H.R. 3471 — Small Business Economic Opportunity Enhancement Act of 1991

 
HR 3471 IH
102d CONGRESS
1st Session
 H. R. 3471
To authorize the Small Business Administration to conduct a demonstration
program to enhance the economic opportunities of startup, newly established,
and growing microenterprises by providing loans and technical assistance
through intermediaries, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
October 2, 1991
Mr. IRELAND introduced the following bill; which was referred jointly to
the Committees on Small Business, Ways and Means, Education and Labor,
Agriculture, and Banking Finance and Urban Affairs
A BILL
To authorize the Small Business Administration to conduct a demonstration
program to enhance the economic opportunities of startup, newly established,
and growing microenterprises by providing loans and technical assistance
through intermediaries, and for other purposes.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Small Business Economic Opportunity Enhancement
  Act of 1991'.
SEC. 2. ESTABLISHMENT OF MICROLOAN DEMONSTRATION PROGRAM.
  (a) IN GENERAL- Section 7 of the Small Business Act (15 U.S.C. 636) is
  amended by adding at the end the following new subsection:
  `(m) MICROLOAN DEMONSTRATION PROGRAM-
  `(1) ESTABLISHMENT- There is established a microloan demonstration program
  under which the Administrator may--
  `(A) make direct loans to not more than 15 eligible intermediaries
  in a fiscal year, as provided under paragraph (3), for the purpose of
  making short-term microloans to startup, newly established, and growing
  microenterprises under paragraph (5); and
  `(B) in conjunction with such loans and subject to the requirement of
  paragraph (4), make grants to such intermediaries for the purpose of
  providing intensive marketing, management, and technical assistance to
  microenterprises that are borrowers under this subsection.
  `(2) ELIGIBILITY FOR PARTICIPATION- An intermediary shall be eligible for
  participation in the program established under paragraph (1) if it--
  `(A) meets the definition in paragraph (9);
  `(B) has at least 1 year of experience making microloans to startup,
  newly established, and growing microenterprises and providing, as an
  integral part of its microloan program, intensive marketing, management,
  and technical assistance to its borrowers; and
  `(C) the appropriate agency of the State in which the intermediary will
  operate the microloan program has--
  `(i) submitted a State plan in support of the establishment of a microloan
  program by the applicant intermediary; and
  `(ii) the Administrator has approved the State plan.
  `(3) LOANS TO INTERMEDIARIES-
  `(A) INTERMEDIARY APPLICATIONS- As part of its application for a loan,
  each intermediary shall submit a description to the Administrator of--
  `(i) the type of microenterprises to be assisted;
  `(ii) the size and range of loans to be made;
  `(iii) the geographic area to be served and its economic and unemployment
  characteristics;
  `(iv) the type of marketing, management, and technical assistance to be
  provided in connection with loans made under this subsection;
  `(v) the qualifications of the intermediary to carry out the purposes of
  this subsection;
  `(vi) any plan to involve the private sector in assisting selected
  microenterprises;
  `(vii) evidence of the amount and source of the intermediary's financial
  contribution; and
  `(viii) evidence of an approved State plan in support of the establishment
  of a microloan program by the applicant intermediary.
  `(B) INTERMEDIARY CONTRIBUTION- As a condition of any loan made to an
  intermediary under 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. Such contributions shall be used by the
  intermediary as a reserve for any loan default.
  `(C) LOAN LIMITS- 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
  Act would, as a result of such loan, exceed $750,000 in the first year
  of such intermediary's participation in the demonstration program and
  $1,250,000 in any subsequent year of the intermediary's participation in
  the demonstration program.
  `(D) LOAN SIZE- Loans made by the Administrator under this subsection
  shall be in an amount adequate to ensure that activities conducted using
  loans will be sufficient in size and scope to produce substantial benefits.
  `(E) LOAN DURATION- Loans made by the Administrator under this subsection
  shall be for a term of 10 years and at an interest rate equal to the rate
  determined by the Secretary of the Treasury for obligations of the United
  States with a period of maturity of 10 years, adjusted to the nearest
  one-eighth of one percent.
  `(F) DELAYED REPAYMENTS- The Administrator 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.
