"NEW SECTION.  Sec. 1   The legislature finds that the linked deposit program is not accessible to many certified small businesses that the program was created to serve. The legislature further finds that the increased involvement of community development financial institutions in the linked deposit program could increase the participation of these small businesses. The legislature intends that the office of minority and women's business enterprises report to the legislature with an analysis of barriers faced by certified small businesses that are currently not able to participate in the linked deposit program and make recommendations on how to overcome those barriers.

NEW SECTION.  Sec. 2   By December 1, 2009, the office of minority and women's business enterprises shall, in consultation with the state treasurer and within existing resources, submit a report with recommendations to the legislature that addresses the following issues:
     (1) The availability of sources of capital for certified borrowers, including the amounts and interest rates for that capital;
     (2) The loans that are not being funded for certified borrowers under the current program and why those loans are not being funded;
     (3) The availability of other sources of capital in the marketplace for those nonfunded loans of certified borrowers, including the amounts and interest rates for that capital;
     (4) Whether there are other institutions that may be willing to make those loans that are currently not being made to certified borrowers under the program;
     (5) Whether the program could be modified to encourage lenders to make those loans that are not currently being made to certified borrowers and whether the cost of those loans would be a barrier;
     (6) A review of how other states seek to increase access to capital for borrowers that traditionally lack access to capital; and
     (7) The role community development financial institutions could play in mitigating the cost of lending to certified borrowers who are not currently being served by the program.

Sec. 3   RCW 43.86A.060 and 2008 c 187 s 3 are each amended to read as follows:
     (1) The state treasurer shall establish a linked deposit program for investment of deposits in qualified public depositaries. As a condition of participating in the program, qualified public depositaries must make qualifying loans as provided in this section. The state treasurer may purchase a certificate of deposit that is equal to the amount of the qualifying loan made by the qualified public depositary or may purchase a certificate of deposit that is equal to the aggregate amount of two or more qualifying loans made by one or more qualified public depositaries.
     (2) Qualifying loans made under this section are those:
     (a) Having terms that do not exceed ten years;
     (b) Where an individual loan does not exceed one million dollars;
     (c)(i) That are made to a minority or women's business enterprise that has received state certification under chapter 39.19 RCW; or
     (ii) That are made to a veteran-owned business that has received state certification under RCW 43.60A.190;
     (d) Where the interest rate on the loan to the minority or women's business enterprise or veteran-owned business does not exceed an interest rate that is two hundred basis points below the interest rate the qualified public depositary would charge for a loan for a similar purpose and a similar term, except that, if the preference given by the state treasurer to the qualified public depositary under subsection (3) of this section is less than two hundred basis points, the qualified public depositary may reduce the preference given on the loan by an amount that corresponds to the reduction in preference below two hundred basis points given to the qualified public depositary; and
     (e) Where the points or fees charged at loan closing do not exceed one percent of the loan amount.
     (3) In setting interest rates of time certificate of deposits, the state treasurer shall offer rates so that a two hundred basis point preference will be given to the qualified public depositary, except that the treasurer ((shall)) may lower the amount of the preference to ensure that the effective interest rate on the ((time certificate of)) deposit is not less than ((two)) zero percent.
     (4) Upon notification by the state treasurer that a minority or women's business enterprise is no longer certified under chapter 39.19 RCW or that a veteran-owned business is no longer certified under RCW 43.60A.190, the qualified public depositary shall reduce the amount of qualifying loans by the outstanding balance of the loan made under this section to the minority or women's business enterprise or the veteran-owned business, as applicable.
     (5) The office of minority and women's business enterprises has the authority to adopt rules to:
     (a) Ensure that when making a qualified loan under the linked deposit program, businesses that have never received a loan under the linked deposit program are given first priority;
     (b) Limit the total principal loan amount that any one business receives in qualified loans under the linked deposit program over the lifetime of the businesses;
     (c) Limit the total principal loan amount that an owner of one or more businesses receives in qualified loans under the linked deposit program during the owner's lifetime; and
     (d) Limit the total amount of any one qualified loan made under the linked deposit program.

NEW SECTION.  Sec. 4   Sections 1 and 2 of this act expire July 1, 2010."