2012 -- H 7320

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- ECONOMIC DEVELOPMENT

     Introduced By: Representatives Schadone, and Corvese

     Date Introduced: February 01, 2012

     Referred To: House Small Business

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

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GOVERNMENT" is hereby amended by adding thereto the following chapter:

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     CHAPTER 64.15

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SMALL BUSINESS REVOLVING LOAN AND CREDIT ENHANCEMENT FUND ACT

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     42-64.15-1. Short title. – This chapter shall be known and may be cited as the "Small

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Business Revolving Loan and Credit Enhancement Fund Act."

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     42-64.15-2. Legislative findings. – The general assembly finds and declares:

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     (1) That small businesses in the state of Rhode Island are of vital significance to Rhode

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Island's economic well-being and that small businesses provide the vast majority of jobs in the

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state;

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     (2) That small businesses have a difficult time borrowing needed funds on a conventional

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basis due to the high cost of these funds and the reluctance of banks to provide one hundred

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percent (100%) financing; and

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     (3) That the Rhode Island economic development corporation shall use the small business

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revolving loan and credit enhancement fund to assist small businesses in reducing the cost of loan

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funds by offering partial, low-cost loans or by purchasing credit enhancements for small business'

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sustenance and growth.

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     42-64.15-3. Fund creation. – (a) A special fund to be known as the "Small Business

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Revolving Loan and Credit Enhancement Fund," hereinafter referred to as the "fund," shall be

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created and administered by the Rhode Island economic development corporation, hereinafter

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referred to as the "corporation."

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     (b) The fund shall be invested by the corporation in securities consistent with the policies

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established by it. All interest on the fund's moneys and any repayment of loans shall be deposited

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in the fund.

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     (c) Loans made by the corporation to small business under the fund shall be loaned at a

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below-market rate.

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     42-64.15-4. Fund purposes. – (a) The moneys appropriated to the fund may be used by

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the corporation for loans up to twenty-five percent (25%) of the total debt required, but not to

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exceed one hundred thousand dollars ($100,000) for working capital and fixed asset purposes.

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     (b) The moneys appropriated to the fund may also be used to purchase credit

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enhancements on behalf of targeted businesses which shall support loans made by and/or through

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financial institutions to such targeted businesses. Credit enhancements purchased shall not

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exceed one hundred thousand dollars ($100,000) and the credit enhancement amount purchased

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shall be determined by the corporation.

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     (c) The moneys appropriated to the fund shall not be used for the following purposes:

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     (1) Grants;

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     (2) Restaurants and professional office buildings except in those distressed areas as

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defined in chapter 42-64.3-1, et al;

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     (3) Projects which do not attract or retain employment opportunities;

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     (4) Private, nonprofit activities; and

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     (5) Private or public speculative real estate ventures.

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     42-64.15-5. Fund eligibility. – In order for a project to be eligible for the fund purposes

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cited in section 42-64.14-4 of this chapter, the project must meet the following criteria:

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     (1) For the purpose of administering the fund, a small business shall be defined as a firm

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having a full-time equivalent complement of one hundred (100) or fewer Rhode Island based

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employees at the time of application;

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     (2) The firm to benefit from fund proceeds must create or retain direct, permanent,

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quality, full-time jobs;

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     (3) The firm eligible for fund proceeds must be eligible for and have received

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commitments for at least seventy-five percent (75%) of the debt amount needed;

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     (4) The firm eligible for fund proceeds must be able to collateralize the fund proceeds to

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the satisfaction of the corporation which shall use to the greatest extent possible bank-like

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underwriting procedures; and

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     (5) The firm eligible for fund proceeds must be able to repay the fund proceeds within a

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time period and at an interest rate determined by the corporation.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- ECONOMIC DEVELOPMENT

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     This act would create a small business revolving loan and credit enhancement fund to be

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administered by the Rhode Island economic development corporation to help Rhode Island

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employers with one hundred (100) or fewer employees.

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     This act would take effect upon passage.

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