H.R. 68 (ih) To amend section 20 of the Small Business Act and make technical corrections in Title III of the Small Business Investment Act. [Introduced in House] ...

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        H.R.68

                       One Hundred Sixth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

         Begun and held at the City of Washington on Wednesday,
   the sixth day of January, one thousand nine hundred and ninety-nine


                                 An Act


 
    To amend section 20 of the Small Business Act and make technical 
     corrections in title III of the Small Business Investment Act.

    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 ``Small Business Investment 
Improvement Act of 1999''.

SEC. 2. SBIC PROGRAM.

    (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 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:

``SEC. 101. SHORT TITLE.

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

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.

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