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.