Bill Text: CA SB936 | 2015-2016 | Regular Session | Chaptered
Bill Title: California Small Business Expansion Fund: corporate guarantees.
Spectrum: Slight Partisan Bill (Democrat 8-5)
Status: (Passed) 2016-09-27 - Chaptered by Secretary of State. Chapter 713, Statutes of 2016. [SB936 Detail]
Download: California-2015-SB936-Chaptered.html
BILL NUMBER: SB 936 CHAPTERED
BILL TEXT
CHAPTER 713
FILED WITH SECRETARY OF STATE SEPTEMBER 27, 2016
APPROVED BY GOVERNOR SEPTEMBER 27, 2016
PASSED THE SENATE AUGUST 18, 2016
PASSED THE ASSEMBLY AUGUST 11, 2016
AMENDED IN ASSEMBLY JUNE 29, 2016
AMENDED IN ASSEMBLY JUNE 2, 2016
AMENDED IN SENATE APRIL 4, 2016
INTRODUCED BY Senator Hertzberg
(Coauthors: Senators Anderson, Cannella, Huff, and Wieckowski)
(Coauthors: Assembly Members Brown, Dodd, Cristina Garcia, Eduardo
Garcia, Hadley, Irwin, Kim, and Rodriguez)
FEBRUARY 2, 2016
An act to amend Section 63089.1 of, and to amend and repeal
Sections 63089.5, 63089.60, 63089.61, and 63089.62 of, the Government
Code, relating to business.
LEGISLATIVE COUNSEL'S DIGEST
SB 936, Hertzberg. California Small Business Expansion Fund:
corporate guarantees.
Existing law, the Small Business Financial Assistance Act of 2013,
establishes the California Small Business Expansion Fund, a
continuously appropriated fund that includes General Fund moneys. The
act requires guarantees made by small business financial development
corporations to be backed by funds on deposit in the corporation's
trust fund account or by receivables due from funds loaned from the
corporation's trust fund account to another fund in state government,
as specified, and requires these loan guarantees to be secured by a
reserve of at least 20%, until January 1, 2018, and 25% thereafter,
as specified.
This bill would reduce the required reserve to 10% indefinitely
and would make conforming changes with respect to related statements
of legislative intent.
Existing law prohibits the amount of guarantee liability
outstanding at any one time from exceeding 5 times the amount of
funds on deposit in the expansion fund plus any receivables due from
funds loaned from the expansion fund to another fund in state
government, as specified, until January 1, 2018, and 4 times
thereafter.
This bill would increase that maximum amount to 10 times the
amount of funds on deposit in the expansion fund plus any receivables
due from funds loaned from the expansion fund to another fund in
state government, as specified, would apply that increased amount
indefinitely, and would make conforming changes.
Existing law requires the program manager under the guidance of
the executive director of the California Infrastructure and Economic
Development Bank, to, among other things, authorize the distribution,
transfer, and withholding of moneys in the expansion fund and trust
funds.
This bill would also require the program manager to leverage
moneys in the expansion fund and trust funds.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 63089.1 of the Government Code is amended to
read:
63089.1. (a) The program manager acting under the guidance of the
executive director shall do all of the following:
(1) Administer this chapter.
(2) Enter into a contract between the bank and each corporation
for services to be provided by the corporations for one or more
programs or financial products under this chapter and Chapter 1
(commencing with Section 14000) of Part 5 of Division 3 of Title 1 of
the Corporations Code.
(3) In accordance with available resources, allow the use of
branch offices for the purposes of making these programs under this
chapter accessible to all areas of the state.
(4) Require each corporation to submit an annual written plan of
operation.
(5) Authorize the distribution, transfer, leverage, and
withholding of moneys in the expansion fund and trust funds.
(6) Authorize the investment of expansion and trust fund moneys.
(7) Oversee the operations of one or more programs authorized
pursuant to this chapter and by Section 8684.2.
(8) Act as liaison between corporations, other state and federal
agencies, lenders, and the Legislature.
(9) Act as secretary to the California Small Business Board, and
attend meetings of the California Small Business Board and the bank
board.
(b) The program manager may attend and participate at corporation
meetings. The program manager or his or her designee shall be an ex
officio, nonvoting representative on the board of directors and loan
committees of each corporation. The program manager shall confer with
the board of directors of each corporation as appropriate and
necessary to carry out his or her duties, but in no case shall the
program manager confer less than once each fiscal year.
(c) In accordance with available resources, assist corporations in
applying for public and private funding opportunities, and in
obtaining program support from the business community.
SEC. 2. Section 63089.5 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is amended to read:
63089.5. (a) There is hereby continued in existence in the State
Treasury the California Small Business Expansion Fund. All or a
portion of the funds in the expansion fund may be paid out, with the
approval of the Department of Finance, to a financial institution or
financial company that will establish a trust fund and act as trustee
of the funds.
