Florida Senate - 2016                                    SB 1592
       
       
        
       By Senator Gibson
       
       9-01652A-16                                           20161592__
    1                        A bill to be entitled                      
    2         An act relating to the Florida Microfinance Act;
    3         amending s. 288.9931, F.S.; revising legislative
    4         intent and conforming provisions to changes made by
    5         the act; amending s. 288.9932, F.S.; providing and
    6         revising definitions; amending s. 288.9934, F.S.;
    7         revising the Microfinance Loan Program; providing that
    8         Enterprise Florida, Inc., rather than the Department
    9         of Economic Opportunity, is responsible for entering
   10         into funding agreements with loan administrators;
   11         revising loan administrator qualifications and
   12         contracting requirements; authorizing microloan
   13         interest charges and fees; revising the loan
   14         administrator’s administrative servicing fee; revising
   15         microloan eligibility; removing a study requirement;
   16         conforming provisions; amending s. 288.9935, F.S.;
   17         revising the Microfinance Guarantee Program; revising
   18         requirements for the administrative contract between
   19         the department and Enterprise Florida, Inc.; revising
   20         eligibility and terms for loan guarantees; authorizing
   21         surety bond guarantees; revising annual reporting
   22         requirements; conforming provisions; amending s.
   23         288.9936, F.S.; revising annual reporting requirements
   24         for the Microfinance Loan Program; amending s.
   25         288.9937, F.S.; revising the timeline for program
   26         evaluation and reporting by the Office of Economic and
   27         Demographic Research; providing an effective date.
   28          
   29  Be It Enacted by the Legislature of the State of Florida:
   30  
   31         Section 1. Section 288.9931, Florida Statutes, is amended
   32  to read:
   33         288.9931 Legislative findings and intent.—The Legislature
   34  finds that the ability of a microbusiness entrepreneurs and
   35  small businesses to access capital is vital to the overall
   36  health and growth of this state’s economy; however, access to
   37  capital is limited by the lack of available credit for a
   38  microbusiness entrepreneurs and small businesses in this state.
   39  The Legislature further finds that a microbusiness in this state
   40  entrepreneurs and small businesses could be assisted through the
   41  creation of a program that will provide an avenue for the
   42  microbusiness entrepreneurs and small businesses in this state
   43  to access credit. In addition Additionally, the Legislature
   44  finds that business management training, business development
   45  training, and technical assistance are necessary to ensure that
   46  a microbusiness receiving credit support develops entrepreneurs
   47  and small businesses that receive credit develop the skills
   48  necessary to grow and achieve long-term financial stability. The
   49  Legislature intends to expand job opportunities for this state’s
   50  workforce by expanding access to credit to a microbusiness
   51  entrepreneurs and small businesses. Furthermore, the Legislature
   52  intends to avoid duplicating existing programs and to
   53  coordinate, assist, augment, and improve access to those
   54  programs for a microbusiness entrepreneurs and small businesses
   55  in this state.
   56         Section 2. Section 288.9932, Florida Statutes, is amended
   57  to read:
   58         288.9932 Definitions.—As used in this part, the term:
   59         (1) “Applicant” or “borrower” means a microbusiness an
   60  entrepreneur or small business that applies to a loan
   61  administrator for a microloan.
   62         (2)“Department” means the Department of Economic
   63  Opportunity.
   64         (3)(2) “Domiciled in this state” means authorized to do
   65  business in this state and located in this state.
   66         (4)“Entity” means a community development financing
   67  institution, a surety provider as defined by the United States
   68  Department of the Treasury, or a nonbank financial institution
   69  specializing in microlending.
   70         (5)“Lender” means a financial institution as defined in s.
   71  655.005 or an entity as defined in subsection (4).
   72         (6)“Loan administrator” means an entity that enters into a
   73  contract with the department or Enterprise Florida, Inc.,
   74  pursuant to s. 288.9934, to administer the Microfinance Loan
   75  Program.
   76         (7)“Loan Loss Reserve Fund” means a reserve pursuant to
   77  the federal Small Business Administration Microloan Program or a
   78  similar program.
   79         (8)“Matching funds” means a source of capital obtained by
   80  a lender to fund microloans pursuant to this part.
   81         (9)“Microbusiness” means a small business that employs 5
   82  or fewer persons, including the owner, and generates annual
   83  gross revenues that average $100,000 or less per year for the
   84  preceding 2 years.
   85         (10)“Microloans” or “microlending” means lending to a
   86  microbusiness that is provided with training and technical
   87  assistance as necessary to strengthen the ability of the
   88  borrower to repay the microloan and effectively manage the
   89  microbusiness. More than one lender may provide capital to
   90  underwrite a single microloan.
