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OLR Bill Analysis
sHB 6467
AN ACT CONCERNING THE SMALL BUSINESS EXPRESS
PROGRAM.
SUMMARY
This bill makes the following changes to components of the
Department of Economic and Community Development ’s (DECD)
Small Business Express program (EXP):
1. expands the revolving loan fund’s allowed uses;
2. allows the DECD commissioner, in consultation with
Connecticut Innovations (CI), to establish a new EXP
component;
3. increases, from $100,000 to $250,000, the maximum size of loans
a minority business revolving loan fund (MBRLF) can provide;
and
4. requires DECD, if it establishes an EXP component operated in
collaboration with Connecticut-based banks, to administer this
component in consultation with CI.
To be eligible for EXP financial assistance, a business must: (1) have
employed no more than 100 employees on at least half of the working
days in the previous 12 months, (2) operate in Connecticut, (3) have
been registered to conduct business for at least 12 months, and (4) be in
good standing with all state and local tax payments and with all state
agencies.
Additionally, the bill (1) creates a new requirement for loan loss
reserve accounts under the Connecticut Capital Access Fund program
and (2) reduces the frequency, from biannually to annually, with
which the DECD commissioner must report on the EXP program to the 2021HB-06467-R000303-BA.DOCX
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General Assembly.
EFFECTIVE DATE: July 1, 2021
CHANGES TO EXP COMPO NENTS
By law, EXP funding is available to eligible businesses in the form
of a loan or a grant through five components:
1. the revolving loan fund,
2. the job creation incentive fund,
3. the matching grant fund,
4. up to two MBRLFs, and
5. a component operated in collaboration with Connecticut-based
banks.
Revolving Loan Fund
Under current law, DECD can provide loans to eligible small
businesses through the revolving loan fund. The bill expands this by
allowing the department to also provide loan guarantees, loan
portfolio guarantees, portfolio insurance, and grants under this EXP
component.
New Component
The bill allows the DECD commissioner to establish, in consultation
with CI, a new EXP component. The new component can provide
financial assistance consistent with CI's powers and the provisions and
purposes of the (1) Connecticut Works Fund (see BACKGROUND)
and (2) Connecticut Capital Access Fund. DECD must operate and
administer the component in collaboration with CI.
Private Lender Component
The law allows DECD to establish, in consultation with private
lenders, a new EXP component comprised of (1) loan guarantees, (2)
short-term loans used as a bridge to private sector financing, and (3)
the transfer of loans issued under the revolving loan fund or job 2021HB-06467-R000303-BA.DOCX
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creation incentive fund. The bill requires DECD to administer this
component in consultation with CI if the department establishes it.
CONNECTICUT CAPITAL ACCESS FUND
Under current law, participation agreements between CI and a
financial institution participating in the Connecticut Capital Access
Fund program must establish a separate loan loss reserve account
owned and controlled by CI but earmarked to cover losses on loans
enrolled by the financial institution in the program. The bill requires
that these loan loss reserve accounts be located within (1) the financial
institution entering the participation agreement or (2) a third-party
financial institution approved by CI.
The Connecticut Capital Access Fund program is designed to
provide portfolio insurance to participating financial institutions to
help them make loans that are somewhat riskier than conventional
loans.
BACKGROUND
Connecticut Works Fund
The Connecticut Works Fund provides direct loans for eligible
projects and includes a loan guarantee program to encourage
participating lenders to provide additional credit on more favorable
terms.
COMMITTEE ACTION
Commerce Committee
Joint Favorable Substitute
Yea 23 Nay 0 (03/22/2021)