  `(G) FEES; COLLATERAL- Except as provided in subparagraph (D), the
  Administrator shall not charge any fees or require any 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-
  `(A) GRANT AMOUNTS- Subject to the requirement of subparagraph (B), each
  intermediary that receives a loan under paragraph (1) shall be eligible to
  receive a grant of not more than 20 percent of the loan amount to provide
  technical assistance to microenterprises that are borrowers under this
  subsection.
  `(B) CONTRIBUTION- As a condition of any grant made under subparagraph (A),
  the Administrator shall require the intermediary to contribute an amount
  equal to not less than one-half 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.
  `(5) LOANS TO MICROENTERPRISES FROM ELIGIBLE INTERMEDIARIES-
  `(A) IN GENERAL- An eligible intermediary shall make short term, fixed
  rate loans to startup, newly established, and growing microenterprises
  from the funds made available to such intermediary under 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 $10,000.
  `(C) INTEREST RATE LIMIT- Notwithstanding any provision of law 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 be not more than 4 percentage points above the
  prime lending rate, as identified by the Administrator and published in
  the Federal Register on a quarterly basis.
  `(D) REVIEW RESTRICTION- The Administrator shall not review individual
  microloans made by intermediaries prior to approval.
  `(6) PROGRAM FUNDING- The Administrator is authorized to use amounts made
  available for direct and immediate participation loans under section 20
  to carry out this subsection.
  `(7) PROGRAM TERM- The Administrator is authorized to carry out the
  demonstration program established by this subsection in each of the first
  5 fiscal years beginning after the date of the enactment of this subsection.
  `(8) REGULATIONS- The Administrator shall issue regulations to carry out
  this subsection not later than 90 days after the date of the enactment of
  this subsection.
  `(9) DEFINITIONS- For purposes of this subsection--
  `(A) the term `intermediary' means a private, nonprofit entity or a nonprofit
  community development corporation that seeks to borrow or has borrowed
  funds from the Administrator to make microloans to microenterprises under
  this subsection;
  `(B) the term `microenterprise' means a commercial enterprise--
  `(i) which has 5 or fewer employees, 1 or more of whom owns the enterprise;
  and
  `(ii) none of the owners of which has income (excluding income generated
  by the commercial enterprise) exceeding 200 percent of the most recent
  official poverty threshold established by the Department of Commerce for
  the relevant family size; and
  `(C) the term `microloan' means a short-term loan of not more than $25,000
  made by an intermediary to a startup, newly established, or growing
  microenterprise.'.
SEC. 3. CLARIFICATION THAT THE JOBS PROGRAM INCLUDES TRAINING AND ACTIVITIES
FOR MICROENTERPRISES.
  (a) INCLUSION IN SERVICES AND ACTIVITIES PROVIDED UNDER THE JOBS PROGRAM-
  (1) IN GENERAL- Section 482(d)(1)(A)(ii) of the Social Security Act (42
  U.S.C. 682(d)(1)(A)(ii)) is amended--
  (A) in subclause (III), by striking `and';
  (B) in subclause (IV), by striking the period and inserting `; and'; and
  (C) by adding at the end the following:
  `(V) microenterprise programs described in paragraph (4).'.
  (2) MICROENTERPRISE PROGRAMS- Section 482(d) of such Act (42 U.S.C. 682(d))
  is amended by adding at the end the following:
  `(4) The programs described in this paragraph are programs of public and
  private organizations, agencies, and other entities (including nonprofit
  and for-profit entities) to enable such entities to facilitate economic
  development by--
  `(A) providing technical assistance, advice, and business support services
  (including assistance, advice, and support relating to developing business
  plans, securing funding, conducting marketing, and otherwise engaging
  in small business activities) to owners of microenterprises and persons
  developing microenterprises; and
  `(B) providing general support (such as peer support programs and counseling)
  to owners of microenterprises and persons developing microenterprises.'.
