Full Text of SB3243 97th General Assembly
SB3243sam001 97TH GENERAL ASSEMBLY | Sen. Dan Kotowski Filed: 3/2/2012
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| 1 | | AMENDMENT TO SENATE BILL 3243
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 3243 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 1. Short title. This Act may be cited as the | 5 | | Microloan Program Act. | 6 | | Section 5. Definitions. For purposes of this Act: | 7 | | "Department" means the Department of Commerce and Economic | 8 | | Opportunity. | 9 | | "Director" means the Director of Commerce and Economic | 10 | | Opportunity. | 11 | | "Intermediary" means (i) a private, non-profit entity; | 12 | | (ii) a private, non-profit community development corporation; | 13 | | (iii) a consortium of private, non-profit organizations or | 14 | | non-profit community development corporations; or (iv) a | 15 | | quasi-governmental economic development entity (such as a | 16 | | planning and development district) if no application is |
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| 1 | | received from an eligible non-profit organization or the | 2 | | Director determines that the needs of a region or geographic | 3 | | area are not adequately served by an existing, eligible | 4 | | non-profit organization that has submitted an application. | 5 | | "Intermediary" also includes an intermediary that has | 6 | | completed the training program created and administered by the | 7 | | Director under Section 60. | 8 | | "Microloan" means a short-term, fixed rate loan of not more | 9 | | than $35,000, made by an intermediary to a small business | 10 | | concern. | 11 | | "Rural area" means any political subdivision or | 12 | | unincorporated area (i) in a non-metropolitan county (as | 13 | | defined by the Secretary of Agriculture) or its equivalent or | 14 | | (ii) in a metropolitan county or its equivalent that has a | 15 | | resident population of less than 20,000 if the Department of | 16 | | Commerce and Economic Opportunity has determined such a | 17 | | political subdivision or area to be rural. | 18 | | "Small business concern" means a legal entity, including a | 19 | | corporation, partnership, or sole proprietorship, that (i) is | 20 | | formed for the purpose of making a profit; (ii) is | 21 | | independently owned and operated; and (iii) has 5 employees or | 22 | | fewer. | 23 | | "Economically distressed area", as used in Section 30, | 24 | | means a county or unit of local government in which a small | 25 | | business concern is located and in which, according to the most | 26 | | recent data available from the Bureau of the Census, Department |
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| 1 | | of Commerce, not less than 40% of residents have an annual | 2 | | income that is at or below the poverty level. | 3 | | Section 10. Purposes. The purposes of the Microloan Program | 4 | | are: | 5 | | (1) to assist female, low-income, veteran, and | 6 | | minority entrepreneurs and business owners and other | 7 | | individuals possessing the capability to operate | 8 | | successful business concerns; | 9 | | (2) to assist small business concerns in those areas | 10 | | suffering from a lack of credit due to economic downturns; | 11 | | (3) to establish a microloan program to be administered | 12 | | by the Department of Commerce and Economic Opportunity in | 13 | | order to: | 14 | | (A) make loans to eligible intermediaries to | 15 | | enable those intermediaries to provide small-scale | 16 | | loans, particularly loans in amounts averaging not | 17 | | more than $13,000, to small business concerns for | 18 | | working capital or the acquisition of materials, | 19 | | supplies, or equipment; | 20 | | (B) make grants to eligible intermediaries that, | 21 | | together with non-State matching funds, will enable | 22 | | those intermediaries to provide intensive marketing, | 23 | | management, and technical assistance to microloan | 24 | | borrowers; | 25 | | (C) make grants to eligible non-profit entities |
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| 1 | | that, together with non-State matching funds, will | 2 | | enable those entities to provide intensive marketing, | 3 | | management, and technical assistance to assist | 4 | | low-income entrepreneurs and other low-income | 5 | | individuals in obtaining private sector financing for | 6 | | their businesses, with or without loan guarantees; and | 7 | | (D) report to the Committee on State Government | 8 | | Administration in the House of Representatives and the | 9 | | State Government and Veterans Affairs Committee in the | 10 | | Senate on the effectiveness of the microloan program. | 11 | | Section 15. Microloan program established. A microloan | 12 | | program is established in the Department of Commerce and | 13 | | Economic Opportunity under which the Director of Commerce and | 14 | | Economic Opportunity may: | 15 | | (1) make direct loans to eligible intermediaries, as | 16 | | provided under Section 25, for the purpose of making | 17 | | short-term, fixed interest rate microloans to small | 18 | | business concerns under Section 40; | 19 | | (2) in conjunction with these loans and subject to the | 20 | | requirements of Section 30, make grants to these | 21 | | intermediaries for the purpose of providing intensive | 22 | | marketing, management, and technical assistance to small | 23 | | business concerns that are borrowers under this Act; | 24 | | (3) subject to the requirements of Section 35 make | 25 | | grants to non-profit entities for the purpose of providing |
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| 1 | | marketing, management, and technical assistance to | 2 | | low-income individuals seeking to start or enlarge their | 3 | | own businesses, if that assistance includes working with | 4 | | the grant recipient to secure loans in amounts not to | 5 | | exceed $35,000 from private sector lending institutions, | 6 | | with or without a loan guarantee from the non-profit | 7 | | entity; and | 8 | | (4) create and administer a training program to train | 9 | | intermediaries in the knowledge, skills, and understanding | 10 | | of microlending necessary to operate successful microloan | 11 | | programs. | 12 | | Section 20. Eligibility for participation. An intermediary | 13 | | shall be eligible to receive loans and grants under paragraphs | 14 | | (1) and (2) of Section 15 if it meets the definition of | 15 | | intermediary in Section 5. | 16 | | Section 25. Loans to intermediaries. | 17 | | (a) As part of its application for a loan, each | 18 | | intermediary shall submit a description to the Director of the | 19 | | type of businesses to be assisted; the size and range of loans | 20 | | to be made; the geographic area to be served and its economic, | 21 | | poverty, and unemployment characteristics; the status of small | 22 | | business concerns in the area to be served and an analysis of | 23 | | their credit and technical assistance needs; any marketing, | 24 | | management, and technical assistance to be provided in |
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| 1 | | connection with a loan made under this Act; the local economic | 2 | | credit markets, including the costs associated with obtaining | 3 | | credit locally; the qualifications of the applicant to carry | 4 | | out the purpose of this Act; and any plan to involve other | 5 | | technical assistance providers or private sector lenders in | 6 | | assisting selected business concerns.
In selecting | 7 | | intermediaries to participate in the program established under | 8 | | this Act, the Director shall give priority to those applicants | 9 | | that provide loans in amounts averaging not more than $13,000. | 10 | | (b) As a condition of any loan made to an intermediary | 11 | | under paragraph (2) of Section 15, the Department shall require | 12 | | the intermediary to contribute not less than 15% of the loan | 13 | | amount in cash from non-State sources. | 14 | | (c) No loan shall be made to an intermediary under this Act | 15 | | if the total amount outstanding and committed to that | 16 | | intermediary (excluding outstanding grants) from the Business | 17 | | Loan and Investment Fund would, as a result of that loan, | 18 | | exceed $750,000 in the first year of the intermediary's | 19 | | participation in the program or $3,500,000 in later years of | 20 | | the intermediary's participation in the program. | 21 | | (d) The Department shall, by regulation, require each | 22 | | intermediary to establish a loan loss reserve fund, and to | 23 | | maintain that reserve fund until all obligations owed to the | 24 | | Department under this Act are repaid.
Unless otherwise | 25 | | authorized under this subsection (d), the Director shall | 26 | | require the loan loss reserve fund of an intermediary to be |
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| 1 | | maintained at a level equal to 15% of the outstanding balance | 2 | | of the notes receivable owed to the intermediary.
After the | 3 | | initial 5 years of an intermediary's participation in the | 4 | | program, the Director shall, at the request of the | 5 | | intermediary, conduct a review of the annual loss rate of the | 6 | | intermediary.
The Director may reduce the annual loan loss | 7 | | reserve requirement of an intermediary to reflect the actual | 8 | | average loan loss rate for the intermediary during the | 9 | | preceding 5-year period, except that in no case shall the loan | 10 | | loss reserve be reduced to less than 10% of the outstanding | 11 | | balance of the notes receivable owed to the intermediary.
