[House Report 106-522]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-522
=======================================================================
SMALL BUSINESS REAUTHORIZATION ACT OF 2000
_______
March 14, 2000.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Talent, from the Committee on Small Business, submitted the
following
R E P O R T
[To accompany H.R. 3843]
The Committee on Small Business, to whom was referred the
bill (H.R. 3843) to reauthorize programs to assist small
business concerns, and for other purposes, having considered
the same, report favorably thereon without amendment and
recommend that the bill do pass.
Purpose
The purpose of H.R. 3843 is to reauthorize the programs and
operations of the Small Business Administration (SBA). H.R.
3843 contains the authorization levels for SBA for fiscal years
2001, 2002, and 2003. It contains no technical or substantive
changes to any of the programs.
Need for Legislation
The Small Business Administration provides a variety of
services for small businesses--financial assistance, technical
assistance, and disaster assistance.
Financial assistance
The Small Business Administration provides approximately
$11 billion in financing to small businesses annually. This
financing is made available through a variety of programs.
SBA's largest financial program is the Section 7(a) general
business loan program. The 7(a) program offers loans to small
businesses through local lending institutions. These loans are
provided with an SBA guarantee of up to 80 percent and are
limited to a maximum of $750,000. The 7(a) program has a
subsidy rate of 1.16% for fiscal year 2000 and an appropriation
of $107 million, permitting $9.8 billion in lending.
The Section 504 loan program provides construction,
renovation and capital investment financing to small businesses
through certified development companies (CDCs). These CDCs are
SBA licensed, local business development organizations which
provide loans of up to $750,000 for small businesses, in
cooperation with local banks. CDCs provide 40% of the financing
package, while the bank provides 50%, and the small business
provides a 10% down payment. CDC funding is obtained through
issuance of an SBA guaranteed debenture. The 504 program
currently operates at no cost to the taxpayer but does require
authorization.
The microloan program provides small loans of up to $25,000
to borrowers in low-income areas. In fiscal year 1999 the
program provided $29 million in loans. In addition, the program
has a technical assistance aspect that provides managerial and
business expertise to microloan borrowers. Microloans are made
by intermediary organizations that specialize in local business
development. The program has a subsidy rate of 8.54%.
The Small Business Investment Company (SBIC) program
provides over $1.5 billion in long term and venture capital
financing for small business annually. SBICs are venture
capital firms that leverage private investment dollars with SBA
guaranteed debentures or participating securities. The SBIC
debenture program currently operates at a zero subsidy rate and
requires no taxpayer subsidy. The participating securities
program has a 1.8% subsidy rate.
Technical assistance
The SBA provides technical and managerial assistance to
small businesses through four primary programs--Small Business
Development Centers (SBDCs), the Service Corps of Retired
Executives (SCORE), the 7(j) technical assistance program, and
the Women's Business Center program.
SBDCS are located primarily at colleges and universities
and provide assistance through 51 center sites and
approximately 970 satellite offices. Through a formula of
matching grants and donations SBDCs offer small businesses
guidance on marketing, financing, start-up, and other areas.
The program currently receives $84 million in appropriations.
SCORE provides small business assistance on-site through
the volunteer efforts of its members. SCORE volunteers are
retired business men and women who offer their expertise to
small businesses. SCORE volunteers are reimbursed for their
travel expenses and SCORE receives funding as well for a
website and offices in Washington, DC.
The 7(j) program provides financing for technical
assistance to the minority contracting community primarily
through courses and direct assistance from management
consultants. In addition, the program provides assistance for
participants to attend business administration classes offered
through several colleges and universities.
The Women's Business Center program provides five year
grants matched by non-federal funds to private sector
organizations to establish business training centers for women.
Depending on the needs of the community, centers teach women
the principles of finance, management and marketing as well as
specialized topics such government contracting or starting
home-based businesses. There are currently 81 centers in 47
states in rural, urban and suburban locations.
