Skip to content
Congress Index

119th Congress

Menu

119th Congress

Title 15 — Commerce and Trade

Chapter 14B — Small Business Investment Program

§ 662. Definitions

Statutory text

As used in this chapter—

(1)

the term “Administration” means the Small Business Administration;

(2)

the term “Administrator” means the Administrator of the Small Business Administration;

(3)

the terms “small business investment company”, “company”, and “licensee” mean a company approved by the Administration to operate under the provisions of this chapter and issued a license as provided in section 681 of this title;

(4)

the term “State” includes the several States, the territories and possessions of the United States, the Commonwealth of Puerto Rico, and the District of Columbia;

(5)

the term “small-business concern” shall have the same meaning as in the Small Business Act [15 U.S.C. 631 et seq.], except that, for purposes of this chapter—

(A)

an investment by a venture capital firm, investment company (including a small business investment company) employee welfare benefit plan or pension plan, or trust, foundation, or endowment that is exempt from Federal income taxation—

(i)

shall not cause a business concern to be deemed not independently owned and operated regardless of the allocation of control during the investment period under any investment agreement between the business concern and the entity making the investment;

(ii)

shall be disregarded in determining whether a business concern satisfies size standards established pursuant to section 3(a)(2) of the Small Business Act [15 U.S.C. 632(a)(2)]; and

(iii)

shall be disregarded in determining whether a small business concern is a smaller enterprise; and

(B)

in determining whether a business concern satisfies net income standards established pursuant to section 3(a)(2) of the Small Business Act [15 U.S.C. 632(a)(2)], if the business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the sum of—

(i)

if the business concern is not required by law to pay State (and local, if any) income taxes at the enterprise level, the net income (determined without regard to this subparagraph), multiplied by the marginal State income tax rate (or by the combined State and local income tax rates, as applicable) that would have applied if the business concern were a corporation; and

(ii)

the net income (so determined) less any deduction for State (and local) income taxes calculated under clause (i), multiplied by the marginal Federal income tax rate that would have applied if the business concern were a corporation;

(6)

the term “development companies” means enterprises incorporated under State law with the authority to promote and assist the growth and development of small-business concerns in the areas covered by their operations;

(7)

the term “license” means a license issued by the Administration as provided in section 681 of this title;

(8)

the term “articles” means articles of incorporation for an incorporated body and means the functional equivalent or other similar documents specified by the Administrator for other business entities;

(9)

the term “private capital”—

(A)

means the sum of—

(i)

the paid-in capital and paid-in surplus of a corporate licensee, the contributed capital of the partners of a partnership licensee, or the equity investment of the members of a limited liability company licensee; and

(ii)

unfunded binding commitments, from investors that meet criteria established by the Administrator, to contribute capital to the licensee: Provided, That such unfunded commitments may be counted as private capital for purposes of approval by the Administrator of any request for leverage, but leverage shall not be funded based on such commitments;

(B)

does not include any—

(i)

funds borrowed by a licensee from any source;

(ii)

funds obtained through the issuance of leverage; or

(iii)

funds obtained directly or indirectly from any Federal, State, or local government, or any government agency or instrumentality, except for—

(I)

funds obtained from the business revenues (excluding any governmental appropriation) of any federally chartered or government-sponsored corporation;

(II)

funds invested by an employee welfare benefit plan, pension plan, foundation, endowment, or trust of any college or university; and

(III)

any qualified nonprivate funds (if the investors of the qualified nonprivate funds do not control, directly or indirectly, the management, board of directors, general partners, or members of the licensee); and

(C)

does not include any funds obtained directly or indirectly from any Federal, State, or local government or any government agency or instrumentality, except for funds described in subclauses (I) through (III) of subparagraph (B)(iii), for the purpose of approval by the Administrator of any request for leverage.1

(10)

the term “leverage” includes—

(A)

debentures purchased or guaranteed by the Administration;

(B)

participating securities purchased or guaranteed by the Administration; and

(C)

preferred securities outstanding as of ;

(11)

the term “third party debt” means any indebtedness for borrowed money, other than indebtedness owed to the Administration;

(12)

the term “smaller enterprise” means any small business concern that, together with its affiliates—

(A)

has—

(i)

a net financial worth of not more than $6,000,000, as of the date on which assistance is provided under this chapter to that business concern; and

(ii)

an average net income for the 2-year period preceding the date on which assistance is provided under this chapter to that business concern, of not more than $2,000,000, after Federal income taxes (excluding any carryover losses) except that, for purposes of this clause, if the business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the sum of—

(I)

if the business concern is not required by law to pay State (and local, if any) income taxes at the enterprise level, the net income (determined without regard to this clause), multiplied by the marginal State income tax rate (or by the combined State and local income tax rates, as applicable) that would have applied if the business concern were a corporation; and

(II)

the net income (so determined) less any deduction for State (and local) income taxes calculated under subclause (I), multiplied by the marginal Federal income tax rate that would have applied if the business concern were a corporation; or

(B)

satisfies the standard industrial classification size standards established by the Administration for the industry in which the small business concern is primarily engaged;

(13)

the term “qualified nonprivate funds” means any—

(A)

funds directly or indirectly invested in any applicant or licensee on or before , by any Federal agency, other than the Administration, under a provision of law explicitly mandating the inclusion of those funds in the definition of the term “private capital”;

