[House Report 106-184]
[From the U.S. Government Publishing Office]



106th Congress                                            Rept. 106-184
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================



 
          PROGRAM FOR INVESTMENT IN MICROENTREPRENEURS (PRIME)

                                _______
                                

                 June 14, 1999.--Ordered to be printed

                                _______


   Mr. Leach, from the Committee on Banking and Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                   DISSENTING AND SUPPLEMENTAL VIEWS

                        [To accompany H.R. 413]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Banking and Financial Services, to whom was 
referred the bill (H.R. 413) to authorize qualified 
organizations to provide technical assistance and capacity 
building services to microenterprise development organizations 
and programs and to disadvantaged entrepreneurs using funds 
from the Community Development Financial Institutions Fund, and 
for other purposes, having considered the same, report 
favorably thereon without amendment and recommend that the bill 
do pass.

                          Purpose and Summary

    The purpose of H.R. 413, the ``Program for Investment in 
Microentrepreneurs Act of 1999'' (the ``Act''), as reported out 
of the Committee on Banking and Financial Services, is to 
encourage entrepreneurship and community development by 
providing assistance to microenterprise development 
organizations, thereby enabling these organizations to more 
effectively meet the growing training and technical assistance 
needs of low income entrepreneurs. The Act authorizes the 
Community Development Financial Institutions (``CDFI'') Fund to 
establish a microenterprise technical assistance and capacity 
building grant program that would award grants on a competitive 
basis to eligible microenterprise development organizations and 
programs. Eligible organizations include Indian Tribes.
    The Act is not a loan program. The PRIME Act provides 
funding to support the training and technical assistance needs 
of microenterprise development organizations that target low 
income and very low income individuals.
    The general philosophy of the microenterprise industry is 
to bring new sources of income to segments of the population 
where job opportunities are low by combining small amounts of 
credit with business management skills. A microenterprise is 
generally a sole proprietorship with fewer than five employees, 
has not had access to credit from commercial banks, and can 
initially use a loan in an amount under $15,000.
    In the past ten years, encouraging entrepreneurship as a 
strategy for poverty alleviation and community development has 
evolved. The ``1999 Director of U.S. Microenterprise Programs'' 
lists 342 microenterprise programs in forty-six states and the 
District of Columbia, a significant increase over the 195 
programs listed in the 1994 directory. Such programs provide a 
range of services to help low income entrepreneurs, including 
business training, financial management, counseling, and 
assistance in accessing capital.
    In testimony provided in the Committee, the Aspen 
Institute, a nonprofit education and research organization, 
presented the findings of its Self-Employment Learning Project 
(``SELP''). Over a five year period, SELP's study tracked 405 
entrepreneurs who were each served by one of seven 
microenterprise programs. The purpose of the study was to 
evaluate the costs and performance of the programs, as well as 
the outcomes experienced by the microentrepreneurs. SELP 
reported the following results:
          The average change in household income was $8,485--
        rising from $13,889 to $22,374 over five years;
          Fifty-three percent of the entrepreneurs increased 
        their incomes enough to cross the poverty line (using 
        150% of the poverty line as the reference point);
          Entrepreneurs reduced their reliance on government 
        assistance by 61% with the largest reduction in the 
        amount of AFDC benefits;
          The business survival rate was 49% over five years; 
        which is comparable to Census Bureau and Internal 
        Revenue Service survival rates for businesses with 
        similar characteristics as the sampled 
        microenterprises.
    The SELP study reinforces the arguments that 
microenterprise organizations are of critical importance to low 
income entrepreneurs. As stated, existing funding for 
microenterprise programs is largely in the form of credit. 
However, the study indicates that credit without training is of 
limited success. Thus, the intent of the Act is to fill this 
void. PRIME Act funds cannot be used to capitalize loans to 
microentrepreneurs, rather the funds may be used for technical 
assistance purposes only. The Act's funding targets low-income 
individuals and at least 50% of the funding must be used to 
target very low income individuals (those at or below 150% of 
the poverty line).
    The Act authorizes the CDFI Fund to establish a 
microenterprise technical assistance and capacity building 
grant program that would award grants on a competitive basis to 
eligible microenterprise development organizations and 
programs. The Act is authorized for four years at levels of $15 
million for FY00, $25 million for FY01, $30 million for FY02, 
and $35 million for FY03. Under the Act, funds could be used by 
qualifying nonprofit organizations to:
          Provide training and technical assistance to low 
        income and disadvantaged individuals interested in 
        starting or expanding their own business;
          Engage in capacity building activities targeted to 
        microenterprise development organizations that serve 
        low income and disadvantaged individuals; and
          Support research and development activities designed 
        to identify and promote entrepreneurial training and 
        technical assistance programs that can effectively 
        serve low income and disadvantaged individuals.
    To be considered qualified for funds under the Act, an 
organization must be a nonprofit microenterprise development 
organization or program with a demonstrated record of serving 
economically disadvantaged individuals. Financial assistance 
under the Act must be matched with funds from sources other 
than the Federal government on a basis of not less than 50% of 
each dollar. The intent of the Act is to ensure that technical 
assistance and capacity building funds are made available to a 
range of microenterprise organizations, including small and 
emerging organizations as well as larger and more established 
organizations.

