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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY FONTANA, COSTA, TARTAGLIONE, SOLOBAY, HUGHES, WOZNIAK, YUDICHAK, BREWSTER, FARNESE AND KASUNIC, MARCH 28, 2011 |
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| REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT, MARCH 28, 2011 |
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| AN ACT |
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1 | Amending Title 64 (Public Authorities and Quasi-Public |
2 | Corporations) of the Pennsylvania Consolidated Statutes, |
3 | providing for the definition of "small business"; and further |
4 | providing for indebtedness and for Second Stage Loan Program. |
5 | The General Assembly of the Commonwealth of Pennsylvania |
6 | hereby enacts as follows: |
7 | Section 1. Section 1504 of Title 64 of the Pennsylvania |
8 | Consolidated Statutes is amended by adding a definition to read: |
9 | § 1504. Definitions. |
10 | The following words and phrases when used in this chapter |
11 | shall have the meaning given to them in this section unless the |
12 | context clearly indicates otherwise: |
13 | * * * |
14 | "Small business." A company that is engaged in a for-profit |
15 | enterprise and that employs no more than 100 individuals. |
16 | * * * |
17 | Section 2. Sections 1543(b)(8) and 1553 of Title 64 are |
18 | amended to read: |
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1 | § 1543. Indebtedness. |
2 | * * * |
3 | (b) Program limitations.--Indebtedness incurred by the |
4 | authority under subsection (a) shall not, in aggregate, exceed |
5 | any of the following: |
6 | * * * |
7 | (8) $50,000,000 for the program established in section |
8 | 1553 (relating to [Second Stage Loan] Small Business |
9 | Investment Guarantee Program). |
10 | * * * |
11 | § 1553. [Second Stage Loan] Small Business Investment Guarantee |
12 | Program. |
13 | (a) Establishment.--There is established a program to be |
14 | known as the Second Stage Loan Program. The program shall |
15 | provide loan guarantees to commercial lending institutions or |
16 | eligible entities that make loans to [life sciences, advanced |
17 | technology or manufacturing businesses] Pennsylvania-related |
18 | businesses for projects. |
19 | (b) Application for enrollment.--A commercial lending |
20 | institution or an eligible entity may apply for enrollment in |
21 | the program authorized by this section. The application shall be |
22 | on the form prescribed by the board and shall include or |
23 | demonstrate all of the following: |
24 | (1) The name and address of the commercial lending |
25 | institution or eligible entity and the name and title of the |
26 | individual who will serve as the point of contact for the |
27 | commercial lending institution or eligible entity. |
28 | (2) A statement defining the service area of the |
29 | commercial lending institution or the jurisdiction of the |
30 | eligible entity. |
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1 | (3) A statement describing the commercial lending |
2 | activities engaged in by the commercial lending institution |
3 | or eligible entity and how the institution intends to expand |
4 | those activities as a result of its participation in the |
5 | program authorized by this section. |
6 | (3.1) A statement describing any lending activities |
7 | associated with the economic development functions of the |
8 | eligible entity and how the eligible entity intends to expand |
9 | or supplement those lending activities through participation |
10 | in the program authorized under this section. |
11 | (4) Any other information required by the board. |
12 | (c) Enrollment approval.--Upon being satisfied that all |
13 | requirements have been met, the board may enroll the commercial |
14 | lending institution or eligible entity in the program authorized |
15 | by this section, and, if enrolled, the authority shall execute a |
16 | master guarantee agreement in favor of the commercial lending |
17 | institution or eligible entity. In addition to any other terms |
18 | and conditions required by the board, the master guarantee |
19 | agreement shall provide for the following: |
20 | (1) The procedure for the submission of a claim for |
21 | payment by the commercial lending institution or eligible |
22 | entity. This procedure shall require that the commercial |
23 | lending institution or eligible entity demonstrate that it |
24 | has exhausted all available remedies against the borrower, |
25 | other guarantors and collateral for the loan before seeking |
26 | payment under the agreement. |
27 | (2) A requirement that a percentage of any moneys |
28 | recovered by the commercial lending institution or eligible |
29 | entity subsequent to any payment made under the master |
30 | guarantee agreement by the authority be remitted to the |
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1 | authority. |
2 | (3) Periodic reporting requirements by the commercial |
3 | lending institution or eligible entity regarding itself and |
4 | regarding the loans for which guarantee certificates have |
5 | been issued under this section. |
