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.