H. Rpt. 119-403 accompanies technology or telecommunications legislation titled "Ai for Main Street Act". Tech bills address data privacy, cybersecurity, artificial intelligence, broadband access, digital platforms, or communications regulation. The Small Business Committee's report explains the technology policy challenge, the regulatory or legislative response, and potential effects on consumers, tech companies, national security, or innovation. Tech reports often grapple with rapidly evolving technologies and their novel legal questions.
Official report text. Use Ctrl+F / Cmd+F to search within the document.
House Report 119-403 - AI FOR MAIN STREET ACT
[House Report 119-403]
[From the U.S. Government Publishing Office]
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 business development centers to assist small business
concerns with the use of artificial intelligence, and for other
purposes, having considered 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 Expenditure 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
XVIII.Minority Views................................................. 37
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 CONCERNS.
(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 inserting a semicolon;
(3) by redesignating the second subparagraph (U) (relating to
providing training in conjunction with the United States Patent
and Trademark Office) as subparagraph (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 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 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 concerns 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
Representative 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 adopting artificial intelligence (AI) practices.
II. Need for Legislation
As AI becomes increasingly popular to streamline business
operations, many small businesses lack the knowledge or staff
to evaluate and adopt reliable AI practices. This bill directs
U.S. Small Business Administration (SBA) funded SBDCs to help
small businesses evaluate and adopt AI into their business
operations. SBDCs are a public-private partnership charged with
providing entrepreneurs 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 leverage the use of AI. Today, SBDCs at universities and
community colleges are establishing AI clinics led by small
business advisors and university students who offer hands-on
guidance to local entrepreneurs.
The technical assistance provided by SBDCs ensures that
entrepreneurs 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 operations.
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
Representatives 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
Representatives requires the Committee to list the recorded
votes on the motion 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.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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
evaluating 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; protecting data and intellectual property; enhancing
cybersecurity; ensuring regulatory compliance; building
customer trust; and integrating AI into daily business
operations.
This section requires SBDCs to conduct outreach to small
businesses, 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 Representatives, the Committee adopts as its own the cost
estimate prepared by the Director of the Congressional Budget
Office pursuant to section 402 of the Congressional Budget Act
of 1974. At the time this report was filed, the Committee has
requested but not received a cost estimate from the Director of
the Congressional Budget 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 Budget Act of 1974, the Committee provides the
following opinion and estimate with respect to new budget
authority, entitlement authority, 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 pursuant 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 oversight 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
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 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 duplicative 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 Assistance.
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 contain 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 Office 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 Congressional 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, Sec. 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 omitted 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, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, 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-business concern, including but not limited to
enterprises that are engaged in the business of
production of food and fiber, ranching 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
concern 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 volume 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
measured by the manufacturing
concern's average employment
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 the size standard varies from
industry to industry to the extent necessary to reflect
the differing characteristics of the various industries
and consider other factors deemed to be relevant by the
Administrator.
(4) Exclusion of certain security expenses from
consideration for purpose of small business size
standards.--
(A) Determination required.--Not later than
30 days after the date of enactment of this
paragraph, the Administrator shall review the
application of size standards established
pursuant to paragraph (2) to small business
concerns that are performing contracts in
qualified areas and determine whether it would
be fair and appropriate to exclude from
consideration in the average annual gross
receipts of such small business concerns any
payments made to such small business concerns
by Federal agencies to reimburse such small
business concerns for the cost of subcontracts
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 Representatives explaining in
detail the basis for the determination
by the Administrator that such an
adjustment 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 performance 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 company
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 alternative to the use
of industry standards.
(B) Interim rule.--Until the date on which
the alternative 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
(ii) the average net income after
Federal income taxes (excluding any
carry-over losses) of the applicant for
the 2 full fiscal years before the date
of the application is not more than
$5,000,000.
(6) Proposed rulemaking.--In conducting rulemaking to
revise, modify or establish size standards pursuant to
this section, 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 currently considered
small that would be considered small under the
proposed rule making and the number of concerns
currently considered small that would be deemed
other than small under the proposed rulemaking.
