EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb1008*
SENATE BILL 1008
C8 5lr3577
CF HB 601
By: Senator Hayes
Introduced and read first time: February 1, 2025
Assigned to: Rules
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
(iii) the loan is used for: 22
2 SENATE BILL 1008
1. working capital; 1
2. refinancing the applicant’s existing debt; 2
3. acquisition and installation of equipment; 3
4. making necessary improvements to real property that the 4
applicant leases or owns in fee simple; or 5
5. acquiring real property that the applicant will own in fee 6
simple if the property is to be used in the applicant’s trade or business for which the 7
guaranty is sought and the financial institution or the Authority places a lien on the 8
property; 9
(iv) the loan matures within 10 years after the closing date of the 10
loan; and 11
(v) the interest rate does not exceed the monthly weighted average 12
of the prime lending rate prevailing in Baltimore City on unsecured commercial loans, plus 13
2%, as determined by the Authority. 14
(2) A GUARANTY PROVIDED UN DER THIS SECTION MAY : 15
(I) BE SUPPORTED BY THE FULL FAITH AND CREDI T OF THE 16
STATE OF MARYLAND; OR 17
(II) BE APPROVED IN ONE OF THE FOLLOWING FORMS: 18
1. AN IRREVOCABLE LETTE R OF CREDIT; 19
2. AN OFFICIAL TREASURE R’S CHECK; 20
3. FUNDS ON DEPOSIT IN AN ESCROW OR OTHER 21
DEPOSITORY ACCOUNT ; OR 22
4. ANY OTHER LEGAL INST RUMENT PROMISING A 23
FINANCIAL INSTITUTIO N RESTITUTION OR REIMBURSEMENT FOR ITS LOAN LOSSES . 24
(3) ANY TERMS AND CONDITI ONS GOVERNING THE IN STRUMENTS 25
DESCRIBED UNDER PARA GRAPH (2)(II) OF THIS SUBSECTION M AY NOT BE SO 26
ONEROUS AS TO DISCOU RAGE THE FINANCIAL I NSTITUTION FROM OFFE RING THE 27
LOAN. 28
SENATE BILL 1008 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, Tha t this Act shall take effect 10
October 1, 2025. 11