H.R. 8063 — SPARK Act

This section sets forth congressional findings on the effectiveness of incubators and accelerators in increasing participant revenues, employees, and success rates; financing denials for minority-owned startups (more than twice as likely as non-minority-owned); lower employment in minority- and women-owned businesses (half as likely) and potential for 9.5 million additional jobs if minorities started businesses at non-minority rates; declining rural entrepreneurship (from 20% in the 1980s to over 12% in the 2010s) with less than 1% of venture capital to rural areas; and low venture capital shares for women founders (2%) and Black and Hispanic founders (less than 3%).

This section establishes the purposes of the Spark Program under section 49 of the Small Business Act, including (1) spurring economic growth in underserved communities through job creation and capital access; (2) increasing success prospects for small businesses in those communities, which face higher failure rates than the national average; (3) creating pipelines to small business ownership for individuals in underserved and rural markets; (4) closing revenue and employment gaps for underserved small businesses; (5) encouraging collaboration between the Small Business Administration and organizations serving low-income, minority, and rural communities; and (6) expanding incubators and accelerators focused on underserved communities and entrepreneurs.

This section establishes the Spark Program in the Small Business Act, requiring the Small Business Administration (SBA) Administrator to develop and begin implementing, not later than one year after enactment, a program to enter into cooperative agreements with eligible entities—such as accelerators, incubators, nonprofits, community development financial institutions, minority depository institutions, certain SBA lenders, and educational institutions—to conduct five-year projects benefiting startup, newly established, or growing small businesses (including cooperatives and community land trusts). The section authorizes renewal of such agreements for additional three-year periods; requires projects to maximize accessibility (e.g., in rural or distressed areas), include full-time staff led by a director with expenditure authority, and provide jointly developed SBA programs and services; and defines key terms including eligible entities, accelerators, incubators, and federally recognized areas of economic distress.

This section establishes the Spark Financing Program within the Small Business Administration (SBA), under which the SBA Administrator must provide grants or loans to covered entities (i.e., eligible entities under section 49 or certain other lenders) within one year of enactment to enable those entities to make grants or low-interest loans to covered small business concerns (i.e., those owned by underserved groups or located in federally recognized areas of economic distress). Financial assistance is limited to $1 million annually per covered entity with a section 49 cooperative agreement (no annual reapplication required) or $500,000 annually for others (with annual reapplication); applications are evaluated using section 49 criteria and may be submitted with or separately from section 49 applications. Covered entities may use the assistance for (1) grants of up to $20,000 total per covered small business concern for projects meeting the economic development objectives in 15 U.S.C. 695(d) (i.e., job creation or retention; local economic improvement; or public policy goals such as business district revitalization, export expansion, minority- or women-owned business development, rural development, or veteran-owned business development); or (2) loans with below-market interest rates or equity requirements to increase financing access in underserved markets. (Thus, recipients pay no fees to covered entities, and covered entities must verify recipient legitimacy.)

This section directs the Small Business Administration Administrator to promulgate, not later than one year after enactment, regulations to implement sections 49 and 50 of the Small Business Act, as amended by this Act. The regulations must include procedures to (1) verify the proper use of financial assistance provided under those sections, including any grant or loan made under section 50 with such assistance; and (2) establish clawback provisions for fraud related to such assistance.