House approves SBA funding, SBIC changes

The program lets SBA-approved companies provide start-up capital to small firms

The House Committee on Small Business has passed legislation to reauthorize the U.S. Small Business Administration and its programs until 2003.

The committee also passed legislation to make technical corrections to the Small Business Investment Company program, according to a press release from the committee's chairman.

The bill, HR 3843, the Small Business Reauthorization Act of 2000, is the first "numbers only" reauthorization bill for the SBA since the 1970s.

House Small Business Committee Chairman Jim Talent said he was pleased with the swift and unanimous mark up.

"The Committee has worked hard, passing more than a dozen bills making changes and modifications to SBA programs. Frankly, I think we covered about all there was to cover," Talent said in the release. "The good news is that all that hard work made it possible to pass this numbers only' reauthorization."

The reauthorization bill increases authorization funding for the SBA's primary lending programs, the 7(a), 504 and microloan programs.

It also includes provisions to authorize and fund disaster loan surety bond guarantees; Small Business Development Centers; the Historically Underutilized Business Zone, or HUBZone, program; the National Women's Business Council; the Service Corps of Retired Executives, or SCORE, program; the Drug Free Workplace program; the Very Small Business contracting program; and the regular salaries and expenses for the SBA.

The committee also passed HR 3845, the Small Business Investment Company Act of 2000, to streamline the successful SBIC program. The SBIC program allows private companies with SBA approval to provide venture and start-up financing to small businesses.

First, the bill modifies the definition of control for SBIC investment in small business, eliminating a cumbersome five-prong test and setting a clear statutory standard.

HR 3845 also modifies the definition of long-term investment under the act, changing it from five years to one year, in order to harmonize that definition with accepted business practice and the tax and banking laws.

Third, the bill allows the administration to adjust the subsidy fee for the SBIC program to maintain the subsidy rate of the program at zero. Finally, the bill makes a change to the distribution language in the investment act, allowing the SBICs more flexibility in making distributions to their investors and simplifying the accounting and tax procedures at SBICs.

Talent said he expects the full House, Senate and president to expeditiously consider both HR 3843 and HR 3845 to maintain the quality SBA programs American small entrepreneurs utilize.