Collapse to view only § 631. Declaration of policy

§ 631.
Declaration of policy
(a)
Aid, counsel, assistance, etc., to small business concerns

The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured. The preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation. Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation.

(b)
Assistance to compete in international markets
(1)
It is the declared policy of the Congress that the Federal Government, through the Administrator of the Small Business Administration, acting through the Associate Administrator for International Trade, and in cooperation with the Department of Commerce and other relevant State and Federal agencies, should aid and assist small businesses, as defined under this chapter, to increase their ability to compete in international markets by—
(A) enhancing their ability to export;
(B) facilitating technology transfers;
(C) enhancing their ability to compete effectively and efficiently against imports;
(D) increasing the access of small businesses to long-term capital for the purchase of new plant and equipment used in the production of goods and services involved in international trade;
(E) disseminating information concerning State, Federal, and private programs and initiatives to enhance the ability of small businesses to compete in international markets; and
(F) ensuring that the interests of small businesses are adequately represented in bilateral and multilateral trade negotiations.
(2) The Congress recognizes that the Department of Commerce is the principal Federal agency for trade development and export promotion and that the Department of Commerce and the Small Business Administration work together to advance joint interests. It is the purpose of this chapter to enhance, not alter, their respective roles.
(c)
Aid for agriculturally related industries; financial assistance

It is the declared policy of the Congress that the Government, through the Small Business Administration, should aid and assist small business concerns which are engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries; and the financial assistance programs authorized by this chapter are also to be used to assist such concerns.

(d)
Use of assistance programs to establish, preserve, and strengthen small business concerns
(1) The assistance programs authorized by sections 636(i) and 636(j) of this title are to be utilized to assist in the establishment, preservation, and strengthening of small business concerns and improve the managerial skills employed in such enterprises, with special attention to small business concerns (1) located in urban or rural areas with high proportions of unemployed or low-income individuals; or (2) owned by low-income individuals; and to mobilize for these objectives private as well as public managerial skills and resources.
(2)
(A)
With respect to the programs authorized by section 636(j) of this title, the Congress finds—
(i) that ownership and control of productive capital is concentrated in the economy of the United States and certain groups, therefore, own and control little productive capital;
(ii) that certain groups in the United States own and control little productive capital because they have limited opportunities for small business ownership;
(iii) that the broadening of small business ownership among groups that presently own and control little productive capital is essential to provide for the well-being of this Nation by promoting their increased participation in the free enterprise system of the United States;
(iv) that such development of business ownership among groups that presently own and control little productive capital will be greatly facilitated through the creation of a small business ownership development program, which shall provide services, including, but not limited to, financial, management, and technical assistance.1
1 So in original. The period probably should be a semicolon.
(v) that the power to let Federal contracts pursuant to section 637(a) of this title can be an effective procurement assistance tool for development of business ownership among groups that own and control little productive capital; and
(vi) that the procurement authority under section 637(a) of this title shall be used only as a tool for developing business ownership among groups that own and control little productive capital.
(B)
It is therefore the purpose of the programs authorized by section 636(j) of this title to—
(i) foster business ownership and development by individuals in groups that own and control little productive capital; and
(ii) promote the competitive viability of such firms in the marketplace by creating a small business and capital ownership development program to provide such available financial, technical, and management assistance as may be necessary.
(e)
Assistance to victims of floods, etc., and those displaced as result of federally aided construction programs

Further, it is the declared policy of the Congress that the Government should aid and assist victims of floods and other catastrophes, and small-business concerns which are displaced as a result of federally aided construction programs.

(f)
Findings; purpose
(1)
with 2
2 So in original. Probably should be capitalized.
respect to the Administration’s business development programs the Congress finds—
(A) that the opportunity for full participation in our free enterprise system by socially and economically disadvantaged persons is essential if we are to obtain social and economic equality for such persons and improve the functioning of our national economy;
(B) that many such persons are socially disadvantaged because of their identification as members of certain groups that have suffered the effects of discriminatory practices or similar invidious circumstances over which they have no control;
(C) that such groups include, but are not limited to, Black Americans, Hispanic Americans, Native Americans, Indian tribes, Asian Pacific Americans, Native Hawaiian Organizations, and other minorities;
(D) that it is in the national interest to expeditiously ameliorate the conditions of socially and economically disadvantaged groups;
(E) that such conditions can be improved by providing the maximum practicable opportunity for the development of small business concerns owned by members of socially and economically disadvantaged groups;
(F) that such development can be materially advanced through the procurement by the United States of articles, equipment, supplies, services, materials, and construction work from such concerns; and
(G) that such procurements also benefit the United States by encouraging the expansion of suppliers for such procurements, thereby encouraging competition among such suppliers and promoting economy in such procurements.
(2)
It is therefore the purpose of section 637(a) of this title to—
(A) promote the business development of small business concerns owned and controlled by socially and economically disadvantaged individuals so that such concerns can compete on an equal basis in the American economy;
(B) promote the competitive viability of such concerns in the marketplace by providing such available contract, financial, technical, and mangement 3
3 So in original. Probably should be “management”.
assistance as may be necessary; and
(C) clarify and expand the program for the procurement by the United States of articles, supplies, services, materials, and construction work from small business concerns owned by socially and economically disadvantaged individuals.
(g)
Assistance to disaster victims under disaster loan program

In administering the disaster loan program authorized by section 636 of this title, to the maximum extent possible, the Administration shall provide assistance and counseling to disaster victims in filing applications, providing information relevant to loan processing, and in loan closing and prompt disbursement of loan proceeds and shall give the disaster program a high priority in allocating funds for administrative expenses.

(h)
Assistance to women owned business
(1)
With respect to the programs and activities authorized by this chapter, the Congress finds that—
(A) women owned business has become a major contributor to the American economy by providing goods and services, revenues, and jobs;
(B) over the past two decades there have been substantial gains in the social and economic status of women as they have sought economic equality and independence;
(C) despite such progress, women, as a group, are subjected to discrimination in entrepreneurial endeavors due to their gender;
(D) such discrimination takes many overt and subtle forms adversely impacting the ability to raise or secure capital, to acquire managerial talents, and to capture market opportunities;
(E) it is in the national interest to expeditiously remove discriminatory barriers to the creation and development of small business concerns owned and controlled by women;
(F) the removal of such barriers is essential to provide a fair opportunity for full participation in the free enterprise system by women and to further increase the economic vitality of the Nation;
(G) increased numbers of small business concerns owned and controlled by women will directly benefit the United States Government by expanding the potential number of suppliers of goods and services to the Government; and
(H) programs and activities designed to assist small business concerns owned and controlled by women must be implemented in such a way as to remove such discriminatory barriers while not adversely affecting the rights of socially and economically disadvantaged individuals.
(2)
It is, therefore, the purpose of those programs and activities conducted under the authority of this chapter that assist women entrepreneurs to—
(A) vigorously promote the legitimate interests of small business concerns owned and controlled by women;
(B) remove, insofar as possible, the discriminatory barriers that are encountered by women in accessing capital and other factors of production; and
(C) require that the Government engage in a systematic and sustained effort to identify, define and analyze those discriminatory barriers facing women and that such effort directly involve the participation of women business owners in the public/private sector partnership.
(i)
Prohibition on use of funds for individuals not lawfully within United States

None of the funds made available pursuant to this chapter may be used to provide any direct benefit or assistance to any individual in the United States if the Administrator or the official to which the funds are made available receives notification that the individual is not lawfully within the United States.

(j)
Contract bundling
In complying with the statement of congressional policy expressed in subsection (a), relating to fostering the participation of small business concerns in the contracting opportunities of the Government, each Federal agency, to the maximum extent practicable, shall—
(1) comply with congressional intent to foster the participation of small business concerns as prime contractors, subcontractors, and suppliers;
(2) structure its contracting requirements to facilitate competition by and among small business concerns, taking all reasonable steps to eliminate obstacles to their participation; and
(3) avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors.
(Pub. L. 85–536, § 2[2], July 18, 1958, 72 Stat. 384; Pub. L. 87–70, title III, § 305(b), June 30, 1961, 75 Stat. 167; Pub. L. 87–305, § 6, Sept. 26, 1961, 75 Stat. 667; Pub. L. 93–386, § 2(a)(1), Aug. 23, 1974, 88 Stat. 742; Pub. L. 94–305, title I, § 112(a), June 4, 1976, 90 Stat. 667; Pub. L. 95–507, title II, §§ 201, 203, Oct. 24, 1978, 92 Stat. 1760, 1763; Pub. L. 96–302, title I, § 118(a), July 2, 1980, 94 Stat. 840; Pub. L. 99–272, title XVIII, § 18015(a), Apr. 7, 1986, 100 Stat. 370; Pub. L. 100–418, title VIII, § 8002, Aug. 23, 1988, 102 Stat. 1553; Pub. L. 100–533, title I, § 101, Oct. 25, 1988, 102 Stat. 2689; Pub. L. 100–590, title I, § 118, Nov. 3, 1988, 102 Stat. 2999; Pub. L. 100–656, title II, §§ 204, 207(b), Nov. 15, 1988, 102 Stat. 3859, 3861; Pub. L. 101–37, § 6(c), June 15, 1989, 103 Stat. 72; Pub. L. 103–403, title VI, § 609, Oct. 22, 1994, 108 Stat. 4204; Pub. L. 105–135, title IV, § 411, Dec. 2, 1997, 111 Stat. 2617; Pub. L. 111–240, title I, § 1203(d), Sept. 27, 2010, 124 Stat. 2522.)
§ 631a.
Congressional declaration of small business economic policy
(a)
Foster small business

For the purpose of preserving and promoting a competitive free enterprise economic system, Congress hereby declares that it is the continuing policy and responsibility of the Federal Government to use all practical means and to take such actions as are necessary, consistent with its needs and obligations and other essential considerations of national policy, to implement and coordinate all Federal department, agency, and instrumentality policies, programs, and activities in order to: foster the economic interests of small businesses; insure a competitive economic climate conducive to the development, growth and expansion of small businesses; establish incentives to assure that adequate capital and other resources at competitive prices are available to small businesses; reduce the concentration of economic resources and expand competition; and provide an opportunity for entrepreneurship, inventiveness, and the creation and growth of small businesses.

(b)
Capital availability to small business

Congress further declares that the Federal Government is committed to a policy of utilizing all reasonable means, consistent with the overall economic policy goals of the Nation and the preservation of the competitive free enterprise system of the Nation, to establish private sector incentives that will help assure that adequate capital at competitive prices is available to small businesses. To fulfill this policy, departments, agencies, and instrumentalities of the Federal Government shall use all reasonable means to coordinate, create, and sustain policies and programs which promote investment in small businesses, including those investments which expand employment opportunities and which foster the effective and efficient use of human and natural resources in the economy of the Nation.

(Pub. L. 96–302, title III, § 302, July 2, 1980, 94 Stat. 848.)
§ 631b.
Reports to Congress; state of small business
(a)
Report on Small Business and Competition
The President shall transmit to the Congress not later than January 20 of each year a Report on Small Business and Competition which shall—
(1) examine the current role of small business in the economy on an industry-by-industry basis;
(2) present current and historical data on production, employment, investment, population, job creation and retention, annual business failures, annual business startups, and other economic variables for small business in the economy as a whole and for small business in each sector of the economy, with, to the extent practicable, specific statistics divided as to urban, suburban, and rural areas;
(3) identify economic trends which will or may affect the small business sector and the state of competition;
(4) examine the effects on small business and competition of policies, programs, and activities, including, but not limited to the Internal Revenue Code [26 U.S.C. 1 et seq.], the Employee Retirement Income Security Act [29 U.S.C. 1001 et seq.], the Securities Act of 1933 [15 U.S.C. 77a et seq.], and the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.], and regulations promulgated thereunder; identify problems generated by such policies, programs, and activities; and recommend legislative and administrative solutions to such problems; and
(5) recommend a program for carrying out the policy declared in section 631a of this title, together with such recommendations for legislation as he may deem necessary or desirable.
(b)
Appendix to report

The President also shall transmit simultaneously as an appendix to such annual report, a report, by agency and department, on the total dollar value of all Federal contracts exceeding $10,000 in amount and the dollar amount (including the subcontracts thereunder in excess of $10,000) awarded to small, minority-owned, female-owned, and veteran-owned businesses.

(c)
Supplementary reports

The President may transmit from time to time to the Congress reports supplementary to the Report on Small Business and Competition, each of which shall include such supplementary or revised recommendations as he may deem necessary or desirable to achieve the policy declared in section 631a of this title.

(d)
Referral to Congressional committees

The Report on Small Business and Competition and all supplementary reports transmitted under subsections (b) and (c) of this section shall, when transmitted to Congress, be referred to the Senate Select Committee on Small Business and the Committee on Small Business of the House of Representatives.

(e)
Small business concerns owned by disadvantaged individuals and by women 1
1 See 1988 Amendment note below.
The information and data required to be reported pursuant to subsection (a) shall separately detail those portions of such information and data that are relevant to—
(1) small business concerns owned and controlled by socially and economically disadvantaged individuals, by gender, as defined pursuant to section 637(d) of this title;
(2) small business concerns owned and controlled by women; and
(3)2
2 So in original. Two pars. (3) have been enacted.
qualified HUBZone small business concern (as defined in section 632(p) 3
3 See References in Text note below.
of this title).
(3)2 small business concerns owned and controlled by veterans, as defined in section 632(q) of this title, and small business concerns owned and controlled by service-disabled veterans, as defined in such section 632(q) of this title.
(Pub. L. 96–302, title III, § 303, July 2, 1980, 94 Stat. 848; Pub. L. 100–533, title V, § 503, Oct. 25, 1988, 102 Stat. 2697; Pub. L. 100–590, title I, § 124, Nov. 3, 1988, 102 Stat. 3000; Pub. L. 101–574, title III, § 305, Nov. 15, 1990, 104 Stat. 2829; Pub. L. 105–135, title VI, § 604(c), title VII, § 705, Dec. 2, 1997, 111 Stat. 2633, 2637; Pub. L. 106–50, title VI, § 602, Aug. 17, 1999, 113 Stat. 248.)
§ 631c.
Small Business Manufacturing Task Force
(a)
Establishment

The Administrator of the Small Business Administration (referred to in this subtitle 1

1 See References in Text note below.
as the “Administrator”) shall establish a Small Business Manufacturing Task Force (referred to in this section as the “Task Force”) to address the concerns of small manufacturers.

(b)
Chair

The Administrator shall assign a member of the Task Force to serve as chair of the Task Force.

(c)
Duties
The Task Force shall—
(1) evaluate and identify whether programs and services are sufficient to serve the needs of small manufacturers;
(2) actively promote the programs and services of the Small Business Administration that serve small manufacturers; and
(3) identify and study the unique conditions facing small manufacturers and develop and propose policy initiatives to support and assist small manufacturers.
(d)
Meetings
(1)
Frequency

The Task Force shall meet not less than 4 times per year, and more frequently if necessary to perform its duties.

(2)
Quorum

A majority of the members of the Task Force shall constitute a quorum to approve recommendations or reports.

(e)
Personnel matters
(1)
Compensation of members

Each member of the Task Force shall serve without compensation in addition to that received for services rendered as an officer or employee of the United States.

(2)
Detail of SBA employees

Any employee of the Small Business Administration may be detailed to the Task Force without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.

(f)
Report
Not later than 1 year after December 8, 2004, and annually thereafter, the Task Force shall submit a report containing the findings and recommendations of the task force to—
(1) the President;
(2) the Committee on Small Business and Entrepreneurship of the Senate; and
(3) the Committee on Small Business of the House of Representatives.
(Pub. L. 108–447, div. K, title I, § 147, Dec. 8, 2004, 118 Stat. 3455.)
§ 632.
Definitions
(a)
Small business concerns
(1)
In general

For the purposes of this chapter, a small-business concern, including but not limited to enterprises that are engaged in the business of production of food and fiber, ranching and raising of livestock, aquaculture, and all other farming and agricultural related industries, shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation.

(2)
Establishment of size standards
(A)
In general

In addition to the criteria specified in paragraph (1) and subject to the requirements specified under subparagraph (C), the Administrator may specify detailed definitions or standards by which a business concern may be determined to be a small business concern for the purposes of this chapter or any other Act.

(B)
Additional criteria

The standards described in paragraph (1) may utilize number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors.

(C)
Requirements
Unless specifically authorized by statute, no Federal department (including the Administration when acting pursuant to subparagraph (A)) or agency may prescribe a size standard for categorizing a business concern as a small business concern, unless such proposed size standard—
(i) is proposed after an opportunity for public notice and comment;
(ii)
provides for determining—
(I) the size of a manufacturing concern as measured by the manufacturing concern’s average employment based upon employment during each of the manufacturing concern’s pay periods for the preceding 24 months;(II) the size of a business concern providing services on the basis of the annual average gross receipts of the business concern over a period of not less than 5 years;(III) the size of other business concerns on the basis of data over a period of not less than 3 years; or(IV) other appropriate factors; and
(iii) is approved by the Administrator.
(3)
Variation by industry and consideration of other factors

When establishing or approving any size standard pursuant to paragraph (2), the Administrator shall ensure that the size standard varies from industry to industry to the extent necessary to reflect the differing characteristics of the various industries and consider other factors deemed to be relevant by the Administrator.

(4)
Exclusion of certain security expenses from consideration for purpose of small business size standards
(A)
Determination required

Not later than 30 days after January 6, 2006, the Administrator shall review the application of size standards established pursuant to paragraph (2) to small business concerns that are performing contracts in qualified areas and determine whether it would be fair and appropriate to exclude from consideration in the average annual gross receipts of such small business concerns any payments made to such small business concerns by Federal agencies to reimburse such small business concerns for the cost of subcontracts entered for the sole purpose of providing security services in a qualified area.

(B)
Action required
Not later than 60 days after January 6, 2006, the Administrator shall either—
(i) initiate an adjustment to the size standards, as described in subparagraph (A), if the Administrator determines that such an adjustment would be fair and appropriate; or
(ii) provide a report to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives explaining in detail the basis for the determination by the Administrator that such an adjustment would not be fair and appropriate.
(C)
Qualified areas
In this paragraph, the term “qualified area” means—
(i) Iraq,
(ii) Afghanistan, and
(iii) any foreign country which included a combat zone, as that term is defined in section 112(c)(2) of title 26, at the time of performance of the relevant Federal contract or subcontract.
(5)
Alternative size standard
(A)
In general

The Administrator shall establish an alternative size standard for applicants for business loans under section 636(a) of this title and applicants for development company loans under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.), that uses maximum tangible net worth and average net income as an alternative to the use of industry standards.

(B)
Interim rule
Until the date on which the alternative size standard established under subparagraph (A) is in effect, an applicant for a business loan under section 636(a) of this title or an applicant for a development company loan under title V of the Small Business Investment Act of 1958 may be eligible for such a loan if—
(i) the maximum tangible net worth of the applicant is not more than $15,000,000; and
(ii) the average net income after Federal income taxes (excluding any carry-over losses) of the applicant for the 2 full fiscal years before the date of the application is not more than $5,000,000.
(6)
Proposed rulemaking
In conducting rulemaking to revise, modify or establish size standards pursuant to this section, the Administrator shall consider, and address, and make publicly available as part of the notice of proposed rulemaking and notice of final rule each of the following:
(A) a detailed description of the industry for which the new size standard is proposed;
(B) an analysis of the competitive environment for that industry;
(C) the approach the Administrator used to develop the proposed standard including the source of all data used to develop the proposed rule making; and
(D) the anticipated effect of the proposed rulemaking on the industry, including the number of concerns not currently considered small that would be considered small under the proposed rule making and the number of concerns currently considered small that would be deemed other than small under the proposed rulemaking.
(7)
Common size standards

In carrying out this subsection, the Administrator may establish or approve a single size standard for a grouping of 4-digit North American Industry Classification System codes only if the Administrator makes publicly available, not later than the date on which such size standard is established or approved, a justification demonstrating that such size standard is appropriate for each individual industry classification included in the grouping.

(8)
Number of size standards

The Administrator shall not limit the number of size standards established pursuant to paragraph (2), and shall assign the appropriate size standard to each North American Industry Classification System Code.

(9)
Petitions for reconsideration of size standards
(A)
In general

A person may file a petition for reconsideration with the Office of Hearings and Appeals (as established under section 634(i) of this title) of a size standard revised, modified, or established by the Administrator pursuant to this subsection.

(B)
Time limit

A person filing a petition for reconsideration described in subparagraph (A) shall file such petition not later than 30 days after the publication in the Federal Register of the notice of final rule to revise, modify, or establish size standards described in paragraph (6).

(C)
Process for agency review

The Office of Hearings and Appeals shall use the same process it uses to decide challenges to the size of a small business concern to decide a petition for review pursuant to this paragraph.

(D)
Judicial review

The publication of a final rule in the Federal Register described in subparagraph (B) shall be considered final agency action for purposes of seeking judicial review. Filing a petition for reconsideration under subparagraph (A) shall not be a condition precedent to judicial review of any such size standard.

(E)
Rules or guidance

The Office of Hearings and Appeals shall begin accepting petitions for reconsideration described in subparagraph (A) after the date on which the Administration issues a rule or other guidance implementing this paragraph. Notwithstanding the provisions of subparagraph (B), petitions for reconsideration of size standards revised, modified, or established in a Federal Register final rule published between November 25, 2015, and the effective date of such rule or other guidance shall be considered timely if filed within 30 days of such effective date.

(b)
“Agency” defined

For purposes of this chapter, any reference to an agency or department of the United States, and the term “Federal agency”, shall have the meaning given the term “agency” by section 551(1) of title 5, but does not include the United States Postal Service or the Government Accountability Office.

(c)
Qualified employee trust; eligibility for loan guarantee; “qualified employee trust” defined; regulations for treatment of trust as qualified employee trust
(1) For purposes of this chapter, a qualified employee trust shall be eligible for any loan guarantee under section 636(a) of this title with respect to a small business concern on the same basis as if such trust were the same legal entity as such concern.
(2)
For purposes of this chapter, the term “qualified employee trust” means, with respect to a small business concern, a trust—
(A)
which forms part of an employee stock ownership plan (as defined in section 4975(e)(7) of title 26)—
(i) which is maintained by such concern, and
(ii) which provides that each participant is entitled to direct the plan trustee as to the manner of how to vote the qualified employer securities (as defined in section 4975(e)(8) of title 26), which are allocated to the account of such participant with respect to a corporate matter which (by law or charter) must be decided by a vote conducted in accordance with section 409(e) of the title 26; and
(B)
in the case of any loan guarantee under section 636(a) of this title, the trustee of which enters into an agreement with the Administrator which is binding on the trust and on such small business concern and which provides that—
(i) the loan guaranteed under section 636(a) of this title shall be used solely for the purchase of qualifying employer securities of such concern,
(ii) all funds acquired by the concern in such purchase shall be used by such concern solely for the purposes for which such loan was guaranteed,
(iii) such concern will provide such funds as may be necessary for the timely repayment of such loan, and the property of such concern shall be available as security for repayment of such loan, and
(iv) all qualifying employer securities acquired by such trust in such purchase shall be allocated to the accounts of participants in such plan who are entitled to share in such allocation, and each participant has a nonforfeitable right, not later than the date such loan is repaid, to all such qualifying employer securities which are so allocated to the participant’s account.
(3)
Under regulations which may be prescribed by the Administrator, a trust may be treated as a qualified employee trust with respect to a small business concern if—
(A) the trust is maintained by an employee organization which represents at least 51 percent of the employees of such concern, and
(B)
such concern maintains a plan—
(i) which is an employee benefit plan which is designed to invest primarily in qualifying employer securities (as defined in section 4975(e)(8) of title 26),
(ii) which provides that each participant in the plan is entitled to direct the plan as to the manner in which voting rights under qualifying employer securities which are allocated to the account of such participant are to be exercised with respect to a corporate matter which (by law or charter) must be decided by a majority vote of the outstanding common shares voted,
(iii) which provides that each participant who is entitled to distribution from the plan has a right, in the case of qualifying employer securities which are not readily tradeable on an established market, to require that the concern repurchase such securities under a fair valuation formula, and
(iv) which meets such other requirements (similar to requirements applicable to employee stock ownership plans as defined in section 4975(e)(7) of title 26) as the Administrator may prescribe, and
(C) in the case of a loan guarantee under section 636(a) of this title, such organization enters into an agreement with the Administration which is described in paragraph (2)(B).
(d)
“Qualified Indian tribe” defined

For purposes of section 636 of this title, the term “qualified Indian tribe” means an Indian tribe as defined in section 5304(a) 1

1 So in original. Probably should be a reference to subsec. “(e)” of section 5304, which defines Indian tribe.
of title 25, which owns and controls 100 per centum of a small business concern.

(e)
“Public or private organization for the handicapped” defined
For purposes of section 636 of this title, the term “public or private organization for the handicapped” means one—
(1) which is organized under the laws of the United States or of any State, operated in the interest of handicapped individuals, the net income of which does not inure in whole or in part to the benefit of any shareholder or other individuals;
(2) which complies with any applicable occupational health and safety standard prescribed by the Secretary of Labor; and
(3)
(f)
“Handicapped individual” defined
For purposes of section 636 of this title, the term “handicapped individual” means an individual—
(1) who has a physical, mental, or emotional impairment, defect, ailment, disease, or disability of a permanent nature which in any way limits the selection of any type of employment for which the person would otherwise be qualified or qualifiable; or
(2) who is a service-disabled veteran.
(g)
“Energy measures” defined
For purposes of section 636 of this title, the term “energy measures” includes—
(1) solar thermal energy equipment which is either of the active type based upon mechanically forced energy transfer or of the passive type based on convective, conductive, or radiant energy transfer or some combination of these types;
(2) photovoltaic cells and related equipment;
(3) a product or service the primary purpose of which is conservation of energy through devices or techniques which increase the energy efficiency of existing equipment, methods of operation, or systems which use fossil fuels, and which is on the Energy Conservation Measures list of the Secretary of Energy or which the Administrator determines to be consistent with the intent of this subsection;
(4) equipment the primary purpose of which is production of energy from wood, biological waste, grain, or other biomass source of energy;
(5) equipment the primary purpose of which is industrial cogeneration of energy, district heating, or production of energy from industrial waste;
(6) hydroelectric power equipment;
(7) wind energy conversion equipment; and
(8) engineering, architectural, consulting, or other professional services which are necessary or appropriate to aid citizens in using any of the measures described in paragraph (1) through (7).
(h)
“Credit elsewhere” defined
The term “credit elsewhere” means—
(1)
for the purposes of this chapter (except as used in section 636(b) of this title), the availability of credit on reasonable terms and conditions to the individual loan applicant from non-Federal, non-State, or non-local government sources, considering factors associated with conventional lending practices, including—
(A) the business industry in which the loan applicant operates;
(B) whether the loan applicant is an enterprise that has been in operation for a period of not more than 2 years;
(C) the adequacy of the collateral available to secure the requested loan;
(D) the loan term necessary to reasonably assure the ability of the loan applicant to repay the debt from the actual or projected cash flow of the business; and
(E) any other factor relating to the particular credit application, as documented in detail by the lender, that cannot be overcome except through obtaining a Federal loan guarantee under prudent lending standards; and
(2) for the purposes of section 636(b) of this title, the availability of credit on reasonable terms and conditions from non-Federal sources taking into consideration the prevailing rates and terms in the community in or near where the applicant business concern transacts business, or the applicant homeowner resides, for similar purposes and periods of time.
(i)
“Homeowners” defined

For purposes of section 636 of this title, the term “homeowners” includes owners and lessees of residential property and also includes personal property.

(j)
“Small agricultural cooperative” defined

For the purposes of this chapter, the term “small agricultural cooperative” means an association (corporate or otherwise) acting pursuant to the provisions of the Agricultural Marketing Act (12 U.S.C. 1141j), whose size does not exceed the size standard established by the Administration for other similar agricultural small business concerns. In determining such size, the Administration shall regard the association as a business concern and shall not include the income or employees of any member shareholder of such cooperative.

(k)
“Disaster” defined
(1) For the purposes of this chapter, the term “disaster” means a sudden event which causes severe damage including, but not limited to, floods, hurricanes, tornadoes, earthquakes, fires, explosions, volcanoes, windstorms, landslides or mudslides, tidal waves, commercial fishery failures or fishery resource disasters (as determined by the Secretary of Commerce under section 4107(b) of title 16), ocean conditions resulting in the closure of customary fishing waters, riots, civil disorders or other catastrophes, except it does not include economic dislocations.
(2)
For purposes of section 636(b)(2) of this title, the term “disaster” includes—
(A) drought;
(B) below average water levels in the Great Lakes, or on any body of water in the United States that supports commerce by small business concerns; and
(C) ice storms and blizzards.
(l)
“Computer crime” defined
For purposes of this chapter—
(1)
2
2 So in original. No par. (2) has been enacted.
the term “computer crime” means—
(A) any crime committed against a small business concern by means of the use of a computer; and
(B) any crime involving the illegal use of, or tampering with, a computer owned or utilized by a small business concern.
(m)
Definitions relating to contracting
In this chapter:
(1)
Prime contract

The term “prime contract” has the meaning given such term in section 8701(4) of title 41.

(2)
Prime contractor

The term “prime contractor” has the meaning given such term in section 8701(5) of title 41.

(3)
Simplified acquisition threshold

The term “simplified acquisition threshold” has the meaning given such term in section 134 of title 41.

(4)
Micro-purchase threshold

The term “micro-purchase threshold” has the meaning given such term in section 1902 of title 41.

(5)
Total purchases and contracts for property and services

The term “total purchases and contracts for property and services” shall mean total number and total dollar amount of contracts and orders for property and services.

(n)
“Small business concern owned and controlled by women” defined
For the purposes of this chapter, a small business concern is a small business concern owned and controlled by women if—
(1) at least 51 percent of small business concern is owned by one or more women or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and
(2) the management and daily business operations of the business are controlled by one or more women.
(o)
Definitions of bundling of contract requirements and related terms
In this chapter:
(1)
Bundled contract

The term “bundled contract” means a contract that is entered into to meet requirements that are consolidated in a bundling of contract requirements.

(2)
Bundling of contract requirements
The term “bundling of contract requirements” means consolidating 2 or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small-business concern due to—
(A) the diversity, size, or specialized nature of the elements of the performance specified;
(B) the aggregate dollar value of the anticipated award;
(C) the geographical dispersion of the contract performance sites; or
(D) any combination of the factors described in subparagraphs (A), (B), and (C).
(3)
Separate smaller contract

The term “separate smaller contract”, with respect to a bundling of contract requirements, means a contract that has been performed by 1 or more small business concerns or was suitable for award to 1 or more small business concerns.

(p)
Qualified HUBZone small business concern

In this chapter, the term “qualified HUBZone small business concern” has the meaning given such term in section 657a(b) of this title.

(q)
Definitions relating to veterans
In this chapter, the following definitions apply:
(1)
Service-disabled veteran

The term “service-disabled veteran” means a veteran with a disability that is service-connected (as defined in section 101(16) of title 38).

(2)
Small business concern owned and controlled by service-disabled veterans
The term “small business concern owned and controlled by service-disabled veterans” means any of the following:
(A)
A small business concern—
(i) not less than 51 percent of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock (not including any stock owned by an ESOP) of which is owned by one or more service-disabled veterans; and
(ii) the management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran.
(B)
A small business concern—
(i) not less than 51 percent of which is owned by one or more service-disabled veterans with a disability that is rated by the Secretary of Veterans Affairs as a permanent and total disability who are unable to manage the daily business operations of such concern; or
(ii) in the case of a publicly owned business, not less than 51 percent of the stock (not including any stock owned by an ESOP) of which is owned by one or more such veterans.
(C)
(i)
During the time period described in clause (ii), a small business concern that was a small business concern described in subparagraph (A) or (B) immediately prior to the death of a service-disabled veteran who was the owner of the concern, the death of whom causes the concern to be less than 51 percent owned by one or more service-disabled veterans, if—
(I) the surviving spouse of the deceased veteran acquires such veteran’s ownership interest in such concern;(II) such veteran had a service-connected disability (as defined in section 101(16) of title 38); and(III) immediately prior to the death of such veteran, and during the period described in clause (ii), the small business concern is included in the database described in section 8127(f) of title 38.
(ii)
The time period described in this clause is the time period beginning on the date of the veteran’s death and ending on the earlier of—
(I) the date on which the surviving spouse remarries;(II) the date on which the surviving spouse relinquishes an ownership interest in the small business concern; or(III)
the date that—
(aa) in the case of a surviving spouse of a veteran with a service-connected disability rated as 100 percent disabling or who dies as a result of a service-connected disability, is 10 years after the date of the death of the veteran; or(bb) in the case of a surviving spouse of a veteran with a service-connected disability rated as less than 100 percent disabling who does not die as a result of a service-connected disability, is 3 years after the date of the death of the veteran.
(3)
Small business concern owned and controlled by veterans
The term “small business concern owned and controlled by veterans” means a small business concern—
(A) not less than 51 percent of which is owned by one or more veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and
(B) the management and daily business operations of which are controlled by one or more veterans.
(4)
Veteran

The term “veteran” has the meaning given the term in section 101(2) of title 38.

(5)
Relief from time limitations
(A)
In general
Any time limitation on any qualification, certification, or period of participation imposed under this chapter on any program that is available to small business concerns shall be extended for a small business concern that—
(i)
is owned and controlled by—
(I) a veteran who was called or ordered to active duty under a provision of law specified in section 101(a)(13)(B) of title 10 on or after September 11, 2001; or(II) a service-disabled veteran who became such a veteran due to an injury or illness incurred or aggravated in the active military, naval, or air service during a period of active duty pursuant to a call or order to active duty under a provision of law referred to in subclause (I) on or after September 11, 2001; and
(ii) was subject to the time limitation during such period of active duty.
(B)
Duration

Upon submission of proper documentation to the Administrator, the extension of a time limitation under subparagraph (A) shall be equal to the period of time that such veteran who owned or controlled such a concern was on active duty as described in that subparagraph.

(C)
Exception for programs subject to Federal Credit Reform Act of 1990

The provisions of subparagraphs (A) and (B) shall not apply to any programs subject to the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).

(6)
ESOP

The term “ESOP” has the meaning given the term “employee stock ownership plan” in section 4975(e)(7) of title 26.

(7)
Surviving spouse

The term “surviving spouse” has the meaning given such term in section 101(3) of title 38.

(r)
Definitions relating to small business lending companies
As used in section 650 of this title:
(1)
Small business lending company

The term “small business lending company” means a business concern that is authorized by the Administrator to make loans pursuant to section 636(a) of this title and whose lending activities are not subject to regulation by any Federal or State regulatory agency.

(2)
Non-Federally regulated lender
The term “non-Federally regulated lender” means a business concern if—
(A) such concern is authorized by the Administrator to make loans under section 636 of this title;
(B) such concern is subject to regulation by a State; and
(C) the lending activities of such concern are not regulated by any Federal banking authority.
(s)
Major disaster

In this chapter, the term “major disaster” has the meaning given that term in section 5122 of title 42.

(t)
Small business development center

In this chapter, the term “small business development center” means a small business development center described in section 648 of this title.

(u)
Region of the Administration

In this chapter, the term “region of the Administration” means the geographic area served by a regional office of the Administration established under section 633(a) of this title.

(v)
Multiple award contract
In this chapter, the term “multiple award contract” means—
(1) a multiple award task order contract or delivery order contract that is entered into under the authority of sections 4101, 4103, 4105, and 4106 of title 41; and
(2) any other indefinite delivery, indefinite quantity contract that is entered into by the head of a Federal agency with 2 or more sources pursuant to the same solicitation.
(w)
Presumption
(1)
In general

In every contract, subcontract, cooperative agreement, cooperative research and development agreement, or grant which is set aside, reserved, or otherwise classified as intended for award to small business concerns, there shall be a presumption of loss to the United States based on the total amount expended on the contract, subcontract, cooperative agreement, cooperative research and development agreement, or grant whenever it is established that a business concern other than a small business concern willfully sought and received the award by misrepresentation.

(2)
Deemed certifications
The following actions shall be deemed affirmative, willful, and intentional certifications of small business size and status:
(A) Submission of a bid or proposal for a Federal grant, contract, subcontract, cooperative agreement, or cooperative research and development agreement reserved, set aside, or otherwise classified as intended for award to small business concerns.
(B) Submission of a bid or proposal for a Federal grant, contract, subcontract, cooperative agreement, or cooperative research and development agreement which in any way encourages a Federal agency to classify the bid or proposal, if awarded, as an award to a small business concern.
(C) Registration on any Federal electronic database for the purpose of being considered for award of a Federal grant, contract, subcontract, cooperative agreement, or cooperative research agreement, as a small business concern.
(3)
Certification by signature of responsible official
(A)
In general

Each solicitation, bid, or application for a Federal contract, subcontract, or grant shall contain a certification concerning the small business size and status of a business concern seeking the Federal contract, subcontract, or grant.

(B)
Content of certifications

A certification that a business concern qualifies as a small business concern of the exact size and status claimed by the business concern for purposes of bidding on a Federal contract or subcontract, or applying for a Federal grant, shall contain the signature of an authorized official on the same page on which the certification is contained.

(4)
Regulations

The Administrator shall promulgate regulations to provide adequate protections to individuals and business concerns from liability under this subsection in cases of unintentional errors, technical malfunctions, and other similar situations.

(x)
Annual certification
(1)
In general

Each business certified as a small business concern under this chapter shall annually certify its small business size and, if appropriate, its small business status, by means of a confirming entry on the Online Representations and Certifications Application database of the Administration, or any successor thereto.

(2)
Regulations
Not later than 1 year after September 27, 2010, the Administrator, in consultation with the Inspector General and the Chief Counsel for Advocacy of the Administration, shall promulgate regulations to ensure that—
(A) no business concern continues to be certified as a small business concern on the Online Representations and Certifications Application database of the Administration, or any successor thereto, without fulfilling the requirements for annual certification under this subsection; and
(B) the requirements of this subsection are implemented in a manner presenting the least possible regulatory burden on small business concerns.
(y)
Policy on prosecutions of small business size and status fraud

Not later than 1 year after September 27, 2010, the Administrator, in consultation with the Attorney General, shall issue a Government-wide policy on prosecution of small business size and status fraud, which shall direct Federal agencies to appropriately publicize the policy.

(z)
Aquaculture business disaster assistance

Subject to section 647(a) of this title and notwithstanding section 647(b)(1) of this title, the Administrator may provide disaster assistance under section 636(b)(2) of this title to aquaculture enterprises that are small businesses.

(aa)
Venture capital operating company

In this chapter, the term “venture capital operating company” means an entity described in clause (i), (v), or (vi) of section 121.103(b)(5) of title 13, Code of Federal Regulations (or any successor thereto).

(bb)
Hedge fund

In this chapter, the term “hedge fund” has the meaning given that term in section 1851(h)(2) of title 12.

(cc)
Private equity firm

In this chapter, the term “private equity firm” has the meaning given the term “private equity fund” in section 1851(h)(2) of title 12.

(dd)
Definitions pertaining to subcontracting
In this chapter:
(1)
Subcontract

The term “subcontract” means a legally binding agreement between a contractor that is already under contract to another party to perform work, and a third party, hereinafter referred to as the subcontractor, for the subcontractor to perform a part, or all, of the work that the contractor has undertaken.

(2)
First tier subcontractor

The term “first tier subcontractor” means a subcontractor who has a subcontract directly with the prime contractor.

(3)
At any tier

The term “at any tier” means any subcontractor other than a subcontractor who is a first tier subcontractor.

(ee)
Puerto Rico business

In this chapter, the term “Puerto Rico business” means a small business concern that has its principal office located in the Commonwealth of Puerto Rico.

(ff)
Covered territory business
In this chapter, the term “covered territory business” means a small business concern that has its principal office located in one of the following:
(1) The United States Virgin Islands.
(2) American Samoa.
(3) Guam.
(4) The Northern Mariana Islands.
(Pub. L. 85–536, § 2[3], July 18, 1958, 72 Stat. 384; Pub. L. 94–305, title I, § 112(b), June 4, 1976, 90 Stat. 667; Pub. L. 95–507, title II, § 224(b), Oct. 24, 1978, 92 Stat. 1772; Pub. L. 96–302, title V, § 504, July 2, 1980, 94 Stat. 851; Pub. L. 96–481, title I, § 108, Oct. 21, 1980, 94 Stat. 2323; Pub. L. 97–35, title XIX, § 1903, Aug. 13, 1981, 95 Stat. 771; Pub. L. 98–270, title III, § 310, Apr. 18, 1984, 98 Stat. 161; Pub. L. 98–362, § 6, July 16, 1984, 98 Stat. 434; Pub. L. 98–473, title I, § 111A(b), Oct. 12, 1984, 98 Stat. 1966; Pub. L. 99–272, title XVIII, § 18016, Apr. 7, 1986, 100 Stat. 371; Pub. L. 99–500, § 101(c) [title X, § 921(f)], Oct. 18, 1986, 100 Stat. 1783–82, 1783–149, and Pub. L. 99–591, § 101(c) [title X, § 921(f)], Oct. 30, 1986, 100 Stat. 3341–82, 3341–149; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 99–661, div. A, title IX, formerly title IV, § 921(f), Nov. 14, 1986, 100 Stat. 3929, renumbered title IX, Pub. L. 100–26, § 3(5), Apr. 21, 1987, 101 Stat. 273; Pub. L. 100–26, § 10(b)(2), Apr. 21, 1987, 101 Stat. 288; Pub. L. 100–456, div. A, title VIII, § 845, Sept. 29, 1988, 102 Stat. 2027; Pub. L. 100–590, title I, § 119(b), Nov. 3, 1988, 102 Stat. 2999; Pub. L. 100–656, title VII, § 732, Nov. 15, 1988, 102 Stat. 3897; Pub. L. 101–510, div. A, title VIII, § 806(e)(1), Nov. 5, 1990, 104 Stat. 1592; Pub. L. 102–366, title II, § 222(a), Sept. 4, 1992, 106 Stat. 999; Pub. L. 103–355, title IV, § 4404(a), title VII, § 7106(d), Oct. 13, 1994, 108 Stat. 3349, 3376; Pub. L. 103–403, title III, § 301, Oct. 22, 1994, 108 Stat. 4187; Pub. L. 104–208, div. D, title I, § 104(b)(1), Sept. 30, 1996, 110 Stat. 3009–730; Pub. L. 105–135, title IV, § 412, title VI, § 602(a), Dec. 2, 1997, 111 Stat. 2617, 2627; Pub. L. 106–50, title I, § 103(a), title IV, § 401(a), Aug. 17, 1999, 113 Stat. 234, 243; Pub. L. 106–554, § 1(a)(9) [title VI, §§ 602–604, 611, 612(b)–615(a), title VIII, § 806(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A–697 to 2763A–701, 2763A–706; Pub. L. 108–271, § 8(b), July 7, 2004, 118 Stat. 814; Pub. L. 108–447, div. K, title I, §§ 151, 152(a)(1), (3)–(c)(1), 162, Dec. 8, 2004, 118 Stat. 3456, 3457, 3465; Pub. L. 109–59, title X, § 10203, Aug. 10, 2005, 119 Stat. 1933; Pub. L. 109–163, div. A, title VIII, §§ 844, 845(a)(1), Jan. 6, 2006, 119 Stat. 3389, 3390; Pub. L. 110–186, title II, § 205, Feb. 14, 2008, 122 Stat. 629; Pub. L. 110–234, title XII, §§ 12063(c)(1), 12071, May 22, 2008, 122 Stat. 1408, 1411; Pub. L. 110–246, § 4(a), title XII, §§ 12063(c)(1), 12071, June 18, 2008, 122 Stat. 1664, 2170, 2173; Pub. L. 111–240, title I, §§ 1116, 1202(b)(1), 1311, 1341, 1342, 1343(b), 1501, Sept. 27, 2010, 124 Stat. 2509, 2521, 2536, 2543–2545, 2550; Pub. L. 112–81, div. E, title LI, § 5107(b), Dec. 31, 2011, 125 Stat. 1829; Pub. L. 112–239, div. A, title XVI, §§ 1661, 1696(b)(1), Jan. 2, 2013, 126 Stat. 2083, 2090; Pub. L. 113–66, div. A, title XVI, § 1614(b), Dec. 26, 2013, 127 Stat. 949; Pub. L. 114–92, div. A, title VIII, §§ 866(a), 869(b), Nov. 25, 2015, 129 Stat. 929, 938; Pub. L. 114–187, title IV, § 412(a)(1), June 30, 2016, 130 Stat. 595; Pub. L. 114–328, div. A, title XVIII, §§ 1831(b), 1832(a), 1833(b), Dec. 23, 2016, 130 Stat. 2658, 2661; Pub. L. 115–91, div. A, title XVII, §§ 1701(a)(2), (3), 1702(b), Dec. 12, 2017, 131 Stat. 1795, 1796, 1803; Pub. L. 115–189, §§ 3(e), 4(a)(1), June 21, 2018, 132 Stat. 1496; Pub. L. 115–232, div. A, title VIII, §§ 861(a), 862(h), Aug. 13, 2018, 132 Stat. 1896, 1900; Pub. L. 115–324, § 2, Dec. 17, 2018, 132 Stat. 4444; Pub. L. 116–92, div. A, title VIII, § 876, Dec. 20, 2019, 133 Stat. 1528; Pub. L. 116–283, div. A, title VIII, §§ 862(b)(3)(A), 863(a), 866(a)(1), Jan. 1, 2021, 134 Stat. 3779, 3784, 3785.)
§ 633.
Small Business Administration
(a)
Creation; principal, branch, and regional offices

In order to carry out the policies of this chapter there is created an agency under the name “Small Business Administration” (herein referred to as the Administration), which Administration shall be under the general direction and supervision of the President and shall not be affiliated with or be within any other agency or department of the Federal Government. The principal office of the Administration shall be located in the District of Columbia. The Administration may establish such branch and regional offices in other places in the United States as may be determined by the Administrator of the Administration. As used in this chapter, the term “United States” includes the several States, the Territories and possessions of the United States, the Commonwealth of Puerto Rico, the Trust Territory of the Pacific Islands, and the District of Columbia.

(b)
Appointment of Administrator, Deputy Administrator, and Associate Administrators; duties of Administrator: preparation of data base and publication of economic indices and annual report; risk management database; computer security and education program
(1) The management of the Administration shall be vested in an Administrator who shall be appointed from civilian life by the President, by and with the advice and consent of the Senate, and who shall be a person of outstanding qualifications known to be familiar and sympathetic with small-business needs and problems. The Administrator shall not engage in any other business, vocation, or employment than that of serving as Administrator. In carrying out the programs administered by the Small Business Administration including its lending and guaranteeing functions, the Administrator shall not discriminate on the basis of sex or marital status against any person or small business concern applying for or receiving assistance from the Small Business Administration, and the Small Business Administration shall give special consideration to veterans of the Armed Forces of the United States and their survivors or dependents. The President also may appoint a Deputy Administrator, by and with the advice and consent of the Senate. The Administrator is authorized to appoint Associate Administrators (including the Associate Administrator specified in section 671 of this title) to assist in the execution of the functions vested in the Administration. One such Associate Administrator shall be the Associate Administrator for Veterans Business Development, who shall administer the Office of Veterans Business Development established under section 657b of this title. One of the Associate Administrators shall be designated at the time of his appointment as the Associate Administrator for Minority Small Business and Capital Ownership Development who shall be an employee in the competitive service or in the Senior Executive Service and a career appointee and shall be responsible to the Administrator for the formulation and execution of the policies and programs under sections 636(j) and 637(a) of this title which provide assistance to minority small business concerns. The Deputy Administrator shall be Acting Administrator of the Administration during the absence or disability of the Administrator or in the event of a vacancy in the office of the Administrator. One such Associate Administrator shall be the Associate Administrator for International Trade, who shall be the head of the Office of International Trade established under section 649 of this title. One such Associate Administrator shall be the Chief Hearing Officer, who shall administer the Office of Hearings and Appeals established under section 634(i) of this title.
(2)
The Administrator also shall be responsible for—
(A)
establishing and maintaining an external small business economic data base for the purpose of providing the Congress and the Administration information on the economic condition and the expansion or contraction of the small business sector. To that end, the Administrator shall publish on a regular basis national small business economic indices and, to the extent feasible, regional small business economic indices, which shall include, but need not be limited to, data on—
(i) employment, layoffs, and new hires;
(ii) number of business establishments and the types of such establishments such as sole proprietorships, corporations, and partnerships;
(iii) number of business formations and failures;
(iv) sales and new orders;
(v) back orders;
(vi) investment in plant and equipment;
(vii) changes in inventory and rate of inventory turnover;
(viii) sources and amounts of capital investment, including debt, equity, and internally generated funds;
(ix) debt to equity ratios;
(x) exports;
(xi) number and dollar amount of mergers and acquisitions by size of acquiring and acquired firm; and
(xii) concentration ratios; and
(B) publishing annually a report giving a comparative analysis and interpretation of the historical trends of the small business sector as reflected by the data acquired pursuant to subparagraph (A) of this subsection.
(3)
Risk management database.—
(A)
Establishment.—
The Administration shall establish, within the management system for the loan programs authorized by subsections (a) and (b) of section 636 of this title and title V of the Small Business Investment Act of 1958 [15 U.S.C. 695 et seq.], a management information system that will generate a database capable of providing timely and accurate information in order to identify loan underwriting, collections, recovery, and liquidation problems.
(B)
Information to be maintained.—
In addition to such other information as the Administration considers appropriate, the database established under subparagraph (A) shall, with respect to each loan program described in subparagraph (A), include information relating to—
(i) the identity of the institution making the guaranteed loan or issuing the debenture;
(ii) the identity of the borrower;
(iii) the total dollar amount of the loan or debenture;
(iv) the total dollar amount of government exposure in each loan;
(v) the district of the Administration in which the borrower has its principal office;
(vi) the principal line of business of the borrower, as identified by Standard Industrial Classification Code (or any successor to that system);
(vii) the delinquency rate for each program (including number of instances and days overdue);
(viii) the number and amount of repurchases, losses, and recoveries in each program;
(ix) the number of deferrals or forbearances in each program (including days and number of instances);
(x) comparisons on the basis of loan program, lender, district and region of the Administration, for all the data elements maintained; and
(xi) underwriting characteristics of each loan that has entered into default, including term, amount and type of collateral, loan-to-value and other actual and projected ratios, line of business, credit history, and type of loan.
(C)
Deadline for operational capability.—
The database established under subparagraph (A) shall—
(i) be operational not later than June 30, 1997; and
(ii) capture data beginning on the first day of the second quarter of fiscal year 1997 beginning after such date and thereafter.
(4)
(A)
The Administrator shall establish a small business computer security and education program to—
(i)
provide small business concerns information regarding—
(I) utilization and management of computer technology;(II) computer crimes committed against small business concerns; and(III) security for computers owned or utilized by small business concerns;
(ii) provide for periodic forums for small business concerns to improve their knowledge of the matters described in clause (i); and
(iii) provide training opportunities to educate small business users on computer security techniques.
(B) The Administrator, after consultation with the Director of the Institute of Computer Sciences and Technology within the Department of Commerce, shall develop information and materials to carry out the activities described in subparagraph (A) of this paragraph.
(c)
Revolving funds; disaster loan fund; business loan and investment fund; payments into funds; appropriations; reports to Congress; business-type budgets; borrowing authority: terms and conditions of notes, interest rate, public debt transactions; payments into miscellaneous receipts; authorization of appropriations for losses and interest subsidies
(1) There are established in the Treasury the following revolving funds: (A) a disaster loan fund which shall be available for financing functions performed under sections 634(e), 636(b)(1), 636(b)(2), 636(b)(3), 636(b)(4), 636(d)(2), and 636(m) of this title; and (B) a business loan and investment fund which shall be available for financing functions performed under sections 634(g), 636(a) and 637(a) of this title, and titles III, IV and V of the Small Business Investment Act of 1958 [15 U.S.C. 681 et seq., 692 et seq., 695 et seq.].
(2) All repayments of loans and debentures, payments of interest and other receipts arising out of transactions heretofore or hereafter entered into by the Administration (A) pursuant to sections 634(e), 636(b)(1), 636(b)(2), 636(b)(3), 636(b)(4), 636(b)(5), 636(b)(6), 636(b)(7), 636(b)(8), 636(d)(2), and 636(g) of this title, shall be paid into a disaster loan fund; and (B) pursuant to sections 634(g), 636(a), 636(h), 636(i), 636(l),1
1 See References in Text note below.
636(m), and 637(a) of this title, and titles III, IV and V of the Small Business Investment Act of 1958 [15 U.S.C. 681 et seq., 692 et seq., 695 et seq.], shall be paid into the business loan and investment fund.
(3) Unexpended balances of appropriations made to the fund pursuant to this subsection, as in effect immediately prior to the effective date of this paragraph, shall be allocated, together with related assets and liabilities, to the funds established by paragraph (1) in such amounts as the Administrator shall determine.
(4) The Administration shall submit to the Committees on Appropriations, Senate Select Committee on Small Business, and the Committee on Small Business of the House of Representatives, as soon as possible after the beginning of each calendar quarter, a full and complete report on the status of each of the funds established by paragraph (1). Business-type budgets for each of the funds established by paragraph (1) shall be prepared, transmitted to the Committees on Appropriations, the Senate Select Committee on Small Business, and the Committee on Small Business of the House of Representatives, and considered, and enacted in the manner prescribed by law (sections 9103 and 9104 of title 31) for wholly owned Government corporations.
(5)
(A) The Administration is authorized to make and issue notes to the Secretary of the Treasury for the purpose of obtaining funds necessary for discharging obligations under the revolving funds created by paragraph (1) and for authorized expenditures out of the funds. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be prescribed by the Administration with the approval of the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Administration under this paragraph. The Secretary of the Treasury is authorized and directed to purchase any notes of the Administration issued hereunder, and, for that purpose, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which such securities may be issued under such chapter are extended to include the purchase of notes issued by the Administration. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States. All borrowing authority contained herein shall be effective only to such extent or in such amounts as are provided in advance in appropriation Acts.
(B)
(i) Moneys in the funds established in paragraph (1) not needed for current operations may be paid into miscellaneous receipts of the Treasury.
(ii) Following the close of each fiscal year, the Administration shall pay into the miscellaneous receipts of the United States Treasury the actual interest that the Administration collects during that fiscal year on all financings made under this chapter.
(C) Except on those loan disbursements on which interest is paid under paragraph (5)(B)(ii), the Administration shall pay into miscellaneous receipts of the Treasury, following the close of each fiscal year, interest received by the Administration on financing functions performed under this chapter and titles III and V of the Small Business Investment Act of 1958 [15 U.S.C. 681 et seq., 695 et seq.] providing the capital used to perform such functions originated from appropriated funds. Such payments shall be treated by the Department of the Treasury as interest income, not as retirement of indebtedness.
(D) There are authorized to be appropriated, in any fiscal year, such sums as may be necessary for losses and interest subsidies incurred by the funds established by paragraph (1), but not previously reimbursed.
(d)
Creation and composition of Loan Policy Board; establishment of policies

There is created the Loan Policy Board of the Small Business Administration, which shall consist of the following members, all ex officio: The Administrator, as Chairman, the Secretary of the Treasury, and the Secretary of Commerce. Either of the said Secretaries may designate an officer of his Department, who has been appointed by the President by and with the advice and consent of the Senate, to act in his stead as a member of the Loan Policy Board with respect to any matter or matters. The Loan Policy Board shall establish general policies (particularly with reference to the public interest involved in the granting and denial of applications for financial assistance by the Administration and with reference to the coordination of the functions of the Administration with other activities and policies of the Government), which shall govern the granting and denial of applications for financial assistance by the Administration.

(e)
Prohibition on provision of assistance

Notwithstanding any other provision of law, the Administration is prohibited from providing any financial or other assistance to any business concern or other person engaged in the production or distribution of any product or service that has been determined to be obscene by a court of competent jurisdiction.

(f)
Certification of compliance with child support obligations
(1)
In general
For financial assistance approved after the promulgation of final regulations to implement this section, each recipient of financial assistance under this chapter, including a recipient of a direct loan or a loan guarantee, shall certify that the recipient is not more than 60 days delinquent under the terms of any—
(A) administrative order;
(B) court order; or
(C) repayment agreement entered into between the recipient and the custodial parent or State agency providing child support enforcement services,
that requires the recipient to pay child support, as such term is defined in section 662(b) 1 of title 42.
(2)
Enforcement

Not later than 6 months after October 22, 1994, the Administration shall promulgate such regulations as may be necessary to enforce compliance with the requirements of this subsection.

(g)
Business Opportunity Specialists
(1)
Duties
The exclusive duties of a Business Opportunity Specialist employed by the Administrator and reporting to the senior official appointed by the Administrator with responsibilities under sections 637, 644, 657a, and 657f of this title (or the designee of such official) shall be to implement sections 636, 637, and 657r of this title and to complete other duties related to contracting programs under this chapter. Such duties shall include—
(A)
with respect to small business concerns eligible to receive contracts and subcontracts pursuant to section 637(a) of this title
(i) providing guidance, counseling, and referrals for assistance with technical, management, financial, or other matters that will improve the competitive viability of such concerns;
(ii) identifying causes of success or failure of such concerns;
(iii) providing comprehensive assessments of such concerns, including identifying the strengths and weaknesses of such concerns;
(iv) monitoring and documenting compliance with the requirements of sections 636 and 637 of this title and any regulations implementing those sections;
(v) explaining the requirements of sections 636, 637, 644, 657a, 657f, and 657r of this title; and
(vi) advising on compliance with contracting regulations (including the Federal Acquisition Regulation) after award of such a contract or subcontract;
(B) reviewing and monitoring compliance with mentor-protege agreements under section 657r of this title;
(C) representing the interests of the Administrator and small business concerns in the award, modification, and administration of contracts and subcontracts awarded pursuant to section 637(a) of this title; and
(D) reporting fraud or abuse under section 636, 637, 644, 657a, 657f, or 657r of this title or any regulations implementing such sections.
(2)
Certification requirements
(A)
In general

Consistent with the requirements of subparagraph (B), a Business Opportunity Specialist described under section 636(j)(10)(D) of this title shall have a Level I Federal Acquisition Certification in Contracting (or any successor certification) or the equivalent Department of Defense certification.

(B)
Delay of certification requirement
The certification described in subparagraph (A) is not required—
(i) for any person serving as a Business Opportunity Specialist on December 12, 2017, until the date that is one calendar year after the date such person was appointed as a Business Opportunity Specialist; or
(ii) for any person serving as a Business Opportunity Specialist on or before January 3, 2013, until January 3, 2020.
(3)
Job posting requirements

The duties and certification requirements described in this subsection shall be included in any initial job posting for the position of a Business Opportunity Specialist.

