Bill Text: IA HF478 | 2015-2016 | 86th General Assembly | Introduced
Bill Title: A bill for an act relating to rural microbusinesses by establishing a rural microbusiness investment loan program and fund.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced - Dead) 2015-03-10 - Subcommittee, Gustafson, Dunkel, and Rogers. H.J. 537. [HF478 Detail]
Download: Iowa-2015-HF478-Introduced.html
House File 478 - Introduced HOUSE FILE BY KELLEY A BILL FOR 1 An Act relating to rural microbusinesses by establishing a 2 rural microbusiness investment loan program and fund. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 2483YH (2) 86 ad/sc PAG LIN 1 1 Section 1. NEW SECTION. 15E.152 Rural microbusiness 1 2 investment loan program. 1 3 1. The authority shall establish and administer a rural 1 4 microbusiness investment loan program. The rural microbusiness 1 5 investment loan program is established to provide financial 1 6 assistance for a qualified investment in an eligible rural 1 7 microbusiness meeting the criteria in subsection 3. Financial 1 8 assistance provided under this section shall be in the form of 1 9 a loan provided from the rural microbusiness investment fund 1 10 created in section 15E.153. 1 11 2. For purposes of this section, unless the context 1 12 otherwise requires: 1 13 a. "Distressed rural area" means an area that has lost 1 14 at least five percent of its population over the last ten 1 15 years, an area that has lost ten percent of its population 1 16 over the last twenty years, an area that has a median family 1 17 income below eighty=five percent of the national median family 1 18 income, an area that has a poverty rate that exceeds twelve and 1 19 one=half percent of the area's total population, or an area 1 20 that has an average unemployment rate in the preceding year 1 21 that exceeds one hundred twenty=five percent of the national 1 22 average. A distressed rural area does not include a city 1 23 with a population above fifty thousand or an urbanized area 1 24 contiguous and adjacent to a city with a population above fifty 1 25 thousand. 1 26 b. "Qualified expenditure" means an amount paid to a rural 1 27 microbusiness and includes but is not limited to costs for 1 28 capital plant and equipment, inventory expenses, and wages, but 1 29 does not include interest or the cost of any vehicle or costs 1 30 associated with purchasing a vehicle. 1 31 c. "Qualified investment" means the excess of the qualified 1 32 expenditures paid for the taxable year less the qualified 1 33 expenditures paid for the preceding taxable year or the average 1 34 annual qualified expenditures paid over the preceding three 1 35 taxable years, whichever is greater. 2 1 3. To be eligible for the program, a rural microbusiness 2 2 must meet all of the following criteria: 2 3 a. The trade or business is carried on as a proprietorship, 2 4 partnership, trust if the trust is an entity in which the 2 5 distributions flow through to the beneficiaries in accordance 2 6 with their pro rata share of the principal or income of the 2 7 trust, S corporation, or any other entity in which the income 2 8 flows through to the partners, shareholders, or members in 2 9 accordance with their pro rata share of the income of the 2 10 entity. 2 11 b. The trade or business is carried on in a distressed rural 2 12 area. 2 13 c. The trade or business has a three=year average annual 2 14 gross revenue that does not exceed one million dollars for the 2 15 period ending with the taxable year in which the application 2 16 for the loan is received. 2 17 d. The trade or business employs not more than five 2 18 full=time equivalent employees. 2 19 e. If the majority of the activity of the trade or business 2 20 is agricultural production, each individual who is an owner, 2 21 shareholder, or holds a capital interest, profits interests, or 2 22 beneficial interests in such trade or business is a first=time 2 23 farmer. 2 24 4. The authority may accept, evaluate, and approve 2 25 applications for financial assistance from rural 2 26 microbusinesses pursuant to the requirements of this section 2 27 and may monitor the compliance of the qualifying businesses 2 28 with the terms of an agreement entered into with the authority. 2 29 5. Upon approval of the application for financial 2 30 assistance by the authority, the eligible rural microbusiness 2 31 shall enter into an agreement with the authority specifying the 2 32 terms of the loan. 2 33 6. a. The amount of a loan awarded to an eligible rural 2 34 microbusiness shall not exceed an amount equal to thirty=five 2 35 percent of the qualified investments in the eligible rural 3 1 microbusiness in the previous fiscal year or seven thousand 3 2 five hundred dollars, whichever is less. 3 3 b. Interest on a loan, for purposes of this program, shall 3 4 not exceed three and nine=tenths percent per annum. 3 5 7. a. An eligible rural microbusiness shall not receive 3 6 more than one award of financial assistance under this section. 3 7 b. An eligible rural microbusiness that receives financial 3 8 assistance under this section may subsequently apply for 3 9 financial assistance under other programs administered by the 3 10 authority. 3 11 8. The maximum amount of the total loans awarded by the 3 12 authority through the rural microbusiness investment loan 3 13 program shall not exceed one hundred thousand dollars in 3 14 a fiscal year. The authority shall award the loans on a 3 15 first=come, first=served basis. 