   91         (3)“Entrepreneur” means an individual residing in this
   92  state who desires to assume the risk of organizing, managing,
   93  and operating a small business in this state.
   94         (11)(4) “Network” means the Florida Small Business
   95  Development Center Network.
   96         (12)(5) “Small business” has the same meaning as provided
   97  in s. 288.703 means a business, regardless of corporate
   98  structure, domiciled in this state which employs 25 or fewer
   99  people and generated average annual gross revenues of $1.5
  100  million or less per year for the preceding 2 years. For the
  101  purposes of this part, the identity of a small business is not
  102  affected by name changes or changes in personnel.
  103         (13)“Startup” means an enterprise that secures financing,
  104  forms its business structure, and has been in operation for less
  105  than 2 years.
  106         (14)“Surety” means a written agreement between two parties
  107  through which a bonding company guarantees the performance of
  108  obligations covered by the agreement.
  109         Section 3. Section 288.9934, Florida Statutes, is amended
  110  to read:
  111         288.9934 Microfinance Loan Program.—
  112         (1) PURPOSE.—The Microfinance Loan Program is established
  113  in the department to make short-term, fixed-rate microloans in
  114  conjunction with business management training, business
  115  development training, and technical assistance to
  116  microbusinesses entrepreneurs and newly established or growing
  117  small businesses for startup costs, working capital, and the
  118  acquisition of materials, supplies, furniture, fixtures, and
  119  equipment. Participation in the loan program is intended to
  120  enable a microbusiness entrepreneurs and small businesses to
  121  access private financing upon completing the loan program.
  122         (2)DEFINITION.—As used in this section, the term “loan
  123  administrator” means an entity that enters into a contract with
  124  the department pursuant to this section to administer the loan
  125  program.
  126         (2)(3)LOAN ADMINISTRATOR QUALIFICATIONS REQUEST FOR
  127  PROPOSAL.—
  128         (a) By April 1, 2017, Enterprise Florida, Inc., shall enter
  129  into a funding agreement with one or more eligible December 1,
  130  2014, the department shall contract with at least one but not
  131  more than three entities to administer the loan program and for
  132  a term of 3 years. The department shall award the contract in
  133  accordance with the request for proposal requirements in s.
  134  287.057 to an entity that:
  135         1. Is a legal entity corporation registered and domiciled
  136  in this state;
  137         2.Does not offer checking accounts or savings accounts;
  138         2.3. Demonstrates that its board of directors and managers
  139  are experienced in microlending and small business finance and
  140  development;
  141         3.4. Demonstrates that it has the technical skills and
  142  sufficient resources and expertise to:
  143         a. Analyze and evaluate applications by microbusinesses
  144  entrepreneurs and small businesses applying for microloans;
  145         b. Underwrite and service microloans provided pursuant to
  146  this part; and
  147         c. Assess, provide, and coordinate the provision of such
  148  business management training, business development training, and
  149  technical assistance as needed required by this part;
  150         4.5. Demonstrates that it has established viable, existing
  151  partnerships with public and private nonstate funding sources,
  152  economic development agencies, and workforce development and job
  153  referral networks; and
  154         5.6. Demonstrates that it has a plan that includes proposed
  155  microlending activities under the loan program, including, but
  156  not limited to, the types of microbusinesses entrepreneurs and
  157  businesses to be assisted and the size and range of microloans
  158  that loans the loan administrator intends to make.
  159         (b) To ensure that Prospective loan administrators must
  160  submit the following information to Enterprise Florida, Inc.
  161  meet the requirements of subparagraphs (a)2.-6., the request for
  162  proposal must require submission of the following information:
  163         1. A description of the types of microbusinesses in which
  164  entrepreneurs and small businesses the loan administrator has
  165  assisted in the past, and the average size and terms of loans
  166  made to those microbusinesses in the past to such entities;
  167         2. A description of the experience of members of the board
  168  of directors and managers in the areas of microlending and small
  169  business finance and development;
  170         3. A description of the loan administrator’s underwriting
  171  and credit policies and procedures, credit decisionmaking
  172  process, monitoring policies and procedures, and collection
  173  practices, and historical default rate, and samples of any
  174  currently used loan documentation;
  175         4. A description of the nonstate funding sources that will
  176  be used by the loan administrator in conjunction with the state
  177  funds to make microloans pursuant to this section;
  178         5. The loan administrator’s three most recent financial
  179  audits or, if no prior audits have been completed, the loan
  180  administrator’s three most recent unaudited financial
  181  statements; and
  182         6. A conflict of interest statement from the loan
  183  administrator’s board of directors certifying that a board
  184  member, employee, or agent, or an immediate family member
  185  thereof, or any other person connected to or affiliated with the
  186  loan administrator, is not receiving or will not receive any
  187  type of compensation or remuneration from a microbusiness that
  188  receives an entrepreneur or small business that has received or
  189  will receive funds from the loan program. The department may
  190  waive this requirement for good cause shown. As used in this
  191  subparagraph, the term “immediate family” means a parent, child,
  192  or spouse, or any other relative by blood, marriage, or
  193  adoption, of a board member, employee, or agent of the loan
  194  administrator.