The | 12 | | Director may reduce the annual loan loss reserve requirement of | 13 | | an intermediary only if the intermediary demonstrates to the | 14 | | satisfaction of the Director that the average annual loss rate | 15 | | for the intermediary during the preceding 5-year period is less | 16 | | than 15%; and that no other factors exist that may impair the | 17 | | ability of the intermediary to repay all obligations owed to | 18 | | the Director under this Act. | 19 | | (e) An intermediary may make a loan under this Act of more | 20 | | than $20,000 to a small business concern only if the small | 21 | | business concern demonstrates that it is unable to obtain | 22 | | credit elsewhere at comparable interest rates and that it has | 23 | | good prospects for success. In no case shall an intermediary | 24 | | make a loan under this Act of more than $35,000, or have | 25 | | outstanding or committed to any one borrower more than $35,000. | 26 | | (f) Loans made by the Department to an intermediary under |
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| 1 | | this Act shall be for a term of 10 years. Except as otherwise | 2 | | provided in this subsection (f), loans made by the Department | 3 | | to an intermediary under this Act shall bear an interest rate | 4 | | equal to 1.25 percentage points below the rate determined by | 5 | | the Secretary of the Treasury for obligations of the United | 6 | | States with a period of maturity of 5 years, adjusted to the | 7 | | nearest one-eighth of 1%. Loans made by the Department to an | 8 | | intermediary that makes loans to small business concerns and | 9 | | entrepreneurs averaging not more than $7,500, shall bear an | 10 | | interest rate that is 2 percentage points below the rate | 11 | | determined by the Secretary of the Treasury for obligations of | 12 | | the United States with a period of maturity of 5 years, | 13 | | adjusted to the nearest one-eighth of 1%. The applicable rate | 14 | | of interest under this subsection (f) shall be applied | 15 | | retroactively for the first year of an intermediary's | 16 | | participation in the program, based upon the actual lending | 17 | | practices of the intermediary as determined by the Department | 18 | | before the end of that year, and be based in the second and | 19 | | subsequent years of an intermediary's participation in the | 20 | | program upon the actual lending practices of the intermediary | 21 | | during the term of the intermediary's participation in the | 22 | | program. The interest rates prescribed in this subsection (f) | 23 | | shall apply to all loans made to intermediaries under this Act. | 24 | | (g) The Department shall not require repayment of interest | 25 | | or principal of a loan made to an intermediary under this Act | 26 | | during the first year of the loan. |
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| 1 | | (h) Except as provided in subsections (b) and (d) of this | 2 | | Section 25, the Department shall not charge any fees or require | 3 | | collateral other than an assignment of the notes receivable of | 4 | | the microloans with respect to any loan made to an intermediary | 5 | | under this Act. | 6 | | Section 30. Marketing, management, and technical | 7 | | assistance grants to intermediaries. | 8 | | (a) Except as otherwise provided in subsections (b) and (c) | 9 | | of this Section 30, each intermediary that receives a loan | 10 | | under paragraph (1) of Section 15 shall be eligible to receive | 11 | | a grant to provide marketing, management, and technical | 12 | | assistance to small business concerns that are borrowers under | 13 | | this Act. Except as provided in subsection (c) of this Section | 14 | | 30, each intermediary meeting the requirements of subsection | 15 | | (b) of this Section 30 may receive a grant of not more than 25% | 16 | | of the total outstanding balance of loans made to it under this | 17 | | Act. | 18 | | (b) As a condition of any grant made under subsection (a) | 19 | | of this Section 30, except for a grant made to an intermediary | 20 | | that provides not less than 50% of its loans to small business | 21 | | concerns located in or owned by one or more residents of an | 22 | | economically distressed area, the Department shall require the | 23 | | intermediary to contribute an amount equal to 25% of the amount | 24 | | of the grant, obtained solely from non-State sources. In | 25 | | addition to cash or other direct funding, the contribution may |
