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Text: HSB00209                          Text: HSB00211
Text: HSB00200 - HSB00299               Text: HSB Index
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House Study Bill 210

Bill Text

PAG LIN
  1  1    Section 1.  Section 12.32, Code 1997, 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 "Eligible borrower" does not include a person who has been
  1 12 determined to be or becomes delinquent in making child support
  1 13 payments or any other payments due the state.
  1 14    2.  "Eligible lending institution" means a financial
  1 15 institution that is empowered to make commercial loans and is
  1 16 eligible pursuant to chapter 12C to be a depository of state
  1 17 funds.
  1 18    3.  "Linked investment" means a certificate of deposit
  1 19 placed pursuant to this division by the treasurer of state
  1 20 with an eligible lending institution, at an interest rate not
  1 21 more than three percent below current market rates rate on the
  1 22 condition that the institution agrees to lend the value of the
  1 23 deposit, according to the investment agreement provided in
  1 24 section 12.35, to an eligible borrower at a rate not to exceed
  1 25 four percent above the rate paid on the certificate of
  1 26 deposit.  The treasurer of state shall determine and make
  1 27 available the current market rate which shall be used each
  1 28 month.
  1 29    Sec. 2.  Section 12.33, Code 1997, is amended to read as
  1 30 follows:
  1 31    12.33  LEGISLATIVE FINDINGS AND INTENT – PURPOSE PUBLIC
  1 32 POLICY.
  1 33    1.  The general assembly finds the following:
  1 34    a.  That many horticultural operations throughout the state
  1 35 are experiencing economic stagnation or decline.
  2  1    b.  That high interest rates have caused potentially viable
  2  2 operations to cease or not expand in the area of horticultural
  2  3 or nontraditional crop production, processing, or marketing.
  2  4    2.  The It is the public policy of this state that a linked
  2  5 investments for tomorrow program provided for in this division
  2  6 is intended be established to provide statewide availability
  2  7 of lower cost funds for lending purposes that will inject
  2  8 needed capital into the business of, and stimulate existing or
  2  9 encourage new businesses in the area of, producing,
  2 10 processing, or marketing horticultural or nontraditional
  2 11 crops.
  2 12    3.  It is the public policy of the state through the linked
  2 13 investments for tomorrow program to create an availability of
  2 14 lower cost funds to inject needed capital into the business of
  2 15 producing, processing, or marketing horticultural crops or
  2 16 nontraditional crops.
  2 17    Sec. 3.  Section 12.34, subsection 1, Code 1997, is amended
  2 18 to read as follows:
  2 19    1.  The treasurer of state may invest up to the lesser of
  2 20 sixty-five million dollars or ten percent of the balance of
  2 21 the state pooled money fund in certificates of deposit in
  2 22 eligible lending institutions pursuant to this division.
  2 23    Sec. 4.  Section 12.40, Code 1997, is amended to read as
  2 24 follows:
  2 25    12.40  RURAL SMALL BUSINESS TRANSFER LINKED INVESTMENT LOAN
  2 26 PROGRAM.
  2 27    1.  As used in this section, "rural small business" means
  2 28 an existing or new rural small business, for which local
  2 29 competition does not exist in the principal realm of business
  2 30 activity of that business, and the loss of which will work a
  2 31 hardship on the rural community.  A rural small business may
  2 32 include a grocery store, drug store, gasoline station,
  2 33 convenience store, hardware business, or farm supply store.  A
  2 34 rural small business does not include a new business.
  2 35    2.  The treasurer of state shall adopt rules consistent
  3  1 with this division to implement a rural small business
  3  2 transfer linked investment loan program to maintain and expand
  3  3 existing employment opportunities and the provision of retail
  3  4 goods and services on a local level in small rural communities
  3  5 by assisting in the transfer of ownership of retail-oriented
  3  6 businesses where, in the absence of sufficient financial
  3  7 assistance, the businesses may close.