(7) Common size standards.--In carrying out this
subsection, the Administrator may establish or approve
a single size standard for a grouping of 4-digit North
American Industry 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 reconsideration with the Office of Hearings
and Appeals (as established 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 reconsideration described in subparagraph
(A) shall file such petition not later than 30
days after the publication in the Federal
Register of the notice of final rule to revise,
modify, or establish size standards described
in paragraph (6).
(C) Process for agency review.--The Office of
Hearings and Appeals shall use the same process
it uses to decide 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 judicial review of any such size
standard.
(E) Rules or guidance.--The Office of
Hearings and Appeals shall begin accepting
petitions for reconsideration described in
subparagraph (A) after the date on which the
Administration issues a rule or other guidance
implementing 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 effective date.
(b) For purposes of this Act, any reference to an agency or
department 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 direct 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 respect 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 Administrator of which enters into an
agreement with the Administrator which is binding on
the trust and no such small business 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 necessary 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 such qualifying
employer securities which are so allocated to
the participant's account.
(3) Under regulations which may be prescribed by the
Administrator, 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 voting rights under
qualifying employer securities which are
allocated to the account of such participant
are to be exercised with respect to a corporate
matter which (by law or charter) must be
decided by a majority vote of the outstanding
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 concern
repurchase such securities under a fair
valuation formula, and
(iv) which meets such other requirements
(similar to requirements applicable to employee
ownership plans as defined 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 Indian 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 private 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 individuals, 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 provision of services during any fiscal year in
which it received financial 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, defect, ailment, disease, or disability of
a permanent nature which in any way limits the
selection of any type of employment 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
measures'' includes--
(1) solar thermal energy equipment which is either of
the active type based upon mechanically forced energy
transfer or of the passive type based on convective,
conductive, or radiant energy transfer or some
combination equipment;
(2) photovoltaic cells and related equipment;
(3) a product or service the primary purpose of which
is conservation of energy through devices or techniques
which increase the energy through devices or techniques
which increase the energy efficiency of existing
equipment, methods of operation, 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 cogeneration 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
professional services which are necessary or
appropriate to aid citizens 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 conditions to the individual loan applicant
from non-Federal, non-State, or non-local government
sources, considering factors associated with
conventional lending practices, including--
(A) the business industry in which the loan
applicant operates;
(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 actual or projected
cash flow of the business; and
(E) any other factor relating to the
particular credit application, as documented in
detail by the lender, that cannot 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 transacts business, or the applicant homeowner
resides, for similar purposes and periods of time.
(i) For purposes of section 7 of this Act, the term
``homeowners'' includes owners and lessees of residential
property and also includes personal property.
(j) For the purposes of this Act, the term ``small
agricultural cooperative'' 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 established 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 include 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 limited to, floods, hurricanes, tornadoes, earthquakes,
fires, explosions, volcanoes, windstorms, landslides or
mudslides, tidal waves, commercial fishery failures or fishery
resource disasters (as determined by the Secretary of Commerce
under the Fishery Resource Disasters Improvement Act), ocean
conditions resulting in the closure of customary fishing
waters, riots, civil disorders or other catastrophes, 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 concern 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
``simplified 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
property 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--
(1) at least 51 percent of small business concern is
owned by one or more women or, in the case of any
publicly owned business, 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
``bundling of contract requirements'' means
consolidating 2 or more procurement requirements for
goods or services previously provided or performed
under separate smaller contracts into a solicitation of
offers for a single contract that is likely to be
unsuitable for award to a small-business concern due
to--
(A) the diversity, size, or specialized
nature of the elements of the performance
specified;
(B) the aggregate dollar value of the
anticipated award;
(C) the geographical dispersion of the
contract performance sites; or
(D) any combination of the factors described
in subparagraphs (A), (B), and (C).
(3) Separate smaller contract.--The term ``separate
smaller contract'', with respect to a bundling of
contract requirements, 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
following definitions apply:
(1) Service-disabled veteran.--The term ``service-
disabled veteran'' means a veteran with a disability
that is service-connected (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
concern 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 veterans; 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
caregiver of such veteran.
