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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
House Bill 2862
Sponsored by Representative EVANS (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced.The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: The Act would create a loan program to support small businesses. (Flesch Readability
Score:72.6).
Establishes the Local Markets Small Business Capital Loan Program to be administered by the
Oregon Business Development Department for the purpose of making interest-only loans to allow
businesses with not more than 50 employees to hire new employees.Requires the payment of prin-
cipal plus penalty for failure to hire and retain employees for at least two years.
Establishes the Local Markets Small Business Capital Loan Fund for the purpose of adminis-
tering the loan program.
Appropriates moneys to the department for the purpose of administering the loan program and
loan fund.
A BILL FOR AN ACT
Relating to interest-only loans to assist small businesses to increase employment.
Be It Enacted by the People of the State of Oregon:
SECTION 1. (1) The Local Markets Small Business Capital Loan Program is hereby es-
tablished for the purpose of making interest-only loans from the Local Markets Small Busi-
ness Capital Loan Fund established under section 2 of this 2025 Act to businesses employing
not more than 50 employees.
(2)(a) A business described in subsection (1) of this section may submit a loan application
to the Oregon Business Development Department in the manner prescribed by the depart-
ment by rule and containing or accompanied by such information and documentation as the
department requires.
(b) The department may charge fees for submission of an application under this section
and, if the application is approved, for processing and administering a loan agreement en-
tered into pursuant to subsection (4) of this section. Fees collected must be deposited in the
Local Markets Small Business Capital Loan Fund and may be used solely to pay the admin-
istrative costs and expenses of the department for administering the program established
under this section and the fund established under section 2 of this 2025 Act.
(3)(a) Upon receipt of an application submitted under subsection (2) of this section, the
department shall determine the applicant’s eligibility for a loan under this section.
(b) The department may approve an application only if, after investigation, the depart-
ment finds that:
(A) The applicant operates a business with 50 or fewer employees;
(B) The applicant has reasonably committed to meet the employment requirements under
subsection (5) of this section;
(C) The applicant has a reasonable prospect of making all required payments; and
(D) There is or will be a sufficient amount of moneys in the Local Markets Small Busi-
NOTE:Matter in boldfaced type in an amended section is new; matter [italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 2127 HB2862
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ness Capital Loan Fund to make a loan to the applicant.
(c) Employees to be hired pursuant to a loan agreement executed under this section may
not be counted toward the 50-employee limit on eligibility for a loan.
(4) If the department approves an application for a loan under this section, the depart-
ment and the applicant shall enter into a loan agreement that, at a minimum:
(a) Includes a covenant that the business will use the loan proceeds solely to meet the
employment requirements under subsection (5) of this section or to pay business operating
expenses connected with those requirements.
(b) Includes a plan for repayment of the loan proceeds, which must include any terms
of repayment the department designates as mandatory. The department shall designate as
mandatory, at a minimum, the term of the loan, the collateral required to secure the re-
payment of the loan, the rate of interest to be charged on the principal amount of the loan,
the schedule of payments and the manner of determining when payments are delinquent.
(c) Provides that, except as provided in subsection (6) of this section, the amount of any
payment shall include only the amount of interest due for the payment period and no amount
of the amortized principal.
(5) The Director of the Oregon Business Development Department, or the director’s
designee, may approve loans only in the following amounts:
(a) $10,000 for a binding commitment by the applicant to hire and retain at least one
full-time employee for a period of not less than two years after the date on which the loan
proceeds are paid to the applicant.
(b) $20,000 for a binding commitment by the applicant to hire and retain at least two
full-time employees for a period of not less than two years after the date on which the loan
proceeds are paid to the applicant.
(c) $30,000 for a binding commitment by the applicant to hire and retain at least three
full-time employees for a period of not less than two years after the date on which the loan
proceeds are paid to the applicant.
(6)(a) If a business that receives a loan under this section meets the employment and
retention requirements under subsection (5) of this section for the entire minimum two-year
period, the principal amount of the loan shall be forgiven and the remaining interest-only
payments shall continue to the end of the term of the loan agreed to in the loan contract.
(b)(A) If at any time during the minimum two-year period required under subsection (5)
of this section, a loan recipient fails to meet the employment and retention requirements
under subsection (5) of this section, all payments of amortized principal that, but for the
provisions of subsection (4)(c) of this section, would have been payable by the business for
the period from the date of execution of the loan agreement up to and including the date of
the most recent loan payment, plus a penalty in an amount equal to 10 percent of the original
principal amount of the loan, shall become due immediately and each following loan payment
for the remaining term of the loan shall include an amount for amortization of the remaining
principal due on the loan.
(B) Subparagraph (A) of this paragraph does not apply if the business cures the failure
within three weeks after the date on which the failure began. The term of the loan shall be
extended by the number of days from the date of failure through the date immediately pre-
ceding the date of cure.
(7) The department, after consulting with a representative of an association that re-
[2] HB2862
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presents the banking industry in this state, may adopt rules to implement the provisions of
this section.
SECTION 2. (1) The Local Markets Small Business Capital Loan Fund is established in
the State Treasury, separate and distinct from the General Fund. All moneys in the Local
Markets Small Business Capital Loan Fund are continuously appropriated to the Oregon
Business Development Department for the following purposes:
(a) Making loans under the Local Markets Small Business Capital Loan Program estab-
lished under section 1 of this 2025 Act; and
(b) Reimbursing the department for the costs and expenses actually incurred by the de-
partment in administering the loan program and the fund.
(2) The Local Markets Small Business Capital Loan Fund consists of:
(a) Fees collected by the department under section 1 of this 2025 Act;
(b) Loan payments, including interest, principal and penalties, required under section 1
of this 2025 Act;
(c) Moneys appropriated to the fund by the Legislative Assembly;
(d) Income earned on moneys in the fund;
(e) Moneys transferred to the fund from the federal government, other state agencies
or local governments; and
(f) Any gifts or donations made to the State of Oregon for deposit in the fund.
SECTION 3. There is appropriated to the Oregon Business Development Department, for
the biennium beginning July 1, 2025, out of the General Fund, the amount of $ for the
purposes of administering and implementing the Local Markets Small Business Capital Loan
Program established under section 1 of this 2025 Act and the Local Markets Small Business
Capital Loan Fund established under section 2 of this 2025 Act.
[3]