STAND. COM. REP. NO. 2535

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2419
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 2419, S.D. 1, entitled:

     "A BILL FOR AN ACT RELATING TO CAPITAL ACCESS PROGRAM,"

begs leave to report as follows:

     The purpose of this bill is to establish a capital access
program in the Department of Business, Economic Development, and
Tourism to encourage lending to small businesses and nonprofits.

     Specifically, this bill creates a new law to implement a
capital loan program in Hawaii and grants powers to the
Department of Business, Economic Development, and Tourism to
administer the program.  This measure also establishes a reserve
fund which allows a lending bank to make loans with a slightly
higher risk than under the bank's conventional underwriting
standards.  The bank and the borrower pay an up-front insurance
premium which goes into the reserve fund held at the originating
bank.  The State matches the combined bank and borrower
contribution with a deposit into the same reserve fund.

     The bill limits to $100,000 the State's contribution to a
participating financial institution's reserve account for any
single loan recipient during a three-year period.  The maximum
amount the Department of Business, Economic Development, and
Tourism may deposit into a reserve account for each capital
access loan is the lesser of $35,000 or eight per cent of the
loan (if in an enterprise zone) or if the borrower is a small or

 
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                                   STAND. COM. REP. NO. 2535
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medium-sized business or nonprofit operating a child care
facility or adult residential care home.  The State is not liable
to any participating financial institution for payment of
principal, interest, or late charges on a capital access loan.  A
participating financial institution is required to report
annually to the Department of Business, Economic Development, and
Tourism, which is required to report annually to the Legislature.

     Your Committee finds that this bill will encourage lending
to small businesses and nonprofits.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B. No.
2419, S.D. 1, and recommends that it pass Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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