Amended in Senate August 12, 2013

Amended in Senate July 8, 2013

Amended in Senate June 18, 2013

Amended in Senate June 5, 2013

Amended in Assembly April 17, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 1247


Introduced by Assembly Member Medina

February 22, 2013


An act to repeal and add Chapter 1 (commencing with Section 14000) of Part 5 of Division 3 of Title 1 of the Corporations Code, and to amend Section 8684.2 of, and to add Chapter 6 (commencing with Section 63088) to Division 1 of Title 6.7 to, to repeal Sections 63089.5, 63089.60, 63089.61, and 63089.62 of, the Government Code, relating to business, making an appropriation therefor, and declaring the urgency thereof to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 1247, as amended, Medina. Business investments: Small Business Financial Assistance Act of 2013.

Existing law, the California Small Business Financial Development Corporation Law, creates the California Small Business Board and the California Small Business Expansion Fund, a continuously appropriated fundbegin delete,end delete which includes General Fund moneys. Existing law authorizes the formation of small business financial development corporations to grant loans from, or guarantee loans made by a financial institution or financial company, as defined, against, moneys awarded to the corporation from the expansion fund for the purpose of stimulating small business development. Existing law authorizes a director designated by the Secretary of Business, Transportation and Housing to perform specified duties under that law. A violation of certain conflict-of-interest provisions by the director and other persons, as specified, is a crime.

This bill would revise and recast these provisions, and would transfer the administration of the California Small Business Financial Development Corporation Law to the California Infrastructure and Economic Development Bank (I-Bank) and a program manager designated by the executive director of the I-Bank, as specified. The bill would expand the definitions of “financial institution” and “financial company” for those purposes. Because the above-described conflict-of-interest provisions would apply to the members of the I-Bank’s board of directors, the program manager, the executive director, and other officers and employees, as specified, the bill would extend the application of a crime, and impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Because this bill would expand the purposes for which a continuously appropriated fund is expended, the bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Chapter 1 (commencing with Section 14000) of
2Part 5 of Division 3 of Title 1 of the Corporations Code is repealed.

3

SEC. 2.  

Chapter 1 (commencing with Section 14000) is added
4to Part 5 of Division 3 of Title 1 of the Corporations Code, to read:

 

P3    1Chapter  1. California Small Business Financial
2Development Corporations
3

3 

4Article 1.  Introduction
5

 

6

14000.  

This chapter shall be known and may be cited as the
7California Small Business Financial Development Corporation
8Law.

9

14001.  

(a) It is the intent of the Legislature in enacting this
10chapter to promote the economic development of small businesses
11through the California Small Business Finance Center by making
12available capital, general management assistance, and other
13resources, including financial services, personnel, and business
14education to small business entrepreneurs, including women,
15veteran, and minority owned businesses, for the purpose of
16promoting the health, safety, and social welfare of the citizens of
17California, to eliminate unemployment of the economically
18disadvantaged of the state, and to stimulate economicbegin delete development,
19employment, minority group, women, and disabled personsend delete

20begin insert development and end insert entrepreneurship.

21(b) It is the further intent of the Legislature to provide a flexible
22means to mobilize and commit all available and potential resources
23in the various regions of the state to fulfill these objectives,
24including federal, state, and local public resources, and private
25debt and equity investment.

26(c) It is the further intent of the Legislature that corporations
27operating pursuant to this law, shall to the maximum extent
28feasible, coordinate with other job and business development
29efforts within their region directed toward implementing the
30purpose of this chapter.

31(d) It is the further intent of the Legislature to provide expanded
32resources allowing participation by small and emerging contractors
33in state public works contracts. Increased access to surety bonding
34resources will assist in supporting participation by those firms in
35public works contracts, and by stimulating increased participation
36by small firms, the state will benefit from increased competition
37and lower bid costs.

38

14002.  

If any provision of this chapter or the application thereof
39to any person or circumstances is held invalid, this invalidity shall
40not affect other provisions or applications of the chapter which
P4    1can be given effect without the invalid provision or application,
2and to this end the provisions of this chapter are severable.

3 

4Article 2.  Definitions
5

 

6

14003.  

Unless the context otherwise requires, the definitions
7in this section shall govern the construction of this chapter.

8(a) “Bank” means the California Infrastructure and Economic
9Development Bank.

10(b) “Bank board” means the board of directors of the California
11Infrastructure and Economic Development Bank.

12(c) “Board of directors” means the board of directors of the
13corporation.

begin insert

14(d) “California Small Business Board” means the advisory
15board established pursuant to Section 14004.1 for the purpose of
16advising on issues and programs affecting small business.

end insert
begin delete

14 17(d)

end delete

18begin insert(e)end insert “California Small Business Finance Center” means the
19governmental unit with the administrative responsibility for
20programs authorized pursuant to Section 63088.5 of the
21Government Code and this chapter.

begin delete

18 22(e)

end delete

23begin insert(f)end insert “Corporation” means any nonprofit California small business
24financial development corporation created pursuant to this chapter,
25or pursuant to Chapter 1 (commencing with Section 32000) of
26Division 15.5 of the Financial Code.

begin delete

22 27(f)

end delete

28begin insert(g)end insert “Directives and requirements” means a document adopted
29by the bank board setting forth policy direction as well as key rules
30governing a particular subject area.

begin delete

25 31(g)

end delete

32begin insert(h)end insert “Executive director” means the executive director of the
33Infrastructure and Economic Development Bank.

begin delete

27 34(h)

end delete

35begin insert(i)end insert “Expansion fund” means the California Small Business
36Expansion Fund.

begin delete

29 37(i)

end delete

38begin insert(j)end insert “Financial company” means banking organizations, including
39national banks and trust companies, savings and loan associations,
40certified community development financial institutions,
P5    1microbusiness lenders, state insurance companies, mutual insurance
2companies, and other public and private banking, lending,
3retirement, and insurance organizations.

begin delete

35 4(j)

end delete

5begin insert(k)end insert “Financial institution” means regulated banking
6organizations, including national banks and trust companies
7authorized to conduct business in the state and state-chartered
8commercial banks, trust companies, credit unions, and savings and
9loan associations.

begin delete

P5   1 10(k)

end delete

11begin insert(l)end insert “Financial product” means the type of financial assistance
12described in Section 63088.5 of the Government Code.

begin delete

13 (l)

end delete

14begin insert(m)end insert “Loan committee” means a committee appointed by the
15board of directors of a corporation to determine the course of action
16on a loan application pursuant to Chapter 6 (commencing with
17Section 63088) of Division 1 of Title 6.7 of the Government Code.

begin delete

7 18(m)

end delete

19begin insert(n)end insert “Microbusiness lender” means a microbusiness lender as
20defined in Section 13997.2 of the Government Code.

begin delete

10 21(n)

end delete

22begin insert(o)end insert “Program Manager” means the manager of the California
23Small Business Finance Center as designated to this title by the
24executive director of the bank.

begin delete

14 25(o)

end delete

26begin insert(p)end insert “Trust fund” means the money from the expansion fund that
27is held in trust by a financial institution or financial company. A
28trust fund is not a deposit of state funds and is not subject to the
29requirements of Section 16506 of the Government Code.

begin delete

19 30(p)

end delete

31begin insert(q)end insert “Trust fund account” means an account within the trust fund
32that is either allocated to a particular corporation or shared by
33multiple corporations for the purpose of paying loan defaults and
34claims on bond guarantees or other financial products and program
35uses provided in this chapter.

36 

37Article 3.  Program Manager
38

 

39

14004.  

(a) The program manager shall do all of the following:

40(1) Administer this chapter.

P6    1(2) Make recommendations to the executive director and the
2bank board on the approval or disapproval of the articles of
3incorporation. This determination shall be based upon the
4following:

5(A) Review of the articles of incorporation and bylaws of the
6corporation to determine whether they contain the provisions
7required by this chapter and conform with the directives and
8requirements adopted by the bank board pursuant to this chapter.

9(B) A determination as to whether the legislative intent
10expressed in Section 14001 shall be served by the proposed
11corporation.

12(C) A determination as to whether the responsibility, character,
13and general fitness of the individuals who will manage the
14corporation are such as to command the confidence of the state
15and to warrant the belief that the business of the proposed
16corporation will be honestly and efficiently conducted in
17accordance with the intent and purpose of this chapter and that
18they include representatives of the financial and business
19community, as well as the economically disadvantaged.

20(D) A determination by the program manager that there is
21significant need for a new corporation.

22(3) Have the accounts of each corporation formed under this
23chapter audited as of the close of business on June 30 of each year.
24Material audit exceptions that are not corrected by the corporation
25within a reasonable period of time may result in the suspension or
26termination of the corporation pursuant to Section 63089.3 of the
27Government Code.

28(4) Have the portfolio of each corporation audited a minimum
29of once a year. Material audit exceptions that are not corrected by
30the corporation within a reasonable period of time may result in
31the suspension or termination of the corporation pursuant to Section
3263089.3 of the Government Code.

33(5) Review reports from the Department of Business Oversight
34and inform corporations as to what corrective action is required.

35(6) Examine, or cause to be examined, at any reasonable time,
36all books, records, and documents of every kind, and the physical
37properties of a corporation. The inspection shall include the right
38to make copies, extracts, and search records.

39(b) The program manager may attend and participate at
40corporation meetings. The program manager, or his or her designee,
P7    1shall be an ex officio, nonvoting representative on the board of
2directors and loan committees of each corporation. The program
3manager shall meet through telecommunication or in person with
4the board of directors of each corporation at least once each fiscal
5year, commencing January 1, 2014.

6

14004.1.  

