Bill would leverage private and state funding to stimulate small businesses loans and support the state’s economic recovery and resiliency
DENVER, CO — The House Committee Finance unanimously today passed HB20-1413, sponsored by Representatives Shannon Bird, D-Westminster, and Lisa Cutter, D-Jefferson County. The bill establishes a recovery loan fund for the first loss capital on loans to small businesses over the next two fiscal years.
“Our small businesses are the backbone of our economy, and too many are struggling to get through this crisis,” said Rep. Bird, D-Westminster. “While federal loans have relieved some of the economic devastation caused by the pandemic, they aren’t enough to support the long term success and recovery of our small businesses economy. I’m grateful for all the community financial institutions who have come to the table and worked with us to establish this recovery loan fund, and I’m excited to see it move forward.”
“Our top priority is helping our state get through this crisis, and that’s why I’m focused on helping our small businesses and hardworking families recover and rebuild,” said Rep. Cutter, D-Jefferson County. “We’re passing legislation to help Coloradans and small businesses safety get back to work, and I’m thankful for all our private sector partners that are working with us to support our state’s recovery.”
HB20-1413 establishes a small business recovery loan fund of up to $250 million. Participating financial institutions will make loans at below market rates to small businesses, with a preference for women, minority and veteran-owned businesses. To help incentivize financial institutions, such as banks, in providing loans, the state fund will cover any losses on the first $50 million in loans.
Under HB20-1413, the state will contribute up to $50 million to the Small Business Recovery Loan Fund, and private lenders will contribute up to $200 million over the next two years through five rounds of contributions to the fund. The money will be matched incrementally with the state contributing one dollar for every four dollars contributed by private investors, a cautious approach where the state will raise $10 million and deposit that funding only after the private sector has raised its first round of $40 million in capital.
The bill creates an oversight board of members with specific executive experience in financial services appointed by the governor, speaker, Senate president, treasurer, and the director of the Office of Economic Development and International Trade. The board will ensure the contract and loan terms are consistent with the purpose of the loan fund and collect data on its efficacy. The bill includes robust conflict of interest provisions to prevent undue influence on policies developed to administer the fund or on the loan distributions.