[House Report 118-469]
[From the U.S. Government Publishing Office]


118th Congress }                                            { Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                            { 118-469

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



 
                INVESTING IN ALL OF AMERICA ACT OF 2023

                                _______
                                

 April 26, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Williams of Texas, from the Committee on Small Business, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 5333]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 5333) to amend the Small Business Investment Act of 
1958 to exclude from the limit on leverage certain amounts 
invested in smaller enterprises located in rural or low-income 
areas and small businesses in critical technology areas, and 
for other purposes, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
   I. Purpose and Bill Summary........................................3
  II. Need for Legislation............................................3
 III. Hearings........................................................3
  IV. Committee Consideration.........................................4
   V. Committee Votes.................................................4
  VI. Section-by-Section of H.R. 5333.................................7
 VII. Congressional Budget Office Cost Estimate.......................7
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditure7
  IX. Oversight Findings & Recommendations............................7
   X. Performance Goals and Objectives................................8
  XI. Statement of Duplication of Federal Programs....................8
 XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
      Benefits........................................................8
XIII. Federal Mandates Statement......................................8
 XIV. Federal Advisory Committee Statement............................8
  XV. Applicability to Legislative Branch.............................8
 XVI. Statement of Constitutional Authority...........................8
XVII. Changes in Existing Law, Made by the Bill, As Reported..........8
XVIII.Minority Views.................................................23


    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Investing in All of America Act of 
2023''.

SEC. 2. SBIC MAXIMUM LEVERAGE EXCLUSION.

  (a) Definitions.--Section 103(9) of the Small Business Investment Act 
of 1958 (15 U.S.C. 662(9)) is amended--
          (1) in subparagraph (A)(ii), by striking ``and'' at the end;
          (2) in subparagraph (B)(iii)--
                  (A) in subclause (I), by striking ``established prior 
                to October 1, 1987'';
                  (B) in subclause (II)--
                          (i) by striking ``or'' and inserting ``,''; 
                        and
                          (ii) by inserting ``, or a foundation, 
                        endowment, or trust of a college or 
                        university'' after ``pension plan''; and
                  (C) in subclause (III), by striking the semicolon at 
                the end and inserting ``; and''; and
          (3) by adding at the end the following new subparagraph:
                  ``(C) does not include any funds obtained directly or 
                indirectly from any Federal, State or local government 
                or any government agency or instrumentality, except for 
                funds described in subclauses (I) through (III) of 
                subparagraph (B)(iii), for the purpose of approval by 
                the Administrator of any request for leverage.''.
  (b) In General.--Section 303(b)(2) of the Small Business Investment 
Act of 1958 (15 U.S.C. 683(b)(2)) is amended--
          (1) in subparagraph (A)(i), by striking ``300'' and inserting 
        ``200'';
          (2) in subparagraph (C)--
                  (A) in the heading--
                          (i) by inserting ``or rural'' after ``low-
                        income''; and
                          (ii) by inserting ``or critical technology 
                        areas'' after ``geographic areas'';
                  (B) in clause (i)--
                          (i) by striking ``(i) In calculating'' and 
                        inserting the following:
                          ``(i) In general.--Except as provided in 
                        clause (iii), in calculating'';
                          (ii) by inserting ``or companies'' after ``of 
                        a company'';
                          (iii) by striking ``subparagraph (A)'' and 
                        inserting ``subparagraphs (A) and (B)'';
                          (iv) by striking ``equity'';
                          (v) by striking ``the company in a smaller 
                        enterprise'' and all that follows and inserting 
                        the following: ``the company or companies in--
                                  ``(I) a smaller enterprise located in 
                                a low-income geographic area (as 
                                defined in section 689 of this title) 
                                or in a rural area; or''; and
                          (vi) by adding at the end the following new 
                        subclause:
                                  ``(II) a small business concern in an 
                                area of critical technology (as defined 
                                in section 4801 of title 10, United 
                                States Code) vital to maintaining the 
                                national security of the United 
                                States.'';
                  (C) by amending clause (ii) to read as follows:
                          ``(ii) Limitation.--While maintaining the 
                        limitation of subparagraph (A)(i) and 
                        consistent with a leverage determination ratio 
                        issued pursuant to section 301(c), the 
                        aggregate amount excluded for a company or 
                        companies under clause (i) from the calculation 
                        of the outstanding leverage of such company or 
                        companies for the purposes of subparagraphs (A) 
                        and (B) may not exceed the lesser of 50 percent 
                        of the private capital of such company or 
                        companies or $125,000,000.''; and
                  (D) by amending clause (iii) to read as follows:
                          ``(iii) Prospective applicability.--An 
                        investment by a licensee is eligible for 
                        exclusion from the calculation of outstanding 
                        leverage under clause (i) only if such 
                        investment is made by such licensee after the 
                        date of enactment of the Investing in All of 
                        America Act of 2023.''; and
          (3) by adding at the end the following new subparagraphs:
                  ``(E) Annual adjustment.--The Administrator shall 
                adjust the dollar amounts described in subparagraphs 
                (A) and (B)--
                          ``(i) on the date of the enactment of this 
                        subparagraph, by a percentage equal to the 
                        percentage (if any) by which the Consumer Price 
                        Index (all items; United States city average), 
                        as published by the Bureau of Labor Statistics, 
                        increased during the period--
                                  ``(I) beginning on December 18, 2015, 
                                and ending on the date of the enactment 
                                of this subparagraph, for subparagraph 
                                (B); and
                                  ``(II) beginning on June 21, 2018, 
                                and ending on the date of the enactment 
                                of this subparagraph, for subparagraph 
                                (A); and
                          ``(ii) on the date that is one year after the 
                        date of the enactment of this subparagraph, and 
                        annually thereafter, by a percentage equal to 
                        the percentage (if any) by which the Consumer 
                        Price Index (all items; United States city 
                        average), as published by the Bureau of Labor 
                        Statistics, increased during the one-year 
                        period preceding the date of the adjustment 
                        under this clause.''.
  (c) Report.--Not later than June 30 of the first year beginning after 
the date of the enactment of this Act, and annually thereafter, the 
Administrator of the Small Business Administration shall submit to the 
Committee on Small Business and Entrepreneurship of the Senate and the 
Committee on Small Business of the House of Representatives a report on 
the results of the exclusion under subparagraph (C) of section 
303(b)(2) of the Small Business Investment Act of 1958 (15 U.S.C. 
683(b)(2)), as amended by subsection (a), including the economic 
activity generated and jobs directly and indirectly created by the 
exclusion.

