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106th Congress                                            Rept. 106-184
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================



 
          PROGRAM FOR INVESTMENT IN MICROENTREPRENEURS (PRIME)

                                _______
                                

  July 2, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


    Mr. Talent, from the Committee on Small Business, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 413]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Small Business, to whom was referred the 
bill (H.R. 413) to authorize qualified organizations to provide 
technical assistance and capacity building services to 
microenterprise development organizations and programs and to 
disadvantaged entrepreneurs using funds from the Community 
Development Financial Institutions Fund, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. PROVISION OF TECHNICAL ASSISTANCE TO MICROENTERPRISES.

  Title I of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (12 U.S.C. 4701 et seq.) is amended by adding 
at the end the following new subtitle:

    ``Subtitle C--Microenterprise Technical Assistance and Capacity 
                            Building Program

``SEC. 171. SHORT TITLE.

  ``This subtitle may be cited as the `Program for Investment in 
Microentrepreneurs Act of 1999', also referred to as the `PRIME Act'.

``SEC. 172. DEFINITIONS.

  ``For purposes of this subtitle--
          ``(1) the term `Administrator' has the same meaning as in 
        section 103;
          ``(2) the term `capacity building services' means services 
        provided to an organization that is, or is in the process of 
        becoming, a microenterprise development organization or 
        program, for the purpose of enhancing its ability to provide 
        training and services to disadvantaged entrepreneurs;
          ``(3) the term `collaborative' means, with respect to 2 or 
        more nonprofit entities, having agreed to act jointly as a 
        qualified organization under this subtitle;
          ``(4) the term `disadvantaged entrepreneur' means a 
        microentrepreneur that is--
                  ``(A) a low-income person;
                  ``(B) a very low-income person; or
                  ``(C) an entrepreneur who lacks adequate access to 
                capital or other resources essential for business 
                success, or is economically disadvantaged, as 
                determined by the Administrator;
          ``(5) the term `Fund' has the same meaning as in section 103;
          ``(6) the term `Indian tribe' has the same meaning as in 
        section 103;
          ``(7) the term `intermediary' means a private, nonprofit 
        entity that seeks to serve microenterprise development 
        organizations and programs;
          ``(8) the term `low-income person' has the same meaning as in 
        section 103;
          ``(9) the term `microentrepreneur' means the owner or 
        developer of a microenterprise;
          ``(10) the term `microenterprise' means a sole 
        proprietorship, partnership, or corporation that--
                  ``(A) has fewer than 5 employees; and
                  ``(B) generally lacks access to conventional loans, 
                equity, or other banking services;
          ``(11) the term `microenterprise development organization or 
        program' means a nonprofit entity, or a program administered by 
        such an entity, including community development corporations or 
        other nonprofit development organizations and social service 
        organizations, that provides services to disadvantaged 
        entrepreneurs or prospective entrepreneurs;
          ``(12) the term `training and technical assistance' means 
        services and support provided to disadvantaged entrepreneurs or 
        prospective entrepreneurs, such as assistance for the purpose 
        of enhancing business planning, marketing, management, 
        financial management skills, and assistance for the purpose of 
        accessing financial services; and
          ``(13) the term `very low-income person' means having an 
        income, adjusted for family size, of not more than 150 percent 
        of the poverty line (as defined in section 673(2) of the 
        Community Services Block Grant Act (42 U.S.C. 9902(2), 
        including any revision required by that section).

``SEC. 173. ESTABLISHMENT OF PROGRAM.

  ``The Administrator shall establish a microenterprise technical 
assistance and capacity building grant program to provide assistance 
from the Fund in the form of grants to qualified organizations in 
accordance with this subtitle.

``SEC. 174. USES OF ASSISTANCE.

  ``A qualified organization shall use grants made under this 
subtitle--
          ``(1) to provide training and technical assistance to 
        disadvantaged entrepreneurs;
          ``(2) to provide training and capacity building services to 
        microenterprise development organizations and programs and 
        groups of such organizations to assist such organizations and 
        programs in developing microenterprise training and services;
          ``(3) to aid in researching and developing the best practices 
        in the field of microenterprise and technical assistance 
        programs for disadvantaged entrepreneurs; and
          ``(4) for such other activities as the Administrator 
        determines are consistent with the purposes of this subtitle, 
        except that grant amounts may not be used to make loans of any 
        kind.

``SEC. 175. QUALIFIED ORGANIZATIONS.

  ``For purposes of eligibility for assistance under this subtitle, a 
qualified organization shall be--
          ``(1) a nonprofit microenterprise development organization or 
        program (or a group or collaborative thereof) that has a 
        demonstrated record of delivering microenterprise services to 
        disadvantaged entrepreneurs;
          ``(2) an intermediary;
          ``(3) a microenterprise development organization or program 
        that is accountable to a local community, and is working in 
        conjunction with a State or local government or Indian tribe; 
        or
          ``(4) an Indian tribe acting on its own, if the Indian tribe 
        certifies that no private organization or program referred to 
        in this paragraph exists within its jurisdiction.

