AI for Main Street Act
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- Congressional materials
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- Crpt 119Hrpt403
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- Crpt 119Hrpt403
Summary
House Report 119-403 of the 119th Congress, 1st Session, on the AI for Main Street Act, submitted December 12, 2025 by Mr. Williams of Texas from the Committee on Small Business to accompany H.R. 5764, together with minority views. The committee reports the bill favorably with an amendment that would amend the Small Business Act to direct small business development centers to assist small business concerns in evaluating and using artificial intelligence, with no additional amounts authorized. The report states that the committee ordered the bill reported on November 18, 2025 by a roll call vote of 27 ayes to 0 nos, and it includes a section-by-section analysis, required House rule statements and the changes in existing law made by the bill. The minority views, signed by Ranking Member Nydia M. Velázquez, discuss safeguards for small businesses adopting AI tools.
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“AI for Main Street Act.”
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119TH CONGRESS REPORT
" HOUSE OF REPRESENTATIVES !
1st Session 119–403
AI FOR MAIN STREET ACT
DECEMBER 12, 2025.—Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. WILLIAMS of Texas, from the Committee on Small Business,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 5764]
The Committee on Small Business, to whom was referred the bill
(H.R. 5764) to amend the Small Business Act to require small busi-
ness development centers to assist small business concerns with
the use of artificial intelligence, and for other purposes, having con-
sidered the same, reports favorably thereon with an amendment
and recommends that the bill as amended do pass.
CONTENTS
Page
I. Purpose and Bill Summary ........................................................................ 2
II. Need for Legislation .................................................................................... 2
III. Hearings ....................................................................................................... 3
IV. Committee Consideration ........................................................................... 3
V. Committee Votes ......................................................................................... 3
VI. Section-by-Section of H.R. 5764 ................................................................. 5
VII. Congressional Budget Office Cost Estimate ............................................. 5
VIII. New Budget Authority, Entitlement Authority, and Tax Expenditures 5
IX. Oversight Findings & Recommendations .................................................. 5
X. Performance Goals and Objectives ............................................................ 5
XI. Statement of Duplication of Federal Programs ........................................ 6
XII. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits ..................................................................................................... 6
XIII. Federal Mandates Statement ..................................................................... 6
XIV. Federal Advisory Committee Statement ................................................... 6
XV. Applicability to Legislative Branch ........................................................... 6
XVI. Statement of Constitutional Authority ...................................................... 6
XVII. Changes in Existing Law Made by the Bill, as Reported ........................ 6
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XVIII. Minority Views ............................................................................................ 37
69–006
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The amendment is as follows:
Strike all after the enacting clause and insert the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘AI for Main Street Act’’.
SEC. 2. GUIDANCE ON THE USE OF ARTIFICIAL INTELLIGENCE FOR SMALL BUSINESS CON-
CERNS.
(a) IN GENERAL.—Section 21(c)(3) of the Small Business Act (15 U.S.C. 648(c)(3))
is amended—
(1) in subparagraph (T), by striking ‘‘and’’ at the end;
(2) in the first subparagraph (U) (relating to encouraging and assisting the
provision of succession planning), by striking the period at the end and insert-
ing a semicolon;
(3) by redesignating the second subparagraph (U) (relating to providing train-
ing in conjunction with the United States Patent and Trademark Office) as sub-
paragraph (V);
(4) in subparagraph (V), as so redesignated, by striking the period at the end
and inserting ‘‘; and’’; and
(5) by adding at the end the following new subparagraph:
‘‘(W) assisting small business concerns in evaluating artificial intelligence con-
cerning operations, including by—
‘‘(i) providing information, guidance, and training to small business con-
cerns on the use of artificial intelligence, including—
‘‘(I) best practices for using artificial intelligence;
‘‘(II) using artificial intelligence to plan for unexpected circumstances,
protect data and intellectual property, improve cybersecurity, facilitate
regulatory compliance, and improve customer trust; and
‘‘(III) incorporating artificial intelligence into business operations;
and
‘‘(ii) conducting outreach to the extent practical to small business con-
cerns regarding the use of artificial intelligence.’’.
(b) CONFORMING AMENDMENT.—Section 3 of the Small Business Act (15 U.S.C.
632) is amended by adding at the end the following new subsection:
‘‘(gg) ARTIFICIAL INTELLIGENCE.—In this Act, the term ‘artificial intelligence’ has
the meaning given such term in section 5002 of the National Artificial Intelligence
Initiative Act of 2020 (15 U.S.C. 9401).’’.
SEC. 3. COMPLIANCE WITH CUTGO.
No additional amounts are authorized to carry out this Act or the amendments
made by this Act.
I. PURPOSE AND BILL SUMMARY
On October 17, 2025, Representative Alford, along with Rep-
resentative Scholten, introduced H.R. 5764, the AI for Mainstreet
Act. H.R. 5764 directs Small Business Development Centers
(SBDCs) to assist small business owners in evaluating and adopt-
ing artificial intelligence (AI) practices.
II. NEED FOR LEGISLATION
As AI becomes increasingly popular to streamline business oper-
ations, many small businesses lack the knowledge or staff to evalu-
ate and adopt reliable AI practices. This bill directs U.S. Small
Business Administration (SBA) funded SBDCs to help small busi-
nesses evaluate and adopt AI into their business operations.
SBDCs are a public-private partnership charged with providing en-
trepreneurs with business counseling and training.
In September 2024, Google’s philanthropic arm, Google.org,
awarded a $10 million grant to America’s SBDC to create a small
business program called America’s SBDC AI U. America’s SBDC AI
U offers AI services and training to small businesses that want to
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leverage the use of AI. Today, SBDCs at universities and commu-
nity colleges are establishing AI clinics led by small business advi-
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3
sors and university students who offer hands-on guidance to local
entrepreneurs.
The technical assistance provided by SBDCs ensures that entre-
preneurs have access to a wide array of expertise to start and grow
their business. AI is rapidly becoming a necessity in business. This
bill would ensure that SBDCs provide counseling and training to
entrepreneurs to help them incorporate AI into their business oper-
ations.
III. HEARINGS
On March 11, 2025, the Committee on Small Business held a
hearing examining matters related to H.R. 5764 entitled ‘‘Restoring
the SBA: Putting Main Street America First.’’
IV. COMMITTEE CONSIDERATION
The Committee on Small Business met in open session, with a
quorum being present, on November 18, 2025, and ordered H.R.
5764, as amended, to be reported favorably to the House of Rep-
resentatives by a roll call vote of 27 ayes to 0 nos.
V. COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of Representa-
tives requires the Committee to list the recorded votes on the mo-
tion to report legislation and amendments thereto. The Committee
voted to favorably report H.R. 5764, as amended, to the House of
Representatives at 11:44 AM.
The Committee considered the following amendments to H.R.
5764:
• Representative Alford offered an amendment in the nature
of a substitute. This amendment was adopted by voice vote.
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VI. SECTION-BY-SECTION OF H.R. 5764
Section 1—Short title
This Act may be cited as the ‘‘AI for Main Street Act.’’
Section 2—Guidance on the use of AI for small business concerns
This section directs SBDCs to assist small businesses in evalu-
ating and adopting AI in their operations. The support includes
providing information, guidance, and training on best practices for
using AI; leveraging AI to prepare for unexpected events; pro-
tecting data and intellectual property; enhancing cybersecurity; en-
suring regulatory compliance; building customer trust; and inte-
grating AI into daily business operations.
This section requires SBDCs to conduct outreach to small busi-
nesses, to the extent practical, to inform small businesses about the
potential uses and benefits of AI.
Section 3—Compliance with Cutgo
No additional funds are authorized to carry out the requirements
in this bill.
VII. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
Pursuant to 3(c)(3) of rule XIII of the Rules of the House of Rep-
resentatives, the Committee adopts as its own the cost estimate
prepared by the Director of the Congressional Budget Office pursu-
ant to section 402 of the Congressional Budget Act of 1974. At the
time this report was filed, the Committee has requested but not re-
ceived a cost estimate from the Director of the Congressional Budg-
et Office.
VIII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY,
AND TAX EXPENDITURES
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House
of Representatives and section 308(a)(I) of the Congressional Budg-
et Act of 1974, the Committee provides the following opinion and
estimate with respect to new budget authority, entitlement author-
ity, and tax expenditures. While the Committee has not received an
estimate of new budget authority contained in the cost estimate
prepared by the Director of the Congressional Budget Office pursu-
ant to section 402 of the Congressional Budget Act of 1974, the
Committee does not believe that there will be any new or increased
costs attributable to this legislation.
IX. OVERSIGHT FINDINGS & RECOMMENDATIONS
In accordance with clause 3(c)(1) of rule XIII and clause 2(b)(1)
of rule X of the Rules of the House of Representatives, the over-
sight findings and recommendations of the Committee on Small
Business with respect to the subject matter contained in H.R. 5764
are incorporated into the descriptive portions of this report.
X. PERFORMANCE GOALS AND OBJECTIVES
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With respect to the requirements of clause 3(c)(4) of rule XIII of
the Rules of the House of Representatives, the goal of H.R. 5764
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is to assist small business owners in evaluating and adopting AI
through SBDCs.
XI. STATEMENT OF DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the House
of Representatives, no provision of H.R. 5764 is known to be dupli-
cative of another Federal program, including any program that was
included in a report to Congress pursuant to section 21 of Public
Law 111–139 or the most recent Catalog of Federal Domestic As-
sistance.
XII. CONGRESSIONAL EARMARKS, LIMITED TAX BENEFITS,
AND LIMITED TARIFF BENEFITS
With respect to clause 9 of rule XXI of the Rules of the House
of Representatives, the Committee finds that the bill does not con-
tain any congressional earmarks, limited tax benefits, or limited
tariff benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI of
the Rules of the House of Representatives.
XIII. FEDERAL MANDATES STATEMENT
The Committee will adopt as its own the estimate of the Federal
mandates prepared by the Director of the Congressional Budget Of-
fice pursuant to section 423 of the Unfunded Mandates Reform Act.
XIV. FEDERAL ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b) of the
Federal Advisory Committee Act were created by this legislation.
XV. APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to the
terms and conditions of employment or access to public services or
accommodations within the meaning of section 102(b)(3) of the Con-
gressional Accountability Act.
XVI. STATEMENT OF CONSTITUTIONAL AUTHORITY
Pursuant to clause 7 of rule XII of the Rules of the House, the
Committee finds that the authority for this legislation in Art. I, § 8,
cl.1 of the Constitution of the United States.
