BILL ANALYSIS Ó
SB 1116
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1116 (Leno) - As Amended: June 27, 2012
Policy Committee: Jobs and Economic
Development Vote: 10-0
Banking 6-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill decreases the minimum contribution required of
borrowers who participate in the Capital Access Loan Program
(CalCAP), and increases the length of time that a financial
institution has to apply to the California Pollution Control
Financing Authority (CPCFA) to enroll a qualified loan in
CalCAP. Specifically, this bill:
1)Decreases the minimum contribution required of borrowers who
participate in the CalCAP from 2% to 1% of the principal
amount of the loan.
2)Provides a sunset of April 1, 2017.
FISCAL EFFECT
1)Minor and absorbable costs to the California Treasure's Office
from the California Capital Access Fund (General Fund/special
fund/federal funds) beginning in 2013-14 through 2015-16 for
the administration of CalCAP.
2)Increased participation in CalCAP could result in possible cost
pressure of potentially hundreds of thousands of dollars or
more, to state funds within the California Capital Access Fund
(General Fund/special fund/federal funds) beginning in 2013-14
through 2015-16.
COMMENTS
1)Purpose . According to the author, SB 1116 will increase
SB 1116
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access to small business loans supported by the Capital Access
Loan Program (CalCAP) by reducing from 2% to 1% the minimum
contribution amount for the borrower and lender to CalCAP
reserve accounts, and extending the time for a lender to
submit a loan enrollment application to CalCAP. The author
argues by increasing access to CalCAP, the State Treasurer
will be able to more effectively distribute the outstanding
Federal funds in a timely manner and give small businesses
more access to loans needed to help their businesses succeed
and grow.
2)Support . According to the sponsor of the measure, California
State Treasurer Bill Lockyer, SB 1116 will increase access to
small business loans supported by CalCAP by reducing from 2%
to 1% the minimum contribution amount for the borrower and
lender to CalCAP reserve accounts, and extending the time for
a lender to submit a loan enrollment application to CalCAP.
3)Background . CalCAP facilitates small business lending in
California by helping lenders reduce the risk of lending to
small businesses. By providing a form of portfolio insurance
through loan loss reserve accounts, CalCAP encourages banks
and other financial institutions to make loans to small
businesses that are having difficulty obtaining capital.
CalCAP, the borrower and the lender all contribute funds to a
loan loss reserve account associated with the lender. These
funds are pooled together and can be used to cover losses
associated with any enrolled loan. CalCAP collects all
interest earned on reserve accounts. The interest earnings
are then used for program purposes. CalCAP is administered by
the State Treasurer under the CPCFA.
In 2007, various programs within CPCFA, including CalCAP, were
narrowed or even cut in order to prevent overextension of
CPCFA funds. In 2010, the Legislature voted to assist small
business financing and boost the CalCAP program, granting it a
$6 million appropriation from the General Fund. In addition,
CalCAP received State Small Business Credit Initiative Act of
2010 federal funds in the amount of $84 million that must be
spent by 2017.
4)Relevant legislation. AB 796 (Blumenfield) increases the
maximum allowable contribution by a financial institution
participating in CalCAP to $200,000. This bill is in the
Senate Appropriations Committee.
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5)Prior legislation
a) AB 901 (V. Manual Perez), Chapter 483, Statutes of 2011,
added microbusiness lenders and small business financial
development corporations to the list of financial
institutions eligible to participate in CalCAP.
b) AB 981 (Hueso), Chapter 484, Statutes of 2011, restored
CalCAP's severely affected area funding augmentations and
authorized the authority to withdraw less than the full
amount of accumulated interest from loan loss reserve
accounts, to offset its costs to administer CalCAP.
c) AB 1632 (Blumenfield), Chapter 731, Statutes of 2010,
transferred $32.4 million from the General Fund to the
California Small Business Expansion Fund, California
Capital Access Fund and the California Economic Development
Fund, to support small businesses and facilitate matching
funds that would ensure a full complement of federal
funding for these programs.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081