  (b) ADJUSTMENT OF PERFORMANCE STANDARDS FOR MICROENTERPRISES TO TAKE ACCOUNT
  OF TIME REQUIRED FOR THEIR ESTABLISHMENT- Section 487(a)(2) of such Act
  (42 U.S.C. 687(a)(2)) is amended by inserting `shall be adjusted with
  respect to microenterprises to reflect the time required to establish,
  and develop a stable income from, such an enterprise as part of a plan to
  achieve economic self-sufficiency,' after `dependency,'.
SEC. 4. TREATMENT OF RESOURCES OF AND INCOME FROM MICROENTERPRISES UNDER
PROGRAM OF AID TO FAMILIES WITH DEPENDENT CHILDREN.
  (a) LIMITED EXCLUSION OF MICROENTERPRISE RESOURCES- Section 402(a)(7)(B)
  of the Social Security Act (42 U.S.C. 602(a)(7)) is amended--
  (1) by striking `or' at the end of clause (iii); and
  (2) by inserting `, or (v) if the State has a State approved program that
  meets the requirements of paragraph (46), the first $20,000 of the net worth
  (assets reduced by liabilities with respect thereto) of any microenterprise'
  before the semicolon.
  (b) LIMITED EXCLUSION OF MICROENTERPRISE INCOME- Section 402(a)(8)(A)
  of such Act (42 U.S.C. 602(a)(8)(A)) is amended--
  (1) by striking `and' at the end of clause (vii); and
  (2) by adding at the end the following:
  `(ix) if the State has a State approved program that meets the requirements
  of paragraph (46), shall disregard the earned income of any child, relative,
  or other individual referred to in clause (ii) that is attributable to a
  microenterprise, unless the State agency (after making such adjustments as
  may be appropriate to take account of regional differences in the cost of
  living and in benefits) determines that such income is reasonably steady
  on an annual basis and not less than 125 percent of the aggregate value of
  all Federal and State benefits received by the child, relative, or other
  individual that would be discontinued if the child were no longer eligible
  for benefits under this part; and'.
  (c) MICROENTERPRISE DEFINED- Section 406 of such Act (42 U.S.C. 606)
  is amended by adding at the end the following:
  `(i) The term `microenterprise' means a commercial enterprise--
  `(1) which has 5 or fewer employees, 1 or more of whom owns the enterprise;
  and
  `(2) none of the owners of which has income exceeding 200 percent of the
  most recent official poverty threshold established by the Department of
  Commerce for the relevant family size.'.
SEC. 5. AUTHORITY OF STATES TO WAIVE FEDERAL AFDC REQUIREMENTS WITH RESPECT
TO PARTICIPANTS IN STATE-APPROVED MICROENTERPRISE PROGRAMS.
  (a) IN GENERAL- Section 402(a) of the Social Security Act (42 U.S.C. 602(a))
  is amended--
  (1) by striking `and' at the end of paragraph (44); and
  (2) by striking the period at the end of paragraph (45) and inserting `;
  and'; and
  (3) by inserting after paragraph (45) the following:
  `(46) at the option of the State, provide that--
  `(A) the agency may disregard such provisions of the State plan approved
  under this part, and such provisions of this part and such regulations
  issued under this part, as the agency deems necessary to enable any person
  eligible for aid under the State plan approved under this part to volunteer,
  and be selected, to participate in any program approved by the State that
  is designed to enable such persons to become self-sufficient through a
  microenterprise and that meets the requirements of this paragraph;
  `(B) participation in any State-approved program described in subparagraph
  (A) must be determined by the program and the State agency but not more
  than 10 percent of the recipients of aid under the State plan, as of
  January 1 of any fiscal year, may so participate during the fiscal year;
  `(C) the State shall not reduce, suspend, or terminate any benefit of any
  participant in any State-approved program described in subparagraph (A)
  by reason of such participation;
  `(D) participation in any State-approved program described in subparagraph
  (A) must cease on the earlier of--
  `(i) the date the program, in consultation with the Governor of the State,
  determines that the participant has failed to make adequate progress toward
  self-sufficiency through a microenterprise;
  `(ii) the date the agency, in consultation with the program, determines
  (after making such adjustments as may be appropriate to take account of
  regional differences in the cost of living and in benefits) that the net
  income of the participant from a microenterprise after Federal, State, and
  local taxes is reasonably steady on an annual basis and not less than 125
  percent of the aggregate value of all Federal and State benefits received
  by the participant that would be discontinued if the participant were no
