Text: HSB00695 Text: HSB00697 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 12.32, Code 1995, is amended to read as 1 2 follows: 1 3 12.32 DEFINITIONS. 1 4 As used in this division, unless the context otherwise 1 5 requires: 1 6 1. "Eligible borrower" means any person who is in the 1 7 business or is entering the business of producing, processing, 1 8 or marketing horticultural crops or nontraditional crops in 1 9 this state or any person in this state who is qualified to 1 10 participate in one of the programs in this division. 1 11 2. "Eligible lending institution" means a financial 1 12 institution that is empowered to make commercial loans,and is 1 13 eligible pursuant to chapter 12C to be a depository of state 1 14 funds, and agrees to participate in the linked investments for1 15tomorrow program. 1 16 3. "Linked investment" means a certificate of deposit 1 17 placed pursuant to this division by the treasurer of state 1 18 with an eligible lending institution, at an interest rate not 1 19 more thanthreetwo percent below current market rates on the 1 20 condition that the institution agrees to lend the value of the 1 21 deposit, according to the investment agreement provided in 1 22 section12.3712.35, to an eligible borrower at a rate not to 1 23 exceed four percent above the rate paid on the certificate of 1 24 deposit. 1 25 Sec. 2. Section 12.34, Code 1995, is amended to read as 1 26 follows: 1 27 12.34 LINKED INVESTMENTS – LIMITATIONS. 1 28 1. The treasurer of state may invest up to ten percent of 1 29 thebalance of the state pooled money fundaverage balance of 1 30 the pooled money investment fund for the previous fiscal year 1 31 in certificates of deposit in eligible lending institutions 1 32 pursuant to this division. 1 33 2. Certificates of deposit placed by the treasurer on or 1 34 after July 1, 1996, pursuant to this division may be renewed 1 35 at the option of the treasurer. The initial certificate of 2 1 deposit for a given borrower shall have a maturity of one year 2 2 and may be renewed for eight additional one-year periods. 2 3 3. A preference shall be given to those persons who are 2 4 less able than other persons to secure funds without 2 5 participation in the linked investment program. 2 62.4. The treasurer shall adopt rules pursuant to chapter 2 7 17A toimplementadminister this divisionincluding, but not2 8limited to, rules identifying horticultural crops and2 9nontraditional crops for which the linked investments may be2 10loaned. 2 11 Sec. 3. Section 12.35, Code 1995, is amended to read as 2 12 follows: 2 13 12.35 APPLICATION. 2 14 1. An eligible lending institution that desires to receive 2 15 a linked investment shall enter into an agreement with the 2 16 treasurer of state, which shall include requirements necessary 2 17 for the eligible lending institution to comply with this 2 18 division. 2 191.2. An eligible lending institution that desires to 2 20 receive a linked investment shall accept and review 2 21 applications for loans from eligible borrowers. The lending 2 22 institution shallapply all usual lending standards to2 23determine the credit worthiness of each eligible borrower2 24 determine whether the applicant is an eligible borrower and 2 25 shall certify to the treasurer of state that the applicant 2 26 would not receive a loan without the linked investment under 2 27 the institution's usual lending standards.Loan applications2 28shall be for the purchase or lease of land, machinery,2 29equipment, seed, fertilizer, direct marketing facilities, or2 30new or expanding processing facilities for horticultural crops2 31or nontraditional crops. The maximum size of a loan is two2 32hundred thousand dollars per borrower for a production loan2 33and five hundred thousand dollars for processing or marketing2 34facilities.2 352.3. The eligiblefinanciallending institution shall 3 1 forward to thestatetreasurer of state a linked investment 3 2 loan package in the form and manner as prescribed by the 3 3 treasurer of state. The package shall include information 3 4 required by the treasurer of state, including but not limited 3 5 to the amount of the loan requested and the purpose of the 3 6 loan. The institution shall certify that the applicant is an 3 7 eligible borrowerand shall certify the present borrowing rate3 8applicable to the specific eligible borrower. 3 9 Sec. 4. Section 12.36, Code 1995, is amended to read as 3 10 follows: 3 11 12.36 ACTIONS BY TREASURER– AGREEMENT. 