(B)

funds directly or indirectly invested in any applicant or licensee by any Federal agency under a provision of law enacted after , explicitly mandating the inclusion of those funds in the definition of the term “private capital”; and

(C)

funds invested in any applicant or licensee by one or more State or local government entities (including any guarantee extended by those entities) in an aggregate amount that does not exceed 33 percent of the private capital of the applicant or licensee;

(14)

the terms “employee welfare benefit plan” and “pension plan” have the same meanings as in section 3 of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1002], and are intended to include—

(A)

public and private pension or retirement plans subject to such Act [29 U.S.C. 1001 et seq.]; and

(B)

similar plans not covered by such Act that have been established and that are maintained by the Federal Government or any State or political subdivision, or any agency or instrumentality thereof, for the benefit of employees;

(15)

the term “member” means, with respect to a licensee that is a limited liability company, a holder of an ownership interest or a person otherwise admitted to membership in the limited liability company;

(16)

the term “limited liability company” means a business entity that is organized and operating in accordance with a State limited liability company statute approved by the Administration;

(17)

the term “long term”, when used in connection with equity capital or loan funds invested in any small business concern or smaller enterprise, means any period of time not less than 1 year;

(18)

the term “Energy Saving debenture” means a deferred interest debenture that—

(A)

is issued at a discount;

(B)

has a 5-year maturity or a 10-year maturity;

(C)

requires no interest payment or annual charge for the first 5 years;

(D)

is restricted to Energy Saving qualified investments; and

(E)

is issued at no cost (as defined in section 661a 2 of title 2) with respect to purchasing and guaranteeing the debenture;

(19)

the term “Energy Saving qualified investment” means investment in a small business concern that is primarily engaged in researching, manufacturing, developing, or providing products, goods, or services that reduce the use or consumption of non-renewable energy resources; and

(20)

the term “underlicensed State” means a State in which the number of licensees per capita is less than the median number of licensees per capita for all States, as calculated by the Administrator.

Footnotes

  1. 1 So in original. The period probably should be a semicolon.
  2. 2 See References in Text note below.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

  1. Small Business Investment Act of 1958

    Pub. L. 85–699 title I § 103 · 72 Stat. 689

    Enacted · 15 U.S.C. § 662

    Pub. L. 85–699, title I, § 103, Aug. 21, 1958, 72 Stat. 690

    Source evidence

    Code source credit
    Pub. L. 85–699, title I, § 103, Aug. 21, 1958, 72 Stat. 690

    Enacted provision · exact public law section
    Sec. 103. definitions As used in this Act— (1) the term “Administration” means the Small Business Administration; (2) the term “Administrator” means the Administrator of the Small Business Administration; (3) the terms “small business investment company” and “company” mean a small business investment company organized as provided in title III, including (except for purposes of section 301 and section 308 (f)) a State-chartered investment company which has obtained the approval of the Administrator to operate under the provisions of this Act as provided in section 309 and a company converted into a small business investment company under section 401 of this Act; (4) the term “United States” means the several States, the Territories of Alaska and Hawaii, the District of Columbia, and the Commonwealth of Puerto Rico; (5) the term “small-business concern” shall have the same meaning as in the Small Business Act; and (6) the term “development companies” means enterprises incorporated under State law with the authority to promote and assist the growth and development of small-business concerns in the areas covered by their operations.

  2. Small Business Investment Act Amendments of 1960

    Pub. L. 86–502 § 3 · 74 Stat. 196

    Substituted · 15 U.S.C. § 662(4)

    Pub. L. 86–502 substituted definition of “State” for definition of “United States”

    Source evidence

    Code amendment note
    Par. (4). Pub. L. 86–502 substituted definition of “State” for definition of “United States”.

    Enacted provision · exact public law section
    Sec. 3. Section 103 of the Act is amended by deleting the paragraph numbered (4) and inserting, in lieu thereof, the following: “the term ‘State’ includes the several States, the Territories and possessions of the United States, the Common wealth of Puerto Rico, and the District of Columbia.”

  3. Small Business Investment Act Amendments of 1961

    Pub. L. 87–341 § 2(1) · 75 Stat. 752

    1. Inserted · 15 U.S.C. § 662(3)

      Pub. L. 87–341, § 2(1), inserted “licensee”

    2. Substituted · 15 U.S.C. § 662(3)

      Pub. L. 87–341, § 2(1), substituted “company approved by the Administration to operate under the provisions of this chapter and issued a license as provided in section 681(c) of this title” for “small business investment company organized as provided in subchapter III of this chapter, including (except for purposes of sections 681 and 687(f) of this title) a State-chartered investment company which has obtained the approval of the Administrator to operate under the provisions of this chapter as provided in section 688 of this title and a company converted into a small business investment company under section 691 of this title”

    Source evidence

    Code amendment note
    Par. (3). Pub. L. 87–341, § 2(1), inserted “licensee” and substituted “company approved by the Administration to operate under the provisions of this chapter and issued a license as provided in section 681(c) of this title” for “small business investment company organized as provided in subchapter III of this chapter, including (except for purposes of sections 681 and 687(f) of this title) a State-chartered investment company which has obtained the approval of the Administrator to operate under the provisions of this chapter as provided in section 688 of this title and a company converted into a small business investment company under section 691 of this title”.

