SENATE BILL REPORT

E2SSB 5665

BYSenate Committee on Ways & Means (originally sponsored by Senators Smitherman, Fleming, Warnke and Bender)

Authorizing local development assistance.

Senate Committee on Commerce & Labor

Senate Hearing Date(s):February 23, 1987; March 4, 1987

Majority Report:  That Substitute Senate Bill No. 5665 be substituted therefor, and the substitute bill do pass and be referred to Committee on Ways & Means.

      Signed by Senators Warnke, Chairman; Smitherman, Vice Chairman; Anderson, Lee, Sellar, Tanner, Vognild, West, Williams.

Senate Staff:Jack Brummel (786-7428)

                  March 4, 1987

Senate Committee on Ways & Means

Senate Hearing Date(s):March 5, 1987

Majority Report:  That Second Substitute Senate Bill No. 5665 be substituted therefor, and the second substitute bill do pass.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Bauer, Fleming, Kreidler, Moore, Owen, Rinehart, Talmadge, Vognild, Warnke, Williams.

Minority Report:  Do not pass.

      Signed by Senators Cantu, McDonald, Rasmussen, Zimmerman.

Senate Staff:Stephen Rose (786-7443)

                  March 23, 1987

AS PASSED SENATE, MARCH 19, 1987

BACKGROUND:

Small businesses have proven to be the major source of new jobs in Washington.  Because small businesses have high failure rates, assistance which lowers their failure rate can improve the state's job creation record.  Small business incubators have been promoted as an effective means of providing the technical assistance that small businesses need.

SUMMARY:

The bill contains three components.  In the first component, the Department of Community Development's Local Development Matching Fund Program is supplemented with monies set aside for small business incubator projects.  The funds for such projects may be used for feasibility studies, planning, program development and delivery of technical assistance to small businesses, both within and outside the incubator.

The bill's second component, the Small Business Loan Program, creates a loan reserve fund administered by the State Supervisor of Banking and an executive director appointed by the Governor.  A premium charge is negotiated between the lender and the borrower when a loan is made under this program.  The premium charge is put into the loan reserve fund.  The state makes a matching payment to the loan reserve fund.  The premium charge and the matching payment are registered in the bank's name and may be used to cover future losses from any loans registered in the program by that bank.  Payments made to cover losses on loans made under the program are limited to the amount in the fund attributable to the bank suffering the loss.  Reports on the program are to be made to the Governor and the Legislature.  The final component, The Washington Investment Opportunities Office, acts as a clearinghouse for entrepreneurs seeking capital and investors seeking good investments.  The Office keeps a list of entrepreneurs in the state looking for capital resources and provides prospective investors with information about these entrepreneurs.  The Office remains current with national trends and preferences in capital markets and provides timely information to both investors and entrepreneurs.

Referrals between the Investment Opportunities Office and the Small Business Innovators' Opportunity Program are required.

Fiscal Note:      available

Senate Committee - Testified: COMMERCE & LABOR: Senator Fleming; Fred Goldberg, Gary Smith, Independent Business Association; Keith Hopper, Washington Bankers Association; William Lotto, Economic Development Executives of Washington; Jackie Lum, Rainier Valley Enterprise Center

Senate Committee - Testified: WAYS & MEANS:  No one