BILL NUMBER: SB 1116	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 21, 2012
	PASSED THE ASSEMBLY  AUGUST 16, 2012
	AMENDED IN ASSEMBLY  JUNE 27, 2012
	AMENDED IN SENATE  APRIL 26, 2012

INTRODUCED BY   Senator Leno

                        FEBRUARY 17, 2012

   An act to amend, repeal, and add Section 44559.4 of the Health and
Safety Code, relating to California Pollution Control Financing
Authority.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1116, Leno. California Pollution Control Financing Authority:
Capital Access Loan Program.
   The California Pollution Control Financing Authority Act
establishes the Capital Access Loan Program for small businesses,
administered by the California Pollution Control Financing Authority,
which provides loans through participating financial institutions to
qualifying small businesses. The authority is required to create a
loss reserve account for each financial institution. The act requires
a financial institution, if it decides to enroll a qualified loan
under the act in order to obtain the protection against loss provided
by its loss reserve account, to notify the authority in writing, as
specified, within 10 days after the date on which the loan is made.
The act requires a participating financial institution, when making a
qualified loan that will be enrolled under the act, to require the
qualified business to which the loan is made to pay a fee of not less
than 2% of the principal amount of the loan, but not more than 31/2%
of the principal amount, for deposit in the loss reserve account.
   This bill would instead require a financial institution, if it
decides to enroll a qualified loan under the act in order to obtain
the protection against loss provided by its loss reserve account, to
notify the authority in writing, as specified, within 15 days after
the date on which the loan is made. This bill would authorize the
Executive Director of the California Pollution Control Financing
Authority to authorize an additional 5 days for a financial
institution to submit this written notification on a loan-by-loan
basis for a reason limited to conditions beyond reasonable control of
the financial institution. The bill also, until April 1, 2017, would
instead require a participating financial institution, when making a
qualified loan that will be enrolled under the act, to require the
qualified business to which the loan is made to pay a fee of not less
than 1% of the principal amount of the loan, but not more than 31/2%
of the principal amount, for deposit in the loss reserve account.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 44559.4 of the Health and Safety Code is
amended to read:
   44559.4.  (a) If a financial institution that is participating in
the Capital Access Loan Program established pursuant to this article
decides to enroll a qualified loan under the program in order to
obtain the protection against loss provided by its loss reserve
account, it shall notify the authority in writing on a form
prescribed by the authority, within 15 days after the date on which
the loan is made, of all of the following:
   (1) The disbursement of the loan.
   (2) The dollar amount of the loan enrolled.
   (3) The interest rate applicable to, and the term of, the loan.
   (4) The amount of the agreed upon premium.
   (b) The executive director may authorize an additional five days
for a financial institution to submit the written notification
described in subdivision (a) to the authority on a loan-by-loan basis
for a reason limited to conditions beyond the reasonable control of
the financial institution.
   (c) The financial institution may make a qualified loan to be
enrolled under the program to an individual, or to a partnership or
trust wholly owned or controlled by an individual, for the purpose of
financing property that will be leased to a qualified business that
is wholly owned by that individual. In that case, the property shall
be treated as meeting the requirements of paragraph (1) of
subdivision (g) of Section 44559.1.
   (d) When making a qualified loan that will be enrolled under the
program, the participating financial institution shall require the
qualified business to which the loan is made to pay a fee of not less
than 1 percent of the principal amount of the loan, but not more
than 31/2 percent of the principal amount. The financial institution
shall also pay a fee in an amount equal to the fee paid by the
borrower. The financial institution shall deliver the fees collected
under this subdivision to the authority for deposit in the loss
reserve account for the institution. The financial institution may
recover from the borrower the cost of its payments to the loss
reserve account through the financing of the loan, upon the agreement
of the financial institution and the borrower. The financial
institution may cover the cost of borrower payments to the loan loss
reserve account.
   (e) When depositing fees collected under subdivision (d) to the
credit of the loss reserve account for a participating financial
institution, the authority shall do the following:
   (1) If no matching funds are available under a federal capital
access program or other source, the authority shall transfer to the
loss reserve account an amount that is not less than the amount of
the fees paid by the participating financial institution. However, if
the qualified business is located within a severely affected
community, the authority shall transfer to the loss reserve account
an amount not less than 150 percent of the amount of the fees paid by
the participating financial institution.
   (2) If matching funds are available under a federal capital access
program or other source, the authority shall transfer, on an
immediate or deferred basis, to the loss reserve account the amount
required by that federal program or other source. However, the total
amount deposited into the loss reserve account shall not be less than
the amount which would have been deposited in the absence of
matching funds.
   (f) This section shall remain in effect only until April 1, 2017,
and as of that date is repealed, unless a later enacted statute, that
is enacted before April 1, 2017, deletes or extends that date.
  SEC. 2.  Section 44559.4 is added to the Health and Safety Code, to
read:
   44559.4.  (a) If a financial institution that is participating in
the Capital Access Loan Program established pursuant to this article
decides to enroll a qualified loan under the program in order to
obtain the protection against loss provided by its loss reserve
account, it shall notify the authority in writing on a form
prescribed by the authority, within 15 days after the date on which
the loan is made, of all of the following:
   (1) The disbursement of the loan.
   (2) The dollar amount of the loan enrolled.
   (3) The interest rate applicable to, and the term of, the loan.
   (4) The amount of the agreed upon premium.
   (b) The executive director may authorize an additional five days
for a financial institution to submit the written notification
described in subdivision (a) to the authority on a loan-by-loan basis
for a reason limited to conditions beyond the reasonable control of
the financial institution.
   (c) The financial institution may make a qualified loan to be
enrolled under the program to an individual, or to a partnership or
trust wholly owned or controlled by an individual, for the purpose of
financing property that will be leased to a qualified business that
is wholly owned by that individual. In that case, the property shall
be treated as meeting the requirements of paragraph (1) of
subdivision (g) of Section 44559.1.
   (d) When making a qualified loan that will be enrolled under the
program, the participating financial institution shall require the
qualified business to which the loan is made to pay a fee of not less
than 2 percent of the principal amount of the loan, but not more
than 31/2 percent of the principal amount. The financial institution
shall also pay a fee in an amount equal to the fee paid by the
borrower. The financial institution shall deliver the fees collected
under this subdivision to the authority for deposit in the loss
reserve account for the institution. The financial institution may
recover from the borrower the cost of its payments to the loss
reserve account through the financing of the loan, upon the agreement
of the financial institution and the borrower. The financial
institution may cover the cost of borrower payments to the loan loss
reserve account.
   (e) When depositing fees collected under subdivision (d) to the
credit of the loss reserve account for a participating financial
institution, the authority shall do the following:
   (1) If no matching funds are available under a federal capital
access program or other source, the authority shall transfer to the
loss reserve account an amount that is not less than the amount of
the fees paid by the participating financial institution. However, if
the qualified business is located within a severely affected
community, the authority shall transfer to the loss reserve account
an amount not less than 150 percent of the amount of the fees paid by
the participating financial institution.
   (2) If matching funds are available under a federal capital access
program or other source, the authority shall transfer, on an
immediate or deferred basis, to the loss reserve account the amount
required by that federal program or other source. However, the total
amount deposited into the loss reserve account shall not be less than
the amount which would have been deposited in the absence of
matching funds.
   (f) This section shall become operative on April 1, 2017.