SenateS. 5633119th Congress
STEP Improvement Act of 2026
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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5633 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 5633
To amend the Small Business Act to reauthorize the State Trade
Expansion Program of the Small Business Administration, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 30, 2026
Mrs. Shaheen introduced the following bill; which was read twice and
referred to the Committee on Small Business and Entrepreneurship
_______________________________________________________________________
A BILL
To amend the Small Business Act to reauthorize the State Trade
Expansion Program of the Small Business Administration, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``STEP Improvement Act of 2026''.
SEC. 2. STATE TRADE EXPANSION PROGRAM.
(a) Application Requirements.--Section 22(l)(3) of the Small
Business Act (15 U.S.C. 649(l)(3)) is amended--
(1) in subparagraph (D)--
(A) in clause (i), by inserting ``, including a
budget plan for use of funds awarded under this
subsection'' before the period at the end; and
(B) by adding at the end the following:
``(iii) Timing.--The Associate
Administrator shall--
``(I) publish information on how to
apply for a grant under this
subsection, including specific
calculations and other determinations
used to award such a grant, not later
than March 31 of each year;
``(II) establish a deadline for the
submission of applications that is--
``(aa) not earlier than 60
days after the date on which
the information is published
under subclause (I); and
``(bb) not later than--
``(AA) May 31 of
each year; or
``(BB) in the event
that full-year
appropriations for the
program for a fiscal
year have not been
enacted as of February
1 of such fiscal year,
120 days after full-
year appropriations are
enacted; and
``(III) announce grant recipients
not later than--
``(aa) September 30 of each
year; or
``(bb) in the event that
full-year appropriations for
the program for a fiscal year
have not been enacted as of
February 1 of such fiscal year,
210 days after full-year
appropriations are enacted.
``(iv) Application streamlining.--The
Associate Administrator shall establish a
concise application for grants under the
program that shall--
``(I) encompass all necessary
information; and
``(II) to the extent feasible, use
forms common to other Federal trade
programs and reduce unnecessary or
duplicative materials.''; and
(2) by adding at the end the following:
``(E) Application information.--The Associate
Administrator shall clearly communicate to applicants
and grant recipients any information about the State
Trade Expansion Program, including--
``(i) for each unsuccessful applicant for a
grant awarded under this subsection,
recommendations to improve a subsequent
application for such a grant;
``(ii) for each successful applicant for
such a grant, an explanation for the amount
awarded, if significantly different from the
amount requested in the application; and
``(iii) a website, which shall be
maintained and linked to from the primary
website for the program, that includes the most
up-to-date information about program
requirements, eligible expenditures, and
procedures, including any changes to such
information due to decisions by staff or
program managers of the Administration.
``(F) Budget plan revisions.--
``(i) In general.--A State receiving a
grant under this subsection may revise the
budget plan of the State submitted under
subparagraph (D) after the disbursal of grant
funds if--
``(I) the revision complies with
allowable uses of grant funds under
this subsection; and
``(II) such State submits
notification of the revision to the
Associate Administrator.
``(ii) Exception.--If a revision under
clause (i) reallocates 10 percent or more of
the amounts described in the budget plan of the
State submitted under subparagraph (D), the
State may not implement the revised budget plan
without the approval of the Associate
Administrator, unless the Associate
Administrator fails to approve or deny the
revised plan within 30 calendar days after
receipt of such revised plan.''.
(b) Cap on Reductions in Grants.--Section 22(l) of the Small
Business Act (15 U.S.C. 649(l)) is amended by striking paragraph (4)
and inserting the following:
``(4) Limitations.--
``(A) Definitions.--In this paragraph--
``(i) the term `current fiscal year' means
the fiscal year for which the Administrator is
determining the amount of a grant to be awarded
to a State, territory, or commonwealth under
the program; and
``(ii) the term `prior fiscal year' means
the most recent fiscal year before the current
fiscal year for which a State, territory, or
commonwealth received a grant under the
program.