``SEC. 176. ALLOCATION OF ASSISTANCE; SUBGRANTS.

  ``(a) Allocation of Assistance.--
          ``(1) In general.--The Administrator shall allocate 
        assistance from the Fund under this subtitle to ensure that--
                  ``(A) activities described in section 174(1) are 
                funded using not less than 75 percent of amounts made 
                available for such assistance; and
                  ``(B) activities described in section 174(2) are 
                funded using not less than 15 percent of amounts made 
                available for such assistance.
          ``(2) Limit on individual assistance.--No single organization 
        or entity may receive more than 10 percent of the total funds 
        appropriated under this subtitle in a single fiscal year.
  ``(b) Targeted Assistance.--The Administrator shall ensure that not 
less than 50 percent of the grants made under this subtitle are used to 
benefit very low-income persons, including those residing on Indian 
reservations.
  ``(c) Subgrants Authorized.--
          ``(1) In general.--A qualified organization receiving 
        assistance under this subtitle may provide grants using that 
        assistance to qualified small and emerging microenterprise 
        organizations and programs, subject to such rules and 
        regulations as the Administrator determines to be appropriate.
          ``(2) Limit on administrative expenses.--Not more than 7.5 
        percent of assistance received by a qualified organization 
        under this subtitle may be used for administrative expenses in 
        connection with the making of subgrants under paragraph (1).
  ``(d) Diversity.--In making grants under this subtitle, the 
Administrator shall ensure that grant recipients include both large and 
small microenterprise organizations, serving urban, rural, and Indian 
tribal communities and racially and ethnically diverse populations.
  ``(e) Consideration of Intermediaries Participating in Microloan 
Program.--The Administrator shall establish and use criteria for 
selecting applications for grants under this subtitle from among 
applications that meet the requirements under this subtitle for 
approval for a grant, which--
          ``(1) may not exclude from consideration any application made 
        by a qualified organization that is a participant in the 
        program established under section 7(m) of the Small Business 
        Act (15 U.S.C. 636(m)); and
          ``(2) shall provide positive consideration to an application 
        made by a qualified organization that is a participant in the 
        program established under section 7(m) of the Small Business 
        Act (15 U.S.C. 636(m)).

``SEC. 177. MATCHING REQUIREMENTS.

  ``(a) In General.--Financial assistance under this subtitle shall be 
matched with funds from sources other than the Federal Government on 
the basis of not less than 50 percent of each dollar provided by the 
Fund.
  ``(b) Sources of Matching Funds.--Fees, grants, gifts, funds from 
loan sources, and in-kind resources of a grant recipient from public or 
private sources may be used to comply with the matching requirement in 
subsection (a).
  ``(c) Exception.--
          ``(1) In general.--In the case of an applicant for assistance 
        under this subtitle with severe constraints on available 
        sources of matching funds, the Administrator may reduce or 
        eliminate the matching requirements of subsection (a).
          ``(2) Limitation.--Not more than 10 percent of the total 
        funds made available from the Fund in any fiscal year to carry 
        out this subtitle may be excepted from the matching 
        requirements of subsection (a), as authorized by paragraph (1) 
        of this subsection.

``SEC. 178. APPLICATIONS FOR ASSISTANCE.

  ``An application for assistance under this subtitle shall be 
submitted in such form and in accordance with such procedures as the 
Fund shall establish.

``SEC. 179. RECORDKEEPING.

  ``The requirements of section 115 shall apply to a qualified 
organization receiving assistance from the Fund under this subtitle as 
if it were a community development financial institution receiving 
assistance from the Fund under subtitle A.

``SEC. 180. REPORT.

  ``Not later than 1 year after the date that the first grant is 
awarded under this subtitle, the Administrator shall submit to the 
Committees on Banking and Financial Services and Small Business of the 
House of Representatives and the Committees on Banking, Housing, and 
Urban Affairs and Small Business of the Senate a report on the 
microenterprise technical assistance and capacity building program 
under this subtitle, which shall include the Administrator's evaluation 
of the effectiveness of the first year of operation of the program and 
the following information:
          ``(1) The number and locations of the qualified organizations 
        funded under the grant program.
          ``(2) The amount of each grant made to a qualified 
        organization.
          ``(3) A description of the matching contributions provided in 
        accordance with section 177 by each qualified organization 
        receiving a grant.
          ``(4) The numbers and amounts of subgrants made by qualified 
        organizations to microenterprise concerns.
          ``(5) For each grant made under the program, the purpose for 
        which the grant funds were used.

``SEC. 181. AUTHORIZATION.

  ``In addition to funds otherwise authorized to be appropriated to the 
Fund to carry out this title, there are authorized to be appropriated 
to the Fund to carry out this subtitle--
          ``(1) $15,000,000 for fiscal year 2000;
          ``(2) $25,000,000 for fiscal year 2001;
          ``(3) $30,000,000 for fiscal year 2002; and
          ``(4) $35,000,000 for fiscal year 2003.

``SEC. 182. IMPLEMENTATION.

