119-s2411

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2411 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 2411

 To amend the Small Business Investment Act of 1958 to establish the 
 Scale-Up Manufacturing Investment Company (``SUMIC'') Program.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 July 23, 2025

 Mr. Booker introduced the following bill; which was read twice and 
 referred to the Committee on Small Business and Entrepreneurship

_______________________________________________________________________

 A BILL

 To amend the Small Business Investment Act of 1958 to establish the 
 Scale-Up Manufacturing Investment Company (``SUMIC'') Program.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Scale-Up Manufacturing Investment 
Company Act of 2025''.

SEC. 2. FINDINGS.

 Congress finds that--

    (1) the strength of the United States manufacturing sector 
 is critical to the economy and the global competitiveness of 
 the United States;

    (2) United States manufacturers support 17,600,000 jobs in 
 the United States and account for 12 percent of the gross 
 domestic product of the United States;

    (3) access to capital is essential to growth and innovation 
 in the manufacturing sector;

    (4) small, emerging manufacturers face unique challenges 
 scaling commercial production in the United States, driving 
 many young manufacturers to other countries;

    (5) structural barriers exist in the United States that 
 prevent key investments in first-commercial manufacturing 
 facilities;

    (6) a healthy manufacturing sector is essential to 
 innovation economy of the United States, providing three-
 quarters of all private sector research and development, 
 employing nearly two-thirds of all research and development 
 workers, and producing the majority of all patents issued;

    (7) technology-intensive manufacturing small businesses, 
 some of which may be start-ups, with the potential to anchor 
 the next generation of manufacturing production where they 
 locate, face special challenges in accessing the capital to 
 move from idea to prototype and into commercial production;

    (8) already more capital intensive than software or 
 services start-ups, manufacturing start-ups and small 
 businesses face a ``second and wider valley of death'' when it 
 comes to raising the capital to scale up for commercial 
 production because of their capital intensity and novel 
 technology;

    (9) a number of countries, including China, South Korea, 
 Germany, and Japan, provide publicly funded incentives to 
 attract these firms, recognizing that despite the risks, the 
 long-term benefits of establishing leadership in emerging 
 technology areas are large;

    (10) a study of manufacturing technology-intensive start-
 ups licensed by the Massachusetts Institute of Technology found 
 that almost all that scaled up into commercial production did 
 so overseas largely because of this far more attractive capital 
 and investment environment for manufacturing start-ups, which 
 is a huge loss for the future of manufacturing in the United 
 States;

    (11) if the United States loses the first generation of 
 production for a new technology or manufacturing process, 
 history suggests that it is an uphill battle once lost to 
 reclaim that capability here given the unique learning and 
 know-how acquired during the building of that first factory; 
 and

    (12) to ensure that manufacturing technologies invented in 
 the United States are ultimately made in the United States will 
 require addressing the unique capital access challenges faced 
 by these technology-intensive manufacturing start-ups.

SEC. 3. SCALE-UP MANUFACTURING INVESTMENT PROGRAM.

    (a) In General.--Title III of the Small Business Investment Act of 
1958 (15 U.S.C. 681 et seq.) is amended by adding at the end the 
following:

 ``PART D--SCALE-UP MANUFACTURING INVESTMENT COMPANY PROGRAM

``

SEC. 399A. DEFINITIONS.

 ``In this part--
 ``

    (1) the term `Associate Administrator' means the 
 Associate Administrator described in 

section 201;
 ``

    (2) the term `Council' means the Scale-Up Manufacturing 
 Investment Company Credit Council that may be established under 
 

section 399K;
 ``

    (3) the term `participating investment fund' means a 
 privately managed investment fund licensed under 

section 399C 
 to operate under the program;
 ``

    (4) the term `private capital' has the meaning given the 
 term in 

section 103

    (9) ;
 ``

    (5) the term `program' means the scale-up manufacturing 
 investment company program established under 

section 399B;
 ``

    (6) the term `qualifying manufacturing project' means an 
 investment in a small and emerging manufacturer for the 
 purposes of building first commercial production facilities, 
 novel manufacturing capabilities, or the introduction into 
 production of emerging manufacturing technologies;
 ``

