Sec. 5. Spark Financing Program
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The Small Business Act ( 15 U.S.C. 631 et seq. ), as amended by section 4, is amended by inserting after section 49 the following: In this section: The term covered entity means— an eligible entity; or solely for the purposes of making loans under subsection (c)(3)(A)(ii), another lender or organization determined appropriate by the Administrator. The term covered small business concern means a small business concern that is— owned by an individual that is a member of an underserved group described in section 49(c)(2)(E); or located in a federally recognized area of economic distress.
The terms eligible entity , federally recognized area of economic distress , growing , newly established , and startup have the meanings given those terms in section 49(a). Not later than 1 year after the date of enactment of the Strengthening Place-based Access, Resources, and Knowledge Act , the Administrator shall establish, and thereafter the Administrator shall carry out, a grant and loan program (to be known as the Spark Financing Program ), under which, in accordance with the requirements of this section, the Administrator shall provide financial assistance to covered entities, which shall use that financial assistance to make grants or loans to covered small business concerns.
The Administrator shall provide financial assistance to covered entities under this section as follows: If the covered entity has entered into a cooperative agreement under section 49— the amount of financial assistance provided under this section shall be not more than $1,000,000 per year; and the entity— shall receive financial assistance under this section at the same time that the covered entity receives financial assistance pursuant to that cooperative agreement under section 49; and shall not be required to reapply for funding under this section on an annual basis.
If the covered entity has not entered into a cooperative agreement under section 49— the amount of financial assistance provided under this section shall be not more than $500,000 per year; and the covered entity shall reapply for financial assistance under this section on an annual basis. A covered entity seeking financial assistance under this section— may, if the covered entity seeks to enter into or renew a cooperative agreement under section 49, seek that financial assistance in an application submitted by the covered entity with respect to entering into or renewing that cooperative agreement, as applicable; or if the covered entity does not seek to enter into a, or is not seeking to renew an existing, cooperative agreement under section 49, shall submit to the Administrator an application seeking that financial assistance.
With respect to an application seeking financial assistance under this section, whether or not submitted as part of an application under section 49— the application shall detail the proposed use of the financial assistance, as provided under paragraph (3); and the Administrator shall evaluate the application using the criteria described in paragraphs
(1)and
(2)of section 49(d), except that, for purposes of this clause, any reference in such paragraph
(1)or
(2)to a cooperative agreement under section 49 shall be deemed to be a reference to financial assistance provided under this section. Subject to clause (ii), an eligible entity to which financial assistance is provided under this section may use that financial assistance to make grants to covered small business concerns to carry out projects that are directed at the objectives described in section 501(d) of the Small Business Investment Act of 1958 ( 15 U.S.C. 695(d) ). A covered small business concern may not receive more than $20,000, in total, in grants made under subclause (I). An eligible entity described in any of clauses
(ii)through
(vi)of section 49(a)(2)(B), or another lender or organization determined appropriate by the Administrator, may use financial assistance provided under this section to make a loan to a covered small business concern with a significantly lower interest rate than is typical, or with a required equity contribution that is lower than is typical, in order to— reduce the number of loan applications that are denied because of insufficient collateral; decrease the cost of financing for covered small business concerns; increase the number of covered small business concerns that qualify for financing, in light of— the difficulties faced by covered small business concerns in accessing conventional financing; and the historical exclusion of covered small business concerns from credit markets; bring more lenders into areas that suffer from under-investment; and bridge public and private financing programs to provide covered small business concerns with a continuum of support. A covered small business concern that receives a grant or loan made under subparagraph
