Sec. 6. Small business investment company program

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Part A of title III of the Small Business Investment Act of 1958 ( 15 U.S.C. 681 et seq.) is amended— in section 302(a) ( 15 U.S.C. 682(a) )— in paragraph (1)— in subparagraph (A), by striking or at the end; in subparagraph (B), by striking the period at the end and inserting ; or ; and by adding at the end the following: $20,000,000, adjusted every 5 years for inflation, with respect to each licensee authorized or seeking authority to sell bonds to Administration as a participating investment company under section 321. ; and by adding at the end the following:

In this section: The term covered population census tract means a population census tract for which— in the case of a tract that is not located within a metropolitan area, the median income does not exceed 80 percent of the statewide (or, with respect to a possession or territory of the United States, the possession- or territory-wide) median family income; or in the case of a tract that is located within a metropolitan area, the median family income does not exceed 80 percent of the greater of the statewide (or, with respect to a possession or territory of the United States, the possession- or territory-wide) median family income and the metropolitan area median family income.

The term eligible small business concern — means a small business concern that— except as provided in subclauses (II), (III), and (IV), had gross receipts during the first or second quarter in 2020 that are not less than 50 percent less than the gross receipts of the entity during the same quarter in 2019; if the entity was not in business during the first or second quarter of 2019, but was in business during the third and fourth quarter of 2019, had gross receipts during the first or second quarter of 2020 that are less than 50 percent of the amount of the gross receipts of the entity during the third or fourth quarter of 2019; if the entity was not in business during the first, second, or third quarter of 2019, but was in business during the fourth quarter of 2019, had gross receipts during the first or second quarter of 2020 that are less than 50 percent of the amount of the gross receipts of the entity during the fourth quarter of 2019; or if the entity was not in business during 2019, but was in operation on February 15, 2020, had gross receipts during the second quarter of 2020 that are less than 50 percent of the amount of the gross receipts of the entity during the first quarter of 2020; is a manufacturing business that is assigned a North American Industry Classification System code beginning with 31, 32, or 33 at the time at which the small business concern receives an investment from a participating investment company under the facility; or is located in a small business low-income census tract; and does not include— an issuer, the securities of which are listed on an exchange registered a national securities exchange under section 6 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78f ); any entity that— is a type of business concern described in paragraph (b), (c), (d), (e), (f), (h), (l), (m), (p), (q), (r), or

(s)of section 120.110 of title 13, Code of Federal Regulations, or any successor regulation; is a type of business concern described in section 120.110(g) of title 13, Code of Federal Regulations, or any successor regulation, except as otherwise provided in the interim final rule of the Administration entitled Business Loan Program Temporary Changes; Paycheck Protection Program—Additional Eligibility Criteria and Requirements for Certain Pledges of Loans (85 Fed. Reg. 21747 (April 20, 2020)); is a type of business concern described in section 120.110(i) of title 13, Code of Federal Regulations, or any successor regulation, except if— the business concern is described in section 501(c)(6) of the Internal Revenue Code and that is exempt from taxation under section 501(a) of such Code (excluding professional football leagues and organizations with the purpose of promoting or participating in a political campaign or other activity); the business concern does not receive more than 10 percent of its receipts from lobbying activities; the lobbying activities of the business concern do not comprise more than 10 percent of the total activities of the business concern; and the business concern employs not more than 300 employees; is a type of business concern described in section 120.110(j) of title 13, Code of Federal Regulations, or any successor regulation, except as otherwise provided in the interim final rules of the Administration entitled Business Loan Program Temporary Changes; Paycheck Protection Program—Eligibility of Certain Electric Cooperatives (85 Fed. Reg. 29847 (May 19, 2020)) and Business Loan Program Temporary Changes; Paycheck Protection Program—Eligibility of Certain Telephone Cooperatives (85 Fed. Reg. 35550 (June 11, 2020)) or any other guidance or rule issued or that may be issued by the Administrator; is a type of business concern described in section 120.110(n) of title 13, Code of Federal Regulations, or any successor regulation, except as otherwise provided in the interim final rule of the Administration entitled Business Loan Program Temporary Changes; Paycheck Protection Program—Additional Eligibility Revisions to First Interim Final Rule (85 Fed. Reg. 38301 (June 26, 2020)) or any other guidance or rule issued or that may be issued by the Administrator; is a type of business concern described in section 120.110(o) of title 13, Code of Federal Regulations, or any successor regulation, except as otherwise provided in any guidance or rule issued or that may be issued by the Administrator; is an entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy or otherwise describes itself as a think tank in any public documents; is an entity that would be described in the provisions listed in subclauses