    Enacted provision · exact public law section
    (1) by striking out paragraph (3) and inserting in lieu thereof the following: “(3) the terms ‘small business investment company’, ‘company’, and ‘licensee’ mean a company approved by the Administration to operate under the provisions of this Act and issued a license as provided in section 301(c);”; and

  4. Small Business Investment Act Amendments of 1961

    Pub. L. 87–341 § 2(2) · 75 Stat. 752

    Added · 15 U.S.C. § 662(7)

    Pub. L. 87–341, § 2(2), added par. (7)

    Source evidence

    Code amendment note
    Par. (7). Pub. L. 87–341, § 2(2), added par. (7).

    Enacted provision · exact public law section
    (2) by striking out “and” at the end of paragraph (5), by striking out the period at the end of paragraph (6) and inserting in lieu thereof “; and”, and by adding after paragraph (6) the following new paragraph: “(7) the term ‘license’ means a license issued by the Administration 15 USC 681. as provided in section 301(c).”

  5. Small Business Investment Act Amendments of 1972

    Pub. L. 92–595 § 2(a) · 86 Stat. 1314

    Substituted · 15 U.S.C. § 662(3)

    Pub. L. 92–595 substituted “section 681” for “section 681(c)”

    Source evidence

    Code amendment note
    Par. (3). Pub. L. 92–595 substituted “section 681” for “section 681(c)”.

    Enacted provision · exact public law section
    (a) Sections 103 (3) and (7) are amended by striking “(c)” after “Section 301” at the end thereof.

  6. Small Business Investment Act Amendments of 1972

    Pub. L. 92–595 § 2(a) · 86 Stat. 1314

    Substituted · 15 U.S.C. § 662(7)

    Pub. L. 92–595 substituted “section 681” for “section 681(c)”

    Source evidence

    Code amendment note
    Par. (7). Pub. L. 92–595 substituted “section 681” for “section 681(c)”.

    Enacted provision · exact public law section
    (a) Sections 103 (3) and (7) are amended by striking “(c)” after “Section 301” at the end thereof.

  7. Pub. L. 94–305 title I § 106(a) · 90 Stat. 663

    Added · 15 U.S.C. § 662(8)

    Pub. L. 94–305 added par. (8)

    Source evidence

    Code amendment note
    Par. (8). Pub. L. 94–305 added par. (8).

    Enacted provision · exact public law section
    (a) Section 103 of the Small Business Investment Act of 15 USC 662. 1958 is amended by striking out “and” at the end of clause (6) and inserting in lieu thereof a semicolon, by striking out the period at the end of clause (7) and inserting in lieu thereof a semicolon and “and”, and by adding at the end the following: “(8) the term ‘articles’ means articles of incorporation for an incorporated body and means the functional equivalent or other similar documents specified by the Administrator for other business entities.”.

  8. Small Business Equity Enhancement Act of 1992

    Pub. L. 102–366 title IV § 410 · 106 Stat. 986

    Added · 15 U.S.C. § 662(9); 15 U.S.C. § 662(10)

    Pub. L. 102–366 added pars. (9) and (10)

    Source evidence

    Code amendment note
    Pars. (9), (10). Pub. L. 102–366 added pars. (9) and (10).

    Enacted provision · exact public law section
    SEC. 410. DEFINITIONS. Section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662) is amended as follows: (1) by striking “and” at the end of paragraph (7); (2) by striking the period at the end of paragraph (8) and inserting in lieu thereof a semicolon; and (3) by adding at the end the following new paragraphs: “(9) notwithstanding any other provision of law, the term ‘private capital’ means the private paid-in capital and paid- in surplus of a corporate licensee, or the private partnership capital of an unincorporate licensee, inclusive of (A) any funds invested in the licensee by a public or private pension fund, (B) any funds invested in the licensee by State or local government entities, to the extent that such investment does not exceed 33 percent of a licensee’s total private capital and other-wise meets criteria established by the Administration, and (C) unfunded commitments from institutional investors that meet criteria established by the Administration, but it excludes any funds which are borrowed by the licensee from any source or which are obtained or derived, directly or indirectly, from any Federal source, including the Administration: Provided, That no unfunded commitment from an institutional investor may be used for the purpose of meeting the minimum amount of private capital required by this Act or as the basis for the Administration to issue obligations to provide financing; and “(10) the term ‘leverage’ includes debentures purchased or guaranteed by the Administration, participating securities purchased or guaranteed by the Administration, or preferred securities issued by companies licensed under section 301(d) of this Act and which have been purchased by the Administration.”.