                      I. Purpose and Bill Summary

    On September 1, 2024, Rep. Meuser and Rep. Scholten 
introduced H.R. 5333. The purpose of H.R. 5333, the ``Investing 
in All of America Act of 2023,'' is to improve the SBIC program 
at the SBA by encouraging private investment in overlooked 
areas of the country while maintaining a zero-subsidy status. 
Specifically, the bill increases the SBIC licensee commitment 
levels by a factor of inflation and provides additional 
leverage to licensees when committing to invest in smaller 
enterprises in rural areas or smaller enterprises developing 
technology that is critical to national defense.

                        II. Need for Legislation

    The SBIC program has been successful in funding several 
companies that go on to become household names. Many of these 
types of companies also go on to produce technology that's 
vital to our national security needs. When it comes to 
investments made by the SBIC program, often overlooked are 
rural areas, and in light of outsourcing, the encouragement of 
American-made military technology. With entrepreneurs of all 
sorts facing challenges of accessing capital in President 
Biden's economy, entrepreneurs in rural America and those 
trying to lessen dependence on China should not be forced to 
fight with one hand behind their backs.

                             III. Hearings

    In the 118th Congress, the Committee held one hearing 
examining the issues covered in H.R. 5333. On April 16, 2024, 
the Subcommittee on Economic Growth, Tax, and Capital Access 
held a hearing titled ``Exploring SBA Programs: Reviewing the 
SBIC and SBIR Programs' Impact on Small Businesses.'' During 
the hearing, witnesses testified to the challenges small 
businesses are facing to bridge the funding gap that exists in 
the marketplace for overlooked areas, and how the SBIC program 
differs from other capital access programs at the SBA. Further, 
the hearing discussed how improvements could be made to the 
SBIC program to continue successfully infusing private 
investments into innovative small businesses.

                      IV. Committee Consideration

    The Committee on Small Business met in open session, with a 
quorum being present, on April 17, 2024 and ordered H.R. 5333 
reported to the House of Representatives. During the markup, 
one Amendment in the Nature of a Substitute was offered.

                           V. Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. The Committee voted to favorably report H.R. 5333 to 
the House of Representatives at 11:45 AM.


                  VI. Section-by-Section of H.R. 5333


Section 1--Short title

    This section cites the bill as the ``Investing in All of 
America Act of 2023.''

Section 2--SBIC Maximum leverage exclusion

    This section provides SBICs with access to additional 
leverage when they invest in rural, low-income, and critical 
technology-focused small businesses. The additional leverage 
(known as bonus leverage) is capped at 50 percent of a fund's 
private capital or $125 million. The bonus leverage would be 
applied prospectively on a fund's eligible investments made 
after the bill's effective date. Additionally, this section 
adds foundations, endowments, and trusts of public colleges and 
universities as eligible private capital that can be leveraged.
    This section also provides for an annual inflation 
adjustment to the statutory dollar limits for individual funds 
or multiple funds under common control, which have not been 
adjusted since 2018 and 2015, respectively. Additionally, this 
section caps the maximum leverage of an SBIC's private capital 
or the statutory dollar limits for individual funds. Lastly, 
this section codifies existing federal regulations to clarify 
that certain funds invested by Federal, state, or local 
government entities, and that are not already exempted by 
statute, do not count towards a licensing decision or leverage 
determination for an SBIC fund.

             VII. Congressional Budget Office Cost Estimate

    Pursuant to clause 3(d)(1) of House rule XIII, the 
Committee adopts as its own the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974. The Committee has 
requested but not received from the Director of the 
Congressional Budget Office a cost estimate for the Committee's 
provisions. Once available, the cost estimate will be published 
in the Congressional Record.

VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a)(I) of the 
Congressional Budget Act of 1974, the Committee provides the 
following opinion and estimate with respect to new budget 
authority, entitlement authority, and tax expenditures. While 
the Committee has not received an estimate of new budget 
authority contained in the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to Sec. 
402 of the Congressional Budget Act of 1974, the Committee does 
not believe that there will be any additional costs 
attributable to this legislation. H.R. 5333 does not increase 
the authorization of the SBIC program, nor does it direct any 
new spending or mandates.

                IX. Oversight Findings & Recommendations

    In accordance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the oversight findings and recommendations of the Committee on 
Small Business with respect to the subject matter contained in 
H.R. 5333 are incorporated into the descriptive portions of 
this report.

                  X. Performance Goals and Objectives

    With respect to the requirements of clause 3(c)(1) of rule 
XIII of the Rules of the House of Representatives, the 
performance goals and objectives of H.R. 5333 are to annually 
report to Congress on the results of the economic activity 
generated and the jobs directly or indirectly created as a 
result of the bill's implementation.

            XI. Statement of Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, no provision of H.R. 5333 is known to 
be duplicative of another Federal program, including any 
program that was included in a report to Congress pursuant to 
section 21 of Public Law 111-139 or the most recent Catalog of 
Federal Domestic Assistance.

 XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee finds that the bill 
does not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits as defined in clause 9(e), 
9(f), or 9(g) of rule XXI of the Rules of the House of 
Representatives.

                    XIII. Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

               XIV. Federal Advisory Committee Statement

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

                XV. Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

               XVI. Statement of Constitutional Authority

    Pursuant to clause 7 of rule XII of the Rules of the House, 
the Committee finds that the authority for this legislation in 
Art. I, Sec. 8, cl.1 of the Constitution of the United States.