(I)through

(VII)if the entity were a business concern; or is assigned, or was approved for a loan under section 7(a)(36) of the Small Business Act ( 15 U.S.C. 636(a)(36) ) with, a North American Industry Classification System code beginning with 52; any business concern or entity primarily engaged in political or lobbying activities, including any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy or otherwise describes itself as a think tank in any public documents; or any business concern or entity— for which an entity created in or organized under the laws of the People's Republic of China or the Special Administrative Region of Hong Kong, or that has significant operations in the People's Republic of China or the Special Administrative Region of Hong Kong, owns or holds, directly or indirectly, not less than 20 percent of the economic interest of the business concern or entity, including as equity shares or a capital or profit interest in a limited liability company or partnership; or that retains, as a member of the board of directors of the business concern, a person who is a resident of the People’s Republic of China. The term facility means the facility established under subsection (b). The term Fund means the fund established under subsection (h). The term participating investment company means a small business investment company approved under subsection

(d)to participate in the facility. The term protégé investment company means a small business investment company that— is majority managed by new, inexperienced, or otherwise underrepresented fund managers; and elects and is selected by the Administration to participate in the pathway-protégé program under subsection (g). The term small business concern has the meaning given the term in section 3(a) of the Small Business Act ( 15 U.S.C. 632(a) ). The term small business low-income census tract — means— a covered population census tract for which the poverty rate is not less than 20 percent; or an area— that is not tracted as a population census tract; for which the poverty rate in the equivalent county division (as defined by the Bureau of the Census) is not less than 20 percent; and for which the median income in the equivalent county division (as defined by the Bureau of the Census) does not exceed 80 percent of the statewide (or, with respect to a possession or territory of the United States, the possession- or territory-wide) median income; and does not include any area or population census tract with a median family income that is not less than 120 percent of the median family income in the United States, according to the most recent American Communities Survey data from the Bureau of the Census. The Administrator shall establish and carry out a facility to improve the recovery of eligible small business concerns from the COVID–19 pandemic, increase resiliency in the manufacturing supply chain of eligible small business concerns, and increase the economic development of small business low-income census tracts by providing financial assistance to participating investment companies that facilitate equity financings to eligible small business concerns in accordance with this section. The facility shall be administered by the Administrator acting through the Associate Administrator described in section 201. Any small business investment company may submit to the Administrator an application to participate in the facility. An application to participate in the facility shall include the following: A business plan describing how the applicant intends to make successful equity investments in eligible small business concerns. Information regarding the relevant investment qualifications and backgrounds of the individuals responsible for the management of the applicant. A description of the extent to which the applicant meets the selection criteria under subsection (d)(2). Not later than 90 days after the date of enactment of this section, the Administrator shall reduce requirements for applicants applying to operate as a participating investment company under this section in order to encourage the participation of new small business investment companies in the facility under this section, which may include the requirements established under part 107 of title 13, Code of Federal Regulations, or any successor regulations, relating to— the approval of initial management expenses; the management ownership diversity requirement; the disclosure of general compensatory practices and fee structures; or any other requirement that the Administrator determines to be an obstacle to achieving the purposes described in this paragraph. Except as provided in paragraph (3), not later than 60 days after the date on which the Administrator receives an application under subsection (c), the Administrator shall— make a final determination to approve or disapprove such applicant to participate in the facility; and transmit the determination to the applicant in writing. Except as provided in paragraph (3), at the time of approval of an applicant, the Administrator shall make a determination of the amount of the commitment that may be awarded to the applicant under this section. In making a determination under paragraph (1), the Administrator shall consider— the probability that the investment strategy of the applicant will successfully repay any financial assistance provided by the Administration, including the probability of a return significantly in excess thereof; the probability that the investments made by the applicant will— provide capital to eligible small business concerns; or create or preserve jobs in the United States; the probability that the applicant will meet the objectives in the business plan of the applicant, including the financial goals, and, if applicable, the pathway-protégé program in accordance with subsection (g); and the probability that the applicant will assist eligible small business concerns in achieving profitability. Notwithstanding paragraph (1), with respect to an application submitted by an applicant to operate as a participating investment company under this section, the Administrator may provide provisional approval for the applicant in lieu of a final determination of approval and determination of the amount of the commitment under that paragraph. The purpose of a provisional approval under clause

(i)is to— encourage applications from investment companies with an investment mandate from the committed private market capital of the investment company that does not conform to the requirements described in this section at the time of application; allow the applicant to more effectively raise capital commitments in the private markets by referencing the intent of the Administrator to award the applicant a commitment; and allow the applicant to more precisely request the desired amount of commitment pending the securing of capital from private market investors. The period between a provisional approval under clause

(i)and the final determination of approval under paragraph

(1)shall not exceed 12 months. The Administrator may, out of amounts available in the Fund, purchase or commit to purchase from a participating investment company 1 or more accruing bonds that include equity features as described in this subsection. A bond purchased by the Administrator from a participating investment company under this subsection shall have the following terms and conditions: The bond shall be issued for a term of not less than 15 years and shall bear interest at a rate determined by the Administrator of not more than 2 percent. Interest on the bond shall accrue and shall be payable in accordance with subparagraph (D). The bond shall be prepayable without penalty after the end of the 1-year period beginning on the date on which the bond was purchased. The Administration shall be entitled to receive a share of the profits net of any profit sharing performance compensation of the participating investment company equal to the quotient obtained by dividing— one-third of the commitment that the participating investment company is approved for under subsection (d); by the commitment approved under subsection

