§5702 — Title 12 Banks and Banking | U.S. Code

Summary

The Secretary must run a State Small Business Credit Initiative and give federal money to participating States. Within 30 days after March 11, 2021, the Secretary must tell each State how much it can get based on the State’s 2021 allocation. For most States, that allocation is based on how much employment fell from December 2019 to December 2020 compared to all States, but no State can get less than 0.9% of the funds. Tribal governments share $500,000,000, split by the Secretary using available data; Tribes that want to join may have to notify the Secretary within 30 days after March 11, 2021, and Tribal allocations can be made within 60 days. If Bureau of Labor Statistics data is missing, the Secretary may use other economic or job data. Each State’s money is divided into three parts. The first third is paid when the State is approved to join. Later thirds are paid only after the State certifies it spent, transferred, or obligated 80% of the previous third on approved loan or investment programs. The Secretary can hold back money during audits. The Treasury Inspector General will audit States, and the Secretary must take back funds if audits show intentional or reckless misuse. States that intentionally lie in reports lose any more money and past allocated funds go to the Treasury general fund. Funds can be used for approved State programs, as collateral for qualifying loan or swap facilities, and for limited admin costs (up to 5% of the first third and up to 3% of later thirds). If a State does not get its second third within 3 years or its last third within 6 years after approval, those unpaid amounts can be taken away and returned or reallocated. From fiscal year 2021 money, $1,500,000,000 is set aside for businesses owned by socially and economically disadvantaged people, $1,000,000,000 is for incentives to States that strongly support those businesses, and at least $500,000,000 must go to very small businesses. Definitions (brief): “2020 State employment decline” = drop in people employed from Dec 2019 to Dec 2020; “allocated amount” = the total Federal funds given to a participating State; “⅓” = first and second are 33% each and the last is 34% of a State’s allocation; “very small business” = a business with fewer than 10 employees, and may include independent contractors and sole proprietors.

Title 12, §5702

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(a)There is established the State Small Business Credit Initiative, to be administered by the Secretary. Under the Program, the Secretary shall allocate Federal funds to participating States and make the allocated funds available to the participating States as provided in this section for the uses described in this section.

(b)(1)Not later than 30 days after March 11, 2021, the Secretary shall allocate Federal funds to participating States so that each State is eligible to receive an amount equal to what the State would receive under the 2021 allocation, as determined under paragraph (2).

(2)(A)With respect to States other than Tribal governments, the Secretary shall determine the 2021 allocation by allocating Federal funds among the States in the proportion that each such State’s 2020 State employment decline bears to the aggregate of the 2020 State employment declines for all States.

(B)The Secretary shall adjust the allocations under subparagraph (A) for each State to the extent necessary to ensure that no State receives less than 0.9 percent of the Federal funds.

(C)In this paragraph and with respect to a State, the term “2020 State employment decline” means the excess (if any) of—

(i)the number of individuals employed in such State determined for December 2019; over

(ii)the number of individuals employed in such State determined for December 2020.

(C)(i)With respect to States that are Tribal governments, the Secretary shall determine the 2021 allocation by allocating $500,000,000 among the Tribal governments in the proportion the Secretary determines appropriate, including with consideration to available employment and economic data regarding each such Tribal government.

(ii)With respect to allocations to States that are Tribal governments, the Secretary may—

(I)require Tribal governments that individually or jointly wish to participate in the Program to file a notice of intent with the Secretary not later than 30 days after March 11, 2021; and

(II)notwithstanding paragraph (1), allocate Federal funds to participating Tribal governments not later than 60 days after March 11, 2021.

(D)If the Secretary determines that employment data with respect to a State is unavailable from the Bureau of Labor Statistics of the Department of Labor, the Secretary shall consider such other economic and employment data that is otherwise available for purposes of determining the employment data of such State.

(c)The amount allocated by the Secretary to each participating State under subsection (b) shall be made available to the State as follows:

(1)(A)The Secretary shall—

(i)apportion the participating State’s allocated amount into thirds;

(ii)transfer to the participating State the first ⅓ when the Secretary approves the State for participation under section 5703 of this title; and

(iii)transfer to the participating State each successive ⅓ when the State has certified to the Secretary that it has expended, transferred, or obligated 80 percent of the last transferred ⅓ for Federal contributions to, or for the account of, State programs that have delivered loans or investments to eligible businesses.

(B)The Secretary may withhold the transfer of any successive ⅓ pending results of a financial audit.

(C)(i)The Inspector General of the Department of the Treasury shall carry out an audit of the participating State’s use of allocated Federal funds transferred to the State.

(ii)The allocation agreement between the Secretary and the participating State shall provide that the Secretary shall recoup any allocated Federal funds transferred to the participating State if the results of the an audit include a finding that there was an intentional or reckless misuse of transferred funds by the State.

(iii)Any participating State that is found to have intentionally misstated any report issued to the Secretary under the Program shall be ineligible to receive any additional funds under the Program. Funds that had been allocated or that would otherwise have been allocated to such participating State shall be paid into the general fund of the Treasury for reduction of the public debt.

(iv)In this subparagraph, the term “participating State” shall include a municipality given special permission to participate in the Program, under section 5703(d) of this title.

(D)The Secretary may, in the Secretary’s discretion, transfer the full amount of the participating State’s allocated amount to the State in a single transfer if the participating State applies to the Secretary for approval to use the full amount of the allocation as collateral for a qualifying loan or swap funding facility.

