ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 4018
(By Mr. Speaker, Mr. Thompson, and Delegate Armstead)
[By Request of the Executive]
[Passed March 8, 2008; in effect from passage.]
AN ACT to amend and reenact §12-1A-1, §12-1A-3, §12-1A-4, §12-1A-5,
§12-1A-6 and §12-1A-9 of the Code of West Virginia, 1931, as
amended, all relating to the renewal of the West Virginia
Small Business Linked Deposit Program.
Be it enacted by the Legislature of West Virginia:
That §12-1A-1, §12-1A-3, §12-1A-4, §12-1A-5, §12-1A-6 and §12-
1A-9 of the Code of West Virginia, 1931, as amended, be amended and
reenacted, all to read as follows:
ARTICLE 1A. WEST VIRGINIA SMALL BUSINESS LINKED DEPOSIT PROGRAM.
§12-1A-1. Definitions.
(a) "Treasurer" means the West Virginia Treasurer's Office.
(b) "Eligible small business" means any business that: (1)
Employs fifty or fewer employees and has gross annual receipts of
five million dollars or less; (2) is headquartered in this state;
(3) is organized for profit; and (4) complies with the terms and conditions of this article regarding eligibility.
(c) "Eligible lending institution" means a financial
institution that is eligible to make commercial loans, is a public
depository of state funds and agrees to participate in the linked
deposit program and comply with its terms and conditions.
(d) "Linked deposit" means a deposit placed by the Treasurer
with an eligible lending institution that agrees to lend a linked
deposit loan to an eligible small business. The amount of the
deposit is equal to the amount of the linked deposit loan at an
interest rate of three percent below the current market rate as
determined and calculated by the Treasurer, but in no event may the
interest rate on the deposit be less than zero percent. The linked
deposit may be placed with the eligible lending institution for up
to seven years depending upon whether the small business remains
eligible for the program. On an annual date, as determined by the
Treasurer, the rate paid to the Treasurer shall be recomputed based
upon the current market rate. If the rate is recomputed, the
amount of the deposit shall be reduced by the amount of principal
paid on the outstanding loan.
(e) "Linked deposit loan" means a loan between an eligible
lending institution and an eligible small business for an amount
not to exceed two hundred fifty thousand dollars at a rate of not
more than one percent above the prime interest rate as published by
the Wall Street Journal on the date the Treasurer receives the linked deposit request. In exchange for providing this reduced rate
loan, the eligible lending institution receives a linked deposit.
On an annual date, as determined by the Treasurer, the rate charged
to the eligible small business may be recomputed but shall not
exceed the prime interest rate plus one percent. If the rate is
recomputed, the amount of the deposit shall be reduced by the
amount of principal paid on the outstanding loan. The linked
deposit loan may be part of a comprehensive loan package, including
guaranteed loans by the United States small business
administration, or other federal or state agency providing a
partial or full guarantee against loss to the eligible lending
institution.
(f) "Small Business Development Center" means the West
Virginia Small Business Development Center, a division of the West
Virginia Development Office.
§12-1A-3. Limitations on investment in linked deposits.
The Treasurer shall invest in linked deposits. The total
amount deposited at any one time shall not exceed, in the
aggregate, twenty million dollars. When deciding how much to
invest in linked deposits, the Treasurer shall give priority to the
investment, liquidity and cash flow needs of the state.
§12-1A-4. Applications for loan priority; loan package; counseling.
(a) An eligible lending institution that desires to
participate in the linked deposit program shall accept and review loan applications from eligible small businesses that have been
prepared with the advice of the Small Business Development Center.
The lending institution shall apply all usual lending standards to
determine the credit worthiness of each eligible small business and
whether the loan application meets the criteria established in this
article.
(b) An eligible small business shall certify on its loan
application that: (1) The small business is in good standing with
the State Tax Division, the Workers' Compensation Commission and
the Bureau of Employment Programs as of the date of the
application; (2) the linked deposit loan will be used to create new
jobs or preserve existing jobs and employment opportunities; and
(3) the linked deposit loan shall not be used to refinance an
existing debt.
(c) In considering which eligible small businesses should
receive linked deposit loans, the eligible lending institution
shall give priority to the economic needs of the area in which the
business is located, the number of jobs to be created and preserved
by the receipt of the loan, the reasonable ability of the small
business to repay the loan and other factors considered appropriate
by the eligible financial institution.
(d) A small business receiving a linked deposit loan shall
receive supervision and counseling provided by the small business
development center when applying for the loan. The services available from the Small Business Development Center include
eligibility certification, business planning, quarterly financial
statement review and loan application assistance. The State Tax
Division, the Bureau of Employment Programs and the Workers'
Compensation Commission shall provide the Small Business
Development Center with information as to the standing of each
small business loan applicant. The Small Business Development
Center shall include these certifications with the loan
application.
(e) After all approvals of the Small Business Development
Center and the financial institution have been given for a linked
deposit loan, the Small Business Development Center and the
financial institution shall forward to the Treasurer a linked
deposit loan request in the form and manner prescribed by the
Treasurer. The Treasurer shall notify the Small Business
Development Center when the linked deposit is made.
§12-1A-5. Acceptance or rejection of loan package; deposit
agreement for linked deposits.
(a) The Treasurer may accept or reject a linked deposit loan
request or any portion of a request based on the criteria
prescribed by this article.
(b) Upon approving the linked deposit loan request, the
Treasurer shall place a linked deposit with the lending
institution.
(c) The eligible lending institution shall enter into a
deposit agreement with the Treasurer in a form prescribed by the
Treasurer and in compliance with the requirements of this article.
§12-1A-6. Certification and monitoring of compliance;
accountability and reporting.
(a) Upon the placement of a linked deposit with an eligible
lending institution, the institution shall lend the funds to the
approved eligible small business listed in the linked deposit loan
package. A certification of compliance with this section shall be
sent to the Small Business Development Center by the eligible
lending institution.
(b) As a condition of remaining in good standing with the
lending institution and the state and as a condition of having the
loan for up to seven years, the loan recipient shall receive
supervision and counseling provided by the Small Business
Development Center. Eligible small businesses shall also grant the
lending institution the right to provide information on the status
of the loan to the Small Business Development Center so as to
assist the small business.
(c) The Small Business Development Center shall take any and
all steps necessary to implement, advertise and monitor compliance
with the linked deposit program.
(d) By the thirty-first day of January of each year, the
Small Business Development Center shall report on the linked deposit program for the preceding calendar year to the West
Virginia Development Office, which shall then report to the Joint
Committee on Government and Finance. The reports shall set forth
the name of the small business, terms, delinquency and default
rates, job growth, gross income evaluation and amounts of the loans
upon which the linked deposits were based.
§12-1A-9. Effective dates.
This article shall be effective from the amendment and
reenactment of this article during the regular session of the
Legislature in two thousand eight, through the first day of July,
two thousand thirteen.