HB702 HD1.DOC

HOUSE OF REPRESENTATIVES	H.B. NO.	702
TWENTY-SIXTH LEGISLATURE, 2011		H.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO BUSINESS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

SMALL BUSINESS HARDSHIP LOAN PROGRAM

§ -1 Definitions. As used in this chapter, unless the context otherwise requires:

"Department" means the department of business, economic development, and tourism.

"Director" means the director of business, economic development, and tourism.

"Loan program" means the small business hardship loan program.

"Small business" means a corporation, partnership, sole proprietorship, or other legal entity that:

(1) Is domiciled in Hawaii;

(2) Is formed to make a profit;

(3) Is wholly owned and operated by Hawaii residents;

(4) Employs Hawaii residents; and

(5) Employs fewer than one hundred full-time employees.

§ -2 Small business hardship loan program. (a) There is established the small business hardship loan program to be administered by the department. The purpose of the loan program is to enable the department to make direct loans to eligible small businesses, as determined by the department, that are experiencing economic hardship.

(b) In administering the small business hardship loan program, the department shall adopt rules under chapter 91 to establish the terms and conditions, maturities, interest rates, collateral, and other requirements for the loans; provided that the interest on loans made under this chapter shall bear simple interest at the rate of one per cent below the prime rate or at a rate of per cent a year, whichever is lower. For purposes of this subsection, the prime rate shall be determined on the first day of each month and shall be the rate charged by the two largest banks in the State identified by the department of commerce and consumer affairs. If there is a difference in rate charged by the institutions, the lower of the two shall be used.

(1) To be eligible, a small business shall obtain a tax clearance certificate from the department of taxation verifying that the small business has filed all required returns and paid all required taxes, penalties, and interest; and

(2) No small business shall be eligible for more than one loan under this chapter.

§ -3 Small business hardship loan revolving fund. (a) There is established in the state treasury the small business hardship loan revolving fund, into which shall be deposited:

(1) Appropriations from the legislature;

(2) Interest derived from moneys in the fund;

(3) Moneys received as repayment of loans; and

(4) Federal funds, if available.

(b) Moneys in the small business loan revolving fund shall be used for the purposes provided in this chapter.

§ -4 Default; security. The department may take all necessary action to collect any delinquent amount in the event of a default in the payment of any installation of principal or interest on any loan made from the small business hardship loan revolving fund and to otherwise secure the loans in a manner that affords reasonable protection of the State's resources.

§ -5 Rulemaking authority. The director may adopt rules, pursuant to chapter 91, necessary to carry out the purposes of this chapter."

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2011-2012 and the same sum or so much thereof as may be necessary for fiscal year 2012-2013 to be deposited into the small business hardship loan revolving fund.

The sums appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this Act.

SECTION 3. This Act shall take effect on July 1, 2112.