House File 2421 - Introduced
HOUSE FILE
BY L. MILLER, BAILEY, WINCKLER,
WESSEL=KROESCHELL, WENTHE,
and MAY
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing for microenterprise business development by
2 creating a statewide microenterprise financial intermediary, a
3 microenterprise partnership program, and a grant program and
4 making appropriations.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
6 TLSB 6037HH 82
7 tw/nh/5
PAG LIN
1 1 Section 1. Section 15.102, Code Supplement 2007, is
1 2 amended by adding the following new subsections:
1 3 NEW SUBSECTION. 1A. "Community microenterprise
1 4 development organization" means a community development,
1 5 economic development, social service, or nonprofit
1 6 organization that provides training, access to financing, and
1 7 technical assistance to microenterprises.
1 8 NEW SUBSECTION. 3A. "Microenterprise" means any business
1 9 with five or fewer employees which generally lacks collateral
1 10 and has difficulty securing financing from conventional
1 11 business lending sources. "Microenterprise" includes
1 12 start=up, home=based, and self=employed businesses.
1 13 NEW SUBSECTION. 3B. "Microloan" means a loan to a
1 14 microenterprise in an amount not to exceed fifty thousand
1 15 dollars.
1 16 NEW SUBSECTION. 4A. "Statewide microenterprise
1 17 development financial intermediary" has the meaning defined in
1 18 section 15.114A, subsection 1.
1 19 Sec. 2. Section 15.108, subsection 7, unnumbered paragraph
1 20 1, Code Supplement 2007, is amended to read as follows:
1 21 To provide assistance to small business, targeted small
1 22 business, microenterprises, and entrepreneurs creating small
1 23 businesses to ensure continued viability and growth. To carry
1 24 out this responsibility, the department shall:
1 25 Sec. 3. Section 15.108, subsection 7, Code Supplement
1 26 2007, is amended by adding the following new paragraph:
1 27 NEW PARAGRAPH. bb. Establish and administer the Iowa
1 28 microenterprise development partnership program established in
1 29 section 15.114.
1 30 Sec. 4. NEW SECTION. 15.114 IOWA MICROENTERPRISE
1 31 DEVELOPMENT PARTNERSHIP PROGRAM.
1 32 The department shall establish and administer an Iowa
1 33 microenterprise development partnership program. The program
1 34 shall provide resources to microenterprises in the state in
1 35 order to create jobs, enhance entrepreneurial skills, expand
2 1 business activities, foster local economic development in
2 2 high=need areas, and increase the capacity of low=income
2 3 households to become economically self=sufficient.
2 4 Sec. 5. NEW SECTION. 15.114A STATEWIDE MICROENTERPRISE
2 5 DEVELOPMENT FINANCIAL INTERMEDIARY == MICROLOAN FUND.
2 6 1. The department shall establish a statewide
2 7 microenterprise development financial intermediary which shall
2 8 perform the duties prescribed in this section. For purposes
2 9 of this section, "statewide microenterprise development
2 10 financial intermediary" means an independent, private
2 11 nonprofit organization with expertise in microenterprise
2 12 development and microlending that serves as an intermediary
2 13 between the department of economic development and community
2 14 microenterprise development organizations and helps those
2 15 organizations increase their capacity to deliver services to
2 16 microenterprises. The director of the department shall ensure
2 17 that the intermediary is not governed by individuals who are
2 18 employed by or associated with organizations that are
2 19 applicants for community microenterprise development
2 20 organization grant funds pursuant to section 15.114B.
2 21 2. The statewide microenterprise development financial
2 22 intermediary shall do all of the following:
2 23 a. Establish and administer a statewide microloan funds in
2 24 the state treasury. Moneys in the fund shall be used for the
2 25 benefit of community microenterprise development
2 26 organizations. In administering the fund, the financial
2 27 intermediary shall engage in efforts to attract new funds from
2 28 the federal, state, or regional level and shall provide
2 29 essential microloan services such as underwriting, loan
2 30 processing, and loan servicing.
