HR 2066 — Investing in All of America Act of 2025

changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 SMALL BUSINESS INVESTMENT ACT OF 1958

 TITLE I--SHORT TITLE, STATEMENT OF POLICY, AND
 DEFINITIONS

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 definitions

 Sec. 103. As used in this Act--
 (1) the term ``Administration'' means the Small 
 Business Administration;
 (2) the term ``Administrator'' means the 
 Administrator of the Small Business Administration;
 (3) the terms ``small business investment company'', 
 ``company'', and ``licensee'' mean a company approved 
 by the Administration to operate under the provisions 
 of this Act and issued a license as provided in section 
 301;
 (4) the term ``State'' includes the several States, 
 the Territories and possessions of the United States, 
 the Commonwealth of Puerto Rico, and the District of 
 Columbia;
 (5) the term ``small-business concern'' shall have 
 the same meaning as in the Small Business Act, except 
 that, for purposes of this Act--
 (A) an investment by a venture capital firm, 
 investment company (including a small business 
 investment company) employee welfare benefit 
 plan or pension plan, or trust, foundation, or 
 endowment that is exempt from Federal income 
 taxation--
 (i) shall not cause a business 
 concern to be deemed not independently 
 owned and operated regardless of the 
 allocation of control during the 
 investment period under any investment 
 agreement between the business concern 
 and the entity making the investment;
 (ii) shall be disregarded in 
 determining whether a business concern 
 satisfies size standards established 
 pursuant to section 3(a)(2) of the 
 Small Business Act; and
 (iii) shall be disregarded in 
 determining whether a small business 
 concern is a smaller enterprise. and
 (B) in determining whether a business concern 
 satisfies net income standards established 
 pursuant to section 3(a)(2) of the Small 
 Business Act, if the business concern is not 
 required by law to pay Federal income taxes at 
 the enterprise level, but is required to pass 
 income through to the shareholders, partners, 
 beneficiaries, or other equitable owners of the 
 business concern, the net income of the 
 business concern shall be determined by 
 allowing a deduction in an amount equal to the 
 sum of--
 (i) if the business concern is not 
 required by law to pay State (and 
 local, if any) income taxes at the 
 enterprise level, the net income 
 (determined without regard to this 
 subparagraph), multiplied by the 
 marginal State income tax rate (or by 
 the combined State and local income tax 
 rates, as applicable) that would have 
 applied if the business concern were a 
 corporation; and
 (ii) the net income (so determined) 
 less any deduction for State (and 
 local) income taxes calculated under 
 clause (i), multiplied by the marginal 
 Federal income tax rate that would have 
 applied if the business concern were a 
 corporation;
 (6) the term ``development companies'' means 
 enterprises incorporated under State law with the 
 authority to promote and assist the growth and 
 development of small-business concerns in the areas 
 covered by their operations;
 (7) the term ``license'' means a license issued by 
 the Administration as provided in section 301;
 (8) the term ``articles'' means articles of 
 incorporation for an incorporated body and means the 
 functional equivalent or other similar documents 
 specified by the Administrator for other business 
 entities;
 (9) the term ``private capital''--
 (A) means the sum of--
 (i) the paid-in capital and paid-in 
 surplus of a corporate licensee, the 
 contributed capital of the partners of 
 a partnership licensee, or the equity 
 investment of the members of a limited 
 liability company licensee; and
 (ii) unfunded binding commitments, 
 from investors that meet criteria 
 established by the Administrator, to 
 contribute capital to the licensee: 
 Provided, That such unfunded 
 commitments may be counted as private 
 capital for purposes of approval by the 
 Administrator of any request for 
 leverage, but leverage shall not be 
 funded based on such commitments; [and]
 (B) does not include any--
 (i) funds borrowed by a licensee from 
 any source;
 (ii) funds obtained through the 
 issuance of leverage; or
 (iii) funds obtained directly or 
 indirectly from any Federal, State, or 
 local government, or any government 
 agency or instrumentality, except for--
 (I) funds obtained from the 
 business revenues (excluding 
 any governmental appropriation) 
 of any federally chartered or 
 government-sponsored 
 corporation [established prior 
 to October 1, 1987];
 (II) funds invested by an 
 employee welfare benefit plan 
 [or], pension plan, foundation, 
 endowment, or trust of any 
 college or university; and
 (III) any qualified 
 nonprivate funds (if the 
 investors of the qualified 
 nonprivate funds do not 
 control, directly or 
 indirectly, the management, 
 board of directors, general 
 partners, or members of the 
 licensee)[;]; and
 (C) does not include any funds obtained 
 directly or indirectly from any Federal, State, 
 or local government or any government agency or 
 instrumentality, except for funds described in 
 subclauses (I) through (III) of subparagraph 
 (B)(iii), for the purpose of approval by the 
 Administrator of any request for leverage.
