[Congressional Record (Bound Edition), Volume 146 (2000), Part 18]
[Extensions of Remarks]
[Pages 27323-27326]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 27323]]

CONFERENCE REPORT ON H.R. 4577, DEPARTMENTS OF LABOR, HEALTH AND HUMAN 
 SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2001

                                 ______
                                 

                          HON. JAMES M. TALENT

                              of missouri

                    in the house of representatives

                       Friday, December 15, 2000

  Mr. TALENT. Mr. Speaker, I rise to include the following statement in 
the record to accompany H.R. 5663, the New Markets Venture Capital 
Program Act of 2000, as enacted by the Conference Report to accompany 
H.R. 4577. This legislation was originally Title IX of H.R. 5545, as 
enacted through the conference report accompanying H.R. 2614. 
Unfortunately, H.R. 2614 did not gain approval in the Senate. However, 
we were able to save the provisions of H.R. 5545 in H.R. 5663 and H.R. 
5667, which were enacted as part of the Conference Report for H.R. 
4577, the Consolidated Appropriations Act.
  The summary I am inserting is almost identical to the language of the 
conference report filed with H.R. 5545. The bill language has not 
changed and neither has the intent of the House and Senate Small 
Business Committees concerning the New Markets Venture Capital Program 
Act of 2000. I submit this statement as a Joint Statement of the House 
Managers in order to provide assistance to the Small Business 
Administration in implementing this law.
  The purpose of H.R. 5663 the ``New Markets Venture Capital Program 
Act of 2000,'' is to promote economic development, wealth and job 
opportunities in low income (LI) areas by encouraging venture capital 
investments and offering technical assistance to small enterprises. The 
central goal of the legislation is to fulfill the unmet equity 
investment needs of small enterprises primarily located in LI areas.
  The bill creates a developmental venture capital program by amending 
the Small Business Investment Act to authorize the U.S. Small Business 
Administration (SBA) to enter into participation agreements with 10 to 
20 New Markets Venture Capital (NMVC) companies in a public/private 
partnership. It further authorizes SBA to guarantee debentures of NMVC 
companies to enable them to make venture capital investments in smaller 
enterprises in LI areas. And it authorizes SBA to make grants to NMVC 
companies, and to other entities, for the purpose of providing 
technical assistance to smaller enterprises that are financed, or 
expected to be financed, by such companies.
  The Act will also enhance the ability of existing Small Business 
Investment Companies (SBICs) to invest in LI areas. It allows them to 
have access to the leverage capital authorized under the program, 
without entering into a participation agreement with SBA to act as an 
NMVC company.
  Finally, the Act enhances the ability of existing Specialized Small 
Business Investment Companies (SSBICs) to invest in LI areas. It allows 
them to have access to the operational assistance grant funds 
authorized under the program, also without entering into a 
participation agreement with SBA to act as an NMVC company.
  Despite our unprecedented economic prosperity, there remain places in 
America that have yet to reap the benefits of this prosperity. Although 
many Americans enjoy strong income and wage growth, millions in 
underserved areas still do not have access to jobs or entrepreneurial 
opportunities.
  For example, between 1997 and 1998, the median income for the 
nation's households rose 3.5 percent in real terms. Yet 12.7 percent of 
Americans (34.5 million people) still live below the poverty level. 
These 34.5 million people live in the inner cities and rural areas of 
America, where jobs are scarce and there is little to attract would-be 
small business investors.
  The overall poverty rate for the U.S. in 1998 was 12.7 percent, but 
the poverty rate among both African American and Latino populations was 
26 percent--double the national average. In rural communities, poverty 
remains a persistent problem. Job growth is well below the national 
average, with unemployment hovering at or above 14%. Additionally, the 
unemployment levels in many urban communities range from 7.5% for 
African Americans to 6.4% for Hispanics. Both are nearly double the 
national average.
  It is not enough to merely create jobs in these pockets of poverty. 
Rather, we must create a small business backbone, an economic 
infrastructure to enable these communities to develop their full 
potential and participate fully in the economic mainstream.
  H.R. 5663 uses SBA resources targeted to corporations and small 
businesses that want to do business in the untapped markets of our 
underserved communities. It is a wise investment in the hopes of 
millions of families who are not sharing in the American Dream.
  There is a pressing need for this legislation. There are virtually no 
institutional sources of equity capital in distressed communities. The 
national venture capital industry for community development comprises 
only 25 firms managing approximately $157 million. Only 14 of those are 
capitalized at $5 million or more--the absolute minimum for economic 
viability.
  H.R. 5663 will tap unrealized resources in our nation, thus 
benefiting our economy as a whole. It will increase the attractiveness 
of investment in places with high unemployment and too few businesses. 
The more the business community

