BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 901 (V.M. Perez)
Hearing Date: 08/25/2011 Amended: 08/15/2011
Consultant: Mark McKenzie Policy Vote: B.&F.I. 7-0
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BILL SUMMARY: AB 901 would establish the California Small
Business Development Center (SBDC) Program and expand the
definition of financial institutions eligible for participation
in the California Capital Access Loan Program (CalCAP).
Specifically, this bill would:
Establish the state SBDC program to support and expand the
development of state services to small businesses, prescribe
the duties of SBDCs, and require the SBDC program to work
collaboratively with specified state entities and economic
development and workforce programs.
Establish the SBA Account within the California Economic
Development Fund and authorize the Secretary of the Business,
Transportation and Housing Agency (BTH) to expend revenues in
the account, upon appropriation by the Legislature, solely for
the purpose of providing state matching funds for specified
federal grants.
Authorize SBDCs to charge reasonable fees for its training
services, and require SBDCs to make efforts to secure federal,
state, local and private funds.
Require administrative lead centers, which oversee and provide
assistance to SBDCs on a regional basis, to report to BTH on
SBDC program activities, and require the Secretary of BTH to
compile lead center reports into an annual report to the
Governor and Legislature, as specified, that will also be
posted on its website.
Expand access to CalCAP by including small business financial
development corporations and microenterprise development
organizations as financial institutions eligible for
participation.
Require additional information to be included in annual
reports to the Governor and Legislature on CalCAP, including
data on businesses served, the impact on jobs, and geographic
distribution of loans.
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Fiscal Impact (in thousands)
AB 901 (V.M. Perez)
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Major Provisions 2011-12 2012-13 2013-14 Fund
CalCAP expansion minor and absorbable costs Special*
CPCFA reporting minor costs to collect and report new
data Special*
on annual report
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* California Capital Access Fund
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
California SBDC Program
California SBDCs are private entities funded through a
combination of federal, state, and private funds that are
structured to provide resources for small business development.
The statewide network of 35 SBDCs is structured around six
regional administrative lead centers and each SBDC provides
consulting, mentoring, training, technical assistance and
workshops either through outreach on a community level or at the
center itself.
California's SBDCs receive a total of $12 million in funding
from the federal Small Business Administration annually. The
lead centers then work together to secure the non-federal funds
required of these entities (a portion of the federal funds must
be returned, if the SBDCs are unable to raise at least $6
million annually through non-federal sources). Through 2002,
these non-federal matching funds were provided by the state.
Since that time, California SBDCs have relied on funding from
local entities, corporate sponsorships, competitive one-time
grants, and one-time contracts with state entities. Last year,
AB 1632 (J.Perez), Chapter 731 of 2010, provided $6 million in
one-time state matching funds for SBDCs.
The author notes that prior to the consolidation of the Trade
and Commerce Agency into BTH, there was a state SBDC program.
Since that time, the program has existed without any direct
state administration. AB 901 would formally codify the
California SBDC program, providing a state point of contact and
a conduit for compiling data on the impacts of statewide SBDC
activity.
BTH indicates that the bill would likely require agency staff to
AB 901 (V.M. Perez)
Page 2
develop and adopt regulations to guide the administration of the
state SBDC program. Costs are currently unknown, but staff
estimates these costs could be in the range of $100,000 to
$150,000. BTH further indicates that the program could be
administered with 1 new PY of staff (Associate Government
Program Analyst level).
This bill is intended to expand and support the further
development of the state's network of services to small
businesses and to establish a structure that provides funding to
match the federal SBDC funds. By establishing a state program
without a dedicated funding source, and given an annual need of
$6 million in matching funds, the bill would create cost
pressures to provide state funds to match available federal
funds (to the extent local, private, or other federal funds are
unavailable).
CalCAP
Existing law establishes CalCAP, which is administered by the
California Pollution Control Financing Authority (authority) to
assist small businesses in accessing loans from participating
financial institutions through a loan loss reserve account
program. Borrowers, lenders, and the authority each contribute
to a loan loss reserve account, which serves as security if a
borrower fails to make payments. Loan proceeds may be used to
finance land acquisition, building construction or renovation,
equipment purchases, capital projects, or working capital.
Under existing law, a wide range of financial institutions are
eligible to apply to the authority for approval as a CalCAP
participant. The authority is required to report annually to
the Governor and Legislature on the financial condition and
programmatic results of CalCAP for small businesses.
AB 901 would expand the definition of financial institutions
eligible for participation as CalCAP lenders to include small
business financial development corporations and microenterprise
development organizations that meet standards established by the
authority, as defined. The bill would also require the
authority to include the following information in its annual
report for all new loans issued through CalCAP: the total number
of businesses served, jobs created, jobs retained, the
geographic distribution of loans, and a breakdown of businesses
served by industry sector.
AB 901 (V.M. Perez)
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The State Treasurer's Office indicates that expanding the
availability of CalCAP would not increase costs to administer
the program. In addition, any costs to prospectively collect
new information from financial institution participants for
inclusion in the annual report would be minor and absorbable.
PROPOSED AMENDMENTS would make a technical change to the
definition of microenterprise development organizations to
clarify that these entities must be lenders.
PROPOSED COMMITTEE AMENDMENTS would delete Sections 1 and 2 of
the bill, pertaining to the creation of a California Small
Business Development Center Program.