What This Bill Does
This bill creates a new category of small businesses called "emerging business enterprises" and gives them special advantages when bidding for government contracts. It changes the rules for Small Business Administration loans to help these newer, smaller companies grow.
Who It Affects
Small businesses that are less than 5 years old with fewer than 25 employees (or 10 percent of the standard employee limit for their industry, whichever is larger). Federal agencies that award government contracts. Lenders who make Small Business Administration loans. The Small Business Administration itself.
Key Provisions
• The Small Business Administration must create rules within 90 days to decide which small businesses qualify as emerging business enterprises, based on how many employees they have, how long they have been in business, and how much their owners earn (Sec. 2(a)).
• Federal agencies must set a goal that at least 3 percent of all their government contracts go to emerging business enterprises each year, and must work to increase this participation from year to year (Sec. 2(b)).
• Emerging business enterprises can receive loans from the Small Business Administration without paying certain fees (called origination fees or guarantee fees) under certain budget conditions (Sec. 2(c)).
• If a business lies about being an emerging business enterprise to get a loan, it must repay the entire loan amount plus pay a fine determined by the Small Business Administration (Sec. 2(c)).
• The Small Business Administration must publish an annual report to Congress showing how many contracts went to emerging business enterprises and which agencies did not meet their goals (Sec. 2(b)).
What Changes
If this bill becomes law, the Small Business Administration will begin accepting applications from qualifying small businesses to become designated as emerging business enterprises. These designated businesses will gain priority in bidding for at least 3 percent of all federal government contracts. They will also be able to get loans without paying certain fees. Federal agencies will be required to report annually on how well they are meeting their emerging business enterprise contracting goals.
Important Definitions
"Emerging business enterprise" means a small business that the Small Business Administration officially recognizes and that meets three requirements: it has fewer than 25 employees (or 10 percent of the standard employee limit for its industry), it has been operating for less than 5 years, and its owners and managers do not earn more than 200 percent of the average salary for a company manager in their field (Sec. 2(a)).
I
118TH CONGRESS
1ST SESSION H. R. 1538
To amend the Small Business Act to provide for contracting preferences
and other benefits for emerging business enterprises, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 10, 2023
Mr. CARSON (for himself, Mr. THOMPSON of Mississippi, Mr. ESPAILLAT, Mr.
GARCI´A of Illinois, Ms. SA´NCHEZ, Ms. GARCIA of Texas, Mr. CASE, and
Mr. LANDSMAN) introduced the following bill; which was referred to the
Committee on Small Business
A BILL
To amend the Small Business Act to provide for contracting
preferences and other benefits for emerging business en-
terprises, 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 ‘‘Emerging Business
4
Encouragement Act of 2023’’.
5
SEC. 2. EMERGING BUSINESS ENTERPRISES.
6
(a) DESIGNATION.—Section 3 of the Small Business
7
Act (15 U.S.C. 632) is amended by adding at the end the
8
following:
9
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‘‘(gg) EMERGING BUSINESS ENTERPRISE.—
1
‘‘(1) IN
GENERAL.—In this Act, the term
2
‘emerging business enterprise’ means a concern des-
3
ignated by the Administrator in accordance with this
4
section.
5
‘‘(2) CRITERIA FOR DESIGNATION.—Not later
6
than 90 days after the date of enactment of this
7
subsection, the Administrator shall establish criteria
8
for designation of a small business concern as an
9
emerging business enterprise which shall include the
10
following:
11
‘‘(A) NUMBER OF EMPLOYEES.—That the
12
highest number of employees of the concern
13
during the year preceding the date of applica-
14
tion is less than the larger of—
15
‘‘(i) 10 percent of the number of em-
16
ployees that a small business concern with-
17
in that industry category may employ, if
18
that small business concern is so classified
19
by reason of a size standard under sub-
20
section (a) pertaining to the number of
21
employees of the concern; or
22
‘‘(ii) 25 employees.
23
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‘‘(B) AGE OF BUSINESS.—That the small
1
business concern has been in operation for less
2
than 5 years on the date of application.
3
‘‘(C) SALARY
REQUIREMENTS.—That the
4
small business concern does not, in the Admin-
5
istrator’s determination, pay to an individual
6
who owns any part of the concern or who is in
7
a management position a salary greater than
8
200 percent of the mean annual salary for an
9
individual in the Managers of Companies and
10
Enterprises sector (as assigned a North Amer-
11
ican Industry Classification System code begin-
12
ning with 55) or the equivalent from the most
13
recent employment and wage estimates devel-
14
oped by the Secretary of Labor.