3 16 9. The authority shall adopt rules pursuant to chapter 17A 3 17 as necessary to administer the program. 3 18 Sec. 2. NEW SECTION. 15E.153 Rural microbusiness investment 3 19 fund. 3 20 1. A rural microbusiness investment fund is created in 3 21 the state treasury under the control of the authority and 3 22 consisting of any moneys appropriated by the general assembly 3 23 and any other moneys available to and obtained or accepted by 3 24 the authority for placement in the fund. 3 25 2. Payments of interest, repayments of moneys loaned, and 3 26 recaptures of loans shall be deposited in the fund. 3 27 3. The fund shall be used to provide financial assistance in 3 28 the form of low=interest loans under the rural microbusiness 3 29 investment loan program established in section 15E.152. 3 30 4. Moneys in the fund are not subject to section 8.33. 3 31 Notwithstanding section 12C.7, subsection 2, interest or 3 32 earnings on moneys in the fund shall be credited to the fund. 3 33 EXPLANATION 3 34 The inclusion of this explanation does not constitute agreement with 3 35 the explanation's substance by the members of the general assembly. 4 1 This bill relates to rural microbusinesses by establishing 4 2 a rural microbusiness investment loan program and fund. The 4 3 bill provides that the economic development authority shall 4 4 establish and administer a rural microbusiness investment loan 4 5 program to provide low=interest loans for qualified investments 4 6 in an eligible rural microbusiness. 4 7 The bill defines a "qualified investment" as the excess of 4 8 the qualified expenditures paid for the taxable year minus the 4 9 qualified expenditures paid for the preceding taxable year or 4 10 the average annual qualified expenditures paid in the previous 4 11 three taxable years, whichever is greater. A "qualified 4 12 expenditure" is an amount paid to a rural microbusiness and 4 13 does not include interest or the cost of any vehicle or the 4 14 cost of purchasing a vehicle. 4 15 The bill defines a "distressed rural area" as an area that 4 16 has lost at least 5 percent of its population in the last 10 4 17 years, an area that has lost 10 percent of its population in 4 18 the last 20 years, an area that has a median family income 4 19 below 85 percent of the national median family income, an area 4 20 that has a poverty rate that exceeds 12.5 percent of the area's 4 21 population, or an area that has an average unemployment rate 4 22 in the preceding year that exceeds 125 percent of the national 4 23 average. A "distressed rural area" does not include a city 4 24 or urbanized area contiguous and adjacent to a city with a 4 25 population over 50,000. 4 26 The bill provides that to qualify for a loan under the rural 4 27 microbusiness investment loan program, a rural microbusiness 4 28 must be: a trade or business carried on as a proprietorship, 4 29 partnership, trust if the trust is an entity in which 4 30 distributions flow through to beneficiaries based on the 4 31 beneficiaries' pro rata share of the principal or income of the 4 32 trust, S corporation, or any other entity in which the income 4 33 flows through to partners, shareholders, or members based on 4 34 their pro rata share of the income in the entity; a trade or 4 35 business carried on in a distressed rural area; a trade or 5 1 business with a three=year average annual gross revenue that 5 2 does not exceed $1 million for the period ending with the 5 3 taxable year in which the business applied for the loan; a 5 4 trade or business which employs not more than five full=time 5 5 equivalent employees; and if the majority of the activity 5 6 of the trade or business is agricultural production, each 5 7 individual who is an owner, shareholder, or holds a capital 5 8 interest, profits interests, or beneficial interests in the 5 9 trade or business is a first=time farmer. 5 10 The bill provides that the economic development authority 5 11 may accept, evaluate, and approve applications for financial 5 12 assistance from rural microbusinesses. Upon approval of an 5 13 application for financial assistance, the eligible rural 5 14 microbusiness and the authority shall enter into an agreement 5 15 discussing the terms of the loan. 5 16 The bill requires that the amount of a loan awarded pursuant 5 17 to the rural microbusiness investment loan program shall not 5 18 exceed 35 percent of the funds invested in the eligible rural 5 19 microbusiness in the previous fiscal year or $7,500, whichever 5 20 is less. The interest on a loan under the rural microbusiness 5 21 investment loan program shall not exceed 3.9 percent per annum. 5 22 The bill provides that an eligible rural microbusiness 5 23 shall not receive more than one award of financial assistance 5 24 under the program; however, an eligible rural microbusiness 5 25 may subsequently apply for financial assistance under other 5 26 programs after receiving financial assistance pursuant to the 5 27 rural microbusiness investment loan program. 5 28 The bill states that the maximum amount of loans awarded by 5 29 the economic development authority for the rural microbusiness 5 30 investment loan program shall not exceed $100,000 in a 5 31 fiscal year, and the loans shall be awarded on a first=come, 5 32 first=served basis. 5 33 The bill requires the authority to adopt rules to administer 5 34 the program. 5 35 The bill establishes a rural microbusiness investment fund 6 1 to provide low=interest loans for the rural microbusiness 6 2 investment loan program. 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