(h)
Commercial market representatives
(1)
Duties
The principal duties of a commercial market representative employed by the Administrator and reporting to the senior official appointed by the Administrator with responsibilities under sections 637, 644, 657a, and 657f of this title (or the designee of the official) shall be to advance the policies established in section 637(d)(1) of this title relating to subcontracting, including—
(A) helping prime contractors to find small business concerns that are capable of performing subcontracts;
(B)
for contractors awarded contracts containing the clause described in section 637(d)(3) of this title, providing—
(i) counseling on the responsibility of the contractor to maximize subcontracting opportunities for small business concerns;
(ii) instruction on methods and tools to identify potential subcontractors that are small business concerns; and
(iii) assistance to increase awards to subcontractors that are small business concerns through visits, training, and reviews of past performance;
(C) providing counseling on how a small business concern may promote the capacity of the small business concern to contractors awarded contracts containing the clause described in section 637(d)(3) of this title; and
(D) conducting periodic reviews of contractors awarded contracts containing the clause described in section 637(d)(3) of this title to assess compliance with subcontracting plans required under section 637(d)(6) of this title.
(2)
Certification requirements
(A)
In general

Consistent with the requirements of subparagraph (B), a commercial market representative referred to in section 644(q)(3) of this title shall have a Level I Federal Acquisition Certification in Contracting (or any successor certification) or the equivalent Department of Defense certification.

(B)
Delay of certification requirement
The certification described in subparagraph (A) is not required—
(i) for any person serving as a commercial market representative on December 12, 2017, until the date that is one calendar year after the date on which the person was appointed as a commercial market representative; or
(ii) for any person serving as a commercial market representative on or before November 25, 2015, until November 25, 2020.
(3)
Job posting requirements

The duties and certification requirements described in this subsection shall be included in any initial job posting for the position of a commercial market representative.

(Pub. L. 85–536, § 2[4], July 18, 1958, 72 Stat. 384; Pub. L. 85–699, title II, § 202, formerly § 202(a), Aug. 21, 1958, 72 Stat. 690, renumbered Pub. L. 87–341, § 11(h)(1), Oct. 3, 1961, 75 Stat. 757; amended Pub. L. 86–367, § 1, Sept. 22, 1959, 73 Stat. 647; Pub. L. 87–70, title III, § 305(c), June 30, 1961, 75 Stat. 167; Pub. L. 87–198, Sept. 5, 1961, 75 Stat. 468; Pub. L. 87–305, § 3, Sept. 26, 1961, 75 Stat. 666; Pub. L. 87–341, §§ 11(h)(3), (4), 12, Oct. 3, 1961, 75 Stat. 757; Pub. L. 87–550, § 1(a), July 25, 1962, 76 Stat. 220; Pub. L. 89–59, §§ 1(c), 2, June 30, 1965, 79 Stat. 207; Pub. L. 89–78, July 21, 1965, 79 Stat. 243; Pub. L. 89–117, title III, § 316(d), Aug. 10, 1965, 79 Stat. 484; Pub. L. 89–334, Nov. 8, 1965, 79 Stat. 1294; Pub. L. 89–409, §§ 1, 2, May 2, 1966, 80 Stat. 132; Pub. L. 89–779, § 8(a), (b), Nov. 6, 1966, 80 Stat. 1364; Pub. L. 90–104, title I, § 102, Oct. 11, 1967, 81 Stat. 268; Pub. L. 90–448, title XVII, § 1721, Aug. 1, 1968, 82 Stat. 610; Pub. L. 91–173, title V, § 504(c), Dec. 30, 1969, 83 Stat. 802; Pub. L. 91–558, title I, § 101, Dec. 17, 1970, 84 Stat. 1468; Pub. L. 91–596, § 28(c), Dec. 29, 1970, 84 Stat. 1618; Pub. L. 91–597, § 25(c), Dec. 29, 1970, 84 Stat. 1634; Pub. L. 92–16, May 18, 1971, 85 Stat. 39; Pub. L. 92–320, § 1, June 27, 1972, 86 Stat. 382; Pub. L. 92–385, § 2(b), Aug. 16, 1972, 86 Stat. 556; Pub. L. 92–500, § 8(b), Oct. 18, 1972, 86 Stat. 899; Pub. L. 92–595, § 3(a), Oct. 27, 1972, 86 Stat. 1316; Pub. L. 93–237, §§ 1, 3(b), 8, Jan. 2, 1974, 87 Stat. 1023–1025; Pub. L. 93–386, §§ 2(a)(2), (3), 7, Aug. 23, 1974, 88 Stat. 742, 748; Pub. L. 94–273, § 2(5), Apr. 21, 1976, 90 Stat. 375; Pub. L. 95–14, §§ 1–3, Mar. 24, 1977, 91 Stat. 25; Pub. L. 95–89, title I, § 101(a)–(c), title II, §§ 201, 202, title III, § 304, title IV, § 401, Aug. 4, 1977, 91 Stat. 553, 557, 559; Pub. L. 95–315, § 4, July 4, 1978, 92 Stat. 379; Pub. L. 95–507, title II, § 206, Oct. 24, 1978, 92 Stat. 1766; Pub. L. 96–302, title I, § 121, title IV, § 401, July 2, 1980, 94 Stat. 842, 849; Pub. L. 96–481, title I, § 103, Oct. 21, 1980, 94 Stat. 2321; Pub. L. 97–35, title XIX, §§ 1908, 1913(b), 1915, Aug. 13, 1981, 95 Stat. 778, 780; Pub. L. 98–270, title III, § 306, Apr. 18, 1984, 98 Stat. 161; Pub. L. 98–352, § 5, July 10, 1984, 98 Stat. 331; Pub. L. 98–362, §§ 3, 4, July 16, 1984, 98 Stat. 431, 433; Pub. L. 100–590, title I, § 111(a), Nov. 3, 1988, 102 Stat. 2995; Pub. L. 100–656, title IV, § 401(a), Nov. 15, 1988, 102 Stat. 3873; Pub. L. 101–37, § 11(a), June 15, 1989, 103 Stat. 73; Pub. L. 101–515, title V, § 1(a), Nov. 5, 1990, 104 Stat. 2140; Pub. L. 101–574, title II, § 221(a), Nov. 15, 1990, 104 Stat. 2823; Pub. L. 102–140, title VI, § 609(k), Oct. 28, 1991, 105 Stat. 831; Pub. L. 103–403, title VI, §§ 601, 611, 612, Oct. 22, 1994, 108 Stat. 4201, 4204; Pub. L. 104–208, div. D, title I, § 102, Sept. 30, 1996, 110 Stat. 3009–725; Pub. L. 106–50, title II, § 201(a), Aug. 17, 1999, 113 Stat. 235; Pub. L. 108–447, div. K, title I, § 132(a), (c), Dec. 8, 2004, 118 Stat. 3452, 3453; Pub. L. 110–234, title XII, § 12068(b)(1), May 22, 2008, 122 Stat. 1410; Pub. L. 110–246, § 4(a), title XII, § 12068(b)(1), June 18, 2008, 122 Stat. 1664, 2172; Pub. L. 111–240, title I, §§ 1202(b)(2), 1203(b), Sept. 27, 2010, 124 Stat. 2521; Pub. L. 114–92, div. A, title VIII, §§ 865(a)(1), (b), 869(a)(2), Nov. 25, 2015, 129 Stat. 927, 928, 938; Pub. L. 115–91, div. A, title XVII, §§ 1704, 1705, Dec. 12, 2017, 131 Stat. 1806, 1807.)
§ 633a.
Detailed justification for proposed changes in budget requests

Beginning in fiscal year 2013 and each fiscal year thereafter, the budget request for the Small Business Administration shall provide a detailed justification of any proposed changes from the enacted level by individual appropriation. The detailed justification shall include at a minimum a description of each credit and non-credit program including amount of funding and costs by appropriation account and fiscal year. For activities funded in multiple appropriations, the budget justification shall specify the amount included in each enacted appropriation, the amount proposed in the budget year and a justification for any proposed changes.

(Pub. L. 112–74, div. C, title V, § 532, Dec. 23, 2011, 125 Stat. 923.)
§ 634.
General powers
(a)
Seal; appointment and compensation of personnel; use of other services and facilities

The Administration shall have power to adopt, alter, and use a seal, which shall be judicially noticed. The Administrator is authorized, subject to the civil service and classification laws, to select, employ, appoint, and fix the compensation of such officers, employees, attorneys, and agents as shall be necessary to carry out the provisions of this chapter; to define their authority and duties; and to pay the costs of qualification of certain of them as notaries public. The Administration, with the consent of any board, commission, independent establishment, or executive department of the Government, may avail itself on a reimbursable or nonreimbursable basis of the use of information, services, facilities (including any field service thereof), officers, and employees thereof, in carrying out the provisions of this chapter.

(b)
Powers of Administrator
In the performance of, and with respect to, the functions, powers, and duties vested in him by this chapter the Administrator may—
(1) sue and be sued in any court of record of a State having general jurisdiction, or in any United States district court, and jurisdiction is conferred upon such district court to determine such controversies without regard to the amount in controversy; but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Administrator or his property;
(2) under regulations prescribed by him, assign or sell at public or private sale, or otherwise dispose of for cash or credit, in his discretion and upon such terms and conditions and for such consideration as the Administrator shall determine to be reasonable, any evidence of debt, contract, claim, personal property, or security assigned to or held by him in connection with the payment of loans granted under this chapter, and to collect or compromise all obligations assigned to or held by him and all legal or equitable rights accruing to him in connection with the payment of such loans until such time as such obligations may be referred to the Attorney General for suit or collection;
(3) deal with, complete, renovate, improve, modernize, insure, or rent, or sell for cash or credit upon such terms and conditions and for such consideration as the Administrator shall determine to be reasonable, any real property conveyed to or otherwise acquired by him in connection with the payment of loans granted under this chapter;
(4) pursue to final collection, by way of compromise or otherwise, all claims against third parties assigned to the Administrator in connection with loans made by him. This shall include authority to obtain deficiency judgments or otherwise in the case of mortgages assigned to the Administrator. Section 6101 of title 41 shall not be construed to apply to any contract of hazard insurance or to any purchase or contract for services or supplies on account of property obtained by the Administrator as a result of loans made under this chapter if the premium therefor or the amount thereof does not exceed $1,000. The power to convey and to execute in the name of the Administrator deeds of conveyance, deeds of release, assignments and satisfactions of mortgages, and any other written instrument relating to real property or any interest therein acquired by the Administrator pursuant to the provisions of this chapter may be exercised by the Administrator or by any officer or agent appointed by him without the execution of any express delegation of power or power of attorney. Nothing in this section shall be construed to prevent the Administrator from delegating such power by order or by power of attorney, in his discretion, to any officer or agent he may appoint;
(5) acquire, in any lawful manner, any property (real, personal, or mixed, tangible or intangible), whenever deemed necessary or appropriate to the conduct of the activities authorized in sections 636(a) and 636(b) of this title;
(6) make such rules and regulations as he deems necessary to carry out the authority vested in him by or pursuant to this chapter;
(7) in addition to any powers, functions, privileges and immunities otherwise vested in him, take any and all actions (including the procurement of the services of attorneys by contract in any office where an attorney or attorneys are not or cannot be economically employed full time to render such services) when he determines such actions are necessary or desirable in making, servicing, compromising, modifying, liquidating, or otherwise dealing with or realizing on loans made under the provisions of this chapter: Provided, That with respect to deferred participation loans, including loans guaranteed under paragraph (15) or (35) of section 636(a) of this title, the Administrator may, in the discretion of and pursuant to regulations promulgated by the Administrator, authorize participating lending institutions to take actions relating to loan servicing on behalf of the Administrator, including determining eligibility and creditworthiness and loan monitoring, collection, and liquidation;
(8) pay the transportation expenses and per diem in lieu of subsistence expenses, in accordance with subchapter I of chapter 57 of title 5, for travel of any person employed by the Administration to render temporary services not in excess of six months in connection with any disaster referred to in section 636(b) of this title
(9) accept the services and facilities of Federal, State, and local agencies and groups, both public and private, and utilize such gratuitous services and facilities as may, from time to time, be necessary, to further the objectives of section 636(b) of this title;
(10) upon purchase by the Administration of any deferred participation entered into under section 636 of this title, continue to charge a rate of interest not to exceed that initially charged by the participating institution on the amount so purchased for the remaining term of the indebtedness;
(11) make such investigations as he deems necessary to determine whether a recipient of or participant in any assistance under this chapter or any other person has engaged or is about to engage in any acts or practices which constitute or will constitute a violation of any provision of this chapter, or of any rule or regulation under this chapter, or of any order issued under this chapter. The Administration shall permit any person to file with it a statement in writing, under oath or otherwise as the Administration shall determine, as to all the facts and circumstances concerning the matter to be investigated. For the purpose of any investigation, the Administration is empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, and documents which are relevant to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in the United States. In case of contumacy by, or refusal to obey a subpena issued to, any person, including a recipient or participant, the Administration may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such person resides or carries on business, in requiring the attendance and testimony of witnesses and the production of books, papers, and documents; and such court may issue an order requiring such person to appear before the Administration, there to produce records, if so ordered, or to give testimony touching the matter under investigation. Any failure to obey such order of the court may be punished by such court as a contempt thereof. All process in any such case may be served in the judicial district whereof such person is an inhabitant or wherever he may be found;
(12)
impose, retain, and use only those fees which are specifically authorized by law or which are in effect on September 30, 1994, and in the amounts and at the rates in effect on such date, except that the Administrator may, subject to approval in appropriations Acts, impose, retain, and utilize, additional fees—
(A) not to exceed $100 for each loan servicing action (other than a loan assumption) requested after disbursement of the loan, including any substitution of collateral, release or substitution of a guarantor, reamortization, or similar action;
(B) not to exceed $300 for loan assumptions;
(C) not to exceed 1 percent of the amount of requested financings under title III of the Small Business Investment Act of 1958 [15 U.S.C. 681 et seq.] for which the applicant requests a commitment from the Administration for funding during the following year; and
(D) to recover the direct, incremental cost involved in the production and dissemination of compilations of information produced by the Administration under the authority of this chapter and the Small Business Investment Act of 1958 [15 U.S.C. 661 et seq.];
(13) collect, retain and utilize, subject to approval in appropriations Acts, any amounts collected by fiscal transfer agents and not used by such agent as payment of the cost of loan pooling or debenture servicing operations, except that amounts collected under this paragraph and paragraph (12) shall be utilized solely to facilitate the administration of the program that generated the excess amounts; and
(14) require any lender authorized to make loans under section 636 of this title to pay examination and review fees, which shall be deposited in the account for salaries and expenses of the Administration, and shall be available for the costs of examinations, reviews, and other lender oversight activities.
(c)
Procurement of experts and consultants; compensation and expenses

To such extent as he finds necessary to carry out the provisions of this chapter, the Administrator is authorized to procure the temporary (not in excess of one year) or intermittent services of experts or consultants or organizations thereof, including stenographic reporting services, by contract or appointment, and in such cases such services shall be without regard to the civil-service and classification laws and, except in the case of stenographic reporting services by organizations, without regard to section 6101 of title 41. Any individual so employed may be compensated at a rate not in excess of the daily equivalent of the highest rate payable under section 5332 of title 5, including travel time, and, while such individual is away from his or her home or regular place of business, he or she may be allowed travel expenses (including per diem in lieu of subsistence) as authorized by section 5703 of title 5.

(d)
Safety deposit box rentals

Section 3324(a) and (b) of title 31 shall not apply to prepayments of rentals made by the Administration on safety deposit boxes used by the Administration for the safeguarding of instruments held as security for loans or for the safeguarding of other documents.

(e)
Undertaking or suspension of payment obligation; period; extension of maturity; repayment agreement; “required payments” defined
(1) Subject to the requirements and conditions contained in this subsection, upon application by a small business concern which is the recipient of a loan made under this chapter, the Administration may undertake the small business concern’s obligation to make the required payments under such loan or may suspend such obligation if the loan was a direct loan made by the Administration. While such payments are being made by the Administration pursuant to the undertaking of such obligation or while such obligation is suspended, no such payment with respect to the loan may be required from the small business concern.
(2)
The Administration may undertake or suspend for a period of not to exceed 5 years any small business concern’s obligation under this subsection only if—
(A) without such undertaking or suspension of the obligation, the small business concern would, in the sole discretion of the Administration, become insolvent or remain insolvent;
(B) with the undertaking or suspension of the obligation, the small business concern would, in the sole discretion of the Administration, become or remain a viable small business entity; and
(C) the small business concern executes an agreement in writing satisfactory to the Administration as provided by paragraph (4).
(3) Notwithstanding the provisions of sections 636(a)(4)(C) and 636(i)(1) of this title, the Administration may extend the maturity of any loan on which the Administration undertakes or suspends the obligation pursuant to this subsection for a corresponding period of time.
(4)
(A)
Prior to the undertaking or suspension by the Administration of any small business concern’s obligation under this subsection, the Administration, consistent with the purposes sought to be achieved herein, shall require the small business concern to agree in writing to repay to it the aggregate amount of the payments which were required under the loan during the period for which such obligation was undertaken or suspended, either—
(i) by periodic payments not less in amount or less frequently falling due than those which were due under the loan during such period, or
(ii) pursuant to a repayment schedule agreed upon by the Administration and the small business concern, or
(iii) by a combination of the payments described in clause (i) and clause (ii).
(B) In addition to requiring the small business concern to execute the agreement described in subparagraph (A), the Administration shall, prior to the undertaking or suspension of the obligation, take such action, and require the small business concern to take such action as the Administration deems appropriate in the circumstances, including the provision of such security as the Administration deems necessary or appropriate to insure that the rights and interests of the lender (Small Business Administration or participant) will be safeguarded adequately during and after the period in which such obligation is so undertaken or suspended.
(5) The term “required payments” with respect to any loan means payments of principal and interest under the loan.
(f)
Sale of guaranteed portion of loans by lender or subsequent holder; limitations; secondary market
(1)
The guaranteed portion of any loan made pursuant to this chapter may be sold by the lender, and by any subsequent holder, consistent with regulations on such sales as the Administration shall establish, subject to the following limitations:
(A) prior to the Administration’s approval of the sale, or upon any subsequent resale, of any loan guaranteed by the Administration, if the lender certifies that such loan has been properly closed and that the lender has substantially complied with the provisions of the guarantee agreement and the regulations of the Administration, the Administration shall review and approve only materials not previously approved;
(B) all fees due the Administration on a guaranteed loan shall have been paid in full prior to any sale; and
(C) each loan, except each loan made under section 636(a)(14) of this title, shall have been fully disbursed to the borrower prior to any sale.
(2) After a loan is sold in the secondary market, the lender shall remain obligated under its guarantee agreement with the Administration, and shall continue to service the loan in a manner consistent with the terms and conditions of such agreement.
(3) The Administration shall develop such procedures as are necessary for the facilitation, administration, and promotion of secondary market operations, and for assessing the increase of small business access to capital at reasonable rates and terms as a result of secondary market operations. Beginning on March 31, 1997, the sale of the unguaranteed portion of any loan made under section 636(a) of this title shall not be permitted until a final regulation that applies uniformly to both depository institutions and other lenders is promulgated by the Administration setting forth the terms and conditions under which such sales can be permitted, including maintenance of appropriate reserve requirements and other safeguards to protect the safety and soundness of the program.
(4) Nothing in this subsection or subsection (g) of this section shall be interpreted to impede or extinguish the right of the borrower or the successor in interest to such borrower to prepay (in whole or in part) any loan made pursuant to section 636(a) of this title, the guaranteed portion of which may be included in such trust or pool, or to impede or extinguish the rights of any party pursuant to section 636(a)(6)(C) of this title or subsection (e) of this section.
(g)
Trust certificates; guarantee of timely payments of principal and interest; full faith and credit of United States; collection of fees; subrogation; division of loan guarantees
(1) The Administration is authorized to issue trust certificates representing ownership of all or a fractional part of the guaranteed portion of one or more loans which have been guaranteed by the Administration under this chapter, or under section 696 of this title: Provided, That such trust certificates shall be based on and backed by a trust or pool approved by the Administration and composed solely of the entire guaranteed portion of such loans.
(2) The Administration is authorized, upon such terms and conditions as are deemed appropriate, to guarantee the timely payment of the principal of and interest on trust certificates issued by the Administration or its agent for purposes of this subsection. Such guarantee shall be limited to the extent of principal and interest on the guaranteed portions of loans which compose the trust or pool. In the event that a loan in such trust or pool is prepaid, either voluntarily or in the event of default, the guarantee of timely payment of principal and interest on the trust certificates shall be reduced in proportion to the amount of principal and interest such prepaid loan represents in the trust or pool. Interest on prepaid or defaulted loans shall accrue and be guaranteed by the Administration only through the date of payment on the guarantee. During the term of the trust certificate, it may be called for redemption due to prepayment or default of all loans constituting the pool.
(3) The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guarantee of such trust certificates issued by the Administration or its agent pursuant to this subsection.
(4)
(A) The Administration may collect a fee for any loan guarantee sold into the secondary market under subsection (f) in an amount equal to not more than 50 percent of the portion of the sale price that exceeds 110 percent of the outstanding principal amount of the portion of the loan guaranteed by the Administration. Any such fee imposed by the Administration shall be collected by the Administration or by the agent which carries out on behalf of the Administration the central registration functions required by subsection (h) of this section and shall be paid to the Administration and used solely to reduce the subsidy on loans guaranteed under section 636(a) of this title: Provided, That such fee shall not be charged to the borrower whose loan is guaranteed: and, Provided further, That nothing herein shall preclude any agent of the Administration from collecting a fee approved by the Administration for the functions described in subsection (h)(2).1
1 See References in Text note below.
(B) The Administration is authorized to impose and collect, either directly or through a fiscal and transfer agent, a reasonable penalty on late payments of the fee authorized under subparagraph (A) in an amount not to exceed 5 percent of such fee per month plus interest.
(C) The Administration may contract with an agent to carry out, on behalf of the Administration, the assessment and collection of the annual fee established under section 636(a)(23) of this title. The agent may receive, as compensation for services, any interest earned on the fee while in the control of the agent before the time at which the agent is contractually required to remit the fee to the Administration.
(5)
(A) In the event the Administration pays a claim under a guarantee issued under this subsection, it shall be subrogated fully to the rights satisfied by such payment.
(B) No State or local law, and no Federal law, shall preclude or limit the exercise by the Administration of its ownership rights in the portions of loans constituting the trust or pool against which the trust certificates are issued.
(6) If the amount of the guaranteed portion of any loan under section 636(a) of this title is more than $500,000, the Administrator shall, upon request of a pool assembler, divide the loan guarantee into increments of $500,000 and 1 increment of any remaining amount less than $500,000, in order to permit the maximum amount of any loan in a pool to be not more than $500,000. Only 1 increment of any loan guarantee divided under this paragraph may be included in the same pool. Increments of loan guarantees to different borrowers that are divided under this paragraph may be included in the same pool.
(h)
Central registration of loans and trust certificates; contracts with agent; disclosures by sellers of guaranteed portions of loans; regulation of brokers and dealers; electronic registration
(1)
Upon the adoption of final rules and regulations, the Administration shall—
(A) provide for a central registration of all loans and trust certificates sold pursuant to subsections (f) and (g) of this section;
(B) contract with an agent to carry out on behalf of the Administration the central registration functions of this section and the issuance of trust certificates to facilitate pooling. Such agent shall provide a fidelity bond or insurance in such amounts as the Administration determines to be necessary to fully protect the interest of the Government;
(C) prior to any sale, require the seller to disclose to a purchaser of the guaranteed portion of a loan guaranteed under this chapter and to the purchaser of a trust certificate issued pursuant to subsection (g), information on the terms, conditions, and yield of such instrument. As used in this paragraph, if the instrument being sold is a loan, the term “seller” does not include (A) an entity which made the loan or (B) any individual or entity which sells three or fewer guaranteed loans per year; and
(D) have the authority to regulate brokers and dealers in guaranteed loans and trust certificates sold pursuant to subsections (f) and (g) of this section.
(2) The agent described in paragraph (1)(B) may be compensated through any of the fees assessed under this section and any interest earned on any funds collected by the agent while such funds are in the control of the agent and before the time at which the agent is contractually required to transfer such funds to the Administration or to the holders of the trust certificates, as appropriate.
(3) Nothing in this subsection shall prohibit the utilization of a book-entry or other electronic form of registration for trust certificates. The Administration may, with the consent of the Secretary of the Treasury, use the book-entry system of the Federal Reserve System.
(i)
Office of Hearings and Appeals
(1)
Establishment
(A)
Office
There is established in the Administration an Office of Hearings and Appeals—
(i)
to impartially decide matters relating to program decisions of the Administrator—
(I) for which Congress requires a hearing on the record; or(II) that the Administrator designates for hearing by regulation; and
(ii) which shall contain the office of the Administration that handles requests submitted pursuant to sections 552 of title 5 (commonly referred to as the “Freedom of Information Act”) and maintains records pursuant to section 552a of title 5 (commonly referred to as the “Privacy Act of 1974”).
(B)
Jurisdiction
(i)
In general

Except as provided in clause (ii), the Office of Hearings and Appeals shall hear appeals of agency actions under or pursuant to this chapter, the Small Business Investment Act of 1958 (15 U.S.C. 661 et seq.), and title 13 of the Code of Federal Regulations, and shall hear such other matters as the Administrator may determine appropriate.

(ii)
Exception

The Office of Hearings and Appeals shall not adjudicate disputes that require a hearing on the record, except disputes pertaining to the small business programs described in this chapter.

(C)
Associate Administrator

The head of the Office of Hearings and Appeals shall be the Chief Hearing Officer appointed under section 633(b)(1) of this title, who shall be responsible to the Administrator.

(2)
Chief Hearing Officer duties
(A)
In general
The Chief Hearing Officer shall—
(i) be a career appointee in the Senior Executive Service and an attorney licensed by a State, commonwealth, territory or possession of the United States, or the District of Columbia; and
(ii) be responsible for the operation and management of the Office of Hearings and Appeals.
(B)
Alternative dispute resolution

The Chief Hearing Officer may assign a matter for mediation or other means of alternative dispute resolution.

(3)
Hearing officers
(A)
In general

The Office of Hearings and Appeals shall appoint Hearing Officers to carry out the duties described in paragraph (1)(A)(i).

(B)
Conditions of employment
A Hearing Officer appointed under this paragraph—
(i) shall serve in the excepted service as an employee of the Administration under section 2103 of title 5 and under the supervision of the Chief Hearing Officer;
(ii) shall be classified at a position to which section 5376 of title 5 applies; and
(iii) shall be compensated at a rate not exceeding the maximum rate payable under such section.
(C)
Authority; powers
Notwithstanding section 556(b) of title 5
(i) a Hearing Officer may hear cases arising under section 554 of such title;
(ii) a Hearing Officer shall have the powers described in section 556(c) of such title; and
(iii) the relevant provisions of subchapter II of chapter 5 of such title (except for section 556(b) of such title) shall apply to such Hearing Officer.
(D)
Treatment of current personnel

An individual serving as a Judge in the Office of Hearings and Appeals (as that position and office are designated in section 134.101 of title 13, Code of Federal Regulations) on the effective date of this subsection shall be considered as qualified to be, and redesignated as, a Hearing Officer.

(4)
Determinations regarding status of concerns
(A)
In general

Not later than 2 days after the date on which a final determination that a business concern does not meet the requirements of the status such concern claims to hold is made, such concern or the Administrator, as applicable, shall update the status of such concern in the System for Award Management (or any successor system).

(B)
Administrator updates

If such concern fails to update the status of such concern as described in subparagraph (A), not later than 2 days after such failure the Administrator shall make such update.

(C)
Notification

A concern required to make an update described under subparagraph (A) shall notify a contracting officer for each contract with respect to which such concern has an offer or bid pending of the determination made under subparagraph (A), if the concern finds, in good faith, that such determination affects the eligibility of the concern to perform such a contract.

(5)
Hearing Officer defined

In this subsection, the term “Hearing Officer” means an individual appointed or redesignated under this subsection who is an attorney licensed by a State, commonwealth, territory or possession of the United States, or the District of Columbia.

(Pub. L. 85–536, § 2[5], July 18, 1958, 72 Stat. 385; Pub. L. 87–305, § 4, Sept. 26, 1961, 75 Stat. 666; Pub. L. 87–367, title I, § 103(3), Oct. 4, 1961, 75 Stat. 787; Pub. L. 92–310, title II, § 224(a), June 6, 1972, 86 Stat. 206; Pub. L. 93–386, §§ 3(1), 10, Aug. 23, 1974, 88 Stat. 745, 749; Pub. L. 94–305, title II, § 208, June 4, 1976, 90 Stat. 671; Pub. L. 95–89, title III, § 303, Aug. 4, 1977, 91 Stat. 558; Pub. L. 95–510, § 103, Oct. 24, 1978, 92 Stat. 1781; Pub. L. 96–302, title I, § 114, July 2, 1980, 94 Stat. 838; Pub. L. 98–352, § 2, July 10, 1984, 98 Stat. 329; Pub. L. 100–590, title I, § 113, Nov. 3, 1988, 102 Stat. 2997; Pub. L. 102–140, title VI, § 609(a), Oct. 28, 1991, 105 Stat. 825; Pub. L. 102–564, title III, § 307(d), Oct. 28, 1992, 106 Stat. 4264; Pub. L. 103–81, § 3(a), Aug. 13, 1993, 107 Stat. 780; Pub. L. 103–282, § 2, July 22, 1994, 108 Stat. 1422; Pub. L. 103–403, title VI, § 602, Oct. 22, 1994, 108 Stat. 4202; Pub. L. 104–36, § 4(b), Oct. 12, 1995, 109 Stat. 297; Pub. L. 104–208, div. D, title I, § 103(e), title II, §§ 205(a), 208(i)(1), Sept. 30, 1996, 110 Stat. 3009–727, 3009–738, 3009–747; Pub. L. 106–554, § 1(a)(9) [title II, § 209], Dec. 21, 2000, 114 Stat. 2763, 2763A–683; Pub. L. 108–306, § 3, Sept. 24, 2004, 118 Stat. 1131; Pub. L. 108–447, div. K, title I, § 131, Dec. 8, 2004, 118 Stat. 3452; Pub. L. 111–240, title I, § 1117, Sept. 27, 2010, 124 Stat. 2509; Pub. L. 114–92, div. A, title VIII, § 869(a)(1), Nov. 25, 2015, 129 Stat. 936; Pub. L. 114–328, div. A, title XVIII, § 1833(a), Dec. 23, 2016, 130 Stat. 2661; Pub. L. 115–232, div. A, title VIII, § 862(b)(2), Aug. 13, 2018, 132 Stat. 1898; Pub. L. 117–81, div. A, title VIII, § 863, Dec. 27, 2021, 135 Stat. 1852.)
§ 634a.
Office of Advocacy within Small Business Administration; Chief Counsel for Advocacy

There is established within the Small Business Administration an Office of Advocacy. The management of the Office shall be vested in a Chief Counsel for Advocacy who shall be appointed from civilian life by the President, by and with the advice and consent of the Senate.

(Pub. L. 94–305, title II, § 201, June 4, 1976, 90 Stat. 668.)
§ 634b.
Primary functions of Office of Advocacy
The primary functions of the Office of Advocacy shall be to—
(1) examine the role of small business in the American economy and the contribution which small business can make in improving competition, encouraging economic and social mobility for all citizens, restraining inflation, spurring production, expanding employment opportunities, increasing productivity, promoting exports, stimulating innovation and entrepreneurship, and providing an avenue through which new and untested products and services can be brought to the marketplace;
(2) assess the effectiveness of existing Federal subsidy and assistance programs for small business and the desirability of reducing the emphasis on such existing programs and increasing the emphasis on general assistance programs designed to benefit all small businesses;
(3) measure the direct costs and other effects of government regulation on small businesses; and make legislative and nonlegislative proposals for eliminating excessive or unnecessary regulations of small businesses;
(4) determine the impact of the tax structure on small businesses and make legislative and other proposals for altering the tax structure to enable all small businesses to realize their potential for contributing to the improvement of the Nation’s economic well-being;
(5) study the ability of financial markets and institutions to meet small business credit needs and determine the impact of government demands for credit on small businesses;
(6) determine financial resource availability and to recommend methods for delivery of financial assistance to minority enterprises, including methods for securing equity capital, for generating markets for goods and services, for providing effective business education, more effective management and technical assistance, and training, and for assistance in complying with Federal, State, and local law;
(7) evaluate the efforts of Federal agencies, business and industry to assist minority enterprises;
(8) make such other recommendations as may be appropriate to assist the development and strengthening of minority and other small business enterprises;
(9) recommend specific measures for creating an environment in which all businesses will have the opportunity to complete 1
1 So in original. Probably should be “compete”.
effectively and expand to their full potential, and to ascertain the common reasons, if any, for small business successes and failures;
(10) determine the desirability of developing a set of rational, objective criteria to be used to define small business, and to develop such criteria, if appropriate;
(11) advise, cooperate with, and consult with, the Chairman of the Administrative Conference of the United States with respect to section 504(e) of title 5; and
(12) evaluate the efforts of each department and agency of the United States, and of private industry, to assist small business concerns owned and controlled by veterans, as defined in section 632(q) of this title, and small business concerns owned and controlled by serviced-disabled 2
2 So in original.
veterans, as defined in such section 632(q) of this title, and to provide statistical information on the utilization of such programs by such small business concerns, and to make appropriate recommendations to the Administrator of the Small Business Administration and to the Congress in order to promote the establishment and growth of those small business concerns.
(Pub. L. 94–305, title II, § 202, June 4, 1976, 90 Stat. 668; Pub. L. 96–481, title II, § 203(b), Oct. 21, 1980, 94 Stat. 2327; Pub. L. 106–50, title VII, § 702, Aug. 17, 1999, 113 Stat. 250.)
§ 634c.
Additional duties of Office of Advocacy
(a)
In general
The Office of Advocacy shall also perform the following duties on a continuing basis:
(1) serve as a focal point for the receipt of complaints, criticisms, and suggestions concerning the policies and activities of the Administration and any other Federal agency which affects small businesses;
(2) counsel small businesses on how to resolve questions and problems concerning the relationship of the small business to the Federal Government;
(3) develop proposals for changes in the policies and activities of any agency of the Federal Government which will better fulfill the purposes of the Small Business Act and communicate such proposals to the appropriate Federal agencies;
(4) represent the views and interests of small businesses before other Federal agencies whose policies and activities may affect small business;
(5) enlist the cooperation and assistance of public and private agencies, businesses, and other organizations in disseminating information about the programs and services provided by the Federal Government which are of benefit to small businesses, and information on how small businesses can participate in or make use of such programs and services; and
(6) carry out the responsibilities of the Office of Advocacy under chapter 6 of title 5.
(b)
Outreach and input from small businesses on trade promotion authority
(1)
Definitions
In this subsection—
(A) the term “agency” has the meaning given the term in section 551 of title 5;
(B) the term “Chief Counsel for Advocacy” means the Chief Counsel for Advocacy of the Small Business Administration;
(C) the term “covered trade agreement” means a trade agreement being negotiated pursuant to section 4202(b) of title 19; and
(D) the term “Working Group” means the Interagency Working Group convened under paragraph (2)(A).
(2)
Working group
(A)
In general
Not later than 30 days after the date on which the President submits the notification required under section 4204(a) of title 19, the Chief Counsel for Advocacy shall convene an Interagency Working Group, which shall consist of an employee from each of the following agencies, as selected by the head of the agency or an official delegated by the head of the agency:
(i) The Office of the United States Trade Representative.
(ii) The Department of Commerce.
(iii) The Department of Agriculture.
(iv) Any other agency that the Chief Counsel for Advocacy, in consultation with the United States Trade Representative, determines to be relevant with respect to the subject of the covered trade agreement.
(B)
Views of small businesses

Not later than 30 days after the date on which the Chief Counsel for Advocacy convenes the Working Group under subparagraph (A), the Chief Counsel for Advocacy shall identify a diverse group of small businesses, representatives of small businesses, or a combination thereof, to provide to the Working Group the views of small businesses in the manufacturing, services, and agriculture industries on the potential economic effects of the covered trade agreement.

(3)
Report
(A)
In general
Not later than 180 days after the date on which the Chief Counsel for Advocacy convenes the Working Group under paragraph (2)(A), the Chief Counsel for Advocacy shall submit to the Committee on Small Business and Entrepreneurship and the Committee on Finance of the Senate and the Committee on Small Business and the Committee on Ways and Means of the House of Representatives a report on the economic impacts of the covered trade agreement on small businesses, which shall—
(i) identify the most important priorities, opportunities, and challenges to various industries from the covered trade agreement;
(ii) assess the impact for new small businesses to start exporting, or increase their exports, to markets in countries that are parties to the covered trade agreement;
(iii) analyze the competitive position of industries likely to be significantly affected by the covered trade agreement;
(iv)
identify—
(I) any State-owned enterprises in each country participating in negotiations for the covered trade agreement that could pose a threat to small businesses; and(II) any steps to take to create a level playing field for those small businesses;
(v) identify any rule of an agency that should be modified to become compliant with the covered trade agreement; and
(vi) include an overview of the methodology used to develop the report, including the number of small business participants by industry, how those small businesses were selected, and any other factors that the Chief Counsel for Advocacy may determine appropriate.
(B)
Delayed submission

To ensure that negotiations for the covered trade agreement are not disrupted, the President may require that the Chief Counsel for Advocacy delay submission of the report under subparagraph (A) until after the negotiations for the covered trade agreement are concluded, provided that the delay allows the Chief Counsel for Advocacy to submit the report to Congress not later than 45 days before the Senate or the House of Representatives acts to approve or disapprove the covered trade agreement.

(C)
Avoidance of duplication

The Chief Counsel for Advocacy shall, to the extent practicable, coordinate the submission of the report under this paragraph with the United States International Trade Commission, the United States Trade Representative, other agencies, and trade advisory committees to avoid unnecessary duplication of reporting requirements.

(Pub. L. 94–305, title II, § 203, June 4, 1976, 90 Stat. 669; Pub. L. 111–240, title I, § 1602(a), Sept. 27, 2010, 124 Stat. 2551; Pub. L. 114–125, title V, § 502, Feb. 24, 2016, 130 Stat. 172.)
§ 634d.
Staff and powers of Office of Advocacy
In carrying out the provisions of sections 634a to 634g of this title, the Chief Counsel for Advocacy may—
(1) employ and fix the compensation of such additional staff personnel as is deemed necessary, without regard to the provisions of title 5, governing appointments in the competitive service, and without regard to chapter 51, and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates but at rates not in excess of the lowest rate for GS–15 of the General Schedule: Provided, however, That not more than 14 staff personnel at any one time may be employed and compensated at a rate not in excess of GS–15, step 10, of the General Schedule;
(2) procure temporary and intermittent services to the same extent as is authorized by section 3109 of title 5;
(3) consult with experts and authorities in the fields of small business investment, venture capital, investment and commercial banking and other comparable financial institutions involved in the financing of business, and with individuals with regulatory, legal, economic, or financial expertise, including members of the academic community, and individuals who generally represent the public interest;
(4) utilize the services of the National Advisory Council established pursuant to the provisions of section 637(b)(13) of this title and in accordance with the provisions of such statute, also appoint such other advisory boards or committees as is reasonably appropriate and necessary to carry out the provisions of sections 634a to 634g of this title; and
(5) hold hearings and sit and act at such times and places as he may deem advisable.
(Pub. L. 94–305, title II, § 204, June 4, 1976, 90 Stat. 669; Pub. L. 96–302, title IV, § 402, July 2, 1980, 94 Stat. 850; Pub. L. 103–403, title VI, §§ 605(b), 610, Oct. 22, 1994, 108 Stat. 4203, 4204.)
§ 634e.
Assistance of Government agencies

Each department, agency, and instrumentality of the Federal Government is authorized and directed to furnish to the Chief Counsel for Advocacy such reports and other information as he deems necessary to carry out his functions under sections 634a to 634g of this title.

(Pub. L. 94–305, title II, § 205, June 4, 1976, 90 Stat. 670.)
§ 634f.
Reports

The Chief Counsel may from time to time prepare and publish such reports as he deems appropriate. Not later than one year after June 4, 1976, he shall transmit to the Congress, the President and the Administration, a full report containing his findings and specific recommendations with respect to each of the functions referred to in section 634b of this title, including specific legislative proposals and recommendations for administration or other action. Not later than 6 months after June 4, 1976, he shall prepare and transmit a preliminary report on his activities. The reports shall not be submitted to the Office of Management and Budget or to any other Federal agency or executive department for any purpose prior to transmittal to the Congress and the President.

(Pub. L. 94–305, title II, § 206, June 4, 1976, 90 Stat. 670.)
§ 634g.
Budgetary line item and authorization of appropriations
(a)
Appropriation requests

Each budget of the United States Government submitted by the President under section 1105 of title 31 shall include a separate statement of the amount of appropriations requested for the Office of Advocacy of the Small Business Administration, which shall be designated in a separate account in the General Fund of the Treasury.

(b)
Administrative operations

The Administrator of the Small Business Administration shall provide the Office of Advocacy with appropriate and adequate office space at central and field office locations, together with such equipment, operating budget, and communications facilities and services as may be necessary, and shall provide necessary maintenance services for such offices and the equipment and facilities located in such offices.

(c)
Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out sections 634a to 634g of this title. Any amount appropriated under this subsection shall remain available, without fiscal year limitation, until expended.

