Angels Nurture Growing Entrepreneurs into Long-Term Successes (ANGELS) Act - Amends the Small Business Investment Act of 1958 to establish within the Investment Division of the Small Business Administration (SBA) the Office of Angel Investment, headed by a Director, to provide support for the development of angel investment opportunities for small businesses.
Requires the Director to: (1) establish and carry out a program, to be known as the Angel Finance Program, to provide financing to approved angel groups; (2) establish and maintain a searchable database, to be known as the Federal Angel Network, to assist small businesses in identifying angel investors; and (3) establish and carry out a program to make grants for the development of new or existing angel groups and to increase awareness and education about angel investing.
Amends the Internal Revenue Code to provide a small business investment tax credit of 20 percent of the amount paid or incurred for qualified small business investment.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4565 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 4565
To amend the Small Business Investment Act of 1958 to establish the
Angel Investment Program.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 15, 2005
Ms. Velazquez (for herself, Mr. Barrow, Ms. Bean, Ms. Bordallo, Mr.
Case, Mrs. Christensen, Mr. Davis of Illinois, Mr. Grijalva, Mr.
Michaud, Ms. Millender-McDonald, Ms. Moore of Wisconsin, and Ms. Linda
T. Sanchez of California) introduced the following bill; which was
referred to the Committee on Small Business, and in addition to the
Committee on Ways and Means, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Small Business Investment Act of 1958 to establish the
Angel Investment Program.
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 ``Angels Nurture Growing Entrepreneurs
into Long-term Successes (ANGELS) Act''.
SEC. 2. ESTABLISHMENT OF ANGEL INVESTMENT PROGRAM.
(a) Establishment.--Title III of the Small Business Investment Act
of 1958 (15 U.S.C. 681 et seq.) is amended by adding at the end the
following new part:
``PART C--ANGEL INVESTMENT PROGRAM
``SEC. 380. OFFICE OF ANGEL INVESTMENT.
``(a) Establishment.--There is established, in the Investment
Division of the Small Business Administration, the Office of Angel
Investment.
``(b) Director.--The head of the Office of Angel Investment is the
Director of Angel Investment.
``(c) Duties.--Subject to the direction of the Secretary, the
Director shall perform the following functions:
``(1) Provide support for the development of angel
investment opportunities for small business concerns.
``(2) Administer the Angel Finance Program under section
381 of this Act.
``(3) Administer the Federal Angel Network under section
382 of this Act.
``(4) Administer the grant program for the development of
angel groups under section 383 of this Act.
``(5) Perform such other duties consistent with this
section as the Administrator shall prescribe.
``SEC. 381. ANGEL FINANCE PROGRAM.
``(a) In General.--The Director of Angel Investment shall establish
and carry out a program, to be known as the Angel Finance Program, to
provide financing to approved angel groups.
``(b) Eligibility.--To be eligible to receive financing under this
section, an angel group shall--
``(1) have demonstrated experience making investments in
local or regional small business concerns;
``(2) have established protocols and a due diligence
process for determining its investment strategy;
``(3) have an established code of ethics; and
``(4) submit an application to the Director of Angel
Investment at such time and containing such information and
assurances as the Director may require.
``(c) Use of Funds.--An angel group that receives financing under
this section shall use the amounts received to make investments in
small business concerns--
``(1) that have been in existence for less than 5 years as
of the date on which the investment is made;
``(2) that have fewer than 75 employees as of the date on
which the investment is made; and
``(3) more than 50 percent of the employees of which
perform substantially all of their services in the United
States as of the date on which the investment is made.
``(d) Limitation on Amount.--No angel group receiving financing
under this section shall receive more than $2,000,000.
``(e) Priority in Providing Financing.--In providing financing
under this section, the Director shall give priority to angel groups
that invest in small business concerns owned and controlled by
veterans, small business concerns owned and controlled by women, and
socially and economically disadvantaged small business concerns.
``(f) Geographic Distribution of Financing.--In providing financing
under this section, the Director shall, to the extent practicable,
provide financing to angel groups that are located in a variety of
geographic areas.
``(g) Matching Requirement.--As a condition of receiving financing
under this section, the Director shall require that for each small
business concern in which the angel group receiving such financing
invests, the angel group shall invest an amount that is equal to or
greater than the amount of financing received under this section from a
source other than the Federal Government that is equal to the amount of
the financing provided under this section that the angel group invests
in that small business concern.
