
ENROLLED
Senate Bill No. 717
(By Senators Craigo, Unger, Oliverio, Anderson, Deem, Kessler, McCabe, Redd,
Ross and Sharpe)
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[Passed April 13, 2001; to take effect July 1, 2001.]
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AN ACT to amend and reenact article one-a, chapter twelve of the
code of West Virginia, one thousand nine hundred thirty-one,
as amended; and to further amend said article by adding
thereto a new section, designated section nine, all relating
to the West Virginia small business linked deposit program.
Be it enacted by the Legislature of West Virginia:


That article one-a, chapter twelve of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended and reenacted; and that said article be further amended, by
adding thereto a new section, designated section nine, 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;
and (3) is organized for profit.
(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.
(d) "Linked deposit" means a certificate of deposit placed by
the treasurer with an eligible lending institution at three percent
below current market rates, as determined and calculated by the
treasurer
, provided the institution agrees to lend the value of the
deposit, according to the deposit agreement provided for by this
article, to eligible small businesses at three percent below the
present borrowing rate applicable to each specific business at the
time of the deposit of state funds in the institution.
§12-1A-2. Legislative findings.
The Legislature finds that many small businesses throughout
the state are experiencing economic stagnation or decline, that
high interest rates have caused small businesses in this state to
suffer disproportionately in profitability and competition and that
the high interest rates have fostered a serious increase in unemployment. The linked deposit program provided for by this
article is intended to provide a statewide availability of lower
cost funds for lending purposes that will materially contribute to
the economic revitalization of this state. Accordingly, it is
declared to be the public policy of the state through the small
business linked deposit program to create an availability of lower-
cost funds to inject needed capital into the small business
community, sustain or improve business profitability, and protect
the jobs of citizens of this state. The Legislature further finds
that the involvement of both the treasurer
in facilitating the
deposit of funds for the program
and the small business development
center in determining which businesses will receive the benefits of
the linked deposit program is necessary in order for state funds to
be used in the most effective manner possible in assisting small
businesses throughout the state and thereby maximizing the impact
of the program.
§12-1A-3. Limitations on investment in linked deposits.
(a) The treasurer
shall invest in linked deposits
. The total
amount so deposited at any one time shall not exceed, in the
aggregate, twenty million dollars.
.
(b) Small business linked deposit funds shall be used to
provide each applicant with no more than one hundred fifty thousand dollars for each reduced rate loan.
(c) 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 receive a
linked deposit shall accept and review applications for loans from
eligible small businesses. 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 the reduced rate loan will be used exclusively to
create new jobs or preserve existing jobs and employment
opportunities. A reduced rate loan shall not be used to refinance
an existing debt. Whoever knowingly makes a false statement
concerning an application shall be prohibited from entering into
the linked deposit loan program and shall be subject to the
criminal penalties of section eight of this article.
(c) In considering which eligible small businesses should
receive reduced rate 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 as a condition of remaining in good standing
with the lending institution and the state and as a condition of
having the loan renewed for up to four years. The services
available from the small business development center include
eligibility certification, business planning, quarterly financial
statement review and loan proposal assistance. 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..
(e) The eligible financial institution shall forward to the
treasurer
a linked deposit loan package, in the form and manner as
prescribed by the small business development center and the
treasurer. The package shall include the amount of the loan
requested and the number of jobs to be created or sustained by each
eligible small business. The institution shall certify that each applicant is an eligible small business, and may, for each
business, certify the present borrowing rate applicable to each
specific eligible business.
(f) The rate charged to the eligible small business shall not
exceed the prime interest rate as published by the wall street
journal on the date that the eligible financial institution
certifies the applicant is eligible.
§12-1A-5. Acceptance or rejection of loan package; deposit
agreement.
(a) The
small business development center in cooperation with
the treasurer may accept or reject a linked deposit loan package or
any portion thereof based on the criteria prescribed by this
article.
(b) The treasurer
shall reject any linked deposit loan package
if the small business requesting the loan is not in good standing
with the state tax department and the bureau of employment programs
and these agencies shall provide the treasurer
with such
information as to the standing of each small business loan
applicant, notwithstanding any provision of this code to the
contrary.
(c) Upon acceptance of the linked deposit loan package or any
portion thereof by the
small business development center in cooperation with the treasurer
, the treasurer
may place
certificates of deposit with the eligible lending institution at
three percent below current market rates, as determined and
calculated by the treasurer
. When necessary, the treasurer
may
place certificates of deposit prior to acceptance of a linked
deposit loan package.
(d) The eligible lending institution shall enter into a
deposit agreement with the treasurer in a form in compliance with
the requirements of this article. The deposit agreement shall
reflect the market conditions prevailing in the lending area and
the period of time in which the lending institution is to lend
funds upon the placement of a linked deposit. The deposit agreement
shall include provisions for the certificates of deposit to be
placed for a maximum of four years with annual renewals
. Interest
shall be paid at the times determined by the treasurer
.
§12-1A-6. Rate of loan; certification and monitoring of
compliance; accountability and reporting.
(a) Upon the placement of a linked deposit with an eligible
lending institution, the institution is required to lend the funds
to each approved eligible small business listed in the linked
deposit loan package required in subsection (d), section four of
this article and in accordance with the deposit agreement required by subsection (c), section five of this article. The loan shall be
at three percent below the present borrowing rate applicable to
each business. A certification of compliance with this section in
the form and manner as prescribed by the small business development
center and the treasurer
shall be required of the eligible lending
institution.
(b) The small business development center and the
treasurer
shall take any and all steps necessary to implement the linked
deposit program and monitor compliance of eligible lending
institutions
. The small business development center shall monitor
the compliance of eligible small businesses.
(c) By the 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-7. Liability of state.
The state, the treasurer and the small business development
center are not liable to any eligible lending institution in any manner for payment of the principal or interest on the loan to an
eligible small business. Any delay in payment or default on the
part of an eligible small business does not in any manner affect
the deposit agreement between the eligible lending institution and
the board.
§12-1A-8. Penalties for violation of article.
Any person who violates this article is guilty of a
misdemeanor and, upon conviction thereof, shall be deemed a
misdemeanor and any person convicted thereof shall be fined not
less than one hundred nor more than five hundred dollars or
imprisoned in the county jail not less than one month nor more
than one year.
§12-1A-9. Effective dates.
This article shall be effective from the first day of July,
two thousand one, through the first day of July, two thousand
six.