      XVII. 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 italics, and existing law in which no 
change is proposed is shown in roman):

         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 italics, and existing law in which no 
change is proposed is shown in roman):

                 SMALL BUSINESS INVESTMENT ACT OF 1958

TITLE I--SHORT TITLE, STATEMENT OF POLICY, AND DEFINITIONS

           *       *       *       *       *       *       *


                              definitions

  Sec. 103. As used in this Act--
          (1) the term ``Administration'' means the Small 
        Business Administration;
          (2) the term ``Administrator'' means the 
        Administrator of the Small Business Administration;
          (3) the terms ``small business investment company'', 
        ``company'', and ``licensee'' mean a company approved 
        by the Administration to operate under the provisions 
        of this Act and issued a license as provided in section 
        301;
          (4) the term ``State'' includes the several States, 
        the Territories and possessions of the United States, 
        the Commonwealth of Puerto Rico, and the District of 
        Columbia;
          (5) the term ``small-business concern'' shall have 
        the same meaning as in the Small Business Act, except 
        that, for purposes of this Act--
                  (A) an investment by a venture capital firm, 
                investment company (including a small business 
                investment company) employee welfare benefit 
                plan or pension plan, or trust, foundation, or 
                endowment that is exempt from Federal income 
                taxation--
                          (i) shall not cause a business 
                        concern to be deemed not independently 
                        owned and operated regardless of the 
                        allocation of control during the 
                        investment period under any investment 
                        agreement between the business concern 
                        and the entity making the investment;
                          (ii) shall be disregarded in 
                        determining whether a business concern 
                        satisfies size standards established 
                        pursuant to section 3(a)(2) of the 
                        Small Business Act; and
                          (iii) shall be disregarded in 
                        determining whether a small business 
                        concern is a smaller enterprise. and
                  (B) in determining whether a business concern 
                satisfies net income standards established 
                pursuant to section 3(a)(2) of the Small 
                Business Act, if the business concern is not 
                required by law to pay Federal income taxes at 
                the enterprise level, but is required to pass 
                income through to the shareholders, partners, 
                beneficiaries, or other equitable owners of the 
                business concern, the net income of the 
                business concern shall be determined by 
                allowing a deduction in an amount equal to the 
                sum of--
                          (i) if the business concern is not 
                        required by law to pay State (and 
                        local, if any) income taxes at the 
                        enterprise level, the net income 
                        (determined without regard to this 
                        subparagraph), multiplied by the 
                        marginal State income tax rate (or by 
                        the combined State and local income tax 
                        rates, as applicable) that would have 
                        applied if the business concern were a 
                        corporation; and
                          (ii) the net income (so determined) 
                        less any deduction for State (and 
                        local) income taxes calculated under 
                        clause (i), multiplied by the marginal 
                        Federal income tax rate that would have 
                        applied if the business concern were a 
                        corporation;
          (6) the term ``development companies'' means 
        enterprises incorporated under State law with the 
        authority to promote and assist the growth and 
        development of small-business concerns in the areas 
        covered by their operations;
          (7) the term ``license'' means a license issued by 
        the Administration as provided in section 301;
          (8) the term ``articles'' means articles of 
        incorporation for an incorporated body and means the 
        functional equivalent or other similar documents 
        specified by the Administrator for other business 
        entities;
          (9) the term ``private capital''--
                  (A) means the sum of--
                          (i) the paid-in capital and paid-in 
                        surplus of a corporate licensee, the 
                        contributed capital of the partners of 
                        a partnership licensee, or the equity 
                        investment of the members of a limited 
                        liability company licensee; and
                          (ii) unfunded binding commitments, 
                        from investors that meet criteria 
                        established by the Administrator, to 
                        contribute capital to the licensee: 
                        Provided, That such unfunded 
                        commitments may be counted as private 
                        capital for purposes of approval by the 
                        Administrator of any request for 
                        leverage, but leverage shall not be 
                        funded based on such commitments; [and]
                  (B) does not include any--
                          (i) funds borrowed by a licensee from 
                        any source;
                          (ii) funds obtained through the 
                        issuance of leverage; or
                          (iii) funds obtained directly or 
                        indirectly from any Federal, State, or 
                        local government, or any government 
                        agency or instrumentality, except for--
                                  (I) funds obtained from the 
                                business revenues (excluding 
                                any governmental appropriation) 
                                of any federally chartered or 
                                government-sponsored 
                                corporation [established prior 
                                to October 1, 1987];
                                  (II) funds invested by an 
                                employee welfare benefit plan 
                                [or], pension plan, or a 
                                foundation, endowment, or trust 
                                of a college or university; and
                                  (III) any qualified 
                                nonprivate funds (if the 
                                investors of the qualified 
                                nonprivate funds do not 
                                control, directly or 
                                indirectly, the management, 
                                board of directors, general 
                                partners, or members of the 
                                licensee)[;]; and
                  (C) does not include any funds obtained 
                directly or indirectly from any Federal, State 
                or local government or any government agency or 
                instrumentality, except for funds described in 
                subclauses (I) through (III) of subparagraph 
                (B)(iii), for the purpose of approval by the 
                Administrator of any request for leverage.
          (10) the term ``leverage'' includes--
                  (A) debentures purchased or guaranteed by the 
                Administration;
                  (B) participating securities purchased or 
                guaranteed by the Administration; and
                  (C) preferred securities outstanding as of 
                October 1, 1995;
          (11) the term ``third party debt'' means any 
        indebtedness for borrowed money, other than 
        indebtedness owed to the Administration;
          (12) the term ``smaller enterprise'' means any small 
        business concern that, together with its affiliates--
                  (A) has--
                          (i) a net financial worth of not more 
                        than $6,000,000, as of the date on 
                        which assistance is provided under this 
                        Act to that business concern; and
                          (ii) an average net income for the 2-
                        year period preceding the date on which 
                        assistance is provided under this Act 
                        to that business concern, of not more 
                        than $2,000,000, after Federal income 
                        taxes (excluding any carryover losses) 
                        except that, for purposes of this 
                        clause, if the business concern is not 
                        required by law to pay Federal income 
                        taxes at the enterprise level, but is 
                        required to pass income through to the 
                        shareholders, partners, beneficiaries, 
                        or other equitable owners of the 
                        business concern, the net income of the 
                        business concern shall be determined by 
                        allowing a deduction in an amount equal 
                        to the sum of--
                                  (I) if the business concern 
                                is not required by law to pay 
                                State (and local, if any) 
                                income taxes at the enterprise 
                                level, the net income 
                                (determined without regard to 
                                this clause), multiplied by the 
                                marginal State income tax rate 
                                (or by the combined State and 
                                local income tax rates, as 
                                applicable) that would have 
                                applied if the business concern 
                                were a corporation; and
                                  (II) the net income (so 
                                determined) less any deduction 
                                for State (and local) income 
                                taxes calculated under 
                                subclause (I), multiplied by 
                                the marginal Federal income tax 
                                rate that would have applied if 
                                the business concern were a 
                                corporation; or
                  (B) satisfies the standard industrial 
                classification size standards established by 
                the Administration for the industry in which 
                the small business concern is primarily 
                engaged;
          (13) the term ``qualified nonprivate funds'' means 
        any--
                  (A) funds directly or indirectly invested in 
                any applicant or licensee on or before August 
                16, 1982, by any Federal agency, other than the 
                Administration, under a provision of law 
                explicitly mandating the inclusion of those 
                funds in the definition of the term ``private 
                capital'';
                  (B) funds directly or indirectly invested in 
                any applicant or licensee by any Federal agency 
                under a provision of law enacted after 
                September 4, 1992, explicitly mandating the 
                inclusion of those funds in the definition of 
                the term ``private capital''; and
                  (C) funds invested in any applicant or 
                licensee by one or more State or local 
                government entities (including any guarantee 
                extended by those entities) in an aggregate 
                amount that does not exceed 33 percent of the 
                private capital of the applicant or licensee;
          (14) the terms ``employee welfare benefit plan'' and 
        ``pension plan'' have the same meanings as in section 3 
        of the Employee Retirement Income Security Act of 1974, 
        and are intended to include--
                  (A) public and private pension or retirement 
                plans subject to such Act; and
                  (B) similar plans not covered by such Act 
                that have been established and that are 
                maintained by the Federal Government or any 
                State or political subdivision, or any agency 
                or instrumentality thereof, for the benefit of 
                employees;
          (15) the term ``member'' means, with respect to a 
        licensee that is a limited liability company, a holder 
        of an ownership interest or a person otherwise admitted 
        to membership in the limited liability company;
          (16) the term ``limited liability company'' means a 
        business entity that is organized and operating in 
        accordance with a State limited liability company 
        statute approved by the Administration;
          (17) the term ``long term'', when used in connection 
        with equity capital or loan funds invested in any small 
        business concern or smaller enterprise, means any 
        period of time not less than 1 year;
          (18) the term ``Energy Saving debenture'' means a 
        deferred interest debenture that--
                  (A) is issued at a discount;
                  (B) has a 5-year maturity or a 10-year 
                maturity;
                  (C) requires no interest payment or annual 
                charge for the first 5 years;
                  (D) is restricted to Energy Saving qualified 
                investments; and
                  (E) is issued at no cost (as defined in 
                section 502 of the Credit Reform Act of 1990) 
                with respect to purchasing and guaranteeing the 
                debenture;
          (19) the term ``Energy Saving qualified investment'' 
        means investment in a small business concern that is 
        primarily engaged in researching, manufacturing, 
        developing, or providing products, goods, or services 
        that reduce the use or consumption of non-renewable 
        energy resources; and
          (20) the term ``underlicensed State'' means a State 
        in which the number of licensees per capita is less 
        than the median number of licensees per capita for all 
        States, as calculated by the Administrator.