``(h) Repayment of Financing.--As a condition of receiving
financing under this section, the Director shall require an angel group
to repay the Director for any investment on which the angel group makes
a profit an amount equal to the percentage of the profit that is equal
to the percentage of the total amount invested by the angel group that
consisted of financing received under this section.
``(i) Angel Investment Fund.--
``(1) Establishment.--There is in the Treasury a fund to be
known as the Angel Investment Fund.
``(2) Deposit of certain amounts.--Amounts collected under
subsection (h) shall be deposited in the fund.
``(3) Use of deposits.--Deposits in the fund shall be
available for the purpose of providing financing under this
section in the amounts specified in annual appropriation laws
without regard to fiscal year limitations.
``(j) Definitions.--In this section:
``(1) The term `small business concern owned and controlled
by veterans' has the meaning given that term under section
3(q)(3) of the Small Business Act (15 U.S.C. 632(q)(3)).
``(2) The term `small business concern owned and controlled
by women' has the meaning given that term under section
8(d)(3)(D) of such Act (15 U.S.C. 637(d)(3)(D)).
``(3) The term `socially and economically disadvantaged
small business concern' has the meaning given that term under
section 8(a)(4)(A) of such Act (15 U.S.C. 637(a)(4)(A)).
``(k) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section--
``(1) $25,000,000 for fiscal year 2007;
``(2) $50,000,000 for fiscal year 2008; and
``(3) $75,000,000 for fiscal year 2009.
``SEC. 382. FEDERAL ANGEL NETWORK.
``(a) In General.--Subject to the succeeding provisions of this
subsection, the Director of the Office of Angel Investment shall
establish and maintain a searchable database, to be known as the
Federal Angel Network, to assist small business concerns in identifying
angel investors.
``(b) Network Contents.--The Federal Angel Network shall include--
``(1) a list of the names and addresses of angel groups and
angel investors;
``(2) information about the types of investments each angel
group or angel investor has made; and
``(3) information about other public and private resources
and registries that provide information about angel groups or
angel investors.
``(c) Collection of Information.--
``(1) In general.--The Director shall collect the
information to be contained in the Federal Angel Network and
shall ensure that such information is updated regularly.
``(2) Request for exclusion of information.--The Director
shall not include such information concerning an angel investor
if that investor contacts the Director to request that such
information be excluded from the Network.
``(d) Availability.--The Director shall make the Federal Angel
Network available on the Internet website of the Administration.
``(e) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $1,000,000, to remain available
until expended.
``SEC. 383. GRANT PROGRAM FOR DEVELOPMENT OF ANGEL GROUPS.
``(a) In General.--The Director of the Office of Angel Investment
shall establish and carry out a grant program to make grants to
eligible entities for the development of new or existing angel groups
and to increase awareness and education about angel investing.
``(b) Eligible Entities.--In this section, the term `eligible
entity' means--
``(1) a State or unit of local government;
``(2) a nonprofit organization;
``(3) a state mutual benefit corporation;
``(4) a Small Business Development Center established
pursuant to section 21 of the Small Business Act (15 U.S.C.
648); or
``(5) a women's business center established pursuant to
section 29 of the Small Business Act (15 U.S.C. 656).
``(c) Application.--To receive a grant under this section, an
eligible entity shall submit an application that contains--
``(1) a proposal describing how the grant would be used;
and
``(2) any other information or assurances as the Director
may require.
``(d) Report.--Not later than 3 years after the date on which an
eligible entity receives a grant under this section, such eligible
entity shall submit a report to the Administrator describing the use of
grant funds and evaluating the success of the angel group developed
using the grant funds.
``(e) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $1,500,000, for each of fiscal
years 2007 through 2009.
``SEC. 384. DEFINITIONS.
``In this part:
``(a) The term `angel group' means two or more angel investors
organized for the purpose of making investments in local or regional
small business concerns that--
``(1) consists primarily of angel investors;
``(2) requires angel investors to be accredited investors;
and
``(3) actively involves the angel investors in evaluating
and making decisions about making investments.
