EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb0601*
HOUSE BILL 601
C8 5lr2247
By: Delegates Phillips, Amprey, Boyce, Conaway, Crutchfield, Pasteur, Patterson,
Pena–Melnyk, Roberson, Ruff, Simmons, Taveras, Toles, Wells,
White Holland, and Woods
Introduced and read first time: January 23, 2025
Assigned to: Ways and Means
A BILL ENTITLED
AN ACT concerning 1
Economic Development – Small Business Guaranty Fund – Alterations 2
FOR the purpose of providing that a guaranty under the Small Business Guaranty Fund 3
may be supported by the full faith and credit of the State of Maryland or approved 4
in a certain other manner; and generally relating to the Small Business Guaranty 5
Fund. 6
BY repealing and reenacting, with amendments, 7
Article – Economic Development 8
Section 5–540(a) 9
Annotated Code of Maryland 10
(2024 Replacement Volume and 2024 Supplement) 11
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 12
That the Laws of Maryland read as follows: 13
Article – Economic Development 14
5–540. 15
(a) (1) The Authority may use the Fund to guarantee up to 80% of the principal 16
of and interest on a long–term loan made by a financial institution to an applicant only if: 17
(i) the applicant meets the requirements under § 5–541 of this 18
subtitle and has not violated § 5–545 of this subtitle; 19
(ii) the loan amount is $5,000 or more and the maximum amount 20
payable by the Authority under the guaranty does not exceed $2,000,000; 21
2 HOUSE BILL 601
(iii) the loan is used for: 1
1. working capital; 2
2. refinancing the applicant’s existing debt; 3
3. acquisition and installation of equipment; 4
4. making necessary improvements to real property that the 5
applicant leases or owns in fee simple; or 6
5. acquiring real property that the applicant will own in fee 7
simple if the property is to be used in the applicant’s trade or business for which the 8
guaranty is sought and the financial institution or the Authority places a lien on the 9
property; 10
(iv) the loan matures within 10 years after the closing date of the 11
loan; and 12
(v) the interest rate does not exceed the monthly weighted average 13
of the prime lending rate prevailing in Baltimore City on unsecured commercial loans, plus 14
2%, as determined by the Authority. 15
(2) A GUARANTY PROVIDED UNDER THIS SECTION MAY: 16
(I) BE SUPPORTED BY THE FULL FAITH AND CREDI T OF THE 17
STATE OF MARYLAND; OR 18
(II) BE APPROVED IN ONE OF THE FOLLOW ING FORMS: 19
1. AN IRREVOCABLE LETTE R OF CREDIT; 20
2. AN OFFICIAL TREASURER’S CHECK; 21
3. FUNDS ON DEPOSIT IN AN ESCROW OR OTHER 22
DEPOSITORY ACCOUNT ; OR 23
4. ANY OTHER LEGAL INST RUMENT PROMISING A 24
FINANCIAL INSTITUTIO N RESTITUTION OR REIMBURSEMENT FOR IT S LOAN LOSSES. 25
(3) ANY TERMS AND CONDITIONS GOVERNING THE INSTRUMENTS 26
DESCRIBED UNDER PARAGRAPH (2)(II) OF THIS SUBSECTION MAY NOT BE SO 27
ONEROUS AS TO DISCOURAGE THE FINANCIAL INSTITUTIO N FROM OFFERING THE 28
LOAN. 29
HOUSE BILL 601 3
[(2)] (4) (i) The Authority may only approve a guaranty under this 1
section if the Authority determines that the loan to be guaranteed will have a substantial 2
economic impact. 3
(ii) To determine the economic impact of a loan, the Authority may 4
consider: 5
1. the amount of the guaranty obligation; 6
2. the terms of the loan to be guaranteed; 7
3. the number of new jobs that the loan will create; and 8
4. any other factor that the Authority considers relevant. 9
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 10
October 1, 2025. 11