           *       *       *       *       *       *       *


                TITLE III--INVESTMENT DIVISION PROGRAMS

Part A--Small Business Investment Companies

           *       *       *       *       *       *       *


                            borrowing power

  Sec. 303. (a) Each small business investment company shall 
have authority to borrow money and to issue its securities, 
promissory notes, or other obligations under such general 
conditions and subject to such limitations and regulations as 
the Administration may prescribe.
  (b) To encourage the formation and growth of small business 
investment companies the Administration is authorized when 
authorized in appropriation Acts, to purchase, or to guarantee 
the timely payment of all principal and interest as scheduled 
on, debentures or participating securities issued by such 
companies. Such purchases or guarantees may be made by the 
Administration on such terms and conditions as it deems 
appropriate, pursuant to regulations issued by the 
Administration. The full faith and credit of the United States 
is pledged to the payment of all amounts which may be required 
to be paid under any guarantee under this subsection. 
Debentures purchased or guaranteed by the Administration under 
this subsection shall be subordinate to any other debenture 
bonds, promissory notes, or other debts and obligations of such 
companies, unless the Administration in its exercise of 
reasonable investment prudence and in considering the financial 
soundness of such company determines otherwise. Such debentures 
may be issued for a term of not to exceed fifteen years and 
shall bear interest at a rate not less than a rate determined 
by the Secretary of the Treasury taking into consideration the 
current average market yield on outstanding marketable 
obligations of the United States with remaining periods to 
maturity comparable to the average maturities on such 
debentures, adjusted to the nearest one-eighth of 1 per centum, 
plus, for debentures obligated after September 30, 2001, an 
additional charge, in an amount established annually by the 
Administration, as necessary to reduce to zero the cost (as 
defined in section 502 of the Federal Credit Reform Act of 1990 
(2 U.S.C. 661a)) to the Administration of purchasing and 
guaranteeing debentures under this Act, which amount may not 
exceed 1.38 percent per year, and which shall be paid to and 
retained by the Administration. The debentures or participating 
securities shall also contain such other terms as the 
Administration may fix, and shall be subject to the following 
restrictions and limitations:
          (1) The total amount of debentures and participating 
        securities that may be guaranteed by the Administration 
        and outstanding from a company licensed under section 
        301(c) of this Act shall not exceed 300 per centum of 
        the private capital of such company: Provided, That 
        nothing in this paragraph shall require any such 
        company that on March 31, 1993, has outstanding 
        debentures in excess of 300 per centum of its private 
        capital to prepay such excess: And provided further, 
        That any such company may apply for an additional 
        debenture guarantee or participating security guarantee 
        with the proceeds to be used solely to pay the amount 
        due on such maturing debenture, but the maturity of the 
        new debenture or security shall be not later than 
        September 30, 2002.
          (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] 200 percent of such 
                        company's private capital; or
                          (ii) $175,000,000.
                  (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 $350,000,000.
                  (C) Investments in low-income or rural 
                geographic areas or critical technology 
                areas.--
                          (i) In general._[In calculating] 
                        Except as provided in clause (iii), in 
                        calculating the outstanding leverage of 
                        a company or companies for the purposes 
                        of [subparagraph (A)] subparagraphs (A) 
                        and (B), the Administrator shall not 
                        include the amount of the cost basis of 
                        any [equity] investment made by [the 
                        company in a smaller enterprise located 
                        in a low-income geographic area (as 
                        defined in section 351), to the extent 
                        that the total of such amounts does not 
                        exceed 50 percent of the company's 
                        private capital.] the company or 
                        companies in--
                                  (I) a smaller enterprise 
                                located in a low-income 
                                geographic area (as defined in 
                                section 689 of this title) or 
                                in a rural area; or 
                                  (II) a small business concern 
                                in an area of critical 
                                technology (as defined in 
                                section 4801 of title 10, 
                                United States Code) vital to 
                                maintaining the national 
                                security of the United States.
                          [(ii) The maximum amount of 
                        outstanding leverage made available 
                        to--
                                  [(I) any 1 company described 
                                in clause (iii) may not exceed 
                                the lesser of 300 percent of 
                                private capital of the company, 
                                or $175,000,000; and
                                  [(II) 2 or more companies 
                                described in clause (iii) that 
                                are under common control (as 
                                determined by the 
                                Administrator) may not exceed 
                                $250,000,000.
                          [(iii) A company described in this 
                        clause is a company licensed under 
                        section 301(c) in the first fiscal year 
                        after the date of enactment of this 
                        clause or any fiscal year thereafter 
                        that certifies in writing that not less 
                        than 50 percent of the dollar amount of 
                        investments of that company shall be 
                        made in companies that are located in a 
                        low-income geographic area (as that 
                        term is defined in section 351).]
                          (ii) Limitation.--While maintaining 
                        the limitation of subparagraph (A)(i) 
                        and consistent with a leverage 
                        determination ratio issued pursuant to 
                        section 301(c), the aggregate amount 
                        excluded for a company or companies 
                        under clause (i) from the calculation 
                        of the outstanding leverage of such 
                        company or companies for the purposes 
                        of subparagraphs (A) and (B) may not 
                        exceed the lesser of 50 percent of the 
                        private capital of such company or 
                        companies or $125,000,000.
                          (iii) Prospective applicability.--An 
                        investment by a licensee is eligible 
                        for exclusion from the calculation of 
                        outstanding leverage under clause (i) 
                        only if such investment is made by such 
                        licensee after the date of enactment of 
                        the Investing in All of America Act of 
                        2023.
                  (D) Investments in energy saving small 
                businesses.--
