BILL ANALYSIS �
AB 201
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Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 201 (Holden) - As Amended: April 30, 2013
Policy Committee: JEDE Vote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the names of small business financial
development corporations that make direct loans to small
businesses to be posted on a prescribed agency website.
FISCAL EFFECT
Minor and absorbable costs for the Governor's Office of Business
and Economic Development's (GO-Biz)
COMMENTS
1)Purpose . According to the author, the Small Business Loan
Guarantee Program (SBLGP) has been instrumental in working
with banks to guarantee loans to undercapitalized small
businesses. At a time when California is striving to rebound
from a long recession, this program can play a pivotal role in
making capital more accessible to thousands of small
businesses so they can expand, create new jobs, and protect
the jobs of existing employees. The author notes under the
Small Business Act, the Obama administration has allotted $78
million to SBLGP, and the state has appropriated another $38
million. The author states AB 201 would ensure that
information about the SBLGP, including a list of participating
lenders, is posted on the GO-Biz website for small businesses
to explore this resource.
2)Background. The SBLGP enables a small business to obtain a
term loan or line of credit when it cannot otherwise qualify
for a loan on its own. The state, working through 11 FDCs,
offers direct loans or loan guarantees that a qualifying small
business borrower could not otherwise obtain.
AB 201
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Applicants must meet the definition of a small business (100
or fewer employees), with the specific market rate loan terms
and interest rates negotiated between the borrower and the
lender. Proceeds of the loan must be used primarily in
California for any standard business purpose applicable to the
applicant's business. The guarantee program provides
guarantees covering up to 90% of the loan, but not exceeding
$500,000. The guarantee program allows a business to not only
obtain a loan but to also establish credit with a lender. The
business is then more likely to obtain additional future
financing on its own.
3)Previous legislation.
a) AB 1247(Medina) repeals and recasts the provisions of
the FDC small business financing programs from BTH to
GO-Biz. This bill is pending in this committee.
b) AB 780 (Bocanegra) appropriates $2 million from the
General Fund for the purpose of providing administrative
funding to the FDCs. This bill is pending in this
committee.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081