XVII. 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 omit-
ted is enclosed in black brackets, new matter is printed in italics,
and existing law in which no change is proposed is shown in
roman):
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,
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as reported, are shown as follows (existing law proposed to be omit-
ted is enclosed in black brackets, new matter is printed in italics,
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and existing law in which no change is proposed is shown in
roman):
SMALL BUSINESS ACT
* * * * * * *
SEC. 3. DEFINITIONS.
(a) SMALL BUSINESS CONCERNS.—
(1) IN GENERAL.—For the purposes of this Act, a small-busi-
ness concern, including but not limited to enterprises that are
engaged in the business of production of food and fiber, ranch-
ing and raising of livestock, aquaculture, and all other farming
and agricultural related industries, shall be deemed to be one
which is independently owned and operated and which is not
dominant in its field of operation.
(2) ESTABLISHMENT OF SIZE STANDARDS.—
(A) IN GENERAL.—In addition to the criteria specified in
paragraph (1) and subject to the requirements specified
under subparagraph (C), the Administrator may specify
detailed definitions or standards by which a business con-
cern may be determined to be a small business concern for
the purposes of this Act or any other Act.
(B) ADDITIONAL CRITERIA.—The standards described in
paragraph (1) may utilize number of employees, dollar vol-
ume of business, net worth, net income, a combination
thereof, or other appropriate factors.
(C) REQUIREMENTS.—Unless specifically authorized by
statute, no Federal department or agency (including the
Administration when acting pursuant to subparagraph (A))
may prescribe a size standard for categorizing a business
concern as a small business concern, unless such proposed
size standard—
(i) is proposed after an opportunity for public notice
and comment;
(ii) provides for determining—
(I) the size of a manufacturing concern as meas-
ured by the manufacturing concern’s average em-
ployment based upon employment during each of
the manufacturing concern’s pay periods for the
preceding 24 months;
(II) the size of a business concern providing
services on the basis of the annual average gross
receipts of the business concern over a period of
not less than 5 years;
(III) the size of other business concerns on the
basis of data over a period of not less than 3
years; or
(IV) other appropriate factors; and
(iii) is approved by the Administrator.
(3) VARIATION BY INDUSTRY AND CONSIDERATION OF OTHER
FACTORS.—When establishing or approving any size standard
pursuant to paragraph (2), the Administrator shall ensure that
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the size standard varies from industry to industry to the extent
necessary to reflect the differing characteristics of the various
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industries and consider other factors deemed to be relevant by
the Administrator.
(4) EXCLUSION OF CERTAIN SECURITY EXPENSES FROM CONSID-
ERATION FOR PURPOSE OF SMALL BUSINESS SIZE STANDARDS.—
(A) DETERMINATION REQUIRED.—Not later than 30 days
after the date of enactment of this paragraph, the Admin-
istrator shall review the application of size standards es-
tablished pursuant to paragraph (2) to small business con-
cerns that are performing contracts in qualified areas and
determine whether it would be fair and appropriate to ex-
clude from consideration in the average annual gross re-
ceipts of such small business concerns any payments made
to such small business concerns by Federal agencies to re-
imburse such small business concerns for the cost of sub-
contracts entered for the sole purpose of providing security
services in a qualified area.
(B) ACTION REQUIRED.—Not later than 60 days after the
date of enactment of this paragraph, the Administrator
shall either—
(i) initiate an adjustment to the size standards, as
described in subparagraph (A), if the Administrator
determines that such an adjustment would be fair and
appropriate; or
(ii) provide a report to the Committee on Small
Business and Entrepreneurship of the Senate and the
Committee on Small Business of the House of Rep-
resentatives explaining in detail the basis for the de-
termination by the Administrator that such an adjust-
ment would not be fair and appropriate.
(C) QUALIFIED AREAS.—In this paragraph, the term
‘‘qualified area’’ means—
(i) Iraq,
(ii) Afghanistan, and
(iii) any foreign country which included a combat
zone, as that term is defined in section 112(c)(2) of the
Internal Revenue Code of 1986, at the time of perform-
ance of the relevant Federal contract or subcontract.
(5) ALTERNATIVE SIZE STANDARD.—
(A) IN GENERAL.—The Administrator shall establish an
alternative size standard for applicants for business loans
under section 7(a) and applicants for development com-
pany loans under title V of the Small Business Investment
Act of 1958 (15 U.S.C. 695 et seq.), that uses maximum
tangible net worth and average net income as an alter-
native to the use of industry standards.
(B) INTERIM RULE.—Until the date on which the alter-
native size standard established under subparagraph (A) is
in effect, an applicant for a business loan under section
7(a) or an applicant for a development company loan under
title V of the Small Business Investment Act of 1958 may
be eligible for such a loan if—
(i) the maximum tangible net worth of the applicant
is not more than $15,000,000; and
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(ii) the average net income after Federal income
taxes (excluding any carry-over losses) of the applicant
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for the 2 full fiscal years before the date of the appli-
cation is not more than $5,000,000.
(6) PROPOSED RULEMAKING.—In conducting rulemaking to re-
vise, modify or establish size standards pursuant to this sec-
tion, the Administrator shall consider, and address, and make
publicly available as part of the notice of proposed rulemaking
and notice of final rule each of the following:
(A) a detailed description of the industry for which the
new size standard is proposed;
(B) an analysis of the competitive environment for that
industry;
(C) the approach the Administrator used to develop the
proposed standard including the source of all data used to
develop the proposed rule making; and
(D) the anticipated effect of the proposed rulemaking on
the industry, including the number of concerns not cur-
rently considered small that would be considered small
under the proposed rule making and the number of con-
cerns currently considered small that would be deemed
other than small under the proposed rulemaking.
(7) COMMON SIZE STANDARDS.—In carrying out this sub-
section, the Administrator may establish or approve a single
size standard for a grouping of 4-digit North American Indus-
try Classification System codes only if the Administrator
makes publicly available, not later than the date on which
such size standard is established or approved, a justification
demonstrating that such size standard is appropriate for each
individual industry classification included in the grouping.
(8) NUMBER OF SIZE STANDARDS.—The Administrator shall
not limit the number of size standards established pursuant to
paragraph (2), and shall assign the appropriate size standard
to each North American Industry Classification System Code.
(9) PETITIONS FOR RECONSIDERATION OF SIZE STANDARDS.—
(A) IN GENERAL.—A person may file a petition for recon-
sideration with the Office of Hearings and Appeals (as es-
tablished under section 5(i)) of a size standard revised,
modified, or established by the Administrator pursuant to
this subsection.
(B) TIME LIMIT.—A person filing a petition for reconsid-
eration described in subparagraph (A) shall file such peti-
tion not later than 30 days after the publication in the
Federal Register of the notice of final rule to revise, mod-
ify, or establish size standards described in paragraph (6).
(C) PROCESS FOR AGENCY REVIEW.—The Office of Hear-
ings and Appeals shall use the same process it uses to de-
cide challenges to the size of a small business concern to
decide a petition for review pursuant to this paragraph.
(D) JUDICIAL REVIEW.—The publication of a final rule in
the Federal Register described in subparagraph (B) shall
be considered final agency action for purposes of seeking
judicial review. Filing a petition for reconsideration under
subparagraph (A) shall not be a condition precedent to ju-
dicial review of any such size standard.
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(E) RULES OR GUIDANCE.—The Office of Hearings and
Appeals shall begin accepting petitions for reconsideration
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10
described in subparagraph (A) after the date on which the
Administration issues a rule or other guidance imple-
menting this paragraph. Notwithstanding the provisions of
subparagraph (B), petitions for reconsideration of size
standards revised, modified, or established in a Federal
Register final rule published between November 25, 2015,
and the effective date of such rule or other guidance shall
be considered timely if filed within 30 days of such effec-
tive date.
(b) For purposes of this Act, any reference to an agency or de-
partment of the United States, and the term ‘‘Federal agency,’’
shall have the meaning given the term ‘‘agency’’ by section 551(1)
of title 5, United States Code, but does not include the United
States Postal Service or the General Accounting Office.
(c)(1) For purposes of this Act, a qualified employee trust shall
be eligible for any loan guarantee under section 7(a) with respect
to a small business concern on the same basis as if such trust were
the same legal entity as such concern.
(2) For purposes of this Act, the term ‘‘qualified employee trust’’
means, with respect to a small business concern, a trust—
(A) which forms part of an employee stock ownership plan
(as defined in section 4975(e)(7) of the Internal Revenue Code
of 1954)—
(i) which is maintained by such concern, and
(ii) which provides that each participant is entitled to di-
rect the plan trustee as to the manner of how to vote the
qualified employer securities (as defined in section
4975(e)(8) of the Internal Revenue Code of 1986), which
are allocated to the account of such participant with re-
spect to a corporate matter which (by law or charter) must
be decided by a vote conducted in accordance with section
409(e) of the Internal Revenue Code of 1986; and
(B) in the case of any loan guarantee under section 7(a), the
trustee of which enters into an agreement with the Adminis-
trator of which enters into an agreement with the Adminis-
trator which is binding on the trust and no such small busi-
ness concern and which provides that—
(i) the loan guaranteed under section 7(a) shall be used
solely for the purchase of qualifying employer securities of
such concern.
(ii) all funds acquired by the concern in such purchase
shall be used by such concern solely for the purposes for
which such loan was guaranteed,
(iii) such concern will provide such funds as may be nec-
essary for the timely repayment of such loan, and the
property of such concern shall be available as security for
repayment of such loan, and
(iv) all qualifying employer securities acquired by such
trust in such purchase shall be allocated to the accounts
of participants in such plan who are entitled to share in
such allocation, and each participant has a nonforfeitable
right, not later than the date such loan is repaid, to all
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such qualifying employer securities which are so allocated
to the participant’s account.
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(3) Under regulations which may be prescribed by the Adminis-
trator, a trust may be treated as a qualified employee trust with
respect to a small business concern if—
(A) the trust is maintained by an employee organization
which represents at least 51 percent of the employee of such
concern, and
(B) such concern maintains a plan—
(i) which is an employee benefit plan which is designed
to invest primarily in qualifying employer securities (as
defined in section 4975(e)(8) of the Internal Revenue Code
of 1954).