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| 1 | | include indirect costs or in-kind contributions paid for under | 2 | | non-State programs. | 3 | | (c) In addition to grants made under subsection (a), each | 4 | | intermediary shall be eligible to receive a grant equal to 5% | 5 | | of the total outstanding balance of loans made to the | 6 | | intermediary under this Act if (i) the intermediary provides | 7 | | not less than 25% of its loans to small business concerns | 8 | | located in or owned by one or more residents of an economically | 9 | | distressed area or (ii) the intermediary has a portfolio of | 10 | | loans made under this Act that averages not more than $13,000 | 11 | | during the period of the intermediary's participation in the | 12 | | program. | 13 | | (d) A grant awarded under subsection (c) may be used to | 14 | | provide marketing, management, and technical assistance to | 15 | | small business concerns that are borrowers under this Act. | 16 | | (e) The contribution requirements in subsection (b) of this | 17 | | Section 30 do not apply to grants made under subsection (c). | 18 | | (f) The eligibility for a grant described in subsections | 19 | | (a) and (c) shall be determined separately for each loan-making | 20 | | site or office of that intermediary. | 21 | | (g) Each intermediary may expend an amount not to exceed | 22 | | 25% of the grant funds received under paragraph (2) of Section | 23 | | 15 to provide information and technical assistance to small | 24 | | business concerns that are prospective borrowers under this | 25 | | Act. | 26 | | (h) An intermediary may expend not more than 25% of the |
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| 1 | | funds received under paragraph (2) of Section 15 to enter into | 2 | | third party contracts for the provision of technical | 3 | | assistance. | 4 | | (i) The Department may accept any funds transferred to it | 5 | | from the State, State agencies, and departments or agencies of | 6 | | the federal government to make grants to participating | 7 | | intermediaries and technical assistance providers under this | 8 | | Section 30, for use in accordance with subsection (k) to | 9 | | provide additional technical assistance and related services | 10 | | to low-income individuals under subparagraph (C) of paragraph | 11 | | (3) of Section 10 at the time the applicant initially applies | 12 | | for assistance. | 13 | | (j) In making grants under subsection (i), the Department | 14 | | may select, from among participating intermediaries and | 15 | | technical assistance providers described in subsection (i), | 16 | | not more than 20 grantees in fiscal year 2013, not more than 25 | 17 | | grantees in fiscal year 2014, and not more than 30 grantees in | 18 | | fiscal year 2015, each of whom may receive a grant under | 19 | | subsection (i) in an amount not to exceed $200,000 per year. | 20 | | (k) Grants under subsection (i) are in addition to other | 21 | | grants provided under this Act and shall not require the | 22 | | contribution of matching amounts as a condition of eligibility; | 23 | | and may be used by a grantee to pay or reimburse a portion of | 24 | | child care and transportation costs of low-income individuals, | 25 | | to the extent these costs are not otherwise paid by State block | 26 | | grants under the Child Care Development Block Grant Act of 1990 |
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| 1 | | (42 U.S.C. 9858 et seq.) or under part A of Title IV of the | 2 | | Social Security Act (42 U.S.C. 601 et seq.); and for marketing, | 3 | | management, and technical assistance to those individuals. | 4 | | (l) Prior to accepting any transfer of funds under | 5 | | subsection (i) from the State, a State agency, or a department | 6 | | or agency of the federal government, the Department shall enter | 7 | | into a Memorandum of Understanding with the State, State | 8 | | agency, or department or agency of the federal government, | 9 | | which shall specify the terms and conditions of the grants; and | 10 | | provide for appropriate monitoring of expenditures by each | 11 | | grantee and each recipient of assistance under subsection (i). | 12 | | Section 35. Private sector borrowing technical assistance | 13 | | grants. | 14 | | (a) The Department may make not more than 55 grants | 15 | | annually, each in an amount not to exceed $200,000 for the | 16 | | purposes specified in subparagraph (C) of paragraph (3) of | 17 | | Section 10. | 18 | | (b) As a condition of the grant, the Department shall | 19 | | require the grant recipient to provide matching funds equal to | 20 | | 20% of the amount of the grant, obtained solely from non-State | 21 | | sources. In addition to cash or other direct funding, the | 22 | | matching funds may include indirect costs or in-kind | 23 | | contributions paid for under non-State programs. | 24 | | Section 40. Loans to small business concerns from eligible |
