PRIA, Government Policy, Made Personal

Summary

Defines the main words used for the rural business program. Articles means the papers a company files to form itself, like articles of incorporation or similar documents the Secretary requires. Developmental capital means equity investments in rural business investment companies to help rural development. Employee welfare benefit plan and pension plan mean the usual federal definitions and include public and private retirement or benefit plans and government-run plans set up for employees. Equity capital means common or preferred stock or similar equity-like investments, including subordinated debt with equity features, but not regular bank-style loans. Leverage covers certain securities the Secretary buys or guarantees, and preferred securities that existed on May 13, 2002. License means a permit the Secretary issues under the program rules. Limited liability company means an LLC formed under a State law the Secretary approves, and member means an owner or admitted participant in that LLC. Operational assistance means management, marketing, or technical help for a rural business. Participation agreement means the contract between the Secretary and an approved rural business investment company that requires investments in smaller rural firms. Private capital means a company’s paid-in or contributed capital plus certain investor commitments (which can count for approval of leverage but cannot be used to fund leverage); it does not include borrowed funds, funds from issuing leverage, or most government funds except for three narrow exceptions: certain funds from federally chartered enterprises before May 13, 2002, funds from employee benefit or pension plans, and qualified nonprivate funds that do not control the company. Qualified nonprivate funds are funds invested on or before May 13, 2002 by a federal agency (other than the Department of Agriculture) when the law required it, or state funds (including guarantees) that do not exceed 33 percent of the company’s private capital. Rural business concern means a public, private, or cooperative business (including tribal businesses) that mainly operates in a rural area as the Secretary decides. Rural business investment company means a company the Secretary has finally approved and that has signed a participation agreement. Smaller enterprise means a rural business that either has a net worth of no more than $6,000,000 and an average after-tax net income for the prior two years of no more than $2,000,000 (with special rules for pass-through entities), or else meets the Small Business Administration’s industry size limits.

Title 7, §2009cc

Agriculture, Source: USLM XML via OLRC

In this subchapter:

(1)Articles

The term “articles” means articles of incorporation for an incorporated body or the functional equivalent or other similar documents specified by the Secretary for other business entities.

(2)Developmental capital

The term “developmental capital” means capital in the form of equity capital investments in rural business investment companies with an objective of fostering economic development in rural areas.

(3)Employee welfare benefit plan; pension plan

(A)In general

The terms “employee welfare benefit plan” and “pension plan” have the meanings given the terms in section 1002 of title 29.

(B)Inclusions

The terms “employee welfare benefit plan” and “pension plan” include—

(i)public and private pension or retirement plans subject to this subchapter; and

(ii)similar plans not covered by this subchapter that have been established, and that are maintained, by the Federal Government or any State (including by a political subdivision, agency, or instrumentality of the Federal Government or a State) for the benefit of employees.

(4)Equity capital

The term “equity capital” means—

(A)common or preferred stock or a similar instrument, including subordinated debt with equity features; and

(B)any other type of equity-like financing that might be necessary to facilitate the purposes of this Act, excluding financing such as senior debt or other types of financing that competes with routine loanmaking of commercial lenders.

(5)Leverage

The term “leverage” includes—

(A)debentures purchased or guaranteed by the Secretary;

(B)participating securities purchased or guaranteed by the Secretary; and

(C)preferred securities outstanding as of May 13, 2002.

(6)License

The term “license” means a license issued by the Secretary as provided in section 2009cc–3(e) of this title.

(7)Limited liability company

The term “limited liability company” means a business entity that is organized and operating in accordance with a State limited liability company law approved by the Secretary.

(8)Member

The term “member” means, with respect to a rural business investment company that is a limited liability company, a holder of an ownership interest or a person otherwise admitted to membership in the limited liability company.

(9)Operational assistance

The term “operational assistance” means management, marketing, and other technical assistance that assists a rural business concern with business development.

(10)Participation agreement

The term “participation agreement” means an agreement, between the Secretary and a rural business investment company granted final approval under section 2009cc–3(e) of this title, that requires the rural business investment company to make investments in smaller enterprises in rural areas.