(B) A small business concern--
(i) not less than 51 percent of which
is owned by one or more service-
disabled veterans with a disability
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-disabled 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 disability
(as defined in section 101(16)
of title 38, United States
Code); and
(III) immediately prior to
the death of such veteran, 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 remarries;
(II) the date on which the
surviving spouse relinquishes
an ownership interest in the
small business concern; or
(III) the date that--
(aa) in the case of a
surviving spouse of a veteran
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 veteran
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
controlled 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.
(4) Veteran.--The term ``veteran'' has the meaning
given the term in section 101(2) of title 38, United
States Code.
(5) Relief from time limitations.--
(A) In general.--Any time limitation on any
qualification, 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 September 11, 2001;
and
(ii) was subject to the time
limitation during such period of active
duty.
(B) Duration.--Upon submission of proper
documentation to the Administrator, the
extension of a time limitation 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 subparagraph.
(C) Exception for programs subject to federal
credit reform act of 1990.--The provisions of
subparagraphs (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
Companies.--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 regulation 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 regulated 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.
Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5122).
(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
``region 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 Administrative 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 received 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 cooperative 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 cooperative research
and development agreement which in any way
encourages a Federal agency to classify the bid
or proposal, 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
cooperative 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 status 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 for
purposes of bidding on a Federal contract or
subcontract, or applying for a Federal grant,
shall contain the signature of an authorized
official on the same page on which the
certification is contained.
(4) Regulations.--The Administrator shall promulgate
regulations to provide adequate protections to
individuals and business concerns from liability under
this subsection in cases of unintentional errors,
technical malfunctions, and other similar 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 Certifications Application
database of the Administration, or any successor
thereto.
(2) Regulations.--Not later than 1 year after the
date of enactment of this subsection, the
Administrator, in consultation with the Inspector
General and the Chief Counsel for Advocacy 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
requirements for annual certification under
this subsection; and
(B) the requirements of this subsection are
implemented in a manner presenting the least
possible regulatory burden on small business
concerns.
(y) Policy on Prosecutions of Small Business Size and Status
Fraud.--Not later than 1 year after the date of enactment of
this subsection, the Administrator, in consultation with the
Attorney 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
Administrator 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
described 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 section 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 subcontractor to perform a part,
or all, of the work that the contractor has undertaken.
(2) First tier subcontractor.--The term ``first tier
subcontractor'' means a subcontractor who has a
subcontract directly with the prime contractor.
(3) At any tier.--The term ``at any tier'' means any
subcontractor other than a subcontractor who is a first
tier subcontractor.
(ee) Puerto Rico Business.--In this Act, the term ``Puerto
Rico business'' means a small business concern that has its
principal office located in the Commonwealth of Puerto Rico.
(ff) Covered Territory Business.--In this Act, the term
``covered 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 government or any agency thereof, any regional entity,
any State-chartered development, credit or finance corporation,
any women's business 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 business oriented employment or natural
resources development programs; studies, research, and
counseling concerning the managing, financing, and operation of
small business enterprises, management and technical assistance
regarding small business participation 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, providing
assistance 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:
Provided, That after December 31, 1990, the Administration
shall not make a grant to any applicant other than an
institution of higher education 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 agreement) 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
own budget and to primarily utilize institutions of higher
education and women's business centers operating pursuant to
section 29 to 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
services.--
(A) Information and services.--The small
business development centers shall work in
close cooperation with the Administration's
regional and local offices, the Department of
Commerce, appropriate Federal, State and local
agencies (including State trade agencies), and
the small business community to serve as an
active information dissemination 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
export assistance centers.--A small business
development center that counsels a small
business concern on issues relating to
international trade shall--
(i) consult with State trade agencies
and Export Assistance 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
Administration 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 operating pursuant to agreements with the Administration
are members of such an association, the Administration is
authorized and directed to recognize the existence and
activities of such an association and to consult with it and
develop documents (i) announcing the annual scope of activities
pursuant to this section, (ii) requesting 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 including the
development of regulations and a uniform negotiated cooperative
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
administrative 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 by reference and shall not be set forth
in summary or other form in regulations.
(C) Whereas On an annual basis, the Small Business
Development 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 condition 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
subparagraph (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 Program,
less any reductions made for expenses
authorized by clause (v) of this
subparagraph, shall be divided on a pro
rata basis, based on the percentage of
the population of each State, as
compared to the population of the
United States.