    (7) the term `small and emerging manufacturer' means any 
 advanced manufacturer that does not exceed the size standard 
 established by the Administrator for the applicable North 
 American Industry Classification System code under 

section 3 of 
 the Small Business Act (15 U.S.C. 632); and
 ``

    (8) the term `small business concern owned and controlled 
 by socially and economically disadvantaged individuals' has the 
 meaning given the term in 

section 8
            (d) (3)
            (C) of the Small 
 Business Act (15 U.S.C. 637
            (d) (3)
            (C) ).

``

SEC. 399B. ESTABLISHMENT.

 ``

    (a) In General.--The Administrator shall establish and carry out 
a scale-up manufacturing investment company program under which the 
Administrator shall provide leverage to participating investment funds 
to support debt and equity investments in qualifying manufacturing 
projects of small and emerging manufacturers in the United States.
 ``

    (b) Administration of Program.--The program shall be administered 
by the Administrator acting through the Associate Administrator.

``

SEC. 399C. SELECTION OF PARTICIPATING INVESTMENT FUNDS.

 ``

    (a) Application for License.--
 ``

    (1) Submission of application.--An investment fund 
 desiring to receive a license to operate under the program 
 shall submit an application to the Administrator at such time 
 and in such manner as the Administrator may require.
 ``

    (2) Requirement.--An application submitted under 
 paragraph

    (1) shall demonstrate that the investment fund--
 ``
        (A) has the requisite minimum private capital 
 raised from investors; and
 ``
        (B) committed to operate under the program as of 
 the date of submission of the application.
 ``

    (3) Status.--Not later than 90 days after the date on 
 which the Administrator receives an application submitted under 
 paragraph

    (1) , the Administrator shall provide the applicant 
 with a written report detailing the status of the application 
 and any requirements remaining for completion of the 
 application.
 ``

    (b) Selection.--
 ``

    (1) In general.--Not later than 180 days after the date 
 on which the Administrator receives an application under 
 subsection

    (a) , the Administrator shall approve or deny the 
 application for a license to operate under the program and 
 notify the applicant of the determination.
 ``

    (2) Criteria.--The Administrator shall establish 
 selection criteria to evaluate applications to operate under 
 the program, which shall include, at a minimum--
 ``
        (A) the proven investment experience of the 
 investment fund manager;
 ``
        (B) the proven, balanced, and positive-investment 
 track record of a previous investment fund or the 
 principals and fund performance analysis measured 
 against benchmarks and peer funds;
 ``
            (C) the experience of the investment fund with 
 investments relating to small manufacturers and 
 emerging technologies related to advanced 
 manufacturing;
 ``
            (D) an evaluation of the use of leverage by the 
 investment fund managers in past deals;
 ``
        (E) evidence indicating a cohesive and effective 
 team and team dynamic;
 ``
        (F) principals with strong reputations;
 ``
        (G) a record of positive realizations and exits 
 from previous investments in the investment track 
 record;
 ``
        (H) clearly articulated focus, investment thesis, 
 investment themes, and investment instruments to be 
 used to capitalize companies; and
 ``
            (I) fund structure and economics that reflect 
 standard practices and industry norms, such as--
 ``
            (i) preferred returns to limited 
 partners;
 ``
            (ii) general partner carried interest 
 allocations, fees and vesting schedules;
 ``
            (iii) adequate fund infrastructure and 
 supporting back office services; and
 ``
            (iv) evidence of fund raising traction 
 and capability.
 ``
            (c) Fees.--
 ``

    (1) In general.--The Administration shall prescribe fees 
 to be paid by each applicant for a license to operate as a 
 participating investment fund under the program.
 ``

    (2) Use of amounts.--Fees collected under this 
 subsection--
 ``
        (A) shall be deposited in the account for 
 salaries and expenses of the Administration; and
 ``
        (B) are authorized to be appropriated solely to 
 cover the costs of licensing examinations.

