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art.023/5/023/4/023/3

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ARTICLE 23 SUBSTITUTE A

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RELATING TO STATE AFFAIRS AND GOVERNMENT - THE INNOVATE RHODE

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ISLAND SMALL BUSINESS PROGRAM

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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 64.16

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THE INNOVATE RHODE ISLAND SMALL BUSINESS PROGRAM

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     42-64.16-1. Establishment of incentive program. – (a) There is hereby established the

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Innovate Rhode Island Small Business Incentive Program SBIR/STTR to be administered by the

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Rhode Island Science and Technology Advisory Council (STAC). In order to foster job creation

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and economic development in the state, STAC may provide grants to eligible businesses to offset

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costs associated with applying to the United States Small Business Administration for Small

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Business Innovation Research (SBIR) grants or Small Business Technology Transfer Research

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(STTR) grants. The grants shall be paid from the Innovate Rhode Island Small Business Account

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established in this chapter.

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     (b) Eligibility. – In order to be eligible for a grant under this section, a business must

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satisfy all of the following conditions:

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     (1) The business must be a for-profit, Rhode Island-based business with fifty (50) or

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fewer employees. For the purposes of this section, a Rhode Island-based business is one that has

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its principal place of business and at least fifty-one percent (51%) of its employees residing in this

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state.

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     (2) The business must have submitted a qualified SBIR/STTR Phase I proposal to a

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participating federal agency in response to a specific federal solicitation.

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     (3) The business must satisfy all federal SBIR/STTR requirements.

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     (4) The business shall not receive concurrent funding support from other sources that

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duplicates the purpose of this section.

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     (5) The business must certify that at least fifty-one percent (51%) of the research

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described in the federal SBIR/STTR Phase I proposal will be conducted in this state and that the

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business will remain a Rhode Island-based business for the duration of the SBIR/STTR Phase I

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project.

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     (6) The business must demonstrate its ability to conduct research in its SBIR/STTR Phase

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I proposal.

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     (c) Grant. – STAC may award grants to reimburse an eligible business for up to fifty

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percent (50%) of the costs of preparing and submitting an SBIR/STTR Phase I proposal, up to a

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maximum of three thousand dollars ($3,000). A business may receive only one grant under this

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section per year. A business may receive only one grant under this section with respect to each

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federal proposal submission. Costs that may be reimbursed include costs incurred directly related

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to preparation and submission of the grant such as word processing services, proposal consulting

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fees, project-related supplies, literature searches, rental of space or equipment related to the

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proposal preparation, and salaries of individuals involved with the preparation of the proposals.

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Costs that shall not be reimbursed include travel expenses, large equipment purchases, facility or

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leasehold improvements, and legal fees.

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     (d) Application. – A business shall apply, under oath, to STAC for a grant under this

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section on a form prescribed by STAC that includes at least all of the following:

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     (1) The name of the business, the form of business organization under which it is

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operated, and the names and addresses of the principals or management of the business.

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     (2) An acknowledgement of receipt of the Phase I proposal by the relevant federal

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agency.

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     (3) An itemized statement of the costs that may be reimbursed.

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     (4) Any other information necessary for STAC to evaluate the application.

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     42-64.16-2. Establishment of matching funds program. – (a) There is established the

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Rhode Island SBIR/STTR Matching Funds Program to be administered by STAC. In order to

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foster job creation and economic development in the state, STAC may provide grants to eligible

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businesses to match funds received by a business as a SBIR or STTR Phase I award, loans to

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eligible businesses to match funds received by a business as a SBIR or STTR Phase II award, and

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to encourage businesses to apply for further Phase II and Phase III awards, respectively.

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     (b) Eligibility. – In order to be eligible for a grant under this section, a business must

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satisfy all of the following conditions:

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     (1) The business must be a for-profit, Rhode Island-based business with fifty (50) or

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fewer employees. For the purposes of this section, Rhode Island-based business is one that has its

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principal place of business and at least fifty-one percent (51%) of its employees residing in this

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state.

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     (2) The business must have received an SBIR/STTR Phase I award from a participating

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federal agency in response to a specific federal solicitation. To receive the full Phase I matching

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grant, the business must also have submitted a final Phase I report, demonstrated that the

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sponsoring agency has interest in the Phase II proposal, and submitted a Phase II proposal to the

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agency. To receive the full Phase II matching loan, the business must also have submitted a final

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Phase II report, demonstrated that the sponsoring agency has interest in the Phase III proposal,

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and submitted a Phase III proposal to the agency.

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     (3) The business must satisfy all federal SBIR/STTR requirements.

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     (4) The business shall not receive concurrent funding support from other sources that

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duplicates the purpose of this section.

