final decision.--Only the Director of the Office of
Financial Assistance may make a final decision with respect
to a request for reconsideration of a denied loan or loan
modification request made by an applicant or recipient of a
loan under this subsection.''.
(b) 504/CDC Loans.--Section 502 of the Small Business
Investment Act of 1958 (15 U.S.C. 696), as amended by this
subtitle, is amended by adding at the end the following:
``(11) Denied loan or loan modification request.--
``(A) Role of administrator.--The Administrator may not
intervene or make a final decision with respect to a request
for reconsideration of a denied loan or loan modification
request made by an applicant or recipient of a loan under
this section.
``(B) Final decision.--Only the Director of the Office of
Financial Assistance may make a final decision with respect
to a request for reconsideration of a denied loan or loan
modification request made by an applicant or recipient of a
loan under this section.''.
SEC. 11119. DIRECT LENDING.
Section 7(a)(1) of the Small Business Act (15 U.S.C.
636(a)(1)), as amended by this subtitle, is amended by adding
at the end the following:
``(I) Notification required before direct lending.--Not
later than 60 days before the Administration implements any
policy or pilot program that would allow the Administration
to directly make a loan under this subsection, the
Administrator shall submit a notification to Congress for
review.''.
SEC. 11120. RESTRICTION ON REFINANCING DEBT.
Section 7(a)(1) of the Small Business Act (15 U.S.C.
636(a)(1)), as amended by this subtitle, is amended by adding
at the end the following:
``(J) Restriction on refinancing debt.--
``(i) Definition.--In this subparagraph, the term
`delegated authority' means status granted by the
Administration to a lender to allow the lender to process,
close, service, and liquidate certain loans made under this
subsection without prior review by the Administration.
``(ii) Restriction.--A lender shall be prohibited from
using any delegated authority under this subsection to
refinance any debt held by the lender, including any loan
made under this subsection.''.
SEC. 11121. GAO STUDY.
Not later than 2 years after the date of enactment of this
Act, the Comptroller General of the United States shall
conduct a study and submit to the Administrator, the
Committee on Small Business and Entrepreneurship of the
Senate, and the Committee on Small Business of the House of
Representatives a report that includes--
(1) an analysis of the use of alternative credit models for
loans made under section 7(a) of the Small Business Act (15
U.S.C. 636(a)) in an amount of less than $350,000,
including--
(A) an analysis of whether appropriate guardrails are in
place to prevent fraud, waste, and abuse and provide
protections for the borrower;
(B) an evaluation of the effectiveness of those credit
models in reducing barriers to access to capital to
underserved and rural communities; and
(C) recommendations as to whether improvements can be made
by Administration in its use of alternative credit models to
prevent waste, fraud, and abuse and to improve access to
capital to underserved and rural communities;
(2) an audit of the operations, staffing, and resources of
the Office of Credit Risk Management of the Administration,
including the efforts of the Office to implement the new
oversight provisions under the amendments made by this title;
and
(3) a survey of the practices of lenders under section 7(a)
of the Small Business Act (15 U.S.C. 636(a)) relating to the
use of criminal history when determining whether to approve a
loan under that section or a similarly sized commercial loan
that is not guaranteed by the Administration.
TITLE LXX--VETERAN ENTREPRENEURSHIP TRAINING ACT OF 2023
SEC. 11201. SHORT TITLE.
This title may be cited as the ``Veteran Entrepreneurship
Training Act of 2023''.
SEC. 11202. BOOTS TO BUSINESS PROGRAM.
Section 32 of the Small Business Act (15 U.S.C. 657b) is
amended by adding at the end the following:
``(h) Boots to Business Program.--
``(1) Covered individual defined.--In this subsection, the
term `covered individual' means--
``(A) a member of the Armed Forces, including the National
Guard or Reserves;
``(B) an individual who is participating in the Transition
Assistance Program established under section 1144 of title
10, United States Code;
``(C) an individual who--
``(i) served on active duty in any branch of the Armed
Forces, including the National Guard or Reserves; and
``(ii) was discharged or released from such service under
conditions other than dishonorable; and
``(D) a spouse or dependent of an individual described in
subparagraph (A), (B), or (C).
