BILL ANALYSIS �
AB 201
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 201 (Holden)
As Amended August 14, 2013
Majority vote
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|ASSEMBLY: |74-0 |(May 23, 2013) |SENATE: |37-0 |(August 22, |
| | | | | |2013) |
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Original Committee Reference: J., E.D. & E.
SUMMARY : Requires the director of the Small Business Loan
Guarantee Program (SBLGP) to maintain or cause to be maintained
a Web site that includes information on the programs
administered through the statewide network of small business
financial development corporations. Programs include, but are
not limited to, loan guarantees, direct lending, surety bond
guarantees, and disaster loans. Information is required to be
presented in a manner appropriate to address the needs of both
small businesses and existing and potential financial
institutions who want to participate in the SBLGP.
The Senate amendments make technical changes to remove a code
conflict.
EXISTING LAW :
1)Authorizes the approval of 11 small business financial
development corporations (FDCs) for the purpose of
administering a number of small business finance programs
including the SBLGP, direct loans, disaster assistance loans,
and surety bond guarantees.
2)Establishes the SBLGP for the purpose of assisting small
businesses in obtaining long-term loans or lines of credit
from conventional financial institutions, which small
businesses would not otherwise qualify for without the
guarantee. Under this program, FDCs act as financial
intermediaries between the state, the small business, and the
financial institution.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, implementation of the bill would result in minor and
absorbable costs. The measure was referred out of the Senate
AB 201
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Committee on Appropriations pursuant to Senate Rule 28.8.
COMMENTS : The FDC management of a variety of small business
lending programs has been instrumental in assisting small
business for more than 40 years. Having these programs
administered through a statewide network of 11 nonprofit
financial intermediaries has proven to be cost effective for the
state and provide a program that is more accessible to local
businesses than a centralized Sacramento-based program.
The state-maintained Web site contains only a hyperlinked list
of FDCs and a main phone number for the state program director.
There is no information about the programs including the loan
guarantee, direct lending, surety bond guarantee, and disaster
loan programs. Given that the state has the opportunity to use
up to $84 million in federal funds for loan guarantees, it is
especially important that Internet-based information platforms
are maintained in a manner that supports deployment of this
capital. This bill provides statutory direction on the minimal
content of the Web site and will help both small businesses and
potential lenders better understand the programs.
California Small Business: California's dominance in many
economic areas is based, in part, on the significant role small
businesses play in the state's $1.9 trillion economy.
Businesses with less than 100 employees comprise nearly 98% of
all businesses, and are responsible for employing more than 37%
of all workers in the state.
Small Business Loan Guarantee Program: 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.
In 2011-12, approximately $5.7 million was made available for
loan guarantees under the state SBLGP, which leveraged $9.9
million in small business loans from financial institutions.
During this period 178 guarantees were provided, creating and/or
retaining over 1,200 jobs. There are currently 1,046 loans
being guaranteed under the state program.
In October 2010, Congress passed and the President signed the
Small Business Jobs Act (Act). Among other things, the Act
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created the State Small Business Credit Initiative, which is
authorized to expend up to $1.5 billion for state sponsored
small business finance programs. Over the life of the program,
every federal dollar must be matched by $10 private sector
dollars. September 2017 is the deadline for using the funds.
Funding for the administration, outreach, and oversight of the
program is primarily the responsibility of the state.
Under the funding formula, California is eligible to receive up
to $168 million, which is the largest amount of any state.
California uses its moneys to capitalize the SBLGP administered
through Business, Transportation and Housing Agency (BTH) and a
loss reserve program and collateral support program administered
through the California Pollution Control Financing Authority at
the State Treasurer's Office.
California has encumbered $16.6 million, with approximately
$13.4 million set aside to cover loan guarantees under the
federal portion of the SBLG Program. Over 18,600 jobs have
been created or retained by the close of 2012.
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090
FN: 0001848