     SECTION 1. SHORT TITLE.
     SECTION 2. NEW MARKETS VENTURE CAPITAL PROGRAM
       This Section amends Title III of the Small Business 
     Investment Act of 1958 by adding new Sections 351 through 368 
     to establish the ``New Markets Venture Capital Program.''
       H.R. 5663 will add the following new sections to the Small 
     Business Investment Act:
     Section 351. Definitions
       Establishes definitions for developmental venture capital, 
     New Markets Venture Capital Companies, low- or moderate-
     income geographic area, operational assistance, participation 
     agreement, and Specialized Small Business Investment 
     Companies as used in the legislation.
       ``Developmental venture capital'' is defined as equity 
     capital invested in small businesses, with a primary 
     objective of fostering economic development in low income 
     geographic areas. For the purposes of this Act, the Committee 
     considers equity capital investments to mean stock of any 
     class in a corporation, stock options, warrants, limited 
     partnership interests, membership interests in a limited 
     liability company, joint venture interests, or subordinated 
     debt with equity features if such debt provides only for 
     interest payments contingent upon earnings. Such investments 
     must not require amortization. They may be guaranteed; but 
     neither the Equity capital investment nor the guarantee may 
     be secured.
       A ``New Markets Venture Capital Company'' is defined as a 
     company that has been approved by the Administration to 
     operate under the New Markets Venture Capital Program, and 
     has entered into a participation agreement with the 
     Administration to make equity investments and provide 
     technical assistance to small enterprises located in low- or 
     moderate-income areas.
       The term ``low income geographic area'' means a census 
     tract, or the equivalent county division as defined in the 
     Bureau of the Census for purposes of defining poverty areas, 
     in which the poverty rate is not less than 20 percent. In 
     those areas in a metropolitan area 50 percent or more of the 
     households must have an income equal to less than 60 percent 
     of the median income for the area. In rural areas the median 
     household income for a tract must not exceed 80 percent of 
     the statewide median household income. This definition also 
     includes any area located
       The term ``low income individual'' is included for the 
     purpose of allowing waivers of the low income area 
     requirement for areas of significant economic disadvantage 
     that may not otherwise qualify. A low income individual is 
     defined as someone whose income does not exceed 80 percent of 
     the area median income in metropolitan areas, or 80 percent 
     of either the area or statewide median income in rural areas.
       The term ``operational assistance'' is defined as 
     management, marketing, and other technical assistance that 
     assists a small business concern with business development.
       ``Participation agreement'' is defined as an agreement 
     between the Administration and an NMVC Company detailing the 
     company's operating plan and investment criteria; and 
     requiring that investments be made in smaller enterprises as 
     least 80 percent of which are located in low income 
     geographic areas.
       ``Specialized Small Business Investment Company'' means any 
     small business investment company that was licensed under 
     section 301(d) as in effect before September 30, 1996.
     Section 352. Purposes
       Describes the purposes of the Act, which are:
       (1) to promote economic development and the creation of 
     wealth and job opportunities in low- or moderate-income 
     geographic areas and among individuals living in such areas 
     by encouraging developmental venture capital investments in 
     smaller enterprises primarily located in such areas; and
       (2) to establish a developmental venture capital program, 
     with the mission of addressing the unmet equity investment 
     needs of small entrepreneurs located in low- or moderate-
     income areas; to be administered by the Small Business 
     Administration; to enter into a participation agreement with 
     NMVC companies; to guarantee debentures of NMVC companies to 
     enable each such company to make developmental venture 
     capital