``(2) Establishment.--During the period beginning on the
date of enactment of this subsection and ending on September
30, 2028, the Administrator shall carry out a program to be
known as the `Boots to Business Program' to provide
entrepreneurship training to covered individuals.
``(3) Goals.--The goals of the Boots to Business Program
are to--
``(A) provide assistance and in-depth training to covered
individuals interested in business ownership; and
``(B) provide covered individuals with the tools, skills,
and knowledge necessary to identify a business opportunity,
draft a business plan, identify sources of capital, connect
with local resources for small business concerns, and start
up a small business concern.
``(4) Program components.--
``(A) In general.--The Boots to Business Program may
include--
``(i) an in-person and virtual, as applicable, presentation
providing exposure to the considerations involved in self-
employment and ownership of a small business concern;
``(ii) an online, self-study course focused on the basic
skills of entrepreneurship, the language of business, and the
considerations involved in self-employment and ownership of a
small business concern;
``(iii) an in-person and virtual, as applicable, classroom
instruction component providing an introduction to the
foundations of self employment and ownership of a small
business concern; and
``(iv) in-depth training delivered through online
instruction, including an online course that leads to the
creation of a business plan.
``(B) Travel costs.--
``(i) In general.--Subject to the other provisions of this
subparagraph, of the total amount of grant funding that a
Veteran Business Outreach Center participating in the Boots
to Business Program receives from the Administration, the
center may not expend more than 35 percent of that funding on
costs relating to international travel with respect to the
Boots to Business Program.
``(ii) Costs not included in cap.--Costs relating to the
salaries of, or stipends for, instructors under the Boots to
Business Program shall not be included for the purposes of
the limitation under clause (i).
``(iii) Petition.--
``(I) In general.--A Veteran Business Outreach Center may
petition the Administrator for the center to expend
additional funds beyond the limitation under clause (i) for
the purposes described in that clause.
``(II) Notification requirement.--If the Administrator
grants any petition submitted under subclause (I), the
Administrator shall submit to the Committee on Small Business
and Entrepreneurship of the Senate and the Committee on Small
Business of the House of Representatives a notification
regarding that decision by the Administrator.
``(C) Collaboration.--The Administrator may--
``(i) collaborate with public and private entities to
develop course curricula for the Boots to Business Program;
``(ii) modify program components in coordination with
entities participating in a Warriors in Transition program,
as defined in section 738(e) of the National Defense
Authorization Act for Fiscal Year 2013 (10 U.S.C. 1071 note);
and
``(iii) consult with Directors of Veteran Business Outreach
Centers regarding the necessity of instructor international
travel and the feasibility of incorporating virtual classroom
components.
``(D) Use of resource partners and district offices.--
``(i) In general.--The Administrator shall--
``(I) ensure that Veteran Business Outreach Centers
regularly participate, on a nationwide basis, in the Boots to
Business Program; and
``(II) to the maximum extent practicable, use district
offices of the Administration and
[[Page S3693]]
a variety of other resource partners and entities in
administering the Boots to Business Program.
``(ii) Grant authority.--In carrying out clause (i), the
Administrator may make grants to Veteran Business Outreach
Centers, other resource partners, or other entities to carry
out components of the Boots to Business Program.
``(E) Availability to department of defense and the
department of labor.--The Administrator shall make available
to the Secretary of Defense and the Secretary of Labor
information regarding the Boots to Business Program,
including all course materials and outreach materials related
to the Boots to Business Program, for inclusion on the
websites of the Department of Defense and the Department of
Labor relating to the Transition Assistance Program, in the
Transition Assistance Program manual, and in other relevant
materials available for distribution from the Secretary of
Defense and the Secretary of Labor.