  ``(a) Regulations.--The Administrator shall, by regulation, establish 
such requirements as may be necessary to carry out this subtitle. The 
Administrator of the Fund shall submit a copy of any such proposed, 
preliminary, interim, or final regulation to the Administrator of the 
Small Business Administrator for review and comment by such 
Administrator, and shall review any comments of such Administrator 
submitted pursuant to such review. No regulation issued to carry out 
this subtitle may take effect before the expiration of the 60-day 
period beginning upon the submission of such regulation to the 
Administrator of the Small Business Administration.
  ``(b) Coordination with Small Business Administration.--Not later 
than 60 days after the date of the enactment of this section, the 
Administrator of the Fund and the Administrator of the Small Business 
Administration shall conduct any necessary consultations and enter into 
a memorandum of understanding providing that the program under this 
subtitle and the microloan program under section 7(m) of the Small 
Business Act (15 U.S.C. 636(m)) will be carried out in conjunction and 
coordination with each other in a manner that advances the purposes of 
both such programs. Notwithstanding any other provision of this 
subtitle, the Administrator of the Fund may not make any grant under 
this subtitle before such memorandum of understanding is agreed to.''.

SEC. 2. ADMINISTRATIVE EXPENSES.

  Section 121(a)(2)(A) of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (12 U.S.C. 4718(a)(2)(A)) is 
amended--
          (1) by striking ``$5,550,000'' and inserting ``$6,100,000''; 
        and
          (2) in the first sentence, by inserting before the period ``, 
        including costs and expenses associated with carrying out 
        subtitle C''.

SEC. 3. CONFORMING AMENDMENTS.

  (a) In General.--Section 104(d) of the Riegle Community Development 
and Regulatory Improvement Act of 1994 (12 U.S.C. 4703(d)) is amended--
          (1) in paragraph (2)--
                  (A) by striking ``15'' and inserting ``17'';
                  (B) in subparagraph (G)--
                          (i) by striking ``9'' and inserting ``11'';
                          (ii) by redesignating clauses (iv) and (v) as 
                        clauses (v) and (vi), respectively; and
                          (iii) by inserting after clause (iii) the 
                        following:
                          ``(iv) 2 individuals who have expertise in 
                        microenterprises and microenterprise 
                        development;''; and
          (2) in paragraph (4), in the first sentence, by inserting 
        before the period ``and subtitle C''.
  (b) Table of Contents.--The table of contents in section 1(b) is 
amended by adding after the item relating to section 158 the following:

    ``Subtitle C--Microenterprise Technical Assistance and Capacity 
                            Building Program

``Sec. 171. Short title.
``Sec. 172. Definitions.
``Sec. 173. Establishment of program.
``Sec. 174. Uses of assistance.
``Sec. 175. Qualified organizations.
``Sec. 176. Allocation of assistance; subgrants.
``Sec. 177. Matching requirements.
``Sec. 178. Applications for assistance.
``Sec. 179. Recordkeeping.
``Sec. 180. Report.
``Sec. 181. Authorization.
``Sec. 182. Implementation.''.

                                Purpose

    The purpose of H.R. 413, the ``Program for Investment in 
Microentrepreneurs Act of 1999'' (the ``Act'', or ``PRIME''), 
as reported out of the Committee on Small Business, is to work 
in conjunction with the Small Business Administration's (SBA) 
Microloan program to encourage entrepreneurship and community 
development by providing technical assistance and capacity 
building assistance to microenterprise development 
organizations, thereby enabling these organizations to more 
effectively meet the growing training and technical assistance 
needs of low-income entrepreneurs. The Act authorizes the 
Community Development Financial Institutions (``CDFI'') Fund to 
establish a microenterprise technical assistance and capacity 
building program that would award grants on a competitive basis 
to eligible microenterprise development organizations and 
programs. Eligible organizations shall include Indian Tribes.

                          Need for Legislation

    One of the greatest challenges to small or micro 
entrepreneurs is access to capital. Often before they can grow 
their businesses several needs must be addressed. 
Traditionally, these needs are in the areas of training, 
education or general capacity building. The Program for 
Investment in Microentrepreneurs was created to assist 
entrepreneurs and community development through the 
establishment of a grant program.
    The passage of the PRIME Act will create an additional 
federal microenterprise assistance-related program. Currently, 
there are a number of such programs dispersed throughout 
various agencies of the federal government. The SBA conducts 
the main program, the 7(m) Microloan program, which was 
permanently authorized in the Fall of 1997. Through the 7(m) 
program, SBA provides loans and grants to nonprofit 
microenterprise intermediaries which, in turn, provide small 
loans and technical assistance to microentrepreneurs. In 
addition to the technical assistance that SBA's 7(m) Microloan 
program provides in conjunction with its loans, it provides 
technical assistance even without the loan component. Through 
its Non-lending Technical Assistance Provider (``NTAP'') 
program, SBA can provide up to $125,000 in capacity building 
grants--like the PRIME Act--that are not tied to loans for the 
explicit purpose of capacity building. In addition to the 7(m) 
program, SBA administers other technical assistance and 
capacity building programs through the Small Business 
Development Center (``SBDC'') Program to provide technical 
assistance to current and prospective small business owners; 
and the Women's Business Development Program, which provides 
technical assistance to women entrepreneurs who are 
economically disadvantaged. Additional microenterprise programs 
are administered through HHS, HUD, Labor, Agriculture and 
Commerce.
    With so many programs currently operating to assist 
microentrepreneurs, and at a time when government is being 
expected to do more with less, it is critical that any new 
program is not repetitive or duplicate of currently established 
programs. The potential does exist for PRIME to duplicate some 
of the services already provided to the microenterprise 
community by the 7(m) program.
    This possibility for conflict is demonstrated by examining 
both the PRIME and the 7(m) programs' statements of purpose. As 
approved by the Committee on Small Business, the PRIME 
program's purpose is:

          To authorize qualified organizations to provide 
        technical assistance and capacity building services to 
        micro enterprise and development organizations and 
        programs to disadvantaged entrepreneurs * * *

    According to the statement of purpose for the SBA's 
Microloan technical assistance and capacity building program, 
as originally authorized in 15 U.S.C. Sec. 636 7(m), the 
program's purpose is:

          To make grants available to eligible nonprofit 
        entities that, together with non-Federal matching 
        funds, will enable such entities to provide intensive 
        marketing, management, and technical assistance to 
        assist low-income entrepreneurs and other low-income 
        individuals * * *

    Because of the potential for duplication, the Committee 
worked to ensure that the PRIME program will work with existing 
federal microenterprise technical assistance and capacity 
building grant programs, especially those that already exist at 
the Small Business Administration. PRIME has the ability to 
make capacity building and technical assistance grants, just as 
the SBA Microloan Program. But, in addition to the technical 
assistance and capacity building that both SBA and PRIME can 
do, the SBA 7(m) Microloan program can make loans in the area 
of entrepreneur development and loans that are tied to 
technical assistance.
    The Committee believes that PRIME can play an important 
role in supplementing the current microenterprise technical 
assistance programs administered through the SBA. This is 
especially true given the fact that PRIME's purpose is to focus 
on only technical assistance and capacity building, an area 
that has been historically under-funded. The PRIME program 
should never extend beyond the level of providing technical 
assistance and capacity building. Hearings and Committee action 
made clear that CDFI does not possess the infrastructure to 
support and administer a Microloan program, and that the PRIME 
Act is not structured in a way to create a framework to 
administer loans in a safe and sound manner.
    Microenterprise programs play a key role in economic 
development and job creation in low-income areas. The ultimate 
goal of any program of this nature must be to get technical 
assistance to the nation's micro-entrepreneurs. The most 
effective way to do this is to ensure that the PRIME Act works 
in conjunction with existing federal programs to provide our 
entrepreneurs with the technical assistance and capacity 
building they need to succeed.

                   Committee Consideration and Votes

    On June 24, 1999, the Committee on Small Business met in 
open session to mark up H.R. 413, the ``Program For Investment 
In Microentrepreneurs'' Act of 1999, pursuant to a referral 
from the Committee on Banking and Financial Services. The 
Committee called up H.R. 413 as reported by the Committee on 
Banking and Financial Services as original text for the purpose 
of amendment. The Committee on Small Business adopted one en 
bloc amendment offered by the Chairman and Ranking Democratic 
Member of the Committee. The amendment prohibits CDFI from 
making loans, requires the inclusion of participants of SBA's 
7(m) program in the PRIME program, adds reporting requirements, 
and requires SBA and CDFI to enter into a Memorandum of 
Understanding (MOU) over the implementation of the PRIME 
legislation, as well as gives SBA the opportunity to comment on 
the final regulations. These changes were made to ensure that 
there is proper coordination of the program and that the fiscal 
safety and soundness of the program is maintained.
    Concerns were raised, by Mr. Davis, that should the MOU not 
be agreed to in 60 days, implementation of the PRIME program 
would be delayed. It is not the intent of the Committee that 
the MOU process be used to delay the implementation of the 
PRIME program. The Committee will use its full oversight 
capabilities to ensure that the SBA and CDFI enter into the MOU 
within the allotted 60 day period. The en bloc amendment was 
then accepted by voice vote.
    Ms. Velazquez then moved that H.R. 413, as amended, be 
ordered reported. A quorum being present, H.R. 413 passed the 
Committee by a voice vote.
    It should also be noted that the Committee held several 
hearings on the Small Business Administration's 7(m) Microloan 
program since its inception. The Committee has always received 
the strongest support testimony for the program from the 
Administration and the program participants. This evidence 
supports the Committee's concern that efforts to assist 
microenterprises may be injured, not by neglect, but rather by 
a dissipation of focus caused by a proliferation of overlapping 
programs. In addition, the legislative package received by the 
Committee from the Small Business Administration included 
several amendments to the Section 7(m) microloan program, 
particularly the NTAP provisions, which point to this lack of 
coordination in Administration efforts. The Committee firmly 
believes that the amendments to H.R. 413 will aid the SBA and 
CDFI in synchronizing their efforts to assist microenterprises.