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     (5) For a Phase I matching grant, the business must certify that at least fifty-one percent

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(51%) of the research described in the federal SBIR/STTR Phase II proposal will be conducted in

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this state and that the business will remain a Rhode Island-based business for the duration of the

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SBIR/STTR Phase II project. For a Phase II matching loan, the business must certify that at least

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fifty-one percent (51%) of the research described in the federal SBIR/STTR Phase III proposal

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will be conducted in this state and that the business will remain a Rhode Island-based business for

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the duration of the SBIR/STTR Phase III project.

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     (6) For a Phase I matching grant, the business must demonstrate its ability to conduct

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research in its SBIR/STTR Phase II proposal. For a Phase II matching loan, the business must

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demonstrate its ability to conduct research in its SBIR/STTR Phase III proposal.

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     (c) Phase I Matching Grant. – STAC may award grants to match the funds received by a

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business through a SBIR/STTR Phase I proposal up to a maximum of one hundred thousand

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dollars ($100,000). Seventy-five percent (75%) of the total grant shall be remitted to the business

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upon receipt of the SBIR/STTR Phase I award and application for funds under this section.

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Twenty-five percent (25%) of the total grant shall be remitted to the business upon submission by

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the business of the Phase II application to the funding agency and acceptance of the Phase I report

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by the funding agency. A business may receive only one grant under this section per year. A

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business may receive only one grant under this section with respect to each federal proposal

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submission. Over its lifetime, a business may receive a maximum of six (6) awards under this

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section.

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     (d) Phase II Matching Loan. – STAC may award loans to match the funds received by a

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business through a SBIR/STTR Phase II proposal up to a maximum of three hundred thousand

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dollars ($300,000) that must be secured by sufficient assets of the business. Seventy-five percent

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(75%) of the total loan shall be remitted to the business upon receipt of the SBIR/STTR Phase II

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award and application for funds under this section. Twenty-five percent (25%) of the total loan

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shall be remitted to the business upon submission by the business of the Phase III application to

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the funding agency and acceptance of the Phase I report by the funding agency. A business may

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receive only one loan under this section per year. A business may receive only one loan under this

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section with respect to each federal proposal submission. Over its lifetime, a business may receive

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a maximum of six (6) loans under this section.

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     (e) Application. – A business shall apply, under oath, to STAC for a grant or loan under

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this section on a form prescribed by STAC that includes at least all of the following:

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     (1) The name of the business, the form of business organization under which it is

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operated, and the names and addresses of the principals or management of the business.

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     (2) For a Phase I matching grant, an acknowledgement of receipt of the Phase I report

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and Phase II proposal by the relevant federal agency. For a Phase II matching loan, an

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acknowledgement of receipt of the Phase II report and Phase III proposal by the relevant federal

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agency.

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     (3) Any other information necessary for STAC to evaluate the application.

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     42-64.16-3. Establishment of bioscience & engineering internship program. – (a)

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There is hereby established the Innovate Rhode Island Bioscience & Engineering Internship

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Program to be administered by STAC. In order to promote workforce development and education

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in the bioscience and engineering fields and enhance the talent pipeline for Rhode Island

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businesses engaged in the biosciences and engineering, STAC may reimburse eligible bioscience

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and engineering companies for eligible internship stipends. The reimbursements shall be paid

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from the Innovate Rhode Island Small Business Account established in this chapter.

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     (b) Bioscience and engineering definitions.

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     (1) Bioscience definition. – For the purposes of this section, "bioscience" shall mean

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advanced and applied sciences that expand the understanding of human physiology and have the

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potential to lead to medical advances or therapeutic applications.

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     (2) Engineering definition. – For the purposes of this section, "engineering" shall mean

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the creative application of advanced mathematics and natural sciences to design or develop

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complex structures, machines, processes, or systems.

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     (c) Business eligibility. – In order to be eligible for reimbursement under this section, a

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business must satisfy all of the following conditions:

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     (1) The business must be a for-profit, Rhode Island-based business with fifty (50) or

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fewer employees. For the purposes of this section, a Rhode Island-based business is one that has

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its principal place of business and at least fifty-one percent (51%) of its employees in this state.

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     (2) The business must be primarily engaged in a bioscience or engineering field and must

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demonstrate its ability to conduct research in bioscience or engineering.

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     (3) The business must host the internship in Rhode Island.

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     (4) The business must offer interns a hands-on learning experience and at least one

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mentor directly overseeing the internship.

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     (5) Any two or more related businesses that are commonly controlled by any person or

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entity, directly or indirectly, are limited to reimbursement under this section available for one

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business only.