 (10) the term ``leverage'' includes--
 (A) debentures purchased or guaranteed by the 
 Administration;
 (B) participating securities purchased or 
 guaranteed by the Administration; and
 (C) preferred securities outstanding as of 
 October 1, 1995;
 (11) the term ``third party debt'' means any 
 indebtedness for borrowed money, other than 
 indebtedness owed to the Administration;
 (12) the term ``smaller enterprise'' means any small 
 business concern that, together with its affiliates--
 (A) has--
 (i) a net financial worth of not more 
 than $6,000,000, as of the date on 
 which assistance is provided under this 
 Act to that business concern; and
 (ii) an average net income for the 2-
 year period preceding the date on which 
 assistance is provided under this Act 
 to that business concern, of not more 
 than $2,000,000, after Federal income 
 taxes (excluding any carryover losses) 
 except that, for purposes of this 
 clause, if the business concern is not 
 required by law to pay Federal income 
 taxes at the enterprise level, but is 
 required to pass income through to the 
 shareholders, partners, beneficiaries, 
 or other equitable owners of the 
 business concern, the net income of the 
 business concern shall be determined by 
 allowing a deduction in an amount equal 
 to the sum of--
 (I) if the business concern 
 is not required by law to pay 
 State (and local, if any) 
 income taxes at the enterprise 
 level, the net income 
 (determined without regard to 
 this clause), multiplied by the 
 marginal State income tax rate 
 (or by the combined State and 
 local income tax rates, as 
 applicable) that would have 
 applied if the business concern 
 were a corporation; and
 (II) the net income (so 
 determined) less any deduction 
 for State (and local) income 
 taxes calculated under 
 subclause (I), multiplied by 
 the marginal Federal income tax 
 rate that would have applied if 
 the business concern were a 
 corporation; or
 (B) satisfies the standard industrial 
 classification size standards established by 
 the Administration for the industry in which 
 the small business concern is primarily 
 engaged;
 (13) the term ``qualified nonprivate funds'' means 
 any--
 (A) funds directly or indirectly invested in 
 any applicant or licensee on or before August 
 16, 1982, by any Federal agency, other than the 
 Administration, under a provision of law 
 explicitly mandating the inclusion of those 
 funds in the definition of the term ``private 
 capital'';
 (B) funds directly or indirectly invested in 
 any applicant or licensee by any Federal agency 
 under a provision of law enacted after 
 September 4, 1992, explicitly mandating the 
 inclusion of those funds in the definition of 
 the term ``private capital''; and
 (C) funds invested in any applicant or 
 licensee by one or more State or local 
 government entities (including any guarantee 
 extended by those entities) in an aggregate 
 amount that does not exceed 33 percent of the 
 private capital of the applicant or licensee;
 (14) the terms ``employee welfare benefit plan'' and 
 ``pension plan'' have the same meanings as in section 3 
 of the Employee Retirement Income Security Act of 1974, 
 and are intended to include--
 (A) public and private pension or retirement 
 plans subject to such Act; and
 (B) similar plans not covered by such Act 
 that have been established and that are 
 maintained by the Federal Government or any 
 State or political subdivision, or any agency 
 or instrumentality thereof, for the benefit of 
 employees;
 (15) the term ``member'' means, with respect to a 
 licensee that is a limited liability company, a holder 
 of an ownership interest or a person otherwise admitted 
 to membership in the limited liability company;
 (16) the term ``limited liability company'' means a 
 business entity that is organized and operating in 
 accordance with a State limited liability company 
 statute approved by the Administration;
 (17) the term ``long term'', when used in connection 
 with equity capital or loan funds invested in any small 
 business concern or smaller enterprise, means any 
 period of time not less than 1 year;
 (18) the term ``Energy Saving debenture'' means a 
 deferred interest debenture that--
 (A) is issued at a discount;
 (B) has a 5-year maturity or a 10-year 
 maturity;
 (C) requires no interest payment or annual 
 charge for the first 5 years;
 (D) is restricted to Energy Saving qualified 
 investments; and
 (E) is issued at no cost (as defined in 
 section 502 of the Credit Reform Act of 1990) 
 with respect to purchasing and guaranteeing the 
 debenture;
 (19) the term ``Energy Saving qualified investment'' 
 means investment in a small business concern that is 
 primarily engaged in researching, manufacturing, 
 developing, or providing products, goods, or services 
 that reduce the use or consumption of non-renewable 
 energy resources; and
 (20) the term ``underlicensed State'' means a State 
 in which the number of licensees per capita is less 
 than the median number of licensees per capita for all 
 States, as calculated by the Administrator.