15
‘‘(3) DEADLINE.—The Administrator shall com-
16
plete review of an application for designation as an
17
emerging business enterprise and either issue or
18
deny such designation not later than one year of re-
19
ceipt of such application.
20
‘‘(4) TERMINATION OF DESIGNATION.—A des-
21
ignation as an emerging business enterprise shall
22
terminate on the date on which the concern is no
23
longer in compliance with the criteria under para-
24
graph (2), except that—
25
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•HR 1538 IH
‘‘(A) with respect to the requirement in
1
paragraph (2)(A), such designation shall termi-
2
nate only if the concern employs 50 percent or
3
more employees than the number of employees
4
that a small business concern within that indus-
5
try category may employ; and
6
‘‘(B) with respect to the requirement in
7
paragraph (2)(C), such designation shall termi-
8
nate only if the concern exceeds such require-
9
ment and employs not more than 10 percent of
10
the number of employees that a small business
11
concern within that industry category may em-
12
ploy, if that small business concern is so classi-
13
fied by reason of a size standard under sub-
14
section (a) pertaining to the number of employ-
15
ees of the concern.
16
‘‘(5) PUBLIC
NOTIFICATION.—The Adminis-
17
trator shall take appropriate action to publicize the
18
establishment of the procedures for designations
19
under this paragraph, including by conducting out-
20
reach to eligible small business concerns.
21
‘‘(6) CONTRACTOR
TRAINING.—The Adminis-
22
trator shall provide training on Federal procurement
23
specifically for emerging business enterprises on an
24
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Internet website of the Administrator, which shall be
1
available to the public at no charge.’’.
2
(b) CONTRACTING PREFERENCE.—Section 15(g)(2)
3
of the Small Business Act (15 U.S.C. 644(g)(2)) is
4
amended by adding at the end the following:
5
‘‘(G)
EMERGING
BUSINESS
ENTER-
6
PRISES.—
7
‘‘(i) IN GENERAL.—The head of each
8
Federal agency shall, after consultation
9
with the Administrator, establish goals for
10
participation by emerging business enter-
11
prises in not less than 3 percent of all
12
prime contracts and subcontracts of such
13
agency for each fiscal year.
14
‘‘(ii) REQUIREMENTS.—The head of a
15
Federal agency—
16
‘‘(I) shall make consistent efforts
17
to annually expand participation by
18
emerging business enterprises from
19
each industry category in contracts of
20
the agency; and
21
‘‘(II) shall, subject to clause (iii),
22
award a contract to an emerging busi-
23
ness enterprise if the head of a Fed-
24
eral agency determines the agency will
25
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•HR 1538 IH
not meet the goals established under
1
this subparagraph for a fiscal year.
2
‘‘(iii) PREFERENCE.—The preference
3
described in clause (ii)(II) shall take pri-
4
ority over any preference for procurement
5
from the procurement list established pur-
6
suant to section 8503 of title 41, United
7
States Code, or the Federal Prison Indus-
8
tries
catalog
described
under
section
9
4124(d) of title 18, United States Code.
10
‘‘(iv) REPORTS.—
11
‘‘(I)
REPORTS
FROM
AGEN-
12
CIES.—At the conclusion of each fiscal
13
year, the head of each Federal agency
14
shall report to the Administrator on
15
the extent of participation by emerg-
16
ing business enterprises in procure-
17
ment contracts of such agency. Such
18
reports shall contain appropriate jus-
19
tifications for failure to meet the goals
20
established under this subparagraph.
21
‘‘(II) REPORTS TO CONGRESS.—
22
The
Administrator
shall
annually
23
compile and analyze the reports sub-
24
mitted by agencies pursuant to sub-
25
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•HR 1538 IH
clause (I) and shall submit to the
1
President and the Committee on
2
Small Business and Entrepreneurship
3
of the Senate and the Committee on
4
Small Business of the House of Rep-
5
resentatives the compilation and anal-
6
ysis, which shall include the following:
7
‘‘(aa) The goals in effect for
8
each agency and the agency’s
9
performance in attaining such
10
goals.
11
‘‘(bb) An analysis of any
12
failure to achieve individual agen-
13
cy goals and the actions planned
14
by such agency (that have been
15
approved by the Administrator)
16
to achieve the goals in the suc-
17
ceeding fiscal year.
