January 3, 2005 |
2005-R-0034 | |
DEDICATED FUNDING FOR MICROLENDING AND SMALL BUSINESS DEVELOPMENT | ||
| ||
By: John Rappa, Principal Analyst | ||
You asked us to identify fees the state imposes on businesses for activities that are the same or similar to those involved in developing and operating micro and small businesses. You also asked us to identify new, non-traditional sources of funding for programs that assist these types of businesses.
SUMMARY
The Banking Department imposes license fees on two types of organizations that specialize in micro and small business lending. Small loan lenders, which make loans for up to $ 15,000, pay an $ 800 license fee, Business and Industrial Development Corporations (BIDCs), which make bigger loans to small businesses, pay a $ 400 license fee. Small loan lender license fees generated about $ 35,000 in FY 2001-02; BIDC license fees generated about $ 22,000 in that fiscal year, the last one for which we have comprehensive data.
Businesses also pay other state fees, regardless of their size. These include the fees the Banking Department charges people and organizations for registering business opportunity investments (i. e. , franchises) and those the secretary of the state charges all businesses when they establish themselves. The tables below list the revenues the fees generated in FY 2001-02. The data comes from a 2003 report the Offices of Legislative Research and Fiscal Analysis prepared on state fees.
States and the federal government generally fund micro and small business development programs through general fund appropriations and bond proceeds. (Many states also provide indirect assistance by exempting new facilities from property taxes and allowing businesses to credit money spent on machinery and equipment against their corporate taxes). Other, non-traditional funding sources include unemployment insurance and state loans induced by state fund deposits (i. e. , linked deposits).
Under federal law, states may allow laid-off workers to use their unemployment insurance to start and run a business. But only 10 states, excluding Connecticut, allow workers to do this. Attachment 1 is a U. S. Labor Department report on state self-employment programs (Crossing the Bridge to Self-Employment, 2001).
Linked deposits are an indirect approach: instead of allowing workers to use unemployment insurance to start a business or lending them money for this purpose, a state deposits or invests its funds in a bank that agrees to finance micro and small businesses. Connecticut’s linked deposit program, though, appears to serve a broader range of borrowers. The treasurer invests funds in banks that make state-guaranteed economic development loans for different size businesses. She also deposits funds in banks that agree to make housing and business loans in traditionally underserved communities.
Linked deposits allow a state to leverage bank dollars, but they pose a potential drawback. The federal laws and regulations that govern the way banks lend money may prevent them from changing loan terms and conditions to help a small business borrower who finds it hard to repay his loan. But these laws and regulations do not extend to nonprofit lenders, who can, for example, reduce loan repayments and extend the repayment period, Donna Wertenbach, Community Economic Development Fund (CEDF) president, explained. Her nonprofit organization finances micro and small businesses.
Finding money for micro and small business loans is only half the battle. The people who start these businesses often need help preparing business plans and loan applications and learning how to run their businesses, Wertenbach explained. The labor department and banks may not have the staff needed to provide that help.
FEES
Certain fees the Banking Department and the secretary of the state impose on businesses relate to activities associated with developing micro and small businesses. While there are no standard, universally accepted definitions for these types of businesses, micro businesses generally employ five or fewer people and generally make less than $ 250,000 annually; small businesses employ 500 or fewer people and make less than $ 5 million annually. Banks are generally reluctant to finance both types of businesses.
Table 1 describes the Banking Department’s fees for licensing small loan lenders and BIDCs and registering business opportunities and the revenue they generated in FY 2001-02.
Table 1: Selected Banking Department Fees
|
Fee |
Initial |
Renewal |
Total FY 2001-02 Revenue | ||
|
Amount |
CGS Citation |
Amount |
CGS Citation | ||
Small Lender License |
$ 800 |
36a-588 |
$ 400 |
36a-558 |
$ 34,700 |
Business and Industrial Development Corporation License |
400 |
36a-633 |
400 |
36a-533 |
21,700 |
Business Opportunity Registration |
400 |
36b-62(a) 36b-65(c) |
100 |
37b-79 |
13,450 |
The secretary of the state imposes fees on all businesses when they register with the state; change their names, addresses, agents, or officers and directors; and dissolve their existence. The fee amounts vary depending on how a business is organized (e. g. , corporation, limited liability partnership). Tables 2 to 12 describe the fees and the revenue they raised in FY 2001-02.