                          (i) In general.--Subject to clause 
                        (ii), in calculating the outstanding 
                        leverage of a company for purposes of 
                        subparagraph (A), the Administrator 
                        shall exclude the amount of the cost 
                        basis of any Energy Saving qualified 
                        investment in a smaller enterprise made 
                        in the first fiscal year after the date 
                        of enactment of this subparagraph or 
                        any fiscal year thereafter by a company 
                        licensed in the applicable fiscal year.
                          (ii) Limitations.--
                                  (I) Amount of exclusion.--The 
                                amount excluded under clause 
                                (i) for a company shall not 
                                exceed 33 percent of the 
                                private capital of that 
                                company.
                                  (II) Maximum investment.--A 
                                company shall not make an 
                                Energy Saving qualified 
                                investment in any one entity in 
                                an amount equal to more than 20 
                                percent of the private capital 
                                of that company.
                                  (III) Other terms.--The 
                                exclusion of amounts under 
                                clause (i) shall be subject to 
                                such terms as the Administrator 
                                may impose to ensure that there 
                                is no cost (as that term is 
                                defined in section 502 of the 
                                Federal Credit Reform Act of 
                                1990 (2 U.S.C. 661a)) with 
                                respect to purchasing or 
                                guaranteeing any debenture 
                                involved.
                  (E) Annual adjustment.--The Administrator 
                shall adjust the dollar amounts described in 
                subparagraphs (A) and (B)--
                          (i) on the date of the enactment of 
                        this subparagraph, by a percentage 
                        equal to the percentage (if any) by 
                        which the Consumer Price Index (all 
                        items; United States city average), as 
                        published by the Bureau of Labor 
                        Statistics, increased during the 
                        period--
                                  (I) beginning on December 18, 
                                2015, and ending on the date of 
                                the enactment of this 
                                subparagraph, for subparagraph 
                                (B); and
                                  (II) beginning on June 21, 
                                2018, and ending on the date of 
                                the enactment of this 
                                subparagraph, for subparagraph 
                                (A); and
                          (ii) on the date that is one year 
                        after the date of the enactment of this 
                        subparagraph, and annually thereafter, 
                        by a percentage equal to the percentage 
                        (if any) by which the Consumer Price 
                        Index (all items; United States city 
                        average), as published by the Bureau of 
                        Labor Statistics, increased during the 
                        one-year period preceding the date of 
                        the adjustment under this clause.
          (3) Subject to the foregoing dollar and percentage 
        limits, a company licensed under section 301(c) of this 
        Act may issue and have outstanding both guaranteed 
        debentures and participating securities: Provided, That 
        the total amount of participating securities 
        outstanding shall not exceed 200 per centum of private 
        capital.
For purposes of this subsection, the term ``venture capital'' 
includes such common stock, preferred stock, or other financing 
with subordination or nonamortization characteristics as the 
Administration determines to be substantially similar to equity 
financing.
  (c) Third Party Debt.--The Administrator--
          (1) shall not permit a licensee having outstanding 
        leverage to incur third party debt that would create or 
        contribute to an unreasonable risk of default or loss 
        to the Federal Government;
          (2) shall permit such licensees to incur third party 
        debt only on such terms and subject to such conditions 
        as may be established by the Administrator, by 
        regulation or otherwise.
  (d) Investments in Smaller Enterprises.--The Administrator 
shall require each licensee, as a condition of approval of an 
application for leverage, to certify in writing that not less 
than 25 percent of the aggregate dollar amount of financings of 
that licensee shall be provided to smaller enterprises.
  (e) Capital Impairment.--Before approving any application for 
leverage submitted by a licensee under this Act, the 
Administrator--
          (1) shall determine that the private capital of the 
        licensee meets the requirements of section 302(a); and
          (2) shall determine, taking into account the nature 
        of the assets of the licensee, the amount and terms of 
        any third party debt owed by such licensee, and any 
        other factors determined to be relevant by the 
        Administrator, that the private capital of the licensee 
        has not been impaired to such an extent that the 
        issuance of additional leverage would create or 
        otherwise contribute to an unreasonable risk of default 
        or loss to the Federal Government.
  (f) Redemption or Repurchase of Preferred Stock.--
Notwithstanding any other provision of law--
          (1) the Administrator may allow the issuer of any 
        preferred stock sold to the Administration before 
        November 1, 1989 to redeem or repurchase such stock, 
        upon the payment to the Administration of an amount 
        less than the par value of such stock, for a repurchase 
        price determined by the Administrator after 
        consideration of all relevant factors, including--
                  (A) the market value of the stock;
                  (B) the value of benefits provided and 
                anticipated to accrue to the issuer;
                  (C) the amount of dividends paid, accrued, 
                and anticipated; and
                  (D) the estimate of the Administrator of any 
                anticipated redemption; and
          (2) any moneys received by the Administration from 
        the repurchase of preferred stock shall be available 
        solely to provide debenture leverage to licensees 
        having 50 percent or more in aggregate dollar amount of 
        their financings invested in smaller enterprises.
  (g) In order to encourage small business investment companies 
to provide equity capital to small businesses, the 
Administration is authorized to guarantee the payment of the 
redemption price and prioritized payments on participating 
securities issued by such companies which are licensed pursuant 
to section 301(c) of this Act, and a trust or a pool acting on 
behalf of the Administration is authorized to purchase such 
securities. Such guarantees and purchases shall be made on such 
terms and conditions as the Administration shall establish by 
regulation. For purposes of this section, (A) the term 
``participating securities'' includes preferred stock, a 
preferred limited partnership interest or a similar instrument, 
including debentures under the terms of which interest is 
payable only to the extent of earnings and (B) the term 
``prioritized payments'' includes dividends on stock, interest 
on qualifying debentures, or priority returns on preferred 
