II 116TH CONGRESS 1ST SESSION S. 2131 To amend the Small Business Act and the Small Business Investment Act of 1958 to increase access to capital for small business concerns that are manufacturers. IN THE SENATE OF THE UNITED STATES JULY 16, 2019 Mr. COONS (for himself, Mr. SCOTT of South Carolina, Mr. GARDNER, and Ms. ROSEN) introduced the following bill; which was read twice and re- ferred to the Committee on Small Business and Entrepreneurship A BILL To amend the Small Business Act and the Small Business Investment Act of 1958 to increase access to capital for small business concerns that are manufacturers. 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 ‘‘Strengthening Invest- 4 ment to Grow Manufacturing in America Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 (1) Manufacturers contributed over 8 $2,330,000,000,000 to the United States economy 9 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 2 •S 2131 IS in the first quarter of 2018 and accounted for 12 1 percent of United States gross domestic product in 2 2017. 3 (2) Manufacturing is one of the most important 4 sectors of the United States economy with respect to 5 employment. In 2013, the manufacturing sector sup- 6 ported over 17,000,000 indirect jobs in the United 7 States, in addition to the 12,000,000 individuals 8 who were directly employed in manufacturing. Com- 9 bined, these indirect and direct manufacturing jobs 10 represented more than 20 percent of United States 11 employment in 2013—more than any other sector. 12 (3) While the United States has added over 13 14,000,000 non-farm jobs since 2010, manufac- 14 turing job growth has lagged and added only ap- 15 proximately 900,000 jobs. Post-recession job recov- 16 ery averages since the 1940s indicate that another 17 1,200,000 manufacturing jobs should have been cre- 18 ated during this period. 19 (4) Small manufacturers are the backbone of 20 the United States manufacturing industry, account- 21 ing for nearly half of all manufacturing jobs in the 22 United States. Ensuring that small manufacturers 23 have adequate access to capital is critical to creating 24 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 3 •S 2131 IS manufacturing jobs and the growth of the United 1 States economy. 2 (5) The 2015 Federal Reserve Small Business 3 Credit Survey indicates that of the 52 percent of 4 manufacturers that applied for financing during the 5 survey period, 65 percent did so to expand their 6 business or to pursue a new business opportunity. 7 The survey also indicates that 42 percent of manu- 8 facturers received less financing than they requested, 9 the primary result of which was delayed expansion 10 of their business. 11 (6) The loan guarantee programs of the Small 12 Business Administration under section 7(a) of the 13 Small Business Act (15 U.S.C. 636(a)) and title V 14 of the Small Business Investment Act of 1958 (15 15 U.S.C. 695 et seq.) encourage lenders to provide 16 loans to creditworthy small businesses that would 17 not otherwise obtain financing on reasonable terms 18 and conditions and can serve as an excellent mecha- 19 nism by which to increase the availability of afford- 20 able credit to small manufacturers in the United 21 States. 22 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 4 •S 2131 IS SEC. 3. SMALL MANUFACTURERS. 1 (a) LOAN GUARANTEE PERCENTAGE.—Section 2 7(a)(2) of the Small Business Act (15 U.S.C. 636(a)(2)) 3 is amended— 4 (1) in subparagraph (A), in the matter pre- 5 ceding clause (i), by striking ‘‘and (E)’’ and insert- 6 ing ‘‘(E), and (F)’’; and 7 (2) by adding at the end the following: 8 ‘‘(F) PARTICIPATION FOR MANUFACTUR- 9 ERS.— 10 ‘‘(i) IN GENERAL.—In an agreement 11 to participate in a loan on a deferred basis 12 under this subsection for a small business 13 concern assigned to a North American In- 14 dustry Classification System code for man- 15 ufacturing or that is designated by the Ad- 16 ministrator under clause (ii), the participa- 17 tion by the Administration shall be 90 per- 18 cent. 19 ‘‘(ii) ADDITION OF ADVANCED MANU- 20 FACTURING SECTORS.—After submitting 21 notice to the Committee on Small Business 22 and Entrepreneurship of the Senate and 23 the Committee on Small Business of the 24 House of Representatives, the Adminis- 25 trator may designate a North American 26 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 5 •S 2131 IS Industry Classification System code for 1 purposes of clause (i) if the Administrator 2 determines the code— 3 ‘‘(I) is not a manufacturing code 4 under the North American Industry 5 Classification System; and 6 ‘‘(II) corresponds to a sector in 7 which manufacturing is a considerable 8 component of the operations of a 9 small business concern, as determined 10 by the Administrator, including ad- 11 vanced manufacturing.’’