Table 2: Domestic Nonstock Corporation Fees (CGS § 33-1013)
Fee |
Amount |
Total FY 2001-02 Revenue |
Certificate of Incorporation, including Registered Agent |
$ 40 |
$ 33,920 |
Application for Reservation of Corporate Name |
30 |
NA |
Organization Report |
25 |
19,125 |
Corrected Report |
25 |
50 |
Certificate of Incorporation Amendment |
10 |
4,220 |
Annual Report |
25 |
351,400 |
Transfer of Reserved Corporate name |
30 |
NA |
Cancellation of Reserved Corporate Name |
30 |
NA |
Restated Certificate of Incorporation |
10 |
160 |
Interim Notice of Changed of Officer/Director |
10 |
NA |
Change of Registered Agent |
10 |
3,590 |
Change of Address of Registered Agent |
10 |
110 |
Notice of Resignation of Registered Agent |
10 |
420 |
Certificate of Dissolution |
10 |
1,960 |
Certificate of Revocation of Dissolution |
10 |
NA |
Certificate of Correction |
10 |
NA |
Certificate of Change of Address |
25 |
8,975 |
Reinstatement |
80 |
480 |
Table 3: Domestic Stock Corporation Fees (CGS § 33-617)
Fee |
Amount |
Total FY 2001-02 Revenue |
Certificate of Incorporation |
$ 50 |
$ 101,950 |
Amendment to Certificate of Incorporation |
50 |
31,750 |
Restated Certificate of Incorporation |
50 |
NA |
Certificate of Correction |
50 |
600 |
Organization Report |
75 |
124,800 |
Corrected Report |
50 |
675 |
Change of Registered Agent |
25 |
33,675 |
Annual Report |
75 |
1,031,150 |
Biennial Report |
150 |
NA |
Change of Addressed of Registered Agent |
25 |
4,125 |
Certificate of Dissolution |
25 |
63,210 |
Certificate of Revocation of Dissolution |
25 |
NA |
Application of Reservation of Corporate Name |
30 |
69,420 |
Transfer of Reserved Corporate Name |
30 |
1,110 |
Cancellation of Reserved Corporate Name |
30 |
660 |
Reinstatement |
150 |
9,750 |
Notice of Registration of Registered Agent |
25 |
8,975 |
Interim Notice of Change of Officer/Director |
10 |
NA |
Franchise Tax Stock Corporation |
150 |
6,784,489 |
Certificate of Merger |
30 |
8,600 |
Certificate of Change of Address |
25 |
14,675 |
Table 4: Foreign Nonstock Corporation Fees (CGS § 33-617)
Fee |
Amount |
Total FY 2001-02 Revenue |
Application for Reservation of Corporate Name |
$ 30 |
NA |
Cancellation of Reserved Corporate Name |
30 |
NA |
Application for Renewal of Registration of Corporate Name |
30 |
NA |
Application for Registration of Corporate Name |
30 |
NA |
Certificate of Change of Address |
25 |
NA |
Application for Amended Certificate of Authority |
60 |
$ 60 |
Application for Certificate of Authority for Foreign Corporation to Transact Business |
20 |
1,520 |
Application of Certificate of Withdrawal of Foreign Corporation |
20 |
400 |
Corrected Report |
25 |
NA |
Change of Address of Registered Agent |
10 |
NA |
Notice of Resignation of Registered Agent |
10 |
NA |
Change of Registered Agent |
10 |
NA |
Interim Notice of Change of Officer/Director |
10 |
NA |
Foreign Nonstock Corporation Report |
25 |
10,775 |
Transfer of Reserved Corporate Name |
30 |
NA |
Table 5: Foreign Stock Corporation Fees (CGS § 33-617)
Fee |
Amount |
Total FY 2001-02 Revenues |
Application for Reservation of Corporate Name |
$ 30 |
NA |
Cancellation of Reserved Corporate Name |
30 |
NA |
Application for Registration of Corporate Name |
30 |
$ 1,350 |
Application for Renewal of Registration of Registration of Corporate Name |
30 |
3,360 |
Transfer of Reserved Corporate Name |
30 |
NA |
Certificate of Change of Address |
25 |
NA |
Notice of Registered Agent |
25 |
NA |
Change of Address of Registered Agent |
25 |
NA |
Change of Registered Agent |
25 |
NA |
Application for Certificate of Withdrawal of Foreign Corporation |
50 |
74,150 |
Corrected Report |
50 |
150 |
Application for Certificate of Authority for Foreign Corporation to Transact Business |
275 |
597,575 |
Application to Amend Certificate of Authorization |
10 |
NA |
Interim Notice of Change of Officer/Director |
10 |
NA |
Annual Report |
