II
118THCONGRESS
1
STSESSION S. 46
To establish a small business and domestic production recovery investment
facility, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JANUARY24 (legislative day, JANUARY3), 2023
Mr. R
UBIO(for himself and Mr. RISCH) introduced the following bill; which
was read twice and referred to the Committee on Small Business and En-
trepreneurship
A BILL
To establish a small business and domestic production
recovery investment facility, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘American Innovation 4
and Manufacturing Act’’. 5
SEC. 2. SMALL BUSINESS INVESTMENT COMPANY PRO-6
GRAM. 7
(a) I
NGENERAL.—Part A of title III of the Small 8
Business Investment Act of 1958 (15 U.S.C. 681 et seq.) 9
is amended— 10
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(1) in section 302(a) (15 U.S.C. 682(a))— 1
(A) in paragraph (1)— 2
(i) in subparagraph (A), by striking 3
‘‘or’’ at the end; 4
(ii) in subparagraph (B), by striking 5
the period at the end and inserting ‘‘; or’’; 6
and 7
(iii) by adding at the end the fol-8
lowing: 9
‘‘(C) $20,000,000, adjusted every 5 years 10
for inflation, with respect to each licensee au-11
thorized or seeking authority to sell bonds to 12
the Administration as a participating invest-13
ment company under section 321.’’; and 14
(2) by adding at the end the following: 15
‘‘SEC. 321. SMALL BUSINESS AND DOMESTIC PRODUCTION 16
RECOVERY INVESTMENT FACILITY. 17
‘‘(a) D
EFINITIONS.—In this section: 18
‘‘(1) E
LIGIBLE SMALL BUSINESS CONCERN .— 19
The term ‘eligible small business concern’— 20
‘‘(A) means a small business concern that 21
is a manufacturing business that is assigned a 22
North American Industry Classification System 23
code beginning with 31, 32, or 33 at the time 24
at which the small business concern receives an 25
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investment from a participating investment 1
company under the facility; and 2
‘‘(B) does not include an entity described 3
in section 7(a)(37)(A)(iv)(III) of the Small 4
Business Act (15 U.S.C. 5
636(a)(37)(A)(iv)(III)). 6
‘‘(2) F
ACILITY.—The term ‘facility’ means the 7
facility established under subsection (b). 8
‘‘(3) F
UND.—The term ‘Fund’ means the fund 9
established under subsection (h). 10
‘‘(4) P
ARTICIPATING INVESTMENT COMPANY .— 11
The term ‘participating investment company’ means 12
a small business investment company approved 13
under subsection (d) to participate in the facility. 14
‘‘(5) P
ROTE´GE´INVESTMENT COMPANY .—The 15
term ‘prote´ge´investment company’ means a small 16
business investment company that— 17
‘‘(A) is majority managed by new, inexperi-18
enced, or otherwise underrepresented fund man-19
agers; and 20
‘‘(B) elects and is selected by the Adminis-21
tration to participate in the pathway-prote´ge´ 22
program under subsection (g). 23
‘‘(6) S
MALL BUSINESS CONCERN .—The term 24
‘small business concern’ has the meaning given the 25
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term in section 3(a) of the Small Business Act (15 1
U.S.C. 632(a)). 2
‘‘(b) E
STABLISHMENT.— 3
‘‘(1) F
ACILITY.—The Administrator shall estab-4
lish and carry out a facility to increase resiliency in 5
the manufacturing supply chain of eligible small 6
business concerns by providing financial assistance 7
to participating investment companies that facilitate 8
equity financings to eligible small business concerns 9
in accordance with this section. 10
‘‘(2) A
DMINISTRATION OF FACILITY .—The fa-11
cility shall be administered by the Administrator act-12
ing through the Associate Administrator described in 13
section 201. 14
‘‘(c) A
PPLICATIONS.— 15
‘‘(1) I
N GENERAL.—Any small business invest-16
ment company may submit to the Administrator an 17
application to participate in the facility. 18
‘‘(2) R
EQUIREMENTS FOR APPLICATION .—An 19
application to participate in the facility shall include 20
the following: 21
‘‘(A) A business plan describing how the 22
applicant intends to make successful equity in-23
vestments in eligible small business concerns. 24
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‘‘(B) Information regarding the relevant 1
investment qualifications and backgrounds of 2
the individuals responsible for the management 3
of the applicant. 4
‘‘(C) A description of the extent to which 5
the applicant meets the selection criteria under 6
subsection (d)(2). 7
‘‘(3) E
XCEPTIONS TO APPLICATION FOR NEW 8
LICENSEES.—Not later than 90 days after the date 9
of enactment of this section, the Administrator shall 10
reduce requirements for applicants applying to oper-11
ate as a participating investment company under 12
this section in order to encourage the participation 13
of new small business investment companies in the 14