``(F) Availability to department of veterans affairs.--In
consultation with the Secretary of Veterans Affairs, the
Administrator shall make available for distribution and
display on the website of the Department of Veterans Affairs
and at local facilities of the Department of Veterans Affairs
outreach materials regarding the Boots to Business Program,
which shall, at a minimum--
``(i) describe the Boots to Business Program and the
services provided; and
``(ii) include eligibility requirements for participating
in the Boots to Business Program.
``(G) Availability to other participating agencies.--The
Administrator shall ensure information regarding the Boots to
Business program, including all course materials and outreach
materials related to the Boots to Business Program, is made
available to other participating agencies in the Transition
Assistance Program and upon request of other agencies.
``(5) Competitive bidding procedures.--The Administration
shall use relevant competitive bidding procedures with
respect to any contract or cooperative agreement executed by
the Administration under the Boots to Business Program.
``(6) Publication of notice of funding opportunity.--Not
later than 30 days before the deadline for submitting
applications for any funding opportunity under the Boots to
Business Program, the Administration shall publish a notice
of the funding opportunity.
``(7) Report.--Not later than 180 days after the date of
enactment of this subsection, and not less frequently than
annually thereafter, the Administrator shall submit to the
Committee on Small Business and Entrepreneurship of the
Senate and the Committee on Small Business of the House of
Representatives a report on the performance and effectiveness
of the Boots to Business Program, which--
``(A) may be included as part of another report submitted
to such committees by the Administrator related to the Office
of Veterans Business Development; and
``(B) shall summarize available information relating to--
``(i) grants awarded under paragraph (4)(D);
``(ii) the total cost of the Boots to Business Program;
``(iii) the amount of program funds used for domestic and
international travel expenses;
``(iv) each domestic location and international location
traveled to for Boots to Business program instruction;
``(v) the number of program participants using each
component of the Boots to Business Program;
``(vi) the completion rates for each component of the Boots
to Business Program; and
``(vii) to the extent possible--
``(I) the demographics of program participants, to include
gender, age, race, ethnicity, and relationship to the Armed
Forces;
``(II) the number of program participants that connect with
a district office of the Administration, a Veteran Business
Outreach Center, or another resource partner of the
Administration;
``(III) the number of program participants that start a
small business concern;
``(IV) the results of the Boots to Business and Boots to
Business Reboot course quality surveys conducted by the
Office of Veterans Business Development before and after
attending each of those courses, including a summary of any
comments received from program participants;
``(V) the results of the Boots to Business Program outcome
surveys conducted by the Office of Veterans Business
Development, including a summary of any comments received
from program participants; and
``(VI) the results of other germane participant
satisfaction surveys;
``(C) an evaluation of the overall effectiveness of the
Boots to Business Program based on each geographic region
covered by the Administration during the most recent fiscal
year;
``(D) an assessment of additional performance outcome
measures for the Boots to Business Program, as identified by
the Administrator;
``(E) any recommendations of the Administrator for
improvement of the Boots to Business Program, which may
include expansion of the types of individuals who are covered
individuals;
``(F) an explanation of how the Boots to Business Program
has been integrated with other transition programs and
related resources of the Administration and other Federal
agencies; and
``(G) any additional information the Administrator
determines necessary.''.
TITLE LXXI--SMALL BUSINESS CHILD CARE INVESTMENT ACT
SEC. 11301. SHORT TITLE.
This title may be cited as the ``Small Business Child Care
Investment Act''.
SEC. 11302. SMALL BUSINESS LOANS FOR NONPROFIT CHILD CARE
PROVIDERS.
(a) In General.--Section 3(a) of the Small Business Act (15
U.S.C. 632(a)) is amended by adding at the end the following:
``(10) Nonprofit child care providers.--
``(A) Definition.--In this paragraph, the term `covered
nonprofit child care provider' means an organization--
``(i) that--
``(I) is in compliance with licensing requirements for
child care providers of the State in which the organization
is located;
``(II) is described in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from tax under section 501(a)
of such Code;
``(III) is primarily engaged in providing child care for
children from birth to compulsory school age; and
``(IV) is in compliance with the size standards established
under this subsection for business concerns in the applicable
industry;
``(ii) for which each employee and regular volunteer
complies with the criminal background check requirements
under section 658H(b) of the Child Care and Development Block
Grant Act of 1990 (42 U.S.C. 9858f(b));
``(iii) that may--
``(I) provide care for school-age children outside of
school hours or outside of the school year; or
``(II) offer preschool or prekindergarten educational
programs; and
``(iv) subject to any exemption under Federal law
applicable to the organization, that certifies to the
Administrator that the organization will not discriminate in
any business practice, including providing services to the
public, on the basis of race, color, religion, sex, sexual
orientation, marital status, age, disability, or national
origin.
