[Congressional Record (Bound Edition), Volume 155 (2009), Part 21]
[House]
[Pages 27989-27993]
[From the U.S. Government Publishing Office, www.gpo.gov]




           SMALL BUSINESS EARLY-STAGE INVESTMENT ACT OF 2009

  Ms. VELAZQUEZ. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 3738) to amend the Small Business Investment Act of 1958 to 
establish a program for the Small Business Administration to provide 
financing to support early stage small businesses in targeted 
industries, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 3738

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Early-Stage 
     Investment Act of 2009''.

     SEC. 2. SMALL BUSINESS EARLY-STAGE INVESTMENT PROGRAM.

       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:

        ``PART D--SMALL BUSINESS EARLY-STAGE INVESTMENT PROGRAM

     ``SEC. 399A. ESTABLISHMENT OF PROGRAM.

       ``The Administrator shall establish and carry out an early-
     stage investment program (hereinafter referred to in this 
     part as the `program') to provide equity investment financing 
     to support early-stage small businesses in targeted 
     industries in accordance with this part.

     ``SEC. 399B. ADMINISTRATION OF PROGRAM.

       ``The program shall be administered by the Administrator 
     acting through the Associate Administrator described under 
     section 201.

     ``SEC. 399C. APPLICATIONS.

       ``(a) In General.--Any incorporated body, limited liability 
     company, or limited partnership organized and chartered or 
     otherwise existing under Federal or State law for the purpose 
     of performing the functions and conducting the activities 
     contemplated under the program and any small business 
     investment company may submit to the Administrator an 
     application to participate in the program.
       ``(b) Requirements for Application.--An application to 
     participate in the program shall include the following:
       ``(1) A business plan describing how the applicant intends 
     to make successful venture capital investments in early-stage 
     small businesses in targeted industries.
       ``(2) Information regarding the relevant venture capital 
     investment qualifications and backgrounds of the individuals 
     responsible for the management of the applicant.
       ``(3) A description of the extent to which the applicant 
     meets the selection criteria under section 399D.
       ``(c) Applications From Small Business Investment 
     Companies.--The Administrator shall establish an abbreviated 
     application process for small business investment companies 
     that have received a license under section 301 and that are 
     applying to participate in the program. Such abbreviated 
     process shall incorporate a presumption that such small 
     business investment companies satisfactorily meet the 
     selection criteria under paragraphs (3) and (5) of section 
     399D(b).

     ``SEC. 399D. SELECTION OF PARTICIPATING INVESTMENT COMPANIES.

       ``(a) In General.--Not later than 90 days after the date on 
     which the Administrator receives an application from an 
     applicant under section 399C, the Administrator shall make a 
     final determination to approve or disapprove such applicant 
     to participate in the program and shall transmit such 
     determination to the applicant in writing.
       ``(b) Selection Criteria.--In making a determination under 
     subsection (a), the Administrator shall consider each of the 
     following:
       ``(1) The likelihood that the applicant will meet the goals 
     specified in the business plan of the applicant.

[[Page 27990]]

       ``(2) The likelihood that the investments of the applicant 
     will create or preserve jobs, both directly and indirectly.
       ``(3) The character and fitness of the management of the 
     applicant.
       ``(4) The experience and background of the management of 
     the applicant.
       ``(5) The extent to which the applicant will concentrate 
     investment activities on early-stage small businesses in 
     targeted industries.
       ``(6) The likelihood that the applicant will achieve 
     profitability.
       ``(7) The experience of the management of the applicant 
     with respect to establishing a profitable investment track 
     record.

     ``SEC. 399E. GRANTS.

       ``(a) In General.--The Administrator may make one or more 
     grants to a participating investment company.
       ``(b) Grant Amounts.--
       ``(1) Non-federal capital.--A grant made to a participating 
     investment company under the program may not be in an amount 
     that exceeds the amount of the capital of such company that 
     is not from a Federal source and that is available for 
     investment on or before the date on which a grant is drawn 
     upon. Such capital may include legally binding commitments 
     with respect to capital for investment.
       ``(2) Limitation on aggregate amount.--The aggregate amount 
     of all grants made to a participating investment company 
     under the program may not exceed $100,000,000.
       ``(c) Grant Process.--In making a grant under the program, 
     the Administrator shall commit a grant amount to a 
     participating investment company and the amount of each such 
     commitment shall remain available to be drawn upon by such 
     company--
       ``(1) for new-named investments during the 5-year period 
     beginning on the date on which each such commitment is first 
     drawn upon; and
       ``(2) for follow-on investments and management fees during 
     the 10-year period beginning on the date on which each such 
     commitment is first drawn upon, with not more than 2 
     additional 1-year periods available at the discretion of the 
     Administrator.