facility under this section, which may include the re-15
quirements established under part 107 of title 13, 16
Code of Federal Regulations, or any successor regu-17
lation, relating to— 18
‘‘(A) the approval of initial management 19
expenses; 20
‘‘(B) the management ownership diversity 21
requirement; 22
‘‘(C) the disclosure of general compen-23
satory practices and fee structures; or 24
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‘‘(D) any other requirement that the Ad-1
ministrator determines to be an obstacle to 2
achieving the purposes described in this para-3
graph. 4
‘‘(d) S
ELECTION OF PARTICIPATINGINVESTMENT 5
C
OMPANIES.— 6
‘‘(1) D
ETERMINATION.— 7
‘‘(A) I
N GENERAL.—Except as provided in 8
paragraph (3), not later than 60 days after the 9
date on which the Administrator receives an ap-10
plication under subsection (c), the Adminis-11
trator shall— 12
‘‘(i) make a final determination to ap-13
prove or disapprove such applicant to par-14
ticipate in the facility; and 15
‘‘(ii) transmit the determination to the 16
applicant in writing. 17
‘‘(B) C
OMMITMENT AMOUNT .—Except as 18
provided in paragraph (3), at the time of ap-19
proval of an applicant, the Administrator shall 20
make a determination of the amount of the 21
commitment that may be awarded to the appli-22
cant under this section. 23
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‘‘(2) SELECTION CRITERIA.—In making a de-1
termination under paragraph (1), the Administrator 2
shall consider— 3
‘‘(A) the probability that the investment 4
strategy of the applicant will successfully repay 5
any financial assistance provided by the Admin-6
istration, including the probability of a return 7
significantly in excess thereof; 8
‘‘(B) the probability that the investments 9
made by the applicant will— 10
‘‘(i) provide capital to eligible small 11
business concerns; or 12
‘‘(ii) create or preserve jobs in the 13
United States; 14
‘‘(C) the probability that the applicant will 15
meet the objectives in the business plan of the 16
applicant, including the financial goals, and, if 17
applicable, the pathway-prote´ge´program in ac-18
cordance with subsection (g); and 19
‘‘(D) the probability that the applicant will 20
assist eligible small business concerns in achiev-21
ing profitability. 22
‘‘(3) A
PPROVAL OF PARTICIPATING INVEST -23
MENT COMPANIES.— 24
‘‘(A) P
ROVISIONAL APPROVAL.— 25
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‘‘(i) IN GENERAL.—Notwithstanding 1
paragraph (1), with respect to an applica-2
tion submitted by an applicant to operate 3
as a participating investment company 4
under this section, the Administrator may 5
provide provisional approval for the appli-6
cant in lieu of a final determination of ap-7
proval and determination of the amount of 8
the commitment under that paragraph. 9
‘‘(ii) P
URPOSE.—The purpose of a 10
provisional approval under clause (i) is 11
to— 12
‘‘(I) encourage applications from 13
investment companies with an invest-14
ment mandate from the committed 15
private market capital of the invest-16
ment company that does not conform 17
to the requirements described in this 18
section at the time of application; 19
‘‘(II) allow the applicant to more 20
effectively raise capital commitments 21
in the private markets by referencing 22
the intent of the Administrator to 23
award the applicant a commitment; 24
and 25
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‘‘(III) allow the applicant to more 1
precisely request the desired amount 2
of commitment pending the securing 3
of capital from private market inves-4
tors. 5
‘‘(iii) L
IMIT ON PERIOD OF THE 6
TIME.—The period between a provisional 7
approval under clause (i) and the final de-8
termination of approval under paragraph 9
(1) shall not exceed 12 months. 10
‘‘(e) C
OMMITMENTS AND SBIC BONDS.— 11
‘‘(1) I
N GENERAL.—The Administrator may, 12
out of amounts available in the Fund, purchase or 13
commit to purchase from a participating investment 14
company 1 or more accruing bonds that include eq-15
uity features as described in this subsection. 16
‘‘(2) B
OND TERMS.—A bond purchased by the 17
Administrator from a participating investment com-18
pany under this subsection shall have the following 19
terms and conditions: 20
‘‘(A) T
ERM AND INTEREST.— 21
‘‘(i) I
N GENERAL.—The bond shall be 22
issued for a term of not less than 15 years 23
and shall bear interest at a rate deter-24
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mined by the Administrator of not more 1
than 2 percent. 2
‘‘(ii) A
CCRUAL OF INTEREST .—Inter-3
est on the bond shall accrue and shall be 4
payable in accordance with subparagraph 5
(D). 6
‘‘(iii) P
REPAYMENT.—The bond shall 7
be prepayable without penalty after the 8
end of the 1-year period beginning on the 9