  9. Department of Commerce and Related Agencies Appropriations Act, 1997

    Pub. L. 104–208 § 208(a)(1) · 110 Stat. 3009

    Inserted · 15 U.S.C. § 662(5)

    Pub. L. 104–208, § 208(a)(1), inserted before semicolon at end “, except that, for purposes of this chapter, an investment by a venture capital firm, investment company (including a small business investment company) employee welfare benefit plan or pension plan, or trust, foundation, or endowment that is exempt from Federal income taxation—

    Source evidence

    Code amendment note
    Par. (5). Pub. L. 104–208, § 208(a)(1), inserted before semicolon at end “, except that, for purposes of this chapter, an investment by a venture capital firm, investment company (including a small business investment company) employee welfare benefit plan or pension plan, or trust, foundation, or endowment that is exempt from Federal income taxation—

    “(A) shall not cause a business concern to be deemed not independently owned and operated; “(B) shall be disregarded in determining whether a business concern satisfies size standards established pursuant to section 3(a)(2) of the Small Business Act; and “(C) shall be disregarded in determining whether a small business concern is a smaller enterprise”.

    Enacted provision · exact public law section
    Sec. 208. None of the funds appropriated under this Act or 16 USC 1851 note. any other Act henceforth may be used to develop new fishery management plans, amendments, or regulations which create new individual fishing quota programs (whether such quotas are transferable or not) or to implement any such plans, amendments or regulations approved by a Regional Fishery Management Council or the Secretary after January 4, 1995, until offsetting fees to pay for the cost of administering such plans, amendments, or regulations are expressly authorized under the Magnuson Fishery Conservation and Management Act (16 U.S.C. 1801 et seq.). This restriction shall also apply to any program relating to the Gulf of Mexico commercial red snapper fishery that authorizes the consolidation of licenses, permits or endorsements that result in different trip limits for vessels in the same class. This restriction shall not apply in any way to the North Pacific halibut and sablefish, South Atlantic wreckfish, or the Mid-Atlantic surfclam and ocean (including mahogany) quohog individual fishing quota programs. The term “individual fishing quota” does not include a community development quota.

  10. Department of Commerce and Related Agencies Appropriations Act, 1997

    Pub. L. 104–208 § 208(a)(2) · 110 Stat. 3009

    Amended · 15 U.S.C. § 662(9)

    Pub. L. 104–208, § 208(a)(2), amended par. (9) generally. Prior to amendment, par. (9) read as follows: “notwithstanding any other provision of law, the term ‘private capital’ means the private paid-in capital and paid-in surplus of a corporate licensee, or the private partnership capital of an unincorporate licensee, inclusive of (A) any funds invested in the licensee by a public or private pension fund, (B) any funds invested in the licensee by State or local government entities, to the extent that such investment does not exceed 33 percent of a licensee’s total private capital and otherwise meets criteria established by the Administration, and (C) unfunded commitments from institutional investors that meet criteria established by the Administration, but it excludes any funds which are borrowed by the licensee from any source or which are obtained or derived, directly or indirectly, from any Federal source, including the Administration: Provided, That no unfunded commitment from an institutional investor may be used for the purpose of meeting the minimum amount of private capital required by this chapter or as the basis for the Administration to issue obligations to provide financing; and”

    Source evidence

    Code amendment note
    Par. (9). Pub. L. 104–208, § 208(a)(2), amended par. (9) generally. Prior to amendment, par. (9) read as follows: “notwithstanding any other provision of law, the term ‘private capital’ means the private paid-in capital and paid-in surplus of a corporate licensee, or the private partnership capital of an unincorporate licensee, inclusive of (A) any funds invested in the licensee by a public or private pension fund, (B) any funds invested in the licensee by State or local government entities, to the extent that such investment does not exceed 33 percent of a licensee’s total private capital and otherwise meets criteria established by the Administration, and (C) unfunded commitments from institutional investors that meet criteria established by the Administration, but it excludes any funds which are borrowed by the licensee from any source or which are obtained or derived, directly or indirectly, from any Federal source, including the Administration: Provided, That no unfunded commitment from an institutional investor may be used for the purpose of meeting the minimum amount of private capital required by this chapter or as the basis for the Administration to issue obligations to provide financing; and”.

    Enacted provision · exact public law section
    Sec. 208. None of the funds appropriated under this Act or 16 USC 1851 note. any other Act henceforth may be used to develop new fishery management plans, amendments, or regulations which create new individual fishing quota programs (whether such quotas are transferable or not) or to implement any such plans, amendments or regulations approved by a Regional Fishery Management Council or the Secretary after January 4, 1995, until offsetting fees to pay for the cost of administering such plans, amendments, or regulations are expressly authorized under the Magnuson Fishery Conservation and Management Act (16 U.S.C. 1801 et seq.). This restriction shall also apply to any program relating to the Gulf of Mexico commercial red snapper fishery that authorizes the consolidation of licenses, permits or endorsements that result in different trip limits for vessels in the same class. This restriction shall not apply in any way to the North Pacific halibut and sablefish, South Atlantic wreckfish, or the Mid-Atlantic surfclam and ocean (including mahogany) quohog individual fishing quota programs. The term “individual fishing quota” does not include a community development quota.

  11. Department of Commerce and Related Agencies Appropriations Act, 1997

    Pub. L. 104–208 § 208(a)(3) · 110 Stat. 3009

    1. Added · 15 U.S.C. § 662(10)(16)

      Pub. L. 104–208, § 208(a)(3), added pars. (10) to (16)

    2. Struck · 15 U.S.C. § 662(10)(16)

      Pub. L. 104–208, § 208(a)(3), struck out former par. (10) which read as follows: “the term ‘leverage’ includes debentures purchased or guaranteed by the Administration, participating securities purchased or guaranteed by the Administration, or preferred securities issued by companies licensed under section 681(d) of this title and which have been purchased by the Administration.”

