[Congressional Record (Bound Edition), Volume 153 (2007), Part 18]
[House]
[Pages 25773-25788]
[From the U.S. Government Publishing Office, www.gpo.gov]




            SMALL BUSINESS INVESTMENT EXPANSION ACT OF 2007

  The SPEAKER pro tempore. Pursuant to House Resolution 682 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the state of the Union for the consideration of the bill, H.R. 3567.

                              {time}  1656


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 3567) to amend the Small Business Investment Act of 1958 to 
expand opportunities for investments in small businesses, and for other 
purposes, with Mr. Kind in the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered read the 
first time.
  The gentlewoman from New York (Ms. Velazquez) and the gentleman from 
Ohio (Mr. Chabot) each will control 30 minutes.
  The Chair recognizes the gentlewoman from New York.
  Ms. VELAZQUEZ. Mr. Chairman, I yield myself as much time as I may 
consume.
  Mr. Chairman, venture capital is the life blood of our Nation's small 
businesses. Venture capital not only serves as the raw material for 
economic growth and job creation, but also acts as fuel for the pursuit 
of new ideas and innovation. Without it, businesses cannot expand, and 
even the best ideas wither and die in what has come to be known as the 
``Valley of Death'' between setup and commercialization. Clearly, our 
Nation's 26 million entrepreneurs depend upon this resource, and yet 
despite its obvious importance, venture capital remains elusive to the 
vast majority of small businesses.
  The Small Business Investment Expansion Act of 2007 is a bipartisan 
effort introduced by Mr. Altmire and Mr. Graves. This legislation 
signifies our commitment to helping small businesses receive the 
venture capital that is vital to economic growth, innovation and job 
creation; and I rise in support of this bill.
  Perhaps no Federal agency is better positioned to meet the challenges 
of small business investment than the Small Business Administration. 
Since 1958, the SBA's investment programs have helped hundreds of small 
businesses and have contributed to the success of several of our 
Nation's notable companies, including Apple Computer, Federal Express, 
Staples, and Costco. Unfortunately, the SBA's programs

[[Page 25774]]

have suffered the effects of mismanagement, flat funding and neglect in 
recent years. By the SBA's own estimates, the total unmet need for 
early-stage equity financing for small businesses is approximately $60 
billion each year. Additionally, it has been identified that the 
greatest equity capital financing need of small businesses is financing 
in the amount of $250,000 to $5 million.
  While new investment strategies possess the potential to make a 
significant impact on unmet capital needs of start-up businesses, they 
have not been fully leveraged for the benefit of our Nation's 
entrepreneurs. The new market's venture capital program has also not 
achieved its full potential. And perhaps most notably, unreasonable and 
outdated policies are still in use, and they restrict the free flow of 
venture capital and other forms of investment to small firms.

                              {time}  1700

  This policy has had an obvious impact on the ability of new 
businesses to access venture capital. Over the past 5 years, there has 
been a steady shift of venture capital away from newly formed 
businesses toward later-stage businesses. In 2002, the SBA licensed 41 
new SBIC funds, more than half of which focus on investment in early-
stage businesses. By contrast, in 2006, the SBA licensed only 10 new 
SBIC funds, none of which were for investment in early-stage 
businesses.
  The Small Business Investment Expansion Act of 2007 represents an 
important step toward revitalizing SBA's investment mission. This 
legislation features a renewed focus on providing equity capital to 
startup firms and businesses in low-income areas, two key sectors of 
the small business community that have continued to face particularly 
high barriers to securing venture capital. The bill will also establish 
a new Angel Investment Program to fill the gap in seed capital that was 
created by the elimination of the participating securities program.
  H.R. 3567 touches on all aspects of the SBA's investment mission, 
including the SBA's surety bonding program. This bill will provide 
much-needed updates to this program and will introduce initiatives 
aimed at increasing the number of businesses and bonding companies that 
participate in the program. Our small businesses have always been the 
incubators of innovation, and investment has been the fuel for this 
great engine of American economic development. As we continue to rely 
on entrepreneurs to spur economic growth and create jobs, the need for 
venture capital will only continue to grow. This legislation ensures 
that small businesses will have the resources they need to remain 
competitive and successful while ensuring that SBA's programs are the 
premier source for small business capital.
  For these reasons, H.R. 3567 has the support of the National Venture 
Capital Association, the Value Technology Industry Organization, the 
Surety and Fidelity Association of America and the American Insurance 
Association.
  Mr. Chairman, I strongly urge my colleagues to vote for the Small 
Business Expansion Act of 2007, and I reserve the balance of my time.
  Mr. CHABOT. I yield myself such time as I may consume.
  Mr. Chairman, today I rise in support of H.R. 3567, the Small 
Business Investment Expansion Act of 2007. Risk-taking and 
entrepreneurship have been part of the American fabric since this 
country's founding, whether it was emigres from France founding a 
munitions company in the early years that would later become DuPont or 
an immigrant peddler who would go on to create Lazarus stores in my 
district, Cincinnati, now Macy's, or two Dayton, Ohio bicycle mechanics 
who invented the airplane. The rise of America is replete with stories 
of entrepreneurs taking risks to change the economy and ultimately the 
world.
  Recent history continues that trend. The most powerful computer 
software company in the world, Microsoft, was created by two college 
dropouts working out of a Seattle garage. Steven Jobs was tinkering in 
his garage when he developed the computer that would lead to the 
creation of the Apple. Fred Smith created Federal Express based on a 
paper written for an undergraduate class at Yale. All of these 
entrepreneurs succeeded because they had an idea and were able to raise 
the money they needed to perfect and market that idea.
  Yet, America has changed. Investors, venture capitalists, hedge 
funds, and private equity firms use sophisticated global investment 
strategies to maximize their returns. The budding entrepreneur with a 
great idea today might get lost in the search by investors for a 
company with a significant business history and record of returns. To 
maintain America as the leader of innovative entrepreneurial firms, we 
must ensure economic and fiscal policy that provides capital to 
entrepreneurs.
  There is little doubt that efforts of Congress, when Republicans 
controlled it, to adopt tax policies that spurred investment and growth 
provided significant incentives to invest in businesses. That is why I 
would very much like to see those tax policies ultimately made 
permanent, so we don't go back and raise taxes. But the Committee on 
Small Business has heard that the market does not provide adequate 
equity funding to the smallest of startup businesses, including those 
that will become the next Dell Computer, Nike, Outback Steakhouse or 
Callaway Golf Clubs. H.R. 3567 takes, in my view, a balanced approach 
to ensure that these new businesses have access to capital. It balances 
the need for limited Federal funding with fiscal restraint and protects 
the Federal taxpayers.
  Now, during the markup of this bill, I did voice strong objections to 
title V as it was introduced. There are five titles in this particular 
piece of legislation. Since markup of the legislation, however, to the 
credit of the gentlewoman from New York, Nydia Velazquez, we worked 
together and we negotiated in good faith and reached a bipartisan 
agreement to address the concerns that we voiced. I believe that the 
compromise that we reached adequately addresses my concern. I want to 
again compliment the chairwoman for her leadership in that effort. It 
eliminates some of the more egregious decisions of the SBA concerning 
venture capital investment in small businesses while maintaining the 
integrity of the Federal procurement process for small business by 
preventing conglomerations of venture-owned firms to bid as small 
businesses.
  Mr. Chairman, in closing, I would again like to thank the chairwoman 
for working in a bipartisan manner on this bill. I would also like to 
thank her staff, particularly Michael Day and Adam Minehardt, for their 
work on this important piece of legislation. I also want to thank Barry 
and Kevin Fitzpatrick for their help, as well, on this bill.
  Mr. Chairman, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Chairman, I yield 5 minutes to the gentleman from 
Pennsylvania (Mr. Altmire). He is the chairman of the Small Business 
Subcommittee on Investigations and Oversight and the leading sponsor of 
this bill.
  Mr. ALTMIRE. Mr. Chairman, I thank the chairwoman, Ms. Velazquez, for 
her assistance in putting together the Small Business Investment 
Expansion Act. I appreciate the opportunity I have had to work with Mr. 
Chabot and Mr. Graves, to work with both of them to produce a 
bipartisan bill that will benefit small businesses across this country. 
Their input was invaluable, and I thank each of them for their 
leadership.
  I represent a district that extends north of Pittsburgh which is home 
to world-class universities. Western Pennsylvania has thousands of 
small business innovators who are doing cutting-edge research and 
development in the life sciences. Western Pennsylvania's entrepreneurs 
have created numerous success stories; however, many of these companies 
did not become success stories overnight. Each of them had their 
challenges. Unfortunately, thousands of small businesses are formed 
each year that are unable to take that next step and overcome the 
capital expenses necessary to keep their businesses afloat during the 
early going.

[[Page 25775]]

  Part of the problem resides within the Small Business 
Administration's investment programs. The current Small Business 
Investment Act was written in 1958 and simply did not envision the type 
of capital environment that exists today in the 21st century. This 
antiquated law has led to inefficiencies in the SBA that contribute to 
an annual shortfall of $60 billion in unmet capital needs for American 
small businesses. Small businesses often require an infusion of private 
investment to purchase additional assets, such as equipment, office 
space and personnel. But the private investment can be difficult to 
acquire.
  To address the substantial unmet capital needs of small businesses in 
western Pennsylvania and across the country, I introduced the bill we 
are debating today, the Small Business Investment Expansion act. My 
bill will improve the environment for small businesses by expanding 
access to two vital sources of investment: venture capital and angel 
investments. Not only do small businesses require investment capital, 
they also require support that will allow them to do research and 
development. Current regulations prohibit a number of these small firms 
from qualifying for support offered through Federal initiatives due to 
their venture ownership. With this legislation, we can create a fix 
that reflects the reality of today's climate, that there are many small 
companies entering into industries that depend on this type of 
investment as their primary financing option.
  Small businesses are the backbone of our economy. It is critical that 
the Federal Government do more to connect these small firms with the 
capital investment required for them to succeed. This bill modernizes 
the SBA's investment programs and creates an environment that 
facilitates the flow of capital to small businesses. This bill will 
create jobs, grow the economy, and help thousands of entrepreneurs grow 
from startups into thriving small businesses.
  Mr. Chairman, for that reason, I strongly support this bill. I 
encourage my colleagues to vote for it.
  Mr. CHABOT. Mr. Chairman, I reserve the balance of my time.
  Ms. VELAZQUEZ. I yield 2 minutes to the gentlewoman from Pennsylvania 
(Ms. Schwartz).
  Ms. SCHWARTZ. Mr. Chairman, I rise to express my support for the 
Small Businesses Investment Expansion Act and to commend my colleague 
from Pennsylvania for his leadership on this issue. In particular, I 
appreciate his work to include a provision that modernizes the 
definition of a small business.
  In today's economy, there are many small companies entering high 
technology, capital-intensive industries that require significant 
investment to bring their products to market. I have seen this 
firsthand in my home State of Pennsylvania, which is a national leader 
in biotechnology initiatives. The biosciences have had a significant 
economic impact on Pennsylvania's economy with more than 125 
biopharmaceutical companies and 2,000 bioscience-related companies 
calling the Commonwealth of Pennsylvania their home. These companies 
are developing groundbreaking therapy, devices, diagnostics and 
vaccines that really will treat once-untreatable diseases and 
debilitating conditions, providing hope for millions of people.
  But developing new cures is not cheap. It often takes 10 years or 
more and costs hundreds of millions of dollars to bring a new treatment 
to market. This means that new bioscience companies can experience 
years of large cash outlays before they have the opportunity to cover 
their costs and repay their loans, let alone realize any profit.
  As the author of a comprehensive proposal, the American Life Sciences 
Competitiveness Act, I have identified a number of actions that this 
Congress can and I hope will take to improve access to capital for this 
life-saving research and product development.
  I am pleased to lend my support to this bill before us today that 
would correct the outdated SBA regulations that currently preclude 
these small businesses, even those with only a handful of employees, 
from receiving assistance because they rely on venture capital to fund 
their work. It is time to enable these American small businesses, which 
are such a vital part of our Nation's economic growth, to compete for 
Federal grants and other small business assistance so they may pursue 
cutting-edge technologies and products that will benefit us all.
  Mr. CHABOT. I yield 4 minutes to the gentleman from Missouri (Mr. 
Graves) who has been one of the two principal sponsors of this 
important legislation.
  Mr. GRAVES. Mr. Chairman, I first would like to thank Ranking Member 
Chabot and Chairwoman Velazquez for moving forward with this bill.
  Mr. Chairman, this bill is critically important to small businesses. 
I am glad I could be a part of this very important process. Small 
businesses are the backbone of our economy. Access to capital is 
essential to their survival and growth. I want to thank you for your 
support and thank them for their support on these provisions.
  I also want to note the bipartisan nature of how the Small Business 
Investment Expansion Act passed through committee and is here before us 
on the House floor. Some initial concerns were brought up over the 
legislation. I am pleased to report that those concerns have been 
resolved due to the open and transparent manner in which this bill is 
being considered.
  Lastly, I would like to thank the staffs of Chairwoman Velazquez and 
Ranking Member Chabot for all their hard work on this issue. This bill 
has been a work in progress for roughly 3 years. I appreciate all the 
work that they have done on my behalf. This is a very important issue 
to me, my constituents, and small businesses everywhere. I am very glad 
to see it before the House today.
  The Small Business Investment Expansion Act improves small business 
access to capital. Whether it is from the Small Business 
Administration, SBA, or through private investment, capital helps small 
companies bring their products to market and succeed. With an economy 
dependent on the success of small companies and firms, it is essential 
to pass this legislation.
  I want to speak to title V of this bill for a brief moment. The 
language included in this title deals with the SBA affiliation rules 
and has been an issue of utmost importance to my constituents and to me 
over the past few years. Private investment in small business is a good 
thing and should be encouraged, not discouraged. The language will 
exclude the employees of these private investors when determining the 
size of a small business, thus allowing them continued access to 
important programs under the SBA.

