Illinois General Assembly - Full Text of SB0708
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Full Text of SB0708  99th General Assembly




State of Illinois
2015 and 2016


Introduced 2/3/2015, by Sen. Dan Kotowski


New Act
30 ILCS 105/5.866 new

    Creates the Microloan Program Act. Provides that the Director of Commerce and Economic Opportunity may (i) make grants to eligible intermediaries for the purpose of making short-term, fixed interest rate microloans to small business concerns, (ii) make grants to these intermediaries for the purpose of providing intensive marketing, management, and technical assistance to small business concerns that are borrowers under the Act, (iii) issue grants to administer a training program to train intermediaries in the knowledge, skills, and understanding of microlending necessary to operate successful microloan programs. Specifies criteria that eligible intermediaries must satisfy. Sets forth requirements for grants made to intermediaries; marketing, management, and technical assistance grants to intermediaries; and the equitable distribution of intermediaries. Provides that the Department may issue grants to administer a training program for intermediaries that presently have minimal or no expertise or experience in microlending. Requires the Department to file certain reports with the General Assembly. Authorizes the Department, subject to appropriation, to use the moneys in the Fund to carry out the purposes of the Microloan Program Act. Amends the State Finance Act. Creates the Business Loan and Investment Fund as a special fund in the State treasury.

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SB0708LRB099 07824 MGM 27959 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Microloan Program Act.
6    Section 5. Definitions. For purposes of this Act:
7    "Department" means the Department of Commerce and Economic
9    "Director" means the Director of Commerce and Economic
11    "Intermediary" means: (i) a private, non-profit entity;
12(ii) a private, non-profit community development corporation;
13(iii) a consortium of private, non-profit organizations or
14non-profit community development corporations; or (iv) a
15quasi-governmental economic development entity (such as a
16planning and development district) if no application is
17received from an eligible non-profit organization or the
18Director determines that the needs of a region or geographic
19area are not adequately served by an existing, eligible
20non-profit organization that has submitted an application.
21"Intermediary" also includes an intermediary that has
22completed the training program created and administered by the
23Director under Section 50.



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1    "Microloan" means a short-term, fixed rate loan of not more
2than $35,000, made by an intermediary to a small business
4    "Rural area" means any political subdivision or
5unincorporated area: (i) in a non-metropolitan county (as
6defined by the Secretary of Agriculture) or its equivalent; or
7(ii) in a metropolitan county or its equivalent that has a
8resident population of less than 20,000 if the Department of
9Commerce and Economic Opportunity has determined such a
10political subdivision or area to be rural.
11    "Small business concern" means a legal entity, including a
12corporation, partnership, or sole proprietorship, that: (i) is
13formed for the purpose of making a profit; (ii) is
14independently owned and operated; and (iii) has 5 employees or
16    Section 10. Purposes. The purposes of the Microloan Program
18        (1) to assist female, low-income, veteran, and
19    minority entrepreneurs and business owners and other
20    individuals possessing the capability to operate
21    successful business concerns;
22        (2) to assist small business concerns in those areas
23    suffering from a lack of credit due to economic downturns;
24        (3) to establish a microloan program to be administered
25    by the Department of Commerce and Economic Opportunity in



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1    order to:
2            (A) make grants to eligible intermediaries to
3        enable those intermediaries to provide small-scale
4        loans to small business concerns for working capital or
5        the acquisition of materials, supplies, or equipment;
6        and
7            (B) make grants to eligible intermediaries that,
8        together with non-State matching funds, will enable
9        those intermediaries to provide intensive marketing,
10        management, and technical assistance to microloan
11        borrowers.
12    Section 15. Microloan program established. Subject to
13appropriation, a microloan program is established in the
14Department of Commerce and Economic Opportunity under which the
15Director of Commerce and Economic Opportunity may:
16        (1) make grants to eligible intermediaries, as
17    provided under Section 25, for the purpose of making
18    short-term, fixed interest rate microloans to small
19    business concerns;
20        (2) in conjunction with these grants and subject to the
21    requirements of Section 30, make grants to these
22    intermediaries for the purpose of providing intensive
23    marketing, management, and technical assistance to small
24    business concerns that are borrowers under this Act; and
25        (3) issue grants to administer a training program to



