BILL ANALYSIS H.B. 2344 By: Patterson March 28, 1995 Committee Report (Unamended) BACKGROUND The Department of Commerce has historically been authorized to make direct loans and loan guarantees to businesses for startups, expansions and export transactions. Except in a few instances where direct loans were made to startup projects, Commerce has made loan guarantees by guaranteeing loans made by private financial institutions. Based on some past experiences where direct loans were made to startup businesses, the belief is that the state should not be in the direct loan business but rather guarantee loans made by traditional lenders. The guarantee approach ensures higher participation of private lenders in small business development financing and uses the lender's underwriting and servicing resources and experience to protect the state's investment. Since there has not been much demand for direct loans and if loan guarantees continue to be available, then small businesses should not be negatively impacted. PURPOSE The bill's purpose is to delete direct loan authorization provided to the Texas Department of Commerce. RULEMAKING AUTHORITY 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 BY SECTION ANALYSIS SECTION 1. Amends Section 481.044(a)(1) and (b)(6), pertaining to powers and duties relating to financing, by deleting any reference to direct loan authorization. SECTION 2. Amends Section 481.059(b), (c), and (d), pertaining to export financing, by deleting any reference to direct loan authorization. SECTION 3. Amends Section 481.084(a) (3)-(5) and (7), and (b), (c), (d), and (f), pertaining to loans in rural areas, by deleting any reference to direct loan authorization. SECTION 4. Emergency clause. SUMMARY OF COMMITTEE ACTION H.B. 2344 was considered by the committee in a public hearing on March 27, 1995. Testifying on the bill was Dan McNeil, representing the Texas Department of Commerce. No one testified against the bill. H.B. 2344 was reported favorably without amendment, with the recommendation that it do pass and be printed, by a record vote of 7 ayes, 0 nays, 0 pnv, 2 absent.