6 | (d) Application for guarantee.--A commercial lending |
7 | institution or eligible entity enrolled in the program |
8 | authorized by this section may submit an application to the |
9 | authority for the guarantee of a proposed loan. The application |
10 | shall be on the form prescribed by the board and shall include |
11 | or demonstrate all of the following: |
12 | (1) The name and address of the borrower, the type of |
13 | business the borrower conducts, the location and age of the |
14 | business and the names and addresses of the principals of the |
15 | borrower. |
16 | (2) The number of projected new or retained employees of |
17 | the borrower as a result of the loan. |
18 | (3) A copy of the borrower's last two years of financial |
19 | statements prepared or reported on by an independent |
20 | certified public accountant. |
21 | (4) A statement describing the purpose of the loan, the |
22 | requested amount of the loan, a copy of the commercial |
23 | lending institution's or eligible entity's commitment letter |
24 | and applicable credit underwriting that supports the |
25 | repayment of the loan, as well as the collateral and other |
26 | guarantees offered by the borrower to support the loan. |
27 | (4.1) A statement describing the need for the guarantee, |
28 | including the likelihood that the projects can be completed |
29 | without the guarantee. |
30 | (5) Any other information required by the board. |
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1 | (e) Application review.-- |
2 | (1) The board shall review the application to determine |
3 | all of the following: |
4 | (i) That the borrower owns and operates a [life |
5 | sciences, advanced technology or manufacturing] |
6 | Pennsylvania-related business. |
7 | [(ii) That the borrower's business has been in |
8 | existence for at least two years but no more than seven |
9 | years at the time of application.] |
10 | (iii) That the borrower is financially responsible |
11 | and has the ability to repay the loan. |
12 | (iv) That the use of loan proceeds by the borrower |
13 | will result in jobs being created or retained within this |
14 | Commonwealth. |
15 | (v) That the borrower's business is located within |
16 | the commercial lending institution's service area or |
17 | within the eligible entity's jurisdiction and within this |
18 | Commonwealth. |
19 | (v.1) That the project is unlikely to proceed |
20 | without a loan guarantee. |
21 | (vi) That the borrower and the commercial lending |
22 | institution or the eligible entity have met all other |
23 | requirements established by the board. |
24 | (2) Upon being satisfied that all requirements have been |
25 | met, the board may approve the guarantee, and, if approved, |
26 | the authority shall issue a guarantee certificate for the |
27 | loan to the commercial lending institution or eligible entity |
28 | stating the terms and amount of the guarantee. |
29 | (3) The board may establish a subcommittee composed of |
30 | one or more members of the board and staff of the department |
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1 | to review and approve applications for guarantees under this |
2 | section. |
3 | (4) Priority shall be given to applications for loan |
4 | guarantees for projects related to the life sciences, |
5 | advanced technology or manufacturing. |
6 | (f) Limitations.-- |
7 | [(1) During the first two years of the term of a loan |
8 | for which a guarantee certificate has been issued, the |
9 | guarantee may not exceed 50% of the outstanding principal |
10 | amount of the loan. From the end of year two through either |
11 | the end of year seven or the end of the term of the loan, |
12 | whichever occurs first, the guarantee may not exceed 25% of |
13 | the outstanding principal amount of the loan. The guarantee |
14 | will terminate at the end of seven years.] |
15 | (1.1) The board may not approve a guarantee unless the |
16 | borrower has an equity investment of at least 10% of the |
17 | total cost of the project from nonpublic sources. |
18 | (2) At no time may a guarantee exceed [$1,000,000] |
19 | $2,000,000 for any one loan. |
20 | (3) At no time may a guarantee exceed 40% of the |
21 | outstanding principal amount of the loan, except that in the |
22 | case of a loan to a small business a guarantee may not exceed |
23 | 100% of the principal amount of the loan. |
24 | (4) The board may not approve a guarantee for any |
25 | project directly or indirectly related to the conduct of |
26 | gaming as defined in 4 Pa.C.S. § 1103 (relating to |
27 | definitions). |
28 | (g) Definitions.--For purposes of this section, an "eligible |
29 | entity" shall mean a political subdivision, a municipal |
30 | authority, a redevelopment authority, an industrial development |
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1 | corporation or any board, commission or other agency or |
2 | instrumentality of a political subdivision, municipal authority, |
3 | redevelopment authority or industrial development corporation. |
4 | Section 3. This act shall take effect in 60 days. |
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