(d)plus the regulatory capital of the participating investment company at the time of approval under that subsection. The share to which the Administration is entitled under clause (i)— shall be determined at the time of approval under subsection (d); and without the approval of the Administration, shall not be revised, including to reflect subsequent distributions of profits, returns of capital, or repayments of bonds, or otherwise. The Administration shall receive a share of profits of not more than 2 percent, which shall be deposited into the Fund and be available to make commitments under this subsection. The managers of the participating investment company may receive a maximum profit sharing performance compensation of 25 percent minus the share of profits paid to the Administration under clause (i). No distributions on capital, including profit distributions, shall be made by the participating investment company to the investors or managers of the participating investment company until the Administration has received payment of all accrued interest on the bond committed under this section. Except as described in subparagraph (F), repayments of principal of the bond of a participating investment company shall be— made at the same time as returns of private capital; and in amounts equal to the pro rata share of the Administration of the total amount being repaid or returned at such time. Upon any liquidation event or default, as defined by the Administration, any unpaid principal or accrued interest on the bond shall— have a priority over all equity of the participating investment company; and be paid before any return of equity or any other distributions to the investors or managers of the participating investment company. The maximum amount of outstanding bonds and commitments to purchase bonds for any participating investment company under the facility shall be the lesser of— twice the amount of the regulatory capital of the participating investment company; or $200,000,000. Commitments by the Administration to purchase bonds under the facility shall remain available to be sold by a participating investment company until the end of the fourth fiscal year following the year in which the commitment is made, subject to review and approval by the Administration based on regulatory compliance, financial status, change in management, deviation from business plan, and such other limitations as may be determined by the Administration by regulation or otherwise. As a condition of receiving a commitment under the facility, not less than 50 percent of amounts invested by the participating investment company shall be invested in eligible small business concerns. In addition to the matters set forth in section 310(c), the Administration shall examine each participating investment company in such detail so as to determine whether the participating investment company has complied with the requirements under this subsection. As a condition of receiving a commitment under the facility, a participating investment company shall make all distributions to the Administrator in the same form and in a manner as are made to investors, or otherwise at a time and in a manner consistent with regulations or policies of the Administration. A participating investment company shall make allocations of income, gain, loss, deduction, and credit to the Administrator with respect to any outstanding bonds as if the Administrator were an investor. The Administrator may not charge fees for participating investment companies other than examination fees that are consistent with the license of the participating investment company. Losses on bonds issued by participating investment companies shall not be offset by fees or any other charges on debenture small business investment companies. The Administrator shall establish a pathway-protégé program in which a protégé investment company may receive technical assistance and program support from a participating investment company on a voluntary basis and without penalty for non-participation. There is established in the Treasury a fund for making commitments and purchasing bonds with equity features under the facility and receiving capital returned by participating investment companies. Amounts appropriated to the Fund or deposited in the Fund under paragraph

(3)shall be available to the Administrator, without further appropriation, for making commitments and purchasing bonds under the facility and expenses and payments, excluding administrative expenses, relating to the operations of the Administrator under the facility. All amounts received by the Administrator from a participating investment company relating to the facility, including any moneys, property, or assets derived by the Administrator from operations in connection with the facility, shall be deposited in the Fund. Amounts deposited under subparagraph

(A)shall remain available until expended. To the extent not inconsistent with requirements under this section, the Administrator may apply sections 309, 311, 312, 313, and 314 to activities under this section and an officer, director, employee, agent, or other participant in a participating investment company shall be subject to the requirements under such sections. There is authorized to be appropriated for the first fiscal year beginning after the date of enactment of this section $10,000,000,000 to carry out the facility. Amounts appropriated pursuant to this subsection shall remain available until the end of the second fiscal year beginning after the date of enactment of this section. . Section 301(c)(2) of the Small Business Investment Act of 1958 ( 15 U.S.C. 681(c)(2) ) is amended— in subparagraph (B), in the matter preceding clause (i), by striking Within and inserting Except as provided in subparagraph (C), within ; and by adding at the end the following: Not later than 45 days after the date on which the Administrator receives a completed application submitted by a bank-owned, non-leveraged applicant in accordance with this subsection, and in accordance with such requirements as the Administrator may prescribe by regulation, the Administrator shall— review the application in its entirety; and approve the application and issue a license for such operation to the applicant if the requirements of this section are satisfied; or disapprove the application and notify the applicant in writing of the disapproval. . Part A of title III of the Small Business Investment Act of 1958 ( 15 U.S.C. 681 et seq.), as amended by subsection

(a)of this section, is amended by adding at the end the following: The Administration shall permit any document submitted under this title, or pursuant to a regulation carrying out this title, to be submitted electronically, including by permitting an electronic signature for any signature that is required on such a document. .

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