3 12 1. The treasurer of state shall accept or reject a linked 3 13 investment loan package or any portion of the package based on 3 14 the type or terms of the loan involved, the availability of 3 15 state funds, or the compliance of the eligible borrower or 3 16 eligible lending institution. 3 17 2. Upon acceptance of the linked investment loan package 3 18 or any portion of the package, the treasurer of state shall 3 19 place certificates of deposit with the eligible lending 3 20 institution at a rate not more thanthreetwo percent below 3 21 the current market rate.After July 1, 1992, theThe 3 22 treasurer of state shall not place a certificate of deposit 3 23 with an eligible lending institution pursuant to this 3 24 division, unless the certificate of deposit earns a rate of 3 25 interest of at least two percent.When necessary, the3 26treasurer may place certificates of deposit prior to3 27acceptance of a linked investment loan package.Interest 3 28 earned on the certificate of deposit and principal not renewed 3 29 shall be remitted to the treasurer of state at the time the 3 30 certificate of deposit matures. Certificates of deposit 3 31 placed pursuant to this division are not subject to a penalty 3 32 for early withdrawal. 3 333. The eligible lending institution shall enter into an3 34investment agreement with the treasurer of state, which shall3 35include requirements necessary to carry out this division.4 1The requirements shall reflect the market conditions4 2prevailing in the eligible lending institution's lending area.4 3The agreement may include a specification of the period of4 4time in which the lending institution is to lend funds upon4 5the placement of a linked investment, and shall include4 6provisions for the certificates of deposit to be placed for4 7one-year maturities that may be renewed for eight additional4 8one-year periods. Interest shall be paid at the times4 9determined by the treasurer of state.4 10 Sec. 5. Section 12.38, Code 1995, is amended to read as 4 11 follows: 4 12 12.38 REPORTS. 4 13 By February 1 of each year, the treasurer of state shall 4 14 report on the linked investments for tomorrowprogram, the4 15rural small business transfer linked investment loan program,4 16the targeted small business linked investments program, and4 17the main street linked investments loan programprograms for 4 18 the preceding calendar year to the governor, the department of 4 19 economic development, the speaker of the house of 4 20 representatives, and the president of the senate. The speaker 4 21 of the house shall transmit copies of this report to the house 4 22 co-chair of the the joint economic development appropriations 4 23 subcommittee and the chairs of the standing committees in the 4 24 house which customarily consider legislation regarding 4 25 agriculture and commerce, and the president of the senate 4 26 shall transmit copies of this report to the senate co-chair of 4 27 the joint economic development appropriations subcommittee and 4 28 the chairs of the standing committees in the senate which 4 29 customarily consider legislation regarding agriculture and 4 30 commerce. The report shall set forth the linked investments 4 31 made by the treasurer of state under the program during the 4 32 year, the date of the investments, the total amount deposited, 4 33 the number of deposits, and an estimate of foregone interest, 4 34 the borrowing rate applicable to each borrower, and shall 4 35 include information regarding the nature, terms, and amounts 5 1 of the loans upon which the linked investments were based and 5 2 the eligible borrowers to which the loans were made. 5 3 Sec. 6. Section 12.40, Code 1995, is amended to read as 5 4 follows: 5 5 12.40 RURAL SMALL BUSINESS TRANSFER LINKED INVESTMENT LOAN 5 6 PROGRAM. 5 7 1. As used in this section, "rural small business" means 5 8 an existing rural small business, for which local competition 5 9 does not exist in the principal realm of business activity of 5 10 that business, and the loss of which will work a hardship on 5 11 the rural community. A rural small business may include a 5 12 grocery store, drug store, gasoline station, convenience 5 13 store, hardware business, or farm supply store. A rural small 5 14 business does not include a new business. 