limited partnership interests which are paid only to the extent 
of earnings. Participating securities guaranteed under this 
subsection shall be subject to the following restrictions and 
limitations, in addition to such other restrictions and 
limitations as the Administration may determine:
          (1) Participating securities shall be redeemed not 
        later than 15 years after their date of issuance for an 
        amount equal to 100 per centum of the original issue 
        price plus the amount of any accrued prioritized 
        payment: Provided, That if, at the time the securities 
        are redeemed, whether as scheduled or in advance, the 
        issuing company (A) has not paid all accrued 
        prioritized payments in full as provided in paragraph 
        (2) below and (B) has not sold or otherwise disposed of 
        all investments subject to profit distributions 
        pursuant to paragraph (11), the company's obligation to 
        pay accrued and unpaid prioritized payments shall 
        continue and payment shall be made from the realized 
        gain, if any, on the disposition of such investments, 
        but if on disposition there is no realized gain, the 
        obligation to pay accrued and unpaid prioritized 
        payments shall be extinguished: Provided further, That 
        in the interim, the company shall not make any in-kind 
        distributions of such investments unless it pays to the 
        Administration such sums, up to the amount of the 
        unrealized appreciation on such investments, as may be 
        necessary to pay in full the accrued prioritized 
        payments.
          (2) Prioritized payments on participating securities 
        shall be preferred and cumulative and payable out of 
        the retained earnings available for distribution, as 
        defined by the Administration, of the issuing company 
        at a rate determined by the Secretary of the Treasury 
        taking into consideration the current average market 
        yield on outstanding marketable obligations of the 
        United States with remaining periods to maturity 
        comparable to the average maturities on such 
        securities, adjusted to the nearest one-eighth of 1 
        percent, plus, for participating securities obligated 
        after September 30, 2001, an additional charge, in an 
        amount established annually by the Administration, as 
        necessary to reduce to zero the cost (as defined in 
        section 502 of the Federal Credit Reform Act of 1990 (2 
        U.S.C. 661a)) to the Administration of purchasing and 
        guaranteeing participating securities under this Act, 
        which amount may not exceed 1.46 percent per year, and 
        which shall be paid to and retained by the 
        Administration.
          (3) In the event of liquidation of the company, 
        participating securities shall be senior in priority 
        for all purposes to all other equity interests in the 
        issuing company, whenever created.
          (4) Any company issuing a participating security 
        under this Act shall commit to invest or shall invest 
        an amount equal to the outstanding face value of such 
        security solely in equity capital. As used in this 
        subsection, ``equity capital'' means common or 
        preferred stock or a similar instrument, including 
        subordinated debt with equity features which is not 
        amortized and which provides for interest payments from 
        appropriate sources, as determined by the 
        Administration.
          (5) The only debt (other than leverage obtained in 
        accordance with this title) which any company issuing a 
        participating security under this subsection may have 
        outstanding shall be temporary debt in amounts limited 
        to not more than 50 per centum of private capital.
          (6) The Administration may permit the proceeds of a 
        participating security to be used to pay the principal 
        amount due on outstanding debentures guaranteed by the 
        Administration, if (A) the company has outstanding 
        equity capital invested in an amount equal to the 
        amount of the debentures being refinanced and (B) the 
        Administration receives profit participation on such 
        terms and conditions as it may determine, but not to 
        exceed the per centums specified in paragraph (11).
          (7) For purposes of computing profit participation 
        under paragraph (11), except as otherwise determined by 
        the Administration, the management expenses of any 
        company which issues participating securities shall not 
        be greater than 2.5 per centum per annum of the 
        combined capital of the company, plus $125,000 if the 
        company's combined capital is less than $20,000,000. 
        For purposes of this paragraph, (A) the term ``combined 
        capital'' means the aggregate amount of private capital 
        and outstanding leverage and (B) the term ``management 
        expenses'' includes salaries, office expenses, travel, 
        business development, office and equipment rental, 
        bookkeeping and the development, investigation and 
        monitoring of investments, but does not include the 
        cost of services provided by specialized outside 
        consultants, outside lawyers and outside auditors, who 
        perform services not generally expected of a venture 
        capital company nor does such term include the cost of 
        services provided by any affiliate of the company which 
        are not part of the normal process of making and 
        monitoring venture capital investments.
          (8) Notwithstanding paragraph (9), if a company is 
        operating as a limited partnership or as a subchapter S 
        corporation or an equivalent pass-through entity for 
        tax purposes and if there are no accumulated and unpaid 
        prioritized payments, the company may make annual 
        distributions to the partners, shareholders, or members 
        in amounts not greater than each partner's, 
        shareholder's, or member's maximum tax liability. For 
        purposes of this paragraph, the term ``maximum tax 
        liability'' means the amount of income allocated to 
        each partner, shareholder, or member (including an 
        allocation to the Administration as if it were a 
        taxpayer) for Federal income tax purposes in the income 
        tax return filed or to be filed by the company with 
        respect to the fiscal year of the company immediately 
        preceding such distribution, multiplied by the highest 
        combined marginal Federal and State income tax rates 
        for corporations or individuals, whichever is higher, 
        on each type of income included in such return. For 
        purposes of this paragraph, the term ``State income 
        tax'' means the income tax of the State where the 
        company's principal place of business is located. A 
        company may also elect to make a distribution under 
        this paragraph at any time during any calendar quarter 
        based on an estimate of the maximum tax liability. If a 
        company makes 1 or more interim distributions for a 
        calendar year, and the aggregate amount of those 
        distributions exceeds the maximum amount that the 
        company could have distributed based on a single annual 
        computation, any subsequent distribution by the company 
        under this paragraph shall be reduced by an amount 
        equal to the excess amount distributed.
          (9) After making any distributions as provided in 
        paragraph (8), a company with participating securities 
        outstanding may distribute the balance of income to its 
        investors, specifically including the Administration, 
        in the per centums specified in paragraph (11), if 
        there are no accumulated and unpaid prioritized 
        payments and if all amounts due the Administration 
        pursuant to paragraph (11) have been paid in full, 
        subject to the following conditions:
                  (A) As of the date of the proposed 
                distribution, if the amount of leverage 
                outstanding is more than 200 per centum of the 