(Pub. L. 94–305, title II, § 207, as added Pub. L. 111–240, title I, § 1602(b), Sept. 27, 2010, 124 Stat. 2551.)
§ 635.
Deposit of moneys; depositaries, custodians, and fiscal agents; contributions to employees’ compensation funds
(a) All moneys of the Administration not otherwise employed may be deposited with the Treasury of the United States subject to check by authority of the Administration. The Federal Reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for the Administration in the general performance of its powers conferred by this chapter. Any banks insured by the Federal Deposit Insurance Corporation, when designated by the Secretary of the Treasury, shall act as custodians and financial agents for the Administration. Each Federal Reserve bank, when designated by the Administrator as fiscal agent for the Administration, shall be entitled to be reimbursed for all expenses incurred as such fiscal agent.
(b) The Administrator shall contribute to the employees’ compensation fund, on the basis of annual billings as determined by the Secretary of Labor, for the benefit payments made from such fund on account of employees engaged in carrying out functions financed by the revolving fund established by section 633(c) of this title. The annual billings shall also include a statement of the fair portion of the cost of the administration of such fund, which shall be paid by the Administrator into the Treasury as miscellaneous receipts.
(Pub. L. 85–536, § 2[6], July 18, 1958, 72 Stat. 387.)
§ 636.
Additional powers
(a)
Loans to small business concerns; allowable purposes; qualified business; restrictions and limitations
The Administration is empowered to the extent and in such amounts as provided in advance in appropriation Acts to make loans for plant acquisition, construction, conversion, or expansion, including the acquisition of land, material, supplies, equipment, and working capital, and to make loans to any qualified small business concern, including those owned by qualified Indian tribes, for purposes of this chapter. Such financings may be made either directly or in cooperation with banks or other financial institutions through agreements to participate on an immediate or deferred (guaranteed) basis. These powers shall be subject, however, to the following restrictions, limitations, and provisions:
(1)
In general.—
(A)
Credit elsewhere.—
(i)
In general.—
The Administrator has the authority to direct, and conduct oversight for, the methods by which lenders determine whether a borrower is able to obtain credit elsewhere. No financial assistance shall be extended pursuant to this subsection if the applicant can obtain credit elsewhere. No immediate participation may be purchased unless it is shown that a deferred participation is not available; and no direct financing may be made unless it is shown that a participation is not available.
(ii)
Liquidity.—
On and after October 1, 2015, the Administrator may not guarantee a loan under this subsection if the lender determines that the borrower is unable to obtain credit elsewhere solely because the liquidity of the lender depends upon the guaranteed portion of the loan being sold on the secondary market.
(B)
Background checks.—
Prior to the approval of any loan made pursuant to this subsection, or section 503 of the Small Business Investment Act of 1958 [15 U.S.C. 697], the Administrator may verify the applicant’s criminal background, or lack thereof, through the best available means, including, if possible, use of the National Crime Information Center computer system at the Federal Bureau of Investigation.
(C)
Lending limits of lenders.—
On and after October 1, 2015, the Administrator may not guarantee a loan under this subsection if the sole purpose for requesting the guarantee is to allow the lender to exceed the legal lending limit of the lender.
(2)
Level of participation in guaranteed loans.—
(A)
In general.—
Except as provided in subparagraphs (B), (D), (E), and (F), in an agreement to participate in a loan on a deferred basis under this subsection (including a loan made under the Preferred Lenders Program), such participation by the Administration shall be equal to—
(i) 75 percent of the balance of the financing outstanding at the time of disbursement of the loan, if such balance exceeds $150,000; or
(ii) 85 percent of the balance of the financing outstanding at the time of disbursement of the loan, if such balance is less than or equal to $150,000.
(B)
Reduced participation upon request.—
(i)
In general.—
The guarantee percentage specified by subparagraph (A) for any loan under this subsection may be reduced upon the request of the participating lender.
(ii)
Prohibition.—
The Administration shall not use the guarantee percentage requested by a participating lender under clause (i) as a criterion for establishing priorities in approving loan guarantee requests under this subsection.
(C)
Interest rate under preferred lenders program.—
(i)
In general.—
The maximum interest rate for a loan guaranteed under the Preferred Lenders Program shall not exceed the maximum interest rate, as determined by the Administration, applicable to other loans guaranteed under this subsection.
(ii)
Export-import bank lenders.—
Any lender that is participating in the Delegated Authority Lender Program of the Export-Import Bank of the United States (or any successor to the Program) shall be eligible to participate in the Preferred Lenders Program.
(iii)
Preferred lenders program defined.—
For purposes of this subparagraph, the term “Preferred Lenders Program” means any program established by the Administrator, as authorized under the proviso in section 634(b)(7) of this title
(I) complete authority to make and close loans with a guarantee from the Administration without obtaining the prior specific approval of the Administration; and(II) complete authority to service and liquidate such loans without obtaining the prior specific approval of the Administration for routine servicing and liquidation activities, but shall not take any actions creating an actual or apparent conflict of interest.
(D)
Participation under export working capital program.—
In an agreement to participate in a loan on a deferred basis under the Export Working Capital Program established pursuant to paragraph (14)(A), such participation by the Administration shall be 90 percent.
(E)
Participation in international trade loan.—
In an agreement to participate in a loan on a deferred basis under paragraph (16), the participation by the Administration may not exceed 90 percent.
(F)
Participation in the paycheck protection program.—
In an agreement to participate in a loan on a deferred basis under paragraph (36), the participation by the Administration shall be 100 percent.
(3)
No loan shall be made under this subsection—
(A) if the total amount outstanding and committed (by participation or otherwise) to the borrower from the business loan and investment fund established by this chapter would exceed $3,750,000 (or if the gross loan amount would exceed $5,000,000), except as provided in subparagraph (B);
(B) if the total amount outstanding and committed (on a deferred basis) solely for the purposes provided in paragraph (16) to the borrower from the business loan and investment fund established by this chapter would exceed $4,500,000 (or if the gross loan amount would exceed $5,000,000), of which not more than $4,000,000 may be used for working capital, supplies, or financings under paragraph (14) for export purposes; and
(C) if effected either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate basis if the amount would exceed $350,000.
(4)
Interest rates and prepayment charges.—
(A)
Interest rates.—
Notwithstanding the provisions of the constitution of any State or the laws of any State limiting the rate or amount of interest which may be charged, taken, received, or reserved, the maximum legal rate of interest on any financing made on a deferred basis pursuant to this subsection shall not exceed a rate prescribed by the Administration, and the rate of interest for the Administration’s share of any direct or immediate participation loan shall not exceed the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans and adjusted to the nearest one-eighth of 1 per centum, and an additional amount as determined by the Administration, but not to exceed 1 per centum per annum: Provided, That for those loans to assist any public or private organization for the handicapped or to assist any handicapped individual as provided in paragraph (10) of this subsection, the interest rate shall be 3 per centum per annum.
(B)
Payment of accrued interest.—
(i)
In general.—
Any bank or other lending institution making a claim for payment on the guaranteed portion of a loan made under this subsection shall be paid the accrued interest due on the loan from the earliest date of default to the date of payment of the claim at a rate not to exceed the rate of interest on the loan on the date of default, minus one percent.
(ii)
Loans sold on secondary market.—
If a loan described in clause (i) is sold on the secondary market, the amount of interest paid to a bank or other lending institution described in that clause from the earliest date of default to the date of payment of the claim shall be no more than the agreed upon rate, minus one percent.
(iii)
Applicability.—
Clauses (i) and (ii) shall not apply to loans made on or after October 1, 2000.
(C)
Prepayment charges
(i)
In general.—
A borrower who prepays any loan guaranteed under this subsection shall remit to the Administration a subsidy recoupment fee calculated in accordance with clause (ii) if—
(I) the loan is for a term of not less than 15 years;(II) the prepayment is voluntary;(III) the amount of prepayment in any calendar year is more than 25 percent of the outstanding balance of the loan; and(IV) the prepayment is made within the first 3 years after disbursement of the loan proceeds.
(ii)
Subsidy recoupment fee.—
The subsidy recoupment fee charged under clause (i) shall be—
(I) 5 percent of the amount of prepayment, if the borrower prepays during the first year after disbursement;(II) 3 percent of the amount of prepayment, if the borrower prepays during the second year after disbursement; and(III) 1 percent of the amount of prepayment, if the borrower prepays during the third year after disbursement.
(5) No such loans including renewals and extensions thereof may be made for a period or periods exceeding twenty-five years, except that such portion of a loan made for the purpose of acquiring real property or constructing, converting, or expanding facilities may have a maturity of twenty-five years plus such additional period as is estimated may be required to complete such construction, conversion, or expansion.
(6)
All loans made under this subsection shall be of such sound value or so secured as reasonably to assure repayment: Provided, however, That—
(A) for loans to assist any public or private organization or to assist any handicapped individual as provided in paragraph (10) of this subsection any reasonable doubt shall be resolved in favor of the applicant;
(B) recognizing that greater risk may be associated with loans for energy measures as provided in paragraph (12) of this subsection, factors in determining “sound value” shall include, but not be limited to, quality of the product or service; technical qualifications of the applicant or his employees; sales projections; and the financial status of the business concern: Provided further, That such status need not be as sound as that required for general loans under this subsection; and 1
1 So in original. The “; and” probably should be a period.
(C) Repealed. Pub. L. 97–35, title XIX, § 1910, Aug. 13, 1981, 95 Stat. 778.
On that portion of the loan used to refinance existing indebtedness held by a bank or other lending institution, the Administration shall limit the amount of deferred participation to 80 per centum of the amount of the loan at the time of disbursement: Provided further, That any authority conferred by this subparagraph on the Administration shall be exercised solely by the Administration and shall not be delegated to other than Administration personnel.
(7)
(A)
In general.—
The Administrator may defer payments on the principal and interest of such loans for a grace period and use such other methods as it deems necessary and appropriate to assure the successful establishment and operation of such concern.
(B)
Deferral requirements.—
With respect to a deferral provided under this paragraph, the Administrator may allow lenders under this subsection—
(i) to provide full payment deferment relief (including payment of principal and interest) for a period of not more than 1 year; and
(ii) to provide an additional deferment period if the borrower provides documentation justifying such additional deferment.
(C)
Secondary market.—
(i)
In general.—
Except as provided in clause (ii), if an investor declines to approve a deferral or additional deferment requested by a lender under subparagraph (B), the Administrator shall exercise the authority to purchase the loan so that the borrower may receive full payment deferment relief (including payment of principal and interest) or an additional deferment as described in subparagraph (B).
(ii)
Exception.—
If, in a fiscal year, the Administrator determines that the cost of implementing clause (i) is greater than zero, the Administrator shall not implement that clause.
(8) The Administration may make loans under this subsection to small business concerns owned and controlled by disabled veterans (as defined in section 4211(3) of title 38).
(9) The Administration may provide loans under this subsection to finance residential or commercial construction or rehabilitation for sale: Provided, however, That such loans shall not be used primarily for the acquisition of land.
(10) The Administration may provide guaranteed loans under this subsection to assist any public or private organization for the handicapped or to assist any handicapped individual, including service-disabled veterans, in establishing, acquiring, or operating a small business concern.
(11) The Administration may provide loans under this subsection to any small business concern, or to any qualified person seeking to establish such a concern when it determines that such loan will further the policies established in section 631(c) 2
2 See References in Text note below.
of this title, with particular emphasis on the preservation or establishment of small business concerns located in urban or rural areas with high proportions of unemployed or low-income individuals or owned by low-income individuals.
(12)
(A) The Administration may provide loans under this subsection to assist any small business concern, including start up, to enable such concern to design architecturally or engineer, manufacture, distribute, market, install, or service energy measures: Provided, however, That such loan proceeds shall not be used primarily for research and development.
(b)3
3 So in original. Probably should be “(B)”.
The Administration may provide deferred participation loans under this subsection to finance the planning, design, or installation of pollution control facilities for the purposes set forth in section 404 of the Small Business Investment Act of 1958 [15 U.S.C. 694–1]. Notwithstanding the limitation expressed in paragraph (3) of this subsection, a loan made under this paragraph may not result in a total amount outstanding and committed to a borrower from the business loan and investment fund of more than $1,000,000.
(13)  The  Administration  may  provide  fi­nancings under this subsection to State and local development companies for the purposes of, and subject to the restrictions in, title V of the Small Business Investment Act of 1958 [15 U.S.C. 695 et seq.].
(14)
Export working capital program.—
(A)
In general.—
The Administrator may provide extensions of credit, standby letters of credit, revolving lines of credit for export purposes, and other financing to enable small business concerns, including small business export trading companies and small business export management companies, to develop foreign markets. A bank or participating lending institution may establish the rate of interest on such financings as may be legal and reasonable.
(B)
Terms.—
(i)
Loan amount.—
The Administrator may not guarantee a loan under this paragraph of more than $5,000,000.
(ii)
Fees.—
(I)
In general.—
For a loan under this paragraph, the Administrator shall collect the fee assessed under paragraph (23) not more frequently than once each year.(II)
Untapped credit.—
The Administrator may not assess a fee on capital that is not accessed by the small business concern.
(C)
Considerations.—
When considering loan or guarantee applications, the Administration shall give weight to export-related benefits, including opening new markets for United States goods and services abroad and encouraging the involvement of small businesses, including agricultural concerns, in the export market.
(D)
Marketing.—
The Administrator shall aggressively market its export financing program to small businesses.
(15)
(A)
The Administration may guarantee loans under this subsection—
(i) to qualified employee trusts with respect to a small business concern for the purpose of purchasing, and for any transaction costs associated with purchasing, stock of the concern under a plan approved by the Administrator which, when carried out, results in the qualified employee trust owning at least 51 per centum of the stock of the concern; and
(ii) to a small business concern under a plan approved by the Administrator, if the proceeds from the loan are only used to make a loan to a qualified employee trust, and for any transaction costs associated with making that loan, that results in the qualified employee trust owning at least 51 percent of the small business concern.
(B)
The plan requiring the Administrator’s approval under subparagraph (A) shall be submitted to the Administration by the trustee of such trust or by the small business concern with its application for the guarantee. Such plan shall include an agreement with the Administrator which is binding on such trust and on the small business concern and which provides that—
(i) not later than the date the loan guaranteed under subparagraph (A) is repaid (or as soon thereafter as is consistent with the requirements of section 401(a) of title 26), at least 51 per centum of the total stock of such concern shall be allocated to the accounts of at least 51 per centum of the employees of such concern who are entitled to share in such allocation,
(ii) there will be periodic reviews of the role in the management of such concern of employees to whose accounts stock is allocated,
(iii) there will be adequate management to assure management expertise and continuity, and
(iv)
with respect to a loan made to a trust, or to a cooperative in accordance with paragraph (35)—
(I) a seller of the small business concern may remain involved as an officer, director, or key employee of the small business concern when a qualified employee trust or cooperative has acquired 100 percent of ownership of the small business concern; and(II) any seller of the small business concern who remains as an owner of the small business concern, regardless of the percentage of ownership interest, shall be required to provide a personal guarantee by the Administration.
(C) In determining whether to guarantee any loan under this paragraph, the individual business experience or personal assets of employee-owners shall not be used as criteria, except inasmuch as certain employee-owners may assume managerial responsibilities, in which case business experience may be considered.
(D) For purposes of this paragraph, a corporation which is controlled by any other person shall be treated as a small business concern if such corporation would, after the plan described in subparagraph (B) is carried out, be treated as a small business concern.
(E)
The Administration shall compile a separate list of applications for assistance under this paragraph, indicating which applications were accepted and which were denied, and shall report periodically to the Congress on the status of employee-owned firms assisted by the Administration, which shall include—
(i)
the total number of loans made to employee-owned business concerns that were guaranteed by the Administrator under this subsection or section 502 of the Small Business Investment Act of 1958 (15 U.S.C. 696), including the number of loans made—
(I) to small business concerns owned and controlled by socially and economically disadvantaged individuals; and(II) to cooperatives;
(ii)
the total number of financings made to employee-owned business concerns by companies licensed under section 301(c) of the Small Business Investment Act of 1958 (15 U.S.C. 696(c)) [15 U.S.C. 681(c)], including the number of financings made—
(I) to small business concerns owned and controlled by socially and economically disadvantaged individuals; and(II) to cooperatives; and
(iii) any outreach and educational activities conducted by the Administration with respect to employee-owned business concerns.
(F) A small business concern that makes a loan to a qualified employee trust under subparagraph (A)(ii) is not required to contain the same terms and conditions as the loan made to the small business concern that is guaranteed by the Administration under such subparagraph.
(G)
(16)
International trade.—
(A)
In general.—
If the Administrator determines that a loan guaranteed under this subsection will allow an eligible small business concern that is engaged in or adversely affected by international trade to improve its competitive position, the Administrator may make such loan to assist such concern—
(i) in the financing of the acquisition, construction, renovation, modernization, improvement, or expansion of productive facilities or equipment to be used in the United States in the production of goods and services involved in international trade;
(ii) in the refinancing of existing indebtedness that is not structured with reasonable terms and conditions, including any debt that qualifies for refinancing under any other provision of this subsection; or
(iii) by providing working capital.
(B)
Security.—
(i)
In general.—
Except as provided in clause (ii), each loan made under this paragraph shall be secured by a first lien position or first mortgage on the property or equipment financed by the loan or on other assets of the small business concern.
(ii)
Exception.—
A loan under this paragraph may be secured by a second lien position on the property or equipment financed by the loan or on other assets of the small business concern, if the Administrator determines the lien provides adequate assurance of the payment of the loan.
(C)
Engaged in international trade.—
For purposes of this paragraph, a small business concern is engaged in international trade if, as determined by the Administrator, the small business concern is in a position to expand existing export markets or develop new export markets.
(D)
Adversely affected by international trade.—
For purposes of this paragraph, a small business concern is adversely affected by international trade if, as determined by the Administrator, the small business concern—
(i) is confronting increased competition with foreign firms in the relevant market; and
(ii) is injured by such competition.
(E)
Findings by certain federal agencies.—
For purposes of subparagraph (D)(ii) the Administrator shall accept any finding of injury by the International Trade Commission or any finding of injury by the Secretary of Commerce pursuant to chapter 3 of title II of the Trade Act of 1974 [19 U.S.C. 2341 et seq.].
(F)
List of export finance lenders.—
(i)
Publication of list required.—
The Administrator shall publish an annual list of the banks and participating lending institutions that, during the 1-year period ending on the date of publication of the list, have made loans guaranteed by the Administration under—
(I) this paragraph;(II) paragraph (14); or(III) paragraph (34).
(ii)
Availability of list.—
The Administrator shall—
(I) post the list published under clause (i) on the website of the Administration; and(II) make the list published under clause (i) available, upon request, at each district office of the Administration.
(17) The Administration shall authorize lending institutions and other entities in addition to banks to make loans authorized under this subsection.
(18)
Guarantee fees.—
(A)
In general.—
With respect to each loan guaranteed under this subsection (other than a loan that is repayable in 1 year or less), the Administration shall collect a guarantee fee, which shall be payable by the participating lender, and may be charged to the borrower, as follows:
(i) A guarantee fee not to exceed 2 percent of the deferred participation share of a total loan amount that is not more than $150,000.
(ii) A guarantee fee not to exceed 3 percent of the deferred participation share of a total loan amount that is more than $150,000, but not more than $700,000.
(iii) A guarantee fee not to exceed 3.5 percent of the deferred participation share of a total loan amount that is more than $700,000.
(iv) In addition to the fee under clause (iii), a guarantee fee equal to 0.25 percent of any portion of the deferred participation share that is more than $1,000,000.
(B)
Retention of certain fees.—
Lenders participating in the programs established under this subsection may retain not more than 25 percent of a fee collected under subparagraph (A)(i).
(19)
(A) In addition to the Preferred Lenders Program authorized by the proviso in section 634(b)(7) of this title, the Administration is authorized to establish a Certified Lenders Program for lenders who establish their knowledge of Administration laws and regulations concerning the guaranteed loan program and their proficiency in program requirements. The designation of a lender as a certified lender shall be suspended or revoked at any time that the Administration determines that the lender is not adhering to its rules and regulations or that the loss experience of the lender is excessive as compared to other lenders, but such suspension or revocation shall not affect any outstanding guarantee.
(B) In order to encourage all lending institutions and other entities making loans authorized under this subsection to provide loans of $50,000 or less in guarantees to eligible small business loan applicants, the Administration shall develop and allow participating lenders to solely utilize a uniform and simplified loan form for such loans.
(C)
Authority to liquidate loans.—
(i)
In general.—
The Administrator may permit lenders participating in the Certified Lenders Program to liquidate loans made with a guarantee from the Administration pursuant to a liquidation plan approved by the Administrator.
(ii)
Automatic approval.—
If the Administrator does not approve or deny a request for approval of a liquidation plan within 10 business days of the date on which the request is made (or with respect to any routine liquidation activity under such a plan, within 5 business days) such request shall be deemed to be approved.
(20)
(A)
The Administration is empowered to make loans either directly or in cooperation with banks or other financial institutions through agreements to participate on an immediate or deferred (guaranteed) basis to small business concerns eligible for assistance under subsection (j)(10) and section 637(a) of this title. Such assistance may be provided only if the Administration determines that—
(i) the type and amount of such assistance requested by such concern is not otherwise available on reasonable terms from other sources;
(ii) with such assistance such concern has a reasonable prospect for operating soundly and profitably within a reasonable period of time;
(iii) the proceeds of such assistance will be used within a reasonable time for plant construction, conversion, or expansion, including the acquisition of equipment, facilities, machinery, supplies, or material or to supply such concern with working capital to be used in the manufacture of articles, equipment, supplies, or material for defense or civilian production or as may be necessary to insure a well-balanced national economy; and
(iv) such assistance is of such sound value as reasonably to assure that the terms under which it is provided will not be breached by the small business concern.
(B)
(i) No loan shall be made under this paragraph if the total amount outstanding and committed (by participation or otherwise) to the borrower would exceed $750,000.
(ii) Subject to the provisions of clause (i), in agreements to participate in loans on a deferred (guaranteed) basis, participation by the Administration shall be not less than 85 per centum of the balance of the financing outstanding at the time of disbursement.
(iii) The rate of interest on financings made on a deferred (guaranteed) basis shall be legal and reasonable.
(iv)
Financings made pursuant to this paragraph shall be subject to the following limitations:
(I) No immediate participation may be purchased unless it is shown that a deferred participation is not available.(II) No direct financing may be made unless it is shown that a participation is unavailable.
(C)
A direct loan or the Administration’s share of an immediate participation loan made pursuant to this paragraph shall be any secured debt instrument—
(i) that is subordinated by its terms to all other borrowings of the issuer;
(ii) the rate of interest on which shall not exceed the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loan and adjusted to the nearest one-eighth of 1 per centum;
(iii) the term of which is not more than twenty-five years; and
(iv) the principal on which is amortized at such rate as may be deemed appropriate by the Administration, and the interest on which is payable not less often than annually.
(21)
(A)
The Administration may make loans on a guaranteed basis under the authority of this subsection—
(i)
to a small business concern that has been (or can reasonably be expected to be) detrimentally affected by—
(I) the closure (or substantial reduction) of a Department of Defense installation; or(II) the termination (or substantial reduction) of a Department of Defense program on which such small business was a prime contractor or subcontractor (or supplier) at any tier; or
(ii) to a qualified individual or a veteran seeking to establish (or acquire) and operate a small business concern.
(B) Recognizing that greater risk may be associated with a loan to a small business concern described in subparagraph (A)(i), any reasonable doubts concerning the firm’s proposed business plan for transition to nondefense-related markets shall be resolved in favor of the loan applicant when making any determination regarding the sound value of the proposed loan in accordance with paragraph (6).
(C) Loans pursuant to this paragraph shall be authorized in such amounts as provided in advance in appropriation Acts for the purposes of loans under this paragraph.
(D)
For purposes of this paragraph a qualified individual is—
(i) a member of the Armed Forces of the United States, honorably discharged from active duty involuntarily or pursuant to a program providing bonuses or other inducements to encourage voluntary separation or early retirement;
(ii) a civilian employee of the Department of Defense involuntarily separated from Federal service or retired pursuant to a program offering inducements to encourage early retirement; or
(iii) an employee of a prime contractor, subcontractor, or supplier at any tier of a Department of Defense program whose employment is involuntarily terminated (or voluntarily terminated pursuant to a program offering inducements to encourage voluntary separation or early retirement) due to the termination (or substantial reduction) of a Department of Defense program.
(E)
Job creation and community benefit.—
In providing assistance under this paragraph, the Administration shall develop procedures to ensure, to the maximum extent practicable, that such assistance is used for projects that—
(i)
have the greatest potential for—
(I) creating new jobs for individuals whose employment is involuntarily terminated due to reductions in Federal defense expenditures; or(II) preventing the loss of jobs by employees of small business concerns described in subparagraph (A)(i); and
(ii) have substantial potential for stimulating new economic activity in communities most affected by reductions in Federal defense expenditures.
(22) The Administration is authorized to permit participating lenders to impose and collect a reasonable penalty fee on late payments of loans guaranteed under this subsection in an amount not to exceed 5 percent of the monthly loan payment per month plus interest.
(23)
Yearly fee.—
(A)
In general.—
With respect to each loan approved under this subsection, the Administration shall assess, collect, and retain a fee, not to exceed 0.55 percent per year of the outstanding balance of the deferred participation share of the loan, in an amount established once annually by the Administration in the Administration’s annual budget request to Congress, as necessary to reduce to zero the cost to the Administration of making guarantees under this subsection. As used in this paragraph, the term “cost” has the meaning given that term in section 661a of title 2.
(B)
Payer.—
The yearly fee assessed under subparagraph (A) shall be payable by the participating lender and shall not be charged to the borrower.
(C)
Lowering of borrower fees.—
If the Administration determines that fees paid by lenders and by small business borrowers for guarantees under this subsection may be reduced, consistent with reducing to zero the cost to the Administration of making such guarantees—
(i) the Administration shall first consider reducing fees paid by small business borrowers under clauses (i) through (iii) of paragraph (18)(A), to the maximum extent possible; and
(ii) fees paid by small business borrowers shall not be increased above the levels in effect on December 8, 2004.
(24)
Notification requirement.—
The Administration shall notify the Committees on Small Business of the Senate and the House of Representatives not later than 15 days before making any significant policy or administrative change affecting the operation of the loan program under this subsection.
(25)
Limitation on conducting pilot projects.—
(A)
In general.—
Not more than 10 percent of the total number of loans guaranteed in any fiscal year under this subsection may be awarded as part of a pilot program which is commenced by the Administrator on or after October 1, 1996.
(B)
“Pilot program” defined.—
In this paragraph, the term ‘pilot program’ means any lending program initiative, project, innovation, or other activity not specifically authorized by law.
(C)
Low documentation loan program.—
The Administrator may carry out the low documentation loan program for loans of $100,000 or less only through lenders with significant experience in making small business loans. Not later than 90 days after September 30, 1996, the Administrator shall promulgate regulations defining the experience necessary for participation as a lender in the low documentation loan program.
(26)
Calculation of subsidy rate.—
All fees, interest, and profits received and retained by the Administration under this subsection shall be included in the calculations made by the Director of the Office of Management and Budget to offset the cost (as that term is defined in section 661a of title 2) to the Administration of purchasing and guaranteeing loans under this chapter.
(27) Repealed. Pub. L. 106–8, § 3(c), Apr. 2, 1999, 113 Stat. 16.
(28)
Leasing.—
In addition to such other lease arrangements as may be authorized by the Administration, a borrower may permanently lease to one or more tenants not more than 20 percent of any property constructed with the proceeds of a loan guaranteed under this subsection, if the borrower permanently occupies and uses not less than 60 percent of the total business space in the property.
(29)
Real estate appraisals.—
(A)
In general.—
With respect to a loan under this subsection that is secured by commercial real property, an appraisal of such property by a State licensed or certified appraiser—
(i) shall be required by the Administration in connection with any such loan, if such loan is in an amount greater than the Federal banking regulator appraisal threshold; or
(ii) may be required by the Administration or the lender in connection with any such loan, if such loan is in an amount equal to or less than the Federal banking regulator appraisal threshold, if such appraisal is necessary for appropriate evaluation of creditworthiness.
(B)
Federal banking regulator appraisal threshold defined.—
For purposes of this paragraph, the term “Federal banking regulator appraisal threshold” means the lesser of the threshold amounts set by the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation for when a federally related transaction that is a commercial real estate transaction requires an appraisal prepared by a State licensed or certified appraiser.
(30)
Ownership requirements.—
Ownership requirements to determine the eligibility of a small business concern that applies for assistance under any credit program under this chapter shall be determined without regard to any ownership interest of a spouse arising solely from the application of the community property laws of a State for purposes of determining marital interests.
(31)
Express loans.—
(A)
Definitions.—
As used in this paragraph:
(i) The term “disaster area” means the area for which the President has declared a major disaster, during the 5-year period beginning on the date of the declaration.
(ii) The term “express lender” means any lender authorized by the Administration to participate in the Express Loan Program.
(iii) The term “express loan” means any loan made pursuant to this paragraph in which a lender utilizes to the maximum extent practicable its own loan analyses, procedures, and documentation.
(iv) The term “Express Loan Program” means the program for express loans established by the Administration under paragraph (25)(B), as in existence on April 5, 2004, with a guarantee rate of not more than 50 percent.
(B)
Restriction to express lender.—
The authority to make an express loan shall be limited to those lenders deemed qualified to make such loans by the Administration. Designation as an express lender for purposes of making an express loan shall not prohibit such lender from taking any other action authorized by the Administration for that lender pursuant to this subsection.
(C)
Grandfathering of existing lenders.—
Any express lender shall retain such designation unless the Administration determines that the express lender has violated the law or regulations promulgated by the Administration or modifies the requirements to be an express lender and the lender no longer satisfies those requirements.
(D)
Maximum loan amount.—
The maximum loan amount under the Express Loan Program is $500,000.
(E)
Option to participate.—
Except as otherwise provided in this paragraph, the Administration shall take no regulatory, policy, or administrative action, without regard to whether such action requires notification pursuant to paragraph (24), that has the effect of requiring a lender to make an express loan pursuant to subparagraph (D).
(F)
Express loans for renewable energy and energy efficiency.—
(i)
Definitions.—
In this subparagraph—
(I)
the term “biomass”—
(aa)
means any organic material that is available on a renewable or recurring basis, including—
(AA) agricultural crops;(BB) trees grown for energy production;(CC) wood waste and wood residues;(DD) plants (including aquatic plants and grasses);(EE) residues;(FF) fibers;(GG) animal wastes and other waste materials; and(HH) fats, oils, and greases (including recycled fats, oils, and greases); and(bb)
does not include—
(AA) paper that is commonly recycled; or(BB) unsegregated solid waste;(II) the term “energy efficiency project” means the installation or upgrading of equipment that results in a significant reduction in energy usage; and(III)
the term “renewable energy system” means a system of energy derived from—
(aa) a wind, solar, biomass (including biodiesel), or geothermal source; or(bb) hydrogen derived from biomass or water using an energy source described in item (aa).
(ii)
Loans.—
The Administrator may make a loan under the Express Loan Program for the purpose of—
(I) purchasing a renewable energy system; or(II) carrying out an energy efficiency project for a small business concern.
(G)
Guarantee fee waiver for veterans.—
(i)
Guarantee fee waiver.—
The Administrator may not collect a guarantee fee described in paragraph (18) in connection with a loan made under this paragraph to a veteran or spouse of a veteran on or after October 1, 2015.
(ii)
Definition.—
In this subparagraph, the term “veteran or spouse of a veteran” means—
(I) a veteran, as defined in section 632(q)(4) of this title;(II) an individual who is eligible to participate in the Transition Assistance Program established under section 1144 of title 10;(III) a member of a reserve component of the Armed Forces named in section 10101 of title 10;(IV) the spouse of an individual described in subclause (I), (II), or (III); or(V) the surviving spouse (as defined in section 101 of title 38) of an individual described in subclause (I), (II), or (III) who died while serving on active duty or as a result of a disability that is service-connected (as defined in such section).
(H)
Recovery opportunity loans.—
(i)
In general.—
The Administrator may guarantee an express loan to a small business concern located in a disaster area in accordance with this subparagraph.
(ii)
Maximums.—
For a loan guaranteed under clause (i)—
(I) the maximum loan amount is $150,000; and(II) the guarantee rate shall be not more than 85 percent.
(iii)
Overall cap.—
A loan guaranteed under clause (i) shall not be counted in determining the amount of loans made to a borrower for purposes of subparagraph (D).
(iv)
Operations.—
A small business concern receiving a loan guaranteed under clause (i) shall certify that the small business concern was in operation on the date on which the applicable major disaster occurred as a condition of receiving the loan.
(v)
Repayment ability.—
A loan guaranteed under clause (i) may only be made to a small business concern that demonstrates, to the satisfaction of the Administrator, sufficient capacity to repay the loan.
(vi)
Timing of payment of guarantees.—
(I)
In general.—
Not later than 90 days after the date on which a request for purchase is filed with the Administrator, the Administrator shall determine whether to pay the guaranteed portion of the loan.(II)
Recapture.—
Notwithstanding any other provision of law, unless there is a subsequent finding of fraud by a court of competent jurisdiction relating to a loan guaranteed under clause (i), on and after the date that is 6 months after the date on which the Administrator determines to pay the guaranteed portion of the loan, the Administrator may not attempt to recapture the paid guarantee.
(vii)
Fees.—
(I)
In general.—
Unless the Administrator has waived the guarantee fee that would otherwise be collected by the Administrator under paragraph (18) for a loan guaranteed under clause (i), and except as provided in subclause (II), the guarantee fee for the loan shall be equal to the guarantee fee that the Administrator would collect if the guarantee rate for the loan was 50 percent.(II)
Exception.—
Subclause (I) shall not apply if the cost of carrying out the program under this subsection in a fiscal year is more than zero and such cost is directly attributable to the cost of guaranteeing loans under clause (i).
(viii)
Rules.—
Not later than 270 days after November 25, 2015, the Administrator shall promulgate rules to carry out this subparagraph.
(32)
Loans for energy efficient technologies.—
(A)
Definitions.—
In this paragraph—
(i) the term “cost” has the meaning given that term in section 661a of title 2;
(ii)
the term “covered energy efficiency loan” means a loan—
(I) made under this subsection; and(II) the proceeds of which are used to purchase energy efficient designs, equipment, or fixtures, or to reduce the energy consumption of the borrower by 10 percent or more; and
(iii) the term “pilot program” means the pilot program established under subparagraph (B) 4
4 So in original.
(B)
Establishment.—
The Administrator shall establish and carry out a pilot program under which the Administrator shall reduce the fees for covered energy efficiency loans.
(C)
Duration.—
The pilot program shall terminate at the end of the second full fiscal year after the date that the Administrator establishes the pilot program.
(D)
Maximum participation.—
A covered energy efficiency loan shall include the maximum participation levels by the Administrator permitted for loans made under this subsection.
(E)
Fees.—
(i)
In general.—
The fee on a covered energy efficiency loan shall be equal to 50 percent of the fee otherwise applicable to that loan under paragraph (18).
(ii)
Waiver.—
The Administrator may waive clause (i) for a fiscal year if—
(I) for the fiscal year before that fiscal year, the annual rate of default of covered energy efficiency loans exceeds that of loans made under this subsection that are not covered energy efficiency loans;(II) the cost to the Administration of making loans under this subsection is greater than zero and such cost is directly attributable to the cost of making covered energy efficiency loans; and(III) no additional sources of revenue authority are available to reduce the cost of making loans under this subsection to zero.
(iii)
Effect of waiver.—
If the Administrator waives the reduction of fees under clause (ii), the Administrator—
(I) shall not assess or collect fees in an amount greater than necessary to ensure that the cost of the program under this subsection is not greater than zero; and(II) shall reinstate the fee reductions under clause (i) when the conditions in clause (ii) no longer apply.
(iv)
No increase of fees.—
The Administrator shall not increase the fees under paragraph (18) on loans made under this subsection that are not covered energy efficiency loans as a direct result of the pilot program.
(F)
GAO report.—
(i)
In general.—
Not later than 1 year after the date that the pilot program terminates, the Comptroller General of the United States shall submit to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate a report on the pilot program.
(ii)
Contents.—
The report submitted under clause (i) shall include—
(I) the number of covered energy efficiency loans for which fees were reduced under the pilot program;(II) a description of the energy efficiency savings with the pilot program;(III) a description of the impact of the pilot program on the program under this subsection;(IV) an evaluation of the efficacy and potential fraud and abuse of the pilot program; and(V) recommendations for improving the pilot program.
(33)
Increased veteran participation program.—
(A)
Definitions.—
In this paragraph—
(i) the term “cost” has the meaning given that term in section 661a of title 2;
(ii) the term “pilot program” means the pilot program established under subparagraph (B); and
(iii) the term “veteran participation loan” means a loan made under this subsection to a small business concern owned and controlled by veterans of the Armed Forces or members of the reserve components of the Armed Forces.
(B)
Establishment.—
The Administrator shall establish and carry out a pilot program under which the Administrator shall reduce the fees for veteran participation loans.
(C)
Duration.—
The pilot program shall terminate at the end of the second full fiscal year after the date that the Administrator establishes the pilot program.
(D)
A veteran participation loan shall include the maximum participation levels by the Administrator permitted for loans made under this subsection.
(E)
Fees.—
(i)
In general.—
The fee on a veteran participation loan shall be equal to 50 percent of the fee otherwise applicable to that loan under paragraph (18).
(ii)
Waiver.—
The Administrator may waive clause (i) for a fiscal year if—
(I) for the fiscal year before that fiscal year, the annual estimated rate of default of veteran participation loans exceeds that of loans made under this subsection that are not veteran participation loans;(II) the cost to the Administration of making loans under this subsection is greater than zero and such cost is directly attributable to the cost of making veteran participation loans; and(III) no additional sources of revenue authority are available to reduce the cost of making loans under this subsection to zero.
(iii)
Effect of waiver.—
If the Administrator waives the reduction of fees under clause (ii), the Administrator—
(I) shall not assess or collect fees in an amount greater than necessary to ensure that the cost of the program under this subsection is not greater than zero; and(II) shall reinstate the fee reductions under clause (i) when the conditions in clause (ii) no longer apply.
(iv)
No increase of fees.—
The Administrator shall not increase the fees under paragraph (18) on loans made under this subsection that are not veteran participation loans as a direct result of the pilot program.
(F)
GAO report.—
(i)
In general.—
Not later than 1 year after the date that the pilot program terminates, the Comptroller General of the United States shall submit to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate a report on the pilot program.
(ii)
Contents.—
The report submitted under clause (i) shall include—
(I) the number of veteran participation loans for which fees were reduced under the pilot program;(II) a description of the impact of the pilot program on the program under this subsection;(III) an evaluation of the efficacy and potential fraud and abuse of the pilot program; and(IV) recommendations for improving the pilot program.
(34)
Export express program.—
(A)
Definitions.—
In this paragraph—
(i)
the term “export development activity” includes—
(I) obtaining a standby letter of credit when required as a bid bond, performance bond, or advance payment guarantee;(II) participation in a trade show that takes place outside the United States;(III) translation of product brochures or catalogues for use in markets outside the United States;(IV) obtaining a general line of credit for export purposes;(V) performing a service contract from buyers located outside the United States;(VI) obtaining transaction-specific financing associated with completing export orders;(VII) purchasing real estate or equipment to be used in the production of goods or services for export;(VIII) providing term loans or other financing to enable a small business concern, including an export trading company and an export management company, to develop a market outside the United States; and(IX) acquiring, constructing, renovating, modernizing, improving, or expanding a production facility or equipment to be used in the United States in the production of goods or services for export; and
(ii) the term “express loan” means a loan in which a lender uses to the maximum extent practicable the loan analyses, procedures, and documentation of the lender to provide expedited processing of the loan application.
(B)
Authority.—
The Administrator may guarantee the timely payment of an express loan to a small business concern made for an export development activity.
(C)
Level of participation.—
(i)
Maximum amount.—
The maximum amount of an express loan guaranteed under this paragraph shall be $500,000.
(ii)
Percentage.—
For an express loan guaranteed under this paragraph, the Administrator shall guarantee—
(I) 90 percent of a loan that is not more than $350,000; and(II) 75 percent of a loan that is more than $350,000 and not more than $500,000.
(35)
Loans to cooperatives.—
(A)
Definition.—
In this paragraph, the term “cooperative” means an entity that is determined to be a cooperative by the Administrator, in accordance with applicable Federal and State laws and regulation.
(B)
Authority.—
The Administration shall guarantee loans made to a cooperative for the purpose described in paragraph (15).
(36)
Paycheck protection program.—
(A)
Definitions.—
In this paragraph—
(i) the terms “appropriate Federal banking agency” and “insured depository institution” have the meanings given those terms in section 1813 of title 12;
(ii) the term “covered loan” means a loan made under this paragraph during the covered period;
(iii) the term “covered period” means the period beginning on February 15, 2020 and ending on June 30, 2021;
(iv) the term “eligible recipient” means an individual or entity that is eligible to receive a covered loan;
(v) the term “eligible self-employed individual” has the meaning given the term in section 7002(b) of the Families First Coronavirus Response Act (Public Law 116–127);
(vi) the term “insured credit union” has the meaning given the term in section 1752 of title 12;
(vii) the term “nonprofit organization” means an organization that is described in section 501(c)(3) of title 26 and that is exempt from taxation under section 501(a) of title 26;
(viii)
the term “payroll costs”—
(I)
means—
(aa)
the sum of payments of any compensation with respect to employees that is a—
(AA) salary, wage, commission, or similar compensation;(BB) payment of cash tip or equivalent;(CC) payment for vacation, parental, family, medical, or sick leave;(DD) allowance for dismissal or separation;(EE) payment required for the provisions of group health care or group life, disability, vision, or dental insurance benefits, including insurance premiums;(FF) payment of any retirement benefit; or(GG) payment of State or local tax assessed on the compensation of employees; and(bb) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred; and(II)
shall not include—
(aa) the compensation of an individual employee in excess of $100,000 on an annualized basis, as prorated for the period during which the compensation is paid or the obligation to pay the compensation is incurred;(bb) taxes imposed or withheld under chapters 21, 22, or 24 of title 26 during the applicable period;(cc) any compensation of an employee whose principal place of residence is outside of the United States;(dd) qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–127); or(ee) qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act (Public Law 116–127);
(ix) the term “veterans organization” means an organization that is described in section 501(c)(19) of title 26 that is exempt from taxation under section 501(a) of title 26;
(x) the term “community development financial institution” has the meaning given the term in section 4702 of title 12); 5
5 So in original. The closing parenthesis probably should not appear.
(xi)
the term “community financial institutions” means—
(I) a community development financial institution;(II) a minority depository institution, as defined in section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1463 note);(III) a development company that is certified under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.); and(IV) an intermediary, as defined in subsection (m)(11);
(xii) the term “credit union” means a State credit union or a Federal credit union, as those terms are defined, respectively, in section 1752 of title 12;
(xiii)
the term “seasonal employer” means an eligible recipient that—
(I) does not operate for more than 7 months in any calendar year; or(II) during the preceding calendar year, had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts of the employer for the other 6 months of that year;
(xiv) the term “housing cooperative” means a cooperative housing corporation (as defined in section 216(b) of title 26) that employs not more than 300 employees;
(xv)
the term “destination marketing organization” means a nonprofit entity that is—
(I) an organization described in section 501(c) of title 26 and exempt from tax under section 501(a) of such title; or(II)
a State, or a political subdivision of a State (including any instrumentality of such entities)—
(aa)
engaged in marketing and promoting communities and facilities to businesses and leisure travelers through a range of activities, including—
(AA) assisting with the location of meeting and convention sites;(BB) providing travel information on area attractions, lodging accommodations, and restaurants;(CC) providing maps; and(DD) organizing group tours of local historical, recreational, and cultural attractions; or(bb) that is engaged in, and derives the majority of the operating budget of the entity from revenue attributable to, providing live events;
(xvi) the terms “exchange”, “issuer”, and “security” have the meanings given those terms in section 78c(a) of this title; and
(xvii)
the term “additional covered nonprofit entity”—
(I) means an organization described in any paragraph of section 501(c) of title 26, other than paragraph (3), (4), (6), or (19), and exempt from tax under section 501(a) of such title; and(II) does not include any entity that, if the entity were a business concern, would be described in section 120.110 of title 13, Code of Federal Regulations (or in any successor regulation or other related guidance or rule that may be issued by the Administrator) other than a business concern described in paragraph (a) or (k) of such section.
(B)
Paycheck protection loans.—
Except as otherwise provided in this paragraph, the Administrator may guarantee covered loans under the same terms, conditions, and processes as a loan made under this subsection.
(C)
Registration of loans.—
Not later than 15 days after the date on which a loan is made under this paragraph, the Administration shall register the loan using the TIN (as defined in section 7701 of title 26) assigned to the borrower.
(D)
Increased eligibility for certain small businesses and organizations.—
(i)
In general.—
During the covered period, in addition to small business concerns, any business concern, nonprofit organization, housing cooperative, veterans organization, or Tribal business concern described in section 657a(b)(2)(C) of this title shall be eligible to receive a covered loan if the business concern, nonprofit organization, housing cooperative, veterans organization, or Tribal business concern employs not more than the greater of—
(I) 500 employees; or(II) if applicable, the size standard in number of employees established by the Administration for the industry in which the business concern, nonprofit organization, housing cooperative, veterans organization, or Tribal business concern operates.
(ii)
Inclusion of sole proprietors, independent contractors, and eligible self-employed individuals.—
(I)
In general.—
During the covered period, individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible to receive a covered loan.(II)
Documentation.—
(iii)
Business concerns with more than 1 physical location.—
(I)
In general.—
During the covered period, any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a North American Industry Classification System code beginning with 72 at the time of disbursal shall be eligible to receive a covered loan.(II)
Eligibility of news organizations.—
(aa)
Definition.—
In this subclause, the term “included business concern” means a business concern, including any station which broadcasts pursuant to a license granted by the Federal Communications Commission under title III of the Communications Act of 1934 (47 U.S.C. 301 et seq.) without regard for whether such a station is a concern as defined in section 121.105 of title 13, Code of Federal Regulations, or any successor thereto—
(AA) that employs not more than 500 employees, or the size standard established by the Administrator for the North American Industry Classification System code applicable to the business concern, per physical location of such business concern; or(BB) any nonprofit organization or any organization otherwise subject to section 511(a)(2)(B) of title 26 that is a public broadcasting entity (as defined in section 397(11) of the Communications Act of 1934 (47 U.S.C. 397(11))).(bb)
Eligibility.—
During the covered period, an included business concern shall be eligible to receive a covered loan if—
(AA) the included business concern is majority owned or controlled by a business concern that is assigned a North American Industry Classification System code beginning with 511110 or 5151 or, with respect to a public broadcasting entity (as defined in section 397(11) of the Communications Act of 1934 (47 U.S.C. 397(11))), has a trade or business that falls under such a code; and(BB) the included business concern makes a good faith certification that proceeds of the loan will be used to support expenses at the component of the included business concern that produces or distributes locally focused or emergency information.(III)
Eligibility of certain organizations.—
Subject to the provisions in this subparagraph, during the covered period—
(aa) a nonprofit organization shall be eligible to receive a covered loan if the nonprofit organization employs not more than 500 employees per physical location of the organization; and(bb) an additional covered nonprofit entity and an organization that, but for subclauses (I)(dd) and (II)(dd) of clause (vii), would be eligible for a covered loan under clause (vii) shall be eligible to receive a covered loan if the entity or organization employs not more than 300 employees per physical location of the entity or organization.(IV)
Eligibility of internet publishing organizations.—
A business concern or other organization that was not eligible to receive a covered loan the day before March 11, 2021, is assigned a North American Industry Classification System code of 519130, certifies in good faith as an Internet-only news publisher or Internet-only periodical publisher, and is engaged in the collection and distribution of local or regional and national news and information shall be eligible to receive a covered loan for the continued provision of news, information, content, or emergency information if—
(aa) the business concern or organization employs not more than 500 employees, or the size standard established by the Administrator for that North American Industry Classification code, per physical location of the business concern or organization; and(bb) the business concern or organization makes a good faith certification that proceeds of the loan will be used to support expenses at the component of the business concern or organization that supports local or regional news.
(iv)
Waiver of affiliation rules.—
During the covered period, the provisions applicable to affiliations under section 121.103 of title 13, Code of Federal Regulations, or any successor regulation, are waived with respect to eligibility for a covered loan for—
(I) any business concern with not more than 500 employees that, as of the date on which the covered loan is disbursed, is assigned a North American Industry Classification System code beginning with 72;(II) any business concern operating as a franchise that is assigned a franchise identifier code by the Administration;(III) any business concern that receives financial assistance from a company licensed under section 681 of this title;(IV)(aa) any business concern (including any station which broadcasts pursuant to a license granted by the Federal Communications Commission under title III of the Communications Act of 1934 (47 U.S.C. 301 et seq.) without regard for whether such a station is a concern as defined in section 121.105 of title 13, Code of Federal Regulations, or any successor thereto) that employs not more than 500 employees, or the size standard established by the Administrator for the North American Industry Classification System code applicable to the business concern, per physical location of such business concern and is majority owned or controlled by a business concern that is assigned a North American Industry Classification System code beginning with 511110 or 5151; or(bb) any nonprofit organization that is assigned a North American Industry Classification System code beginning with 5151; and(V)
any business concern or other organization that was not eligible to receive a covered loan the day before March 11, 2021, is assigned a North American Industry Classification System code of 519130, certifies in good faith as an Internet-only news publisher or Internet-only periodical publisher, and is engaged in the collection and distribution of local or regional and national news and information, if the business concern or organization—
(aa) employs not more than 500 employees, or the size standard established by the Administrator for that North American Industry Classification code, per physical location of the business concern or organization; and(bb) is majority owned or controlled by a business concern or organization that is assigned a North American Industry Classification System code of 519130.
(v)
Employee.—
For purposes of determining whether a business concern, nonprofit organization, veterans organization, or Tribal business concern described in section 657a(b)(2)(C) of this title employs not more than 500 employees under clause (i)(I), or for purposes of determining the number of employees of a housing cooperative or a business concern or organization made eligible for a loan under this paragraph under subclause (II), (III), or (IV) of clause (iii), subclause (IV) or (V) of clause (iv), clause (vii), or clause (ix), the term “employee” includes individuals employed on a full-time, part-time, or other basis.
(vi)
Affiliation.—
The provisions applicable to affiliations under section 121.103 of title 13, Code of Federal Regulations, or any successor thereto, shall apply with respect to a nonprofit organization, a business concern or organization made eligible for a loan under this paragraph under clause (vii), a housing cooperative, and a veterans organization in the same manner as with respect to a small business concern.
(vii)
Eligibility for certain 501(c)(6) organizations.—
(I)
In general.—
Any organization that is described in section 501(c)(6) of title 26 and that is exempt from taxation under section 501(a) of such title (excluding professional sports leagues and organizations with the purpose of promoting or participating in a political campaign or other activity) shall be eligible to receive a covered loan if—
(aa) the organization does not receive more than 15 percent of its receipts from lobbying activities;(bb) the lobbying activities of the organization do not comprise more than 15 percent of the total activities of the organization;(cc) the cost of the lobbying activities of the organization did not exceed $1,000,000 during the most recent tax year of the organization that ended prior to February 15, 2020; and(dd) the organization employs not more than 300 employees.(II)
Destination marketing organizations.—
Any destination marketing organization shall be eligible to receive a covered loan if—
(aa) the destination marketing organization does not receive more than 15 percent of its receipts from lobbying activities;(bb) the lobbying activities of the destination marketing organization do not comprise more than 15 percent of the total activities of the organization;(cc) the cost of the lobbying activities of the destination marketing organization did not exceed $1,000,000 during the most recent tax year of the destination marketing organization that ended prior to February 15, 2020; and 6
6 So in original. The word “and” probably should not appear.
(dd) the destination marketing organization employs not more than 300 employees; and(ee)
the destination marketing organization—
(AA) is described in section 501(c) of title 26 and is exempt from taxation under section 501(a) of such title; or(BB) is a quasi-governmental entity or is a political subdivision of a State or local government, including any instrumentality of those entities.
(viii)
Ineligibility of publicly-traded entities.—
(I)
In general.—
Subject to subclause (II), and notwithstanding any other provision of this paragraph, on and after December 27, 2020, an entity that is an issuer, the securities of which are listed on an exchange registered as a national securities exchange under section 78f of this title, shall be ineligible to receive a covered loan under this paragraph.(II)
Rule for affiliated entities.—
With respect to a business concern or organization made eligible by subclause (II) or (IV) of clause (iii) or subclause (IV) or (V) of clause (iv) of this subparagraph, the Administrator shall not consider whether any affiliated entity, which for purposes of this subclause shall include any entity that owns or controls such business concern or organization, is an issuer.
(ix)
Eligibility of additional covered nonprofit entities.—
An additional covered nonprofit entity shall be eligible to receive a covered loan if—
(I) the additional covered nonprofit entity does not receive more than 15 percent of its receipts from lobbying activities;(II) the lobbying activities of the additional covered nonprofit entity do not comprise more than 15 percent of the total activities of the organization;(III) the cost of the lobbying activities of the additional covered nonprofit entity did not exceed $1,000,000 during the most recent tax year of the additional covered nonprofit entity that ended prior to February 15, 2020; and(IV) the additional covered nonprofit entity employs not more than 300 employees.
(E)
Maximum loan amount.—
Except as provided in subparagraph (V), during the covered period, with respect to a covered loan, the maximum loan amount shall be the lesser of—
(i)(I)
the sum of—
(aa)
the product obtained by multiplying—
(AA) the average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made, except that an applicant that is a seasonal employer shall use the average total monthly payments for payroll for any 12-week period selected by the seasonal employer between February 15, 2019, and February 15, 2020; by(BB) 2.5; and(bb) the outstanding amount of a loan under subsection (b)(2) that was made during the period beginning on January 31, 2020 and ending on the date on which covered loans are made available to be refinanced under the covered loan; or(II)
if requested by an otherwise eligible recipient that was not in business during the period beginning on February 15, 2019 and ending on June 30, 2019, the sum of—
(aa)
the product obtained by multiplying—
(AA) the average total monthly payments by the applicant for payroll costs incurred during the period beginning on January 1, 2020 and ending on February 29, 2020; by(BB) 2.5; and(bb) the outstanding amount of a loan under subsection (b)(2) that was made during the period beginning on January 31, 2020 and ending on the date on which covered loans are made available to be refinanced under the covered loan; or
(ii) $10,000,000.
(F)
Allowable uses of covered loans.—
(i)
In general.—
During the covered period, an eligible recipient may, in addition to the allowable uses of a loan made under this subsection, use the proceeds of the covered loan for—
(I) payroll costs;(II) costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;(III) employee salaries, commissions, or similar compensations;(IV) payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation);(V) rent (including rent under a lease agreement);(VI) utilities;(VII) interest on any other debt obligations that were incurred before the covered period;(VIII) covered operations expenditures, as defined in section 636m(a) of this title;(IX) covered property damage costs, as defined in section 636m(a) of this title;(X) covered supplier costs, as defined in section 636m(a) of this title; and(XI) covered worker protection expenditures, as defined in section 636m(a) of this title.
(ii)
Delegated authority.—
(I)
In general.—
For purposes of making covered loans for the purposes described in clause (i), a lender approved to make loans under this subsection shall be deemed to have been delegated authority by the Administrator to make and approve covered loans, subject to the provisions of this paragraph.(II)
Considerations.—
In evaluating the eligibility of a borrower for a covered loan with the terms described in this paragraph, a lender shall consider whether the borrower—
(aa) was in operation on February 15, 2020; and(bb)(AA) had employees for whom the borrower paid salaries and payroll taxes; or(BB) paid independent contractors, as reported on a Form 1099–MISC.
(iii)
Additional lenders.—
The authority to make loans under this paragraph shall be extended to additional lenders determined by the Administrator and the Secretary of the Treasury to have the necessary qualifications to process, close, disburse and service loans made with the guarantee of the Administration.
(iv)
Refinance.—
A loan made under subsection (b)(2) during the period beginning on January 31, 2020
(v)
Nonrecourse.—
Notwithstanding the waiver of the personal guarantee requirement or collateral under subparagraph (J), the Administrator shall have no recourse against any individual shareholder, member, or partner of an eligible recipient of a covered loan for nonpayment of any covered loan, except to the extent that such shareholder, member, or partner uses the covered loan proceeds for a purpose not authorized under clause (i) or (iv).
(vi)
Prohibition.—
None of the proceeds of a covered loan may be used for—
(I) lobbying activities, as defined in section 1602 of title 2;(II) lobbying expenditures related to a State or local election; or(III) expenditures designed to influence the enactment of legislation, appropriations, regulation, administrative action, or Executive order proposed or pending before Congress or any State government, State legislature, or local legislature or legislative body.
(G)
Borrower requirements.—
(i)
7
7 So in original. No cl. (ii) has been enacted.
Certification.—
An eligible recipient applying for a covered loan shall make a good faith certification—
(I) that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient;(II) acknowledging that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments;(III) that the eligible recipient does not have an application pending for a loan under this subsection for the same purpose and duplicative of amounts applied for or received under a covered loan; and(IV) during the period beginning on February 15, 2020 and ending on December 31, 2020, that the eligible recipient has not received amounts under this subsection for the same purpose and duplicative of amounts applied for or received under a covered loan.
(H)
Fee waiver.—
With respect to a covered loan—
(i) in lieu of the fee otherwise applicable under paragraph (23)(A), the Administrator shall collect no fee; and
(ii) in lieu of the fee otherwise applicable under paragraph (18)(A), the Administrator shall collect no fee.
(I)
Credit elsewhere.—
During the covered period, the requirement that a small business concern is unable to obtain credit elsewhere, as defined in section 632(h) of this title, shall not apply to a covered loan.
(J)
Waiver of personal guarantee requirement.—
With respect to a covered loan—
(i) no personal guarantee shall be required for the covered loan; and
(ii) no collateral shall be required for the covered loan.
(K)
Maturity for loans with remaining balance after application of forgiveness.—
With respect to a covered loan that has a remaining balance after reduction based on the loan forgiveness amount under section 636m of this title
(i) the remaining balance shall continue to be guaranteed by the Administration under this subsection; and
(ii) the covered loan shall have a minimum maturity of 5 years and a maximum maturity of 10 years from the date on which the borrower applies for loan forgiveness under that section.
(L)
Interest rate requirements.—
A covered loan shall bear an interest rate not to exceed 4 percent, calculated on a non-compounding, non-adjustable basis.
(M)
Loan deferment.—
(i)
Definition of impacted borrower.—
(I)
In general.—
In this subparagraph, the term “impacted borrower” means an eligible recipient that—
(aa) is in operation on February 15, 2020; and(bb) has an application for a covered loan that is approved or pending approval on or after March 27, 2020.(II)
Presumption.—
For purposes of this subparagraph, an impacted borrower is presumed to have been adversely impacted by COVID–19.
(ii)
Deferral.—
The Administrator shall—
(I) consider each eligible recipient that applies for a covered loan to be an impacted borrower; and(II) require lenders under this subsection to provide complete payment deferment relief for impacted borrowers with covered loans, including payment of principal, interest, and fees, until the date on which the amount of forgiveness determined under section 636m of this title is remitted to the lender.
(iii)
Secondary market.—
With respect to a covered loan that is sold on the secondary market, if an investor declines to approve a deferral requested by a lender under clause (ii), the Administrator shall exercise the authority to purchase the loan so that the impacted borrower may receive a deferral, including payment of principal, interest, and fees, until the date on which the amount of forgiveness determined under section 636m of this title is remitted to the lender.
(iv)
Guidance.—
Not later than 30 days after March 27, 2020, the Administrator shall provide guidance to lenders under this paragraph on the deferment process described in this subparagraph.
(v)
Rule of construction.—
If an eligible recipient fails to apply for forgiveness of a covered loan within 10 months after the last day of the covered period defined in section 636m(a) of this title, such eligible recipient shall make payments of principal, interest, and fees on such covered loan beginning on the day that is not earlier than the date that is 10 months after the last day of such covered period.
(N)
Secondary market sales.—
A covered loan shall be eligible to be sold in the secondary market consistent with this subsection. The Administrator may not collect any fee for any guarantee sold into the secondary market under this subparagraph.
(O)
Regulatory capital requirements.—
(i)
Risk weight.—
With respect to the appropriate Federal banking agencies or the National Credit Union Administration Board applying capital requirements under their respective risk-based capital requirements, a covered loan shall receive a risk weight of zero percent.
(ii)
Temporary relief from tdr disclosures.—
Notwithstanding any other provision of law, an insured depository institution or an insured credit union that modifies a covered loan in relation to COVID–19-related difficulties in a troubled debt restructuring on or after March 13, 2020, shall not be required to comply with the Financial Accounting Standards Board Accounting Standards Codification Subtopic 310–40 (“Receivables – Troubled Debt Restructurings by Creditors”) for purposes of compliance with the requirements of the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), until such time and under such circumstances as the appropriate Federal banking agency or the National Credit Union Administration Board, as applicable, determines appropriate.
(P)
Reimbursement for processing.—
(i)
In general.—
The Administrator shall reimburse a lender authorized to make a covered loan as follows:
(I)
With respect to a covered loan made during the period beginning on March 27, 2020, and ending on the day before December 27, 2020, the Administrator shall reimburse such a lender at a rate, based on the balance of the financing outstanding at the time of disbursement of the covered loan, of—
(aa) 5 percent for loans of not more than $350,000;(bb) 3 percent for loans of more than $350,000 and less than $2,000,000; and(cc) 1 percent for loans of not less than $2,000,000.(II)
With respect to a covered loan made on or after December 27, 2020, the Administrator shall reimburse such a lender—
(aa)
for a covered loan of not more than $50,000, in an amount equal to the lesser of—
(AA) 50 percent of the balance of the financing outstanding at the time of disbursement of the covered loan; or(BB) $2,500; and(bb)
at a rate, based on the balance of the financing outstanding at the time of disbursement of the covered loan, of—
(AA) 5 percent for a covered loan of more than $50,000 and not more than $350,000;(BB) 3 percent for a covered loan of more than $350,000 and less than $2,000,000; and(CC) 1 percent for a covered loan of not less than $2,000,000.
(ii)
Fee limits.—
An agent that assists an eligible recipient to prepare an application for a covered loan may not collect a fee in excess of the limits established by the Administrator. If an eligible recipient has knowingly retained an agent, such fees shall be paid by the eligible recipient and may not be paid out of the proceeds of a covered loan. A lender shall only be responsible for paying fees to an agent for services for which the lender directly contracts with the agent.
(iii)
Timing.—
A reimbursement described in clause (i) shall be made not later than 5 days after the reported disbursement of the covered loan and may not be required to be repaid by a lender unless the lender is found guilty of an act of fraud in connection with the covered loan.
(iv)
Sense of the senate.—
It is the sense of the Senate that the Administrator should issue guidance to lenders and agents to ensure that the processing and disbursement of covered loans prioritizes small business concerns and entities in underserved and rural markets, including veterans and members of the military community, small business concerns owned and controlled by socially and economically disadvantaged individuals (as defined in section 637(d)(3)(C) of this title), women, and businesses in operation for less than 2 years.
(Q)
Duplication.—
Nothing in this paragraph shall prohibit a recipient of an economic injury disaster loan made under subsection (b)(2) that is for a purpose other than paying payroll costs and other obligations described in subparagraph (F) from receiving assistance under this paragraph.
(R)
Waiver of prepayment penalty.—
Notwithstanding any other provision of law, there shall be no prepayment penalty for any payment made on a covered loan.
(S)
Set-aside for insured depository institutions, credit unions, and community financial institutions.—
(i)
Insured depository institutions and credit unions.—
In making loan guarantees under this paragraph after April 24, 2020, the Administrator shall guarantee not less than $30,000,000,000 in loans made by—
(I) insured depository institutions with consolidated assets of not less than $10,000,000,000 and less than $50,000,000,000; and(II) credit unions with consolidated assets of not less than $10,000,000,000 and less than $50,000,000,000.
(ii)
Community financial institutions, small insured depository institutions, and credit unions.—
In making loan guarantees under this paragraph after April 24, 2020, the Administrator shall guarantee not less than $30,000,000,000 in loans made by—
(I) community financial institutions;(II) insured depository institutions with consolidated assets of less than $10,000,000,000; and(III) credit unions with consolidated assets of less than $10,000,000,000.
(T)
Requirement for date in operation.—
A business or organization that was not in operation on February 15, 2020 shall not be eligible for a loan under this paragraph.
(U)
Exclusion of entities receiving shuttered venue operator grants.—
An eligible person or entity (as defined under of 4 section 9009a of this title) that receives a grant under such section 9009a shall not be eligible for a loan under this paragraph.
(V)
Calculation of maximum loan amount for farmers and ranchers.—
(i)
Definition.—
In this subparagraph, the term “covered recipient” means an eligible recipient that—
(I) operates as a sole proprietorship or as an independent contractor, or is an eligible self-employed individual;(II) reports farm income or expenses on a Schedule F (or any equivalent successor schedule); and(III) was in business as of February 15, 2020.
(ii)
No employees .—
With respect to 8
8 So in original. The word “a” probably should appear.
covered recipient without employees, the maximum covered loan amount shall be the lesser of—
(I)
the sum of—
(aa)
the product obtained by multiplying—
(AA) the gross income of the covered recipient in 2019, as reported on a Schedule F (or any equivalent successor schedule), that is not more than $100,000, divided by 12; and(BB) 2.5; and(bb) the outstanding amount of a loan under subsection (b)(2) that was made during the period beginning on January 31, 2020 and ending on April 3, 2020 that the borrower intends to refinance under the covered loan, not including any amount of any advance under the loan that is not required to be repaid; or(II) $2,000,000.
(iii)
With employees.—
With respect to a covered recipient with employees, the maximum covered loan amount shall be calculated using the formula described in subparagraph (E), except that the gross income of the covered recipient described in clause (ii)(I)(aa)(AA) of this subparagraph, as divided by 12, shall be added to the sum calculated under subparagraph (E)(i)(I).
(iv)
Recalculation.—
A lender that made a covered loan to a covered recipient before December 27, 2020 may, at the request of the covered recipient—
(I) recalculate the maximum loan amount applicable to that covered loan based on the formula described in clause (ii) or (iii), as applicable, if doing so would result in a larger covered loan amount; and(II) provide the covered recipient with additional covered loan amounts based on that recalculation.
(37)
Paycheck protection program second draw loans.—
(A)
Definitions.—
In this paragraph—
(i) the terms “additional covered nonprofit entity”, “eligible self-employed individual”, “housing cooperative”, “nonprofit organization”, “payroll costs”, “seasonal employer”, and “veterans organization” have the meanings given those terms in paragraph (36), except that “eligible entity” shall be substituted for “eligible recipient” each place it appears in the definitions of those terms;
(ii) the term “covered loan” means a loan made under this paragraph;
(iii) the terms “covered mortgage obligation”, “covered operating expenditure”, “covered property damage cost”, “covered rent obligation”, “covered supplier cost”, “covered utility payment”, and “covered worker protection expenditure” have the meanings given those terms in section 636m(a) of this title;
(iv)
the term “eligible entity”—
(I)
means any business concern, nonprofit organization, housing cooperative, veterans organization, Tribal business concern, eligible self-employed individual, sole proprietor, independent contractor, or small agricultural cooperative that—
(aa) employs not more than 300 employees; and(bb)(AA) except as provided in subitems (BB), (CC), and (DD), had gross receipts during the first, second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter in 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the same quarter in 2019;(BB) 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, second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the third or fourth quarter of 2019;(CC) 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, second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the fourth quarter of 2019; or(DD) if the entity was not in business during 2019, but was in operation on February 15, 2020, had gross receipts during the second, third, or, only with respect to an application submitted on or after January 1, 2021, fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the first quarter of 2020;(II) includes a business concern or organization made eligible for a loan under paragraph (36) under subclause (II), (III), or (IV) of clause (iii), subclause (IV) or (V) of clause (iv), clause (vii), or clause (ix) of subparagraph (D) of paragraph (36) and that meets the requirements described in items (aa) and (bb) of subclause (I); and(III)
does not include—
(aa) any entity that is a type of business concern (or would be, if such entity were a business concern) described in section 120.110 of title 13, Code of Federal Regulations (or in any successor regulation or other related guidance or rule that may be issued by the Administrator) other than a business concern described in subsection (a) or (k) of such section; or(bb) any business concern or entity primarily engaged in political or lobbying activities, which shall include 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;(cc)
any business concern or entity—
(AA) 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(BB) 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;(dd) any person required to submit a registration statement under section 612 of title 22; or(ee) an eligible person or entity (as defined under section 9009a of this title) that receives a grant under such section 9009a; and
(v) the term “Tribal business concern” means a Tribal business concern described in section 657a(b)(2)(C) of this title.
(B)
Loans.—
Except as otherwise provided in this paragraph, the Administrator may guarantee covered loans to eligible entities under the same terms, conditions, and processes as a loan made under paragraph (36).
(C)
Maximum loan amount.—
(i)
In general.—
Except as otherwise provided in this subparagraph, the maximum amount of a covered loan made to an eligible entity is the lesser of—
(I)
the product obtained by multiplying—
(aa)
at the election of the eligible entity, the average total monthly payment for payroll costs incurred or paid by the eligible entity during—
(AA) the 1-year period before the date on which the loan is made; or(BB) calendar year 2019; by(bb) 2.5; or(II) $2,000,000.
(ii)
Seasonal employers.—
The maximum amount of a covered loan made to an eligible entity that is a seasonal employer is the lesser of—
(I)
the product obtained by multiplying—
(aa) at the election of the eligible entity, the average total monthly payments for payroll costs incurred or paid by the eligible entity for any 12-week period between February 15, 2019 and February 15, 2020; by(bb) 2.5; or(II) $2,000,000.
(iii)
New entities.—
The maximum amount of a covered loan made to an eligible entity that did not exist during the 1-year period preceding February 15, 2020 is the lesser of—
(I)
the product obtained by multiplying—
(aa)
the quotient obtained by dividing—
(AA) the sum of the total monthly payments by the eligible entity for payroll costs paid or incurred by the eligible entity as of the date on which the eligible entity applies for the covered loan; by(BB) the number of months in which those payroll costs were paid or incurred; by(bb) 2.5; or(II) $2,000,000.
(iv)
NAICS 72 entities.—
The maximum amount of a covered loan made to an eligible entity that is assigned a North American Industry Classification System code beginning with 72 at the time of disbursal is the lesser of—
(I)
the product obtained by multiplying—
(aa)
at the election of the eligible entity, the average total monthly payment for payroll costs incurred or paid by the eligible entity during—
(AA) the 1-year period before the date on which the loan is made; or(BB) calendar year 2019; by(bb) 3.5; or(II) $2,000,000.
(D)
Business concerns with more than 1 physical location.—
(i)
In general.—
For a business concern with more than 1 physical location, the business concern shall be an eligible entity if the business concern would be eligible for a loan under paragraph (36) pursuant to clause (iii) of subparagraph (D) of such paragraph, as applied in accordance with clause (ii) of this subparagraph, and meets the revenue reduction requirements described in item (bb) of subparagraph (A)(iv)(I).
(ii)
Size limit.—
For purposes of applying clause (i), the Administrator shall substitute “not more than 300 employees” for “not more than 500 employees” in paragraph (36)(D)(iii).
(E)
Waiver of affiliation rules.—
(i)
In general.—
The waiver described in paragraph (36)(D)(iv) shall apply for purposes of determining eligibility under this paragraph.
(ii)
Size limit.—
For purposes of applying clause (i), the Administrator shall substitute “not more than 300 employees” for “not more than 500 employees” in subclause (I) and (IV) of paragraph (36)(D)(iv).
(F)
Loan number limitation.—
An eligible entity may only receive 1 covered loan.
(G)
Exception from certain certification requirements.—
An eligible entity applying for a covered loan shall not be required to make the certification described in clause (iii) or (iv) of paragraph (36)(G).
(H)
Fee waiver.—
With respect to a covered loan—
(i) in lieu of the fee otherwise applicable under paragraph (23)(A), the Administrator shall collect no fee; and
(ii) in lieu of the fee otherwise applicable under paragraph (18)(A), the Administrator shall collect no fee.
(I)
Gross receipts and simplified certification of revenue test.—
(i)
Loans of up to $150,000.—
For a covered loan of not more than $150,000, the eligible entity—
(I) may submit a certification attesting that the eligible entity meets the applicable revenue loss requirement under subparagraph (A)(iv)(I)(bb); and(II) if the eligible entity submits a certification under subclause (I), shall, on or before the date on which the eligible entity submits an application for forgiveness under subparagraph (J), produce adequate documentation that the eligible entity met such revenue loss standard.
(ii)
For nonprofit and veterans organizations.—
For purposes of calculating gross receipts under subparagraph (A)(iv)(I)(bb) for an eligible entity that is a nonprofit organization, a veterans organization, or an organization described in subparagraph (A)(iv)(II), gross receipts means gross receipts within the meaning of section 6033 of title 26.
(J)
Loan forgiveness.—
(i)
Definition of covered period.—
In this subparagraph, the term “covered period” has the meaning given that term in section 636m(a) of this title.
(ii)
Forgiveness generally.—
Except as otherwise provided in this subparagraph, an eligible entity shall be eligible for forgiveness of indebtedness on a covered loan in the same manner as an eligible recipient with respect to a loan made under paragraph (36) of this section, as described in section 636m of this title.
(iii)
Forgiveness amount.—
An eligible entity shall be eligible for forgiveness of indebtedness on a covered loan in an amount equal to the sum of the following costs incurred or expenditures made during the covered period:
(I)
Payroll costs, excluding any payroll costs that are—
(aa) qualified wages, as defined in subsection (c)(3) of section 2301 of the CARES Act (26 U.S.C. 3111 note), taken into account in determining the credit allowed under such section;(bb) qualified wages taken into account in determining the credit allowed under subsection (a) or (d) of section 303 of the Taxpayer Certainty and Disaster Relief Act of 2020; or(cc) premiums taken into account in determining the credit allowed under section 6432 of title 26.(II) Any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation).(III) Any covered operations expenditure.(IV) Any covered property damage cost.(V) Any payment on any covered rent obligation.(VI) Any covered utility payment.(VII) Any covered supplier cost.(VIII) Any covered worker protection expenditure.
(iv)
Limitation on forgiveness for all eligible entities.—
Subject to any reductions under section 636m(d) of this title, the forgiveness amount under this subparagraph shall be equal to the lesser of—
(I) the amount described in clause (ii); and(II)
the amount equal to the quotient obtained by dividing—
(aa) the amount of the covered loan used for payroll costs during the covered period; and(bb) 0.60.
(v)
Submission of materials for forgiveness.—
For purposes of applying subsection (l)(1) of section 636m of this title to a covered loan of not more than $150,000 under this paragraph, an eligible entity may be required to provide, at the time of the application for forgiveness, documentation required to substantiate revenue loss in accordance with subparagraph (I).
(K)
Lender eligibility.—
Except as otherwise provided in this paragraph, a lender approved to make loans under paragraph (36) may make covered loans under the same terms and conditions as in paragraph (36).
(L)
Reimbursement for loan processing and servicing.—
The Administrator shall reimburse a lender authorized to make a covered loan—
(i)
for a covered loan of not more than $50,000, in an amount equal to the lesser of—
(I) 50 percent of the balance of the financing outstanding at the time of disbursement of the covered loan; or(II) $2,500;
(ii)
at a rate, based on the balance of the financing outstanding at the time of disbursement of the covered loan, of—
(I) 5 percent for a covered loan of more than $50,000 and not more than $350,000; and(II) 3 percent for a covered loan of more than $350,000.
(M)
Publication of guidance.—
Not later than 10 days after December 27, 2020, the Administrator shall issue guidance addressing barriers to accessing capital for minority, underserved, veteran, and women-owned business concerns for the purpose of ensuring equitable access to covered loans.
(N)
Standard operating procedure.—
(O)
Supplemental covered loans.—
A covered loan under this paragraph may only be made to an eligible entity that—
(i) has received a loan under paragraph (36); and
(ii) on or before the expected date on which the covered loan under this paragraph is disbursed to the eligible entity, has used, or will use, the full amount of the loan received under paragraph (36).
(b)
Disaster loans; authorization, scope, terms and conditions, etc.
Except as to agricultural enterprises as defined in section 647(b)(1) of this title, the Administration also is empowered to the extent and in such amounts as provided in advance in appropriation Acts—
(1)
(A)
to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred (guaranteed) basis) as the Administration may determine to be necessary or appropriate to repair, rehabilitate or replace property, real or personal, damaged or destroyed by or as a result of natural or other disasters: Provided, That such damage or destruction is not compensated for by insurance or otherwise: And provided further, That the Administration may increase the amount of the loan by up to an additional 20 per centum of the aggregate costs of such damage or destruction (whether or not compensated for by insurance or otherwise) if it determines such increase to be necessary or appropriate in order to protect the damaged or destroyed property from possible future disasters by taking mitigating measures, including—
(i) construction of retaining walls and sea walls;
(ii) grading and contouring land; and
(iii) relocating utilities and modifying structures, including construction of a safe room or similar storm shelter designed to protect property and occupants from tornadoes or other natural disasters, if such safe room or similar storm shelter is constructed in accordance with applicable standards issued by the Federal Emergency Management Agency;
(B) to refinance any mortgage or other lien against a totally destroyed or substantially damaged home or business concern: Provided, That no loan or guarantee shall be extended unless the Administration finds that (i) the applicant is not able to obtain credit elsewhere; (ii) such property is to be repaired, rehabilitated, or replaced; (iii) the amount refinanced shall not exceed the amount of physical loss sustained; and (iv) such amounts shall be reduced to the extent such mortgage or lien is satisfied by insurance or otherwise; and
(C) during fiscal years 2000 through 2004, to establish a predisaster mitigation program to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred (guaranteed) basis), as the Administrator may determine to be necessary or appropriate, to enable small businesses to use mitigation techniques in support of a formal mitigation program established by the Federal Emergency Management Agency, except that no loan or guarantee may be extended to a small business under this subparagraph unless the Administration finds that the small business is otherwise unable to obtain credit for the purposes described in this subparagraph;
(2)
to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred (guaranteed) basis) as the Administration may determine to be necessary or appropriate to any small business concern, private nonprofit organization, or small agricultural cooperative located in an area affected by a disaster,9
9 So in original. The comma probably should not appear.
(including drought), with respect to both farm-related and nonfarm-related small business concerns, if the Administration determines that the concern, the organization, or the cooperative has suffered a substantial economic injury as a result of such disaster and if such disaster constitutes—
(A) a major disaster, as determined by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.);
(B) a natural disaster, as determined by the Secretary of Agriculture pursuant to section 1961 of title 7, in which case, assistance under this paragraph may be provided to farm-related and nonfarm-related small business concerns, subject to the other applicable requirements of this paragraph;
(C) a disaster, as determined by the Administrator of the Small Business Administration;
(D) an emergency involving Federal primary responsibility determined to exist by the President under the section 5191(b) of title 42; or
(E) if no disaster or emergency declaration has been issued pursuant to subparagraph (A), (B), (C), or (D), the Governor of a State in which a disaster or emergency has occurred may certify to the Small Business Administration that small business concerns, private nonprofit organizations, or small agricultural cooperatives (1) have suffered economic injury as a result of such disaster or emergency, and (2) are in need of financial assistance which is not available on reasonable terms in the disaster- or emergency-stricken area. Not later than 30 days after the date of receipt of such certification by a Governor of a State, the Administration shall respond in writing to that Governor on its determination and the reasons therefore,10
10 So in original. Probably should be “therefor,”.
and may then make such loans as would have been available under this paragraph if a disaster or emergency declaration had been issued.
(3)
(A)
In this paragraph—
(i) the term “active service” has the meaning given that term in section 101(d)(3) of title 10;
(ii) the term “essential employee” means an individual who is employed by a small business concern and whose managerial or technical expertise is critical to the successful day-to-day operations of that small business concern; and
(iii)
the term “substantial economic injury” means an economic harm to a business concern that results in the inability of the business concern—
(I) to meet its obligations as they mature;(II) to pay its ordinary and necessary operating expenses; or(III) to market, produce, or provide a product or service ordinarily marketed, produced, or provided by the business concern.
(B) The Administration may make such disaster loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis) to assist a small business concern that has suffered or that is likely to suffer substantial economic injury as the result of an essential employee of such small business concern being ordered to perform active service for a period of more than 30 consecutive days.
(C) A small business concern described in subparagraph (B) shall be eligible to apply for assistance under this paragraph during the period beginning on the date on which the essential employee is ordered to active service and ending on the date that is 1 year after the date on which such essential employee is discharged or released from active service. The Administrator may, when appropriate (as determined by the Administrator), extend the ending date specified in the preceding sentence by not more than 1 year.
(D) Any loan or guarantee extended pursuant to this paragraph shall be made at the same interest rate as economic injury loans under paragraph (2).
(E) No loan may be made under this paragraph, either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis, if the total amount outstanding and committed to the borrower under this subsection would exceed $1,500,000, unless such applicant constitutes, or have 11
11 So in original. Probably should be “has”.
become due to changed economic circumstances, a major source of employment in its surrounding area, as determined by the Administration, in which case the Administration, in its discretion, may waive the $1,500,000 limitation.
(F) For purposes of assistance under this paragraph, no declaration of a disaster area shall be required.
(G)
(i) Notwithstanding any other provision of law, the Administrator may make a loan under this paragraph of not more than $50,000 without collateral.
(ii)
The Administrator may defer payment of principal and interest on a loan described in clause (i) during the longer of—
(I) the 1-year period beginning on the date of the initial disbursement of the loan; and(II) the period during which the relevant essential employee is on active service.
(H) The Administrator shall give priority to any application for a loan under this paragraph and shall process and make a determination regarding such applications prior to processing or making a determination on other loan applications under this subsection, on a rolling basis.
(4)
Coordination with fema.—
(A)
In general.—
Notwithstanding any other provision of law, for any disaster declared under this subsection or major disaster (including any major disaster relating to which the Administrator declares eligibility for additional disaster assistance under paragraph (9)), the Administrator, in consultation with the Administrator of the Federal Emergency Management Agency, shall ensure, to the maximum extent practicable, that all application periods for disaster relief under this chapter correspond with application deadlines established under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.), or as extended by the President.
(B)
Deadlines.—
Notwithstanding any other provision of law, not later than 10 days before the closing date of an application period for a major disaster (including any major disaster relating to which the Administrator declares eligibility for additional disaster assistance under paragraph (9)), the Administrator, in consultation with the Administrator of the Federal Emergency Management Agency, shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report that includes—
(i) the deadline for submitting applications for assistance under this chapter relating to that major disaster;
(ii) information regarding the number of loan applications and disbursements processed by the Administrator relating to that major disaster for each day during the period beginning on the date on which that major disaster was declared and ending on the date of that report; and
(iii) an estimate of the number of potential applicants that have not submitted an application relating to that major disaster.
(5)
Public awareness of disasters.—
If a disaster is declared under this subsection or the Administrator declares eligibility for additional disaster assistance under paragraph (9), the Administrator shall make every effort to communicate through radio, television, print, and web-based outlets, all relevant information needed by disaster loan applicants, including—
(A) the date of such declaration;
(B) cities and towns within the area of such declaration;
(C) loan application deadlines related to such disaster;
(D) all relevant contact information for victim services available through the Administration (including links to small business development center websites);
(E) links to relevant Federal and State disaster assistance websites, including links to websites providing information regarding assistance available from the Federal Emergency Management Agency;
(F) information on eligibility criteria for Administration loan programs, including where such applications can be found; and
(G) application materials that clearly state the function of the Administration as the Federal source of disaster loans for homeowners and renters.
(6)
Authority for qualified private contractors.—
(A)
Disaster loan processing.—
The Administrator may enter into an agreement with a qualified private contractor, as determined by the Administrator, to process loans under this subsection in the event of a major disaster (including any major disaster relating to which the Administrator declares eligibility for additional disaster assistance under paragraph (9)), under which the Administrator shall pay the contractor a fee for each loan processed.
(B)
Loan loss verification services.—
The Administrator may enter into an agreement with a qualified lender or loss verification professional, as determined by the Administrator, to verify losses for loans under this subsection in the event of a major disaster (including any major disaster relating to which the Administrator declares eligibility for additional disaster assistance under paragraph (9)), under which the Administrator shall pay the lender or verification professional a fee for each loan for which such lender or verification professional verifies losses.
(7)
Disaster assistance employees.—
(A)
In general.—
In carrying out this section, the Administrator may, where practicable, ensure that the number of full-time equivalent employees—
(i) in the Office of the Disaster Assistance is not fewer than 800; and
(ii) in the Disaster Cadre of the Administration is not fewer than 1,000.
(B)
Report.—
In carrying out this subsection, if the number of full-time employees for either the Office of Disaster Assistance or the Disaster Cadre of the Administration is below the level described in subparagraph (A) for that office, not later than 21 days after the date on which that staffing level decreased below the level described in subparagraph (A), the Administrator shall submit to the Committee on Appropriations and the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Appropriations and Committee on Small Business of the House of Representatives, a report—
(i) detailing staffing levels on that date;
(ii) requesting, if practicable and determined appropriate by the Administrator, additional funds for additional employees; and
(iii) containing such additional information, as determined appropriate by the Administrator.
(8)
Increased loan caps.—
(A)
Aggregate loan amounts.—
Except as provided in subparagraph (B), and notwithstanding any other provision of law, the aggregate loan amount outstanding and committed to a borrower under this subsection may not exceed $2,000,000.
(B)
Waiver authority.—
The Administrator may, at the discretion of the Administrator, increase the aggregate loan amount under subparagraph (A) for loans relating to a disaster to a level established by the Administrator, based on appropriate economic indicators for the region in which that disaster occurred.
(9)
Declaration of eligibility for additional disaster assistance.—
(A)
In general.—
If the President declares a major disaster, the Administrator may declare eligibility for additional disaster assistance in accordance with this paragraph.
(B)
Threshold.—
A major disaster for which the Administrator declares eligibility for additional disaster assistance under this paragraph shall—
(i) have resulted in extraordinary levels of casualties or damage or disruption severely affecting the population (including mass evacuations), infrastructure, environment, economy, national morale, or government functions in an area;
(ii) be comparable to the description of a catastrophic incident in the National Response Plan of the Administration, or any successor thereto, unless there is no successor to such plan, in which case this clause shall have no force or effect; and
(iii)
be of such size and scope that—
(I) the disaster assistance programs under the other paragraphs under this subsection are incapable of providing adequate and timely assistance to individuals or business concerns located within the disaster area; or(II) a significant number of business concerns outside the disaster area have suffered disaster-related substantial economic injury as a result of the incident.
(C)
Additional economic injury disaster loan assistance.—
(i)
In general.—
If the Administrator declares eligibility for additional disaster assistance under this paragraph, the Administrator may make such loans under this subparagraph (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis) as the Administrator determines appropriate to eligible small business concerns located anywhere in the United States.
(ii)
Processing time.—
(I)
In general.—
(II)
Suspension of applications from outside disaster area.—
If the Administrator determines that the average processing time for applications for disaster loans under this subparagraph relating to a specific major disaster is more than 30 days, the Administrator shall suspend the processing of such applications submitted by eligible small business concerns located outside the disaster area, until the Administrator determines that the average processing time for such applications is not more than 15 days.
(iii)
Loan terms.—
A loan under this subparagraph shall be made on the same terms as a loan under paragraph (2).
(D)
Definitions.—
In this paragraph—
(i) the term “disaster area” means the area for which the applicable major disaster was declared;
(ii)
the term “disaster-related substantial economic injury” means economic harm to a business concern that results in the inability of the business concern to—
(I) meet its obligations as it matures;(II) meet its ordinary and necessary operating expenses; or(III) market, produce, or provide a product or service ordinarily marketed, produced, or provided by the business concern because the business concern relies on materials from the disaster area or sells or markets in the disaster area; and
(iii)
the term “eligible small business concern” means a small business concern—
(I) that has suffered disaster-related substantial economic injury as a result of the applicable major disaster; and(II)(aa) for which not less than 25 percent of the market share of that small business concern is from business transacted in the disaster area;(bb) for which not less than 25 percent of an input into a production process of that small business concern is from the disaster area; or(cc) that relies on a provider located in the disaster area for a service that is not readily available elsewhere.
(10)
Reducing closing and disbursement delays.—
The Administrator shall provide a clear and concise notification on all application materials for loans made under this subsection and on relevant websites notifying an applicant that the applicant may submit all documentation necessary for the approval of the loan at the time of application and that failure to submit all documentation could delay the approval and disbursement of the loan.
(11)
Increasing transparency in loan approvals.—
The Administrator shall establish and implement clear, written policies and procedures for analyzing the ability of a loan applicant to repay a loan made under this subsection.
(12)
Additional awards to small business development centers, women’s business centers, and score for disaster recovery.—
(A)
In general.—
The Administration may provide financial assistance to a small business development center, a women’s business center described in section 656 of this title, the Service Corps of Retired Executives, or any proposed consortium of such individuals or entities to spur disaster recovery and growth of small business concerns located in an area for which the President has declared a major disaster.
(B)
Form of financial assistance.—
Financial assistance provided under this paragraph shall be in the form of a grant, contract, or cooperative agreement.
(C)
No matching funds required.—
Matching funds shall not be required for any grant, contract, or cooperative agreement under this paragraph.
(D)
Requirements.—
A recipient of financial assistance under this paragraph shall provide counseling, training, and other related services, such as promoting long-term resiliency, to small business concerns and entrepreneurs impacted by a major disaster.
(E)
Performance.—
(i)
In general.—
The Administrator, in cooperation with the recipients of financial assistance under this paragraph, shall establish metrics and goals for performance of grants, contracts, and cooperative agreements under this paragraph, which shall include recovery of sales, recovery of employment, reestablishment of business premises, and establishment of new small business concerns.
(ii)
Use of estimates.—
The Administrator shall base the goals and metrics for performance established under clause (i), in part, on the estimates of disaster impact prepared by the Office of Disaster Assistance for purposes of estimating loan-making requirements.
(F)
Term.—
(i)
In general.—
The term of any grant, contract, or cooperative agreement under this paragraph shall be for not more than 2 years.
(ii)
Extension.—
The Administrator may make 1 extension of a grant, contract, or cooperative agreement under this paragraph for a period of not more than 1 year, upon a showing of good cause and need for the extension.
(G)
Exemption from other program requirements.—
Financial assistance provided under this paragraph is in addition to, and wholly separate from, any other form of assistance provided by the Administrator under this chapter.
(H)
Competitive basis.—
The Administration shall award financial assistance under this paragraph on a competitive basis.
(13)
Supplemental assistance for contractor malfeasance.—
(A)
In general.—
If a contractor or other person engages in malfeasance in connection with repairs to, rehabilitation of, or replacement of real or personal property relating to which a loan was made under this subsection and the malfeasance results in substantial economic damage to the recipient of the loan or substantial risks to health or safety, upon receiving documentation of the substantial economic damage or the substantial risk to health and safety from an independent loss verifier, and subject to subparagraph (B), the Administrator may increase the amount of the loan under this subsection, as necessary for the cost of repairs, rehabilitation, or replacement needed to address the cause of the economic damage or health or safety risk.
(B)
Requirements.—
The Administrator may only increase the amount of a loan under subparagraph (A) upon receiving an appropriate certification from the borrower and person performing the mitigation attesting to the reasonableness of the mitigation costs and an assignment of any proceeds received from the person engaging in the malfeasance. The assignment of proceeds recovered from the person engaging in the malfeasance shall be equal to the amount of the loan under this section. Any mitigation activities shall be subject to audit and independent verification of completeness and cost reasonableness.
(14)
Business recovery centers.—
(A)
In general.—
The Administrator, acting through the district offices of the Administration, shall identify locations that may be used as recovery centers by the Administration in the event of a disaster declared under this subsection or a major disaster.
(B)
Requirements for identification.—
Each district office of the Administration shall—
(i) identify a location described in subparagraph (A) in each county, parish, or similar unit of general local government in the area served by the district office; and
(ii) ensure that the locations identified under subparagraph (A) may be used as a recovery center without cost to the Government, to the extent practicable.
(15)
Increased oversight of economic injury disaster loans.—
The Administrator shall increase oversight of entities receiving loans under paragraph (2), and may consider—
(A) scheduled site visits to ensure borrower eligibility and compliance with requirements established by the Administrator; and
(B) reviews of the use of the loan proceeds by an entity described in paragraph (2) to ensure compliance with requirements established by the Administrator.
No loan under this subsection, including renewals and extensions thereof, may be made for a period or periods exceeding thirty years: Provided, That the Administrator may consent to a suspension in the payment of principal and interest charges on, and to an extension in the maturity of, the Federal share of any loan under this subsection for a period not to exceed five years, if (A) the borrower under such loan is a homeowner or a small business concern, (B) the loan was made to enable (i) such homeowner to repair or replace his home, or (ii) such concern to repair or replace plant or equipment which was damaged or destroyed as the result of a disaster meeting the requirements of clause (A) or (B) of paragraph (2) of this subsection, and (C) the Administrator determines such action is necessary to avoid severe financial hardship: Provided further, That the provisions of paragraph (1) of subsection (d) of this section shall not be applicable to any such loan having a maturity in excess of twenty years. Notwithstanding any other provision of law, and except as provided in subsection (d), the interest rate on the Administration’s share of any loan made under subsection (b) shall not exceed the average annual interest rate on all interest-bearing obligations of the United States then forming a part of the public debt as computed at the end of the fiscal year next preceding the date of the loan and adjusted to the nearest one-eighth of 1 per centum plus one-quarter of 1 per centum: Provided, however, That the interest rate for loans made under paragraphs (1) and (2) hereof shall not exceed the rate of interest which is in effect at the time of the occurrence of the disaster. In agreements to participate in loans on a deferred basis under this subsection, such participation by the Administration shall not be in excess of 90 per centum of the balance of the loan outstanding at the time of disbursement. Notwithstanding any other provision of law, the interest rate on the Administration’s share of any loan made pursuant to paragraph (1) of this subsection to repair or replace a primary residence and/or replace or repair damaged or destroyed personal property, less the amount of compensation by insurance or otherwise, with respect to a disaster occurring on or after July 1, 1976, and prior to October 1, 1978, shall be: 1 per centum on the amount of such loan not exceeding $10,000, and 3 per centum on the amount of such loan over $10,000 but not exceeding $40,000. The interest rate on the Administration’s share of the first $250,000 of all other loans made pursuant to paragraph (1) of this subsection, with respect to a disaster occurring on or after July 1, 1976, and prior to October 1, 1978, shall be 3 per centum. All repayments of principal on the Administration’s share of any loan made under the above provisions shall first be applied to reduce the principal sum of such loan which bears interest at the lower rates provided in this paragraph. The principal amount of any loan made pursuant to paragraph (1) in connection with a disaster which occurs on or after April 1, 1977, but prior to January 1, 1978, may be increased by such amount, but not more than $2,000, as the Administration determines to be reasonable in light of the amount and nature of loss, damage, or injury sustained in order to finance the installation of insulation in the property which was lost, damaged, or injured, if the uninsured, damaged portion of the property is 10 per centum or more of the market value of the property at the time of the disaster. Not later than June 1, 1978, the Administration shall prepare and transmit to the Select Committee on Small Business of the Senate, the Committee on Small Business of the House of Representatives, and the Committees of the Senate and House of Representatives having jurisdiction over measures relating to energy conservation, a report on its activities under this paragraph, including therein an evaluation of the effect of such activities on encouraging the installation of insulation in property which is repaired or replaced after a disaster which is subject to this paragraph, and its recommendations with respect to the continuation, modification, or termination of such activities.
In the administration of the disaster loan program under paragraphs (1) and (2) of this subsection, in the case of property loss or damage or injury resulting from a major disaster as determined by the President or a disaster as determined by the Administrator which occurs on or after January 1, 1971, and prior to July 1, 1973, the Small Business Administration, to the extent such loss or damage or injury is not compensated for by insurance or otherwise—
(A) may make any loan for repair, rehabilitation, or replacement of property damaged or destroyed without regard to whether the required financial assistance is otherwise available from private sources;
(B) may, in the case of the total destruction or substantial property damage of a home or business concern, refinance any mortgage or other liens outstanding against the destroyed or damaged property if such property is to be repaired, rehabilitated, or replaced, except that (1) in the case of a business concern, the amount refinanced shall not exceed the amount of the physical loss sustained, and (2) in the case of a home, the amount of each monthly payment of principal and interest on the loan after refinancing under this clause shall not be less than the amount of each such payment made prior to such refinancing;
(C) may, in the case of a loan made under clause (A) or a mortgage or other lien refinanced under clause (B) in connection with the destruction of, or substantial damage to, property owned and used as a residence by an individual who by reason of retirement, disability, or other similar circumstances relies for support on survivor, disability, or retirement benefits under a pension, insurance, or other programs, consent to the suspension of the payments of the principal of that loan, mortgage, or lien during the lifetime of that individual and his spouse for so long as the Administration determines that making such payments would constitute a substantial hardship;
(D)
shall notwithstanding the provisions of any other law and upon presentation by the applicant of proof of loss or damage or injury and a bona fide estimate of cost of repair, rehabilitation, or replacement, cancel the principal of any loan made to cover a loss or damage or injury resulting from such disaster, except that—
(i) with respect to a loan made in connection with a disaster occurring on or after January 1, 1971 but prior to January 1, 1972, the total amount so canceled shall not exceed $2,500, and the interest on the balance of the loan shall be at a rate of 3 per centum per annum; and
(ii) with respect to a loan made in connection with a disaster occurring on or after January 1, 1972 but prior to July 1, 1973, the total amount so canceled shall not exceed $5,000 and the interest on the balance of the loan shall be at a rate of 1 percentum per annum.
(E)12
12 See 1980 Amendment note below.
A State grant made on or prior to July 1, 1979, shall not be considered compensation for the purpose of applying the provisions of section 312(a) of the Disaster Relief and Emergency Assistance Act [42 U.S.C. 5155(a)] to a disaster loan under paragraph (1) (2) 13
13 So in original. Probably should be “or (2)”.
of this subsection.
With respect to any loan referred to in clause (D) which is outstanding on August 16, 1972, the Administrator shall—
(i) make such change in the interest rate on the balance of such loan as is required under that clause effective as of August 16, 1972; and
(ii) in applying the limitation set forth in that clause with respect to the total amount of such loan which may be canceled, consider as part of the amount so canceled any part of such loan which was previously canceled pursuant to section 231 of the Disaster Relief Act of 1970 [15 U.S.C. 636a].
Whoever wrongfully misapplies the proceeds of a loan obtained under this subsection shall be civilly liable to the Administrator in an amount equal to one-and-one half times the original principal amount of the loan.
(c)
Private disaster loans
(1)
Definitions
In this subsection—
(A) the term “disaster area” means any area for which the President declared a major disaster relating to which the Administrator declares eligibility for additional disaster assistance under subsection (b)(9), during the period of that major disaster declaration;
(B) the term “eligible individual” means an individual who is eligible for disaster assistance under subsection (b)(1) relating to a major disaster relating to which the Administrator declares eligibility for additional disaster assistance under subsection (b)(9);
(C)
the term “eligible small business concern” means a business concern that is—
(i) a small business concern, as defined under this chapter; or
(ii) a small business concern, as defined in section 103 of the Small Business Investment Act of 1958 [15 U.S.C. 662];
(D) the term “preferred lender” means a lender participating in the Preferred Lender Program;
(E) the term “Preferred Lender Program” has the meaning given that term in subsection (a)(2)(C)(ii); and
(F)
the term “qualified private lender” means any privately-owned bank or other lending institution that—
(i) is not a preferred lender; and
(ii) the Administrator determines meets the criteria established under paragraph (10).
(2)
Program required

