Home > 106th Congressional Bills > H.R. 4531 (ih) To amend the Reclamation Wastewater and Groundwater Study and [Introduced in House] ...H.R. 4531 (ih) To amend the Reclamation Wastewater and Groundwater Study and [Introduced in House] ...
Union Calendar No. 452
106th CONGRESS
2d Session
H. R. 4530
[Report No. 106-785]
To amend the Small Business Investment Act of 1958 to direct the
Administrator of the Small Business Administration to establish a New
Markets Venture Capital Program, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 24, 2000
Ms. Velazquez (for herself, Mr. Talent, Mr. King, Ms. Millender-
McDonald, Mrs. Kelly, Mr. Davis of Illinois, Mr. English, Mrs. McCarthy
of New York, Mrs. Bono, Mr. Pascrell, Mr. Sweeney, Mr. Hinojosa, Mrs.
Christensen, Mr. Brady of Pennsylvania, Mr. Udall of New Mexico, Mr.
Moore, Mrs. Jones of Ohio, Mr. Gonzalez, Mr. Phelps, Mrs. Napolitano,
Mr. Baird, Ms. Berkley, Mr. Udall of Colorado, Ms. Stabenow, Mr.
Kanjorski, and Mr. Barrett of Wisconsin) introduced the following bill;
which was referred to the Committee on Small Business
July 25, 2000
Committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to direct the
Administrator of the Small Business Administration to establish a New
Markets Venture Capital Program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``New Markets Venture Capital Program
Act of 2000''.
SEC. 2. NEW MARKETS VENTURE CAPITAL PROGRAM.
Title III of the Small Business Investment Act of 1958 (15 U.S.C.
681 et seq.) is amended--
(1) in the heading for the title, by striking ``SMALL
BUSINESS INVESTMENT COMPANIES'' and inserting ``INVESTMENT
DIVISION PROGRAMS'';
(2) by inserting before the heading for section 301 the
following:
``Part A--Small Business Investment Companies''5
; and
(3) by adding at the end the following:
``Part B--New Markets Venture Capital Program
``SEC. 351. DEFINITIONS.
``In this part, the following definitions apply:
``(1) Developmental venture capital.--The term
`developmental venture capital' means capital in the form of
equity investments in businesses made with a primary objective
of fostering economic development in low- or moderate-income
geographic areas.
``(2) Low- or moderate-income geographic area.--The term
`low- or moderate-income geographic area' means--
``(A) a census tract, or the equivalent county
division as defined by the Bureau of the Census for
purposes of defining poverty areas, in which--
``(i) the poverty rate is not less than 20
percent;
``(ii) in the case of a census tract or
division located within a metropolitan area,
the median family income for such tract or
division does not exceed the greater of 80
percent of the statewide median family income
or 80 percent of the metropolitan area median
family income; or
``(iii) in the case of a census tract or
division not located within a metropolitan
area, the median family income for such tract
or division does not exceed 80 percent of the
statewide median family income; or
``(B) any area located within--
``(i) a historically underutilized business
zone (HUBZone), as defined in section 3(p) of
the Small Business Act (15 U.S.C. 632(p));
``(ii) an urban empowerment zone or an
urban enterprise community, as designated by
the Secretary of the Department of Housing and
Urban Development; or
``(iii) a rural empowerment zone or a rural
enterprise community, as designated by the
Secretary of the Department of Agriculture.
``(3) New markets venture capital company.--The term `New
Markets Venture Capital company' means a company that--
``(A) has been granted final approval by the
Administration under section 354(e); and
``(B) has entered into a participation agreement
with the Administration.
``(4) Operational assistance.--The term `operational
assistance' means management, marketing, and other technical
assistance that assists a small business concern with business
development.
``(5) Participation agreement.--The term `participation
agreement' means an agreement, between the Administration and a
company granted final approval under section 354(e), that--
``(A) details the company's operating plan and
investment criteria; and
``(B) requires the company to make investments in
smaller enterprises at least 80 percent of which are
located in low- or moderate-income geographic areas.
``(6) Specialized small business investment company.--The
term `specialized small business investment company' means any
small business investment company that--
``(A) invests solely in small business concerns
that contribute to a well-balanced national economy by
facilitating ownership in such concerns by persons
whose participation in the free enterprise system is
hampered because of social or economic disadvantages;
``(B) is organized or chartered under State
business or nonprofit corporations statutes, or formed
as a limited partnership; and
``(C) was licensed under section 301(d), as in
effect before September 30, 1996.
``SEC. 352. PURPOSES.
``The purposes of the New Markets Venture Capital Program
established under this part are--
``(1) to promote economic development and the creation of
wealth and job opportunities in low- or moderate-income
geographic areas and among individuals living in such areas by
encouraging developmental venture capital investments in
smaller enterprises primarily located in such areas; and
``(2) to establish a developmental venture capital program,
with the mission of addressing the unmet equity investment
needs of small enterprises located in low- and moderate-income
geographic areas, to be administered by the Administration--
``(A) to enter into participation agreements with
New Markets Venture Capital companies;
``(B) to guarantee debentures of New Markets
Venture Capital companies to enable each such company
to make developmental venture capital investments in
smaller enterprises in low- or moderate-income
geographic areas; and
``(C) to make grants to New Markets Venture Capital
companies, and to other entities, for the purpose of
providing operational assistance to smaller enterprises
financed, or expected to be financed, by such
companies.
