S202-119

1. Short title This Act may be cited as the Helping Small Businesses To Hedge Risk and Insure against Volatile Expenses Act or the Helping Small Businesses THRIVE Act.

2. Definitions In this Act: The term Administrator means the Administrator of the Small Business Administration. The terms Commission, commodity, commodity pool, commodity trading advisor, future delivery, and futures commission merchant have the meanings given those terms in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). The term covered commodity means a commodity that the Administrator, under section 4(b), determines is eligible to be the subject of an agreement entered into under section 4(a). The term eligible entity— means a small business concern; and does not include a small business concern that— is, or is owned or controlled by an entity that is, a financial institution (as defined in section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809)); is, or is owned or controlled by an entity that is, with respect to any financial activity, subject to the jurisdiction of the Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.); is, or is owned or controlled by, an investment adviser (as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a))) that is required to register with the Securities and Exchange Commission under section 203 of that Act (15 U.S.C. 80b–3); is, or is owned or controlled by, a broker (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); has been in operation for less than 1 year, as of the date on which the small business concern submits an application under section 3(b); or the Administrator otherwise determines should be excluded in order— to preserve the integrity of the Program; and to ensure that the focus of the Program remains on small business concerns desiring to participate in the Program to maximize stability with respect to the direct operating costs of those small business concerns. The term Program means the Helping Small Businesses Thrive Program established under section 3(a). The term resource partners means— small business development centers; women’s business centers described in section 29 of the Small Business Act (15 U.S.C. 656); chapters of the Service Corps of Retired Executives established under section 8(b)(1)(B) of the Small Business Act (15 U.S.C. 637(b)(1)(B)); and Veteran Business Outreach Centers described in section 32 of the Small Business Act (15 U.S.C. 657b). The terms small business concern and small business development center have the meanings given those terms in section 3 of the Small Business Act (15 U.S.C. 632).

3. Helping Small Businesses Thrive Program Not later than 1 year after the date of enactment of this Act, the Administrator shall, in consultation with the Commission, the Secretary of the Treasury, and such other Federal officials determined appropriate by the Administrator, establish within the Small Business Administration a pilot program— which shall be known as the Helping Small Businesses Thrive Program; and the purpose of which shall be to assist eligible entities in limiting the risk faced by those eligible entities with respect to rising input costs from commodities. An eligible entity seeking to participate in the Program shall submit an application— at such time, in such manner, and containing such information as the Administrator determines to be necessary; that shall include information necessary to establish that the entity submitting the application is an eligible entity; and that may include additional information to ensure that the Administrator, through the Program, is able to properly assist the eligible entity in determining whether entering into an agreement under section 4(a) would be beneficial for the eligible entity, including a description of expenses incurred by the eligible entity relating to commodities. The Administrator shall develop guidance, which shall be posted on a publicly available website of the Small Business Administration, to assist an eligible entity in determining whether the eligible entity should submit an application to participate in the Program and whether entering into an agreement under section 4(a) would be beneficial for the eligible entity, including information regarding— the purpose of the Program, the products the Program offers, and how those products can reduce exposure to price volatility for eligible entities with respect to covered commodities; determining the cost of covered commodities; the expenses of eligible entities relating to each covered commodity, including when expenses for covered commodities incurred by an eligible entity reach a level such that it might not be beneficial for the eligible entity to participate in the Program; and the percentages of commodity-related expenses for the eligible entity that are most likely beneficial to offset through participation in the Program; and the impact of the type of revenue of an eligible entity, such as a cost-plus or highly variable pricing model for revenue or long-term recurring revenue. In carrying out the Program, the Administrator shall conduct outreach to small business concerns, including small business concerns that are not eligible entities by operation of section 2(4)(B)(v), to share information regarding the Program and the benefits of the Program, including by— providing informational materials to the small business centers of the Small Business Administration, small business stakeholders and trade associations, and resource partners for distribution to small business concerns; conducting webinars or in-person events with small business concerns regarding the Program; and operating a website and telephone line that— offers additional information regarding the Program; and allows a small business concern to ask questions and obtain assistance in determining whether the small business concern would benefit from participating in the Program. In carrying out the Program, the following shall apply: The Administrator may— issue such rules as may be necessary; and in consultation with the Commission, form a commodity pool and apply for registration as a commodity pool operator under the Commodity Exchange Act (7 U.S.C. 1 et seq.). The Administrator may not take delivery of any physical commodity except in extreme and exigent circumstances. The Administrator shall conduct such purchases and sales to close positions with respect to covered commodities as are necessary to ensure that the Administrator remains in compliance with the prohibition under subparagraph (A). There are authorized to be appropriated to the Administrator such sums as may be necessary to establish and operate the Program, which shall remain available until the date that is 5 years after the date of enactment of this Act.

