Bill Text: CA SB551 | 2017-2018 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Capital Access Loan Program for Small Businesses.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2018-08-16 - August 16 hearing: Held in committee and under submission. [SB551 Detail]
Download: California-2017-SB551-Introduced.html
Bill Title: Capital Access Loan Program for Small Businesses.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2018-08-16 - August 16 hearing: Held in committee and under submission. [SB551 Detail]
Download: California-2017-SB551-Introduced.html
CALIFORNIA LEGISLATURE—
2017–2018 REGULAR SESSION
| Senate Bill | No. 551 |
| Introduced by Senator Hueso |
February 16, 2017 |
An act to amend Section 44559.4 of the Health and Safety Code, relating to the Capital Access Loan Program.
LEGISLATIVE COUNSEL'S DIGEST
SB 551, as introduced, Hueso.
California Pollution Control Financing Authority: Capital Access Loan Program for Small Businesses.
(1) Existing law establishes the Capital Access Loan Program for small businesses, administered by the California Pollution Control Financing Authority, which provides loans through participating financial institutions to qualifying small businesses. The authority is required to create a loss reserve account for each financial institution. The act requires a financial institution, if it decides to enroll a qualified loan under the act in order to obtain the protection against loss provided by its loss reserve account, to notify the authority in writing, as specified, within a specified number of days after the date on which the loan is made.
Until April 1, 2017, the act requires a participating financial institution, when making a qualified loan that will be enrolled under the act, to require the qualified business to which
the loan is made to pay a fee of not less than 1% of the principal amount of the loan, but not more than 3 ½ % of the principal amount, for deposit in the loss reserve account. Commencing April 1, 2017, the act requires a participating financial institution, when making a qualified loan that will be enrolled under the act, to require the qualified business to which the loan is made to pay a fee of not less than 2% of the principal amount of the loan, but not more than 3 ½ % of the principal amount, for deposit in the loss reserve account.
This bill would instead require the qualified business to which the loan is made to pay a fee of not less than 1% of the principal amount of the loan subject to that principal amount for deposit in the loss reserve account.
(2) If matching funds are not available under a federal capital access program or other source, existing law requires the authority to transfer to
the loss reserve account an amount that is not less than the amount of the fees paid by the participating financial institution, as specified. If matching funds are available under a federal capital access program or other source, existing law requires the authority to transfer to the loss reserve account the amount required by that federal program or other source, as specified.
If matching funds are not available to the authority, the bill would authorize a participating financial institution with an existing loss reserve account to continue to enroll qualified loans to qualified businesses under the program and would require the participating financial institution to pay to the authority a specified enrollment processing fee and a claims processing fee for all claims for reimbursement for losses incurred as a result of qualified loan defaults.
(3) This bill would authorize a participating financial
institution to withdraw from the program upon specified written notice to the authority. Upon receipt of a notice of withdrawal from the program, after all outstanding claims have been paid, the bill would require the authority to make specified calculations and distributions related to the remaining loss reserve account balance.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 44559.4 of the Health and Safety Code, as amended by Section 192 of Chapter 86 of the Statutes of 2016, is amended to read:44559.4.
(a) If a financial institution that is participating in the Capital Access Loan Program established pursuant to this article decides to enroll a qualified loan under the program in order to obtain the protection against loss provided by its loss reserve account, it shall notify the authority in writing on a form prescribed by the authority, within 15 days after the date on which the loan is made, of all of the following:(1) The disbursement of the loan.
(2) The dollar amount of the loan enrolled.
(3) The interest rate applicable to, and the term of, the loan.
(4) The
amount of the agreed upon premium.
(b) The executive director may authorize an additional five days for a financial institution to submit the written notification described in subdivision (a) to the authority on a loan-by-loan basis for a reason limited to conditions beyond the reasonable control of the financial institution.
(c) The financial institution may make a qualified loan to be enrolled under the program to an individual, or to a partnership or trust wholly owned or controlled by an individual, for the purpose of financing property that will be leased to a qualified business that is wholly owned by that individual. In that case, the property shall be treated as meeting the requirements of paragraph (1) of subdivision (i) of Section 44559.1.
(d) When making a qualified loan that will be enrolled under the
program, the participating financial institution shall require the qualified business to which the loan is made to pay a fee of not less than 2
1 percent of the principal amount of the loan, but not more than 31/2 percent of the principal amount. The financial institution shall also pay a fee in an amount equal to the fee paid by the borrower. The financial institution shall deliver the fees collected under this subdivision to the authority for deposit in the loss reserve account for the institution. The financial institution may recover from the borrower the cost of its payments to the loss reserve account through the financing of the loan, upon the agreement of the financial institution and the borrower. The financial institution may cover the cost of borrower payments to the loan loss reserve account.
(e) When depositing fees collected under subdivision (d) to the credit of the loss reserve account for a participating financial institution, the
authority shall do the following:
(1) If matching funds are not available under a federal capital access program or other source, the authority shall transfer to the loss reserve account an amount that is not less than the amount of the fees paid by the participating financial institution. However, if the qualified business is located within a severely affected community, the authority shall transfer to the loss reserve account an amount not less than 150 percent of the amount of the fees paid by the participating financial institution.
(2) If matching funds are available under a federal capital access program or other source, the authority shall transfer, on an immediate or deferred basis, to the loss reserve account the amount required by that federal program or other source. However, the total amount deposited into the loss reserve account shall not be less than the amount
which would have been deposited in the absence of matching funds.
(f)This section shall become operative on April 1, 2017.
(f) (1) If no matching funds are available to the authority under any state or federal capital access program, or other source, a participating financial institution with an existing loss reserve account may continue to enroll qualified loans to qualified businesses under the program. The authority shall have no obligation to deposit moneys to the credit of the institution’s loss reserve account for any loan enrolled pursuant to this subdivision.
(2) On qualified loans enrolled pursuant to this subdivision, the participating financial institution shall pay to the authority an enrollment processing fee of twenty-five dollars ($25), and a claims processing fee of two hundred dollars ($200) for all claims for reimbursement for losses incurred as a result of qualified loan defaults. These fees shall be deposited in the loss reserve account.
(g) (1) Upon written notice to the authority, a participating financial institution may withdraw from the program. The financial institution shall state in the notice either of the following:
(A) All qualified loans secured by its loss reserve account have been repaid, and there are no pending claims for reimbursement for losses incurred as a result of qualified loan defaults.
(B) The
financial institution waives all rights to submit claims for reimbursement for losses incurred as a result of charge offs or loan defaults with respect to all qualified loans that are enrolled in its loss reserve account that have not been fully repaid as of the date the notice of withdrawal is filed with the authority.
(2) Upon receipt of a notice of withdrawal from the program, after all outstanding claims have been paid, the authority shall do all of the following:
(A) Determine the total historical contributions to the loan loss reserve account made by the authority, the financial institution, and borrowers.
(B) Calculate the proportion of total contributions made by the authority, to the combined total contributions made by the financial institution and borrowers.
(C) Divide the remaining loss reserve account balance into two fractions, based on the proportionate amounts calculated in subparagraph (B), and distribute funds to the participating financial institution in an amount corresponding to the proportionate share fraction attributed to the financial institution and the borrowers.
(3) The funds remaining in the loss reserve account after distribution of contributions pursuant to this paragraph are the exclusive property of the authority, as set forth in Section 44559.3.
