Bill Text: IA HF2578 | 2019-2020 | 88th General Assembly | Introduced

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Bill Title: A bill for an act establishing a small business revolving loan program and small business revolving loan fund within the economic development authority to award low-interest loans to eligible small businesses.

Spectrum: Partisan Bill (Democrat 38-0)

Status: (Introduced - Dead) 2020-02-27 - Introduced, referred to Appropriations. H.J. 398. [HF2578 Detail]

Download: Iowa-2019-HF2578-Introduced.html

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House File 2578 - Introduced
HOUSE FILE 2578
BY RUNNING-MARQUARDT ,
STECKMAN , B. MEYER ,
ANDERSON , COHOON ,
KONFRST , DONAHUE , GASKILL ,
DERRY , WINCKLER , KURTH ,
JUDGE , WILBURN , HUNTER ,
KURTZ , FORBES , NIELSEN ,
ABDUL-SAMAD , BEARINGER ,
WOLFE , ISENHART , SUNDE ,
MATSON , WESSEL-KROESCHELL ,
LENSING , MASCHER ,
BROWN-POWERS , EHLERT ,
GAINES , OLDSON , BENNETT ,
R. SMITH , McCONKEY ,
KACENA , WILLIAMS , HALL ,
BRECKENRIDGE , and OURTH
A BILL FOR
An Act establishing a small business revolving loan program
and small business revolving loan fund within the economic
development authority to award low-interest loans to
eligible small businesses.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. NEW SECTION . 15.302 Small business revolving
loan program and fund.
1. As used in this section, unless the context otherwise
requires:
a. “Eligible small business” means a business meeting the
requirements of subsection 5.
b. “Financial assistance” means a low-interest loan with a
five-year term.
c. “Fund” means the small business revolving loan fund.
d. “Located in” means the place or places at which
a business’s operations are located and where at least
ninety-five percent of the business’s employees work, or where
employees that are paid at least ninety-five percent of the
business’s payroll work.
e. “Program” means the small business revolving loan
program.
2. a. A small business revolving loan fund is created
in the state treasury under the control of the authority
and consists of any moneys appropriated to the fund by the
general assembly and any other moneys available and obtained
or accepted by the authority for placement in the fund. The
fund shall be used to provide financial assistance under the
program. The authority shall use any moneys specifically
appropriated for purposes of this section only for the purposes
of this section.
b. Notwithstanding section 8.57, subsection 5, paragraph
“c” , there is appropriated from the rebuild Iowa infrastructure
fund to the authority for deposit in the fund, for the fiscal
year beginning July 1, 2020, and for each succeeding fiscal
year, the sum of five million dollars.
c. Notwithstanding section 12C.7, subsection 2, interest
or earnings on moneys in the fund shall accrue to the
authority and shall be used for purposes of this section.
Notwithstanding section 8.33, moneys in the fund at the end
of each fiscal year shall not revert to any other fund but
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H.F. 2578
shall remain in the fund for expenditure for subsequent fiscal
years. All repayments, payments of interest, or recaptures
of the financial assistance provided under this section shall
accrue to the authority and shall be used for purposes of this
section.
d. The authority shall not use more than five percent of
the moneys in the fund at the beginning of the fiscal year for
purposes of administrative costs, marketing, and other program
support.
3. The authority shall establish and administer a small
business revolving loan program for purposes of awarding
financial assistance to eligible small businesses. Financial
assistance awarded to an eligible small business pursuant to
the program shall not exceed fifty thousand dollars.
4. The authority shall begin to award financial assistance
from the fund not later than January 1, 2021.
5. A business is eligible to apply for financial assistance
under the program if the business meets all of the following
criteria at the time of the business’s application:
a. The business has fifteen or fewer full-time equivalent
employees.
b. The business is located in Iowa.
c. The business is owned, operated, and actively managed by
a resident of Iowa.
d. The business has a business plan and has received
assistance in the development stage or the expansion stage from
a small business development center.
e. If the business has been a going concern for two years or
more, the business has not been found to be in violation of any
environmental or worker safety laws or rules.
f. The business only employs individuals legally authorized
to work in the state.
g. The business does not engage in the production,
depiction, or distribution of obscene material. For purposes
of this paragraph, “obscene material” means the same as defined
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H.F. 2578
in section 728.1.
h. The business is not in bankruptcy and is not imminently
contemplating filing for bankruptcy.
6. Upon approval by the authority of a business’s
application, the business shall enter into an agreement with
the authority which shall include but not be limited to all of
the following provisions:
a. If the business, after being awarded financial
assistance, does not continue to meet one or more of the
criteria for eligibility under subsection 5, except for
subsection 5, paragraph “a” , all or a portion of the financial
assistance received is subject to disallowance, recapture, or
immediate repayment.
b. If, after being awarded financial assistance, the
business ceases operations or removes a significant portion