     ``SEC. 399F. INVESTMENTS IN EARLY-STAGE SMALL BUSINESSES IN 
                   TARGETED INDUSTRIES.

       ``(a) In General.--As a condition of receiving a grant 
     under the program, a participating investment company shall 
     make all of the investments of such company in small business 
     concerns, of which at least 50 percent shall be early-stage 
     small businesses in targeted industries.
       ``(b) Evaluation of Compliance.--With respect to a grant 
     amount committed to a participating investment company under 
     section 399E, the Administrator shall evaluate the compliance 
     of such company with the requirements under this section if 
     such company has drawn upon 50 percent of such commitment.

     ``SEC. 399G. PRO RATA INVESTMENT SHARES.

       ``Each investment made by a participating investment 
     company under the program shall be treated as comprised of 
     capital from grants under the program according to the ratio 
     that capital from grants under the program bears to all 
     capital available to such company for investment.

     ``SEC. 399H. GRANT INTEREST.

       ``(a) Grant Interest.--
       ``(1) In general.--As a condition of receiving a grant 
     under the program, a participating investment company shall 
     convey a grant interest to the Administrator in accordance 
     with paragraph (2).
       ``(2) Effect of conveyance.--The grant interest conveyed 
     under paragraph (1) shall have all the rights and attributes 
     of other investors attributable to their interests in the 
     participating investment company, but shall not denote 
     control or voting rights to the Administrator. The grant 
     interest shall entitle the Administrator to a pro rata 
     portion of any distributions made by the participating 
     investment company equal to the percentage of capital in the 
     participating investment company that the grant comprises. 
     The Administrator shall receive distributions from the 
     participating investment company at the same times and in the 
     same amounts as any other investor in the company with a 
     similar interest. The investment company shall make 
     allocations of income, gain, loss, deduction, and credit to 
     the Administrator with respect to the grant interest as if 
     the Administrator were an investor.
       ``(b) Manager Profits.--As a condition of receiving a grant 
     under the program, the manager profits interest payable to 
     the managers of a participating investment company under the 
     program shall not exceed 20 percent of profits, exclusive of 
     any profits that may accrue as a result of the capital 
     contributions of any such managers with respect to such 
     company. Any excess of this amount, less taxes payable 
     thereon, shall be returned by the managers and paid to the 
     investors and the Administrator in proportion to the capital 
     contributions and grants paid in. No manager profits interest 
     (other than a tax distribution) shall be paid prior to the 
     repayment to the investors and the Administrator of all 
     contributed capital and grants made.
       ``(c) Distribution Requirements.--As a condition of 
     receiving a grant under the program, a participating 
     investment company shall make all distributions to all 
     investors in cash and shall make distributions within a 
     reasonable time after exiting investments, including 
     following a public offering or market sale of underlying 
     investments.

     ``SEC. 399I. FUND.

       ``There is hereby created within the Treasury a separate 
     fund for grants which shall be available to the Administrator 
     subject to annual appropriations as a revolving fund to be 
     used for the purposes of the program. All amounts received by 
     the Administrator, including any moneys, property, or assets 
     derived by the Administrator from operations in connection 
     with the program, shall be deposited in the fund. All 
     expenses and payments, excluding administrative expenses, 
     pursuant to the operations of the Administrator under the 
     program shall be paid from the fund.

     ``SEC. 399J. APPLICATION OF OTHER SECTIONS.

       ``To the extent not inconsistent with requirements under 
     this part, the Administrator may apply sections 309, 311, 
     312, 313, and 314 to activities under this part and an 
     officer, director, employee, agent, or other participant in a 
     participating investment company shall be subject to the 
     requirements under such sections.

     ``SEC. 399K. DEFINITIONS.