 * * * * * * *

 TITLE III--INVESTMENT DIVISION PROGRAMS

 Part A--Small Business Investment Companies

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 borrowing power

 Sec. 303. (a) Each small business investment company shall 
have authority to borrow money and to issue its securities, 
promissory notes, or other obligations under such general 
conditions and subject to such limitations and regulations as 
the Administration may prescribe.
 (b) To encourage the formation and growth of small business 
investment companies the Administration is authorized when 
authorized in appropriation Acts, to purchase, or to guarantee 
the timely payment of all principal and interest as scheduled 
on, debentures or participating securities issued by such 
companies. Such purchases or guarantees may be made by the 
Administration on such terms and conditions as it deems 
appropriate, pursuant to regulations issued by the 
Administration. 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 under this subsection. 
Debentures purchased or guaranteed by the Administration under 
this subsection shall be subordinate to any other debenture 
bonds, promissory notes, or other debts and obligations of such 
companies, unless the Administration in its exercise of 
reasonable investment prudence and in considering the financial 
soundness of such company determines otherwise. Such debentures 
may be issued for a term of not to exceed fifteen years and 
shall bear interest at a rate not less than 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 comparable to the average maturities on such 
debentures, adjusted to the nearest one-eighth of 1 per centum, 
plus, for debentures obligated after September 30, 2001, an 
additional charge, in an amount established annually by the 
Administration, as necessary to reduce to zero the cost (as 
defined in section 502 of the Federal Credit Reform Act of 1990 
(2 U.S.C. 661a)) to the Administration of purchasing and 
guaranteeing debentures under this Act, which amount may not 
exceed 1.38 percent per year, and which shall be paid to and 
retained by the Administration. The debentures or participating 
securities shall also contain such other terms as the 
Administration may fix, and shall be subject to the following 
restrictions and limitations:
 (1) The total amount of debentures and participating 
 securities that may be guaranteed by the Administration 
 and outstanding from a company licensed under section 
 301(c) of this Act shall not exceed 300 per centum of 
 the private capital of such company: Provided, That 
 nothing in this paragraph shall require any such 
 company that on March 31, 1993, has outstanding 
 debentures in excess of 300 per centum of its private 
 capital to prepay such excess: And provided further, 
 That any such company may apply for an additional 
 debenture guarantee or participating security guarantee 
 with the proceeds to be used solely to pay the amount 
 due on such maturing debenture, but the maturity of the 
 new debenture or security shall be not later than 
 September 30, 2002.
 (2) Maximum leverage.--
 (A) In general.--The maximum amount of 
 outstanding leverage made available to any one 
 company licensed under section 301(c) of this 
 Act may not exceed the lesser of--
 (i) [300] 200 percent of such 
 company's private capital; or
 [(ii) $175,000,000.]
 (ii)(I) with respect to such a 
 company that makes quarterly or 
 semiannual interest payments 
 $250,000,000; or
 (II) $175,000,000 with respect to any 
 other company licensed under section 
 301(c).
 (B) Multiple licenses under common control.--
 The maximum amount of outstanding leverage made 
 available to two or more companies licensed 
 under section 301(c) of this Act that are 
 commonly controlled (as determined by the 
 Administrator) and not under capital impairment 
 [may not exceed $350,000,000.] may not exceed--
 (i) with respect to such companies 
 that are commonly controlled and that 
 make quarterly or semiannual interest 
 payments, $475,000,000; or 
 (ii) $350,000,000 with respect to any 
 other companies licensed under section 
 301(c) that are commonly controlled. 