(II) If the pro rata amount
calculated under subclause (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 subclause (II) shall be deducted
from the amount calculated under
subclause (I) for States eligible to
receive more than the minimum funding
level. The deductions 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 subclause (III) shall be added to
the grants of those States that are not
eligible to receive more than the
minimum funding level in order to
achieve the minimum funding level for
each such State, except that the
eligible amount of a grant to any State
shall not be reduced 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 based on the amount available for the
fiscal year in which performance of the grant
commences, but not including 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 Government, as required under
subparagraph (A).
(iii) Minimum funding level.--The amount of
the minimum 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 minimum 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 remaining
funds as follows:
(I) If the grant to any State is less
than the amount received by that State
in fiscal year 2000, the Administration
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 necessary 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 occurs.
(II) If any funds remain after the
application of subclause (I), the
remaining amount may be distributed as
supplemental grants to any State, as
the Administration 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 (I) may be used for
examination expenses under section
20(a)(1)(E) if the usage would reduce
the amount of grants made available
under clause (i)(I) of this
subparagraph to less than $85,000,000
(after excluding any amounts provided
in appropriations Acts, or accompanying
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 Administration or another Federal agency
to carry out subsection (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 authorized to be appropriated to carry out
this subparagraph--
(I) $130,000,000 for fiscal year
2005; and
(II) $135,000,000 for fiscal year
2006.
(viii) Limitation.--From the funds
appropriated pursuant 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 expenses 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 subparagraph (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 subject 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 business 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
under this paragraph shall not be subject to the
matching funds or eligibility requirements of paragraph
(4).
(D) Additional provision.--Notwithstanding any other
provision 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 economically disadvantaged
business contracting goal under section 15(g).
(6) Any applicant which is funded by the
Administration as a Small Business Development Center
may apply for an additional 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 minority-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 matching 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 recipient of funds under this paragraph
shall receive a grant which would exceed its pro rata
share of a $15,000,000 program based upon the
populations to be served by the Small Business
Development Center as compared to the total population
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 contractor 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 assistance under this section without
the consent of such individual or small
business concern, unless--
(i) the Administrator is ordered to
make such a disclosure 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 information
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 information to conduct
client surveys.
(C) Regulations.--
(i) In general.--The Administrator
shall issue regulations to establish
standards--
(I) for disclosures with
respect to financial audits
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 information.
(ii) Maximum privacy protection.--
Regulations under this subparagraph,
shall, to the extent practicable,
provide for the maximum amount of
privacy protection.
(iii) Inspector general.--Until the
effective date of regulations under
this subparagraph, any client survey
and the use of such information shall
be approved by the Inspector General
who shall include such approval in his
semi-annual report.
(8) Cybersecurity assistance.--
(A) In general.--The Department of Homeland
Security, and any other Federal department or
agency in coordination with the Department of
Homeland Security, may leverage small business
development centers to provide assistance to
small business concerns by disseminating
information relating to cybersecurity risks and
other homeland security matters to help small
business concerns in developing or enhancing
cybersecurity infrastructure, awareness of
cyber threat indicators, and cyber training
programs for employees.
(B) Definitions.--In this paragraph, the
terms ``cybersecurity risk'' and ``cyber threat
indicator'' have the meanings 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 applicant 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 approved 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
submitting to the Administration for approval a plan naming
those authorized in subsection (a) to participate in the
program, the geographic 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
submitted 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.
(3) Assistance to out-of-state small business
concerns.--
(A) In general.--At the discretion of the
Administration, 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 proximity to the small business
development center, as determined by the
Administration.
(B) Disaster recovery assistance.--
(i) In general.--At the discretion of
the Administrator, the Administrator
may authorize a small business
development center to provide advice,
information, 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 assistance 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 disaster for the area in
which the small business
concern 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 development 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 otherwise 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
Administrator for use to provide
disaster recovery assistance.
