Establishing a small business revolving loan program and small business revolving loan fund within the economic development authority to award low-interest loans to eligible small businesses

This bill establishes a small business revolving loan program and small business revolving loan fund within the economic development authority for the purpose of awarding low-interest loans to eligible small businesses. The bill creates a small business revolving loan fund (fund) in the state treasury under the control of the economic development authority (authority). The fund consists of any moneys appropriated to the fund by the general assembly and any other moneys available and obtained or accepted by the authority for placement in the fund. The bill establishes a $5 million standing appropriation for the fund for the fiscal year beginning July 1, 2020, from the rebuild Iowa infrastructure fund. The bill requires that the fund be used to provide financial assistance under the small business revolving loan program (program). “Financial assistance” is defined in the bill as a low-interest loan with a five-year term. Interest or earnings on moneys in the fund shall accrue to the authority and must be used for purposes of the program. Moneys in the fund at the end of each fiscal year do not revert to any other fund but remain in the fund for expenditure for subsequent fiscal years. All payments of interest, repayments, or recaptures of financial assistance awarded under the program accrue to the authority and must be used for purposes of the program. The authority may use not more than percent of the moneys in the fund at the beginning of each fiscal year for purposes of administrative costs, marketing, and other program support. The authority is required to begin to award financial assistance from the fund not later than January 1, 2021. The bill directs the authority to establish a program for purposes of providing financial assistance to eligible small businesses. Financial assistance awarded to an eligible small business shall not exceed $50,000. A business is eligible to apply for financial assistance under the program if the business, at the time of application, has or fewer full-time equivalent employees; is located in Iowa; is owned, operated, and actively managed by a resident of Iowa; has a business plan and has received assistance in the development stage or the expansion stage from a small business development center; only employs individuals legally authorized to work in the state; does not engage in the production, depiction, or distribution of obscene material; and is not in bankruptcy or imminently contemplating filing for bankruptcy. If the business has been a going concern for two years or more, the business must not have violated any environmental or worker safety laws or rules. “Located in” is defined in the bill as the place or places at which a business’s operations are located and where at least percent of the business’s employees work, or where employees that are paid at least percent of the business’s payroll work. Upon the authority’s approval of a business’s application, the eligible small business is required to enter into an agreement with the authority. The agreement must include provisions as outlined in the bill. An eligible small business may not be awarded more than one loan under the program; however, the business may apply for financial assistance under other programs administered by the authority. Awarded financial assistance cannot be used by an eligible small business for meeting payroll obligations. The bill directs the authority to submit an annual report on the program by January to the general assembly. The report must include information, as detailed in the bill, for each business that received financial assistance under the program in the immediately preceding calendar year. The authority must adopt rules pursuant to Code chapter 17A as necessary to administer the program.