                              {time}  1715

  This is important because many small firms and capital intensive 
fields rely on private investment to continue the very promising 
research and development that has attracted such development. The SBA 
has a number of programs that have proven vital to the success of small 
businesses and want to ensure our small businesses have continued 
access to them.
  American innovation is what drives this country and its economy, and 
as Members of Congress we need to create an environment that will keep 
American innovation at the forefront of the global market. As a member 
of the Small Business Committee, I work to advocate on behalf of small 
businesses. The passage of this bill is a tremendous help to the 
competitiveness of those small firms, which is why I support its 
passage.
  Again, I would like to thank the chairwoman and ranking member.
  Ms. VELAZQUEZ. Mr. Chairman, I would like to say to the gentleman, 
Mr. Graves, thank you so much for the work that you have done with the 
committee to work in a bipartisan manner to address the issues that are 
important to small businesses in this country. Your input and 
collaboration in putting together this legislation is greatly 
appreciated.
  Mr. Chairman, I yield 2 minutes to the gentleman from Ohio (Mr. 
Ryan).
  Mr. RYAN of Ohio. Mr. Chairman, I thank the gentlewoman and also want

[[Page 25776]]

to lend my support to this fine piece of legislation. I also thank the 
gentleman from Ohio (Mr. Chabot). This is something that many areas of 
our country need. Those areas that once thrived in the Industrial Age 
and are trying to recreate their economy need the kind of early capital 
that this bill is going to put into these small firms.
  The gentleman from Pennsylvania who was here earlier, Mr. Altmire, 
and I are trying to create a Technology Belt between Cleveland, Akron, 
Youngstown, and Pittsburgh. We have many early startup companies that 
need the venture capital that they are going to be able to access, in 
particular in the New Market Venture Capital Program, which will allow 
low-income areas to expand the reach for more capital to go in there, 
also the office of Angel Investment, where we have public-private 
partnerships so that those early startup companies will have that early 
capital that they need. Tax cuts for the top 1 percent don't get to 
these businesses. We need that early capital in order to grow them
  In Ohio, for example, we have a company in Cleveland called 
BioEnterprise. Over the past 5 years they have brought in over $500 
million in venture capital, 80 percent of it from outside of the State 
of Ohio. They employ 20,000 people in northeast Ohio. The hardest thing 
for them to do is to get that early venture capital. That's what this 
bill does.
  So I want to thank the gentlewoman, I want to thank the gentleman 
from Ohio and also the gentleman from Pennsylvania for putting this 
together. We are giving life and hope and opportunity to those areas of 
the country that are trying to retool their economy. This is going to 
allow us to do this, whether it's medical device technology, any kind 
of medical technology that may be coming up, advanced manufacturing. 
These are the kinds of programs that we need.
  So I want to thank everyone again for putting so much effort into 
this bill and being so thoughtful. These are the kinds of things that 
are going to help us create a strong, vibrant economy in the United 
States and in the industrial Midwest.
  Mr. CHABOT. Mr. Chairman, I continue to reserve my time.
  Ms. VELAZQUEZ. Mr. Chairman, I yield such time as she may consume to 
the gentlewoman from California (Ms. Woolsey) for the purpose of 
entering into a colloquy.
  Ms. WOOLSEY. Mr. Chairman, I rise today to engage in a colloquy with 
the chairwoman. I thank her for agreeing to do this with me.
  Madam Chairman, there has been a concern expressed from some voices 
in the small business community that title V of this bill will open up 
small business Federal contracts to be taken advantage of by large 
corporations and venture capital firms. If this is true, it's obviously 
a concern, because it would directly cut against the intent of this 
bill.
  Can the chairwoman please explain to me the protections in this bill 
that she believes will prevent large corporations and venture capital 
firm from abusing the intent of the bill?
  Ms. VELAZQUEZ. Mr. Chairman, I thank the gentlewoman from California 
for bringing up these concerns. The Small Business Committee is a 
champion of small business and, as such, has strong protections built 
into this bill to prevent large corporations and venture capital firms 
from unfairly benefiting from Federal small business contracts.
  You will be pleased to know that eligible VCs cannot have more than 
500 employees, they cannot be controlled by a large corporation, and 
they must be based in the United States. In addition, an amendment by 
Mr. Chabot has been made in order under the rule that will even further 
strengthen these protections by adding a requirement that no VC can own 
more than 50 percent of any eligible small business.
  I am confident that these provisions will protect the intent of this 
bill and prevent large corporations or venture capital firms from 
taking advantage of these programs.
  Ms. WOOLSEY. I thank the gentlewoman. There seem to be adequate 
protections in this bill to ensure small businesses are the ones 
getting these contracts and that they aren't unfairly influenced by 
large capital firms.
  Again, I thank the Chair for engaging in this colloquy with me.
  Ms. VELAZQUEZ. I yield 2 minutes to the gentleman from Washington 
(Mr. Inslee).
  Mr. INSLEE. Mr. Chairman, I would like to express my support of this 
bill and congratulate the Chair for her great work.
  Mr. Chairman, there's a lot of great news in this bill: Updating the 
definition of small business for today's realities, taking care of 
small companies that are entering into high-technology capital-
intensive industries. Many of these small companies are based in my 
home State of Washington. There's over 200 biotechnology and medical 
device companies. They are developing cures for debilitating diseases; 
they are improving the Nation's biodefense system.
  Mr. Chairman, 44 percent of these companies have been formed just in 
the last 5 years, and they obviously rely heavily on venture capital. 
Unfortunately, there's some outdated SBA regulations that currently 
preclude small businesses, even though with a handful of employees, 
from receiving assistance simply because they rely on venture capital 
funds for their R&D.
  I want to thank the chairwoman for including as a solution to this a 
provision that will correct this unwise discrimination that is now 
going on against small businesses that are so dependent on venture 
capital funding. Today, these companies will again be able to compete 
for grants and receive other small business assistance because of a 
provision in this bill. I have been working on a legislative solution 
for quite a while, so I am very happy to see this fixed today.
  We are happy to see the American Dream is going to be helped by this 
bill. I want to thank the chairwoman again. I look forward to future 
success.
  Mr. CHABOT. Mr. Chairman, I have no further speakers.
  I just want to again thank the chairwoman for her cooperation in 
drafting what is essentially, I believe, a very good bill, which will 
improve small business' ability to have access to capital all across 
the country.
  Without further ado, I yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Chairman, I just would like to take this 
opportunity to thank the staff that worked on this bill. From Mr. 
Altmire's office, Cara Toman; from Mr. Graves' office, Paul Sass; and 
from the minority staff, Barry Pineless. From the majority, I would 
like to thank Adam Minehardt and Andy Jiminez.
  Mr. Chairman, I strongly urge my colleagues to vote for the Small 
Business Investment Expansion Act of 2007.
  Mr. LOEBSACK. Mr. Chairman, I rise today in strong support of the 
Small Business Investment Expansion Act.
  Today's small business owners are leaders in job creation and 
economic development not only in Iowa, but across the country. Small 
businesses create 80 percent of new jobs in the United States, and they 
make up 97 percent of United States exporters. They are truly the 
backbone of our Nation's economy.
  Many of Iowa's communities are built upon the strength of small 
businesses, and ensuring that entrepreneurs have the resources and 
tools their businesses need to thrive is critical to their success.
  Yet access to capital is an increasingly common concern for new 
business owners. The Small Business Investment Expansion Act takes 
vital steps to reverse this trend. By increasing access to loans, 
capital, and Angel investors, this bill ensures that the Small Business 
Administration is an effective partner for our Nation's small 
businesses.
  It overhauls the Small Business Investment Company and the New 
Markets Venture Capital program to improve the efficiency of their 
resources for fledging enterprises. The Small Business Investment 
Expansion Act also creates a new Angel Investment program to provide 
seed financing to new businesses through public-private partnership. 
Through these changes, as well as renewed investments in under-served 
areas, this bill will provide small businesses with critically needed 
support.
  Small business owners are leaders in their communities, and 
innovative support programs are essential tools that help them to 
flourish.

[[Page 25777]]

In my district, the Economic Development Center was established to help 
small businesses grow and succeed not only in Iowa's Second District, 
but across the State. To date, the EDC has assisted over 300 
entrepreneurs; raised over $6 million in capital for its businesses; 
and helped to generate over $30 million for the region through the 
success of its businesses. In turn, EDC businesses created over 200 new 
jobs.
  I am a proud advocate of the Economic Development Center, and I 
believe that the Small Business Investment Expansion Act will help 
organizations such as the EDC to be even more effective partners with 
Iowa's--and our country's--small businesses.
  Mr. HONDA. Mr. Chairman, I rise to express my support for H.R. 3567, 
the Small Business Investment Expansion Act. In particular, Title V of 
the Small Business Investment Expansion Act modernizes the definition 
of a small business so that it reflects current reality. In today's 
economy, there are many small companies entering high technology, 
capital-intensive industries that receive venture capital investment.
  Many of these small companies are based in my home State of 
California. California is one of the most innovative States in the 
country, with the San Francisco Bay area as the birthplace of the 
biotechnology industry. From 2000 to 2003, California biotech companies 
developed 32 breakthrough drugs, and over 600 new therapies are 
currently in the research and development pipeline. Private investment 
is the lifeblood of the biotechnology industry, and venture capital 
investment in life sciences typically outpaces investment in any other 
industry. This venture capital investment allows small biotechnology 
companies to pursue breakthrough technologies--from developing cures 
for debilitating diseases to creating alternative energy sources.
  Also concentrated in my Silicon Valley district, the burgeoning 
nanotechnology industry has been predicted to be a $1 trillion market 
by the year 2017. Many of these small, innovative nanotech companies 
rely on venture capital investments to support their heavy costs of 
startup and basic research and development. In 2005, the Blue Ribbon 
Task Force on Nanotechnology that I commissioned to advise me on ways 
to promote the development and sustainability of the nanotechnology 
industry recommended expanding Small Business Innovation Research 
eligibility in the same way as Title V of H.R. 3567.
  Unfortunately, the outdated U.S. Small Business Administration 
regulations currently prevent small businesses from receiving 
assistance if they rely on venture capital to fund their R&D. Often 
some of the most important breakthroughs these companies make are a 
result of the riskier work they do, which only federal funding for 
small business research can enable. H.R. 3567 will correct this unwise 
discrimination against small businesses that receive venture capital 
funding so that these companies will again be able to compete for 
grants and receive other small business assistance.
  By making this important change to the SBA regulations, the House 
will be moving forward on another piece of our Innovation Agenda and 
helping to keep America a leader in the global marketplace. I thank my 
colleague Mr. Altmire for introducing this bill; Chairwoman Velazquez 
and Ranking Member Chabot for moving it through their committee; and 
Majority Leader Hoyer and Speaker Pelosi for bringing this bill to the 
floor. I urge my colleagues to vote in favor of H.R. 3567.
  Mr. HOLT. Mr. Chairman, I rise today in support of H.R. 3567 the 
Small Business Investment Expansion Act.
  Much of the economic success that we enjoy as a Nation is the result 
of innovation and development by America's small business community. 
Almost half of Americans working in the private sector are employed by 
small businesses. They are responsible for over 45 percent of our 
national payroll and have created 60 to 80 percent of new jobs over the 
last 10 years.
  Since it was created in 1953, the Small Business Administration, SBA, 
has played an essential role in maintaining and strengthening the 
Nation's economy by aiding, assisting and protecting the interests of 
America's small businesses. However, there is an expanding gap between 
the assistance that the SBA's programs are able to provide and the 
capital needs of small businesses.
  The legislation before us today will help to close this gap by 
expanding and improving two of the SBA's most successful programs, the 
Small Business Investment Company and the New Markets Capital Program. 
As a public-private partnership the Small Business Investment Company 
program stimulates and supplements the flow of private equity capital 
and long term loan funds for the sound financing, growth, expansion and 
modernization of small business operations. This program was able to 
leverage more than $21 billion to 2,000 small businesses in the last 
year alone; however more could be done to improve access to this 
program. This legislation will expand access for early-stage and 
capital-intensive small businesses by simplifying how maximum leverage 
caps are calculated and revising the limitation on aggregate 
investments. H.R. 3567 will also expand access to the New Markets 
Venture Capital program that provides entrepreneurial expertise and 
equity capital to small businesses in low-income regions. This 
legislation not only expands the programs but provides incentives for 
investors to invest in small manufacturing companies.
  Additionally, H.R. 3567 will create a new office within the SBA to 
help start-up of companies find investors to support them in their 
early stages of growth, the Office of Angel vestment. This legislation 
will focus on three main initiatives: providing angel groups with 
matching financing leverage, create a federal directory of angel 
investors, and funding for awareness and educational programs about 
angel Investment opportunities.
  Small businesses make up the engine that drives our economy. The 
legislation before us today will give small businesses the tools that 
they need to succeed. I therefore encourage my colleagues to support 
this legislation.
  Mr. MANZULLO. Mr. Chairman, I rise in reluctant opposition to the 
Small Business Investment Expansion Act of 2007, H.R. 3567. The non-
partisan Congressional Budget Office, CBO, estimates that this bill 
will cost $102 million over the next 5 years. Thus far this year, the 
CBO estimates that the Democrat-controlled House Small Business 
Committee has authorized $5.9 billion in new spending over the next 5 
years--$1.55 billion in fiscal year 2008 alone. To put this massive 
spending increase in perspective, the Fiscal Year 2008 Financial 
Services Appropriations bill, H.R. 2829, provides $582 million in total 
spending on the SBA in FY 08.
  In the past, legislation dealing with programs in the Small Business 
Investment Act operated under the assumption that the bill should not 
cost the taxpayer any new money. I am proud that the Republican-led 
Congress took the Small Business Investment Company, SBIC, program to 
``zero-subsidy,'' funded solely by user-fees, first with the debenture 
program in 1996 and then the participating securities program in 2001. 
I regret that because of the downturn in the markets earlier this 
decade, the participating securities component of the SBIC program, 
which targeted equity investments in early stage small businesses, has 
become essentially insolvent and defunct since 2005. During the 109th 
Congress, I tried numerous ways in my capacity as chairman of the House 
Small Business Committee, to thread the needle to reopen the 
participating securities program while still keeping it at ``zero 
subsidy.'' However, H.R. 3567 abandons fiscal restraint by creating yet 
another new program to promote equity investments in early stage small 
businesses.
  First, CBO estimates that the creation of the Angel Investment 
Program in Title III of H.R. 3567 will cost $57 million over the next 5 
years. While there is a provision that requires an angel group repay 
any investment it receives, the repayment comes solely out of any 
profit the group receives. But what if the angel group makes no money? 
Then the taxpayer is left holding the bag. This is a departure from the 
regular SBIC program where upfront fees are also charged, in addition 
to retaining a share of the profits, to help offset the cost of the 
program.
  The bill creates yet another new office and more bureaucracy at the 
Small Business Administration, SBA, to promote angel investments in 
early stage small firms. It also spends $1 million to create a Federal 
angel network to collect and maintain information on local and regional 
angel investors that is readily available over the Internet, e.g., 
www.bandofangels.com. H.R. 3567 also spends $1.5 million to create yet 
another grant program to increase awareness and education about angel 
investing, heaping potentially yet another mission upon the already 
stretched Small Business Development Center, SBDC, program. Earlier 
this year, the House passed three SBDC-related bills that created nine 
new programs for them to implement.
  Last year, I held a hearing on the Small Business Committee to listen 
to the leading experts on the angel movement. At the time, the 
committee debated similar angel legislation, H.R. 4565, offered by 
Democrats to what is on the floor today. All the witnesses except the 
one called by the Democrats testified that because of the decentralized 
and informality of angels, a tax credit modeled after what exists in 
many states is far more preferable to creating yet another office and 
program at the SBA to promote angel investments. This is

