[106th Congress Public Law 9]
[From the U.S. Government Printing Office]


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[DOCID: f:publ009.106]


[[Page 113 STAT. 17]]

Public Law 106-9
106th Congress

                                 An Act


 
    To amend section 20 of the Small Business Act and make technical 
       corrections in title III of the Small Business Investment 
                Act. <<NOTE: Apr. 5, 1999 -  [H.R. 68]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Small Business 
Investment Improvement Act of 1999.>> 

SECTION 1. SHORT TITLE. <<NOTE: 15 USC 661 note.>> 

    This Act may be cited as the ``Small Business Investment Improvement 
Act of 1999''.

SEC. 2. SBIC PROGRAM. <<NOTE: Loans.>> 

    (a) In General.--Section 308(i)(2) of the Small Business Investment 
Act of 1958 (15 U.S.C. 687(i)(2)) is amended by adding at the end the 
following: ``In this paragraph, the term `interest' includes only the 
maximum mandatory sum, expressed in dollars or as a percentage rate, 
that is payable with respect to the business loan amount received by the 
small business concern, and does not include the value, if any, of 
contingent obligations, including warrants, royalty, or conversion 
rights, granting the small business investment company an ownership 
interest in the equity or increased future revenue of the small business 
concern receiving the business loan.''.
    (b) Funding Levels.--Section 20 of the Small Business Act (15 U.S.C. 
631 note) is amended--
            (1) in subsection (d)(1)(C)(i), by striking ``$800,000,000'' 
        and inserting ``$1,200,000,000''; and
            (2) in subsection (e)(1)(C)(i), by striking ``$900,000,000'' 
        and inserting ``$1,500,000,000''.

    (c) Definitions.--
            (1) Small business concern.--Section 103(5) of the Small 
        Business Investment Act of 1958 (15 U.S.C. 662(5)) is amended--
                    (A) by redesignating subparagraphs (A) through (C) 
                as clauses (i) through (iii), and indenting 
                appropriately;
                    (B) in clause (iii), as redesignated, by adding 
                ``and'' at the end;
                    (C) by striking ``purposes of this Act, an 
                investment'' and inserting the following: ``purposes of 
                this Act--
                    ``(A) an investment''; and
                    (D) by adding at the end the following:
                    ``(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

[[Page 113 STAT. 18]]

                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;''.
            (2) Smaller enterprise.--Section 103(12)(A)(ii) of the Small 
        Business Investment Act of 1958 (15 U.S.C. 662(12)(A)(ii)) is 
        amended by inserting before the semicolon at the end the 
        following: ``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''.

    (d) Technical Corrections.--
            (1) Repeal.--Section 303(g) of the Small Business Investment 
        Act of 1958 (15 U.S.C. 683(g)) is amended by striking paragraph 
        (13).
            (2) Issuance of guarantees and trust certificates.--Section 
        320 of the Small Business Investment Act of 1958 (15 U.S.C. 
        687m) is amended by striking ``6'' and inserting ``12''.
            (3) Elimination of table of contents.--Section 101 of the 
        Small Business Investment Act of 1958 (15 U.S.C. 661 note) is 
        amended to read as follows:

[[Page 113 STAT. 19]]

``SEC. 101. SHORT TITLE.

    ``This Act may be cited as the `Small Business Investment Act of 
1958'.''.

    Approved April 5, 1999.

LEGISLATIVE HISTORY--H.R. 68 (S. 364):
---------------------------------------------------------------------------

HOUSE REPORTS: No. 106-1 (Comm. on Small Business).
SENATE REPORTS: No. 106-6 accompanying S. 364 (Comm. on Small Business).
CONGRESSIONAL RECORD, Vol. 145 (1999):
            Feb. 2, considered and passed House.
            Mar. 22, considered and passed Senate, amended, in lieu of 
                S. 364.
            Mar. 23, House concurred in Senate amendment.

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