Second Regular Session
Sixty-first General Assembly
LLS NO. 980636.01 EBD
SENATE BILL 98163
STATE OF COLORADO
BY SENATOR Dennis;
also REPRESENTATIVE Schauer.
BUSINESS AFFAIRS & LABOR
A BILL FOR AN ACT
CONCERNING A GRANT MADE TO THE STATE BOARD FOR COMMUNITY
COLLEGES AND OCCUPATIONAL EDUCATION TO ESTABLISH A SMALL BUSINESS
DEVELOPMENT REVOLVING LOAN FUND.
Bill Summary
(Note: This summary applies to this bill as introduced
and does not necessarily reflect any amendments that may be subsequently
adopted.)
Creates the Colorado small business assistance account within the state board for community colleges and occupational education fund. Specifies that the state board for community colleges and occupational education shall use the fund to make grants to qualified nonprofit small business assistance organizations.
Defines small business assistance organization as a nonprofit organization that submits an application to the board demonstrating that the organization has the ability to provide business counseling and business related services and is willing to develop a partnership with other organizations to accomplish this goal. Requires the organization to develop a program that involves business planning, training, mentoring, outreach, and development. Requires that the funds be used to create a micro loan program. Requires the adoption of underwriting criteria for the loans, and a program in which the organization seeks private sector purchasers of the loans in the secondary market. The organization must demonstrate local support by obtaining matching funds for state moneys in a ratio to be determined by the state board for community colleges and occupational education.
Requires the board to develop a formula for the distribution of the money based on the economic conditions in the area served by the organization. Specifies that the grants do not need to be made to all organizations or spread equally across the state. Requires the board to inform the small business development centers and community development corporations of the availability of these funds.
Allows the organizations to set the terms and conditions on any loans made, but requires borrowers to participate in mentoring and educational programs. Requires that a report be compiled yearly for the general assembly. Forbids the award of loans for public purposes. Requires that organizations ceasing operations return any remaining state money to the state.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. Part 5 of article 60 of title 23, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read:
2360503. Grants for community college administered small business loan revolving funds. (1) (a) THE GENERAL ASSEMBLY HEREBY FINDS, DETERMINES, AND DECLARES THAT SMALL BUSINESS GENERATES THE MAJORITY OF NEW JOBS IN COLORADO AND AS SUCH THE NEEDS OF SMALL BUSINESS ARE OF PARAMOUNT CONCERN TO THE GENERAL ASSEMBLY. THE GENERAL ASSEMBLY BELIEVES THAT A SIGNIFICANT NUMBER OF SMALL BUSINESS FAILURES MAY BE ATTRIBUTED TO UNDERCAPITALIZATION AND A LACK OF TRAINING FOR THE CHALLENGES SMALL BUSINESS PERSONS FACE. WHILE COLORADANS WHO CURRENTLY RESIDE IN THE STATE HAVE THE IDEAS AND ENERGY NECESSARY FOR THE CREATION OF SMALL BUSINESSES, MANY COLORADANS LACK THE ACCESS TO CAPITAL AND TRAINING THAT WOULD HELP TO LOWER THE RATE OF FAILURE OF SMALL BUSINESSES. THE GENERAL ASSEMBLY BELIEVES THAT BY PROVIDING ACCESS TO CAPITAL AND TRAINING, IT WILL HELP TO UNLOCK THE POTENTIAL OF ALL COLORADANS TO ACHIEVE SMALL BUSINESS SUCCESS.
(b) THE GENERAL ASSEMBLY ALSO FINDS, DETERMINES, AND DECLARES THAT MANY COLORADO SMALL BUSINESSES NEED ACCESS TO SMALL AMOUNTS OF CAPITAL, AND THAT THOSE LOANS COULD BE SUCCESSFULLY SOLD ON THE SECONDARY MARKET AS THE SMALL BUSINESS MATURES AND PROSPERS.
(c) THE GENERAL ASSEMBLY FURTHER FINDS, DETERMINES, AND DECLARES THAT THE FUNDS DISTRIBUTED PURSUANT TO THIS SECTION SHALL, ONCE DISTRIBUTED, REMAIN IN THE HANDS OF THE LOCAL NONPROFIT SMALL BUSINESS ASSISTANCE ORGANIZATIONS, SUCH AS THE EL PUEBLO INTERDEVELOPMENT CORPORATION ("EPIC"), WHICH HAVE A BETTER UNDERSTANDING OF THE NEEDS OF LOCAL SMALL BUSINESSES.