(a) The California Small Business Board is hereby
7continued and created as an advisory board to the California
8Infrastructure and Economic Development Bank Board, the
9executive director, and the program manager. The California Small
10Business Board may also advise the Governor and the Small
11Business Advocate regarding issues and programs affecting
12California’s small business community, including, but not limited
13to, business innovation and expansion, export finance, state
14procurement, management and technical assistance, venture capital,
15and financial assistance.

16(b) The California Small Business Board consists of the
17following membership:

18(1) The Director of Finance or his or her designee.

19(2) The Director of the Office of the Small Business Advocate
20or his or her designee.

21(3) The Treasurer or his or her designee.

22(4) A representative from two different corporations selected
23by the corporations.

24(5) begin deleteTwo end deletebegin insertFour end insertmembers appointed by the Governor, one of
25whom will serve as chair of the California Small Business Board,
26who are actively involved in the California small business
27community.

28(6) Two persons actively involved in the business or agricultural
29communities, one appointed by the Speaker of the Assembly and
30one appointed by the Senate Committee on Rules.

31(7) Two Members of the Legislature, or their designees, one
32appointed by the Speaker of the Assembly and one appointed by
33the Senate Committee on Rules, so long as it does not conflict with
34the duties of their duties as legislators.

35(c) The California Small Business Board shall advise the
36program manager on matters regarding this chapter and Chapter
376 (commencing with Section 63088) of Division 1 of Title 6.7 of
38the Government Code.

P8    1(d) The public members of the California Small Business Board,
2at the discretion of the bank board, may be reimbursed per diem
3and travel expenses pursuant to state law.

4

14004.2.  

The bank board shall approve new corporations
5recommended by the program manager, based on an examination
6of each of the following:

7(a) Review of the articles of incorporation and bylaws of the
8corporation to determine whether they contain the provisions
9required by this chapter and conform with the directives and
10requirements adopted by the bank board pursuant to this chapter.

11(b) Determination as to whether the legislative intent expressed
12in Section 14001 will be served by the proposed corporation.

13(c) Determination as to whether the responsibility, character,
14and general fitness of the individuals who will manage the
15corporation are able to command the confidence of the state and
16to warrant the belief that the business of the proposed corporation
17will be honestly and efficiently conducted in accordance with the
18intent and purpose of this chapter and that they include
19representatives of the financial and business community, as well
20as the economically disadvantaged.

21(d) Determination of the program manager that there is
22significant need for a new corporation.

23 

24Article 4.  New Corporations
25

 

26

14005.  

Upon approval by the bank board to become a
27corporation, an entity shall adopt or amend its articles of
28incorporation to comply with the following:

29(a) The name of the corporation shall include the words “small
30business financial development corporation,” except for those
31corporations formed pursuant to this chapter prior to 2002, which
32may also be called “small business development corporations,” or
33those formed prior to 1985, which may also be called “rural or
34urban development corporations.”

35(b) The purposes for which the corporation is formed, which
36shall be those specified in Section 14001. This requirement shall
37not be deemed to preclude a statement of powers.

38(c) A geographical description of the corporation’s primary
39service area.

P9    1(d) The name and addresses of seven or more persons who are
2to act in the capacity of directors until the selection of their
3successors.

4(e) That the corporation is organized pursuant to the California
5Small Business Financial Development Corporation Law.

6

14006.  

If the bank board concurs with the findings of the
7program manager pursuant to Section 14004, the bank board shall
8direct the program manager to approve the articles of incorporation
9and endorse the approval thereon and forward the same to the
10Secretary of State for his or her approval and filing. Likewise, the
11program manager shall review all amendments to the articles of
12incorporation to ensure consistency with the purposes of this
13chapter.

14

14007.  

(a) The corporation’s existence as a small business
15development corporation begins upon the filing of the articles with
16the Secretary of State and continues perpetually, unless otherwise
17expressly provided for by law.

18(b) If a corporation is terminated from participation in all
19programs, in order to continue its existence as a nonprofit
20corporation pursuant to the Nonprofit Public Benefit Corporation
21Law (Part 2 (commencing with Section 5110) of Division 2 of
22Title 1 of the Corporations Code), the corporation shall amend its
23articles of incorporation in accordance with Chapter 8
24(commencing with Section 5180) of Part 2 of Division 2 of Title
251 to remove the provisions required by Section 14005, including
26an amendment to remove the words “small business financial
27development corporation,” “small business development
28corporation,” or “rural or urban development corporation,” as
29applicable, from the corporate name, and shall no longer be
30registered with the Secretary of State as a small business financial
31development corporation. A corporation shall not enjoy any of the
32benefits of a small business financial development corporation
33following suspension.

34

14009.  

(a) Each corporation shall have provisions establishing
35a grievance procedure for employees, clients, or potential clients,
36to appeal a decision or obtain redress of an action done by the staff
37or loan committee of the corporation. The procedures shall be
38established in writing during the probationary period of a new
39corporation.

P10   1(b) The bylaws of the corporation shall authorize the removal
2of officers only by a two-thirds vote of the directors of the
3corporation.

4

14011.  

The Nonprofit Public Benefit Corporation Law (Part
52 (commencing with Section 5110) of Division 2 of this title)
6applies to corporations formed under this chapter, except as to
7matters otherwise provided for in this chapter.

8

14012.  

For six months following the establishment of a
9corporation, commencing upon filing of the articles of
10incorporation with the Secretary of State, a corporation shall be
11on probation. While on probation, a corporation may be suspended
12if suspension is recommended by the program manager and
13affirmed by the executive director. This suspension is
14nonappealable and not subject to the procedures for suspension
15applicable to a corporation not on probation.

16 

17Article 5.  Corporation Board
18

 

19

14013.  

The corporate powers of a corporation shall be exercised
20by the board of directors.

21

14014.  

The bank shall enter into a contract with each
22corporation that shall require that:

23(a) A person may not serve on a board of directors who is not
24a resident of, or person conducting business in, the primary service
25area described in the articles of incorporation.

26(b) A board of directors shall include representatives from all
27of the following:

28(1) The financial community.

29(2) The business community.

30(3) The economically disadvantaged.

31(c) Not more than one employee of the corporation may serve
32on the board of directors at any one time.

33(d) A person who has a financial interest related to a matter over
34which the board of directors has authority may not make,
35participate in making, or in any way attempt to influence that
36matter.

37

14015.  

If any director ceases to meet the qualifications
38established in Section 14014, he or she shall immediately vacate
39his or her position as a director and the position shall be deemed
40vacant.

P11   1

14016.  

If any vacancy occurs in the elective membership of
2the board of directors through death, resignation, or otherwise, the
3remaining directors shall elect a person representing the appropriate
4category to fill the vacancy for the unexpired term.

5

14017.  

The bank board shall direct the program manager to
6establish new small business financial development corporations
7pursuant to the directives and requirements. The directives and
8requirements shall include steps to achieve a goal of ensuring that
9small businesses in all areas of the state would have reasonable
10access to the financial products authorized by Chapter 6
11(commencing with Section 63088) of Division 1 of Title 6.7 of
12the Government Code for which they are eligible.

13 

14Article 6.  Corporations, Miscellaneous
15

 

16

14018.  

Every corporation shall provide for, and maintain a
17central staff to perform, all administrative requirements of the
18corporation, including all those functions required of a corporation
19by the contract and this chapter.

20

14019.  

Reasonable costs incurred by a corporation in the
21creation and maintenance of a central staff shall be paid to the
22corporation from state funds, including a portion of the interest
23earned on the expansion fund and the corporation’s trust fund
24account, if the corporation has a trust fund account, otherwise, on
25the expansion fund.

26

14020.  

A corporation shall report to the program manager, or
27his or her designated representative, all statistical and other reports
28required by this chapter and Chapter 6 (commencing with Section
2963088) of Division 1 of Title 6.7 of the Government Code,
30including responses to audit reports, budget requirements, and
31other information relating to the establishment, monitoring, and
32suspension or termination of a corporation.

33

14021.  

A corporation shall make a report to the program
34manager, as required by Chapter 6 (commencing with Section
3563088) of Division 1 of Title 6.7 of the Government Code.

36 

37Article 7.  Conflict of Interest
38

 

39

14022.  

It shall be unlawful for a member of the bank board or
40for the executive director, program manager, or any person who
P12   1is an officer, director, contractor, or employee of a corporation, or
2who is a member of a loan committee, or who is an employee of
3the California Infrastructure and Economic Development Bank to
4do any of the following:

5(a) Ask for, consent, or agree to receive, any commission,
6emolument, gratuity, money, property, or thing of value for his or
7her own use, benefit, or personal advantage, for procuring or
8endeavoring to procure for any person, partnership, joint venture,
9association, or corporation, any loan, guarantee, financial, or other
10assistance from any corporation.

11(b) Borrow money, property, or to benefit knowingly, directly
12or indirectly, from the use of the money, credit, or property of any
13corporation.

14(c) Make, maintain, or attempt to make or maintain, a deposit
15of the funds of a corporation with any other corporation or
16association on condition, or with the understanding, expressed or
17implied, that the corporation or association receiving the deposit
18shall pay any money or make a loan or advance, directly or
19indirectly, to any person, partnership, joint venture, association,
20or corporation, other than to a corporation formed under this
21chapter.

22

14023.  

It shall be unlawful for a member of the bank board or
23for the executive director, program manager, or any person who
24is an officer or director of a corporation, or who is an employee
25of the California Infrastructure and Economic Development Bank
26to purchase or receive, or to be otherwise interested in the purchase
27or receipt, directly or indirectly, of any asset of a corporation,
28without paying to the corporation the fair market value of the asset
29at the time of the transaction.

30

14024.  

Violation of any provision of this article shall constitute
31a felony.

32

SEC. 3.  

Section 8684.2 of the Government Code is amended
33to read:

34

8684.2.  