                      Section-by-Section Analysis


    section 1. provision of technical assistance to microenterprises

    Section 1 amends Title I of the ``Riegle Community 
Development and Regulatory Improvement Act of 1994'' by adding 
a new subtitle, ``Subtitle C--Microenterprise Technical 
Assistance and Capacity Building Program'' which includes the 
following sections:

Section 171. Short title

    This Section designates new Subtitle C as the ``Program for 
Investment in Microentrepreneurs Act of 1999'' (PRIME Act).

Section 172. Definitions

    This section defines terms as they apply to the PRIME Act.

Section 173. Establishment of program

    This section requires the Treasury Secretary to establish a 
microenterprise technical assistance and capacity building 
grant program which shall provide assistance from the CDFI Fund 
in the form of grants to qualified organizations.

Section 174. Uses of assistance

    This section provides that grants can be used for 
assistance to provide training, technical assistance, capacity 
building and educational assistance targeted to microenterprise 
and microenterprise development organizations that serve low 
income entrepreneurs. The Committee added language prohibiting 
the PRIME act to be used as a loan program. The Committee 
further believes that funding for this program should be 
focused in manner that provides the maximum assistance directly 
to the microentrepreneurs and not in manner that would have 
only secondary or limited benefits for the microenterprise 
community.

Section 175. Qualified organizations

    This section defines a qualified organization as a non-
profit microenterprise development organization as one that has 
a demonstrated record of assisting disadvantaged enterpreneurs, 
an intermediary nonprofit entity that serves microenterprise 
development organizations, or an Indian tribe if it can certify 
that a nonprofit microenterprise development program exists in 
the area.

Section 176. Allocation of assistance; subgrants

    This section provides the manner in which funding is to be 
used and defines the parameter under which organizations will 
participate in the program. The Committee added language 
ensuring that all participants of SBA's 7(m) Microloan program 
will be eligible for funding under PRIME. It is critical to 
PRIME's success, that those participants in the SBA's 7(m) 
program be included in the PRIME program. CDFI should make 
every effort to ensure that participants of SBA's 7(m) 
Microloan program are included in the PRIME program. The 7(m) 
intermediaries have the institutional experience and expertise 
to help the PRIME program hit the ground running, and allow the 
program to work efficiently and effectively.

Section 177. Matching requirements

    This section provides matching requirements from sources 
other than the Federal Government equal to fifty percent of 
each dollar provided by the CDFI Fund. Sources of matching 
funds may include fees, grants, gifts, funds from loan sources, 
or in the form of in-kind resources, grants, or loans to the 
organization.
    In the case of an applicant with severe economic 
constraints on sources available for matching funds, the 
Administrator may reduce or eliminate the matching requirement. 
Not more than 10% of the total funds made available under the 
Act may be excepted from the matching requirements.

Section 178. Applications for assistance

    This section requires the CDFI Fund to establish procedures 
for submission of applications for assistance.

Section 179. Recordkeeping

    This section establishes record keeping requirements for 
organizations that receive PRIME Act grants, including an 
annual report in which the organization discloses its 
activities, financial conditions, and its success in satisfying 
the terms and conditions of its assistance agreement.

Section 180. Report

    This section requires the Administrator to submit to the 
House and Senate Small Business and Banking Committees, within 
one year after CDFI has awarded and funded the first grant, and 
annually after that, the following information: (1) the number 
and locations of the organizations funded under the grant 
program; (2) the amount of each grant made to a qualified 
organization; (3) a description of the matching contributions 
provided by each qualified organization receiving a grant; (4) 
the numbers and amounts of sub-grants made by qualified 
organizations to small business concerns; (5) each grant made 
under the program, the purpose for which the grant funds were 
used.

Section 181. Authorization

    This section authorizes appropriations of $15 million for 
fiscal year 2000, $25 million for fiscal year 2001, $30 million 
for fiscal year 2002, and $35 million for fiscal year 2003.

Section 182. Implementation

    This section directs the administrator to develop 
regulations for the implementation of the program. Prior to the 
development of these regulations and before any grants are 
awarded, the Administrator is to enter into a Memorandum of 
Understanding with the Small Business Administration. This 
should include, but not be limited to such items as outreach 
and information to organizations. This agreement must be 
completed within 60 days of enactment of the legislation. The 
Committee encourages both SBA and CDFI to complete this 
agreement quickly, and the committee will closely monitor the 
progress of this agreement to ensure that this is carried out 
in an expeditious manner. Should issues arise that make 
completion of the MOU by the 60 day deadline impossible, it is 
the Committee's hope that a third party, such as the Office of 
Budget and Management, would be available to assist in 
resolving any outstanding issues.
    Prior to the issuing any proposed preliminary, interim or 
final regulations, the Administrator of the fund must provide 
the Administrator of SBA 60 days to comment and suggest changes 
to these regulation that reflect SBA's experience in the area 
of assisting micro-entrepreneurs and to ensure that the two 
programs do not duplicate services already provided by SBA.

                   section 2. administrative expenses

    Section 2 increases the CDFI Fund's authorized 
administrative expenses from $5,500,000 to $6,100,000 to 
accommodate administration of the PRIME Act.

                    section 3. conforming amendments

    This section makes technical and conforming amendments.