300 |
4,310,400 |
Table 6: Foreign Limited Liability Company Fees (CGS § 34-112)
Fee |
Amount |
Total FY 2001-02 Revenue |
Application for Reservation of Limited Liability Company |
$ 30 |
NA |
Application for Registration of Limited Liability Company |
60 |
$ 66,780 |
Cancellation of Reserved Limited Liability Company |
30 |
NA |
Certificate of Amendment to Application for Registration |
60 |
19,800 |
Interim Notice of Change of Membership |
25 |
NA |
Certificate of Cancellation |
60 |
13,405 |
Notice of Registration of Statutory Age |
25 |
200 |
Transfer of Reserved Limited Liability |
30 |
NA |
Change of Address of Agent |
25 |
175 |
Change of Agent |
25 |
3,050 |
Annual Report |
10 |
26,385 |
Table 7: Domestic Limited Liability Company Fees (CGS § 34-112)
Fee |
Amount |
Total FY 2001-02 Revenue |
Application to Reserve a Limited Liability Company Name |
$ 30 |
NA |
Cancellation of Reserved Limited Liability Company Name |
30 |
NA |
Articles of Organization |
60 |
$ 1,063,440 |
Articles of Dissolution |
25 |
40,850 |
Amendment to Articles of Organization |
60 |
62,820 |
Articles of Merger or Consolidation |
30 |
870 |
Amend and Restate Articles of Organization |
60 |
NA |
Restated Articles of Organization |
60 |
NA |
Certificate of Change of Location of Principal Office |
25 |
NA |
Annual Report |
10 |
397,240 |
Judicial Decree of Dissolution |
25 |
NA |
Interim Notice of Change of Member/Manager |
25 |
NA |
Change of Address of Statutory Agent |
25 |
2,875 |
Change of Statutory Agent |
25 |
13,175 |
Notice of Registration of Statutory Age |
25 |
2,800 |
Certificate of Reinstatement |
60 |
NA |
Transfer of Reserved Limited Liability |
30 |
NA |
Table 9: Uniform Partnership Act Fees (CGS § 34-305)
Fee |
Amount |
Total FY 2001-02 Revenue |
Statement of Partnership Authority |
$ 75 |
$ 300 |
Amended Statement of Partnership Authority |
75 |
|
Statement of Conversion |
75 |
|
Statement of Cancellation |
75 |
|
Statement of Dissociation |
75 |
100 |
Statement of Denial |
75 |
NA |
Statement of Dissolution |
75 |
NA |
Table 10: Limited Partnership Fees (CGS §34-38n)
Fee |
Amount |
Total FY 2001-02 Revenue |
Application for Reservation of Limited Partnership Name |
$ 30 |
NA |
Certificate of Limited Partnership and Appointment of Statutory Agent |
60 |
$ 6,600 |
Notice of Resignation of Statutory Agent |
10 |
200 |
Cancellation of Reserved Limited Partnership Name |
30 |
NA |
Certificate of Cancellation |
30 |
4,560 |
Change of Agent |
10 |
770 |
Change of Address of Agent |
10 |
50 |
Transfer of Reserved Limited Partnership Name |
30 |
NA |
Certificate of Amendment |
60 |
8,400 |
Certificate of Merger or Consolidation |
30 |
2,640 |
Certificate of Registration of Foreign Limited Liability Partnership |
60 |
10,380 |
Annual Report for Foreign Limited Liability Partnership |
10 |
545 |
Table 11: Limited Liability Partnership Fees (CGS §34-413)
Fee |
Amount |
Total FY 2001-02 Revenue |
Application for Reservation of Limited Liability Partnership |
$ 30 |
NA |
Certificate of Limited Liability Partnership |
60 |
$ 4,560 |
Certificate of Amendment |
60 |
660 |
Transferred of Reserved Limited Liability Partner |
30 |
NA |
Certificate of Merger |
30 |
NA |
Conversion |
75 |
NA |
Change of Statutory Agent |
25 |
NA |
Change of Address of Statutory Agent |
25 |
50 |
Renunciation of Status Report |
25 |
450 |
Annual Report |
10 |
4,595 |
Table 12: Foreign Limited Liability Partnership Fees (CGS §34-413)
Fee |
Amount |
Total FY 2001-2002 Revenue |
Application for Reservation of Limited Liability Partnership Name |
$ 30 |
NA |
Transfer of Reserved Limited Liability |
30 |
NA |
Certificate of Authority to Transact Business |
60 |
$ 900 |
Certificate of Amended Certificate of Authority to Transact Business |
60 |
120 |
Withdrawal of Certificate of Authority |
60 |
240 |
Change of Statutory Agent |
25 |
25 |
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