 (C) Investments in low-income or rural 
 geographic areas, critical technology areas, or 
 small manufacturers.--[(i) In calculating]
 (i) In general._Except as provided in 
 clause (iii), in calculating the 
 outstanding leverage of a company or 
 companies for the purposes of 
 [subparagraph (A)] subparagraphs (A) 
 and (B), the Administrator shall not 
 include the amount of the cost basis of 
 any [equity] investment made by [the 
 company in a smaller enterprise located 
 in a low-income geographic area (as 
 defined in section 351), to the extent 
 that the total of such amounts does not 
 exceed 50 percent of the company's 
 private capital.] the company or 
 companies in--
 (I) a small business concern 
 located in a low-income 
 geographic area (as defined in 
 section 351 of this title) or 
 in a rural area (as defined in 
 section 343(a)(13) of the 
 Agricultural Act of 1961 (7 
 U.S.C. 1991(a)(13))); 
 (II) a small business concern 
 operating primarily in a 
 covered technology category (as 
 defined in section 149(e) of 
 title 10, United States Code); 
 or 
 (III) a small manufacturer 
 (as defined in section 
 501(e)(6) of this Act). 
 [(ii) The maximum amount of 
 outstanding leverage made available 
 to--
 [(I) any 1 company described 
 in clause (iii) may not exceed 
 the lesser of 300 percent of 
 private capital of the company, 
 or $175,000,000; and
 [(II) 2 or more companies 
 described in clause (iii) that 
 are under common control (as 
 determined by the 
 Administrator) may not exceed 
 $250,000,000.
 [(iii) A company described in this 
 clause is a company licensed under 
 section 301(c) in the first fiscal year 
 after the date of enactment of this 
 clause or any fiscal year thereafter 
 that certifies in writing that not less 
 than 50 percent of the dollar amount of 
 investments of that company shall be 
 made in companies that are located in a 
 low-income geographic area (as that 
 term is defined in section 351).]
 (ii) Limitation.--While maintaining 
 the limitation of subparagraph (A)(i) 
 and consistent with a leverage 
 determination ratio issued pursuant to 
 section 301(c), the aggregate amount 
 excluded for a company or companies 
 under clause (i) from the calculation 
 of the outstanding leverage such 
 company or companies for the purposes 
 of subparagraphs (A) and (B) may not 
 exceed the lesser of 50 percent of the 
 private capital of such company or 
 companies or $125,000,000.
 (iii) Prospective applicability.--An 
 investment by a licensee is eligible 
 for exclusion from the calculation of 
 outstanding leverage under clause (i) 
 only if such investment is made by such 
 licensee after the date of enactment of 
 this clause.
 (D) Investments in energy saving small 
 businesses.--
 (i) In general.--Subject to clause 
 (ii), in calculating the outstanding 
 leverage of a company for purposes of 
 subparagraph (A), the Administrator 
 shall exclude the amount of the cost 
 basis of any Energy Saving qualified 
 investment in a smaller enterprise made 
 in the first fiscal year after the date 
 of enactment of this subparagraph or 
 any fiscal year thereafter by a company 
 licensed in the applicable fiscal year.
 (ii) Limitations.--
 (I) Amount of exclusion.--The 
 amount excluded under clause 
 (i) for a company shall not 
 exceed 33 percent of the 
 private capital of that 
 company.
 (II) Maximum investment.--A 
 company shall not make an 
 Energy Saving qualified 
 investment in any one entity in 
 an amount equal to more than 20 
 percent of the private capital 
 of that company.
 (III) Other terms.--The 
 exclusion of amounts under 
 clause (i) shall be subject to 
 such terms as the Administrator 
 may impose to ensure that there 
 is no cost (as that term is 
 defined in section 502 of the 
 Federal Credit Reform Act of 
 1990 (2 U.S.C. 661a)) with 
 respect to purchasing or 
 guaranteeing any debenture 
 involved.
 (3) Subject to the foregoing dollar and percentage 
 limits, a company licensed under section 301(c) of this 
 Act may issue and have outstanding both guaranteed 
 debentures and participating securities: Provided, That 
 the total amount of participating securities 
 outstanding shall not exceed 200 per centum of private 
 capital.