  195         (3)(4) CONTRACT AND AWARD OF FUNDS.—
  196         (a) The selected loan administrator must enter into a
  197  contract with the department for a term of 3 years to receive
  198  state funds for the loan program. Funds appropriated to the
  199  program must be reinvested and maintained as a long-term and
  200  stable source of funding for the program. The amount of state
  201  funds used in any microloan made pursuant to this part may not
  202  exceed 50 percent of the total matching funds amount on a single
  203  microloan amount. Enterprise Florida, Inc., The department shall
  204  establish financial performance measures and objectives for the
  205  loan program and for the loan administrator in order to maximize
  206  the state funds awarded. The selected loan administrator must:
  207         1.Enter into a contract with Enterprise Florida, Inc., for
  208  an initial term of 5 years to receive state funds for the loan
  209  program.
  210         2.Agree to a revolving loan fund structure.
  211         (b) State funds may be used only to provide direct
  212  microloans to microbusinesses entrepreneurs and small businesses
  213  according to the limitations, terms, and conditions provided in
  214  this part. Except as provided in subsection (4) (5), state funds
  215  may not be used to pay administrative costs, underwriting costs,
  216  servicing costs, or any other costs associated with providing
  217  microloans, business management training, business development
  218  training, or technical assistance.
  219         (c)The loan administrator shall reserve 10 percent of the
  220  total award amount from the department to provide microloans
  221  pursuant to this part to entrepreneurs and small businesses that
  222  employ no more than five people and generate annual gross
  223  revenues averaging no more than $250,000 per year for the last 2
  224  years.
  225         (d)1. Enterprise Florida, Inc., If the loan program is
  226  appropriated funding in a fiscal year, the department shall
  227  distribute such funds to the loan administrator within 30 days
  228  after of the execution of the contract by Enterprise Florida,
  229  Inc., the department and the loan administrator.
  230         2. The total amount of funding allocated to the loan
  231  administrator in a fiscal year may not exceed the amount
  232  appropriated for the loan program in the same fiscal year. If
  233  the funds appropriated to the loan program in a fiscal year
  234  exceed the amount of state funds received by the loan
  235  administrator, such excess funds shall revert to Enterprise
  236  Florida, Inc. the General Revenue Fund.
  237         (e)Within 30 days of executing its contract with the
  238  department, the loan administrator must enter into a memorandum
  239  of understanding with the network:
  240         1.For the provision of business management training,
  241  business development training, and technical assistance to
  242  entrepreneurs and small businesses that receive microloans under
  243  this part; and
  244         2.To promote the program to underserved entrepreneurs and
  245  small businesses.
  246         (f)By September 1, 2014, the department shall review
  247  industry best practices and determine the minimum business
  248  management training, business development training, and
  249  technical assistance that must be provided by the network to
  250  achieve the goals of this part.
  251         (c)(g) The loan administrator must meet the requirements of
  252  this section, the terms of its contract with Enterprise Florida,
  253  Inc. the department, and any other applicable state or federal
  254  laws to be eligible to receive funds in any fiscal year. The
  255  contract with the loan administrator must specify any sanctions
  256  for the loan administrator’s failure to comply with the contract
  257  or this part.
  258         (4)(5)COST OF FUNDS FEES.—
  259         (a) Except as otherwise provided in this section,
  260  Enterprise Florida, Inc., the department may not charge fees or
  261  interest or require collateral from the loan administrator. The
  262  department may:
  263         1.Use funds appropriated from the state for reasonable
  264  costs associated with the creation of documentation necessary to
  265  administer microfinance programs.
  266         2.Charge the loan administrator a variable interest that
  267  will annually reset up to 50 percent of the prime rate published
  268  in the Wall Street Journal, payable on a quarterly basis, as of
  269  the start date specified in the contract for state funds
  270  received under the loan program. Enterprise Florida, Inc., shall
  271  require an assignment of the notes receivable of the microloans
  272  made by the loan administrator as collateral. This collateral
  273  can be pari passu or subordinate to prior liens, and Enterprise
  274  Florida, Inc., shall reserve the right to require additional
  275  collateral.
