Reigniting Opportunity for Innovators Act

II 116TH CONGRESS 2D SESSION S. 4903 To amend the Higher Education Act of 1965 to encourage entrepreneurship by providing loan deferment and loan cancellation for founders and employees of small business startups, and for other purposes. IN THE SENATE OF THE UNITED STATES NOVEMBER 17, 2020 Ms. HASSAN introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Higher Education Act of 1965 to encourage entrepreneurship by providing loan deferment and loan cancellation for founders and employees of small business startups, 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 ‘‘Reigniting Opportunity 4 for Innovators Act’’. 5 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4903 IS SEC. 2. SMALL BUSINESS STARTUP FOUNDER AND EM- 1 PLOYEE LOAN DEFERMENT AND CANCELLA- 2 TION. 3 (a) DEFERMENT WITHOUT INTEREST ACCRUAL FOR 4 SMALL BUSINESS STARTUP FOUNDERS AND EMPLOY- 5 EES.—Section 455(f) of the Higher Education Act of 6 1965 (20 U.S.C. 1087e(f)) is amended— 7 (1) by redesignating paragraphs (4) and (5) as 8 paragraphs (5) and (6), respectively; and 9 (2) by inserting after paragraph (3) the fol- 10 lowing: 11 ‘‘(4) DEFERMENT WITHOUT INTEREST AC- 12 CRUAL FOR SMALL BUSINESS STARTUP FOUNDERS 13 AND EMPLOYEES.— 14 ‘‘(A) IN GENERAL.—Subject to subpara- 15 graph (B), a qualifying small business startup 16 borrower shall be eligible for a deferment, dur- 17 ing which periodic installments of principal 18 need not be paid and interest shall not accrue, 19 during any period while the borrower is em- 20 ployed as a founder or full-time employee of a 21 small business startup. 22 ‘‘(B) LIMITATIONS.—A qualifying small 23 business startup borrower shall not receive a 24 deferment under this paragraph for any pe- 25 riod— 26 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4903 IS ‘‘(i) in excess of 3 years; or 1 ‘‘(ii) that begins more than 5 years, 2 or ends more than 8 years, after the date 3 the small business startup was established 4 (as determined by the small business devel- 5 opment center that approved such bor- 6 rower under section 21(o)(5) of the Small 7 Business Act (15 U.S.C. 648(o)(5))). 8 ‘‘(C) DEFINITIONS.—In this paragraph— 9 ‘‘(i) the terms ‘founder’, ‘full-time em- 10 ployee’, and ‘small business startup’ have 11 the meanings given the terms in subsection 12 (r)(2); and 13 ‘‘(ii) the term ‘qualifying small busi- 14 ness startup borrower’ means a borrower 15 of a loan made under this part whose em- 16 ployment as a small business startup 17 founder or full-time employee is approved 18 by a small business development center 19 under section 21(o)(5) of the Small Busi- 20 ness Act (15 U.S.C. 648(o)(5)).’’. 21 (b) LOAN CANCELLATION.—Section 455 of the High- 22 er Education Act of 1965 (20 U.S.C. 1087e) is amended 23 by adding at the end the following: 24 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4903 IS ‘‘(r) LOAN CANCELLATION FOR FOUNDERS AND EM- 1 PLOYEES OF SMALL BUSINESS STARTUPS IN DISTRESSED 2 AREAS.— 3 ‘‘(1) LOAN CANCELLATION.— 4 ‘‘(A) IN GENERAL.—The Secretary shall 5 cancel the balance of interest and principal due, 6 subject to subparagraph (B), on any eligible 7 Federal Direct Loan not in default for a bor- 8 rower who— 9 ‘‘(i) at the time of such cancellation, 10 is employed as a founder or full-time em- 11 ployee of a small business startup in a dis- 12 tressed area who— 13 ‘‘(I) has been approved for loan 14 cancellation by a small business devel- 15 opment center under section 21(o)(6) 16 of the Small Business Act (15 U.S.C. 17 648(o)(6)); and 18 ‘‘(II) began such employment 19 during the 5-year period beginning on 20 the date that the small business start- 21 up was established (as determined by 22 such small business development cen- 23 ter); and 24 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4903 IS ‘‘(ii) during the time period for which 1 the borrower has been approved by the 2 small business development center, which 3 in no case shall be more than 10 years 4 after the date on which the small business 5 startup was established, has made 24 6 monthly payments on the eligible Federal 7 Direct Loan pursuant to any repayment 8 plan under subsection (d)(1) or a combina- 9 tion of such plans while so employed. 10 ‘‘(B) LOAN CANCELLATION MAXIMUM.— 11 The Secretary shall cancel under this subsection 12 not more than an aggregate of $20,000 of the 13 loan obligation on the eligible Federal Direct 14 Loans of a borrower. 15 ‘‘(C) TIMING REQUIREMENTS.