``

SEC. 399D. PROVISION OF LEVERAGE TO PARTICIPATING INVESTMENT FUNDS.

 ``

    (a) In General.--Not later than 60 days after the date on which 
the Administrator approves and issues a license under 

section 399C to 
operate as a participating investment fund under the program, the 
Administrator may provide not more than $1 of leverage for every $1 of 
private capital raised by the participating investment fund.
 ``

    (b) Maximum Leverage.--The maximum amount of outstanding leverage 
made available in any given fiscal year--
 ``

    (1) to any participating investment fund may not exceed 
 $500,000,000; and
 ``

    (2) to all participating investment funds in aggregate 
 may not exceed $1,000,000,000.
 ``
            (c) Private Capital Requirement.--
 ``

    (1) In general.--The private capital of a participating 
 investment fund shall be not less than $250,000,000.
 ``

    (2) Financial institution investments.--Any national 
 bank, or any member bank of the Federal Reserve System or 
 nonmember insured bank to the extent permitted under applicable 
 State law, may invest in any one or more participating 
 investment funds, or in any entity established to invest solely 
 in participating investment funds, except that in no event 
 shall the total amount of such investments of any such bank 
 exceed 5 percent of the capital and surplus of the bank.
 ``
            (d) Leverage Fee.--The Administrator shall charge and collect a 
leverage fee of not more than 5.5 percent and not less than 3 percent 
of the face amount of the leverage issued.

``

SEC. 399E. BORROWING POWER.

 ``

    (a) In General.--Each participating investment fund shall have 
the authority to borrow money and issue debentures and preferred 
securities, subject to such limitations and regulations as the 
Administration may prescribe.
 ``

    (b) Limitation.--Of the leverage provided by the Administrator to 
a participating investment fund under 

section 399D--
 ``

    (1) not less than 70 percent shall be issued as 
 debentures under subsection

    (a) ; and
 ``

    (2) not more than 30 percent may be issued as preferred 
 securities under subsection

    (a) .
 ``
            (c) Federal Financing Bank.--The Federal Financing Bank may 
acquire a debenture issued by a participating investment fund company 
under subsection

    (a) .
 ``
            (d) Purchase and Guarantee by SBA.--
 ``

    (1) In general.--The Administration may purchase or 
 guarantee the timely payment of all principal and interest as 
 scheduled on debentures or preferred securities issued by 
 participating investment funds under subsection

    (a) , subject to 
 such limitations and regulations as the Administration may 
 prescribe.
 ``

    (2) Full faith and credit.--The full faith and credit of 
 the United States is pledged to the payment of all amounts 
 which may be required to be paid under any guarantee under this 
 subsection.
 ``

    (e) Third-Party Debt.--The Administrator--
 ``

    (1) shall not permit a participating investment fund 
 having outstanding leverage to incur third-party debt that 
 would create or contribute to an unreasonable risk of default 
 or loss to the Federal Government; and
 ``

    (2) shall permit such participating investment funds to 
 incur third-party debt only on such terms and subject to such 
 conditions as may be established by the Administrator, by 
 regulation or otherwise.
 ``

    (f) Calculation of Subsidy Rate.--All fees, interest, and profits 
received and retained by the Administration under this section and 

section 399D shall be included in the calculations made by the Director 
of the Office of Management and Budget to offset the cost (as that term 
is defined in 

section 502 of the Federal Credit Reform Act of 1990 (2 
U.S.C. 661a)) to the Administration of purchasing and guaranteeing 
debentures and preferred securities under this Act.

``

SEC. 399F. INVESTMENTS IN SMALL BUSINESS CONCERNS.