(ii) which provides that each participant in the plan is
entitled to direct the plan as to the manner in which vot-
ing rights under qualifying employer securities which are
allocated to the account of such participant are to be exer-
cised with respect to a corporate matter which (by law or
charter) must be decided by a majority vote of the out-
standing common shares voted,
(iii) which provides that each participant who is entitled
to distribution from the plan has a right, in the case of
qualifying employer securities which are not readily
tradable on an established market, to require that the con-
cern repurchase such securities under a fair valuation for-
mula, and
(iv) which meets such other requirements (similar to re-
quirements applicable to employee ownership plans as de-
fined in section 4975(e)(7) of the Internal Revenue Code of
1954) as the Administrator may prescribe, and
(C) in the case of a loan guarantee under section 7(a), such
organization enters into an agreement with the Administration
which is described in paragraph (2)(B).
(d) For purposes of section 7 of this Act, the term ‘‘qualified In-
dian tribe’’ means an Indian tribe as defined in section 4(a) of the
Indian Self-Determination and Education Assistance Act, which
owns and controls 100 per centum of a small business concern.
(e) For purposes of section 7 of this Act, the term ‘‘public or pri-
vate organization for the handicapped’’ means one—
(1) which is organized under the laws of the United States
or of any State, operated in the interest of handicapped indi-
viduals, the net income of which does not insure in whole or
in part to the benefit of any shareholder or other individual;
(2) which complies with any applicable occupational health
and safety standard prescribed by the Secretary of Labor; and
(3) which, in the production of commodities and in the provi-
sion of services during any fiscal year in which it received fi-
nancial assistance under this subsection, employs handicapped
individuals for not less than 75 per centum of the man-hours
required for the production or provision of the commodities or
services.
(f) For purposes of section 7 of this Act, the term ‘‘handicapped
individual’’ means an individual—
(1) who has a physical, mental, or emotional impairment, de-
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fect, ailment, disease, or disability of a permanent nature
which in any way limits the selection of any type of employ-
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12
ment for which the person would otherwise be qualified or
qualifiable; or
(2) who is a service-disabled veteran.
(g) For purposes of section 7 of this Act, the term ‘‘energy meas-
ures’’ includes—
(1) solar thermal energy equipment which is either of the ac-
tive type based upon mechanically forced energy transfer or of
the passive type based on convective, conductive, or radiant en-
ergy transfer or some combination equipment;
(2) photovoltaic cells and related equipment;
(3) a product or service the primary purpose of which is con-
servation of energy through devices or techniques which in-
crease the energy through devices or techniques which increase
the energy efficiency of existing equipment, methods of oper-
ation, or systems which use fossil fuels, and which is on the
Energy Conservation Measures list of the Secretary of Energy
or which the Administrator determines to be consistent with
the intent of this subsection;
(4) equipment the primary purpose of which is production of
energy from wood, biological waste, grain, or other biomass
source of energy;
(5) equipment the primary purpose of which is industrial co-
generation of energy, district heating, or production of energy
from industrial waste;
(6) hydroelectric power equipment;
(7) wind energy conversion equipment; and
(8) engineering, architectural, consulting, or other profes-
sional services which are necessary or appropriate to aid citi-
zens in using any of the measures described in paragraph (1)
through (7).
(h) The term ‘‘credit elsewhere’’ means—
(1) for the purposes of this Act (except as used in section
7(b)), the availability of credit on reasonable terms and condi-
tions to the individual loan applicant from non-Federal, non-
State, or non-local government sources, considering factors as-
sociated with conventional lending practices, including—
(A) the business industry in which the loan applicant op-
erates;
(B) whether the loan applicant is an enterprise that has
been in operation for a period of not more than 2 years;
(C) the adequacy of the collateral available to secure the
requested loan;
(D) the loan term necessary to reasonably assure the
ability of the loan applicant to repay the debt from the ac-
tual or projected cash flow of the business; and
(E) any other factor relating to the particular credit ap-
plication, as documented in detail by the lender, that can-
not be overcome except through obtaining a Federal loan
guarantee under prudent lending standards; and
(2) for the purposes of section 7(b), the availability of credit
on reasonable terms and conditions from non-Federal sources
taking into consideration the prevailing rates and terms in the
community in or near where the applicant business concern
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transacts business, or the applicant homeowner resides, for
similar purposes and periods of time.
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13
(i) For purposes of section 7 of this Act, the term ‘‘homeowners’’
includes owners and lessees of residential property and also in-
cludes personal property.
(j) For the purposes of this Act, the term ‘‘small agricultural co-
operative’’ means an association (corporate or otherwise) acting
pursuant to the provisions of the Agricultural Marketing Act (12
U.S.C. 1141j), whose size does not exceed the size standard estab-
lished by the Administration for other similar agricultural small
business concerns. In determining such size, the Administration
shall regard the association as a business concern and shall not in-
clude the income or employees of any member shareholder of such
cooperative.
(k)(1) For the purposes of this Act, the term ‘‘disaster’’ means a
sudden event which causes severe damage including, but not lim-
ited to, floods, hurricanes, tornadoes, earthquakes, fires, explosions,
volcanoes, windstorms, landslides or mudslides, tidal waves, com-
mercial fishery failures or fishery resource disasters (as determined
by the Secretary of Commerce under the Fishery Resource Disas-
ters Improvement Act), ocean conditions resulting in the closure of
customary fishing waters, riots, civil disorders or other catas-
trophes, except it does not include economic dislocations.
(2) For purposes of section 7(b)(2), the term ‘‘disaster’’ includes—
(A) drought;
(B) below average water levels in the Great Lakes, or on any
body of water in the United States that supports commerce by
small business concerns; and
(C) ice storms and blizzards.
(l) For purposes of this Act—
(1) the term ‘‘computer crime’’ means’’—
(A) any crime committed against a small business con-
cern by means of the use of a computer; and
(B) any crime involving the illegal use of, or tampering
with, a computer owned or utilized by a small business
concern.
(m) DEFINITIONS RELATING TO CONTRACTING.—In this Act:
(1) PRIME CONTRACT.—The term ‘‘prime contract’’ has the
meaning given such term in section 8701(4) of title 41, United
States Code.
(2) PRIME CONTRACTOR.—The term ‘‘prime contractor’’ has
the meaning given such term in section 8701(5) of title 41,
United States Code.
(3) SIMPLIFIED ACQUISITION THRESHOLD.—The term ‘‘sim-
plified acquisition threshold’’ has the meaning given such term
in section 134 of title 41, United States Code.
(4) MICRO-PURCHASE THRESHOLD.—The term ‘‘micro-purchase
threshold’’ has the meaning given such term in section 1902 of
title 41, United States Code.
(5) TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND
SERVICES.—The term ‘‘total purchases and contracts for prop-
erty and services’’ shall mean total number and total dollar
amount of contracts and orders for property and services.
(n) For the purposes of this Act, a small business concern is a
small business concern owned and controlled by women if—
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(1) at least 51 percent of small business concern is owned by
one or more women or, in the case of any publicly owned busi-
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14
ness, at least 51 percent of the stock of which is owned by one
or more women; and
(2) the management and daily business operations of the
business are controlled by one or more women.
(o) DEFINITIONS OF BUNDLING OF CONTRACT REQUIREMENTS AND
RELATED TERMS.—In this Act:
(1) BUNDLED CONTRACT.—The term ‘‘bundled contract’’
means a contract that is entered into to meet requirements
that are consolidated in a bundling of contract requirements.
(2) BUNDLING OF CONTRACT REQUIREMENTS.—The term ‘‘bun-
dling of contract requirements’’ means consolidating 2 or more
procurement requirements for goods or services previously pro-
vided or performed under separate smaller contracts into a so-
licitation of offers for a single contract that is likely to be un-
suitable for award to a small-business concern due to—
(A) the diversity, size, or specialized nature of the ele-
ments of the performance specified;
(B) the aggregate dollar value of the anticipated award;
(C) the geographical dispersion of the contract perform-
ance sites; or
(D) any combination of the factors described in subpara-
graphs (A), (B), and (C).
(3) SEPARATE SMALLER CONTRACT.—The term ‘‘separate
smaller contract’’, with respect to a bundling of contract re-
quirements, means a contract that has been performed by 1 or
more small business concerns or was suitable for award to 1
or more small business concerns.
(p) QUALIFIED HUBZONE SMALL BUSINESS CONCERN.—In this Act,
the term ‘‘qualified HUBZone small business concern’’ has the
meaning given such term in section 31(b).
(q) DEFINITIONS RELATING TO VETERANS.—In this Act, the fol-
lowing definitions apply:
(1) SERVICE-DISABLED VETERAN.—The term ‘‘service-disabled
veteran’’ means a veteran with a disability that is service-con-
nected (as defined in section 101(16) of title 38, United States
Code).
(2) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY
SERVICE-DISABLED VETERANS.—The term ‘‘small business con-
cern owned and controlled by service-disabled veterans’’ means
any of the following:
(A) A small business concern—
(i) not less than 51 percent of which is owned by one
or more service-disabled veterans or, in the case of any
publicly owned business, not less than 51 percent of
the stock (not including any stock owned by an ESOP)
of which is owned by one or more service-disabled vet-
erans; and
(ii) the management and daily business operations
of which are controlled by one or more service-disabled
veterans or, in the case of a veteran with permanent
and severe disability, the spouse or permanent care-
giver of such veteran.
(B) A small business concern—
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(i) not less than 51 percent of which is owned by one
or more service-disabled veterans with a disability
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15
that is rated by the Secretary of Veterans Affairs as
a permanent and total disability who are unable to
manage the daily business operations of such concern;
or
(ii) in the case of a publicly owned business, not less
than 51 percent of the stock (not including any stock
owned by an ESOP) of which is owned by one or more
such veterans.
(C)(i) During the time period described in clause (ii), a
small business concern that was a small business concern
described in subparagraph (A) or (B) immediately prior to
the death of a service-disabled veteran who was the owner
of the concern, the death of whom causes the concern to
be less than 51 percent owned by one or more service-dis-
abled veterans, if—
(I) the surviving spouse of the deceased veteran
acquires such veteran’s ownership interest in such
concern;
(II) such veteran had a service-connected dis-
ability (as defined in section 101(16) of title 38,
United States Code); and
(III) immediately prior to the death of such vet-
eran, and during the period described in clause
(ii), the small business concern is included in the
database described in section 36.
(ii) The time period described in this clause is the
time period beginning on the date of the veteran’s
death and ending on the earlier of—
(I) the date on which the surviving spouse re-
marries;
(II) the date on which the surviving spouse re-
linquishes an ownership interest in the small
business concern; or
(III) the date that—
(aa) in the case of a surviving spouse of a vet-
eran with a service-connected disability rated as
100 percent disabling or who dies as a result of a
service-connected disability, is 10 years after the
date of the death of the veteran; or
(bb) in the case of a surviving spouse of a vet-
eran with a service-connected disability rated as
less than 100 percent disabling who does not die
as a result of a service-connected disability, is 3
years after the date of the death of the veteran.
