Financial Institutions Committee

By: Giddings
Committee Report (Unamended)


The Historically Underutilized Business and Small Business Linked
Deposit Program was passed in the 73rd session of the Texas
Legislature in 1993.  The program encourages banks to lend to HUBs
and small businesses in distressed communities by providing lenders
and borrowers with a lower cost of capital.

Participating lenders receive deposits from the State Treasury in
the amount to be borrowed by the business.  The lender receives
those funds at up to 2 percent below the current 6 month U.S.
Treasury Bill rate and charges up to 4 percentage points above the
Treasury Bill rate to the borrower.  The rate charged the borrower
is generally lower than the interest rate the borrower would
normally be charged by the lender.


Under the original program, financing is provided for purchase,
construction, or lease of capital assets, including land,
buildings, and equipment.  Lenders have indicated the greatest need
for HUBs and small businesses in distressed communities is loans
for working capital.  House Bill 1991 adds working capital to the
permitted uses of loan proceeds


It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.


SECTION 1. Amends Section 481.197(c), Subchapter N, Government
Code, to read as follows:

         Section 481.197(c).  Adds working capital as a permitted use
         of loan proceeds.

SECTION 2.    Effective date.

SECTION 3. Emergency clause.


The committee convened in a public hearing on March 27, 1995, to consider HB 1991.

The bill was left pending.

The committee convened in a public hearing on April 3, 1995 to consider HB 1991 as pending

The following people testified in favor of the bill:
Kelly Rodgers; and
Karen Neeley.

The bill was reported favorably without amendments, with the recommendation that it do pass and
be printed and be sent to the Committee on Local and Consent Calendars, which prevailed by the
following record vote:  9 Ayes, 0 Nays, 0 PNV, 0 Absent.