SB 551

Bill Subjects

Abstract

Existing law establishes the Capital Access Loan Program for Small Businesses, which is administered by the California Pollution Control Financing Authority, to assist qualifying small businesses in financing the costs of complying with environmental mandates and the remediation of contamination on their properties. Under the program, the authority may enter into contracts with participating financial institutions and is required to establish a loss reserve account with participating financial institutions. Existing law authorizes a participating financial institution that experiences a default on a qualified loan enrolled in the Capital Access Loan Program to obtain reimbursement from the authority by submitting a claim for reimbursement for a specified amount of the loss covered by that loan, subject to certain procedures. Existing law also establishes other capital access loan programs that are administered by the authority, including the California Americans with Disabilities Small Business Capital Access Loan Program and the California Seismic Safety Capital Access Loan Program. Under the Small Business Financial Assistance Act of 2013, the California Infrastructure and Economic Development Bank, within the Governor's Office of Business and Economic Development, administers specific programs relating to small business, either administered directly by the bank or under contract with small business financial development corporations. Existing law establishes within the bank the California Small Business Finance Center and authorizes the center to administer programs to assist businesses seeking new capital resources under the Small Business Financial Assistance Act of 2013, and establishes other related provisions. The act establishes the program manager as the manager of the California Small Business Finance Center, and requires each small business financial development corporation formed pursuant to the act to submit specified information to the program manager related to their activities. Existing law requires the program manager, no later than January 1 of each year, to prepare and submit to the Governor and the Legislature a report for the preceding fiscal year ending June 30 containing the financial product activity of each small business financial development corporation formed. Existing law establishes the Small Business Expansion Fund in the State Treasury, and continuously appropriates specified moneys into the fund for purposes related to the Small Business Financial Assistance Act of 2013. This bill would create the Loan Loss Reserve Account in the California Small Business Expansion Fund to be under the administrative and management control of the California Small Business Finance Center within the bank, and would continuously appropriate all moneys deposited into the account to the center for purposes of the Small Business Financial Assistance Act of 2013. By establishing a continuously appropriated fund, this bill would make an appropriation. The bill would require that the account be established and maintained by the bank for the benefit of qualified financial companies or financial institutions participating as a lender in the loan loss reserve program or another program authorized pursuant to Small Business Financial Assistance Act of 2013. The bill would authorize the program to hold funds in the loan loss reserve account in a financial institution or company that establishes a trust fund, as specified. The bill would prescribe a process for the transfer of specified moneys, including those from the General Fund, held by the California Pollution Control Financing Authority to the Capital Access Reserve Fund. The bill would require the bank to create holding accounts and loss reserve accounts and would prescribe the purposes for which they may be used. The bill would create the California Loan Loss Reserve Program for Small Business, a loan loss reserve and credit enhancement program, within the Small Business Financial Assistance Act of 2013. The bill would provide for the transfer of the loss reserve loan portfolio of the California Capital Access Loan Program, administered by the California Pollution Control Financing Authority, to the California Small Business Finance Center for purposes of the California Loan Loss Reserve Program for Small Business, pursuant to a specified process. The bill would authorize the bank to contract with a qualified financial company or financial institution to participate as a lender in the program, and would state a specified priority for loans to be enrolled. The bill would require the bank to develop directives and requirements to implement the program. The bill would provide for the maintenance of regulations adopted by the California Pollution Control Financing Authority in connection with the management and control of loan loss reserve funds, as specified. The bill would prescribe a process pursuant to which a financial company or institution participating as a lender may withdraw from the program. The bill would also provide for the transfer of the collateral support loan portfolio of the California Capital Access Loan Program, administered by the California Pollution Control Financing Authority, to the bank pursuant to a specified process. The bill would make conforming and technical changes. The bill would modify the requirements of the annual report described above by requiring the program manager to include in its annual report the financial product activity of each financial institution or company that participates in the loan loss reserve program specified information, and would require the program manager, for one year following the creation of the loan loss reserve program, to prepare and submit to the Governor and the Legislature a semi-annual progress report relating to the transfer of the loan loss reserve program from the California Pollution Control Financing Authority to the California Small Business Finance Center at the bank.