H.F. 668 Section 1. NEW SECTION . 15E.81 Short title. 1 This division shall be known as and may be cited as the 2 “Linked Investment Loans for Emerging Businesses Act” . 3 Sec. 2. NEW SECTION . 15E.82 Definitions. 4 For purposes of this division, unless the context otherwise 5 requires: 6 1. “Department” means the department of economic 7 development. 8 2. “Eligible borrower” means a business meeting the 9 requirements of section 15E.83. 10 3. “Eligible lending institution” means a financial 11 institution empowered to make commercial loans and eligible to 12 be a depository of state funds pursuant to chapter 12C. 13 4. “Emerging business” means a business in existence less 14 than five years. 15 5. “Fund” means the grow Iowa values fund created in section 16 15G.111. 17 6. “Linked investment” means an agreement between the 18 department and an eligible lending institution in which the 19 department obtains a certificate of deposit from the lending 20 institution and in which the eligible lending institution 21 agrees to loan to an eligible borrower an amount at least equal 22 to the amount of the principal specified in the certificate of 23 deposit. 24 7. “Primary sector business” means a business participating 25 in interstate or intrastate commerce and engaged in 26 manufacturing, processing, or assembling products, conducting 27 research and development, or providing services in interstate 28 or intrastate commerce. “Primary sector business” does not 29 include retail, health, or professional services businesses. 30 8. “Program” means the linked investment loans for emerging 31 businesses program established in section 15E.84. 32 9. “Qualifying wage threshold” means the same as defined in 33 section 15G.101. 34 Sec. 3. NEW SECTION . 15E.83 Eligible borrowers. 35 -1- LSB 1950YH (3) 84 tw/sc 1/ 6

H.F. 668 1. A business meeting the requirements of this section is 1 eligible to apply for the linked investment loans for emerging 2 businesses program established in section 15E.84. 3 2. To be eligible, a business must meet all of the following 4 requirements: 5 a. The business is an Iowa-based primary sector business. 6 b. The business is an emerging business seeking to 7 expand, an emerging business seeking to purchase another 8 Iowa-based business, or any existing business that has suffered 9 significant physical damage as a result of a natural disaster. 10 c. The business can demonstrate that the proceeds of a 11 linked investment loan will result in the creation or retention 12 of five or more jobs at one hundred eighty percent of the 13 qualifying wage threshold, ten or more jobs at one hundred 14 sixty percent of the qualifying wage threshold, or twenty or 15 more jobs at one hundred thirty percent of the qualifying wage 16 threshold. 17 Sec. 4. NEW SECTION . 15E.84 Linked investment loans for 18 emerging businesses program. 19 1. Program established. 20 a. The department shall establish and administer a linked 21 investment loans for emerging businesses program for purposes 22 of investing moneys in financial institutions in order to 23 facilitate the flow of private capital to eligible borrowers. 24 b. In investing moneys under the program, the department 25 shall invest in certificates of deposit at eligible lending 26 institutions. The department may invest as much as twenty-five 27 percent of the balance of moneys in the fund. 28 c. The department may obtain or renew a certificate of 29 deposit from an eligible lending institution for an amount of 30 time determined by the department, but the total amount of time 31 a certificate may be held by an eligible lending institution 32 shall not exceed five years. 33 d. Interest earned under the program shall be considered 34 earnings of the fund and notwithstanding section 12C.7 shall 35 -2- LSB 1950YH (3) 84 tw/sc 2/ 6

H.F. 668 be credited to the fund. 1 e. A loan provided to an eligible borrower through a linked 2 investment pursuant to this division does not receive financial 3 assistance for purposes of section 15G.112 and is not subject 4 to the job and wage requirements specified in that section. 5 2. Application and certification. 6 a. An eligible lending institution wishing to participate in 7 the program shall accept and review applications for loans from 8 eligible borrowers. 9 b. The eligible lending institution shall certify that the 10 applicant is an eligible borrower under the program, determine 11 whether to make a loan to the applicant, and, if so, the amount 12 of the loan. 13 3. Loan packages. 14 a. An eligible lending institution wishing to accept 15 a linked investment from the department shall send to the 16 department a loan package. 17 b. The loan package shall include but not be limited to the 18 amount of the loan requested by the applicant, the amount of 19 the investment requested by the eligible lending institution 20 from the department, a plan detailing the purposes for which 21 the applicant intends to expend the loan proceeds, an estimate 22 of the economic impact to the state of the applicant’s plan 23 for the proceeds, and a certification by the eligible lending 24 institution that the applicant is an eligible borrower pursuant 25 to section 15E.83. 26 4. Linked investment terms. 27 a. The department shall accept and review loan packages sent 28 by eligible lending institutions. The department, subject to 29 the requirements of this division, may make a linked investment 30 according to the terms requested in the loan package or may 31 negotiate other terms. 32 b. In reviewing a loan package as a potential linked 33 investment, the department shall consider the type or terms of 34 the loan involved, the nature of the applicant’s business, the 35 -3- LSB 1950YH (3) 84 tw/sc 3/ 6

