April 15, 2008, Introduced by Senators RICHARDVILLE, KAHN, PAPPAGEORGE, VAN WOERKOM and KUIPERS and referred to the Committee on Economic Development and Regulatory Reform.
A bill to amend 1984 PA 270, entitled
"Michigan strategic fund act,"
by amending section 88d (MCL 125.2088d), as added by 2005 PA 225.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 88d. (1) The fund shall create and operate a loan
enhancement program.
(2) As a separate and distinct part of the loan enhancement
program, the fund may create a loan guarantee program that does all
of the following:
(a) Provide a loan guarantee mechanism to financial
institutions located in this state that provide commercial loans to
qualified businesses, public authorities, and local units of
government.
(b) Ensures that participating financial institutions do not
refinance prior debt.
(c) Provide that a qualified business is only eligible for a
loan guarantee under this section if it has a documented growth
opportunity. As used in this subdivision, "documented growth
opportunity" means a plant expansion, capital equipment investment,
acquisition of intellectual property or technology, or the hiring
of new employees to meet or satisfy a new business opportunity.
(d) Provide that a qualified business that engages primarily
in retail sales is not eligible for a loan guarantee under this
chapter unless the fund board makes a specific finding that the
loan guarantee supports a new concept that has significant growth
potential.
(e) Provide repayment provisions for a loan or a guarantee
given to a qualified business that leaves Michigan within 3 years
of the provision of the loan or guarantee or otherwise breaches the
terms of an agreement with the fund.
(3) As a separate and distinct part of the loan enhancement
program, the fund shall reestablish the small business capital
access program that was previously operated by the fund for small
businesses in a manner similar to how that program was operated
before January 1, 2002. The small business capital access program
shall operate on a market-driven basis and provide for premium
payments by borrowers into a special reserve fund. The small
business capital access program established by the board shall
prohibit an officer, director, principal shareholder of a
participating financial institution, or his or her immediate family
members from receiving a small business capital access program loan
from the financial institution. A loan under the small business
capital access program shall provide that the proceeds of a loan
may only be used for a business purpose within this state and may
not be used for any of the following:
(a) The construction or purchase of residential housing.
(b) To finance passive real estate ownership.
(c) To refinance prior debt from the participating financial
institution that is not part of the small business capital access
program.
(4) As a separate and distinct part of the loan enhancement
program, the fund shall establish the choose Michigan
entrepreneurial loan fund to invest in loans from the 21st century
jobs trust fund and the investment fund to companies eligible for a
tax credit under section 441 of the Michigan business tax act, 2007
PA 36, MCL 208.1441. A loan issued under this subsection is subject
to all of the following requirements:
(a) A loan shall be provided at an interest rate of not less
than 1%.
(b) The minimum amount of a loan under this subsection is
$50,000.00.
(c) The maximum term of a loan under this subsection is 10
years, including up to 3 years of deferred principal payments to
align principal payments with receipt of tax credit, as determined
by the fund board.
(d) The value of the loan may not exceed the value of the tax
credit that the company is eligible to receive over 3 years, as
discounted by the fund board. A loan authorized by the fund board
may provide for a loan amount equal to a portion or all of the
discounted value of the tax credit, as discounted by the fund
board.
(e) The company is responsible for repayment of the loan
regardless of the actual tax credit amount received.
(f) The company also obtains an additional loan from an
accredited financial institution or other approved lending market.
(g) The loan shall be issued consistent with guidelines for
the initiation of a loan and the terms of the loan under this
subsection approved by the fund board.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 1204 of the 94th Legislature is enacted into
law.