SENATE BILL REPORT

SHB 1858

BYHouse Committee on Trade & Economic Development (originally sponsored by Representatives Kremen, Cantwell, Doty, Schoon, Rasmussen, Moyer, Raiter, Braddock and Wineberry)

Authorizing the supervisor of banking to regulate the small business association 7(a) loan guaranty program.

House Committe on Trade & Economic Development

Rereferred House Committee on Appropriations

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):March 27, 1989

Majority Report:  Do pass.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McMullen, Matson, Murray, Saling, Smitherman, West, Williams.

Senate Staff:Jack Brummel (786-7428)

                  March 27, 1989

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, MARCH 27, 1989

BACKGROUND:

The federal government has a number of programs which facilitate the availability of capital to small businesses.  One such program, known as the 7(a) loan guaranty program, allows nondepository lenders to make loans guaranteed by the Small Business Administration only if the state regulates such centers.

SUMMARY:

The state Supervisor of Banking licenses and regulates nonbank lenders wishing to use the 7(a) loan guaranty program of the Small Business Administration.  Applicants for licenses must have a minimum of $500,000, show that they are competent to operate as a nondepository lender, and have a loan loss reserve sufficient to cover projected losses not covered by the loan guaranty program.

In addition to regulating the nondepository lenders making loans under the 7(a) program, the Supervisor of Banking will collect fees from them sufficient to cover the costs of such regulation.

Appropriation:    $25,000 to the Department of General Administration

Revenue:    yes

Fiscal Note:      available

Senate Committee - Testified: FOR:  Allen Schmelzer, Greater Spokane Business Development Association