[[Page 25778]]

what the leading experts in the angel movement said about the ideas 
contained in H.R. 4565, which is now Title III of H.R. 3567, at the May 
10, 2006, Small Business Committee hearing:
  Dr. Ian Sobieski, founder and managing director of the Band of 
Angels: ``I would be wary of any kind of government interaction with 
angel groups because of the danger of perturbing a natural market 
process that is still good for it. The tax credit changes the 
environment in which capital decisions are being made . . . The danger 
in . . . data collection is the implied authority by which it is 
collected. If the Federal Government gets involved in collecting data 
(on angels) that has the imprimatur of the United States Government, 
that speaks with great weight.''
  Susan Preston of Davis, Wright Tremaine LLP: ``. . . the vast 
majority of investments by angels are done by individuals, not members 
of angel groups. These are highly independent autonomous anonymous 
individuals that don't want their name in databases and aren't 
interested, for the most part, in joining groups.''
  I simply don't understand why this Democratic-led Congress ignores 
the advice of angel experts to direct the SBA to provide capital to 
extremely wealthy individuals to support investments they probably 
would make anyway. I'm also surprised that this Democratic-led 
Congress, which routinely criticizes the SBA for its alleged 
incompetence, would add another yet another mission to its 
responsibilities. That's why I was proud to join Representative Earl 
Pomeroy of North Dakota in reintroducing the alternative to this 
government-run approach--the Access to Capital for Entrepreneurs, ACE, 
Act of 2007, H.R. 578--to keep decisions on angel investments at the 
individual and local level.
  Second, I also have concerns about Title II of H.R. 3567 that 
dramatically expands the New Markets Venture Capital, NMVC, program and 
opens up the Federal Government to more exposure. The CBO estimates 
that Title II raises the subsidy or exposure rate to 17 percent and 
will cost the taxpayer $11 million over the next 5 years. The mission 
of the NMVC is to promote venture capital investments in economically 
distressed communities in both urban and rural America. However, I 
believe the NMVC program is already a triplicate of two other programs 
that already exists--the regular SBIC program and the Rural Business 
Investment, RBIC, program at the U.S. Department of Agriculture, USDA. 
Of the 2,299 U.S. small businesses that received SBIC financing in 
fiscal year 2005, 23 percent were located in Low- and Moderate-Income 
(LMI) areas of the country. Those LMI-district companies received $543 
million or 19 percent of the total $2.9 billion invested by SBICs in FY 
2005. Also, 30 percent of SBIC investments were made in small U.S. 
manufacturers. For the period FY 2001 through FY 2005, SBIC investments 
in small manufacturing companies totaled $4.3 billion. In addition, the 
USDA runs the RBIC program in cooperation with the SBA to promote 
equity investments in rural areas. Thus, I see no need expand a program 
to help small businesses that are already being assisted by two other 
government programs.
  Third, I object to reinstating taxpayer funding for the surety bond 
program. This program is important to help small businesses, primarily 
small construction firms, win federal government contracts by offering 
a bond to guarantee that the work will be completed. To cover the costs 
of those guarantees, fees are paid to the SBA by both the contractor 
receiving the guarantee and the surety or insurance company that issues 
the bond for the contractor's performance. In fiscal year 2006, the SBA 
provided guarantees under the surety bond program for about 5,000 small 
businesses and collected about $7 million in fees. Section 405 of H.R. 
3567 eliminates fees that are currently charged to contractors and 
sureties. That's why the CBO estimates Section 405 will cost the 
taxpayer over the next 5 years.
  Mr. Chairman, there is no need to do this. During my tenure as 
chairman of the Small Business Committee, I never heard from a small 
business complaining about fees charged in the surety bond program. 
This could develop into a problem for the Federal Government when small 
businesses, which have no financial stake in their surety bond and thus 
have nothing at risk if they default, do not complete the contract. I 
predict that there will be more broken contracts and uncompleted work. 
Section 405 also sets a precedent to do away with the ``zero'' subsidy 
policy in other SBA programs, such as in the 7(a) loan guarantee 
program.
  But the most egregious provision in H.R. 3567 is the revamping of 
small business size standards in Title V. This provision allows 
companies not independently-owned and operated but controlled by 
venture capital, VC, investors to still be considered as a small 
business in the eyes of the Federal Government. Title V will allow 
large businesses and universities that establish a VC to potentially 
game the system to benefit from not just various SBA technology 
programs but every other SBA loan and procurement assistance program. 
It could even complicate the Regulatory Flexibility Act, which requires 
Federal agencies to take into account the interests of small businesses 
during the development of new regulations. When I was chairman of the 
Small Business Committee, I was proud of the bipartisan support I 
received in eliminating big businesses from participating in various 
federal small business programs. This led the SBA to finally clamp down 
on this abuse and issue new regulations and policies to do away with 
this practice. However, I fear that many of my colleagues have not 
fully thought through the implications of this provision. Title V would 
undo all the bipartisan work done on this issue over the past five 
years.
  In particular, I spent a lot of time and effort trying to solve the 
specific problem of the eligibility of some small businesses with 
venture capital investments to participate in the Small Business 
Innovative Research, SBIR, program at the National Institutes of 
Health, NIH. The SBIR program guarantees that at least 2.5 percent of 
Federal research and development, R&D, dollars must go to small 
businesses. After the Defense Department, the NIH is the second-largest 
spender of R&D funding in the Federal Government.
  Title V tries to solve a problem that is grossly exaggerated. It is a 
myth that small businesses with VC investments are unable to 
participate in the SBIR program at NIH because of a misinterpretation 
of the law by the SBA. In an impartial Government Accountability 
Office, GAO, study that I requested, they discovered that 17 percent of 
NIH SBIR awards, accounting for 18 percent of the dollar value, went to 
small business with VC investments in fiscal year 2004. These small 
firms had no problem in complying with SBA guidelines. Nevertheless, I 
tried to proffer a compromise that would have established a 2-year 
pilot program to set-aside 0.5 percent of NIH R&D funding, over-and-
above the 2.5 percent currently set-aside for small businesses, for 
these firms that receive a preponderance of their funding from VCs and 
do not own or control their company. Unfortunately, my compromise was 
rejected by NIH and by the biotech and VC industries. However, the 
solution contained in Title V is a dramatic overreach in the effort to 
solve this specific problem with NIH.
  The amendment offered by my good friend and colleague, Representative 
Steve Chabot of Ohio, is a good step forward. It prohibits any one 
single VC from owning a small business that wishes to benefit from a 
SBA program. However, I can easily envision a situation where two VCs 
with common ownership but with different board of directors could game 
the system and still be eligible for SBA programs. Because even the 
largest VCs have less than 500 employees, Title V--even as changed by 
the Chabot amendment--would open up SBA programs to large businesses 
and universities.
  In particular, I am concerned about the future of the SBIR program. 
It's important to remember that when the SBIR program was created 25 
years ago, it was because of the frustration that federal research and 
development dollars went only to large businesses and universities. 
Even under current law, only 2.5 percent of all Federal R&D dollars is 
set-aside for small business. But Title V allows large universities 
that establish a VC to participate in the SBIR program. This provision 
will further decrease Federal R&D dollars going to independently owned 
and operated small high technology firms.
  Mr. Chairman, I enclose for the record the Statement of 
Administration Policy in opposition to this bill plus two letters from 
the oldest small business association in America--the National Small 
Business Association; a letter from the nation's only association that 
represents small high technology firms--the Small Business Technology 
Council; and a letter from the world's largest business federation--the 
U.S. Chamber of Commerce. I urge my colleagues to heed the 
recommendations of the administration and these business associations 
by voting against H.R. 3567.

         Executive Office of the President, Office of Management 
           and Budget,
                               Washington, DC, September 26, 2007.

                   Statement of Administration Policy


       H.R. 3567--small business investment expansion act of 2007

       The Administration strongly opposes House passage of H.R. 
     3567.
       The Administration strongly opposes the proposed ``Angel 
     Investor'' program. The Administration does not support 
     providing capital to high net worth individuals to support

[[Page 25779]]

     their investments. The best way to strengthen small business 
     is through an economic framework that encourages investment 
     at all levels through broad-based and reasonable tax rates 
     and reduced regulatory impediments to the flow of capital. 
     This approach will have a more significant impact than any 
     targeted program.
       The Administration also strongly opposes the proposed 
     change to the definition of a small business for the purposes 
     of venture capital investment. This redefinition strips the 
     elements of independent ownership and control that identify 
     small business ownership under current law. Not only would 
     this change be inequitable for actual small businesses, but 
     it would be a step backward from our recent progress in 
     addressing the misidentification of large firms as small 
     businesses for Federal procurement purposes. By eliminating 
     the concept of affiliation for venture capital operating 
     companies, the provision would allow large businesses, not-
     for-profit organizations, and colleges and universities to 
     own and control small businesses and benefit from programs 
     designed for independent small businesses. The Administration 
     believes that the intent of this provision is to allow for 
     reasonable, non-controlling investment in small business. 
     Unfortunately, the current language is overly broad, and the 
     Administration strongly opposes this provision unless it is 
     amended to ensure that ownership and control rests positively 
     with the entrepreneur.
                                  ____

                                                    National Small


                                         Business Association,

                               Washington, DC, September 25, 2007.
     Hon. Donald A. Manzullo,
     House of Representatives,
     Washington, DC.
       Dear Representative Manzullo: The U.S. House of 
     Representatives soon will consider H.R. 3567, the Small 
     Business Investment Expansion Act of 2007. While supportive 
     of most sections of H.R. 3567--believing that they provide 
     necessary and overdue improvements to three of the Small 
     Business Administration's investment programs--and its aim of 
     helping small businesses acquire needed capital, the National 
     Small Business Association (NSBA) cannot support the bill in 
     its current form.
       Reaching 150,000 small-businesses across the nation, NSBA--
     the country's oldest small-business advocacy organization--is 
     a member-driven association that advocates for the best 
     interests of the overall small-business community. Convinced 
     that Title V of the bill will gut over half a century of laws 
     that define a small business, NSBA urges Congress to remove 
     Title V from the measure or defeat the entire bill.
       Since the Small Business Act was passed in 1953, a small 
     business has been defined as one that is: (1) independently 
     owned and operated, (2) not dominant in its field, and (3) 
     for-profit. This definition not only has controlled which 
     companies can access federal small-business programs, it also 
     has defined which firms are small for purposes of federal 
     regulatory compliance across a vast areas of banking, 
     securities, environmental, pension, and worker-safety laws.
       Title V of H.R. 3567 would effectively repeal these 
     provisions, creating a new class of business conglomerates 
     that would be defined as small businesses despite meeting 
     none of the existing statutory requirements.
       1. The ``independently owned and operated'' statutory test? 
     Gone.
       Title V of H.R 3567 would prohibit the SBA from classifying 
     any venture capital (VC) company as a large business as long 
     as the VC firm had fewer than 500 employees--no matter how 
     many ``small'' businesses the VC firm controlled. It is 
     important to note that virtually no VC firm in the country 
     has more than 500 employees.
       Under Title V of H.R. 3567, a VC firm could create a 
     conglomerate controlling 1000 small companies, employing 
     100,000 people, and generating billions in revenue, and the 
     SBA and other federal agencies would be forced to treat each 
     company in the conglomerate as a small business as long as it 
     had fewer than 500 employees. Banking regulators, securities 
     regulators, environmental regulators, and all other kinds of 
     federal regulators that base their definition of ``small'' on 
     Section 3 of the Small Business Act would be prohibited from 
     considering the overall number of employees or revenue of the 
     VC firm.
       2. The ``not dominant in its field'' statutory test? Gone.
       The VC conglomerates could include, for example, nearly 
     every company capable of bidding on a government contract 
     that had been set aside for small business. Yet the SBA and 
     other federal contracting agencies would be forced to 
     classify the companies in the conglomerate as ``small.'' 
     Conceivably, the VC conglomerates also could own every single 
     company producing a specific product, service or technology, 
     and the federal government still could be forced to classify 
     each of these companies as ``small'' businesses. This is an 
     especially galling notion in the wake of years of controversy 
     over large companies receiving government contracts intended 
     for small businesses.
       3. The ``for profit'' statutory test? Gone.
       Title V of H.R. 3567 would allow universities to control 
     unlimited numbers of small companies and still classify all 
     such businesses as ``small.'' Yet the true owners would be 
     non-profit universities, many of them with endowments worth 
     hundreds of millions of dollars or more. Such a scenario 
     would hardly help level the playing field for the majority of 
     small businesses.
       Supporters of Title V of H.R. 3567 contend that the bill 
     prevents big businesses from controlling these venture 
     capital firms. This mayor may not be true. It does not 
     matter. The bill encourages the venture capital firms 
     themselves to become big businesses--and then to claim to be 
     small. Acting together, these conglomerates could put truly 
     independent companies at competitive disadvantages in nearly 
     every situation that mattered.
       If Title V of H.R. 3567 passes, everything in federal law 
     that is premised upon section 3 of the Small Business Act--
     including dozens of laws and hundreds of court cases--will be 
     called into question. Thousands of pages of federal 
     regulations will be rendered moot. Utilizing this legal 
     vacuum, the new VC conglomerates would be empowered to abuse 
     all manner of government regulations and programs by claiming 
     to be small businesses.
       In sum, this legislation violates a fundamental trust. It 
     would eviscerate the very concept of a small business as 
     Congress and the American people understand it. There would 
     be no limits on the capital, the labor, and the financial 
     resources that the VC conglomerates could control and still 
     be treated as ``small businesses.'' Every law that Congress 
     has enacted over the past half century to aid small 
     businesses would become little more than a ``speed bump'' as 
     a new category of big businesses raced in to seize the 
     protections and advantages intended for small businesses.
       NSBA urges Congress to strike Title V from H.R. 3567 or to 
     defeat the bill entirely. If Title V is struck, NSBA will be 
     pleased to support the measure.
           Sincerely,
                                                Todd O. McCracken,
                                                        President.
                                  ____
                                  