                                Hearings

    The Committee held a hearing on H.R. 413, the ``Program for 
Investment in Microentrepreneurs Act of 1999,'' on May 26, 
1999. Testifying at the hearing were: the Honorable Edward M. 
Kennedy; the Honorable Bobby L. Rush; Gary Gensler, 
Undersecretary for Domestic Finance, Department of the 
Treasury; Ellen W. Lazar, Director, Community Development 
Financial Institutions Fund; Jason J. Friedman, Vice President, 
Institute for Social and Economic Development; Marguerite 
Sisson, Owner, River City Cleaning; Joan Dallis, Vice 
President, Rural Opportunities Enterprise, Inc.; Karla Melvin, 
Director, Employment Services, Women Venture; Peggy Clark, 
Executive Director, Economic Opportunities Program, The Aspen 
Institute; Ellen Golden, Chair, Association for Enterprise 
Opportunities; and Mark Pinsky, Chairman, Coalition of 
Community Development Financial Institutions.

                   Committee Consideration and Votes

    On May 26, 1999, the full committee met in open session to 
mark up H.R. 413, the ``Program for Investment in 
Microentrepreneurs Act in 1999.'' The Committee called up H.R. 
413 as original text for purposes of amendment. No amendments 
were offered. On the question of final passage, the Committee, 
by voice vote, favorably reported H.R. 413 to the full House of 
Representatives for consideration. Also, the Committee passed 
by voice vote a motion to authorize the Chairman to offer such 
motions as may be necessary in the House of Representatives to 
go to conference with the Senate on a similar bill.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                     Committee on Government Reform

    No findings and recommendations of the Committee on 
Government Reform were received as referred to in clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

                        Constitutional Authority

    In compliance with clause 3(d)(1) of rule XIII of the Rules 
of the House of Representatives, the constitutional authority 
for Congress to enact this legislation is derived from both the 
power to regulate interstate commerce (Clause 3, Section 8, 
Article I) and ``to coin money'' and ``regulate the value 
thereof'' (Clause 5, Section 8, Article I). The latter 
Constitutional power has been broadly construed to allow for 
the Federal regulation of the provision of credit and other 
forms of economic assistance via the financial services 
industry and to regulate every phase of the subject of 
currency. In addition, Congress is granted the authority to 
make laws (Clause 18, Section 8, Article I) that are necessary 
and proper to carry out the foregoing powers as well as other 
powers vested by the Constitution.

               New Budget Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, please see the attached 
Congressional Budget Office cost estimate.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                    Congressional Accountability Act

    The reporting requirement under section 102(b)(3) of the 
Congressional Accountability Act (P.L. 104-1) is inapplicable 
because this legislation does not relate to terms and 
conditions of employment or access to public services or 
accommodations.

