EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb1008*
SENATE BILL 1008
C8 5lr3577
CF HB 601
By: Senator Hayes
Introduced and read first time: February 1, 2025
Assigned to: Rules
Re–referred to: Finance, February 10, 2025
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: February 25, 2025
CHAPTER ______
AN ACT concerning 1
Economic Development – Small Business Guaranty Fund – Alterations 2
FOR the purpose of providing that authorizing the Maryland Small Business Development 3
Financing Authority to authorize the provision of a guaranty under the Small 4
Business Guaranty Fund may be supported by the full faith and credit of the State 5
of Maryland or approved in a certain other manner; and generally relating to the 6
Small Business Guaranty Fund. 7
BY repealing and reenacting, with amendments, 8
Article – Economic Development 9
Section 5–540(a) 10
Annotated Code of Maryland 11
(2024 Replacement Volume and 2024 Supplement) 12
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 13
That the Laws of Maryland read as follows: 14
Article – Economic Development 15
5–540. 16
(a) (1) The Authority may use the Fund to guarantee up to 80% of the principal 17
of and interest on a long–term loan made by a financial institution to an applicant only if: 18
2 SENATE BILL 1008
(i) the applicant meets the requirements under § 5–541 of this 1
subtitle and has not violated § 5–545 of this subtitle; 2
(ii) the loan amount is $5,000 or more and the maximum amount 3
payable by the Authority under the guaranty does not exceed $2,000,000; 4
(iii) the loan is used for: 5
1. working capital; 6
2. refinancing the applicant’s existing debt; 7
3. acquisition and installation of equipment; 8
4. making necessary improvements to real property that the 9
applicant leases or owns in fee simple; or 10
5. acquiring real property that the applicant will own in fee 11
simple if the property is to be used in the applicant’s trade or business for which the 12
guaranty is sought and the financial institution or the Authority places a lien on the 13
property; 14
(iv) the loan matures within 10 years after the closing date of the 15
loan; and 16
(v) the interest rate does not exceed the monthly weighted average 17
of the prime lending rate prevailing in Baltimore City on unsecured commercial loans, plus 18
2%, as determined by the Authority. 19
(2) A GUARANTY PROVIDED UN DER THIS SECTION MAY : 20
(I) BE SUPPORTED BY THE FULL FAITH AND CREDI T OF THE 21
STATE OF MARYLAND; OR 22
(II) BE APPROVED IN ONE OF THE FOLLOWING FOR MS: 23
(2) THE AUTHORITY MAY AUTHORI ZE THE PROVISION OF A 24
GUARANTY UNDER THIS SECTION IN THE FOLLO WING FORMS: 25
1. (I) AN IRREVOCABLE LETTE R OF CREDIT; 26
2. (II) AN OFFICIAL TREASURE R’S CHECK; 27
3. (III) FUNDS ON DEPOSIT IN AN ESCROW OR OTHER 28
DEPOSITORY ACCOUNT ; OR 29
SENATE BILL 1008 3
4. (IV) ANY OTHER LEGAL INST RUMENT PROMISING A 1
FINANCIAL INSTITUTIO N RESTITUTION OR REI MBURSEMENT FOR ITS L OAN LOSSES, 2
WITHIN THE LIMITS OF THE GUARANTY . 3
(3) ANY TERMS AND CONDITI ONS GOVERNING THE IN STRUMENTS 4
DESCRIBED UNDER PARA GRAPH (2)(II) (2) OF THIS SUBSECTION M AY NOT BE SO 5
ONEROUS AS TO DISCOU RAGE THE FINANCIAL I NSTITUTION FROM OFFE RING THE 6
LOAN. 7
[(2)] (4) (i) The Authority may only approve a guaranty under this 8
section if the Authority determines that the loan to be guaranteed will have a substantial 9
economic impact. 10
(ii) To determine the economic impact of a loan, the Authority may 11
consider: 12
1. the amount of the guaranty obligation; 13
2. the terms of the loan to be guaranteed; 14
3. the number of new jobs that the loan will create; and 15
4. any other factor that the Authority considers relevant. 16
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 17
October 1, 2025. 18
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.