(3) SMALL BUSINESS CONCERN OWNED AND CONTROLLED BY
VETERANS.—The term ‘‘small business concern owned and con-
trolled by veterans’’ means a small business concern—
(A) not less than 51 percent of which is owned by one
or more veterans or, in the case of any publicly owned
business, not less than 51 percent of the stock of which is
owned by one or more veterans; and
(B) the management and daily business operations of
which are controlled by one or more veterans.
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(4) VETERAN.—The term ‘‘veteran’’ has the meaning given
the term in section 101(2) of title 38, United States Code.
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(5) RELIEF FROM TIME LIMITATIONS.—
(A) IN GENERAL.—Any time limitation on any qualifica-
tion, certification, or period of participation imposed under
this Act on any program that is available to small business
concerns shall be extended for a small business concern
that—
(i) is owned and controlled by—
(I) a veteran who was called or ordered to active
duty under a provision of law specified in section
101(a)(13)(B) of title 10, United States Code, on or
after September 11, 2001; or
(II) a service-disabled veteran who became such
a veteran due to an injury or illness incurred or
aggravated in the active military, naval, or air
service during a period of active duty pursuant to
a call or order to active duty under a provision of
law referred to in subclause (I) on or after Sep-
tember 11, 2001; and
(ii) was subject to the time limitation during such
period of active duty.
(B) DURATION.—Upon submission of proper documenta-
tion to the Administrator, the extension of a time limita-
tion under subparagraph (A) shall be equal to the period
of time that such veteran who owned or controlled such a
concern was on active duty as described in that subpara-
graph.
(C) EXCEPTION FOR PROGRAMS SUBJECT TO FEDERAL
CREDIT REFORM ACT OF 1990.—The provisions of subpara-
graphs (A) and (B) shall not apply to any programs subject
to the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et
seq.).
(6) ESOP.—The term ‘‘ESOP’’ has the meaning given the
term ‘‘employee stock ownership plan’’ in section 4975(e)(7) of
the Internal Revenue Code of 1986 (26 U.S.C. 4975(e)(7)).
(7) SURVIVING SPOUSE.—The term ‘‘surviving spouse’’ has the
meaning given such term in section 101(3) of title 38, United
States Code.
(r) DEFINITIONS RELATING TO SMALL BUSINESS LENDING COMPA-
NIES.—As used in section 23 of this Act:
(1) SMALL BUSINESS LENDING COMPANY.—The term ‘‘small
business lending company’’ means a business concern that is
authorized by the Administrator to make loans pursuant to
section 7(a) and whose lending activities are not subject to reg-
ulation by any Federal or State regulatory agency.
(2) NON-FEDERALLY REGULATED LENDER.—The term ‘‘non-
Federally regulated lender’’ means a business concern if—
(A) such concern is authorized by the Administrator to
make loans under section 7;
(B) such concern is subject to regulation by a State; and
(C) the lending activities of such concern are not regu-
lated by any Federal banking authority.
(s) MAJOR DISASTER.—In this Act, the term ‘‘major disaster’’ has
the meaning given that term in section 102 of the Robert T. Staf-
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ford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122).
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17
(t) SMALL BUSINESS DEVELOPMENT CENTER.—In this Act, the
term ‘‘small business development center’’ means a small business
development center described in section 21.
(u) REGION OF THE ADMINISTRATION.—In this Act, the term ‘‘re-
gion of the Administration’’ means the geographic area served by
a regional office of the Administration established under section
4(a).
(v) MULTIPLE AWARD CONTRACT.—In this Act, the term ‘‘multiple
award contract’’ means—
(1) a multiple award task order contract or delivery order
contract that is entered into under the authority of sections
303H through 303K of the Federal Property and Administra-
tive Services Act of 1949 (41 U.S.C. 253h through 253k); and
(2) any other indefinite delivery, indefinite quantity contract
that is entered into by the head of a Federal agency with 2 or
more sources pursuant to the same solicitation.
(w) PRESUMPTION.—
(1) IN GENERAL.—In every contract, subcontract, cooperative
agreement, cooperative research and development agreement,
or grant which is set aside, reserved, or otherwise classified as
intended for award to small business concerns, there shall be
a presumption of loss to the United States based on the total
amount expended on the contract, subcontract, cooperative
agreement, cooperative research and development agreement,
or grant whenever it is established that a business concern
other than a small business concern willfully sought and re-
ceived the award by misrepresentation.
(2) DEEMED CERTIFICATIONS.—The following actions shall be
deemed affirmative, willful, and intentional certifications of
small business size and status:
(A) Submission of a bid or proposal for a Federal grant,
contract, subcontract, cooperative agreement, or coopera-
tive research and development agreement reserved, set
aside, or otherwise classified as intended for award to
small business concerns.
(B) Submission of a bid or proposal for a Federal grant,
contract, subcontract, cooperative agreement, or coopera-
tive research and development agreement which in any
way encourages a Federal agency to classify the bid or pro-
posal, if awarded, as an award to a small business concern.
(C) Registration on any Federal electronic database for
the purpose of being considered for award of a Federal
grant, contract, subcontract, cooperative agreement, or co-
operative research agreement, as a small business concern.
(3) CERTIFICATION BY SIGNATURE OF RESPONSIBLE OFFICIAL.—
(A) IN GENERAL.—Each solicitation, bid, or application
for a Federal contract, subcontract, or grant shall contain
a certification concerning the small business size and sta-
tus of a business concern seeking the Federal contract,
subcontract, or grant.
(B) CONTENT OF CERTIFICATIONS.—A certification that a
business concern qualifies as a small business concern of
the exact size and status claimed by the business concern
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for purposes of bidding on a Federal contract or sub-
contract, or applying for a Federal grant, shall contain the
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18
signature of an authorized official on the same page on
which the certification is contained.
(4) REGULATIONS.—The Administrator shall promulgate reg-
ulations to provide adequate protections to individuals and
business concerns from liability under this subsection in cases
of unintentional errors, technical malfunctions, and other simi-
lar situations.
(x) ANNUAL CERTIFICATION.—
(1) IN GENERAL.—Each business certified as a small business
concern under this Act shall annually certify its small business
size and, if appropriate, its small business status, by means of
a confirming entry on the Online Representations and Certifi-
cations Application database of the Administration, or any suc-
cessor thereto.
(2) REGULATIONS.—Not later than 1 year after the date of
enactment of this subsection, the Administrator, in consulta-
tion with the Inspector General and the Chief Counsel for Ad-
vocacy of the Administration, shall promulgate regulations to
ensure that—
(A) no business concern continues to be certified as a
small business concern on the Online Representations and
Certifications Application database of the Administration,
or any successor thereto, without fulfilling the require-
ments for annual certification under this subsection; and
(B) the requirements of this subsection are implemented
in a manner presenting the least possible regulatory bur-
den on small business concerns.
(y) POLICY ON PROSECUTIONS OF SMALL BUSINESS SIZE AND STA-
TUS FRAUD.—Not later than 1 year after the date of enactment of
this subsection, the Administrator, in consultation with the Attor-
ney General, shall issue a Government-wide policy on prosecution
of small business size and status fraud, which shall direct Federal
agencies to appropriately publicize the policy.
(z) AQUACULTURE BUSINESS DISASTER ASSISTANCE.—Subject to
section 18(a) and notwithstanding section 18(b)(1), the Adminis-
trator may provide disaster assistance under section 7(b)(2) to
aquaculture enterprises that are small businesses.
(aa) VENTURE CAPITAL OPERATING COMPANY.—In this Act, the
term ‘‘venture capital operating company’’ means an entity de-
scribed in clause (i), (v), or (vi) of section 121.103(b)(5) of title 13,
Code of Federal Regulations (or any successor thereto).
(bb) HEDGE FUND.—In this Act, the term ‘‘hedge fund’’ has the
meaning given that term in section 13(h)(2) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1851(h)(2)).
(cc) PRIVATE EQUITY FIRM.—In this Act, the term ‘‘private equity
firm’’ has the meaning given the term ‘‘private equity fund’’ in sec-
tion 13(h)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1851(h)(2)).
(dd) DEFINITIONS PERTAINING TO SUBCONTRACTING.—In this Act:
(1) SUBCONTRACT.—The term ‘‘subcontract’’ means a legally
binding agreement between a contractor that is already under
contract to another party to perform work, and a third party,
hereinafter referred to as the subcontractor, for the subcon-
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tractor to perform a part, or all, of the work that the contractor
has undertaken.
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(2) FIRST TIER SUBCONTRACTOR.—The term ‘‘first tier subcon-
tractor’’ means a subcontractor who has a subcontract directly
with the prime contractor.
(3) AT ANY TIER.—The term ‘‘at any tier’’ means any subcon-
tractor other than a subcontractor who is a first tier subcon-
tractor.
(ee) PUERTO RICO BUSINESS.—In this Act, the term ‘‘Puerto Rico
business’’ means a small business concern that has its principal of-
fice located in the Commonwealth of Puerto Rico.
(ff) COVERED TERRITORY BUSINESS.—In this Act, the term ‘‘cov-
ered territory business’’ means a small business concern that has
its principal office located in one of the following:
(1) The United States Virgin Islands.
(2) American Samoa.
(3) Guam.
(4) The Northern Mariana Islands.
(gg) ARTIFICIAL INTELLIGENCE.—In this Act, the term ‘‘artificial
intelligence’’ has the meaning given such term in section 5002 of the
National Artificial Intelligence Initiative Act of 2020 (15 U.S.C.
9401).