(2) AS USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE REQUIRES:
(a) "BOARD" MEANS THE STATE BOARD FOR COMMUNITY COLLEGES AND OCCUPATIONAL EDUCATION, ESTABLISHED IN SECTION 2360104 (1) (b), C.R.S., OR THE BOARD'S DESIGNEE;
(b) "SMALL BUSINESS ASSISTANCE ORGANIZATION" MEANS AN ORGANIZATION, ORGANIZED PURSUANT TO SECTION 501 (c) (3) OF THE FEDERAL "INTERNAL REVENUE CODE OF 1986", AS AMENDED, THAT SUBMITS AN APPLICATION TO THE BOARD THAT DEMONSTRATES THAT SUCH ORGANIZATION HAS THE ABILITY TO PROVIDE BUSINESS COUNSELING AND BUSINESS RELATED SERVICES FOR COLORADO SMALL BUSINESS LOAN APPLICANTS AND IS WILLING TO DEVELOP A PARTNERSHIP INVOLVING OTHER ORGANIZATIONS, BOTH PUBLIC AND PRIVATE, FOR THE PURPOSE OF ESTABLISHING A MICRO LOAN PROGRAM CONSISTING OF:
(I) A BUSINESS PLANNING TRAINING PROGRAM PROVIDED THROUGH AN EDUCATIONAL INSTITUTION, OR OTHER INSTITUTION WILLING TO PROVIDE SUCH TRAINING;
(II) A BUSINESS DEVELOPMENT MICRO LOAN PROGRAM, INVOLVING LOANS OF LESS THAN FIFTY THOUSAND DOLLARS, THAT LOANS SMALL AMOUNTS OF CAPITAL TO PROMISING COLORADO SMALL BUSINESS PERSONS WHO HAVE COMPLETED THE BUSINESS PLANNING TRAINING PROGRAM THAT INCLUDES:
(A) UNDERWRITING CRITERIA TO MINIMIZE THE POSSIBILITY OF NONPAYMENT OF SUCH LOANS; AND
(B) A PROGRAM IN WHICH THE SMALL BUSINESS ASSISTANCE ORGANIZATION ACTIVELY SEEKS PRIVATE SECTOR PURCHASERS OF SUCH LOANS IN THE SECONDARY MARKET;
(III) DEVELOPMENT OF A MENTORING PROGRAM FOR AT LEAST TWO YEARS AFTER THE DATE THE LOAN IS GRANTED THAT CONSISTS OF REGULAR MEETINGS TO PROVIDE COUNSELING, TECHNICAL ASSISTANCE, AND OVERVIEW OF THE ACTIVITY OF THE BORROWER;
(IV) A PLAN SETTING FORTH THE TARGETED AREAS OF BUSINESS ACTIVITY, GOALS, AND PURPOSE FOR THE LOAN FUND;
(V) AN OUTREACH PROGRAM TO MAKE PERSONS WHO MAY QUALIFY FOR LOANS UNDER THE PROGRAM AWARE OF THE EXISTENCE OF THE PROGRAM; AND
(VI) DEMONSTRATED LOCAL COMMUNITY SUPPORT BY HAVING COMMITMENTS FOR MATCHING FUNDS FOR ANY MONEYS GRANTED BY THE STATE IN A RATIO TO BE DETERMINED BY THE BOARD.
(3) (a) THE BOARD MAY DISTRIBUTE SUCH MONEYS IN THE FORM OF GRANTS UPON APPLICATION OF A QUALIFIED SMALL BUSINESS ASSISTANCE ORGANIZATION. WHEN MAKING GRANTS PURSUANT TO THIS SECTION, THE BOARD SHALL TAKE INTO CONSIDERATION THE EXTENT TO WHICH THE AREA OF THE STATE SERVED BY THE SMALL BUSINESS ASSISTANCE ORGANIZATION SUFFERS FROM UNEMPLOYMENT, UNDEREMPLOYMENT, ECONOMIC DISTRESS, LOW PRODUCTIVITY, OR EMPLOYMENT DISLOCATION. THE BOARD SHALL DEVELOP A FORMULA FOR THE DISTRIBUTION OF THE MONEYS APPROPRIATED PURSUANT TO THIS SECTION TO MAXIMIZE THE AMOUNT OF MONEY DISTRIBUTED TO SUCH AREAS. THE BOARD SHALL ALSO DEVELOP A RATIO FOR REQUIRED MATCHING FUNDS FROM THE LOCAL COMMUNITY.
(b) NOTHING IN THIS SUBSECTION (3) SHALL BE CONSTRUED TO REQUIRE THAT EACH SMALL BUSINESS ASSISTANCE ORGANIZATION RECEIVES AN EQUAL AMOUNT OF MONEY DISBURSED PURSUANT TO THIS SECTION. NOTHING IN THIS SUBSECTION (3) SHALL BE CONSTRUED TO REQUIRE THAT GRANTS DISBURSED PURSUANT TO THIS SECTION BE EQUALLY DISTRIBUTED ACROSS THE STATE ACCORDING TO GEOGRAPHY OR POPULATION DISTRIBUTION.