of its operations to a location outside of the state, all or
a portion of the financial assistance received is subject to
disallowance, recapture, or immediate repayment.
7. a. An eligible small business shall not receive more
than one award of financial assistance under this section.
b. An eligible small business that is awarded financial
assistance under this section may apply for financial
assistance under other programs administered by the authority.
c. An eligible small business that is awarded financial
assistance under this section shall not use such financial
assistance for purposes of meeting the business’s payroll
obligations.
8. The authority shall, by January 15 of each year, submit
a report on the program to the general assembly. The report
shall include all of the following information for each small
business that is awarded financial assistance under the program
in the immediately preceding calendar year:
a. The industry or service area in which the business
operates.
b. The number of employees employed by the business.
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H.F. 2578
c. The amount of the financial assistance awarded by the
authority to the business.
d. The county in which the business is located.
e. Whether the business is a start-up or a going concern.
f. Identification of the small business development center
providing the business with assistance in the development stage
or the expansion stage.
g. If applicable, identification of the small business
center that referred the business to the program.
9. The authority shall adopt rules pursuant to chapter 17A
as necessary to administer the program.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill establishes a small business revolving loan
program and small business revolving loan fund within the
economic development authority for the purpose of awarding
low-interest loans to eligible small businesses.
The bill creates a small business revolving loan fund
(fund) in the state treasury under the control of the economic
development authority (authority). The fund consists of any
moneys appropriated to the fund by the general assembly and
any other moneys available and obtained or accepted by the
authority for placement in the fund. The bill establishes a $5
million standing appropriation for the fund for the fiscal year
beginning July 1, 2020, from the rebuild Iowa infrastructure
fund. The bill requires that the fund be used to provide
financial assistance under the small business revolving loan
program (program). “Financial assistance” is defined in the
bill as a low-interest loan with a five-year term.
Interest or earnings on moneys in the fund shall accrue to
the authority and must be used for purposes of the program.
Moneys in the fund at the end of each fiscal year do not revert
to any other fund but remain in the fund for expenditure for
subsequent fiscal years. All payments of interest, repayments,
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H.F. 2578
or recaptures of financial assistance awarded under the program
accrue to the authority and must be used for purposes of the
program. The authority may use not more than 5 percent of the
moneys in the fund at the beginning of each fiscal year for
purposes of administrative costs, marketing, and other program
support. The authority is required to begin to award financial
assistance from the fund not later than January 1, 2021.
The bill directs the authority to establish a program for
purposes of providing financial assistance to eligible small
businesses. Financial assistance awarded to an eligible small
business shall not exceed $50,000. A business is eligible
to apply for financial assistance under the program if the
business, at the time of application, has 15 or fewer full-time
equivalent employees; is located in Iowa; is owned, operated,
and actively managed by a resident of Iowa; has a business plan
and has received assistance in the development stage or the
expansion stage from a small business development center; only
employs individuals legally authorized to work in the state;
does not engage in the production, depiction, or distribution
of obscene material; and is not in bankruptcy or imminently
contemplating filing for bankruptcy. If the business has been
a going concern for two years or more, the business must not
have violated any environmental or worker safety laws or rules.
“Located in” is defined in the bill as the place or places at
which a business’s operations are located and where at least 95
percent of the business’s employees work, or where employees
that are paid at least 95 percent of the business’s payroll
work.
Upon the authority’s approval of a business’s application,
the eligible small business is required to enter into an
agreement with the authority. The agreement must include
provisions as outlined in the bill.
An eligible small business may not be awarded more than one
loan under the program; however, the business may apply for
financial assistance under other programs administered by the
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authority. Awarded financial assistance cannot be used by an
eligible small business for meeting payroll obligations.
The bill directs the authority to submit an annual report on
the program by January 15 to the general assembly. The report
must include information, as detailed in the bill, for each
business that received financial assistance under the program
in the immediately preceding calendar year.
The authority must adopt rules pursuant to Code chapter 17A
as necessary to administer the program.
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