81R6590 KFF-D

By: Shapleigh S.B. No. 1602

A BILL TO BE ENTITLED

AN ACT

relating to creating a microloan guarantee program using funds appropriated to the Texas Enterprise Fund.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 481.078(c), Government Code, is amended to read as follows:

(c) Except as provided by Subsection (d) and subject to Section 481.0781, the fund may be used only for economic development, infrastructure development, community development, job training programs, and business incentives.

SECTION 2. Subchapter E, Chapter 481, Government Code, is amended by adding Section 481.0781 to read as follows:

Sec. 481.0781. TEXAS ENTERPRISE FUND MICROLOAN GUARANTEE PROGRAM. (a) In this section:

(1) "Financial institution" has the meaning assigned by Section 31.002, Finance Code.

(2) "Microloan" means a business loan of not more than $10,000.

(3) "Microloan guarantee program" means the Texas Enterprise Fund microloan guarantee program established under this section.

(b) At least one percent of the funds appropriated by the legislature to the Texas Enterprise Fund must be used to administer and fund the microloan guarantee program established under this section.

(c) In accordance with this section, the office shall establish and administer the Texas Enterprise Fund microloan guarantee program to assist in the creation and expansion of businesses and jobs in this state by guaranteeing microloans to eligible businesses by financial institutions that participate in the program.

(d) To be eligible to receive a loan guarantee under the microloan guarantee program, a business must:

(1) apply to the office on a form prescribed by the office;

(2) be unable to obtain a loan from a participating financial institution without a loan guarantee; and

(3) meet the eligibility requirements established by the office.

(e) An application for a microloan under this section must contain:

(1) a plan for the applicant's proposed use of microloan proceeds, including a description of how the microloan proceeds will be used to promote business or job growth; and

(2) a signed statement from a loan officer of the financial institution that states that a loan guarantee is required for approval of the loan application.

(f) The office may charge a reasonable fee for processing an application filed under this section.

(g) The office shall consider the following factors in determining whether to approve an application for a microloan guarantee:

(1) the anticipated benefits from granting a microloan guarantee, including the potential to promote business or job growth;

(2) the applicant's qualifications;

(3) the feasibility of the applicant's plan; and

(4) other repayment sources available to the applicant.

(h) If a recipient of a loan guarantee defaults on a loan that is guaranteed under this section and the office is required to honor its guarantee, the office may bring suit against the defaulting party.

(i) The office shall adopt rules necessary to implement this section, including rules regarding the participation of financial institutions in the microloan guarantee program.

SECTION 3. This Act takes effect September 1, 2009.