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SENATE BILL 266 |
SENATE AUTHOR: Ellis et al. |
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EFFECTIVE: 9-1-97 |
HOUSE SPONSOR: Oliveira et al. |
Senate Bill 266 amends the Government Code to direct the Texas Department of Commerce to create the capital access program and discontinues loans from the Texas exporters loan and the Texas rural economic development funds. Funds in the capital access program must be used to assist a financial institution in making an economic development-related loan to a small or medium-sized business or a nonprofit corporation and are deposited in the reserve account of the institution making the loan. Funds in the reserve account comprise mandatory program, borrower, and institution contributions and may be used only to reimburse the lender for any losses incurred through loans in the program. Loans related to residential housing, certain real estate investments, and certain other transactions are prohibited, and a higher state contribution rate to the lender reserve account is established for projects involving enterprise zones, day-care centers, and group day-care homes.
The act stipulates that, among other provisions, the state has no liability for loan repayment. It permits a participating financial institution to cover only a portion of a loan made under the program and to recover any portion of its required contribution to the reserve account from the borrower.