``(B) General limitation on reductions in grants.--
Subject to subparagraphs (C) and (D), the Administrator
may not award a grant to a State, territory, or
commonwealth under the program for the current fiscal
year in an amount that is less than 80 percent of the
amount received by the State, territory, or
commonwealth under a grant under the program for the
prior fiscal year.
``(C) Potential additional adjustments.--
``(i) Exception for reduction in
appropriations.--Subject to subparagraph (D),
if the total amount appropriated for the
program for the current fiscal year is less
than the amount appropriated for the program
for the prior fiscal year, for purposes of
applying subparagraph (B), the Administrator
shall substitute for `the amount received by
the State, territory, or commonwealth under a
grant under the program for the prior fiscal
year' the product obtained by multiplying--
``(I) subject to clause (ii) of
this subparagraph, the amount received
by the State, territory, or
commonwealth under a grant under the
program for the prior fiscal year; by
``(II) the ratio of the
appropriation for the current fiscal
year to the appropriation for the prior
fiscal year.
``(ii) Exception for grantees that use less
than 80 percent of the amount of a grant.--
Subject to subparagraph (D), if a State,
territory, or commonwealth expends less than 80
percent of the amount of a grant under the
program for the prior fiscal year before the
end of the period of the grant for the prior
fiscal year established under paragraph
(3)(C)(iii)(I), for purposes of applying
subparagraph (B) of this paragraph, if
appropriations are not reduced, or applying
clause (i) of this subparagraph, if
appropriations are reduced, the Administrator
shall substitute for `the amount received by
the State, territory, or commonwealth under a
grant under the program for the prior fiscal
year' the difference obtained by subtracting--
``(I) the amount equal to 50
percent of the amount remaining
available under the grant under the
program to the State, territory, or
commonwealth for the prior fiscal year,
as of the last day of such period; from
``(II) the amount of the grant
under the program to the State,
territory, or commonwealth for the
prior fiscal year.
``(iii) Exception for increase in grantees
resulting in insufficient funding.--If the
number of States, territories, or commonwealths
participating in the program has increased from
the prior fiscal year to such an extent that
funding is not sufficient to provide each
grantee the minimum amount required under this
paragraph (including any reductions under
clause (i) or (ii) of this subparagraph, if
applicable) the Administrator may make pro rata
reductions to the minimum grant amount
otherwise required under this paragraph on a
one-time basis to ensure that all qualified
applicants may receive grants.
``(D) Violations.--The amount of a grant to a
State, territory, or commonwealth may be less than the
minimum amount determined under subparagraph (B)
(including any substitution of amounts under clauses
(i) and (ii) of subparagraph (C), as applicable), if
the State, territory, or commonwealth has been found to
have committed a significant violation of the rules or
policies of the program.''.
(c) Survey.--Section 22(l) of the Small Business Act (15 U.S.C.
649(l)) is amended--
(1) by redesignating (7) through (9) as paragraphs (9)
through (11), respectively;
(2) by redesignating paragraphs (5) and (6) as paragraphs
(6) and (7), respectively; and
(3) by inserting after paragraph (7) the following:
``(8) Survey.--The Associate Administrator shall conduct an
annual survey of each State that received a grant under this
subsection during the preceding year to solicit feedback on the
program and develop best practices for grantees.''.
(d) Funding Formula.--Section 22(l) of the Small Business Act (15
U.S.C. 649(l)) is amended by inserting after paragraph (4), as amended
by subsection (b) of this section, the following:
``(5) Funding formula.--
``(A) Minimum allocation.--Subject to paragraph
(4), and except as provided otherwise in this
paragraph, the minimum amount of a grant under the
program for a fiscal year--
``(i) for a territory or commonwealth,
shall be the amount equal to 0.5 percent of the
total amount appropriated for the program for
the fiscal year; and
``(ii) for a State, shall be the amount
equal to 0.75 percent of the total amount
appropriated for the program for the fiscal
year.