  276         3.Charge a fee for the use of guarantee funds for a Loan
  277  Loss Reserve Fund. Enterprise Florida, Inc., shall require an
  278  assignment of the Loan Loss Reserve Fund as collateral. This
  279  collateral can be pari passu or subordinate to prior liens, and
  280  Enterprise Florida, Inc., shall reserve the right to require any
  281  additional collateral. charge an annual fee or interest of up to
  282  80 percent of the Federal Funds Rate as of the date specified in
  283  the contract for state funds received under the loan program.
  284  The department shall require as collateral an assignment of the
  285  notes receivable of the microloans made by the loan
  286  administrator under the loan program.
  287         (b) The loan administrator is entitled to retain a one-time
  288  administrative servicing fee of 5 1 percent of the total award
  289  amount to offset the administrative costs of underwriting and
  290  servicing microloans made pursuant to this part. This fee may
  291  not be charged to or paid by microloan borrowers participating
  292  in the loan program. Except as provided in paragraph (6)(c)
  293  (7)(c), the loan administrator may not be required to return
  294  this fee to Enterprise Florida, Inc. the department.
  295         (c) The loan administrator may not charge interest, fees,
  296  or costs except as authorized in subsection (8) (9).
  297         (d) Except as provided in subsection (6) (7), the loan
  298  administrator is not required to return the interest, fees, or
  299  costs authorized under subsection (8), as long as the loan
  300  administrator remains in compliance and good standing (9).
  301         (5)(6) REPAYMENT OF AWARD FUNDS.—
  302         (a) After collecting interest and any fees or costs
  303  permitted under this section in satisfaction of all microloans
  304  made pursuant to this part, the loan administrator shall remit
  305  to Enterprise Florida, Inc., the department the microloan
  306  principal collected from all microloans made with state funds
  307  received under this part at the end of the contract, unless
  308  provisions for contract renewal are provided. Repayment of
  309  microloan principal to Enterprise Florida, Inc., the department
  310  may be deferred by Enterprise Florida, Inc., the department for
  311  a period not to exceed the maturity date of the microloan terms
  312  6 months; however, the loan administrator may not provide a
  313  microloan under this part after the contract with Enterprise
  314  Florida, Inc., the department expires.
  315         (b) If for any reason the loan administrator is unable to
  316  make repayments to Enterprise Florida, Inc., the department in
  317  accordance with the contract, Enterprise Florida, Inc., the
  318  department may accelerate maturity of the state funds awarded
  319  and demand repayment in full. In this event, or if a loan
  320  administrator violates this part or the terms of its contract,
  321  the loan administrator shall surrender to Enterprise Florida,
  322  Inc., the department possession of all collateral required
  323  pursuant to subsection (4) (5). Any loss or deficiency greater
  324  than the value of the collateral may be recovered by Enterprise
  325  Florida, Inc., the department from the loan administrator.
  326         (c) In the event of a default as specified in the contract,
  327  termination of the contract, or violation of this section, the
  328  state may, in addition to any other remedy provided by law,
  329  bring suit to enforce its interest.
  330         (d)A microloan borrower’s default does not relieve the
  331  loan administrator of its obligation to repay an award to the
  332  department.
  333         (6)(7) CONTRACT TERMINATION.—
  334         (a) The loan administrator’s contract with Enterprise
  335  Florida, Inc., the department may be terminated by Enterprise
  336  Florida, Inc. the department, and the loan administrator
  337  required to immediately return all uncommitted state funds
  338  awarded, including any interest, fees, and pro rata costs it
  339  would otherwise be entitled to retain pursuant to subsection (4)
  340  (5) for that fiscal year, upon a finding by Enterprise Florida,
  341  Inc., the department that:
  342         1. The loan administrator has, within the previous 5 years,
  343  participated in a state-funded economic development program in
  344  this or any other state and was found to have failed to comply
  345  with the requirements of that program;
  346         2. The loan administrator is currently in material
  347  noncompliance with any statute, rule, or program administered by
  348  Enterprise Florida, Inc., or the department;
  349         3. The loan administrator or any member of its board of
  350  directors, officers, partners, managers, or shareholders has
  351  pled no contest to or been found guilty, regardless of whether
  352  adjudication was withheld, of any felony or any misdemeanor
  353  involving fraud, misrepresentation, or dishonesty;
  354         4. The loan administrator failed to meet or agree to the
  355  terms of the contract with Enterprise Florida, Inc., the
  356  department or failed to meet this part; or
  357         5. Enterprise Florida, Inc., The department finds that the
  358  loan administrator provided fraudulent or misleading information
  359  to Enterprise Florida, Inc. the department.