* * * * * * *
SEC. 21. (a)(1) The Administration is authorized to make grants
(including contracts and cooperative agreements) to any State gov-
ernment or any agency thereof, any regional entity, any State-char-
tered development, credit or finance corporation, any women’s busi-
ness center operating pursuant to section 29, any public or private
institution of higher education, including but not limited to any
land-grant college or university, any college or school of business,
engineering, commerce, or agriculture, community college or junior
college, or to any entity formed by two or more of the above entities
(herein referred to as ‘‘applicants’’) to assist in establishing small
business development centers and to any such labor for: small busi-
ness oriented employment or natural resources development pro-
grams; studies, research, and counseling concerning the managing,
financing, and operation of small business enterprises, manage-
ment and technical assistance regarding small business participa-
tion in international markets, export promotion and technology
transfer; delivery or distribution of such services and information;
providing access to business analysts who can refer small business
concerns to available experts; and, to the extent practicable, pro-
viding assistance in furtherance of the Small Business Develop-
ment Center Cyber Strategy developed under section 1841(a) of the
National Defense Authorization Act for Fiscal Year 2017: Provided,
That after December 31, 1990, the Administration shall not make
a grant to any applicant other than an institution of higher edu-
cation or a women’s business center operating pursuant to section
29 as a Small Business Development Center unless the applicant
was receiving a grant (including a contract or cooperative agree-
ment) on such date. The previous sentence shall not apply to an
applicant that has its principal office located in the Commonwealth
of the Northern Mariana Islands. The Administration shall require
any applicant for a small business development center grant with
performance commencing on or after January 1, 1992 to have its
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own budget and to primarily utilize institutions of higher education
and women’s business centers operating pursuant to section 29 to
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20
provide services to the small business community. The term of such
grants shall be made on a calendar year basis or to coincide with
the Federal fiscal year.
(2) COOPERATION TO PROVIDE INTERNATIONAL TRADE SERV-
ICES.—
(A) INFORMATION AND SERVICES.—The small business de-
velopment centers shall work in close cooperation with the
Administration’s regional and local offices, the Department
of Commerce, appropriate Federal, State and local agen-
cies (including State trade agencies), and the small busi-
ness community to serve as an active information dissemi-
nation and service delivery mechanism for existing trade
promotion, trade finance, trade adjustment, trade remedy
and trade data collection programs of particular utility for
small businesses.
(B) COOPERATION WITH STATE TRADE AGENCIES AND EX-
PORT ASSISTANCE CENTERS.—A small business development
center that counsels a small business concern on issues re-
lating to international trade shall—
(i) consult with State trade agencies and Export As-
sistance Centers to provide appropriate services to the
small business concern; and
(ii) as necessary, refer the small business concern to
a State trade agency or an Export Assistance Center
for further counseling or assistance.
(C) DEFINITION.—In this paragraph, the term ‘‘Export
Assistance Center’’ has the same meaning as in section 22.
(3) The Small Business Development Center Program shall be
under the general management and oversight of the Administra-
tion for the delivery of programs and services to the small business
community. Such programs and services shall be jointly developed,
negotiated, and agreed upon, with full participation of both parties,
pursuant to an executed cooperative agreement between the Small
Business Development Center applicant and the Administration.
(A) Small business development centers are authorized to form
an association to pursue matters of common concern. If more than
a majority of the small business development centers which are op-
erating pursuant to agreements with the Administration are mem-
bers of such an association, the Administration is authorized and
directed to recognize the existence and activities of such an associa-
tion and to consult with it and develop documents (i) announcing
the annual scope of activities pursuant to this section, (ii) request-
ing proposals to deliver assistance as provided in this section and
(iii) governing the general operations and administration of the
Small Business Development Center Program, specifically includ-
ing the development of regulations and a uniform negotiated coop-
erative agreement for use on an annual basis when entering into
individual negotiated agreements with small business development
centers.
(B) Provisions governing audits, cost principles and administra-
tive requirements for Federal grants, contracts and cooperative
agreements which are included in uniform requirements of Office
of Management and Budget (OMB) Circulars shall be incorporated
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by reference and shall not be set forth in summary or other form
in regulations.
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(C) Whereas On an annual basis, the Small Business Devel-
opment Center shall review and coordinate public and private
partnerships and cosponsorships with the Administration for
the purpose of more efficiently leveraging available resources
on a National and a State basis.
(4) SMALL BUSINESS DEVELOPMENT CENTER PROGRAM LEVEL.—
(A) IN GENERAL.—The Administration shall require as a con-
dition of any grant (or amendment or modification thereof)
made to an applicant under this section, that a matching
amount (excluding any fees collected from recipients of such
assistance) equal to the amount of such grant be provided from
sources other than the Federal Government, to be comprised of
not less than 50 percent cash and not more than 50 percent
of indirect costs and in-kind contributions.
(B) RESTRICTION.—The matching amount described in sub-
paragraph (A) shall not include any indirect costs or in-kind
contributions derived from any Federal program.
(C) FUNDING FORMULA.—
(i) IN GENERAL.—Subject to clause (iii), the amount of a
formula grant received by a State under this subparagraph
shall be equal to an amount determined in accordance
with the following formula:
(I) The annual amount made available under section
20(a) for the Small Business Development Center Pro-
gram, less any reductions made for expenses author-
ized by clause (v) of this subparagraph, shall be di-
vided on a pro rata basis, based on the percentage of
the population of each State, as compared to the popu-
lation of the United States.
(II) If the pro rata amount calculated under sub-
clause (I) for any State is less than the minimum
funding level under clause (iii), the Administration
shall determine the aggregate amount necessary to
achieve that minimum funding level for each such
State.
(III) The aggregate amount calculated under sub-
clause (II) shall be deducted from the amount cal-
culated under subclause (I) for States eligible to re-
ceive more than the minimum funding level. The de-
ductions shall be made on a pro rata basis, based on
the population of each such State, as compared to the
total population of all such States.
(IV) The aggregate amount deducted under sub-
clause (III) shall be added to the grants of those States
that are not eligible to receive more than the min-
imum funding level in order to achieve the minimum
funding level for each such State, except that the eligi-
ble amount of a grant to any State shall not be re-
duced to an amount below the minimum funding level.
(ii) GRANT DETERMINATION.—The amount of a grant that
a State is eligible to apply for under this subparagraph
shall be the amount determined under clause (i), subject to
any modifications required under clause (iii), and shall be
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based on the amount available for the fiscal year in which
performance of the grant commences, but not including
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22
amounts distributed in accordance with clause (iv). The
amount of a grant received by a State under any provision
of this subparagraph shall not exceed the amount of
matching funds from sources other than the Federal Gov-
ernment, as required under subparagraph (A).
(iii) MINIMUM FUNDING LEVEL.—The amount of the min-
imum funding level for each State shall be determined for
each fiscal year based on the amount made available for
that fiscal year to carry out this section, as follows:
(I) If the amount made available is not less than
$81,500,000 and not more than $90,000,000, the min-
imum funding level shall be $500,000.
(II) If the amount made available is less than
$81,500,000, the minimum funding level shall be the
remainder of $500,000 minus a percentage of $500,000
equal to the percentage amount by which the amount
made available is less than $81,500,000.
(III) If the amount made available is more than
$90,000,000, the minimum funding level shall be the
sum of $500,000 plus a percentage of $500,000 equal
to the percentage amount by which the amount made
available exceeds $90,000,000.
(iv) DISTRIBUTIONS.—Subject to clause (iii), if any State
does not apply for, or use, its full funding eligibility for a
fiscal year, the Administration shall distribute the remain-
ing funds as follows:
(I) If the grant to any State is less than the amount
received by that State in fiscal year 2000, the Admin-
istration shall distribute such remaining funds, on a
pro rata basis, based on the percentage of shortage of
each such State, as compared to the total amount of
such remaining funds available, to the extent nec-
essary in order to increase the amount of the grant to
the amount received by that State in fiscal year 2000,
or until such funds are exhausted, whichever first oc-
curs.
(II) If any funds remain after the application of sub-
clause (I), the remaining amount may be distributed
as supplemental grants to any State, as the Adminis-
tration determines, in its discretion, to be appropriate,
after consultation with the association referred to in
subsection (a)(3)(A).
(v) USE OF AMOUNTS.—
(I) IN GENERAL.—Of the amounts made available in
any fiscal year to carry out this section—
(aa) not more than $500,000 may be used by the
Administration to pay expenses enumerated in
subparagraphs (B) through (D) of section 20(a)(1);
and
(bb) not more than $500,000 may be used by the
Administration to pay the examination expenses
enumerated in section 20(a)(1)(E).
(II) LIMITATION.—No funds described in subclause
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(I) may be used for examination expenses under sec-
tion 20(a)(1)(E) if the usage would reduce the amount
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23
of grants made available under clause (i)(I) of this sub-
paragraph to less than $85,000,000 (after excluding
any amounts provided in appropriations Acts, or ac-
companying report language, for specific institutions
or for purposes other than the general small business
development center program) or would further reduce
the amount of such grants below such amount.
(vi) EXCLUSIONS.—Grants provided to a State by the Ad-
ministration or another Federal agency to carry out sub-
section (a)(6) or (c)(3)(G), or for supplemental grants set
forth in clause (iv)(II) of this subparagraph, shall not be
included in the calculation of maximum funding for a
State under clause (ii) of this subparagraph.
(vii) AUTHORIZATION OF APPROPRIATIONS.—There are au-
thorized to be appropriated to carry out this subpara-
graph—
(I) $130,000,000 for fiscal year 2005; and
(II) $135,000,000 for fiscal year 2006.
(viii) LIMITATION.—From the funds appropriated pursu-
ant to clause (vii), the Administration shall reserve not
less than $1,000,000 in each fiscal year to develop portable
assistance for startup and sustainability non-matching
grant programs to be conducted by eligible small business
development centers in communities that are economically
challenged as a result of a business or government facility
down sizing or closing, which has resulted in the loss of
jobs or small business instability. A non-matching grant
under this clause shall not exceed $100,000, and shall be
used for small business development center personnel ex-
penses and related small business programs and services.
(ix) STATE DEFINED.—In this subparagraph, the term
‘‘State’’ means each of the several States, the District of
Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Commonwealth
of the Northern Mariana Islands.
(5) FEDERAL CONTRACTS WITH SMALL BUSINESS DEVELOPMENT
CENTERS.—
(A) IN GENERAL.—Subject to the conditions set forth in sub-
paragraph (B), a small business development center may enter
into a contract with a Federal department or agency to provide
specific assistance to small business concerns.
(B) CONTRACT PREREQUISITES.—Before bidding on a contract
described in subparagraph (A), a small business development
center shall receive approval from the Associate Administrator
of the small business development center program of the sub-
ject and general scope of the contract. Each approval under
subparagraph (A) shall be based upon a determination that the
contract will provide assistance to small business concerns and
that performance of the contract will not hinder the small busi-
ness development center in carrying out the terms of the grant
received by the small business development center from the
Administration.
(C) EXEMPTION FROM MATCHING REQUIREMENT.—A contract
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under this paragraph shall not be subject to the matching
funds or eligibility requirements of paragraph (4).
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24
(D) ADDITIONAL PROVISION.—Notwithstanding any other pro-
vision of law, a contract for assistance under this paragraph
shall not be applied to any Federal department or agency’s
small business, woman-owned business, or socially and eco-
nomically disadvantaged business contracting goal under sec-
tion 15(g).