[[Page 27324]]

     investments in smaller enterprises in low- or moderate-income 
     geographic areas; and to make grants to NMVC companies for 
     the purpose of providing operational assistance to smaller 
     enterprises financed, or expected to be financed, by such 
     companies.
     Section 353. Establishment
       Authorizes the SBA to establish the NMVC Program, under 
     which the SBA may form New Markets Venture Capital companies 
     by entering into participation agreements with firms that are 
     granted final approval under the requirements set forth in 
     Section 354 and formed for the purposes outlined in Section 
     352.
       This Section also authorizes SBA to guarantee the 
     debentures issued by the NMVC Companies as provided in 
     Section 355; and to make operational assistance grants to 
     NMVC Companies and other entities in accordance with Section 
     358.
     Section 354. Selection of the New Markets Venture Capital 
         Companies
       Establishes the criteria to be followed by SBA in selecting 
     the NMVC Companies. This section provides for specific 
     selection criteria to be developed by the SBA--based on the 
     criteria enumerated in this legislation--and designed to 
     ensure that a variety of investment models are chosen and 
     that appropriate public policy goals are addressed. 
     Geographic dispersion must also be taken into account in the 
     selection process.
       H.R. 5663 requires Program participants to satisfy the 
     following application requirements:
       (1) Each NMVC must be a newly formed, for-profit entity 
     with at least $5 million of contributed capital or binding 
     capital commitments from non-Federal investors, and with the 
     primary objective of economic development in low- or 
     moderate-income geographic areas.
       (2) Each NMVC's management team must be experienced in some 
     form of community development or venture capital financing.
       (3) Each NMVC must concentrate its activities on serving 
     its investment areas, and submit a proposal that will expand 
     economic opportunities and address the unmet capital needs 
     within the investment areas.
       (4) Each applicant must submit a strong proposal to provide 
     operational assistance, including the possible use of 
     outside, licensed professionals.
       (5) Each NMVC must have binding commitments (in cash or in-
     kind) for operational assistance and overhead, payable or 
     available over a multi-year period not to exceed 10 years, in 
     an amount equal to 30% of its committed and contributed 
     capital. These commitments may be from any non-SBA source and 
     the cash portion may be invested in an annuity payable semi-
     annually over a multi-year period not to exceed 10 years.
       The Committee is well aware that it will be difficult for 
     some NMVCs to raise their entire operational assistance match 
     during the application stage. Those NMVCs that are unable to 
     raise the required match, but have submitted a reasonable 
     plan to the Administrator to meet the requirement, may be 
     granted a conditional approval from the Administrator and be 
     allowed to draw one dollar of federal matching funds for 
     every dollar of private funds raised provided that (for the 
     purpose of final approval) they raise at least 20 percent of 
     the required matching funds, and have at least 20 percent of 
     the match on hand when applying for additional grant funds.
       The Committee believes that it is important to give NMVCs 
     the flexibility to obtain the required private operational 
     assistance funds, however, from a safety and soundness 
     standpoint, federal assistance funds should not be placed at 
     greater risk than private assistance funds.
       This conditional approval shall be made with the 
     expectation that the required capital funding commitments 
     will be obtained within two years of the conditional 
     approval.
       The bill also authorizes SBA to select firms that have 
     experience with investing in enterprises located in low 
     income areas to participate as NMVCs. SBA will enter into an 
     agreement with each NMVC setting forth the specific terms of 
     that firm's participation in the program. Each agreement will 
     be tailored to the particular NMVC's operations and will be 
     based on the NMVC's own proposal, submitted as part of the 
     NMVC's application form. The agreement will require that 
     investments be made by the NMVC in smaller enterprises, at 
     least 80% of which are located in low income geographic 
     areas.
       In order for an investment to be counted toward the 80% 
     goal under H.R. 5663, the investment must be made in a small 
     business concern located in an LI area. This ensures that the 
     New Markets Venture Capital Company Program will focus 
     investment capital where it is most needed, rather than 
     duplicating existing SBA programs.
       The Committee believes that the targeting of low-income 
     communities is the most important element of H.R. 5663. If 
     Congress and the Administration are serious about helping our 
     nation's low-income cities, towns, and rural areas we should 
     demonstrate our commitment by ensuring that this bill is 
     focused on these areas. The Committee has accomplished this 
     by requiring that 80% of all investment will concentrate on 
     those needing this help the most.
