SMALL BUSINESS INVESTMENT COMPANY PROGRAM REFORM.

SEC. 215. SMALL BUSINESS INVESTMENT COMPANY PROGRAM REFORM. (a) Bank Investments.— Section 302(b) of the Small Business Investment Act of 1958 (15 U.S.C. 682(b)) is amended by striking “1956,” and all that follows before the period and inserting the following: “1956, any national bank, or any member bank of the Federal Reserve System or nonmember insured bank to the extent permitted under applicable State law, may invest in any 1 or more small business investment companies, or in any entity established to invest solely in small business investment companies, except that in no event shall the total amount of such investments of any such bank exceed 5 percent of the capital and surplus of the bank”. 111 STAT. 2602 (b) Indexing for Leverage.— Section 303 of the Small Business Investment Act of 1958 (15 U.S.C. 683) is amended— (1) in subsection (b)— (A) in paragraph (2), by adding at the end the following: “(D) (i) The dollar amounts in subparagraphs (A), (B), and (C) shall be adjusted annually to reflect increases in the Consumer Price Index established by the Bureau of Labor Statistics of the Department of Labor. “(ii) The initial adjustments made under this subparagraph after the date of enactment of the Small Business Reauthorization Act of 1997 shall reflect only increases from March 31, 1993.”; and (B) by striking paragraph (4) and inserting the following: “(4) Maximum aggregate amount of leverage.— “(A) In general.— Except as provided in subparagraph (B), the aggregate amount of outstanding leverage issued to any company or companies that are commonly controlled (as determined by the Administrator) may not exceed $90,000,000, as adjusted annually for increases in the Consumer Price Index. “(B) Exceptions.— The Administrator may, on a case-by-case basis— “(i) approve an amount of leverage that exceeds the amount described in subparagraph (A) for companies under common control; and “(ii) impose such additional terms and conditions as the Administrator determines to be appropriate to minimize the risk of loss to the Administration in the event of default. “(C) Applicability of other provisions.— Any leverage that is issued to a company or companies commonly controlled in an amount that exceeds $90,000,000, whether as a result of an increase in the Consumer Price Index or a decision of the Administrator, is subject to subsection (d).”; and (2) by striking subsection (d) and inserting the following: “(d) Required Certifications.— “(1) In general.— The Administrator shall require each licensee, as a condition of approval of an application for leverage, to certify in writing— “(A) for licensees with leverage less than or equal to $90,000,000, that not less than 20 percent of the licensee’s aggregate dollar amount of financings will be provided to smaller enterprises; and “(B) for licensees with leverage in excess of $90,000,000, that, in addition to satisfying the requirements of subparagraph (A), 100 percent of the licensee’s aggregate dollar amount of financings made in whole or in part with leverage in excess of $90,000,000 will be provided to smaller enterprises (as defined in section 103(12)). “(2) Multiple licensees.— Multiple licensees under common control (as determined by the Administrator) shall be considered to be a single licensee for purposes of determining both the applicability of and compliance with the investment percentage requirements of this subsection.”. 111 STAT. 2603 (c) Tax Distributions.— Section 303(g)(8) of the Small Business Investment Act of 1958 (15 U.S.C. 683(g)(8)) is amended by adding at the end the following: “A company may also elect to make a distribution under this paragraph at the end of any calendar quarter based on a quarterly estimate of the maximum tax liability. If a company makes 1 or more quarterly distributions for a calendar year, and the aggregate amount of those distributions exceeds the maximum amount that the company could have distributed based on a single annual computation, any subsequent distribution by the company under this paragraph shall be reduced by an amount equal to the excess amount distributed.”. (d) Leverage Fee.— Section 303(i) of the Small Business Investment Act of 1958 (15 U.S.C. 683(i)) is amended by striking “payable upon” and all that follows before the period and inserting the following: “in the following manner: 1 percent upon the date on which the Administration enters into any commitment for such leverage with the licensee, and the balance of 2 percent (or 3 percent if no commitment has been entered into by the Administration) on the date on which the leverage is drawn by the licensee”. (e) Periodic Issuance of Guarantees and Trust Certificates.— Section 320 of the Small Business Investment Act of 1958 (15 U.S.C. 687m) is amended by striking “three months” and inserting “6 months”.