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By:  Ellis                                                        S.B. No. 1653


A BILL TO BE ENTITLED

AN ACT

relating to the operation of the Capital Access Program:  Reserve 
Account   
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 481.408 of the Government Code is 
amended to read as follows:
	(A)  On approval by the department and after entering into a 
participation agreement with the department, a participating 
financial institution making a capital access loan shall establish 
a reserve account.  The reserve account shall be used by the 
institution only to cover any losses arising from a default of a 
capital access loan made by the institution under this subchapter 
or as otherwise provided by this subchapter.
	(B)  When a participating financial institution makes a loan 
enrolled in the program, the institution shall require the borrower 
to pay to the institution a fee in an amount that is not less than 
two percent but not more than three percent of the principal amount 
of the loan, which the financial institution shall deposit in the 
reserve account.  The institution shall also deposit in the reserve 
account an amount equal to the amount of the fee received by the 
institution from the borrower under this subsection.  The 
institution may recover from the borrower all or part of the amount 
the institution is required to pay under this subsection in any 
manner agreed to by the institution and borrower.
	(C)  For each capital access loan made by a financial 
institution, the institution shall certify to the department, 
within the period prescribed by the department, that the 
institution has made a capital access loan, the amount the 
institution has deposited in the reserve account, including the 
amount of fees received from the borrower, and, if applicable, that 
the borrower is located in or financing a project, activity, or 
enterprise in an area designated as an enterprise zone under 
Chapter 2303.
	(D)  On receipt of a certification made under Subsection (c) 
and subject to Section 481.409, the department shall deposit in the 
institution's reserve account for each capital access loan made by 
the institution:
		(1)  an amount equal to the amount deposited by the 
institution for each loan if the institution:
			(a)  has assets of more than $1 billion; or                                  
			(b)  has previously enrolled loans in the program 
that in the aggregate are more than $2 million
		(2)  an amount equal to 150 percent of the total amount 
deposited under Subsection (b) for each loan if the institution is 
not described by Subdivision (1); or
		(3)  notwithstanding Subdivisions (1) and (2), an 
amount equal to 200 percent of the total amount deposited under 
Subsection (b) for each loan if:
			(a)  the borrower is located in or financing a 
project, activity, or enterprise in an area designated as an 
enterprise zone under Chapter 2303; or
			(b)  the borrower is a small or medium-size 
business or a nonprofit organization that operates or proposes to 
operate a day-care center or a group day-care home, as those terms 
are defined by Section 42.002, Human Resources Code.
			(c)  the participating financial institution is a 
federally certified Community Development Financial Institution as 
assigned by 12 U.S.C. Section 4702, as amended.
	SECTION 2.  Section 481.409 of the Government Code is 
amended to read as follows:
	(A)  The amount deposited by the department into a 
participating financial institution's reserve account for any 
single loan recipient may not exceed $150,000 during a three-year 
period.
	(B)  The maximum amount the department may deposit into a 
reserve account for each capital access loan made under this 
subchapter is the lesser of $35,000 or an amount equal to:
	(1)  eight percent of the loan amount if:                                      
		(a)  the borrower is located in or financing a project, 
activity, or enterprise in an area designed as an enterprise zone 
under Chapter 2303; or
		(b)  the borrower is a small or medium-size business or 
a nonprofit organization that operates or proposes to operate a 
day-care center or a group day-care home, as those terms are defined 
by Section 42.002, Human Resources Code; or
	(c)  the participating financial institution is a federally 
certified Community Development Financial Institution as assigned 
by 12 U.S.C. Section 4702, as amended; or
		(2)  six percent of the loan amount for any other 
borrower.                 
	SECTION 3.  This Act takes effect September 1, 2003.