    Source evidence

    Code amendment note
    Pars. (10) to (16). Pub. L. 104–208, § 208(a)(3), added pars. (10) to (16) and struck out former par. (10) which read as follows: “the term ‘leverage’ includes debentures purchased or guaranteed by the Administration, participating securities purchased or guaranteed by the Administration, or preferred securities issued by companies licensed under section 681(d) of this title and which have been purchased by the Administration.”

    Enacted provision · exact public law section
    Sec. 208. None of the funds appropriated under this Act or 16 USC 1851 note. any other Act henceforth may be used to develop new fishery management plans, amendments, or regulations which create new individual fishing quota programs (whether such quotas are transferable or not) or to implement any such plans, amendments or regulations approved by a Regional Fishery Management Council or the Secretary after January 4, 1995, until offsetting fees to pay for the cost of administering such plans, amendments, or regulations are expressly authorized under the Magnuson Fishery Conservation and Management Act (16 U.S.C. 1801 et seq.). This restriction shall also apply to any program relating to the Gulf of Mexico commercial red snapper fishery that authorizes the consolidation of licenses, permits or endorsements that result in different trip limits for vessels in the same class. This restriction shall not apply in any way to the North Pacific halibut and sablefish, South Atlantic wreckfish, or the Mid-Atlantic surfclam and ocean (including mahogany) quohog individual fishing quota programs. The term “individual fishing quota” does not include a community development quota.

  12. Small Business Reauthorization Act of 1997

    Pub. L. 105–135 title II § 213 · 111 Stat. 2592

    1. Added · 15 U.S.C. § 662(9)(B)(iii)

      Pub. L. 105–135 added subcl. (I)

    2. Redesignated · 15 U.S.C. § 662(9)(B)(iii)

      Pub. L. 105–135 redesignated former subcls. (I) and (II) as (II) and (III), respectively

    Source evidence

    Code amendment note
    Par. (9)(B)(iii). Pub. L. 105–135 added subcl. (I) and redesignated former subcls. (I) and (II) as (II) and (III), respectively.

    Enacted provision · exact public law section
    SEC. 213. PRIVATE CAPITAL. Section 103(9)(B)(iii) of the Small Business Investment Act of 1958 (15 U.S.C. 662(9)(B)(iii)) is amended— (1) by redesignating subclauses (I) and (II) as subclauses and (III), respectively; and (2) by inserting before subclause (II) (as redesignated) the following: “(I) funds obtained from the business revenues (excluding any governmental appropriation) of any federally chartered or government-sponsored corporation established prior to October 1, 1987;”.

  13. Pub. L. 106–9 § 2(c)(1) · 113 Stat. 17

    1. Amended · 15 U.S.C. § 662(5)

      Pub. L. 106–9, § 2(c)(1), designated existing provisions after “for purposes of this chapter” as subpar. (A)

    2. Redesignated · 15 U.S.C. § 662(5)

      Pub. L. 106–9, § 2(c)(1), redesignated former subpars. (A) to (C) as cls. (i) to (iii), respectively

    3. Added · 15 U.S.C. § 662(5)

      Pub. L. 106–9, § 2(c)(1), added subpar. (B)

    Source evidence

    Code amendment note
    Par. (5). Pub. L. 106–9, § 2(c)(1), designated existing provisions after “for purposes of this chapter” as subpar. (A), redesignated former subpars. (A) to (C) as cls. (i) to (iii), respectively, and added subpar. (B).

    Enacted provision · exact public law section
    (1) Small business concern.— Section 103(5) of the Small Business Investment Act of 1958 (15 U.S.C. 662(5)) is amended— (A) by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), and indenting appropriately; (B) in clause (iii), as redesignated, by adding “and” at the end; (C) by striking “purposes of this Act, an investment” and inserting the following: “purposes of this Act— “(A) an investment”; and (D) by adding at the end the following: “(B) in determining whether a business concern satisfies net income standards established pursuant to section 3(a)(2) of the Small Business Act, if the business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the sum of— “(i) if the business concern is not required by law to pay State (and local, if any) income taxes at the enterprise level, the net income (determined without regard to this subparagraph), multiplied by the marginal State income tax rate (or by the combined State and local income tax rates, as applicable) that would have applied if the business concern were a corporation; and “(ii) the net income (so determined) less any deduction for State (and local) income taxes calculated under clause (i), multiplied by the marginal Federal income tax rate that would have applied if the business concern were a corporation;”.

  14. Pub. L. 106–9 § 2(c)(2) · 113 Stat. 17

    Inserted · 15 U.S.C. § 662(12)(A)(ii)

    Pub. L. 106–9, § 2(c)(2), inserted before “; or”: “except that, for purposes of this clause, if the business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the sum of—

    Source evidence

    Code amendment note
    Par. (12)(A)(ii). Pub. L. 106–9, § 2(c)(2), inserted before “; or”: “except that, for purposes of this clause, if the business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the sum of—

    “(I) if the business concern is not required by law to pay State (and local, if any) income taxes at the enterprise level, the net income (determined without regard to this clause), multiplied by the marginal State income tax rate (or by the combined State and local income tax rates, as applicable) that would have applied if the business concern were a corporation; and “(II) the net income (so determined) less any deduction for State (and local) income taxes calculated under subclause (I), multiplied by the marginal Federal income tax rate that would have applied if the business concern were a corporation”.