2 31 b. Award grants to community microenterprise development
2 32 organizations as described in section 15.114B.
2 33 c. Provide technical assistance and business support to
2 34 community microenterprise development organizations.
2 35 d. Promote microlending and educate stakeholders
3 1 throughout the state in best practices for microlending.
3 2 e. Coordinate microenterprise development efforts with
3 3 other economic development efforts in the state, including
3 4 department programs such as the targeted small business
3 5 financial assistance program in section 15.247.
3 6 f. Provide an annual report to the department that
3 7 describes the program's activities, measures impacts, and
3 8 assesses outcomes. The report shall include all of the
3 9 following:
3 10 (1) The number of businesses started.
3 11 (2) The number of businesses expanded.
3 12 (3) The number of businesses stabilized.
3 13 (4) The estimated number of jobs created.
3 14 (5) A summary of the capital available to
3 15 microenterprises.
3 16 (6) A summary of activity for the statewide microloan
3 17 fund.
3 18 (7) The amount of nonstate funds leveraged by the
3 19 intermediary.
3 20 (8) Any other outcome or measurement the department
3 21 reasonably believes necessary.
3 22 g. Provide an annual report to the governor and the
3 23 general assembly on the status of microenterprise development
3 24 in the state, including the impact of microenterprises on the
3 25 economy and the activities of and the results produced by the
3 26 Iowa microenterprise development partnership program.
3 27 Sec. 6. NEW SECTION. 15.114B COMMUNITY MICROENTERPRISE
3 28 DEVELOPMENT ORGANIZATION GRANTS.
3 29 1. The statewide microenterprise development financial
3 30 intermediary shall award grants to community microenterprise
3 31 development organizations. A grant shall not be awarded to a
3 32 community microenterprise development organization unless the
3 33 community microenterprise development organization can match
3 34 at least twenty percent of the funds to be awarded. The
3 35 matching funds may be from private foundations, federal or
4 1 local government funds, financial institutions, or
4 2 individuals.
4 3 2. In awarding grants to community microenterprise
4 4 development organizations, the statewide microenterprise
4 5 development financial intermediary shall consider all of the
4 6 following:
4 7 a. The overall geographic diversity of the applicants for
4 8 grants, including both urban and rural communities.
4 9 b. The ability of a community microenterprise development
4 10 organization to provide services to low=income individuals and
4 11 underserved communities. In determining the ability to
4 12 provide services, all of the following shall be considered:
4 13 (1) The ability to identify potential microentrepreneurs
4 14 within a community.
4 15 (2) The capacity to perform client assessment and
4 16 screening.
4 17 (3) The ability to provide business training and technical
4 18 assistance, including information about access to markets,
4 19 business management, and financial literacy.
4 20 (4) The capacity to provide assistance in securing
4 21 financing.
4 22 c. The scope of services offered and the efficient
4 23 delivery of such services, especially to low=income and
4 24 minority individuals.
4 25 d. The ability to monitor the progress of clients and to
4 26 identify those clients in need of additional technical and
4 27 financial assistance.
4 28 e. The ability to build relationships and coordinate
4 29 resources with other entities supporting microentrepreneurs.
4 30 These entities may include but are not limited to community
4 31 colleges, cooperative extension services, small business
4 32 development centers, chambers of commerce, community economic
4 33 development organizations, workforce centers, and community
4 34 nonprofit service providers that serve low=income individuals.
4 35 f. The ability to coordinate activities with any targeted
5 1 small business advocate services operating in the community.
5 2 g. The amount and sufficiency of operating funds
5 3 available.
5 4 h. Any other criteria the financial intermediary and the
5 5 department may reasonably agree upon.