For purposes of this subsection, the term ``venture capital'' 
includes such common stock, preferred stock, or other financing 
with subordination or nonamortization characteristics as the 
Administration determines to be substantially similar to equity 
financing.
 (c) Third Party Debt.--The Administrator--
 (1) shall not permit a licensee having outstanding 
 leverage to incur third party debt that would create or 
 contribute to an unreasonable risk of default or loss 
 to the Federal Government;
 (2) shall permit such licensees to incur third party 
 debt only on such terms and subject to such conditions 
 as may be established by the Administrator, by 
 regulation or otherwise.
 (d) Investments in Smaller Enterprises.--The Administrator 
shall require each licensee, as a condition of approval of an 
application for leverage, to certify in writing that not less 
than 25 percent of the aggregate dollar amount of financings of 
that licensee shall be provided to smaller enterprises.
 (e) Capital Impairment.--Before approving any application for 
leverage submitted by a licensee under this Act, the 
Administrator--
 (1) shall determine that the private capital of the 
 licensee meets the requirements of section 302(a); and
 (2) shall determine, taking into account the nature 
 of the assets of the licensee, the amount and terms of 
 any third party debt owed by such licensee, and any 
 other factors determined to be relevant by the 
 Administrator, that the private capital of the licensee 
 has not been impaired to such an extent that the 
 issuance of additional leverage would create or 
 otherwise contribute to an unreasonable risk of default 
 or loss to the Federal Government.
 (f) Redemption or Repurchase of Preferred Stock.--
Notwithstanding any other provision of law--
 (1) the Administrator may allow the issuer of any 
 preferred stock sold to the Administration before 
 November 1, 1989 to redeem or repurchase such stock, 
 upon the payment to the Administration of an amount 
 less than the par value of such stock, for a repurchase 
 price determined by the Administrator after 
 consideration of all relevant factors, including--
 (A) the market value of the stock;
 (B) the value of benefits provided and 
 anticipated to accrue to the issuer;
 (C) the amount of dividends paid, accrued, 
 and anticipated; and
 (D) the estimate of the Administrator of any 
 anticipated redemption; and
 (2) any moneys received by the Administration from 
 the repurchase of preferred stock shall be available 
 solely to provide debenture leverage to licensees 
 having 50 percent or more in aggregate dollar amount of 
 their financings invested in smaller enterprises.
 (g) In order to encourage small business investment companies 
to provide equity capital to small businesses, the 
Administration is authorized to guarantee the payment of the 
redemption price and prioritized payments on participating 
securities issued by such companies which are licensed pursuant 
to section 301(c) of this Act, and a trust or a pool acting on 
behalf of the Administration is authorized to purchase such 
securities. Such guarantees and purchases shall be made on such 
terms and conditions as the Administration shall establish by 
regulation. For purposes of this section, (A) the term 
``participating securities'' includes preferred stock, a 
preferred limited partnership interest or a similar instrument, 
including debentures under the terms of which interest is 
payable only to the extent of earnings and (B) the term 
``prioritized payments'' includes dividends on stock, interest 
on qualifying debentures, or priority returns on preferred 
limited partnership interests which are paid only to the extent 
of earnings. Participating securities guaranteed under this 
subsection shall be subject to the following restrictions and 
limitations, in addition to such other restrictions and 
limitations as the Administration may determine:
 (1) Participating securities shall be redeemed not 
 later than 15 years after their date of issuance for an 
 amount equal to 100 per centum of the original issue 
 price plus the amount of any accrued prioritized 
 payment: Provided, That if, at the time the securities 
 are redeemed, whether as scheduled or in advance, the 
 issuing company (A) has not paid all accrued 
 prioritized payments in full as provided in paragraph 
 (2) below and (B) has not sold or otherwise disposed of 
 all investments subject to profit distributions 
 pursuant to paragraph (11), the company's obligation to 
 pay accrued and unpaid prioritized payments shall 
 continue and payment shall be made from the realized 
 gain, if any, on the disposition of such investments, 
 but if on disposition there is no realized gain, the 
 obligation to pay accrued and unpaid prioritized 
 payments shall be extinguished: Provided further, That 
 in the interim, the company shall not make any in-kind 
 distributions of such investments unless it pays to the 
 Administration such sums, up to the amount of the 
 unrealized appreciation on such investments, as may be 
 necessary to pay in full the accrued prioritized 
 payments.