(a) It is the intent of the Legislature:

35(1) To provide the Governor with appropriate emergency powers
36in order to enable utilization of available emergency funding to
37provide guarantees for interim loans to be made by lending
38institutions, in connection with relief provided for those persons
39affected by disasters or a state of emergency in affected areas
40during periods of disaster relief assistance, for the purpose of
P13   1supplying interim financing to enable small businesses to continue
2operations pending receipt of federal disaster assistance.

3(2) That the Governor should utilize this authority to prevent
4business insolvencies and loss of employment in areas affected by
5these disasters.

6(b) In addition to the allocations authorized by Section 8683
7and the loan guarantee provisions of Section 63089.90, the
8Governor may allocate funds made available for the purposes of
9this chapter, in connection with relief provided, in affected areas
10during the period of federal disaster relief, to the Small Business
11Expansion Fund for use by the California Infrastructure and
12Economic Development Bank, pursuant to Chapter 1 (commencing
13with Section 14000) of Part 5 of Division 3 of Title 1 of the
14Corporations Code and Chapter 6 (commencing with Section
1563088) of Division 1 of Title 6.7 of this code, to provide guarantees
16for low-interest interim loans to be made by lending institutions
17for the purpose of providing interim financing to enable small
18businesses that have suffered actual physical damage or significant
19economic losses, as a result of the disaster or state of emergency
20for which funding under this section is made available, to continue
21or resume operations pending receipt of loans made or guaranteed
22by the federal Small Business Administration. The maximum
23amount of any loan guarantee funded under this paragraph shall
24be limited by the directives and requirementsbegin delete and shall not exceed
25two hundred thousand dollars ($200,000)end delete
. Each loan guarantee
26shall not exceed 95 percent of the loan amount, except that a loan
27guarantee may be for 100 percent of the loan amount if the
28applicant can demonstrate that access to business records pertinent
29to the loan application has been precluded by official action
30prohibiting necessary reentry into the affected business premises
31or that those business records pertinent to the loan application have
32been destroyed. The term of the loan shall be determined by the
33lending institution providing the loan or shall be made payable on
34the date the proceeds of a loan made or guaranteed by the federal
35Small Business Administration with respect to the same damage
36or loss are made available to the borrower, whichever event first
37occurs.

38(c) Loan guarantees for which the initial 12-month term has
39expired and for which an application for disaster assistance funding
40from the federal Small Business Administration is still pending
P14   1may be extended until thebegin insert federalend insert Small Business Administration
2has reached a final decision on the application. Applications for
3interim loans shall be processed in an expeditious manner.
4Wherever possible, lending institutions shall fund nonconstruction
5loans within 60 calendar days of application. Loan guarantees for
6loans that have been denied funding by the federal Small Business
7Administration, may be extended by the financial institution
8provided that the loan is for no longer than a maximum of seven
9 years, if the business demonstrates the ability to repay the loan
10with an extended loan term, and a new credit analysis is provided.
11All loans extended under this provision shall be repaid in
12installments of principal and interest, and be fully amortized over
13the term of the loan. Nothing in this section shall preclude the
14lender from charging reasonable administrative fees in connection
15with the loan.

16(d) Allocations pursuant to this section shall, for purposes of
17all provisions of law, be deemed to be for extraordinary emergency
18or disaster response operation costs, as provided in Section 8690.6,
19incurred by state employees assigned to work on the financial
20development corporation program.

21(e) The California Infrastructure and Economic Development
22Bank may adopt directives and requirements to implement the loan
23guarantee program authorized by this section.

24(f) As long as there are any outstanding small business disaster
25loan guarantees, as authorized by Section 8684.2 or 63089.90, the
26bank shall provide a report to the Legislature on loan guarantees
27approved and rejected by gender, ethnic group, type of business
28and location, and each participating loan institution. The report
29may be combined with the report required in Section 63089.98.

30

SEC. 4.  

Chapter 6 (commencing with Section 63088) is added
31to Division 1 of Title 6.7 of the Government Code, to read:

32 

33Chapter  6. Small Business Financial Assistance Act of
342013
35

35 

36Article 1.  Introduction
37

 

38

63088.  

(a) This chapter shall be known, and may be cited, as
39the Small Business Financial Assistance Act of 2013.

P15   1(b) Notwithstanding any other provision of this division, this
2chapter shall not apply to any other activities, powers, and duties
3of the bank under any of the other chapters of this division.

4

63088.1.  

The Legislature finds all of the following:

5(a) Small businesses form the core of the California economy
6and that it is in the interest of the state to increase opportunities
7for entrepreneurs, the self-employed, and microbusiness and small
8business owners to have better access to capital and other technical
9resources.

10(b) Unemployment in California is a matter of statewide concern
11requiring concerted public and private action to develop
12employment opportunities for the disadvantaged, unemployed
13persons, veterans, and youth.

14(c) It is necessary to direct additional capital, general
15management assistance, business education, and other resources
16to encourage the development of small business opportunities,
17particularly for minorities, women, and disabled persons, to
18alleviate unemployment.

19 

20Article 2.  Definitions
21

 

22

63088.3.  

Unless the context otherwise requires, the definitions
23in this section shall govern the construction of this chapter. The
24definitions provided in this section shall only apply to this chapter
25and not to any other chapter of this division.

26(a) “Bank” means the California Infrastructure and Economic
27Development Bank.

28(b) “Bank board” means the board of directors of the California
29Infrastructure and Economic Development Bank.

30(c) “Board of directors” means the board of directors of a
31corporation.

begin insert

32(d) “California Small Business Board” means the advisory
33board established pursuant to Section 14004.1 of the Corporations
34Code for the purpose of advising on issues and programs affecting
35small business.

end insert
begin delete

19 36(d)

end delete

37begin insert(e)end insert “California Small Business Finance Center” means the
38governmental unit with the administrative responsibility for
39programs authorized pursuant tobegin delete Section 63088.5end deletebegin insert Chapter 1
P16   1(commencing with Section 14000) of Part 5 of Division 3 of Title
21 of the Corporations Codeend insert
and this chapter.

begin delete

22 3(e)

end delete

4begin insert(f)end insert “Corporation” means any nonprofit California small business
5financial development corporation created pursuant to Chapter 1
6(commencing with Section 14000) of Part 5 of Division 3 of Title
71 of the Corporations Code, or pursuant to Chapter 1 (commencing
8with Section 32000) of Division 15.5 of the Financial Code.

begin delete

27 9(f)

end delete

10begin insert(g)end insert “Directives and requirements” means a document adopted
11by the bank board setting forth policy direction as well as key rules
12governing a particular subject area.

begin delete

13(g) “Employment incentive loan” means a loan to a qualified
14 business or to a business located within an enterprise zone, as
15defined in subdivision (d) of Section 7072.

end delete

16(h) “Executive director” means the executive director of the
17California Infrastructure and Economic Development Bank.

18(i) “Expansion fund” means the California Small Business
19Expansion Fund.

20(j) “Financial company” means banking organizations, including
21national banks and trust companies, savings and loan associations,
22certified community development financial institutions,
23microbusiness lenders, state insurance companies, mutual insurance
24companies, and other public and private banking, lending,
25retirement, and insurance organizations.

26(k) “Financial institution” means regulated banking
27organizations, including national banks and trust companies
28authorized to conduct business in California and state-chartered
29commercial banks, trust companies, credit unions, and savings and
30loan associations.

31(l) “Financial product” means the type of financial assistance
32described in Section 63088.5.

33(m) “Loan committee” means a committee appointed by the
34board of directors of a corporation to determine the course of action
35on a loan application pursuant to this chapter.

36(n) “Microbusiness lender” means a microbusiness lender as
37defined in Section 13997.2begin delete of the Government Codeend delete.

38(o) “Program manager” means the manager of the California
39Small Business Finance Center as designated to this title by the
P17   1 executive director of the California Infrastructure and Economic
2Development Bank.

3(p) “Small business loan” means a loan to a business defined
4as an eligible small business as set forth in Section 121.3-10 of
5Part 121 of Chapter 1 of Title 13 of the Code of Federal
6Regulations, including those businesses organized for agricultural
7purposes that create or retain employment as a result of the loan
8unless otherwise defined by thebegin delete executive director by regulationend delete
9begin insert directives and requirementsend insert. Directives and requirements shall
10provide guidelines as to the preferred ratio of jobs created or
11retained to total funds borrowed for guidance to the corporations.

12(q) “Trust fund” means the moneys from the expansion fund
13that is held in trust by a financial institution or financial company.
14A trust fund is not a deposit of state funds and is not subject to the
15requirements of Section 16506.

16(r) “Trustee” means the lending institution or financial company
17selected by the bank board to hold and invest the trust funds, or
18selected by a predecessor agency to the bank, if applicable. An
19agreement made pursuant to this chapter and the trustee shall not
20be construed to be a deposit of state funds.

21(s) “Trust fund account” means an account within the trust fund
22that is either allocated to a particular corporation or shared by
23multiple corporations for the purpose of paying loan defaults and
24claims on bond guarantees or other financial products and program
25uses provided in this chapter.

26 

27Article 3.  Purpose
28

 

29

63088.5.  

(a) There is within the Governor’s Office of Business
30and Economic Development the California Infrastructure and
31Economic Development Bank, which shall, among other things,
32administer the California Small Business Financial Center that
33administers programs to assist businesses seeking new capital
34resources.

35(b) Pursuant to this chapter and Chapter 1 (commencing with
36Section 14000) of Part 5 ofbegin insert Division 3 ofend insert Title 1 of the Corporations
37Code, the bank board may continue programs funded by the Small
38Business Expansion Fund or establish one or more programs
39administered under contract with small business financial
40development corporations. Programs established pursuant to this
P18   1chapter or Chapter 1 (commencing with Section 14000) of Part 5
2ofbegin insert Division 3 ofend insert Title 1 of the Corporations Code may include the
3following types of financial products:

4(1) Loan guarantees and other credit enhancements.

