AB 1862, as introduced, Kim. Small Business Expansion Fund.
Existing law creates the Small Business Expansion Fund to provide guarantees to loans offered by financial institutions and financial companies to small businesses. Existing law prohibits a corporation from issuing a guarantee pursuant to these provisions unless it makes specified determinations.
This bill would make a technical, nonsubstantive change to these provisions.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 63089.70 of the Government Code is
2amended to read:
(a) The Small Business Expansion Fund, which is
4hereby continued in existence, shall, among other things, provide
5guarantees to loans offered by financial institutions and financial
6companies to small businesses.
7(b) The Legislature finds and declares that the Small Business
8Loan Guarantee Program has enabled participating small businesses
P2 1that do not qualify for conventional business loans or Small
2Business Administration loans to secure funds to expand their
3businesses. These small businesses would not have been able to
4expand their businesses in the absence of the program. The program
5has also provided valuable technical assistance to small businesses
6to ensure growth and stability. The study commissioned by former
7Section 14069.6 of the Corporations Code, as
added by Chapter
8919 of the Statutes of 1997, documented the return on investment
9of the program and the need for its services. The value of the
10program has also been recognized by the Governor through
11proposals contained in the May Revision to the Budget Act of
122000 for the 2000-01 fiscal year.
13(c) A corporation shall not issue a guaranteebegin delete underend deletebegin insert pursuant toend insert
14 this section unless it determines that the following conditions are
15satisfied:
16(1) There is a low probability that the loan being guaranteed
17would be granted by a financial company or financial institution
18under reasonable terms and conditions and the borrower has
19demonstrated a reasonable prospect of repayment.
20(2) The loan proceeds will be used exclusively in this state.
21(3) The loan qualifies as a small business loan or an employment
22incentive loan.
23(4) The borrower has a minimum equity interest in the business
24as determined by the directives and requirements.
25(5) As a result of the loan being guaranteed, the jobs generated
26or retained demonstrate reasonable conformance to any directives
27and requirements specifying employment criteria.
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