 (2) Prioritized payments on participating securities 
 shall be preferred and cumulative and payable out of 
 the retained earnings available for distribution, as 
 defined by the Administration, of the issuing company 
 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 
 comparable to the average maturities on such 
 securities, adjusted to the nearest one-eighth of 1 
 percent, plus, for participating securities obligated 
 after September 30, 2001, an additional charge, in an 
 amount established annually by the Administration, as 
 necessary to reduce to zero the cost (as defined in 
 section 502 of the Federal Credit Reform Act of 1990 (2 
 U.S.C. 661a)) to the Administration of purchasing and 
 guaranteeing participating securities under this Act, 
 which amount may not exceed 1.46 percent per year, and 
 which shall be paid to and retained by the 
 Administration.
 (3) In the event of liquidation of the company, 
 participating securities shall be senior in priority 
 for all purposes to all other equity interests in the 
 issuing company, whenever created.
 (4) Any company issuing a participating security 
 under this Act shall commit to invest or shall invest 
 an amount equal to the outstanding face value of such 
 security solely in equity capital. As used in this 
 subsection, ``equity capital'' means common or 
 preferred stock or a similar instrument, including 
 subordinated debt with equity features which is not 
 amortized and which provides for interest payments from 
 appropriate sources, as determined by the 
 Administration.
 (5) The only debt (other than leverage obtained in 
 accordance with this title) which any company issuing a 
 participating security under this subsection may have 
 outstanding shall be temporary debt in amounts limited 
 to not more than 50 per centum of private capital.
 (6) The Administration may permit the proceeds of a 
 participating security to be used to pay the principal 
 amount due on outstanding debentures guaranteed by the 
 Administration, if (A) the company has outstanding 
 equity capital invested in an amount equal to the 
 amount of the debentures being refinanced and (B) the 
 Administration receives profit participation on such 
 terms and conditions as it may determine, but not to 
 exceed the per centums specified in paragraph (11).
 (7) For purposes of computing profit participation 
 under paragraph (11), except as otherwise determined by 
 the Administration, the management expenses of any 
 company which issues participating securities shall not 
 be greater than 2.5 per centum per annum of the 
 combined capital of the company, plus $125,000 if the 
 company's combined capital is less than $20,000,000. 
 For purposes of this paragraph, (A) the term ``combined 
 capital'' means the aggregate amount of private capital 
 and outstanding leverage and (B) the term ``management 
 expenses'' includes salaries, office expenses, travel, 
 business development, office and equipment rental, 
 bookkeeping and the development, investigation and 
 monitoring of investments, but does not include the 
 cost of services provided by specialized outside 
 consultants, outside lawyers and outside auditors, who 
 perform services not generally expected of a venture 
 capital company nor does such term include the cost of 
 services provided by any affiliate of the company which 
 are not part of the normal process of making and 
 monitoring venture capital investments.
 (8) Notwithstanding paragraph (9), if a company is 
 operating as a limited partnership or as a subchapter S 
 corporation or an equivalent pass-through entity for 
 tax purposes and if there are no accumulated and unpaid 
 prioritized payments, the company may make annual 
 distributions to the partners, shareholders, or members 
 in amounts not greater than each partner's, 
 shareholder's, or member's maximum tax liability. For 
 purposes of this paragraph, the term ``maximum tax 
 liability'' means the amount of income allocated to 
 each partner, shareholder, or member (including an 
 allocation to the Administration as if it were a 
 taxpayer) for Federal income tax purposes in the income 
 tax return filed or to be filed by the company with 
 respect to the fiscal year of the company immediately 
 preceding such distribution, multiplied by the highest 
 combined marginal Federal and State income tax rates 
 for corporations or individuals, whichever is higher, 
 on each type of income included in such return. For 
 purposes of this paragraph, the term ``State income 
 tax'' means the income tax of the State where the 
 company's principal place of business is located. A 
 company may also elect to make a distribution under 
 this paragraph at any time during any calendar quarter 
 based on an estimate of the maximum tax liability. If a 
 company makes 1 or more interim distributions for a 
 calendar year, and the aggregate amount of those 
 distributions exceeds the maximum amount that the 
 company could have distributed based on a single annual 
 computation, any subsequent distribution by the company 
 under this paragraph shall be reduced by an amount 
 equal to the excess amount distributed.