                      Committee Estimate of Costs

    Pursuant to the Congressional Budget Act of 1974, the 
Committee estimates that the amendments made by the Committee 
on Small Business to H.R. 413 will not increase discretionary 
spending. The Committee estimate concurs with the Congressional 
Budget Office (CBO) estimate on H.R. 413 included with the 
original report from the Committee on Banking and Financial 
Services.
    Furthermore, pursuant to clause 3(d)(2)(A) of rule XIII of 
the Rules of the House of Representatives, the Committee 
estimates that implementation of H.R. 413, as amended, will not 
significantly increase administrative costs.

                           Oversight Findings

    In accordance with clause 4(c)(2) of rule X of the Rules of 
the House of Representatives, the Committee states that no 
oversight findings or recommendations have been made by the 
Committee on Government Reform with respect to the subject 
matter contained in H.R. 413.
    In accordance with clause (2)(b)(1) of rule X of the Rules 
of the House of Representatives, the oversight findings and 
recommendations of the Committee on Small Business with respect 
to the subject matter contained in H.R. 413 are incorporated 
into the descriptive portions of this report.

                 Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, clause 18, of the 
Constitution of the United States.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

RIEGLE COMMUNITY DEVELOPMENT & REGULATORY IMPROVEMENT

           *       *       *       *       *       *       *



SECTION 1. SHORT TITLE; TABLE OF CONTENTS

  (a) Short Title.--This Act may be cited as the ``Riegle 
Community Development and Regulatory Improvement Act of 1994''.
  (b)  Table of Contents.--The table of contents for this Act 
is as follows:

Sec. 1. Short title; table of contents.

         TITLE I--COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION

Subtitle A--Community Development Banking and Financial Institutions Act

Sec. 101. Short title.
     * * * * * * *

 Subtitle C--Microenterprise Technical Assistance and Capacity Building 
                                 Program

Sec. 171. Short title.
Sec. 172. Definitions.
Sec. 173. Establishment of program.
Sec. 174. Uses of assistance.
Sec. 175. Qualified organizations.
Sec. 176. Allocation of assistance; subgrants.
Sec. 177. Matching requirements.
Sec. 178. Applications for assistance.
Sec. 179. Recordkeeping.
Sec. 180. Report.
Sec. 181. Authorization.
Sec. 182. Implementation.

           *       *       *       *       *       *       *


         TITLE I--COMMUNITY DEVELOPMENT AND CONSUMER PROTECTION

 Subtitle A--Community Development Banking and Financial Institutions 
                                  Act

SEC. 104. ESTABLISHMENT OF NATIONAL FUND FOR COMMUNITY DEVELOPMENT 
                    BANKING.

  (a) * * *

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  (d) Advisory Board.--
          (1) * * *
          (2) Membership.--The Board shall consist of [15] 17 
        members, including--
                  (A) * * *

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                  (G) [9] 11 private citizens, appointed by the 
                President, who shall be selected, to the 
                maximum extent practicable, to provide for 
                national geographic representation and racial, 
                ethnic, and gender diversity, including--
                          (i) * * *

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                          (iv) 2 individuals who have expertise 
                        in microenterprises and microenterprise 
                        development;
                          [(iv)] (v) 2 individuals who have 
                        expertise in community development; and
                          [(v)] (vi) 1 individual who has 
                        personal experience and specialized 
                        expertise in the unique lending and 
                        community development issues confronted 
                        by Indian tribes on Indian 
                        reservations.

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          (4) Board function.--It shall be the function of the 
        Board to advise the Administrator on the policies of 
        the Fund regarding activities under this subtitle and 
        subtitle C. The Board shall not advise the 
        Administrator on the granting or denial of any 
        particular application.

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SEC. 121. AUTHORIZATION OF APPROPRIATIONS.

  (a) Fund Authorization.--
          (1) * * *
          (2) Administrative expenses.--
                  (A) In general.--Of amounts authorized to be 
                appropriated to the Fund pursuant to this 
                section, not more than [$5,550,000] $6,100,000 
                may be used by the Fund in each fiscal year to 
                pay the administrative costs and expenses of 
                the Fund, including costs and expenses 
                associated with carrying out subtitle C. Costs 
                associated with the training program 
                established under section 109 and the technical 
                assistance program established under section 
                108 shall not be considered to be 
                administrative expenses for purposes of this 
                paragraph.

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Subtitle C--Microenterprise Technical Assistance and Capacity Building 
                                Program

SEC. 171. SHORT TITLE.

  This subtitle may be cited as the ``Program for Investment in 
Microentrepreneurs Act of 1999'', also referred to as the 
``PRIME Act''.