    Congressional Budget Office Cost Estimate and Unfunded Mandates 
                                Analysis

    The cost estimate pursuant to clause 3(c)(3) of rule XIII 
of the Rules of the House of Representatives and section 402 of 
the Congressional Budget Act of 1974 is attached herewith:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 10, 1999.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 413, the Program 
for Investment in Microentrepreneurs Act of 1999 (PRIME Act).
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Deborah Reis.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 413--Program for Investment in Microentrepreneurs Act of 1999 
        (PRIME Act)

    Summary: H.R. 413 would establish within the Community 
Development Financial Institutions (CDFI) Fund a new program to 
provide assistance to nonprofit organizations and other 
entities that serve low-income entrepreneurs of very small 
businesses. The bill would authorize the fund to provide grants 
to qualified organizations to help them assist such businesses 
through training and other aid. Up to 15 percent of such grants 
also could be used to expand the capacity of these 
organizations. For the purposes of carrying out the new 
program, the bill would authorize appropriations of $15 million 
in 2000, $25 million in 2001, $30 million in 2002, and $35 
million in 2003. CBO estimates that appropriations of the 
authorized amounts would result in discretionary spending of 
$70 million over the 2000-2004 period.
    Enacting H.R. 413 would not affect direct spending or 
receipts; therefore, pay-as-you-go procedures would not apply. 
The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandate Reform Act (UMRA) 
and would impose no costs on state or local governments. Any 
costs incurred by tribal governments would be voluntary.
    Estimated cost to the Federal Government: Assuming 
appropriation of the authorized amounts, CBO estimates that the 
CDFI fund would spend about $70 million through fiscal year 
2004 to implement the assistance program established by H.R. 
413. (The balance of $35 million authorized for this purpose 
would be spent after 2004.) The estimated budgetary impact of 
H.R. 413 is shown in the following table. The costs of this 
legislation fall within budget function 450 (community and 
regional development).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                               -------------------------------------------------
                                                                  2000      2001      2002      2003      2004
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Authorization Level...........................................        15        25        30        35         0
Estimated Outlays.............................................         3         8        14        22        23
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For purposes of this estimate, CBO 
assumes that the full amounts authorized for the 
microentrepreneur investment program will be appropriated for 
each fiscal year and that outlays will occur at spending rates 
similar to those experienced with existing CDFI programs. The 
activities authorized by H.R. 413 would constitute a new 
program within the CDFI fund; at present, there is no spending 
for such activities.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: The bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state or local 
governments. Any costs incurred by tribal governments would be 
voluntary.
    Estimate prepared by: Deborah Reis.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

        Section-by-Section Analysis--Program for Investment in 
                     Microentrepreneurs Act of 1999


    Section 1. Provision of Technical Assistance to Microenterprises

    Section 1 amends Title I of the ``Riegle Community 
Development and Regulatory Improvement Act of 1994'' by adding 
the following new sections:

Section 171. Short title

    This section designates new Subtitle C as the ``Program for 
Investment in Microentrepreneurs Act of 1999'' (PRIME Act).

Section 172. Definitions

    This section defines terms as they apply to the PRIME Act.

Section 173. Establishment of program

    This section requires the Treasury Secretary to establish a 
microenterprise technical assistance and capacity building 
grant program which shall provide assistance from the CDFI Fund 
in the form of grants to qualified organizations.

Section 174. Uses of assistance

    This section provides that grants can be used for the 
following purposes: (1) to provide training and technical 
assistance to disadvantaged entrepreneurs; (2) to engage in 
capacity building activities targeted to microenterprise 
development organizations that serve low income entrepreneurs; 
and (3) to aid in researching and developing the best practices 
in the field of microenterprise and technical assistance 
programs of disadvantaged entrepreneurs.

Section 175. Qualified organizations

    This section defines a qualified organization as a 
nonprofit microenterprise development organization that has a 
demonstrated record of assisting disadvantaged entrepreneurs, 
an intermediary private nonprofit entity that serves 
microenterprise development organizations, or an Indian tribe 
if it can certify that a nonprofit microenterprise development 
does not exist in the area.

