1Amending Title 64 (Public Authorities and Quasi-Public
2Corporations) of the Pennsylvania Consolidated Statutes,
3establishing the Veteran-owned Business Loan Guarantee
4Program.

5The General Assembly of the Commonwealth of Pennsylvania
6hereby enacts as follows:

7Section 1. Title 64 of the Pennsylvania Consolidated
8Statutes is amended by adding a section to read:

9§ 1559. Veteran-owned Business Loan Guarantee Program.

10(a) Establishment.--The Veteran-owned Business Loan
11Guarantee Program is established. The program shall provide loan
12guarantees to commercial lending institutions that make loans to
13veteran-owned businesses.

14(b) Application for enrollment.--A commercial lending
15institution may apply for enrollment in the program authorized
16under this section. The application shall be on the form
17prescribed by the board and shall include or demonstrate all of

1the following:

2(1) The name and address of the commercial lending
3institution and the name and title of the individual who will
4serve as the point of contact for the commercial lending
5institution.

6(2) A statement defining the service area of the
7commercial lending institution.

8(3) A statement describing the commercial lending
9activities engaged in by the commercial lending institution
10and how the commercial lending institution intends to expand
11the activities as a result of its participation in the
12program authorized by this section.

13(4) Any other information required by the board.

14(c) Enrollment approval.--Upon being satisfied that all
15requirements have been met, the board may enroll the commercial
16lending institution in the program authorized under this section
17and, if enrolled, the authority shall execute a master guarantee
18agreement in favor of the commercial lending institution. In
19addition to any other terms and conditions required by the
20board, the master guarantee agreement shall provide for the
21following:

22(1) The procedure for the submission of a claim for
23payment by the commercial lending institution. The procedure
24shall require that the commercial lending institution
25demonstrate that it has exhausted all available remedies
26against the borrower, other guarantors and collateral for the
27loan before seeking payment under the agreement.

28(2) A requirement that a percentage of any money
29recovered by the commercial lending institution subsequent to
30any payment made under the master guarantee agreement by the

1authority be remitted to the authority.

2(3) Periodic reporting requirements by the commercial
3lending institution regarding itself and regarding the loans
4for which guarantee certificates have been issued under this
5section.

6(d) Application for guarantee.--A commercial lending
7institution enrolled in the program authorized under this
8section may submit an application to the authority for the
9guarantee of a proposed loan. The application shall be on the
10form prescribed by the board and shall include or demonstrate
11all of the following:

12(1) The name and address of the borrower, the type of
13business the borrower conducts, the location and age of the
14business and the names and addresses of the principals of the
15borrower.

16(2) The number of projected new or retained employees of
17the borrower as a result of the loan.

18(3) A copy of the borrower's last two years of financial
19statements prepared or reported on by an independent
20certified public accountant, if available.

21(4) A statement describing the purpose of the loan, the
22requested amount of the loan, a copy of the commercial
23lending institution's commitment letter and applicable credit
24underwriting that supports the repayment of the loan,
25including the collateral and other guarantees offered by the
26borrower to support the loan.

27(5) Any other information required by the board.

28(e) Application review.--

29(1) The board shall review the application to determine
30all of the following:

1(i) That the borrower owns and operates a veteran-
2owned business.

3(ii) That the borrower is financially responsible
4and has the ability to repay the loan.

5(iii) That the use of loan proceeds by the borrower
6will result in jobs being created or retained within this
7Commonwealth.

8(iv) That the borrower's business is located within
9the commercial lending institution's service area and
10within this Commonwealth.

11(v) That the borrower and the commercial lending
12institution have met all other requirements established
13by the board.

14(2) Upon being satisfied that all requirements have been
15met, the board may approve the guarantee and, if approved,
16the authority shall issue a guarantee certificate for the
17loan to the commercial lending institution stating the terms
18and amount of the guarantee.

19(3) The board may establish a subcommittee composed of
20one or more members of the board and staff of the department
21to review and approve applications for guarantees under this
22section.

23(f) Limitations.--

24(1) A guarantee may not exceed 50% of the outstanding
25principal amount of a loan during the term of a loan for
26which a guarantee certificate has been issued.

27(2) A guarantee may not exceed $250,000 for any one
28loan.

29(g) Account.--The sum of $5,000,000 shall be transferred
30from the Second Stage Loan Program into a trust account

1established by the board for purposes of providing loan
2guarantees under this section.

3Section 2. This act shall take effect in 60 days.