5(2) Direct loans and otherbegin delete debitend deletebegin insert debtend insert instruments.

6(3) Disaster loan guarantees.

7(4) Surety bond guarantees.

8(c) In all of their state-funded programs, the corporations shall,
9to the extent practicable, be complementary to, and not competitive
10with, commercial lenders and other state and federal programs.

11(d) In carrying out this chapter the program manager, the
12executive director, and the bank board may call on the California
13Small Business Board for advice and recommendations. All actions
14by the California Small Business Board are advisory.

15(e) The California Small Business Board may also advise the
16Governor and the Small Business Advocate regarding issues and
17programs affecting California’s small business community,
18including, but not limited to, business innovation and expansion,
19export finance, state procurement, management and technical
20assistance, venture capital, and financial assistance.

21

63088.6.  

To implement its responsibilities, a corporation shall
22undertake program activities that shall include, but not be limited
23to, the following:

24(a) Outreach to low-resource small businesses and
25microbusinesses. The corporations located in rural areas shall give
26priority to low-resource farmers and rural and agriculturally related
27businesses.

28(b) Collaboration with other organizations and lenders to identify
29and assist those businesses that are creditworthy but face
30impediments to accessing conventional sources because of reasons,
31such as low equity, inadequate collateral, unacceptable legal
32structure (such as a co-op or nonprofit organization), management
33inadequacies, and language problems.

34(c) To the extent possible, bringing all possible financial
35resources (low-interest lenders, BIDCOs, MESBICs, other
36guarantors, etc.) to bear on the borrower’s problems.

37(d) Technical assistance to businesses receiving loans or
38guarantees that will maximize the probability of loan repayment.

39(e) Ongoing strategies for increasing program resources through
40private sector involvement and nonstate funds.

P19   1(f) A program for collecting and liquidating defaulted loans so
2that the corporations can qualify to become full-service lenders
3under the Small Business Administration. Corporations located in
4rural areas shall, in addition, try to qualify for lender status under
5the United States Department of Agriculture’s Rural Development
6and Farm Services Agency.

7(g) Become an agent for other financial institutions and financial
8companies.

9 

10Article 4.  Administrative Structure
11

 

12

63089.  

The bank board shall adopt directives and requirements
13concerning the implementation of this chapter and pursuant to
14Chapter 1 (commencing with Section 14000) of Part 5 of Division
153 of Title 1 of the Corporations Code. Any regulations adopted
16pursuant to Chapter 1 (commencing with Section 14000) of Part
175 of Division 3 of Title 1 of the Corporations Code, as that chapter
18read on January 1, 2013, shall remain in effect until the bank board
19adopts directives and requirements relating to the specific policy
20or activity, but in no case beyond June 1, 2015.

21

63089.1.  

The program manager acting under the guidance of
22the executive director shall do all of the following:

23(a) Administer this chapter.

24(b) Enter into a contract between the bank and each corporation
25for services to be provided by the corporations for one or more
26programs under this chapter and Chapter 1 (commencing with
27Section 14000) of Part 5 of Division 3 of Title 1 of the
28Corporations Code.

29(c) In accordance with available resources, allow the use of
30branch offices for the purposes of making these programs under
31this chapter accessible to all areas of the state.

32(d) Require each corporation to submit an annual written plan
33of operation.

34(e) Authorize the distribution, transfer, and withholding of
35moneys in the expansion fund and trust funds.

36(f) Authorize the investment of expansion and trust fund moneys.

37(g) Oversee the operations of one or more programs authorized
38pursuant to this chapter.

39(h) Act as liaison between corporations, other state and federal
40agencies, lenders, and the Legislature.

P20   1(i) Act as secretary to the California Small Business Board, and
2attend meetings of the California Small Business Board and the
3bank board.

4(j) Attend and participate at corporation meetings. The program
5manager or his or her designee shall be an ex officio, nonvoting
6representative on the board of directors and loan committees of
7each corporation. The program manager shall confer with the board
8of directors of each corporation as appropriate and necessary to
9carry out his or her duties, but in no case shall the program manager
10confer less than once each fiscal year.

11(k) Assist corporations in applying for public and private funding
12opportunities, and in obtaining program support from the business
13community.

14

63089.2.  

begin insert(a)end insertbegin insertend insertThe use of state funds paid out to the trust fund
15and the return on those funds from investment pursuant to Section
1663089.56 is conditional pursuant to Sections 63089.3 and 63089.57.
17Each corporation shall enter into a written signed agreement with
18the bank to provide program management services for one or more
19programs authorized under this chapter and Chapter 1 (commencing
20with Section 14000) of Part 5 of Division 3 of Title 1 of the
21Corporations Code.begin delete Agreementsend delete

22begin insert(b)end insertbegin insertend insertbegin insertAgreementsend insert with the corporations entered into pursuant to
23this chapter are exempt from the requirements of Sections 10295,
24andbegin insert Sectionsend insert 10335 to 10381, inclusive, of the Publicbegin delete Contractsend delete
25begin insert Contractend insert Code. The agreement shall, at a minimum, govern the
26activities in which the corporation engages, the investment of state
27funds and its return, and the budgeted administrative expenses the
28corporations may incur.begin delete Inend delete

29begin insert(c)end insertbegin insertend insertbegin insertInend insert the event the program manager and corporation do not
30reach an agreement,begin delete or theend deletebegin insert the corporation may appeal one or
31more conditions of the contract to the executive director or the
32bank board by providing written notice to the executive director
33within 10 days of the final written contract proposal from the
34program manager. The executive director or the bank board shall
35make a determination within 30 days of receiving written notice.end insert

36begin insert(d)end insertbegin insertend insertbegin insertIn the event that theend insert program manager finds the corporation
37has violated the terms of an active agreement, the program manager
38may take any action under Section 63089.3 or 63089.57, or any
39other action as appropriate. In the event the program managerbegin delete and
40corporation do not reach agreement or the program managerend delete
finds
P21   1the corporation hasbegin insert substantivelyend insert violated the terms of an active
2agreement, the corporation shall have no authority to withdraw or
3encumber the moneys in the trust fund or the return of those funds
4by the issuance of guarantees, commitments for other financial
5products, or by incurring expenses against the fund and its return
6in any manner whatsoever, and the program manager may take
7any action under Section 63089.3 or 63089.57, or any other action
8as appropriate. Any guarantee or other encumbrance made by the
9corporation in violation of this section shall be null and void, and
10the state, the bank, the expansion fund, or the trust fund will not
11be liable therefor.

12

63089.3.  

(a) The program manager may temporarily suspend
13the guarantee authority or other financial product authority of a
14corporation if in the determination of the program manager a
15corporation has substantially failed to comply with any of the
16requirements in subdivision (b)begin insert,end insert causing irreparable harm to the
17program, the corporation’s guarantee or any other financial
18products authority. The notice of temporary suspension sent to the
19corporation shall specify the reasons for the action.

20(1) As used in this section, “guarantee or any other financial
21products authority” means the authority to make or guarantee or
22administer any other financial products that encumber funds in a
23trust fund account, any account or subaccount under the direct
24control of the bank or other state entity, or the expansion fund.

25(2) The program manager shall make one of the determinations
26specified in subdivision (b) within 30 days of the effective date of
27the temporary suspension, unless the corporation and the program
28manager mutually agree to an extension. The corporation shall
29have the opportunity to submit written material to the program
30manager addressing the items stated in the temporary suspension
31notice. If the program manager does not make any determinations
32within 30 days, the temporary suspension shall be reversed. The
33corporation’s yearly contract shall remain in effect during the
34period of temporary suspension, and the corporation shall continue
35to receive reimbursement of necessary operating expenses.

36(b) Failure of a corporation to substantially comply with the
37following may result in the suspension or termination of a
38corporation:

39(1) Directives and requirements adopted by the bank board, for
40implementing the California Small Business Development
P22   1Corporation Law (Chapter 1 (commencing with Section 14000)
2of Part 5 of Division 3 of Title 1 of the Corporations Code) and
3this chapter.

4(2) Failure to meet any fiscal, audit, or portfolio requirement,
5as contained in the directives and requirements.

6(3) Failure to significantly meet any milestones or scope of work
7as contained in the performance contract between the corporation
8and the bank.

9(4) Any other action in the opinion of the program manager that
10causes irreparable harm to the corporation, the expansion fund, or
11the trust fund.

12(c) Pursuant to subdivisions (a) and (b), the program manager
13may take any of the following actions:

14(1) Terminate the temporary suspension.

15(2) Terminate the temporary suspension subject to the
16corporation’s adoption of a specified remedial action plan approved
17by the program manager.

18(3) Continue the temporary suspension of guarantee and other
19financial product authority until a specified time.

20(4) Terminate the corporation’s authority to administer specified
21loan guarantees or other financial products.

22(5) Terminate the corporation’s authority to remain a corporation
23authorized pursuant to the California Small Business Development
24Corporation Law (Chapter 1 (commencing with Section 14000)
25of Part 5 of Division 3 of Title 1 of the Corporations Code) and
26this chapter.

27(d) The program manager shall make one of the determinations
28specified in subdivision (c) within 30 days of the effective date of
29the temporary suspension notice, unless the corporation and the
30program manager mutually agree to an extension. If the program
31manager does not make any determinations within 30 days, the
32temporary suspension shall be negated. The corporation’s yearly
33contract shall remain in effect during the period of temporary
34suspension, and the corporation shall continue to receive
35reimbursement of necessary operating expenses.

36(e) The actions contained in paragraphs (3) to (5), inclusive, of
37subdivision (c) require a finding that irreparable harm will occur
38unless the action is taken, and a finding that the corporation has
39failed to comply with the California Small Business Development
40Corporation Law (Chapter 1 (commencing with Section 14000)
P23   1of Part 5 of Division 3 of Title 1 of the Corporations Code) and
2this chapter.