(6) Any applicant which is funded by the Administration as
a Small Business Development Center may apply for an addi-
tional grant to be used solely to assist—
(A) with the development and enhancement of exports by
small business concerns;
(B) in technology transfer; and
(C) with outreach, development, and enhancement of mi-
nority-owned small business startups or expansions,
HUBZone small business concerns, veteran-owned small
business startups or expansions, and women-owned small
business startups or expansions, in communities impacted
by base closings or military or corporate downsizing, or in
rural or underserved communities;
as provided under subparagraphs (B) through (G) of subsection
(c)(3). Applicants for such additional grants shall comply with
all of the provisions of this section, including providing match-
ing funds, except that funding under this paragraph shall be
effective for any fiscal year to the extent provided in advance
in appropriations Acts and shall be in addition to the dollar
program limitations specified in paragraphs (4) and (5). No re-
cipient of funds under this paragraph shall receive a grant
which would exceed its pro rata share of a $15,000,000 pro-
gram based upon the populations to be served by the Small
Business Development Center as compared to the total popu-
lation of the United States. The minimum amount of eligibility
for any State shall be $100,000.
(7) PRIVACY REQUIREMENTS.—
(A) IN GENERAL.—A small business development center,
consortium of small business development centers, or con-
tractor or agent of a small business development center
may not disclose the name, address, or telephone number
of any individual or small business concern receiving as-
sistance under this section without the consent of such in-
dividual or small business concern, unless—
(i) the Administrator is ordered to make such a dis-
closure by a court in any civil or criminal enforcement
action initiated by a Federal or State agency; or
(ii) the Administrator considers such a disclosure to
be necessary for the purpose of conducting a financial
audit of a small business development center, but a
disclosure under this clause shall be limited to the in-
formation necessary for such audit.
(B) ADMINISTRATOR USE OF INFORMATION.—This section
shall not—
(i) restrict Administrator access to program activity
data; or
(ii) prevent the Administrator from using client in-
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formation to conduct client surveys.
(C) REGULATIONS.—
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25
(i) IN GENERAL.—The Administrator shall issue reg-
ulations to establish standards—
(I) for disclosures with respect to financial au-
dits under subparagraph (A)(ii); and
(II) for client surveys under subparagraph
(B)(ii), including standards for oversight of such
surveys and for dissemination and use of client in-
formation.
(ii) MAXIMUM PRIVACY PROTECTION.—Regulations
under this subparagraph, shall, to the extent prac-
ticable, provide for the maximum amount of privacy
protection.
(iii) INSPECTOR GENERAL.—Until the effective date of
regulations under this subparagraph, any client sur-
vey and the use of such information shall be approved
by the Inspector General who shall include such ap-
proval in his semi-annual report.
(8) CYBERSECURITY ASSISTANCE.—
(A) IN GENERAL.—The Department of Homeland Secu-
rity, and any other Federal department or agency in co-
ordination with the Department of Homeland Security,
may leverage small business development centers to pro-
vide assistance to small business concerns by dissemi-
nating information relating to cybersecurity risks and
other homeland security matters to help small business
concerns in developing or enhancing cybersecurity infra-
structure, awareness of cyber threat indicators, and cyber
training programs for employees.
(B) DEFINITIONS.—In this paragraph, the terms ‘‘cyberse-
curity risk’’ and ‘‘cyber threat indicator’’ have the mean-
ings given such terms, respectively, under section 2200 of
the Homeland Security Act of 2002.
(b)(1) Financial assistance shall not be made available to any ap-
plicant if approving such assistance would be inconsistent with a
plan for the area involved which has been adopted by an agency
recognized by the State government as authorized to do so and ap-
proved by the Administration in accordance with the standards and
requirements established pursuant to this section.
(2) An applicant may apply to participate in the program by sub-
mitting to the Administration for approval a plan naming those au-
thorized in subsection (a) to participate in the program, the geo-
graphic area to be served, the services that it would provide, the
method for delivering services, a budget, and any other information
and assurances the Administration may require to insure that the
applicant will carry out the activities eligible for assistance. The
Administration is authorized to approve, conditionally approve or
reject a plan or combination of plans submitted. In all cases, the
Administration shall review plans for conformity with the plan sub-
mitted pursuant to paragraph (1) of this subsection, and with a
view toward providing small business with the most comprehensive
and coordinated assistance in the State or part thereof to be
served.
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(3) ASSISTANCE TO OUT-OF-STATE SMALL BUSINESS CON-
CERNS.—
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26
(A) IN GENERAL.—At the discretion of the Administra-
tion, the Administration is authorized to permit a small
business development center to provide advice, information
and assistance, as described in subsection (c), to small
businesses located outside the State, but only to the extent
such businesses are located within close geographical prox-
imity to the small business development center, as deter-
mined by the Administration.
(B) DISASTER RECOVERY ASSISTANCE.—
(i) IN GENERAL.—At the discretion of the Adminis-
trator, the Administrator may authorize a small busi-
ness development center to provide advice, informa-
tion, and assistance, as described in subsection (c), to
a small business concern located outside of the State,
without regard to geographic proximity to the small
business development center, if the small business
concern is located in an area for which the President
has declared a major disaster.
(ii) TERM.—
(I) IN GENERAL.—A small business development
center may provide advice, information, and as-
sistance to a small business concern under clause
(i) for a period of not more than 2 years after the
date on which the President declared a major dis-
aster for the area in which the small business con-
cern is located.
(II) EXTENSION.—The Administrator may, at the
discretion of the Administrator, extend the period
described in subclause (I).
(iii) CONTINUITY OF SERVICES.—A small business de-
velopment center that provides counselors to an area
described in clause (i) shall, to the maximum extent
practicable, ensure continuity of services in any State
in which the small business development center other-
wise provides services.
(iv) ACCESS TO DISASTER RECOVERY FACILITIES.—For
purposes of this subparagraph, the Administrator
shall, to the maximum extent practicable, permit the
personnel of a small business development center to
use any site or facility designated by the Adminis-
trator for use to provide disaster recovery assistance.
(c)(1) Applicants receiving grants under this section shall assist
small businesses in solving problems concerning operations, manu-
facturing, engineering, technology exchange and development, per-
sonnel administration, marketing, sales, merchandising, finance,
accounting, business strategy development, and other disciplines
required for small business growth and expansion, innovation, in-
creased productivity, and management improvement, and for de-
creasing industry economic concentrations. Applicants receiving
grants under this section may also assist small businesses by pro-
viding, where appropriate, education on the requirements applica-
ble to small businesses under the regulations issued under section
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38 of the Arms Export Control Act (22 U.S.C. 2778) and on compli-
ance with those requirements.
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27
(2) A small business development center shall provide services as
close as possible to small businesses by providing extension serv-
ices and utilizing satellite locations when necessary. The facilities
and staff of each Small Business Development Center shall be lo-
cated in such places as to provide maximum accessibility and bene-
fits to the small businesses which the center is intended to serve.
To the extent possible, it also shall make full use of other Federal
and State government programs that are concerned with aiding
small business. A small business development center shall have—
(A) a full-time staff, including a full-time director who shall
have the authority to make expenditures under the center’s
budget and who shall manage the program activities;
(B) access to business analysts to counsel, assist, and inform
small business clients;
(C) access to technology transfer agent to provide state or art
technology to small businesses through coupling with national
and regional technology data sources;
(D) access to information specialists to assist in providing in-
formation searches and referrals to small business;
(E) access to part-time professional specialists to conduct re-
search or to provide counseling assistance whenever the need
arises;
(F) access to laboratory and adaptive engineering facilities;
and
(G) access to cybersecurity specialists to counsel, assist, and
inform small business concern clients, in furtherance of the
Small Business Development Center Cyber Strategy developed
under section 1841(a) of the National Defense Authorization
Act for Fiscal Year 2017.
(3) Services provided by a small business development center
shall include, but shall not be limited to—
(A) furnishing one-to-one individual counseling to small busi-
nesses, including—
(i) working with individuals to increase awareness of
basic credit practices and credit requirements;
(ii) working with individuals to develop business plans,
financial packages, credit applications, and contract pro-
posals;
(iii) working with the Administration to develop and pro-
vide informational tools for use in working with individ-
uals on pre-business startup planning, existing business
expansion, and export planning; and
(iv) working with individuals referred by the local offices
of the Administration and Administration participating
lenders;
(B) assisting in technology transfer, research and develop-
ment, including applied research, and coupling from existing
sources to small businesses, including—
(i) working to increase the access of small businesses to
the capabilities of automated flexible manufacturing sys-
tems;
(ii) working through existing networks and developing
new networks for technology transfer that encourage part-
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nership between the small business and academic commu-
nities to help commercialize university-based research and
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28
development and introduce university-based engineers and
scientists to their counterparts in small technology-based
firms; and
(iii) exploring the viability of developing shared produc-
tion facilities, under appropriate circumstances;
(C) in cooperation with the Department of Commerce and
other relevant Federal agencies, actively assisting small busi-
nesses in exporting by identifying and developing potential ex-
port markets, facilitating export transactions, developing link-
ages between United States small business firms and
prescreened foreign buyers, assisting small businesses to par-
ticipate in international trade shows, assisting small busi-
nesses in obtaining export financing, and facilitating the devel-
opment or reorientation of marketing and production strate-
gies; where appropriate, the Small Business Development Cen-
ter and the Administration may work in cooperation with the
State to establish a State international trade center for these
purposes;
(D) developing a program in conjunction with the Export-Im-
port Bank and local and regional Administration offices that
will enable Small Business Development Centers to serve as
an information network and to assist small business applicants
for Export-Import Bank financing programs, and otherwise
identify and help to make available export financing programs
to small businesses;
(E) working closely with the small business community,
small business consultants, State agencies, universities and
other appropriate groups to make translation services more
readily available to small business firms doing business, or at-
tempting to develop business, in foreign markets;
(F) in providing assistance under this subsection, applicants
shall cooperate with the Department of Commerce and other
relevant Federal agencies to increase access to available export
market information systems, including the CIMS system;
(G) assisting small businesses to develop and implement
strategic business plans to timely and effectively respond to
the planned closure (or reduction) of a Department of Defense
facility within the community, or actual or projected reductions
in such firms’ business base due to the actual or projected ter-
mination (or reduction) of a Department of Defense program or
a contract in support of such program—
(i) by developing broad economic assessments of the ad-
verse impacts of—
(I) the closure (or reduction) of the Department of
Defense facility on the small business concerns pro-
viding goods or services to such facility or to the mili-
tary and civilian personnel currently stationed or
working at such facility; and
(II) the termination (or reduction) of a Department
of Defense program (or contracts under such program)
on the small business concerns participating in such
program as a prime contractor, subcontractor or sup-
plier at any tier;
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(ii) by developing, in conjunction with appropriate Fed-
eral, State, and local governmental entities and other pri-
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29
vate sector organizations, the parameters of a transition
adjustment program adaptable to the needs of individual
small business concerns;
(iii) by conducting appropriate programs to inform the
affected small business community regarding the antici-
pated adverse impacts identified under clause (i) and the
economic adjustment assistance available to such firms;
and
(iv) by assisting small business concerns to develop and
implement an individualized transition business plan.