18
‘‘(cc) The total number and
19
dollar value of prime contracts
20
and subcontracts awarded to
21
emerging business enterprises for
22
each agency.
23
‘‘(III) ANNUAL
PRESIDENTIAL
24
REPORT
ON
THE
STATE
OF
SMALL
25
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•HR 1538 IH
BUSINESS.—The President shall in-
1
clude the information required by sub-
2
clause (II) in each annual report to
3
the Congress on the state of small
4
business prepared pursuant to section
5
303(a) of the Small Business Eco-
6
nomic Policy Act of 1980 (15 U.S.C.
7
631b(a)).’’.
8
(c) FEE WAIVERS.—Section 7(a) of the Small Busi-
9
ness Act (15 U.S.C. 636(a)) is amended by adding at the
10
end the following:
11
‘‘(38) FEE WAIVERS.—The Administrator may
12
not collect an origination fee or a guarantee fee de-
13
scribed in paragraph (18) in connection with a loan
14
made under this subsection to an emerging business
15
enterprise, unless—
16
‘‘(A) the President’s budget for the upcom-
17
ing fiscal year, submitted to Congress pursuant
18
to section 1105(a) of title 31, United States
19
Code, includes a cost for the program estab-
20
lished under this paragraph that is above zero;
21
and
22
‘‘(B) the Administrator determines car-
23
rying out this paragraph will have no adverse
24
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•HR 1538 IH
effect on the waivers provided under paragraph
1
(31)(G) or (33)(E)(ii) for a fiscal year.
2
‘‘(39) EMERGING BUSINESS ENTERPRISES.—
3
‘‘(A) REPORTS.—On the date that is 1
4
year after the end of the first fiscal year for
5
which a guaranteed loan is made to an emerg-
6
ing business enterprise under this subsection,
7
and annually thereafter, each lender making
8
such a loan shall submit to the Administrator
9
a report with respect to the preceding fiscal
10
year on the total number and dollar amount of
11
such loans made and the number of waivers
12
issued under paragraph (38).
13
‘‘(B) VERIFICATION.—A lender shall verify
14
with the Administrator the status of a concern
15
as an emerging business enterprise before mak-
16
ing a loan guaranteed under this subsection to
17
such emerging business enterprise.
18
‘‘(C) PENALTY.—If a concern received a
19
loan under this subsection and fraudulently
20
misrepresented the status of the concern as an
21
emerging business enterprise, that concern
22
shall—
23
‘‘(i) repay the amount of the loan to
24
the lender (from which amount the lender
25
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•HR 1538 IH
shall repay the amount of any guarantee
1
paid on the loan to the Administrator);
2
and
3
‘‘(ii) pay a fine to the Administrator
4
in an amount determined by the Adminis-
5
trator.’’.
6
SEC. 3. RULEMAKING.
7
(a) IN GENERAL.—Not later 1 year after the date
8
of enactment of this subsection and for each industry cat-
9
egory for which the Administrator of the Small Business
10
Administration established a size standard under section
11
3(a) of the Small Business Act (15 U.S.C. 632(a)), the
12
Administrator shall issue a rule—
13
(1) establishing procedures for designating a
14
small business concern in each such industry cat-
15
egory as an emerging business enterprise that in-
16
clude the criteria under subsection (gg)(3) of section
17
3 of the Small Business Act (15 U.S.C. 632), as
18
added by this Act, and a process for appealing des-
19
ignation decisions of the Administrator;
20
(2) establishing procedures for certification by
21
the Administrator as an emerging business enter-
22
prise;
23
(3) requiring a small business concern to annu-
24
ally submit documentation to the Administrator to
25
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•HR 1538 IH
establish eligibility for designation as an emerging
1
business enterprise; and
2
(4) establishing compliance requirements for
3
emerging business enterprises.
4
(b) DEFINITIONS.—In this section:
5
(1) SMALL
BUSINESS
CONCERN.—The term
6
‘‘small business concern’’ has the meaning given
7
under section 3 of the Small Business Act (15
8
U.S.C. 632).
9
(2) EMERGING
BUSINESS
ENTERPRISE.—The
10
term ‘‘emerging business enterprise’’ has the mean-
11
ing given under subsection (gg) of section 3 of the
12
Small Business Act (15 U.S.C. 632), as added by
13
this Act.
14
Æ
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