3(f) In considering any action specified in subdivision (c), the
4program manager shall consider, along with other criteria as
5specified in subdivision (b), the corporation’s history and past
6performance.

7(g) If the program manager decides to take any action pursuant
8to paragraphs (3) to (5), inclusive, of subdivision (c), the program
9manager shall transfer all funds subject to the action, whether
10encumbered or not, in the trust fund account of the suspended or
11terminated corporation into either the expansion fund, or either
12permanently or temporarily transfer the funds to the trust fund
13account of another corporation, unless an appeal is received from
14the corporation pursuant to subdivision (h).

15(h) If the program manager intends to transfer funds as specified
16in paragraph (g), the corporation shall be notified of the funds
17transfer 10 days before the effective date of the transfer. The
18corporation shall have the right to appeal the program manager’s
19decision to the executive director within that 10-day period by
20sending written notice to the executive director. Once the executive
21director receives notice that the action is being appealed, the
22program manager’s funds transfer shall be stayed.

23(i) The corporation shall have the opportunity to submit written
24material to the executive director addressing the actions and
25findings stated in the program manager’s determination. The
26executive director shall consider and make a final determination
27on the appeal within 30 days of receiving the appeal notice from
28the corporation, or such longer time as agreed to by the executive
29director and the corporation. The executive director may elect to
30take any of the actions listed in subdivision (j). The action of the
31program manager shall remain in effect until the executive director
32issues a decision. The corporation’s performance contract shall
33remain in effect during the appeal period, and the corporation shall
34continue to receive reimbursement of necessary operating expenses.

35(j) Pursuant to subdivision (i), the executive director may
36independently take action or seek the advice and recommendation
37of thebegin delete small business boardend deletebegin insert California Small Business Boardend insert prior
38to taking any of the following actions:

39(1) Rescind the action taken by the program manager.

P24   1(2) Modify the action taken by the program manager subject to
2the adoption by the corporation of a specified remedial action plan
3approved by the executive director.

4(3) Affirm the action taken by the program manager.

5(k) Following the executive director’s concurrence any action
6pursuant to paragraphs (3) to (5), inclusive, of subdivision (c), the
7program manager shall transfer all funds subject to the action,
8whether encumbered or not, in the trust fund account of the
9suspended or terminated corporation into either the expansion
10fund, or either permanently or temporarily transfer the funds to
11the trust fund account of another corporation. The corporation shall
12be notified of the funds transfer 10 days before the effective date
13of the transfer. The corporation shall have the right to appeal the
14 executive director’s decision to the bank board within that 10-day
15period by sending written notice to the chair of the bank board.
16Once the chair of the bank board receives notice that the executive
17director’s determination is being appealed, the program manager’s
18funds transfer shall be stayed.

19(l) The corporation shall have the opportunity to submit written
20material to the bank board addressing the actions and findings
21stated in the executive director’s determination. The bank board
22shall consider and make a final determination on the appeal within
2330 days of receiving the appeal notice from the corporation, or
24such longer time as agreed to by the chair of the bank board and
25the corporation. The action of the executive director shall remain
26in effect until the bank board issues a decision. The corporation’s
27performance contract shall remain in effect during the appeal
28period, and the corporation shall continue to receive reimbursement
29 of necessary operating expenses.

30(m) Pursuant to subdivision (l), the bank board may
31independently take action or seek the advice and recommendation
32of the California Small Business Board prior to taking any of the
33following actions:

34(1) Rescind the action taken by the executive director.

35(2) Modify the action taken by the executive director subject to
36the adoption by the corporation of a specified remedial action plan
37acceptable to the executive director.

38(3) Affirm the action taken by the executive director.begin delete The
39decision of the bank board is final.end delete

P25   1(n) Following the bank board’s concurrence with the executive
2director’s determination consistent with any action pursuant to
3paragraphs (3) to (5), inclusive, of subdivision (c),begin insert the program
4manager shallend insert
transfer all funds subject to the action, whether
5encumbered or not, in the trust fund account of the suspended or
6terminated corporation into either the expansion fund, or either
7permanently or temporarily transfer the funds to the trust fund
8account of another corporation. The corporation shall be notified
9of the funds transfer 10 days before the effective date of the
10transfer.

11(o) Notwithstanding Sectionbegin delete 63089.53,end deletebegin insert 63089.56,end insert in the event
12a final determination was made by the program manager, the
13executive director or the bank board, whichever is applicable, to
14temporarily transfer the funds of the corporation to the expansion
15fund or to the trust fund account of another corporation, upon
16compliance with all requirements of that final determination as
17determined by the executive director, the transferred funds shall
18be returned to thebegin delete corporationsend deletebegin insert corporation’send insert trust fund account.
19While the funds of a corporation’s trust fund account reside in the
20expansion fund, use of the principal on the funds shall be governed
21by the implementing directives and requirements specifying use
22of funds in the expansion fund. Interest on the funds moved from
23a corporation’s trust fund account upon temporary withdrawal
24shall be limited to payment of the corporation’s administrative
25expenses, as contained in the contract between the corporation and
26the bank pursuant to this chapter.

27(p) Following a final determination of termination of all
28activities of an active corporation, in order to continue its existence
29as a nonprofit corporation pursuant to the Nonprofit Public Benefit
30Corporation Law (Part 2 (commencing with Section 5110) of
31Division 2 of Title 1 of the Corporations Code), the corporation
32must amend its articles of incorporation in accordance with Chapter
338 of Part 2 of Division 2 of the Corporations Code to remove the
34provisions required by Section 14005 of the Corporations Code,
35including an amendment to remove the words “small business
36financial development corporation,” “small business development
37corporation,” or “rural or urban development corporation,” as
38applicable, from the corporate name and shall no longer be
39registered with the Secretary of State as a small business financial
40development corporation. A corporation shall not enjoy any of the
P26   1benefits of a small business financial development corporation
2following suspension.

3

63089.4.  

The bank is authorized to:

4(a) Approve new corporations recommended by the program
5manager.

6(b) Enter into contracts with corporations for program
7management services.

8(c) Select a financial institution or financial company to act as
9trustee of the trust fund as specified in this chapter.

10(d) Invest expansion fund and trust fund moneys as specified
11in this chapter.

12(e) Affirm, modify, or rescind the determinations of the program
13manager and the executive director as specified in this chapter.

14(f) Adopt directives and requirements as specified in this chapter.

15(g) Authorize new financial product programs pursuant to the
16provisions of this chapter.

17 

18Article 5.  Expansion Fund and Trust Fund
19

 

20

63089.5.  

(a) There is hereby continued in existence in the State
21Treasury the California Small Business Expansion Fund. All or a
22portion of the funds in the expansion fund may be paid out, with
23the approval of the Department of Finance, to a financial institution
24or financial company that will establish a trust fund and act as
25trustee of the funds.

26(b) The expansion fund and the trust fund shall be used for the
27following purposes:

28(1) To pay defaulted loan guarantee or surety bond losses, or
29other financial product defaults or losses.

30(2) To fund direct loans and other debt instruments.

31(3) To pay administrative costs of corporations.

32(4) To pay state support and administrative costs.

33(5) To pay those costs necessary to protect a real property
34interest in a financial product default.

35(c) The expansion fund and trust fund are created solely for the
36purpose of receiving state, federal, or local government moneys,
37and other public or private moneys to make loans, guarantees, and
38other financial products pursuant to this chapter.begin insert The program
39manager shall provide written notice to the Joint Legislative
40Budget Committee and to the Chief Clerk of the Assembly and the
P27   1Secretary of the Senate who shall provide a copy of the notice to
2the relevant policy committees within 10 days of any nonstate funds
3being deposited in the expansion fund. The notice shall include
4the source, purpose, timeliness, and other relevant information as
5determined by the bank board.end insert

6(d) One or more accounts in the expansion fund and the trust
7fund may be created by the program manager for corporations
8participating in one or more programs authorized under this
9chapter. Each account is a legally separate account, and shall not
10be used to satisfy loan guarantees or other financial product
11obligations of another corporation except when the expansion fund
12or trust fund is shared by multiple corporations.

13(e) The amount of guarantee liability outstanding at any one
14time shall not exceed five times the amount of funds on deposit in
15the expansion fund plus any receivables due from funds loaned
16from the expansion fund to another fund in state government as
17directed by the Department of Finance pursuant to a statute enacted
18by the Legislature, including each of the trust fund accounts within
19the trust fund.

20(f) This section shall remain in effect only until January 1, 2018,
21and as of that date is repealed, unless a later enacted statute, that
22is enacted before January 1, 2018, deletes or extends that date.

23

63089.5.  

(a) There is hereby continued in existence in the State
24Treasury the California Small Business Expansion Fund. All or a
25portion of the funds in the expansion fund may be paid out, with
26the approval of the Department of Finance, to a financial institution
27or financial company that will establish a trust fund and act as
28trustee of the funds.

29(b) The expansion fund and the trust fund shall be used for the
30following purposes:

31(1) To pay defaulted loan guarantee or surety bond losses, or
32other financial product defaults or losses.

33(2) To fund direct loans and other debt instruments.

34(3) To pay administrative costs of corporations.

35(4) To pay state support and administrative costs.

36(5) To pay those costs necessary to protect a real property
37interest in a financial product default.

38(c) The expansion fund and trust fund are created solely for the
39purpose of receiving state, federal, or local government moneys,
P28   1and other public or private moneys to make loans, guarantees, and
2other financial products pursuant to this chapter.

3(d) One or more accounts in the expansion fund and the trust
4fund may be created by the program manager for corporations
5participating in one or more programs authorized under this
6chapter. Each account is a legally separate account, and shall not
7be used to satisfy loan guarantees or other financial product
8obligations of another corporation except when the expansion fund
9or trust fund is shared by multiple corporations.