—Each of 16 the 24 monthly payments required under this 17 subsection shall be made after the date of en- 18 actment of this subsection. 19 ‘‘(D) INELIGIBILITY FOR DOUBLE BENE- 20 FITS.—No borrower may, for the same service, 21 receive a reduction of loan obligations under 22 both this subsection and— 23 ‘‘(i) subsection (m); or 24 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 4903 IS ‘‘(ii) section 428J, 428K, 428L, or 1 460. 2 ‘‘(2) DEFINITIONS.—In this subsection: 3 ‘‘(A) DISTRESSED AREA.—The term ‘dis- 4 tressed area’ has the meaning given the term in 5 section 21(o)(1) of the Small Business Act (15 6 U.S.C. 648(o)(1)). 7 ‘‘(B) ELIGIBLE FEDERAL DIRECT LOAN.— 8 The term ‘eligible Federal Direct Loan’ means 9 a Federal Direct Stafford Loan, Federal Direct 10 PLUS Loan, Federal Direct Unsubsidized Staf- 11 ford Loan, or a Federal Direct Consolidation 12 Loan. 13 ‘‘(C) FOUNDER; FULL-TIME EMPLOYEE.— 14 The terms ‘founder’ and ‘full-time employee’ 15 have the meanings given the terms in section 16 21(o)(1) of the Small Business Act (15 U.S.C. 17 648(o)(1)). 18 ‘‘(D) SMALL BUSINESS STARTUP.—The 19 term ‘small business startup’ means a business 20 that is certified by a small business develop- 21 ment center under section 21(o)(3) of the Small 22 Business Act (15 U.S.C. 648(o)(3)).’’. 23 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 4903 IS (c) CONFORMING AMENDMENTS.—Title IV of the 1 Higher Education Act of 1965 (20 U.S.C. 1070a et seq.) 2 is further amended— 3 (1) in section 428J(g)(2), by striking ‘‘section 4 455(m)’’ and inserting ‘‘subsection (m) or (r) of sec- 5 tion 455’’; 6 (2) in section 428K(f)— 7 (A) by inserting ‘‘subsection (m) or (r) of 8 section 455 or’’ before ‘‘section 428J’’; and 9 (B) by striking ‘‘455(m)’’; 10 (3) in section 428L(g), by striking ‘‘455(m)’’ 11 and inserting ‘‘subsection (m) or (r) of section 455’’; 12 (4) in section 455(m)(4), by inserting ‘‘sub- 13 section (r) or’’ before ‘‘section 428J’’; and 14 (5) in section 460(g)(2)(B), by striking ‘‘section 15 455(m)’’ and inserting ‘‘subsection (m) or (r) of sec- 16 tion 455’’. 17 SEC. 3. SMALL BUSINESS DEVELOPMENT CENTERS. 18 Section 21 of the Small Business Act (15 U.S.C. 648) 19 is amended— 20 (1) in subsection (c)(3)— 21 (A) in subparagraph (T), by striking 22 ‘‘and’’ at the end; 23 (B) in the first subparagraph (U) (relating 24 to encouraging and assisting the provision of 25 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 4903 IS succession planning), by striking the period at 1 the end of clause (v) and inserting a semicolon; 2 (C) in the second subparagraph (U) (relat- 3 ing to providing training in conjunction with 4 the United States Patent and Trademark Of- 5 fice)— 6 (i) by redesignating that subpara- 7 graph as subparagraph (V); and 8 (ii) in clause (ii)(II), by striking the 9 period at the end and inserting a semi- 10 colon; and 11 (D) by adding at the end the following: 12 ‘‘(W) certifying small business startups under 13 subsection (o)(3); and 14 ‘‘(X) approving loan deferment or cancellation 15 under paragraph (5) or (6) of subsection (o) for 16 founders and full-time employees of certain small 17 business startups, as those terms are defined in 18 paragraph (1) of that subsection.’’; and 19 (2) by adding at the end the following: 20 ‘‘(o) DEFERMENT OR CANCELLATION OF CERTAIN 21 LOANS.— 22 ‘‘(1) DEFINITIONS.—In this subsection— 23 ‘‘(A) the term ‘distressed area’ has the 24 meaning given the term ‘low-income community’ 25 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 4903 IS in section 45D(e) of the Internal Revenue Code 1 of 1986; 2 ‘‘(B) the term ‘eligible Federal Direct 3 Loan’ has the meaning given the term in sec- 4 tion 455(r)(2) of the Higher Education Act of 5 1965; 6 ‘‘(C) the terms ‘founder’ and ‘full-time em- 7 ployee’, with respect to a small business start- 8 up, have the meanings given the terms by the 9 Administrator; and 10 ‘‘(D) the term ‘small business startup’ 11 means a small business concern that, as of the 12 date that the small business concern submits an 13 application under paragraph (3), has been in 14 existence for not more than 3 years. 15 ‘‘(2) ROLE OF SMALL BUSINESS DEVELOPMENT 16 CENTERS.—Any small business development center 17 may, for purposes of eligible Federal Direct Loan 18 deferment or cancellation under subsection (f)(4) or 19 (r) of section 455 of the Higher Education Act of 20 1965 (20 U.S.C. 1087e)— 21 ‘‘(A) certify a small business startup under 22 paragraph (3); and 23 ‘‘(B) approve eligible Federal Direct Loan 24 deferment or cancellation for a founder or full- 25 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 4903 IS time employee of a qualifying small business 1 startup under paragraph (5) or (6). 