       ``In this part, the following definitions apply:
       ``(1) Early-stage small business in a targeted industry.--
     The term `early-stage small business in a targeted industry' 
     means a small business concern that--
       ``(A) is domiciled in a State;
       ``(B) has not generated gross annual sales revenues 
     exceeding $15,000,000 in any of the previous 3 years; and
       ``(C) is engaged primarily in researching, developing, 
     manufacturing, producing, or bringing to market goods, 
     products, or services with respect to any of the following 
     business sectors:
       ``(i) Agricultural technology.
       ``(ii) Energy technology.
       ``(iii) Environmental technology.
       ``(iv) Life science.
       ``(v) Information technology.
       ``(vi) Digital media.
       ``(vii) Clean technology.
       ``(viii) Defense technology.
       ``(ix) Photonics technology.
       ``(2) Participating investment company.--The term 
     `participating investment company' means an applicant 
     approved under section 399D to participate in the program.
       ``(3) Small business concern.--The term `small business 
     concern' has the same meaning given such term under section 
     3(a) of the Small Business Act (15 U.S.C. 632(a)).

     ``SEC. 399L. AUTHORIZATION OF APPROPRIATIONS.

       ``There is authorized to be appropriated to carry out the 
     program $200,000,000 for the first full fiscal year beginning 
     after the date of the enactment of this part.''.

     SEC. 3. PROHIBITIONS ON EARMARKS.

       None of the funds appropriated for the program established 
     under part D of title III of the Small Business Investment 
     Act of 1958, as added by this Act, may be used for a 
     Congressional earmark as defined in clause 9(d) of rule XXI 
     of the Rules of the House of Representatives.

     SEC. 4. REGULATIONS.

       Except as otherwise provided in this Act or in amendments 
     made by this Act, after an opportunity for notice and 
     comment, but not later than 180 days after the date of the 
     enactment of this Act, the Administrator shall issue 
     regulations to carry out this Act and the amendments made by 
     this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
New York (Ms. Velazquez) and the gentleman from Missouri (Mr. Graves) 
each will control 20 minutes.
  The Chair recognizes the gentlewoman from New York.


                             General Leave

  Ms. VELAZQUEZ. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and include extraneous material on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from New York?
  There was no objection.
  Ms. VELAZQUEZ. Mr. Speaker, like the credit markets, the pipeline for 
equity financing has become clogged. For many entrepreneurs who are 
looking to turn a good idea into a profitable, job-creating business, 
venture capital has traditionally been an important source of 
financing. In today's economy, that funding often isn't there.
  Venture capital funds are on track to invest between $15 billion and 
$20 billion in new companies this year. That is between $15 billion and 
$20 billion less than the previous 2 years. This simply means fewer 
firms are finding the funds they need to get off the ground. Between 
January and October of this year, there were 1,100 fewer venture 
capital deals compared to the same period last year.
  The legislation offered by Mr. Nye, H.R. 3738, will reverse this 
troubling

[[Page 27991]]