(A)shall not be required to pay a fee, or to otherwise pay any compensation, to the applicable covered entity with respect to that grant or loan. A covered entity that makes a grant or loan to a covered small business concern using financial assistance provided to the covered entity under this section shall verify the legitimacy of that covered small business concern, which may include collecting the following information from the covered small business concern: A description of the history of the covered small business concern and the nature of the business of the covered small business concern. The amount and purpose of the grant or loan. The most recent financial statements of the covered small business concern. Past financial statements or tax returns of the covered small business concern, as determined appropriate by the Administrator. The tax verification described in section 120.191 of title 13, Code of Federal Regulations, or any successor regulation. A business plan provided by the small business concern. Any other material determined appropriate by the Administrator. The Administrator shall— develop and implement an examination of the grants and loans made with financial assistance provided under this section, under which each covered entity to which financial assistance is provided under this section shall provide to the Administrator— documentation establishing metrics to measure success on the use of that financial assistance and detailing whether that use satisfied those metrics; if the covered entity has made loans with financial assistance provided under this section, default rates for those loans; if the covered entity has made grants with financial assistance provided under this section, failure rates of the covered small business concerns to which those grants were made; and any other documentation that the Administrator may require; and analyze the results of the examination conducted under subparagraph (A). In determining whether a covered entity described in subsection (c)(1)(A) shall continue to receive financial assistance under this section concurrent with the provision of financial assistance pursuant to a cooperative agreement under section 49, or whether to approve a re-application for financial assistance provided under this section that is submitted by a covered entity described in subsection (c)(1)(B)(ii), the Administrator— shall consider the results of the most recent examination conducted under paragraph (1); and may withdraw financial assistance provided under this section, or reject such a re-application, if— the Administrator determines that the applicable covered entity has failed to provide information required to be provided (including information provided for the purpose of the annual report by the Administrator under subsection (h)); or the information provided by the applicable covered entity is inadequate. Not later than 2 years after the date of enactment of the Strengthening Place-based Access, Resources, and Knowledge Act , the Administrator shall— conduct a study to determine whether the program examination criteria under this subsection and the reporting requirements under subsection
(h)should vary or include other metrics based on the type and location of a project; and submit to Congress a report detailing the results of the study conducted under subparagraph (A). The Administrator— shall provide in-person or online training and technical assistance to each covered entity to which financial assistance is provided under this section at the beginning of the participation of the covered entity in the program established under this section in order to build the capacity of the covered entity and ensure compliance with procedures established by the Administrator; shall ensure that the training and technical assistance described in paragraph
(1)is provided at no cost or at a low cost; and may enter into a contract to provide the training or technical assistance described in paragraph
(1)with 1 or more organizations with expertise in the entrepreneurial development programs of the Administration, innovation, and entrepreneurial development. In making a grant or loan with financial assistance provided under this section, a covered entity may coordinate with— resource and lending partners of the Administration; programs of State and local governments that are concerned with aiding small business concerns; and other Federal agencies, including to provide services to and assist small business concerns in participating in the SBIR and STTR programs, as defined in section 9(e). The Administrator shall— publish information about the program carried out under this section online, including— on the website of the Administration; and on the social media of the Administration; and request that the resource and lending partners of the Administration and the district offices of the Administration publicize the program carried out under this section. Not later than 1 year after the date on which the Administrator establishes the program under this section, and annually thereafter, the Administrator shall submit to Congress a report on the activities under the program, including— the number of grants and loans made using the financial assistance provided under this section; the use of the funds from grants and loans described in subparagraph (A); the amount of financial assistance provided under this section that was expended for each job created or retained through the expenditure of that financial assistance; the number of startup, newly established, and growing covered small business concerns to which grants and loans have been made using financial assistance provided under this section (referred to in this subsection as participants ), including a breakdown of the owners of the participants by race, gender, veteran status, and urban versus rural location; the retention rate for participants; the total and median amount of capital accessed by participants, including the type of capital accessed; the total and median number of employees of participants; the number and median wage of jobs created by participants; the number of jobs sustained by participants; and information regarding such other metrics as the Administrator determines appropriate, including coordination with other private or public small business assistance programs. There are authorized to be appropriated such sums as may be necessary to carry out this section. Of the amount made available to carry out this section for any fiscal year, not more than 10 percent may be used by the Administrator for administrative expenses. .
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