       By clearly focusing this legislation on the communities 
     that need assistance the most, the Committee has maximized 
     the impact of this program. It is also the Committee's view 
     that by investing the majority of funds in low income 
     communities, we will not only provide the benefit of 
     increased opportunities for working families, but H.R. 4530 
     will also provide the benefit of improving the physical 
     community. This double benefit ensures that the resources 
     spent under H.R. 4530 will provide the maximum economic 
     impact on the low- or moderate-income communities to which 
     this bill is targeted.
       The Committee recognizes that the legislation may offer 
     some benefits to working families located outside of the LMI 
     areas as defined by the legislation. To address this concern, 
     up to 20% of a New Markets Venture Capital Company's 
     investments are permitted in those businesses that are in 
     need of equity investment, but fall outside the LMI areas as 
     defined by the legislation. However, it is the
     Section 355. Debentures
       Authorizes SBA to guarantee debentures issued by NMVC 
     companies. The terms of the guaranteed debentures issued 
     under this section may not exceed 15 years and the maximum 
     total guarantee for any NMVC company shall not exceed 150 
     percent of a company's private capital.
     Section 356. Issuance and Guarantee of Trust Certificates
       Authorizes SBA to issue and guarantee trust certificates 
     representing ownership of all or part of the debentures 
     issued by an NMVC company and guaranteed by the 
     Administration. Each guarantee issued under this section is 
     limited to the amount of the principal and interest on the 
     guaranteed debentures that compose the trust or pool of 
     certificates.
       This section grants SBA subrogation and ownership rights 
     over the trust certificates guaranteed under this section, 
     but prohibits SBA from collecting a fee for any guarantee of 
     a trust certificate issued under this section. Finally, this 
     section allows SBA to contract with an agent to carry out the 
     polling and central registration functions for the trust 
     certificates issued.
     Section 357. Fees
       Authorizes SBA to charge such fees as it deems appropriate 
     with respect to any guarantee or grant issued to an NMVC 
     company. This authorization is subject to the prohibition 
     contained in Section 356 that prohibits SBA from collecting a 
     fee for any guarantee of a trust certificate issued under the 
     section.
     Section 358. Operational Assistant Grants
       Authorizes SBA to make operational assistance grants to new 
     Markets Venture Capital Companies established under the 
     legislation and to certain Specialized Small Business 
     Investment Companies.
       Each NMVC is eligible for one or more grants, on a matching 
     basis, in an amount equal to the amount the NMVC makes 
     available for operational assistance. The operational 
     assistance grant will be made available to the NMVC semi-
     annually over a multi-year period not to exceed 10 years. SBA 
     is also authorized to provide supplemental grants to NMVCs.
       This section of the bill also allows Specialized Small 
     Business Investment Companies (``SSBICs'') access to the 
     operational assistance grants funds authorized under the 
     program without entering into a participation agreement with 
     SBA to act
       This section of the bill explicitly prohibits NMVCs and 
     SSBICs from using operational assistance grants, both the 
     federal contribution and the match, to supplement their own 
     bottom line. This prohibition includes items that are not 
     aimed at directly benefiting the small enterprises, such as, 
     but not limited to--the purchase of furniture, office 
     supplies, physical improvements to the NMVCs' or SSBICs' 
     places of business, and marketing services. The Committee 
     included this limitation to ensure that the investments made 
     through this program will be for the benefit of small 
     businesses located in LMI areas, which is the intent of the 
     legislation.
       It is the Committee's view that this provision does allow 
     for operational assistance funds under the legislation to be 
     used for salaries of those NMVC or SSBIC employees that are 
     providing direct technical assistance to the small 
     enterprise. NMVCs and SSBICs that use their own staff to 
     provide the necessary direct assistance to smaller 
     enterprises may be reimbursed for the direct cost of staff 
     out of grant funds, but only to the extent such costs are 
     allocable to the operational assistance.
       This section also requires the NMVC companies to document 
     in their operation plan the extent to which they intend to 
     use licensed professionals (e.g., licensed attorneys and 
     Certified Public Accountants) when providing technical 
     assistance that requires such expertise. This ensures that 
     the NMVC companies will provide the best assistance possible 
     to the small business concerns. It is not meant to be 
     constructed as requirement that licensed professionals are 
     sole persons to provide such assistance, but their use is 
     encouraged in highly technical situations.
       Evidence presented to the Congress by the community 
     development venture capital advocates indicates that 
     providing technical