SEC. 172. DEFINITIONS.

  For purposes of this subtitle--
          (1) the term ``Administrator'' has the same meaning 
        as in section 103;
          (2) the term ``capacity building services'' means 
        services provided to an organization that is, or is in 
        the process of becoming, a microenterprise development 
        organization or program, for the purpose of enhancing 
        its ability to provide training and services to 
        disadvantaged entrepreneurs;
          (3) the term ``collaborative'' means, with respect to 
        2 or more nonprofit entities, having agreed to act 
        jointly as a qualified organization under this 
        subtitle;
          (4) the term ``disadvantaged entrepreneur'' means a 
        microentrepreneur that is--
                  (A) a low-income person;
                  (B) a very low-income person; or
                  (C) an entrepreneur who lacks adequate access 
                to capital or other resources essential for 
                business success, or is economically 
                disadvantaged, as determined by the 
                Administrator;
          (5) the term ``Fund'' has the same meaning as in 
        section 103;
          (6) the term ``Indian tribe'' has the same meaning as 
        in section 103;
          (7) the term ``intermediary'' means a private, 
        nonprofit entity that seeks to serve microenterprise 
        development organizations and programs;
          (8) the term ``low-income person'' has the same 
        meaning as in section 103;
          (9) the term ``microentrepreneur'' means the owner or 
        developer of a microenterprise;
          (10) the term ``microenterprise'' means a sole 
        proprietorship, partnership, or corporation that--
                  (A) has fewer than 5 employees; and
                  (B) generally lacks access to conventional 
                loans, equity, or other banking services;
          (11) the term ``microenterprise development 
        organization or program'' means a nonprofit entity, or 
        a program administered by such an entity, including 
        community development corporations or other nonprofit 
        development organizations and social service 
        organizations, that provides services to disadvantaged 
        entrepreneurs or prospective entrepreneurs;
          (12) the term ``training and technical assistance'' 
        means services and support provided to disadvantaged 
        entrepreneurs or prospective entrepreneurs, such as 
        assistance for the purpose of enhancing business 
        planning, marketing, management, financial management 
        skills, and assistance for the purpose of accessing 
        financial services; and
          (13) the term ``very low-income person'' means having 
        an income, adjusted for family size, of not more than 
        150 percent of the poverty line (as defined in section 
        673(2) of the Community Services Block Grant Act (42 
        U.S.C. 9902(2), including any revision required by that 
        section).

SEC. 173. ESTABLISHMENT OF PROGRAM.

  The Administrator shall establish a microenterprise technical 
assistance and capacity building grant program to provide 
assistance from the Fund in the form of grants to qualified 
organizations in accordance with this subtitle.

SEC. 174. USES OF ASSISTANCE.

  A qualified organization shall use grants made under this 
subtitle--
          (1) to provide training and technical assistance to 
        disadvantaged entrepreneurs;
          (2) to provide training and capacity building 
        services to microenterprise development organizations 
        and programs and groups of such organizations to assist 
        such organizations and programs in developing 
        microenterprise training and services;
          (3) to aid in researching and developing the best 
        practices in the field of microenterprise and technical 
        assistance programs for disadvantaged entrepreneurs; 
        and
          (4) for such other activities as the Administrator 
        determines are consistent with the purposes of this 
        subtitle, except that grant amounts may not be used to 
        make loans of any kind.

SEC. 175. QUALIFIED ORGANIZATIONS.

  For purposes of eligibility for assistance under this 
subtitle, a qualified organization shall be--
          (1) a nonprofit microenterprise development 
        organization or program (or a group or collaborative 
        thereof) that has a demonstrated record of delivering 
        microenterprise services to disadvantaged 
        entrepreneurs;
          (2) an intermediary;
          (3) a microenterprise development organization or 
        program that is accountable to a local community, and 
        is working in conjunction with a State or local 
        government or Indian tribe; or
          (4) an Indian tribe acting on its own, if the Indian 
        tribe certifies that no private organization or program 
        referred to in this paragraph exists within its 
        jurisdiction.

SEC. 176. ALLOCATION OF ASSISTANCE; SUBGRANTS.

