Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Business & Financial Services Committee

SB 6085

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Summary of Bill

Increases the amount of funds available for the purpose of loans to veteran owned businesses.
Adds prioritization criteria for awarding loans to qualified businesses.
Requires lines of credit with a zero balance for 12 or more months be removed from the program.

Background:

Linked Deposit Program.

The Linked Deposit Program (Program) allows certified businesses to obtain reduced interest rate loans from participating financial institutions. The State Treasurer is authorized to use short-term state treasury surplus funds for the Program. These funds are deposited in qualified public depositories as certificates of deposit (CDs) on the condition that the public depositary make "qualifying loans" under the Program. The state forgoes up to 2 percent in interest on the CDs and passes along the savings to the public depository with the condition that the depository reduces the interest rate for the loan recipients.

Up to $15 million per year of the total program amount is provided for veteran owned businesses, and up to $175 million in funding is provided for to minority-owned and women-owned businesses. A qualifying loan cannot exceed $1 million per business or have a repayment period greater than ten years.

The Office of Minority and Women's Business Enterprises (OMWBE) must adopt rules implementing the Program to:

ensure businesses that have never received a loan under the Program are given first priority;
limit the total principal loan amount that any one business or owner may receive over the business or owner's lifetime;
limit the total amount of any one loan under the Program; and
ensure that loans are made to qualifying businesses.

Summary of Bill:

The State Treasurer is authorized to make deposits up to $25 million in accordance with the Program for veteran owned businesses.

A line of credit issued under the Program that has a zero balance for 12 or more months will be removed. The OMWBE must prioritize loans that create jobs in underserved communities that have inadequate access to capital, and are targeted for applicants that do not currently have loans with other small business lending agencies.