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