. 12 (b) GUARANTEE FEE REDUCTION.—Section 7(a)(18) 13 of the Small Business Act (15 U.S.C. 636(a)(18)) is 14 amended— 15 (1) in subparagraph (A), by striking ‘‘With re- 16 spect’’ and inserting ‘‘Except as provided in sub- 17 paragraph (C), with respect’’; and 18 (2) by adding at the end the following: 19 ‘‘(C) MANUFACTURERS.— 20 ‘‘(i) IN GENERAL.—Subject to clause 21 (ii), with respect to a loan guaranteed 22 under this subsection for a small business 23 concern described in paragraph (2)(F)(i)— 24 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 6 •S 2131 IS ‘‘(I) the Administration may not 1 collect a guarantee fee under this 2 paragraph for a loan of not more than 3 $350,000; and 4 ‘‘(II) for a loan of more than 5 $350,000, the Administration shall 6 collect a guarantee fee under this 7 paragraph equal to 50 percent of the 8 guarantee fee that the Administration 9 would otherwise collect for the loan. 10 ‘‘(ii) EXCEPTION.—The requirements 11 of clause (i) shall not apply to loans made 12 during a fiscal year if— 13 ‘‘(I) the budget of the President 14 for that fiscal year, submitted to Con- 15 gress under section 1105(a) of title 16 31, United States Code, includes a 17 cost for the program established 18 under this subsection that is above 19 zero; and 20 ‘‘(II) the Administrator submits 21 to Congress— 22 ‘‘(aa) notice regarding the 23 determination of cost described 24 in subclause (I); and 25 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 7 •S 2131 IS ‘‘(bb) a detailed discussion 1 indicating why not implementing 2 clause (i) will cause the cost of 3 the program established under 4 this subsection to be not more 5 than zero.’’. 6 (c) CERTIFIED DEVELOPMENT COMPANY LOANS.— 7 (1) MANUFACTURING LOAN AMOUNT.—Section 8 502(2)(A)(iii) of the Small Business Investment Act 9 of 1958 (15 U.S.C. 696(2)(A)(iii)) is amended by 10 striking ‘‘$5,500,000’’ and inserting ‘‘10,000,000’’. 11 (2) CONTRIBUTION REQUIREMENT.—Section 12 502(3)(C) of the Small Business Investment Act of 13 1958 (15 U.S.C. 696(3)(C)) is amended— 14 (A) in clause (iii), by striking ‘‘or’’ at the 15 end; 16 (B) by redesignating clause (iv) as clause 17 (v); and 18 (C) by inserting after clause (iii) the fol- 19 lowing: 20 ‘‘(iv) for a small manufacturer (as de- 21 fined in section 501(e)(7))— 22 ‘‘(I) at least 5 percent of the 23 total cost of the project financed, if 24 the small business concern has been in 25 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 8 •S 2131 IS operation for a period of 2 years or 1 less; 2 ‘‘(II) at least 5 percent of the 3 total cost of the project financed, if 4 the project involves a limited or single 5 purpose building or structure; 6 ‘‘(III) at least 10 percent of the 7 total cost of the project financed if the 8 project involves both of the conditions 9 set forth in subclauses (I) and (II); or 10 ‘‘(IV) at least 5 percent of the 11 total cost of the project financed, in 12 all other circumstances, at the discre- 13 tion of the development company; or’’. 14 (3) CREATION OR RETENTION OF JOBS RE- 15 QUIREMENT.—Section 501(e) of the Small Business 16 Investment Act of 1958 (15 U.S.C. 695(e)) is 17 amended— 18 (A) in paragraph (1), by striking ‘‘creates 19 or retains’’ and all that follows and inserting 20 ‘‘creates or retains 1 job for every $75,000 21 guaranteed by the Administration, except that 22 the amount is $150,000 in the case of a project 23 of a small manufacturer.’’; 24 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 9 •S 2131 IS (B) in paragraph (2), by striking ‘‘creates 1 or retains’’ and all that follows and inserting 2 ‘‘creates or retains 1 job for every $75,000 3 guaranteed by the Administration, except that 4 the amount is $150,000 in the case of a project 5 of a small manufacturer.’’; 6 (C) by redesignating paragraph (6) as 7 paragraph (7); and 8 (D) by inserting after paragraph (5) the 9 following: 10 ‘‘(6) For a loan for a project directed toward the cre- 11 ation of job opportunities under subsection (d)(1), the Ad- 12 ministrator shall publish on the website of the Administra- 13 tion the number of jobs created or retained under the 14 project as of the date that is 2 years after the completion 15 (as determined based on information provided by the de- 16 velopment company) of the project.’’