BILL ANALYSIS


                                                        H.B. 1991
                                              By: Giddings (West)
                                             Economic Development
                                                          5-23-95
                              Senate Committee Report (Unamended)
BACKGROUND

The Historically Underutilized Business (HUB) and Small Business
Linked Deposit Program was passed in the 73rd 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.

Under the original program, financing is provided for purchase,
construction, or lease of capital assets including land, buildings,
and equipment.  Lenders have indicated that the greatest need for
HUBs and small businesses in distressed communities is loans for
working capital.

PURPOSE

As proposed, H.B. 1991 adds working capital to the permitted uses
of loan proceeds.

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 481.197(c), Government Code, to require
a borrower who proposes to begin operating a small business in a
distressed community or a historically underutilized business to
apply a loan granted under this subchapter to working capital or to
the purchase, construction, or lease of capital assets.

SECTION 2. Effective date: September 1, 1995.
           Makes application of this Act prospective.

SECTION 3. Emergency clause.