trend. Under this bill, the Small Business Administration could begin 
to act as a partner to private venture capital firms, offering them 
incentives to help small business startups get off the ground.
  Through the creation of this new public-private partnership, the SBA 
can encourage more venture capital firms to begin investing again. The 
program will also mean larger blocks of funding will be available to 
businesses in their early growth stages. Helping early stage startups 
launch is one of our most powerful tools for generating job 
opportunities. During economic downturns, when larger companies 
contract and engage in layoffs, startups go in the opposite direction 
by growing and creating jobs. These early stage businesses also engage 
in some of the most promising research areas--like defense, medicine, 
and renewable energy. Advances in these fields mean new products and 
new jobs.
  Mr. Speaker, after every previous recession, we have found our way 
back to prosperity thanks to the risk-takers that do not wait around 
for the economy to bounce back but go out and start creating a new 
product or new service. That can only happen when investors are ready 
to help move new ideas from the drawing board to the marketplace.
  With this bill, we will help new small businesses launch and start 
creating new jobs in the short term. I commend the gentleman from 
Virginia for his work on this legislation. I urge my colleagues to vote 
``yes.''
  I reserve the balance of my time.
  Mr. GRAVES. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, today I rise in support of the request to suspend the 
rules and pass H.R. 3738, a bill to provide early stage seed-capital 
financing for small businesses, and I would like to thank Chairwoman 
Velazquez for working in a cooperative and bipartisan manner to bring 
this bill to the House floor today.
  As I mentioned in a recent floor statement, America needs to stop 
exporting risk and restart making products that the world desires. 
Those products are most likely to come from the minds of America's 
entrepreneurs in such fields as value-added agriculture, biotechnology, 
renewable energy, and computer software. Nevertheless, startups in 
these fields are finding it increasingly difficult to find financing. 
If these enterprises have to rely on expensive debt capital, it will 
detract from their ability to expand their businesses.
  The SBA used to have a program designed to help provide long-term 
equity capital to start up small businesses. However, this program was 
overly complex and forced potential participants to wade through a 
lengthy, maze-like application process.
  The bill before us today, H.R. 3738, provides a streamlined process 
to enable qualified venture capitalists to bootstrap their investment 
with additional Federal moneys to provide needed equity capital to 
small businesses. Successful operators will pay back the Federal 
Government before they take their own profits.
  While there is a modest cost to the program, the potential benefits 
to the economy are quite significant. Some of the best known names in 
American businesses, including companies like Federal Express, Dell, 
Intel, Nike, Callaway Golf and Build-A-Bear received assistance through 
the use of long term equity capital. If H.R. 3738 creates a new Intel, 
it would certainly pay for itself. More importantly, the program will 
help America's entrepreneurs, the individual risk-takers who had an 
idea, and that is what made this country great.
  Mr. Speaker, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield such time as he may consume to 
the lead sponsor of this bill, the gentleman from Virginia (Mr. Nye).
  Mr. NYE. Mr. Speaker, the financial crisis that led to the current 
economic downturn has caused our small business credit markets to dry 
up. There has been much discussion in recent weeks about the difficulty 
that small firms face in securing affordable credit. Somewhat less 
attention has been paid to the other side of the capital equation, 
namely investment.
  For early stage businesses, investment from venture capital firms 
makes more sense than taking out a loan. After all, fledgling 
businesses typically do not have the cash flow to make regular payments 
on debt. For these enterprises, investment from venture capital firms 
is usually a better way to raise capital. These early stage businesses 
engage in some of the most promising research areas like defense, 
medicine, and renewable energy. Breakthroughs in these fields mean new 
products, and more importantly, they mean new jobs.
  In my home State of Virginia, we have seen the importance of venture 
funding to job growth. Virginia ranks ninth in the Nation for jobs 
created or saved by venture capital, and over the past 6 years, we have 
been able to trace the creation of 13,000 Virginia jobs to venture 
capital investments.
  If our economic recovery is going to be sustained, we will need high 
growth, high-risk firms that will spawn nascent innovative products, 
break new ground, and hire out-of-work Americans.

                              {time}  1115

  That kind of progress will require investment from venture capital 
communities.
  My bill, the Small Business Early Investment Act of 2009, will help 
promote a new wave of venture capital investments by creating a new 
Small Business Early Stage Investment program at the SBA. Under the 
program, carefully screened companies that invest in new enterprises 
will be eligible for SBA grants. These grants will match the capital 
that investors have already raised from the private market.
  Once these investments mature and the venture capital companies exit 
their investments, the SBA will be paid back at the same rate as 
traditional investors. These grants will go to those who invest in 
early-stage companies that are doing work in some of our most promising 
sectors, like alternative energies, biotechnology, and defense 
technology. These are fields in which we want the United States to 
maintain its competitive edge. So these grants will not only stimulate 
growth but will also advance our national priorities.
  Mr. Speaker, we all know that entrepreneurs will be central to our 
economic recovery; however, for these firms to perform their 
traditional job-creating role, they need capital. The legislation 
before us would, for the first time, create a program at the SBA that 
is dedicated to ensuring America's small businesses can access venture 
capital. This will help new companies get off the ground and early-
stage companies fully develop. Most of all, this bill will invest 
taxpayer dollars wisely by creating new jobs, sparking technological 
progress, and fostering entrepreneurship.
  I want to thank Chairwoman Velazquez and Ranking Member Graves for 
their leadership on the committee and for working with me on this 
important initiative.
  I urge my colleagues to support and pass this bill for our small 
businesses and for the recovery of our economy.
  Mr. GRAVES. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Arizona (Mr. Flake).
  Mr. FLAKE. I thank the gentleman for yielding.
  I rise in opposition to the legislation. This bill is one of many 
we're considering under suspension of the rules that were part of 
broader pieces of legislation we passed just a few weeks ago.
  Members may recall that I offered an amendment to clarify that the 
grant program established under this program remain free of earmarks. 
That amendment was hardly controversial. It's passed a number of times, 
a similar amendment on similar bills. In fact, I think it's been by 
voice vote six times in the 111th Congress, twice by recorded vote, 
once in the 110th and again just a few weeks ago. This amendment on 
this bill earlier passed by a margin of 370-55, yet that language does 
not appear in the legislation that we're considering today.
  Ms. VELAZQUEZ. Will the gentleman yield?
  Mr. FLAKE. I yield to the gentlewoman from New York.