  360         (b) The loan administrator’s contract with Enterprise
  361  Florida, Inc., the department may be terminated by Enterprise
  362  Florida, Inc., the department at any time for any reason upon 30
  363  days’ notice by Enterprise Florida, Inc. the department. In such
  364  a circumstance, the loan administrator shall return to
  365  Enterprise Florida, Inc., all uncommitted awarded state funds
  366  awarded to the department within 60 days after of the
  367  termination. However, the loan administrator may retain any
  368  interest, fees, or costs it has collected pursuant to subsection
  369  (4) (5).
  370         (c) The loan administrator’s contract with Enterprise
  371  Florida, Inc., the department may be terminated by the loan
  372  administrator at any time for any reason upon 30 days’ notice by
  373  the loan administrator. In such a circumstance, the loan
  374  administrator shall return to Enterprise Florida, Inc., all
  375  uncommitted awarded state funds awarded to the department,
  376  including any interest, fees, and costs it has retained or would
  377  otherwise be entitled to retain pursuant to subsection (4) (5),
  378  within 30 days after of the termination.
  379         (7)(8) AUDITS AND REPORTING.—
  380         (a) The loan administrator shall annually submit to
  381  Enterprise Florida, Inc., the department a financial audit
  382  performed by an independent certified public accountant and an
  383  operational performance audit for the most recently completed
  384  fiscal year. Both audits must indicate whether any material
  385  weakness or instances of material noncompliance are indicated in
  386  the audit.
  387         (b) The loan administrator shall submit quarterly reports
  388  to Enterprise Florida, Inc., the department as required by s.
  389  288.9936(2) 288.9936(3).
  390         (c) The loan administrator shall make its books and records
  391  related to the loan program available to the department or
  392  Enterprise Florida, Inc., or its designee for inspection upon
  393  reasonable notice.
  394         (8)(9) ELIGIBILITY AND APPLICATION.—
  395         (a) To be eligible for a microloan, an applicant must, at a
  396  minimum, be a microbusiness an entrepreneur or small business
  397  located in this state.
  398         (b) Microloans may not be made if the direct or indirect
  399  purpose or result of granting the microloan would be to:
  400         1. Pay off any creditors of the applicant, including the
  401  refund of a debt owed to a small business investment company
  402  organized pursuant to 15 U.S.C. s. 681, unless the restructuring
  403  of the refinanced debt reflects a documented business purpose
  404  and improves cash flow or reduces debt service by at least 10
  405  percent;
  406         2. Provide funds, directly or indirectly, for payment,
  407  distribution, or as a microloan to owners, partners, or
  408  shareholders of the applicant’s business, except as ordinary
  409  compensation for services rendered;
  410         3. Finance the acquisition, construction, improvement, or
  411  operation of real property which is, or will be, held primarily
  412  for sale or investment;
  413         4. Pay for lobbying activities; or
  414         5. Replenish funds used for any of the purposes specified
  415  in subparagraphs 1.-4.
  416         (c) A microloan applicant shall submit an a written
  417  application in the format prescribed by the loan administrator
  418  and Enterprise Florida, Inc., and shall pay an application fee
  419  not to exceed $50 to the loan administrator.
  420         (d) The following minimum terms apply to a microloan made
  421  by the loan administrator:
  422         1. The amount of a microloan may not exceed $50,000;
  423         2. A borrower may not receive more than $75,000 per year in
  424  total microloans under this loan program;
  425         3. A borrower may not receive more than two microloans per
  426  year and may not receive more than five microloans in any 3-year
  427  period under this loan program;
  428         4. The proceeds of the microloan may be used only for
  429  startup costs, working capital, tenant improvements, and the
  430  acquisition of materials, supplies, furniture, fixtures, and
  431  equipment;
  432         5. The period of any microloan may not exceed 5 years 1
  433  year;
  434         6. The interest rate may not exceed the prime rate
  435  published in the Wall Street Journal as of the date specified in
  436  the microloan, plus 500 1000 basis points;
  437         7. All microloans must be personally guaranteed;
  438         8. The borrower must complete participate in business
  439  management training, business development training, and
  440  technical assistance as determined by the loan administrator in
  441  the microloan agreement as a condition of initial funding. The
  442  loan administrator shall determine the provider of training and
  443  technical assistance. The cost of such training and technical
  444  assistance must be reasonable and can be included in the
  445  microloan and payable from matching funds;
  446         9. The borrower shall provide such information as required
  447  by the loan administrator, including monthly job creation and
  448  financial data, in the manner prescribed by the loan
  449  administrator; and
  450         10. The loan administrator may collect fees for late
  451  payments which are consistent with standard business lending
  452  practices and may recover costs and fees incurred for any
  453  collection efforts necessitated by a borrower’s default.