(11)Private capital

(A)In general

The term “private capital” means the total of— (i)

(ii)unfunded binding commitments from investors that meet criteria established by the Secretary to contribute capital to the rural business investment company, except that—

(I)unfunded commitments may be counted as private capital for purposes of approval by the Secretary of any request for leverage; but

(II)leverage shall not be funded based on the commitments.

(B)Exclusions

The term “private capital” does not include—

(i)any funds borrowed by a rural business investment company from any source;

(ii)any funds obtained through the issuance of leverage; or

(iii)any funds obtained directly or indirectly from the Federal Government or any State (including by a political subdivision, agency, or instrumentality of the Federal Government or a State), except for—

(I)funds obtained from the business revenues (excluding any governmental appropriation) of any federally chartered or government-sponsored enterprise established prior to May 13, 2002;

(II)funds invested by an employee welfare benefit plan or pension plan; and

(III)any qualified nonprivate funds (if the investors of the qualified nonprivate funds do not control, directly or indirectly, the management, board of directors, general partners, or members of the rural business investment company).

(12)Qualified nonprivate funds

The term “qualified nonprivate funds” means any—

(A)funds directly or indirectly invested in any applicant or rural business investment company on or before May 13, 2002, by any Federal agency, other than the Department of Agriculture, under a provision of law explicitly mandating the inclusion of those funds in the definition of the term “private capital”; and

(B)funds invested in any applicant or rural business investment company by 1 or more entities of any State (including by a political subdivision, agency, or instrumentality of the State and including any guarantee extended by those entities) in an aggregate amount that does not exceed 33 percent of the private capital of the applicant or rural business investment company.

(13)Rural business concern

The term “rural business concern” means—

(A)a public, private, or cooperative for-profit or nonprofit organization;

(B)a for-profit or nonprofit business controlled by an Indian tribe on a Federal or State reservation or other federally recognized Indian tribal group; or

(C)any other person or entity;

that primarily operates in a rural area, as determined by the Secretary.

(14)Rural business investment company

The term “rural business investment company” means a company that—

(A)has been granted final approval by the Secretary under section 2009cc–3(e) of this title; and

(B)has entered into a participation agreement with the Secretary.

(15)Smaller enterprise

The term “smaller enterprise” means any rural business concern that, together with its affiliates—

(A)has—

(i)a net financial worth of not more than $6,000,000, as of the date on which assistance is provided under this subchapter to the rural business concern; and

(ii)an average net income for the 2-year period preceding the date on which assistance is provided under this subchapter to the rural business concern, of not more than $2,000,000, after Federal income taxes (excluding any carryover losses), except that, for purposes of this clause, if the rural business concern is not required by law to pay Federal income taxes at the enterprise level, but is required to pass income through to the shareholders, partners, beneficiaries, or other equitable owners of the business concern, the net income of the business concern shall be determined by allowing a deduction in an amount equal to the total of—

(I)if the rural business concern is not required by law to pay State (and local, if any) income taxes at the enterprise level, the net income (determined without regard to this clause), multiplied by the marginal State income tax rate (or by the combined State and local income tax rates, as applicable) that would have applied if the business concern were a corporation; and

(II)the net income (so determined) less any deduction for State (and local) income taxes calculated under subclause (I), multiplied by the marginal Federal income tax rate that would have applied if the rural business concern were a corporation; or

(B)satisfies the standard industrial classification size standards established by the Administrator of the Small Business Administration for the industry in which the rural business concern is primarily engaged.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This Act, referred to in par. (4)(B), means Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 294, known as the Agricultural Act of 1961. For complete classification of this Act to the Code, see

Short Title

note set out under section 1911 of this title and Tables.

Amendments

2018—Par. (2). Pub. L. 115–334, § 6426(a)(1), struck out “venture” after “Developmental” in heading and after “ ‘developmental” in text. Par. (4). Pub. L. 115–334, § 6426(a)(2), added par. (4) and struck out former par. (4). Prior to amendment, text read as follows: “The term ‘equity capital’ means common or preferred stock or a similar instrument, including subordinated debt with equity features.”

§2009cc Definitions