2 ‘‘(3) CERTIFICATION.—In order to be certified 3 by a small business development center, a small 4 business startup shall submit to the small business 5 development center an application that includes— 6 ‘‘(A) a 5-year business plan for the small 7 business startup; 8 ‘‘(B) the number of employees that the 9 small business startup intends to employ on an 10 annual basis; and 11 ‘‘(C) information that demonstrates that 12 the small business startup has the potential for 13 success. 14 ‘‘(4) PUBLICATION OF DISTRESSED AREAS.— 15 Not less frequently than once every 3 years begin- 16 ning after the date of enactment of this subsection, 17 the Administrator shall identify and make publically 18 available on the website of the Administration a list 19 of distressed areas. 20 ‘‘(5) LOAN DEFERMENT FOR FOUNDERS AND 21 FULL-TIME EMPLOYEES OF A SMALL BUSINESS 22 STARTUP.— 23 ‘‘(A) APPLICATION.—In order to be ap- 24 proved by a small business development center 25 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 4903 IS for eligible Federal Direct Loan deferment 1 under subsection (f)(4) of section 455 of the 2 Higher Education Act of 1965 (20 U.S.C. 3 1087e), a borrower of an eligible Federal Direct 4 Loan shall submit to the small business devel- 5 opment center an application that includes such 6 information as the Administrator may require. 7 ‘‘(B) REQUIREMENTS.—A small business 8 development center shall approve a borrower 9 who applies under subparagraph (A) for eligible 10 Federal Direct Loan deferment if the small 11 business development center determines that— 12 ‘‘(i) the borrower is, as of the date on 13 which the application is submitted, a 14 founder or full-time employee of a small 15 business startup that is certified under 16 paragraph (3); and 17 ‘‘(ii) the employment of the borrower 18 with the small business startup began dur- 19 ing the 5-year period beginning on the date 20 on which the small business startup was 21 established. 22 ‘‘(6) LOAN CANCELLATION FOR FOUNDERS AND 23 FULL-TIME EMPLOYEES OF A SMALL BUSINESS 24 STARTUP IN A DISTRESSED AREA.— 25 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 4903 IS ‘‘(A) APPLICATION.—In order to be ap- 1 proved by a small business development center 2 for eligible Federal Direct Loan cancellation 3 under subsection (r) of section 455 of the High- 4 er Education Act of 1965 (20 U.S.C. 1087e), a 5 borrower of an eligible Federal Direct Loan 6 shall submit to the small business development 7 center an application that includes such infor- 8 mation as the Administrator may require, in- 9 cluding an identification of the time period dur- 10 ing which the borrower has made 24 monthly 11 payments on the eligible Federal Direct Loan, 12 as required under subparagraphs (A)(ii) and 13 (C) of paragraph (1) of such subsection (r). 14 ‘‘(B) REQUIREMENTS.—A small business 15 development center shall approve a borrower 16 who applies under subparagraph (A) for eligible 17 Federal Direct Loan cancellation if the small 18 business development center determines that 19 the borrower— 20 ‘‘(i) as of the date on which the appli- 21 cation is submitted, is employed as a 22 founder or full-time employee of a small 23 business startup that— 24 VerDate Sep 11 2014 04:37 Nov 24, 2020 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4903.IS S4903 pbinns on DSKJLVW7X2PROD with BILLS 13 •S 4903 IS ‘‘(I) is located in an area that 1 was a distressed area not more than 2 3 years before the date on which the 3 small business startup was estab- 4 lished; 5 ‘‘(II) is certified under paragraph 6 (3) by the small business development 7 center; and 8 ‘‘(III) as of the date on which the 9 small business development center ap- 10 proves the borrower under this para- 11 graph, has been operating continu- 12 ously for not less than 5 years and 13 not more than 10 years; and 14 ‘‘(ii) was employed as a founder or a 15 full-time employee by a small business 16 startup described in clause (i) during a pe- 17 riod beginning not more than 5 years after 18 the date on which the small business start- 19 up was established, as identified by the 20 borrower under subparagraph (A).’’. 21 SEC. 4. TREATMEN [Text truncated for display. Full text available on Congress.gov.]