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1    train intermediaries in the knowledge, skills, and
2    understanding of microlending necessary to operate
3    successful microloan programs.
4    Section 20. Eligibility for participation. An intermediary
5shall be eligible to receive loans and grants under paragraphs
6(1) and (2) of Section 15 if it meets the definition of
7intermediary in Section 5.
8    Section 25. Grants to intermediaries.
9    (a) As part of its application for a grant, each
10intermediary shall submit a description to the Director of the
11type of businesses to be assisted; the size and range of loans
12to be made; the geographic area to be served and its economic,
13poverty, and unemployment characteristics; the status of small
14business concerns in the area to be served and an analysis of
15their credit and technical assistance needs; any marketing,
16management, and technical assistance to be provided in
17connection with a loan made under this Act; the local economic
18credit markets, including the costs associated with obtaining
19credit locally; the qualifications of the applicant to carry
20out the purpose of this Act; and any plan to involve other
21technical assistance providers or private sector lenders in
22assisting selected business concerns.
23    (b) As a condition of any grant made to an intermediary
24under paragraph (2) of Section 15, the Department shall require



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1the intermediary to contribute not less than 15% of the grant
2amount in cash as a match from non-State sources.
3    (c) No grant shall be made to an intermediary under this
4Act if the total amount outstanding and committed to that
5intermediary (excluding outstanding grants) from the Business
6Microloan and Investment Fund would, as a result of that grant,
7exceed $750,000 in the first year of the intermediary's
8participation in the program or $3,500,000 in later years of
9the intermediary's participation in the program.
10    (d) An intermediary may make a loan under this Act of not
11more than $35,000 to a small business concern only if the small
12business concern demonstrates that it is unable to obtain
13credit elsewhere at comparable interest rates and that it has
14good prospects for success. In no case shall an intermediary
15commit to any one borrower more than $35,000.
16    Section 30. Marketing, management, and technical
17assistance grants to intermediaries. The Department may make
18grants to intermediaries that receive a grant under paragraph
19(1) of Section 15 to provide marketing, management, and
20technical assistance to small business concerns that are
21prospective borrowers or borrowers under this Act.
22    Section 35. Program funding for microloans. Under the
23program authorized by this Act, the Department may fund, on a
24competitive basis, not more than 300 intermediaries annually.



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1    Section 40. Equitable distribution of intermediaries. In
2approving intermediaries and providing funding to
3intermediaries under this Act, the Department shall select and
4provide funding to intermediaries as will ensure appropriate
5availability of loans for small businesses in all industries
6located throughout the State, particularly those located in
7urban and in rural areas.
8    Section 45. Grants for management, marketing, technical
9assistance, and related services.
10    (a) The Department may procure technical assistance for
11intermediaries participating in the Microloan Program to
12ensure that those intermediaries have the knowledge, skills,
13and understanding of microlending practices necessary to
14operate successful microloan programs.
15    (b) The General Assembly may appropriate up to 7% of the
16balance in the Business Microloan and Investment Fund to the
17Department for the specific purpose of providing one or more
18technical assistance grants to experienced microlending
19organizations that have demonstrated experience in providing
20training support for microenterprise development and financing
21to achieve the purposes set forth in Section 10.
22    Section 50. Training program.    The Department may issue
23grants to administer a training program for intermediaries that



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1presently have minimal or no expertise or experience in
2microlending. The training program shall train the
3intermediaries in the knowledge, skills, and understanding of
4microlending practices necessary to operate successful
5microloan programs.
6    Section 55. Report to General Assembly. On November 1,
72017, the Department shall submit to the General Assembly a
8report, including the Department's evaluation of the
9effectiveness of the microloan program and the following:
10        (1) the numbers and locations of the intermediaries
11    funded to conduct microloan programs;
12        (2) the amounts of each grant to intermediaries;
13        (3) a description of the matching contributions of each
14    intermediary;
15        (4) the numbers and amounts of microloans made by the
16    intermediaries to small business concern borrowers;
17        (5) a summary of the repayment history of each
18    intermediary;
19        (6) a description of the loan portfolio of each
20    intermediary including the extent to which it provides
21    microloans to small business concerns in rural areas; and
22        (7) any recommendations for legislative changes that
23    would improve program operations.
24    Section 60. Business Microloan and Investment Fund. The



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1Business Microloan and Investment Fund is created as a special
2fund in the State treasury to accept appropriations, grants,
3gifts, and other donations made to fund the Microloan Program
4created by this Act. Moneys in the Fund may, subject to
5appropriation, be used by the Department to carry out the
6requirements of this Act.
7    Section 95. The State Finance Act is amended by adding
8Section 5.866 as follows:
9    (30 ILCS 105/5.866 new)
10    Sec. 5.866. The Business Microloan and Investment Fund.