HF 2578 (LSB 5432YH (3) 88)

HOUSE FILE 2578

BY  RUNNING-MARQUARDT, STECKMAN, B. MEYER, ANDERSON, COHOON, KONFRST, DONAHUE, GASKILL, DERRY, WINCKLER, KURTH, JUDGE, WILBURN, HUNTER, KURTZ, FORBES, NIELSEN, ABDUL-SAMAD, BEARINGER, WOLFE, ISENHART, SUNDE, MATSON, WESSEL-KROESCHELL, LENSING, MASCHER, BROWN-POWERS, EHLERT, GAINES, OLDSON, BENNETT, R. SMITH, McCONKEY, KACENA, WILLIAMS, HALL, BRECKENRIDGE, and OURTH

A BILL FOR

An Act establishing a small business revolving loan program and small business revolving loan fund within the economic development authority to award low-interest loans to eligible small businesses. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  15.302  Small business revolving loan program and fund.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Eligible small business” means a business meeting the requirements of subsection 5.
   b.  “Financial assistance” means a low-interest loan with a five-year term.
   c.  “Fund” means the small business revolving loan fund.
   d.  “Located in” means the place or places at which a business’s operations are located and where at least ninety-five percent of the business’s employees work, or where employees that are paid at least ninety-five percent of the business’s payroll work.
   e.  “Program” means the small business revolving loan program. 
   2.  a.  A small business revolving loan fund is created in the state treasury under the control of the authority and consists of any moneys appropriated to the fund by the general assembly and any other moneys available and obtained or accepted by the authority for placement in the fund. The fund shall be used to provide financial assistance under the program. The authority shall use any moneys specifically appropriated for purposes of this section only for the purposes of this section.
   b.  Notwithstanding section 8.57, subsection 5, paragraph “c”, there is appropriated from the rebuild Iowa infrastructure fund to the authority for deposit in the fund, for the fiscal year beginning July 1, 2020, and for each succeeding fiscal year, the sum of five million dollars.
   c.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall accrue to the authority and shall be used for purposes of this section. Notwithstanding section 8.33, moneys in the fund at the end of each fiscal year shall not revert to any other fund but shall remain in the fund for expenditure for subsequent fiscal years. All repayments, payments of interest, or recaptures of the financial assistance provided under this section shall accrue to the authority and shall be used for purposes of this section.
   d.  The authority shall not use more than five percent of the moneys in the fund at the beginning of the fiscal year for purposes of administrative costs, marketing, and other program support.
   3.  The authority shall establish and administer a small business revolving loan program for purposes of awarding financial assistance to eligible small businesses. Financial assistance awarded to an eligible small business pursuant to the program shall not exceed fifty thousand dollars.
   4.  The authority shall begin to award financial assistance from the fund not later than January 1, 2021.
   5.  A business is eligible to apply for financial assistance under the program if the business meets all of the following criteria at the time of the business’s application:
   a.  The business has fifteen or fewer full-time equivalent employees.
   b.  The business is located in Iowa.
   c.  The business is owned, operated, and actively managed by a resident of Iowa.
   d.  The business has a business plan and has received assistance in the development stage or the expansion stage from a small business development center.
   e.  If the business has been a going concern for two years or more, the business has not been found to be in violation of any environmental or worker safety laws or rules.
   f.  The business only employs individuals legally authorized to work in the state.
   g.  The business does not engage in the production, depiction, or distribution of obscene material. For purposes of this paragraph, “obscene material” means the same as defined in section 728.1.
   h.  The business is not in bankruptcy and is not imminently contemplating filing for bankruptcy.
   6.  Upon approval by the authority of a business’s application, the business shall enter into an agreement with the authority which shall include but not be limited to all of the following provisions:
   a.  If the business, after being awarded financial assistance, does not continue to meet one or more of the criteria for eligibility under subsection 5, except for subsection 5, paragraph “a”, all or a portion of the financial assistance received is subject to disallowance, recapture, or immediate repayment.
   b.  If, after being awarded financial assistance, the business ceases operations or removes a significant portion of its operations to a location outside of the state, all or a portion of the financial assistance received is subject to disallowance, recapture, or immediate repayment.
   7.  a.  An eligible small business shall not receive more than one award of financial assistance under this section.