(c)(1) Applicants receiving grants under this section shall
assist small businesses in solving problems concerning
operations, manufacturing, engineering, technology exchange and
development, personnel administration, marketing, sales,
merchandising, finance, accounting, business strategy
development, and other disciplines required for small business
growth and expansion, innovation, increased productivity, and
management improvement, and for decreasing industry economic
concentrations. Applicants receiving grants under this section
may also assist small businesses by providing, where
appropriate, education on the requirements applicable to small
businesses under the regulations issued under section 38 of the
Arms Export Control Act (22 U.S.C. 2778) and on compliance with
those requirements.
(2) A small business development center shall provide
services as close as possible to small businesses by providing
extension services and utilizing satellite locations when
necessary. The facilities and staff of each Small Business
Development Center shall be located in such places as to
provide maximum accessibility and benefits 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 information searches and referrals to small
business;
(E) access to part-time professional specialists to
conduct research 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 businesses, 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 proposals;
(iii) working with the Administration to
develop and provide informational tools for use
in working with individuals 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
development, 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 systems;
(ii) working through existing networks and
developing new networks for technology transfer
that encourage partnership between the small
business and academic communities to help
commercialize university-based research and
development and introduce university-based
engineers and scientists to their counterparts
in small technology-based firms; and
(iii) exploring the viability of developing
shared production facilities, under appropriate
circumstances;
(C) in cooperation with the Department of Commerce
and other relevant Federal agencies, actively assisting
small businesses in exporting by identifying and
developing potential export markets, facilitating
export transactions, developing linkages between United
States small business firms and prescreened foreign
buyers, assisting small businesses to participate in
international trade shows, assisting small businesses
in obtaining export financing, and facilitating the
development or reorientation of marketing and
production strategies; where appropriate, the Small
Business Development Center 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-Import 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 attempting 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 termination (or reduction) of a Department of
Defense program or a contract in support of such
program--
(i) by developing broad economic assessments
of the adverse impacts of--
(I) the closure (or reduction) of the
Department of Defense facility on the
small business concerns providing goods
or services to such facility or to the
military 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 supplier at any tier;
(ii) by developing, in conjunction with
appropriate Federal, State, and local
governmental entities and other private 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 anticipated 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 environmental,
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
communications 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
community;
(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 businesses, facilitating export
transactions for rural small businesses, 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
(iv) by providing information and assistance
in obtaining financing for business startups
and expansion;
(O) in conjunction with the United States Travel and
Tourism 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 developing 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
regarding compliance with regulatory requirements;
(R) developing informational publications,
establishing resource centers of reference materials,
and distributing compliance guides published under
section 312(a) of the Small Business 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 centers 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 programs on or before October 1, 2006;
[and]
(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 subparagraph as
``employee-owned business concerns''), including by--
(i) providing training to individuals to
promote the successful management, governance,
or operation of a business 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 Administration that may be
used to support the transition of ownership 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 centers of the Department of
Agriculture, the land grant extension network,
the Manufacturing Extension Partnership,
community development financial institutions,
employee ownership associations and service
providers, and local, regional and national
cooperative associations[.];
[(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 website[.]; 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 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 concerns regarding
the use of artificial intelligence.
(4) A small business development center shall continue to
upgrade 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 Development Center pursuant to paragraph (6) of such
subsection within 60 days after the effective date of any grant
under subsection (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 paragraph (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 subsection (a).
(7) In performing the services identified in
paragraph (3), the Small Business Development Centers
shall work in close cooperation with the
Administration's regional and local offices, the local
small business community, and appropriate State and
local agencies.
(8) The Associate Administrator for Small Business
Development Centers, in consultation with the Small
Business Development Centers, shall develop and
implement an information sharing system. Subject to
amounts approved in advance in appropriations 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
participating 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
enhancing 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 Development Center, using joint State and
Federal funding, and any other appropriate measures directed at
improving the export performance 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
Regional Technology Transfer Centers.--The National Aeronautics
and Space Administration and regional technology transfer
centers supported by the National Aeronautics and Space
Administration are authorized and directed to cooperate with
small business development centers participating in the
program.
(h) Associate Administrator for Small Business Development
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, governing
appointments in the competitive service, and without
regard to chapter 51, and subchapter III of chapter 53
of such title relating to classification and General
Schedule pay rates, 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 center program.