    Enacted provision · exact public law section
    (2) Smaller enterprise.— Section 103(12)(A)(ii) of the Small Business Investment Act of 1958 (15 U.S.C. 662( 12)(A)(ii)) is amended by inserting before the semicolon at the end the following: “except that, for purposes of this clause, if the business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the sum of— “(I) if the business concern is not required by law to pay State (and local, if any) income taxes at the enterprise level, the net income (determined without regard to this clause), multiplied by the marginal State income tax rate (or by the combined State and local income tax rates, as applicable) that would have applied if the business concern were a corporation; and “(II) the net income (so determined) less any deduction for State (and local) income taxes calculated under subclause (I), multiplied by the marginal Federal income tax rate that would have applied if the business concern were a corporation”.

  15. Consolidated Appropriations Act, 2001

    Pub. L. 106–554 § 1(a)(9)(tIV)(s402)(a) · 114 Stat. 2763

    Inserted · 15 U.S.C. § 662(5)(A)(i)

    Pub. L. 106–554, § 1(a)(9) [title IV, § 402(a)], inserted before semicolon at end “regardless of the allocation of control during the investment period under any investment agreement between the business concern and the entity making the investment”

    Source evidence

    Code amendment note
    Par. (5)(A)(i). Pub. L. 106–554, § 1(a)(9) [title IV, § 402(a)], inserted before semicolon at end “regardless of the allocation of control during the investment period under any investment agreement between the business concern and the entity making the investment”.

    Enacted provision · exact public law section
    (9) H.R. 5667, as introduced on December 15, 2000.

  16. Consolidated Appropriations Act, 2001

    Pub. L. 106–554 § 1(a)(9)(tIV)(s402)(b) · 114 Stat. 2763

    Added · 15 U.S.C. § 662(17)

    Pub. L. 106–554, § 1(a)(9) [title IV, § 402(b)], added par. (17)

    Source evidence

    Code amendment note
    Par. (17). Pub. L. 106–554, § 1(a)(9) [title IV, § 402(b)], added par. (17).

    Enacted provision · exact public law section
    (9) H.R. 5667, as introduced on December 15, 2000.

  17. Energy Independence and Security Act of 2007

    Pub. L. 110–140 title XII § 1205(b) · 121 Stat. 1492

    Added · 15 U.S.C. § 662(18); 15 U.S.C. § 662(19)

    Pub. L. 110–140 added pars. (18) and (19)

    Source evidence

    Code amendment note
    Pars. (18), (19). Pub. L. 110–140 added pars. (18) and (19).

    Enacted provision · exact public law section
    (b) Definitions.— Section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 662) is amended— (1) in paragraph (16), by striking “and” at the end; (2) in paragraph (17), by striking the period at the end and inserting a semicolon; and (3) by adding at the end the following: “(18) the term ‘Energy Saving debenture’ means a deferred interest debenture that— “(A) is issued at a discount; “(B) has a 5-year maturity or a 10-year maturity; “(C) requires no interest payment or annual charge for the first 5 years; “(D) is restricted to Energy Saving qualified investments; and “(E) is issued at no cost (as defined in section 502 of the Credit Reform Act of 1990) with respect to purchasing and guaranteeing the debenture; and “(19) the term ‘Energy Saving qualified investment’ means investment in a small business concern that is primarily engaged in researching, manufacturing, developing, or providing products, goods, or services that reduce the use or consumption of non-renewable energy resources.” .

    Effective date note
    Amendment by Pub. L. 110–140 effective on the date that is 1 day after Dec. 19, 2007, see section 1601 of Pub. L. 110–140, set out as an Effective Date note under section 1824 of Title 2, The Congress.

  18. Spurring Business in Communities Act of 2017

    Pub. L. 115–333 § 2(1) · 132 Stat. 4488

    Added · 15 U.S.C. § 662(20)

    Pub. L. 115–333 added par. (20)

    Source evidence

    Code amendment note
    Par. (20). Pub. L. 115–333 added par. (20).

    Enacted provision · exact public law section
    (1) in section 103 (15 U.S.C. 662)— (A) in paragraph (18)(E), by striking “and” at the end; (B) in paragraph (19), by striking the period at the end and inserting “; and”; and (C) by adding at the end the following: “(20) the term ‘underlicensed State’ means a State in which the number of licensees per capita is less than the median number of licensees per capita for all States, as calculated by the Administrator.” ;

  19. Pub. L. 119–92 § 2(a)(2)(A) · 140 Stat. 825

    Struck · 15 U.S.C. § 662(9)(B)(iii)(I)

    Pub. L. 119–92, § 2(a)(2)(A), struck out “established prior to October 1, 1987” before semicolon at end

    Unresolved: Pub. L. 119–92 was not found in the local Statutes at Large index.