                amount of private capital, any amounts 
                distributed shall be made to private investors 
                and to the Administration in the ratio of 
                leverage to private capital.
                  (B) As of the date of the proposed 
                distribution, if the amount of leverage 
                outstanding is more than 100 per centum but not 
                more than 200 per centum of the amount of 
                private capital, 50 per centum of any amounts 
                distributed shall be made to the Administration 
                and 50 per centum shall be made to the private 
                investors.
                  (C) If the amount of leverage outstanding is 
                100 per centum, or less, of the amount of 
                private capital, the ratio shall be that for 
                distribution of profits as provided in 
                paragraph (11).
                  (D) Any amounts received by the 
                Administration under subparagraph (A) or (B) 
                shall be applied first as profit participation 
                as provided in paragraph (11) and any remainder 
                shall be applied as a prepayment of the 
                principal amount of the participating 
                securities or debentures.
          (10) After making any distributions pursuant to 
        paragraph (8), a company with participating securities 
        outstanding may return capital to its investors, 
        specifically including the Administration, if there are 
        no accumulated and unpaid prioritized payments and if 
        all amounts due the Administration pursuant to 
        paragraph (11) have been paid in full. Any 
        distributions under this paragraph shall be made to 
        private investors and to the Administration in the 
        ratio of private capital to leverage as of the date of 
        the proposed distribution: Provided, That if the amount 
        of leverage outstanding is less than 50 per centum of 
        the amount of private capital or $10,000,000, whichever 
        is less, no distribution shall be required to be made 
        to the Administration unless the Administration 
        determines, on a case by case basis, to require 
        distributions to the Administration to reduce the 
        amount of outstanding leverage to an amount less than 
        $10,000,000.
          (11)(A) A company which issues participating 
        securities shall agree to allocate to the 
        Administration a share of its profits determined by the 
        relationship of its private capital to the amount of 
        participating securities guaranteed by the 
        Administration in accordance with the following:
                  (i) If the total amount of participating 
                securities is 100 per centum of private capital 
                or less, the company shall allocate to the 
                Administration a per centum share computed as 
                follows: the amount of participating securities 
                divided by private capital times 9 per centum.
                  (ii) If the total amount of participating 
                securities is more than 100 per centum but not 
                greater than 200 per centum of private capital, 
                the company shall allocate to the 
                Administration a per centum share computed as 
                follows:
                          (I) 9 per centum, plus
                          (II) 3 per centum of the amount of 
                        participating securities minus private 
                        capital divided by private capital.
          (B) Notwithstanding any other provision of this 
        paragraph--
                  (i) in no event shall the total per centum 
                required by this paragraph exceed 12 per 
                centum, unless required pursuant to the 
                provisions of (ii) below,
                  (ii) if, on the date the participating 
                securities are marketed, the interest rate on 
                Treasury bonds with a maturity of 10 years is a 
                rate other than 8 per centum, the 
                Administration shall adjust the rate specified 
                in paragraph (A) above, either higher or lower, 
                by the same per centum by which the Treasury 
                bond rate is higher or lower than 8 per centum, 
                and
                  (iii) this paragraph shall not be construed 
                to create any ownership interest of the 
                Administration in the company.
          (12) A company may elect to make an in-kind 
        distribution of securities only if such securities are 
        publicly traded and marketable. The company shall 
        deposit the Administration's share of such securities 
        for disposition with a trustee designated by the 
        Administration or, at its option and with the agreement 
        of the company, the Administration may direct the 
        company to retain the Administration's share. If the 
        company retains the Administration's share, it shall 
        sell the Administration's share and promptly remit the 
        proceeds to the Administration. As used in this 
        paragraph, the term ``trustee'' means a person who is 
        knowledgeable about and proficient in the marketing of 
        thinly traded securities.
  (h) The computation of amounts due the Administration under 
participating securities shall be subject to the following 
terms and conditions:
          (1) The formula in subsection (g)(11) shall be 
        computed annually and the Administration shall receive 
        distributions of its profit participation at the same 
        time as other investors in the company.
          (2) The formula shall not be modified due to an 
        increase in the private capital unless the increase is 
        provided for in a proposed business plan submitted to 
        and approved by the Administration.
          (3) After distributions have been made, the 
        Administration's share of such distributions shall not 
        be recomputed or reduced.
          (4) If the company prepays or repays the 
        participating securities, the Administration shall 
        receive the requisite participation upon the 
        distribution of profits due to any investments held by 
        the company on the date of the repayment or prepayment.
          (5) If a company is licensed on or before March 31, 
        1993, it may elect to exclude from profit participation 
        all investments held on that date and in such case the 
        Administration shall determine the amount of the future 
        expenses attributable to such prior investment: 
        Provided, That if the company issues participating 
        securities to refinance debentures as authorized in 
        subsection (g)(6), it may not elect to exclude profits 
        on existing investments under this paragraph.
  (i) Leverage Fee.--With respect to leverage granted by the 
Administration to a licensee, the Administration shall collect 
from the licensee a nonrefundable fee in an amount equal to 3 
percent of the face amount of leverage granted to the licensee 
in the following manner: 1 percent upon the date on which the 
Administration enters into any commitment for such leverage 
with the licensee, and the balance of 2 percent (or 3 percent 
if no commitment has been entered into by the Administration) 
on the date on which the leverage is drawn by the licensee.
  (j) Calculation of Subsidy Rate.--All fees, interest, and 
profits received and retained by the Administration under this 
section shall be included in the calculations made by the 
Director of the Office of Management and Budget to offset the 
cost (as that term is defined in section 502 of the Federal 
Credit Reform Act of 1990) to the Administration of purchasing 
and guaranteeing debentures and participating securities under 
this Act.
  (k) Energy Saving Debentures.--In addition to any other 
authority under this Act, a small business investment company 
licensed in the first fiscal year after the date of enactment 
of this subsection or any fiscal year thereafter may issue 
Energy Saving debentures.

