5223-S

AN ACT Relating to the Washington state self-employment loan program; adding a new chapter to Title 43 RCW; and making an appropriation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that:

(1) The existence of poverty within the state is of substantial public concern, posing a serious threat to the safety, health, and welfare of the state's residents, causing significant public expenditures, and jeopardizing sources of public revenue;

(2) Self-employment is a realistic means by which some low-income persons can escape poverty and the cycle of dependence that traditional welfare programs may perpetuate; and

(3) Insufficient opportunity currently exists for those in poverty to become self-employed, due primarily to their unique training and financial needs.

Therefore, the legislature declares that there is substantial public purpose in providing training and capital to promote the self-employment of low-income persons in Washington. To accomplish this purpose, the legislature creates the Washington state self-employment loan program.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Department" means the department of community development.

(2) "Director" means the director of the department of community development.

(3) "Low-income individual" means any person:

(a) Whose personal income is no greater than fifty percent of the median personal income for the county where the person resides or who is a member of a family whose income is no greater than fifty percent of the median family income for the county where the person resides; or

(b) Eligible to receive cash welfare payments under any federal, state, or local welfare program or is eligible to receive food stamps.

NEW SECTION. Sec. 3. Subject to the restrictions contained in this chapter, the department is authorized to solicit and approve applications of local development organizations for funds which the local organization will use within a self-employment program as a revolving loan fund to finance the small businesses of low-income individuals within their jurisdiction.

NEW SECTION. Sec. 4. The department shall approve those applications for funds that meet the minimum standards set forth in this chapter and that will best serve the intent of this chapter to provide self-employment for low-income persons in Washington state.

(1) The department shall not approve any application for more than sixty thousand dollars.

(2) In the first year of each biennium, the department may approve distribution of up to one-half of the fund appropriated to carry out the purposes of this chapter, with the remaining funds distributed in the second year.

(3) The department may approve up to two applications from a single organization, but only one each biennium.

NEW SECTION. Sec. 5. An application to the department shall include, but is not limited to:

(1) A detailed description of the need for a self-employment program in the area served by the applicant organization, including economic conditions and other characteristics of the community which the program would address;

(2) A detailed description of the applicant organization and its capacity to administer a self-employment program that includes a revolving loan fund. Relevant information may include the organization's standing in the community, its experience with low-income persons and in business training and development, its fiscal record, its relationship with other community organizations and governmental entities, and its staff resources;

(3) A detailed description of the self-employment program into which the revolving loan fund will be incorporated, including, but not limited to, a description of:

(a) The criteria and procedure by which program participants will be selected, explaining any particular groups that will be targeted and why;

(b) The personal and business training that will be provided program participants, including curriculum, schedule, training providers, and how this training will meet the unique needs of the community's low-income individuals wishing to become self-employed;

(c) The loan process, including the criteria and procedure by which applicants will be screened, general terms of the loans, and the means by which the organization will facilitate timely repayment; and

(d) Any oversight, social support, and follow-up assistance to be provided program participants who have been trained or provided loans.

(4) Any other information the department deems necessary to fully evaluate an organization's ability to carry out the purpose of this chapter.

NEW SECTION. Sec. 6. Any local development organization receiving funds under this chapter shall:

(1) Use the funds only in a revolving loan fund to finance the businesses of low-income individuals participating in the organization's self-employment program;

(2) Provide no loan out of these funds of more than five thousand dollars;

(3) Charge a reasonable rate of interest on loans provided out of these funds, using interest payments received for program administrative costs;

(4) Annually submit to the department a detailed report on the progress and status of the self-employment program and loan fund including, but not limited to:

(a) A description and explanation of any changes in the program from the original application;

(b) The number and characteristics of participants in the program, including their training status;

(d) The number and size of loans provided, the terms of the loans, and their repayment status;

(e) A self-evaluation detailing the strengths and weaknesses of the program and what the local development organization will do to improve the program in the following year;

(f) Any other information the department deems necessary to:

(i) Evaluate the effectiveness of the program in carrying out the intent of this chapter; and

(ii) Determine the program characteristics that have contributed to or detracted from such effectiveness.

NEW SECTION. Sec. 7. If the department finds that an organization to whom funds were distributed under this chapter is unable to meet the intent of the chapter, the department may require that such funds be returned to the department for redistribution by the department.

NEW SECTION. Sec. 8. The department shall:

(1) Work with local development organizations to promote applications for funds; and

(2) Adopt rules to carry out its authority under this chapter.

NEW SECTION. Sec. 9. The department shall biennially report to the appropriate standing committees of the legislature on the progress and status of the self-employment loan program. The report shall include sufficient data to evaluate program effectiveness, including, but not limited to, a compilation and summary of the annual reports submitted by local organizations under section 6 of this act.

NEW SECTION. Sec. 10. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 11. Sections 1 through 9 of this act shall constitute a new chapter in Title 43 RCW.

NEW SECTION. Sec. 12. The sum of two hundred seventy thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1995, from the general fund to the department of community development for the purposes of this act. No more than fifteen percent of this appropriation may be used by the department for administration costs.