5 15 2. The treasurer of state shall adopt rules consistent 5 16 with this division to implement a rural small business 5 17 transfer linked investment loan program tofurther the5 18following purposes:5 19a. To promote the business prosperity and economic welfare5 20of Iowa through promoting the prosperity and economic welfare5 21of rural Iowa.5 22b. Tomaintain and expand existing employment 5 23 opportunities and the provision of retail goods on a local 5 24 level in small rural communities by assisting in the transfer 5 25 of ownership of retail-oriented businesses where, in the 5 26 absence of sufficient financial assistance, the businesses may 5 27 close. 5 28 3.Upon the placement of linked investment moneys with an5 29eligible lending institution, the institution is required to5 30lend money to a person pursuant to rules adopted by the5 31treasurer of state for the transfer of a rural small business.5 32TheIn order to qualify as an eligible borrower, the rural 5 33 small business must be located in a city with a population of 5 34 five thousand or less. A city located in a county with a 5 35 population in excess of three hundred thousand, if the city is 6 1 contiguous to another city in the county and that other city 6 2 is contiguous to the largest city in that county, shall be 6 3considered as having a population in excess of five thousand6 4 ineligible to qualify as a borrower. 6 5 4.TheIn order to qualify as an eligible borrower, the 6 6 transfer of the rural small business must be by purchase, 6 7 lease-purchase, or contract of sale. The purchase must be for 6 8 a portion of the business which is essential to its continued 6 9 viability, including real estate where the business is 6 10 located, fixtures attached to the real estate, equipment 6 11 relied upon by the business, and inventory for sale by the 6 12 business. 6 135. The eligible lending institution shall apply all usual6 14lending standards to determine the creditworthiness of each6 15eligible borrower. The lending institution shall forward to6 16the treasurer of state all information or any certification6 17relating to the loan required and in a manner prescribed by6 18this division and rules which shall be adopted by the6 19treasurer of state.6 206.5.AIn order to qualify as an eligible borrower, a 6 21 borrower and the seller of the rural small business shall not 6 22 be within the third degree of consanguinity or affinity. 6 23 6. Loan proceeds shall not be used to refinance existing 6 24 debt, including credit card debt. However, proceeds may be 6 25 used to refinance a short-term bridge loan made in 6 26 anticipation of the treasurer's approval of the linked 6 27 investment loan package. 6 28 7. The maximum loan amount that a borrower may receive 6 29 under this program shallnot be more thanbe fifty thousand 6 30 dollars. 6 318. Not more than one-third of the amount of the percentage6 32authorized in section 12.34 may be used for purposes of6 33supporting this program and the main street linked investment6 34loan program under section 12.51.6 35 Sec. 7. NEW SECTION. 12.41 HORTICULTURAL AND 7 1 NONTRADITIONAL CROPS LINKED INVESTMENT LOAN PROGRAM. 7 2 The treasurer of state shall adopt rules to implement a 7 3 horticultural and nontraditional crops linked investment loan 7 4 program to provide statewide availability of lower cost funds 7 5 for lending that will stimulate existing or encourage new 7 6 businesses in the areas of producing, processing, or marketing 7 7 horticultural or nontraditional crops. The rules shall be in 7 8 accordance with the following: 7 9 1. In order to qualify as an eligible borrower, the loan 7 10 application shall be for the purchase or lease of land, 7 11 machinery, equipment, or the purchase of other inputs used in 7 12 the business of producing, processing, or marketing 7 13 horticultural or nontraditional crops as defined by the 7 14 treasurer. 7 15 2. Loan proceeds shall not be used to refinance existing 7 16 debt, including credit card debt. However, proceeds may be 7 17 used to refinance a short-term bridge loan made in 7 18 anticipation of the treasurer's approval of the linked 7 19 investment loan package. 7 20 3. The maximum loan amount that an eligible borrower may 7 21 receive under this program is one hundred thousand dollars. 7 22 Sec. 8. Section 12.43, Code 1995, is amended to read as 7 23 follows: 7 24 12.43 TARGETED SMALL BUSINESS LINKEDINVESTMENTS7 25 INVESTMENT LOAN PROGRAMCREATED – DEFINITIONS. 7 26 The treasurer of state shall adopt rules to implement a 7 27 targeted small business linkedinvestmentsinvestment loan 7 28 program to increase the availability of lower cost funds to 7 29 inject needed capital into small businesses owned and operated 7 30 by women or minorities, which is the public policy of the 7 31 state. The rules shall be in accordance with the following: 7 32 1. "Targeted small business" means a business as defined 7 33 in section 15.102, subsection 5. 