Disaster assistance
The Small Business Administration also provides disaster
loan assistance to homeowners and small businesses nationwide.
This program is a key component of the overall Federal recovery
effort for communities struck by natural disasters. This
assistance is authorized by section 7(b) of the Small Business
Act which provides authority for reduced interest rate loans.
Currently the interest rates fluctuate according to the
statutory formula--a lower rate, not to exceed four percent is
offered to applicants with no credit available elsewhere, while
a rate of a maximum of eight percent is available for other
borrowers.
Committee Action
hearing on the sba budget
On March 1, 2000 at 10:00 a.m., the Committee on Small
Business convened a hearing to discuss the Administration's
budget submission for fiscal year 2001, their legislative
proposals, and the reauthorization of the SBA's programs. The
Committee received testimony from five witnesses: Hon. Aida
Alvarez, Administrator of the Small Business Administration;
Mr. Anthony Wilkinson, President of the National Association of
Government Guaranteed Lenders; Mr. Lee Mercer, President of the
National Association of Small Business Investment Companies;
Mr. Woody McCutchen, Executive Director of the Association of
Small Business Development Centers; Ms. Caroline Hayashi,
representing the Association for enterprise Opportunity; and
Mr. John Geigel, Vice President for Government Relations of the
National Association of Development Companies.
Ms. Alvarez's testimony supported the Administration's
request.
Mr. Wilkinson testified in support of the proposed 2001
budget. He also expressed his organization's support for
increase authorization levels for fiscal year 2001, 2002, and
2003. He suggested authorization levels of 14.5, 15 and 16
billion dollars for fiscal years 2001, 2002 and 2003
respectively.
Mr. Mercer testified in support of the Administration's
budget request for the SBIC program and recommended
participating securities program levels of 2.5, 3.25, and 4
billion dollars for fiscal years 2001, 2002, 2003 respectively.
He also recommended debenture program levels of 1, 1.5, and 2
billion dollars for fiscal years 2001, 2002, and 2003,
respectively.
Mr. Geigel generally supported the SBA budget for 2001. On
behalf of NADCO he suggested 504 program authorizations of
3.75, 4.5, and 5 billion dollars for fiscal years 2001, 2002,
and 2003, respectively.
Mr. McCutchen discussed the needs of the Small Business
Development Center (SBDC) program and expressed support for the
Administration's request for fiscal year 2001. However, he
asked that the committee consider reauthorizing the SBDC
program at $100 million per year.
During the hearing Chairman Talent questioned Administrator
Alvarez on the proliferation of unauthorized programs at the
SBA. In particular, he questioned the requests for $6.6 million
for the Business Linc program and $5 million for the e-commerce
initiative. The Chairman expressed doubts on the efficiency of
operating technical assistance programs at so many levels
versus a consolidation of effort and services. He was
particularly concerned that the Administrator could not provide
the Committee with a clear explanation of purpose and operation
of the Business Linc program or the e-commerce initiative.
Ranking Member Velazquez questioned the Administrator on
the status of the procurement center representatives (PCRs) at
the SBA's Office of Government Contracting. PCRs are SBA
employees stationed at major procurement centers in order to
assist in identifying and advertising procurement opportunities
for small business. Ms. Velazquez questioned why the SBA had
failed to assign PCRs to several major procurement centers and
had not requested any funding for PCR staff in the 2001 budget.
Ms. Velazquez was concerned that, for example, there were no
PCRs stationed in Virginia, a state with a large percentage of
federal procurement activity.
Representative Pascrell questioned the Administrator on the
efforts to implement the HUBZone program. Mr. Pascrell was
concerned that SBA had drafted the regulations in an overly
restrictive fashion which had caused anomalies in the program's
application. Of particular concern were instances where small
businesses were not being considered eligible for the HUBZone
program because they were literally across the street from the
designated HUBZone. Mr. Pascrell expressed his belief that
these businesses, which hired significantly from the HUBZone
communities, were being denied opportunities to participate
even though they were fulfilling the goal of the program--
employment in low income areas.