(2)Each amount transferred to a participating State under this section shall remain available to the State until used by the State as permitted under paragraph (3).

(3)Each participating State may use funds transferred to it under this section only—

(A)for making Federal contributions to, or for the account of, an approved State program;

(B)as collateral for a qualifying loan or swap funding facility;

(C)in the case of the first ⅓ transferred, for paying administrative costs incurred by the State in implementing an approved State program in an amount not to exceed 5 percent of that first ⅓; or

(D)in the case of each successive ⅓ transferred, for paying administrative costs incurred by the State in implementing an approved State program in an amount not to exceed 3 percent of that successive ⅓.

(4)(A)Any portion of a participating State’s allocated amount that has not been transferred to the State under this section may be deemed by the Secretary to be no longer allocated to the State and no longer available to the State and shall be returned to the general fund of the Treasury or reallocated as described under subparagraph (B), if—

(i)the second ⅓ of a State’s allocated amount has not been transferred to the State before the end of the end of the 3-year period beginning on the date that the Secretary approves the State for participation; or

(ii)the last ⅓ of a State’s allocated amount has not been transferred to the State before the end of the end of the 6-year period beginning on the date that the Secretary approves the State for participation.

(B)Any amount deemed by the Secretary to be no longer allocated to a State and no longer available to such State under subparagraph (A) may be reallocated by the Secretary to other participating States. In making such a reallocation, the Secretary shall not take into account the minimum allocation requirements under subsection (b)(2)(B) or the specific allocation for Tribal governments described under subsection (b)(2)(C).

(5)The amounts transferred to a participating State under this section shall not be considered assistance for purposes of subtitle V of title 31.

(6)In this section—

(A)the term “allocated amount” means the total amount of Federal funds allocated by the Secretary under subsection (b) to the participating State; and

(B)the term “⅓” means—

(i)in the case of the first ⅓ and second ⅓, an amount equal to 33 percent of a participating State’s allocated amount; and

(ii)in the case of the last ⅓, an amount equal to 34 percent of a participating State’s allocated amount.

(d)Of the amounts appropriated for fiscal year 2021 to carry out the Program, the Secretary shall—

(1)allocate $1,500,000,000 to States from funds allocated under this section and, by regulation or other guidance, prescribe Program requirements that the funds be expended for business enterprises owned and controlled by socially and economically disadvantaged individuals; and

(2)allocate such amounts to States based on the needs of business enterprises owned and controlled by socially and economically disadvantaged individuals, as determined by the Secretary, in each State, and not subject to the allocation formula described under subsection (b).

(e)Of the amounts appropriated for fiscal year 2021 to carry out the Program, the Secretary shall set aside $1,000,000,000 for an incentive program under which the Secretary shall increase the second ⅓ and last ⅓ allocations for States that demonstrate robust support, as determined by the Secretary, for business concerns owned and controlled by socially and economically disadvantaged individuals in the deployment of prior allocation amounts.

(f)(1)Of the amounts appropriated to carry out the Program, the Secretary shall allocate not less than $500,000,000 to States from funds allocated under this section to be expended for very small businesses.

(2)In this subsection, the term “very small business”—

(A)means a business with fewer than 10 employees; and

(B)may include independent contractors and sole proprietors.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2021—Subsec. (b)(1). Pub. L. 117–2, § 3301(a)(1)(A)(i)(I), amended par. (1) generally. Prior to amendment, par. (1) required allocation of funds by 30 days after Sept. 27, 2010. Subsec. (b)(2). Pub. L. 117–2, § 3301(a)(1)(A)(ii)(II)(bb), substituted “2020” for “2008” wherever appearing. Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(aa), substituted “2021” for “2009” in heading and in subpar. (A). Subsec. (b)(2)(A). Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(cc), substituted “With respect to States other than Tribal governments, the Secretary” for “The Secretary”. Subsec. (b)(2)(C). Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(ee), added subpar. (C) relating to separate allocation for tribal governments. Subsec. (b)(2)(C)(i). Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(dd), substituted “2019” for “2007” in cl. (i) of subpar. (C) defining 2020 State employment decline. Subsec. (b)(2)(D). Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(ee), added subpar. (D). Subsec. (b)(3). Pub. L. 117–2, § 3301(a)(1)(A)(i)(III), struck out par. (3) which provided for the 2010 allocation formula. Subsec. (c)(1)(A)(iii). Pub. L. 117–2, § 3301(a)(1)(A)(ii)(I), inserted before period at end “that have delivered loans or investments to eligible businesses”. Subsec. (c)(4). Pub. L. 117–2, § 3301(a)(1)(A)(ii)(II), amended par. (4) generally. Prior to amendment, text read as follows: “Any portion of a participating State’s allocated amount that has not been transferred to the State under this section by the end of the 2-year period beginning on the date that the Secretary approves the State for participation may be deemed by the Secretary to be no longer allocated to the State and no longer available to the State and shall be returned to the General Fund of the Treasury.” Subsecs. (d), (e). Pub. L. 117–2, § 3301(b), added subsecs. (d) and (e). Subsec. (f). Pub. L. 117–2, § 3301(c), added subsec. (f).

Statutory Notes and Related Subsidiaries

Effective Date

of 2021 AmendmentAmendment by Pub. L. 117–2 applicable with respect to funds appropriated under section 3301 of Pub. L. 117–2 and funds appropriated on and after Mar. 11, 2021, see section 3301(g) of Pub. L. 117–2, set out as a note under section 5701 of this title.

§5702 Federal funds allocated to States