``(b) The term `angel investor' means an individual who--
``(1) on the basis of such factors as financial
sophistication, income, net worth, knowledge, and experience in
financial matters, or amount of assets under management,
qualifies as an accredited investor under rules and regulations
prescribed by the Commissioner of the Securities and Exchange
Commission; and
``(2) provides capital to or makes investments in a small
business concern.''.
SEC. 3. TAX CREDIT FOR SMALL BUSINESS INVESTMENT.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to nonrefundable
personal credits) is amended by inserting after section 25D the
following new section:
``SEC. 25E. SMALL BUSINESS INVESTMENT.
``(a) In General.--In the case of an individual, there shall be
allowed as a credit against the tax imposed by this chapter an amount
equal to 20 percent of the amount paid or incurred for qualified small
business investments during the taxable year.
``(b) Limitation.--With respect to any qualified small business
investment in any corporation or partnership, the amount paid or
incurred by any taxpayer which is taken into account under subsection
(a) shall not exceed $250,000 ($500,000 in the case of a joint return),
reduced by the amount taken into account under such subsection with
respect to investments by the taxpayer in such corporation or
partnership for all prior taxable years.
``(c) Qualified Small Business Investment.--For purposes of this
section--
``(1) In general.--The term `qualified small business
investment' means any small business stock and any small
business partnership interest.
``(2) Small business stock.--The term `small business
stock' means any stock in a domestic corporation acquired by
the taxpayer at its original issue (directly or through an
underwriter) solely in exchange for cash, if--
``(A) such corporation is an eligible small
business (as defined in section 41(b)(3)(D)(ii)),
``(B) such corporation is engaged primarily in the
trade or business of manufacturing, processing,
assembling, or researching and developing products or
in the trade or business of agriculture, technology, or
life science,
``(C) such corporation has been in existence for
less than 5 years as of such acquisition,
``(D) such corporation has fewer than 75 employees
as of such acquisition,
``(E) more than 50 percent of the corporation's
employees perform substantially all of their services
in the United States as of such acquisition, and
``(F) such stock is designated by the corporation
for purposes of this paragraph.
For purposes of subparagraph (E), stock shall not be treated as
designated if such designation would result in the aggregate
amount which may be taken into account under this section with
respect to stock issued by such corporation to exceed $750,000,
taking into account all taxpayers for all taxable years.
``(3) Small business partnership interest.--The term `small
business partnership interest' means any capital or profits
interest in a domestic partnership acquired by the taxpayer
from the partnership solely in exchange for cash, if--
``(A) such partnership is an eligible small
business (as defined in section 41(b)(3)(D)(ii)),
``(B) such partnership is engaged primarily in the
trade or business of manufacturing, processing,
assembling, or researching and developing products or
in the trade or business of agriculture, technology, or
life science,
``(C) such partnership has been in existence for
less than 5 years as of such acquisition,
``(D) such partnership has fewer than 75 employees
as of such acquisition,
``(E) more than 50 percent of the partnership's
employees perform substantially all of their services
in the United States as of such acquisition, and
``(F) such capital or profits interest is
designated by partnership for purposes of this
paragraph.
For purposes of subparagraph (E), a capital or profits interest
shall not be treated as designated if such designation would
result in the aggregate amount which may be taken into account
under this section with respect to interests in such
partnership to exceed $750,000, taking into account all
taxpayers for all taxable years.
``(d) Carryforward of Unused Credit.--If the credit allowable under
subsection (a) exceeds the limitation imposed by section 26(a) for such
taxable year reduced by the sum of the credits allowable under this
subpart (other than this section), such excess shall be carried to the
succeeding taxable year and added to the credit allowable under this
section. Such excess shall not be taken into account under this
subsection for such succeeding taxable year or any taxable year
succeeding such year.''.
(b) Clerical Amendment.--The table of sections of such subpart is
amended by inserting after the item relating to section 25D the
following new item:
``Sec. 25E. Small business investment.''.
(c) Report to Congress.--The Secretary of the Treasury shall
conduct a study and report to Congress on the effectiveness of the
credit allowed under section 25E of the Internal Revenue Code of 1986
(as added by this section), and similar State tax credits, in providing
incentives for investment in qualified small businesses. There are
authorized to be appropriated $500,000 to carry out the purposes of
this subsection.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Small Business, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Small Business, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Small Business, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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