15 U.S.C. § 662 — Definitions

For this chapter: (1) “Administration” means the Small Business Administration. (2) “Administrator” means its Administrator. (3) “Small business investment company,” “company,” and “licensee” mean a company approved by the Administration to operate under this chapter and licensed under section 681. (4) “State” includes the States, United States territories and possessions, Puerto Rico, and the District of Columbia. (5) “Small-business concern” has the meaning in the Small Business Act, except: (A) An investment by a venture-capital firm, investment company (including an investment company), employee welfare or pension plan, tax-exempt trust, foundation, or endowment (i) does not make a concern not independently owned and operated, regardless of control allocation during the investment; (ii) is disregarded for Small Business Act size standards; and (iii) is disregarded in deciding whether the concern is a smaller enterprise. (B) If a concern is not required to pay Federal income tax at the enterprise level but must pass income through to owners, its net income for the Small Business Act’s net-income standards is reduced by: (i) if it also is not required to pay State or local enterprise-level tax, its net income before this subparagraph multiplied by the corporate marginal State or combined State-local rate; plus (ii) that net income after the first deduction, multiplied by the corporate marginal Federal rate. (6) “Development companies” means State-incorporated enterprises authorized to promote and help small-business growth and development in their operating areas. (7) “License” means an Administration license under section 681. (8) “Articles” means articles of incorporation, or equivalent documents specified by the Administrator for another business entity. (9) “Private capital” means (A) the total of (i) paid-in capital and paid-in surplus of a corporate licensee, contributed partnership capital, or a limited-liability-company member’s equity investment, and (ii) unfunded binding commitments from Administrator-qualified investors to contribute capital. Those commitments may count for approval of leverage, but leverage cannot be funded from them. It does not include (B) borrowed licensee funds, leverage proceeds, or funds directly or indirectly from a Federal, State, or local government or its agency, except (I) business revenues other than appropriations of a federally chartered or government-sponsored corporation, (II) investments by a college or university employee welfare plan, pension plan, foundation, endowment, or trust, and (III) qualified nonprivate funds when their investors do not control the licensee’s management, board, general partners, or members. For leverage approval, private capital also does not include government funds except those described in (B)(iii)(I)–(III). (10) “Leverage” includes (A) Administration-purchased or guaranteed debentures, (B) Administration-purchased or guaranteed participating securities, and (C) preferred securities outstanding on October 1, 1995. (11) “Third-party debt” means borrowed-money debt other than debt owed to the Administration. (12) “Smaller enterprise” means a small-business concern and its affiliates that either (A) have (i) net financial worth of no more than $6,000,000 when assistance is provided and (ii) average net income for the preceding two years of no more than $2,000,000 after Federal income taxes, excluding carryover losses; or (B) meet the Administration’s industry size standards. If income passes through to owners instead of being taxed at the enterprise level, the average net income under (A)(ii) is reduced using the same State/local and Federal corporate-rate calculations stated in paragraph (5)(B). (13) “Qualified nonprivate funds” means (A) funds invested by a Federal agency other than the Administration on or before August 16, 1982, under a law expressly requiring their inclusion in private capital; (B) funds invested by a Federal agency under a law enacted after September 4, 1992, expressly requiring that inclusion; and (C) funds invested by State or local governments, including their guarantees, totaling no more than 33 percent of the applicant’s or licensee’s private capital. (14) “Employee welfare benefit plan” and “pension plan” have the meanings in section 3 of ERISA and include public and private plans covered by that Act and similar uncovered plans established and maintained by the Federal Government, a State, or a political subdivision or instrumentality for employees. (15) “Member” means an LLC owner or other person admitted to LLC membership. (16) “Limited liability company” means a business entity organized and operating under a State LLC law approved by the Administration. (17) “Long term,” for equity or loan funds invested in a concern or smaller enterprise, means at least one year. (18) “Energy Saving debenture” means a deferred-interest debenture that (A) is issued at a discount, (B) matures in five or ten years, (C) requires no interest or annual charge for its first five years, (D) is limited to Energy Saving qualified investments, and (E) is issued at no cost, as defined in section 661a of title 2, for purchase and guarantee. (19) “Energy Saving qualified investment” means investment in a concern mainly researching, making, developing, or providing products, goods, or services that reduce use or consumption of nonrenewable energy. (20) “Underlicensed State” means a State whose licensees per capita number is below the median for all States, calculated by the Administrator.