date on which the bond was purchased. 10
‘‘(B) P
ROFITS.— 11
‘‘(i) I
N GENERAL.—The Administra-12
tion shall be entitled to receive a share of 13
the profits net of any profit sharing per-14
formance compensation of the participating 15
investment company equal to the quotient 16
obtained by dividing— 17
‘‘(I) one-third of the commitment 18
that the participating investment com-19
pany is approved for under subsection 20
(d); by 21
‘‘(II) the commitment approved 22
under subsection (d) plus the regu-23
latory capital of the participating in-24
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vestment company at the time of ap-1
proval under that subsection. 2
‘‘(ii) D
ETERMINATION OF PERCENT -3
AGE.—The share to which the Administra-4
tion is entitled under clause (i)— 5
‘‘(I) shall be determined at the 6
time of approval under subsection (d); 7
and 8
‘‘(II) without the approval of the 9
Administration, shall not be revised, 10
including to reflect subsequent dis-11
tributions of profits, returns of cap-12
ital, or repayments of bonds, or other-13
wise. 14
‘‘(C) P
ROFIT SHARING PERFORMANCE 15
COMPENSATION.— 16
‘‘(i) R
ECEIPT BY ADMINISTRATION .— 17
The Administration shall receive a share of 18
profits of not more than 2 percent, which 19
shall be deposited into the Fund and be 20
available to make commitments under this 21
subsection. 22
‘‘(ii) R
ECEIPT BY MANAGERS .—The 23
managers of the participating investment 24
company may receive a maximum profit 25
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sharing performance compensation of 25 1
percent minus the share of profits paid to 2
the Administration under clause (i). 3
‘‘(D) P
ROHIBITION ON DISTRIBUTIONS .— 4
No distributions on capital, including profit dis-5
tributions, shall be made by the participating 6
investment company to the investors or man-7
agers of the participating investment company 8
until the Administration has received payment 9
of all accrued interest on the bond committed 10
under this section. 11
‘‘(E) R
EPAYMENT OF PRINCIPAL .—Except 12
as described in subparagraph (F), repayments 13
of principal of the bond of a participating in-14
vestment company shall be— 15
‘‘(i) made at the same time as returns 16
of private capital; and 17
‘‘(ii) in amounts equal to the pro rata 18
share of the Administration of the total 19
amount being repaid or returned at such 20
time. 21
‘‘(F) L
IQUIDATION OR DEFAULT .—Upon 22
any liquidation event or default, as defined by 23
the Administration, any unpaid principal or ac-24
crued interest on the bond shall— 25
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‘‘(i) have a priority over all equity of 1
the participating investment company; and 2
‘‘(ii) be paid before any return of eq-3
uity or any other distributions to the inves-4
tors or managers of the participating in-5
vestment company. 6
‘‘(3) A
MOUNT OF COMMITMENTS AND PUR -7
CHASES.— 8
‘‘(A) M
AXIMUM AMOUNT .—The maximum 9
amount of outstanding bonds and commitments 10
to purchase bonds for any participating invest-11
ment company under the facility shall be the 12
lesser of— 13
‘‘(i) twice the amount of the regu-14
latory capital of the participating invest-15
ment company; or 16
‘‘(ii) $200,000,000. 17
‘‘(4) C
OMMITMENT PROCESS .—Commitments by 18
the Administration to purchase bonds under the fa-19
cility shall remain available to be sold by a partici-20
pating investment company until the end of the 21
fourth fiscal year following the year in which the 22
commitment is made, subject to review and approval 23
by the Administration based on regulatory compli-24
ance, financial status, change in management, devi-25
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ation from business plan, and such other limitations 1
as may be determined by the Administration by reg-2
ulation or otherwise. 3
‘‘(5) C
OMMITMENT CONDITIONS .— 4
‘‘(A) I
N GENERAL.—As a condition of re-5
ceiving a commitment under the facility, not 6
less than 50 percent of amounts invested by the 7
participating investment company shall be in-8
vested in eligible small business concerns. 9
‘‘(B) E
XAMINATIONS.—In addition to the 10
matters set forth in section 310(c), the Admin-11
istration shall examine each participating in-12
vestment company in such detail so as to deter-13
mine whether the participating investment com-14
pany has complied with the requirements under 15
this subsection. 16
‘‘(f) D
ISTRIBUTIONS ANDFEES.— 17
‘‘(1) D
ISTRIBUTION REQUIREMENTS .— 18
‘‘(A) D
ISTRIBUTIONS.—As a condition of 19
receiving a commitment under the facility, a 20
participating investment company shall make 21
all distributions to the Administrator in the 22
same form and in a manner as are made to in-23
vestors, or otherwise at a time and in a manner 24