10(e) The amount of guarantee liability outstanding at any one
11time shall not exceed four times the amount of funds on deposit
12in the expansion fund plus any receivables due from funds loaned
13from the expansion fund to another fund in state government as
14directed by the Department of Finance pursuant to a statute enacted
15by the Legislature, including each of the trust fund accounts within
16the trust fund.

17(f) This section shall become operative on January 1, 2018.

18

63089.51.  

(a) All money deposited in the expansion fund is
19hereby continuously appropriated, without regard to fiscal years,
20for the purposes of this chapter.

21(b) Except as specified in subdivision (b) of Section 63089.54,
22the state or the bank shall not be liable or obligated in any way
23beyond the state money that is allocated in the expansion fund
24from moneys from the General Fund appropriated for those
25purposes.

26

63089.52.  

(a) The program manager, at his or her discretion,
27with the approval of the executive director, may request the trustee
28to invest those moneys in the trust fund in any of the securities
29described in Section 16430. Returns from these investments shall
30be deposited in the expansion fund and shall be used to support
31the programs of this chapter.

32(b) Any investments made in securities described in Section
3316430 shall be governed by the investment policy approved by the
34bank board.

35

63089.53.  

begin deleteThe state end deleteExcept as specified in subdivision (b) of
36Section 63089.54, the state or the bank shall not be liable or
37obligated in any way beyond the money that is allocated and
38deposited in the trust fund accounts.

39

63089.54.  

(a) There is hereby created in the State Treasury
40the Small Business Disaster Recovery Loan Loss Reserve Account,
P29   1as part of the expansion fund. This account shall be used to pay
2for losses resulting from loan guarantees issued pursuant to
3subdivision (a) of Section 63089.90 or subdivision (b) of this
4section, and disaster loan guarantees and other credit enhancement
5defaults issued prior to the effective date of this section that are in
6default.

7(b) Any lending institution that issues a loan that is guaranteed
8by resources in this account shall be fully reimbursed for the
9guaranteed portion of principal and interest that result from a loan
10or loans that are in default. If there are insufficient funds in this
11account to fully satisfy all claimants, the full faith of the resources
12in the General Fund are pledged to satisfy the obligations of this
13account. This account may only guarantee as much loan dollar
14value as is specifically authorized by the Director of Finance with
15the concurrence of the Governor. This account shall receive all
16moneys transferred pursuant to Section 63089.55, and any
17unencumbered balances transferred to the California Small
18Business Expansion Fund pursuant to Chapters 11 and 12 of the
19First Extraordinary Session of the Statutes of 1989, and Chapter
201525 of the Statutes of 1990, as of July 1, 1992.

21(c) The Governor may utilize this authority to prevent business
22insolvencies and loss of employment in an area affected by a state
23of emergency within the state and declared a disaster by the
24President of the United States, by the Administrator of the United
25States Small Business Administration, or by the United States
26Secretary of Agriculture, or declared to be in a state of emergency
27by the Governor of California.

28

63089.55.  

The Director of Finance, with the approval of the
29Governor, may transfer moneys in the Special Fund for Economic
30Uncertainties to the California Small Business Expansion Fund
31for use as authorized by the bank board, in an amount necessary
32to make loan guarantees pursuant to Section 8684.2 and this
33chapter.

34

63089.56.  

(a) The funds in the expansion fund shall be paid
35out to trust fund accounts by the Treasurer on funds drawn by the
36Controller and requisitioned by the program manager, pursuant to
37the purposes of this chapter. The program manager may transfer
38funds allocated from the expansion fund to accounts, established
39solely to receive the funds, in financial institutions or financial
40companies designated by the bank to act as trustee. The financial
P30   1institutions or financial companies so designated shall be approved
2by the state for the receipt of state deposits. Interest earned on the
3trust fund accounts in financial institutions or financial companies
4may be utilized by the corporations or the bank pursuant to the
5purposes of this chapter.

6(b) The program manager may reallocate funds held within a
7corporation’s trust fund account.

8(1) The program manager shall reallocate funds based on which
9corporation is most effectively using its guarantee funds. If funds
10are withdrawn from a less effective corporation as part of a
11reallocation, the program manager shall make that withdrawal only
12after giving consideration to that corporation’s fiscal solvency, its
13ability to honor loan guarantee defaults, and its ability to maintain
14a viable presence within the region it serves. Reallocation of funds
15shall occur no more frequently than once per fiscal year. Any
16decision made by the program manager pursuant to this subdivision
17may be appealed to the executive director unless otherwise
18specified. The executive director has the authority to repeal or
19modify any decision to reallocate funds.

20(2) The program manager may authorize a corporation to exceed
21the leverage ratio specified in Section 63089.5 or subdivision (a)
22of Section 63089.62, pending the annual reallocation of funds
23pursuant to this section. However, no corporation shall be permitted
24to exceed an outstanding guarantee liability of more than specified
25in subdivision (a) of Section 63089.62 after a reallocation is made.

26(c) Except as specified in subdivision (e), the program manager
27shall allocate and transfer money to trust fund accounts based on
28performance-based criteria. The criteria shall include, but not be
29limited to, the following:

30(1) The default record of the corporation.

31(2) The number and amount of loans guaranteed by a
32corporation.

33(3) The number and amount of loans made by a corporation if
34state funds were used to make those loans.

35(4) The number and amount of surety bonds guaranteed by a
36corporation.

37(5) The number and amount of other financial product activity.

38(6) The number of jobs created or retained due to the financial
39product activity.

P31   1(d) The criteria specified in subdivision (c) shall not apply to a
2corporation that has been in existence for five years or less. If not
3already adopted, the bank board shall develop directives and
4requirements specifying the basis for transferring account funds
5to those corporations that have been in existence for five years or
6less.

7(e) Any decision made by the program manager pursuant to this
8section may be appealed to the executive director within 15 days
9of notice of the proposed action. The executive director may repeal
10or modify any reallocation and transfer decisions made by the
11program manager. The appealing corporation shall submit, in
12writing, the specific area or areas of appeal and set forth any
13recommendation to the executive director for consideration. The
14executive director shall render a final decision within five business
15days of receiving the written appeal.

16(f)  Any decision made by the executive director shall be
17appealable in writing to the bank board within 15 days of the
18executive director’s decision, or such longer period as agreed to
19between the executive director and the corporation. The bank board
20shall make a final reallocation or transfer decision within 30 days
21of receiving the appeal, or such longer period agreed to between
22the executive director and the corporation.

23(g) In the event of an appeal under this section, all allocations
24or transfers of money to trust fund accounts shall be on hold
25pending resolution by the executive director or bank board, as
26applicable.

27

63089.57.  

Pursuant to this chapter and any directives and
28requirements adopted pursuant to this chapter, the state has residual
29interest in the funds deposited by the state to a trust fund account
30and to the return on these funds from investments. On dissolution,
31suspension, or termination of the corporation, these funds shall be
32withdrawn by the program manager from the trust fund account
33and returned to the expansion fund or temporarily transferred to
34another trust fund account. This provision shall be contained in
35the trust instructions to the trustee.

36

63089.58.  

Each trust fund account shall consist of a loan
37guarantee account, and, upon recommendation by the program
38manager, a bond guarantee account or other financial product
39account, each of which is a legally separate account, and the assets
40of one account shall not be used to satisfy loan guarantees or other
P32   1financial product obligations of another corporation, except when
2a trust fund account is designated by the program manager to be
3shared by multiple corporations. The amount of funds allocated
4to a bond guarantee account shall be pursuant to the directives and
5requirements. A corporation shall not use trust fund accounts to
6secure a corporate indebtedness. State funds deposited in the trust
7fund accounts, with the exception of guarantees established
8pursuant to this chapter, shall not be subject to liens or
9encumbrances of the corporation or its creditors.

10

63089.59.  

(a) The financial institution or financial company
11that is to act as trustee of the trust fund shall be designated by the
12bank. The corporation shall not receive money on deposit to
13support guarantees or other financial products issued under this
14chapter without the approval of the program manager.

15(b) State funds may not be used to finance an expense incurred
16by a corporation in a location not approved pursuant to the contract
17between the bank and the corporation. The prohibition against use
18of state funds also applies to the location of satellite offices, and
19the area served from a corporation office.

20(c) Except as otherwise provided in this chapter, the trust fund
21account shall be used solely to make loans, guarantee bonds and
22loans, and provide other financial products approved by the
23corporation that meet the financial product criteria of the directives
24and requirements. Except as provided in subdivision (b) of Section
2563089.54, the state or the bank shall not be liable or obligated in
26any way as a result of the allocation of state moneys to a trust fund
27account beyond the state moneys that are allocated and deposited
28in the fund pursuant to this chapter, and that are not otherwise
29withdrawn by the state pursuant to this chapter.

30

63089.60.  

(a) The program manager shall recommend whether
31the expansion fund and trust fund accounts are to be leveraged,
32and if so, by how much. Upon the request of the corporation, the
33program manager’s decision may be repealed or modified by the
34executive director or the bank board.

35(b) The amount of guarantee liability outstanding at any one
36time shall not exceed five times the amount of funds on deposit in
37the expansion fund plus any receivables due from funds loaned
38from the expansion fund to another fund in state government as
39directed by the Department of Finance pursuant to a statute enacted
P33   1by the Legislature, including each of the trust fund accounts within
2the trust fund.

3(c) This section shall remain in effect only until January 1, 2018,
4and as of that date is repealed, unless a later enacted statute, that
5is enacted before January 1, 2018, deletes or extends that date.

6

63089.60.  

(a) The program manager shall recommend whether
7the expansion fund and trust fund accounts are to be leveraged,
8and if so, by how much. Upon the request of the corporation, the
9program manager’s decision may be repealed or modified by the
10executive director or the bank board.