    Source evidence

    Code amendment note
    Par. (9)(B)(iii)(I). Pub. L. 119–92, § 2(a)(2)(A), struck out “established prior to October 1, 1987” before semicolon at end.

  20. Pub. L. 119–92 § 2(a)(2)(B) · 140 Stat. 825

    Substituted · 15 U.S.C. § 662(9)(B)(iii)(II)

    Pub. L. 119–92, § 2(a)(2)(B), substituted “benefit plan, pension plan, foundation, endowment, or trust of any college or university” for “benefit plan or pension plan”

    Unresolved: Pub. L. 119–92 was not found in the local Statutes at Large index.

    Source evidence

    Code amendment note
    Par. (9)(B)(iii)(II). Pub. L. 119–92, § 2(a)(2)(B), substituted “benefit plan, pension plan, foundation, endowment, or trust of any college or university” for “benefit plan or pension plan”.

  21. Pub. L. 119–92 § 2(a)(1) · 140 Stat. 825

    Added · 15 U.S.C. § 662(9)(C)

    Pub. L. 119–92, § 2(a)(1), (2)(C), (3), added subpar. (C)

    Unresolved: Pub. L. 119–92 was not found in the local Statutes at Large index.

    Source evidence

    Code amendment note
    Par. (9)(C). Pub. L. 119–92, § 2(a)(1), (2)(C), (3), added subpar. (C).

23 of 26 references resolved to an enrolled provision · 3 unresolved

Editorial Notes

References in Text

For definition of “this chapter”, referred to in text, see References in Text note set out under section 661 of this title.

The Small Business Act, referred to in par. (5), is Pub. L. 85–536, § 2(1 et seq.), , 72 Stat. 384, which is classified to chapter 14A (§ 631 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under section 631 of this title and Tables. The term “small-business concern” is defined in section 632 of this title.

The Employee Retirement Income Security Act of 1974, referred to in par. (14), is Pub. L. 93–406, , 88 Stat. 829, which is classified principally to chapter 18 (§ 1001 et seq.) of Title 29, Labor. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 29 and Tables.

Section 661a of title 2, referred to in par. (18)(E), was in the original “section 502 of the Credit Reform Act of 1990”, which was translated as reading “section 502 of the Federal Credit Reform Act of 1990”, to reflect the probable intent of Congress.

Amendments1960–2026 · 12 rounds

2026

Par. (9)(B)(iii)(I). Pub. L. 119–92, § 2(a)(2)(A), struck out “established prior to ” before semicolon at end.

Par. (9)(B)(iii)(II). Pub. L. 119–92, § 2(a)(2)(B), substituted “benefit plan, pension plan, foundation, endowment, or trust of any college or university” for “benefit plan or pension plan”.

Par. (9)(C). Pub. L. 119–92, § 2(a)(1), (2)(C), (3), added subpar. (C).

2018

Par. (20). Pub. L. 115–333 added par. (20).

2007

Pars. (18), (19). Pub. L. 110–140 added pars. (18) and (19).

2000

Par. (5)(A)(i). Pub. L. 106–554, § 1(a)(9) [title IV, § 402(a)], inserted before semicolon at end “regardless of the allocation of control during the investment period under any investment agreement between the business concern and the entity making the investment”.

Par. (17). Pub. L. 106–554, § 1(a)(9) [title IV, § 402(b)], added par. (17).

1999

Par. (5). Pub. L. 106–9, § 2(c)(1), designated existing provisions after “for purposes of this chapter” as subpar. (A), redesignated former subpars. (A) to (C) as cls. (i) to (iii), respectively, and added subpar. (B).

Par. (12)(A)(ii). Pub. L. 106–9, § 2(c)(2), inserted before “; or”: “except that, for purposes of this clause, if the business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the sum of—

“(I) if the business concern is not required by law to pay State (and local, if any) income taxes at the enterprise level, the net income (determined without regard to this clause), multiplied by the marginal State income tax rate (or by the combined State and local income tax rates, as applicable) that would have applied if the business concern were a corporation; and

“(II) the net income (so determined) less any deduction for State (and local) income taxes calculated under subclause (I), multiplied by the marginal Federal income tax rate that would have applied if the business concern were a corporation”.

1997

Par. (9)(B)(iii). Pub. L. 105–135 added subcl. (I) and redesignated former subcls. (I) and (II) as (II) and (III), respectively.

1996

Par. (5). Pub. L. 104–208, § 208(a)(1), inserted before semicolon at end “, except that, for purposes of this chapter, an investment by a venture capital firm, investment company (including a small business investment company) employee welfare benefit plan or pension plan, or trust, foundation, or endowment that is exempt from Federal income taxation—

“(A) shall not cause a business concern to be deemed not independently owned and operated;

“(B) shall be disregarded in determining whether a business concern satisfies size standards established pursuant to section 3(a)(2) of the Small Business Act; and

“(C) shall be disregarded in determining whether a small business concern is a smaller enterprise”.