[[Page 27325]]

     assistance to a small business dramatically increases that 
     business' chance of success. The Congress wishes to ensure 
     that all small businesses receiving technical assistance 
     under this program will receive the best technical assistance 
     available. We believe this will further increase the 
     businesses' chances of success.
     Section 359. Bank Participation
       Allows any national bank, and any member bank of the 
     Federal Reserve System to invest in an NMVC company formed 
     under this legislation so long as the investment would not 
     exceed 5 percent of the capital and surplus of the bank.
       Banks that are not members of the Federal Reserve System 
     are allowed to invest in an NMVC company formed under this 
     legislation so long as such investment is allowed under 
     applicable State law, and so long as the investment would not 
     exceed 5 percent of the capital and surplus of the bank.
     Section 360. Federal Financing Bank
       Establishes that Section 318 of the Small Business 
     Investment Act does not apply to any NMVC company created 
     under this legislation.
      Section 361. Reporting Requirements
       Establishes reporting requirements for the NMVC companies.
       Specifically, the NMVC companies are required to provide to 
     SBA such information as the Administration requires, 
     including: information related to the measurement criteria 
     that the NMVC proposed in its program application; and, for 
     each case in which the NMVC makes an investment or a grant to 
     a business located outside of an LMI area, a report on the 
     number and percentage of employees of the business who reside 
     in an LMI area.
     Section 362. Examinations
       Requires that each NMVC company shall be subjected to 
     examinations made at the direction of the Investment Division 
     of SBA. This section allows for examinations to be conducted 
     with the assistance of a private sector entity that has both 
     the necessary qualifications and expertise.
       It is the intent of the Committee that the oversight of the 
     NMVC program be modeled after that developed for the SBIC 
     program and administered by SBA's Investment Division. 
     Oversight should include a close working relationship between 
     SBA analysts and NMVC management teams, detailed reporting 
     requirements, frequent on-site examinations to evaluate 
     performance and conformance with the operating plan, and 
     careful analysis of the firm's economic impact.
     Section 363. Injunctions and Other Orders
       Grants SBA the power of injunction over NMVC companies and 
     the authority to act as a trustee or receiver of a company if 
     appointed by a court.
       This section of the legislation closely tracks the existing 
     injunction provision (Section 311) of the Small Business 
     Investment Act of 1958. Again, it is the Committee's intent 
     that oversight of the NMVC program be modeled after that 
     developed for the SBIC program and administered by SBA's 
     Investment Division. This oversight should include a close 
     working relationship between SBA analysts and NMVC management 
     teams, detailed reporting requirements, frequent on-site 
     examination to evaluate performance and conformance with the 
     operating plan, and careful analysis of the firm's economic 
     impact.
     Section 364. Additional Penalties for Noncompliance
       Grants SBA or the Attorney General the authority to file a 
     cause of action against an NMVC company for noncompliance. 
     Should a court find that a company violated or failed to 
     comply with provisions of this legislation or other 
     provisions of the Small Business Investment Act of 1958, this 
     section grants SBA the authority to void the participation 
     agreement between the company and the SBA.
     Section 365. Unlawful Acts and Omissions; Breach of Fiduciary 
         Duty
       Defines what is to be considered as a violation of this 
     legislation, who is considered to have a fiduciary duty, and 
     who is ineligible to serve as an officer, director, or 
     employee of any NMVC company because of unlawful acts.
       This section of the legislation closely tracks the unlawful 
     acts provision (Section 314) of the Small Business Investment 
     Act of 1958. It is the Committee's intent to grant SBA the 
     same authority over NMVC companies that it has over Small 
     Business Investment Companies with respect to unlawful acts 
     and the breach of fiduciary responsibility.
     Section 366. Removal or Suspension of Directors or Officers
       Grants SBA the authority to use the procedures set forth in 
     Section 313 of the Small Business Investment Act of 1958 to 
     remove or suspend any director or officer of any NMVC 
     company.
     Section 367. Regulations
       Authorizes the Small Business Administration to issue such 
     regulations as it deems necessary to carry out the provisions 
     of the legislation.
     Section 368. Authorization of Appropriations
       Authorizes appropriations for the Program for Fiscal Years 
     2001 through 2006. This section authorizes such subsidy 
     budget authority as necessary to guarantee $150,000,000 of 
     debentures and $30,000,000 to make operational assistance 