Section 176. Allocation of assistance; subgrants

    This section provides that not less than seventy-five 
percent of PRIME's funding shall be used for training and 
technical assistance to microenterprise development 
organization and not less than fifteen percent for capacity 
building activities.
    The legislation targets very low income entrepreneurs. 
Specifically, this section requires that not less than fifty 
percent of PRIME's grants be made to very low income persons. 
Very low income person is defined as having an income, adjusted 
for family size, of not more than 150 percent of the poverty 
line.
    This section requires diversity in the extension of grants 
to ensure that grant recipients include both large and small 
microenterprise organizations, serving urban, rural, and Indian 
tribal communities and racially and ethnically diverse 
populations.

Section 177. Matching requirements

    This section provides matching requirements from sources 
other than the Federal government equal to fifty percent of 
each dollar provided by the CDFI Fund. Sources of matching 
funds may include fees, grants, gifts, funds from loan sources, 
or in the form of in-kind resources, grants, or loans to the 
organization.
    In the case of an applicant with severe economic 
constraints on sources available for matching funds, the 
Administrator may reduce or eliminate the matching requirement. 
Not more than 10% of the total funds made available under the 
Act may be excepted from the matching requirements.

Section 178. Applications for assistance

    This section requires the CDFI Fund to establish procedures 
for submission of applications for assistance.

Section 179. Recordkeeping

    This section establishes recordkeeping requirements for 
organizations that receive PRIME Act grants, including an 
annual report in which the organization discloses its 
activities, financial condition and its success in satisfying 
the terms and conditions of its assistance agreement.

Section 180. Authorization

    This section authorizes appropriations of $15 million for 
fiscal year 2000, $25 million for fiscal year 2001, $30 million 
for fiscal year 2002, and $35 million for fiscal year 2003.

Section 181. Implementation

    This section gives the Treasury Secretary the authority to 
carry out the PRIME Act.

                   Section 2. Administrative Expenses

    Section 2 increases the CDFI Fund's authorized 
administrative expenses from $5,550,000 to $6,100,000 to 
accommodate administration of the PRIME Act.

                    Section 3. Conforming Amendments

    This section makes technical and conforming amendments.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

THE RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY IMPROVEMENT ACT OF 1994

           *       *       *       *       *       *       *



         TITLE I--COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION

 SUBTITLE A--COMMUNITY DEVELOPMENT BANKING AND FINANCIAL INSTITUTIONS 
                                 ACT

           *       *       *       *       *       *       *


SEC. 104. ESTABLISHMENT OF NATIONAL FUND FOR COMMUNITY DEVELOPMENT 
                    BANKING.

  (a)  * * *

           *       *       *       *       *       *       *

  (d) Advisory Board.--
          (1)  * * *
          (2) Membership.--The Board shall consist of [15] 17 
        members, including--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (G) [9] 11 private citizens, appointed by the 
                President, who shall be selected, to the 
                maximum extent practicable, to provide for 
                national geographic representation and racial, 
                ethnic, and gender diversity, including--
                          (i) 2 individuals who are officers of 
                        existing community development 
                        financial institutions;
                          (ii) 2 individuals who are officers 
                        of insured depository institutions;
                          (iii) 2 individuals who are officers 
                        of national consumer or public interest 
                        organizations;
                          (iv) 2 individuals who have expertise 
                        in microenterprises and microenterprise 
                        development;
                          [(iv)] (v) 2 individuals who have 
                        expertise in community development; and
                          [(v)] (vi) 1 individual who has 
                        personal experience and specialized 
                        expertise in the unique lending and 
                        community development issues confronted 
                        by Indian tribes on Indian 
                        reservations.

           *       *       *       *       *       *       *

          (4) Board function.--It shall be the function of the 
        Board to advise the Administrator on the policies of 
        the Fund regarding activities under this subtitle and 
        subtitle C. The Board shall not advise the 
        Administrator on the granting or denial of any 
        particular application.

           *       *       *       *       *       *       *


SEC. 121. AUTHORIZATION OF APPROPRIATIONS.