                                                    National Small


                                         Business Association,

                               Washington, DC, September 27, 2007.
     Hon. Donald A. Manzullo,
     House of Representatives,
     Washington, DC.
       Dear Representative Manzullo: Today, the U.S. House of 
     Representatives is scheduled to consider H.R 3567, the Small 
     Business Investment Expansion Act of 2007. Convinced that it 
     will divert money Congress intended for actual small 
     businesses to large companies masquerading as small 
     businesses, the National Small Business Association (NSBA) 
     strongly urges Congress to strike Title V from the bill or 
     defeat it. The well-intentioned amendment to be offered by 
     Rep. Steve Chabot also does not resolve the underlying 
     problems in Title V.
       Reaching 150,000 small-businesses across the nation, NSBA 
     is a member-driven association that advocates for the best 
     interests of the overall small-business community. NSBA is 
     not alone in its opposition. In fact, no small-business 
     organization has publicly supported Title V. It is strongly 
     supported by the venture-capital and biotechnology community, 
     however--but isn't this supposed to be a small-business bill?
       The Small Business Technology Council, a nonpartisan group 
     that represents small technology firms, also strongly opposes 
     Title V. In fact, in today's LA Times, its executive 
     director, Jere Glover, the former chief counsel for the SBA 
     Office of Advocacy in the Clinton administration, called it 
     ``the worst piece of small business legislation I've seen in 
     25 years.''
       The Statement of Administration Policy issued from OMB 
     states, ``By eliminating the concept of affiliation for 
     venture capital operating companies, the provision would 
     allow large businesses, not-for-profit organizations, and 
     colleges and universities to own and control small businesses 
     and benefit from programs designed for independent small 
     businesses.''
       Title V of H.R. 3567 would prohibit the SBA from 
     classifying any venture capital (VC) company as a large 
     business as long as the VC firm had fewer than 500 
     employees--no matter how many ``small'' businesses the VC 
     firm controlled. It is important to note that virtually no VC 
     firm in the country has more than 500 employees.
       Under Title V of H.R. 3567, a VC firm could create a 
     conglomerate controlling 1000 small companies, employing 
     100,000 people, and generating billions in revenue, and the 
     SBA and other federal agencies would be forced to treat each 
     company in the conglomerate as a small business as long as it 
     had fewer than 500 employees.
       Are these the sorts of ``small businesses'' Congress had in 
     mind when it passed the Small Business Act in 1953? Are they 
     the kind of ``small businesses'' that need government 
     investment?
       NSBA urges Congress to strike--not amend--Title V of H.R. 
     3567 or to defeat the bill. If Title V is struck, NSBA will 
     be pleased to support the measure.
           Sincerely,
                                                Todd O. McCracken,
                                                        President.

[[Page 25780]]

                                  ____
                                  
                                               September 25, 2007.
     Hon. Donald A. Manzullo,
     House of Representatives,
     Washington, DC.
       Dear Representative Manzullo: On behalf of the Small 
     Business Technology Council, the nation's largest nonprofit 
     organization of small, technology-based companies in diverse 
     fields, I urge you oppose Title 5 of H.R. 3567, and to vote 
     against H.R. 3567 if that Title is included in the bill when 
     it comes to a vote on the House floor soon.
       Title 5 of H.R. 3567 would encourage abuse of federal 
     government programs and protections intended for small 
     business.
       H.R. 3567 would establish a new class of business holding 
     companies operated by groups of investors. These holding 
     companies (or conglomerates) would be incentivized to acquire 
     huge portfolios of small firms.
       The key incentive: the federal government would have to 
     treat these holding companies as small businesses, no matter 
     how many businesses, employees, capital and resources they 
     controlled. All the holding companies would have to do is 
     have fewer than 500 employees themselves and keep each of the 
     acquired companies below 500 employees. There would be no 
     limit on the total number of companies and employees that the 
     holding companies could control.
       Proponents of this sweeping--and largely unexamined--change 
     frequently state that certain SBA programs are unavailable to 
     small firms that have venture capital backing. That is 
     untrue.
       SBA's only requirement for calling a business ``small'' is 
     that it meet certain size standards--generally, a cap of 500 
     employees. But SBA counts firms that are controlled by other 
     firms as one firm. That's what this bill would end. And once 
     that ends, large companies could demand access to small 
     business programs and small business regulatory treatment.
       Today, large VC's and other investment companies (with more 
     than 500 employees, including affiliates and subsidiaries) 
     can control up to 49% of a firm that SBA classifies as 
     ``small.'' Small investment companies and VC's (with fewer 
     than 500 employees, including affiliates and subsidiaries), 
     can control up to 100%.
       So, despite what you may have heard, the problem is not 
     that firms with VC backing are ``kept out'' of SBA programs. 
     They aren't.
       The real problem, from the point of view of some investment 
     companies, is that large companies cannot masquerade as small 
     companies for purposes of obtaining federal small business 
     benefits.
       Big business trying to access small business programs is 
     not a new issue. It goes back decades. (Just recently, 
     Congress has criticized SBA for letting large companies 
     obtain federal procurement contracts intended for small 
     companies.)
       This Congress should handle the small business/big business 
     issue with integrity, just as other Congresses have.
       The only difference between H.R. 3567 and countless past 
     efforts by big businesses to slip into small business 
     programs is that this bill would encourage investment 
     companies themselves to become big businesses, while 
     prohibiting them from being ``controlled'' by other big 
     businesses. That's certainly a twist on the usual approach, 
     but it ends up in the same place--with big companies 
     pretending to be small in order to take advantage of federal 
     benefits intended for small business.
       Moreover, the term ``control by a large business'' (as it 
     applies to these holding companies) is not defined in the 
     bill, so even that modest difference from past attacks by 
     large business may not amount to anything.
       The worst feature of Title 5 is that it totally undermines 
     federal efforts to lower unnecessary the regulatory burdens 
     on small businesses. The holding companies incentivized by 
     H.R. 3567 would begin demanding to be treated as small 
     businesses for purposes of federal regulations, even though 
     they are--in commonsense reality--large companies. Since many 
     of these regulations are based on SBA's definition of what a 
     small business is--the very definition that the holding 
     companies propose to exempt themselves from--they would 
     presumably have to be treated as ``small'' for purposes of 
     these regulations--in such areas as environmental 
     regulations, pension regulations, securities regulations, and 
     the like. This would wreck decades of careful work by 
     Congress and federal agencies to protect small companies. It 
     would also cast doubt on many laws and court cases that are 
     based on the SBA definition of small business.
       SBTC therefore strongiy urges Congress to strike Title 5 
     from H.R. 3567. With Title 5 removed, we will support the 
     bill. With Title 5 largely or totally intact, we will 
     strongly oppose the bill in total.
           Regards,

                                               Jere W. Glover,

                                               Executive Director,
     Small Business Technology Council.
                                  ____

         Chamber of Commerce of the United States of America,
                               Washington, DC, September 27, 2007.
       To the Members of the U.S. House of Representatives: The 
     U.S. Chamber of Commerce, the world's largest business 
     federation representing more than three million businesses 
     and organizations of every size, sector, and region, has 
     serious concerns with Title V of H.R. 3567, the ``Small 
     Business Investment Expansion Act of 2007,'' which is 
     expected to be considered by the House today.
       Title V of H.R. 3567, if passed into law, would allow 
     changes to the longstanding definition of small business that 
     would permit larger business concerns to effectively control 
     and dominate small business enterprises while at the same 
     time allowing them to participate in small business programs. 
     This fundamental change could undermine the public policy 
     objectives of all of the small business resources and 
     programs authorized by Congress to foster innovation, growth, 
     and help to level the playing field for small businesses 
     within the marketplace.
       Title V of H.R. 3567 would allow venture capital 
     conglomerates, colleges, and universities to have effective 
     control and ownership of an unlimited number of small 
     businesses while still falling under the definition of small 
     business for the purposes of using government resources and 
     programs meant for traditionally defined small businesses. 
     These new enterprises would not be subject to the affiliation 
     rules as they now apply to all existing business concerns. As 
     a longstanding advocate for small business, the Chamber 
     opposes creating a loophole in the law that allows the 
     unfettered growth of a conglomerate business enterprise that 
     will not be restricted by existing size-standards as 
     determined by affiliation rules and still be able to avail 
     themselves of services, resources, and programs that have 
     been dedicated to traditional small businesses.
       For these reasons, the Chamber opposes Title V of H.R. 
     3567. The Chamber looks forward to working with Congress to 
     address these important concerns.
           Sincerely,

                                              R. Bruce Josten,

                                         Executive Vice President,
                                               Government Affairs.

  Ms. VELAQUEZ. Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the bill shall be considered read for amendment 
under the 5-minute rule.
  The text of the bill is as follows:

                               H.R. 3567

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Investment Expansion Act of 2007''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

           TITLE I--SMALL BUSINESS INVESTMENT COMPANY PROGRAM

Sec. 101. Simplified maximum leverage limits.
Sec. 102. Increased investments in women-owned and socially 
              disadvantaged small businesses.
Sec. 103. Increased investments in smaller enterprises.
Sec. 104. Simplified aggregate investment limitations.

             TITLE II--NEW MARKETS VENTURE CAPITAL PROGRAM

Sec. 201. Expansion of New Markets Venture Capital Program.
Sec. 202. Improved nationwide distribution.
Sec. 203. Increased investment in small manufacturers.
Sec. 204. Updating definition of low-income geographic area.
Sec. 205. Study on availability of equity capital.
Sec. 206. Expanding operational assistance to conditionally approved 
              companies.
Sec. 207. Streamlined application for New Markets Venture Capital 
              Program.
Sec. 208. Elimination of matching requirement.
Sec. 209. Simplified formula for operational assistance grants.
Sec. 210. Authorization of appropriations and dedication to small 
              manufacturing.

                  TITLE III--ANGEL INVESTMENT PROGRAM

Sec. 301. Establishment of Angel Investment Program.

                     TITLE IV--SURETY BOND PROGRAM

Sec. 401. Study and report.
Sec. 402. Preferred Surety Bond Program.
Sec. 403. Denial of liability.
Sec. 404. Increasing the bond threshold.
Sec. 405. Fees.

             TITLE V--VENTURE CAPITAL INVESTMENT STANDARDS

Sec. 501. Determining whether business concern is independently owned 
              and operated.

                         TITLE VI--REGULATIONS

Sec. 601. Regulations.

[[Page 25781]]



           TITLE I--SMALL BUSINESS INVESTMENT COMPANY PROGRAM

     SEC. 101. SIMPLIFIED MAXIMUM LEVERAGE LIMITS.

       Section 303(b) of the Small Business Investment Act of 1958 
     (15 U.S.C. 683(b)) is amended--
       (1) by amending paragraph (2) to read as follows:
       ``(2) Maximum leverage.--
       ``(A) In general.--The maximum amount of outstanding 
     leverage made available to any one company licensed under 
     section 301(c) of this Act may not exceed the lesser of--
       ``(i) 300 percent of such company's private capital; or
       ``(ii) $150,000,000.
       ``(B) Multiple licenses under common control.--The maximum 
     amount of outstanding leverage made available to two or more 
     companies licensed under section 301(c) of this Act that are 
     commonly controlled (as determined by the Administrator) and 
     not under capital impairment may not exceed $225,000,000.''; 
     and
       (2) by striking paragraph (4).

     SEC. 102. INCREASED INVESTMENTS IN WOMEN-OWNED AND SOCIALLY 
                   DISADVANTAGED SMALL BUSINESSES.

       Section 303(b)(2) of the Small Business Investment Act of 
     1958 (15 U.S.C. 683(b)(2)), as amended by section 101, is 
     further amended by adding at the end the following:
       ``(C) Increased investments in women-owned and socially 
     disadvantaged small businesses.--The limits provided in 
     subparagraphs (A)(ii) and (B) shall be $175,000,000 and 
     $250,000,000, respectively, for any company that certifies in 
     writing that not less than 50 percent of the company's 
     aggregate dollar amount of investments will be made in small 
     businesses that prior to the investment are--
       ``(i) majority owned by one or more--

       ``(I) socially or economically disadvantaged individuals 
     (as defined by Administrator);
       ``(II) veterans of the Armed Forces; or
       ``(III) current or former members of the National Guard or 
     Reserve; or

       ``(ii) located in a low-income geographic area (as defined 
     in section 351).''.