           *       *       *       *       *       *       *


                         XVIII. MINORITY VIEWS

    In September 2023, the Small Business Administration 
(``SBA'') and the Department of Defense (``DOD'') launched a 
joint initiative, known as the Small Business Investment 
Company Critical Technologies Initiative (``SBICCT''). The 
SBICCT Initiative couples the SBA's Small Business Investment 
Company Program (``SBIC Program'') with the DOD's robust 
scientific and technical expertise and national security 
mission with the goal of attracting and scaling private 
investment into businesses in technology areas critical to 
national and economic security.
    The high priority financing areas in critical technology 
are typically venture and scale up/growth equity investment. 
Due to the early revenue profile, the often capital-intensive 
nature, and pre-profitability status of these businesses, the 
majority of financing in these businesses comes in the form of 
equity rather than debt. The duration of the funds investing in 
businesses engaged in critical technology is significantly 
longer than those funds running mezzanine debt and other credit 
strategies. As a result, such investments are not always a 
``match'' for SBICs with limited partners with typically 
shorter time horizons. For example, currently, of the 
approximately $24 billion in private capital committed to SBIC 
licensed funds only about 30 percent come from traditional 
institutional investors with longer time horizons that can 
allocate more capital to long duration investments in critical 
technology businesses.
    In order to resolve this mismatch and ensure institutional 
investors with longer time horizons are able to invest in 
critical technologies through the SBIC program, and effectively 
carryout the SBICCT Initiative, it is necessary to update 
antiquated statutory constraints that limit participation in 
the SBIC program.
    At the same time, there continues to be a significant lack 
of capital investment in small businesses in rural and 
underserved communities. Importantly, the Small Business 
Investment Act has historically permitted ``bonus'' leverage to 
be allocated post licensing for investments in low-income 
communities. However, due to changes in market conditions and 
investment strategies, after the SBIC's fund's formation, 
utilization of the ``bonus'' leverage is not typically 
utilized. Therefore, to drive additional SBIC investment 
capital to small businesses in rural and underserved 
communities, it is important to provide utilization of 
``bonus'' leverage upfront at the time of licensing, rather 
than a licensee requesting additional leverage midway through 
the investment period.
    The bill would amend the Small Business Investment Act of 
1958 to exclude from the limit on leverage certain amounts 
invested in smaller enterprises located in rural or low-income 
areas and small businesses in critical technology areas.

                                        Nydia M. Velazquez,
                                                    Ranking Member.