CHAPTER 10
SB 222-FN-A-LOCAL - FINAL VERSION
5jan00.....2064h
2000 SESSION
SENATE BILL 222-FN-A-LOCAL
AN ACT relative to guarantee of loans to local development organizations.
SPONSORS: Sen. F. King, Dist 1; Sen. Hollingworth, Dist 23
This bill establishes state guarantees of loans to local development organizations.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
5jan00.....2064h
99-0970
03/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand
AN ACT relative to guarantee of loans to local development organizations.
Be it Enacted by the Senate and House of Representatives in General Court convened:
10:1 New Section; Public Safety and Welfare; Business Finance Authority; Guarantee of Loans to Local Development Organizations. Amend RSA 162-A by inserting after section 7 the following new section:
162-A:7-a Guarantee of Loans to Local Development Organizations.
I. Upon recommendation of the authority for the proper implementation of the declared purposes of this chapter, the governor and council may award a state guarantee of the principal of, interest on, and reasonable collection expenses related to, loans to local development organizations which provide new private capital for business loan funds and meet the requirements set forth in this section. Such state guarantee shall not at any time exceed 80 percent of the maximum principal amount that may be borrowed under the terms of the loan, plus interest and related reasonable collection expenses with respect to such loan. The full faith and credit of the state shall be pledged for any such guarantee, but the total outstanding amount of principal guaranteed by the state under this section shall not exceed, in the aggregate at any time, $3,000,000, nor shall the guarantee cause the contingent credit limit of RSA 162-A:22 to be exceeded. The authority shall establish appropriate guidelines to insure that the guarantee is used to capitalize loan funds that serve the most economically distressed areas of the state.
II. The state's guarantee of a loan under this section shall be evidenced by a guarantee agreement entered into by the state, the lender, and the borrower. Such guarantee agreement shall contain such terms and conditions as the authority and the governor and council may impose, including, without limitation, restrictions on the use of loan proceeds, restrictions on the use and operation of any project financed or assisted by the loan, provisions for the state to demand acceleration of the payment of the loan in the event of a default by the borrower, provisions for payment to the authority of guarantee fees and reimbursement of costs and expenses, provisions for reimbursement of the state if the state is required to honor the guarantee, appropriate financial covenants, and provisions for the establishment of reserves. The guarantee agreement shall specifically require that the proceeds of a guaranteed loan shall be used by the local development organization only to make loans to businesses within a particular locale or region of the state. In addition, as a condition of awarding any guarantee, the state shall be subrogated to all of the rights and security of the lender to the extent it honors the guarantee. Any guarantee agreement authorized in accordance with this section shall be executed on behalf of the state by the chairperson, vice chairperson, or executive director of the authority. The governor, with the advice and consent of the council, is authorized to draw a warrant for such sum as may be necessary out of money in the state treasury not otherwise appropriated, for the purpose of honoring any guarantee awarded under this section.
III. The amount payable under a guarantee awarded under this program may be based upon the percentage of the maximum principal amount available under the loan, and as may be determined by the authority, need not be reduced in proportion to any reduction in the principal balance of the loan.
IV. The governor and council shall not award or renew any state guarantee under this section unless after a hearing they have made the findings specified in RSA 162-A:18.
10:2 Public Safety and Welfare; Business Finance Authority; Programs for Public Purpose, Required Findings; References Added. Amend the introductory paragraph of RSA 162-A:18, I to read as follows:
I. The authority shall not take any action described in RSA 162-A:7, IV, 162-A:9, III, 162-A:10, IV, or 162-A:12, V, and the governor and council shall not award any guarantee under RSA 162-A:7-a, RSA 162-A:8, RSA 162-A:10, III, [or] RSA 162-A:13, or RSA 162-A:13-a unless the governor and council have made the following findings:
10:3 Public Safety and Welfare; Business Finance Authority; Programs for Public Purpose, Required Findings; References Added. Amend the introductory paragraph of RSA 162-A:18, II(b) to read as follows:
(b) If the action is the award or renewal of a state guarantee pursuant to RSA 162-A:7-a, RSA 162-A:8, [or] RSA 162-A:13, or RSA 162-A:13-a, the governor and council shall find that:
10:4 Public Safety and Welfare; Business Finance Authority; Unified Contingent Credit Limit; References Added. Amend RSA 162-A:22 to read as follows:
162-A:22 Unified Contingent Credit Limit. The total amount of state guarantees in force under RSA 162-A:7-a, RSA 162-A:8, RSA 162-A:10, III, RSA 162-A:13, RSA 162-A:13-a, RSA 162-A:17, and RSA 162-I:9-b shall not exceed in the aggregate at any time $50,000,000 plus interest, provided that such amount shall be increased to $80,000,000 plus interest on January 1, 1993, and to $95,000,000 plus interest on January 1, 1994.
10:5 Effective Date. This act shall take effect July 1, 2000.
(Approved: February 16, 2000)
(Effective Date: July 1, 2000)
LBAO
99-0970
2/23/99
SB 222-FN-A-LOCAL - FISCAL NOTE
AN ACT relative to guarantee of loans to local development organizations.
FISCAL IMPACT:
The Business Finance Authority stated this bill will have no fiscal impact on state, county and local revenue or expenditures.
METHODOLOGY:
The Business Finance Authority (BFA) is a body corporate and politic, having a distinct existence separate from the state and does not constitute a department of state government. Therefor, there is no direct impact on the state. The BFA currently has $21,700,000 in state guaranteed debt and this bill enables the BFA to guarantee up to an additional $3,000,000 of loans to capitalize local development organizations with state guaranty. The BFA assumes a charge of 1% per year for the guarantee, and half of the $3,000,000 will be used the first year, with the total balance outstanding beginning in year 2. The BFA will immediately expend 3% of the guarantee amount to cover losses until 5% of the total exposure has been expended, and the applicants will pay all administrative costs. Therefor, BFA revenue will increase by $15,000 in FY 2000 and by $30,000 in FY 2001 and each year thereafter. BFA expenditures will increase by $45,000 in FY 2000, by $60,000 in FY 2001 and by $45,000 in FY 2002.