. 17 (4) BUILDING OCCUPANCY.—Section 502(5) of 18 the Small Business Investment Act of 1958 (15 19 U.S.C. 696(5)), is amended— 20 (A) by striking ‘‘In addition’’ and inserting 21 the following: 22 ‘‘(A) IN GENERAL.—Except as provided in 23 subparagraph (B), in addition’’; and 24 (B) by adding at the end the following: 25 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 10 •S 2131 IS ‘‘(B) EXCEPTION.—With respect to an as- 1 sisted small business that is a small manufac- 2 turer (as defined in section 501(e)(7)), the 3 small manufacturer may lease not more than 49 4 percent of the project to 1 or more other ten- 5 ants, if the small manufacturer occupies perma- 6 nently and uses not less than a total of 51 per- 7 cent of the space in the project after the execu- 8 tion of any leases authorized under this section, 9 without regard to whether the project is with 10 respect to an existing building or new construc- 11 tion.’’. 12 (5) COLLATERAL REQUIREMENTS.—Section 13 502(3)(E)(i) of the Small Business Investment Act 14 of 1958 (15 U.S.C. 696(3)(E)(i)), is amended by 15 adding at the end the following: ‘‘Additional collat- 16 eral shall not be required in the case of a small man- 17 ufacturer (as defined in section 501(e)(7)).’’. 18 (6) DEBT REFINANCING.—Section 502(7)(B) of 19 the Small Business Investment Act of 1958 (15 20 U.S.C. 696(7)(B)) is amended in the matter pre- 21 ceding clause (i) by inserting ‘‘(or in the case of a 22 small manufacturer (as defined in section 501(e)(7)) 23 that does not exceed 100 percent of the project cost 24 of the expansion)’’ after ‘‘cost of the expansion’’. 25 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 11 •S 2131 IS (7) AMOUNT OF GUARANTEED DEBENTURE.— 1 Section 503(a) of the Small Business Investment 2 Act of 1958 (15 U.S.C. 697(a)) is amended by add- 3 ing at the end the following: 4 ‘‘(5) Any debenture issued by a State or local devel- 5 opment company to a small manufacturer (as defined in 6 section 501(e)(7)) with respect to which a guarantee is 7 made under this subsection shall be in an amount equal 8 to not more than 50 percent of the cost of the project 9 with respect to which such debenture is issued, without 10 regard to whether good cause has been shown.’’. 11 (d) MANUFACTURING DEBENTURES.— 12 (1) IN GENERAL.—Section 303 of the Small 13 Business Investment Act of 1958 (15 U.S.C. 683) is 14 amended by adding at the end the following: 15 ‘‘(l) MANUFACTURING DEBENTURES.—In addition to 16 any other authority under this Act, on and after the first 17 day of the first fiscal year beginning after the date of en- 18 actment of this subsection, a small business investment 19 company may issue manufacturing debentures.’’. 20 (2) DEFINITIONS.—Section 103 of the Small 21 Business Investment Act of 1958 (15 U.S.C. 662) is 22 amended— 23 (A) in paragraph (19), by striking ‘‘and’’ 24 at the end; 25 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 12 •S 2131 IS (B) in paragraph (20), by striking the pe- 1 riod at the end and inserting a semicolon; and 2 (C) by adding at the end the following: 3 ‘‘(21) the term ‘manufacturing debenture’ 4 means a deferred interest debenture that— 5 ‘‘(A) is issued at a discount; 6 ‘‘(B) has a 5-year maturity or a 10-year 7 maturity; 8 ‘‘(C) requires no interest payment or an- 9 nual charge for the first 5 years; 10 ‘‘(D) is restricted to companies assigned to 11 a North American Industry Classification Sys- 12 tem code for manufacturing; and 13 ‘‘(E) is issued at no cost (as defined in 14 section 502 of the Credit Reform Act of 1990 15 (2 U.S.C. 661a)) with respect to purchasing 16 and guaranteeing the debenture.’’. 17 (3) STARTUP SMALL MANUFACTURERS.—Sec- 18 tion 502(3)(C)(i) of the Small Business Investment 19 Act of 1958 (15 U.S.C. 696(3)(C)(i)) is amended by 20 inserting ‘‘is not a small manufacturer (as defined in 21 section 501(e)(7)) and’’ after ‘‘small business con- 22 cern’’. 23 (e) ADDITIONAL LEVERAGE FOR MANUFACTUR- 24 ERS.—Section 303(b)(2) of the Small Business Invest- 25 VerDate Sep 11 2014 02:34 Jul 19, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 kjohnson on DSK79L0C42 with BILLS 13 •S 2131 IS ment Act of 1958 (15 U.S.C. 683(b)(2)) is amended by 1 adding at the end the following: 2 ‘‘(E) ADDITIONAL LEVERAGE BASE ON IN- 3 VESTMENT IN MANUFACTURERS.— 4 ‘‘(i) DEFINITION.—In this subpara- 5 graph, the term ‘covered small manufac- 6 tur [Text truncated for display. 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