PRINTER'S NO. 3412
No. 2437 Session of 1986
INTRODUCED BY D. R. WRIGHT, HAYES, BOWSER, BOYES, STEVENS, COLE,
MERRY, BROUJOS, ROBBINS, LIVENGOOD, WASS, STEWART, SERAFINI,
BIRMELIN, BURD, VEON, HASAY, SIRIANNI, COLAFELLA, HERMAN,
LESCOVITZ, CIMINI, McCALL, BUSH, CAWLEY, FARGO, ARGALL,
FISCHER, MOEHLMANN, STAIRS, TIGUE, SAURMAN, ANGSTADT, NAHILL,
JAROLIN, JOHNSON, BLAUM, JACKSON, SCHULER, DeVERTER, GEIST,
LANGTRY, GODSHALL, PITTS, LETTERMAN, FOX, GLADECK, TELEK,
GRUITZA, WOGAN, POTT, BALDWIN, ARTY, LLOYD, E. Z. TAYLOR,
F. TAYLOR, LUCYK, J. TAYLOR, BELARDI, STABACK, VROON, SEMMEL,
FOSTER, B. SMITH, PERZEL, BLACK, DISTLER, SWEET, SWIFT,
LASHINGER, MARKOSEK, COSLETT, VAN HORNE, L. E. SMITH,
PETRARCA, MACKOWSKI, DIETZ, KUKOVICH, RAYMOND, HERSHEY,
HONAMAN, CHADWICK, HUTCHINSON, PICCOLA, MOWERY, STEIGHNER,
G. SNYDER, R. C. WRIGHT, GRUPPO, J. L. WRIGHT, CLYMER, CLARK,
PUNT, GREENWOOD, BOOK, PHILLIPS, CARLSON, DOMBROWSKI,
CAPPABIANCA, DALEY, GANNON, D. W. SNYDER, MICOZZIE, BUNT,
McCLATCHY AND HAGARTY, APRIL 30, 1986
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE, APRIL 30, 1986
AN ACT
1 Amending the act of July 2, 1984 (P.L.555, No.111), entitled "An
2 act creating a small business incubator program; providing
3 for loans and loan guarantees to small business incubators;
4 specifying the conditions of and requirements for grants and
5 loans; providing for seed grants; and making appropriations,"
6 further providing for grants, loans and loan guarantees; and
7 removing provisions relating to guidelines and regulations.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. The title, the definition of "tenant" in section
11 2 and sections 4 and 5 of the act of July 2, 1984 (P.L.555,
12 No.111), known as the Small Business Incubators Act, are amended
13 to read:
1 AN ACT
2 Creating a small business incubator program; providing for
3 grants, loans and loan guarantees to small business incubators;
4 specifying the conditions of and requirements for grants and
5 loans; providing for seed grants; and making appropriations.
6 Section 2. Definitions.
7 The following words and phrases when used in this act shall
8 have the meanings given to them in this section unless the
9 context clearly indicates otherwise:
10 * * *
11 "Tenant." A sole proprietorship, business partnership or
12 corporation operating a business for profit or, if permitted by
13 this act, not for profit, and leasing or otherwise occupying
14 space in an incubator.
15 Section 4. Incubator grants, loans and loan guarantees.
16 (a) Application.--A local sponsor may submit an application
17 to the board to obtain a grant, loan or loan guarantee to
18 establish an incubator. Each application shall:
19 (1) Demonstrate that a facility exists that can be
20 transformed into an incubator at a specified cost.
21 (2) Demonstrate the ability to directly provide or
22 arrange for the provision of business development services for
23 tenants of the incubator. These services shall include, but not
24 be limited to, financial consulting assistance, management and
25 marketing assistance and physical services.
26 (3) Demonstrate a potential for sustained use of the
27 incubator facility by eligible tenants, through a market
28 study or other means.
29 (4) Demonstrate the ability to manage and operate the
30 incubator facility in accordance with section 5.
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1 (5) Include other information as the board may require
2 through guidelines.