     grants.
       The Committee estimates that the Program will only require 
     a one-time appropriation of $45 million--$15 million for loan 
     guarantees and $30 million for operational assistance grants. 
     This $15 million will allow SBA to back $150 million in loans 
     to small business in low- or moderate-income areas.
     Section 368(c). Conforming Amendment
       Makes a conforming change to the Small Business Investment 
     Act of 1958 to account for the changes made by this 
     legislation.
     Section 368(d). Calculation of Maximum Amount of SBIC 
         Leverage
       Allows Small Business Investment Companies (``SBICs'') to 
     obtain additional access to leverage outside the statutory 
     caps. The exemption of the SBICs, however, is limited only to 
     investments they make in LMI areas.
       This section provides that investments made in LMI areas 
     will not apply against the leverage cap of the individual 
     SBIC as long as the total amount invested through the program 
     does not exceed 50% of the SBIC's paid-in capital.
     Section 368(e). Bankruptcy Exemption
       Adds NMVC companies to the list of entities that may not be 
     considered a debtor under a Title 11 bankruptcy proceeding.
     Section 368(f). Federal Savings Associations
       Amends the ``Home Owners Loan Act'' to allow federal 
     savings associations to invest in an NMVC company formed 
     under this legislation so long as the investment would not 
     exceed 5 percent of the capital and surplus of the savings 
     association.
     Section 102. BusinessLINC Grants and Cooperative Agreements.
       H.R. 5663, also contains section 102 which establishes the 
     BusinessLINC program, designed to promote business growth in 
     inner cities and economically distressed rural areas by 
     matching large and small firms into business-to-business 
     partnering and mentoring relationships. BusinessLINC would 
     accomplish this by providing seed funding to third party 
     entities such as local Chambers of Commerce to promote such 
     relationships. In addition to seed funding, such entities 
     will also receive funds for technical assistance programs to 
     small businesses to supplement the mentor-protege 
     relationships established as a result of BusinessLINC.
       BusinessLINC helps businesses by providing online 
     information and a database of companies that are interested 
     in mentor-protege programs.
       Grants may be made to a coalition/combination of private 
     and public entities only if the coalition/combination 
     provides an amount, either in kind or in cash, equal to the 
     grant amount for the purposes above.
       Despite the unprecedented economic prosperity we are 
     experiencing in this country, there are several areas of the 
     country that have still not achieved parity. These areas are 
     primarily inner cities, rural areas, and Native American 
     communities. BusinessLINC will enable business opportunities 
     for small businesses who would otherwise have no access to 
     outside larger markets. While these small businesses have 
     strong potential, they are located in communities where 
     corporate America would not necessarily look. BusinessLINC 
     will break that barrier. When the BusinessLINC model has been 
     applied in the past, small businesses have seen growth as 
     much as 45 percent. With this assistance, the local community 
     will be charting its own path to recovery. The ``LINC'' in 
     BusinessLINC stands for ``Learning, Information, Networking 
     and Collaboration.''
       Section 102 adds a new paragraph (n) ``BusinessLINC Grants 
     and Cooperative agreements.'' to section 8 of the Small 
     Business Act.
       Paragraph (1) allows the Administrator to make grants or 
     enter into cooperative agreements with any coalition/
     combination of private and/or public entities to (a) promote 
     business-to-business relationships between large and small 
     businesses and (b) to provide online information and a 
     database of companies that are interested in mentor-protege 
     programs.
       It is the opinion of the Committee that private and/or 
     public entities eligible for grants should be limited to 
     chambers of commerce and other not-for-profit business 
     organizations. The Committee intend that grant money be 
     provided to large businesses. Further, if a grant is made to 
     a combination of entities, one entity must take a lead 
     position.
       It is further the opinion of the Committee that promotion 
     of business-to-business relationships between large and small 
     businesses referenced in paragraph (a) above should include 
     the facilitation of such relationships as mentor-protege, 
     prime/subcontractor, and teaming.
       The Committee intends that an element to be considered by 
     the Administrator when evaluating a grant proposal, shall be 
     the training of small businesses or ``proteges.'' An 
     additional evaluation element intended by the Committee shall 
     be measurable goals to be achieved through the business-to-
     business partnerships.
       The Committee further intends that the online database 
     referenced in paragraph (b) above, should make use of the 
     SBA's current PRO-Net database to the greatest extent