  longer eligible for benefits under this part; and
  `(iii) a date determined by the agency that is not earlier than 24 months
  after the date the participant commenced participation in the program and
  not later than 36 months after such commencement date;
  `(E) a program shall not be considered a State-approved program described
  in subparagraph (A), unless the State determines that the program is
  reasonably likely to effectively provide business training, technical
  assistance, and access to capital adequate to develop, support, and enhance
  the microenterprise activities of the participants in the program, based on--
  `(i) the commitment of the program to microenterprise development for low
  income, diverse populations, including the degree to which the program
  can provide individual attention (including peer support and counseling)
  to the special needs of the participants;
  `(ii) the ability to conduct and monitor the program, including access to
  local service, credit, and capital providers; and
  `(iii) the ability of the program to, and the likelihood that the program
  will leverage private sector funds and in-kind support; and
  `(F) the State agency must, on an annual basis, monitor and evaluate
  activities undertaken in the State under this paragraph, and prepare and
  submit to the Administrator a report that--
  `(i) describes the State-approved programs described in subparagraph (A);
  `(ii) describes the major effects and outcomes of such programs, and
  discusses the value of such programs to enhance human and economic
  development;
  `(iii) specifies the number of individuals participating in such programs;
  and
  `(iv) specifies the provisions of this part and of regulations issued
  under this part that the State has waived in carrying out activities under
  this paragraph.'.
  (b) PARTICIPATION IN STATE-APPROVED MICROENTERPRISE PROGRAMS NOT TO AFFECT
  MEANS-TESTED FEDERAL BENEFITS OF PARTICIPANTS- The benefits for which any
  participant in any State-approved program described in section 402(a)(46)(A)
  of the Social Security Act would otherwise be eligible under any Federal
  program the eligibility for which is, or benefits under which are, based
  on means may not be reduced, suspended, or terminated by reason of such
  participation.
  (c) EFFECTIVE DATE- The amendments made by subsection (a) shall apply to
  payments under part A of title IV of the Social Security Act for calendar
  quarters beginning on or after October 1, 1991.
SEC. 6. RURAL DEVELOPMENT ASSISTANCE TO MICROENTERPRISES.
  (a) RURAL DEVELOPMENT LOANS- Sections 304(b) and 312(b) of the Consolidated
  Farm and Rural Development Act (7 U.S.C. 1924(b) and 1942(b)) are each
  amended by inserting `(including microenterprises)' after `enterprises'.
  (b) RURAL DEVELOPMENT GRANTS- Section 310B(c) of such Act (7 U.S.C. 1932(c))
  is amended by inserting `(including microenterprises)' after `enterprises'.
  (c) MICROENTERPRISE DEFINED- Section 343(a) of such Act (7 U.S.C. 1991(a))
  is amended--
  (1) by striking `and' at the end of clause (9); and
  (2) by inserting `and (11) the term `microenterprise' means a commercial
  enterprise (A) which has 5 or fewer employees, 1 or more of whom owns the
  enterprise, and (B) none of the owners of which has income exceeding 200
  percent of the most recent official poverty threshold established by the
  Department of Commerce for the relevant family size' before the period at
  the end.
  (d) SENSE OF CONGRESS- It is the sense of the Congress that 1 percent of
  the amounts appropriated to carry out sections 304(b), 310B(c), and 312(b)
  of the Consolidated Farm and Rural Development Act for any fiscal year
  should be reserved for the purpose of providing assistance to public and
  private organizations, agencies, and other entities (including nonprofit
  and for-profit entities) to enable such entities to facilitate economic
  development by--
  (1) providing credit (including providing direct loans and loan guarantees,
  establishing revolving loan funds, and facilitating peer lending programs)
  for the establishment, stabilization, and expansion of microenterprises;
  (2) providing technical assistance, advice, and business support services
  (including assistance, advice, and support relating to developing business
  plans, securing funding, conducting marketing, and otherwise engaging
  in small business activities) to owners of microenterprises and persons
  developing microenterprises; and
  (3) providing general support (such as peer support programs and counseling)
  to owners of microenterprises and persons developing microenterprises.
