Year 2000 Readiness and Small Business Programs Restructuring and Reform Act of 1998

TABLE OF CONTENTS:

Title I: Small Business Year 2000 Readiness

Title II: Small Business Program Restructuring and Reform

Title III: Small Business Environmental Assistance Pilot

Program

Year 2000 Readiness and Small Business Programs Restructuring and Reform Act of 1998 - Title I: Small Business Year 2000 Readiness - Amends the Small Business Act (the Act) to direct the Small Business Administration (SBA) to establish a pilot loan guarantee program under which the SBA shall guarantee loans made by eligible lenders to small businesses to address Year 2000 computer problems (Y2K problem), including the repair or acquisition of information technology systems and other automated systems. Limits: (1) the loan amount for each participating small business to $50,000; and (2) the amount which is guaranteed by the SBA to 50 percent of the total loan received from a lender.

(Sec. 103) Requires the SBA to notify the small business committees at least 30 days in advance of the initiation of any pilot program under the Act or a pilot program change that may affect the subsidy rate estimates for a loan program. Requires an annual report to such committees on each pilot program under which loans are guaranteed by the SBA.

(Sec. 104) Includes assistance to small business concerns in meeting Year 2000 technology requirements as one of the purposes of the SBA loan program.

Title II: Small Business Program Restructuring and Reform - Increases from $8 to $12 million, for FY 1999 and thereafter, the authorization of appropriations for the women's business center program. Repeals a provision concerning the terms of assistance to certain organizations under the program. Directs the Comptroller General (CG) to review the administration of such program and report review results to the small business committees. Requires a follow-up report from the CG.

(Sec. 202) Amends provisions of the Act relating to the Small Business Innovative Research Program (SBIR) to: (1) direct the SBA to encourage Federal agencies to fund programs for the research and development of assistive and universally designed technology for the availability of new products for individuals with disabilities; (2) require existing Federal procurement outreach activities, including electronic commerce resource centers and technical assistance centers, to conduct program outreach activities for the SBIR program; and (3) repeal a provision which terminates the SBIR on October 1, 2000.

(Sec. 203) Amends the Small Business Investment Act of 1958 to: (1) increase the funding levels for participating securities under the Small Business Investment Company (SBIC) program to $1 billion for FY 1999 and $1.2 billion for FY 2000; (2) remove a requirement that at least 50 percent of the annual program level of approved participating securities be reserved for funding with SBICs having private capital of not more than $20 million; (3) provide for the determination of an eligible small business or smaller enterprise that is not required to pay Federal income tax at the corporate level but that is required to pass income through to its shareholders or partners by using a specified formula to compute its after-tax income; and (4) require the SBA to issue SBIC guarantees and trust certificates at periodic intervals of not less than 12 (currently six) months.

(Sec. 204) Directs the SBA to authorize certain qualifying State and local development companies to foreclose and liquidate loans in their portfolios that are funded with the proceeds of debentures guaranteed by the SBA under the Small Business Development Company (SBDC) program. Outlines development company qualification requirements. Requires a qualified development company to submit to the SBA a proposed liquidation plan, requiring SBA approval or denial within 15 business days. Authorizes such a company to submit a proposed workout plan (subject to the same 15-day time limit). Allows such a company to consider and approve compromise offers from obligors. Prohibits any action by a State or local development company that would result in a conflict of interest with any third party lender participating in the liquidation or foreclosure of the loan. Authorizes the SBA to suspend or revoke the authority of a qualified development company under appropriate circumstances. Directs the SBA to report annually to the small business committees on the results of the delegation to such companies of the authority to liquidate and foreclose such loans. Terminates the current SBA loan liquidation pilot program on the date on which final regulations implementing this section are promulgated. Makes the expansion of women-owned business development one of the goals of the SBDC program.

(Sec. 205) Directs the SBA to submit annually to the small business committees a comprehensive report concerning the goal of increased participation in Federal procurement contracts by small businesses during the previous fiscal year, including those owned and controlled by socially and economically disadvantaged individuals and by women. Requires: (1) the use of data from the Federal Procurement System in preparing such reports; and (2) each report to include a detailed description and qualitative analysis of the procurement data submitted. Prohibits the SBA from issuing a waiver authorizing the head of a Federal agency to change the statistical methodology used for meeting its reporting requirements unless such waiver is accompanied by comments from the Chief Counsel for Advocacy regarding the appropriateness of the decision to issue such waiver.

Amends the HUBZone Program under the Small Business Reauthorization Act of 1997 to include the Labor Department among the Federal agencies authorized to participate in such Program prior to September 30, 2000.