4. Assisting small businesses transacting in commodity futures markets The Administrator, in accordance with the other provisions of this subsection, shall enter into agreements with eligible entities that have been accepted for participation in the Program for the purpose of assisting those eligible entities in transacting in commodity futures markets with respect to any commodity selected by the Administrator under subsection (b). Subject to subparagraphs (C) and (D), an eligible entity may enter into 1 or more agreements under this subsection under which the eligible entity agrees to purchase a covered commodity (or a derivative, the price of which is related to a covered commodity) at a price established by the Administrator for the duration of the agreement. In determining which agreements to offer to an eligible entity under this subsection, the Administrator shall consider— how closely the agreement correlates with the actual costs of the eligible entity and whether an agreement already offered under this subsection provides similar benefits; how to minimize complexity for the eligible entity; how to reduce friction in trading costs with respect to covered commodities; and how to minimize the number and type of market positions of the Program in order to reduce costs and the potential for errors. An agreement under this subsection shall offer to the applicable eligible entity the covered commodity (or derivative, as applicable) that is the subject of the agreement at cost, including any fees and commissions incurred by the Administrator in procuring the covered commodity or derivative. The Administrator, through the Program, may offer to enter into a call option purchase agreement with an eligible entity to protect the eligible entity in any case in which the price of the applicable covered commodity increases by more than 5 percent. Each agreement under this subsection shall clearly state that— the applicable eligible entity shall be responsible for all costs associated with the agreement; and any initial costs shall be paid at the time that the applicable eligible entity enters into the agreement. An agreement entered into under this subsection shall be for a duration of not less than 60 days and not more than 3 years. The Administrator shall ensure that the majority of agreements entered into under this subsection shall be for a duration of not less than 120 days. Subject to paragraph (2), the Administrator shall determine which commodities shall be eligible to be the subject of agreements entered into under subsection (a). In carrying out paragraph (1), the Administrator— shall ensure that gasoline and diesel gasoline are covered commodities; may offer agreements under subsection (a) relating to not more than 3 covered commodities in addition to gasoline and diesel gasoline during the 1-year period beginning on the date on which the Administrator establishes the Program, of which only 1 covered commodity may be intended for specific industry use; may remove a commodity from being eligible to be the subject of an agreement entered into subsection (a) only after providing not less than 90 days notice to participants in the Program; and shall use contracts available through entities regulated by the Commission, such as designated contract markets, to the maximum extent practicable. In determining additional commodities that can be the subject of agreements entered into under subsection (a) (beyond the commodities that are required to be included for that purpose under paragraph (2) of this subsection), or in removing a commodity that is eligible to be the subject of an agreement entered into under subsection (a), the Administrator, in consultation with the Commission, shall— take into consideration— feedback from eligible entities and stakeholders, including survey data that the Administrator may collect, relating to demand from eligible entities for the Administrator to add to the list of covered commodities (beyond the commodities that are required to be classified as covered commodities under paragraph (2) of this subsection), including whether certain commodities may see higher demand from eligible entities in specific industries, even if demand is not as widespread across all industries; demand and transaction volume in particular commodities; available liquidity in new commodity markets; and the capacity of the Program with respect to funding and staff expertise relating to commodities; and give particular consideration to classifying standard utilities, such as electricity and natural gas, as covered commodities. The Administrator— shall conduct or facilitate such transactions in commodity derivatives markets as the Administrator determines to be necessary to fulfill the obligations of the Program under agreements entered into with eligible entities under subsection (a); and may enter into an agreement with a commodity trading advisor or futures commission merchant to carry out paragraph (1). The Administrator shall— use any proceeds earned by the Program in a fiscal year to offset the operating costs of the Program for that fiscal year; and return any proceeds beyond the proceeds required to carry out paragraph (1) to the general fund of the Treasury.

5. Reports Not later than 120 days after the date of enactment of this Act, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report, which shall include— a description of the structure of, and procedures for, the Program, including how covered commodities are selected; a plan for management of the Program; and a description of the merit-based review process to be used in selecting eligible entities to participate in the Program. Not later than 1 year after the date of enactment of this Act, and annually thereafter, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report regarding the Program, which shall include, for the period covered by the report— the number of applications submitted by eligible entities for participation in the Program; the number of agreements entered into under section 4(a); the total notional value of the covered commodities that were the subjects of the agreements described in subparagraph (B), which shall be disaggregated by covered commodity; and the effect of the Program on the eligible entities participating the Program, including feedback from those eligible entities on any costs and benefits of the Program with respect to the business operations of those eligible entities, in particular with respect to expansion and growth plans. Except as provided in subparagraph (B), in collecting information from eligible entities for the purpose of carrying out paragraph (1)(D), the Administrator may not require an eligible entity to report to the Administrator more frequently than upon the termination of an agreement under section 4(a) to which the eligible entity is a party or annually, whichever is less frequent. For the first 2 fiscal years after the fiscal year in which an eligible entity enters into an agreement under section 4(a), the Administrator, for the purpose of carrying out paragraph (1)(D), may not require an eligible entity to report to the Administrator more frequently than upon the termination of an agreement under section 4(a) to which the eligible entity is a party or annually, whichever is more frequent.