     SEC. 103. INCREASED INVESTMENTS IN SMALLER ENTERPRISES.

       Section 303 of the Small Business Investment Act of 1958 
     (15 U.S.C. 683) is amended by striking subsection (d) and 
     inserting the following:
       ``(d) Increased Investments in Smaller Enterprises.--The 
     Administrator shall require each licensee, as a condition of 
     an application for leverage, to certify in writing that not 
     less than 25 percent of the licensee's aggregate dollar 
     amount of financings will be provide to smaller enterprises 
     (as defined in section 103(12)).''.

     SEC. 104. SIMPLIFIED AGGREGATE INVESTMENT LIMITATIONS.

       Section 306(a) of the Small Business Investment Act of 1958 
     (15 U.S.C. 686(a)) is amended to read as follows:
       ``(a) If any small business investment company has obtained 
     financing from the Administration and such financing remains 
     outstanding, the aggregate amount of securities acquired and 
     for which commitments may be issued by such company under the 
     provisions of this title for any single enterprise shall not, 
     without the approval of the Administration, exceed 10 percent 
     of the sum of--
       ``(1) the private capital of such company; and
       ``(2) the total amount of leverage projected by the company 
     in the company's business plan that was approved by the 
     Administration at the time of the grant of the company's 
     license.''.

             TITLE II--NEW MARKETS VENTURE CAPITAL PROGRAM

     SEC. 201. EXPANSION OF NEW MARKETS VENTURE CAPITAL PROGRAM.

       (a) Administration Participation Required.--Section 353 of 
     the Small Business Investment Act of 1958 (15 U.S.C. 689b) is 
     amended by striking ``under which the Administrator may'' and 
     inserting ``under which the Administrator shall''.
       (b) Report to Congress.--Not later than 1 year after the 
     date of the enactment of this Act, the Administrator of the 
     Small Business Administration shall submit to Congress a 
     report evaluating the success of the expansion of the New 
     Markets Venture Capital Program under this section.

     SEC. 202. IMPROVED NATIONWIDE DISTRIBUTION.

       Section 354 of the Small Business Investment Act of 1958 
     (15 U.S.C. 689c) is amended by adding at the end the 
     following:
       ``(f) Geographic Expansion.--From among companies 
     submitting applications under subsection (b), the 
     Administrator shall consider the selection criteria and 
     nationwide distribution under subsection (c) and shall, to 
     the maximum extent practicable, approve at least one company 
     from each geographic region of the Small Business 
     Administration.''.

     SEC. 203. INCREASED INVESTMENT IN SMALL MANUFACTURERS.

       Section 354(d)(1) of the Small Business Investment Act of 
     1958 (15 U.S.C. 689c(d)(1)) is amended--
       (1) by striking ``Each'' and inserting the following:
       ``(A) In general.--Except as provided in subparagraph (B), 
     each''; and
       (2) by adding at the end the following:
       ``(B) Small manufacturer investment capital requirements.--
     Each conditionally approved company engaged primarily in 
     development of and investment in small manufacturers shall 
     raise not less than $3,000,000 of private capital or binding 
     capital commitments from one or more investors (other than 
     agencies or departments of the Federal Government) who meet 
     criteria established by the Administrator.''.

     SEC. 204. UPDATING DEFINITION OF LOW-INCOME GEOGRAPHIC AREA.

       Section 351 of the Small Business Investment Act of 1958 
     (15 U.S.C. 689) is amended--
       (1) by striking paragraphs (2) and (3);
       (2) by inserting after paragraph (1) the following:
       ``(2) Low-income geographic area.--The term `low-income 
     geographic area' has the same meaning given the term `low-
     income community' in section 45D(e) of the Internal Revenue 
     Code of 1986 (26 U.S.C. 45D(e)).''; and
       (3) by redesignating paragraphs (4) through (8) as (3) 
     through (7), respectively.

     SEC. 205. STUDY ON AVAILABILITY OF EQUITY CAPITAL.

       (a) Study Required.--Before the expiration of the 180-day 
     period that begins on the date of the enactment of this Act, 
     the Chief Counsel for Advocacy of the Small Business 
     Administration shall conduct a study on the availability of 
     equity capital in low-income urban and rural areas.
       (b) Report.--Not later than 90 days after the completion of 
     the study under subsection (a) the Administrator of the Small 
     Business Administration shall submit to Congress a report 
     containing the findings of the study required under 
     subsection (a) and any recommendations of the Administrator 
     based on such study.

     SEC. 206. EXPANDING OPERATIONAL ASSISTANCE TO CONDITIONALLY 
                   APPROVED COMPANIES.

       (a) Operational Assistance Grants to Conditionally Approved 
     Companies.--Section 358(a) of the Small Business Investment 
     Act of 1958 (15 U.S.C. 689(a)) is amended by adding at the 
     end the following new paragraph:
       ``(6) Grants to conditionally approved companies.--
       ``(A) In general.--Subject to subparagraphs (A) and (B), 
     upon the request of a company conditionally-approved under 
     section 354(c), the Administrator shall make a grant to the 
     company under this subsection.
       ``(B) Repayment by companies not approved.--If a company 
     receives a grant under paragraph (6) and does not enter into 
     a participation agreement for final approval, the company 
     shall repay the amount of the grant to the Administrator.
       ``(C) Deduction from grant to approved company.--If a 
     company receives a grant under paragraph (6) and receives 
     final approval under section 354(e), the Administrator shall 
     deduct the amount of the grant under that paragraph from the 
     total grant amount that the company receives for operational 
     assistance.
       ``(D) Amount of grant.--No company may receive a grant of 
     more than $50,000 under this paragraph.''.
       (b) Limitation on Time for Final Approval.--Section 354(d) 
     of the Small Business Investment Act of 1958 (15 U.S.C. 
     689c(d)) is amended in the matter preceding paragraph (1) by 
     striking ``a period of time, not to exceed 2 years,'' and 
     inserting ``2 years''.

     SEC. 207. STREAMLINED APPLICATION FOR NEW MARKETS VENTURE 
                   CAPITAL PROGRAM.

       Not later than 60 days after the date of the enactment of 
     this section, the Administrator of the Small Business 
     Administration shall prescribe standard documents for final 
     New Markets Venture Capital Company approval application 
     under section 354(e) of the Small Business Investment Act of 
     1958 (15 U.S.C. 689c(e)). The Administrator shall assure that 
     the standard documents shall be designed to substantially 
     reduce the cost burden of the application process on the 
     companies involved.

     SEC. 208. ELIMINATION OF MATCHING REQUIREMENT.

       Section 354(d)(2)(A)(i) of the Small Business Investment 
     Act of 1958 (15 U.S.C. 689c(d)(2)(A)(i)) is amended--
       (1) in subclause (I) by adding ``and'' at the end;
       (2) in subclause (II) by striking ``and'' at the end; and
       (3) by striking subclause (III).

     SEC. 209. SIMPLIFIED FORMULA FOR OPERATIONAL ASSISTANCE 
                   GRANTS.

       Section 358(a)(4)(A) of the Small Business Investment Act 
     of 1958 (15 U.S.C. 689g(a)(4)(A)) is amended--
       (1) by striking ``shall be equal to'' and all that follows 
     through the period at the end and by inserting ``shall be 
     equal to the lesser of--''; and
       (2) by adding at the end the following:
       ``(i) 10 percent of the resources (in cash or in kind) 
     raised by the company under section 354(d)(2); or
       ``(ii) $1,000,000.''.

[[Page 25782]]



     SEC. 210. AUTHORIZATION OF APPROPRIATIONS AND DEDICATION TO 
                   SMALL MANUFACTURING.

       Section 368(a) of the Small Business Investment Act of 1958 
     (15 U.S.C. 689q(a)) is amended--
       (1) by striking ``fiscal years 2001 through 2006'' and 
     inserting ``fiscal years 2008 through 2010'';
       (2) in paragraph (1)--
       (A) by striking ``$150,000,000'' and inserting 
     ``$30,000,000''; and
       (B) by inserting before the period at the end the 
     following: ``, of which not less than one-quarter shall be 
     used to guarantee debentures of companies engaged primarily 
     in development of and investment in small manufacturers''; 
     and
       (3) in paragraph (2)--
       (A) by striking ``$30,000,000'' and inserting 
     ``$5,000,000''; and
       (B) by inserting before the period at the end the 
     following: ``, of which not less than one-quarter shall be 
     used to make grants to companies engaged primarily in 
     development of and investment in small manufacturers''.

                  TITLE III--ANGEL INVESTMENT PROGRAM

     SEC. 301. ESTABLISHMENT OF ANGEL INVESTMENT PROGRAM.

       (a) Establishment.--Title III of the Small Business 
     Investment Act of 1958 (15 U.S.C. 681 et seq.) is amended by 
     adding at the end the following new part:

                   ``PART C--ANGEL INVESTMENT PROGRAM

     ``SEC. 380. OFFICE OF ANGEL INVESTMENT.

       ``(a) Establishment.--There is established, in the 
     Investment Division of the Small Business Administration, the 
     Office of Angel Investment.
       ``(b) Director.--The head of the Office of Angel Investment 
     is the Director of Angel Investment.
       ``(c) Duties.--Subject to the direction of the Secretary, 
     the Director shall perform the following functions:
       ``(1) Provide support for the development of angel 
     investment opportunities for small business concerns.
       ``(2) Administer the Angel Investment Program under section 
     382 of this Act.
       ``(3) Administer the Federal Angel Network under section 
     383 of this Act.
       ``(4) Administer the grant program for the development of 
     angel groups under section 384 of this Act.
       ``(5) Perform such other duties consistent with this 
     section as the Administrator shall prescribe.

     ``SEC. 381. DEFINITIONS.

       ``In this part:
       ``(1) The term `angel group' means 10 or more angel 
     investors organized for the purpose of making investments in 
     local or regional small business concerns that--
       ``(A) consists primarily of angel investors;
       ``(B) requires angel investors to be accredited investors; 
     and
       ``(C) actively involves the angel investors in evaluating 
     and making decisions about making investments.
       ``(2) The term `angel investor' means an individual who--
       ``(A) qualifies as an accredited investor (as that term is 
     defined under Rule 501 of Regulation D of the Securities and 
     Exchange Commission (17 C.F.R. 230.501));
       ``(B) provides capital to or makes investments in a small 
     business concern.
       ``(3) The term `small business concern owned and controlled 
     by veterans' has the meaning given that term under section 
     3(q)(3) of the Small Business Act (15 U.S.C. 632(q)(3)).
       ``(4) The term `small business concern owned and controlled 
     by women' has the meaning given that term under section 
     8(d)(3)(D) of such Act (15 U.S.C. 637(d)(3)(D)).
       ``(5) The term `socially and economically disadvantaged 
     small business concern' has the meaning given that term under 
     section 8(a)(4)(A) of such Act (15 U.S.C. 637(a)(4)(A)).

     ``SEC. 382. ANGEL INVESTMENT PROGRAM.

       ``(a) In General.--The Director of Angel Investment shall 
     establish and carry out a program, to be known as the Angel 
     Investment Program, to provide financing to approved angel 
     groups for the purpose of providing venture capital 
     investment in small businesses in their communities.
       ``(b) Eligibility.--To be eligible to receive financing 
     under this section, an angel group shall--
       ``(1) have demonstrated experience making investments in 
     local or regional small business concerns;
       ``(2) have established protocols and a due diligence 
     process for determining its investment strategy;
       ``(3) have an established code of ethics; and
       ``(4) submit an application to the Director of Angel 
     Investment at such time and containing such information and 
     assurances as the Director may require.
       ``(c) Use of Funds.--An angel group that receives financing 
     under this section shall use the amounts received to make 
     investments in small business concerns--
       ``(1) that have been in existence for less than 5 years as 
     of the date on which the investment is made;
       ``(2) that have fewer than 75 employees as of the date on 
     which the investment is made;
       ``(3) more than 50 percent of the employees of which 
     perform substantially all of their services in the United 
     States as of the date on which the investment is made; and
       ``(4) within the geographic area determined by the Director 
     under subsection (e).
       ``(d) Limitation on Amount.--No angel group receiving 
     financing under this section shall receive more than 
     $2,000,000.
       ``(e) Limitation on Geographic Area.--For each angel group 
     receiving financing under this section, the Director shall 
     determine the geographic area in which a small business 
     concern must be located to receive an investment from that 
     angel group.
       ``(f) Priority in Providing Financing.--In providing 
     financing under this section, the Director shall give 
     priority to angel groups that invest in small business 
     concerns owned and controlled by veterans, small business 
     concerns owned and controlled by women, and socially and 
     economically disadvantaged small business concerns.
       ``(g) Nationwide Distribution of Financing.--In providing 
     financing under this section, the Director shall, to the 
     extent practicable, provide financing to angel groups that 
     are located in a variety of geographic areas.
       ``(h) Matching Requirement.--As a condition of receiving 
     financing under this section, the Director shall require that 
     for each small business concern in which the angel group 
     receiving such financing invests, the angel group shall 
     invest an amount that is equal to or greater than the amount 
     of financing received under this section from a source other 
     than the Federal Government that is equal to the amount of 
     the financing provided under this section that the angel 
     group invests in that small business concern.
       ``(i) Repayment of Financing.--As a condition of receiving 
     financing under this section, the Director shall require an 
     angel group to repay the Director for any investment on which 
     the angel group makes a profit an amount equal to the 
     percentage of the returns that is equal to the percentage of 
     the total amount invested by the angel group that consisted 
     of financing received under this section.
       ``(j) Angel Investment Fund.--
       ``(1) Establishment.--There is in the Treasury a fund to be 
     known as the Angel Investment Fund.
       ``(2) Deposit of certain amounts.--Amounts collected under 
     subsection (i) shall be deposited in the fund.
       ``(3) Use of deposits.--Deposits in the fund shall be 
     available for the purpose of providing financing under this 
     section in the amounts specified in annual appropriation laws 
     without regard to fiscal year limitations.
       ``(k) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section--
       ``(1) $10,000,000 for fiscal year 2008;
       ``(2) $20,000,000 for fiscal year 2009; and
       ``(3) $20,000,000 for fiscal year 2010.