(H) maintaining current information concerning Federal,
State, and local regulations that affect small businesses and
counsel small businesses on methods of compliance. Counseling
and technology development shall be provided when necessary
to help small businesses find solutions for complying with envi-
ronmental, energy, health, safety, and other Federal, State,
and local regulations;
(I) coordinating and conducting research into technical and
general small business problems for which there are no ready
solutions;
(J) providing and maintaining a comprehensive library that
contains current information and statistical data needed by
small businesses;
(K) maintaining a working relationship and open commu-
nications with the financial and investment communities, legal
associations, local and regional private consultants, and local
and regional small business groups and associations in order
to help address the various needs of the small business com-
munity;
(L) conducting in-depth surveys for local small business
groups in order to develop general information regarding the
local economy and general small businesses strengths and
weaknesses in the locality;
(M) in cooperation with the Department of Commerce, the
Administration and other relevant Federal agencies, actively
assisting rural small businesses in exporting by identifying
and developing potential export markets for rural small busi-
nesses, facilitating export transactions for rural small busi-
nesses, developing linkages between United States’ rural small
businesses and prescreened foreign buyers, assisting rural
small businesses to participate in international trade shows,
assisting rural small businesses in obtaining export financing
and developing marketing and production strategies;
(N) assisting rural small businesses—
(i) in developing marketing and production strategies
that will enable them to better compete in the domestic
market—
(ii) by providing technical assistance needed by rural
small businesses;
(iii) by making available managerial assistance to rural
small business concerns; and
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(iv) by providing information and assistance in obtaining
financing for business startups and expansion;
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30
(O) in conjunction with the United States Travel and Tour-
ism Administration, assist rural small business in developing
the tourism potential of rural communities by—
(i) identifying the cultural, historic, recreational, and
scenic resources of such communities;
(ii) providing assistance to small businesses in devel-
oping tourism marketing and promotion plans relating to
tourism in rural areas; and
(iii) assisting small business concerns to obtain capital
for starting or expanding businesses primarily serving
tourists;
(P) maintaining lists of local and regional private consultants
to whom small business can be referred;
(Q) providing information to small business concerns regard-
ing compliance with regulatory requirements;
(R) developing informational publications, establishing re-
source centers of reference materials, and distributing compli-
ance guides published under section 312(a) of the Small Busi-
ness Regulatory Enforcement Fairness Act of 1996;
(S) providing small business owners with access to a wide
variety of export-related information by establishing on-line
computer linkages between small business development cen-
ters and an international trade data information network with
ties to the Export Assistance Center program;
(T) providing information and assistance to small business
concerns with respect to establishing drug-free workplace pro-
grams on or before October 1, 2006; øand¿
(U) encouraging and assisting the provision of succession
planning to small business concerns with a focus on
transitioning to cooperatives, as defined in section 7(a)(35), and
qualified employee trusts (collectively referred to in this sub-
paragraph as ‘‘employee-owned business concerns’’), including
by—
(i) providing training to individuals to promote the suc-
cessful management, governance, or operation of a busi-
ness purchased by those individuals in the formation of an
employee-owned business concern;
(ii) assisting employee-owned business concerns that
meet applicable size standards established under section
3(a) with education and technical assistance with respect
to financing and contracting programs administered by the
Administration;
(iii) coordinating with lenders on conducting outreach on
financing through programs administered by the Adminis-
tration that may be used to support the transition of own-
ership to employees;
(iv) supporting small business concerns in exploring or
assessing the possibility of transitioning to an employee-
owned business concern; and
(v) coordinating with the cooperative development cen-
ters of the Department of Agriculture, the land grant ex-
tension network, the Manufacturing Extension Partner-
ship, community development financial institutions, em-
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ployee ownership associations and service providers, and
local, regional and national cooperative associationsø.¿;
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31
ø(U)¿ (V) in conjunction with the United States Patent and
Trademark Office, providing training—
(i) to small business concerns relating to—
(I) domestic and international intellectual property
protections; and
(II) how the protections described in subclause (I)
should be considered in the business plans and growth
strategies of the small business concerns; and
(ii) that may be delivered—
(I) in person; or
(II) through a websiteø.¿; and
(W) assisting small business concerns in evaluating artificial
intelligence concerning operations, including by—
(i) providing information, guidance, and training to
small business concerns on the use of artificial intelligence,
including—
(I) best practices for using artificial intelligence;
(II) using artificial intelligence to plan for unex-
pected circumstances, protect data and intellectual
property, improve cybersecurity, facilitate regulatory
compliance, and improve customer trust; and
(III) incorporating artificial intelligence into business
operations; and
(ii) conducting outreach to the extent practical to small
business concerns regarding the use of artificial intel-
ligence.
(4) A small business development center shall continue to up-
grade and modify its services, as needed, in order to meet the
changing and evolving needs of the small business community.
(5) In addition to the methods prescribed in section 21(c)(2), a
small business development center shall utilize and compensate as
one of its resources qualified small business vendors, including but
not limited to, private management consultants, private consulting
engineers and private testing laboratories, to provide services as
described in this subsection to small businesses on behalf of such
small business development center.
(6) In any State (A) in which the Administration has not made
a grant pursuant to paragraph (1) of subsection (a), or (B) in which
no application for a grant has been made by a Small Business De-
velopment Center pursuant to paragraph (6) of such subsection
within 60 days after the effective date of any grant under sub-
section (a)(1) to such center or the date the Administration notifies
the grantee funded under subsection (a)(1) that funds are available
for grant applications pursuant to subsection (a)(6), whichever date
occurs last, the Administration may make grants to a non-profit
entity in that State to carry out the activities specified in para-
graph (6) of subsection (a). Any such applicants shall comply with
the matching funds requirement of paragraph (4) of subsection (a).
Such grants shall be effective for any fiscal year only to the extent
provided in advance in appropriations Acts, and each State shall be
limited to the pro rata share provisions of paragraph (6) of sub-
section (a).
(7) In performing the services identified in paragraph (3), the
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Small Business Development Centers shall work in close co-
operation with the Administration’s regional and local offices,
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32
the local small business community, and appropriate State and
local agencies.
(8) The Associate Administrator for Small Business Develop-
ment Centers, in consultation with the Small Business Devel-
opment Centers, shall develop and implement an information
sharing system. Subject to amounts approved in advance in ap-
propriations Acts, the Administration may make grants or
enter cooperative agreements with one or more centers to carry
out the provisions of this paragraph. Said grants or cooperative
agreements shall be awarded for periods of no more than five
years duration. The matching funds provisions of subsection (a)
shall not be applicable to grants or cooperative agreements
under this paragraph. The system shall—
(A) allow Small Business Development Centers partici-
pating in the program to exchange information about their
programs; and
(B) provide information central to technology transfer.
(d) Where appropriate, the Small Business Development Centers
shall work in conjunction with the relevant State agency and the
Department of Commerce to develop a comprehensive plan for en-
hancing the export potential of small businesses located within the
State. This plan may involve the cofunding and staffing of a State
Office of International Trade within the State Small Business De-
velopment Center, using joint State and Federal funding, and any
other appropriate measures directed at improving the export per-
formance of small businesses within the State.
(e) Laboratories operated and funded by the Federal Government
are authorized and directed to cooperate with the Administration
in developing and establishing programs to support small business
development centers by making facilities and equipment available;
providing experiment station capabilities in adaptive engineering;
providing library and technical information processing capabilities;
and providing professional staff for consulting. The Administration
is authorized to reimburse the laboratories for such services.
(f) The National Science Foundation is authorized and directed
to cooperate with the Administration and with the Small Business
Development Centers in developing and establishing programs to
support the centers.
(g) NATIONAL AERONAUTICS AND SPACE ADMINISTRATION AND RE-
GIONAL TECHNOLOGY TRANSFER CENTERS.—The National Aero-
nautics and Space Administration and regional technology transfer
centers supported by the National Aeronautics and Space Adminis-
tration are authorized and directed to cooperate with small busi-
ness development centers participating in the program.
(h) ASSOCIATE ADMINISTRATOR FOR SMALL BUSINESS DEVELOP-
MENT CENTERS.—
(1) APPOINTMENT AND COMPENSATION.—The Administrator
shall appoint an Associate Administrator for Small Business
Development Centers who shall report to an official who is not
more than one level below the Office of the Administrator and
who shall serve without regard to the provisions of title 5, gov-
erning appointments in the competitive service, and without
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regard to chapter 51, and subchapter III of chapter 53 of such
title relating to classification and General Schedule pay rates,
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33
but at a rate not less than the rate of GS–17 of the General
Schedule.
(2) DUTIES.—
(A) IN GENERAL.—The sole responsibility of the Associate
Administrator for Small Business Development Centers
shall be to administer the small business development cen-
ter program. Duties of the position shall include recom-
mending the annual program budget, reviewing the annual
budgets submitted by each applicant, establishing appro-
priate funding levels therefore, selecting applicants to par-
ticipate in this program, implementing the provisions of
this section, maintaining a clearinghouse to provide for the
dissemination and exchange of information between small
business development centers and conducting audits of re-
cipients of grants under this section.
(B) CONSULTATION REQUIREMENTS.—In carrying out the
duties described in this subsection, the Associate Adminis-
trator shall confer with and seek the advice of the Board
established by subsection (i) and Administration officials
in areas served by the small business development centers;
however, the Associate Administrator shall be responsible
for the management and administration of the program
and shall not be subject to the approval or concurrence of
such Administration officials.