  (a) Fund Authorization.--
          (1) * * *

           *       *       *       *       *       *       *

          (2) Administrative expenses.--
                  (A) In general.--Of amounts authorized to be 
                appropriated to the Fund pursuant to this 
                section, not more than [$5,550,000] $6,100,000 
                may be used by the Fund in each fiscal year to 
                pay the administrative costs and expenses of 
                the Fund, including costs and expenses 
                associated with carrying out subtitle C. Costs 
                associated with the training program 
                established under section 109 and the technical 
                assistance program established under section 
                108 shall not be considered to be 
                administrative expenses for purposes of this 
                paragraph.

           *       *       *       *       *       *       *


Subtitle C--Microenterprise Technical Assistance and Capacity Building 
                                Program

SEC. 171. SHORT TITLE.

  This subtitle may be cited as the ``Program for Investment in 
Microentrepreneurs Act of 1999'', also referred to as the 
``PRIME Act''.

SEC. 172. DEFINITIONS.

  For purposes of this subtitle--
          (1) the term ``Administrator'' has the same meaning 
        as in section 103;
          (2) the term ``capacity building services'' means 
        services provided to an organization that is, or is in 
        the process of becoming a microenterprise development 
        organization or program, for the purpose of enhancing 
        its ability to provide training and services to 
        disadvantaged entrepreneurs;
          (3) the term ``collaborative'' means 2 or more 
        nonprofit entities that agree to act jointly as a 
        qualified organization under this subtitle;
          (4) the term ``disadvantaged entrepreneur'' means a 
        microentrepreneur that is--
                  (A) a low-income person;
                  (B) a very low-income person; or
                  (C) an entrepreneur that lacks adequate 
                access to capital or other resources essential 
                for business success, or is economically 
                disadvantaged, as determined by the 
                Administrator;
          (5) the term ``Fund'' has the same meaning as in 
        section 103;
          (6) the term ``Indian tribe'' has the same meaning as 
        in section 103;
          (7) the term ``intermediary'' means a private, 
        nonprofit entity that seeks to serve microenterprise 
        development organizations and programs as authorized 
        under section 175;
          (8) the term ``low-income person'' has the same 
        meaning as in section 103;
          (9) the term ``microentrepreneur'' means the owner or 
        developer of a microenterprise;
          (10) the term ``microenterprise'' means a sole 
        proprietorship, partnership, or corporation that--
                  (A) has fewer than 5 employees; and
                  (B) generally lacks access to conventional 
                loans, equity, or other banking services;
          (11) the term ``microenterprise development 
        organization or program'' means a nonprofit entity, or 
        a program administered by such an entity, including 
        community development corporations or other nonprofit 
        development organizations and social service 
        organizations, that provides services to disadvantaged 
        entrepreneurs or prospective entrepreneurs;
          (12) the term ``training and technical assistance'' 
        means services and support provided to disadvantaged 
        entrepreneurs or prospective entrepreneurs, such as 
        assistance for the purpose of enhancing business 
        planning, marketing, management, financial management 
        skills, and assistance for the purpose of accessing 
        financial services; and
          (13) the term ``very low-income person'' means having 
        an income, adjusted for family size, of not more than 
        150 percent of the poverty line (as defined in section 
        673(2) of the Community Services Block Grant Act (42 
        U.S.C. 9902(2), including any revision required by that 
        section).

SEC. 173. ESTABLISHMENT OF PROGRAM.

  The Administrator shall establish a microenterprise technical 
assistance and capacity building grant program to provide 
assistance from the Fund in the form of grants to qualified 
organizations in accordance with this subtitle.

SEC. 174. USES OF ASSISTANCE.

  A qualified organization shall use grants made under this 
subtitle--
          (1) to provide training and technical assistance to 
        disadvantaged entrepreneurs;
          (2) to provide training and capacity building 
        services to microenterprise development organizations 
        and programs and groups of such organizations to assist 
        such organizations and programs in developing 
        microenterprise training and services;
          (3) to aid in researching and developing the best 
        practices in the field of microenterprise and technical 
        assistance programs for disadvantaged entrepreneurs; 
        and
          (4) for such other activities as the Administrator 
        determines are consistent with the purposes of this 
        subtitle.

