BILL ANALYSIS Ó
AB 1537
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ASSEMBLY THIRD READING
AB
1537 (Committee on Jobs, Economic Development, and the Economy)
As Introduced March 25, 2015
2/3 vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+----------------------|
|Jobs |8-0 |Eduardo Garcia, | |
| | |Kim, Brough, Brown, | |
| | |Chu, Gipson, Irwin, | |
| | |Mathis | |
| | | | |
|----------------+------+--------------------+----------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bloom, Bonta, | |
| | |Calderon, Chang, | |
| | |Daly, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Holden, | |
| | |Jones, Quirk, | |
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Expands the type of information being reported on
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financial assistance provided through the Small Business Finance
Center. Specifically, this bill requires reporting annually by
city and county on the number and dollar value of credit
enhancements and debt instruments issued by the small business
financial development corporations (FDCs).
EXISTING LAW:
1)Establishes the Infrastructure and Economic Development Bank
(I-Bank) within the Governor's Office of Business and Economic
Development (GO-Biz) and authorizes it to undertake a variety of
financial activities including, but not limited to, the
administration of a revolving loan fund for infrastructure
development, oversight of the activities undertaken by the Small
Business Finance Center, and the issuance of tax-exempt and
taxable revenue bonds.
2)Establishes the Small Business Finance Center within the I-Bank
for the purpose of assisting businesses seeking capital
resources not otherwise available in the private markets
including:
a) Loan guarantees and other credit enhancements;
b) Direct loans and other debt instruments;
c) Disaster loan guarantees; and
d) Surety bond guarantees.
3)Requires the FDCs to report annually on their activities
financed through the Small Business Finance Center. This
information is used by the I-Bank to prepare an annual report of
its activities.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, implementation of this bill will result in absorbable
costs to GO-Biz of up to $100,000.
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COMMENTS: California offers a range of financial assistance to
small businesses. One of the largest programs is the Small
Business Loan Guarantee, which is administered through the Small
Business Finance Center.
As initially designed, the state designated FDCs to serve specific
geographic areas. Today, some FDCs serve small businesses across
the state or within larger and sometimes overlapping geographic
areas in the state. This change in program delivery necessitates
a change in reporting. This bill, a committee bill, expands
reporting requirements to include the city and county of the
assisted businesses under all programs offered through the Small
Business Finance Center, including the Small Business Loan
Guarantee Program.
State Small Businesses Credit Initiative: In October 2010, the
United States Congress passed and the United States President
signed the Small Business Jobs Act (Act). Among other things, the
federal Act created the State Small Business Credit Initiative
(SSBCI), which is authorized to expend up to $1.5 billion for
state sponsored small business finance programs. Over the life of
this program, every federal dollar must be matched by $10 from the
private sector -- the deadline for using the funds is September
2017.
Under the SSBCI funding formula, California is eligible to receive
up to $168 million, which is the largest amount of any state.
California uses its moneys to capitalize the Small Business Loan
Guarantee Program at the I-Bank's Small Business Finance Center
and the California Capital Access Program (CalCAP) loan loss
reserve program and a collateral support program administered
through the California Pollution Control Financing Authority.
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California has received $110 million of the total $168 million
available and, as of June 30, 2014, the state has encumbered
roughly $87.6 million with approximately $40.6 million set aside
to cover loan guarantees; $7.2 million deposited with private
financial institutions through the CalCAP and $39.8 million used
for the collateral support program. Approximately $2.4 million
has been used for direct administrative costs, resulting in a
cumulative 2.18% administrative cost per dollar allocated by the
United States Treasury. Since inception, 47,202 jobs have been
created (7,372) or retained (39,830) by the close of 2013. Job
impacts in 2014 were 2,228 new jobs and 13,931 retained jobs.
This bill's reporting requirements would apply to the FDC
administered portion of the SSBCI funds, as well as the $32
million in state funds being delivered through the FDC under
contract with the Small Business Finance Center.
Further Information: The policy committee analysis includes
additional information on the I-Bank, the $168 million in small
business capital being administered though the federal grant, and
related legislation.
Analysis Prepared by:
Toni Symonds / J., E.D., & E. / (916) 319-2090
FN: 0000385
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