The Administrator replied that while she understood Mr.
Pascrell's position she was constrained by the statute.
consideration of h.r. 3843
At 10:00 a.m. on March 9, 2000, the Committee on Small
Business met to consider and report H.R. 3843 and H.R. 3845.
The Chairman declared H.R. 3843 open for amendment at any point
and no amendments were offered. The Chairman then moved the
bill be reported, and at 10:10 a.m., by a voice vote, a quorum
being present, the committee passed H.R. 3843 and ordered it
reported.
Section-by-Section Analysis
Section 1. Short title
Section 2. Reauthorization of small business programs
This section provides the authorized appropriation levels
for the following programs: Section 7(a) general business
loans, Section 504 Certified Development Company loans, direct
microloans, guaranteed microloans, microloan technical
assistance, Defense Transition (DELTA) loans, Small Business
Investment Company debentures, Small Business Investment
Company participating securities, Surety Bonds guarantees,
SCORE, disaster loans, and salaries and expenses.
The following are the authorizations levels for the
financial programs:
[In millions of dollars]
------------------------------------------------------------------------
2001 2002 2003
------------------------------------------------------------------------
7(a)................................... $14,500 $15,000 $16,000
504.................................... 4,000 4,500 5,000
Microloan.............................. 60 80 100
Microloan TA........................... 50 70 90
Microloan gty.......................... 200 250 300
SBIC debentures........................ 1,500 2,500 3,000
SBIC part. Securities.................. 2,500 3,500 4,000
Surety bonds........................... 4,000 5,000 6,000
------------------------------------------------------------------------
This section also authorizes the Service Corps of Retired
Executive (SCORE). SCORE will be authorized at 5, 6, and 7
million dollars for fiscal years 2001, 2002, and 2003,
respectively.
Section 2 also contains provisions authorizing funding for
salaries and expenses at the Small Business Administration.
These authorizations are established as ``such sums as may be
necessary''. However, separate authorizations are established
for direct administration of the 7(a), 504 and microloan
programs and for the operations of the Office of Investment.
The committee intends that the funds authorized for the direct
administration of the loan programs be used solely for
headquarters operations and not field services. These
operations are authorized at 14, 16, and 17 million dollars for
fiscal years 2001, 2002, 2003, respectively.
Section 3. Additional reauthorizations
This section authorizes six programs:
(a) Small Business Development Centers Program--Increases
the authorization level from $95,000,000 to $125,000,000.
(b) Drug Free Workplace--Extends authorization through
fiscal year 2003 at $5,000,000 per year.
(c) HUBZones--Authorizes appropriations of $10,000,000 per
year through fiscal year 2003.
(d) National Women's Business Council--Increases
authorization to $1,000,000 per year and extends authorization
through fiscal year 2003.
(e) Very Small Business Concerns--Extends authorization
through September 30, 2003.
(f) SDB Certification--Extends authorization through
September 30, 2003.
Committee Estimate of Costs
Pursuant to the Congressional Budget Act of 1974, the
Committee estimates that the reauthorization of the Small
Business Act contained in H.R. 3843, if fully funded, will
increase discretionary spending over the next five fiscal years
by approximately $2.0 billion. The Committee also estimates
that H.R. 3843 will not affect direct spending or receipts.
This estimate concurs with Congressional Budget Office (CBO)
estimates.
Furthermore, pursuant to clause 3(d)(2)(A) of rule XIII of
the Rules of the House of Representatives, the Committee
estimates that implementation of H.R. 3843 will not
significantly increase administrative costs.
Oversight Findings
In accordance with clause 4(c)(2) of rule X of the Rules of
the House of Representatives, the Committee states that no
oversight findings or recommendations have been made by the
Committee on Government Reform with respect to the subject
matter contained in H.R. 3843.
