HOUSE BILL REPORT

2SSB 5203

BYSenate Committee on Ways & Means (originally sponsored by Senators Anderson and Lee)

Establishing the Washington state self-employment loan program.

House Committe on Trade & Economic Development

Majority Report:  Do pass with amendments.  (12)

      Signed by Representatives Cantwell, Chair; Wineberry, Vice Chair; Doty, Ranking Republican Member; Kremen, Moyer, Rasmussen, Raiter, Rector, Schoon, Tate, Walk and Youngsman.

House Staff:Bill Lynch (786-7092)

AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT

MARCH 31, 1989

BACKGROUND:

Beginning in the early 1980's, a number of programs were developed in this country and throughout the world based on the assumption that some low-income persons, many dependent on traditional welfare programs, have the potential for self-sufficiency through self-employment.  These programs suggest that appropriate training and minimal financial assistance can help those possessing such potential.  The Washington Department of Employment Security is involved in a federal Department of Labor demonstration project to assist unemployed persons in establishing their own business.  No program exists to build this capacity on the local level.

SUMMARY:

BILL AS AMENDED:  The self-employment loan program committee is established in the Department of Community Development.  The committee will solicit and approve applications for funds from local development organizations to use as a revolving loan fund to finance the small businesses of low-income persons.

The committee consists of seven members.  One member must have experience in community-based economic developments; two members shall represent philanthropic organizations with a history of assisting community-based economic development organizations; one member shall represent a financial institution; two members shall represent small business, and one of the businesses must be a minority or women-owned business; and one member must represent an educational organization which provides entrepreneurial education.

The committee will award funds to local organizations on a competitive basis.  Applications to the committee must include: 1) a detailed description of the need for a self-employment program in the particular community; 2) a detailed description of the applicant organization and its capacity to administer a program; and 3) a detailed description of the loan procedure and the self-employment training and support program into which the loan fund will be incorporated.

The committee may not approve any application for greater than $60,000.  The committee may award to a single organization only one grant per biennium.  The committee may withdraw an award if an organization fails to meet the purposes of the act.  It must report biannually to the Legislature on the progress and status of the overall program.

An organization may provide loans from awarded funds of no greater than $5,000.  It must report annually to the committee on the progress and status of its program.

AMENDED BILL COMPARED TO SECOND SUBSTITUTE:  The amendment adds two small business owners to the self-employment loan program committee and specifies that one of the businesses must be a minority or woman-owned business. The staff person from the Department of Social and Health Services and one of the members with community-based economic development is removed from the committee.

The amount which an individual may receive as a loan is increased from $1,000 to $5,000.  The appropriation is removed.

The definition of low-income individual is amended to adjust for family size.

Fiscal Note:      Available.

House Committee ‑ Testified For:    Sharon Hitt, Snohomish Private Industry Council.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    A successful program is currently operating in Snohomish County.  Loans may only be given to someone connected with an entrepreneurial training program.  This is a good method for people to work themselves out of poverty. Low-income individuals are unable to get loans from financial institutions to start their own businesses.  Other states have had success with similar programs.

House Committee - Testimony Against:      None Presented.