 ``

    (a) In General.--A participating investment fund shall use 
leverage received under 

section 399D to make debt and equity 
investments in small and emerging manufacturers to carry out qualifying 
manufacturing projects.
 ``

    (b) Limitation.--Not more than 50 percent of the amount provided 
by a participating investment fund to a small and emerging manufacturer 
under subsection

    (a) for a qualifying manufacturing project shall 
consist of leverage provided to the participating investment fund under 
the program.
 ``
            (c) Portfolio Management.--A single investment made by a 
participating investment fund under subsection

    (a) may not exceed 10 
percent of the total capital of the participating investment fund, 
which includes private capital and any leverage projected to be 
provided to the participating investment fund, if applicable.
 ``
            (d) Increased Outreach.--The Administration shall issue policy 
directives to provide for enhanced outreach efforts to increase 
investments by participating investment funds in--
 ``

    (1) a small business concern owned and controlled by 
 socially and economically disadvantaged individuals; and
 ``

    (2) small business concerns owned and controlled by--
 ``
        (A) women;
 ``
        (B) veterans; or
 ``
            (C) individuals with disabilities.

``

SEC. 399G. EXAMINATIONS AND VALUATIONS.

 ``

    (a) Examinations.--
 ``

    (1) In general.--Each participating investment fund shall 
 be subject to examinations made at the direction of the 
 Investment Division of the Administration in accordance with 
 this subsection.
 ``

    (2) Assistance of private sector entities.--Examinations 
 under this subsection may be conducted with the assistance of a 
 private sector entity that has the qualifications and the 
 expertise necessary to conduct such examinations.
 ``

    (3) Costs.--
 ``
        (A) Assessment.--
 ``
            (i) In general.--The Administrator may 
 assess the cost of examinations under this 
 subsection, including compensation of the 
 examiners, against the participating investment 
 fund examined.
 ``
            (ii) Payment.--Any participating 
 investment fund against which the Administrator 
 assesses costs under subparagraph
        (A) shall pay 
 such costs.
 ``
        (B) Deposit of funds.--Funds collected under this 
 subsection--
 ``
            (i) shall be deposited in the account for 
 salaries and expenses of the Administration; 
 and
 ``
            (ii) are authorized to be appropriated 
 solely to cover the costs of examinations and 
 other program oversight activities.
 ``

    (b) Valuations.--
 ``

    (1) Frequency of valuations.--
 ``
        (A) In general.--Each participating investment 
 fund shall submit to the Administrator a written 
 valuation of the loans and investments of the 
 participating investment fund not less often than 
 semiannually or otherwise upon the request of the 
 Administrator, except that any participating investment 
 fund with no leverage outstanding shall submit such 
 valuations annually, unless the Administrator 
 determines otherwise.
 ``
        (B) Material adverse changes.--Not later than 30 
 days after the end of a fiscal quarter of a 
 participating investment fund during which a material 
 adverse change in the aggregate valuation of the loans 
 and investments or operations of the participating 
 investment fund occurs, the participating investment 
 fund shall notify the Administrator in writing of the 
 nature and extent of that change.
 ``
            (C) Independent certification.--
 ``
            (i) In general.--Not less than once 
 during each fiscal year, each participating 
 investment fund shall submit to the 
 Administrator the financial statements of the 
 participating investment fund, audited by an 
 independent certified public accountant 
 approved by the Administrator.
 ``
            (ii) Audit requirements.--Each audit 
 conducted under clause
            (i) shall include--
 ``
            (I) a review of the procedures 
 and documentation used by the 
 participating investment fund in 
 preparing the valuations required by 
 this subsection; and
 ``
            (II) a statement by the 
 independent certified public accountant 
 that such valuations were prepared in 
 conformity with the valuation criteria 
 applicable to the participating 
 investment fund established in 
 accordance with paragraph

    (2) .
 ``

    (2) Valuation criteria.--Each valuation submitted under 
 this subsection shall be prepared by the participating 
 investment fund in accordance with valuation criteria, which 
 shall--
 ``
        (A) be established or approved by the 
 Administrator; and
 ``
        (B) include appropriate safeguards to ensure that 
 the noncash assets of a participating investment fund 
 are not overvalued.