The Administrator shall carry out a program, to be known as the Private Disaster Assistance program, under which the Administration may guarantee timely payment of principal and interest, as scheduled, on any loan made to an eligible small business concern located in a disaster area and to an eligible individual.

(3)
Use of loans

A loan guaranteed by the Administrator under this subsection may be used for any purpose authorized under subsection (b).

(4)
Online applications
(A)
Establishment

The Administrator may establish, directly or through an agreement with another entity, an online application process for loans guaranteed under this subsection.

(B)
Other Federal assistance

The Administrator may coordinate with the head of any other appropriate Federal agency so that any application submitted through an online application process established under this paragraph may be considered for any other Federal assistance program for disaster relief.

(C)
Consultation

In establishing an online application process under this paragraph, the Administrator shall consult with appropriate persons from the public and private sectors, including private lenders.

(5)
Maximum amounts
(A)
Guarantee percentage

The Administrator may guarantee not more than 85 percent of a loan under this subsection.

(B)
Loan amount

The maximum amount of a loan guaranteed under this subsection shall be $2,000,000.

(6)
Terms and conditions

A loan guaranteed under this subsection shall be made under the same terms and conditions as a loan under subsection (b).

(7)
Lenders
(A)
In general
A loan guaranteed under this subsection made to—
(i) a qualified individual may be made by a preferred lender; and
(ii) a qualified small business concern may be made by a qualified private lender or by a preferred lender that also makes loans to qualified individuals.
(B)
Compliance
If the Administrator determines that a preferred lender knowingly failed to comply with the underwriting standards for loans guaranteed under this subsection or violated the terms of the standard operating procedure agreement between that preferred lender and the Administration, the Administrator shall do 1 or more of the following:
(i) Exclude the preferred lender from participating in the program under this subsection.
(ii) Exclude the preferred lender from participating in the Preferred Lender Program for a period of not more than 5 years.
(8)
Fees
(A)
In general

The Administrator may not collect a guarantee fee under this subsection.

(B)
Origination fee

The Administrator may pay a qualified private lender or preferred lender an origination fee for a loan guaranteed under this subsection in an amount agreed upon in advance between the qualified private lender or preferred lender and the Administrator.

(9)
Documentation

A qualified private lender or preferred lender may use its own loan documentation for a loan guaranteed by the Administrator under this subsection, to the extent authorized by the Administrator. The ability of a lender to use its own loan documentation for a loan guaranteed under this subsection shall not be considered part of the criteria for becoming a qualified private lender under the regulations promulgated under paragraph (10).

(10)
Implementation regulations
(A)
In general

Not later than 1 year after the date of enactment of the Small Business Disaster Response and Loan Improvements Act of 2008, the Administrator shall issue final regulations establishing permanent criteria for qualified private lenders.

(B)
Report to Congress

Not later than 6 months after the date of enactment of the Small Business Disaster Response and Loan Improvements Act of 2008, the Administrator shall submit a report on the progress of the regulations required by subparagraph (A) to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives.

(11)
Authorization of appropriations
(A)
In general

Amounts necessary to carry out this subsection shall be made available from amounts appropriated to the Administration to carry out subsection (b).

(B)
Authority to reduce interest rates and other terms and conditions

Funds appropriated to the Administration to carry out this subsection,9 may be used by the Administrator to meet the loan terms and conditions specified in paragraph (6).

(12)
Purchase of loans

The Administrator may enter into an agreement with a qualified private lender or preferred lender to purchase any loan guaranteed under this subsection.

(d)
Extension or renewal of loans; purchase of participations; assumption of obligations; disaster loans; interest rates; loan amounts
(1) The Administration may further extend the maturity of or renew any loan made pursuant to this section, or any loan transferred to the Administration pursuant to Reorganization Plan Numbered 2 of 1954, or Reorganization Plan Numbered 1 of 1957, for additional periods not to exceed ten years beyond the period stated therein, if such extension or renewal will aid in the orderly liquidation of such loan.
(2) During any period in which principal and interest charges are suspended on the Federal share of any loan, as provided in subsection (b), the Administrator shall, upon the request of any person, firm, or corporation having a participation in such loan, purchase such participation, or assume the obligation of the borrower, for the balance of such period, to make principal and interest payments on the non-Federal share of such loan: Provided, That no such payments shall be made by the Administrator in behalf of any borrower unless (i) the Administrator determines that such action is necessary in order to avoid a default, and (ii) the borrower agrees to make payments to the Administration in an aggregate amount equal to the amount paid in its behalf by the Administrator, in such manner and at such times (during or after the term of the loan) as the Administrator shall determine having due regard to the purposes sought to be achieved by this paragraph.
(3)
With respect to a disaster occurring on or after October 1, 1978, and prior 14
14 So in original. Probably should be “prior to”.
August 13, 1981, on the Administration’s share of loans made pursuant to paragraph (1) of subsection (b)—
(A) if the loan proceeds are to repair or replace a primary residence and/or repair or replace damaged or destroyed personal property, the interest rate shall be 3 percent on the first $55,000 of such loan;
(B) if the loan proceeds are to repair or replace property damaged or destroyed and if the applicant is a business concern which is unable to obtain sufficient credit elsewhere, the interest rate shall be as determined by the Administration, but not in excess of 5 percent per annum; and
(C) if the loan proceeds are to repair or replace property damaged or destroyed and if the applicant is a business concern which is able to obtain sufficient credit elsewhere, the interest rate shall not exceed the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans and adjusted to the nearest one-eighth of 1 percent, and an additional amount as determined by the Administration, but not to exceed 1 percent: Provided, That three years after such loan is fully disbursed and every two years thereafter for the term of the loan, if the Administration determines that the borrower is able to obtain a loan from non-Federal sources at reasonable rates and terms for loans of similar purposes and periods of time, the borrower shall, upon request by the Administration, apply for and accept such a loan in sufficient amount to repay the Administration: Provided further, That no loan under subsection (b)(1) shall be made, either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis, if the total amount outstanding and committed to the borrower under such subsection would exceed $500,000 for each disaster, unless an applicant constitutes a major source of employment in an area suffering a disaster, in which case the Administration, in its discretion, may waive the $500,000 limitation.
(4)
Notwithstanding the provisions of any other law, the interest rate on the Federal share of any loan made under subsection (b) shall be—
(A) in the case of a homeowner unable to secure credit elsewhere, the rate prescribed by the Administration but not more than one-half the rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans plus an additional charge of not to exceed 1 per centum per annum as determined by the Administrator, and adjusted to the nearest one-eighth of 1 per centum but not to exceed 8 per centum per annum;
(B) in the case of a homeowner able to secure credit elsewhere, the rate prescribed by the Administration but not more than the rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans plus an additional charge of not to exceed 1 per centum per annum as determined by the Administrator, and adjusted to the nearest one-eighth of 1 per centum;
(C) in the case of a business concern unable to obtain credit elsewhere, not to exceed 8 per centum per annum;
(D) in the case of a business concern able to obtain credit elsewhere, the rate prescribed by the Administration but not in excess of the rate prevailing in private market for similar loans and not more than the rate prescribed by the Administration as the maximum interest rate for deferred participation (guaranteed) loans under subsection (a). Loans under this subparagraph shall be limited to a maximum term of three years.
(5)
Notwithstanding the provisions of any other law, the interest rate on the Federal share of any loan made under subsection (b)(1) and (b)(2) on account of a disaster commencing on or after October 1, 1982, shall be—
(A) in the case of a homeowner unable to secure credit elsewhere, the rate prescribed by the Administration but not more than one-half the rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loan plus an additional charge of not to exceed 1 per centum per annum as determined by the Administrator, and adjusted to the nearest one-eighth of 1 per centum, but not to exceed 4 per centum per annum;
(B) in the case of a homeowner able to secure credit elsewhere, the rate prescribed by the Administration but not more than the rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans plus an additional charge of not to exceed 1 per centum per annum as determined by the Administrator, and adjusted to the nearest one-eighth of 1 per centum, but not to exceed 8 per centum per annum;
(C) in the case of a business, private nonprofit organization, or other concern, including agricultural cooperatives, unable to obtain credit elsewhere, not to exceed 4 per centum per annum;
(D) in the case of a business concern able to obtain credit elsewhere, the rate prescribed by the Administration but not in excess of the lowest of (i) the rate prevailing in the private market for similar loans, (ii) the rate prescribed by the Administration as the maximum interest rate for deferred participation (guaranteed) loans under subsection (a), or (iii) 8 per centum per annum. Loans under this subparagraph shall be limited to a maximum term of 7 years.
(6) Notwithstanding the provisions of any other law, such loans, subject to the reductions required by subparagraphs (A) and (B) of subsection (b)(1), shall be in amounts equal to 100 per centum of loss. The interest rates for loans made under subsection (b)(1) and (2), as determined pursuant to paragraph (5), shall be the rate of interest which is in effect on the date of the disaster commenced: Provided, That no loan under subsection (b)(1) and (2) shall be made, either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred (guaranteed) basis, if the total amount outstanding and committed to the borrower under subsection (b) would exceed $500,000 for each disaster unless an applicant constitutes a major source of employment in an area suffering a disaster, in which case the Administration, in its discretion, may waive the $500,000 limitation: Provided further, That the Administration, subject to the reductions required by subparagraphs (A) and (B) of subsection (b)(1), shall not reduce the amount of eligibility for any homeowner on account of loss of real estate to less than $100,000 for each disaster nor for any homeowner or lessee on account of loss of personal property to less than $20,000 for each disaster, such sums being in addition to any eligible refinancing: Provided further, That the Administration shall not require collateral for loans of $25,000 or less (or such higher amount as the Administrator determines appropriate in the event of a disaster) which are made under paragraph (1) of subsection (b): Provided further, That the Administrator, in obtaining the best available collateral for a loan of not more than $200,000 under paragraph (1) or (2) of subsection (b) relating to damage to or destruction of the property of, or economic injury to, a small business concern, shall not require the owner of the small business concern to use the primary residence of the owner as collateral if the Administrator determines that the owner has other assets of equal quality and with a value equal to or greater than the amount of the loan that could be used as collateral for the loan: Provided further, That nothing in the preceding proviso may be construed to reduce the amount of collateral required by the Administrator in connection with a loan described in the preceding proviso or to modify the standards used to evaluate the quality (rather than the type) of such collateral. Employees of concerns sharing a common business premises shall be aggregated in determining “major source of employment” status for nonprofit applicants owning such premises.
With respect to any loan which is outstanding on April 18, 1984, and which was made on account of a disaster commencing on or after October 1, 1982, the Administrator shall make such change in the interest rate on the balance of such loan as is required herein effective as of April 18, 1984.
(7) The Administration shall not withhold disaster assistance pursuant to this paragraph to nurseries who are victims of drought disasters. As used in subsection (b)(2) the term “an area affected by a disaster” includes any county, or county contiguous thereto, determined to be a disaster by the President, the Secretary of Agriculture or the Administrator of the Small Business Administration.
(8)
Disaster loans for superstorm sandy.—
(A)
In general.—
Notwithstanding any other provision of law, and subject to the same requirements and procedures that are used to make loans pursuant to subsection (b), a small business concern, homeowner, nonprofit entity, or renter that was located within an area and during the time period with respect to which a major disaster was declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) by reason of Superstorm Sandy may apply to the Administrator—
(i) for a loan to repair, rehabilitate, or replace property damaged or destroyed by reason of Superstorm Sandy; or
(ii) if such a small business concern has suffered substantial economic injury by reason of Superstorm Sandy, for a loan to assist such a small business concern.
(B)
Timing.—
The Administrator shall select loan recipients and make available loans for a period of not less than 1 year after the date on which the Administrator carries out this authority.
(C)
Inspector general review.—
Not later than 6 months after the date on which the Administrator begins carrying out this authority, the Inspector General of the Administration shall initiate a review of the controls for ensuring applicant eligibility for loans made under this paragraph.
(e)
Funds for small business development centers under section 648 of this title

The Administration shall not fund any Small Business Development Center or any variation thereof, except as authorized in section 648 of this title.

(f)
Additional requirements for subsection (b) loans
(1)
15
15 So in original. No par. (2) has been enacted.
Increased deferment authorized
(A)
In general

In making loans under subsection (b), the Administrator may provide, to the person receiving the loan, an option to defer repayment on the loan.

(B)
Period

The period of a deferment under subparagraph (A) may not exceed 4 years.

(g)
Net earnings clauses prohibited for subsection (b) loans

In making loans under subsection (b), the Administrator shall not require the borrower to pay any non-amortized amount for the first five years after repayment begins.

(h)
Loans to handicapped persons and organizations for handicapped
(1)
The Administration also is empowered, where other financial assistance is not available on reasonable terms, to make such loans (either directly or in cooperation with Banks or other lending institutions through agreements to participate on an immediate or deferred basis) as the Administration may determine to be necessary or appropriate—
(A)
to assist any public or private organization—
(i) which is organized under the laws of the United States or of any State, operated in the interest of handicapped individuals, the net income of which does not inure in whole or in part to the benefit of any shareholder or other individual;
(ii) which complies with any applicable occupational health and safety standard prescribed by the Secretary of Labor; and
(iii)
(B) to assist any handicapped individual in establishing, acquiring, or operating a small business concern.
(2) The Administration’s share of any loan made under this subsection shall not exceed $350,000, nor may any such loan be made if the total amount outstanding and committed (by participation or otherwise) to the borrower from the business loan and investment fund established by section 633(c)(1)(B) of this title would exceed $350,000. In agreements to participate in loans on a deferred basis under this subsection, the Administration’s participation may total 100 per centum of the balance of the loan at the time of disbursement. The Administration’s share of any loan made under this subsection shall bear interest at the rate of 3 per centum per annum. The maximum term of any such loan, including extensions and renewals thereof, may not exceed fifteen years. All loans made under this subsection shall be of such sound value or so secured as reasonably to assure repayment: Provided, however, That any reasonable doubt shall be resolved in favor of the applicant.
(3) For purposes of this subsection, the term “handicapped individual” means a person who has a physical, mental, or emotional impairment, defect, ailment, disease, or disability of a permanent nature which in any way limits the selection of any type of employment for which the person would otherwise be qualified or qual­ifiable.
(i)
Loans to small business concerns located in urban or rural areas with high proportions of unemployed or low-income individuals, or owned by low-income individuals
(1) The Administration also is empowered to make, participate (on an immediate basis) in, or guarantee loans, repayable in not more than fifteen years, to any small business concern, or to any qualified person seeking to establish such a concern, when it determines that such loans will further the policies established in section 631(b) 2 of this title, with particular emphasis on the preservation or establishment of small business concerns located in urban or rural areas with high proportions of unemployed or low-income individuals, or owned by low-income individuals: Provided, however, That no such loans shall be made, participated in, or guaranteed if the total of such Federal assistance to a single borrower outstanding at any one time would exceed $100,000. The Administration may defer payments on the principal of such loans for a grace period and use such other methods as it deems necessary and appropriate to assure the successful establishment and operation of such concern. The Administration may, in its discretion, as a condition of such financial assistance, require that the borrower take steps to improve his management skills by participating in a management training program approved by the Administration: Provided, however, That any management training program so approved must be of sufficient scope and duration to provide reasonable opportunity for the individuals served to develop entrepreneurial and managerial self-sufficiency.
(2) The Administration shall encourage, as far as possible, the participation of the private business community in the program of assistance to such concerns, and shall seek to stimulate new private lending activities to such concerns through the use of the loan guarantees, participations in loans, and pooling arrangements authorized by this subsection.
(3) To insure an equitable distribution between urban and rural areas for loans between $3,500 and $100,000 made under this subsection, the Administration is authorized to use the agencies and agreements and delegations developed under title III of the Economic Opportunity Act of 1964, as amended [42 U.S.C. 2841 et seq.], as it shall determine necessary.
(4) The Administration shall provide for the continuing evaluation of programs under this subsection, including full information on the location, income characteristics, and types of businesses and individuals assisted, and on new private lending activity stimulated, and the results of such evaluation together with recommendations shall be included in the report required by section 639(a) of this title.
(5)
Loans made pursuant to this subsection (including immediate participation in and guarantees of such loans) shall have such terms and conditions as the Administration shall determine, subject to the following limitations—
(A) there is reasonable assurance of repayment of the loan;
(B) the financial assistance is not otherwise available on reasonable terms from private sources or other Federal, State, or local programs;
(C) the amount of the loan, together with other funds available, is adequate to assure completion of the project or achievement of the purposes for which the loan is made;
(D) the loan bears interest at a rate not less than (i) a rate determined by the Secretary of the Treasury, taking into consideration the average market yield on outstanding Treasury obligations of comparable maturity, plus (ii) such additional charge, if any, toward covering other costs of the program as the Administration may determine to be consistent with its purposes: Provided, however, That the rate of interest charged on loans made in redevelopment areas designated under the Public Works and Economic Development Act of 1965 [42 U.S.C. 3121 et seq.] shall not exceed the rate currently applicable to new loans made under section 201 of that Act [42 U.S.C. 3141]; and
(E) fees not in excess of amounts necessary to cover administrative expenses and probable losses may be required on loan guarantees.
(6) The Administration shall take such steps as may be necessary to insure that, in any fiscal year, at least 50 per centum of the amounts loaned or guaranteed pursuant to this subsection are allotted to small business concerns located in urban areas identified by the Administration as having high concentrations of unemployed or low-income individuals or to small business concerns owned by low-income individuals. The Administration shall define the meaning of low income as it applies to owners of small business concerns eligible to be assisted under this subsection.
(7) No financial assistance shall be extended pursuant to this subsection where the Administration determines that the assistance will be used in relocating establishments from one area to another if such relocation would result in an increase in unemployment in the area of original location.
(j)
Financial assistance for projects providing technical or management assistance; areas of high concentration of unemployment or low-income; preferences; manner and method of payment; accessible services; program evaluations; establishment of development program; coordination of policies
(1) The Administration shall provide financial assistance to public or private organizations to pay all or part of the cost of projects designed to provide technical or management assistance to individuals or enterprises eligible for assistance under subsection (i), paragraph (10) of this subsection; and section 637(a) of this title, with special attention to small businesses located in areas of high concentration of unemployed or low-income individuals, to small businesses eligible to receive contracts pursuant to section 637(a) of this title.
(2)
Financial assistance under this subsection may be provided for projects, including, but not limited to—
(A) planning and research, including feasibility studies and market research;
(B) the identification and development of new business opportunities;
(C) the furnishing of centralized services with regard to public services and Federal Government programs including programs authorized under subsection (i); paragraph (10) of this subsection, and section 637(a) of this title;
(D) the establishment and strengthening of business service agencies, including trade associations and cooperatives; and
(E) the furnishing of business counseling, management training, and legal and other related services, with special emphasis on the development of management training programs using the resources of the business community, including the development of management training opportunities in existing business, and with emphasis in all cases upon providing management training of sufficient scope and duration to develop entrepreneurial and managerial self-sufficiency on the part of the individuals served.
(3) The Administration shall encourage the placement of subcontracts by businesses with small business concerns located in areas of high concentration of unemployed or low-income individuals, with small businesses owned by low-income individuals, and with small businesses eligible to receive contracts pursuant to section 637(a) of this title. The Administration may provide incentives and assistance to such businesses that will aid in the training and upgrading of potential subcontractors or other small business concerns eligible for assistance under subsections (i) and (j), and section 637(a) of this title.
(4) The Administration shall give preference to projects which promote the ownership, participation in ownership, or management of small businesses owned by low-income individuals and small businesses eligible to receive contracts pursuant to section 637(a) of this title.
(5) The financial assistance authorized for projects under this subsection includes assistance advanced by grant, agreement, or contract.
(6) The Administration is authorized to make payments under grants and contracts entered into under this subsection in lump sum or installments, and in advance or by way of reimbursement, and in the case of grants, with necessary adjustments on account of overpayments or underpayments.
(7) To the extent feasible, services under this subsection shall be provided in a location which is easily accessible to the individuals and small business concerns served.
(8) Repealed. Pub. L. 101–574, title II, § 242(2), Nov. 15, 1990, 104 Stat. 2827.
(9) The Administration shall take such steps as may be necessary and appropriate, in coordination and cooperation with the heads of other Federal departments and agencies, to insure that contracts, subcontracts, and deposits made by the Federal Government or with programs aided with Federal funds are placed in such way as to further the purposes of subsections (i) and (j) and section 637(a) of this title.
(10)
There is established within the Administration a small business and capital ownership development program (hereinafter referred to as the “Program”) which shall provide assistance exclusively for small business concerns eligible to receive contracts pursuant to section 637(a) of this title. The program, and all other services and activities authorized under this subsection and section 637(a) of this title, shall be managed by the Associate Administrator for Minority Small Business and Capital Ownership Development under the supervision of, and responsible to, the Administrator.
(A)
The Program shall—
(i) assist small business concerns participating in the Program (either through public or private organizations) to develop and maintain comprehensive business plans which set forth the Program Participant’s specific business targets, objectives, and goals developed and maintained in conformity with subparagraph (D).16
16 So in original. The period probably should be a semicolon.
(ii) provide for such other nonfinancial services as deemed necessary for the establishment, preservation, and growth of small business concerns participating in the Program, including but not limited to (I) loan packaging, (II) financial counseling, (III) accounting and bookkeeping assistance, (IV) marketing assistance, and (V) management assistance;
(iii) assist small business concerns participating in the Program to obtain equity and debt financing;
(iv) establish regular performance monitoring and reporting systems for small business concerns participating in the Program to assure compliance with their business plans;
(v) analyze and report the causes of success and failure of small business concerns participating in the Program; and
(vi) provide assistance necessary to help small business concerns participating in the Program to procure surety bonds, with such assistance including, but not limited to, (I) the preparation of application forms required to receive a surety bond, (II) special management and technical assistance designed to meet the specific needs of small business concerns participating in the Program and which have received or are applying to receive a surety bond, and (III) preparation of all forms necessary to receive a surety bond guarantee from the Administration pursuant to title IV, part B of the Small Business Investment Act of 1958 [15 U.S.C. 694a et seq.].
(B) Small business concerns eligible to receive contracts pursuant to section 637(a) of this title shall participate in the Program.
(C)
(i)
A small business concern participating in any program or activity conducted under the authority of this paragraph or eligible for the award of contracts pursuant to section 637(a) of this title on September 1, 1988, shall be permitted continued participation and eligibility in such program or activity for a period of time which is the greater of—
(I) 9 years less the number of years since the award of its first contract pursuant to section 637(a) of this title; or(II) its original fixed program participation term (plus any extension thereof) assigned prior to November 15, 1988, plus eighteen months.
(ii) Nothing contained in this subparagraph shall be deemed to prevent the Administration from instituting a termination or graduation pursuant to subparagraph (F) or (H) for issues unrelated to the expiration of any time period limitation.
(D)
(i) Promptly after certification under paragraph (11) a Program Participant shall submit a business plan (hereinafter referred to as the “plan”) as described in clause (ii) of this subparagraph for review by the Business Opportunity Specialist assigned to assist such Program Participant. The plan may be a revision of a preliminary business plan submitted by the Program Participant or required by the Administration as a part of the application for certification under this section and shall be designed to result in the Program Participant eliminating the conditions or circumstances upon which the Administration determined eligibility pursuant to section 637(a)(6) of this title. Such plan, and subsequent modifications submitted under clause (iii) of this subparagraph, shall be approved by the business opportunity specialist prior to the Program Participant being eligible for award of a contract pursuant to section 637(a) of this title.
(ii)
The plans submitted under this subparagraph shall include the following:
(I) An analysis of market potential, competitive environment, and other business analyses estimating the Program Participant’s prospects for profitable operations during the term of program participation and after graduation.(II) An analysis of the Program Participant’s strengths and weaknesses with particular attention to correcting any financial, managerial, technical, or personnel conditions which are likely to impede the small business concern from receiving contracts other than those awarded under section 637(a) of this title.(III) Specific targets, objectives, and goals, for the business development of the Program Participant during the next and succeeding years utilizing the results of the analyses conducted pursuant to subclauses (I) and (II).(IV) A transition management plan outlining specific steps to assure profitable business operations after graduation (to be incorporated into the Program Participant’s plan during the first year of the transitional stage of Program participation).(V) Estimates of contract awards pursuant to section 637(a) of this title and from other sources, which the Program Participant will require to meet the specific targets, objectives, and goals for the years covered by its plan. The estimates established shall be consistent with the provisions of subparagraph (I) and section 637(a) of this title.
(iii) Each Program Participant shall annually review its currently approved plan with its Business Opportunity Specialist and modify such plan as may be appropriate. Any modified plan shall be submitted to the Administration for approval. The currently approved plan shall be considered valid until such time as a modified plan is approved by the Business Opportunity Specialist. Annual reviews pertaining to years in the transitional stage of program participation shall require, as appropriate, a written verification that such Program Participant has complied with the requirements of subparagraph (I) relating to attaining business activity from sources other than contracts awarded pursuant to section 637(a) of this title.
(iv)
Each Program Participant shall annually forecast its needs for contract awards under section 637(a) of this title for the next program year and the succeeding program year during the review of its business plan, conducted pursuant to clause (iii). Such forecast shall be known as the section 8(a) [15 U.S.C. 637(a)] contract support level and shall be included in the Program Participant’s business plan. Such forecast shall include—
(I) the aggregate dollar value of contract support to be sought on a noncompetitive basis under section 637(a) of this title, reflecting compliance with the requirements of subparagraph (I) relating to attaining business activity from sources other than contracts awarded pursuant to section 637(a) of this title,(II) the types of contract opportunities being sought, identified by Standard Industrial Classification (SIC) Code or otherwise,(III) an estimate of the dollar value of contract support to be sought on a competitive basis, and(IV) such other information as may be requested by the Business Opportunity Specialist to provide effective business development assistance to the Program Participant.
(E)
A small business concern participating in the program conducted under the authority of this paragraph and eligible for the award of contracts pursuant to section 637(a) of this title shall be denied all such assistance if such concern—
(i) voluntarily elects not to continue participation;
(ii) completes the period of Program participation as prescribed by paragraph (15);
(iii) is terminated pursuant to a termination proceeding conducted in accordance with section 637(a)(9) of this title; or
(iv) is graduated pursuant to a graduation proceeding conducted in accordance with section 637(a)(9) of this title.
(F)
For purposes of this section and section 637(a) of this title, the term “terminated” and the term “termination” means the total denial or suspension of assistance under this paragraph or under section 637(a) of this title prior to the graduation of the participating small business concern or prior to the expiration of the maximum program participation term. An action for termination shall be based upon good cause, including—
(i) the failure by such concern to maintain its eligibility for Program participation;
(ii) the failure of the concern to engage in business practices that will promote its competitiveness within a reasonable period of time as evidenced by, among other indicators, a pattern of unjustified delinquent performance or terminations for default with respect to contracts awarded under the authority of section 637(a) of this title;
(iii) a demonstrated pattern of failing to make required submissions or responses to the Administration in a timely manner;
(iv) the willful violation of any rule or regulation of the Administration pertaining to material issues;
(v) the debarment of the concern or its disadvantaged owners by any agency pursuant to subpart 9.4 of title 48, Code of Federal Regulations (or any successor regulation); or
(vi) the conviction of the disadvantaged owner or an officer of the concern for any offense indicating a lack of business integrity including any conviction for embezzlement, theft, forgery, bribery, falsification or violation of section 645 of this title. For purposes of this clause, no termination action shall be taken with respect to a disadvantaged owner solely because of the conviction of an officer of the concern (who is other than a disadvantaged owner) unless such owner conspired with, abetted, or otherwise knowingly acquiesced in the activity or omission that was the basis of such officer’s conviction.
(G) The Director of the Division may initiate a termination proceeding by recommending such action to the Associate Administrator for Minority Small Business and Capital Ownership Development. Whenever the Associate Administrator, or a designee of such officer, determines such termination is appropriate, within 15 days after making such a determination the Program Participant shall be provided a written notice of intent to terminate, specifying the reasons for such action. No Program Participant shall be terminated from the Program pursuant to subparagraph (F) without first being afforded an opportunity for a hearing in accordance with section 637(a)(9) of this title.
(H) For the purposes of this subsection and section 637(a) of this title the term “graduated” or “graduation” means that the Program Participant is recognized as successfully completing the program by substantially achieving the targets, objectives, and goals contained in the concern’s business plan thereby demonstrating its ability to compete in the marketplace without assistance under this section or section 637(a) of this title.
(I)
(i) During the developmental stage of its participation in the Program, a Program Participant shall take all reasonable efforts within its control to attain the targets contained in its business plan for contracts awarded other than pursuant to section 637(a) of this title (hereinafter referred to as “business activity targets.”). Such efforts shall be made a part of the business plan and shall be sufficient in scope and duration to satisfy the Administration that the Program Participant will engage a reasonable marketing strategy that will maximize its potential to achieve its business activity targets.
(ii) During the transitional stage of the Program a Program Participant shall be subject to regulations regarding business activity targets that are promulgated by the Administration pursuant to clause (iii);
(iii)
The regulations referred to in clause (ii) shall:
(I) establish business activity targets applicable to Program Participants during the fifth year and each succeeding year of Program Participation; such targets, for such period of time, shall reflect a reasonably consistent increase in contracts awarded other than pursuant to section 637(a) of this title, expressed as a percentage of total sales; when promulgating business activity targets the Administration may establish modified targets for Program Participants that have participated in the Program for a period of longer than four years on June 1, 1989;(II) require a Program Participant to attain its business activity targets;(III) provide that, before the receipt of any contract to be awarded pursuant to section 637(a) of this title, the Program Participant (if it is in the transitional stage) must certify that it has complied with the regulations promulgated pursuant to subclause (II), or that it is in compliance with such remedial measures as may have been ordered pursuant to regulations issued under subclause (V);(IV) require the Administration to review each Program Participant’s performance regarding attainment of business activity targets during periodic reviews of such Participant’s business plan; and(V) authorize the Administration to take appropriate remedial measures with respect to a Program Participant that has failed to attain a required business activity target for the purpose of reducing such Participant’s dependence on contracts awarded pursuant to section 637(a) of this title; such remedial actions may include, but are not limited to assisting the Program Participant to expand the dollar volume of its competitive business activity or limiting the dollar volume of contracts awarded to the Program Participant pursuant to section 637(a) of this title; except for actions that would constitute a termination, remedial measures taken pursuant to this subclause shall not be reviewable pursuant to section 637(a)(9) of this title.
(J)
(i) The Administration shall conduct an evaluation of a Program Participant’s eligibility for continued participation in the Program whenever it receives specific and credible information alleging that such Program Participant no longer meets the requirements for Program eligibility. Upon making a finding that a Program Participant is no longer eligible, the Administration shall initiate a termination proceeding in accordance with subparagraph (F). A Program Participant’s eligibility for award of any contract under the authority of section 637(a) of this title may be suspended pursuant to subpart 9.4 of title 48, Code of Federal Regulations (or any successor regulation).
(ii)(I) Except as authorized by subclauses (II) or (III), no award shall be made pursuant to section 637(a) of this title to a concern other than a small business concern.(II) In determining the size of a small business concern owned by a socially and economically disadvantaged Indian tribe (or a wholly owned business entity of such tribe), each firm’s size shall be independently determined without regard to its affiliation with the tribe, any entity of the tribal government, or any other business enterprise owned by the tribe, unless the Administrator determines that one or more such tribally owned business concerns have obtained, or are likely to obtain, a substantial unfair competitive advantage within an industry category.(III) Any joint venture established under the authority of section 602(b) of Public Law 100–656, the “Business Opportunity Development Reform Act of 1988”, shall be eligible for award of a contract pursuant to section 637(a) of this title.
(11)
(A) The Associate Administrator for Minority Small Business and Capital Ownership Development shall be responsible for coordinating and formulating policies relating to Federal assistance to small business concerns eligible for assistance under subsection (i) and small business concerns eligible to receive contracts pursuant to section 637(a) of this title.
(B)
(i) Except as provided in clause (iii), no individual who was determined pursuant to section 637(a) of this title to be socially and economically disadvantaged before August 15, 1989, shall be permitted to assert such disadvantage with respect to any other concern making application for certification after August 15, 1989.
(ii) Except as provided in clause (iii), any individual upon whom eligibility is based pursuant to section 637(a)(4) of this title shall be permitted to assert such eligibility for only one small business concern.
(iii)
A socially and economically disadvantaged Indian tribe may own more than one small business concern eligible for assistance pursuant to paragraph (10) and section 637(a) of this title if—
(I) the Indian tribe does not own another firm in the same industry which has been determined to be eligible to receive contracts under this program, and(II) the individuals responsible for the management and daily operations of the concern do not manage more than two Program Participants.
(C) No concern, previously eligible for the award of contracts pursuant to section 637(a) of this title, shall be subsequently recertified for program participation if its prior participation in the program was concluded for any of the reasons described in paragraph (10)(E).
(D) A concern eligible for the award of contracts pursuant to this subsection shall remain eligible for such contracts if there is a transfer of ownership and control (as defined pursuant to section 637(a)(4) of this title) to individuals who are determined to be socially and economically disadvantaged pursuant to section 637(a) of this title. In the event of such a transfer, the concern, if not terminated or graduated, shall be eligible for a period of continued participation in the program not to exceed the time limitations prescribed in paragraph (15).
(E) There is established a Division of Program Certification and Eligibility (hereinafter referred to in this paragraph as the “Division”) that shall be made part of the Office of Minority Small Business and Capital Ownership Development. The Division shall be headed by a Director who shall report directly to the Associate Administrator for Minority Small Business and Capital Ownership Development. The Division shall establish field offices within such regional offices of the Administration as may be necessary to perform efficiently its functions and responsibilities.
(F)
Subject to the provisions of section 637(a)(9) of this title, the functions and responsibility of the Division are to—
(i) receive, review and evaluate applications for certification pursuant to paragraphs (4), (5), (6) and (7) of section 637(a) of this title;
(ii) advise each program applicant within 15 days after the receipt of an application as to whether such application is complete and suitable for evaluation and, if not, what matters must be rectified;
(iii) render recommendations on such applications to the Associate Administrator for Minority Small Business and Capital Ownership Development;
(iv) review and evaluate financial statements and other submissions from concerns participating in the program established by paragraph (10) to ascertain continued eligibility to receive subcontracts pursuant to section 637(a) of this title;
(v) make a request for the initiation of termination or graduation proceedings, as appropriate, to the Associate Administrator for Minority Small Business and Capital Ownership Development;
(vi) make recommendations to the Associate Administrator for Minority Small Business and Capital Ownership Development concerning protests from applicants that have been denied program admission;
(vii) decide protests regarding the status of a concern as a disadvantaged concern for purposes of any program or activity conducted under the authority of subsection (d) of section 637 of this title, or any other provision of Federal law that references such subsection for a definition of program eligibility; and
(viii) implement such policy directives as may be issued by the Associate Administrator for Minority Small Business and Capital Ownership Development pursuant to subparagraph (I) regarding, among other things, the geographic distribution of concerns to be admitted to the program and the industrial make-up of such concerns.
(G)
An applicant shall not be denied admission into the program established by paragraph (10) due solely to a determination by the Division that specific contract opportunities are unavailable to assist in the development of such concern unless—
(i) the Government has not previously procured and is unlikely to procure the types of products or services offered by the concern; or
(ii) the purchases of such products or services by the Federal Government will not be in quantities sufficient to support the developmental needs of the applicant and other Program Participants providing the same or similar items or services.
(H) Not later than 90 days after receipt of a completed application for Program certification, the Associate Administrator for Minority Small Business and Capital Ownership Development shall certify a small business concern as a Program Participant or shall deny such application.
(I)
Thirty days before the conclusion of each fiscal year, the Director of the Division shall review all concerns that have been admitted into the Program during the preceding 12-month period. The review shall ascertain the number of entrants, their geographic distribution and industrial classification. The Director shall also estimate the expected growth of the Program during the next fiscal year and the number of additional Business Opportunity Specialists, if any, that will be needed to meet the anticipated demand for the Program. The findings and conclusions of the Director shall be reported to the Associate Administrator for Minority Small Business and Capital Ownership Development by September 30 of each year. Based on such report and such additional data as may be relevant, the Associate Administrator shall, by October 31 of each year, issue policy and program directives applicable to such fiscal year that—
(i) establish priorities for the solicitation of program applications from underrepresented regions and industry categories;
(ii) assign staffing levels and allocate other program resources as necessary to meet program needs; and
(iii) establish priorities in the processing and admission of new Program Participants as may be necessary to achieve an equitable geographic distribution of concerns and a distribution of concerns across all industry categories in proportions needed to increase significantly contract awards to small business concerns owned and controlled by socially and economically disadvantaged individuals. When considering such increase the Administration shall give due consideration to those industrial categories where Federal purchases have been substantial but where the participation rate of such concerns has been limited.
(12)
(A) The Administration shall segment the Capital Ownership Development Program into two stages: a developmental stage; and a transitional stage.
(B) The developmental stage of program participation shall be designed to assist the concern in its effort to overcome its economic disadvantage by providing such assistance as may be necessary and appropriate to access its markets and to strengthen its financial and managerial skills.
(C) The transitional stage of program participation shall be designed to overcome, insofar as practicable, the remaining elements of economic disadvantage and to prepare such concern for graduation from the program.
(13)
A Program Participant, if otherwise eligible, shall be qualified to receive the following assistance during the stages of program participation specified in paragraph 12: 17
17 So in original. Probably should be “paragraph (12):”.
(A) Contract support pursuant to section 637(a) of this title.
(B) Financial assistance pursuant to subsection (a)(20).
(C) A maximum of two exemptions from the requirements of section 35(a) 2 of title 41, which exemptions shall apply only to contracts awarded pursuant to section 637(a) of this title and shall only be used to allow for contingent agreements by a small business concern to acquire the machinery, equipment, facilities, or labor needed to perform such contracts. No exemption shall be made pursuant to this subparagraph if the contract to which it pertains has an anticipated value in excess of $10,000,000. This subparagraph shall cease to be effective on October 1, 1992.
(D)
A maximum of five exemptions from the requirements of sections 3131 and 3133 of title 40, which exemptions shall apply only to contracts awarded pursuant to section 637(a) of this title, except that, such exemptions may be granted under this subparagraph only if—
(i) the Administration finds that such concern is unable to obtain the requisite bond or bonds from a surety and that no surety is willing to issue a bond subject to the guarantee provision of title IV of the Small Business Investment Act of 1958 (15 U.S.C. 692 et seq.);
(ii) the Administration and the agency providing the contracting opportunity have provided for the protection of persons furnishing materials or labor to the Program Participant by arranging for the direct disbursement of funds due to such persons by the procuring agency or through any bank the deposits of which are insured by the Federal Deposit Insurance Corporation; and
(iii) the contract to which it pertains does not exceed $3,000,000 in amount. This subparagraph shall cease to be effective on October 1, 1994.
(E)
Financial assistance whereby the Administration may purchase in whole or in part, and on behalf of such concerns, skills training or upgrading for employees or potential employees of such concerns. Such assistance may be made without regard to section 647(a) of this title. Assistance may be made by direct payment to the training provider or by reimbursing the Program Participant or the Participant’s employee, if such reimbursement is found to be reasonable and appropriate. For purposes of this subparagraph the term “training provider” shall mean an institution of higher education, a community or vocational college, or an institution eligible to provide skills training or upgrading under title I of the Workforce Innovation and Opportunity Act [29 U.S.C. 3111 et seq.]. The Administration shall, in consultation with the Secretary of Labor, promulgate rules and regulations to implement this subparagraph that establish acceptable training and upgrading performance standards and provide for such monitoring or audit requirements as may be necessary to ensure the integrity of the training effort. No financial assistance shall be granted under the subparagraph unless the Administrator determines that—
(i) such concern has documented that it has first explored the use of existing cost-free or cost-subsidized training programs offered by public and private sector agencies working with programs of employment and training and economic development;
(ii) no more than five employees or potential employees of such concern are recipients of any benefits under this subparagraph at any one time;
(iii) no more than $2,500 shall be made available for any one employee or potential employee;
(iv) the length of training or upgrading financed by this subparagraph shall be no less than one month nor more than six months;
(v) such concern has given adequate assurance it will employ the trainee or upgraded employee for at least six months after the training or upgrading financed by this subparagraph has been completed and each trainee or upgraded employee has provided a similar assurance to remain within the employ of such concern for such period; if such concern, trainee, or upgraded employee breaches this agreement, the Administration shall be entitled to and shall make diligent efforts to obtain from the violating party the repayment of all funds expended on behalf of the violating party, such repayment shall be made to the Administration together with such interest and costs of collection as may be reasonable; the violating party shall be barred from receiving any further assistance under this subparagraph;
(vi) the training to be financed may take place either at such concern’s facilities or at those of the training provider; and
(vii) such concern will maintain such records as the Administration deems appropriate to ensure that the provisions of this paragraph and any other applicable law have not been violated.
(F)
(i) The transfer of technology or surplus property owned by the United States to such a concern. Activities designed to effect such transfer shall be developed in cooperation with the heads of Federal agencies and shall include the transfer by grant, license, or sale of such technology or property to such a concern. Such property may be transferred to Program Participants on a priority basis. Technology or property transferred under this subparagraph shall be used by the concern during the normal conduct of its business operation and shall not be sold or transferred to any other party (other than the Government) during such concern’s term of participation in the Program and for one year thereafter.
(ii)(I)
In this clause—
(aa) the term “covered period” means the 2-year period beginning on the date on which the President declared the applicable major disaster; and(bb) the term “disaster area” means the area for which the President has declared a major disaster, during the covered period.(II)
The Administrator may transfer technology or surplus property under clause (i) on a priority basis to a small business concern located in a disaster area if—
(aa) the small business concern meets the requirements for such a transfer, without regard to whether the small business concern is a Program Participant; and(bb) for a small business concern that is a Program Participant, on and after the date on which the President declared the applicable major disaster, the small business concern has not received property under this subparagraph on the basis of the status of the small business concern as a Program Participant.(III) For any transfer of property under this clause to a small business concern, the terms and conditions shall be the same as a transfer to a Program Participant, except that the small business concern shall agree not to sell or transfer the property to any party other than the Federal Government during the covered period.(IV) A small business concern that receives a transfer of property under this clause may not receive a transfer of property under clause (i) during the covered period.(V) If a small business concern sells or transfers property in violation of the agreement described in subclause (III), the Administrator may initiate proceedings to prohibit the small business concern from receiving a transfer of property under this clause or clause (i), in addition to any other remedy available to the Administrator.
(iii)(I)
In this clause, the term “covered period” means—
(aa) in the case of a Puerto Rico business, the period beginning on August 13, 2018, and ending on the date on which the Oversight Board established under section 2121 of title 48 terminates; and(bb) in the case of a covered territory business, the period beginning on January 1, 2021, and ending on the date that is 4 years after such date.(II) The Administrator may transfer technology or surplus property under clause (i) to a Puerto Rico business or a covered territory business if either such business meets the requirements for such a transfer, without regard to whether either such business is a Program Participant.
(G) Training assistance whereby the Administration shall conduct training sessions to assist individuals and enterprises eligible to receive contracts under section 637(a) of this title in the development of business principles and strategies to enhance their ability to successfully compete for contracts in the marketplace.
(H) Joint ventures, leader-follower arrangements, and teaming agreements between the Program Participant and other Program Participants and other business concerns with respect to contracting opportunities for the research, development, full-scale engineering or production of major systems. Such activities shall be undertaken on the basis of programs developed by the agency responsible for the procurement of the major system, with the assistance of the Administration.
(I) Transitional management business planning training and technical assistance.
(J) Program Participants in the developmental stage of Program participation shall be eligible for the assistance provided by subparagraphs (A), (B), (C), (D), (E), (F), and (G).
(14) Program Participants in the transitional stage of Program participation shall be eligible for the assistance provided by subparagraphs (A), (B), (F), (G), (H), and (I) of paragraph (13).
(15)
Subject to the provisions of paragraph (10)(C), a small business concern may receive developmental assistance under the Program and contracts under section 637(a) of this title for a total period of not longer than nine years, measured from the date of its certification under the authority of such section, of which—
(A) no more than four years may be spent in the developmental stage of Program Participation; and
(B) no more than five years may be spent in the transitional stage of Program Participation.
(16)
(A) The Administrator shall develop and implement a process for the systematic collection of data on the operations of the Program established pursuant to paragraph (10).
(B)
Not later than April 30 of each year, the Administrator shall submit a report to the Congress on the Program that shall include the following:
(i) The average personal net worth of individuals who own and control concerns that were initially certified for participation in the Program during the immediately preceding fiscal year. The Administrator shall also indicate the dollar distribution of net worths, at $50,000 increments, of all such individuals found to be socially and economically disadvantaged. For the first report required pursuant to this paragraph the Administrator shall also provide the data specified in the preceding sentence for all eligible individuals in the Program as of November 15, 1988.
(ii) A description and estimate of the benefits and costs that have accrued to the economy and the Government in the immediately preceding fiscal year due to the operations of those business concerns that were performing contracts awarded pursuant to section 637(a) of this title.
(iii) A compilation and evaluation of those business concerns that have exited the Program during the immediately preceding three fiscal years. Such compilation and evaluation shall detail the number of concerns actively engaged in business operations, those that have ceased or substantially curtailed such operations, including the reasons for such actions, and those concerns that have been acquired by other firms or organizations owned and controlled by other than socially and economically disadvantaged individuals. For those businesses that have continued operations after they exited from the Program, the Administrator shall also separately detail the benefits and costs that have accrued to the economy during the immediately preceding fiscal year due to the operations of such concerns.
(iv) A listing of all participants in the Program during the preceding fiscal year identifying, by State and by Region, for each firm: the name of the concern, the race or ethnicity, and gender of the disadvantaged owners, the dollar value of all contracts received in the preceding year, the dollar amount of advance payments received by each concern pursuant to contracts awarded under section 637(a) of this title, and a description including (if appropriate) an estimate of the dollar value of all benefits received pursuant to paragraphs (13) and (14) and subsection (a)(20) during such year.
(v) The total dollar value of contracts and options awarded during the preceding fiscal year pursuant to section 637(a) of this title and such amount expressed as a percentage of total sales of (I) all firms participating in the Program during such year; and (II) of firms in each of the nine years of program participation.
(vi) A description of such additional resources or program authorities as may be required to provide the types of services needed over the next two-year period to service the expected portfolio of firms certified pursuant to section 637(a) of this title.
(vii) The total dollar value of contracts and options awarded pursuant to section 637(a) of this title, at such dollar increments as the Administrator deems appropriate, for each four digit standard industrial classification code under which such contracts and options were classified.
(C) The first report required by subparagraph (B) shall pertain to fiscal year 1990.
(k)
Functions relating to loans and financial assistance for projects providing technical or management assistance to individuals or enterprises eligible for assistance as small business concerns located in urban or rural areas with high proportions of unemployed or low-income individuals, or owned by low-income individuals
In carrying out its functions under subsections (i) and (j) and section 637(a) of this title, the Administration is authorized—
(1) to utilize, with their consent, the services and facilities of Federal agencies without reimbursement, and, with the consent of any State or political subdivision of a State, accept and utilize the services and facilities of such State or subdivision without reimbursement;
(2) to accept, in the name of the Administration, and employ or dispose of in furtherance of the purposes of this chapter, any money or property, real, personal, or mixed, tangible, or intangible, received by gift, devise, bequest, or otherwise;
(3) to accept voluntary and uncompensated services, notwithstanding the provisions of section 1342 of title 31; and
(4) to employ experts and consultants or organizations thereof as authorized by section 3109 of title 5, except that no individual may be employed under the authority of this subsection for more than one hundred days in any fiscal year; to compensate individuals so employed at rates not in excess of the daily equivalent of the highest rate payable under section 5332 of title 5, including traveltime; and to allow them, while away from their homes or regular places of business, travel expenses (including per diem in lieu of subsistence) as authorized by section 5703 of title 5 for persons in the Government service employed intermittently, while so employed: Provided, however, That contracts for such employment may be renewed annually.
(l)
Small business intermediary lending pilot program
(1)
Definitions
In this subsection—
(A)
the term “eligible intermediary”—
(i)
means a private, nonprofit entity that—
(I) seeks or has been awarded a loan from the Administrator to make loans to small business concerns under this subsection; and(II) has not less than 1 year of experience making loans to startup, newly established, or growing small business concerns; and
(ii)
includes—
(I) a private, nonprofit community development corporation;(II) a consortium of private, nonprofit organizations or nonprofit community development corporations; and(III) an agency of or nonprofit entity established by a Native American Tribal Government; and
(B) the term “Program” means the small business intermediary lending pilot program established under paragraph (2).
(2)
Establishment

