STEP Improvement Act of 2026

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. <all>