Par. (9). Pub. L. 104–208, § 208(a)(2), amended par. (9) generally. Prior to amendment, par. (9) read as follows: “notwithstanding any other provision of law, the term ‘private capital’ means the private paid-in capital and paid-in surplus of a corporate licensee, or the private partnership capital of an unincorporate licensee, inclusive of (A) any funds invested in the licensee by a public or private pension fund, (B) any funds invested in the licensee by State or local government entities, to the extent that such investment does not exceed 33 percent of a licensee’s total private capital and otherwise meets criteria established by the Administration, and (C) unfunded commitments from institutional investors that meet criteria established by the Administration, but it excludes any funds which are borrowed by the licensee from any source or which are obtained or derived, directly or indirectly, from any Federal source, including the Administration: Provided, That no unfunded commitment from an institutional investor may be used for the purpose of meeting the minimum amount of private capital required by this chapter or as the basis for the Administration to issue obligations to provide financing; and”.

Pars. (10) to (16). Pub. L. 104–208, § 208(a)(3), added pars. (10) to (16) and struck out former par. (10) which read as follows: “the term ‘leverage’ includes debentures purchased or guaranteed by the Administration, participating securities purchased or guaranteed by the Administration, or preferred securities issued by companies licensed under section 681(d) of this title and which have been purchased by the Administration.”

1992

Pars. (9), (10). Pub. L. 102–366 added pars. (9) and (10).

1976

Par. (8). Pub. L. 94–305 added par. (8).

1972

Par. (3). Pub. L. 92–595 substituted “section 681” for “section 681(c)”.

Par. (7). Pub. L. 92–595 substituted “section 681” for “section 681(c)”.

1961

Par. (3). Pub. L. 87–341, § 2(1), inserted “licensee” and substituted “company approved by the Administration to operate under the provisions of this chapter and issued a license as provided in section 681(c) of this title” for “small business investment company organized as provided in subchapter III of this chapter, including (except for purposes of sections 681 and 687(f) of this title) a State-chartered investment company which has obtained the approval of the Administrator to operate under the provisions of this chapter as provided in section 688 of this title and a company converted into a small business investment company under section 691 of this title”.

Par. (7). Pub. L. 87–341, § 2(2), added par. (7).

1960

Par. (4). Pub. L. 86–502 substituted definition of “State” for definition of “United States”.

Statutory Notes and Related Subsidiaries

Effective Date of 2007 Amendment

Amendment by Pub. L. 110–140 effective on the date that is 1 day after , see section 1601 of Pub. L. 110–140, set out as an Effective Date note under section 1824 of Title 2, The Congress.

Effective Date of 1997 Amendment

Amendment by Pub. L. 105–135 effective , see section 3 of Pub. L. 105–135, set out as a note under section 631 of this title.

Effect of Small Business Equity Enhancement Act of 1992 on Securities Laws

Nothing in amendment by Pub. L. 102–366 to be construed to affect applicability of securities laws or to otherwise supersede or limit jurisdiction of Securities and Exchange Commission, see section 418 of Pub. L. 102–366, set out as a note under section 661 of this title.

Credits

1958–2026 · 13 acts
  1. 1958Pub. L. 85–699, title I, § 103, , 72 Stat. 690
  2. 1960Pub. L. 86–502, § 3, , 74 Stat. 196
  3. 1961Pub. L. 87–341, § 2, , 75 Stat. 752
  4. 1972Pub. L. 92–595, § 2(a), , 86 Stat. 1314
  5. 1976Pub. L. 94–305, title I, § 106(a), , 90 Stat. 666
  6. 1992Pub. L. 102–366, title IV, § 410, , 106 Stat. 1017
  7. 1996Pub. L. 104–208, div. D, title II, § 208(a), , 110 Stat. 3009–739
  8. 1997Pub. L. 105–135, title II, § 213, , 111 Stat. 2601
  9. 1999Pub. L. 106–9, § 2(c), , 113 Stat. 17
  10. 2000Pub. L. 106–554, § 1(a)(9) [title IV, § 402], , 114 Stat. 2763, 2763A–690
  11. 2007Pub. L. 110–140, title XII, § 1205(b), , 121 Stat. 1773
  12. 2018Pub. L. 115–333, § 2(1), , 132 Stat. 4488
  13. 2026Pub. L. 119–92, § 2(a), , 140 Stat. 825.
Show as published

(Pub. L. 85–699, title I, § 103, , 72 Stat. 690; Pub. L. 86–502, § 3, , 74 Stat. 196; Pub. L. 87–341, § 2, , 75 Stat. 752; Pub. L. 92–595, § 2(a), , 86 Stat. 1314; Pub. L. 94–305, title I, § 106(a), , 90 Stat. 666; Pub. L. 102–366, title IV, § 410, , 106 Stat. 1017; Pub. L. 104–208, div. D, title II, § 208(a), , 110 Stat. 3009–739; Pub. L. 105–135, title II, § 213, , 111 Stat. 2601; Pub. L. 106–9, § 2(c), , 113 Stat. 17; Pub. L. 106–554, § 1(a)(9) [title IV, § 402], , 114 Stat. 2763, 2763A–690; Pub. L. 110–140, title XII, § 1205(b), , 121 Stat. 1773; Pub. L. 115–333, § 2(1), , 132 Stat. 4488; Pub. L. 119–92, § 2(a), , 140 Stat. 825.)

Parsed from the official OLRC USLM XML in data/usc_all/usc15.xml · release point 119-108 · OLRC build 2026-09-09

USLM identifier /us/usc/t15/s662