There is established a 3-year small business intermediary lending pilot program, under which the Administrator may make direct loans to eligible intermediaries, for the purpose of making loans to startup, newly established, and growing small business concerns.

(3)
Purposes
The purposes of the Program are—
(A) to assist small business concerns in areas suffering from a lack of credit due to poor economic conditions or changes in the financial market; and
(B) to establish a loan program under which the Administrator may provide loans to eligible intermediaries to enable the eligible intermediaries to provide loans to startup, newly established, and growing small business concerns for working capital, real estate, or the acquisition of materials, supplies, or equipment.
(4)
Loans to eligible intermediaries
(A)
Application
Each eligible intermediary desiring a loan under this subsection shall submit an application to the Administrator that describes—
(i) the type of small business concerns to be assisted;
(ii) the size and range of loans to be made;
(iii) the interest rate and terms of loans to be made;
(iv) the geographic area to be served and the economic, poverty, and unemployment characteristics of the area;
(v) the status of small business concerns in the area to be served and an analysis of the availability of credit; and
(vi) the qualifications of the applicant to carry out this subsection.
(B)
Loan limits

No loan may be made to an eligible intermediary under this subsection if the total amount outstanding and committed to the eligible intermediary by the Administrator would, as a result of such loan, exceed $1,000,000 during the participation of the eligible intermediary in the Program.

(C)
Loan duration

Loans made by the Administrator under this subsection shall be for a term of 20 years.

(D)
Applicable interest rates

Loans made by the Administrator to an eligible intermediary under the Program shall bear an annual interest rate equal to 1.00 percent.

(E)
Fees; collateral

The Administrator may not charge any fees or require collateral with respect to any loan made to an eligible intermediary under this subsection.

(F)
Delayed payments

The Administrator shall not require the repayment of principal or interest on a loan made to an eligible intermediary under the Program during the 2-year period beginning on the date of the initial disbursement of funds under that loan.

(G)
Maximum participants and amounts
During each of fiscal years 2011, 2012, and 2013, the Administrator may make loans under the Program—
(i) to not more than 20 eligible intermediaries; and
(ii) in a total amount of not more than $20,000,000.
(5)
Loans to small business concerns
(A)
In general

The Administrator, through an eligible intermediary, shall make loans to startup, newly established, and growing small business concerns for working capital, real estate, and the acquisition of materials, supplies, furniture, fixtures, and equipment.

(B)
Maximum loan

An eligible intermediary may not make a loan under this subsection of more than $200,000 to any 1 small business concern.

(C)
Applicable interest rates

A loan made by an eligible intermediary to a small business concern under this subsection, may have a fixed or a variable interest rate, and shall bear an interest rate specified by the eligible intermediary in the application of the eligible intermediary for a loan under this subsection.

(D)
Review restrictions

The Administrator may not review individual loans made by an eligible intermediary to a small business concern before approval of the loan by the eligible intermediary.

(6)
Termination

The authority of the Administrator to make loans under the Program shall terminate 3 years after September 27, 2010.

(m)
Microloan Program
(1)
(A)
Purposes
The purposes of the Microloan Program are—
(i) to assist women, low-income, veteran (within the meaning of such term under section 632(q) of this title), and minority entrepreneurs and business owners and other such individuals possessing the capability to operate successful business concerns;
(ii) to assist small business concerns in those areas suffering from a lack of credit due to economic downturns;
(iii)
to establish a microloan program to be administered by the Small Business Administration—
(I) to make loans to eligible intermediaries to enable such intermediaries to provide small-scale loans, particularly loans in amounts averaging not more than $10,000, to startup, newly established, or growing small business concerns for working capital or the acquisition of materials, supplies, or equipment;(II) to make grants to eligible intermediaries that, together with non-Federal matching funds, will enable such intermediaries to provide intensive marketing, management, and technical assistance to microloan borrowers;(III) to make grants to eligible nonprofit entities that, together with non-Federal matching funds, will enable such entities to provide intensive marketing, management, and technical assistance to assist low-income entrepreneurs and other low-income individuals obtain private sector financing for their businesses, with or without loan guarantees; and(IV) to report to the Committees on Small Business of the Senate and the House of Representatives on the effectiveness of the microloan program and the advisability and feasibility of implementing such a program nationwide; and
(iv)
to establish a welfare-to-work microloan initiative, which shall be administered by the Administration, in order to test the feasibility of supplementing the technical assistance grants provided under clauses (ii) and (iii) of subparagraph (B) to individuals who are receiving assistance under the State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), or under any comparable State funded means tested program of assistance for low-income individuals, in order to adequately assist those individuals in—
(I) establishing small businesses; and(II) eliminating their dependence on that assistance.
(B)
Establishment
There is established a microloan program, under which the Administration may—
(i) make direct loans to eligible intermediaries, as provided under paragraph (3), for the purpose of making short-term, fixed interest rate microloans to startup, newly established, and growing small business concerns under paragraph (6);
(ii) in conjunction with such loans and subject to the requirements of paragraph (4), make grants to such intermediaries for the purpose of providing intensive marketing, management, and technical assistance to small business concerns that are borrowers under this subsection; and
(iii) subject to the requirements of paragraph (5), make grants to nonprofit entities for the purpose of providing marketing, management, and technical assistance to low-income individuals seeking to start or enlarge their own businesses, if such assistance includes working with the grant recipient to secure loans in amounts not to exceed $50,000 from private sector lending institutions, with or without a loan guarantee from the nonprofit entity.
(2)
Eligibility for participation
An intermediary shall be eligible to receive loans and grants under subparagraphs (B)(i) and (B)(ii) of paragraph (1) if it—
(A) meets the definition in paragraph (10); 2 and
(B) has at least 1 year of experience making microloans to startup, newly established, or growing small business concerns and providing, as an integral part of its microloan program, intensive marketing, management, and technical assistance to its borrowers.
(3)
Loans to intermediaries
(A)
Intermediary applications
(i)
In general
As part of its application for a loan, each intermediary shall submit a description to the Administration of—
(I) the type of businesses to be assisted;(II) the size and range of loans to be made;(III) the geographic area to be served and its economic, poverty, and unemployment characteristics;(IV) the status of small business concerns in the area to be served and an analysis of their credit and technical assistance needs;(V) any marketing, management, and technical assistance to be provided in connection with a loan made under this subsection;(VI) the local economic credit markets, including the costs associated with obtaining credit locally;(VII) the qualifications of the applicant to carry out the purpose of this subsection; and(VIII) any plan to involve other technical assistance providers (such as counselors from the Service Corps of Retired Executives or small business development centers) or private sector lenders in assisting selected business concerns.
(ii)
Selection of intermediaries

In selecting intermediaries to participate in the program established under this subsection, the Administration shall give priority to those applicants that provide loans in amounts averaging not more than $10,000.

(B)
Intermediary contribution

As a condition of any loan made to an intermediary under subparagraph (B)(i) of paragraph (1), the Administrator shall require the intermediary to contribute not less than 15 percent of the loan amount in cash from non-Federal sources.

(C)
Loan limits

Notwithstanding subsection (a)(3), no loan shall be made under this subsection if the total amount outstanding and committed to one intermediary (excluding outstanding grants) from the business loan and investment fund established by this chapter would, as a result of such loan, exceed $750,000 in the first year of such intermediary’s participation in the program, $7,000,000 (in the aggregate) in the remaining years of the intermediary’s participation in the program, and $3,000,000 in any of those remaining years.

(D)
(i)
In general

The Administrator shall, by regulation, require each intermediary to establish a loan loss reserve fund, and to maintain such reserve fund until all obligations owed to the Administration under this subsection are repaid.

(ii)
Level of loan loss reserve fund
(I)
In general

Subject to subclause (III), the Administrator shall require the loan loss reserve fund of an intermediary to be maintained at a level equal to 15 percent of the outstanding balance of the notes receivable owed to the intermediary.

(II)
Review of loan loss reserve

After the initial 5 years of an intermediary’s participation in the program authorized by this subsection, the Administrator shall, at the request of the intermediary, conduct a review of the annual loss rate of the intermediary. Any intermediary in operation under this subsection prior to October 1, 1994, that requests a reduction in its loan loss reserve shall be reviewed based on the most recent 5-year period preceding the request.

(III)
Reduction of loan loss reserve

Subject to the requirements of clause IV,18

18 So in original. Probably should be “subclause (IV),”.
the Administrator may reduce the annual loan loss reserve requirement of an intermediary to reflect the actual average loan loss rate for the intermediary during the preceding 5-year period, except that in no case shall the loan loss reserve be reduced to less than 10 percent of the outstanding balance of the notes receivable owed to the intermediary.

(IV)
Requirements
The Administrator may reduce the annual loan loss reserve requirement of an intermediary only if the intermediary demonstrates to the satisfaction of the Administrator that—
(aa) the average annual loss rate for the intermediary during the preceding 5-year period is less than 15 percent; and(bb) that 19
19 So in original. The word “that” probably should not appear.
no other factors exist that may impair the ability of the intermediary to repay all obligations owed to the Administration under this subsection.
(E)
Unavailability of comparable credit

An intermediary may make a loan under this subsection of more than $20,000 to a small business concern only if such small business concern demonstrates that it is unable to obtain credit elsewhere at comparable interest rates and that it has good prospects for success. In no case shall an intermediary make a loan under this subsection of more than $50,000, or have outstanding or committed to any 1 borrower more than $50,000.

(F)
Loan duration; interest rates
(i)
Loan duration

Loans made by the Administration under this subsection shall be for a term of 10 years.

(ii)
Applicable interest rates

Except as provided in clause (iii), loans made by the Administration under this subsection to an intermediary shall bear an interest rate equal to 1.25 percentage points below the rate determined by the Secretary of the Treasury for obligations of the United States with a period of maturity of 5 years, adjusted to the nearest one-eighth of 1 percent.

(iii)
Rates applicable to certain small loans

Loans made by the Administration to an intermediary that makes loans to small business concerns and entrepreneurs averaging not more than $7,500, shall bear an interest rate that is 2 percentage points below the rate determined by the Secretary of the Treasury for obligations of the United States with a period of maturity of 5 years, adjusted to the nearest one-eighth of 1 percent.

(iv)
Rates applicable to multiple sites or offices

The interest rate prescribed in clause (ii) or (iii) shall apply to each separate loan-making site or office of 1 intermediary only if such site or office meets the requirements of that clause.

(v)
Rate basis
The applicable rate of interest under this paragraph shall—
(I) be applied retroactively for the first year of an intermediary’s participation in the program, based upon the actual lending practices of the intermediary as determined by the Administration prior to the end of such year; and(II) be based in the second and subsequent years of an intermediary’s participation in the program, upon the actual lending practices of the intermediary during the term of the intermediary’s participation in the program.
(vii)
20
20 So in original. Probably should be “(vi)”.
Covered intermediaries

The interest rates prescribed in this subparagraph shall apply to all loans made to intermediaries under this subsection on or after October 28, 1991.

(G)
Delayed payments

The Administration shall not require repayment of interest or principal of a loan made to an intermediary under this subsection during the first year of the loan.

(H)
Fees; collateral

Except as provided in subparagraphs (B) and (D), the Administration shall not charge any fees or require collateral other than an assignment of the notes receivable of the microloans with respect to any loan made to an intermediary under this subsection.

(4)
Marketing, management and technical assistance grants to intermediaries
Grants made in accordance with subparagraph (B)(ii) of paragraph (1) shall be subject to the following requirements:
(A)
Grant amounts

Except as otherwise provided in subparagraphs (C) and (G) and subject to subparagraph (B), each intermediary that receives a loan under subparagraph (B)(i) of paragraph (1) shall be eligible to receive a grant to provide marketing, management, and technical assistance to small business concerns that are borrowers under this subsection. Except as provided in subparagraphs (C) and (G), each intermediary meeting the requirements of subparagraph (B) may receive a grant of not more than 25 percent of the total outstanding balance of loans made to it under this subsection.

(B)
Contribution

As a condition of a grant made under subparagraph (A), the Administrator shall require the intermediary to contribute an amount equal to 25 percent of the amount of the grant, obtained solely from non-Federal sources. In addition to cash or other direct funding, the contribution may include indirect costs or in-kind contributions paid for under non-Federal programs.

(C)
Additional technical assistance grants for making certain loans
(i)
In general
In addition to grants made under subparagraph (A) or (G), each intermediary shall be eligible to receive a grant equal to 5 percent of the total outstanding balance of loans made to the intermediary under this subsection if—
(I) the intermediary provides not less than 25 percent of its loans to small business concerns located in or owned by 1 or more residents of an economically distressed area; or(II)
the intermediary has a portfolio of loans made under this subsection—
(aa) that averages not more than $10,000 during the period of the intermediary’s participation in the program; or(bb) of which not less than 25 percent is serving rural areas during the period of the intermediary’s participation in the program.
(ii)
Purposes

A grant awarded under clause (i) may be used to provide marketing, management, and technical assistance to small business concerns that are borrowers under this subsection.

(iii)
Contribution exception

The contribution requirements in subparagraph (B) do not apply to grants made under this subparagraph.

(D)
Eligibility for multiple sites or offices

The eligibility for a grant described in subparagraph (A),9 or (C) shall be determined separately for each loan-making site or office of 1 intermediary.

(E)
Assistance to certain small business concerns
(i)
In general

Each intermediary may expend an amount not to exceed 50 percent of the grant funds received under paragraph (1)(B)(ii) to provide information and technical assistance to small business concerns that are prospective borrowers under this subsection.

(ii)
Technical assistance

An intermediary may expend not more than 50 percent of the funds received under paragraph (1)(B)(ii) to enter into third party contracts for the provision of technical assistance.

(F)
Supplemental grant
(i)
In general

The Administration may accept any funds transferred to the Administration from other departments or agencies of the Federal Government to make grants in accordance with this subparagraph and section 202(b) of the Small Business Reauthorization Act of 1997 to participating intermediaries and technical assistance providers under paragraph (5), for use in accordance with clause (iii) to provide additional technical assistance and related services to recipients of assistance under a State program described in paragraph (1)(A)(iv) at the time they initially apply for assistance under this subparagraph.

(ii)
Eligible recipients; grant amounts

In making grants under this subparagraph, the Administration may select, from among participating intermediaries and technical assistance providers described in clause (i), not more than 20 grantees in fiscal year 1998, not more than 25 grantees in fiscal year 1999, and not more than 30 grantees in fiscal year 2000, each of whom may receive a grant under this subparagraph in an amount not to exceed $200,000 per year.

(iii)
Use of grant amounts
Grants under this subparagraph—
(I) are in addition to other grants provided under this subsection and shall not require the contribution of matching amounts as a condition of eligibility; and(II)
may be used by a grantee—
(aa) to pay or reimburse a portion of child care and transportation costs of recipients of assistance described in clause (i), to the extent such costs are not otherwise paid by State block grants under the Child Care Development Block Grant Act of 1990 (42 U.S.C. 9858 2 et seq.) or under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.); and(bb) for marketing, management, and technical assistance to recipients of assistance described in clause (i).
(iv)
Memorandum of Understanding
Prior to accepting any transfer of funds under clause (i) from a department or agency of the Federal Government, the Administration shall enter into a Memorandum of Understanding with the department or agency, which shall—
(I) specify the terms and conditions of the grants under this subparagraph; and(II) provide for appropriate monitoring of expenditures by each grantee under this subparagraph and each recipient of assistance described in clause (i) who receives assistance from a grantee under this subparagraph, in order to ensure compliance with this subparagraph by those grantees and recipients of assistance.
(G)
Grant amounts based on appropriations

In any fiscal year in which the amount appropriated to make grants under subparagraph (A) is sufficient to provide to each intermediary that receives a loan under paragraph (1)(B)(i) a grant of not less than 25 percent of the total outstanding balance of loans made to the intermediary under this subsection, the Administration shall make a grant under subparagraph (A) to each intermediary of not less than 25 percent and not more than 30 percent of that total outstanding balance for the intermediary.

(5)
Private sector borrowing technical assistance grants
Grants made in accordance with subparagraph (B)(iii) of paragraph (1) shall be subject to the following requirements:
(A)
Grant amounts

Subject to the requirements of subparagraph (B), the Administration may make not more than 55 grants annually, each in amounts not to exceed $200,000 for the purposes specified in subparagraph (B)(iii) of paragraph (1).

(B)
Contribution

As a condition of any grant made under subparagraph (A), the Administration shall require the grant recipient to contribute an amount equal to 20 percent of the amount of the grant, obtained solely from non-Federal sources. In addition to cash or other direct funding, the contribution may include indirect costs or in-kind contributions paid for under non-Federal programs.

(6)
Loans to small business concerns from eligible intermediaries
(A)
In general

An eligible intermediary shall make short-term, fixed rate loans to startup, newly established, and growing small business concerns from the funds made available to it under subparagraph (B)(i) of paragraph (1) for working capital and the acquisition of materials, supplies, furniture, fixtures, and equipment.

(B)
Portfolio requirement

To the extent practicable, each intermediary that operates a microloan program under this subsection shall maintain a microloan portfolio with an average loan size of not more than $15,000.

(C)
Interest limit
Notwithstanding any provision of the laws of any State or the constitution of any State pertaining to the rate or amount of interest that may be charged, taken, received, or reserved on a loan, the maximum rate of interest to be charged on a microloan funded under this subsection shall not exceed the rate of interest applicable to a loan made to an intermediary by the Administration—
(i) in the case of a loan of more than $7,500 made by the intermediary to a small business concern or entrepreneur by more than 7.75 percentage points; and
(ii) in the case of a loan of not more than $7,500 made by the intermediary to a small business concern or entrepreneur by more than 8.5 percentage points.
(D)
Review restriction

The Administration shall not review individual microloans made by intermediaries prior to approval.

(E)
Establishment of child care or transportation businesses

In addition to other eligible small businesses concerns, borrowers under any program under this subsection may include individuals who will use the loan proceeds to establish for-profit or nonprofit child care establishments or businesses providing for-profit transportation services.

(7)
Program funding for microloans
(A)
Number of participants

Under the program authorized by this subsection, the Administration may fund, on a competitive basis, not more than 300 intermediaries.

(B)
Allocation
(i)
Minimum allocation
Subject to the availability of appropriations, of the total amount of new loan funds made available for award under this subsection in each fiscal year, the Administration shall make available for award in each State (including the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa) an amount equal to the sum of—
(I)
the lesser of—
(aa) $800,000; or(bb)155 of the total amount of new loan funds made available for award under this subsection for that fiscal year; and(II) any additional amount, as determined by the Administration.
(ii)
Redistribution

If, at the beginning of the third quarter of a fiscal year, the Administration determines that any portion of the amount made available to carry out this subsection is unlikely to be made available under clause (i) during that fiscal year, the Administration may make that portion available for award in any one or more States (including the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa) without regard to clause (i).

(8)
Equitable distribution of intermediaries

In approving microloan program applicants and providing funding to intermediaries under this subsection, the Administration shall select and provide funding to such intermediaries as will ensure appropriate availability of loans for small businesses in all industries located throughout each State, particularly those located in urban and in rural areas.

(9)
Grants for management, marketing, technical assistance, and related services
(A)
In general

The Administration may procure technical assistance for intermediaries participating in the Microloan Program to ensure that such intermediaries have the knowledge, skills, and understanding of microlending practices necessary to operate successful microloan programs.

(B)
Assistance amount

The Administration shall transfer 7 percent of its annual appropriation for loans and loan guarantees under this subsection to the Administration’s Salaries and Expense Account for the specific purpose of providing 1 or more technical assistance grants to experienced microlending organizations and national and regional nonprofit organizations that have demonstrated experience in providing training support for microenterprise development and financing.21

21 So in original. The period probably should not appear.
to achieve the purpose set forth in subparagraph (A).

(C)
Welfare-to-work microloan initiative

Of amounts made available to carry out the welfare-to-work microloan initiative under paragraph (1)(A)(iv) in any fiscal year, the Administration may use not more than 5 percent to provide technical assistance, either directly or through contractors, to welfare-to-work microloan initiative grantees, to ensure that, as grantees, they have the knowledge, skills, and understanding of microlending and welfare-to-work transition, and other related issues, to operate a successful welfare-to-work microloan initiative.

(10)
Report to Congress
On November 1, 1995, the Administration shall submit to the Committees on Small Business of the Senate and the House of Representatives a report, including the Administration’s evaluation of the effectiveness of the first 3½ years of the microloan program and the following:
(A) the numbers and locations of the intermediaries funded to conduct microloan programs;
(B) the amounts of each loan and each grant to intermediaries;
(C) a description of the matching contributions of each intermediary;
(D) the numbers and amounts of microloans made by the intermediaries to small business concern borrowers;
(E) the repayment history of each intermediary;
(F) a description of the loan portfolio of each intermediary including the extent to which it provides microloans to small business concerns in rural areas; and
(G) any recommendations for legislative changes that would improve program operations.
(11)
Definitions
For purposes of this subsection—
(A)
the term “intermediary” means—
(i) a private, nonprofit entity;
(ii) a private, nonprofit community development corporation;
(iii) a consortium of private, nonprofit organizations or nonprofit community development corporations;
(iv)
a quasi-governmental economic development entity (such as a planning and development district), other than a State, county, municipal government, or any agency thereof, if—
(I) no application is received from an eligible nonprofit organization; or(II) the Administration determines that the needs of a region or geographic area are not adequately served by an existing, eligible nonprofit organization that has submitted an application; or
(v) an agency of or nonprofit entity established by a Native American Tribal Government,
that seeks to borrow or has borrowed funds from the Administration to make microloans to small business concerns under this subsection;
(B) the term “microloan” means a short-term, fixed rate loan of not more than $50,000, made by an intermediary to a startup, newly established, or growing small business concern;
(C)
the term “rural area” means any political subdivision or unincorporated area—
(i) in a nonmetropolitan county (as defined by the Secretary of Agriculture) or its equivalent thereof; or
(ii) in a metropolitan county or its equivalent that has a resident population of less than 20,000 if the Small Business Administration has determined such political subdivision or area to be rural.22
22 So in original. The period probably should be “; and”.
(D) the term “economically distressed area”, as used in paragraph (4), means a county or equivalent division of local government of a State in which the small business concern is located, in which, according to the most recent data available from the Bureau of the Census, Department of Commerce, not less than 40 percent of residents have an annual income that is at or below the poverty level.
(12)
Deferred participation loan pilot
In lieu of making direct loans to intermediaries as authorized in paragraph (1)(B), during fiscal years 1998 through 2000, the Administration may, on a pilot program basis, participate on a deferred basis of not less than 90 percent and not more than 100 percent on loans made to intermediaries by a for-profit or nonprofit entity or by alliances of such entities, subject to the following conditions:
(A)
Number of loans

In carrying out this paragraph, the Administration shall not participate in providing financing on a deferred basis to more than 10 intermediaries in urban areas or more than 10 intermediaries in rural areas.

(B)
Term of loans

The term of each loan shall be 10 years. During the first year of the loan, the intermediary shall not be required to repay any interest or principal. During the second through fifth years of the loan, the intermediary shall be required to pay interest only. During the sixth through tenth years of the loan, the intermediary shall be required to make interest payments and fully amortize the principal.

(C)
Interest rate

The interest rate on each loan shall be the rate specified by paragraph (3)(F) for direct loans.

(13)
Evaluation of welfare-to-work microloan initiative

On January 31, 1999, and annually thereafter, the Administration shall submit to the Committees on Small Business of the House of Representatives and the Senate a report on any monies distributed pursuant to paragraph (4)(F).

(n)
Repayment deferred for active service reservists
(1)
Definitions
In this subsection:
(A)
Active service

The term “active service” has the meaning given that term in section 101(d)(3) of title 10.

(B)
Eligible reservist

The term “eligible reservist” means a member of a reserve component of the Armed Forces ordered to perform active service for a period of more than 30 consecutive days.

(C)
Essential employee

The term “essential employee” means an individual who is employed by a small business concern and whose managerial or technical expertise is critical to the successful day-to-day operations of that small business concern.

(D)
Qualified borrower
The term “qualified borrower” means—
(i) an individual who is an eligible reservist and who received a direct loan under subsection (a) or (b) before being ordered to active service; or
(ii) a small business concern that received a direct loan under subsection (a) or (b) before an eligible reservist, who is an essential employee, was ordered to active service.
(2)
Deferral of direct loans
(A)
In general

The Administration shall, upon written request, defer repayment of principal and interest due on a direct loan made under subsection (a) or (b), if such loan was incurred by a qualified borrower.

(B)
Period of deferral

The period of deferral for repayment under this paragraph shall begin on the date on which the eligible reservist is ordered to active service and shall terminate on the date that is 180 days after the date such eligible reservist is discharged or released from active service.

(C)
Interest rate reduction during deferral

Notwithstanding any other provision of law, during the period of deferral described in subparagraph (B), the Administration may, in its discretion, reduce the interest rate on any loan qualifying for a deferral under this paragraph.

(3)
Deferral of loan guarantees and other financings
The Administration shall—
(A) encourage intermediaries participating in the program under subsection (m) to defer repayment of a loan made with proceeds made available under that subsection, if such loan was incurred by a small business concern that is eligible to apply for assistance under subsection (b)(3); and
(B)
not later than 30 days after August 17, 1999, establish guidelines to—
(i) encourage lenders and other intermediaries to defer repayment of, or provide other relief relating to, loan guarantees under subsection (a) and financings under section 697a of this title that were incurred by small business concerns that are eligible to apply for assistance under subsection (b)(3), and loan guarantees provided under subsection (m) if the intermediary provides relief to a small business concern under this paragraph; and
(ii) implement a program to provide for the deferral of repayment or other relief to any intermediary providing relief to a small business borrower under this paragraph.
(Pub. L. 85–536, § 2[7], July 18, 1958, 72 Stat. 387; Pub. L. 85–699, title VI, § 602(c), Aug. 21, 1958, 72 Stat. 698; Pub. L. 86–367, § 2, Sept. 22, 1959, 73 Stat. 647; Pub. L. 87–70, title III, § 305[a], June 30, 1961, 75 Stat. 167; Pub. L. 87–305, § 9, Sept. 26, 1961, 75 Stat. 668; Pub. L. 88–264, § 1, Feb. 5, 1964, 78 Stat. 7; Pub. L. 88–560, title III, § 319, Sept. 2, 1964, 78 Stat. 794; Pub. L. 89–59, § 1(a), (b), June 30, 1965, 79 Stat. 206; Pub. L. 89–409, § 3(a), May 2, 1966, 80 Stat. 133; Pub. L. 89–769, § 7(b), Nov. 6, 1966, 80 Stat. 1319; Pub. L. 90–104, title I, §§ 103, 104, Oct. 11, 1967, 81 Stat. 268; Pub. L. 90–448, title XI, § 1106(a), Aug. 1, 1968, 82 Stat. 567; Pub. L. 90–495, § 31, Aug. 23, 1968, 82 Stat. 835; Pub. L. 91–173, title V, § 504(a), (b), Dec. 30, 1969, 83 Stat. 802; Pub. L. 91–596, § 28(a), (b), Dec. 29, 1970, 84 Stat. 1618; Pub. L. 91–597, § 25(a), (b), Dec. 29, 1970, 84 Stat. 1633, 1634; Pub. L. 92–385, §§ 1(a), 2(a), Aug. 16, 1972, 86 Stat. 554, 555; Pub. L. 92–500, § 8(a), Oct. 18, 1972, 86 Stat. 898; Pub. L. 92–595, § 3(b), Oct. 27, 1972, 86 Stat. 1316; Pub. L. 93–237, §§ 2(a), (b), 3(a), 5, 6, Jan. 2, 1974, 87 Stat. 1023, 1024; Pub. L. 93–386, §§ 2(a)(4), 3(2), 8, 9, 12, Aug. 23, 1974, 88 Stat. 742, 746, 748, 749; Pub. L. 94–305, title I, §§ 108(b), 109, 111, 112(c), (d), 114, June 4, 1976, 90 Stat. 666, 667; Pub. L. 95–89, title I, § 101(d), (e), title III, §§ 301, 302, title IV, §§ 402–405, Aug. 4, 1977, 91 Stat. 553, 558–560; Pub. L. 95–315, §§ 2, 3, July 4, 1978, 92 Stat. 377, 378; Pub. L. 95–507, title II, §§ 204, 205, 231, Oct. 24, 1978, 92 Stat. 1764, 1766, 1772; Pub. L. 95–510, § 104, Oct. 24, 1978, 92 Stat. 1782; Pub. L. 96–38, title I, § 101(a), (b), July 25, 1979, 93 Stat. 118; Pub. L. 96–302, title I, §§ 119(a), (b), 122–124, title II, § 203, title V, § 505, July 2, 1980, 94 Stat. 840, 841, 843, 848, 852; Pub. L. 96–481, title I, §§ 104, 106(a), 107, 112, Oct. 21, 1980, 94 Stat. 2322, 2323; Pub. L. 97–35, title XIX, §§ 1902, 1910–1912, 1913(a), (c), 1914, Aug. 13, 1981, 95 Stat. 767, 778–780; Pub. L. 98–270, title III, §§ 301, 304, 308, 309, 311, Apr. 18, 1984, 98 Stat. 159–161; Pub. L. 98–395, § 5, Aug. 21, 1984, 98 Stat. 1368; Pub. L. 99–272, title XVIII, §§ 18006(a)(1), (2), 18007, 18013, Apr. 7, 1986, 100 Stat. 366, 370; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 100–418, title VIII, §§ 8005, 8007(a), Aug. 23, 1988, 102 Stat. 1557, 1559; Pub. L. 100–533, title III, § 302(a), Oct. 25, 1988, 102 Stat. 2693; Pub. L. 100–590, title I, §§ 102(a), 103, 111(c), 119(a), 120–122, Nov. 3, 1988, 102 Stat. 2992, 2995, 2999, 3000; Pub. L. 100–656, title II, §§ 201(a), 202, 203, 205, 206, 208, title III, §§ 301–303(a), title IV, § 408, title V, § 505(h), Nov. 15, 1988, 102 Stat. 3856, 3858, 3859, 3861, 3862, 3865–3868, 3877, 3887; Pub. L. 100–707, title I, § 109(f), Nov. 23, 1988, 102 Stat. 4708; Pub. L. 101–37, §§ 4–6(a), 7(a), 8–10(b), June 15, 1989, 103 Stat. 70–73; Pub. L. 101–162, title V, (1), (2), Nov. 21, 1989, 103 Stat. 1024, 1025; Pub. L. 101–574, title II, §§ 202, 204(a), 206, 242, 245, title III, § 307, Nov. 15, 1990, 104 Stat. 2818–2820, 2827, 2830; Pub. L. 102–140, title VI, § 609(b), (h), Oct. 28, 1991, 105 Stat. 825, 827; Pub. L. 102–191, § 4, Dec. 5, 1991, 105 Stat. 1591; Pub. L. 102–366, title I, §§ 104, 113(a), title II, § 211, Sept. 4, 1992, 106 Stat. 988, 989, 997; Pub. L. 102–564, title III, § 307(b), (c), Oct. 28, 1992, 106 Stat. 4263, 4264; Pub. L. 103–81, §§ 4, 5(a), 8, Aug. 13, 1993, 107 Stat. 781, 782; Pub. L. 103–403, title II, §§ 201, 202, 204–208(b), 209–211, title VI, §§ 603–605(a), Oct. 22, 1994, 108 Stat. 4180–4183, 4202, 4203; Pub. L. 104–36, §§ 2–4(a), 5, Oct. 12, 1995, 109 Stat. 295–297; Pub. L. 104–208, div. D, title I, §§ 103(a)–(d), (f), 105, 107, 111, Sept. 30, 1996, 110 Stat. 3009–726, 3009–727, 3009–731 to 3009–733; Pub. L. 105–135, title II, §§ 201, 202(a), 231, title VII, § 706, Dec. 2, 1997, 111 Stat. 2597, 2598, 2606, 2637; Pub. L. 105–277, div. A, § 101(f) [title VIII, § 405(d)(10), (f)(9)], Oct. 21, 1998, 112 Stat. 2681–337, 2681–420, 2681–430; Pub. L. 106–8, § 3(a), (c), Apr. 2, 1999, 113 Stat. 13, 16; Pub. L. 106–22, §§ 2, 3, Apr. 27, 1999, 113 Stat. 36, 37; Pub. L. 106–24, § 1(a), Apr. 27, 1999, 113 Stat. 39; Pub. L. 106–50, title IV, §§ 401(b), 402(a), (b), 403, 404, Aug. 17, 1999, 113 Stat. 244–246; Pub. L. 106–554, § 1(a)(9) [title II, §§ 202–208(a), 210, title VIII, § 802(a)], Dec. 21, 2000, 114 Stat. 2763, 2763A–681 to 2763A–684, 2763A–702; Pub. L. 107–100, § 6(a), Dec. 21, 2001, 115 Stat. 970; Pub. L. 108–447, div. K, title I, §§ 101(a), 102, 103(a), 107(a), (b), Dec. 8, 2004, 118 Stat. 3442–3446; Pub. L. 109–163, div. A, title VIII, § 845(a)(2), (c), Jan. 6, 2006, 119 Stat. 3390, 3391; Pub. L. 110–140, title XII, §§ 1201, 1202, Dec. 19, 2007, 121 Stat. 1764, 1765; Pub. L. 110–186, title II, §§ 201(a), 203, 204, 208, Feb. 14, 2008, 122 Stat. 627, 629, 631; Pub. L. 110–234, title XII, §§ 12061, 12063(a), (c)(2), 12065, 12066(a), 12068(a), (b)(2), 12070, 12074(a), 12077–12078(b)(1), (c), 12081–12083(a), May 22, 2008, 122 Stat. 1406, 1407, 1409–1411, 1414–1418; Pub. L. 110–246, § 4(a), title XII, §§ 12061, 12063(a), (c)(2), 12065, 12066(a), 12068(a), (b)(2), 12070, 12074(a), 12077–12078(b)(1), (c), 12081–12083(a), June 18, 2008, 122 Stat. 1664, 2168, 2169, 2171–2173, 2176–2180; Pub. L. 111–240, title I, §§ 1111, 1113, 1131(a), 1133, 1135, 1206(a)–(g), 1401(a), (c)(1), Sept. 27, 2010, 124 Stat. 2507, 2508, 2512, 2514, 2520, 2530–2532, 2547, 2549; Pub. L. 112–74, div. C, title V, § 531, Dec. 23, 2011, 125 Stat. 922; Pub. L. 112–239, div. A, title XVI, § 1622(c), Jan. 2, 2013, 126 Stat. 2069; Pub. L. 113–128, title V, § 512(cc), July 22, 2014, 128 Stat. 1717; Pub. L. 114–38, §§ 2, 4(b), July 28, 2015, 129 Stat. 437, 438; Pub. L. 114–88, div. A, title I, §§ 1101–1104, div. B, title I, §§ 2101, 2102(a), (b), 2105–2107, 2109, title II, § 2201, title III, § 2301(a), Nov. 25, 2015, 129 Stat. 687–690, 692, 694, 695; Pub. L. 114–92, div. A, title VIII, § 865(a)(2), Nov. 25, 2015, 129 Stat. 928; Pub. L. 115–141, div. E, title V, § 532, Mar. 23, 2018, 132 Stat. 581; Pub. L. 115–189, § 4(a)(2), June 21, 2018, 132 Stat. 1497; Pub. L. 115–232, div. A, title VIII, §§ 853(b), 861(c), 862(b)(1), (f), Aug. 13, 2018, 132 Stat. 1885, 1896, 1897, 1900; Pub. L. 115–370, § 2, Dec. 21, 2018, 132 Stat. 5105; Pub. L. 116–92, div. A, title VIII, § 877(a), Dec. 20, 2019, 133 Stat. 1529; Pub. L. 116–136, div. A, title I, §§ 1102(a), (c), (d), 1110(f), Mar. 27, 2020, 134 Stat. 286, 294, 308; Pub. L. 116–139, div. A, § 101(d), Apr. 24, 2020, 134 Stat. 621; Pub. L. 116–142, §§ 2(a), 3(a), (c), June 5, 2020, 134 Stat. 641, 642; Pub. L. 116–260, div. N, title III, §§ 304(a), (b)(1)(C)(ii), 308(a), 310(a)(1), (b), 311(a), 313(a), 315(a), 316–319, 326, 329(a), 334, 335(a), 336(a), 337(a), 338(a), 339(b), 340(a), (b)(1), 341–343(a), 344, Dec. 27, 2020, 134 Stat. 1993, 1994, 2000, 2001, 2008, 2011–2015, 2036, 2037, 2041, 2042, 2047, 2048, 2049–2051; Pub. L. 116–283, div. A, title VIII, § 866(b), Jan. 1, 2021, 134 Stat. 3785; Pub. L. 117–2, title V, § 5001(a), (b), (c)(2), Mar. 11, 2021, 135 Stat. 81–84; Pub. L. 117–6, § 2(a), Mar. 30, 2021, 135 Stat. 250.)
§ 636a.
Repealed. Pub. L. 97–35, title XIX, § 1917, Aug. 13, 1981, 95 Stat. 781
§ 636b.
Disaster loan interest rates

Any loan made under section 636a 1

1 See References in Text note below.
of this title and section 4452 1 of title 42 shall not exceed the current cost of repairing or replacing the disaster injury, loss, or damage in conformity with current codes and specifications. Any loan made under sections 636a 1 and 636d of this title, and sections 3538 and 4452 1 of title 42 shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity of ten to twelve years reduced by not to exceed 2 per centum per annum. In no event shall any loan made under this section bear interest at a rate in excess of 6 per centum per annum.

(Pub. L. 91–606, title II, § 234, Dec. 31, 1970, 84 Stat. 1754.)
§ 636c.
Age of applicant for disaster loans

In the administration of any Federal disaster loan program under the authority of section 636a 1

1 See References in Text note below.
of this title, section 4452 1 of title 42, or section 233 of Public Law 91–606, the age of any adult loan applicant shall not be considered in determining whether such loan should be made or the amount of such loan.

(Pub. L. 91–606, title II, § 235, Dec. 31, 1970, 84 Stat. 1754.)
§ 636d.
Disaster aid to major sources of employment
(a)
Loans to disaster areas

The Small Business Administration in the case of a nonagricultural enterprise, and the Farmers Home Administration in the case of an agricultural enterprise, are authorized to provide any industrial, commercial, agricultural, or other enterprise, which has constituted a major source of employment in an area suffering a major disaster and which is no longer in substantial operation as a result of such disaster, a loan in such amount as may be necessary to enable such enterprise to resume operations in order to assist in restoring the economic viability of the disaster area. Loans authorized by this section shall be made without regard to limitations on the size of loans which may otherwise be imposed by any other provision of law or regulations promulgated pursuant thereto.

(b)
Interest; deferred payments

Assistance under this section shall be in addition to any other Federal disaster assistance, except that such other assistance may be adjusted or modified to the extent deemed appropriate by the Director under the authority of section 4418 1

1 See References in Text note below.
of title 42. Any loan made under this section shall be subject to the interest requirements of section 636b of this title, but the President, if he deems it necessary, may defer payments of principal and interest for a period not to exceed three years after the date of the loan. Any such deferred payments shall bear interest at the rate determined under section 636b of this title.

(Pub. L. 91–606, title II, § 237, Dec. 31, 1970, 84 Stat. 1754.)
§ 636e.
Definitions
In this subtitle— 1
1 See References in Text note below.
(1) the terms “Administration” and “Administrator” mean the Small Business Administration and the Administrator thereof, respectively;
(2) the term “disaster area” means an area affected by a natural or other disaster, as determined for purposes of paragraph (1) or (2) of section 636(b) of this title, during the period of such declaration;
(3) the term “disaster loan program of the Administration” means assistance under section 636(b) of this title, as amended by this Act;
(4) the term “disaster update period” means the period beginning on the date on which the President declares a major disaster (including any major disaster relating to which the Administrator declares eligibility for additional disaster assistance under paragraph (9) of section 636(b) of this title, as added by this Act) and ending on the date on which such declaration terminates;
(5) the term “major disaster” has the meaning given that term in section 5122 of title 42;
(6) the term “small business concern” has the meaning given that term under section 632 of this title; and
(7) the term “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, the Virgin Islands, Guam, American Samoa, and any territory or possession of the United States.
(Pub. L. 110–234, title XII, § 12052, May 22, 2008, 122 Stat. 1406; Pub. L. 110–246, § 4(a), title XII, § 12052, June 18, 2008, 122 Stat. 1664, 2168.)
§ 636f.
Coordination of efforts between the Administrator and the Internal Revenue Service to expedite loan processing

The Administrator and the Commissioner of Internal Revenue shall, to the maximum extent practicable, ensure that all relevant and allowable tax records for loan approval are shared with loan processors in an expedited manner, upon request by the Administrator.

(Pub. L. 110–234, title XII, § 12066(b), May 22, 2008, 122 Stat. 1410; Pub. L. 110–246, § 4(a), title XII, § 12066(b), June 18, 2008, 122 Stat. 1664, 2172.)
§ 636g.
Development and implementation of major disaster response plan
(a)
In general
Not later than 3 months after the date of enactment of this Act, the Administrator shall—
(1) by rule, amend the 2006 Atlantic hurricane season disaster response plan of the Administration (in this section referred to as the “disaster response plan”) to apply to major disasters; and
(2) submit a report to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives detailing the amendments to the disaster response plan.
(b)
Contents
The report required under subsection (a)(2) shall include—
(1) any updates or modifications made to the disaster response plan since the report regarding the disaster response plan submitted to Congress on July 14, 2006;
(2) a description of how the Administrator plans to use and integrate District Office personnel of the Administration in the response to a major disaster, including information on the use of personnel for loan processing and loan disbursement;
(3) a description of the disaster scalability model of the Administration and on what basis or function the plan is scaled;
(4) a description of how the agency-wide Disaster Oversight Council is structured, which offices comprise its membership, and whether the Associate Deputy Administrator for Entrepreneurial Development of the Administration is a member;
(5) a description of how the Administrator plans to coordinate the disaster efforts of the Administration with State and local government officials, including recommendations on how to better incorporate State initiatives or programs, such as State-administered bridge loan programs, into the disaster response of the Administration;
(6) recommendations, if any, on how the Administration can better coordinate its disaster response operations with the operations of other Federal, State, and local entities;
(7)
(8) the number of full-time equivalent employees and job descriptions for the planning and disaster response staff of the Administration;
(9) the in-service and preservice training procedures for disaster response staff of the Administration;
(10) information on the logistical support plans of the Administration (including equipment and staffing needs, and detailed information on how such plans will be scalable depending on the size and scope of the major disaster 1
1 So in original. Probably should be followed by a closing parenthesis.
;
(11) a description of the findings and recommendations of the Administrator, if any, based on a review of the response of the Administration to Hurricane Katrina of 2005, Hurricane Rita of 2005, and Hurricane Wilma of 2005; and
(12) a plan for how the Administrator, in consultation with the Administrator of the Federal Emergency Management Agency, will coordinate the provision of accommodations and necessary resources for disaster assistance personnel to effectively perform their responsibilities in the aftermath of a major disaster.
(c)
Biennial disaster simulation exercise
(1)
Exercise required

The Administrator shall conduct a disaster simulation exercise at least once every 2 fiscal years. The exercise shall include the participation of, at a minimum, not less than 50 percent of the individuals in the disaster reserve corps and shall test, at maximum capacity, all of the information technology and telecommunications systems of the Administration that are vital to the activities of the Administration during such a disaster.

(2)
Report

The Administrator shall include a report on the disaster simulation exercises conducted under paragraph (1) each time the Administration submits a report required under section 657o of this title, as added by this Act.

(Pub. L. 110–234, title XII, § 12072, May 22, 2008, 122 Stat. 1411; Pub. L. 110–246, § 4(a), title XII, § 12072, June 18, 2008, 122 Stat. 1664, 2173.)
§ 636h.
Disaster planning responsibilities
(a)
Assignment of Small Business Administration disaster planning responsibilities
The disaster planning function of the Administration shall be assigned to an individual appointed by the Administrator who—
(1) is not an employee of the Office of Disaster Assistance of the Administration;
(2) has proven management ability;
(3) has substantial knowledge in the field of disaster readiness and emergency response; and
(4) has demonstrated significant experience in the area of disaster planning.
(b)
Responsibilities
The individual assigned the disaster planning function of the Administration shall report directly and solely to the Administrator and shall be responsible for—
(1) creating, maintaining, and implementing the comprehensive disaster response plan of the Administration described in section 636g of this title;
(2) ensuring there are in-service and pre-service training procedures for the disaster response staff of the Administration;
(3) coordinating and directing the training exercises of the Administration relating to disasters, including disaster simulation exercises and disaster exercises coordinated with other government departments and agencies; and
(4) other responsibilities relevant to disaster planning and readiness, as determined by the Administrator.
(c)
Coordination
In carrying out the responsibilities described in subsection (b), the individual assigned the disaster planning function of the Administration shall coordinate with—
(1) the Office of Disaster Assistance of the Administration;
(2) the Administrator of the Federal Emergency Management Agency; and
(3) other Federal, State, and local disaster planning offices, as necessary.
(d)
Resources

The Administrator shall ensure that the individual assigned the disaster planning function of the Administration has adequate resources to carry out the duties under this section.

(e)
Report
Not later than 30 days after the date of enactment of this Act, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report containing—
(1) a description of the actions of the Administrator to assign an individual the disaster planning function of the Administration;
(2) information detailing the background and expertise of the individual assigned; and
(3) information on the status of the implementation of the responsibilities described in subsection (b).
(Pub. L. 110–234, title XII, § 12073, May 22, 2008, 122 Stat. 1413; Pub. L. 110–246, § 4(a), title XII, § 12073, June 18, 2008, 122 Stat. 1664, 2175.)
§ 636i.
Small business bonding threshold
(a)
In general

Except as provided in subsection (b), and notwithstanding any other provision of law, for any procurement related to a major disaster, the Administrator may, upon such terms and conditions as the Administrator may prescribe, guarantee and enter into commitments to guarantee any surety against loss resulting from a breach of the terms of a bid bond, payment bond, performance bond, or bonds ancillary thereto, by a principal on any total work order or contract amount at the time of bond execution that does not exceed $5,000,000.

(b)
Increase of amount

Upon request of the head of any Federal agency other than the Administration involved in reconstruction efforts in response to a major disaster, the Administrator may guarantee and enter into a commitment to guarantee any security against loss under subsection (a) on any total work order or contract amount at the time of bond execution that does not exceed $10,000,000.

(c)
Limitation on use of other funds

The Administrator may carry out this section only with amounts appropriated in advance specifically to carry out this section.

(Pub. L. 110–234, title XII, § 12079, May 22, 2008, 122 Stat. 1416; Pub. L. 110–246, § 4(a), title XII, § 12079, June 18, 2008, 122 Stat. 1664, 2178.)
§ 636j.
Repealed. Pub. L. 116–6, div. D, title V, § 532, Feb. 15, 2019, 133 Stat. 180
§ 636k.
Reports on disaster assistance
(a)
Monthly accounting report to Congress
(1)
Reporting requirements

Not later than the fifth business day of each month during the applicable period for a major disaster, the Administrator shall submit to the Committee on Small Business and Entrepreneurship and the Committee on Appropriations of the Senate and to the Committee on Small Business and the Committee on Appropriations of the House of Representatives a report on the operation of the disaster loan program authorized under section 636 of this title for that major disaster during the preceding month.

(2)
Contents
Each report submitted under paragraph (1) shall include—
(A) the daily average lending volume, in number of loans and dollars, and the percent by which each category has increased or decreased since the previous report under paragraph (1);
(B) the weekly average lending volume, in number of loans and dollars, and the percent by which each category has increased or decreased since the previous report under paragraph (1);
(C) the amount of funding spent over the month for loans, both in appropriations and program level, and the percent by which each category has increased or decreased since the previous report under paragraph (1);
(D) the amount of funding available for loans, both in appropriations and program level, and the percent by which each category has increased or decreased since the previous report under paragraph (1), noting the source of any additional funding;
(E) an estimate of how long the available funding for such loans will last, based on the spending rate;
(F) the amount of funding spent over the month for staff, along with the number of staff, and the percent by which each category has increased or decreased since the previous report under paragraph (1);
(G) the amount of funding spent over the month for administrative costs, and the percent by which such spending has increased or decreased since the previous report under paragraph (1);
(H) the amount of funding available for salaries and expenses combined, and the percent by which such funding has increased or decreased since the previous report under paragraph (1), noting the source of any additional funding; and
(I) an estimate of how long the available funding for salaries and expenses will last, based on the spending rate.
(b)
Weekly disaster updates to Congress for presidentially declared disasters
(1)
In general

Each week during a disaster update period, the Administration shall submit to the Committee on Small Business and Entrepreneurship of the Senate and to the Committee on Small Business of the House of Representatives a report on the operation of the disaster loan program of the Administration for the area in which the President declared a major disaster.