(i)(1) There is established a National Small Business Develop-
ment Center Advisory Board (herein referred to as ‘‘Board’’) which
shall consist of nine members appointed from civilian life by the
Administrator and who shall be persons of outstanding qualifica-
tions known to be familiar and sympathetic with small business
needs and problems. No more than three members shall be from
universities or their affiliates and six shall be from small busi-
nesses or associations representing small businesses. At the time
of the appointment of the Board, the Administrator shall designate
one-third of the members and at least one from each category
whose term shall end in two years from the date of appointment,
a second third whose term shall end in three years from the date
of appointment, and the final third whose term shall end in four
years from the date of appointment. Succeeding Boards shall have
three-year terms, with one-third of the Board changing each year.
(2) The Board shall elect a Chairman and advise, counsel, and
confer with the Associate Administrator for Small Business Devel-
opment Centers in carrying out the duties described in this section.
The Board shall meet at least semiannually and at the call of the
Chairman of the Board. Each member of the Board shall be enti-
tled to be compensated at the rate not in excess of the per diem
equivalent of the highest rate of pay for individuals occupying the
position under GS–18 of the General Schedule for each day en-
gaged in activities of the Board and shall be entitled to be reim-
bursed for expenses as a member of the Board.
(j)(1) Each small business development center shall establish an
advisory board.
(2) Each small business development center advisory board shall
elect a chairman and advise, counsel, and confer with the director
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of the small business development center on all policy matters per-
taining to the operation of the small business development center,
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34
including who may be eligible to receive assistance from, and how
local and regional private consultants may participate with the
small business development center.
(k) PROGRAM EXAMINATION AND ACCREDITATION.—
(1) EXAMINATION.—Not later than 180 days after the date of
enactment of this subsection, the Administration shall develop
and implement a biennial programmatic and financial exam-
ination of each small business development center established
pursuant to this section.
(2) ACCREDITATION.—The Administration may provide finan-
cial support, by contract or otherwise, to the association au-
thorized by subsection (a)(3)(A) for the purpose of developing a
small business development center accreditation program.
(3) EXTENSION OR RENEWAL OF COOPERATIVE AGREEMENTS.—
(A) IN GENERAL.—In extending or renewing a cooperative
agreement of a small business development center, the Ad-
ministration shall consider the results of the examination
and accreditation program conducted pursuant to para-
graphs (1) and (2).
(B) ACCREDITATION REQUIREMENT.—After September 30,
2000, the Administration may not renew or extend any co-
operative agreement with a small business development
center unless the center has been approved under the ac-
creditation program conducted pursuant to this subsection,
except that the Associate Administrator for Small Business
Development Centers may waive such accreditation re-
quirement, in the discretion of the Associate Adminis-
trator, upon a showing that the center is making a good
faith effort to obtain accreditation.
(l) CONTRACT AUTHORITY.—The authority to enter into contracts
shall be in effect for each fiscal year only to the extent and in the
amounts as are provided in advance in appropriations Acts. After
the administration has entered a contract, either as a grant or a
cooperative agreement, with any applicant under this section, it
shall not suspend, terminate, or fail to renew or extend any such
contract unless the Administration provides the applicant with
written notification setting forth the reasons therefore and afford-
ing the applicant an opportunity for a hearing, appeal, or other ad-
ministrative proceeding under the provisions of chapter 5 of title 5,
United States Code. If any contract or cooperative agreement under
this section with an entity that is covered by this section is not re-
newed or extended, any award of a successor contract or coopera-
tive agreement under this section to another entity shall be made
on a competitive basis.
(m) PROHIBITION ON CERTAIN FEES.—A small business develop-
ment center shall not impose or otherwise collect a fee or other
compensation in connection with the provision of counseling serv-
ices under this section.
(n) VETERANS ASSISTANCE AND SERVICES PROGRAM.—
(1) IN GENERAL.—A small business development center may
apply for a grant under this subsection to carry out a veterans
assistance and services program.
(2) ELEMENTS OF PROGRAM.—Under a program carried out
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with a grant under this subsection, a small business develop-
ment center shall—
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35
(A) create a marketing campaign to promote awareness
and education of the services of the center that are avail-
able to veterans, and to target the campaign toward vet-
erans, service-disabled veterans, military units, Federal
agencies, and veterans organizations;
(B) use technology-assisted online counseling and dis-
tance learning technology to overcome the impediments to
entrepreneurship faced by veterans and members of the
Armed Forces; and
(C) increase coordination among organizations that as-
sist veterans, including by establishing virtual integration
of service providers and offerings for a one-stop point of
contact for veterans who are entrepreneurs or owners of
small business concerns.
(3) AMOUNT OF GRANTS.—A grant under this subsection shall
be for not less than $75,000 and not more than $250,000.
(4) FUNDING.—Subject to amounts approved in advance in
appropriations Acts, the Administration may make grants or
enter into cooperative agreements to carry out the provisions
of this subsection.
(o) CYBER STRATEGY TRAINING FOR SMALL BUSINESS DEVELOP-
MENT CENTERS.—
(1) DEFINITIONS.—In this subsection—
(A) the term ‘‘cyber strategy’’ means resources and tac-
tics to assist in planning for cybersecurity and defending
against cyber risks and attacks; and
(B) the term ‘‘lead small business development center’’
means a small business development center that receives
reimbursement from the Administrator under paragraph
(5).
(2) CERTIFICATION PROGRAM.—The Administrator shall estab-
lish a cyber counseling certification program, or designate 1 or
more substantially similar governmental or private cybersecu-
rity certification programs, to certify the employees of lead
small business development centers in providing cyber plan-
ning assistance to small business concerns.
(3) NUMBER OF CERTIFIED EMPLOYEES.—The Administrator
shall ensure that the number of employees of each lead small
business development center who are certified in providing
cyber planning assistance is not less than the lesser of—
(A) 5; or
(B) 10 percent of the total number of employees of the
lead small business development center.
(4) CYBER STRATEGY.—In carrying out paragraph (2), the Ad-
ministrator, to the extent practicable, shall consider any cyber
strategy methods included in the Small Business Development
Center Cyber Strategy developed under section 1841(a)(3)(B) of
the National Defense Authorization Act for Fiscal Year 2017
(Public Law 114–328; 130 Stat. 2662).
(5) REIMBURSEMENT FOR CERTIFICATION.—
(A) IN GENERAL.—Subject to the availability of appro-
priations, the Administrator may reimburse each lead
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small business development center for costs relating to the
certification of 1 or more employees of the lead small busi-
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36
ness center in providing cyber planning assistance under
a program established or designated under paragraph (2).
(B) LIMITATION.—The total amount reimbursed by the
Administrator under subparagraph (A) may not exceed
$350,000 in any fiscal year.
* * * * * * *
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XVIII. MINORITY VIEWS
Artificial intelligence (AI) is technology that enables computers
and machines to perform sophisticated tasks that model human
reasoning and decision making, and it has the potential to revolu-
tionize every aspect of our lives. Many small business owners have
expressed interest in adopting AI tools and software products to
improve efficiency, enhance customer experience, and gain a com-
petitive edge. In particular, generative AI (GenAI) tools for content
creation, the most visible AI tools today, have exploded in popu-
larity and attention.1
Not all small business owners are technologically inclined. In
fact, according to the U.S. Census Bureau, nearly 1 in 4 businesses
do not know whether they will or will not use AI in production dur-
ing the next six months.2 This can be attributed to a lack of aware-
ness of AI technology, their capabilities and limitations, and what
software qualifies as AI. Currently, AI literacy resources are not
uniform or widespread among communities. In areas where AI lit-
eracy courses are held, offerings vary in quality, scope, afford-
ability, and accessibility. Concerns have also been raised that un-
even resource distribution in this area could exacerbate the digital
divide among various regions, communities, and socioeconomic
groups. The emerging nature of this technology gives large corpora-
tions an advantage over small businesses because they have the
technical expertise and resources to adopt it quickly.
AI has the potential to benefit small businesses by enhancing
productivity and operations. That said, it is crucial for small busi-
nesses to also consider the risks and limitations of AI, and how
those may impede small businesses’ work and growth. Concerns
have been raised that AI could be used to ‘‘monitor, evaluate, and
control workers,’’ such as by punishing them ‘‘for not smiling
enough or taking a bathroom break,’’ negatively impacting the
health and productivity of small business employees.3 AI is also ca-
pable of bias and discrimination against marginalized commu-
nities.4
Moreover, AI remains a developing technology. AI tools can
sometimes fail to effectively perform the tasks they were designed
to accomplish, which is why many GenAI tools include a disclaimer
stating that outputs can be incorrect and reminding users to verify
outputs’ accuracy. Many high-profile incidents stemming from AI
use were quite avoidable. For example, in December 2023, a Chev-
1 H. COMM. ON SMALL BUS. DEMOCRATIC STAFF, BOTS OVER BRUSHES: THE LOOMING COMPETI-
TION BETWEEN GENERATIVE AI AND SMALL CONTENT CREATORS (Mar. 19, 2024).
2 U.S. CENSUS BUREAU, Business Trends and Outlook Survey (Oct. 24, 2024), https://
www.census.gov/hfp/btos/data.
3 Artificial Intelligence: Principles to Protect Workers, AFL–CIO (Oct. 15, 2025), https://
aflcio.org/reports/workers-first-ai.
4 CONG. RESEARCH SERV., R48555, Regulating Artificial Intelligence: U.S. and International
Approaches and Considerations for Congress (Jun. 4, 2025).
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(37)
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38
rolet dealership in Watsonville, CA deployed an automated cus-
tomer service chatbot agent powered by ChatGPT, a GenAI tool to
answer questions about products. Users quickly began manipu-
lating the chatbot, and one user purchased a Chevy Tahoe for $1
with acknowledgements that its offers were ‘‘legally binding.’’ 5 This
incident and numerous others could have been avoided by a thor-
ough and critical review of the underlying AI technology involved
and any relevant flaws, liabilities, or drawbacks.
The negative outcomes caused or amplified by AI, whether delib-
erate or otherwise, must be minimized by appropriate safeguards.
It is important for the resource partners help equip entrepreneurs
with the knowledge and skills necessary to make fully informed,
critical decisions about whether AI tools are right for them and
worth adopting.
America’s Small Business Development Center (SBDC) launched
the AI U Program, which is a comprehensive program that will
train SBDC advisors on how to educate small business owners
about AI and use the tools effectively.
NYDIA M. VELÁZQUEZ,
Ranking Member.
Æ
5 Katie Notopoulos, A car dealership added an AI chatbot to its site. Then all hell broke loose.,
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BUS. INSIDER (Dec. 18, 2023), https://www.businessinsider.com/car-dealership-chevrolet-chatbot-
chatgpt-pranks-chevy-2023-12.
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