``(B) Eligibility for certain loan programs.--
``(i) In general.--Notwithstanding any other provision of
this subsection, a covered nonprofit child care provider
shall be deemed to be a small business concern for purposes
of loans under section 7(a) of this Act or financing under
title V of the Small Business Investment Act of 1958 (15
U.S.C. 695 et seq.).
``(ii) Loan guarantee.--A covered nonprofit child care
center provider--
``(I) shall obtain a guarantee of timely payment of the
loan or financing from another person or entity to be
eligible for a loan or financing of more than $500,000 under
the authority under clause (i); and
``(II) shall not be required to obtain a guarantee of
timely payment of the loan or financing to be eligible for a
loan or financing that is not more than $500,000 under the
authority under clause (i).
``(C) Limitation on basis for ineligibility.--The
Administrator may not determine that a covered nonprofit
child care center provider is not eligible for a loan or
financing described in subparagraph (B)(i) on the basis that
the proceeds of the loan or financing will be used for a
religious activity protected under the First Amendment to the
Constitution of the United States, as interpreted by the
courts of the United States.''.
(b) Reporting.--
(1) Definition.--In this subsection, the term ``covered
nonprofit child care provider'' has the meaning given the
term in paragraph (10) of section 3(a) of the Small Business
Act (15 U.S.C. 632(a)), as added by subsection (a).
(2) Requirement.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter, the
Administrator shall submit to Congress a report that
contains--
(A) for the year covered by the report--
(i) the number of loans made under section 7(a) of the
Small Business Act (15 U.S.C. 636(a)) and the number of
financings provided under title V of the Small Business
Investment Act of 1958 (15 U.S.C. 695 et seq.) to covered
nonprofit child care providers; and
(ii) the amount of such loans made and the amount of such
financings provided to covered nonprofit child care
providers; and
(B) any other information determined relevant by the
Administrator.
TITLE LXXII--SUPPORTING SMALL BUSINESS AND CAREER AND TECHNICAL
EDUCATION ACT OF 2023
SEC. 11401. SHORT TITLE.
This title may be cited as the ``Supporting Small Business
and Career and Technical Education Act of 2023''.
SEC. 11402. INCLUSION OF CAREER AND TECHNICAL EDUCATION.
(a) Definition.--Section 3 of the Small Business Act (15
U.S.C. 632) is amended by adding at the end the following:
``(gg) Career and Technical Education.--The term `career
and technical education' has the meaning given the term in
section 3 of the Carl D. Perkins Career and Technical
Education Act of 2006 (20 U.S.C. 2302).''.
(b) Small Business Development Centers.--Section 21(c)(3)
of the Small Business Act (15 U.S.C. 648(c)(3)) is amended--
(1) in subparagraph (T), by striking ``and'' at the end;
(2) in clause (v) of the first subparagraph (U) (relating
to succession planning), by striking the period at the end
and inserting a semicolon;
(3) by redesignating the second subparagraph (U) (relating
to training on domestic
[[Page S3694]]
and international intellectual property protections) as
subparagraph (V);
(4) in subparagraph (V)(ii)(II), as so redesignated, by
striking the period at the end and inserting a semicolon; and
(5) by adding at the end the following:
``(W) assisting small business concerns in hiring graduates
from career and technical education programs or programs of
study; and
``(X) assisting graduates of career and technical education
programs or programs of study in starting up a small business
concern.''.