  3  8    3.  In order to qualify as an eligible borrower, the rural
  3  9 small business must be located in a city with a population of
  3 10 five thousand or less.  A city located in a county with a
  3 11 population in excess of three hundred thousand, if the city is
  3 12 contiguous to another city in the county and that other city
  3 13 is contiguous to the largest city in that county, shall be
  3 14 ineligible to qualify as a borrower.  In order to qualify
  3 15 under this program, the borrower must not have a net worth
  3 16 exceeding five hundred thousand dollars as defined in rules
  3 17 adopted by the treasurer of state pursuant to chapter 17A and
  3 18 the rural small business must meet all of the following
  3 19 criteria:
  3 20    a.  Be a for-profit business.
  3 21    b.  Have annual sales of two million dollars or less.
  3 22    c.  Not be operated out of the home of any person.
  3 23    d.  Not involve real estate investments, rental of real
  3 24 estate, leasing of real estate, or real estate speculation.
  3 25    e.  Not provide professional services.
  3 26    f.  Liquor, beer, and wine sales must not exceed twenty
  3 27 percent of annual sales.
  3 28    4.  In order to qualify as an eligible borrower, the
  3 29 transfer of the an existing rural small business must be by
  3 30 purchase, lease-purchase, or contract of sale.  The purchase
  3 31 must be for a portion of the business which is essential to
  3 32 its continued viability, including real estate where the
  3 33 business is located, fixtures attached to the real estate,
  3 34 equipment, supplies, and machinery relied upon by the
  3 35 business, and inventory for sale by the business.
  4  1    5.  In order to qualify as an eligible borrower, a borrower
  4  2 and the seller of the an existing rural small business shall
  4  3 not be within the third degree of consanguinity or affinity.
  4  4    6.  A borrower who meets the requirements of subsection 3
  4  5 may receive a loan under this program for a new rural small
  4  6 business.  Loan proceeds for a new rural small business shall
  4  7 only be used for the acquisition of inventory, supplies,
  4  8 machinery, fixtures, and equipment relied upon by the
  4  9 business.
  4 10    6. 7.  Loan proceeds shall not be used to refinance
  4 11 existing debt, including credit card debt.  However, proceeds
  4 12 may be used to refinance a short-term bridge loan made in
  4 13 anticipation of the treasurer's approval of the linked
  4 14 investment loan package.
  4 15    7. 8.  The maximum loan amount that a borrower or a
  4 16 business may receive under during the lifetime of this loan
  4 17 program shall be fifty thousand dollars.
  4 18    9.  An eligible borrower with an outstanding loan made
  4 19 under either the main street linked investments loan program,
  4 20 as created in section 12.51, Code 1995, or the targeted small
  4 21 business linked investments program, as created in section
  4 22 12.43, Code 1997, shall be eligible to participate under the
  4 23 provisions of this division for the remaining period of
  4 24 eligibility under either of those programs.
  4 25    Sec. 5.  Section 12.41, subsection 1, Code 1997, is amended
  4 26 to read as follows:
  4 27    1.  In order to qualify as an eligible borrower, the
  4 28 borrower must not have a net worth exceeding five hundred
  4 29 thousand dollars as defined in the rules adopted by the
  4 30 treasurer and the loan application shall must be for the
  4 31 purchase or lease of land, machinery, equipment, or the
  4 32 purchase of other inputs used in the business of producing,
  4 33 processing, or marketing horticultural or nontraditional crops
  4 34 as defined in rules adopted by the treasurer.
  4 35    Sec. 6.  Section 12.41, subsection 3, Code 1997, is amended
  5  1 to read as follows:
  5  2    3.  The maximum loan amount that an eligible or new
  5  3 borrower may receive under during the lifetime of this loan
  5  4 program is two hundred thousand dollars for a production loan
  5  5 and five hundred thousand dollars for processing or marketing
  5  6 facilities.  Loans made under this program shall qualify for
  5  7 the below market rate on the first fifty thousand dollars
  5  8 loaned only.  Each month the treasurer of state shall
  5  9 determine and make available a blended rate for all loan
  5 10 amounts above the first fifty thousand dollars loaned under
  5 11 the program.  A borrower under this program shall be limited
  5 12 to one loan from one financial institution.