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     (d) Intern eligibility. – In order to be an eligible intern under this section, a prospective

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intern must satisfy all of the following requirements:

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     (1) The prospective intern must be a Rhode Island resident and must attend a college or

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university located in Rhode Island.

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     (2) For students enrolled in community college, the student must be enrolled in an

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Associate's Degree or Certificate program or completed one within the past year; for students

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enrolled in four-year college or university, the student must have or will have completed at least

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sophomore year the semester before the internship, or have graduated within the past year; for

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graduate students, the student must be enrolled in a Master's Degree program or received their

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Master's Degree within the past year.

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     (3) The intern cannot be the spouse, child, grandchild, sibling, niece, nephew, or spouse

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of a child, grandchild, sibling, niece, or nephew of any employee of the business.

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     (4) The intern cannot participate in more than one internship subsidized under this section

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in the same calendar year.

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     (5) The intern cannot participate in more than two internships subsidized under this

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section, over two calendar years, with the same business.

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     (e) Reimbursement. – STAC may reimburse eligible companies for pay rates up to twelve

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dollars ($12) per hour for a total reimbursement of no more than three thousand dollars ($3,000)

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per eligible intern in a bioscience or engineering internship program. Businesses may seek

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reimbursement for up to two (2) interns per calendar year. Interns shall be paid directly by the

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eligible business. Eligible businesses may seek reimbursement under this section by providing

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certification and proof of payment to STAC.

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     (f) Business application. – A business shall apply, under oath, to STAC to qualify for

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reimbursement under this section on a form prescribed by STAC that includes at least all of the

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following:

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     (1) The name of the business, the form of business organization under which it is

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operated, and the names and addresses of the principals or management of the business.

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     (2) Certification that the business meets the requirements for eligibility under this section.

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     (3) A description of the bioscience or engineering internship program that the business

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intends to offer.

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     (4) Any other information necessary for STAC to evaluate the application.

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     (g) Prospective intern application. – A prospective intern shall apply, under oath, to

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STAC to qualify for an internship under this section on a form prescribed by STAC that includes

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at least all of the following:

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     (1) The prospective intern’s name, address, college or university, program of study, year

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of study at the college or university, and degree of attainment.

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     (2) Certification that prospective intern meets the requirements for eligibility under this

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section.

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     (3) Proof of Rhode Island residency.

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     (4) Proof of enrollment in a college or university in Rhode Island or proof of having

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graduated from a college or university in Rhode Island within the past year.

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     (5) Resume and cover letter.

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     (6) Any other information necessary for STAC to evaluate the application.

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     (h) Application process. – STAC may receive applications from businesses and

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prospective interns throughout the calendar year and make determinations relating to eligibility

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under this section. STAC may make available to eligible businesses the eligible intern

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applications. Eligible businesses looking to host interns may review applications, interview

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candidates, and select and hire interns according to their qualifications and the businesses’ needs.

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     42-64.16-4. Program guidelines. – STAC shall develop guidelines related to the

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administration of the programs established by this chapter. At least twenty (20) days before the

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effective date of any guidelines or nontechnical amendments to guidelines, STAC must publish

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the proposed guidelines on STAC website and provide notice to persons who have requested

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notice of proposed guidelines. In addition, STAC must accept oral and written comments on the

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proposed guidelines during the fifteen (15) business days beginning on the first day that STAC

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has completed these notifications. For the purpose of this section, a technical amendment is either

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of the following:

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     (1) An amendment that corrects a spelling or grammatical error.

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     (2) An amendment that makes a clarification based on public comment and could have

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been anticipated by the public notice that immediately preceded the public comment.

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     42-64.16-5. Innovate Rhode Island Small Business Account established as a special

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revenue fund. – (a) Establishment. – The Innovate Rhode Island Small Business Account is

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hereby established as a special revenue fund in STAC.

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     (b) Purpose. – The Innovate Rhode Island Small Business Account ("IRISBA") shall be

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used for the Rhode Island SBIR/STTR Incentive Program, the Rhode Island SBIR/STTR

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Matching Funds Program, and the Rhode Island Bioscience & Engineering Internship Program,

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as specified in this chapter. Moneys in the IRISBA shall be allocated as specified in this chapter

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and shall not exceed available funds in the account.

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     42-64.16-6. Reports. -- STAC shall publish a report on the use of funds in the Innovate

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Rhode Island Small Business Account ("IRISBA") at the end of each fiscal quarter. The report

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shall contain information on the commitment, disbursement, and use of funds allocated under the

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(IRISBA). The report is due no later than one month after the end of the fiscal quarter, and must

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be submitted to the following:

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     (1) The chairs of the house of representatives and senate finance committees.

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     (2) The fiscal offices of the general assembly.

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     SECTION 2. This act shall take effect upon passage.