(2)
Contents
Each report submitted under paragraph (1) shall include—
(A) the number of Administration staff performing loan processing, field inspection, and other duties for the declared disaster, and the allocations of such staff in the disaster field offices, disaster recovery centers, workshops, and other Administration offices nationwide;
(B) the daily number of applications received from applicants in the relevant area, as well as a breakdown of such figures by State;
(C) the daily number of applications pending application entry from applicants in the relevant area, as well as a breakdown of such figures by State;
(D) the daily number of applications withdrawn by applicants in the relevant area, as well as a breakdown of such figures by State;
(E) the daily number of applications summarily declined by the Administration from applicants in the relevant area, as well as a breakdown of such figures by State;
(F) the daily number of applications declined by the Administration from applicants in the relevant area, as well as a breakdown of such figures by State;
(G) the daily number of applications in process from applicants in the relevant area, as well as a breakdown of such figures by State;
(H) the daily number of applications approved by the Administration from applicants in the relevant area, as well as a breakdown of such figures by State;
(I) the daily dollar amount of applications approved by the Administration from applicants in the relevant area, as well as a breakdown of such figures by State;
(J) the daily amount of loans dispersed, both partially and fully, by the Administration to applicants in the relevant area, as well as a breakdown of such figures by State;
(K) the daily dollar amount of loans disbursed, both partially and fully, from the relevant area, as well as a breakdown of such figures by State;
(L) the number of applications approved, including dollar amount approved, as well as applications partially and fully disbursed, including dollar amounts, since the last report under paragraph (1); and
(M) the declaration date, physical damage closing date, economic injury closing date, and number of counties included in the declaration of a major disaster.
(c)
Periods when additional disaster assistance is made available
(1)
In general

During any period for which the Administrator declares eligibility for additional disaster assistance under paragraph (9) of section 636(b) of this title, as amended by this Act, the Administrator shall, on a monthly basis, submit to the Committee on Small Business and Entrepreneurship of the Senate and to the Committee on Small Business of the House of Representatives a report on the disaster assistance operations of the Administration with respect to the applicable major disaster.

(2)
Contents
Each report submitted under paragraph (1) shall specify—
(A) the number of applications for disaster assistance distributed;
(B) the number of applications for disaster assistance received;
(C) the average time for the Administration to approve or disapprove an application for disaster assistance;
(D) the amount of disaster loans approved;
(E) the average time for initial disbursement of disaster loan proceeds; and
(F) the amount of disaster loan proceeds disbursed.
(d)
Notice of the need for supplemental funds

On the same date that the Administrator notifies any committee of the Senate or the House of Representatives that supplemental funding is necessary for the disaster loan program of the Administration in any fiscal year, the Administrator shall notify in writing the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives regarding the need for supplemental funds for that loan program.

(e)
Report on contracting
(1)
In general

Not later than 6 months after the date on which the President declares a major disaster, and every 6 months thereafter until the date that is 18 months after the date on which the major disaster was declared, the Administrator shall submit a report to the Committee on Small Business and Entrepreneurship of the Senate and to the Committee on Small Business of the House of Representatives regarding Federal contracts awarded as a result of that major disaster.

(2)
Contents
Each report submitted under paragraph (1) shall include—
(A) the total number of contracts awarded as a result of that major disaster;
(B) the total number of contracts awarded to small business concerns as a result of that major disaster;
(C) the total number of contracts awarded to women and minority-owned businesses as a result of that major disaster; and
(D) the total number of contracts awarded to local businesses as a result of that major disaster.
(f)
Report on loan approval rate
(1)
In general

Not later than 6 months after the date of enactment of this Act, the Administrator shall submit a report to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives detailing how the Administration can improve the processing of applications under the disaster loan program of the Administration.

(2)
Contents
The report submitted under paragraph (1) shall include—
(A)
recommendations, if any, regarding—
(i) staffing levels during a major disaster;
(ii) how to improve the process for processing, approving, and disbursing loans under the disaster loan program of the Administration, to ensure that the maximum assistance is provided to victims in a timely manner;
(iii) the viability of using alternative methods for assessing the ability of an applicant to repay a loan, including the credit score of the applicant on the day before the date on which the disaster for which the applicant is seeking assistance was declared;
(iv) methods, if any, for the Administration to expedite loss verification and loan processing of disaster loans during a major disaster for businesses affected by, and located in the area for which the President declared, the major disaster that are a major source of employment in the area or are vital to recovery efforts in the region (including providing debris removal services, manufactured housing, or building materials);
(v) legislative changes, if any, needed to implement findings from the Accelerated Disaster Response Initiative of the Administration; and
(vi) a description of how the Administration plans to integrate and coordinate the response to a major disaster with the technical assistance programs of the Administration; and
(B) the plans of the Administrator for implementing any recommendation made under subparagraph (A).
(Pub. L. 110–234, title XII, § 12091, May 22, 2008, 122 Stat. 1423; Pub. L. 110–246, § 4(a), title XII, § 12091, June 18, 2008, 122 Stat. 1664, 2185.)
§ 636l.
Semiannual report

Not later than 180 days after December 20, 2019, and semiannually thereafter, the President shall submit to the Committee on Small Business and Entrepreneurship and the Committee on Appropriations of the Senate and the Committee on Small Business and the Committee on Appropriations of the House of Representatives a report on the number of loans made under the Military Reservist Economic Injury Disaster Loan program and the dollar volume of those loans. The report shall contain the subsidy rate of the disaster loan program as authorized under section 636(b) of this title with the loans made under the Military Reservist Economic Injury Disaster Loan program and without those loans included.

(Pub. L. 116–92, div. A, title VIII, § 877(c), Dec. 20, 2019, 133 Stat. 1529.)
§ 636m.
Loan forgiveness
(a)
Definitions
In this section—
(1) the term “covered loan” means a loan guaranteed under section 636(a)(36) of this title;
(2)
the term “covered mortgage obligation” means any indebtedness or debt instrument incurred in the ordinary course of business that—
(A) is a liability of the borrower;
(B) is a mortgage on real or personal property; and
(C) was incurred before February 15, 2020;
(3) the term “covered operations expenditure” means a payment for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses;
(4)
the term “covered period” means the period—
(A) beginning on the date of the origination of a covered loan; and
(B)
ending on a date selected by the eligible recipient of the covered loan that occurs during the period—
(i) beginning on the date that is 8 weeks after such date of origination; and
(ii) ending on the date that is 24 weeks after such date of origination;
(5) the term “covered property damage cost” means a cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation;
(6) the term “covered rent obligation” means rent obligated under a leasing agreement in force before February 15, 2020;
(7)
the term “covered supplier cost” means an expenditure made by an entity to a supplier of goods for the supply of goods that—
(A) are essential to the operations of the entity at the time at which the expenditure is made; and
(B)
is made pursuant to a contract, order, or purchase order—
(i) in effect at any time before the covered period with respect to the applicable covered loan; or
(ii) with respect to perishable goods, in effect before or at any time during the covered period with respect to the applicable covered loan;
(8) the term “covered utility payment” means payment for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020;
(9)
the term “covered worker protection expenditure”—
(A) means an operating or a capital expenditure to facilitate the adaptation of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government, during the period beginning on March 1, 2020 and ending the date on which the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to the Coronavirus Disease 2019 (COVID–19) expires related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19;
(B)
may include—
(i)
the purchase, maintenance, or renovation of assets that create or expand—
(I) a drive-through window facility;(II) an indoor, outdoor, or combined air or air pressure ventilation or filtration system;(III) a physical barrier such as a sneeze guard;(IV) an expansion of additional indoor, outdoor, or combined business space;(V) an onsite or offsite health screening capability; or(VI) other assets relating to the compliance with the requirements or guidance described in subparagraph (A), as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; and
(ii)
the purchase of—
(I) covered materials described in section 328.103(a) of title 44, Code of Federal Regulations, or any successor regulation;(II) particulate filtering facepiece respirators approved by the National Institute for Occupational Safety and Health, including those approved only for emergency use authorization; or(III) other kinds of personal protective equipment, as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; and
(C) does not include residential real property or intangible property;
(10) the term “eligible recipient” means the recipient of a covered loan;
(11)
the term “expected forgiveness amount” means the amount of principal that a lender reasonably expects a borrower to expend during the covered period on the sum of any—
(A) payroll costs;
(B) payments of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation);
(C) payments on any covered rent obligation;
(D) covered utility payments;
(E) covered operations expenditures;
(F) covered property damage costs;
(G) covered supplier costs; and
(H) covered worker protection expenditures; and
(12) the terms “payroll costs” and “seasonal employer” have the meanings given those terms in section 636(a)(36) of this title. Such payroll costs shall not include qualified wages taken into account in determining the credit allowed under section 2301 of the CARES Act, qualified wages taken into account in determining the credit allowed under subsection (a) or (d) of section 303 of the Taxpayer Certainty and Disaster Relief Act of 2020, or premiums taken into account in determining the credit allowed under section 6432 of title 26. Such payroll costs shall not include qualified wages taken into account in determining the credit allowed under subsection (a) or (d) of section 303 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020.1
1 So in original.
(b)
Forgiveness
An eligible recipient shall be eligible for forgiveness of indebtedness on a covered loan in an amount equal to the sum of the following costs incurred and payments made during the covered period:
(1) Payroll costs.
(2) Any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation).
(3) Any payment on any covered rent obligation.
(4) Any covered utility payment.
(5) Any covered operations expenditure.
(6) Any covered property damage cost.
(7) Any covered supplier cost.
(8)
(c)
Treatment of amounts forgiven
(1)
In general

Amounts which have been forgiven under this section shall be considered canceled indebtedness by a lender authorized under section 636(a) of this title.

(2)
Purchase of guarantees

For purposes of the purchase of the guarantee for a covered loan by the Administrator, amounts which are forgiven under this section shall be treated in accordance with the procedures that are otherwise applicable to a loan guaranteed under section 636(a) of this title.

(3)
Remittance

Not later than 90 days after the date on which the amount of forgiveness under this section is determined, the Administrator shall remit to the lender an amount equal to the amount of forgiveness, plus any interest accrued through the date of payment.

(4)
Advance purchase of covered loan
(A)
Report

A lender authorized under section 636(a) of this title, or, at the discretion of the Administrator, a third party participant in the secondary market, may, report to the Administrator an expected forgiveness amount on a covered loan or on a pool of covered loans of up to 100 percent of the principal on the covered loan or pool of covered loans, respectively.

(B)
Purchase

The Administrator shall purchase the expected forgiveness amount described in subparagraph (A) as if the amount were the principal amount of a loan guaranteed under section 636(a) of this title.

(C)
Timing

Not later than 15 days after the date on which the Administrator receives a report under subparagraph (A), the Administrator shall purchase the expected forgiveness amount under subparagraph (B) with respect to each covered loan to which the report relates.

(d)
Limits on amount of forgiveness
(1)
Amount may not exceed principal

The amount of loan forgiveness under this section shall not exceed the principal amount of the financing made available under the applicable covered loan.

(2)
Reduction based on reduction in number of employees
(A)
In general
The amount of loan forgiveness under this section shall be reduced, but not increased, by multiplying the amount described in subsection (b) by the quotient obtained by dividing—
(i) the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period; by
(ii)(I)
at the election of the borrower—
(aa) the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019; or(bb) the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on January 1, 2020 and ending on February 29, 2020; or(II) in the case of an eligible recipient that is seasonal employer, as determined by the Administrator, the average number of full-time equivalent employees per month employed by the eligible recipient during the period beginning on February 15, 2019 and ending on June 30, 2019.
(B)
Calculation of average number of employees

For purposes of subparagraph (A), the average number of full-time equivalent employees shall be determined by calculating the average number of full-time equivalent employees for each pay period falling within a month.

(3)
Reduction relating to salary and wages
(A)
In general

The amount of loan forgiveness under this section shall be reduced by the amount of any reduction in total salary or wages of any employee described in subparagraph (B) during the covered period that is in excess of 25 percent of the total salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period.

(B)
Employees described

An employee described in this subparagraph is any employee who did not receive, during any single pay period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000.

(4)
Tipped workers

An eligible recipient with tipped employees described in section 203(m)(2)(A) of title 29 may receive forgiveness for additional wages paid to those employees.

(5)
Exemption for re-hires
(A)
In general

In a circumstance described in subparagraph (B), the amount of loan forgiveness under this section shall be determined without regard to a reduction in the number of full-time equivalent employees of an eligible recipient or a reduction in the salary of 1 or more employees of the eligible recipient, as applicable, during the period beginning on February 15, 2020 and ending on the date that is 30 days after March 27, 2020.

(B)
Circumstances
A circumstance described in this subparagraph is a circumstance—
(i)
in which—
(I) during the period beginning on February 15, 2020 and ending on the date that is 30 days after March 27, 2020, there is a reduction, as compared to February 15, 2020, in the number of full-time equivalent employees of an eligible recipient; and(II) not later than December 31, 2020 (or, with respect to a covered loan made on or after December 27, 2020, not later than the last day of the covered period with respect to such covered loan), the eligible employer has eliminated the reduction in the number of full-time equivalent employees;
(ii)
in which—
(I) during the period beginning on February 15, 2020 and ending on the date that is 30 days after March 27, 2020, there is a reduction, as compared to February 15, 2020, in the salary or wages of 1 or more employees of the eligible recipient; and(II) not later than December 31, 2020 (or, with respect to a covered loan made on or after December 27, 2020, not later than the last day of the covered period with respect to such covered loan), the eligible employer has eliminated the reduction in the salary or wages of such employees; or
(iii) in which the events described in clause (i) and (ii) occur.
(6)
Exemptions

The Administrator and the Secretary of the Treasury may prescribe regulations granting de minimis exemptions from the requirements under this subsection.

(7)
Exemption based on employee availability
During the period beginning on February 15, 2020, and ending on December 31, 2020 (or, with respect to a covered loan made on or after December 27, 2020, ending on the last day of the covered period with respect to such covered loan), the amount of loan forgiveness under this section shall be determined without regard to a proportional reduction in the number of full-time equivalent employees if an eligible recipient, in good faith—
(A)
is able to document—
(i) an inability to rehire individuals who were employees of the eligible recipient on February 15, 2020; and
(ii) an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020 (or, with respect to a covered loan made on or after December 27, 2020, on or before the last day of the covered period with respect to such covered loan); or
(B) is able to document an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020 (or, with respect to a covered loan made on or after December 27, 2020, ending on the last day of the covered period with respect to such covered loan), related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.
(8)
Limitation on forgiveness

To receive loan forgiveness under this section, an eligible recipient shall use at least 60 percent of the covered loan amount for payroll costs, and may use up to 40 percent of such amount for any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation), any payment on any covered rent obligation, any payment on any covered operations expenditure, any payment on any covered property damage cost, any payment on any covered supplier cost, any payment on any covered worker protection expenditure, or any covered utility payment.

(e)
Application
Except as provided in subsection (l), an eligible recipient seeking loan forgiveness under this section shall submit to the lender that is servicing the covered loan an application, which shall include—
(1)
documentation verifying the number of full-time equivalent employees on payroll and pay rates for the periods described in subsection (d), including—
(A) payroll tax filings reported to the Internal Revenue Service; and
(B) State income, payroll, and unemployment insurance filings;
(2) documentation, including cancelled checks, payment receipts, transcripts of accounts, purchase orders, orders, invoices, or other documents verifying payments on covered mortgage obligations, payments on covered rent obligations, payments on covered operations expenditures, payments on covered property damage costs, payments on covered supplier costs, payments on covered worker protection expenditures, and covered utility payments;
(3)
a certification from a representative of the eligible recipient authorized to make such certifications that—
(A) the documentation presented is true and correct; and
(B) the amount for which forgiveness is requested was used to retain employees, make interest payments on a covered mortgage obligation, make payments on a covered rent obligation, make payments on covered operations expenditures, make payments on covered property damage costs, make payments on covered supplier costs, make payments on covered worker protection expenditures, or make covered utility payments; and
(4) any other documentation the Administrator determines necessary.
(f)
Prohibition on forgiveness without documentation

No eligible recipient shall receive forgiveness under this section without submitting to the lender that is servicing the covered loan the documentation required under subsection (e) or the certification required under subsection (l), as applicable.

(g)
Decision

Not later than 60 days after the date on which a lender receives an application for loan forgiveness under this section from an eligible recipient, the lender shall issue a decision on the an 1 application.

(h)
Hold harmless
(1)
Definition

In this subsection, the term “initial or second draw PPP loan” means a covered loan or a loan under paragraph (37) of section 636(a) of this title.

(2)
Reliance
A lender may rely on any certification or documentation submitted by an applicant for an initial or second draw PPP loan or an eligible recipient or eligible entity receiving initial or second draw PPP loan that—
(A) is submitted pursuant to all applicable statutory requirements, regulations, and guidance related to initial or second draw PPP loan, including under paragraph (36) or (37) of section 636(a) of this title and under this section; and
(B) attests that the applicant, eligible recipient, or eligible entity, as applicable, has accurately provided the certification or documentation to the lender in accordance with the statutory requirements, regulations, and guidance described in subparagraph (A).
(3)
No enforcement action
With respect to a lender that relies on a certification or documentation described in paragraph (2) related to an initial or second draw PPP loan, an enforcement action may not be taken against the lender, and the lender shall not be subject to any penalties relating to loan origination or forgiveness of the initial or second draw PPP loan, if—
(A) the lender acts in good faith relating to loan origination or forgiveness of the initial or second draw PPP loan based on that reliance; and
(B) all other relevant Federal, State, local, and other statutory and regulatory requirements applicable to the lender are satisfied with respect to the initial or second draw PPP loan.
(i)
Tax treatment
For purposes of title 26—
(1) no amount shall be included in the gross income of the eligible recipient by reason of forgiveness of indebtedness described in subsection (b),
(2) no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by paragraph (1), and
(3)
in the case of an eligible recipient that is a partnership or S corporation—
(A) any amount excluded from income by reason of paragraph (1) shall be treated as tax exempt income for purposes of sections 705 and 1366 of title 26, and
(B) except as provided by the Secretary of the Treasury (or the Secretary’s delegate), any increase in the adjusted basis of a partner’s interest in a partnership under section 705 of title 26 with respect to any amount described in subparagraph (A) shall equal the partner’s distributive share of deductions resulting from costs giving rise to forgiveness described in subsection (b).
(j)
Rule of construction

The cancellation of indebtedness on a covered loan under this section shall not otherwise modify the terms and conditions of the covered loan.

(k)
Regulations

Not later than 30 days after March 27, 2020, the Administrator shall issue guidance and regulations implementing this section.

(l)
Simplified application
(1)
Covered loans up to $150,000
(A)
In general
With respect to a covered loan made to an eligible recipient that is not more than $150,000, the covered loan amount shall be forgiven under this section if the eligible recipient—
(i)
signs and submits to the lender a certification, to be established by the Administrator not later than 24 days after December 27, 2020, which—
(I) shall be not more than 1 page in length; and(II)
shall only require the eligible recipient to provide—
(aa) a description of the number of employees the eligible recipient was able to retain because of the covered loan;(bb) the estimated amount of the covered loan amount spent by the eligible recipient on payroll costs; and(cc) the total loan value;
(ii)
attests that the eligible recipient has—
(I) accurately provided the required certification; and(II) complied with the requirements under section 636(a)(36) of this title; and
(iii)
retains records relevant to the form that prove compliance with such requirements—
(I) with respect to employment records, for the 4-year period following submission of the form; and(II) with respect to other records, for the 3-year period following submission of the form.
(B)
Limitation on requiring additional materials

An eligible recipient of a covered loan that is not more than $150,000 shall not, at the time of the application for forgiveness, be required to submit any application or documentation in addition to the certification and information required to substantiate forgiveness.

(C)
Records for other requirements

Nothing in subparagraph (A) or (B) shall be construed to exempt an eligible recipient from having to provide documentation independently to a lender to satisfy relevant Federal, State, local, or other statutory or regulatory requirements, or in connection with an audit as authorized under subparagraph (E).

(D)
Demographic information

The certification established by the Administrator under subparagraph (A) shall include a means by which an eligible recipient may, at the discretion of the eligible recipient, submit demographic information of the owner of the eligible recipient, including the sex, race, ethnicity, and veteran status of the owner.

(E)
Audit authority
The Administrator may—
(i) review and audit covered loans described in subparagraph (A);
(ii) access any records described in subparagraph (A)(iii); and
(iii)
in the case of fraud, ineligibility, or other material noncompliance with applicable loan or loan forgiveness requirements, modify—
(I) the amount of a covered loan described in subparagraph (A); or(II) the loan forgiveness amount with respect to a covered loan described in subparagraph (A).
(2)
Covered loans of more than $150,000
(A)
In general

With respect to a covered loan in an amount that is more than $150,000, the eligible recipient shall submit to the lender that is servicing the covered loan the documentation described in subsection (e).

(B)
Demographic information

The process for submitting the documentation described in subsection (e) shall include a means by which an eligible recipient may, at the discretion of the eligible recipient, submit demographic information of the owner of the eligible recipient, including the sex, race, ethnicity, and veteran status of the owner.

(3)
Forgiveness audit plan
(A)
In general
Not later than 45 days after December 27, 2020, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives an audit plan that details—
(i) the policies and procedures of the Administrator for conducting forgiveness reviews and audits of covered loans; and
(ii) the metrics that the Administrator shall use to determine which covered loans will be audited.
(B)
Reports
Not later than 30 days after the date on which the Administrator submits the audit plan required under subparagraph (A), and each month thereafter, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report on the forgiveness review and audit activities of the Administrator under this subsection, which shall include—
(i) the number of active reviews and audits;
(ii) the number of reviews and audits that have been ongoing for more than 60 days; and
(iii) any substantial changes made to the audit plan submitted under subparagraph (A).
(Pub. L. 85–536, § 2[7A], formerly Pub. L. 116–136, div. A, title I, § 1106, Mar. 27, 2020, 134 Stat. 297; Pub. L. 116–142, § 3(b), June 5, 2020, 134 Stat. 641; renumbered Pub. L. 85–536, § 2[7A], and amended Pub. L. 116–260, div. N, title II, § 276(a)(1), title III, §§ 304(b)(1)(A), (B), (2), 305(a), 306, 307(a), 311(b)(1), 315(b), div. EE, title II, § 206(c)(1), title III, § 303(g), Dec. 27, 2020, 134 Stat. 1979, 1993, 1994, 1996–1998, 2006, 2011, 3060, 3079; Pub. L. 117–2, title V, § 5001(c)(1), Mar. 11, 2021, 135 Stat. 84.)
§ 637.
Additional powers
(a)
Procurement contracts; subcontracts to disadvantaged small business concerns; performance bonds; contract negotiations; definitions; eligibility; determinations; publication; recruitment; construction subcontracts; annual estimates; Indian tribes
(1)
It shall be the duty of the Administration and it is hereby empowered, whenever it determines such action is necessary or appropriate—
(A) to enter into contracts with the United States Government and any department, agency, or officer thereof having procurement powers obligating the Administration to furnish articles, equipment, supplies, services, or materials to the Government or to perform construction work for the Government. In any case in which the Administration certifies to any officer of the Government having procurement powers that the Administration is competent and responsible to perform any specific Government procurement contract to be let by any such officer, such officer shall be authorized in his discretion to let such procurement contract to the Administration upon such terms and conditions as may be agreed upon between the Administration and the procurement officer. Whenever the Administration and such procurement officer fail to agree, the matter shall be submitted for determination to the Secretary or the head of the appropriate department or agency by the Administrator. Not later than 5 days from the date the Administration is notified of a procurement officer’s adverse decision, the Administration may notify the contracting officer of the intent to appeal such adverse decision, and within 15 days of such date the Administrator shall file a written request for a reconsideration of the adverse decision with the Secretary of the department or agency head. For the purposes of this subparagraph, a procurement officer’s adverse decision includes a decision not to make available for award pursuant to this subsection a particular procurement requirement or the failure to agree on the terms and conditi
(B) to arrange for the performance of such procurement contracts by negotiating or otherwise letting subcontracts to socially and economically disadvantaged small business concerns for construction work, services, or the manufacture, supply, assembly of such articles, equipment, supplies, materials, or parts thereof, or servicing or processing in connection therewith, or such management services as may be necessary to enable the Administration to perform such contracts;
(C)
to make an award to a small business concern owned and controlled by socially and economically disadvantaged individuals which has completed its period of Program Participation as prescribed by section 636(j)(15) of this title, if—
(i) the contract will be awarded as a result of an offer (including price) submitted in response to a published solicitation relating to a competition conducted pursuant to subparagraph (D); and
(ii) the prospective contract awardee was a Program Participant eligible for award of the contract on the date specified for receipt of offers contained in the contract solicitation; and
(D)
(i)
A contract opportunity offered for award pursuant to this subsection shall be awarded on the basis of competition restricted to eligible Program Participants if—
(I) there is a reasonable expectation that at least two eligible Program Participants will submit offers and that award can be made at a fair market price, and(II) the anticipated award price of the contract (including options) will exceed $7,000,000 in the case of a contract opportunity assigned a standard industrial classification code for manufacturing and $3,000,000 (including options) in the case of all other contract opportunities.
(ii) The Associate Administrator for Minority Small Business and Capital Ownership Development, on a nondelegable basis, is authorized to approve a request from an agency to award a contract opportunity under this subsection on the basis of a competition restricted to eligible Program Participants even if the anticipated award price is not expected to exceed the dollar amounts specified in clause (i)(II). Such approvals shall be granted only on a limited basis.
(2)
Notwithstanding subsections (a), (b), and (e) of section 3131 of title 40, no small business concern shall be required to provide any amount of any bond as a condition of receiving any subcontract under this subsection if the Administrator determines that such amount is inappropriate for such concern in performing such contract: Provided, That the Administrator shall exercise the authority granted by the paragraph only if—
(A) the Administration takes such measures as it deems appropriate for the protection of persons furnishing materials and labor to a small business receiving any benefit pursuant to this paragraph;
(B) the Administration assists, insofar as practicable, a small business receiving the benefits of this paragraph to develop, within a reasonable period of time, such financial and other capability as may be needed to obtain such bonds as the Administration may subsequently require for the successful completion of any program conducted under the authority of this subsection;
(C) the Administration finds that such small business is unable to obtain the requisite bond or bonds from a surety and that no surety is willing to issue bond or bonds subject to the guarantee provisions of Title IV of the Small Business Investment Act of 1958 [15 U.S.C. 692 et seq.]; and
(D) the small business is determined to be a start-up concern and such concern has not been participating in any program conducted under the authority of this subsection for a period exceeding one year.
The authority to waive bonds provided in this paragraph (2) may not be exercised after September 30, 1988.
(3)
(A) Any Program Participant selected by the Administration to perform a contract to be let noncompetitively pursuant to this subsection shall, when practicable, participate in any negotiation of the terms and conditions of such contract.
(B)
(i) For purposes of paragraph (1) a “fair market price” shall be determined by the agency offering the procurement requirement to the Administration, in accordance with clauses (ii) and (iii).
(ii) The estimate of a current fair market price for a new procurement requirement, or a requirement that does not have a satisfactory procurement history, shall be derived from a price or cost analysis. Such analysis may take into account prevailing market conditions, commercial prices for similar products or services, or data obtained from any other agency. Such analysis shall consider such cost or pricing data as may be timely submitted by the Administration.
(iii) The estimate of a current fair market price for a procurement requirement that has a satisfactory procurement history shall be based on recent award prices adjusted to insure comparability. Such adjustments shall take into account differences in quantities, performance times, plans, specifications, transportation costs, packaging and packing costs, labor and materials costs, overhead costs, and any other additional costs which may be deemed appropriate.
(C) An agency offering a procurement requirement for potential award pursuant to this subsection shall, upon the request of the Administration, promptly submit to the Administration a written statement detailing the method used by the agency to estimate the current fair market price for such contract, identifying the information, studies, analyses, and other data used by such agency. The agency’s estimate of the current fair market price (and any supporting data furnished to the Administration) shall not be disclosed to any potential offeror (other than the Administration).
(D) A small business concern selected by the Administration to perform or negotiate a contract to be let pursuant to this subsection may request the Administration to protest the agency’s estimate of the fair market price for such contract pursuant to paragraph (1)(A).
(4)
(A)
For purposes of this section, the term “socially and economically disadvantaged small business concern” means any small business concern which meets the requirements of subparagraph (B) and—
(i)
which is at least 51 per centum unconditionally owned by—
(I) one or more socially and economically disadvantaged individuals,(II) an economically disadvantaged Indian tribe (or a wholly owned business entity of such tribe), or(III) an economically disadvantaged Native Hawaiian organization, or
(ii)
in the case of any publicly owned business, at least 51 per centum of the stock of which is unconditionally owned by—
(I) one or more socially and economically disadvantaged individuals,(II) an economically disadvantaged Indian tribe (or a wholly owned business entity of such tribe), or(III) an economically disadvantaged Native Hawaiian organization.
(B)
A small business concern meets the requirements of this subparagraph if the management and daily business operations of such small business concern are controlled by one or more—
(i) socially and economically disadvantaged individuals described in subparagraph (A)(i)(I) or subparagraph (A)(ii)(I),
(ii) members of an economically disadvantaged Indian tribe described in subparagraph (A)(i)(II) or subparagraph (A)(ii)(II), or
(iii) Native Hawaiian organizations described in subparagraph (A)(i)(III) or subparagraph (A)(ii)(III).
(C) Each Program Participant shall certify, on an annual basis, that it meets the requirements of this paragraph regarding ownership and control.
(5) Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.
(6)
(A) Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged. In determining the degree of diminished credit and capital opportunities the Administration shall consider, but not be limited to, the assets and net worth of such socially disadvantaged individual. In determining the economic disadvantage of an Indian tribe, the Administration shall consider, where available, information such as the following: the per capita income of members of the tribe excluding judgment awards, the percentage of the local Indian population below the poverty level, and the tribe’s access to capital markets.
(B)
Each Program Participant shall annually submit to the Administration—
(i) a personal financial statement for each disadvantaged owner;
(ii) a record of all payments made by the Program Participant to each of its disadvantaged owners or to any person or entity affiliated with such owners; and
(iii) such other information as the Administration may deem necessary to make the determinations required by this paragraph.
(C)
(i) Whenever, on the basis of information provided by a Program Participant pursuant to subparagraph (B) or otherwise, the Administration has reason to believe that the standards to establish economic disadvantage pursuant to subparagraph (A) have not been met, the Administration shall conduct a review to determine whether such Program Participant and its disadvantaged owners continue to be impaired in their ability to compete in the free enterprise system due to diminished capital and credit opportunities when compared to other concerns in the same business area, which are not socially disadvantaged.
(ii) If the Administration determines, pursuant to such review, that a Program Participant and its disadvantaged owners are no longer economically disadvantaged for the purpose of receiving assistance under this subsection, the Program Participant shall be graduated pursuant to section 636(j)(10)(G) of this title subject to the right to a hearing as provided for under paragraph (9).
(D)
(i) Whenever, on the basis of information provided by a Program Participant pursuant to subparagraph (B) or otherwise, the Administration has reason to believe that the amount of funds or other assets withdrawn from a Program Participant for the personal benefit of its disadvantaged owners or any person or entity affiliated with such owners may have been unduly excessive, the Administration shall conduct a review to determine whether such withdrawal of funds or other assets was detrimental to the achievement of the targets, objectives, and goals contained in such Program Participant’s business plan.
(ii)
If the Administration determines, pursuant to such review, that funds or other assets have been withdrawn to the detriment of the Program Participant’s business, the Administration shall—
(I) initiate a proceeding to terminate the Program Participant pursuant to section 636(j)(10)(F) of this title, subject to the right to a hearing under paragraph (9); or(II) require an appropriate reinvestment of funds or other assets and such other steps as the Administration may deem necessary to ensure the protection of the concern.
(E)
Whenever the Administration computes personal net worth for any purpose under this paragraph, it shall exclude from such computation—
(i) the value of investments that disadvantaged owners have in their concerns, except that such value shall be taken into account under this paragraph when comparing such concerns to other concerns in the same business area that are owned by other than socially disadvantaged persons;
(ii) the equity that disadvantaged owners have in their primary personal residences, except that any portion of such equity that is attributable to unduly excessive withdrawals from a Program Participant or a concern applying for program participation shall be taken into account.
(7)
(A) No small business concern shall be deemed eligible for any assistance pursuant to this subsection unless the Administration determines that with contract, financial, technical, and management support the small business concern will be able to perform contracts which may be awarded to such concern under paragraph (1)(C) and has reasonable prospects for success in competing in the private sector.
(B) Limitations established by the Administration in its regulations and procedures restricting the award of contracts pursuant to this subsection to a limited number of standard industrial classification codes in an approved business plan shall not be applied in a manner that inhibits the logical business progression by a participating small business concern into areas of industrial endeavor where such concern has the potential for success.
(8) All determinations made pursuant to paragraph (5) with respect to whether a group has been subjected to prejudice or bias shall be made by the Administrator after consultation with the Associate Administrator for Minority Small Business and Capital Ownership Development. All other determinations made pursuant to paragraphs (4), (5), (6), and (7) shall be made by the Associate Administrator for Minority Small Business and Capital Ownership Development under the supervision of, and responsible to, the Administrator.
(9)
(A) Subject to the provisions of subparagraph (E), the Administration, prior to taking any action described in subparagraph (B), shall provide the small business concern that is the subject of such action, an opportunity for a hearing on the record, in accordance with chapter 5 of title 5.
(B)
The actions referred to in subparagraph (A) are—
(i) denial of program admission based upon a negative determination pursuant to paragraph (4), (5), or (6);
(ii) a termination pursuant to section 636(j)(10)(F) of this title;
(iii) a graduation pursuant to section 636(j)(10)(G) of this title; and
(iv) the denial of a request to issue a waiver pursuant to paragraph (21)(B).
(C) The Administration’s proposed action, in any proceeding conducted under the authority of this paragraph, shall be sustained unless it is found to be arbitrary, capricious, or contrary to law.
(D) A decision rendered pursuant to this paragraph shall be the final decision of the Administration and shall be binding upon the Administration and those within its employ.
(E)
The adjudicator selected to preside over a proceeding conducted under the authority of this paragraph shall decline to accept jurisdiction over any matter that—
(i) does not, on its face, allege facts that, if proven to be true, would warrant reversal or modification of the Administration’s position;
(ii) is untimely filed;
(iii) is not filed in accordance with the rules of procedure governing such proceedings; or
(iv) has been decided by or is the subject of an adjudication before a court of competent jurisdiction over such matters.
(F) Proceedings conducted pursuant to the authority of this paragraph shall be completed and a decision rendered, insofar as practicable, within ninety days after a petition for a hearing is filed with the adjudicating office.
(10) The Administration shall develop and implement an outreach program to inform and recruit small business concerns to apply for eligibility for assistance under this subsection. Such program shall make a sustained and substantial effort to solicit applications for certification from small business concerns located in areas of concentrated unemployment or underemployment or within labor surplus areas and within States having relatively few Program Participants and from small disadvantaged business concerns in industry categories that have not substantially participated in the award of contracts let under the authority of this subsection.
(11) To the maximum extent practicable, construction subcontracts awarded by the Administration pursuant to this subsection shall be awarded within the county or State where the work is to be performed.
(12)
(A) The Administration shall require each concern eligible to receive subcontracts pursuant to this subsection to annually prepare and submit to the Administration a capability statement. Such statement shall briefly describe such concern’s various contract performance capabilities and shall contain the name and telephone number of the Business Opportunity Specialist assigned such concern. The Administration shall separate such statements by those primarily dependent upon local contract support and those primarily requiring a national marketing effort. Statements primarily dependent upon local contract support shall be disseminated to appropriate buying activities in the marketing area of the concern. The remaining statements shall be disseminated to the Directors of Small and Disadvantaged Business Utilization for the appropriate agencies who shall further distribute such statements to buying activities with such agencies that may purchase the types of items or services described on the capability statements.
(B)
(C)
Each executive agency reporting to the Federal Procurement Data System contract actions with an aggregate value in excess of $50,000,000 in fiscal year 1988, or in any succeeding fiscal year, shall prepare a forecast of expected contract opportunities or classes of contract opportunities for the next and succeeding fiscal years that small business concerns, including those owned and controlled by socially and economically disadvantaged individuals, are capable of performing. Such forecast shall be periodically revised during such year. To the extent such information is available, the agency forecasts shall specify:
(i) The approximate number of individual contract opportunities (and the number of opportunities within a class).
(ii) The approximate dollar value, or range of dollar values, for each contract opportunity or class of contract opportunities.
(iii) The anticipated time (by fiscal year quarter) for the issuance of a procurement request.
(iv) The activity responsible for the award and administration of the contract.
(D)
The head of each executive agency subject to the provisions of subparagraph (C) shall within 10 days of completion furnish such forecasts to—
(i) the Director of the Office of Small and Disadvantaged Business Utilization established pursuant to section 644(k) of this title for such agency; and
(ii) the Administrator.
(E) The information reported pursuant to subparagraph (D) may be limited to classes of items and services for which there are substantial annual purchases.
(F) Such forecasts shall be available to small business concerns.
(13)
For purposes of this subsection, the term “Indian tribe” means any Indian tribe, band, nation, or other organized group or community of Indians, including any Alaska Native village or regional or village corporation (within the meaning of the Alaska Native Claims Settlement Act [43 U.S.C. 1601 et seq.]) which—
(A) is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians, or
(B) is recognized as such by the State in which such tribe, band, nation, group, or community resides.
(14)
Limitations on subcontracting.—
A concern may not be awarded a contract under this subsection as a small business concern unless the concern agrees to satisfy the requirements of section 657s of this title.
(15)
For purposes of this subsection, the term “Native Hawaiian Organization” means any community service organization serving Native Hawaiians in the State of Hawaii which—
(A) is a nonprofit corporation that has filed articles of incorporation with the director (or the designee thereof) of the Hawaii Department of Commerce and Consumer Affairs, or any successor agency,
(B) is controlled by Native Hawaiians, and
(C) whose business activities will principally benefit such Native Hawaiians.
(16)
(A)
The Administration shall award sole source contracts under this section to any small business concern recommended by the procuring agency offering the contract opportunity if—
(i) the Program Participant is determined to be a responsible contractor with respect to performance of such contract opportunity;
(ii) the award of such contract would be consistent with the Program Participant’s business plan; and
(iii) the award of the contract would not result in the Program Participant exceeding the requirements established by section 636(j)(10)(I) of this title.
(B) To the maximum extent practicable, the Administration shall promote the equitable geographic distribution of sole source contracts awarded pursuant to this subsection.
(17)
(A) An otherwise responsible business concern that is in compliance with the requirements of subparagraph (B) shall not be denied the opportunity to submit and have considered its offer for any procurement contract, which contract has as its principal purpose the supply of a product to be let pursuant to this subsection, subsection (m), section 644(a) of this title, section 657a of this title, or section 657f of this title, solely because such concern is other than the actual manufacturer or processor of the product to be supplied under the contract.
(B)
To be in compliance with the requirements referred to in subparagraph (A), such a business concern shall—
(i) be primarily engaged in the wholesale or retail trade;
(ii) be a small business concern under the numerical size standard for the Standard Industrial Classification Code assigned to the contract solicitation on which the offer is being made;
(iii) be a regular dealer, as defined pursuant to section 35(a) 1
1 See References in Text note below.
of title 41 (popularly referred to as the Walsh-Healey Public Contracts Act), in the product to be offered the Government or be specifically exempted from such section by section 636(j)(13)(C) of this title; and
(iv)
represent that it will supply the product of a domestic small business manufacturer or processor, unless a waiver of such requirement is granted—
(I) by the Administrator, after reviewing a determination by the contracting officer that no small business manufacturer or processor can reasonably be expected to offer a product meeting the specifications (including period for performance) required of an offeror by the solicitation; or(II) by the Administrator for a product (or class of products), after determining that no small business manufacturer or processor is available to participate in the Federal procurement market.
(C)
Limitation.—
This paragraph shall not apply to a contract that has as its principal purpose the acquisition of services or construction.
(18)
(A) No person within the employ of the Administration shall, during the term of such employment and for a period of two years after such employment has been terminated, engage in any activity or transaction specified in subparagraph (B) with respect to any Program Participant during such person’s term of employment, if such person participated personally (either directly or indirectly) in decision-making responsibilities relating to such Program Participant or with respect to the administration of any assistance provided to Program Participants generally under this subsection, section 636(j)(10) of this title, or section 636(a)(20) of this title.
(B)
The activities and transactions prohibited by subparagraph (A) include—
(i) the buying, selling, or receiving (except by inheritance) of any legal or beneficial ownership of stock or any other ownership interest or the right to acquire any such interest;
(ii) the entering into or execution of any written or oral agreement (whether or not legally enforceable) to purchase or otherwise obtain any right or interest described in clause (i); or
(iii) the receipt of any other benefit or right that may be an incident of ownership.
(C)
(i) The employees designated in clause (ii) shall annually submit a written certification to the Administration regarding compliance with the requirements of this paragraph.
(ii)
The employees referred to in clause (i) are—
(I) regional administrators;(II) district directors;(III) the Associate Administrator for Minority Small Business and Capital Ownership Development;(IV) employees whose principal duties relate to the award of contracts or the provision of other assistance pursuant to this subsection or section 636(j)(10) of this title; and(V) such other employees as the Administrator may deem appropriate.
(iii) Any present or former employee of the Administration who violates this paragraph shall be subject to a civil penalty, assessed by the Attorney General, that shall not exceed 300 per centum of the maximum amount of gain such employee realized or could have realized as a result of engaging in those activities and transactions prescribed 2
2 So in original. Probably should be “proscribed”.
by subparagraph (B).
(iv) In addition to any other remedy or sanction provided for under law or regulation, any person who falsely certifies pursuant to clause (i) shall be subject to a civil penalty under the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801–3812).
(19)
(A) Any employee of the Administration who has authority to take, direct others to take, recommend, or approve any action with respect to any program or activity conducted pursuant to this subsection or section 636(j) of this title, shall not, with respect to any such action, exercise or threaten to exercise such authority on the basis of the political activity or affiliation of any party. Employees of the Administration shall expeditiously report to the Inspector General of the Administration any such action for which such employee’s participation has been solicitated 3
3 So in original. Probably should be “solicited”.
or directed.
(B) Any employee who willfully and knowingly violates subparagraph (A) shall be subject to disciplinary action which may consist of separation from service, reduction in grade, suspension, or reprimand.
(C) Subparagraph (A) shall not apply to any action taken as a penalty or other enforcement of a violation of any law, rule, or regulation prohibiting or restricting political activity.
(D) The prohibitions of subparagraph (A), and remedial measures provided for under subparagraphs (B) and (C) with regard to such prohibitions, shall be in addition to, and not in lieu of, any other prohibitions, measures or liabilities that may arise under any other provision of law.
(20)
(A)
Small business concerns participating in the Program under section 636(j)(10) of this title and eligible to receive contracts pursuant to this section shall semiannually report to their assigned Business Opportunity Specialist the following:
(i) A listing of any agents, representatives, attorneys, accountants, consultants, and other parties (other than employees) receiving compensation to assist in obtaining a Federal contract for such Program Participant.
(ii) The amount of compensation received by any person listed under clause (i) during the relevant reporting period and a description of the activities performed in return for such compensation.
(B) The Business Opportunity Specialist shall promptly review and forward such report to the Associate Administrator for Minority Small Business and Capital Ownership Development. Any report that raises a suspicion of improper activity shall be reported immediately to the Inspector General of the Administration.
(C) The failure to submit a report pursuant to the requirements of this subsection and applicable regulations shall be considered “good cause” for the initiation of a termination proceeding pursuant to section 636(j)(10)(F) of this title.
(21)
(A) Subject to the provisions of subparagraph (B), a contract (including options) awarded pursuant to this subsection shall be performed by the concern that initially received such contract. Notwithstanding the provisions of the preceding sentence, if the owner or owners upon whom eligibility was based relinquish ownership or control of such concern, or enter into any agreement to relinquish such ownership or control, such contract or option shall be terminated for the convenience of the Government, except that no repurchase costs or other damages may be assessed against such concerns due solely to the provisions of this subparagraph.
(B)
The Administrator may, on a nondelegable basis, waive the requirements of subparagraph (A) only if one of the following conditions exist:
(i) When it is necessary for the owners of the concern to surrender partial control of such concern on a temporary basis in order to obtain equity financing.
(ii) The head of the contracting agency for which the contract is being performed certifies that termination of the contract would severely impair attainment of the agency’s program objectives or missions;
(iii) Ownership and control of the concern that is performing the contract will pass to another small business concern that is a program participant, but only if the acquiring firm would otherwise be eligible to receive the award directly pursuant to subsection (a);
(iv) The individuals upon whom eligibility was based are no longer able to exercise control of the concern due to incapacity or death; or
(v)
When, in order to raise equity capital, it is necessary for the disadvantaged owners of the concern to relinquish ownership of a majority of the voting stock of such concern, but only if—
(I) such concern has exited the Capital Ownership Development Program;(II) the disadvantaged owners will maintain ownership of the largest single outstanding block of voting stock (including stock held by affiliated parties); and(III) the disadvantaged owners will maintain control of daily business operations.
(C)
The Administrator may waive the requirements of subparagraph (A) if—
(i) in the case of subparagraph (B) (i), (ii) and (iv), he is requested to do so prior to the actual relinquishment of ownership or control; and
(ii) in the case of subparagraph (B)(iii), he is requested to do so as soon as possible after the incapacity or death occurs.
(D) Concerns performing contracts awarded pursuant to this subsection shall be required to notify the Administration immediately upon entering an agreement (either oral or in writing) to transfer all or part of its stock or other ownership interest to any other party.
(E) Notwithstanding any other provision of law, for the purposes of determining ownership and control of a concern under this section, any potential ownership interests held by investment companies licensed under the Small Business Investment Act of 1958 [15 U.S.C. 661 et seq.] shall be treated in the same manner as interests held by the individuals upon whom eligibility is based.
(b)
Procurement and property disposal powers; determination of small-business concerns
It shall also be the duty of the Administration and it is empowered, whenever it determines such action is necessary—
(1)
(A)
to provide—
(i)
technical, managerial, and informational aids to small business concerns—
(I) by advising and counseling on matters in connection with Government procurement and policies, principles, and practices of good management;(II)
by cooperating and advising with—
(aa) voluntary business, professional, educational, and other nonprofit organizations, associations, and institutions (except that the Administration shall take such actions as it determines necessary to ensure that such cooperation does not constitute or imply an endorsement by the Administration of the organization or its products or services, and shall ensure that it receives appropriate recognition in all printed materials); and(bb) other Federal and State agencies;(III) by maintaining a clearinghouse for information on managing, financing, and operating small business enterprises; and(IV) by disseminating such information, including through recognition events, and by other activities that the Administration determines to be appropriate; and
(ii)
through cooperation with a profit-making concern (referred to in this paragraph as a “cosponsor”), training, information, and education to small business concerns, except that the Administration shall—
(I)
take such actions as it determines to be appropriate to ensure that—
(aa) the Administration receives appropriate recognition and publicity;(bb) the cooperation does not constitute or imply an endorsement by the Administration of any product or service of the cosponsor;(cc) unnecessary promotion of the products or services of the cosponsor is avoided; and(dd) utilization of any one cosponsor in a marketing area is minimized; and(II)
develop an agreement, executed on behalf of the Administration by an employee of the Administration in Washington, the District of Columbia, that provides, at a minimum, that—
(aa) any printed material to announce the cosponsorship or to be distributed at the cosponsored activity, shall be approved in advance by the Administration;(bb) the terms and conditions of the cooperation shall be specified;(cc) only minimal charges may be imposed on any small business concern to cover the direct costs of providing the assistance;(dd) the Administration may provide to the cosponsorship mailing labels, but not lists of names and addresses of small business concerns compiled by the Administration;(ee) all printed materials containing the names of both the Administration and the cosponsor shall include a prominent disclaimer that the cooperation does not constitute or imply an endorsement by the Administration of any product or service of the cosponsor; and(ff) the Administration shall ensure that it receives appropriate recognition in all cosponsorship printed materials.
(B) To establish, conduct, and publicize, and to recruit, select, and train volunteers for (and to enter into contracts, grants, or cooperative agreements therefor), volunteer programs, including a Service Corps of Retired Executives (SCORE) and an Active Corps of Executive (ACE) for the purposes of subparagraph (A). To facilitate the implementation of such volunteer programs the Administration shall maintain at its headquarters and pay the salaries, benefits, and expenses of a volunteer and professional staff to manage and oversee the program. Any such payments made pursuant to this subparagraph shall be effective only to such extent or in such amounts as are provided in advance in appropriation Acts. Notwithstanding any other provision of law, SCORE may solicit cash and in-kind contributions from the private sector to be used to carry out its functions under this chapter, and may use payments made by the Administration pursuant to this subparagraph for such solicitation and the management of the contributions received.
(C)
To allow any individual or group of persons participating with it in furtherance of the purposes of subparagraphs (A) and (B) to use the Administration’s office facilities and related material and services as the Administration deems appropriate, including clerical and stenographic services:
(i) such volunteers, while carrying out activities under this paragraph shall be deemed Federal employees for the purposes of the Federal tort claims provisions in title 28; and for the purposes of subchapter I of chapter 81 of title 5 (relative to compensation to Federal employees for work injuries) shall be deemed civil employees of the United States within the meaning of the term “employee” as defined in section 8101 of title 5, and the provisions of that subchapter shall apply except that in computing compensation benefits for disability or death, the monthly pay of a volunteer shall be deemed that received under the entrance salary for a grade GS–11 employee;
(ii) the Administrator is authorized to reimburse such volunteers for all necessary out-of-pocket expenses incident to their provision of services under this chapter, or in connection with attendance at meetings sponsored by the Administration, or for the cost of malpractice insurance, as the Administrator shall determine, in accordance with regulations which he or she shall prescribe, and, while they are carrying out such activities away from their homes or regular places of business, for travel expenses (including per diem in lieu of subsistence) as authorized by section 5703 of title 5 for individuals serving without pay; and
(iii) such volunteers shall in no way provide services to a client of such Administration with a delinquent loan outstanding, except upon a specific request signed by such client for assistance in connection with such matter.
(D) Notwithstanding any other provision of law, no payment for supportive services or reimbursement of out-of-pocket expenses made to persons serving pursuant to this paragraph shall be subject to any tax or charge or be treated as wages or compensation for the purposes of unemployment, disability, retirement, public assistance, or similar benefit payments, or minimum wage laws.
(E) In carrying out its functions under subparagraph (A), to make grants (including contracts and cooperative agreements) to any public or private institution of higher education for the establishment and operation of a small business institute, which shall be used to provide business counseling and assistance to small business concerns through the activities of students enrolled at the institution, which students shall be entitled to receive educational credits for their activities.
(F) Notwithstanding any other provision of law and pursuant to regulations which the Administrator shall prescribe, counsel may be employed and counsel fees, court costs, bail, and other expenses incidental to the defense of volunteers may be paid in judicial or administrative proceedings arising directly out of the performance of activities pursuant to this paragraph, to which volunteers have been made parties.
(G) In carrying out its functions under this chapter and to carry out the activities authorized by title IV of the Women’s Business Ownership Act of 1988 [15 U.S.C. 7101 et seq.], the Administration is authorized to accept, in the name of the Administration, and employ or dispose of in furtherance of the purposes of this chapter, any money or property, real, personal, or mixed, tangible, or intangible, received by gift, devise, bequest, or otherwise; and, further, to accept gratuitous services and facilities.
(2) to make a complete inventory of all productive facilities of small-business concerns or to arrange for such inventory to be made by any other governmental agency which has the facilities. In making any such inventory, the appropriate agencies in the several States may be requested to furnish an inventory of the productive facilities of small-business concerns in each respective State if such an inventory is available or in prospect;
(3) to coordinate and to ascertain the means by which the productive capacity of small-business concerns can be most effectively utilized;
(4) to consult and cooperate with officers of the Government having procurement or property disposal powers, in order to utilize the potential productive capacity of plants operated by small-business concerns;
(5) to obtain information as to methods and practices which Government prime contractors utilize in letting subcontracts and to take action to encourage the letting of subcontracts by prime contractors to small-business concerns at prices and on conditions and terms which are fair and equitable;
(6) to determine within any industry the concerns, firms, persons, corporations, partnerships, cooperatives, or other business enterprises which are to be designated “small-business concerns” for the purpose of effectuating the provisions of this chapter. To carry out this purpose the Administrator, when requested to do so, shall issue in response to each such request an appropriate certificate certifying an individual concern as a “small-business concern” in accordance with the criteria expressed in this chapter. Any such certificate shall be subject to revocation when the concern covered thereby ceases to be a “small-business concern”. Offices of the Government having procurement or lending powers, or engaging in the disposal of Federal property or allocating materials or supplies, or promulgating regulations affecting the distribution of materials or supplies, shall accept as conclusive the Administration’s determination as to which enterprises are to be designated “small-business concerns”, as authorized and directed under this paragraph;
(7)
(A) To certify to Government procurement officers, and officers engaged in the sale and disposal of Federal property, with respect to all elements of responsibility, including, but not limited to, capability, competency, capacity, credit, integrity, perseverance, and tenacity, of any small business concern or group of such concerns to receive and perform a specific Government contract. A Government procurement officer or an officer engaged in the sale and disposal of Federal property may not, for any reason specified in the preceding sentence preclude any small business concern or group of such concerns from being awarded such contract without referring the matter for a final disposition to the Administration.
(B) If a Government procurement officer finds that an otherwise qualified small business concern may be ineligible due to the provisions of section 35(a) 1 of title 41, he shall notify the Administration in writing of such finding. The Administration shall review such finding and shall either dismiss it and certify the small business concern to be an eligible Government contractor for a specific Government contract or if it concurs in the finding, forward the matter to the Secretary of Labor for final disposition, in which case the Administration may certify the small business concern only if the Secretary of Labor finds the small business concern not to be in violation.
(C) In any case in which a small business concern or group of such concerns has been certified by the Administration pursuant to (A) or (B) to be a responsible or eligible Government contractor as to a specific Government contract, the officers of the Government having procurement or property disposal powers are directed to accept such certification as conclusive, and shall let such Government contract to such concern or group of concerns without requiring it to meet any other requirement of responsibility or eligibility. Notwithstanding the first sentence of this subparagraph, the Administration may not establish an exemption from referral or notification or refuse to accept a referral or notification from a Government procurement officer made pursuant to subparagraph (A) or (B) of this paragraph, but nothing in this paragraph shall require the processing of an application for certification if the small business concern to which the referral pertains declines to have the application processed.
(8) to obtain from any Federal department, establishment, or agency engaged in procurement or in the financing of procurement or production such reports concerning the letting of contracts and subcontracts and the making of loans to business concerns as it may deem pertinent in carrying out its functions under this chapter;
(9) to obtain from any Federal department, establishment, or agency engaged in the disposal of Federal property such reports concerning the solicitation of bids, time of sale, or otherwise as it may deem pertinent in carrying out its functions under this chapter;
(10) to obtain from suppliers of materials information pertaining to the method of filling orders and the bases for allocating their supply, whenever it appears that any small business is unable to obtain materials from its normal sources;
(11) to make studies and recommendations to the appropriate Federal agencies to insure that a fair proportion of the total purchases and contracts for property and services for the Government be placed with small-business enterprises, to insure that a fair proportion of Government contracts for research and development be placed with small-business concerns, to insure that a fair proportion of the total sales of Government property be made to small-business concerns, and to insure a fair and equitable share of materials, supplies, and equipment to small-business concerns;
(12) to consult and cooperate with all Government agencies for the purpose of insuring that small-business concerns shall receive fair and reasonable treatment from such agencies;
(13) to establish such advisory boards and committees as may be necessary to achieve the purposes of this chapter and of the Small Business Investment Act of 1958 [15 U.S.C. 661 et seq.]; to call meetings of such boards and committees from time to time; to pay the transportation expenses and a per diem allowance in accordance with section 5703 of title 5 to the members of such boards and committees for travel and subsistence expenses incurred at the request of the Administration in connection with travel to points more than fifty miles distant from the homes of such members in attending the meeting of such boards and committees; and to rent temporarily, within the District of Columbia or elsewhere, such hotel or other accommodations as are needed to facilitate the conduct of such meetings;
(14) to provide at the earliest practicable time such information and assistance as may be appropriate, including information concerning eligibility for loans under section 636(b)(3) of this title, to local public agencies (as defined in section 110(h) of the Housing Act of 1949 [42 U.S.C. 1460(h)]) and to small-business concerns to be displaced by federally aided urban renewal projects in order to assist such small-business concerns in reestablishing their operations;
(15) to disseminate, without regard to the provisions of section 3204 of title 39 data and information, in such form as it shall deem appropriate, to public agencies, private organizations, and the general public;
(16) to make studies of matters materially affecting the competitive strength of small business, and of the effect on small business of Federal laws, programs, and regulations, and to make recommendations to the appropriate Federal agency or agencies for the adjustment of such programs and regulations to the needs of small business; and
(17) to make grants to, and enter into contracts and cooperative agreements with, educational institutions, private businesses, veterans’ nonprofit community-based organizations, and Federal, State, and local departments and agencies for the establishment and implementation of outreach programs for disabled veterans (as defined in section 4211(3) of title 38), veterans, and members of a reserve component of the Armed Forces.
(c)
[Reserved]
(d)
Performance of contracts by small business concerns; inclusion of required contract clause; subcontracting plans; contract eligibility; incentives; breach of contract; review; report to Congress
(1) It is the policy of the United States that small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women, shall have the maximum practicable opportunity to participate in the performance of contracts let by any Federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women.
(2)
The clause stated in paragraph (3) shall be included in all contracts let by any Federal agency except any contract which—
(A) does not exceed the simplified acquisition threshold;
(B) including all subcontracts under such contracts will be performed entirely outside of any State, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico; or
(C) is for services which are personal in nature.
(3)
The clause required by paragraph (2) shall be as follows:
“(A) It is the policy of the United States that small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women shall have the maximum practicable opportunity to participate in the performance of contracts let by any Federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women.
“(B) The contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with the efficient performance of this contract. The contractor further agrees to cooperate in any studies or surveys as may be conducted by the United States Small Business Administration or the awarding agency of the United States as may be necessary to determine the extent of the contractor’s compliance with this clause.
“(C)
As used in this contract, the term ‘small business concern’ shall mean a small business as defined pursuant to section 3 of the Small Business Act and relevant regulations promulgated pursuant thereto. The term ‘small business concern owned and controlled by socially and economically disadvantaged individuals’ shall mean a small business concern—
“(i) which is at least 51 per centum owned by one or more socially and economically disadvantaged individuals; or, in the case of any publicly owned business, at least 51 per centum of the stock of which is owned by one or more socially and economically disadvantaged individuals; and
“(ii) whose management and daily business operations are controlled by one or more of such individuals.
“The contractor shall presume that socially and economically disadvantaged individuals include Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and other minorities, or any other individual found to be disadvantaged by the Administration pursuant to section 8(a) of the Small Business Act.
“(D)
The term ‘small business concern owned and controlled by women’ shall mean a small business concern—
“(i) which is at least 51 per centum owned by one or more women; or, in the case of any publicly owned business, at least 51 per centum of the stock of which is owned by one or more women; and
“(ii) whose management and daily business operations are controlled by one or more women.
“(E)
The term ‘small business concern owned and controlled by veterans’ shall mean a small business concern—
“(i) which is at least 51 per centum owned by one or more eligible veterans; or, in the case of any publicly owned business, at least 51 per centum of the stock of which is owned by one or more veterans; and
“(ii) whose management and daily business operations are controlled by such veterans. The contractor shall treat as veterans all individuals who are veterans within the meaning of the term under section 3(q) of the Small Business Act.
“(F) Contractors acting in good faith may rely on written representations by their subcontractors regarding their status as either a small business concern, small business concern owned and controlled by veterans, small business concern owned and controlled by service-disabled veterans, a small business concern owned and controlled by socially and economically disadvantaged individuals, or a small business concern owned and controlled by women.
“(G) In this contract, the term ‘qualified HUBZone small business concern’ has the meaning given that term in section 31(b) 4
4 So in original. Probably should be followed by “of the Small Business Act”.
.
“(H) In this contract, the term ‘small business concern owned and controlled by service-disabled veterans’ has the meaning given that term in section 3(q) 4.”
(4)
(A) Each solicitation of an offer for a contract to be let by a Federal agency which is to be awarded pursuant to the negotiated method of procurement and which may exceed $1,000,000, in the case of a contract for the construction of any public facility, or $500,000, in the case of all other contracts, shall contain a clause notifying potential offering companies of the provisions of this subsection relating to contracts awarded pursuant to the negotiated method of procurement.
(B)
Before the award of any contract to be let, or any amendment or modification to any contract let, by any Federal agency which—
(i) is to be awarded, or was let, pursuant to the negotiated method of procurement,
(ii) is required to include the clause stated in paragraph (3),
(iii) may exceed $1,000,000 in the case of a contract for the construction of any public facility, or $500,000 in the case of all other contracts, and
(iv) which offers subcontracting possibilities,
the apparent successful offeror shall negotiate with the procurement authority a subcontracting plan which incorporates the information prescribed in paragraph (6). The subcontracting plan shall be included in and made a material part of the contract.
(C) If, within the time limit prescribed in regulations of the Federal agency concerned, the apparent successful offeror fails to negotiate the subcontracting plan required by this paragraph, such offeror shall become ineligible to be awarded the contract. Prior compliance of the offeror with other such subcontracting plans shall be considered by the Federal agency in determining the responsibility of that offeror for the award of the contract.
(D) No contract shall be awarded to any offeror unless the procurement authority determines that the plan to be negotiated by the offeror pursuant to this paragraph provides the maximum practicable opportunity for small business concerns, qualified HUBZone small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women to participate in the performance of the contract.
(E) Notwithstanding any other provision of law, every Federal agency, in order to encourage subcontracting opportunities for small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, and small business concerns owned and controlled by the socially and economically disadvantaged individuals as defined in paragraph (3) of this subsection and for small business concerns owned and controlled by women, is hereby authorized to provide such incentives as such Federal agency may deem appropriate in order to encourage such subcontracting opportunities as may be commensurate with the efficient and economical performance of the contract: Provided, That, this subparagraph shall apply only to contracts let pursuant to the negotiated method of procurement.
(F)
(i) Each contract subject to the requirements of this paragraph or paragraph (5) shall contain a clause for the payment of liquidated damages upon a finding that a prime contractor has failed to make a good faith effort to comply with the requirements imposed on such contractor by this subsection.
(ii) The contractor shall be afforded an opportunity to demonstrate a good faith effort regarding compliance prior to the contracting officer’s final decision regarding the imposition of damages and the amount thereof. The final decision of a contracting officer regarding the contractor’s obligation to pay such damages, or the amounts thereof, shall be subject to chapter 71 of title 41.
(iii)
Each agency shall ensure that the goals offered by the apparent successful bidder or offeror are attainable in relation to—
(I) the subcontracting opportunities available to the contractor, commensurate with the efficient and economical performance of the contract;(II) the pool of eligible subcontractors available to fulfill the subcontracting opportunities; and(III) the actual performance of such contractor in fulfilling the subcontracting goals specified in prior plans.
(G)
The following factors shall be designated by the Federal agency as significant factors for purposes of evaluating offers for a bundled contract where the head of the agency determines that the contract offers a significant opportunity for subcontracting:
(i) A factor that is based on the rate provided under the subcontracting plan for small business participation in the performance of the contract.
(ii) For the evaluation of past performance of an offeror, a factor that is based on the extent to which the offeror attained applicable goals for small business participation in the performance of contracts.
(5)
(A)
Each solicitation of a bid for any contract to be let, or any amendment or modification to any contract let, by any Federal agency which—
(i) is to be awarded pursuant to the formal advertising method of procurement,
(ii) is required to contain the clause stated in paragraph (3) of this subsection,
(iii) may exceed $1,000,000 in the case of a contract for the construction of any public facility, or $500,000, in the case of all other contracts, and
(iv) offers subcontracting possibilities,
shall contain a clause requiring any bidder who is selected to be awarded a contract to submit to the Federal agency concerned a subcontracting plan which incorporates the information prescribed in paragraph (6).
(B) If, within the time limit prescribed in regulations of the Federal agency concerned, the bidder selected to be awarded the contract fails to submit the subcontracting plan required by this paragraph, such bidder shall become ineligible to be awarded the contract. Prior compliance of the bidder with other such subcontracting plans shall be considered by the Federal agency in determining the responsibility of such bidder for the award of the contract. The subcontracting plan of the bidder awarded the contract shall be included in and made a material part of the contract.
(6)
Each subcontracting plan required under paragraph (4) or (5) shall include—
(A) percentage goals for the utilization as subcontractors of small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women;
(B) the name of an individual within the employ of the offeror or bidder who will administer the subcontracting program of the offeror or bidder and a description of the duties of such individual;
(C) a description of the efforts the offeror or bidder will take to assure that small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women will have an equitable opportunity to compete for subcontracts;
(D)
assurances that the offeror or bidder will include the clause required by paragraph (2) of this subsection in all subcontracts which offer further subcontracting opportunities, and that the offeror or bidder will require all subcontractors (except small business concerns) who receive subcontracts in excess of $1,000,000 in the case of a contract for the construction of any public facility, or in excess of $500,000 in the case of all other contracts, to adopt a plan similar to the plan required under paragraph (4) or (5), and assurances at a minimum that the offeror or bidder, and all subcontractors required to maintain subcontracting plans pursuant to this paragraph, will—
(i) review and approve subcontracting plans submitted by their subcontractors;
(ii) monitor subcontractor compliance with their approved subcontracting plans;
(iii) ensure that subcontracting reports are submitted by their subcontractors when required;
(iv) acknowledge receipt of their subcontractors’ reports;
(v) compare the performance of their subcontractors to subcontracting plans and goals; and
(vi) discuss performance with subcontractors when necessary to ensure their subcontractors make a good faith effort to comply with their subcontracting plans;
(E) assurances that the offeror or bidder will submit such periodic reports and cooperate in any studies or surveys as may be required by the Federal agency or the Administration in order to determine the extent of compliance by the offeror or bidder with the subcontracting plan;
(F) a recitation of the types of records the successful offeror or bidder will maintain to demonstrate procedures which have been adopted to comply with the requirements and goals set forth in this plan, including the establishment of source lists of small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women; and efforts to identify and award subcontracts to such small business concerns;
(G) a recitation of the types of records the successful offeror or bidder will maintain to demonstrate that procedures have been adopted to substantiate the credit the successful offeror or bidder will elect to receive under paragraph (16)(A);
(H)
a recitation of the types of records the successful offeror or bidder will maintain to demonstrate procedures which have been adopted to ensure subcontractors at all tiers comply with the requirements and goals set forth in the plan established in accordance with subparagraph (D) of this paragraph, including—
(i) the establishment of source lists of small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women; and
(ii) efforts to identify and award subcontracts to such small business concerns; and
(I)
a representation that the offeror or bidder will—
(i) make a good faith effort to acquire articles, equipment, supplies, services, or materials, or obtain the performance of construction work from the small business concerns used in preparing and submitting to the contracting agency the bid or proposal, in the same amount and quality used in preparing and submitting the bid or proposal; and
(ii) provide to the contracting officer a written explanation if the offeror or bidder fails to acquire articles, equipment, supplies, services, or materials or obtain the performance of construction work as described in clause (i).
(7)
The head of the contracting agency shall ensure that—
(A) the agency collects and reports data on the extent to which contractors of the agency meet the goals and objectives set forth in subcontracting plans submitted pursuant to this subsection; and
(B) the agency periodically reviews data collected and reported pursuant to subparagraph (A) for the purpose of ensuring that such contractors comply in good faith with the requirements of this subsection and subcontracting plans submitted by the contractors pursuant to this subsection.
(8) The provisions of paragraphs (4), (5), and (6) shall not apply to offerors or bidders who are small business concerns.
(9)
Material breach.—
The failure of any contractor or subcontractor to comply in good faith with—
(A) the clause contained in paragraph (3) of this subsection,
(B) any plan required of such contractor pursuant to the authority of this subsection to be included in its contract or subcontract, or
(C) assurances provided under paragraph (6)(E),
shall be a material breach of such contract or subcontract and may be considered in any past performance evaluation of the contractor.
(10) Nothing contained in this subsection shall be construed to supersede the requirements of Defense Manpower Policy Number 4A (32A CFR Chap. 1) or any successor policy.
(11)
In the case of contracts within the provisions of paragraphs (4), (5), and (6), the Administration is authorized to—
(A) assist Federal agencies and businesses in complying with their responsibilities under the provisions of this subsection, including the formulation of subcontracting plans pursuant to paragraph (4);
(B) review any solicitation for any contract to be let pursuant to paragraphs (4) and (5) to determine the maximum practicable opportunity for small business concerns, small business concerns owned and controlled by veterans, small business concerns owned and controlled by service-disabled veterans, qualified HUBZone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women to participate as subcontractors in the performance of any contract resulting from any solicitation, and to submit its findings, which shall be advisory in nature, to the appropriate Federal agency; and
(C) evaluate compliance with subcontracting plans as a supplement to evaluations performed by the contracting agency, either on a contract-by-contract basis or, in the case of contractors having multiple contracts, on an aggregate basis.
(12) For purposes of determining the attainment of a subcontract utilization goal under any subcontracting plan entered into with any executive agency pursuant to this subsection, a mentor firm providing development assistance to a protege firm under the pilot Mentor-Protege Program established pursuant to section 831 of the National Defense Authorization Act for Fiscal Year 1991 (Public Law 101–510; 10 U.S.C. 2301 note [2302 note]) shall be granted credit for such assistance in accordance with subsection (g) of such section.
(13)
Payment of Subcontractors.—
(A)
Definition.—
In this paragraph, the term “covered contract” means a contract relating to which a prime contractor is required to develop a subcontracting plan under paragraph (4) or (5).
(B)
Notice.—
(i)
In general.—
A prime contractor for a covered contract shall notify in writing the contracting officer for the covered contract if the prime contractor pays a reduced price to a subcontractor for goods and services upon completion of the responsibilities of the subcontractor or the payment to a subcontractor is more than 90 days past due for goods or services provided for the covered contract for which the Federal agency has paid the prime contractor.
(ii)
Contents.—
A prime contractor shall include the reason for the reduction in a payment to or failure to pay a subcontractor in any notice made under clause (i).
(C)
Performance.—
A contracting officer for a covered contract shall consider the unjustified failure by a prime contractor to make a full or timely payment to a subcontractor in evaluating the performance of the prime contractor.
(D)
Control of funds.—
If the contracting officer for a covered contract determines that a prime contractor has a history of unjustified, untimely payments to contractors, the contracting officer shall record the identity of the contractor in accordance with the regulations promulgated under subparagraph (E).
(E)
Regulations.—
Not later than 1 year after September 27, 2010, the Federal Acquisition Regulatory Council established under section 1302(a) of title 41 shall amend the Federal Acquisition Regulation issued under section 1303(a) of title 41 to—
(i) describe the circumstances under which a contractor may be determined to have a history of unjustified, untimely payments to subcontractors;
(ii) establish a process for contracting officers to record the identity of a contractor described in clause (i); and
(iii) require the identity of a contractor described in clause (i) to be incorporated in, and made publicly available through, the Federal Awardee Performance and Integrity Information System, or any successor thereto.
(14) An offeror for a covered contract that intends to identify a small business concern as a potential subcontractor in a bid or proposal for the contract, or in a plan submitted pursuant to this subsection in connection with the contract, shall notify the small business concern prior to making such identification.
(15) The Administrator shall establish a reporting mechanism that allows a subcontractor or potential subcontractor to report fraudulent activity or bad faith by a contractor with respect to a subcontracting plan submitted pursuant to this subsection.
(16)
Credit for certain small business concern subcontractors.—
(A)
In general.—
For purposes of determining whether or not a prime contractor has attained the percentage goals specified in paragraph (6)—
(i)
(ii) if the subcontracting goals pertain to more than one contract with one or more Federal agencies, or to one contract with more than one Federal agency, the prime contractor may only receive credit for first tier subcontractors that are small business concerns.
(B)
Collection and review of data on subcontracting plans.—
The head of each contracting agency shall ensure that the agency—
(i) collects and reports data on the extent to which prime contractors of the agency meet the goals and objectives set forth in subcontracting plans submitted pursuant to this subsection; and
(ii) periodically reviews data collected and reported pursuant to clause (i) for the purpose of ensuring that such contractors comply in good faith with the requirements of this subsection.
(C)
Rule of construction.—
Nothing in this paragraph shall be construed to allow a Federal agency to establish a goal for an 5
5 So in original. Probably should be “a”.
number of subcontracts with a subcontractor at any tier for a prime contractor otherwise eligible to receive credit under this paragraph.
(17)
Past performance ratings for certain small business subcontractors.—
Upon request by a small business concern that performed as a first tier subcontractor on a covered contract (as defined in paragraph (13)(A)), the prime contractor for such covered contract shall submit to such small business concern a record of past performance for such small business concern with respect to such covered contract. If a small business concern elects to use such record of past performance, a contracting officer shall consider such record of past performance when evaluating an offer for a prime contract made by such small business concern.
(e)
Covered executive agency activities; procurement notice; publication; time limitations
(1)
Except as provided in subsection (g)—
(A)
an executive agency intending to—
(i) solicit bids or proposals for a contract for property or services for a price expected to exceed $25,000; or
(ii) place an order, expected to exceed $25,000, under a basic agreement, basic ordering agreement, or similar arrangement,
shall publish a notice described in subsection (f);
(B)
an executive agency intending to solicit bids or proposals for a contract for property or services shall post, for a period of not less than ten days, in a public place at the contracting office issuing the solicitation a notice of solicitation described in subsection (f)—
(i) in the case of an executive agency other than the Department of Defense, if the contract is for a price expected to exceed $10,000, but not to exceed $25,000; and
(ii) in the case of the Department of Defense, if the contract is for a price expected to exceed $5,000, but not to exceed $25,000;
(C) an executive agency awarding a contract for property or services for a price exceeding $100,000, or placing an order referred to in clause (A)(ii) exceeding $100,000, shall furnish for publication by the Secretary of Commerce a notice announcing the award or order if there is likely to be any subcontract under such contract or order.
(2)
(A)
A notice of solicitation required to be published under paragraph (1) may be published—
(i) by electronic means that meet the accessibility requirements under section 1708(d) of title 41; or
(ii) by the Secretary of Commerce in the Commerce Business Daily.
(B) The Secretary of Commerce shall promptly publish in the Commerce Business Daily each notice or announcement received under this subsection for publication by that means.
(3)
Whenever an executive agency is required by paragraph (1)(A) to publish a notice of solicitation, such executive agency may not—
(A) issue the solicitation earlier than 15 days after the date on which the notice is published; or
(B)
in the case of a contract or order estimated to be greater than the simplified acquisition threshold, establish a deadline for the submission of all bids or proposals in response to the notice required by paragraph (1)(A) that—
(i) in the case of an order under a basic agreement, basic ordering agreement, or similar arrangement, is earlier than the date 30 days after the date the notice required by paragraph (1)(A)(ii) is published;
(ii) in the case of a solicitation for research and development, is earlier than the date 45 days after the date the notice required by paragraph (1)(A)(i) is published; or
(iii) in any other case, is earlier than the date 30 days after the date the solicitation is issued.
(f)
Contents of notice
Each notice of solicitation required by subparagraph (A) or (B) of subsection (e)(1) shall include—
(1) an accurate description of the property or services to be contracted for, which description (A) shall not be unnecessarily restrictive of competition, and (B) shall include, as appropriate, the agency nomenclature, National Stock Number or other part number, and a brief description of the item’s form, fit, or function, physical dimensions, predominant material of manufacture, or similar information that will assist a prospective contractor to make an informed business judgment as to whether a copy of the solicitation should be requested;
(2)
provisions that—
(A) state whether the technical data required to respond to the solicitation will not be furnished as part of such solicitation, and identify the source in the Government, if any, from which the technical data may be obtained; and
(B) state whether an offeror, its product, or service must meet a qualification requirement in order to be eligible for award, and, if so, identify the office from which a qualification requirement may be obtained;
(3) the name, business address, and telephone number of the contracting officer;
(4) a statement that all responsible sources may submit a bid, proposal, or quotation (as appropriate) which shall be considered by the agency;
(5) in the case of a procurement using procedures other than competitive procedures, a statement of the reason justifying the use of such procedures and the identity of the intended source; and
(6)
in the case of a contract in an amount estimated to be greater than $25,000 but not greater than the simplified acquisition threshold—
(A) a description of the procedures to be used in awarding the contract; and
(B) a statement specifying the periods for prospective offerors and the contracting officer to take the necessary preaward and award actions.
(g)
Exempted, etc., activities of executive agency
(1)
A notice is not required under subsection (e)(1) if—
(A)
the proposed procurement is for an amount not greater than the simplified acquisition threshold and is to be conducted by—
(i) using widespread electronic public notice of the solicitation in a form that allows convenient and universal user access through a single, Government-wide point of entry; and
(ii) permitting the public to respond to the solicitation electronically.
(B) the notice would disclose the executive agency’s needs and the disclosure of such needs would compromise the national security;
(C)
the proposed procurement would result from acceptance of—
(i) any unsolicited proposal that demonstrates a unique and innovative research concept and the publication of any notice of such unsolicited research proposal would disclose the originality of thought or innovativeness of the proposal or would disclose proprietary information associated with the proposal; or
(ii) a proposal submitted under section 638 of this title;
(D) the procurement is made against an order placed under a requirements contract;
(E) the procurement is made for perishable subsistence supplies;
(F) the procurement is for utility services, other than telecommunication services, and only one source is available; or
(G) the procurement is for the services of an expert for use in any litigation or dispute (including preparation for any foreseeable litigation or dispute) that involves or could involve the Federal Government in any trial, hearing, or proceeding before any court, administrative tribunal, or agency, or in any part of an alternative dispute resolution process, whether or not the expert is expected to testify.
(2) The requirements of subsection (a)(1)(A) do not apply to any procurement under conditions described in paragraph (2), (3), (4), (5), or (7) of section 3304(a) of title 41 or paragraph (2), (3), (4), (5), or (7) of section 3204(a) of title 10.
(3) The requirements of subsection (a)(1)(A) shall not apply in the case of any procurement for which the head of the executive agency makes a determination in writing, after consultation with the Administrator for Federal Procurement Policy and the Administrator of the Small Business Administration, that it is not appropriate or reasonable to publish a notice before issuing a solicitation.
(h)
Award of contracts; procedures other than competitive ones; exceptions
(1)
An executive agency may not award a contract using procedures other than competitive procedures unless—
(A)
except as provided in paragraph (2), a written justification for the use of such procedures has been approved—
(i) in the case of a contract for an amount exceeding $100,000 (but equal to or less than $1,000,000), by the advocate for competition for the procuring activity (without further delegation);
(ii) in the case of a contract for an amount exceeding $1,000,000 (but equal to or less than $10,000,000), by the head of the procuring activity or a delegate who, if a member of the Armed Forces, is a general or flag officer, or, if a civilian, is serving in a position in grade GS–16 or above under the General Schedule (or in a comparable or higher position under another schedule); or
(iii) in the case of a contract for an amount exceeding $10,000,000, by the senior procurement executive of the agency designated pursuant to section 414(3) of title 41 1 (without further delegation); and
(B) all other requirements applicable to the use of such procedures under division C (except sections 3302, 3307(e), 3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41 or sections 3201 through 3205 of title 10, as appropriate, have been satisfied.
(2) The same exceptions as are provided in paragraphs (3) and (4) of section 3304(e) of title 41 or paragraphs (3) and (4) of section 3204(e) of title 10 shall apply with respect to the requirements of paragraph (1)(A) of this subsection in the same manner as such exceptions apply to the requirements of section 3304(e)(1) of title 41 or section 3204(e)(1) of title 10, as appropriate.
(i)
Availability; complete solicitation package; fees