  5 13    Sec. 7.  Section 12.43, Code 1997, is repealed.
  5 14    Sec. 8.  Loan applications on file with the treasurer of
  5 15 state on the effective date of this Act for the targeted small
  5 16 business linked investment program shall be considered
  5 17 eligible to be considered for participation under the relevant
  5 18 linked deposit program in this division.  
  5 19                           EXPLANATION
  5 20    This bill relates to the linked investments programs in
  5 21 Code chapter 12.
  5 22    The bill amends Code section 12.32 relating to the
  5 23 definitions used in the program.  The bill provides that a
  5 24 person does not qualify as an eligible borrower if the person
  5 25 has been determined to be or becomes delinquent in paying
  5 26 child support or any other payments due the state.  The bill
  5 27 provides that the treasurer of state shall determine and make
  5 28 available each month the current market rate which shall be
  5 29 used by institutions in determining interest rates for
  5 30 certificates of deposit placed by the treasurer of state.  The
  5 31 bill provides that the treasurer of state may invest up to the
  5 32 lesser of $65 million or 10 percent of the balance of the
  5 33 state pooled money fund in certificates of deposit under the
  5 34 linked deposit programs.
  5 35    The bill provides that the rural small business program is
  6  1 a loan program for an existing or new rural small business
  6  2 located in a city with a population of 5,000 or less.  The
  6  3 bill provides that the program is not limited to situations
  6  4 involving the transfer of ownership of an existing business.
  6  5 In order to qualify under the program, the borrower must have
  6  6 a net worth of $500,000 or less and the business must be a
  6  7 for-profit business, the business must have annual sales of
  6  8 $2,000,000 or less, the business must not be operated out of
  6  9 any person's home, the business must not conduct real estate
  6 10 transactions, the business must not provide professional
  6 11 services, and liquor, beer, and wine sales must not exceed 20
  6 12 percent of annual sales.
  6 13    The bill provides that loan proceeds for a new rural small
  6 14 business under the rural small business linked investment loan
  6 15 program shall only be used for the purchase of inventory,
  6 16 supplies, machinery, fixtures, and equipment relied upon by
  6 17 the business.
  6 18    The bill provides that the maximum amount that a borrower
  6 19 or a business may receive during the lifetime of the rural
  6 20 small business linked investment loan program shall be
  6 21 $50,000.  The bill provides that eligible businesses receiving
  6 22 loans made under the main street linked investments loan
  6 23 program or the targeted small business linked investments
  6 24 program which remain outstanding shall be eligible to
  6 25 participate under this program for the remaining eligibility
  6 26 period under those two programs.
  6 27    The bill amends the horticultural and nontraditional crops
  6 28 linked investment loan program by providing that an eligible
  6 29 borrower shall not have a net worth exceeding $500,000 and the
  6 30 maximum amount a borrower may receive during the lifetime of
  6 31 this loan program is $200,000.  The bill provides that loans
  6 32 made under the program shall qualify for the below market rate
  6 33 for the first $50,000 loaned and a blended rate for all
  6 34 amounts over the first $50,000 loaned under the program.  The
  6 35 bill provides that a borrower under the program shall be
  7  1 limited to one loan from one financial institution.
  7  2    The bill repeals the targeted small business linked
  7  3 investments program under Code section 12.43.  The targeted
  7  4 small business linked investments program was created to
  7  5 provide lower cost moneys to inject capital into small
  7  6 businesses owned and operated by women or minorities.  A
  7  7 moratorium on new linked investments under this program is
  7  8 currently in place until June 30, 1997, pursuant to 1996 Iowa
  7  9 Acts, chapter 1058, section 9.
  7 10    Loan applications on file with the treasurer of state on
  7 11 the effective date of this Act for the targeted small business
  7 12 linked investments program shall be eligible to be considered
  7 13 under the relevant linked deposit program in this division.  
  7 14 LSB 2121YC 77
  7 15 tm/jj/8
     

Text: HSB00209                          Text: HSB00211
Text: HSB00200 - HSB00299               Text: HSB Index
Bills and Amendments: General Index     Bill History: General Index

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