``(B) Additional funds.--
``(i) In general.--Subject to clause (ii),
amounts remaining for grants under the program
for a fiscal year after the minimum allocation
under subparagraph (A) shall be allocated among
States receiving a grant under the program in
accordance with the following metrics:
``(I) 20 percent of amounts
remaining shall be proportionally
allocated based on the ratio, for the
most recently completed grant cycle for
which complete reporting data is
available, of the dollar value of
export sales reported by a State that
were initiated as a result of program
activities undertaken by eligible small
business concerns that are located in
the State to the amount of the grant
received by the State.
``(II) 20 percent of amounts
remaining shall be proportionally
allocated based on the ratio, for the
most recently completed grant cycle for
which complete reporting data is
available, of the total number of
activities described in paragraph (2)
undertaken by eligible small business
concerns participating in the program
that are located in the State to the
amount of the grant received by the
State.
``(III) 15 percent of amounts
remaining shall be proportionally
allocated based on the ratio, for the
most recently completed grant cycle for
which complete reporting data is
available, of the number of eligible
small business concerns participating
in the program for the first time that
are located in the State to the amount
of the grant received by the State.
``(IV) 15 percent of amounts
remaining shall be proportionally
allocated based on the ratio, for the
most recently completed grant cycle for
which complete reporting data is
available, of the number of eligible
small business concerns participating
in the program that are located in the
State and that engaged in trade outside
the United States for the first time to
the amount of the grant received by the
State.
``(V) 15 percent of amounts
remaining shall be proportionally
allocated based on the ratio, for the
most recently completed grant cycle for
which complete reporting data is
available, of the total number of new
markets reached by eligible small
business concerns participating in the
program that are located in the State
to the amount of the grant received by
the State.
``(VI) 15 percent of amounts
remaining shall be proportionally
allocated based on the ratio, for the
most recently completed grant cycle, of
the total number of eligible small
business concerns participating in the
program that are located in the State
to the number of eligible small
business concerns participating in the
program that are located in the State
and that meet 1 or more of the
following criteria:
``(aa) Located in a low-
income or moderate-income area.
``(bb) Located in a rural
area.
``(cc) Located in an
HUBZone, as that term is
defined in section 31(b).
``(dd) Located in a
community that has been
designated as an empowerment
zone or enterprise community
under section 1391 of the
Internal Revenue Code of 1986.
``(ee) Located in a
community that has been
designated as a promise zone by
the Secretary of Housing and
Urban Development.
``(ff) Located in a
community that has been
designated as a qualified
opportunity zone under section
1400Z-1 of the Internal Revenue
Code of 1986.
``(gg) Being owned by
women.
``(ii) Limitation.--In allocating funds
under each of subclauses (I) through (VI) of
clause (i), the amount of funds allocated under
such subclause to the State with the highest
ratio for a metric may not be more than 10
times the amount of funds allocated under such
subclause to the State with the lowest ratio
that is greater than zero for that metric.
``(C) Limit on reduction below grant before
enactment.--In addition to the limitations under
paragraph (4), and except to the extent a State elects
to return funds under subparagraph (E), the amount of a
grant to the State under the program for any fiscal
year may not be less than the amount of the grant to
the State under the program for the most recent full
fiscal year before the date of enactment of the State
Trade Expansion Program Modernization Act of 2024 for
which the State received such a grant.
``(D) Matching requirement for formula funds.--The
Associate Administrator shall provide to each State
receiving a grant under the program an award in the
amount calculated in accordance with the funding
formula under subparagraphs (A), (B), and (C) if the
State has committed to provide the necessary cash,
indirect costs, and in-kind contributions for the non-
Federal share of the cost of the trade expansion
program of the State, as required under paragraph (7).
``(E) Return of grants.--Not later than 15 days
after the date on which the Associate Administrator
notifies a State of the amount to be awarded to the
State under a grant under the program for a fiscal
year, the State may decline or return to the Associate
Administrator, in whole or in part, such amounts.