In accordance with clause (2)(b)(1) of rule X of the Rules
of the House of Representatives, the oversight findings and
recommendations of the Committee on Small Business with respect
to the subject matter contained in H.R. 3843 are incorporated
into the descriptive portions of this report.
Statement of Constitutional Authority
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, Section 8, clause 18, of the
Constitution of the United States.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SMALL BUSINESS ACT
* * * * * * *
Sec. 20. (a) * * *
* * * * * * *
(g) Fiscal Year 2001.--
(1) Program levels.--The following program levels are
authorized for fiscal year 2001:
(A) For the programs authorized by this Act,
the Administration is authorized to make--
(i) $50,000,000 in technical
assistance grants as provided in
section 7(m); and
(ii) $60,000,000 in direct loans, as
provided in 7(m).
(B) For the programs authorized by this Act,
the Administration is authorized to make
$19,200,000,000 in deferred participation loans
and other financings. Of such sum, the
Administration is authorized to make--
(i) $14,500,000,000 in general
business loans as provided in section
7(a);
(ii) $4,000,000,000 in financings as
provided in section 7(a)(13) of this
Act and section 504 of the Small
Business Investment Act of 1958;
(iii) $500,000,000 in loans as
provided in section 7(a)(21); and
(iv) $200,000,000 in loans as
provided in section 7(m).
(C) For the programs authorized by title III
of the Small Business Investment Act of 1958,
the Administration is authorized to make--
(i) $2,500,000,000 in purchases of
participating securities; and
(ii) $1,500,000,000 in guarantees of
debentures.
(D) For the programs authorized by part B of
title IV of the Small Business Investment Act
of 1958, the Administration is authorized to
enter into guarantees not to exceed
$4,000,000,000 of which not more than
$650,000,000 may be in bonds approved pursuant
to section 411(a)(3) of that Act.
(E) The Administration is authorized to make
grants or enter cooperative agreements for a
total amount of $5,000,000 for the Service
Corps of Retired Executives program authorized
by section 8(b)(1).
(2) Additional authorizations.--
(A) There are authorized to be appropriated
to the Administration for fiscal year 2001--
(i) $14,000,000 for the direct
administration of the loan programs
established under sections 7(a) and
7(m) of this Act and under title V of
the Small Business Investment Act of
1958; and
(ii) $10,000,000 for the salaries and
expenses of the Investment Division
established in title II of the Small
Business Investment Act of 1958.
(B) There are authorized to be appropriated
to the Administration for fiscal year 2001 such
sums as may be necessary to carry out the
provisions of this Act not elsewhere provided
for, including administrative expenses and
necessary loan capital for disaster loans
pursuant to section 7(b), and to carry out
title IV of the Small Business Investment Act
of 1958, including salaries and expenses of the
Administration.
(C) Notwithstanding any other provision of
this paragraph, for fiscal year 2001--
(i) no funds are authorized to be
used as loan capital for the loan
program authorized by section 7(a)(21)
except by transfer from another Federal
department or agency to the
Administration, unless the program
level authorized for general business
loans under paragraph (1)(B)(i) is
fully funded; and
(ii) the Administration may not
approve loans on its own behalf or on
behalf of any other Federal department
or agency, by contract or otherwise,
under terms and conditions other than
those specifically authorized under
this Act or the Small Business
Investment Act of 1958, except that it
may approve loans under section
7(a)(21) of this Act in gross amounts
of not more than $1,250,000.
(h) Fiscal Year 2002.--
(1) Program levels.--The following program levels are
authorized for fiscal year 2002:
(A) For the programs authorized by this Act,
the Administration is authorized to make--
(i) $70,000,000 in technical
assistance grants as provided in
section 7(m); and
(ii) $80,000,000 in direct loans, as
provided in 7(m).
(B) For the programs authorized by this Act,
the Administration is authorized to make
$20,250,000,000 in deferred participation loans
and other financings. Of such sum, the
Administration is authorized to make--
(i) $15,000,000,000 in general
business loans as provided in section
7(a);
(ii) $4,500,000,000 in financings as
provided in section 7(a)(13) of this
Act and section 504 of the Small
Business Investment Act of 1958;
(iii) $500,000,000 in loans as
provided in section 7(a)(21); and
(iv) $250,000,000 in loans as
provided in section 7(m).
