PA 06-166—sHB 5493

Commerce Committee

Appropriations Committee

Legislative Management Committee

AN ACT ESTABLISHING A PILOT MICROLOAN PROGRAM FOR MICROENTERPRISES

SUMMARY: This act establishes a pilot program to help new and existing very small businesses (i. e. , microenterprises) grow and develop. It does this by requiring the economic and community development commissioner to make a grant to the nonprofit Community Economic Development Fund (CEDF), which must disperse the grant funds to other organizations (i. e. , microloan generating organizations). These organizations must help microenterprises prepare business plans, complete loan applications, and obtain financial and technical assistance from public and private sources. The commissioner must report to the Commerce Committee by June 30, 2007 on the program's status and accomplishments.

EFFECTIVE DATE: July 1, 2006

ELIGIBILITY

Microloan Generating Organizations

Under the act, CEDF must allocate the grant funds to microloan generating organizations. In doing so, CEDF must consider:

1. where an organization receives its operating funds and whether they are sufficient to implement the pilot program,

2. the organization's ability to provide the services the act requires, and

3. the extent to which the organization has helped businesses secure loans and other economic assistance from programs similar to the pilot program.

Assistance

Microloan generating organizations must help microenterprises obtain business loans (i. e. , microloan applicants). In doing so, they must use the grant funds to:

1. identify appropriate microloan applicants throughout the state;

2. evaluate the need for the product or service in the community where the applicant does business or proposes to do business;

3. evaluate the extent to which the community supports that business;

4. work with other public and private organizations, including CEDF, to help the applicant prepare and complete its business plan;

5. help prospective applicants identify and access technical and financial assistance from other organizations;

6. track the services provided to clients and measure the results;

7. promote microenterprises; and

8. coordinate the way other organizations deliver services to microenterprises.

Eligible Businesses

Microloan generating organizations may use the grants to assist only microenterprises, which are new or existing businesses employing 10 or fewer people and grossing less than $500,000 a year. These enterprises include those based in homes and those operated by the owner.

BACKGROUND

CEDF

Established by law in 1993, CEDF helps economically distressed neighborhoods develop businesses and create jobs. It does this by making and guaranteeing loans to small businesses, including microenterprises.

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