``(F) Distribution of returned and remaining
amounts.--
``(i) Remaining amounts.--In this
subparagraph, the term `remaining amounts'
means--
``(I) amounts declined or returned
under subparagraph (E) for a fiscal
year; or
``(II) amounts remaining for grants
under the program for a fiscal year
after allocating funds in accordance
with subparagraphs (A), (B), and (C)
due to reductions in the amount of
grants because of the amount committed
by States for the non-Federal share of
the cost of the trade expansion program
of the States.
``(ii) Distribution.--The Associate
Administrator shall distribute any remaining
amounts for a fiscal year among the States
receiving a grant under the program that
requested to receive such remaining amounts, in
an amount that is proportional to the
allocations under subparagraphs (A), (B), and
(C).
``(G) Limitation on basis for reducing amounts.--
The Associate Administrator may not reduce the amount
determined to be allocated or distributed to a State
under any subparagraph of this paragraph based on the
proposed use of such amount by the State, except to the
extent that such use is not an eligible use of funds
for a grant under the program.
``(H) Rounding.--The total amount of a grant to a
State, territory, or commonwealth under the program, as
determined under this paragraph, shall be rounded to
the nearest increment of $1,000.
``(I) Application.--
``(i) In general.--The Associate
Administrator shall award grants under this
subsection based on the formula described in
this paragraph, and without regard to paragraph
(3)(B)--
``(I) for the second consecutive
fiscal year for which the amount made
available for the program is not less
than $30,000,000; and
``(II) for each fiscal year after
the fiscal year described in subclause
(I) for which the amount made available
for the program is not less than
$30,000,000.
``(ii) Award when not based on formula.--
For any fiscal year for which grants are not
awarded based on the formula described in this
paragraph, the Associate Administrator shall
award grants under this subsection on a
competitive basis, taking into account the
considerations described in paragraph (3)(B).
``(J) Transition plan.--
``(i) Initial plan.--
``(I) In general.--If the amount
made available for the program for a
fiscal year is not less than
$30,000,000, the Associate
Administrator shall develop a
transition plan describing how the
Administration intends to begin
awarding grants based on the formula
described in this paragraph, to ensure
the Administration is prepared to award
grants based on the formula described
in this paragraph if the amount made
available for the program for the next
fiscal year is not less than
$30,000,000.
``(II) One-time requirement.--
Subclause (I) shall not apply on and
after the first day of the first fiscal
year for which the Associate
Administrator awards grants based on
the formula described in this
paragraph.
``(III) Requirement to use
formula.--The Associate Administrator
shall award grants based on the formula
described in this paragraph in
accordance with the requirements under
subparagraph (I), without regard to
whether the Associate Administrator
develops the transition plan required
under subclause (I) of this clause.
``(ii) Updates.--If, for any fiscal year
after the first fiscal year for which the
Associate Administrator awards grants based on
the formula described in this paragraph, the
amount made available for the program for the
fiscal year is less than $30,000,000, the
Associate Administrator shall update the plan
to award grants based on the formula described
in this paragraph, to ensure the Administration
is prepared to award grants based on the
formula described in this paragraph if the
amount made available for the program for the
next fiscal year is not less than $30,000,000.
``(K) Reporting.--Not later than 180 days after the
end of each fiscal year for which the amount of grants
under this subsection is determined under the formula
described in this paragraph, the Associate
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 that provides the information
used by the Associate Administrator to determine the
amounts of grants under the formula, which shall
include for the applicable fiscal year--
``(i) the number of States that applied for
a grant under the program;
``(ii) the number of States that received a
grant under the program;
``(iii) the raw data for each factor used
to calculate award amounts in accordance with
subparagraph (B), broken out by State;
``(iv) the utilization rates of each
grantee, broken out by grantee;
``(v) the amount carried over by a grantee
under paragraph (3)(C)(iii)(II)(aa), broken out
by grantee;
``(vi) the amount returned to Treasury due
to a failure to use the amounts under paragraph
(3)(C)(iii)(II)(cc), broken out by grantee; and
``(vii) the amount returned to the
Associate Administrator during the period
described in subparagraph (E).''.