(C) For the programs authorized by title III
of the Small Business Investment Act of 1958,
the Administration is authorized to make--
(i) $3,500,000,000 in purchases of
participating securities; and
(ii) $2,500,000,000 in guarantees of
debentures.
(D) For the programs authorized by part B of
title IV of the Small Business Investment Act
of 1958, the Administration is authorized to
enter into guarantees not to exceed
$5,000,000,000 of which not more than
$650,000,000 may be in bonds approved pursuant
to section 411(a)(3) of that Act.
(E) The Administration is authorized to make
grants or enter cooperative agreements for a
total amount of $6,000,000 for the Service
Corps of Retired Executives program authorized
by section 8(b)(1).
(2) Additional authorizations.--
(A) There are authorized to be appropriated
to the Administration for fiscal year 2002--
(i) $16,000,000 for the direct
administration of the loan programs
established under sections 7(a) and
7(m) of this Act and under title V of
the Small Business Investment Act of
1958; and
(ii) $11,000,000 for the salaries and
expenses of the Investment Division
established in title II of the Small
Business Investment Act of 1958.
(B) There are authorized to be appropriated
to the Administration for fiscal year 2002 such
sums as may be necessary to carry out the
provisions of this Act not elsewhere provided
for, including administrative expenses and
necessary loan capital for disaster loans
pursuant to section 7(b), and to carry out
title IV of the Small Business Investment Act
of 1958, including salaries and expenses of the
Administration.
(C) Notwithstanding any other provision of
this paragraph, for fiscal year 2002--
(i) no funds are authorized to be
used as loan capital for the loan
program authorized by section 7(a)(21)
except by transfer from another Federal
department or agency to the
Administration, unless the program
level authorized for general business
loans under paragraph (1)(B)(i) is
fully funded; and
(ii) the Administration may not
approve loans on its own behalf or on
behalf of any other Federal department
or agency, by contract or otherwise,
under terms and conditions other than
those specifically authorized under
this Act or the Small Business
Investment Act of 1958, except that it
may approve loans under section
7(a)(21) of this Act in gross amounts
of not more than $1,250,000.
(i) Fiscal Year 2003.--
(1) Program levels.--The following program levels are
authorized for fiscal year 2003:
(A) For the programs authorized by this Act,
the Administration is authorized to make--
(i) $90,000,000 in technical
assistance grants as provided in
section 7(m); and
(ii) $100,000,000 in direct loans, as
provided in 7(m).
(B) For the programs authorized by this Act,
the Administration is authorized to make
$21,800,000,000 in deferred participation loans
and other financings. Of such sum, the
Administration is authorized to make--
(i) $16,000,000,000 in general
business loans as provided in section
7(a);
(ii) $5,000,000,000 in financings as
provided in section 7(a)(13) of this
Act and section 504 of the Small
Business Investment Act of 1958;
(iii) $500,000,000 in loans as
provided in section 7(a)(21); and
(iv) $300,000,000 in loans as
provided in section 7(m).
(C) For the programs authorized by title III
of the Small Business Investment Act of 1958,
the Administration is authorized to make--
(i) $4,000,000,000 in purchases of
participating securities; and
(ii) $3,000,000,000 in guarantees of
debentures.
(D) For the programs authorized by part B of
title IV of the Small Business Investment Act
of 1958, the Administration is authorized to
enter into guarantees not to exceed
$6,000,000,000 of which not more than
$650,000,000 may be in bonds approved pursuant
to section 411(a)(3) of that Act.
(E) The Administration is authorized to make
grants or enter into cooperative agreements for
a total amount of $7,000,000 for the Service
Corps of Retired Executives program authorized
by section 8(b)(1).