 (9) After making any distributions as provided in 
 paragraph (8), a company with participating securities 
 outstanding may distribute the balance of income to its 
 investors, specifically including the Administration, 
 in the per centums specified in paragraph (11), if 
 there are no accumulated and unpaid prioritized 
 payments and if all amounts due the Administration 
 pursuant to paragraph (11) have been paid in full, 
 subject to the following conditions:
 (A) As of the date of the proposed 
 distribution, if the amount of leverage 
 outstanding is more than 200 per centum of the 
 amount of private capital, any amounts 
 distributed shall be made to private investors 
 and to the Administration in the ratio of 
 leverage to private capital.
 (B) As of the date of the proposed 
 distribution, if the amount of leverage 
 outstanding is more than 100 per centum but not 
 more than 200 per centum of the amount of 
 private capital, 50 per centum of any amounts 
 distributed shall be made to the Administration 
 and 50 per centum shall be made to the private 
 investors.
 (C) If the amount of leverage outstanding is 
 100 per centum, or less, of the amount of 
 private capital, the ratio shall be that for 
 distribution of profits as provided in 
 paragraph (11).
 (D) Any amounts received by the 
 Administration under subparagraph (A) or (B) 
 shall be applied first as profit participation 
 as provided in paragraph (11) and any remainder 
 shall be applied as a prepayment of the 
 principal amount of the participating 
 securities or debentures.
 (10) After making any distributions pursuant to 
 paragraph (8), a company with participating securities 
 outstanding may return capital to its investors, 
 specifically including the Administration, if there are 
 no accumulated and unpaid prioritized payments and if 
 all amounts due the Administration pursuant to 
 paragraph (11) have been paid in full. Any 
 distributions under this paragraph shall be made to 
 private investors and to the Administration in the 
 ratio of private capital to leverage as of the date of 
 the proposed distribution: Provided, That if the amount 
 of leverage outstanding is less than 50 per centum of 
 the amount of private capital or $10,000,000, whichever 
 is less, no distribution shall be required to be made 
 to the Administration unless the Administration 
 determines, on a case by case basis, to require 
 distributions to the Administration to reduce the 
 amount of outstanding leverage to an amount less than 
 $10,000,000.
 (11)(A) A company which issues participating 
 securities shall agree to allocate to the 
 Administration a share of its profits determined by the 
 relationship of its private capital to the amount of 
 participating securities guaranteed by the 
 Administration in accordance with the following:
 (i) If the total amount of participating 
 securities is 100 per centum of private capital 
 or less, the company shall allocate to the 
 Administration a per centum share computed as 
 follows: the amount of participating securities 
 divided by private capital times 9 per centum.
 (ii) If the total amount of participating 
 securities is more than 100 per centum but not 
 greater than 200 per centum of private capital, 
 the company shall allocate to the 
 Administration a per centum share computed as 
 follows:
 (I) 9 per centum, plus
 (II) 3 per centum of the amount of 
 participating securities minus private 
 capital divided by private capital.
 (B) Notwithstanding any other provision of this 
 paragraph--
 (i) in no event shall the total per centum 
 required by this paragraph exceed 12 per 
 centum, unless required pursuant to the 
 provisions of (ii) below,
 (ii) if, on the date the participating 
 securities are marketed, the interest rate on 
 Treasury bonds with a maturity of 10 years is a 
 rate other than 8 per centum, the 
 Administration shall adjust the rate specified 
 in paragraph (A) above, either higher or lower, 
 by the same per centum by which the Treasury 
 bond rate is higher or lower than 8 per centum, 
 and
 (iii) this paragraph shall not be construed 
 to create any ownership interest of the 
 Administration in the company.
 (12) A company may elect to make an in-kind 
 distribution of securities only if such securities are 
 publicly traded and marketable. The company shall 
 deposit the Administration's share of such securities 
 for disposition with a trustee designated by the 
 Administration or, at its option and with the agreement 
 of the company, the Administration may direct the 
 company to retain the Administration's share. If the 
 company retains the Administration's share, it shall 
 sell the Administration's share and promptly remit the 
 proceeds to the Administration. As used in this 
 paragraph, the term ``trustee'' means a person who is 
 knowledgeable about and proficient in the marketing of 
 thinly traded securities.