H.F. 668 availability of state funds, and the compliance history of both 1 the eligible borrower and the eligible lending institution. 2 c. Upon reaching acceptable terms for the linked 3 investment, the department shall deposit with the eligible 4 lending institution moneys from the fund, and the eligible 5 lending institution shall issue to the department one or more 6 certificates of deposit. 7 d. The interest rate of a certificate of deposit may 8 be negotiated by the department and the eligible lending 9 institution but shall be at a rate below the current market 10 rate. However, the department shall not negotiate an 11 annualized interest rate on the certificate of deposit that is 12 less than one-half of one percent. 13 e. The eligible lending institution shall remit the interest 14 earned on the certificate of deposit and any principal not 15 renewed on the date the certificate of deposit matures. 16 f. Certificates of deposit issued pursuant to this division 17 shall not be subject to a penalty for early withdrawal. 18 5. Loan terms. An eligible lending institution accepting 19 a linked investment shall make a loan to the applicant for an 20 amount at least equal to the value of the moneys deposited by 21 the department. The loan shall be at an interest rate not more 22 than four percent above the interest rate of the certificate 23 of deposit. 24 Sec. 5. NEW SECTION . 15E.85 Liability. 25 1. Neither the state nor the department shall be liable to 26 an eligible lending institution in any manner for payment of 27 the principal or interest on the loan from an eligible lending 28 institution to an eligible borrower. 29 2. In making linked investments with eligible lending 30 institutions for loans to eligible borrowers, the department 31 shall not pledge the credit or taxing power of the state nor 32 in any manner give or loan the state’s credit in aid of the 33 eligible borrower. 34 3. In making linked investments with eligible lending 35 -4- LSB 1950YH (3) 84 tw/sc 4/ 6

H.F. 668 institutions for loans to eligible borrowers, the department 1 shall not pay, assume, or become responsible for the debts or 2 liabilities of the eligible borrower. 3 4. A delay in payments by an eligible borrower to an 4 eligible lending institution or a default on the part of an 5 eligible borrower shall not in any manner affect the linked 6 investment agreement between the eligible lending institution 7 and the department. 8 Sec. 6. NEW SECTION . 15E.86 Rules. 9 The department shall adopt rules pursuant to chapter 17A 10 to administer this division. The rules shall provide for the 11 administration of the program and for monitoring the compliance 12 of eligible lending institutions and eligible borrowers with 13 the requirements of this division. 14 EXPLANATION 15 This bill creates a linked investment loans for emerging 16 businesses program. 17 The program is similar in structure to the linked 18 investments for tomorrow Act in Code sections 12.31 through 19 12.43. Under the program created in the bill, an eligible 20 business applies to an eligible lending institution for a loan, 21 and the lending institution seeks a linked investment from the 22 department of economic development. Moneys invested by the 23 department come from the grow Iowa values fund. 24 An eligible lending institution is a financial institution 25 empowered to make commercial loans and eligible to be a 26 depository of state funds pursuant to Code chapter 12C. An 27 eligible borrower is a business that is: (1) an Iowa-based 28 primary sector business; (2) an emerging business seeking 29 to expand, an emerging business seeking to purchase another 30 Iowa-based business, or any existing business that has suffered 31 significant physical damage as a result of a natural disaster; 32 and (3) a business that can demonstrate that the proceeds of a 33 linked investment loan will result in the creation or retention 34 of five or more jobs at 180 percent of the qualifying wage 35 -5- LSB 1950YH (3) 84 tw/sc 5/ 6

H.F. 668 threshold, 10 or more jobs at 160 percent of the qualifying 1 wage threshold, or 20 or more jobs at 130 percent of the 2 qualifying wage threshold. 3 If a lending institution wishes to receive a linked 4 investment, the lending institution must send a loan package 5 to the department for review. The department may negotiate 6 the terms of the linked investment and accept a certificate of 7 deposit from the lending institution. The lending institution 8 must agree to loan an amount at least equal to the value of 9 the certificate of deposit to the eligible borrower. The 10 annualized interest rate on the certificate of deposit is 11 negotiable but cannot be less than one-half of 1 percent. 12 The loan to the eligible borrower cannot be at a rate of 13 interest more than 4 percent above the rate of the department’s 14 certificate of deposit. 15 The linked investments do not constitute the payment of a 16 business debt by the state nor do they pledge the credit or 17 taxing power of the state. 18 The department is directed to adopt rules for the 19 administration of the program. 20 -6- LSB 1950YH (3) 84 tw/sc 6/ 6