SENATE BILL NO. 279
INTRODUCED BY W. MCNUTT, SLITER
AN ACT AUTHORIZING A 4 PERCENT LOAN RATE FOR THE FIRST 5 YEARS FOR A LOAN TO A BUSINESS CREATING OR RETAINING 10 TO 14 JOBS UNDER THE VALUE-ADDED LOAN PROGRAM; ESTABLISHING THE BOARD OF INVESTMENTS' POSTED RATE AS THE RATE OF INTEREST FOR THE THIRD 5-YEAR PERIOD ON A LOAN; PROVIDING THAT THE RATE OF INTEREST ON A LOAN IS THE BOARD'S POSTED RATE UNTIL JOB CERTIFICATION REQUIREMENTS HAVE BEEN MET; PROVIDING A MATHEMATICAL NUMERICAL THRESHOLD FOR DETERMINING LOAN PROGRAM ELIGIBILITY; AMENDING SECTION 17-6-317, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 17-6-317, MCA, is amended to read:
"17-6-317. Participation by private financial institutions -- rulemaking. (1) (a) The board may jointly participate with private financial institutions in making loans to a business enterprise if the loan will:
(i) result in the creation of a business estimated to employ at least 15 10 people in Montana on a permanent, full-time
basis; or
(ii) result in the expansion of a business estimated to employ at least an additional 15 10 people in Montana on a
permanent, full-time basis; or
(iii) prevent the elimination of the jobs of at least 10 Montana residents who are permanent, full-time employees of the business.
(b) Loans under this section may be made only to business enterprises that are producing or will produce value-added products or commodities.
(c) a A loan made pursuant to this section does not qualify for a job credit interest rate reduction under 17-6-318.
(2) A loan made pursuant to this section may not exceed 1% of the coal severance tax permanent fund and must comply with each of the following requirements:
(a) (i) The business enterprise seeking a loan must have a cash equity position equal to at least 25% of the total loan amount.
(ii) A participating private financial institution may not require: the business to have an equity position greater than 50%
of the total loan amount.
(A) the business enterprise to have an equity position greater than 25% of the total loan amount; or
(B) additional security or guarantees to cover its exposure, but this does not preclude federal guarantees.
(iii) If additional security or guarantees, exclusive of federal guarantees, are required to cover a participating private financial institution, then the additional security or guarantees must be proportional to the amount loaned by all participants, including the board of investments.
(b) The board shall provide 75% of the total loan amount.
(c) The term of the loan may not exceed 15 years.
(d) The board shall charge interest at the following annual rate:
(i) 2% a year for the first 5 years if 15 or more jobs are created or retained;
(ii) 4% for the first 5 years if 10 to 14 jobs are created or retained;
(ii)(iii) 6% a year for the second 5 years; and
(iii)(iv) the board's posted interest rate for the third 5 years, an amount equal to the national prime interest rate, adjusted
annually on January 1 of each year, but not to exceed 10% a year.
(e) (i) The interest rates in subsections (2)(d)(i) and (2)(d)(ii) become effective when the board receives certification that the required number of jobs has been created or as provided in subsection (2)(e)(ii). If the board disburses loan proceeds prior to creation of the required jobs, the loan must bear interest at the board's posted rate.
(ii) In establishing interest rates under subsections (2)(d)(i) and (2)(d)(ii) for preventing the elimination of jobs, the board shall require the submission of financial data that allows the board to determine if the loan and interest rate will in fact prevent the elimination of jobs.
(f) If a business, entitled to the interest rate in subsection (2)(d)(i) or (2)(d)(ii), reduces the number of required jobs, the board may apply a graduated scale to increase the interest rate, not to exceed the board's posted rate.
(g) For purposes of calculating job creation or retention requirements, the board shall use the average weekly salary, as defined in 39-71-116, multiplied by the number of jobs required. This calculated number is the minimum aggregate salary threshold that is required to be eligible for a reduced interest rate. If individual jobs created pay less than the average weekly salary, the borrower shall create more jobs to meet the minimum aggregate salary threshold. If fewer jobs are created or retained than required in subsection (2)(d)(i) or (2)(d)(ii) but aggregate salaries meet the minimum aggregate salary threshold, the borrower is eligible for the reduced interest rate. A job paying less than the minimum wage, provided for in 39-3-409, may not be included in the required number of jobs.
(e)(h) (i) A participating private financial institution may charge interest in an amount equal to the national prime
interest rate, adjusted on January 1 of each year, but the interest rate may not be less than 6% or greater than 12%.
(ii) At the borrower's discretion, the borrower may request the lead lender to change this prime rate to an adjustable or fixed rate on terms acceptable to the borrower and lender.
(ii)(iii) A participating private financial institution, or lead private financial institution if more than one is participating,
may charge a 0.5% annual service fee.
(f)(i) The business enterprise may not be charged a loan prepayment penalty.
(g)(j) The loan agreement must contain provisions providing for pro rata lien priority and pro rata liquidation provisions
based upon the loan percentage of the board and each participating private lender.
(3) If a portion of a loan made pursuant to this section is for construction, disbursement of that portion of the loan must be made based upon the percentage of completion to ensure that the construction portion of the loan is advanced prior to completion of the project.
(4) A private financial institution shall participate in a loan made pursuant to this section to the extent of 85% of its lending limit or 25% of the loan, whichever is less. However, the board's participation in the loan must be 75% of the loan amount.
(5) A business enterprise receiving a loan under the provisions of this section may not pay bonuses or dividends to investors until the loan has been paid off, except that incentives may be paid to employees for achieving performance standards or goals.
(6) The board may adopt rules that it considers necessary to implement this section."
Section 2. Effective date. [This act] is effective on passage and approval.
- END -
Latest Version of SB 279 (SB0279.ENR)
Processed for the Web on April 3, 2001 (4:07PM)
New language in a bill appears underlined, deleted material appears stricken.
Sponsor names are handwritten on introduced bills, hence do not appear on the bill until it is reprinted. See the status of this bill for the bill's primary sponsor.
Status of this Bill | 2001 Legislature | Leg. Branch Home
All versions of this bill (PDF Format)
Authorized print version w/line numbers (PDF format)
(406)444-3064