[[Page 27992]]


  Ms. VELAZQUEZ. I don't know what bill you read, but your amendment is 
part of the bill, so I would invite the gentleman to go back and read 
the bill.
  Mr. FLAKE. I hope I'm mistaken. I hope that it is.
  Ms. VELAZQUEZ. The gentleman is mistaken.
  Mr. FLAKE. Thank you. I appreciate that.
  On to the broader piece of legislation, this Early Stage Investment 
program would allow the SBA to provide matching grants to private 
investment firms when they will use the money to invest in small 
business. I have to wonder, have to question----
  Ms. VELAZQUEZ. Will the gentleman yield again?
  Mr. FLAKE. Yes, I yield.
  Ms. VELAZQUEZ. Page 11, section 3, ``Prohibitions on Earmarks. None 
of the funds appropriated for the program established under part D of 
title III of the Small Business Investment Act of 1958, as added by 
this act, may be used for a congressional earmark as defined in clause 
9(d) of rule XXI of the rules of the House of Representatives.''
  Thank you for yielding.
  Mr. FLAKE. I thank the gentlewoman and I apologize.
  Ms. VELAZQUEZ. Is it correct that this is your language?
  Mr. FLAKE. Yes, that is correct.
  Ms. VELAZQUEZ. Thank you.
  Mr. FLAKE. That is my language. I'm pleased to see it is part of the 
legislation. However, as to the broader bill, I still remain opposed, 
but I thank the gentlewoman, and I hope that that language remains in 
all the legislation. Sometimes we have a habit of putting it in, then 
it goes to conference and the language is removed and it comes back. So 
I'm glad to be surprised and I'm very happy to be wrong in this case.
  As to the broader bill, I think that when we are running a deficit of 
$1.4 trillion this year and have a debt of somewhere around $11 
trillion, it behooves us to look at programs like this and wonder why 
we are taking taxpayer money. I know the sponsor of the legislation 
says that it will be invested wisely.
  We are basically, as I understand it, using taxpayer money to give to 
or combine with venture capital money to invest in small business. By 
definition, if we are moving in with Federal taxpayer money, it's 
because venture capitalists and others don't see a profit being 
generated in the future or don't see the need or don't agree that this 
business model is sound. Yet we are taking taxpayer money and saying 
we're going to invest it because we know better than the venture 
capitalists, that somehow Congress, in all of our wisdom, in all of our 
small business wisdom and business acumen, we know better than venture 
capitalists which businesses are going to succeed and which ones are 
not. I think that that thinking is folly.
  We in Congress don't have a stellar record when it comes to 
investing. You could name a number of things starting decades and 
decades ago where we haven't exactly picked the best winners and losers 
in the economy. But in this case with the kind of deficit we're 
running, with the kind of debt that we have, with the unfunded 
obligations totaling more than $50 trillion out there, to come with new 
authorization for new money, to invest where venture capitalists dare 
not tread, with taxpayer money, I think it should frighten us all. And 
to the extent that this legislation does that, we should reject it.
  I should mention, as well, that this is talked about with early 
investment, but under the legislation only 50 percent of the funding is 
required to be invested early. Now, I think it would be folly to invest 
early, late, or anytime with Federal taxpayer money in private business 
in this fashion, but I think it's a bit of a misnomer even to call it 
``early investment'' when only half of the money is required to be 
invested early in this case.
  I hope that we reconsider this. Between now and the end of the year, 
we're going to be passing a lot of authorization bills like this, and a 
lot of people will say, well, it's not appropriation. It's not real 
money. We're just authorizing it. We're just stating goals and ideals. 
But then come next year or later when we haven't funded this, people 
will say, hey, we're cutting back or we're cutting funding that has 
been authorized. The Congress authorized it by a big margin, and this 
will probably pass by a big margin, and yet when we don't fund it, 
people will come back and say we haven't funded what we've authorized.
  So it is important to make a statement here that it's not the right 
time, now or anytime, frankly, to use taxpayer money to invest in small 
business in this fashion, to go where venture capitalists dare not 
tread, where they will not invest their own money, but we're going to 
put Federal taxpayer money in this venture.
  So with that, I appreciate the gentleman for yielding, and I thank 
the gentlewoman again. And I appreciate the diligence that you've 