SEC. 175. QUALIFIED ORGANIZATIONS.

  For purposes of eligibility for assistance under this 
subtitle, a qualified organization shall be--
          (1) a nonprofit microenterprise development 
        organization or program (or a group or collaborative 
        thereof) that has a demonstrated record of delivering 
        microenterprise services to disadvantaged 
        entrepreneurs;
          (2) an intermediary;
          (3) a microenterprise development organization or 
        program that is accountable to a local community, 
        working in conjunction with a State or local government 
        or Indian tribe; or
          (4) an Indian tribe acting on its own, if the Indian 
        tribe can certify that no private organization or 
        program referred to in this paragraph exists within its 
        jurisdiction.

SEC. 176. ALLOCATION OF ASSISTANCE; SUBGRANTS.

  (a) Allocation of Assistance.--
          (1) In general.--The Administrator shall allocate 
        assistance from the Fund under this subtitle to ensure 
        that--
                  (A) activities described in section 174(1) 
                are funded using not less than 75 percent of 
                amounts made available for such assistance; and
                  (B) activities described in section 174(2) 
                are funded using not less than 15 percent of 
                amounts made available for such assistance.
          (2) Limit on individual assistance.--No single 
        organization or entity may receive more than 10 percent 
        of the total funds appropriated under this subtitle in 
        a single fiscal year.
  (b) Targeted Assistance.--The Administrator shall ensure that 
not less than 50 percent of the grants made under this subtitle 
are used to benefit very low-income persons, including those 
residing on Indian reservations.
  (c) Subgrants Authorized.--
          (1) In general.--A qualified organization receiving 
        assistance under this subtitle may provide grants using 
        that assistance to qualified small and emerging 
        microenterprise organizations and programs, subject to 
        such rules and regulations as the Administrator 
        determines to be appropriate.
          (2) Limit on administrative expenses.--Not more than 
        7.5 percent of assistance received by a qualified 
        organization under this subtitle may be used for 
        administrative expenses in connection with the making 
        of subgrants under paragraph (1).
  (d) Diversity.--In making grants under this subtitle, the 
Administrator shall ensure that grant recipients include both 
large and small microenterprise organizations, serving urban, 
rural, and Indian tribal communities and racially and 
ethnically diverse populations.

SEC. 177. MATCHING REQUIREMENTS.

  (a) In General.--Financial assistance under this subtitle 
shall be matched with funds from sources other than the Federal 
Government on the basis of not less than 50 percent of each 
dollar provided by the Fund.
  (b) Sources of Matching Funds.--Fees, grants, gifts, funds 
from loan sources, and in-kind resources of a grant recipient 
from public or private sources may be used to comply with the 
matching requirement in subsection (a).
  (c) Exception.--
          (1) In general.--In the case of an applicant for 
        assistance under this subtitle with severe constraints 
        on available sources of matching funds, the 
        Administrator may reduce or eliminate the matching 
        requirements of subsection (a).
          (2) Limitation.--Not more than 10 percent of the 
        total funds made available from the Fund in any fiscal 
        year to carry out this subtitle may be excepted from 
        the matching requirements of subsection (a), as 
        authorized by paragraph (1) of this subsection.

SEC. 178. APPLICATIONS FOR ASSISTANCE.

  An application for assistance under this subtitle shall be 
submitted in such form and in accordance with such procedures 
as the Fund shall establish.

SEC. 179. RECORDKEEPING.

  The requirements of section 115 shall apply to a qualified 
organization receiving assistance from the Fund under this 
subtitle as if it were a community development financial 
institution receiving assistance from the Fund under subtitle 
A.

SEC. 180. AUTHORIZATION.

  In addition to funds otherwise authorized to be appropriated 
to the Fund to carry out this title, there are authorized to be 
appropriated to the Fund to carry out this subtitle--
          (1) $15,000,000 for fiscal year 2000;
          (2) $25,000,000 for fiscal year 2001;
          (3) $30,000,000 for fiscal year 2002; and
          (4) $35,000,000 for fiscal year 2003.

SEC. 181. IMPLEMENTATION.