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| 1 | | intermediaries. | 2 | | (a) An eligible intermediary shall make short-term, fixed | 3 | | rate loans to small business concerns from the funds made | 4 | | available to it under paragraph (1) of Section 15 for working | 5 | | capital and the acquisition of materials, supplies, furniture, | 6 | | fixtures, and equipment. | 7 | | (b) To the extent practicable, each intermediary that | 8 | | operates a microloan program under this Act shall maintain a | 9 | | microloan portfolio with an average loan size of not more than | 10 | | $13,000. | 11 | | (c) The Department shall not review individual microloans | 12 | | made by intermediaries prior to approval. | 13 | | (d) In addition to other eligible small business concerns, | 14 | | borrowers under any program under this Act may include | 15 | | individuals who will use the loan proceeds to establish | 16 | | for-profit or non-profit child care establishments or | 17 | | businesses providing for-profit transportation services. | 18 | | Section 45. Program funding for microloans. | 19 | | (a) Under the program authorized by this Act, the | 20 | | Department may fund, on a competitive basis, not more than 300 | 21 | | intermediaries. | 22 | | (b) Subject to the availability of appropriations, of the | 23 | | total amount of new loan funds made available for award under | 24 | | this Act in each fiscal year, the Department shall make | 25 | | available for award an amount equal to the sum appropriated by |
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| 1 | | the General Assembly for that purpose. | 2 | | Section 50. Equitable distribution of intermediaries. In | 3 | | approving intermediaries and providing funding to | 4 | | intermediaries under this Act, the Department shall select and | 5 | | provide funding to intermediaries as will ensure appropriate | 6 | | availability of loans for small businesses in all industries | 7 | | located throughout the State, particularly those located in | 8 | | urban and in rural areas.
| 9 | | Section 55. Grants for management, marketing, technical | 10 | | assistance, and related services.
| 11 | | (a) The Department may procure technical assistance for | 12 | | intermediaries participating in the Microloan Program to | 13 | | ensure that those intermediaries have the knowledge, skills, | 14 | | and understanding of microlending practices necessary to | 15 | | operate successful microloan programs. | 16 | | (b) The General Assembly may appropriate up to 7% of the | 17 | | balance in the Business Loan and Investment Fund to the | 18 | | Department for the specific purpose of providing one or more | 19 | | technical assistance grants to experienced microlending | 20 | | organizations that have demonstrated experience in providing | 21 | | training support for microenterprise development and financing | 22 | | to achieve the purposes set forth in Section 10. | 23 | | Section 60. Training program. The Department shall |
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| 1 | | create and administer a training program for intermediaries | 2 | | that presently have minimal or no expertise or experience in | 3 | | microlending. The training program shall train the | 4 | | intermediaries in the knowledge, skills, and understanding of | 5 | | microlending practices necessary to operate successful | 6 | | microloan programs. | 7 | | Section 65. Report to General Assembly. On November 1, | 8 | | 2014, the Department shall submit to the General Assembly a | 9 | | report, including the Department's evaluation of the | 10 | | effectiveness of the microloan program and the following: | 11 | | (1) the numbers and locations of the intermediaries | 12 | | funded to conduct microloan programs; | 13 | | (2) the amounts of each loan and each grant to | 14 | | intermediaries; | 15 | | (3) a description of the matching contributions of each | 16 | | intermediary; | 17 | | (4) the numbers and amounts of microloans made by the | 18 | | intermediaries to small business concern borrowers; | 19 | | (5) the repayment history of each intermediary; | 20 | | (6) a description of the loan portfolio of each | 21 | | intermediary including the extent to which it provides | 22 | | microloans to small business concerns in rural areas; and | 23 | | (7) any recommendations for legislative changes that | 24 | | would improve program operations. |
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| 1 | | Section 70. Business Loan and Investment Fund. The Business | 2 | | Loan and Investment Fund is created as a special fund in the | 3 | | State treasury to accept appropriations, grants, gifts, and | 4 | | other donations made to fund the Microloan Program created by | 5 | | this Act. Moneys in the Fund may, subject to appropriation, be | 6 | | used by the Department to carry out the requirements of this | 7 | | Act. | 8 | | Section 75. The State Finance Act is amended by adding | 9 | | Section 5.811 as follows: | 10 | | (30 ILCS 105/5.811 new) | 11 | | Sec. 5.811. The Business Loan and Investment Fund. ".
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