An executive agency shall make available to any business concern, or the authorized representative of such concern, the complete solicitation package for any on-going procurement announced pursuant to a notice under subsection (e). An executive agency may require the payment of a fee, not exceeding the actual cost of duplication, for a copy of such package.

(j)
“Executive agency” defined

For purposes of this section, the term “executive agency” has the meaning provided such term in section 133 of title 41.

(k)
Notices of subcontracting opportunities
(1)
In general
Notices of subcontracting opportunities may be submitted for publication on the appropriate Federal Web site (as determined by the Administrator) by—
(A) a business concern awarded a contract by an executive agency subject to subsection (e)(1)(C); and
(B) a business concern that is a subcontractor or supplier (at any tier) to such contractor having a subcontracting opportunity in excess of $10,000.
(2)
Content of notice
The notice of a subcontracting opportunity shall include—
(A) a description of the business opportunity that is comparable to the description specified in paragraphs (1), (2), (3), and (4) of subsection (f); and
(B) the due date for receipt of offers.
(l)
Management assistance for small businesses affected by military operations
(1)
In general

The Administration shall utilize, as appropriate, its entrepreneurial development and management assistance programs, including programs involving State or private sector partners, to provide business counseling and training to any small business concern adversely affected by the deployment of units of the Armed Forces of the United States in support of a period of military conflict.

(2)
Definition of period of military conflict
In this subsection, the term “period of military conflict” means—
(A) a period of war declared by the Congress;
(B) a period of national emergency declared by the Congress or by the President; or
(C) a period of a contingency operation, as defined in section 101(a) of title 10.
(m)
Procurement program for women-owned small business concerns
(1)
Definitions
In this subsection, the following definitions apply:
(A)
Contracting officer

The term “contracting officer” has the meaning given such term in section 2101(1) of title 41.

(B)
Small business concern owned and controlled by women

The term “small business concern owned and controlled by women” has the meaning given such term in section 632(n) of this title, except that ownership shall be determined without regard to any community property law.

(2)
Authority to restrict competition
In accordance with this subsection, a contracting officer may restrict competition for any contract for the procurement of goods or services by the Federal Government to small business concerns owned and controlled by women, if—
(A) each of the concerns is not less than 51 percent owned by one or more women who are economically disadvantaged (and such ownership is determined without regard to any community property law);
(B) the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by women will submit offers for the contract;
(C) the contract is for the procurement of goods or services with respect to an industry identified by the Administrator pursuant to paragraph (3);
(D) in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price; and
(E) each of the concerns is certified by a Federal agency, a State government, the Administrator, or a national certifying entity approved by the Administrator as a small business concern owned and controlled by women.
(3)
Waiver

With respect to a small business concern owned and controlled by women, the Administrator may waive subparagraph (2)(A) if the Administrator determines that the concern is in an industry in which small business concerns owned and controlled by women are substantially underrepresented.

(4)
Identification of industries

The Administrator shall conduct a study to identify industries in which small business concerns owned and controlled by women are underrepresented with respect to Federal procurement contracting.

(5)
Enforcement; penalties
(A)
Verification of eligibility
In carrying out this subsection, the Administrator shall establish procedures relating to—
(i) the filing, investigation, and disposition by the Administration of any challenge to the eligibility of a small business concern to receive assistance under this subsection (including a challenge, filed by an interested party, relating to the veracity of a certification made or information provided to the Administration by a small business concern under paragraph (2)(E)); and
(ii) verification by the Administrator of the accuracy of any certification made or information provided to the Administration by a small business concern under paragraph (2)(E).
(B)
Examinations

The procedures established under subparagraph (A) may provide for program examinations (including random program examinations) by the Administrator of any small business concern making a certification or providing information to the Administrator under paragraph (2)(E).

(C)
Penalties
In addition to the penalties described in section 645(d) of this title, any small business concern that is determined by the Administrator to have misrepresented the status of that concern as a small business concern owned and controlled by women for purposes of this subsection, shall be subject to—
(i)section 1001 of title 18; and
(ii) sections 3729 through 3733 of title 31.
(6)
Provision of data

Upon the request of the Administrator, the head of any Federal department or agency shall promptly provide to the Administrator such information as the Administrator determines to be necessary to carry out this subsection.

(7)
Authority for sole source contracts for economically disadvantaged small business concerns owned and controlled by women
A contracting officer may award a sole source contract under this subsection to any small business concern owned and controlled by women described in paragraph (2)(A) and certified under paragraph (2)(E) if—
(A) such concern is determined to be a responsible contractor with respect to performance of the contract opportunity and the contracting officer does not have a reasonable expectation that 2 or more businesses described in paragraph (2)(A) will submit offers;
(B)
the anticipated award price of the contract (including options) will not exceed—
(i) $7,000,000, in the case of a contract opportunity assigned a standard industrial classification code for manufacturing; or
(ii) $4,000,000, in the case of any other contract opportunity; and
(C) in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price.
(8)
Authority for sole source contracts for small business concerns owned and controlled by women in substantially underrepresented industries
A contracting officer may award a sole source contract under this subsection to any small business concern owned and controlled by women certified under paragraph (2)(E) that is in an industry in which small business concerns owned and controlled by women are substantially underrepresented (as determined by the Administrator under paragraph (3)) if—
(A) such concern is determined to be a responsible contractor with respect to performance of the contract opportunity and the contracting officer does not have a reasonable expectation that 2 or more businesses in an industry that has received a waiver under paragraph (3) will submit offers;
(B)
the anticipated award price of the contract (including options) will not exceed—
(i) $7,000,000, in the case of a contract opportunity assigned a standard industrial classification code for manufacturing; or
(ii) $4,000,000, in the case of any other contract opportunity; and
(C) in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price.
(n)
Business grants and cooperative agreements
(1)
In general
In accordance with this subsection, the Administrator may make grants to and enter into cooperative agreements with any coalition of private entities, public entities, or any combination of private and public entities—
(A) to expand business-to-business relationships between large and small businesses; and
(B) to provide businesses, directly or indirectly, with online information and a database of companies that are interested in mentor-protege programs or community-based, statewide, or local business development programs.
(2)
Matching requirement

Subject to subparagraph (B), the Administrator may make a grant to a coalition under paragraph (1) only if the coalition provides for activities described in paragraph (1)(A) or (1)(B) an amount, either in kind or in cash, equal to the grant amount.

(3)
Authorization of appropriations

There is authorized to be appropriated to carry out this subsection $6,600,000, to remain available until expended, for each of fiscal years 2001 through 2006.

(Pub. L. 85–536, § 2[8], July 18, 1958, 72 Stat. 389; Pub. L. 87–305, §§ 7, 8, Sept. 26, 1961, 75 Stat. 667, 668; Pub. L. 88–560, title III, § 305(c), Sept. 2, 1964, 78 Stat. 786; Pub. L. 89–754, title X, § 1017, Nov. 3, 1966, 80 Stat. 1295; Pub. L. 90–104, title I, §§ 105–107, Oct. 11, 1967, 81 Stat. 268, 269; Pub. L. 91–375, § 6(g), Aug. 12, 1970, 84 Stat. 776; Pub. L. 95–89, title V, § 501, Aug. 4, 1977, 91 Stat. 561; Pub. L. 95–507, title II, §§ 202(a), 211, Oct. 24, 1978, 92 Stat. 1761, 1767; Pub. L. 95–510, § 101, Oct. 24, 1978, 92 Stat. 1780; Pub. L. 96–302, title I, § 118(b), July 2, 1980, 94 Stat. 840; Pub. L. 96–481, title I, §§ 101, 105, Oct. 21, 1980, 94 Stat. 2321, 2322; Pub. L. 98–47, §§ 1(a), 2, 3, July 13, 1983, 97 Stat. 243; Pub. L. 98–72, § 1(a), Aug. 11, 1983, 97 Stat. 403; Pub. L. 98–362, § 5(a), July 16, 1984, 98 Stat. 433; Pub. L. 98–577, title IV, §§ 401, 402, 404(a), Oct. 30, 1984, 98 Stat. 3079, 3082; Pub. L. 99–272, title XVIII, § 18015(b)–(d), Apr. 7, 1986, 100 Stat. 370, 371; Pub. L. 99–500, § 101(c) [title X, §§ 921(b)(2), (c)(1), 922(a), (d)(1)], Oct. 18, 1986, 100 Stat. 1783–82, 1783–147, 1783–151, 1783–152, and Pub. L. 99–591, § 101(c) [title X, §§ 921(b)(2), (c)(1), 922(a), (d)(1)], Oct. 30, 1986, 100 Stat. 3341–82, 3341–147, 3341–151, 3341–152; Pub. L. 99–567, §§ 1(a), 2, 3, Oct. 27, 1986, 100 Stat. 3188; Pub. L. 99–661, div. A, title IX, formerly title IV, §§ 921(b)(2), (c)(1), 922(a), (d)(1), Nov. 14, 1986, 100 Stat. 3927, 3930, 3932, renumbered title IX, Pub. L. 100–26, § 3(5), Apr. 21, 1987, 101 Stat. 273; Pub. L. 100–26, § 10(b)(3), Apr. 21, 1987, 101 Stat. 288; Pub. L. 100–533, title II, §§ 201, 202, Oct. 25, 1988, 102 Stat. 2690, 2692; Pub. L. 100–590, title I, §§ 127(a), (b), 131(b), Nov. 3, 1988, 102 Stat. 3001, 3003, 3004; Pub. L. 100–656, title II, §§ 201(b), 207(a), (c), 209, title III, §§ 303(b)–(e), (g), (h), 304(a), title IV, §§ 402–404, 407, 409, title V, § 501, Nov. 15, 1988, 102 Stat. 3858, 3861, 3863, 3869, 3870, 3872–3874, 3876, 3878, 3880; Pub. L. 101–37, §§ 6(b), (d), 7(b), 10(c), (e), 12–14, 16, 17, June 15, 1989, 103 Stat. 72–74; Pub. L. 101–162, title V, (3), Nov. 21, 1989, 103 Stat. 1025; Pub. L. 101–510, div. A, title VIII, § 806(e)(2), Nov. 5, 1990, 104 Stat. 1593; Pub. L. 101–574, title II, §§ 204(b), 207, 210, 244, Nov. 15, 1990, 104 Stat. 2819–2821, 2827; Pub. L. 102–190, div. A, title VIII, § 814(c), Dec. 5, 1991, 105 Stat. 1425; Pub. L. 102–191, § 3, Dec. 5, 1991, 105 Stat. 1591; Pub. L. 102–366, title II, § 232(a), Sept. 4, 1992, 106 Stat. 1001; Pub. L. 102–564, title III, §§ 303(a), 304, Oct. 28, 1992, 106 Stat. 4262; Pub. L. 103–355, title I, § 1055(b)(2), title IV, §§ 4202(d), 4404(b), title VII, § 7106(b), Oct. 13, 1994, 108 Stat. 3265, 3345, 3349, 3375; Pub. L. 103–403, title IV, §§ 401(a)(1), 407, 415, Oct. 22, 1994, 108 Stat. 4190, 4192, 4198; Pub. L. 104–106, div. D, title XLIII, § 4321(c)(1), (2), Feb. 10, 1996, 110 Stat. 674; Pub. L. 105–85, div. A, title VIII, § 850(e)(1), Nov. 18, 1997, 111 Stat. 1848; Pub. L. 105–135, title IV, §§ 415, 416(a), (c), title VI, § 603(a), title VII, § 708, Dec. 2, 1997, 111 Stat. 2619, 2620, 2631, 2637; Pub. L. 106–50, title III, § 303(a), title V, § 501, Aug. 17, 1999, 113 Stat. 243, 247; Pub. L. 106–398, § 1 [[div. A], title VIII, § 810(c)], Oct. 30, 2000, 114 Stat. 1654, 1654A–209; Pub. L. 106–554, § 1(a)(8) [§ 2], § 1(a)(9) [title V, § 504(a), title VI, § 615(b), title VIII, §§ 803, 807, 809, 811], Dec. 21, 2000, 114 Stat. 2763, 2763A–666, 2763A–695, 2763A–701, 2763A–702, 2763A–706, 2763A–708; Pub. L. 108–447, div. K, title I, §§ 132(b), (c), 141(a), 144, Dec. 8, 2004, 118 Stat. 3453, 3455; Pub. L. 111–240, title I, §§ 1322, 1334, Sept. 27, 2010, 124 Stat. 2540, 2542; Pub. L. 112–239, div. A, title XVI, §§ 1653(a), 1654, 1696(b)(2), 1697(a), Jan. 2, 2013, 126 Stat. 2081, 2083, 2091; Pub. L. 113–66, div. A, title XVI, § 1614(a), Dec. 26, 2013, 127 Stat. 948; Pub. L. 113–291, div. A, title VIII, § 825(a), Dec. 19, 2014, 128 Stat. 3437; Pub. L. 114–92, div. A, title VIII, § 864(a), Nov. 25, 2015, 129 Stat. 927; Pub. L. 114–328, div. A, title XVIII, §§ 1821(a), 1822, 1832(c), Dec. 23, 2016, 130 Stat. 2654, 2660; Pub. L. 115–91, div. A, title XVII, §§ 1701(a)(4)(C), 1706, Dec. 12, 2017, 131 Stat. 1796, 1808; Pub. L. 116–92, div. A, title VIII, §§ 870, 877(d), Dec. 20, 2019, 133 Stat. 1524, 1530; Pub. L. 116–283, div. A, title VIII, §§ 864(1), 868(b), Jan. 1, 2021, 134 Stat. 3784, 3787; Pub. L. 117–81, div. A, title XVII, § 1702(e)(2), Dec. 27, 2021, 135 Stat. 2156.)
§ 637a.
Repealed. Pub. L. 89–409, § 3(b), May 2, 1966, 80 Stat. 133
§ 637b.
Availability of information
(a)
Requests for information
For any contract to be let by any Federal agency, such agency shall provide to any small business concern upon its request—
(1) a copy of bid sets and specifications with respect to such contract;
(2) the name and telephone number of an employee of such agency to answer questions with respect to such contract; and
(3) adequate citations to each major Federal law or agency rule with which such business concern must comply in performing such contract.
(b)
Exempt contracts
Subsection (a) shall not apply to any contract or subcontract under such contract which—
(1) will be performed entirely outside any State, territory, or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico; or
(2) is for services which are personal in nature.
(Pub. L. 95–507, title II, § 223, Oct. 24, 1978, 92 Stat. 1772.)
§ 637c.
Definitions
For purposes of this Act—
(1) the term “Administrator” means the Administrator of the Small Business Administration;
(2) the term “Federal agency” has the meaning given the term “agency” by section 551(1) of title 5, but does not include the United States Postal Service or the Government Accountability Office; and
(3) the term “Government procurement contract” means any contract for the procurement of any goods or services by any Federal agency.
(Pub. L. 95–507, title II, § 224(a), Oct. 24, 1978, 92 Stat. 1772; Pub. L. 108–271, § 8(b), July 7, 2004, 118 Stat. 814.)
§ 637d.
Subcontracting plan reports
(1)
Reporting requirements

Not later than 1 year after January 2, 2013, the Administrator of the Small Business Administration shall take such actions as are necessary to ensure that the electronic subcontracting reporting system established by the Administration to carry out the requirement of section 637(d)(6)(E) of this title is modified to ensure that it can identify entities that fail to submit required reports.

(2)
Annual report
Not later than March 31 of each year, the Administrator of the Small Business Administration shall provide the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate a report, based on data available through existing systems, that sets forth, by agency (and to the extent practicable, by type of goal or plan), the following information:
(A) the percentage of entities required to submit reports pursuant to section 637(d)(6) of this title that filed such reports and that failed to file such reports during the prior fiscal year;
(B) the percentage of entities filing such reports that met, exceeded, or failed to meet goals set forth in their subcontracting plans during the prior fiscal year; and
(C) the aggregate value by which such entities exceeded, or failed to meet, their subcontracting goals during the prior fiscal year.
(Pub. L. 112–239, div. A, title XVI, § 1653(b), Jan. 2, 2013, 126 Stat. 2082.)
§ 638.
Research and development
(a)
Declaration of policy

Research and development are major factors in the growth and progress of industry and the national economy. The expense of carrying on research and development programs is beyond the means of many small-business concerns, and such concerns are handicapped in obtaining the benefits of research and development programs conducted at Government expense. These small-business concerns are thereby placed at a competitive disadvantage. This weakens the competitive free enterprise system and prevents the orderly development of the national economy. It is the policy of the Congress that assistance be given to small-business concerns to enable them to undertake and to obtain the benefits of research and development in order to maintain and strengthen the competitive free enterprise system and the national economy.

(b)
Assistance to small-business concerns
It shall be the duty of the Administration, and it is empowered—
(1) to assist small-business concerns to obtain Government contracts for research and development;
(2) to assist small-business concerns to obtain the benefits of research and development performed under Government contracts or at Government expense;
(3) to provide technical assistance to small-business concerns to accomplish the purposes of this section;
(4) to develop and maintain a source file and an information program to assure each qualified and interested small business concern the opportunity to participate in Federal agency small business innovation research programs and small business technology transfer programs;
(5) to coordinate with participating agencies a schedule for release of SBIR and STTR solicitations, and to prepare a master release schedule so as to maximize small businesses’ opportunities to respond to solicitations;
(6) to independently survey and monitor the operation of SBIR and STTR programs within participating Federal agencies;
(7)
to report not less than annually to the Committee on Small Business of the Senate, and to the Committee on Science and the Committee on Small Business of the House of Representatives, on the SBIR and STTR programs of the Federal agencies and the Administration’s information and monitoring efforts related to the SBIR and STTR programs, including—
(A) the data on output and outcomes collected pursuant to subsections (g)(8) and (o)(9);
(B) the number of proposals received from, and the number and total amount of awards to, HUBZone small business concerns and firms with venture capital, hedge fund, or private equity firm investment (including those majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms) under each of the SBIR and STTR programs;
(C) a description of the extent to which each Federal agency is increasing outreach and awards to firms owned and controlled by women or by socially or economically disadvantaged individuals under each of the SBIR and STTR programs;
(D) general information about the implementation of, and compliance with the allocation of funds required under, subsection (dd) for firms owned in majority part by venture capital operating companies, hedge funds, or private equity firms and participating in the SBIR program;
(E) a detailed description of appeals of Phase III awards and notices of noncompliance with the SBIR Policy Directive and the STTR Policy Directive filed by the Administrator with Federal agencies;
(F) an accounting of funds, initiatives, and outcomes under the Commercialization Readiness Program;
(G) a description of the extent to which Federal agencies are providing in a timely manner information needed to maintain the database described in subsection (k); and
(H) with respect to a Federal agency to which subsection (f)(1) or (n)(1) applies, whether the Federal agency has complied with the applicable subsection for the year covered by the report;
(8) to provide for and fully implement the tenets of Executive Order No. 13329 (Encouraging Innovation in Manufacturing);
(9) to coordinate the implementation of electronic databases at each of the Federal agencies participating in the SBIR program or the STTR program, including the technical ability of the participating agencies to electronically share data; and
(10) to consult, where appropriate, with personnel from the relevant Federal agency to assist small business concerns participating in a SBIR or STTR program with commercializing research developed under such a program before such small business concern is awarded a contract from such Federal agency.
(c)
Consultation and cooperation with Government agencies; studies and recommendations

The Administration is authorized to consult and cooperate with all Government agencies and to make studies and recommendations to such agencies, and such agencies are authorized and directed to cooperate with the Administration in order to carry out and to accomplish the purposes of this section.

(d)
Joint programs; approval of agreements; withdrawal of approval; publication in Federal Register
(1)
The Administrator is authorized to consult with representatives of small-business concerns with a view to assisting and encouraging such firms to undertake joint programs for research and development carried out through such corporate or other mechanism as may be most appropriate for the purpose. Such joint programs may, among other things, include the following purposes:
(A) to construct, acquire, or establish laboratories and other facilities for the conduct of research;
(B) to undertake and utilize applied research;
(C) to collect research information related to a particular industry and disseminate it to participating members;
(D) to conduct applied research on a protected, proprietary, and contractual basis with member or nonmember firms, Government agencies, and others;
(E) to prosecute applications for patents and render patent services for participating members; and
(F) to negotiate and grant licenses under patents held under the joint program, and to establish corporations designed to exploit particular patents obtained by it.
(2) The Administrator may, after consultation with the Attorney General and the Chairman of the Federal Trade Commission, and with the prior written approval of the Attorney General, approve any agreement between small-business firms providing for a joint program of research and development, if the Administrator finds that the joint program proposed will maintain and strengthen the free enterprise system and the economy of the Nation. The Administrator or the Attorney General may at any time withdraw his approval of the agreement and the joint program of research and development covered thereby, if he finds that the agreement or the joint program carried on under it is no longer in the best interests of the competitive free enterprise system and the economy of the Nation. A copy of the statement of any such finding and approval intended to be within the coverage of this subsection, and a copy of any modification or withdrawal of approval, shall be published in the Federal Register. The authority conferred by this subsection on the Administrator shall not be delegated by him.
(3) No act or omission to act pursuant to and within the scope of any joint program for research and development, under an agreement approved by the Administrator under this subsection, shall be construed to be within the prohibitions of the antitrust laws or the Federal Trade Commission Act [15 U.S.C. 41 et seq.]. Upon publication in the Federal Register of the notice of withdrawal of his approval of the agreement granted under this subsection, either by the Administrator or by the Attorney General, the provisions of this subsection shall not apply to any subsequent act or omission to act by reason of such agreement or approval.
(e)
Definitions
For the purpose of this section—
(1) the term “extramural budget” means the sum of the total obligations minus amounts obligated for such activities by employees of the agency in or through Government-owned, Government-operated facilities, except that for the Department of Energy it shall not include amounts obligated for atomic energy defense programs solely for weapons activities or for naval reactor programs, and except that for the Agency for International Development it shall not include amounts obligated solely for general institutional support of international research centers or for grants to foreign countries;
(2) the term “Federal agency” means an executive agency as defined in section 105 of title 5 or a military department as defined in section 102 of such title, except that it does not include any agency within the Intelligence Community (as the term is defined in section 3.4(f) of Executive Order 12333 or its successor orders);
(3) the term “funding agreement” means any contract, grant, or cooperative agreement entered into between any Federal agency and any small business for the performance of experimental, developmental, or research work funded in whole or in part by the Federal Government;
(4)
the term “Small Business Innovation Research Program” or “SBIR” means a program under which a portion of a Federal agency’s research or research and development effort is reserved for award to small business concerns through a uniform process having—
(A) a first phase for determining, insofar as possible, the scientific and technical merit and feasibility of ideas that appear to have commercial potential, as described in subparagraph (B), submitted pursuant to SBIR program solicitations;
(B)
a second phase, which shall not include any invitation, pre-screening, or pre-selection process for eligibility for Phase II, that will further develop proposals which meet particular program needs, in which awards shall be made based on the scientific and technical merit and feasibility of the proposals, as evidenced by the first phase, considering, among other things, the proposal’s commercial potential, as evidenced by—
(i) the small business concern’s record of successfully commercializing SBIR or other research;
(ii) the existence of second phase funding commitments from private sector or non-SBIR funding sources;
(iii) the existence of third phase, follow-on commitments for the subject of the research; and
(iv) the presence of other indicators of the commercial potential of the idea; and
(C)
where appropriate, a third phase for work that derives from, extends, or completes efforts made under prior funding agreements under the SBIR program—
(i) in which commercial applications of SBIR-funded research or research and development are funded by non-Federal sources of capital or, for products or services intended for use by the Federal Government, by follow-on non-SBIR Federal funding awards; or
(ii) for which awards from non-SBIR Federal funding sources are used for the continuation of research or research and development that has been competitively selected using peer review or merit-based selection procedures;
(5) the term “research” or “research and development” means any activity which is (A) a systematic, intensive study directed toward greater knowledge or understanding of the subject studied; (B) a systematic study directed specifically toward applying new knowledge to meet a recognized need; or (C) a systematic application of knowledge toward the production of useful materials, devices, and systems or methods, including design, development, and improvement of prototypes and new processes to meet specific requirements;
(6)
the term “Small Business Technology Transfer Program” or “STTR” means a program under which a portion of a Federal agency’s extramural research or research and development effort is reserved for award to small business concerns for cooperative research and development through a uniform process having—
(A) a first phase, to determine, to the extent possible, the scientific, technical, and commercial merit and feasibility of ideas submitted pursuant to STTR program solicitations;
(B) a second phase, which shall not include any invitation, pre-screening, or pre-selection process for eligibility for Phase II, that will further develop proposals that meet particular program needs, in which awards shall be made based on the scientific, technical, and commercial merit and feasibility of the idea, as evidenced by the first phase and by other relevant information; and
(C)
where appropriate, a third phase for work that derives from, extends, or completes efforts made under prior funding agreements under the STTR program—
(i) in which commercial applications of STTR-funded research or research and development are funded by non-Federal sources of capital or, for products or services intended for use by the Federal Government, by follow-on non-STTR Federal funding awards; and
(ii) for which awards from non-STTR Federal funding sources are used for the continuation of research or research and development that has been competitively selected using peer review or scientific review criteria;
(7) the term “cooperative research and development” means research or research and development conducted jointly by a small business concern and a research institution in which not less than 40 percent of the work is performed by the small business concern, and not less than 30 percent of the work is performed by the research institution;
(8) the term “research institution” means a nonprofit institution, as defined in section 3703(5) 1
1 See References in Text note below.
of this title, and includes federally funded research and development centers, as identified by the National Scientific Foundation in accordance with the governmentwide Federal Acquisition Regulation issued in accordance with section 1303(a)(1) of title 41 (or any successor regulation thereto);
(9) the term “commercial applications” shall not be construed to exclude testing and evaluation of products, services, or technologies for use in technical or weapons systems, and further, awards for testing and evaluation of products, services, or technologies for use in technical or weapons systems may be made in either Phase II or Phase III of the Small Business Innovation Research Program and of the Small Business Technology Transfer Program, as defined in this subsection;
(10)
the term “commercialization” means—
(A) the process of developing products, processes, technologies, or services; and
(B) the production and delivery (whether by the originating party or by others) of products, processes, technologies, or services for sale to or use by the Federal Government or commercial markets;
(11)
the term “Phase I” means—
(A) with respect to the SBIR program, the first phase described in paragraph (4)(A); and
(B) with respect to the STTR program, the first phase described in paragraph (6)(A);
(12)
the term “Phase II” means—
(A) with respect to the SBIR program, the second phase described in paragraph (4)(B); and
(B) with respect to the STTR program, the second phase described in paragraph (6)(B);
(13)
the term “Phase III” means—
(A) with respect to the SBIR program, the third phase described in paragraph (4)(C); and
(B) with respect to the STTR program, the third phase described in paragraph (6)(C); and
(14) the term “senior procurement executive” means an official designated under section 1702(c) of title 41 as the senior procurement executive of a Federal agency participating in a SBIR or STTR program.
(f)
Federal agency expenditures for SBIR program
(1)
Required expenditure amounts
Except as provided in paragraph (2)(B), each Federal agency which has an extramural budget for research or research and development in excess of $100,000,000 for fiscal year 1992, or any fiscal year thereafter, shall expend with small business concerns—
(A) not less than 1.5 percent of such budget in each of fiscal years 1993 and 1994;
(B) not less than 2.0 percent of such budget in each of fiscal years 1995 and 1996;
(C) not less than 2.5 percent of such budget in each of fiscal years 1997 through 2011;
(D) not less than 2.6 percent of such budget in fiscal year 2012;
(E) not less than 2.7 percent of such budget in fiscal year 2013;
(F) not less than 2.8 percent of such budget in fiscal year 2014;
(G) not less than 2.9 percent of such budget in fiscal year 2015;
(H) not less than 3.0 percent of such budget in fiscal year 2016; and
(I) not less than 3.2 percent of such budget in fiscal year 2017 and each fiscal year thereafter,
specifically in connection with SBIR programs which meet the requirements of this section, policy directives, and regulations issued under this section.
(2)
Limitations
A Federal agency shall not—
(A) use any of its SBIR budget established pursuant to paragraph (1) for the purpose of funding administrative costs of the program, including costs associated with salaries and expenses; or
(B) make available for the purpose of meeting the requirements of paragraph (1) an amount of its extramural budget for basic research which exceeds the percentages specified in paragraph (1).
Exclusion of certain funding agreements

Funding agreements with small business concerns for research or research and development which result from competitive or single source selections other than an SBIR program shall not be considered to meet any portion of the percentage requirements of paragraph (1).

(4)
Rule of construction

Nothing in this subsection may be construed to prohibit a Federal agency from expending with small business concerns an amount of the extramural budget for research or research and development of the agency that exceeds the amount required under paragraph (1).

(g)
Administration of small business innovation research programs by Federal agencies required to establish such programs
Each Federal agency required by subsection (f) to establish a small business innovation research program shall, in accordance with this chapter and regulations issued hereunder—
(1) unilaterally determine categories of projects to be in its SBIR program;
(2) issue small business innovation research solicitations in accordance with a schedule determined cooperatively with the Small Business Administration;
(3)
unilaterally determine research topics within the agency’s SBIR solicitations, giving special consideration to broad research topics and to topics that further 1 or more critical technologies, as identified by—
(A) the National Critical Technologies Panel (or its successor) in the 1991 report required under section 6683 1 of title 42, and in subsequent reports issued under that authority; or
(B) the Secretary of Defense, in the 1992 report issued in accordance with section 2522 1 of title 10, and in subsequent reports issued under that authority;
(4)
(A) unilaterally receive and evaluate proposals resulting from SBIR proposals; and
(B)
make a final decision on each proposal submitted under the SBIR program—
(i) not later than 1 year after the date on which the applicable solicitation closes, if with respect to the National Institutes of Health or the National Science Foundation, or 90 days after the date on which the applicable solicitation closes, if with respect to any other participating agency; or
(ii) if the Administrator authorizes an extension with respect to a solicitation, not later than 90 days after the date that would otherwise be applicable to the agency under clause (i);
(5) subject to subsection (l), unilaterally select awardees for its SBIR funding agreements and inform each awardee under such an agreement, to the extent possible, of the expenses of the awardee that will be allowable under the funding agreement;
(6) administer its own SBIR funding agreements (or delegate such administration to another agency);
(7) make payments to recipients of SBIR funding agreements on the basis of progress toward or completion of the funding agreement requirements and, in all cases, make payment to recipients under such agreements in full, subject to audit, on or before the last day of the 12-month period beginning on the date of completion of such requirements;
(8)
collect annually, and maintain in a common format in accordance with the simplified reporting requirements under subsection (v), such information from awardees as is necessary to assess the SBIR program, including information necessary to maintain the database described in subsection (k), including—
(A)
whether an awardee—
(i)
has venture capital, hedge fund, or private equity firm investment or is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms and, if so—
(I) the amount of venture capital, hedge fund, or private equity firm investment that the awardee has received as of the date of the award; and(II) the amount of additional capital that the awardee has invested in the SBIR technology;
(ii)
has an investor that—
(I) is an individual who is not a citizen of the United States or a lawful permanent resident of the United States and, if so, the name of any such individual; or(II) is a person that is not an individual and is not organized under the laws of a State or the United States and, if so, the name of any such person;
(iii) is owned by a woman or has a woman as a principal investigator; 2
2 So in original. Probably should be “investor;”.
(iv) is owned by a socially or economically disadvantaged individual or has a socially or economically disadvantaged individual as a principal investigator; 2
(v) is a faculty member or a student of an institution of higher education, as that term is defined in section 1001 of title 20; or
(vi) is located in a State described in subsection (u)(3);
(B) a justification statement from the agency, if an awardee receives an award in an amount that is more than the award guidelines under this section; and
(C) data with respect to the Federal and State Technology Partnership Program (FAST Program);
(9) make an annual report on the SBIR program to the Small Business Administration and the Office of Science and Technology Policy;
(10) include, as part of its annual performance plan as required by subsections (a) and (b) of section 1115 of title 31, a section on its SBIR program, which section shall describe whether or not the Federal agency complied with the requirements of subsection (f) for the year covered by that plan and include a justification for failure to comply (if applicable),,3
3 So in original.
and shall submit such section to the Committee on Small Business of the Senate, and the Committee on Science and the Committee on Small Business of the House of Representatives;
(11) provide for and fully implement the tenets of Executive Order No. 13329 (Encouraging Innovation in Manufacturing); and
(12) provide timely notice to the Administrator of any case or controversy before any Federal judicial or administrative tribunal concerning the SBIR program of the Federal agency.
(h)
Establishment of goals for funding agreements for research or research and development to small business concerns by agencies having budg­ets for research and development

In addition to the requirements of subsection (f), each Federal agency which has a budget for research or research and development in excess of $20,000,000 for any fiscal year beginning with fiscal year 1983 or subsequent fiscal year shall establish goals specifically for funding agreements for research or research and development to small business concerns, and no goal established under this subsection shall be less than the percentage of the agency’s research or research and development budget expended under funding agreements with small business concerns in the immediately preceding fiscal year.

(i)
Annual reporting
(1)
In general

Each Federal agency required by this section to have an SBIR program or to establish goals shall report annually to the Small Business Administration the number of awards (including awards under subsection (y)) pursuant to grants, contracts, or cooperative agreements over $10,000 in amount and the dollar value of all such awards, identifying SBIR awards and comparing the number and amount of such awards with awards to other than small business concerns.

(2)
Calculation of extramural budget
(A)
Methodology

Not later than 4 months after the date of the enactment of each appropriations Act for a Federal agency required by this section to have an SBIR program, the Federal agency shall submit to the Administrator a report, which shall include a description of the methodology used for calculating the amount of the extramural budget of that Federal agency.

(B)
Administrator’s analysis

The Administrator shall include an analysis of the methodology received from each Federal agency referred to in subparagraph (A) in the report required by subsection (b)(7).

(j)
Small Business Administration policy directives for the general conduct of small business innovation research programs
(1)
Policy directives
The Small Business Administration, after consultation with the Administrator of the Office of Federal Procurement Policy, the Director of the Office of Science and Technology Policy, and the Intergovernmental Affairs Division of the Office of Management and Budget, shall, within one hundred and twenty days of July 22, 1982, issue policy directives for the general conduct of the SBIR programs within the Federal Government, including providing for—
(A) simplified, standardized, and timely SBIR solicitations;
(B) a simplified, standardized funding process which provides for (i) the timely receipt and review of proposals; (ii) outside peer review for at least Phase II proposals, if appropriate; (iii) protection of proprietary information provided in proposals; (iv) selection of awardees; (v) retention of rights in data generated in the performance of the contract by the small business concern; (vi) transfer of title to property provided by the agency to the small business concern if such a transfer would be more cost effective than recovery of the property by the agency; (vii) cost sharing; and (viii) cost principles and payment schedules;
(C) exemptions from the regulations under paragraph (2) 4
4 So in original. Probably should be “subparagraph (B)”.
if national security or intelligence functions clearly would be jeopardized;
(D) minimizing regulatory burden associated with participation in the SBIR program for the small business concern which will stimulate the cost-effective conduct of Federal research and development and the likelihood of commercialization of the results of research and development conducted under the SBIR program;
(E) simplified, standardized, and timely annual report on the SBIR program to the Small Business Administration and the Office of Science and Technology Policy;
(F) standardized and orderly withdrawal from program participation by an agency having a SBIR program; at the discretion of the Administration, such directives may require a phased withdrawal over a period of time sufficient in duration to minimize any adverse impact on small business concerns; and
(G) the voluntary participation in a SBIR program by a Federal agency not required to establish such a program pursuant to subsection (f).
(2)
Modifications
Not later than 90 days after October 28, 1992, the Administrator shall modify the policy directives issued pursuant to this subsection to provide for—
(A) retention by a small business concern of the rights to data generated by the concern in the performance of an SBIR award for a period of not less than 4 years;
(B) continued use by a small business concern participating in Phase III of the SBIR program, as a directed bailment, of any property transferred by a Federal agency to the small business concern in Phase II of an SBIR program for a period of not less than 2 years, beginning on the initial date of the concern’s participation in Phase III of such program;
(C) procedures to ensure, to the extent practicable, that an agency which intends to pursue research, development, or production of a technology developed by a small business concern under an SBIR program enters into follow-on, non-SBIR funding agreements with the small business concern for such research, development, or production;
(D) an increase to $150,000 in the amount of funds which an agency may award in Phase I of an SBIR program, and to $1,000,000 in Phase II of an SBIR program, and an adjustment of such amounts every year for inflation;
(E)
a process for notifying the participating SBIR agencies and potential SBIR participants of the 1991, 1992, and the current critical technologies, as identified—
(i) by the National Critical Technologies Panel (or its successor), in accordance with section 6683 1 of title 42; or
(ii) by the Secretary of Defense, in accordance with section 2522 1 of title 10;
(F) enhanced outreach efforts to increase the participation of socially and economically disadvantaged small business concerns, as defined in section 637(a)(4) of this title, and the participation of small businesses that are 51 percent owned and controlled by women in technological innovation and in SBIR programs, including Phase III of such programs, and the collection of data to document such participation;
(G) technical and programmatic guidance to encourage agencies to develop gap-funding programs to address the delay between an award for Phase I of an SBIR program and the application for and extension of an award for Phase II of such program;
(H) procedures to ensure that a small business concern that submits a proposal for a funding agreement for Phase I of an SBIR program and that has received more than 15 Phase II SBIR awards during the preceding 5 fiscal years is able to demonstrate the extent to which it was able to secure Phase III funding to develop concepts resulting from previous Phase II SBIR awards; and
(I) procedures to ensure that agencies participating in the SBIR program retain the information submitted under subparagraph (H) at least until the Government Accountability Office submits the report required under section 105 of the Small Business Research and Development Enhancement Act of 1992.
(3)
Additional modifications
Not later than 120 days after December 21, 2000, the Administrator shall modify the policy directives issued pursuant to this subsection—
(A) to clarify that the rights provided for under paragraph (2)(A) apply to all Federal funding awards under this section, including Phase I, Phase II, and Phase III;
(B) to provide for the requirement of a succinct commercialization plan with each application for a Phase II award that is moving toward commercialization;
(C)
to require agencies to report to the Administration, not less frequently than annually, all instances in which an agency pursued research, development, or production of a technology developed by a small business concern using an award made under the SBIR program of that agency, and determined that it was not practicable to enter into a follow-on non-SBIR program funding agreement with the small business concern, which report shall include, at a minimum—
(i) the reasons why the follow-on funding agreement with the small business concern was not practicable;
(ii) the identity of the entity with which the agency contracted to perform the research, development, or production; and
(iii) a description of the type of funding agreement under which the research, development, or production was obtained; and
(D) to implement subsection (v), including establishing standardized procedures for the provision of information pursuant to subsection (k)(3).
(4)
Modifications relating to procurement center representatives

Upon the enactment of this paragraph, the Administrator shall modify the policy directives issued pursuant to this subsection to require procurement center representatives (as described in section 644(l) of this title) to consult with the appropriate personnel from the relevant Federal agency, to assist small business concerns participating in the SBIR program, particularly in Phase III.

