BILL NUMBER: SB 936	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hertzberg
   (Coauthors: Senators Anderson and Wieckowski)
   (Coauthors: Assembly Members Dodd and Hadley)

                        FEBRUARY 2, 2016

   An act to amend and repeal Sections 63089.61 and 63089.62 of the
Government Code, relating to business.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 936, as introduced, 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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  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
 20   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. 
   (d) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date. 
  SEC. 2.  Section 63089.61 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is repealed.

   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 25
percent to be determined by the program manager, unless a higher
leverage ratio has been approved for an individual corporation
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.
   (d) This section shall become operative on January 1, 2018.

  SEC. 3.  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  20   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. 
   (c) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date. 
  SEC. 4.  Section 63089.62 of the Government Code, as added by
Section 4 of Chapter 537 of the Statutes of 2013, is repealed.

   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 20 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.
   (c) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.