  454         (e) The department or Enterprise Florida, Inc., may not
  455  review any microloans made by the loan administrator pursuant to
  456  this part before approval of the loan by the loan administrator.
  457         (9)(10) STATEWIDE STRATEGIC PLAN.—In implementing this
  458  section, the department shall be guided by the 5-year statewide
  459  strategic plan adopted pursuant to s. 20.60(5). The department
  460  shall promote and advertise the loan program by, among other
  461  things, cooperating with government, nonprofit, and private
  462  industry to organize, host, or participate in seminars and other
  463  forums for microbusinesses entrepreneurs and small businesses.
  464         (11)STUDY.—By December 31, 2014, the department shall
  465  commence or commission a study to identify methods and best
  466  practices that will increase access to credit to entrepreneurs
  467  and small businesses in this state. The study must also explore
  468  the ability of, and limitations on, Florida nonprofit
  469  organizations and private financial institutions to expand
  470  access to credit to entrepreneurs and small businesses in this
  471  state.
  472         (10)(12) CREDIT OF THE STATE.—With the exception of funds
  473  appropriated to the loan program by the Legislature, the credit
  474  of the state may not be pledged. The state is not liable or
  475  obligated in any way for claims on the loan program or against
  476  the loan administrator or the department.
  477         Section 4. Section 288.9935, Florida Statutes, is amended
  478  to read:
  479         288.9935 Microfinance Guarantee Program.—
  480         (1) PURPOSE.—The Microfinance Guarantee Program is
  481  established in the department. The purpose of the program is to
  482  stimulate access to credit for microbusinesses entrepreneurs and
  483  small businesses in this state by providing targeted guarantees
  484  to loans or surety made to such microbusinesses entrepreneurs
  485  and small businesses. Funds appropriated to the program must be
  486  reinvested and maintained as a long-term and stable source of
  487  funding for the program.
  488         (2) As used in this section, the term “lender” means a
  489  financial institution as defined in s. 655.005.
  490         (3)CONTRACT.—The department must enter into a contract
  491  with Enterprise Florida, Inc., to administer the Microfinance
  492  Guarantee Program. In administering the program, Enterprise
  493  Florida, Inc., must, at a minimum:
  494         (a) Establish eligibility requirements for lenders and
  495  borrowers lender and borrower eligibility requirements in
  496  addition to those provided in this section;
  497         (b) Determine a reasonable leverage ratio of loan or surety
  498  amounts guaranteed to state funds; however, the leverage ratio
  499  may not exceed 5 3 to 1;
  500         (c) Establish reasonable fees and interest;
  501         (d) Promote the program to lenders financial institutions
  502  that provide loans or surety to microbusinesses entrepreneurs
  503  and small businesses in order to maximize the number of lenders
  504  throughout the state which participate in the program;
  505         (e)Enter into a memorandum of understanding with the
  506  network to promote the program to underserved entrepreneurs and
  507  small businesses;
  508         (e)(f) Establish limits on the total amount of loan
  509  guarantees that a single lender can receive;
  510         (g)Establish an average loan guarantee amount for loans
  511  guaranteed under this section;
  512         (f)(h) Establish procedures to address default and payment
  513  of a guarantee a risk-sharing strategy to be employed in the
  514  event of a loan failure; and
  515         (g)(i) Establish financial performance measures and
  516  objectives for the program in order to maximize the state funds.
  517         (3)ALLOWABLE ADMINISTRATIVE COSTS.—Enterprise Florida,
  518  Inc., may not use funds appropriated from the state for costs
  519  associated with administering the guarantee program except as
  520  provided in this part.
  521         (4) ELIGIBILITY AND APPLICATION.—
  522         (a)Enterprise Florida, Inc., must provide the following
  523  minimum guarantee terms:
  524         1.Total loan guarantee Enterprise Florida, Inc., is
  525  limited to providing loan guarantees for loans with total loan
  526  amounts of at least $50,000 but and not more than $250,000. A
  527  loan guarantee may not exceed 50 percent of the total loan
  528  amount, except that transactions originated by a community
  529  development financing institution or a nonbank financial
  530  institution may not exceed 75 percent.
  531         2.Total surety bond amounts of at least $25,000 but not
  532  more than $1 million. A guarantee may not exceed 25 percent of
  533  the total surety amount.