(Sec. 206) Establishes in the SBA: (1) the position of Associate Administrator for Veterans Business Development; and (2) an Office of Veterans Business Development, to be administered by the Associate Administrator. Establishes the Advisory Committee on Veterans Business Affairs to serve as an independent source of advice and policy recommendations to the SBA Administrator, the Congress, and the President. Directs the Administrator to enter into a memorandum of understanding with the Service Corps of Retired Executives (SCORE) for the appointment by SCORE of a National Veterans Business Coordinator, who shall establish and administer entrepreneurial counseling and training to veterans through SCORE chapters in the United States. Requires notification of the availability of such services through a toll-free telephone number and an Internet website. Directs the Administrator, beginning in the year 2000, to report annually to the small business committees on the needs of small businesses owned and controlled by veterans and service-disabled veterans. Authorizes appropriations.

Requires the SBA's Office of Advocacy to evaluate Federal and private efforts to assist small businesses owned by veterans and service-disabled veterans and to make appropriate recommendations to the Administrator and the Congress.

Adds the provision of assistance to veterans to authorized purposes and activities under the Microloan Program.

(Sec. 207) Repeals provisions concerning the payment of accrued interest with respect to SBA-guaranteed small business loans.

(Sec. 208) Authorizes the SBA, during FY 1999 through 2003, to establish a pre-disaster mitigation program to make loans to enable small businesses to install mitigation devices or to take preventive measures against disasters, in support of a formal mitigation program established by the Federal Emergency Management Agency. Prohibits such a loan unless the SBA finds that the small business is otherwise unable to obtain credit for such purposes. Authorizes appropriations during the above fiscal years. Directs the Administrator to report to the small business committees on the effectiveness of the mitigation program.

(Sec. 209) Amends the Microloan Program to repeal the current per-State limit on allocable funds. Requires its loan loss reserve fund to be maintained at a level equal to not more than 15 percent of the outstanding balance of the microloans owed to the intermediary, but allows such fund to be reduced below such level if the intermediary can demonstrate to the Administrator, after a five-year demonstration period, that the average loan loss rate during such period is less than 15 percent, and the Administrator determines that no other factors are likely to impair the intermediary's ability to repay all obligations owed to the SBA. Directs the Administrator to then reduce such rate accordingly, except that such rate cannot be reduced to less than ten percent of the outstanding balance of the microloans owed to such intermediary.

(Sec. 210) Revises appraisal standards relating to certain SBA-guaranteed loans to provide that, if a loan involves the use of more than $250,000 for a real estate transaction, then the Administrator, prior to loan disbursement, shall require a real estate appraisal by a State licensed or certified appraiser. Requires a lender to obtain an appraisal from a licensed or certified appraiser for loans of less than $250,000 if the lender requires such appraisals for similar unguaranteed loans.

(Sec. 211) Authorizes the Administrator to enter into one or more contracts with developmental organizations to carry out training and research activities to prepare community development venture capital organizations (organizations investing in the development of low-income communities) for such ventures. Authorizes the Administrator to provide grants to: (1) the developmental organizations for such training and research; and (2) intermediary organizations to promote intensive marketing, management, and technical assistance and training for the venture capital organizations. Requires grant amounts to be matched by non-Federal sources. Authorizes appropriations for FY 1999 through 2002.

Title III: Small Business Environmental Assistance Pilot Program - Establishes the Advisory Committee on Small Business Environmental Assistance Programs to provide advice and recommendations to the SBA, the Administrator of the Environmental Protection Agency (EPA), and the Congress on the enhancement of existing programs designed to improve the environmental performance of small businesses. Requires the Advisory Committee to report to the SBA, the EPA Administrator, and the small business committees on the strategy developed to enhance such programs, as well as recommendations for pilot programs that would implement such strategy.

Directs the CG to submit to the small business committees an evaluation of the pilot program. Terminates the Advisory Committee after submission of its report.

Requires the SBA, 90 days after such report is submitted, to publish in the Federal Register a notice of the demonstration program established to implement the above strategy. Requires such notice to include application requirements for small business development centers seeking to participate in the program. Outlines selection requirements, and directs the SBA to make a grant to the center chosen. Limits such grant to $400,000 for any fiscal year, with an exception.

Authorizes appropriations for FY 1999 through 2003 for activities under this title. Limits administrative, evaluation, and reporting costs. Requires the designation of an SBA employee to assist in administering the pilot program on a full-time basis.