(k)
Database
(1)
Public database
Not later than 180 days after December 21, 2000, the Administrator shall develop, maintain, and make available to the public a searchable, up-to-date, electronic database that includes—
(A) the name, size, location, and an identifying number assigned by the Administrator, of each small business concern that has received a Phase I or Phase II SBIR or STTR award from a Federal agency;
(B)
a description of each Phase I or Phase II SBIR or STTR award received by that small business concern, including—
(i) an abstract of the project funded by the award, excluding any proprietary information so identified by the small business concern;
(ii) the Federal agency making the award; and
(iii) the date and amount of the award;
(C) an identification of any business concern or subsidiary established for the commercial application of a product or service for which an SBIR or STTR award is made;
(D) information regarding mentors and Mentoring Networks, as required by section 657e(d) of this title;
(E)
with respect to assistance under the STTR program only—
(i)
(ii) whether the small business concern or the research institution originated any technology relating to the assisted STTR project;
(iii) the length of time it took to negotiate any licensing agreement between the small business concern and the research institution under each assisted STTR project; and
(iv) how the proceeds from commercialization, marketing, or sale of technology resulting from each assisted STTR project were allocated (by percentage) between the small business concern and the research institution; and
(F)
for each small business concern that has received a Phase I or Phase II SBIR or STTR award from a Federal agency, whether the small business concern—
(i) has venture capital, hedge fund, or private equity firm investment and, if so, whether the small business concern is registered as majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms as required under subsection (dd)(3);
(ii) is owned by a woman or has a woman as a principal investigator; 2
(iii) is owned by a socially or economically disadvantaged individual or has a socially or economically disadvantaged individual as a principal investigator; 2
(iv) is owned by a faculty member or a student of an institution of higher education, as that term is defined in section 1001 of title 20; or
(v) received assistance under the Federal and State Technology Partnership Program (FAST Program).
(2)
Government database
Not later than 90 days after December 31, 2011, the Administrator, in consultation with Federal agencies required to have an SBIR program pursuant to subsection (f)(1) or an STTR program pursuant to subsection (n)(1), shall develop and maintain a database to be used exclusively for SBIR and STTR program evaluation that—
(A)
contains for each small business concern that applies for, submits a proposal for, or receives an award under Phase I or Phase II of the SBIR program or the STTR program—
(i) the name, size, and location of, and the identifying number assigned by the Administration to, the small business concern;
(ii) an abstract of the applicable project;
(iii) the specific aims of the project;
(iv) the number of employees of the small business concern;
(v) the names and titles of the key individuals that will carry out the project, the position each key individual holds in the small business concern, and contact information for each key individual;
(vi) the percentage of effort each individual described in clause (v) will contribute to the project;
(vii) whether the small business concern is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms; and
(viii) the Federal agency to which the application is made and contact information for the person or office within the Federal agency that is responsible for reviewing applications and making awards under the SBIR program or the STTR program;
(B)
contains for each Phase II award made by a Federal agency—
(i) information collected in accordance with paragraph (3) on revenue from the sale of new products or services resulting from the research conducted under the award;
(ii) information collected in accordance with paragraph (3) on additional investment from any source, other than Phase I or Phase II SBIR or STTR awards, to further the research and development conducted under the award; and
(iii) any other information received in connection with the award that the Administrator, in conjunction with the SBIR and STTR program managers of Federal agencies, considers relevant and appropriate;
(C) includes any narrative information that a small business concern receiving a Phase II award voluntarily submits to further describe the outputs and outcomes of its awards;
(D)
includes, for each awardee—
(i) the name, size, and location of, and any identifying number assigned by the Administrator to, the awardee;
(ii)
whether the awardee has venture capital, hedge fund, or private equity firm investment and, if so—
(I) the amount of venture capital, hedge fund, or private equity firm investment as of the date of the award;(II) the percentage of ownership of the awardee held by a venture capital operating company, hedge fund, or private equity firm, including whether the awardee is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms; and(III) the amount of additional capital that the awardee has invested in the SBIR or STTR technology, which information shall be collected on an annual basis;
(iii) the names and locations of any affiliates of the awardee;
(iv) the number of employees of the awardee;
(v) the number of employees of the affiliates of the awardee; and
(vi)
the names of, and the percentage of ownership of the awardee held by—
(I) any individual who is not a citizen of the United States or a lawful permanent resident of the United States; or(II) any person that is not an individual and is not organized under the laws of a State or the United States;
(E) includes any other data collected by or available to any Federal agency that such agency considers may be useful for SBIR or STTR program evaluation;
(F) is available for use solely for program evaluation purposes by the Federal Government or, in accordance with policy directives issued by the Administration, by other authorized persons who are subject to a use and nondisclosure agreement with the Federal Government covering the use of the database; and
(G)
includes a timely and accurate list of any individual or small business concern that has participated in the SBIR program or STTR program that has been—
(i) convicted of a fraud-related crime involving funding received under the SBIR program or STTR program; or
(ii) found civilly liable for a fraud-related violation involving funding received under the SBIR program or STTR program.
(3)
Updating information for database
(A)
In general

A small business concern applying for a Phase II award under this section shall be required to update information in the database established under this subsection for any prior Phase II award received by that small business concern. In complying with this paragraph, a small business concern may apportion sales or additional investment information relating to more than one Phase II award among those awards, if it notes the apportionment for each award.

(B)
Annual updates upon termination
A small business concern receiving a Phase II award under this section shall—
(i) update information in the database concerning that award at the termination of the award period; and
(ii) be requested to voluntarily update such information annually thereafter for a period of 5 years.
(C)
Government database

Not later than 60 days after the date established by a Federal agency for submitting applications or proposals for a Phase I or Phase II award under the SBIR program or STTR program, the head of the Federal agency shall submit to the Administrator the data required under paragraph (2) with respect to each small business concern that applies or submits a proposal for the Phase I or Phase II award.

(4)
Protection of information

Information provided under paragraph (2) shall be considered privileged and confidential and not subject to disclosure pursuant to section 552 of title 5.

(5)
Rule of construction

Inclusion of information in the database under this subsection shall not be considered to be publication for purposes of subsection (a) or (b) of section 102 of title 35.

(l)
Reporting of awards made from single proposal, to multiple award winners, or to critical technology topics
(1)
Single proposal

If a Federal agency required to establish an SBIR program under subsection (f) makes an award with respect to an SBIR solicitation topic or subtopic for which the agency received only 1 proposal, the agency shall provide written justification for making the award in its next quarterly report to the Administration and in the agency’s next annual report required under subsection (g)(8).

(2)
Multiple awards

An agency referred to in paragraph (1) shall include in its next annual report required under subsection (g)(8) an accounting of the awards the agency has made for Phase I of an SBIR program during the reporting period to entities that have received more than 15 awards for Phase II of an SBIR program during the preceding 5 fiscal years.

(3)
Critical technology awards

An agency referred to in paragraph (1) shall include in its next annual report required under subsection (g)(8), an accounting of the number of awards it has made to critical technology topics, as defined in subsection (g)(3), including an identification of the specific critical technologies topics, and the percentage by number and dollar amount of the agency’s total SBIR awards to such critical technology topics.

(m)
Termination

The authorization to carry out the Small Business Innovation Research Program established under this section shall terminate on September 30, 2022.

(n)
Required expenditures for STTR by Federal agencies
(1)
Required expenditure amounts
(A)
In general

With respect to each fiscal year through fiscal year 2022, each Federal agency that has an extramural budget for research, or research and development, in excess of $1,000,000,000 for that fiscal year, shall expend with small business concerns not less than the percentage of that extramural budget specified in subparagraph (B), specifically in connection with STTR programs that meet the requirements of this section and any policy directives and regulations issued under this section.

(B)
Expenditure amounts
The percentage of the extramural budget required to be expended by an agency in accordance with subparagraph (A) shall be—
(i) 0.15 percent for each fiscal year through fiscal year 2003;
(ii) 0.3 percent for each of fiscal years 2004 through 2011;
(iii) 0.35 percent for each of fiscal years 2012 and 2013;
(iv) 0.40 percent for each of fiscal years 2014 and 2015; and
(v) 0.45 percent for fiscal year 2016 and each fiscal year thereafter.
(2)
Limitations
A Federal agency shall not—
(A) use any of its STTR budget established pursuant to paragraph (1) for the purpose of funding administrative costs of the program, including costs associated with salaries and expenses, or, in the case of a small business concern or a research institution, costs associated with salaries, expenses, and administrative overhead (other than those direct or indirect costs allowable under guidelines of the Office of Management and Budget and the governmentwide Federal Acquisition Regulation issued in accordance with section 1303(a)(1) of title 41); or
(B) make available for the purpose of meeting the requirements of paragraph (1) an amount of its extramural budget for basic research which exceeds the percentage specified in paragraph (1).
(3)
Exclusion of certain funding agreements

Funding agreements with small business concerns for research or research and development which result from competitive or single source selections other than an STTR program shall not be considered to meet any portion of the percentage requirements of paragraph (1).

(o)
Federal agency STTR authority
Each Federal agency required to establish an STTR program in accordance with subsection (n) and regulations issued under this chapter, shall—
(1) unilaterally determine categories of projects to be included in its STTR program;
(2) issue STTR solicitations in accordance with a schedule determined cooperatively with the Administration;
(3)
unilaterally determine research topics within the agency’s STTR solicitations, giving special consideration to broad research topics and to topics that further 1 or more critical technologies, as identified—
(A) by the National Critical Technologies Panel (or its successor) in reports required under section 6683 1 of title 42; or
(B) by the Secretary of Defense, in accordance with section 2522 1 of title 10;
(4)
(A) unilaterally receive and evaluate proposals resulting from STTR solicitations; and
(B)
make a final decision on each proposal submitted under the STTR program—
(i) not later than 1 year after the date on which the applicable solicitation closes, if with respect to the National Institutes of Health or the National Science Foundation, or 90 days after the date on which the applicable solicitation closes, if with respect to any other participating agency; or
(ii) if the Administrator authorizes an extension for a solicitation, not later than 90 days after the date that would be applicable to the agency under clause (i);
(5) unilaterally select awardees for its STTR funding agreements and inform each awardee under such an agreement, to the extent possible, of the expenses of the awardee that will be allowable under the funding agreement;
(6) administer its own STTR funding agreements (or delegate such administration to another agency);
(7) make payments to recipients of STTR funding agreements on the basis of progress toward or completion of the funding agreement requirements and, in all cases, make payment to recipients under such agreements in full, subject to audit, on or before the last day of the 12-month period beginning on the date of the completion of such requirements;
(8) include, as part of its annual performance plan as required by subsections (a) and (b) of section 1115 of title 31, a section on its STTR program, which section shall describe whether or not the Federal agency complied with the requirements of subsection (n) for the year covered by that plan and include a justification for failure to comply (if applicable),,3 and shall submit such section to the Committee on Small Business of the Senate, and the Committee on Science and the Committee on Small Business of the House of Representatives;
(9)
collect annually, and maintain in a common format in accordance with the simplified reporting requirements under subsection (v), such information from applicants and awardees as is necessary to assess the STTR program outputs and outcomes, including information necessary to maintain the database described in subsection (k), including—
(A)
whether an applicant or awardee—
(i)
has venture capital, hedge fund, or private equity firm investment or is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms and, if so—
(I) the amount of venture capital, hedge fund, or private equity firm investment that the applicant or awardee has received as of the date of the application or award, as applicable; and(II) the amount of additional capital that the applicant or awardee has invested in the STTR technology;
(ii)
has an investor that—
(I) is an individual who is not a citizen of the United States or a lawful permanent resident of the United States and, if so, the name of any such individual; or(II) is a person that is not an individual and is not organized under the laws of a State or the United States and, if so, the name of any such person;
(iii) is owned by a woman or has a woman as a principal investigator; 2
(iv) is owned by a socially or economically disadvantaged individual or has a socially or economically disadvantaged individual as a principal investigator; 2
(v) is a faculty member or a student of an institution of higher education, as that term is defined in section 1001 of title 20; or
(vi) is located in a State in which the total value of contracts awarded to small business concerns under all STTR programs is less than the total value of contracts awarded to small business concerns in a majority of other States, as determined by the Administrator in biennial fiscal years, beginning with fiscal year 2008, based on the most recent statistics compiled by the Administrator;
(B) if an awardee receives an award in an amount that is more than the award guidelines under this section, a statement from the agency that justifies the award amount; and
(C) data with respect to the Federal and State Technology Partnership Program (FAST Program);
(10) submit an annual report on the STTR program to the Administration and the Office of Science and Technology Policy;
(11) adopt the agreement developed by the Administrator under subsection (w) as the agency’s model agreement for allocating between small business concerns and research institutions intellectual property rights and rights, if any, to carry out follow-on research, development, or commercialization;
(12)
develop, in consultation with the Office of Federal Procurement Policy and the Office of Government Ethics, procedures to ensure that federally funded research and development centers (as defined in subsection (e)(8)) that participate in STTR agreements—
(A) are free from organizational conflicts of interests relative to the STTR program;
(B) do not use privileged information gained through work performed for an STTR agency or private access to STTR agency personnel in the development of an STTR proposal; and
(C) use outside peer review, as appropriate;
(13)
not later than July 31, 1993, develop procedures for assessing the commercial merit and feasibility of STTR proposals, as evidenced by—
(A) the small business concern’s record of successfully commercializing STTR or other research;
(B) the existence of Phase II funding commitments from private sector or non-STTR funding sources;
(C) the existence of Phase III follow-on commitments for the subject of the research; and
(D) the presence of other indicators of the commercial potential of the idea;
(14) implement an outreach program to research institutions and small business concerns for the purpose of enhancing its STTR program, in conjunction with any such outreach done for purposes of the SBIR program;
(15) provide for and fully implement the tenets of Executive Order No. 13329 (Encouraging Innovation in Manufacturing); and
(16) provide timely notice to the Administrator of any case or controversy before any Federal judicial or administrative tribunal concerning the STTR program of the Federal agency.
(p)
STTR policy directive
(1)
Issuance
The Administrator shall issue a policy directive for the general conduct of the STTR programs within the Federal Government. Such policy directive shall be issued after consultation with—
(A) the heads of each of the Federal agencies required by subsection (n) to establish an STTR program;
(B) the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office; and
(C) the Director of the Office of Federal Procurement Policy.
(2)
Contents
The policy directive required by paragraph (1) shall provide for—
(A) simplified, standardized, and timely STTR solicitations;
(B)
a simplified, standardized funding process that provides for—
(i) the timely receipt and review of proposals;
(ii) outside peer review, if appropriate;
(iii) protection of proprietary information provided in proposals;
(iv) selection of awardees;
(v) retention by a small business concern of the rights to data generated by the concern in the performance of an STTR award for a period of not less than 4 years;
(vi) continued use by a small business concern, as a directed bailment, of any property transferred by a Federal agency to the small business concern in Phase II of the STTR program for a period of not less than 2 years, beginning on the initial date of the concern’s participation in Phase III of such program;
(vii) cost sharing;
(viii) cost principles and payment schedules; and
(ix) 1-year awards for Phase I of an STTR program, generally not to exceed $150,000, and 2-year awards for Phase II of an STTR program, generally not to exceed $1,000,000, (each of which the Administrator shall adjust for inflation annually) greater or lesser amounts to be awarded at the discretion of the awarding agency, and shorter or longer periods of time to be approved at the discretion of the awarding agency where appropriate for a particular project;
(C) minimizing regulatory burdens associated with participation in STTR programs;
(D) guidelines for a model agreement, to be used by all agencies, for allocating between small business concerns and research institutions intellectual property rights and rights, if any, to carry out follow-on research, development, or commercialization;
(E)
procedures to ensure that—
(i) a recipient of an STTR award is a small business concern, as defined in section 632 of this title and the regulations promulgated thereunder; and
(ii) such small business concern exercises management and control of the performance of the STTR funding agreement pursuant to a business plan providing for the commercialization of the technology that is the subject matter of the award;
(F) procedures to ensure, to the extent practicable, that an agency which intends to pursue research, development, or production of a technology developed by a small business concern under an STTR program enters into follow-on, non-STTR funding agreements with the small business concern for such research, development, or production; and
(G)
procedures to ensure that procurement center representatives (as described in section 644(l) of this title)—
(i) consult with the appropriate personnel from the relevant Federal agency, to assist small business concerns participating in the STTR program, particularly in Phase III;
(ii) provide technical assistance to such concerns to submit a bid for an award of a Federal contract; and
(iii) consult with the appropriate personnel from the relevant Federal agency in providing the assistance described in clause (i).
(3)
Modifications

Not later than 120 days after October 15, 2001, the Administrator shall modify the policy directive issued pursuant to this subsection to clarify that the rights provided for under paragraph (2)(B)(v) apply to all Federal funding awards under this section, including Phase I, Phase II, and Phase III.

(q)
Discretionary technical and business assistance
(1)
In general
Each Federal agency required by this section to conduct an SBIR program or STTR program may enter into an agreement with 1 or more vendors selected under paragraph (2)(A) to provide small business concerns engaged in SBIR or STTR projects with technical and business assistance services, such as access to a network of scientists and engineers engaged in a wide range of technologies, assistance with product sales, intellectual property protections, market research, market validation, and development of regulatory plans and manufacturing plans, or access to technical and business literature available through on-line data bases, for the purpose of assisting such concerns in—
(A) making better technical decisions concerning such projects;
(B) solving technical problems which arise during the conduct of such projects;
(C) minimizing technical risks associated with such projects; and
(D) developing and commercializing new commercial products and processes resulting from such projects, including intellectual property protections.
(2)
Vendor selection
(A)
In general

Each agency may select 1 or more vendors from which small business concerns may obtain assistance in meeting the goals listed in paragraph (1) for a term not to exceed 5 years. Such selection shall be competitive and shall utilize merit-based criteria.

(B)
Selection by small business concern

A small business concern may, by contract or otherwise, select 1 or more vendors to assist the small business concern in meeting the goals listed in paragraph (1).

(3)
Additional technical assistance
(A)
Phase I
A Federal agency described in paragraph (1) may—
(i) provide to the recipient of a Phase I SBIR or STTR award, through a vendor selected under paragraph (2)(A), the services described in paragraph (1), in an amount equal to not more than $6,500 per year; or
(ii) authorize the recipient of a Phase I SBIR or STTR award to purchase the services described in paragraph (1), in an amount equal to not more than $6,500 per year, which shall be in addition to the amount of the recipient’s award.
(B)
Phase II
A Federal agency described in paragraph (1) may—
(i) provide to the recipient of a Phase II SBIR or STTR award, through a vendor selected under paragraph (2)(A), the services described in paragraph (1), in an amount equal to not more than $50,000 per project; or
(ii) authorize the recipient of a Phase II SBIR or STTR award to purchase the services described in paragraph (1), in an amount equal to not more than $50,000 per project, which may, as determined appropriate by the head of the Federal agency, be included as part of the recipient’s award or be in addition to the amount of the recipient’s award.
(C)
Flexibility

In carrying out subparagraphs (A) and (B), each Federal agency shall provide the allowable amounts to a recipient that meets the eligibility requirements under the applicable subparagraph, if the recipient requests to seek technical or business assistance from an individual or entity other than a vendor selected under paragraph (2)(A) by the Federal agency. Business-related services aimed at improving the commercialization success of a small business concern may be obtained from an entity, such as a public or private organization or an agency of or other entity established or funded by a State that facilitates or accelerates the commercialization of technologies or assists in the creation and growth of private enterprises that are commercializing technology.

(D)
Limitation
A Federal agency may not—
(i) use the amounts authorized under subparagraph (A) or (B) unless 1 or more vendors selected under paragraph (2)(A) provides the technical or business assistance to the recipient; or
(ii) enter a contract with a vendor under paragraph (2)(A) under which the amount provided for technical or business assistance is based on total number of Phase I or Phase II awards.
(E)
Multiple award recipients

The Administrator shall establish a limit on the amount of technical and business assistance services that may be received or purchased under subparagraph (B) by a small business concern that has received multiple Phase II SBIR or STTR awards for a fiscal year.

(4)
Annual reporting
(A)
In general

A small business concern that receives technical or business assistance from a vendor under this subsection during a fiscal year shall submit to the Federal agency contracting with the vendor a description of the technical or business assistance provided and the benefits and results of the technical or business assistance provided.

(B)
Use of existing reporting mechanism

The information required under subparagraph (A) shall be collected by a Federal agency as part of a report required to be submitted by small business concerns engaged in SBIR or STTR projects of the Federal agency for which the requirement was in effect on August 13, 2018.

(r)
Phase III agreements, competitive procedures, and justification for awards
(1)
In general

In the case of a small business concern that is awarded a funding agreement for Phase II of an SBIR or STTR program, a Federal agency may enter into a Phase III agreement with that business concern for additional work to be performed during or after the Phase II period. The Phase II funding agreement with the small business concern may, at the discretion of the agency awarding the agreement, set out the procedures applicable to Phase III agreements with that agency or any other agency.

(2)
Definition

In this subsection, the term “Phase III agreement” means a follow-on, non-SBIR or non-STTR funded contract as described in paragraph (4)(C) or paragraph (6)(C) of subsection (e).

(3)
Intellectual property rights

Each funding agreement under an SBIR or STTR program shall include provisions setting forth the respective rights of the United States and the small business concern with respect to intellectual property rights and with respect to any right to carry out follow-on research.

(4)
Competitive procedures and justification for awards
To the greatest extent practicable, Federal agencies and Federal prime contractors shall—
(A) consider an award under the SBIR program or the STTR program to satisfy the requirements under sections 3201 through 3205 of title 10 and any other applicable competition requirements; and
(B) issue, without further justification, Phase III awards relating to technology, including sole source awards, to the SBIR and STTR award recipients that developed the technology.
(s)
Competitive selection procedures for SBIR and STTR programs

All funds awarded, appropriated, or otherwise made available in accordance with subsection (f) or (n) must be awarded pursuant to competitive and merit-based selection procedures.

(t)
Inclusion in strategic plans

Program information relating to the SBIR and STTR programs shall be included by each Federal agency in any update or revision required of the Federal agency under section 306(b) of title 5.

(u)
Coordination of technology development programs
(1)
Definition of technology development program
In this subsection, the term “technology development program” means—
(A) the Experimental Program to Stimulate Competitive Research of the National Science Foundation, as established under section 1862g of title 42;
(B) the Defense Experimental Program to Stimulate Competitive Research of the Department of Defense;
(C) the Experimental Program to Stimulate Competitive Research of the Department of Energy;
(D) the Experimental Program to Stimulate Competitive Research of the Environmental Protection Agency;
(E) the Experimental Program to Stimulate Competitive Research of the National Aeronautics and Space Administration;
(F) the Institutional Development Award Program of the National Institutes of Health; and
(G) the National Research Initiative Competitive Grants Program of the Department of Agriculture.
(2)
Coordination requirements
Each Federal agency that is subject to subsection (f) and that has established a technology development program may, in each fiscal year, review for funding under that technology development program—
(A)
any proposal to provide outreach and assistance to one or more small business concerns interested in participating in the SBIR program, including any proposal to make a grant or loan to a company to pay a portion or all of the cost of developing an SBIR proposal, from an entity, organization, or individual located in—
(i) a State that is eligible to participate in that program; or
(ii) a State described in paragraph (3); or
(B)
any proposal for Phase I of the SBIR program, if the proposal, though meritorious, is not funded through the SBIR program for that fiscal year due to funding restraints, from a small business concern located in—
(i) a State that is eligible to participate in a technology development program; or
(ii) a State described in paragraph (3).
(3)
Additionally eligible State

A State referred to in subparagraph (A)(ii) or (B)(ii) of paragraph (2) is a State in which the total value of contracts awarded to small business concerns under all SBIR programs is less than the total value of contracts awarded to small business concerns in a majority of other States, as determined by the Administrator in biennial fiscal years, beginning with fiscal year 2000, based on the most recent statistics compiled by the Administrator.

(v)
Reducing paperwork and compliance burden
(1)
Standardization of reporting requirements

The Administrator shall work with the Federal agencies required by this section to have an SBIR or STTR program to standardize reporting requirements for the collection of data from SBIR or STTR applicants and awardees, including data for inclusion in the database under subsection (k), taking into consideration the unique needs of each agency, and to the extent possible, permitting the updating of previously reported information by electronic means. Such requirements shall be designed to minimize the burden on small businesses.

(2)
Simplification of application and award process

Not later than 1 year after December 31, 2011, and after a period of public comment, the Administrator shall issue regulations or guidelines, taking into consideration the unique needs of each Federal agency, to ensure that each Federal agency required to carry out an SBIR program or STTR program simplifies and standardizes the program proposal, selection, contracting, compliance, and audit procedures for the SBIR program or STTR program of the Federal agency (including procedures relating to overhead rates for applicants and documentation requirements) to reduce the paperwork and regulatory compliance burden on small business concerns applying to and participating in the SBIR program or STTR program.

(w)
STTR model agreement for intellectual property rights
(1)
In general

The Administrator shall promulgate regulations establishing a single model agreement for use in the STTR program that allocates between small business concerns and research institutions intellectual property rights and rights, if any, to carry out follow-on research, development, or commercialization.

(2)
Opportunity for comment

In promulgating regulations under paragraph (1), the Administrator shall provide to affected agencies, small business concerns, research institutions, and other interested parties the opportunity to submit written comments.

(x)
Research and development focus
(1)
Revision and update of criteria and procedures of identification

In carrying out subsection (g), the Secretary of Defense shall, not less often than once every 4 years, revise and update the criteria and procedures utilized to identify areas of the research and development efforts of the Department of Defense which are suitable for the provision of funds under the Small Business Innovation Research Program and the Small Business Technology Transfer Program.

(2)
Utilization of plans
The criteria and procedures described in paragraph (1) shall be developed through the use of the most current versions of the following plans:
(A) The Joint Warfighting Science and Technology Plan required under section 270 of the National Defense Authorization Act for Fiscal Year 1997 (Public Law 104–201; 10 U.S.C. 2501 note).1
(B) The Defense Technology Area Plan of the Department of Defense.
(C) The Basic Research Plan of the Department of Defense.
(3)
Input in identification of areas of effort

The criteria and procedures described in paragraph (1) shall include input in the identification of areas of research and development efforts described in that paragraph from Department of Defense program managers (PMs) and program executive officers (PEOs).

(y)
Commercialization Readiness Program
(1)
In general

The Secretary of Defense and the Secretary of each military department is authorized to create and administer a “Commercialization Readiness Program” to accelerate the transition of technologies, products, and services developed under the Small Business Innovation Research Program or Small Business Technology Transfer Program to Phase III, including the acquisition process. The authority to create and administer a Commercialization Readiness Program under this subsection may not be construed to eliminate or replace any other SBIR program or STTR program that enhances the insertion or transition of SBIR or STTR technologies, including any such program in effect on January 6, 2006.

(2)
Identification of research programs for accelerated transition to acquisition process

In carrying out the Commercialization Readiness Program, the Secretary of Defense and the Secretary of each military department shall identify research programs of the Small Business Innovation Research Program or Small Business Technology Transfer Program that have the potential for rapid transitioning to Phase III and into the acquisition process.

(3)
Limitation

No research program may be identified under paragraph (2) unless the Secretary of the military department concerned certifies in writing that the successful transition of the program to Phase III and into the acquisition process is expected to meet high priority military requirements of such military department.

(4)
Funding
(A)
In general

The Secretary of Defense and each Secretary of a military department may use not more than an amount equal to 1 percent of the funds available to the Department of Defense or the military department pursuant to the Small Business Innovation Research Program for payment of expenses incurred to administer the Commercialization Readiness Program under this subsection.

(B)
Limitations
The funds described in subparagraph (A)—
(i) shall not be subject to the limitations on the use of funds in subsection (f)(2); and
(ii) shall not be used to make Phase III awards.
(5)
Insertion incentives
For any contract with a value of not less than $100,000,000, the Secretary of Defense is authorized to—
(A) establish goals for the transition of Phase III technologies in subcontracting plans; and
(B) require a prime contractor on such a contract to report the number and dollar amount of contracts entered into by that prime contractor for Phase III SBIR or STTR projects.
(6)
Goal for SBIR and STTR technology insertion
The Secretary of Defense shall—
(A) set a goal to increase the number of Phase II SBIR contracts and the number of Phase II STTR contracts awarded by the Secretary that lead to technology transition into programs of record or fielded systems;
(B) use incentives in effect on December 31, 2011, or create new incentives, to encourage agency program managers and prime contractors to meet the goal under subparagraph (A); and
(C)
submit to the Administrator for inclusion in the annual report under subsection (b)(7)—
(i) the number and percentage of Phase II SBIR and STTR contracts awarded by the Secretary that led to technology transition into programs of record or fielded systems;
(ii) information on the status of each project that received funding through the Commercialization Readiness Program and efforts to transition those projects into programs of record or fielded systems; and
(iii) a description of each incentive that has been used by the Secretary under subparagraph (B) and the effectiveness of that incentive with respect to meeting the goal under subparagraph (A).
(z)
Encouraging innovation in energy efficiency
(1)
Federal agency energy-related priority
In carrying out its duties under this section relating to SBIR and STTR solicitations by Federal departments and agencies, the Administrator shall—
(A) ensure that such departments and agencies give high priority to small business concerns that participate in or conduct energy efficiency or renewable energy system research and development projects; and
(B) include in the annual report to Congress under subsection (b)(7) a determination of whether the priority described in subparagraph (A) is being carried out.
(2)
Consultation required

The Administrator shall consult with the heads of other Federal departments and agencies in determining whether priority has been given to small business concerns that participate in or conduct energy efficiency or renewable energy system research and development projects, as required by this subsection.

(3)
Guidelines

The Administrator shall, as soon as is practicable after December 19, 2007, issue guidelines and directives to assist Federal agencies in meeting the requirements of this subsection.

(4)
Definitions
In this subsection—
(A)
the term “biomass”—
(i)
means any organic material that is available on a renewable or recurring basis, including—
(I) agricultural crops;(II) trees grown for energy production;(III) wood waste and wood residues;(IV) plants (including aquatic plants and grasses);(V) residues;(VI) fibers;(VII) animal wastes and other waste materials; and(VIII) fats, oils, and greases (including recycled fats, oils, and greases); and
(ii)
does not include—
(I) paper that is commonly recycled; or(II) unsegregated solid waste;
(B) the term “energy efficiency project” means the installation or upgrading of equipment that results in a significant reduction in energy usage; and
(C)
the term “renewable energy system” means a system of energy derived from—
(i) a wind, solar, biomass (including biodiesel), or geothermal source; or
(ii) hydrogen derived from biomass or water using an energy source described in clause (i).
(aa)
Limitation on size of awards
(1)
Limitation

No Federal agency may issue an award under the SBIR program or the STTR program if the size of the award exceeds the award guidelines established under this section by more than 50 percent.

(2)
Maintenance of information
Participating agencies shall maintain information on awards exceeding the guidelines established under this section, including—
(A) the amount of each award;
(B) a justification for exceeding the guidelines for each award;
(C) the identity and location of each award recipient; and
(D) whether an award recipient has received any venture capital, hedge fund, or private equity firm investment and, if so, whether the recipient is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms.
(3)
Reports

The Administrator shall include the information described in paragraph (2) in the annual report of the Administrator to Congress.

(4)
Waiver for specific topic
Upon the receipt of an application from a Federal agency, the Administrator may grant a waiver from the requirement under paragraph (1) with respect to a specific topic (but not for the agency as a whole) for a fiscal year if the Administrator determines, based on the information contained in the application from the agency, that—
(A) the requirement under paragraph (1) will interfere with the ability of the agency to fulfill its research mission through the SBIR program or the STTR program; and
(B) the agency will minimize, to the maximum extent possible, the number of awards that do not satisfy the requirement under paragraph (1) to preserve the nature and intent of the SBIR program and the STTR program.
(5)
Rule of construction

Nothing in this subsection shall be construed to prevent a Federal agency from supplementing an award under the SBIR program or the STTR program using funds of the Federal agency that are not part of the SBIR program or the STTR program of the Federal agency.

(bb)
Subsequent Phase II awards
(1)
Agency flexibility

A small business concern that received a Phase I award from a Federal agency under this section shall be eligible to receive a subsequent Phase II award from another Federal agency, if the head of each relevant Federal agency or the relevant component of the Federal agency makes a written determination that the topics of the relevant awards are the same and both agencies report the awards to the Administrator for inclusion in the public database under subsection (k).

(2)
SBIR and STTR program flexibility

A small business concern that received a Phase I award under this section under the SBIR program or the STTR program may receive a subsequent Phase II award in either the SBIR program or the STTR program and the participating agency or agencies shall report the awards to the Administrator for inclusion in the public database under subsection (k).

(3)
Preventing duplicative awards

The head of a Federal agency shall verify that any activity to be performed with respect to a project with a Phase I or Phase II SBIR or STTR award has not been funded under the SBIR program or STTR program of another Federal agency.

(cc)
Phase flexibility

During fiscal years 2012 through 2022, the National Institutes of Health, the Department of Defense, and the Department of Education may each provide to a small business concern an award under Phase II of the SBIR program with respect to a project, without regard to whether the small business concern was provided an award under Phase I of an SBIR program with respect to such project, if the head of the applicable agency determines that the small business concern has completed the determinations described in subsection (e)(4)(A) with respect to such project despite not having been provided a Phase I award.

(dd)
Participation of small business concerns majority-owned by venture capital operating companies, hedge funds, or private equity firms in the SBIR program
(1)
Authority
Upon providing a written determination described in paragraph (2) to the Administrator, the Committee on Small Business and Entrepreneurship of the Senate, and the Committee on Small Business and the Committee on Science, Space, and Technology of the House of Representatives, not later than 30 days before the date on which any such award is made—
(A) the Director of the National Institutes of Health, the Secretary of Energy, and the Director of the National Science Foundation may award not more than 25 percent of the funds allocated for the SBIR program of the applicable Federal agency to small business concerns that are owned in majority part by multiple venture capital operating companies, hedge funds, or private equity firms through competitive, merit-based procedures that are open to all eligible small business concerns; and
(B) the head of a Federal agency other than a Federal agency described in subparagraph (A) that participates in the SBIR program may award not more than 15 percent of the funds allocated for the SBIR program of the Federal agency to small business concerns that are owned in majority part by multiple venture capital operating companies, hedge funds, or private equity firms through competitive, merit-based procedures that are open to all eligible small business concerns.
(2)
Determination
A written determination described in this paragraph is a written determination by the head of a Federal agency that explains how the use of the authority under paragraph (1) will—
(A) induce additional venture capital, hedge fund, or private equity firm funding of small business innovations;
(B) substantially contribute to the mission of the Federal agency;
(C) demonstrate a need for public research; and
(D) otherwise fulfill the capital needs of small business concerns for additional financing for SBIR projects.
(3)
Registration
A small business concern that is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms and qualified for participation in the program authorized under paragraph (1) shall—
(A) register with the Administrator on the date that the small business concern submits an application for an award under the SBIR program; and
(B) indicate in any SBIR proposal that the small business concern is registered under subparagraph (A) as majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms.
(4)
Compliance
(A)
In general

The head of a Federal agency that makes an award under this subsection during a fiscal year shall collect and submit to the Administrator data relating to the number and dollar amount of Phase I awards, Phase II awards, and any other category of awards by the Federal agency under the SBIR program during that fiscal year.

(B)
Annual reporting

The Administrator shall include as part of each annual report by the Administration under subsection (b)(7) any data submitted under subparagraph (A) and a discussion of the compliance of each Federal agency that makes an award under this subsection during the fiscal year with the maximum percentages under paragraph (1).

(5)
Enforcement

If a Federal agency awards more than the percent of the funds allocated for the SBIR program of the Federal agency authorized under paragraph (1) for a purpose described in paragraph (1), the head of the Federal agency shall transfer an amount equal to the amount awarded in excess of the amount authorized under paragraph (1) to the funds for general SBIR programs from the non-SBIR and non-STTR research and development funds of the Federal agency not later than 180 days after the date on which the Federal agency made the award that caused the total awarded under paragraph (1) to be more than the amount authorized under paragraph (1) for a purpose described in paragraph (1).

(6)
Final decisions on applications under the SBIR program
(A)
Definition
In this paragraph, the term “covered small business concern” means a small business concern that—
(i) was not majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms on the date on which the small business concern submitted an application in response to a solicitation under the SBIR programs; and
(ii) on the date of the award under the SBIR program is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms.
(B)
In general
If a Federal agency does not make an award under a solicitation under the SBIR program before the date that is 9 months after the date on which the period for submitting applications under the solicitation ends—
(i) a covered small business concern is eligible to receive the award, without regard to whether the covered small business concern meets the requirements for receiving an award under the SBIR program for a small business concern that is majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms, if the covered small business concern meets all other requirements for such an award; and
(ii) the head of the Federal agency shall transfer an amount equal to any amount awarded to a covered small business concern under the solicitation to the funds for general SBIR programs from the non-SBIR and non-STTR research and development funds of the Federal agency, not later than 90 days after the date on which the Federal agency makes the award.
(7)
Evaluation criteria

A Federal agency may not use investment of venture capital or investment from hedge funds or private equity firms as a criterion for the award of contracts under the SBIR program or STTR program.

(ee)
Collaborating with Federal laboratories and research and development centers
(1)
Authorization
Subject to the limitations under this section, the head of each participating Federal agency may make SBIR and STTR awards to any eligible small business concern that—
(A) intends to enter into an agreement with a Federal laboratory or federally funded research and development center for portions of the activities to be performed under that award; or
(B) has entered into a cooperative research and development agreement (as defined in section 3710a(d) of this title) with a Federal laboratory.
(2)
Prohibition
No Federal agency shall—
(A) condition an SBIR or STTR award upon entering into agreement with any Federal laboratory or any federally funded laboratory or research and development center for any portion of the activities to be performed under that award;
(B) approve an agreement between a small business concern receiving an SBIR or STTR award and a Federal laboratory or federally funded laboratory or research and development center, if the small business concern performs a lesser portion of the activities to be performed under that award than required by this section and by the SBIR Policy Directive and the STTR Policy Directive of the Administrator; or
(C) approve an agreement that violates any provision, including any data rights protections provision, of this section or the SBIR and the STTR Policy Directives.
(3)
Implementation
Not later than 180 days after December 31, 2011, the Administrator shall modify the SBIR Policy Directive and the STTR Policy Directive issued under this section to ensure that small business concerns—
(A) have the flexibility to use the resources of the Federal laboratories or federally funded research and development centers; and
(B) are not mandated to enter into agreement with any Federal laboratory or any federally funded laboratory or research and development center as a condition of an award.
(4)
Advance payment

If a small business concern receiving an award under this section enters into an agreement with a Federal laboratory or federally funded research and development center for portions of the activities to be performed under that award, the Federal laboratory or federally funded research and development center may not require advance payment from the small business concern in an amount greater than the amount necessary to pay for 30 days of such activities.

(ff)
Additional SBIR and STTR awards
(1)
Express authority for awarding a sequential Phase II award

A small business concern that receives a Phase II SBIR award or a Phase II STTR award for a project remains eligible to receive 1 additional Phase II SBIR award or Phase II STTR award for continued work on that project.

(2)
Preventing duplicative awards

The head of a Federal agency shall verify that any activity to be performed with respect to a project with a Phase I or Phase II SBIR or STTR award has not been funded under the SBIR program or STTR program of another Federal agency.

(gg)
Pilot program
(1)
Authorization
The head of each covered Federal agency may allocate not more than 10 percent of the funds allocated to the SBIR program and the STTR program of the covered Federal agency—
(A) for awards for technology development, testing, evaluation, and commercialization assistance for SBIR and STTR Phase II technologies; or
(B) to support the progress of research, research and development, and commercialization conducted under the SBIR or STTR programs to Phase III.
(2)
Application by Federal agency
(A)
In general

A covered Federal agency may not establish a pilot program unless the covered Federal agency makes a written application to the Administrator, not later than 90 days before the first day of the fiscal year in which the pilot program is to be established, that describes a compelling reason that additional investment in SBIR or STTR technologies is necessary, including unusually high regulatory, systems integration, or other costs relating to development or manufacturing of identifiable, highly promising small business technologies or a class of such technologies expected to substantially advance the mission of the agency.

(B)
Determination
The Administrator shall—
(i) make a determination regarding an application submitted under subparagraph (A) not later than 30 days before the first day of the fiscal year for which the application is submitted;
(ii) publish the determination in the Federal Register; and
(iii) make a copy of the determination and any related materials available to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business and the Committee on Science, Space, and Technology of the House of Representatives.
(3)
Maximum amount of award

The head of a covered Federal agency may not make an award under a pilot program in excess of 3 times the dollar amounts generally established for Phase II awards under subsection (j)(2)(D) or (p)(2)(B)(ix).

(4)
Registration

Any applicant that receives an award under a pilot program shall register with the Administrator in a registry that is available to the public.

(5)
Award criteria or consideration

When making an award under this section, the head of a covered Federal agency shall give consideration to whether the technology to be supported by the award is likely to be manufactured in the United States.

(6)
Report

The head of each covered Federal agency shall include in the annual report of the covered Federal agency to the Administrator an analysis of the various activities considered for inclusion in the pilot program of the covered Federal agency and a statement of the reasons why each activity considered was included or not included, as the case may be.

(7)
Termination

The authority to establish a pilot program under this section expires at the end of fiscal year 2022.

(8)
Definitions
In this subsection—
(A)
the term “covered Federal agency”—
(i) means a Federal agency participating in the SBIR program or the STTR program; and
(ii) does not include the Department of Defense; and
(B) the term “pilot program” means each program established under paragraph (1).
(hh)
Timing of release of funding
(1)
In general

Federal agencies participating in the SBIR program or STTR program shall, to the extent possible, shorten the amount of time between the provision of notice of an award under the SBIR program or STTR program and the subsequent release of funding with respect to the award.

(2)
Pilot program to accelerate Department of Defense SBIR and STTR awards
(A)
In general
Not later than 1 year after August 13, 2018, the Under Secretary of Defense for Research and Engineering, acting through the Director of Defense Procurement and Acquisition Policy of the Department of Defense, shall establish a pilot program to reduce the time for awards under the SBIR and STTR programs of the Department of Defense, under which the Department of Defense shall—
(i) develop simplified and standardized procedures and model contracts throughout the Department of Defense for Phase I, Phase II, and Phase III SBIR awards;
(ii) for Phase I SBIR and STTR awards, reduce the amount of time between solicitation closure and award;
(iii) for Phase II SBIR and STTR awards, reduce the amount of time between the end of a Phase I award and the start of the Phase II award;
(iv) for Phase II SBIR and STTR awards that skip Phase I, reduce the amount of time between solicitation closure and award;
(v) for sequential Phase II SBIR and STTR awards, reduce the amount of time between Phase II awards; and
(vi) reduce the award times described in clauses (ii), (iii), (iv), and (v) to be as close to 90 days as possible.
(B)
Consultation

In carrying out the pilot program under subparagraph (A), the Director of Defense Procurement and Acquisition Policy of the Department of Defense shall consult with the Director of the Office of Small Business Programs of the Department of Defense.

(C)
Termination

The pilot program under subparagraph (A) shall terminate on September 30, 2022.

(ii)
Reporting on timing
(1)
In general

Federal agencies participating in the SBIR program or STTR program shall provide to the Administrator, for the annual report on the SBIR and STTR program under subsection (b)(7), the average amount of time the agency takes to make a final decision on proposals submitted under such programs, the average amount of time the agency takes to release funding with respect to an award under such programs, and the goals established to reduce such amounts.

(2)
Comptroller General reports
The Comptroller General of the United States shall submit to the Committee on Small Business and Entrepreneurship of the Senate, the Committee on Armed Services of the Senate, the Committee on Small Business of the House of Representatives, and the Committee on Armed Services of the House of Representatives—
(A)
not later than 1 year after August 13, 2018, and every year thereafter for 3 years, a report that—
(i) provides the average and median amount of time that each component of the Department of Defense with an SBIR or STTR program takes to review and make a final decision on proposals submitted under the program; and
(ii) compares that average and median amount of time with that of other Federal agencies participating in the SBIR or STTR program; and
(B)
not later than December 5, 2021, a report that—
(i) includes the information described in subparagraph (A);
(ii) assesses where each Federal agency participating in the SBIR or STTR program needs improvement with respect to the proposal review and award times under the program;
(iii) identifies best practices for shortening the proposal review and award times under the SBIR and STTR programs, including the pros and cons of using contracts compared to grants; and
(iv) analyzes the efficacy of the pilot program established under subsection (hh)(2).
(jj)
Phase 0 Proof of Concept Partnership pilot program
(1)
In general

The Director of the National Institutes of Health may use $5,000,000 of the funds allocated under subsection (n)(1) for a Proof of Concept Partnership pilot program to accelerate the creation of small businesses and the commercialization of research innovations from qualifying institutions. To implement this program, the Director shall award, through a competitive, merit-based process, grants to qualifying institutions. These grants shall only be used to administer Proof of Concept Partnership awards in conformity with this subsection.

(2)
Definitions
In this subsection—
(A) the term “Director” means the Director of the National Institutes of Health;
(B) the term “pilot program” refers to the Proof of Concept Partnership pilot program; and
(C) the terms “qualifying institution” and “institution” mean a university or other research institution that participates in the National Institutes of Health’s STTR program.
(3)
Proof of Concept Partnerships
(A)
In general

A Proof of Concept Partnership shall be set up by a qualifying institution to award grants to individual researchers. These grants should provide researchers with the initial investment and the resources to support the proof of concept work and commercialization mentoring needed to translate promising research projects and technologies into a viable company. This work may include technical validations, market research, clarifying intellectual property rights position and strategy, and investigating commercial or business opportunities.

(B)
Award guidelines
The administrator of a Proof of Concept Partnership program shall award grants in accordance with the following guidelines:
(i)
The Proof of Concept Partnership shall use a market-focused project management oversight process, including—
(I) a rigorous, diverse review board comprised of local experts in translational and proof of concept research, including industry, start-up, venture capital, technical, financial, and business experts and university technology transfer officials;(II) technology validation milestones focused on market feasibility;(III) simple reporting effective at redirecting projects; and(IV) the willingness to reallocate funding from failing projects to those with more potential.
(ii) Not more than $100,000 shall be awarded towards an individual proposal.
(C)
Educational resources and guidance

The administrator of a Proof of Concept Partnership program shall make educational resources and guidance available to researchers attempting to commercialize their innovations.

(4)
Awards
(A)
Size of award

The Director may make awards to a qualifying institution for up to $1,000,000 per year for up to 4 years.

(B)
Award criteria
In determining which qualifying institutions receive pilot program grants, the Director shall consider, in addition to any other criteria the Director determines necessary, the extent to which qualifying institutions—
(i) have an established and proven technology transfer or commercialization office and have a plan for engaging that office in the program’s implementation;
(ii) have demonstrated a commitment to local and regional economic development;
(iii) are located in diverse geographies and are of diverse sizes;
(iv) can assemble project management boards comprised of industry, start-up, venture capital, technical, financial, and business experts;
(v) have an intellectual property rights strategy or office; and
(vi) demonstrate a plan for sustainability beyond the duration of the funding award.
(5)
Limitations
The funds for the pilot program shall not be used—
(A)
for basic research, but to evaluate the commercial potential of existing discoveries, including—
(i) proof of concept research or prototype development; and
(ii) activities that contribute to determining a project’s commercialization path, to include technical validations, market research, clarifying intellectual property rights, and investigating commercial and business opportunities; or
(B) to fund the acquisition of research equipment or supplies unrelated to commercialization activities.
(6)
Evaluative report
The Director shall submit to the Committee on Science, Space, and Technology and the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate an evaluative report regarding the activities of the pilot program. The report shall include—
(A) a detailed description of the institutional and proposal selection process;
(B) an accounting of the funds used in the pilot program;
(C) a detailed description of the pilot program, including incentives and activities undertaken by review board experts;
(D) a detailed compilation of results achieved by the pilot program, including the number of small business concerns included and the number of business packages developed, and the number of projects that progressed into subsequent STTR phases; and
(E) an analysis of the program’s effectiveness with supporting data.
(7)
Sunset

The pilot program under this subsection shall terminate at the end of fiscal year 2022.

(kk)
Phase III reporting
The annual SBIR or STTR report to Congress by the Administration under subsection (b)(7) shall include, for each Phase III award—
(1) the name of the agency or component of the agency or the non-Federal source of capital making the Phase III award;
(2) the name of the small business concern or individual receiving the Phase III award; and
(3) the dollar amount of the Phase III award.
(ll)
Consent to release contact information to organizations
(1)
Enabling concern to give consent
Each Federal agency required by this section to conduct an SBIR program or an STTR program shall enable a small business concern that is an SBIR applicant or an STTR applicant to indicate to the Federal agency whether the Federal agency has the consent of the concern to—
(A) identify the concern to appropriate local and State-level economic development organizations as an SBIR applicant or an STTR applicant; and
(B) release the contact information of the concern to such organizations.
(2)
Rules

The Administrator shall establish rules to implement this subsection. The rules shall include a requirement that a Federal agency include in the SBIR and STTR application a provision through which the applicant can indicate consent for purposes of paragraph (1).

(mm)
Assistance for administrative, oversight, and contract processing costs
(1)
In general
Subject to paragraph (3) and until September 30, 2022, the Administrator shall allow each Federal agency required to conduct an SBIR program to use not more than 3 percent of the funds allocated to the SBIR program of the Federal agency for—
(A) the administration of the SBIR program or the STTR program of the Federal agency;
(B) the provision of outreach and technical assistance relating to the SBIR program or STTR program of the Federal agency, including technical assistance site visits, personnel interviews, and national conferences;
(C) the implementation of commercialization and outreach initiatives that were not in effect on December 31, 2011;
(D) carrying out the program under subsection (y);
(E) activities relating to oversight and congressional reporting, including waste, fraud, and abuse prevention activities;
(F) targeted reviews of recipients of awards under the SBIR program or STTR program of the Federal agency that the head of the Federal agency determines are at high risk for fraud, waste, or abuse to ensure compliance with requirements of the SBIR program or STTR program, respectively;
(G) the implementation of oversight and quality control measures, including verification of reports and invoices and cost reviews;
(H) carrying out subsection (dd);
(I) contract processing costs relating to the SBIR program or STTR program of the Federal agency;
(J) funding for additional personnel and assistance with application reviews; and
(K) funding for improvements that increase commonality across data systems, reduce redundancy, and improve data oversight and accuracy.
(2)
Outreach and technical assistance
(A)
In general

Except as provided in subparagraph (B), a Federal agency participating in the program under this subsection shall use a portion of the funds authorized for uses under paragraph (1) to carry out the policy directive required under subsection (j)(2)(F) and to increase the participation of States with respect to which a low level of SBIR awards have historically been awarded.

(B)
Waiver

A Federal agency may request the Administrator to waive the requirement contained in subparagraph (A). Such request shall include an explanation of why the waiver is necessary. The Administrator may grant the waiver based on a determination that the agency has demonstrated a sufficient need for the waiver, that the outreach objectives of the agency are being met, and that there is increased participation by States with respect to which a low level of SBIR awards have historically been awarded.

(3)
Performance criteria

A Federal agency may not use funds as authorized under paragraph (1) until after the effective date of performance criteria, which the Administrator shall establish, to measure any benefits of using funds as authorized under paragraph (1) and to assess continuation of the authority under paragraph (1).

(4)
Rules

Not later than 180 days after December 31, 2011, the Administrator shall issue rules to carry out this subsection.

(5)
Coordination with IG

Each Federal agency shall coordinate the activities funded under subparagraph (E), (F), or (G) of paragraph (1) with their respective Inspectors General, when appropriate, and each Federal agency that allocates more than $50,000,000 to the SBIR program of the Federal agency for a fiscal year may share such funding with its Inspector General when the Inspector General performs such activities.

(6)
Reporting

The Administrator shall collect data and provide to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business, the Committee on Science, Space, and Technology, and the Committee on Appropriations of the House of Representatives a report on the use of funds under this subsection, including funds used to achieve the objectives of paragraph (2)(A) and any use of the waiver authority under paragraph (2)(B).

(nn)
Annual report on SBIR and STTR program goals
(1)
Development of metrics
The head of each Federal agency required to participate in the SBIR program or the STTR program shall develop metrics to evaluate the effectiveness and the benefit to the people of the United States of the SBIR program and the STTR program of the Federal agency that—
(A) are science-based and statistically driven;
(B) reflect the mission of the Federal agency; and
(C) include factors relating to the economic impact of the programs.
(2)
Evaluation
The head of each Federal agency described in paragraph (1) shall conduct an annual evaluation using the metrics developed under paragraph (1) of—
(A) the SBIR program and the STTR program of the Federal agency; and
(B) the benefits to the people of the United States of the SBIR program and the STTR program of the Federal agency.
(3)
Report
(A)
In general

The head of each Federal agency described in paragraph (1) shall submit to the appropriate committees of Congress and the Administrator an annual report describing in detail the results of an evaluation conducted under paragraph (2).

(B)
Public availability of report

The head of each Federal agency described in paragraph (1) shall make each report submitted under subparagraph (A) available to the public online.

(C)
Definition
In this paragraph, the term “appropriate committees of Congress” means—
(i) the Committee on Small Business and Entrepreneurship of the Senate; and
(ii) the Committee on Small Business and the Committee on Science, Space, and Technology of the House of Representatives.
(oo)
Competitive selection procedures for SBIR and STTR programs

All funds awarded, appropriated, or otherwise made available in accordance with subsection (f) or (n) must be awarded pursuant to competitive and merit-based selection procedures.

(pp)
Limitation on pilot programs
(1)
Existing pilot programs

The Administrator may only carry out a covered pilot program that is in operation on December 31, 2011, during the 3-year period beginning on such date.

(2)
New pilot programs
The Administrator may only carry out a covered pilot program established after December 31, 2011
(A) during the 3-year period beginning on the date on which such program is established; and
(B) if such program does not continue and is not based on, in any manner, a previously established covered pilot program.
(3)
Covered pilot program defined
In this subsection, the term “covered pilot program” means any initiative, project, innovation, or other activity—
(A) established by the Administrator;
(B) relating to an SBIR or STTR program; and
(C) not specifically authorized by law.
(qq)
Minimum standards for participation
(1)
Progress to Phase II success
(A)
Establishment of system and minimum commercialization rate
Not later than 1 year after December 31, 2011, the head of each Federal agency participating in the SBIR or STTR program shall—
(i) establish a system to measure, where appropriate, the success of small business concerns with respect to the receipt of Phase II SBIR or STTR awards for projects that have received Phase I SBIR or STTR awards;
(ii) establish a minimum performance standard for small business concerns with respect to the receipt of Phase II SBIR or STTR awards for projects that have received Phase I SBIR or STTR awards; and
(iii) begin evaluating, each fiscal year, whether each small business concern that received a Phase I SBIR or STTR award from the agency meets the minimum performance standard established under clause (ii).
(B)
Consequence of failure to meet minimum commercialization rate

If the head of a Federal agency determines that a small business concern that received a Phase I SBIR or STTR award from the agency is not meeting the minimum performance standard established under subparagraph (A)(ii), such concern may not participate in Phase I (or Phase II if under the authority of subsection (cc)) of the SBIR or STTR program of that agency during the 1-year period beginning on the date on which such determination is made.

(2)
Progress to Phase III success
(A)
Establishment of system and minimum commercialization rate
Not later than 2 years after December 31, 2011, the head of each Federal agency participating in the SBIR or STTR program shall—
(i) establish a system to measure, where appropriate, the success of small business concerns with respect to the receipt of Phase III SBIR or STTR awards for projects that have received Phase I SBIR or STTR awards;
(ii) establish a minimum performance standard for small business concerns with respect to the receipt of Phase III SBIR or STTR awards for projects that have received Phase I SBIR or STTR awards; and
(iii) begin evaluating, each fiscal year, whether each small business concern that received a Phase I SBIR or STTR award from the agency meets the minimum performance standard established under clause (ii).
(B)
Consequence of failure to meet minimum commercialization rate

If the head of a Federal agency determines that a small business concern that received a Phase I SBIR or STTR award from the agency is not meeting the minimum performance standard established under subparagraph (A)(ii), such concern may not participate in Phase I (or Phase II if under the authority of subsection (cc)) of the SBIR or STTR program of that agency during the 1-year period beginning on the date on which such determination is made.

(3)
Administration oversight
(A)
Approval and publication of systems and minimum performance standards

Each system and minimum performance standard established under paragraph (1) or paragraph (2) shall be submitted by the head of the applicable Federal agency to the Administrator and shall be subject to the approval of the Administrator. In making a determination with respect to approval, the Administrator shall ensure that the minimum performance standard exceeds a de minimis level. The Administrator shall publish on the Internet Web site of the Administration the systems and minimum performance standards approved.

(B)
Submission of evaluation results by agency

The head of each covered Federal agency shall submit to the Administrator the results of each evaluation conducted under paragraph (1) or paragraph (2).

(4)
Requirement of notice and comment

Each system and minimum performance standard established under paragraph (1) or paragraph (2) and each approval provided by the Administrator under paragraph (3)(A), at least 60 days before becoming effective, shall be preceded by the provision of notice of and an opportunity for public comment on such system, standard, or approval.

(rr)
Publication of certain information

In order to increase the number of small businesses receiving awards under the SBIR or STTR programs of participating agencies, and to simplify the application process for such awards, the Administrator shall establish and maintain a public Internet Web site on which the Administrator shall publish such information relating to notice of and application for awards under the SBIR program and STTR program of each participating Federal agency as the Administrator determines appropriate.

(ss)
Report on enhancement of manufacturing activities
Not later than October 1, 2013, and annually thereafter, the head of each Federal agency that makes more than $50,000,000 in awards under the SBIR and STTR programs of the agency combined shall submit to the Administrator, for inclusion in the annual report required under subsection (b)(7), information that includes—
(1) a description of efforts undertaken by the head of the Federal agency to enhance United States manufacturing activities;
(2) a comprehensive description of the actions undertaken each year by the head of the Federal agency in carrying out the SBIR or STTR program of the agency in support of Executive Order 13329 (69 Fed. Reg. 9181; relating to encouraging innovation in manufacturing);
(3) an assessment of the effectiveness of the actions described in paragraph (2) at enhancing the research and development of United States manufacturing technologies and processes;
(4) a description of efforts by vendors selected to provide discretionary technical assistance under subsection (q)(1) to help SBIR and STTR concerns manufacture in the United States; and
(5) recommendations that the program managers of the SBIR or STTR program of the agency consider appropriate for additional actions to increase the effectiveness of enhancing manufacturing activities.
(tt)
Outstanding reports and evaluations
(1)
In general
Not later than