  (a) Allocation of Assistance.--
          (1) In general.--The Administrator shall allocate 
        assistance from the Fund under this subtitle to ensure 
        that--
                  (A) activities described in section 174(1) 
                are funded using not less than 75 percent of 
                amounts made available for such assistance; and
                  (B) activities described in section 174(2) 
                are funded using not less than 15 percent of 
                amounts made available for such assistance.
          (2) Limit on individual assistance.--No single 
        organization or entity may receive more than 10 percent 
        of the total funds appropriated under this subtitle in 
        a single fiscal year.
  (b) Targeted Assistance.--The Administrator shall ensure that 
not less than 50 percent of the grants made under this subtitle 
are used to benefit very low-income persons, including those 
residing on Indian reservations.
  (c) Subgrants Authorized.--
          (1) In general.--A qualified organization receiving 
        assistance under this subtitle may provide grants using 
        that assistance to qualified small and emerging 
        microenterprise organizations and programs, subject to 
        such rules and regulations as the Administrator 
        determines to be appropriate.
          (2) Limit on administrative expenses.--Not more than 
        7.5 percent of assistance received by a qualified 
        organization under this subtitle may be used for 
        administrative expenses in connection with the making 
        of subgrants under paragraph (1).
  (d) Diversity.--In making grants under this subtitle, the 
Administrator shall ensure that grant recipients include both 
large and small microenterprise organizations, serving urban, 
rural, and Indian tribal communities and racially and 
ethnically diverse populations.
  (e) Consideration of Intermediaries Participating in 
Microloan Program.--The Administrator shall establish and use 
criteria for selecting applications for grants under this 
subtitle from among applications that meet the requirements 
under this subtitle for approval for a grant, which--
          (1) may not exclude from consideration any 
        application made by a qualified organization that is a 
        participant in the program established under section 
        7(m) of the Small Business Act (15 U.S.C. 636(m)); and
          (2) shall provide positive consideration to an 
        application made by a qualified organization that is a 
        participant in the program established under section 
        7(m) of the Small Business Act (15 U.S.C. 636(m)).

SEC. 177. MATCHING REQUIREMENTS.

  (a) In General.--Financial assistance under this subtitle 
shall be matched with funds from sources other than the Federal 
Government on the basis of not less than 50 percent of each 
dollar provided by the Fund.
  (b) Sources of Matching Funds.--Fees, grants, gifts, funds 
from loan sources, and in-kind resources of a grant recipient 
from public or private sources may be used to comply with the 
matching requirement in subsection (a).
  (c) Exception.--
          (1) In general.--In the case of an applicant for 
        assistance under this subtitle with severe constraints 
        on available sources of matching funds, the 
        Administrator may reduce or eliminate the matching 
        requirements of subsection (a).
          (2) Limitation.--Not more than 10 percent of the 
        total funds made available from the Fund in any fiscal 
        year to carry out this subtitle may be excepted from 
        the matching requirements of subsection (a), as 
        authorized by paragraph (1) of this subsection.

SEC. 178. APPLICATIONS FOR ASSISTANCE.

  An application for assistance under this subtitle shall be 
submitted in such form and in accordance with such procedures 
as the Fund shall establish.

SEC. 179. RECORDKEEPING.

  The requirements of section 115 shall apply to a qualified 
organization receiving assistance from the Fund under this 
subtitle as if it were a community development financial 
institution receiving assistance from the Fund under subtitle 
A.

SEC. 180. REPORT.

  Not later than 1 year after the date that the first grant is 
awarded under this subtitle, the Administrator shall submit to 
the Committees on Banking and Financial Services and Small 
Business of the House of Representatives and the Committees on 
Banking, Housing, and Urban Affairs and Small Business of the 
Senate a report on the microenterprise technical assistance and 
capacity building program under this subtitle, which shall 
include the Administrator's evaluation of the effectiveness of 
the first year of operation of the program and the following 
information:
          (1) The number and locations of the qualified 
        organizations funded under the grant program.
          (2) The amount of each grant made to a qualified 
        organization.
          (3) A description of the matching contributions 
        provided in accordance with section 177 by each 
        qualified organization receiving a grant.
          (4) The numbers and amounts of subgrants made by 
        qualified organizations to microenterprise concerns.
          (5) For each grant made under the program, the 
        purpose for which the grant funds were used.

SEC. 181. AUTHORIZATION.

  In addition to funds otherwise authorized to be appropriated 
to the Fund to carry out this title, there are authorized to be 
appropriated to the Fund to carry out this subtitle--
          (1) $15,000,000 for fiscal year 2000;
          (2) $25,000,000 for fiscal year 2001;
          (3) $30,000,000 for fiscal year 2002; and
          (4) $35,000,000 for fiscal year 2003.

SEC. 182. IMPLEMENTATION.

  (a) Regulations.--The Administrator shall, by regulation, 
establish such requirements as may be necessary to carry out 
this subtitle. The Administrator of the Fund shall submit a 
copy of any such proposed, preliminary, interim, or final 
regulation to the Administrator of the Small Business 
Administration for review and comment by such Administrator, 
and shall review any comments of such Administrator submitted 
pursuant to such review. No regulation issued to carry out this 
subtitle may take effect before the expiration of the 60-day 
period beginning upon the submission of such regulation to the 
Administrator of the Small Business Administration.
  (b) Coordination With Small Business Administration.--Not 
later than 60 days after the date of the enactment of this 
section, the Administrator of the Fund and the Administrator of 
the Small Business Administration shall conduct any necessary 
consultations and enter into a memorandum of understanding 
providing that the program under this subtitle and the 
microloan program under section 7(m) of the Small Business Act 
(15 U.S.C. 636(m)) will be carried out in conjunction and 
coordination with each other in a manner that advances the 
purposes of both such programs. Notwithstanding any other 
provision of this subtitle, the Administrator of the Fund may 
not make any grant under this subtitle before such memorandum 
of understanding is agreed to.