BILL ANALYSIS �
AB 981
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 981 (Hueso) - As Introduced: February 18, 2011
Policy Committee: Banking and
Finance Vote: 12-0
JEDE 6-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides additional incentives within the California
Capital Access Program (CalCAP) to encourage lenders to lend to
small businesses. Specifically, this bill:
1)Expands the financial institution definition to include
insured depository institutions, insured credit unions, and
community development financial institutions.
2)Authorizes the California Pollution Control Financing
Authority (CPCFA) to withdraw a portion of the interest or
other income that has been credited to the loss reserve
account.
3)Requires the CPCFA to contribute an amount not less than 150%
of the amount of the fees paid by the participating financial
institution if the business is located within a severely
affected community.
FISCAL EFFECT
There is neither direct fiscal impact to the state nor any
increased liability for loans.
COMMENTS
1)According to the Sponsor, the California State Treasurer, AB
981 would do three things: it would allow CalCAP to provide
added incentives for loans to businesses in high unemployment
areas and other distressed communities; it would allow CalCAP
AB 981
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to make more lenders eligible to provide assistance to
for-profit community development financial institutions; and
it would allow CalCAP to reduce the amount of interest it
takes from loan loss reserve accounts to cover program costs.
The treasurer states, "Over the next few years, CalCAP is
projected to create over $1.3 billion in small business
lending. AB 981 makes changes that will allow CalCAP to
attract new lenders and better assist small businesses in our
most distressed communities."
2)Federal law. In 2010, President Obama signed into law the
Small Business Jobs Act. The new law provides resources to
help small businesses by extending the small business enhanced
loan provisions, while offering billions more in lending
support, tax cuts and other opportunities for entrepreneurs
and small business owners. It established the State Small
Business Credit Initiative that provides up to $15 billion to
support state-run small business lending programs.
California, so far, has received $56 million from the Small
Business Jobs Act. If California makes use of the money,
California could end up receiving $168 million for small
business loan programs such as CalCAP and the Small Business
Loan Guarantee Program.
3)Related legislation. AB 901 (V. Manuel Perez) expands the
definition of financial institutions in CalCAP and increases
CalCAP reporting requirements. This bill is pending in this
committee.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081