(b) The expansion fund and the trust fund shall be used for the
following purposes:
(1) To pay defaulted loan guarantee or surety bond losses, or
other financial product defaults or losses.
(2) To fund direct loans and other debt instruments.
(3) To pay administrative costs of corporations.
(4) To pay state support and administrative costs.
(5) To pay those costs necessary to protect a real property
interest in a financial product default.
(c) The expansion fund and trust fund are created solely for the
purpose of receiving state, federal, or local government moneys, and
other public or private moneys to make loans, guarantees, and other
financial products that the California Small Business Finance Center
or a financial development corporation is authorized to provide. The
program manager shall provide written notice to the Joint Legislative
Budget Committee and to the Chief Clerk of the Assembly and the
Secretary of the Senate who shall provide a copy of the notice to the
relevant policy committees within 10 days of any nonstate funds
being deposited in the expansion fund. The notice shall include the
source, purpose, timeliness, and other relevant information as
determined by the bank board.
(d) (1) One or more accounts in the expansion fund and the trust
fund may be created by the program manager for corporations
participating in one or more programs authorized under this chapter
and Section 8684.2. Each account is a legally separate account, and
shall not be used to satisfy loan guarantees or other financial
product obligations of another corporation except when the expansion
fund or trust fund is shared by multiple corporations.
(2) The program manager may create one or more holding accounts in
the expansion fund or the trust fund, or in both, to accommodate the
temporary or permanent transfers of funds pursuant to Section
63089.3.
(e) The amount of guarantee liability outstanding at any one time
shall not exceed 10 times the amount of funds on deposit in the
expansion fund plus any receivables due from funds loaned from the
expansion fund to another fund in state government as directed by the
Department of Finance pursuant to a statute enacted by the
Legislature, including each of the trust fund accounts within the
trust fund.
SEC. 3. Section 63089.5 of the Government Code, as amended by
Section 8 of Chapter 132 of the Statutes of 2014, is repealed.
SEC. 4. Section 63089.60 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is amended to read:
63089.60. (a) The program manager shall recommend whether the
expansion fund and trust fund accounts are to be leveraged, and if
so, by how much. Upon the request of the corporation, the program
manager's decision may be repealed or modified by the executive
director or the bank board.
(b) The amount of guarantee liability outstanding at any one time
shall not exceed 10 times the amount of funds on deposit in the
expansion fund plus any receivables due from funds loaned from the
expansion fund to another fund in state government as directed by the
Department of Finance pursuant to a statute enacted by the
Legislature, including each of the trust fund accounts within the
trust fund.
SEC. 5. Section 63089.60 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is repealed.
SEC. 6. Section 63089.61 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is amended to read:
63089.61. (a) The corporate guarantee shall be backed by funds on
deposit in the corporation's trust fund account, or by receivables
due from funds loaned from the corporation's trust fund account to
another fund in state government, as directed by the Department of
Finance pursuant to a statute enacted by the Legislature.
(b) Loan guarantees shall be secured by a reserve of at least 10
percent to be determined by the program manager unless a higher
leverage ratio for an individual corporation has been approved
pursuant to subdivision (b) of Section 63089.56.
(c) The expansion fund and trust fund accounts shall be used to
guarantee obligations and other financial product obligations, to pay
the administrative costs of the corporations, and for other uses
pursuant to this chapter and Section 8684.2.
SEC. 7. Section 63089.61 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is repealed.
SEC. 8. Section 63089.62 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is amended to read:
63089.62. (a) It is the intent of the Legislature that the
corporations make maximum use of their statutory authority to
guarantee loans and surety bonds, and administer other financial
products, including the authority to secure loans with a minimum loan
loss reserve of only 10 percent, unless the program manager
authorizes a higher leverage ratio for an individual corporation
pursuant to subdivision (b) of Section 63089.56, so that the
financing needs of small business may be met as fully as possible
within the limits of corporations' trust fund account balance.
(b) Any corporation that serves an area declared to be in a state
of emergency by the Governor or a disaster area by the President of
the United States, the Administrator of the United States Small
Business Administration, or the United States Secretary of
Agriculture shall increase the portfolio of loan guarantees where the
dollar amount of the loan is less than one hundred thousand dollars
($100,000), so that at least 15 percent of the dollar value of loans
guaranteed by the corporation is for those loans. The corporation
shall comply with this requirement within one year of the date the
emergency or disaster is declared. Upon application of a corporation,
the executive director may waive or modify the rule for the
corporation if the corporation demonstrates that it made a good faith
effort to comply and failed to locate lending institutions in the
region that the corporation serves that are willing to make
guaranteed loans in that amount.
SEC. 9. Section 63089.62 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is repealed.