  The Administrator shall, by regulation, establish such 
requirements as may be necessary to carry out this subtitle.

                            DISSENTING VIEWS

    A new federal subsidized lending program to copy another 
problem-ridden one should be rejected for a variety of reasons. 
While the proponents of the bill may be well meaning, one 
should make a distinction between intentions and results. The 
initial government intervention in the private market (with 
high taxes, overburdening regulation and easy credit) is the 
cause of much of the problem, and it is what must be addressed. 
Congress should, of course, recognize Constitutional restraints 
and not interfere in local lending initiatives.
    When I was sworn in as a U.S. Congressman, I pledged to 
uphold the Constitution. This document detailed an agenda of 
limited government: Article One, Section 8 (the enumerated 
powers clause) and the ninth and tenth amendments (reserving to 
the states and people those powers not specifically granted to 
the federal government). A careful reading of the Constitution, 
Bill of Rights, and Declaration of Independence make the 
unconstitutional status of this vast expansion of federal 
powers easy to discern.
    H.R. 413, the PRIME Act, continues not only the expansion 
of federal powers beyond the bounds set by the Constitution but 
increases its unconstitutional expenditure by $15 million of 
other people's money to create yet another new, wasteful 
government program. And the amount is set to double in just two 
years!
    Whatever the merits or demerits of the idea of 
microlending, the question before this body is whether we will 
respect constitutional constraints and always remember that we 
are allocating other people's money. The answer to the problem 
of community development will not be found in Federal 
government programs. Indeed, previous expenditures to fund an 
increasing number of expanding programs has not solved the 
problem. Yet the problem remains--to listen to the supporters 
of this bill who call for ever-increasing funding for programs 
that have not worked, the problem is actually worsening. It is 
time to reject this approach and focus on sound fiscal and 
monetary fundamentals as the best path to true community 
development.

                                                          Ron Paul.

                           SUPPLEMENTAL VIEWS

    We strongly support the goals of the Program for 
Investments and Micro Entrepreneurs (``PRIME'') Act. It is 
vital that we provide technical assistance and capacity 
building to low-income and very low-income micro-entrepreneurs.
    Technical assistance programs for micro-entrepreneurs, as 
well as funding for these programs, are desperately needed. 
Although the PRIME program was drafted to provide much-needed 
assistance to low-income micro-entrepreneurs, it does not 
address the largest issue confronting micro-enterprise 
programs--the need for adequate funding. Funding for the SBA 
Microloan program has historically been inadequate. Although 
the authorization for the Microloan technical assistance 
program has remained at $40 million since FY 1998, the 
Administration requested only $16.5 million for the program in 
FY 1998, and the Congress appropriated just over $12.9 million. 
In FY 1999, the Administration again requested $16.5 million 
and the Congress appropriated that same amount. In Fiscal Years 
1998 and 1999, the SBA Microloan technical assistance program 
has received only $17.4 million in total funding. This clearly 
insufficient amount represents less than one-fourth of the 
program's total authorized funding level during that period.
    We are concerned that the PRIME program will be forced to 
share already scarce funding with the SBA Microloan program, 
creating two well-intention, but underfunded programs.
    As members of the Banking Committee who also serve on the 
Small Business Committee, we have spent a great deal of time 
working to assist low- and moderate-income entrepreneurs which 
programs like PRIME are targeted to assist. We are especially 
concerned that this program complement--and not simply 
duplicate--the services already provided by the Small Business 
Administration, especially the 7(m) Microloan program.
    The similarities between the proposed PRIME Act and the SBA 
Microloan program are demonstrated by each program's statement 
of purpose. As approved by the Committee, the PRIME program's 
purpose is:

          To authorize qualified organizations to provide 
        technical assistance and capacity building services to 
        micro enterprise and development organizations and 
        programs to disadvantaged entrepreneurs * * *

    According to the statement of purpose for the SBA's 
Microloan technical assistance and capacity building program, 
as originally authorized in 15 U.S.C. Sec. 636 7(m), the 
program's purpose is:

          To make grants available to eligible nonprofit 
        entities that, together with non-Federal matching 
        funds, will enable such entities to provide intensive 
        marketing, management, and technical assistance to 
        assist low-income entrepreneurs and other low-income 
        individuals * * *

    Because of the potential for duplication, we have several 
concerns about how the PRIME program will work with existing 
federal micro-enterprise technical assistance and capacity 
building grant programs, especially those that already exist at 
the Small Business Administration. We are hopeful that further 
work will be done to ensure that PRIME works in conjunction 
with existing programs, especially in the following areas:

    coordination to allow prime to complement sba microloan program

    We believe that, for PRIME to be successful, it is critical 
that it build on the lessons learned by more experienced 
federal program, such as SBA's Microloan program. By working in 
concert with SBA to develop the regulations to implement the 
PRIME program, CDFI will prevent any conflict or duplication. 
As a result, this step will enable PRIME to operate more 
efficiently and effectively. It would be unfortunate in this 
time of budget restraints for Congress to create a new 
government program, one that closely resembles an existing 
program, while ignoring the lessons learned and the expertise 
developed in the operation of a similar program.
    Since the inception of the Microloan program, SBA has 
learned what regulations are necessary to ensure the efficient 
and effective operation of a technical assistance and capacity 
building grant program. Since the PRIME program is 
substantively similar to the existing SBA Microloan program, we 
believe that CDFI and, in the end, the micro-enterprise 
community could benefit from the expertise SBA has to offer in 
developing the initial regulations for the program.

   sba microloan technical assistance and capacity building programs

    The PRIME Act holds the potential to complement and 
supplement what the SBA Microloan program is currently doing. A 
main component of the PRIME Act, as is the case with SBA's 
Microloan program, is its focus on capacity building. It should 
be noted that, in addition to the technical assistance SBA 
provides with its 7(m) Microloan program, it has the ability to 
provide technical assistance without the loan component. 
Through its Non-lending Technical Assistance Provider 
(``NTAP'') program, SBA can provide up to $125,000 in capacity 
building loans--like the PRIME Act--for the specific purpose of 
capacity building.
    Because SBA has spent a considerable amount of time on the 
areas targeted by the PRIME Act, namely technical assistance 
and capacity building, it has cultivated a network of 
experienced entrepreneurial intermediaries that have developed 
critical expertise in serving the micro-entrepreneurial 
community. To move forward with an entirely new program without 
including or providing an incentive for the already existing 
network of micro-intermediaries to participate would be a 
detriment the micro-entrepreneurial community. If the PRIME Act 
is to be successful, it must take into account the experience 
of these intermediaries and provide a catalyst for them to 
participate in this new program.

                               conclusion

    Our greatest concern with the PRIME Act is that it has the 
potential to duplicate existing federal programs. Therefore, we 
urge that steps be taken to ensure this new program work in 
concert with existing programs, especially those administered 
by the SBA. If these steps are not taken, then it is likely 
that a duplicative program will be created. As a result, two 
underfunded programs will be operating, neither of which will 
be serving the target community. This is especially of concern 
since the Microloan program has been traditionally underfunded.
    Specifically, we believe for PRIME to be successful that 
CDFI should work with SBA to draft any regulations regarding 
the PRIME Act. The Administration has developed a great deal of 
expertise over the years with technical assistance and capacity 
building, and their knowledge of the special needs of this type 
of program is invaluable. At the same time, existing 
intermediaries with experience in providing technical 
assistance and capacity building to micro-enterprises must be 
included in any new program. We believe that the ultimate goal 
of any program of this nature must be to get technical 
assistance to the nation's micro-entrepreneurs. The most 
effective way to do this is to ensure that the Prime Act works 
in conjunction with existing programs to provide our 
entrepreneurs with the technical assistance and capacity 
building they need to succeed.

                                   Nydia M Velazquez.
                                   Sue Kelly.
                                   Rick Hill.
                                   John E. Sweeney.
                                   Donald A. Manzullo.
                                   Dennis Moore.
                                   Stephanie Tubbs Jones.
                                   Charles A. Gonzalez.

                                  
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