SEC. 7. COMMUNITY DEVELOPMENT BLOCK GRANTS.
  (a) DEFINITION OF MICROENTERPRISE- Section 102(a) of the Housing and
  Community Development Act of 1974 (42 U.S.C. 5302(a)) is amended by adding
  at the end the following new paragraph:
  `(22) The term `microenterprise' means a commercial enterprise (A) which
  has 5 or fewer employees, 1 or more of whom owns the enterprise, and (B)
  none of the owners of which has an income exceeding 200 percent of the
  most recent official poverty threshold established by the Department of
  Commerce for the relevant family size.'.
  (b) ELIGIBILITY OF MICROENTERPRISE ASSISTANCE-
  (1) IN GENERAL- Section 105(a) of the Housing and Community Development
  Act of 1974 (42 U.S.C. 5305(a)) is amended--
  (A) in paragraph (19), by striking `and' at the end;
  (B) in paragraph (20), by striking the period at the end and inserting `;
  and'; and
  (C) by adding at the end the following new paragraph:
  `(21) provision of assistance to public and private organizations, agencies,
  and other entities (including nonprofit and for-profit entities) to enable
  such entities to facilitate economic development by--
  `(A) providing credit (including providing direct loans and loan guarantees,
  establishing revolving loan funds, and facilitating peer lending programs)
  for the establishment, stabilization, expansion of microenterprises;
  `(B) providing technical assistance, advice, and business support services
  (including assistance, advice, and support relating to developing business
  plans, securing funding, conducting marketing, and otherwise engaging
  in small business activities) to owners of microenterprises and persons
  developing microenterprises; and
  `(C) providing general support (such as peer support programs and counseling)
  to owners of microenterprises and persons developing microenterprises.'.
  (2) TECHNICAL AMENDMENTS- Section 907(b)(2) of the Cranston-Gonzalez
  National Affordable Housing Act (42 U.S.C. 5305 note) is amended--
  (A) in subparagraph (A), by striking `paragraph (18)' and inserting
  `paragraph (19)'; and
  (B) by striking subparagraphs (B) and (C) and inserting the following
  new subparagraphs:
  `(B) by striking paragraph (20); and
  `(C) by redesignating paragraph (21) as paragraph (20).'.
  (c) LOW- AND MODERATE-INCOME BENEFIT- Section 105(c) of the Housing and
  Community Development Act of 1974 (42 U.S.C. 5305(c)) is amended by adding
  at the end the following new paragraph:
  `(4) Any assisted activity described in paragraph (21) of subsection (a)
  shall be considered to benefit persons of low and moderate income.'.
  (d) SENSE OF THE CONGRESS- It is the sense of the Congress that each
  grantee under the community development block grant program under title
  I of the Housing and Community Development Act of 1974 should reserve 1
  percent of any grant amounts the grantee receives in each fiscal year for
  the purpose of providing assistance under section 105(a)(21) of such Act
  to facilitate economic development through commercial microenterprises.
SEC. 8. CLARIFICATION OF JOB TRAINING PARTNERSHIP ACT AVAILABILITY TO SUPPORT
MICROENTERPRISE TRAINING ACTIVITIES.
  (a) USE OF FUNDS- Section 204 of the Job Training Partnership Act (29
  U.S.C. 1604) is amended--
  (1) by redesignating paragraphs (6) through (28) as paragraphs (7) through
  (29), respectively; and
  (2) by inserting after paragraph (5) the following new paragraph:
  `(6) training activities with respect to microenterprises (commercial
  enterprises employing 5 or fewer employees, one of whom is the owner),'.
  (b) PERFORMANCE STANDARDS- Section 106(e)(1) of such Act is amended by
  adding at the end thereof the following: `The Governor shall adjust standards
  regarding placement in microenterprises (as defined in section 204(b)(6)) to
  reflect the time required to establish and develop a stable income from such
  an enterprise as participants seek to achieve economic self-sufficiency.'.
Small Business Economic Opportunity Enhancement Act of 1991

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