SENATE BILL REPORT

SSB 5647

BYSenate Committee on Economic Development & Labor (originally sponsored by Senators Lee, Smitherman, Anderson and McMullen)

Enabling the use of federal loan guarantees.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 1, 1989; February 9, 1989

Majority Report:  That Substitute Senate Bill No. 5647 be substituted therefor, and the substitute bill do pass.

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

Senate Staff:Jack Brummel (786-7428)

                  March 13, 1989

AS PASSED SENATE, MARCH 10, 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:      requested January 26, 1989

Senate Committee - Testified: Mary Jean Ryan, Evergreen Community Development Corporation (pro)