(e) Reports.--Paragraph (9) of section 22(l) of the Small Business
Act (15 U.S.C. 649(l)), as so redesignated by subsection (c), is
amended--
(1) in subparagraph (B)--
(A) in clause (i)--
(i) in subclause (I), by inserting ``, as
well as the timing of applications and award
announcements'' before the semicolon at the
end;
(ii) in subclause (III), by inserting ``,
including the total number of eligible small
business concerns assisted by the program
(disaggregated by economically distressed small
business concerns, small business concerns
owned and controlled by women, and rural small
business concerns)'' before the semicolon at
the end;
(iii) in subclause (IV), by striking
``and'' at the end;
(iv) in subclause (V)--
(I) by striking ``description of
best practices'' and inserting
``detailed description of best
practices''; and
(II) by striking the period at the
end and inserting a semicolon; and
(v) by adding at the end the following:
``(VI) an analysis of the
performance metrics described in clause
(iii), including a determination of
whether or not any goals relating to
such performance metrics were met, and
an analysis of the survey described in
paragraph (8); and
``(VII) a description of lessons
learned by grant recipients under this
subsection that may apply to other
assistance provided by the
Administration.''; and
(B) by adding at the end the following:
``(iii) Performance metrics.--Annually, the
Associate Administrator shall collect data on
eligible small business concerns assisted by
the program for the following performance
metrics:
``(I) Total number of such
concerns, disaggregated by economically
distressed small business concerns,
small business concerns owned and
controlled by women, and rural small
business concerns.
``(II) Total dollar amount of
export sales by eligible small business
concerns assisted by the program.
``(III) Number of such concerns
that have not previously participated
in an activity described in paragraph
(2).
``(IV) Number of such concerns
that, because of participation in the
program, have accessed a new market.
``(V) Number of such concerns that,
because of participation in the
program, have created new jobs.
``(VI) Number of such concerns
participating in foreign trade missions
or trade show exhibitions,
disaggregated by economically
distressed small business concerns,
small business concerns owned and
controlled by women, and rural small
business concerns.''; and
(2) by adding at the end the following:
``(C) Reporting by recipients; processing of
reimbursements.--
``(i) In general.--The Associate
Administrator shall--
``(I) establish for recipients of
grants under the program a reporting
process, template, or spreadsheet
format to report information regarding
the program that minimizes manual data
entry, including performance data, for
participating grant recipients and
reduces duplicative or unnecessary
reporting requirements, except as
needed to report congressionally
required key performance indicators,
make funding decisions, or conduct
necessary oversight of the program; and
``(II) to the maximum extent
feasible, and working in conjunction
with the Chief Technology Officer or
any successor official within the
Administration, accommodate the
uploading of the data, templates, or
spreadsheets generated by customer
relationship management or spreadsheet
software.
``(ii) Processing of reimbursement
requests.--The Associate Administrator shall--
``(I) process information submitted
by a State, territory, or commonwealth
for purposes of obtaining reimbursement
for eligible activities in a timely
manner;
``(II) notify a State, territory,
or commonwealth if such information is
not processed on or before the date
that is 21 days after the date such
information is submitted; and
``(III) provide an estimated
completion timeline with any
notification under subclause (II).
``(D) Monthly obligations.--Not later than 30 days
after the date of enactment of this subparagraph, and
every month thereafter, the Administration shall submit
to the Committee on Small Business and Entrepreneurship
and the Committee on Appropriations of the Senate and
the Committee on Small Business and the Committee on
Appropriations of the House of Representatives a
monthly obligations report that includes information on
obligations of funding under the program, which shall
include--
``(i) the Treasury Account Symbols;
``(ii) the period of availability;
``(iii) the unobligated balance for the
program at the beginning of the month;
``(iv) monthly realized recoveries or
recaptures;
``(v) monthly obligations;
``(vi) a comparison of the obligations
incurred in the period covered by the report to
the obligations incurred in the same period in
the 2 prior fiscal years; and
``(vii) the resulting unobligated balances
at the end of the month.''.
