Chabot Amendment Paves Way for Passage of Small Business Investment Expansion Act
Congressman Steve Chabot's (R-Cincinnati) amendment to the Small Business Investment Expansion Act of 2007 (H.R. 3567), passed the House last night by a voice vote. The product of a bipartisan effort between Small Business Committee Ranking Member Chabot and Committee Chairwoman Nydia Velazquez (D-NY), the amendment alleviated significant concerns with H.R. 3567 and helped facilitate its passage by a margin of 325 to 72.
"America has changed," Congressman Chabot said. "Our country's next great idea runs the risk of being lost in the shuffle of companies with longer histories and proven returns. For the United States to remain the leader of innovative entrepreneurial firms, we must ensure an economic and fiscal policy that allows our prospective business owners to thrive."
Congressman Chabot's amendment makes improvements to a provision in H.R. 3567 that challenged the basic premise of a small business by allowing conglomerations of venture-owned firms to be considered small. As written, Title V undermined the condition that small businesses are independently owned and operated which has been the cornerstone of the Small Business Administration's (SBA) size standard since its inception in 1953.
Specifically, Chabot's amendment prohibits a business from being considered small if a venture capital firm owns more than 50 percent of it or if the venture capital firm's employees constitute a majority of the business' board of directors. By preserving the long-held standard that a business be independently owned and operated, the amendment eliminated some of the more egregious decisions concerning venture capital investment while maintaining the integrity of the federal procurement process.
With the incorporation of the Chabot's change, H.R. 3567 offers a sensible approach to providing new and growing businesses access to capital while protecting the American taxpayer by balancing the need for limited federal funding with fiscal restraint. The Small Business Investment Expansion Act provides updates and improvements to four key SBA programs: the Small Business Investment Company program; the New Markets Venture Capital Companies program; the newly established Angel Investment program; and the Surety Bond program.