     ``SEC. 383. FEDERAL ANGEL NETWORK.

       ``(a) In General.--Subject to the succeeding provisions of 
     this subsection, the Director of the Office of Angel 
     Investment shall establish and maintain a searchable 
     database, to be known as the Federal Angel Network, to assist 
     small business concerns in identifying angel investors.
       ``(b) Network Contents.--The Federal Angel Network shall 
     include--
       ``(1) a list of the names and addresses of angel groups and 
     angel investors;
       ``(2) information about the types of investments each angel 
     group or angel investor has made; and
       ``(3) information about other public and private resources 
     and registries that provide information about angel groups or 
     angel investors.
       ``(c) Collection of Information.--
       ``(1) In general.--The Director shall collect the 
     information to be contained in the Federal Angel Network and 
     shall ensure that such information is updated regularly.
       ``(2) Request for exclusion of information.--The Director 
     shall not include such information concerning an angel 
     investor if that investor contacts the Director to request 
     that such information be excluded from the Network.
       ``(d) Availability.--The Director shall make the Federal 
     Angel Network available on the Internet website of the 
     Administration and shall do so in a manner that permits 
     others to download, distribute, and use the information 
     contained in the Federal Angel Network.
       ``(e) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $1,000,000, to 
     remain available until expended.

     ``SEC. 384. GRANT PROGRAM FOR DEVELOPMENT OF ANGEL GROUPS.

       ``(a) In General.--The Director of the Office of Angel 
     Investment shall establish and carry out a grant program to 
     make grants to eligible entities for the development of new 
     or existing angel groups and to increase awareness and 
     education about angel investing.
       ``(b) Eligible Entities.--In this section, the term 
     `eligible entity' means--
       ``(1) a State or unit of local government;
       ``(2) a nonprofit organization;
       ``(3) a state mutual benefit corporation;
       ``(4) a Small Business Development Center established 
     pursuant to section 21 of the Small Business Act (15 U.S.C. 
     648); or
       ``(5) a women's business center established pursuant to 
     section 29 of the Small Business Act (15 U.S.C. 656).

[[Page 25783]]

       ``(c) Matching Requirement.--The Administrator shall 
     require, as a condition of any grant made under this section, 
     that the eligible entity receiving the grant provide from 
     resources (in cash or in kind), other than those provided by 
     the Administrator or any other Federal source, a matching 
     contribution equal to 50 percent of the amount of the grant.
       ``(d) Application.--To receive a grant under this section, 
     an eligible entity shall submit an application that 
     contains--
       ``(1) a proposal describing how the grant would be used; 
     and
       ``(2) any other information or assurances as the Director 
     may require.
       ``(e) Report.--Not later than 3 years after the date on 
     which an eligible entity receives a grant under this section, 
     such eligible entity shall submit a report to the 
     Administrator describing the use of grant funds and 
     evaluating the success of the angel group developed using the 
     grant funds.
       ``(f) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $1,500,000, for 
     each of fiscal years 2008 through 2010.''.

                     TITLE IV--SURETY BOND PROGRAM

     SEC. 401. STUDY AND REPORT.

       (a) Study.--The Administrator of the Small Business 
     Administration shall conduct a study of the current funding 
     structure of the surety bond program carried out under part B 
     (15 U.S.C. 694a et seq.) of title IV of the Small Business 
     Investment Act of 1958. The study shall include--
       (1) an assessment of whether the program's current funding 
     framework and program fees are inhibiting the program's 
     growth;
       (2) an assessment of whether surety companies and small 
     business concerns could benefit from an alternative funding 
     structure; and
       (3) an assessment of whether permissible premium rates for 
     surety companies participating in the program should be 
     placed on parity with the rates authorized by appropriate 
     State insurance regulators and how such a change would affect 
     the program under the current funding framework.
       (b) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Administrator shall submit to 
     Congress a report on the results of the study.

     SEC. 402. PREFERRED SURETY BOND PROGRAM.

       (a) Program Required.--Part B (15 U.S.C. 694a et seq.) of 
     title IV of the Small Business Investment Act of 1958 is 
     amended by adding at the end the following:

     ``SEC. 413. PREFERRED SURETY BOND PROGRAM.

       ``(a) Program Required.--The Administrator shall carry out 
     a program, to be known as the Preferred Surety Bond Program, 
     under which the Administration, by a written agreement 
     between the surety and the Administration, delegates to the 
     surety complete authority to issue, monitor, and service 
     bonds subject to guaranty from the Administration without 
     obtaining the specific approval of the Administration. Bonds 
     made under the program shall carry a 70 percent guaranty.
       ``(b) Term.--The term of a delegation of authority under 
     such an agreement shall not exceed 2 years.
       ``(c) Renewal.--Such an agreement may be renewed one or 
     more times, each such renewal providing one additional term. 
     Before each renewal, the Administrator shall review the 
     surety's bonds, policies, and procedures for compliance with 
     relevant rules and regulations.
       ``(d) Application.--The Administrator shall promptly act 
     upon an application from a surety to participate in the 
     program, in accordance with criteria and procedures 
     established in regulations pursuant to section 411(d).
       ``(e) Reduction or Termination of Participation.--The 
     Administrator is authorized to reduce the allotment of bond 
     guarantee authority or terminate the participation of a 
     surety in the program based on the rate of participation of 
     such surety during the 4 most recent fiscal year quarters 
     compared to the median rate of participation by the other 
     sureties in the program.''.
       (b) Conforming Amendments.--Section 411 of the Small 
     Business Investment Act of 1958 (15 U.S.C. 694b) is amended--
       (1) in subsection (a), by striking paragraphs (3), (4), and 
     (5);
       (2) in subsection (b)(2), by striking ``the authority of 
     subsection (a)(3)'' and inserting ``the authority of section 
     413'';
       (3) in subsection (c)--
       (A) by striking paragraph (1); and
       (B) by redesignating paragraphs (2) through (4) as (1) 
     through (3), respectively; and
       (4) in subsection (g)(3), by striking ``the authority of 
     paragraph (3) of subsection (a)'' and inserting ``the 
     authority of section 413''.

     SEC. 403. DENIAL OF LIABILITY.

       Section 411 of the Small Business Investment Act of 1958 
     (15 U.S.C. 694b) is amended by adding at the end the 
     following:
       ``(k) For bonds made or executed with the prior approval of 
     the Administration, the Administration shall not deny 
     liability to a surety based upon information that was 
     provided as part of the guaranty application.''.

     SEC. 404. INCREASING THE BOND THRESHOLD.

       Section 411(a) of the Small Business Investment Act of 1958 
     (15 U.S.C. 694b(a)) is amended by striking ``$2,000,000'' and 
     inserting ``$3,000,000''.

     SEC. 405. FEES.

       Section 411 of the Small Business Investment Act of 1958 
     (15 U.S.C. 694b) is amended by adding at the end the 
     following:
       ``(l) To the extent that amounts are made available to the 
     Administrator for the purpose of fee contributions, the 
     Administrator shall use such funds to offset fees established 
     and assessed under this section. Each fee contribution shall 
     be effective for one fiscal quarter and shall be adjusted as 
     necessary to ensure that amounts made available are fully 
     used.''.

             TITLE V--VENTURE CAPITAL INVESTMENT STANDARDS

     SEC. 501. DETERMINING WHETHER BUSINESS CONCERN IS 
                   INDEPENDENTLY OWNED AND OPERATED.

       Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) 
     is amended by adding at the end the following:
       ``(5) Non-affiliation of venture capital from consideration 
     of small business concern.--For purposes of determining 
     whether a small business concern is independently owned and 
     operated under paragraph (1) or meets the small business size 
     standards instituted under paragraph (2), the Administrator 
     shall not consider a concern that has received financing from 
     a venture capital operating company to be affiliated with 
     either the venture capital operating company or any other 
     business which the venture capital operating company has 
     financed.
       ``(6) Definition of `independently owned and operated'.--
     For purposes of this section, a business concern shall be 
     deemed to be `independently owned and operated' if it is 
     owned in majority part by one or more natural persons or 
     venture capital operating companies meeting the definition in 
     paragraph (7).
       ``(7) Definition of `venture capital operating company'.--
     For purposes of this section, the term `venture capital 
     operating company' means a business concern--
       ``(A) that--
       ``(i) is a Venture Capital Operating Company, as that term 
     is defined in regulations promulgated by the Secretary of 
     Labor; or
       ``(ii) is an entity that--

       ``(I) is registered under the Investment Company Act of 
     1940 (15 U.S.C. 80a-51 et seq.);
       ``(II) is an investment company, as defined in section 
     3(c)(14) of such Act (15 U.S.C. 80a-3(c)(14)), which is not 
     registered under such Act because it is beneficially owned by 
     less than 100 persons; or
       ``(III) is a nonprofit organization affiliated with, or 
     serving as a patent and licensing organization for, a 
     university or other institution of higher education and that 
     invests primarily in small business concerns; and

       ``(B) that is not controlled by any business concern that 
     is not a small business concern within the meaning of section 
     3; and
       ``(C) that has fewer than 500 employees; and
       ``(D) that is itself a business concern incorporated and 
     domiciled in the United States, or is controlled by a 
     business concern that is incorporated and domiciled in the 
     United States.''.

                         TITLE VI--REGULATIONS

     SEC. 601. REGULATIONS.

       Not later than 90 days after the date of the enactment of 
     this Act, the Administrator shall issue revisions to all 
     existing regulations as necessary to ensure their conformity 
     with the amendments made by this Act.

  The CHAIRMAN. No amendment to the bill is in order except those 
printed in House Report 110-350. Each amendment may be offered only in 
the order printed in the report, by a Member designated in the report, 
shall be considered read, shall be debatable for the time specified in 
the report, equally divided and controlled by the proponent and an 
opponent of the amendment, shall not be subject to amendment, and shall 
not be subject to a demand for division of the question.


                 Amendment No. 1 Offered by Mr. Chabot

  The CHAIRMAN. It is now in order to consider amendment No. 1 printed 
in part A of House Report 110-350.
  Mr. CHABOT. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 1 offered by Mr. Chabot.
       Strike title V and insert the following:

             TITLE V--VENTURE CAPITAL INVESTMENT STANDARDS

     SEC. 501. DETERMINING WHETHER BUSINESS CONCERN IS 
                   INDEPENDENTLY OWNED AND OPERATED.

       Section 3(a) of the Small Business Act (15 U.S.C. 632(a)) 
     is amended by adding at the end the following:
       ``(5) Non-affiliation of venture capital from consideration 
     of small business concern.--For purposes of determining 
     whether a small business concern is independently owned and 
     operated under paragraph (1) or

[[Page 25784]]

     meets the small business size standards instituted under 
     paragraph (2), the Administrator shall not consider a 
     business concern to be affiliated with a venture capital 
     operating company (or with any other business that the 
     venture capital operating company has financed) if--
       ``(A) the venture capital operating company does not own 50 
     percent or more of the business concern; and
       ``(B) employees of the venture capital operating company do 
     not constitute a majority of the board of directors of the 
     business concern.
       ``(6) Definition of `independently owned and operated'.--
     For purposes of this section, a business concern shall be 
     deemed to be `independently owned and operated' if--
       ``(A) it is owned in majority part by one or more natural 
     persons or venture capital operating companies;
       ``(B) there is no single venture capital operating company 
     that owns 50 percent or more of the business concern; and
       ``(C) there is no single venture capital operating company 
     the employees of which constitute a majority of the board of 
     directors of the business concern.
       ``(7) Definition of `venture capital operating company'.--
     For purposes of this section, the term `venture capital 
     operating company' means a business concern--
       ``(A) that--
       ``(i) is a Venture Capital Operating Company, as that term 
     is defined in regulations promulgated by the Secretary of 
     Labor; or
       ``(ii) is an entity that--

       ``(I) is registered under the Investment Company Act of 
     1940 (15 U.S.C. 80a-51 et seq.);
       ``(II) is an investment company, as defined in section 
     3(c)(14) of such Act (15 U.S.C. 80a-3(c)(14)), which is not 
     registered under such Act because it is beneficially owned by 
     less than 100 persons; or
       ``(III) is a nonprofit organization affiliated with, or 
     serving as a patent and licensing organization for, a 
     university or other institution of higher education and that 
     invests primarily in small business concerns; and

       ``(B) that is not controlled by any business concern that 
     is not a small business concern within the meaning of section 
     3; and
       ``(C) that has fewer than 500 employees; and
       ``(D) that is itself a concern incorporated and domiciled 
     in the United States, or is controlled by a concern that is 
     incorporated and domiciled in the United States.''.