7 34 2.A linked investment shall only be approved in7 35connection with a loan application for aIn order to qualify 8 1 as an eligible borrower, the targeted small businesswhich has8 2beenmust be certified pursuant to section 10A.104, subsection 8 3 8. 8 4 3. In order to qualify as an eligible borrower, the net 8 5 worth of the targeted small business shall not exceed four 8 6 hundred thousand dollars. 8 73.4. Loan applications for a targeted small business 8 8 shall be for business expenses, including, but not limited to, 8 9 the purchase of land, machinery, equipment, or licenses, or 8 10 patent, trademark, or copyright feesand expenses. 8 11 5. Loan proceeds shall not be used to purchase land or 8 12 buildings for use for rental housing, for medical facilities 8 13 or buildings, or to refinance existing debt, including credit 8 14 card debt. However, proceeds may be used to refinance a 8 15 short-term bridge loan made in anticipation of the treasurer's 8 16 approval of the linked investment loan package. 8 174.6. The maximum size of a targeted small business loan 8 18 istwoone hundredfiftythousand dollars per borrower. 8 195.7. A preference shall be given to those persons who are 8 20 less able than other persons to secure funds for a targeted 8 21 small business without participation in the targeted small 8 22 business linked investment program. 8 23 Sec. 9. Sections 12.51 and 12.52, Code 1995, are repealed. 8 24 EXPLANATION 8 25 This bill provides that an eligible borrower under the 8 26 linked investment program includes any person, corporation, 8 27 cooperative, partnership, or municipality which is qualified 8 28 to participate in a linked investment program. Currently, 8 29 only persons who are in the business or entering the business 8 30 of producing, processing, or marketing horticultural crops or 8 31 nontraditional crops may be eligible borrowers. A linked 8 32 investment certificate of deposit shall earn interest at not 8 33 more than 2 percent below the market rate. 8 34 The bill also provides that linked investments by the 8 35 treasurer of state are limited to 10 percent of the average 9 1 balance for the previous fiscal year of the pooled money 9 2 investment fund (currently called the state pooled money 9 3 fund). The bill also adds language that the treasurer may 9 4 renew certificates of deposit under the program for up to 9 5 eight one-year periods after the initial one-year period. In 9 6 addition, the bill authorizes a preference for persons who are 9 7 less able to secure funds without participation in the linked 9 8 investment program and authorizes the treasurer to reject a 9 9 linked investment package due to the unavailability of state 9 10 funds, or a lack of compliance with program requirements by an 9 11 eligible borrower or eligible lending institution. 9 12 The bill further prohibits under the various loan programs 9 13 the use of linked investment loan proceeds for the purchase of 9 14 land or buildings for rental housing, for medical facilities 9 15 or buildings, or refinancing an existing debt, including 9 16 credit card debt, and provides an exception for refinancing a 9 17 loan made in anticipation of a linked investment loan being 9 18 approved. Also, the bill provides that $100,000 is the 9 19 maximum amount which may be loaned under the horticultural and 9 20 nontraditional crops program. Currently, the maximum size for 9 21 a production loan is $200,000 and the maximum size of a 9 22 processing or marketing facilities loan is $500,000. The bill 9 23 also establishes a limit on the net worth of a targeted small 9 24 business of $400,000 in order to be eligible for a linked 9 25 investment loan and provides that loans may be used for 9 26 general business expenses, except refinancing debt or credit 9 27 card debt. Targeted small business linked investment loans 9 28 are limited to $100,000. Currently targeted small business 9 29 loans may be up to $250,000. 9 30 The bill also repeals the main street linked investments 9 31 loan program. 9 32 LSB 3665HC 76 9 33 mk/jw/5
Text: HSB00695 Text: HSB00697 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
Iowa General Assembly
Search: House Bills and Amendments (76th General Assembly)
© 1996 Cornell College and League of Women Voters of Iowa
Comments? webmaster@legis.iowa.gov.
Last update: Fri Feb 23 08:43:11 CST 1996
URL: /DOCS/GA/76GA/Legislation/HSB/00600/HSB00696/960222.html
jhf