11(b) The amount of guarantee liability outstanding at any one
12time shall not exceed four times the amount of funds on deposit
13in the expansion fund plus any receivables due from funds loaned
14from the expansion fund to another fund in state government as
15directed by the Department of Finance pursuant to a statute enacted
16by the Legislature, including each of the trust fund accounts within
17the trust fund, unless the program manager has permitted a higher
18leverage ratio for an individual corporation pursuant to subdivision
19(b) of Section 63089.56.

20(c) This section shall become operative on January 1, 2018.

21

63089.61.  

(a) The corporate guarantee shall be backed by
22funds on deposit in the corporation’s trust fund account, or by
23receivables due from funds loaned from the corporation’s trust
24fund account to another fund in state government, as directed by
25the Department of Finance pursuant to a statute enacted by the
26Legislature.

27(b) Loan guarantees shall be secured by a reserve of at least 20
28percent to be determined by the program manager unless a higher
29leverage ratio for an individual corporation has been approved
30pursuant to subdivision (b) of Section 63089.56.

31(c) The expansion fund and trust fund accounts shall be used to
32guarantee obligations and other financial product obligations, to
33pay the administrative costs of the corporations, and for other uses
34pursuant to this chapter.

35(d) This section shall remain in effect only until January 1, 2018,
36and as of that date is repealed, unless a later enacted statute, that
37is enacted before January 1, 2018, deletes or extends that date.

38

63089.61.  

(a) The corporate guarantee shall be backed by
39funds on deposit in the corporation’s trust fund account, or by
40receivables due from funds loaned from the corporation’s trust
P34   1fund account to another fund in state government, as directed by
2the Department of Finance pursuant to a statute enacted by the
3Legislature.

4(b) Loan guarantees shall be secured by a reserve of at least 25
5percent to be determined by the program manager, unless a higher
6leverage ratio has been approved for an individual corporation
7pursuant to subdivision (b) of Section 63089.56.

8(c) The expansion fund and trust fund accounts shall be used to
9guarantee obligations and other financial product obligations, to
10pay the administrative costs of the corporations, and for other uses
11pursuant to this chapter.

12(d) This section shall become operative on January 1, 2018.

13

63089.62.  

(a) It is the intent of the Legislature that the
14corporations make maximum use of their statutory authority to
15guarantee loans and surety bonds, and administer other financial
16products, including the authority to secure loans with a minimum
17loan loss reserve of only 20 percent, unless the program manager
18authorizes a higher leverage ratio for an individual corporation
19pursuant to subdivision (b) of Section 63089.56, so that the
20financing needs of small business may be met as fully as possible
21within the limits of corporations’ trust fund account balance.

22(b) Any corporation that serves an area declared to be in a state
23of emergency by the Governor or a disaster area by the President
24of the United States, the Administrator of the United States Small
25Business Administration, or the United States Secretary of
26Agriculture shall increase the portfolio of loan guarantees where
27the dollar amount of the loan is less than one hundred thousand
28dollars ($100,000), so that at least 15 percent of the dollar value
29of loans guaranteed by the corporation is for those loans. The
30corporation shall comply with this requirement within one year of
31the date the emergency or disaster is declared. Upon application
32of a corporation, the executive director may waive or modify the
33rule for the corporation if the corporation demonstrates that it made
34a good faith effort to comply and failed to locate lending
35institutions in the region that the corporation serves that are willing
36to make guaranteed loans in that amount.

37(c) This section shall remain in effect only until January 1, 2018,
38and as of that date is repealed, unless a later enacted statute, that
39is enacted before January 1, 2018, deletes or extends that date.

P35   1

63089.62.  

(a) It is the intent of the Legislature that the
2corporations make maximum use of their statutory authority to
3guarantee loans and surety bonds, and administer other financial
4products, including the authority to secure loans with a minimum
5loan loss reserve of only 25 percent, unless the program manager
6authorizes a higher leverage ratio for an individual corporation
7pursuant to subdivision (b) of Section 63089.56, so that the
8financing needs of small business may be met as fully as possible
9within the limits of corporations’ trust fund account balance.

10(b) Any corporation that serves an area declared to be in a state
11of emergency by the Governor or a disaster area by the President
12of the United States, the Administrator of the United States Small
13Business Administration, or the United States Secretary of
14Agriculture shall increase the portfolio of loan guarantees where
15the dollar amount of the loan is less than one hundred thousand
16dollars ($100,000), so that at least 15 percent of the dollar value
17of loans guaranteed by the corporation is for those loans. The
18corporation shall comply with this requirement within one year of
19the date the emergency or disaster is declared. Upon application
20of a corporation, the program manager may waive or modify the
21rule for the corporation if the corporation demonstrates that it made
22a good faith effort to comply and failed to locate lending
23institutions in the region that the corporation serves that are willing
24to make guaranteed loans in that amount.

25(c) This section shall become operative on January 1, 2018.

26 

27Article 6.  Corporations, Miscellaneous
28

 

29

63089.65.  

(a) A corporation shall establish one or more loan
30committees, each of which shall be composed of five or more
31persons, a majority of whom shall be experienced in banking and
32lending operations.

33(b) A loan committee shall review applications to the corporation
34for a loan or guarantee and shall do each of the following:

35(1) Determine the feasibility of the proposed transaction. The
36loan committee shall recommend approval of the application only
37upon a determination that there is a reasonable chance that the loan
38will be repaid.

39(2) On the basis of that determination, recommend to the board
40of directors any action that the loan committee deems appropriate
P36   1under the circumstances, or, in the event that approval authority
2has been delegated to the loan committee by the board of directors,
3approve or disapprove the loan application.

4(c) A loan committee shall expeditiously act to accept or reject
5loan applications.

6(d) A person who has a financial interest related to a matter over
7which the loan committee has authority may not make, participate
8in making, or in any way attempt to influence that matter.

9

63089.66.  

Unless delegated to its loan committee, the
10corporation’s board of directors, upon a recommendation from its
11loan committee, shall do all of the following:

12(a) Emphasize consideration to applications that will increase
13employment of disadvantaged, disabled, or unemployed persons,
14or increase employment of youth residing in areas of high youth
15unemployment and high youth delinquency.

16(b) Give consideration to applications from traditional and
17safety-net providers of Medi-Cal services that will promote access
18to quality medical care for individuals enrolled in Medi-Cal
19managed health care networks that are contracting with or owned
20or operated by a county board of supervisors, a county health
21 commission, or a county health authority organized pursuant to
22Section 14018.7, 14087.31, 14087.35, 14087.36, 14087.38, or
2314087.9605 of the Welfare and Institutions Code.

24

63089.67.  

A corporation may charge the borrower or financial
25institution a loan fee or credit enhancement fee on all loans made
26or guaranteed by the corporation to defray the operating expenses
27of the corporation. The amount of the fee shall be determined by
28the directives and requirements.

29 

30Article 7.  Loan Guarantees
31

 

32

63089.70.  

(a) The Small Business Expansion Fund, which is
33hereby continued in existence, shall, among other things, provide
34guarantees to loans offered by financial institutions and financial
35companies to small businesses.

36(b) The Legislature finds and declares that the Small Business
37Loan Guarantee Program has enabled participating small businesses
38that do not qualify for conventional business loans or Small
39Business Administration loans to secure funds to expand their
40businesses. These small businesses would not have been able to
P37   1expand their businesses in the absence of the program. The program
2has also provided valuable technical assistance to small businesses
3to ensure growth and stability. The study commissioned by former
4Section 14069.6 of the Corporations Code, as added by Chapter
5919 of the Statutes of 1997, documented the return on investment
6of the program and the need for its services. The value of the
7program has also been recognized by the Governor through
8proposals contained in the May Revision to the Budget Act of
92000 for the 2000-01 fiscal year.

10(c) A corporation shall not issue a loan or guarantee, unless it
11determines that the following conditions are satisfied:

12(1) There is no probability that the loan would be granted by a
13financial company or financial institution under reasonable terms
14and conditions and the borrower has demonstrated a reasonable
15prospect of repayment.

16(2) The loan proceeds will be used exclusively in this state.

17(3) The loan qualifies as a small business loan or an employment
18incentive loan.

19(4) The borrower has a minimum equity interest in the business
20as determined by the directives and requirements.

21(5) As a result of the loan, the jobs generated or retained
22demonstrate reasonable conformance to any directives and
23requirements specifying employment criteria.

24

63089.71.  

(a) Among other priorities, corporations shall give
25high priority to the issuance of loan guarantees to small business
26incubators and to businesses that lease space in incubators.

27(b) For the purposes of this section, “incubator” means a facility
28that allows new small businesses to increase their probability of
29success by sharing needed capital equipment, services, and
30facilities, which may include, but are not limited to, the following:

31(1) Reception and meeting area.

32(2) Secretarial services, such as collating, telephone answering,
33or mailhandling.

34(3) Accounting and bookkeeping services.

35(4) Research libraries.

36(5) Onsite financial and management counseling.

37(6) Parking.

38(7) Flexible lease arrangements for flexible space.

39(8) Computer or word processing facilities.

40(9) Day care facilities.

P38   1(10) Office furniture rentals.

2(11) A graduation policy sometimes requiring firms to leave
3after three to five years in a subsidized, nurturing environment.

4(12) Employee training and placement services.

5(c) Among other priorities, corporations shall give high priority
6to marketing their services to Phase 1 or Phase 2 Small Business
7Innovation Research (SBIR) recipients and providing loan
8guarantees, whenever possible.

9 

10Article 8.  Direct Lending and Other Debt Instruments
11

 

12

63089.80.  

(a) A corporation may utilize funds for direct
13lending or other debt instruments pursuant to the directives and
14requirements.

15(b) The amount of funds available for direct lending and other
16debt instruments shall be determined by the directives and
17requirements. In its capacity as a direct lender, the corporation
18may sell in the secondary market the guaranteed portion of each
19loan, if guaranteed, so as to raise additional funds for direct lending.