  The CHAIRMAN. Pursuant to House Resolution 682, the gentleman from 
Ohio (Mr. Chabot) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Ohio.
  Mr. CHABOT. Thank you, Mr. Chairman. And I won't use the full 5 
minutes.
  I yield myself such time as I may consume.
  As I have already explained when discussing the underlying bill, this 
amendment adopts a bright-line test for determining whether a business 
that receives funding from a venture capital company is considered 
affiliated with that firm and any other firms that the venture capital 
company may own.
  The test is simple and sensible and I think easily applied. In my 
view, it strikes the correct balance between allowing needed venture 
capital funding for small businesses, while protecting against the 
possibility that venture capital firms will be able to create 
conglomerates that would have an unfair competitive advantage against 
independently owned and operated small businesses. As the chairwoman 
already mentioned, so I won't go into great detail, the venture capital 
company can't have more than 50 percent.
  As a result, I believe that this amendment alleviates many of the 
concerns that the Small Business Administration has, although maybe not 
all, with title V. I ask that Members support the amendment.
  Mr. Chairman, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Chairman, while not opposed to the amendment, I 
ask unanimous consent to claim the time in opposition.
  The CHAIRMAN. Is there objection to the request of the gentlewoman 
from New York?
  There was no objection.
  Ms. VELAZQUEZ. Mr. Chairman, in developing this legislation, we 
worked very closely with the ranking member to try and address his 
concerns with this bill. I understand that he has some remaining 
concerns with title V of the bill. I am confident, however, that the 
legislation we have reported includes adequate safeguards.
  The ranking member's amendment will provide further protections. I 
thank him for working with us to perfect this bill. I am willing to 
accept his amendment, which provides an additional level of 
clarification and direction for the agency. I appreciate his time and 
patience in working through this complicated issue with us.
  Mr. Chairman, I would yield such time as he may consume to the 
gentleman from Pennsylvania (Mr. Altmire), the main sponsor of the 
bill.
  Mr. ALTMIRE. I thank the chairwoman and the ranking member. I think 
the way that we worked together as a committee to resolve this issue is 
a model for the way this Congress should operate. The ranking member 
voiced some concerns about the bill and deferred in the process to get 
it to the floor so he could offer his amendment on the floor.
  There are some outside groups, I know, that are concerned about title 
V. We want to alleviate their concerns on this issue and get the 
support of the entire small business community on this. Hopefully, with 
this amendment, that is going to happen.
  Mr. Chairman, none of this would have happened without the support of 
the ranking member and the way that he handled this issue. I really 
want to thank him for offering this amendment. I think this is going to 
secure the bill for some of the groups that have concerns. I also 
accept it and I encourage my colleagues to support the ranking member's 
amendment.
  Mr. CHABOT. Mr. Chairman, I would like to thank the gentleman for his 
kind remarks and also note that the gentleman also worked in a 
bipartisan manner with Mr. Graves from Missouri in drafting the bill 
and moving forward in the first place.
  As he mentioned, the Small Business Committee, I think, has been a 
model in many ways for the entire Congress in the way a committee can 
work together. We have philosophical disagreements at times. We work 
together, and we are not going to agree on everything, but, in general, 
we try to work things out for the benefit of the small business 
community.
  There are Republicans, there are Democrats, there are independents 
that benefit from the small business community thriving in this 
country. I think we are trying to work altogether to make it a 
healthier situation. I wish all committees around here were able to do 
the same thing.
  Mr. Chairman, I yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Chairman, I thank the gentleman from Ohio, and I 
urge adoption of his amendment.
  Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Ohio (Mr. Chabot).
  The amendment was agreed to.


                 Amendment No. 2 Offered by Mr. Inslee

  The CHAIRMAN. It is now in order to consider amendment No. 2 printed 
in part A of House Report 110-350.
  Mr. INSLEE. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 2 offered by Mr. Inslee:
       Section 206, add at the end the following:
       (c) Expanded Definition of Operational Assistance.--Section 
     351(5) of the Small Business Investment Act of 1958 (15 
     U.S.C. 689(5)) is amended by inserting before the period at 
     the end the following: ``, including assistance on how to 
     implement energy efficiency and sustainable practices that 
     reduce the use of non-renewable resources or minimize 
     environmental impact and reduce overall costs and increase 
     health of employees''.

  The CHAIRMAN. Pursuant to House Resolution 682, the gentleman from 
Washington (Mr. Inslee) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Washington.

                              {time}  1730

  Mr. INSLEE. Mr. Chairman, I rise today to support the Inslee-Welch 
amendment to the Small Business Investment Act which will support the 
legislation's overall goal to modernize small business investment 
programs. Small businesses are the backbone of the growth in our 
economy and will be

[[Page 25785]]

the brains behind the forthcoming clean-energy revolution.
  Our amendment will ensure that the small business investment 
companies give consideration to innovators that create clean energy 
technologies and services.
  There are 26.8 million small businesses in the United States. The 
vast majority of renewable fuels producers, such as biodiesel and 
ethanol, are small businesses. The chairwoman understands this, and I 
thank her for her support and commend her efforts to support small 
green businesses.
  Under the chairwoman's leadership, the House passed a clean energy 
package that will help small businesses become more energy efficient 
and will establish a debenture financing program exclusively focused on 
investments in renewable fuels.
  These efforts truly have been outstanding. However, I believe we must 
ensure that every piece of legislation that passes this Chamber that 
deals with taxpayer dollars and Federal investment include a provision 
to encourage investments in truly clean energy technologies. This 
amendment will help American innovators and entrepreneurs turn their 
ideas into products that will help prevent our worst-case climate 
change scenarios and will create green-collar jobs, and I urge its 
passage.
  Mr. Chairman, I yield back the balance of my time.
  Mr. CHABOT. Mr. Chairman, I rise to claim the time in opposition, but 
I am not opposed and we are prepared to accept the gentleman's 
amendment.
  The CHAIRMAN. Without objection, the gentleman from Ohio is 
recognized for 5 minutes.
  There was no objection.
  Mr. CHABOT. Thank you. And we are prepared to accept the gentleman's 
amendment.
  Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Washington (Mr. Inslee).
  The amendment was agreed to.


                 Amendment No. 3 Offered by Mr. Inslee

  The CHAIRMAN. It is now in order to consider amendment No. 3 printed 
in House Report 110-350.
  Mr. INSLEE. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 3 offered by Mr. Inslee:
       Redesignate section 104 as 105 and insert after section 103 
     the following:34

     SEC. 104. INCREASED INVESTMENTS IN SMALL BUSINESSES CREATING 
                   NEW TECHNOLOGIES, MANUFACTURED GOODS, OR 
                   MATERIALS OR PROVIDING SERVICES TO REDUCE 
                   CARBON EMISSIONS IN THE UNITED STATES, REDUCE 
                   THE USE OF NON-RENEWABLE RESOURCES, MINIMIZE 
                   ENVIRONMENTAL IMPACT, AND RELATE PEOPLE WITH 
                   THE NATURAL ENVIRONMENT.

       Section 303 of the Small Business Investment Act of 1958 
     (15 U.S.C. 683), as amended by this Act, is further amended 
     by adding at the end the following:
       ``(k) Increased Investments in Small Businesses.--The 
     Administrator shall give consideration to investments in 
     small businesses that are creating new technologies, 
     manufactured goods, or materials, or providing services to 
     reduce carbon emissions in the United States, reduce the use 
     of non-renewable resources, minimize environmental impact, 
     and relate people with the natural environment.''.

  The CHAIRMAN. Pursuant to House Resolution 682, the gentleman from 
Washington (Mr. Inslee) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Washington.
  Mr. INSLEE. Mr. Chairman, I rise to offer a second Inslee-Welch 
amendment that will help small business achieve energy efficiency. We 
need all hands on deck in the effort to reduce greenhouse gas 
emissions, including our Nation's 26 million small businesses.
  This amendment will help small businesses in low-income areas upgrade 
to energy-efficient buildings, technologies and practices. It will give 
them operational assistance in these areas through the New Market 
Venture Capital program.
  The majority of small business owners say that they have been 
affected by rising energy prices and that reducing energy costs will 
serve to increase their profitability. At the same time, however, half 
of these entrepreneurs have not yet invested in energy-efficient 
programs for their businesses.
  For instance, if a small business owner can replace 20 100-watt 
incandescent bulbs with 27-watt compact fluorescent bulbs, it does cost 
the owner $400 up front but saves them $980 a year in energy costs.
  The owner of the Snoqualmie Gourmet Ice Cream factory in Maltby, WA 
retrofitted their small business lighting system and reduced their 
lighting costs by 50 percent. So we know that these simple, new, 
relatively inexpensive technologies pay for themselves in months, or at 
most in a couple of years.
  We know small businesses benefit from energy efficiency and 
sustainable workplace practices. This amendment will help American 
innovators with the know-how to reduce greenhouse gas emissions in 
America while increasing their profits. This is a green/green solution 
in both ways. I want to thank the chairwoman for her support, and urge 
passage of the amendment.
  Mr. Chairman, I yield back the balance of my time.
  Mr. CHABOT. I will claim the time in opposition, Mr. Chairman.
  The CHAIRMAN. The gentleman from Ohio is recognized for 5 minutes.
  Mr. CHABOT. Mr. Chairman, we have heard the gentleman's amendment and 
we are prepared to accept the amendment.
  Mr. WELCH of Vermont. Mr. Chairman, I want to thank the gentleman 
from Washington, Mr. Inslee, for his two very thoughtful amendments to 
H.R. 3567, the Small Business Investment Expansion Act and for allowing 
me to cosponsor them.
  The first amendment will help small businesses increase their energy 
efficiency and implement sustainable practices. The second amendment 
would direct the Small Business Administration, SBA, to reward small 
businesses that are reducing their carbon footprint.
  Earlier this year, I offered an amendment, which the House passed, to 
set a 5 percent procurement goal for the Federal Government to contract 
with green small businesses.
  It is critical that small businesses be encouraged to operate and to 
develop and supply products and services in an environmentally sound 
way.
  Many small businesses are already incorporating sustainable practices 
into their own business, such as conserving energy and water, using 
sustainable products, or minimizing generation of waste and the release 
of pollutants. They strive to make products from recycled materials. 
They use energy from renewable resources such as bio-fuels, solar and 
wind power. Or they transport goods and services in alternate fuel 
vehicles.
  We all have a responsibility to protect our environment. As 
populations expand and lifestyles change, we must keep the planet in 
good condition so that future generations will have the same natural 
resources that we have and enjoy now. The Earth faces many threats 
ranging from pollution to acid rain to global warming to the 
destruction of rainforests and other wild habitats to the decline and 
extinction of thousands of species of animals and plants. Combating 
these threats is essential to ensuring that future generations can live 
healthy lives.
  Our small businesses embrace our Nation's entrepreneurial spirit. The 
Federal Government can and should serve as a model to the private 
sector and the rest of the world. As a Congress, we should reward 
businesses that are striving to be environmentally responsible.
  Both of these amendments would greatly improve the bill before us and 
I ask that they be adopted by the House.
  Mr. CHABOT. I yield back the balance of my time.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Washington (Mr. Inslee).
  The amendment was agreed to.
  The CHAIRMAN. There being no other amendments, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Capuano) having assumed the chair, Mr. Kind, Chairman of the Committee 
of the Whole House on the state of the Union, reported that that 
Committee,

[[Page 25786]]

having had under consideration the bill (H.R. 3567) to amend the Small 
Business Investment Act of 1958 to expand opportunities for investments 
in small businesses, and for other purposes, pursuant to House 
Resolution 682, he reported the bill back to the House with sundry 
amendments adopted by the Committee of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  Is a separate vote demanded on any amendment reported from the 
Committee of the Whole? If not, the Chair will put them en gros.
  The amendments were agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


               Motion to Recommit Offered by Mr. Walberg

  Mr. WALBERG. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. WALBERG. Yes, in its current form.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Walberg moves to recommit the bill H.R. 3567 to the 
     Committee on Small Business with instructions to report the 
     same back to the House forthwith with the following 
     amendments:
       In title III of the bill, in the quoted matter proposing to 
     insert a new part C in title III of the Small Business 
     Investment Act of 1958:
       (1) Strike sections 382 and 384, and redesignate section 
     383 as 382.
       (2) In section 380(c), strike paragraphs (2) and (4); 
     strike ``383'' in paragraph (3) and insert ``382''; and 
     redesignate paragraphs (3) and (5) as (2) and (3), 
     respectively.

  The SPEAKER pro tempore. The gentleman from Michigan is recognized 
for 5 minutes.
  Mr. WALBERG. Mr. Speaker, in considering tonight's legislation, I am 
reminded of a quote from the great communicator himself, Ronald Reagan: 
``The government's view of the economy could be summed up in a few 
short phrases: If it moves, tax it. If it keeps moving, regulate it. 
And it if stops moving, subsidize it.''
  I find it ironic that we sit here this evening debating a clause to 
provide millionaires with Federal funding in the name of spurring 
investment when the majority party constantly supports to tax private 
investments out of business.
  The best way to encourage innovation and investment in the 
marketplace is to reduce financial and regulatory impediments. The key 
is reducing regulation. Congress must support tax measures that have 
proven to stimulate the economy, such as extending the capital gains 
and dividends tax reduction beyond 2010. These commonsense tax 
reductions have a proven track record of producing greater wealth and 
encouraging further investment in the economy.
  Instead, the majority in Congress has stood in the way of providing 
tax relief by supporting and passing a budget containing the largest 
tax increase in American history, which would result in a $3,000 tax 
increase for the average taxpayer in Michigan and in every other State. 
Now the majority wants to subsidize millionaires with funds that would 
be better used to assist the middle class.
  Title III of the bill before us creates a brand new program in the 
Small Business Administration to promote so-called ``angel investors.'' 
Angel investors are those financial backers who provide venture capital 
funds for small startups or entrepreneurs.
  Among other things, this new SBA program will provide funds of up to 
$2 million to qualified angel investors. These millionaire investors 
will take taxpayer dollars to finance their own small business. This 
begs the question: Who exactly are these angel investors? Do they have 
halos? Do they really need government money if they are already 
millionaires?
  According to the regulations referenced in this bill, a qualified 
angel investor would be ``any natural person whose individual net 
worth, or joint net worth with that person's spouse exceeds $1 
million.''
  In other words, to even qualify to receive government money, these 
angels already have to be millionaires.
  According to the University of New Hampshire, angel investments 
totaled $25.6 billion nationally, up 10 percent over the previous year. 
I don't know about you, but it appears angel investors already are 
having financial success, and I question whether they need help from 
the American taxpayer.
  Title III of the bill also includes a new grant program to help 
develop new angel investor groups; in other words, a taxpayer-
subsidized grant program to help millionaires get together and make 
investments. One can only wonder if these programs come with a 
complimentary tin of caviar.
  My motion to recommit would simply strike the two sections of bill 
that authorize taxpayer funding for these angel millionaire investors. 
Congress does not need to enact another Federal entitlement program to 
help millionaires decide what to invest in. The focus in this debate 
should be on lowering taxes for every American to encourage investment 
and personal wealth to create entrepreneurship and allow job creators 
to thrive.
  Mr. Speaker, I yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I rise to claim the time in opposition to 
the motion to recommit.
  The SPEAKER pro tempore. The gentlewoman from New York is recognized 
for 5 minutes.
  Ms. VELAZQUEZ. Mr. Speaker, I would like to ask the gentleman from 
Michigan: What bill did you read? Did you read H.R. 3567? Did you? 
Because if you read the bill, I want to ask you, show me in this bill 
where one single penny will go to millionaires? Show me in the bill 
where that happens?
  It goes to small businesses in low-income communities. It goes to 
veterans. It goes to small businesses. If the goal is to cut access to 
capital, that is what this motion will do.
  One of the primary goals of this program is to put capital in the 
hands of veterans and entrepreneurs. This amendment will bar 
entrepreneurs from such funds. It will invest in startups that could 
become the next Microsoft. They are not there yet. They are small, 
small businesses.
  We always hear how we need to be doing more to encourage investment. 
This program does exactly that. This is not a new program, it merely 
fixes an old program that has been badly mismanaged by this 
administration. The total cost of this program is half of what the 
other party said when it was in charge. This is a 3-year pilot program, 
and all funding remains subject to the application. The Federal 
Government will actually have less risk under the angel investment 
program than any other current government programs. And when we talk 
about being stewards of the taxpayers' money, profits from this 
investment go right back to the taxpayers.
  Mr. Speaker, I ask Members to oppose the motion to recommit.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. WALBERG. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of passage.
  The vote was taken by electronic device, and there were--yeas 183, 
nays 213, not voting 36, as follows:

                             [Roll No. 922]

                               YEAS--183

     Aderholt
     Akin
     Alexander
     Bachmann
     Baker
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Biggert
     Bilbray
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehner
     Bono
     Boozman
     Boustany
     Brady (TX)
     Broun (GA)
     Brown (SC)

[[Page 25787]]


     Brown-Waite, Ginny
     Buchanan
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp (MI)
     Campbell (CA)
     Cannon
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Coble
     Cole (OK)
     Conaway
     Crenshaw
     Culberson
     Davis (KY)
     Davis, David
     Davis, Tom
     Deal (GA)
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Doolittle
     Drake
     Dreier
     Duncan
     Ehlers
     Emerson
     Fallin
     Feeney
     Ferguson
     Flake
     Forbes
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gilchrest
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Granger
     Graves
     Hall (TX)
     Hastings (WA)
     Hayes
     Heller
     Hensarling
     Hobson
     Hulshof
     Hunter
     Inglis (SC)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Jordan
     Keller
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline (MN)
     Knollenberg
     Kuhl (NY)
     Lamborn
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Mack
     Manzullo
     McCarthy (CA)
     McCotter
     McCrery
     McHenry
     McHugh
     McKeon
     McMorris Rodgers
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Murphy, Tim
     Musgrave
     Myrick
     Neugebauer
     Nunes
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Poe
     Porter
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roskam
     Royce
     Ryan (WI)
     Sali
     Saxton
     Schmidt
     Sensenbrenner
     Sessions
     Shadegg
     Shays
     Shimkus
     Shuster
     Simpson
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Sullivan
     Tancredo
     Terry
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walberg
     Walden (OR)
     Walsh (NY)
     Wamp
     Weldon (FL)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                               NAYS--213

     Abercrombie
     Ackerman
     Allen
     Altmire
     Andrews
     Arcuri
     Baca
     Baird
     Baldwin
     Barrow
     Bean
     Becerra
     Berkley
     Berman
     Berry
     Bishop (NY)
     Blumenauer
     Boren
     Boswell
     Boucher
     Boyd (FL)
     Boyda (KS)
     Brady (PA)
     Braley (IA)
     Butterfield
     Capps
     Capuano
     Cardoza
     Carnahan
     Carney
     Castor
     Chandler
     Clarke
     Clay
     Cleaver
     Clyburn
     Cohen
     Cooper
     Costa
     Costello
     Courtney
     Cramer
     Crowley
     Cuellar
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (IL)
     Davis, Lincoln
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Doggett
     Donnelly
     Edwards
     Ellison
     Ellsworth
     Emanuel
     Engel
     English (PA)
     Eshoo
     Etheridge
     Farr
     Fattah
     Filner
     Frank (MA)
     Giffords
     Gillibrand
     Gonzalez
     Gordon
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hall (NY)
     Hare
     Harman
     Hastings (FL)
     Herseth Sandlin
     Higgins
     Hill
     Hinchey
     Hirono
     Hodes
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jefferson
     Johnson (GA)
     Kagen
     Kanjorski
     Kaptur
     Kildee
     Kilpatrick
     Kind
     Klein (FL)
     Kucinich
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Loebsack
     Lowey
     Lynch
     Mahoney (FL)
     Maloney (NY)
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy (NY)
     McCollum (MN)
     McDermott
     McGovern
     McIntyre
     McNerney
     McNulty
     Meek (FL)
     Meeks (NY)
     Melancon
     Michaud
     Miller (NC)
     Miller, George
     Mitchell
     Mollohan
     Moore (KS)
     Moore (WI)
     Murphy (CT)
     Murphy, Patrick
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Pallone
     Pascrell
     Pastor
     Payne
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Richardson
     Rodriguez
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Ryan (OH)
     Salazar
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Schwartz
     Scott (GA)
     Serrano
     Sestak
     Shea-Porter
     Sherman
     Shuler
     Sires
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Space
     Spratt
     Stupak
     Sutton
     Tanner
     Tauscher
     Taylor
     Thompson (CA)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Walz (MN)
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Welch (VT)
     Wexler
     Wilson (OH)
     Woolsey
     Wu
     Wynn
     Yarmuth

                             NOT VOTING--36

     Bachus
     Bishop (GA)
     Bonner
     Brown, Corrine
     Carson
     Conyers
     Cubin
     Davis, Jo Ann
     Dingell
     Doyle
     Everett
     Hastert
     Herger
     Hinojosa
     Hoekstra
     Issa
     Jackson-Lee (TX)
     Jindal
     Johnson, E. B.
     Jones (OH)
     Kennedy
     LaHood
     Linder
     Lofgren, Zoe
     Marchant
     McCaul (TX)
     Moran (KS)
     Moran (VA)
     Paul
     Perlmutter
     Rush
     Scott (VA)
     Stark
     Thompson (MS)
     Visclosky
     Wilson (NM)

                              {time}  1809

  Messrs. CUMMINGS, LOEBSACK, SNYDER, LINCOLN DAVIS of Tennessee, Ms. 
DELAURO and Ms. WASSERMAN SCHULTZ changed their vote from ``yea'' to 
``nay.''
  Mr. HASTINGS of Washington and Mr. SOUDER changed their vote from 
``nay'' to ``yea.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Ms. VELAZQUEZ. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 325, 
nays 72, not voting 35, as follows:

                             [Roll No. 923]

                               YEAS--325

     Abercrombie
     Ackerman
     Akin
     Alexander
     Allen
     Altmire
     Andrews
     Baca
     Baird
     Baldwin
     Barrow
     Bartlett (MD)
     Bean
     Becerra
     Berkley
     Berman
     Berry
     Biggert
     Bilbray
     Bilirakis
     Bishop (NY)
     Blumenauer
     Bono
     Boozman
     Boren
     Boswell
     Boucher
     Boustany
     Boyda (KS)
     Brady (PA)
     Braley (IA)
     Brown (SC)
     Buchanan
     Burgess
     Butterfield
     Buyer
     Camp (MI)
     Capito
     Capps
     Capuano
     Cardoza
     Carnahan
     Carney
     Castle
     Castor
     Chabot
     Chandler
     Clarke
     Clay
     Cleaver
     Clyburn
     Cohen
     Cole (OK)
     Conaway
     Cooper
     Costa
     Costello
     Courtney
     Cramer
     Crenshaw
     Crowley
     Cuellar
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (IL)
     Davis, David
     Davis, Lincoln
     Davis, Tom
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dicks
     Doggett
     Donnelly
     Drake
     Edwards
     Ehlers
     Ellison
     Ellsworth
     Emanuel
     Emerson
     Engel
     English (PA)
     Eshoo
     Etheridge
     Fallin
     Farr
     Fattah
     Ferguson
     Filner
     Forbes
     Fortenberry
     Fossella
     Frank (MA)
     Frelinghuysen
     Gerlach
     Giffords
     Gilchrest
     Gillibrand
     Gohmert
     Gonzalez
     Goodlatte
     Gordon
     Granger
     Graves
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hall (NY)
     Hall (TX)
     Hare
     Harman
     Hastings (FL)
     Hastings (WA)
     Hayes
     Herseth Sandlin
     Higgins
     Hill
     Hinchey
     Hirono
     Hobson
     Hodes
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Hulshof
     Inslee
     Israel
     Jackson (IL)
     Jefferson
     Johnson (GA)
     Johnson (IL)
     Jordan
     Kagen
     Kanjorski
     Kaptur
     Keller
     Kildee
     Kilpatrick
     Kind
     King (IA)
     King (NY)
     Kirk
     Klein (FL)
     Kline (MN)
     Knollenberg
     Kucinich
     Kuhl (NY)
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Latham
     LaTourette
     Lee
     Levin
     Lewis (GA)
     Lewis (KY)
     Lipinski
     LoBiondo
     Loebsack
     Lowey
     Lucas
     Lynch
     Mahoney (FL)
     Maloney (NY)
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy (CA)
     McCarthy (NY)
     McCollum (MN)
     McCotter
     McDermott
     McGovern
     McHugh
     McIntyre
     McMorris Rodgers
     McNerney
     McNulty
     Meek (FL)
     Meeks (NY)
     Melancon
     Michaud
     Miller (MI)
     Miller (NC)
     Miller, Gary
     Miller, George
     Mitchell
     Mollohan
     Moore (KS)
     Moore (WI)
     Murphy (CT)
     Murphy, Patrick
     Murphy, Tim
     Murtha
     Musgrave
     Nadler
     Napolitano
     Neal (MA)
     Neugebauer
     Nunes
     Oberstar
     Obey
     Olver
     Ortiz
     Pallone
     Pascrell
     Pastor
     Payne
     Pearce
     Peterson (MN)
     Peterson (PA)
     Pickering
     Platts
     Pomeroy
     Porter
     Price (NC)
     Pryce (OH)
     Putnam
     Rahall
     Rangel
     Regula
     Rehberg
     Reichert
     Renzi
     Reyes
     Reynolds
     Richardson
     Rodriguez
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Ros-Lehtinen
     Roskam
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Salazar
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Saxton
     Schakowsky
     Schiff
     Schmidt
     Schwartz
     Scott (GA)
     Scott (VA)
     Serrano
     Sestak
     Shays
     Shea-Porter
     Sherman
     Shimkus
     Shuler
     Shuster
     Simpson
     Sires
     Skelton
     Slaughter
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Solis
     Souder
     Space
     Spratt
     Stupak
     Sullivan
     Sutton
     Tanner
     Tauscher
     Taylor
     Terry
     Thompson (CA)
     Thompson (MS)
     Tiahrt
     Tiberi
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Upton
     Van Hollen
     Velazquez
     Walsh (NY)
     Walz (MN)
     Wamp
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Welch (VT)

[[Page 25788]]


     Weller
     Westmoreland
     Wexler
     Whitfield
     Wicker
     Wilson (OH)
     Wolf
     Woolsey
     Wu
     Wynn
     Yarmuth
     Young (AK)
     Young (FL)

                                NAYS--72

     Aderholt
     Bachmann
     Baker
     Barrett (SC)
     Barton (TX)
     Bishop (UT)
     Blackburn
     Blunt
     Boehner
     Brady (TX)
     Broun (GA)
     Brown-Waite, Ginny
     Burton (IN)
     Calvert
     Campbell (CA)
     Cannon
     Cantor
     Carter
     Coble
     Culberson
     Davis (KY)
     Deal (GA)
     Doolittle
     Dreier
     Duncan
     Feeney
     Flake
     Foxx
     Franks (AZ)
     Gallegly
     Garrett (NJ)
     Gingrey
     Goode
     Heller
     Hensarling
     Hunter
     Inglis (SC)
     Johnson, Sam
     Jones (NC)
     Kingston
     Lamborn
     Lewis (CA)
     Lungren, Daniel E.
     Mack
     Manzullo
     McCrery
     McHenry
     McKeon
     Mica
     Miller (FL)
     Myrick
     Pence
     Petri
     Pitts
     Poe
     Price (GA)
     Radanovich
     Ramstad
     Rohrabacher
     Royce
     Ryan (WI)
     Sali
     Sensenbrenner
     Sessions
     Shadegg
     Stearns
     Tancredo
     Thornberry
     Walberg
     Walden (OR)
     Weldon (FL)
     Wilson (SC)

                             NOT VOTING--35

     Arcuri
     Bachus
     Bishop (GA)
     Bonner
     Boyd (FL)
     Brown, Corrine
     Carson
     Conyers
     Cubin
     Davis, Jo Ann
     Dingell
     Doyle
     Everett
     Hastert
     Herger
     Hinojosa
     Hoekstra
     Issa
     Jackson-Lee (TX)
     Jindal
     Johnson, E. B.
     Jones (OH)
     Kennedy
     LaHood
     Linder
     Lofgren, Zoe
     Marchant
     McCaul (TX)
     Moran (KS)
     Moran (VA)
     Paul
     Perlmutter
     Stark
     Visclosky
     Wilson (NM)


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (during the vote). Members are advised there 
are less than 2 minutes remaining on this vote.

                              {time}  1819

  Ms. PRYCE of Ohio and Mr. BURGESS changed their vote from ``nay'' to 
``yea.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________