 (h) The computation of amounts due the Administration under 
participating securities shall be subject to the following 
terms and conditions:
 (1) The formula in subsection (g)(11) shall be 
 computed annually and the Administration shall receive 
 distributions of its profit participation at the same 
 time as other investors in the company.
 (2) The formula shall not be modified due to an 
 increase in the private capital unless the increase is 
 provided for in a proposed business plan submitted to 
 and approved by the Administration.
 (3) After distributions have been made, the 
 Administration's share of such distributions shall not 
 be recomputed or reduced.
 (4) If the company prepays or repays the 
 participating securities, the Administration shall 
 receive the requisite participation upon the 
 distribution of profits due to any investments held by 
 the company on the date of the repayment or prepayment.
 (5) If a company is licensed on or before March 31, 
 1993, it may elect to exclude from profit participation 
 all investments held on that date and in such case the 
 Administration shall determine the amount of the future 
 expenses attributable to such prior investment: 
 Provided, That if the company issues participating 
 securities to refinance debentures as authorized in 
 subsection (g)(6), it may not elect to exclude profits 
 on existing investments under this paragraph.
 (i) Leverage Fee.--With respect to leverage granted by the 
Administration to a licensee, the Administration shall collect 
from the licensee a nonrefundable fee in an amount equal to 3 
percent of the face amount of leverage granted to the licensee 
in the following manner: 1 percent upon the date on which the 
Administration enters into any commitment for such leverage 
with the licensee, and the balance of 2 percent (or 3 percent 
if no commitment has been entered into by the Administration) 
on the date on which the leverage is drawn by the licensee.
 (j) Calculation of Subsidy Rate.--All fees, interest, and 
profits received and retained by the Administration under this 
section 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 502 of the Federal 
Credit Reform Act of 1990) to the Administration of purchasing 
and guaranteeing debentures and participating securities under 
this Act.
 (k) Energy Saving Debentures.--In addition to any other 
authority under this Act, a small business investment company 
licensed in the first fiscal year after the date of enactment 
of this subsection or any fiscal year thereafter may issue 
Energy Saving debentures.

 * * * * * * *

 XVIII. MINORITY VIEWS

 In September 2023, the Small Business Administration (SBA) 
and the Department of Defense (DOD) launched a joint 
initiative, known as the Small Business Investment Company 
Critical Technologies (SBICCT) Initiative. The SBICCT 
Initiative couples the SBA's Small Business Investment Company 
(SBIC) Program with the DOD's robust scientific and technical 
expertise and national security mission with the goal of 
attracting and scaling private investment into businesses in 
technology areas critical to national and economic security.
 The high priority financing areas in critical technology 
are typically venture and scale up/growth equity investment. 
Due to the early revenue profile, the often-capital-intensive 
nature, and pre- profitability status of these businesses, the 
majority of financing in these businesses comes in the form of 
equity rather than debt. The duration of the funds investing in 
businesses engaged in critical technology is significantly 
longer than those funds running mezzanine debt and other credit 
strategies. As a result, such investments are not always a 
``match'' for SBICs with limited partners with typically 
shorter time horizons. For example, as of 2023, of the 
approximately $24 billion in private capital committed to SBIC 
licensed funds only about 30 percent come from traditional 
institutional investors with longer time horizons that can 
allocate more capital to long duration investments in critical 
technology businesses.
 In order to resolve this mismatch and ensure institutional 
investors with longer time horizons are able to invest in 
critical technologies through the SBIC program, and effectively 
carryout the SBICCT Initiative, it is necessary to update 
antiquated statutory constraints that limit participation in 
the SBIC program.
 At the same time, there continues to be a significant lack 
of capital investment in small manufacturers as well as small 
businesses in rural and underserved communities. Importantly, 
the Small Business Investment Act (15 U.S.C. Sec. 661 et. al.) 
has historically permitted ``bonus'' leverage to be allocated 
post licensing for investments in low-income communities. 
However, due to changes in market conditions and investment 
strategies, after the SBIC's fund's formation, utilization of 
the ``bonus'' leverage is not typically utilized. Therefore, to 
drive additional SBIC investment capital to small manufacturers 
and small businesses in rural and underserved communities, it 
is important to provide utilization of ``bonus'' leverage 
upfront at the time of licensing, rather than a licensee 
requesting additional leverage midway through the investment 
period.
 Nydia M. Velazquez,
 Ranking Member.