3 (b) Review of application.--The board shall review and
4 accept applications based on the following criteria:
5 (1) Ability of the local sponsor to carry out the
6 provisions of section 5.
7 (2) Economic impact of the incubator on the community.
8 (3) Conformance with areawide and local economic
9 development plans if such exist.
10 (4) Location of the incubator, in order to encourage
11 geographic distribution of incubators across the State.
12 (5) Such other criteria as may be established by the
13 board through guidelines.
14 (c) [Loan] Grant and loan conditions.--
15 (1) [Loans] Grants and loans awarded or guaranteed shall
16 be used only for the acquisition and leasing of land and
17 existing buildings, the rehabilitation of buildings or other
18 facilities and the purchase of equipment and furnishings,
19 which are necessary for the creation and operation of the
20 incubator.
21 (2) [Loans] Grants, loans and loan guarantees may not
22 exceed 50% of total eligible project costs, or $650,000,
23 whichever is less. The maximum grant amount awarded in any
24 project may not exceed $240,000. Grants shall be provided
25 only to projects located in municipalities designated as
26 distressed under the Federal Department of Housing and Urban
27 Development under the Housing and Community Development Act
28 of 1974 (Public Law 93-383, 42 U.S.C. § 5301 et seq.), as
29 amended, or which meet criteria promulgated by the Department
30 of Commerce.
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1 (3) Funds loaned shall be secured by lien positions on
2 collateral at the highest level of priority which can
3 accommodate the borrower's ability to raise sufficient debt
4 and equity capital. When the obligation of a local sponsor is
5 guaranteed, the financial institution holding the obligation
6 shall be required to adequately secure the obligation.
7 (4) [Loans] Grants, loans and loan guarantees for an
8 incubator in which the facility is currently leased shall
9 only be made if the applicant intends to buy the facility.
10 These loans shall be secured by a leasehold mortgage.
11 (5) Payment of interest and principal on loans may be
12 deferred at the discretion of the board.
13 (6) [Interest on all loans shall be no less than the
14 interest paid on the bonds issued pursuant to the act of July
15 2, 1984 (P.L.512, No.104), known as the Pennsylvania Economic
16 Revitalization Act.
17 (7)] Funds may be lent for a maximum of ten years or the
18 useful life of the property, as established by the United
19 States Department of Treasury, whichever is greater.
20 Section 5. Responsibilities of local sponsors.
21 A local sponsor, or the organization receiving assistance
22 through the local sponsor, shall have the following
23 responsibilities and duties in establishing and operating an
24 incubator with assistance from this program:
25 (1) Secure title on the facility or a lease with the
26 intent to secure title to the facility.
27 (2) Manage the physical development of the incubator
28 facility, including the provision of common conference or
29 meeting space.
30 (3) Furnish and equip the facility to provide business
19860H2437B3412 - 4 -
1 services to the tenants.
2 (4) Market the facility and secure eligible tenants.
3 (5) Provide financial consulting, marketing and
4 management assistance services or arrange for the provision
5 of these services for tenants of the incubator, including
6 assistance in accessing private financial markets.
7 (6) Set rental and service fees.
8 (7) Encourage the sharing of ideas between tenants and
9 otherwise aid the tenants in an innovative manner while they
10 are within the incubator.
11 (8) Establish policies and criteria for the acceptance
12 of tenants into the incubator and for the termination of
13 occupancy of tenants so as to maximize the opportunity to
14 succeed for the greatest number of tenants, consistent with
15 the other criteria specified in this act. Retail enterprises,
16 not-for-profit enterprises (except not-for-profit enterprises
17 engaged in research and development), wholesale enterprises
18 and personal service enterprises (except those firms
19 providing services directly to other businesses) are not
20 permitted as tenants in incubators funded through this act.
21 No more than 20% of the useful square footage of such a
22 facility shall be occupied by a tenant who does not meet
23 these eligibility requirements, other than a retail firm,
24 with a long term lease.
25 (9) Establish a local advisory committee to assist in
26 the performance of these functions.
27 Section 2. Section 10 of the act is repealed.
28 Section 3. This act shall take effect immediately.
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