5 6 Sec. 7. IOWA MICROENTERPRISE DEVELOPMENT PARTNERSHIP
5 7 PROGRAM == COMMUNITY MICROENTERPRISE DEVELOPMENT ORGANIZATIONS
5 8 == APPROPRIATION.
5 9 1. There is appropriated from the general fund of the
5 10 state to the department of economic development for the fiscal
5 11 year beginning July 1, 2008, and ending June 30, 2009, the
5 12 following amount, or so much thereof as is necessary, to be
5 13 used for the purposes designated:
5 14 For the administration of an Iowa microenterprise
5 15 development partnership program and for competitive grants to
5 16 community microenterprise development organizations, including
5 17 salaries, support, maintenance, miscellaneous purposes, and
5 18 for not more than the following full=time equivalent
5 19 positions:
5 20 .................................................. $ 1,050,000
5 21 ............................................... FTEs 1.00
5 22 2. Of the moneys appropriated in subsection 1, not more
5 23 than $80,000 shall be expended on any one community
5 24 microenterprise development organizations.
5 25 3. From the moneys appropriated in subsection 1, the
5 26 department shall award grants to at least four community
5 27 microenterprise development organizations in rural areas of
5 28 the state that show an economic growth rate lower than the
5 29 average economic growth rate of the state.
5 30 4. From the moneys appropriated in subsection 1, the
5 31 department shall award grants to at least three community
5 32 microenterprise development organizations in neighborhoods in
5 33 urban areas of the state that show high rates of poverty and
5 34 signs of economic distress.
5 35 5. Of the moneys appropriated in subsection 1, not more
6 1 than $90,000 may be used for a full=time equivalent staff
6 2 person to administer the microenterprise development
6 3 partnership program.
6 4 Sec. 8. STATEWIDE MICROENTERPRISE DEVELOPMENT FINANCIAL
6 5 INTERMEDIARY == APPROPRIATION. There is appropriated from the
6 6 general fund of the state to the department of economic
6 7 development for the fiscal year beginning July 1, 2008, and
6 8 ending June 30, 2009, the following amount, or so much thereof
6 9 as is necessary, to be used for the purpose designated:
6 10 1. For establishing a statewide microenterprise
6 11 development financial intermediary:
6 12 .................................................. $ 250,000
6 13 2. For capitalization of the microloan fund and loan loss
6 14 reserve fund administered by the financial intermediary:
6 15 .................................................. $ 250,000
6 16 EXPLANATION
6 17 This bill relates to microenterprise business development.
6 18 Microenterprises are businesses with fewer than five employees
6 19 that lack collateral for loans and have difficulty securing
6 20 financing.
6 21 The bill directs the department of economic development to
6 22 establish an Iowa microenterprise development partnership
6 23 program to assist microenterprises in business management and
6 24 the development of entrepreneurial skills.
6 25 The bill also directs the department to establish a
6 26 statewide microenterprise financial intermediary to administer
6 27 a microloan program, award grants to community microenterprise
6 28 development organizations, provide technical assistance and
6 29 business support to community microenterprise development
6 30 organizations, promote microlending and educate stakeholders
6 31 throughout the state in best practices for microlending, and
6 32 coordinate microenterprise development efforts with other
6 33 entities. The statewide microenterprise financial
6 34 intermediary must submit annual reports on its activities to
6 35 the department and to the governor and the general assembly.
7 1 The bill creates a competitive grant program for community
7 2 microenterprise development organizations to be administered
7 3 by the statewide microenterprise financial intermediary.
7 4 The bill appropriates $1,050,000 for FY 2008=2009 to the
7 5 department for the creation of the partnership program and the
7 6 awarding of the competitive grant funds.
7 7 The bill appropriates $250,000 for FY 2008=2009 for the
7 8 establishment of the statewide microenterprise financial
7 9 intermediary and another $250,000 for the capitalization of
7 10 the loan fund managed by the statewide microenterprise
7 11 financial intermediary.
7 12 LSB 6037HH 82
7 13 tw/nh/5.1