12 U.S.C. § 5704
A participating State that establishes a new, or has an existing, State capital access program that meets the eligibility criteria in subsection (c) may apply to Secretary to have the State capital access program approved as eligible for Federal contributions to the reserve fund.
The Secretary shall approve such State capital access program as eligible for Federal contributions to the reserve fund if-
For a State capital access program to be approved under this section, that program shall be required to be a program of the State that-
A State capital access program approved under this section will be eligible for receiving Federal contributions to the reserve fund in an amount equal to the sum of the amount of the insurance premium charges paid by the borrowers and by the financial institution to the reserve fund for loans that meet the requirements in subsection (c)(4). A participating State may use the Federal contribution to make its contribution to the reserve fund of an approved State capital access program.
The Secretary shall, by regulation or other guidance, prescribe Program requirements that meet the following minimum requirements:
The participating State shall determine for each financial institution that participates in the State capital access program, after consultation with the appropriate Federal banking agency or, in the case of a financial institution that is a nondepository community development financial institution, the Community Development Financial Institution Fund, that the financial institution has sufficient commercial lending experience and financial and managerial capacity to participate in the approved State capital access program. The determination by the State shall not be reviewable by the Secretary.
Subject to applicable State law, the participating State may invest, or cause to be invested, funds held in a reserve fund by establishing a deposit account at the financial institution lender in the name of the participating State. In the event that funds in the reserve fund are not deposited in such an account, such funds shall be invested in a form that the participating State determines is safe and liquid.
A loan to be filed for enrollment in an approved State capital access program may be made with such interest rate, fees, and other terms and conditions, and the loan may be enrolled in the approved State capital access program and claims may be filed and paid, as agreed upon by the financial institution lender and the borrower, consistent with applicable law.
A loan to be filed for enrollment in the State capital access program shall require the financial institution lender to have a meaningful amount of its own capital resources at risk in the loan.
The insurance premium charges payable to the reserve fund by the borrower and the financial institution lender shall be prescribed by the financial institution lender, within minimum and maximum limits that require that the sum of the insurance premium charges paid in connection with a loan by the borrower and the financial institution lender may not be less than 2 percent nor more than 7 percent of the amount of the loan enrolled in the approved State capital access program.
In enrolling a loan in an approved State capital access program, the participating State may make a contribution to the reserve fund to supplement Federal contributions made under this Program.
In connection with the filing of a loan for enrollment in an approved State capital access program, the financial institution lender-
In this paragraph, the terms "executive officer", "director", "principal shareholder", "immediate family", and "related interest" refer to the same relationship to a financial institution lender as the relationship described in part 215 of title 12 of the Code of Federal Regulations, or any successor to such part.
At the time that a State applies to the Secretary to have the State capital access program approved as eligible for Federal contributions, the State shall deliver to the Secretary a report stating how the State plans to use the Federal contributions to the reserve fund to provide access to capital for small businesses in low- and moderate-income, minority, and other underserved communities, including women- and minority-owned small businesses.
12 U.S.C. § 5704
EDITORIAL NOTES
AMENDMENTS2021-Subsec. (b)(1), (2). Pub. L. 117-2 substituted "March 11, 2021" for "September 27, 2010".
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2021 AMENDMENT Amendment by Pub. L. 117-2 applicable with respect to funds appropriated under section 3301 of Pub. L. 117-2 and funds appropriated on and after Mar. 11, 2021, see section 3301(g) of Pub. L. 117-2 set out as a note under section 5701 of this title.
- Director
- The term "Director" means the Director of the Bureau.
- Federal contribution
- The term "Federal contribution" means the portion of the contribution made by a participating State to, or for the account of, an approved State program that is made with Federal funds allocated to the State by the Secretary under section 5702 of this title.
- Program
- The term "Program" means the State Small Business Credit Initiative established under this chapter.
- Secretary
- The term "Secretary" means the Secretary of the Treasury.
- State capital access program
- The term "State capital access program" means a program of a State that-(A) uses public resources to promote private access to credit; and(B) meets the eligibility criteria in section 5704(c) of this title.
- State
- The term "State" means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands or any federally recognized Indian tribe, as defined by the Secretary of the Interior under section 5131(a) of title 25.
- affiliate
- The term "affiliate" means any person that controls, is controlled by, or is under common control with another person.
- enrolled loan
- The term "enrolled loan" means a loan made by a financial institution lender that is enrolled by a participating State in an approved State capital access program in accordance with this chapter.
- financial institution
- The term "financial institution" means any insured depository institution, insured credit union, or community development financial institution, as those terms are each defined in section 4702 of this title.
- participating State
- The term "participating State" means any State that has been approved for participation in the Program under section 5703 of this title.
- reserve fund
- The term "reserve fund" means a fund, established by a participating State, dedicated to a particular financial institution lender, for the purposes of-(A) depositing all required premium charges paid by the financial institution lender and by each borrower receiving a loan under an approved State program from that financial institution lender;(B) depositing contributions made by the participating State, including State contributions made with Federal contributions; and(C) covering losses on enrolled loans by disbursing accumulated funds.