(c) Women's Business Centers.--Section 29(b) of the Small
Business Act (15 U.S.C. 656(b)) is amended--
(1) in paragraph (2), by striking ``and'' at the end;
(2) in paragraph (3), by striking the period at the end and
inserting a semicolon; and
(3) by adding at the end the following:
``(4) assistance for small business concerns to hire
graduates from career and technical education programs or
programs of study; and
``(5) assistance for graduates of career and technical
education programs or programs of study to start up a small
business concern.''.
TITLE LXXIII--SMALL BUSINESS DISASTER DAMAGE FAIRNESS ACT OF 2023
SEC. 11501. SHORT TITLE.
This title may be cited as the ``Small Business Disaster
Damage Fairness Act of 2023''.
SEC. 11502. COLLATERAL REQUIREMENTS FOR DISASTER LOANS.
Section 7(d)(6) of the Small Business Act (15 U.S.C.
636(d)(6)) is amended, in the third proviso--
(1) by striking ``$14,000'' and inserting ``$25,000''; and
(2) by striking ``major disaster'' and inserting
``disaster''.
SEC. 11503. GAO REPORT ON DEFAULT RATES.
Not later than 3 years after the date of enactment of this
Act, the Comptroller General of the United States shall
submit to the Committee on Small Business and
Entrepreneurship of the Senate and the Committee on Small
Business of the House of Representatives a report on the
performance, including the default rate, of loans made under
section 7(b)(1) of the Small Business Act (15 U.S.C.
636(b)(1)), and the impact of the amendments to collateral
amounts made under section 11502 on the performance of those
loans, during the period--
(1) beginning on September 30, 2020; and
(2) ending on the date on that is 2 years after the date of
enactment of this Act.
TITLE LXXIV--NATIVE AMERICAN ENTREPRENEURIAL AND OPPORTUNITY ACT OF
2023
SEC. 11601. SHORT TITLE.
This title may be cited as the ``Native American
Entrepreneurial and Opportunity Act of 2023''.
SEC. 11602. OFFICE OF NATIVE AMERICAN AFFAIRS.
The Small Business Act (15 U.S.C. 631 et seq.) is amended--
(1) by redesignating section 49 (15 U.S.C. 631 note) as
section 50; and
(2) by inserting after section 48 (15 U.S.C. 657u) the
following:
``SEC. 49. OFFICE OF NATIVE AMERICAN AFFAIRS.
``(a) Definitions.--In this section:
``(1) Associate administrator.--The term `Associate
Administrator' means the Associate Administrator for Native
American Affairs appointed under subsection (c).
``(2) Indian tribe.--The term `Indian Tribe' has the
meaning given the term `Indian tribe' in section 8(a)(13).
``(3) Native hawaiian organization.--The term `Native
Hawaiian Organization' has the meaning given the term in
section 8(a)(15).
``(4) Office.--The term `Office' means the Office of Native
American Affairs described in this section.
``(b) Establishment.--
``(1) In general.--There is established within the
Administration the Office of Native American Affairs, which
shall be responsible for establishing a working relationship
with Indian Tribes and Native Hawaiian Organizations by
targeting programs of the Administration relating to
entrepreneurial development, contracting, and capital access
to revitalize Native businesses and economic development in
Indian country.
``(2) Connection with other programs.--To the extent
reasonable, the Office shall connect Indian Tribes and Native
Hawaiian Organizations to programs administered by other
Federal agencies related to the interests described in
paragraph (1).
``(3) Alternative work sites.--
``(A) In general.--The Office may establish alternative
work sites within such regional offices of the Administration
as may be necessary, with initial focus on those parts of
Indian Country most economically disadvantaged, to perform
efficiently the functions and responsibilities of the Office.
``(B) Prohibition.--The alternative work sites established
under subparagraph (A) shall not be field offices of the
Administration.