Duties of the position shall include
recommending the annual program budget,
reviewing the annual budgets submitted by each
applicant, establishing appropriate funding
levels therefore, selecting applicants to
participate 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 recipients of grants under this
section.
(B) Consultation requirements.--In carrying
out the duties described in this subsection,
the Associate Administrator 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
Development 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 qualifications 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 businesses 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
Development 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 entitled 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 engaged in activities of the Board and
shall be entitled to be reimbursed 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 of the small business development center on all policy
matters pertaining to the operation of the small business
development center, 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 examination of each small
business development center established pursuant to
this section.
(2) Accreditation.--The Administration may provide
financial support, by contract or otherwise, to the
association authorized 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 Administration shall
consider the results of the examination and
accreditation program conducted pursuant to
paragraphs (1) and (2).
(B) Accreditation requirement.--After
September 30, 2000, the Administration may not
renew or extend any cooperative agreement with
a small business development center unless the
center has been approved under the
accreditation program conducted pursuant to
this subsection, except that the Associate
Administrator for Small Business Development
Centers may waive such accreditation
requirement, in the discretion of the Associate
Administrator, 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 affording
the applicant an opportunity for a hearing, appeal, or other
administrative 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 renewed or extended, any award of a
successor contract or cooperative agreement under this section
to another entity shall be made on a competitive basis.
(m) Prohibition on Certain Fees.--A small business
development center shall not impose or otherwise collect a fee
or other compensation in connection with the provision of
counseling services 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
with a grant under this subsection, a small business
development center shall--
(A) create a marketing campaign to promote
awareness and education of the services of the
center that are available to veterans, and to
target the campaign toward veterans, service-
disabled veterans, military units, Federal
agencies, and veterans organizations;
(B) use technology-assisted online counseling
and distance learning technology to overcome
the impediments to entrepreneurship faced by
veterans and members of the Armed Forces; and
(C) increase coordination among organizations
that assist 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 Development
Centers.--
(1) Definitions.--In this subsection--
(A) the term ``cyber strategy'' means
resources and tactics 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
establish a cyber counseling certification program, or
designate 1 or more substantially similar governmental
or private cybersecurity certification programs, to
certify the employees of lead small business
development centers in providing cyber planning
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 Administrator, 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 appropriations, the Administrator may
reimburse each lead small business development
center for costs relating to the certification
of 1 or more employees of the lead small
business 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.
* * * * * * *
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 revolutionize 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 competitive edge. In
particular, generative AI (GenAI) tools for content creation,
the most visible AI tools today, have exploded in popularity
and attention.\1\
---------------------------------------------------------------------------
\1\H. Comm. on Small Bus. Democratic Staff, Bots Over Brushes: The
Looming Competition Between Generative AI and Small Content Creators
(Mar. 19, 2024).
---------------------------------------------------------------------------
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 during the next six months.\2\ This can be
attributed to a lack of awareness 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 literacy
courses are held, offerings vary in quality, scope,
affordability, and accessibility. Concerns have also been
raised that uneven 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 corporations an advantage over
small businesses because they have the technical expertise and
resources to adopt it quickly.
---------------------------------------------------------------------------
\2\U.S. Census Bureau, Business Trends and Outlook Survey (Oct. 24,
2024), https://www.census.gov/hfp/btos/data.
---------------------------------------------------------------------------
AI has the potential to benefit small businesses by
enhancing productivity and operations. That said, it is crucial
for small businesses 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 capable of bias and
discrimination against marginalized communities.\4\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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 Chevrolet dealership in Watsonville, CA
deployed an automated customer service chatbot agent powered by
ChatGPT, a GenAI tool to answer questions about products. Users
quickly began manipulating 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 thorough and critical review of the
underlying AI technology involved and any relevant flaws,
liabilities, or drawbacks.
---------------------------------------------------------------------------
\5\Katie Notopoulos, A car dealership added an AI chatbot to its
site. Then all hell broke loose., Bus. Insider (Dec. 18, 2023), https:/
/www.businessinsider.com/car-dealership-chevrolet-chatbot-chatgpt-
pranks-chevy-2023-12.
---------------------------------------------------------------------------
The negative outcomes caused or amplified by AI, whether
deliberate 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. Velazquez,
Ranking Member.
[all]