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consistent with regulations or policies of the 1
Administration. 2
‘‘(B) A
LLOCATIONS.—A participating in-3
vestment company shall make allocations of in-4
come, gain, loss, deduction, and credit to the 5
Administrator with respect to any outstanding 6
bonds as if the Administrator were an investor. 7
‘‘(2) F
EES.—The Administrator may not 8
charge fees for participating investment companies 9
other than examination fees that are consistent with 10
the license of the participating investment company. 11
‘‘(3) B
IFURCATION.—Losses on bonds issued by 12
participating investment companies shall not be off-13
set by fees or any other charges on debenture small 14
business investment companies. 15
‘‘(g) P
ROTE´GE´PROGRAM.—The Administrator shall 16
establish a pathway-prote´ge´program in which a prote´ge´ 17
investment company may receive technical assistance and 18
program support from a participating investment company 19
on a voluntary basis and without penalty for non-partici-20
pation. 21
‘‘(h) L
OSSLIMITINGFUND.— 22
‘‘(1) I
N GENERAL.—There is established in the 23
Treasury a fund for making commitments and pur-24
chasing bonds with equity features under the facility 25
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and receiving capital returned by participating in-1
vestment companies. 2
‘‘(2) U
SE OF FUNDS.—Amounts appropriated 3
to the Fund or deposited in the Fund under para-4
graph (3) shall be available to the Administrator, 5
without further appropriation, for making commit-6
ments and purchasing bonds under the facility and 7
expenses and payments, excluding administrative ex-8
penses, relating to the operations of the Adminis-9
trator under the facility. 10
‘‘(3) D
EPOSITING OF AMOUNTS .— 11
‘‘(A) I
N GENERAL.—All amounts received 12
by the Administrator from a participating in-13
vestment company relating to the facility, in-14
cluding any moneys, property, or assets derived 15
by the Administrator from operations in con-16
nection with the facility, shall be deposited in 17
the Fund. 18
‘‘(B) P
ERIOD OF AVAILABILITY.—Amounts 19
deposited under subparagraph (A) shall remain 20
available until expended. 21
‘‘(i) A
PPLICATION OFOTHERSECTIONS.—To the ex-22
tent not inconsistent with requirements under this section, 23
the Administrator may apply sections 309, 311, 312, 313, 24
and 314 to activities under this section and an officer, di-25
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rector, employee, agent, or other participant in a partici-1
pating investment company shall be subject to the require-2
ments under such sections. 3
‘‘(j) A
UTHORIZATION OF APPROPRIATIONS.—There 4
is authorized to be appropriated for the first fiscal year 5
beginning after the date of enactment of this part 6
$10,000,000,000 to carry out the facility. Amounts appro-7
priated pursuant to this subsection shall remain available 8
until the end of the second fiscal year beginning after the 9
date of enactment of this section.’’. 10
(b) A
PPROVAL OFBANK-OWNED, NON-LEVERAGED 11
A
PPLICANTS.—Section 301(c)(2) of the Small Business 12
Investment Act of 1958 (15 U.S.C. 681(c)(2)) is amend-13
ed— 14
(1) in subparagraph (B), in the matter pre-15
ceding clause (i), by striking ‘‘Within’’ and inserting 16
‘‘Except as provided in subparagraph (C), within’’; 17
and 18
(2) by adding at the end the following: 19
‘‘(C) E
XCEPTION FOR BANK -OWNED, NON- 20
LEVERAGED APPLICANTS .—Notwithstanding 21
subparagraph (B), not later than 45 days after 22
the date on which the Administrator receives a 23
completed application submitted by a bank- 24
owned, non-leveraged applicant in accordance 25
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with this subsection and in accordance with 1
such requirements as the Administrator may 2
prescribe by regulation, the Administrator 3
shall— 4
‘‘(i) review the application in its en-5
tirety; and 6
‘‘(ii)(I) approve the application and 7
issue a license for such operation to the 8
applicant if the requirements of this sec-9
tion are satisfied; or 10
‘‘(II) disapprove the application and 11
notify the applicant in writing of the dis-12
approval.’’. 13
(c) E
LECTRONICSUBMISSIONS.—Part A of title III 14
of the Small Business Investment Act of 1958 (15 U.S.C. 15
681 et seq.), as amended by subsection (a) of this section, 16
is amended by adding at the end the following: 17
‘‘SEC. 322. ELECTRONIC SUBMISSIONS. 18
‘‘The Administration shall permit any document sub-19
mitted under this title, or pursuant to a regulation car-20
rying out this title, to be submitted electronically, includ-21
ing by permitting an electronic signature for any signature 22
that is required on such a document.’’. 23
Æ
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