BILL ANALYSIS Ó
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CONSENT
Bill No: AB 674
Author: Quirk-Silva (D), et al.
Amended: 1/14/14 in Assembly
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM. : 9-0, 6/16/14
AYES: Lieu, Wyland, Berryhill, Block, Corbett, Galgiani,
Hernandez, Hill, Torres
ASSEMBLY FLOOR : 75-0, 1/21/14 - See last page for vote
SUBJECT : Microenterprise
SOURCE : Author
DIGEST : This bill revises the definition of "microenterprise"
and "microenterprise development provider."
ANALYSIS :
Existing law:
1.Defines "microenterprise" as a sole proprietorship,
partnership, or corporation that has fewer than five
employees, including the owner, is part time or full time, and
generally lacks access to conventional loans, equity, or other
banking services.
2.States that microenterprises are distinct from small
businesses or microbusinesses and include, but are not limited
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to, businesses that provide child development services,
businesses that provide landscaping services, businesses that
provide building maintenance, businesses that provide personal
and business services, businesses that provide specialty food
products, and home-based businesses. Provides that
"microenterprise development provider" means a nonprofit or
public agency that provides self-employment training,
technical assistance, and access to microloans to individuals
seeking to become self-employed or to expand their current
business.
3.Provides that every city, county, and city and county is
encouraged to (a) access microenterprise development in order
to create new jobs and income opportunities for individuals of
low and moderate income, and (b) include microenterprise
development as a part of their economic development strategy.
Provides that California communities and the public agencies
that serve them, such as workforce investment boards,
community colleges, and local economic development agencies,
are encouraged to promote local partnerships that invest in
microenterprise development.
This bill:
1.Specifies that a microenterprise (a) has five or fewer
employees, including the owner who may be employed full or
part-time, and (b) generally lacks sufficient access to loans,
equity, or other financial capital.
2.Provides that a limited liability company is one of the types
of entities that can be defined as a "microenterprise."
3.Modifies the definition of "microenterprise development
provider" to include a nonprofit organization or public agency
providing self-employment training, technical assistance, and
access to microloans to a microenterprise seeking to expand
its current business.
4.Removes the specific list of examples of microenterprises.
5.Makes technical and clarifying changes.
Background
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The term "microenterprise" has come into common usage in the
economic development community over the past decade to describe
the type of self-employment that can become a principal way to
help people exit poverty and accrue wealth. The federal Small
Business Administration's definition generally refers to a
business that will have fewer than five employees, requires less
than $35,000 in startup capital and which does not have access
to the traditional commercial banking sector. California law
goes a step further and distinguishes microenterprises from
small businesses in that they include, but are not limited to,
businesses that provide child development services, landscaping
services, building maintenance, personal and business services,
specialty food products, and home-based businesses.
Microenterprise development is the process of providing
training, technical assistance and microloans to the smallest
business owners. Microenterprise development programs are
generally operated by nonprofit organizations that target
individuals who experience obstacles to successful business
growth such as a limited access to credit, lack of business
management experience and language barriers. Financial support
for microenterprise development organizations is a complex mix
of funding from federal, state and local government, plus
private dollars from foundations, corporations, and faith-based
organizations.
Many of the nonprofit organizations around the state that serve
microbusinesses have a critical need to build their capacity to
serve potential entrepreneurs, particularly in rural areas.
Capacity building generally includes projects such as:
acquisition of computer hardware, software and technology skills
to better assess and track microentrepreneurial activities, and
evaluate and report microenterprise progress and program
outcomes; professional development of trainers and business
consultants; development of outreach materials to communicate
with special populations; development of websites to facilitate
microentrepreneur access to regional business services; computer
upgrades and software to ensure effective micro loan tracking;
and staff expansions for program delivery/evaluation,
information management and fund development.
Common types of microenterprises include engineering, computer
system design, housekeeping, construction, landscaping and
personnel services. Many microenterprises start as part-time or
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home-based businesses. Due to their small size and limited
business experience, many owners of microenterprises have
difficulty meeting the traditional credit and collateral
requirements of mainstream financial institutions. A typical
microenterprise start-up will be financed through the
entrepreneur's personal assets, including savings accounts, home
equity loans and credit cards.
Microenterprise development is a model for providing services,
technical assistance and financing to new, prospective and
existing owners of microenterprises.
Comments
According to the author, "during these tough economic times, we
must make a strong effort to support these small businesses that
fuel our economy."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
ASSEMBLY FLOOR : 75-0, 1/21/14
AYES: Achadjian, Alejo, Allen, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray,
Hagman, Hall, Harkey, Roger Hernández, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
Pérez, Quirk, Quirk-Silva, Rendon, Rodriguez, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Yamada,
John A. Pérez
NO VOTE RECORDED: Ammiano, Beth Gaines, Grove, Ridley-Thomas,
Williams
MW:nl 6/18/14 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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