  534         3.Total Loan Loss Reserve Fund amounts of not more than
  535  $300,000. A Loan Loss Reserve Fund may not exceed 25 percent of
  536  the total Small Business Association Microloan Program award
  537  amount.
  538         (b)(5) Enterprise Florida, Inc., may not guarantee a loan
  539  if the direct or indirect purpose or result of the loan would be
  540  to:
  541         1.(a) Pay off any creditors of the applicant, including the
  542  refund of a debt owed to a small business investment company
  543  organized pursuant to 15 U.S.C. s. 681, unless the restructuring
  544  of the refinanced debt reflects a documented business purpose
  545  and improves cash flow or reduces debt service by at least 10
  546  percent;
  547         2.(b) Provide funds, directly or indirectly, for payment,
  548  distribution, or as a loan to owners, partners, or shareholders
  549  of the applicant’s business, except as ordinary compensation for
  550  services rendered;
  551         3.(c) Finance the acquisition, construction, improvement,
  552  or operation of real property which is, or will be, held
  553  primarily for sale or investment;
  554         4.(d) Pay for lobbying activities; or
  555         5.(e) Replenish funds used for any of the purposes
  556  specified in subparagraphs 1.-4. paragraphs (a)-(d).
  557         (6)Enterprise Florida, Inc., may not use funds
  558  appropriated from the state for costs associated with
  559  administering the guarantee program.
  560         (c)(7) To be eligible to receive a loan guarantee under the
  561  Microfinance Guarantee Program, a borrower must, at a minimum:
  562         1.(a) Be a microbusiness an entrepreneur or small business
  563  located in this state; and
  564         (b)Employ 25 or fewer people;
  565         (c)Generate average annual gross revenues of $1.5 million
  566  or less per year for the last 2 years; and
  567         2.(d) Meet any additional requirements established by
  568  Enterprise Florida, Inc.
  569         (5)AUDITS AND REPORTING.—
  570         (a)(8) By October 1 of each year, Enterprise Florida, Inc.,
  571  shall submit a complete and detailed annual report to the
  572  department for inclusion in the department’s report required
  573  under s. 20.60(10). The report must, at a minimum, provide:
  574         1.(a) A comprehensive description of the program, including
  575  an evaluation of its application and guarantee activities,
  576  recommendations for change, and identification of any other
  577  state programs that overlap with the program;
  578         (b)An assessment of the current availability of and access
  579  to credit for entrepreneurs and small businesses in this state;
  580         2.(c) A summary of the financial and employment results of
  581  the microbusinesses entrepreneurs and small businesses receiving
  582  loan guarantees, including the number of full-time equivalent
  583  jobs created as a result of the guaranteed loans and the amount
  584  of wages paid to employees in the newly created jobs;
  585         3.(d) Industry data about the borrowers, including the six
  586  digit North American Industry Classification System (NAICS)
  587  code;
  588         4.(e) The name and location of lenders that receive loan
  589  guarantees;
  590         5.(f) The amount of state funds received by Enterprise
  591  Florida, Inc.;
  592         6.The amount of state funds allocated to guaranteed loans
  593  or surety;
  594         7.(g) The number of loan guarantee applications received;
  595         8.(h) The number, duration, location, and amount of
  596  guarantees made;
  597         9.(i) The number and amount of guaranteed loans or surety
  598  outstanding, if any;
  599         10.(j) The number and amount of guaranteed loans with
  600  payments overdue, if any;
  601         11.(k) The number and amount of guaranteed loans or surety
  602  in default, if any;
  603         12.The leverage achieved by a Loan Loss Reserve Fund, if
  604  applicable;
  605         13.(l) The repayment history of the guaranteed loans or
  606  surety made; and
  607         14.Demographic and other information as required by
  608  Enterprise Florida, Inc.; and
  609         15.(m) An evaluation of the program’s ability to meet the
  610  financial performance measures and objectives specified in
  611  subsection (2) (3).
  612         (b)The department shall include in the report required by
  613  s. 20.60(10) the annual report provided by Enterprise Florida,
  614  Inc., pursuant to paragraph (5)(a).
  615         (6)(9)CREDIT OF THE STATE OR ENTERPRISE FLORIDA, INC.—With
  616  the exception of funds appropriated to the guarantee program by
  617  the Legislature, the credit of the state or Enterprise Florida,
  618  Inc., may not be pledged except for funds appropriated by law to
  619  the Microfinance Guarantee Program. The state is not liable or
  620  obligated in any way for claims on the program or against
  621  Enterprise Florida, Inc., or the department. The source of funds
  622  available to satisfy the payment obligations of Enterprise
  623  Florida, Inc., under the guarantee program is limited to funds
  624  available in the guarantee fund.
