BILL ANALYSIS Ó
AB 484
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
484 (Gipson) - As Amended April 14, 2015
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|Policy |Jobs, Economic Development, |Vote:|8 - 1 |
|Committee: |and the Economy | | |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY: This bill authorizes the Small Business Finance Center,
administered through the California Infrastructure and Economic
Development Bank (I-Bank), to include insurance, coinsurance,
and other forms of surety among the types of financial products
included in programs administered by the I-Bank. Specifically,
this bill:
AB 484
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1)Requires the I-Bank to adopt collateral or security
requirements to ensure the solvency of any insurance,
coinsurance, or surety extended under this bill.
2)Authorizes the I-Bank to act as agent for creditworthy
California exporters, to sell approved and insured accounts
receivable to qualified parties and function as a
clearinghouse for the collection and disbursement of funds
relative to those sales.
3)Requires a participating small business to have less than 250
employees; be an exporter or plan to become an exporter of
California products including agricultural products, as
specified; demonstrate that the business could not otherwise
access the surety product under reasonable terms and
conditions; demonstrate their ability to fully make the
payments covered by the surety; and have a minimum equity
interest in the business, as set by the I-Bank.
4)Authorizes the I-Bank to charge the applicant or financial
institution an insurance origination fee or other fee on all
instruments made by the I-Bank, as specified.
5)Specifies the amount of insured liability outstanding at any
one time shall be secured by no less than a 25% reserve amount
of funds on deposit in the California Small Business Expansion
Fund plus any receivables due from the funds loaned from the
California Small Business Expansion Fund to another fund in
state government, as specified.
6)Requires the I-Bank to adopt implementing directives and
requirements should the I-Bank choose to activate this
program.
7)Expands the activities of the I-Bank funded through a
continuous appropriation (California Small Business Expansion
Fund), thereby requiring a 2/3 vote of the Legislature.
AB 484
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FISCAL EFFECT
Ongoing administrative costs of approximately $300,000 GF for
the I-Bank to offer insurance, coinsurance and other forms of
surety. Additionally, the I-Bank estimates a need of
approximately $30 million for start-up capital to offer the
export related financial assistance.
COMMENTS:
1)Purpose. This bill authorizes the California Small Business
Finance Center, through the California Small Business
Expansion Fund, to include insurance, coinsurance, and other
forms of surety among the types of financial products included
in programs administered by the I-Bank. The bill aims to
provide small businesses the same types of finance export
assistance as previously offered through the California Export
Finance Office (CEFO).
2)Background. The Governor's Office of Business and Economic
Development (GO-Biz) oversees the I-Bank which administers the
California Small Business Finance Center. The California Small
Business Finance Center administers programs to assist
businesses seeking new capital resources, including, but not
limited to, the Small Business Loan Guarantee Program.
AB 484
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The State Small Business Loan Guarantee Program started in
1968. The State-Funded Trust Fund account has received several
appropriations over the years to fund loan guarantees. As of
2013-2014, the State Funded Trust Fund account has a balance
of $30,950,000. The I-Bank has not received an appropriation
to add funds to the Trust Fund in several years. According to
the I-Bank, additional resources are needed to add insurance,
coinsurance and other forms of surety.
3)Prior related legislation. SB 511 (Lieu) proposed to
re-establish the Export Finance Advisory Board and provided
gap insurance authority for exporting small businesses. This
bill was held on the Suspense file in this committee.
Analysis Prepared by:Misty Feusahrens / APPR. / (916)
319-2081