(f) Expansion of Definition of Eligible Small Business Concern;
Economically Distressed Small Business Concern.--
(1) In general.--Section 22(l)(1) of the Small Business Act
(15 U.S.C. 649(l)(1)) is amended--
(A) be redesignating subparagraphs (A) through (E)
as subparagraphs (B) through (F), respectively;
(B) by inserting before subparagraph (B), as so
redesignated, the following:
``(A) the term `economically distressed small
business concern' means a small business concern that
is--
``(i) located in a low-income or moderate-
income area;
``(ii) located in an HUBZone, as defined in
section 31(b);
``(iii) located in a community that has
been designated as an empowerment zone or
enterprise community under section 1391 of the
Internal Revenue Code of 1986;
``(iv) located in a community that has been
designated as a promise zone by the Secretary
of Housing and Urban Development; or
``(v) located in a community that has been
designated as a qualified opportunity zone
under section 1400Z-1 of the Internal Revenue
Code of 1986;''; and
(C) in subparagraph (B), as so redesignated--
(i) in clause (iii)(II), by adding ``and''
at the end;
(ii) by striking clause (iv); and
(iii) by redesignating clause (v) as clause
(iv).
(2) Limitation on use of funds for participation in foreign
trade missions.--Section 22(l)(2)(A) of the Small Business Act
(15 U.S.C. 649(l)(2)(A)) is amended by inserting ``by eligible
small business concerns that have been in operation for not
less than 1 year'' after ``trade missions''.
(g) Requirements Related to State Employees.--Section 22(l)(3) of
the Small Business Act (15 U.S.C. 649(l)(3)), as amended by subsection
(a), is amended by adding at the end the following:
``(G) Limitation on collection of state official
and employee information.--
``(i) In general.--Subject to clause (ii),
the Associate Administrator--
``(I) may only collect name,
position, and contact information for
any State, territory, or commonwealth
official or employee unless that
official or employee is the designated
staffer managing a grant under this
subsection; and
``(II) may only require that a
State, territory, or commonwealth
receiving a grant under this subsection
report the salary of a State,
territory, or commonwealth official or
employee to the extent that the State,
territory, or commonwealth--
``(aa) includes such salary
as part of the non-Federal
share of the cost of the trade
expansion program; or
``(bb) uses amounts
received under the grant for
the cost of such salary, in
whole or in part.
``(ii) Exceptions.--Notwithstanding clause
(i), the Associate Administrator may require a
State, territory, or commonwealth to provide
information about a State, territory, or
commonwealth official or employee that is
relevant to any investigation into suspected
mismanagement, fraud, or malfeasance or that is
necessary to comply with Federal grant
requirements.''.
(h) Authorization of Appropriations.--Paragraph (11) of section
22(l) of the Small Business Act (15 U.S.C. 649(l)), as so redesignated
by subsection (b), is amended by striking ``fiscal years 2016 through
2020'' and inserting ``fiscal years 2027 through 2031''.
(i) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the Associate Administrator for International
Trade of the Small Business Administration shall submit to Congress a
report on the State Trade Expansion Program established under section
22(l) of the Small Business Act (15 U.S.C. 649(l)), as amended by this
section, that includes a description of--
(1) the process developed for review of revised budget
plans submitted under subparagraph (F) of section 22(l)(3) of
the Small Business Act (15 U.S.C. 649(l)(3)), as added by this
Act;
(2) the process through which the Small Business
Administration selects and funds grantees and the criteria used
by the Administration in making such decisions;
(3) any changes made to streamline the application and
reporting processes to remove duplicative requirements and
create a more transparent process;
(4) the process developed to share best practices by States
described in paragraph (9)(B)(i)(V) of section 22(l) of the
Small Business Act (15 U.S.C. 649(l)), as so redesignated by
this Act, particularly for first-time grant recipients under
the State Trade Expansion Program or grant recipients that are
facing problems using grant funds; and
(5) the process developed to communicate, both verbally and
in writing, relevant information about the State Trade
Expansion Program to all grant recipients in a timely manner.
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