20(c) To execute the direct loan and other debt instrument
21programs established in this chapter, the bank may loan trust funds
22to a corporation for the express purpose of lending those funds to
23an identified borrower. The loan authorized by the bank to the
24corporation shall be on terms similar to the loan between the
25corporation and the borrower.

26(d) The amount of the loan may be in excess of the amount of
27a loan to any individual borrower, but actual disbursements
28pursuant to the bank loan agreement shall be required to be
29supported by a loan agreement between the borrower and the
30corporation in an amount at least equal to the requested
31disbursement. The loan between the bank and the corporation shall
32be evidenced by a credit agreement. In the event that any loan
33between the corporation and borrower is not guaranteed by a
34governmental agency, the portion of the credit agreement
35attributable to that loan shall be secured by assignment of any note,
36executed in favor of the corporation by the borrower to the bank.
37The terms and conditions of the credit agreement shall be similar
38to the loan agreement between the corporation and the borrower,
39which shall be collateralized by the note between the corporation
40and the borrower.

P39   1(e) In the absence of fraud on the part of the corporation, the
2liability of the corporation to repay the loan to the bank is limited
3to the repayment received by the corporation from the borrower,
4except in a case where the United States Department of Agriculture
5requires exposure by the corporation in rule or regulation. The
6corporation may use trust funds for loan repayment to the bank if
7the corporation has exhausted a loan loss reserve created for this
8purpose. Interest and principal received by the bank from the
9corporation shall be deposited into the same account from which
10the funds were originally borrowed.

11(f) Upon the approval of the program manager, a corporation
12shall be authorized to borrow trust funds from the bank for the
13purpose of relending those funds to small businesses. A corporation
14shall demonstrate to the program manager that it has the capacity
15to administer a direct loan program, and has procedures in place
16to limit the default rate for loans to startup businesses. The
17percentage of any trust fund account to be used for the direct
18lending pursuant to this subdivision shall be established in the
19directives and requirements.

20(g) A corporation shall not issue a direct loan or other financial
21product, unless and until it determines that all of the following
22conditions are satisfied:

23(1) The direct loan or other financial product assistance would
24not be granted by a financial company or financial institution under
25reasonable terms and conditions and the borrower has demonstrated
26a reasonable prospect of repayment.

27(2) The loan or financial product proceeds will be used
28exclusively in this state.

29(3) The direct loan or financial product qualifies as a small
30business loan or employment incentive loan.

31(4) The borrower has a minimum equity interest in the business
32as determined by the directives and requirements.

33(5) As a result of the direct loan or other debt instrument, the
34jobs generated or retained demonstrate reasonable conformance
35to any directives and requirements specifying employment criteria.

36(h) The maximum loan or other debt instrument amount to a
37small business shall be set by the directives and requirements. In
38the absence of fraud on the part of the corporation, the repayment
39obligation pursuant to the loan or other debt instrument to the
40corporation shall be limited to the amount of funds received by
P40   1the corporation for the loan or other debt instrument to the small
2business and any other funds received from the bank that are not
3disbursed. The corporation shall be authorized to charge a fee to
4the small business borrower, in an amount determined pursuant to
5the directives and requirements. The programs provided for in this
6subdivision shall be available in all geographic areas of the state.

7 

8Article 9.  Disaster Loan Guarantees
9

 

10

63089.90.  

(a) Pursuant to Section 8684.2 and the contract
11between a corporation and the bank, a corporation may, in an area
12affected by a state of emergency within the state and declared a
13disaster by the President of the United States, the Administrator
14of the United States Small Business Administration, or the United
15States Secretary of Agriculture, or declared to be in a state of
16emergency by the Governor of California, provide loan guarantees
17from funds allocated in Section 63089.55 to small businesses,
18small farms, nurseries, and agriculture-related enterprises that have
19suffered actual physical damage or significant economic injury as
20a result of the disaster.

21(b) The bank board may adopt directives and requirements to
22implement the disaster loan guarantee program authorized by this
23section. Any regulations adopted under Chapter 1 (commencing
24with Section 14000) of Part 5 of Division 3 of Title 1 of the
25Corporations Code shall remain in effect until the bank adopts
26directives and requirements.

27(c) A corporation shall not issue a disaster loan guarantee unless
28and until it determines that the following conditions are satisfied:

29(1) The borrower cannot reasonably obtain a loan without some
30form of credit enhancement.

31(2) The borrower has demonstrated a reasonable prospect of
32repayment.

33(3) The guaranteed loan will be used exclusively in this state.

34(4) The disaster loan qualifies as a small business loan or
35employment incentive loan.

36(d) Allocations pursuant to subdivision (a) shall be deemed to
37be for extraordinary emergency or disaster response operations
38costs incurred by the issuance of disaster loan guarantees.

 

P41   1Article 10.  Surety Bond Guarantees
2

 

3

63089.95.  

In furtherance of the purposes set forth in Section
463088.1 of this code and Section 14001 of the Corporations Code,
5a corporation may do any one or more of the following activities,
6but only to the extent that the activities are authorized pursuant to
7the contract between the bank and corporation: guarantee, endorse,
8or act as surety on the bonds, notes, contracts, or other obligations
9of, or assist financially, any person, firm, corporation, or
10association, and may establish and regulate the terms and
11conditions with respect to any such loans or financial assistance
12and the charges for interest and service connected therewith, except
13that the corporation shall not make or guarantee any loan, unless
14and until it determines:

15(a) There is no probability that the loan or other financial
16assistance would be granted by a financial institution or financial
17company under reasonable terms or conditions, and the borrower
18has demonstrated a reasonable prospect of repayment of the loan.

19(b) The loan proceeds will be used exclusively in this state.

20(c) The loan qualifies as a small business loan or an employment
21incentive loan.

22(d) The borrower has a minimum equity interest in the business
23as determined by the directives and requirements.

24(e) As a result of the loan, the jobs generated or retained
25demonstrate reasonable conformance to the directives and
26requirements specifying employment criteria.

27

63089.96.  

(a) In addition to the authority granted by Section
2863089.95, pursuant to the directives and requirements a corporation
29may act as guarantor on a surety bond for any small business
30contractor, including, but not limited to, women, minority, and
31disabled veteran contractors.

32(b) The provisions of subdivision (a) allowing a corporation to
33act as a guarantor on surety bonds may be funded through
34appropriate state or federal funding sources. Federal funds shall
35be deposited in the Federal Trust Fund in the State Treasury in
36accordance with Section 16360, for transfer to the expansion fund.

 

P41   1Article 11.  Reporting
2

 

3

63089.97.  

Each corporation shall provide to the program
4manager, in a format prescribed by him or her, the following data
5and reports:

6(a) A summary of all outstanding loans, bonds, and other credit
7enhancements to which a corporation guarantee, as authorized by
8this chapter, is attached, on a schedule determined by the program
9manager.

10(b) A summary of all outstanding loans and other debt
11instruments made by a corporation, as authorized by this chapter,
12on a schedule determined by the program manager.

13(c) A summary of all outstanding other financial project
14obligations made by a corporation, as authorized by this chapter,
15on a schedulebegin delete ofend delete determined by the program manager.

16(d) Statement of economic interests from each designated person
17pursuant to Section 87302.

18(e) No later than July 31 of each fiscal year, commencing
19January 1, 2014, each of the following documents:

20(1) A copy of the corporation board approved budget for the
21current fiscal year.

22(2) Projected fiscal year summary of authorized program
23activities including loans, loan guarantees, bond guarantees, and
24other financial product activity supported by the expansion fund.

25(3) A copy of the written plan of operation or strategic plan for
26the current fiscal year as approved by the corporations board of
27directors.

28(4) A copy of the current and valid articles of incorporation and
29bylaws of the corporation with noted amendments from the prior
30fiscal year.

31(f) No later than October 31 of each year commencing January
321, 2014, a copy of the corporation’s prior fiscal year audit, auditor
33findings, if any, and finding responses.

34(g) Any other statistical and other data, reports, or other
35information required by the directives and requirements or the
36program manager.

37

63089.98.  

(a) Annually, not later than January 1 of each year
38commencing January 1, 2014, the program manager shall prepare
39and submit to the Governor and the Legislature, pursuant to Section
409795, a report for the preceding fiscal year ending June 30,
P43   1containing the expansion fund and trust fund financial product
2activity of each corporation, including all of the following:

3(1) Loans, guarantees, and other financial products awarded
4and outstanding balances.

5(2) Default and loss statistics.

6(3) Employment data.

7 (4) Ethnicity and gender data of participating contractors and
8other entities, and experience of surety insurer participants in the
9bond guarantee program.

10(5) Significant events.

11(b) The program manager shall post the report on the bank’s
12Internet Web site.

13

SEC. 5.  

No reimbursement is required by this act pursuant to
14Section 6 of Article XIII B of the California Constitution because
15the only costs that may be incurred by a local agency or school
16district will be incurred because this act creates a new crime or
17infraction, eliminates a crime or infraction, or changes the penalty
18for a crime or infraction, within the meaning of Section 17556 of
19the Government Code, or changes the definition of a crime within
20the meaning of Section 6 of Article XIII B of the California
21Constitution.

22

SEC. 6.  

This act is an urgency statute necessary for the
23immediate preservation of the public peace, health, or safety within
24the meaning of Article IV of the Constitution and shall go into
25immediate effect. The facts constituting the necessity are:

26It is necessary that this bill take effect immediately in order to
27provide, as is necessary to timely implement the Governor’s
28reorganization plan, for a better managed and more efficient
29transition of small business assistance programs from the soon to
30be defunct Business, Transportation and Housing Agency to the
31California Infrastructure and Economic Development Bank within
32the Governor’s Office of Business and Economic Development.



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