[[Page 27326]]

     practicable. The Committee is concerned that online privacy 
     issues should also be addressed by the SBA in the 
     implementation of the databases. Further, it is the 
     Committee's opinion that the databases should be vigilantly 
     maintained by the SBA to ensure that only firms eligible to 
     be mentors should be included in the mentor database, and 
     only those firms eligible to serve as intermediaries should 
     be included in the intermediary database.
       Paragraph (2) specifies that the Administrator may make 
     grants as long as the coalition/combination of public and/or 
     private entities provides an amount, either in kind or in 
     cash, equal to the grant amount for the purposes delineated 
     in paragraph (1) above.
       The Committee is well aware that it may be difficult for 
     some entities to raise their entire match during the 
     application stage. Those entities that are unable to raise 
     the required match, but have submitted to the Administrator a 
     reasonable plan to meet the requirement, may be granted a 
     conditional approval from the Administrator and be allowed to 
     draw one dollar of federal matching funds for every dollar of 
     private funds raised. This conditional approval shall be made 
     with the expectation that the required funding commitments 
     will be obtained within two years of the conditional 
     approval.
       The Committee believes that it is important to give 
     entities the flexibility to obtain the required private 
     operational assistance funds, however, from a safety and 
     soundness standpoint, federal funds should not be placed at 
     greater risk than private capital.
       Paragraph (3) specifies the authorization for the program 
     for fiscal years 2001 through 2003. This amount shall be 
     $6,600,000 for each of the three fiscal years.

     

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