``(c) Associate Administrator.--The Office shall be headed
by an Associate Administrator for Native American Affairs,
who shall--
``(1) be appointed by and report to the Administrator;
``(2) have knowledge of Native American cultures and
experience providing culturally tailored small business
development assistance to Native Americans;
``(3) carry out the program to provide assistance to Indian
Tribes and Native Hawaiian Organizations and small business
concerns owned and controlled by individuals who are members
of those groups;
``(4) administer and manage Native American outreach
expansion;
``(5) enhance assistance to Native Americans by formulating
and promoting policies, programs, and assistance that better
address their entrepreneurial, capital access, business
development, and contracting needs, and collaborate with
other Associate Administrators and intergovernmental leaders
with similar missions across Federal agencies on the
development of policies and plans to implement new programs
of the Administration, while supplementing existing Federal
programs to holistically serve those needs;
``(6) provide grants, contracts, cooperative agreements, or
other financial assistance to Indian Tribes and Native
Hawaiian Organizations, or to private nonprofit organizations
governed by members of those entities, that have the
experience and capability to--
``(A) deploy training, counseling, workshops, educational
outreach, and supplier events; and
``(B) access the entrepreneurial, capital, and contracting
programs of the Administration;
``(7) assist the Administrator in conducting, or conduct,
Tribal consultation to solicit input and facilitate
discussion of potential modifications to programs and
procedures of the Administration; and
``(8) recommend annual budgets for the Office.
``(d) Authorization of Appropriations.--There is authorized
to be appropriated to the Office such sums as may be
necessary for each of fiscal years 2024 through 2028 to carry
out this section.''.
TITLE LXXV--SUPPORTING COMMUNITY LENDERS ACT
SEC. 11701. SHORT TITLE.
This title may be cited as the ``Supporting Community
Lenders Act''.
SEC. 11702. COORDINATOR FOR COMMUNITY FINANCIAL INSTITUTIONS.
Section 7 of the Small Business Act (15 U.S.C. 636) is
amended by adding at the end the following:
``(o) Coordinator for Community Financial Institutions.--
``(1) Definitions.--In this subsection--
``(A) the term `Associate Administrator' means the
Associate Administrator of the Office of Capital Access of
the Administration;
``(B) the term `community financial institution' has the
meaning given the term in paragraph (36); and
``(C) the term `Coordinator' means the Coordinator for
Community Financial Institutions.
``(2) Establishment.--There is established within the
Office of Capital Access of the Administration the position
of Coordinator for Community Financial Institutions, the
occupant of which shall be responsible for the planning,
coordination, implementation, evaluation, and improvement of
the efforts of the Administrator to enhance the performance
of community financial institutions and support access to
capital for small business concerns.
``(3) Coordinator.--
``(A) In general.--Not later than 180 days after the date
of enactment of the Supporting Community Lenders Act, the
Administrator shall designate an individual to serve as
Coordinator, who shall--
``(i) report to the Associate Administrator; and
``(ii) have knowledge of community financial institutions
and experience providing access to capital to small business
concerns in underserved communities.
``(B) Duties.--The Coordinator shall--
``(i) create and implement strategies and programs that
support the activities, development, and growth of community
financial institutions;
``(ii) administer and manage outreach, technical support,
and training programs to existing, and potential, community
financial institutions;
``(iii) establish partnerships within the Administration
and with relevant Federal agencies, including the Department
of the Treasury, the Federal Deposit Insurance Corporation,
the Department of Agriculture, and the Minority Business
Development Agency, to advance the goal of supporting the
economic success of small business concerns through community
financial institutions;
``(iv) review the effectiveness and impact of community
financial institutions;
``(v) when appropriate, advocate on behalf of community
financial institutions within the Administration, and to
outside organizations, including other relevant Federal
agencies;
``(vi) hold public meetings with relevant stakeholders not
less frequently than once every 6 months beginning 1 year
after the date of enactment of the Supporting Community
Lenders Act; and
``(vii) not later than 3 years after the date of enactment
of the Supporting Community Lenders Act, and not less
frequently than once every 3 years thereafter, submit to
Congress a report on the major activities of the Coordinator,
recommendations for congressional action based on the
expertise of the Coordinator, and potential for growth within
the areas in which the Coordinator operates.