``

SEC. 399H. MISCELLANEOUS.

 ``The Administrator may take such action as set forth in sections 
309, 311, 312, 314, 315, and 316 and an owner (including a member, 
partner, or shareholder), officer, director, employee, agent, or other 
participant in the management or conduct of the affairs of a 
participating investment fund shall be subject to the requirements of 
such sections.

``

SEC. 399I. VIOLATIONS; REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.

 ``

    (a) Violations.--If any participating investment fund violates or 
fails to comply with any of the provisions of this part or of 
regulations prescribed hereunder, all of its rights, privileges, and 
franchises derived therefrom may thereby be forfeited. Before any such 
participating investment fund shall be declared dissolved, or its 
rights, privileges, and franchises forfeited, any noncompliance with or 
violation of this Act shall be determined and adjudged by a court of 
the United States of competent jurisdiction in a suit brought for that 
purpose in the district, territory, or other place subject to the 
jurisdiction of the United States, in which the principal office of 
such participating investment fund is located. Any such suit shall be 
brought by the United States at the instance of the Administration or 
the Attorney General.
 ``

    (b) Suspension of Management Officials.--Using the procedures for 
removing or suspending a director or an officer of a licensee set forth 
in 

section 313, the Administrator may remove or suspend any management 
official of a participating investment fund.

``

SEC. 399J. REPORTS.

 ``Each participating investment fund shall, on a semi-annual basis, 
provide to the Administrator such information as the Administrator may 
require, including--
 ``

    (1) information related to the measurement criteria that 
 the participating investment fund proposed in the application 
 for the program;
 ``

    (2) information on the use of leverage by the 
 participating investment fund; and
 ``

    (3) in each case in which the participating investment 
 fund makes an investment in a small business concern that is 
 not a small business concern owned and controlled by socially 
 and economically disadvantaged individuals, a report on the 
 number and percentage of employees of the small business 
 concern who are socially and economically disadvantaged 
 individuals.

``

SEC. 399K. SCALE-UP MANUFACTURING INVESTMENT COMPANY CREDIT COUNCIL.

 ``

    (a) Establishment.--The Administrator may establish a Scale-Up 
Manufacturing Investment Company Credit Council, which, if established, 
shall consist of 5 members from the private sector with aggregate and 
collective experience in technology development, manufacturing 
financing, and capital investment.
 ``

    (b) Duties.--The Council, if established, shall advise the 
Administrator on carrying out the program, which shall include--
 ``

    (1) providing advice from time to time on advanced scale-
 up manufacturing industries; and
 ``

    (2) establishing and conducting an annual briefing 
 beginning not later than 18 months after the date of enactment 
 of this section.

``

SEC. 399L. REGULATIONS.

 ``The Administrator may issue such regulations as the Administrator 
determines necessary to carry out the provisions of this part in 
accordance with its purposes.''.

    (b) Bank Holding Company Act of 1956.--

Section 13
            (d) (1)
        (E) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1851
            (d) (1)
        (E) ) is amended 
by inserting ``investments in 1 or more participating investment funds, 
as defined in 

section 399A of the Small Business Investment Act of 
1958,'' before ``or investments''.
            (c) Ineligibility for Bankruptcy.--

Section 109

    (b)

    (2) of title 11, 
United States Code, is amended by inserting ``a participating 
investment fund as defined in 

section 399A of the Small Business 
Investment Act of 1958,'' before ``credit union''.
            (d) Eligibility for CRA Credit.--

Section 804 of the Community 
Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by adding at the 
end the following:
 ``

    (e) Investments in Participating Investment Funds.--In assessing 
and taking into account, under subsection

    (a) , the record of a 
financial institution, the appropriate Federal financial supervisory 
agency shall consider, as a factor, investments made in 1 or more 
participating investment funds under part D of title III of the Small 
Business Investment Act of 1958.''.
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