Economic Development – Week of February 24, 2011

STAFF CONTACT:  Sue Foecke

SF 161 – Save Our Small Business Loan Fund and Program

COMMITTEE ACTION:

SF 161 relates to the Save Our Small Business Program that provides low-interest loans to eligible small businesses (i.e., 35 or fewer employees) to promote the creation and retention of jobs in Iowa’s economy and to assist businesses in being more competitive. Last year, in Senate File 2389, the Legislature appropriated $5 million to the Iowa Department of Economic Development for the program. Senate File 161 expands the eligibility of businesses and extends the reversion funds and sunset dates. The bill extends by two years the time period during which the Iowa Department of Economic Development must obligate the funds available under the program. The reversion of funds date is changed from March 31, 2011, to March 31, 2013. In addition, the fund sunset date is changed from March 31, 2016, to March 31, 2018. The bill allows the Department to negotiate the terms on which financial assistance is provided, including negotiating six months of interest-free financing. The bill directs the Department to accept business plans from banks, credit unions and extension offices. This is in addition to the Small Business Development Centers and Department approved consultants. The bill allows the Department to authorize up to 25 percent of the loan proceeds for certain operational expenses. The Department shall by rule determine what expenses quality as eligible operational expenses. [2/22: 9-6, party-line]