``SEC. 353. ESTABLISHMENT.
``In accordance with this part, the Administration shall establish
a New Markets Venture Capital Program, under which the Administration
may--
``(1) enter into participation agreements with companies
granted final approval under section 354(e) for the purposes
set forth in section 352;
``(2) guarantee the debentures issued by New Markets
Venture Capital companies as provided in section 355; and
``(3) make grants to New Markets Venture Capital companies,
and to other entities, under section 358.
``SEC. 354. SELECTION OF NEW MARKETS VENTURE CAPITAL COMPANIES.
``(a) Eligibility.--A company shall be eligible to apply to
participate, as a New Markets Venture Capital company, in the program
established under this part if--
``(1) the company is a newly formed for-profit entity or a
newly formed for-profit subsidiary of an existing entity;
``(2) the company has a management team with experience in
community development financing or relevant venture capital
financing; and
``(3) the company has a primary objective of economic
development of low- or moderate-income geographic areas.
``(b) Application.--To participate, as a New Markets Venture
Capital company, in the program established under this part a company
meeting the eligibility requirements set forth in subsection (a) shall
submit an application to the Administration that includes--
``(1) a business plan describing how the company intends to
make successful developmental venture capital investments in
identified low- or moderate-income geographic areas;
``(2) information regarding the community development
finance or relevant venture capital qualifications and general
reputation of the company's management;
``(3) a description of how the company intends to work with
community organizations and to seek to address the unmet
capital needs of the communities served;
``(4) a proposal describing how the company will use the
grant funds provided under this part to provide operational
assistance to smaller enterprises financed by the company,
including information regarding whether the company will use
licensed professionals, where applicable, on the company's
staff or from an outside entity;
``(5) with respect to binding commitments to be made to the
company under this part, an estimate of the ratio of cash to
in-kind contributions;
``(6) a description of the criteria to be used to evaluate
whether and to what extent the company meets the objectives of
the program established under this part;
``(7) information regarding the management and financial
strength of any parent firm, affiliated firm, or any other firm
essential to the success of the company's business plan; and
``(8) such other information as the Administration may
require.
``(c) Conditional Approval.--
``(1) In general.--From among companies submitting
applications under subsection (b), the Administration shall, in
accordance with this subsection, conditionally approve
companies to participate in the New Markets Venture Capital
Program.
``(2) Selection criteria.--In selecting companies under
paragraph (1), the Administration shall consider the following:
``(A) The likelihood that the company will meet the
goals of its business plan.
``(B) The experience and background of the
company's management team.
``(C) The need for developmental venture capital
investments in the geographic areas in which the
company intends to invest.
``(D) The extent to which the company will
concentrate its activities on serving the geographic
areas in which it intends to invest.
``(E) The likelihood that the company will be able
to satisfy the conditions under subsection (d).
``(F) The extent to which the activities proposed
by the company will expand economic opportunities in
the geographic areas in which the company intends to
invest.
``(G) The strength of the company's proposal to
provide operational assistance under this part as the
proposal relates to the ability of the applicant to
meet applicable cash requirements and properly utilize
in-kind contributions, including the use of resources
for the services of licensed professionals whether
provided by persons on the company's staff or by
persons outside of the company.
``(H) Any other factors deemed appropriate by the
Administration.
``(3) Nationwide distribution.--The Administration shall
select companies under paragraph (1) in such a way that
promotes investment nationwide.
``(d) Requirements To Be Met for Final Approval.--The
Administration shall grant each conditionally approved company a period
of time, not to exceed 2 years, to satisfy the following requirements:
``(1) Capital requirement.--Each conditionally approved
company must raise not less than $5,000,000 of private capital
or binding capital commitments from 1 or more investors (other
than agencies or departments of the Federal Government) who
meet criteria established by the Administration.
``(2) Nonadministration resources for operational
assistance.--In order to provide operational assistance to
smaller enterprises expected to be financed by the company,
each conditionally approved company--
``(A) must have binding commitments (for
contribution in cash or in kind)--
``(i) from any sources other than the
Administration that meet criteria established
by the Administration;
``(ii) payable or available over a
multiyear period acceptable to the
Administration (not to exceed 10 years); and
``(iii) in an amount not less than 30
percent of the total amount of capital and
commitments raised under paragraph (1);
``(B) must have purchased an annuity--
``(i) from an insurance company acceptable
to the Administration;
``(ii) using funds (other than the funds
raised under paragraph (1)) from any source
other than the Administration; and
``(iii) that yields cash payments over a
multiyear period acceptable to the
Administration (not to exceed 10 years) in an
amount not less than 30 percent of the total
amount of capital and commitments raised under
paragraph (1); or
``(C) must have binding commitments (for
contributions in cash or in kind) of the type described
in subparagraph (A) and must have purchased an annuity
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