``(C) Consultation.--In carrying out the duties under this
paragraph, the Coordinator shall consult with--
[[Page S3695]]
``(i) district offices of the Administration; and
``(ii) other relevant Federal agencies, including the
Department of the Treasury, the Federal Deposit Insurance
Corporation, and the Minority Business Development Agency.''.
SEC. 11703. OFFICE OF ADVOCACY EMPLOYEE ELIGIBILITY FOR
FAMILY AND MEDICAL LEAVE.
The Chief Counsel for Advocacy of the Administration shall
immediately notify the Committee on Small Business and
Entrepreneurship of the Senate and the Committee on Small
Business of the House of Representatives if, at any point, an
employee, including a contracted employee, of the Office of
Advocacy who has been employed at the Office of Advocacy for
more than 1 year is not eligible for paid leave under
subchapter V of chapter 63 of title 5, United States Code.
TITLE LXXVI--SBIC ADVISORY COMMITTEE ACT OF 2023
SEC. 11801. SHORT TITLE.
This title may be cited as the ``SBIC Advisory Committee
Act of 2023''.
SEC. 11802. SBIC ADVISORY COMMITTEE.
(a) Definitions.--In this section--
(1) the term ``Advisory Committee'' means the SBIC Advisory
Committee established under subsection (b);
(2) the term ``covered Members'' means the Chair and
Ranking Member of--
(A) the Committee on Small Business and Entrepreneurship of
the Senate; and
(B) the Committee on Small Business of the House of
Representatives;
(3) the terms ``licensee'', ``small business investment
company'', and ``underlicensed State'' have the meanings
given those terms in section 103 of the Small Business
Investment Act of 1958 (15 U.S.C. 662);
(4) the term ``low-income community'' has the meaning given
the term in section 45D(e) of the Internal Revenue Code of
1986;
(5) the term ``rural area'' has the meaning given the term
by the Bureau of the Census;
(6) the terms ``small business concern owned and controlled
by veterans'' and ``small business concern owned and
controlled by women'' have the meanings given those terms in
section 3 of the Small Business Act (15 U.S.C. 632);
(7) the term ``socially or economically disadvantaged
individual'' means a socially disadvantaged individual or
economically disadvantaged individual, as described in
paragraphs (5) and (6)(A), respectively, of section 8(a) of
the Small Business Act (15 U.S.C. 637(a));
(8) the term ``underfinanced State'' means a State that has
below median financing, as determined by the Administrator;
and
(9) the term ``underserved community'' means--
(A) a HUBZone, as defined in section 31(b) of the Small
Business Act (15 U.S.C. 657a(b));
(B) a community that has been designated as an empowerment
zone or an enterprise community under section 1391 of the
Internal Revenue Code of 1986;
(C) a community that has been designated as a promise zone
by the Secretary of Housing and Urban Development; or
(D) a community that has been designated as a qualified
opportunity zone under section 1400Z-1 of the Internal
Revenue Code of 1986.
(b) Establishment.--The Administrator shall establish an
SBIC Advisory Committee to convene outside experts to advise
on the small business investment program under title III of
the Small Business Investment Act of 1958 (15 U.S.C. 681 et
seq.).
(c) Composition.--
(1) Membership.--The Advisory Committee shall be composed
of 16 members appointed by the Administrator as follows:
(A) The Associate Administrator of the Office of Investment
and Innovation of the Administration, or another designee of
the Associate Administrator, as determined by the
Administrator.
(B) 7 members with competence regarding, interest in, or
knowledge of the small business investment program under
title III of the Small Business Investment Act of 1958 (15
U.S.C. 681 et seq.), of whom--
(i) not fewer than 3 shall have a demonstrated record of
expertise in investing in--
(I) low-income communities;
(II) communities that have been designated as qualified
opportunity zones under section 1400Z-1 of the Internal
Revenue Code of 1986;
(III) businesses primarily engaged in research and
development;
(IV) manufacturers;
(V) businesses primarily owned or controlled by individuals
in underserved communities before receiving capital from the
licensee;
(VI) rural areas; or
(VII) underfinanced States; and
(ii) not less than 1 shall be a representative from a trade
association for the small business investment program under
title III of the Small Business Investment Act of 1958 (15
U.S.C. 681 et seq.).