(c) THE BOARD SHALL MAKE REASONABLE EFFORTS TO INFORM THE SMALL BUSINESS DEVELOPMENT CENTERS, COMMUNITY DEVELOPMENT CORPORATIONS, AND OTHER INTERESTED PERSONS OF THE AVAILABILITY OF FUNDS TO SMALL BUSINESS ASSISTANCE ORGANIZATIONS.
(4) (a) THE MONEYS GRANTED BY THE BOARD TO THE SMALL BUSINESS ASSISTANCE ORGANIZATIONS PURSUANT TO THIS SECTION SHALL BE USED TO MAKE LOANS TO PRIVATE PERSONS AND ENTITIES FOR USE IN SMALL BUSINESS DEVELOPMENT. THE SMALL BUSINESS ASSISTANCE ORGANIZATION MAY ESTABLISH WHATEVER TERMS AND CONDITIONS IT DEEMS APPROPRIATE IN MAKING SUCH LOANS; EXCEPT THAT ANY SUCH TERMS AND CONDITIONS SHALL INCLUDE BORROWER PARTICIPATION IN THE MENTORING AND EDUCATIONAL PROGRAMS REQUIRED BY THIS SECTION. THE LOAN AMOUNT AND ANY INTEREST EARNED THEREON SHALL BE REPAID TO THE SMALL BUSINESS ASSISTANCE ORGANIZATION. AMOUNTS OF PRINCIPAL REPAID ON LOANS AND THE INTEREST EARNED ON THE LOANS MADE FROM THE FUND SHALL REMAIN IN THE SMALL BUSINESS ASSISTANCE ORGANIZATION TO BE USED FOR FUTURE LOANS.
(b) THE SMALL BUSINESS ASSISTANCE ORGANIZATION MAY BE REIMBURSED FOR THE COSTS OF THE CREATION OF THE ORGANIZATION IN AN AMOUNT NOT TO EXCEED FIVE THOUSAND DOLLARS.
(c) NO SMALL BUSINESS ASSISTANCE ORGANIZATION MAY APPROVE GRANTS OR LOANS TO STATE DEPARTMENTS, OR AGENCIES, OR TO ANY POLITICAL SUBDIVISION OF THE STATE FOR SPECIFIC PROJECTS THAT ARE TYPICALLY CONSIDERED BY THE GENERAL ASSEMBLY IN THE GENERAL APPROPRIATION BILL, OR IN SUPPLEMENTAL APPROPRIATION BILLS, OR BY THE GOVERNING BODIES OF THE POLITICAL SUBDIVISIONS OF THE STATE.
(d) THE SMALL BUSINESS ASSISTANCE ORGANIZATION SHALL REPORT TO THE BOARD EACH YEAR ALL LOANS MADE FROM FUNDS GRANTED PURSUANT TO THIS SECTION AND THE UNENCUMBERED BALANCE OF THE ACCOUNT. THE BOARD SHALL COMPILE SUCH INFORMATION AND SUBMIT IT TO THE JOINT BUDGET COMMITTEE BY JANUARY 1 OF EACH YEAR.
(e) ANY SMALL BUSINESS ASSISTANCE ORGANIZATION THAT CEASES OPERATIONS SHALL RETURN TO THE BOARD ANY AMOUNTS GRANTED TO THE SMALL BUSINESS ASSISTANCE ORGANIZATION AND THE PROCEEDS FROM SUCH GRANTS, LESS THE AMOUNT OF LOSSES SUSTAINED BY SUCH SMALL BUSINESS ORGANIZATION. ANY AMOUNTS RETURNED TO THE BOARD PURSUANT TO THIS PARAGRAPH (d) SHALL BE GRANTED BY THE BOARD USING THE PROCESS SET FORTH IN THIS SECTION.
(5) THERE IS HEREBY CREATED AN ACCOUNT WITHIN THE STATE BOARD FOR COMMUNITY COLLEGES AND OCCUPATIONAL EDUCATION FUND, CREATED IN SECTION 2360107, TO BE KNOWN AS THE COLORADO SMALL BUSINESS DEVELOPMENT ACCOUNT, REFERRED TO IN THIS SECTION AS THE "ACCOUNT". THE MONEYS IN THE ACCOUNT ARE HEREBY CONTINUOUSLY APPROPRIATED TO THE BOARD FOR THE PURPOSES OF THIS SECTION.
SECTION 2. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.