BILL ANALYSIS |
C.S.H.B. 4195 |
By: Johnson, Eric |
Economic & Small Business Development |
Committee Report (Substituted) |
BACKGROUND AND PURPOSE
Interested parties assert that many small businesses face difficulties in securing capital to finance their enterprises through traditional loans. However, these parties note that some small businesses have found success in accessing capital through community development financial institutions. C.S.H.B. 4195 seeks to improve access to capital for small businesses located in Texas by establishing the reinvestment in support for employment program.
|
||||||||
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
|
||||||||
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.
|
||||||||
ANALYSIS
C.S.H.B. 4195 amends the Government Code to establish the reinvestment in support for employment program, which is to be funded by direct appropriation and is required to expand access to capital for small businesses to create jobs in Texas. For purposes of the program, "small business" means a legal entity that is domiciled in Texas or has at least 51 percent of its employees located in Texas; that is formed to make a profit; that is independently owned and operated; and that employs fewer than 100 full-time employees. The bill requires a community development financial institution, as that term is defined by federal law, to enter into a participation agreement with the Texas Economic Development Bank in order to participate in the program and specifies that the agreement sets out the terms under which the bank will make contributions to the institution's revolving loan account. The bill requires the bank to specify the criteria for a revolving loan from the program and requires the bank, in establishing such criteria, to consider reasonable criteria relating to a community development financial institution, including the institution's financial capacity, historical disbursements, loan loss reserve capacity, and default rates.
C.S.H.B. 4195 requires the bank to determine the eligibility of a community development financial institution to participate in the program and authorizes the bank to limit the total number of institutions eligible to participate in the program. The bill sets out requirements for a loan to qualify as a capital investment loan and requires money from a revolving loan account to be disbursed quarterly to participating community development financial institutions. The bill makes a community development financial institution solely responsible for loan losses under the program and establishes that the state is not liable for money disbursed under the program.
C.S.H.B. 4195 requires a community development financial institution participating in the program to report quarterly to the bank the names of businesses that have received capital investment loans, the current balance of all outstanding loans made under the program, the default rate on existing loans, and any other information the bank requires. The bill requires a participating institution to prepare a detailed financial statement each quarter and to allow the bank to inspect the institution's financial records on request. The bill requires the bank to issue an annual status report on the program and to deliver its report to the governor, the lieutenant governor, the speaker of the house, and the standing committees of the legislature with primary jurisdiction for small business and economic development.
|
||||||||
EFFECTIVE DATE
On passage, or, if the bill does not receive the necessary vote, September 1, 2017.
|
||||||||
COMPARISON OF ORIGINAL AND SUBSTITUTE
While C.S.H.B. 4195 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and formatted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.
|
||||||||
|