(C) 8 members appointed by the Administrator as follows:
(i) 2 members shall be selected from among the individuals
in the list submitted by the Chair of the Committee on Small
Business and Entrepreneurship of the Senate under paragraph
(2).
(ii) 2 members shall be selected from among the individuals
in the list submitted by the Ranking Member of the Committee
on Small Business and Entrepreneurship of the Senate under
paragraph (2).
(iii) 2 members shall be selected from among the
individuals in the list submitted by the Chair of the
Committee on Small Business of the House of Representatives
under paragraph (2).
(iv) 2 members shall be selected from among the individuals
in the list submitted by the Ranking Member of the Committee
on Small Business of the House of Representatives under
paragraph (2).
(2) Recommendations.--Not later than 30 days after the date
of enactment of this Act, each of the covered Members shall
provide to the Administrator a list of 3 candidates for
membership on the Advisory Committee, who shall be
individuals who have no conflict of interest in the small
business investment program under title III of the Small
Business Investment Act of 1958 (15 U.S.C. 681 et seq.) and
hold a high-ranking position or senior leadership role in--
(A) a relevant industry trade association;
(B) the investment industry with expertise in pensions,
endowments, and other non-banking institutions;
(C) academia with expertise in the investment industry; or
(D) a nonprofit institution, including a nonprofit
institution that serves any of the entities described in
subclauses (I) through (VII) of paragraph (1)(B)(i).
(3) Private sector members.--Not fewer than 2 and not more
than 4 of the members of the Advisory Committee shall be
investors in the private sector who--
(A) invest in small business concerns; and
(B) as of the date of appointment, do not participate in
the small business investment program under title III of the
Small Business Investment Act of 1958 (15 U.S.C. 681 et
seq.).
(4) Chairperson.--The Chairperson of the Advisory Committee
shall be the member of the Advisory Committee appointed under
paragraph (1)(A).
(5) Period of appointment.--Members of the Advisory
Committee shall be appointed for the life of the Advisory
Committee.
(6) Vacancies.--Any vacancy in the Advisory Committee shall
be filled in the same manner as the original appointment.
(d) Deadline for Appointment.--Not later than 60 days after
the date on which the covered Members provide the lists to
the Administrator under subsection (c)(2), the Administrator
shall--
(1) appoint the members of the Advisory Committee; and
(2) submit to Congress a list of the members so appointed.
(e) Duties.--The Advisory Committee shall provide advice
and recommendations to the Administrator concerning--
(1) policy and program development and other matters of
significance concerning activities under the Small Business
Act (15 U.S.C. 631 et seq.) and the Small Business Investment
Act of 1958 (15 U.S.C. 661 et seq.), including diversifying
management teams or companies;
(2) incentives for small business investment companies to--
(A) invest and locate in underlicensed States and
underfinanced States; and
(B) invest in small business concerns, including small
business concerns owned and controlled by socially or
economically disadvantaged individuals, small business
concerns owned and controlled by veterans, and small business
concerns owned and controlled by women;
(3) metrics of success, and benchmarks for success, with
respect to the goals described in this section; and
(4) the impact of the small business investment program
under title III of the Small Business Investment Act of 1958
(15 U.S.C. 681 et seq.) on the private investment market,
including whether investments under the program compete with
the private sector.
(f) Report.--Not later than 18 months after the date on
which the Administrator establishes the Advisory Committee
under subsection (b), the Advisory Committee shall submit to
the Administrator, the Committee on Small Business and
Entrepreneurship of the Senate, and the Committee on Small
Business of the House of Representatives a report that
includes the recommendations of the Advisory Committee
described in subsection (e).
(g) Termination.--The Advisory Committee shall terminate on
the date on which the Advisory Committee submits the report
required under subsection (f).
______