  625         Section 5. Section 288.9936, Florida Statutes, is amended
  626  to read:
  627         288.9936 Annual report of the Microfinance Loan Program.—
  628         (1) The department shall include in the report required by
  629  s. 20.60(10) a complete and detailed annual report on the
  630  Microfinance Loan Program. The report must include:
  631         (a) A comprehensive description of the program, including
  632  an evaluation of its application and funding activities,
  633  recommendations for change, and identification of any other
  634  state programs that overlap with the program;
  635         (b) The lenders financial institutions and the public and
  636  private organizations and individuals participating in the
  637  program;
  638         (c)An assessment of the current availability of and access
  639  to credit for entrepreneurs and small businesses in this state;
  640         (c)(d) A summary of the financial and employment results of
  641  the borrowers entities receiving microloans;
  642         (d)(e) The number of full-time equivalent jobs created as a
  643  result of the microloans and the amount of wages paid to
  644  employees in the newly created jobs;
  645         (e)(f) The number and location of prospective loan
  646  administrators that responded to the department request for
  647  proposals;
  648         (f)(g) The amount of state funds received by the loan
  649  administrator;
  650         (g)The amount and source of matching funds used and amount
  651  of borrower equity required for each microloan;
  652         (h) The number of microloan applications received by the
  653  loan administrator;
  654         (i) The number, duration, and location of microloans made
  655  by the loan administrator, including the aggregate number of
  656  microloans made to minority business enterprises if available;
  657         (j) The number and amount of microloans outstanding, if
  658  any;
  659         (k) The number and amount of microloans with payments
  660  overdue, if any;
  661         (l) The number and amount of microloans in default, if any;
  662         (m) The repayment history of the microloans made;
  663         (n) The repayment history and performance of funding
  664  awards;
  665         (o)Demographic and other information as required by
  666  Enterprise Florida, Inc.;
  667         (p)(o) An evaluation of the program’s ability to meet the
  668  financial performance measures and objectives specified in s.
  669  288.9934; and
  670         (q)(p) A description and evaluation of the technical
  671  assistance and business management and development training
  672  provided by the network pursuant to its memorandum of
  673  understanding with the loan administrator, including the type of
  674  training and technical assistance, number of hours of training
  675  or technical assistance received, training or technical
  676  assistance providers, and other relevant information.
  677         (2)The department shall submit the report provided to the
  678  department from Enterprise Florida, Inc., pursuant to s.
  679  288.9935(8) for inclusion in the department’s annual report
  680  required under s. 20.60(10).
  681         (2)(3)Enterprise Florida, Inc., The department shall
  682  require at least quarterly reports from the loan administrator.
  683  The loan administrator’s report must include, at a minimum, the
  684  number of microloan applications received, the number of
  685  microloans made, the amount and interest rate of each microloan
  686  made, the amount of technical assistance or business development
  687  and management training provided, the number of full-time
  688  equivalent jobs created as a result of the microloans, the
  689  amount of wages paid to employees in the newly created jobs, the
  690  six-digit North American Industry Classification System (NAICS)
  691  code associated with the borrower’s business, and the borrower’s
  692  locations.
  693         (4)The Office of Program Policy Analysis and Government
  694  Accountability shall conduct a study to evaluate the
  695  effectiveness and the Office of Economic and Demographic
  696  Research shall conduct a study to evaluate the return on
  697  investment of the State Small Business Credit Initiative
  698  operated in this state pursuant to 12 U.S.C. ss. 5701 et seq.
  699  The offices shall each submit a report to the President of the
  700  Senate and the Speaker of the House of Representatives by
  701  January 1, 2015.
  702         Section 6. Section 288.9937, Florida Statutes, is amended
  703  to read:
  704         288.9937 Evaluation of programs.—The Office of Economic and
  705  Demographic Research shall analyze, evaluate, and determine the
  706  economic benefits, as defined in s. 288.005, of the first 5 3
  707  years of the Microfinance Loan Program and the Microfinance
  708  Guarantee Program. The analysis must also evaluate the number of
  709  jobs created, the increase or decrease in personal income, and
  710  the impact on state gross domestic product from the direct,
  711  indirect, and induced effects of the state’s investment. The
  712  analysis must also identify any inefficiencies in the programs
  713  and provide recommendations for changes to the programs. The
  714  office shall submit a report to the President of the Senate and
  715  the Speaker of the House of Representatives by January 1, 2020
  716  2018. This section expires January 31, 2020 2018.
  717         Section 7. This act shall take effect July 1, 2016.