(2) Additional authorizations.--
(A) There are authorized to be appropriated
to the Administration for fiscal year 2003--
(i) $17,000,000 for the direct
administration of the loan programs
established under sections 7(a) and
7(m) of this Act and under title V of
the Small Business Investment Act of
1958; and
(ii) $12,000,000 for the salaries and
expenses of the Investment Division
established in title II of the Small
Business Investment Act of 1958.
(B) There are authorized to be appropriated
to the Administration for fiscal year 2003 such
sums as may be necessary to carry out the
provisions of this Act not elsewhere provided
for, including administrative expenses and
necessary loan capital for disaster loans
pursuant to section 7(b), and to carry out
title IV of the Small Business Investment Act
of 1958, including salaries and expenses of the
Administration.
(C) Notwithstanding any other provision of
this paragraph, for fiscal year 2003--
(i) no funds are authorized to be
used as loan capital for the loan
program authorized by section 7(a)(21)
except by transfer from another Federal
department or agency to the
Administration, unless the program
level authorized for general business
loans under paragraph (1)(B)(i) is
fully funded; and
(ii) the Administration may not
approve loans on its own behalf or on
behalf of any other Federal department
or agency, by contract or otherwise,
under terms and conditions other than
those specifically authorized under
this Act or the small Business
Investment Act of 1958, except that it
may approve loans under section
7(a)(21) of this Act in gross amounts
of not more than $1,250,000.
Sec. 21. (a)(1) * * *
* * * * * * *
(4) Small business development center program level.--
(A) * * *
* * * * * * *
(C) National program.--
(i) * * *
* * * * * * *
(iii) National program.--There are authorized
to be appropriated to carry out the national
program under this section--
(I) $85,000,000 for fiscal year 1998;
(II) $90,000,000 for fiscal year
1999; and
(III) [$95,000,000] $125,000,000 for
fiscal year 2000 and each fiscal year
thereafter.
* * * * * * *
SEC. 27. DRUG-FREE WORKPLACE DEMONSTRATION PROGRAM.
(a) * * *
* * * * * * *
(g) Authorization.--
(1) In general.--There is authorized to be
appropriated to carry out this section, [$10,000,000
for fiscal years 1999 and 2000] $5,000,000 for each of
fiscal years 2001 through 2003. Amounts made available
under this subsection shall remain available until
expended.
* * * * * * *
SEC. 31. HUBZONE PROGRAM.
(a) * * *
* * * * * * *
(d) Authorization of Appropriations.--There is authorized to
be appropriated to carry out the program established by this
section $10,000,000 for each of fiscal years 2001 through 2003.
* * * * * * *
----------
SECTION 411 OF THE WOMEN'S BUSINESS OWNERSHIP ACT
SEC. 411. AUTHORIZATION OF APPROPRIATIONS.
(a) In General.--There is authorized to be appropriated to
carry out this title [$600,000, for each of fiscal years 1998
through 2000,] $1,000,000 for each of fiscal years 2001 through
2003, of which $200,000 shall be available in each fiscal year
to carry out sections 409 and 410.
* * * * * * *
----------
SECTION 304 OF THE SMALL BUSINESS ADMINISTRATION REAUTHORIZATION AND
AMENDMENTS ACT OF 1994
SEC. 304. PILOT PROGRAM FOR VERY SMALL BUSINESS CONCERNS.
(a) * * *
* * * * * * *
(i) Program Term.--Implementation of the program shall begin
not later than August 30, 1995. The program authorized by this
section shall expire on September 30, [2000] 2003.
* * * * * * *
----------
SECTION 7102 OF THE FEDERAL ACQUISITION STREAMLINING ACT OF 1994
SEC. 7102. CONTRACTING PROGRAM FOR CERTAIN SMALL BUSINESS CONCERNS.
(a) * * *
* * * * * * *
(c) Termination.--This section shall cease to be effective at
the end of September 30, [2000] 2003.
* * * * * * *