   b.  An eligible small business that is awarded financial assistance under this section may apply for financial assistance under other programs administered by the authority.
   c.  An eligible small business that is awarded financial assistance under this section shall not use such financial assistance for purposes of meeting the business’s payroll obligations.
   8.  The authority shall, by January 15 of each year, submit a report on the program to the general assembly. The report shall include all of the following information for each small business that is awarded financial assistance under the program in the immediately preceding calendar year:
   a.  The industry or service area in which the business operates.
   b.  The number of employees employed by the business.
   c.  The amount of the financial assistance awarded by the authority to the business.
   d.  The county in which the business is located.
   e.  Whether the business is a start-up or a going concern.
   f.  Identification of the small business development center providing the business with assistance in the development stage or the expansion stage.
   g.  If applicable, identification of the small business center that referred the business to the program.
   9.  The authority shall adopt rules pursuant to chapter 17A as necessary to administer the program.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill establishes a small business revolving loan program and small business revolving loan fund within the economic development authority for the purpose of awarding low-interest loans to eligible small businesses.
   The bill creates a small business revolving loan fund (fund) in the state treasury under the control of the economic development authority (authority). The fund consists of any moneys appropriated to the fund by the general assembly and any other moneys available and obtained or accepted by the authority for placement in the fund. The bill establishes a $5 million standing appropriation for the fund for the fiscal year beginning July 1, 2020, from the rebuild Iowa infrastructure fund. The bill requires that the fund be used to provide financial assistance under the small business revolving loan program (program). “Financial assistance” is defined in the bill as a low-interest loan with a five-year term.
   Interest or earnings on moneys in the fund shall accrue to the authority and must be used for purposes of the program. Moneys in the fund at the end of each fiscal year do not revert to any other fund but remain in the fund for expenditure for subsequent fiscal years. All payments of interest, repayments, or recaptures of financial assistance awarded under the program accrue to the authority and must be used for purposes of the program. The authority may use not more than 5 percent of the moneys in the fund at the beginning of each fiscal year for purposes of administrative costs, marketing, and other program support. The authority is required to begin to award financial assistance from the fund not later than January 1, 2021.
   The bill directs the authority to establish a program for purposes of providing financial assistance to eligible small businesses. Financial assistance awarded to an eligible small business shall not exceed $50,000. A business is eligible to apply for financial assistance under the program if the business, at the time of application, has 15 or fewer full-time equivalent employees; is located in Iowa; is owned, operated, and actively managed by a resident of Iowa; has a business plan and has received assistance in the development stage or the expansion stage from a small business development center; only employs individuals legally authorized to work in the state; does not engage in the production, depiction, or distribution of obscene material; and is not in bankruptcy or imminently contemplating filing for bankruptcy. If the business has been a going concern for two years or more, the business must not have violated any environmental or worker safety laws or rules. “Located in” is defined in the bill as the place or places at which a business’s operations are located and where at least 95 percent of the business’s employees work, or where employees that are paid at least 95 percent of the business’s payroll work.
   Upon the authority’s approval of a business’s application, the eligible small business is required to enter into an agreement with the authority. The agreement must include provisions as outlined in the bill.
   An eligible small business may not be awarded more than one loan under the program; however, the business may apply for financial assistance under other programs administered by the authority. Awarded financial assistance cannot be used by an eligible small business for meeting payroll obligations.
   The bill directs the authority to submit an annual report on the program by January 15 to the general assembly. The report must include information, as detailed in the bill, for each business that received financial assistance under the program in the immediately preceding calendar year.
   The authority must adopt rules pursuant to Code chapter 17A as necessary to administer the program.