worked with to keep the language in the legislation. That hasn't always 
happened, and I appreciate that it is here.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I know that he didn't read his language in the bill, but 
perhaps I might help him understand the bill.
  SBA doesn't do any investing in this bill. It doesn't pick winners 
and losers.
  I reserve the balance of my time.
  Mr. GRAVES. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I stand here today in support 
of H.R. 3738, the Small Business Early-Stage Investment Act of 2009, 
which establishes the Small Business Early-Stage Investment program to 
provide equity investment finance to small businesses. I support this 
resolution because I believe that encouraging small business investment 
is crucial as the United States emerges from the recent economic 
downturn.
  I would like to first thank my colleague, Congressman Glenn Nye, for 
introducing this valuable legislation. According to the National Bureau 
of Economic Research (NBER), the United States economy experienced the 
longest recession since World War II. As described by the Congressional 
Research Service (CRS), ``this recession features the largest decline 
in output, consumption, and investment . . . of any post-war 
recession.'' The tightened credit markets have caused nonresidential 
investment to decline by 1.7% in the third quarter of 2008, by 21.7% in 
the fourth quarter of 2008, and by an estimated 37.9% in the first 
quarter of 2009, as reported by CRS. The impacts of the tightened 
credit markets and decline in business investment include the 
possibility of lenders declining to make loans to small businesses that 
they otherwise would in a more robust economy and small businesses 
possibly becoming more risk averse, thereby delaying or aborting 
projects. The difficulty obtaining investment that small businesses 
face today could lead to delays in new business ventures.
  There are certain business sectors that we rely upon for innovation 
in order to transform our society. The United States is looking to 
innovation from the energy technology, environmental technology, and 
clean technology sectors to lead the way in developing technology that 
will reduce or eliminate climate change factors while maintaining our 
standard of living. We are looking to the information technology and 
digital media sectors to help level the educational playing field and 
open up the world to all students. If we allow these sectors to recover 
on their own, we could lose precious time for solving these problems.
  H.R. 3738 seeks to reverse the negative impacts of the recession and 
the subsequent decline in investment opportunities for small businesses 
in critical economic sectors. While there currently exists a Small 
Business Innovation Research program established to provide small 
businesses with venture capital for projects in late stages of 
development, there does not currently exist a program to provide grant 
funding for early state research. Particularly, the biotechnology and 
defense technology business sectors require early stage investment to 
develop innovative technology. H.R. 3738 will help those and other 
critical sectors gain access to capital in order to drive innovation.
  H.R. 3738 will establish a new program to provide equity financing to 
small businesses in targeted industries with early stage projects. The 
Small Business Administration (SBA) will be authorized to provide 
grants to qualified investment companies, determined by the SBA 
Administrator, under certain criteria. Any firm that applies for funds 
must have a 1-to-1 match of private funds. Equity firms that apply for 
these funds must return the funds in full

[[Page 27993]]

plus 20 percent. While there is a $250 million initial appropriation, 
the program is predicted to be self-sustaining from the profits of the 
loan program.
  My district is the perfect example of why small businesses are so 
vital to the nation's economy. Houston's newer and growing economic 
sub-centers have relied more on small business as their cornerstone 
than the older Central Business District. According to a report issued 
by the SBA Office of Advocacy, findings suggest that while small firms 
support urban economic growth, as development proceeds they grow 
substantially. In turn, small firm growth plays an important role in 
urban economic development which is likely to lead to economic growth 
for the entire local economy. I believe that H.R. 3738 will support the 
small businesses that sustain Houston's economy.
  Ms. VELAZQUEZ. Mr. Speaker, I urge adoption of this bill, and I yield 
back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentlewoman from New York (Ms. Velazquez) that the House suspend the 
rules and pass the bill, H.R. 3738, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________