1Amending Title 12 (Commerce and Trade) of the Pennsylvania
2Consolidated Statutes, further providing for capital
3development loans, for loans in distressed communities, for
4pollution prevention assistance loans and for export
5financing loans.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Sections 2306, 2308, 2309 and 2310 of Title 12 of
9the Pennsylvania Consolidated Statutes are amended to read:

10§ 2306. Capital development loans.

11(a) Application.--A small business may submit an application
12and any applicable application fee to its area loan organization
13requesting a loan for certain costs of a capital development
14project. The application shall be on the form required by the
15department and shall include or demonstrate all of the
16following:

17(1) The name and address of the applicant.

18(2) A statement of the amount of loan assistance sought.

1(3) A statement of the capital development project,
2including a detailed statement of the cost of the project.

3(4) A financial commitment from a responsible source for
4any cost of the capital development project in excess of the
5amount requested.

6(5) Any other information required by the department.

7(b) Area loan organization review.--

8(1) Upon receipt of a completed application, an area
9loan organization shall investigate and determine all of the
10following:

11(i) If the applicant is a small business.

12(ii) If the project is a capital development
13project.

14(iii) If, when the applicant is a small business,
15the capital development project demonstrates a
16substantial likelihood of creating or preserving
17employment activities in this Commonwealth or if, when
18the applicant is an agricultural producer, the project
19demonstrates a substantial likelihood of enhancing and
20growing normal agriculture operations.

21(iv) The ability of the applicant to meet and
22satisfy the debt service as it becomes due and payable.

23(v) The existence and sufficiency of collateral for
24the loan.

25(vi) Relevant criminal and credit history and
26ratings of the applicant as determined from outside
27credit reporting services and other sources.

28(vii) The number of employment opportunities to be
29created or preserved by the proposed capital development
30project.

1(viii) If the applicant complied with all other
2criteria established by the department.

3(2) Upon being satisfied that all requirements have been
4met, the area loan organizations shall recommend the
5applicant to the department and forward the application with
6all supporting documentation to the department for its review
7and approval.

8(c) Department review.--

9(1) Within 30 days of receiving a recommendation and a
10completed application, the department shall review the
11application. If the department is satisfied that all
12requirements have been met, the department may approve the
13loan request in accordance with the following:

14(i) A loan for land, buildings and machinery and
15equipment may not exceed [$200,000 or 50%] $250,000 or 
1675% of the total capital development project costs,
17whichever is less. For the purposes of this subparagraph,
18capital development project costs incurred during the
19[12-month] 18-month period prior to the date of
20submission of the application to the department shall be
21considered part of the total capital development project
22costs.

23(ii) A loan for working capital may not exceed
24[$100,000 or 50%] $150,000 or 75% of the total capital
25development project costs, whichever is less.

26(iii) Except for loans to agricultural producers, a
27loan must create or preserve one job for every $25,000
28loaned.

29(2) The department shall notify the area loan
30organization and applicant of its decision.

1(d) Approvals.--For applications which are approved, the
2department shall draw an advance equal to the principal amount
3of the loan from the fund. The advance shall be forwarded to the
4area loan organization and, upon receipt by the area loan
5organization, shall become an obligation of the area loan
6organization. Prior to providing loan funds to the applicant,
7the area loan organization shall require the applicant to
8execute a note and to enter into a loan agreement. In addition
9to the requirements of subsection (e), the loan agreement shall
10include a provision requiring the recipient to use the loan
11proceeds to pay the costs of the capital development project.
12The department may require the area loan organization to impose
13other terms and conditions on the recipient if the department
14determines that they are in the best interests of this
15Commonwealth, including a provision requiring collateral for any
16penalty imposed under subsection (g).

17(e) Loan terms.--A loan agreement entered into in accordance
18with subsection (c) shall do all of the following:

19(1) State the collateral securing the loan. All loans
20shall be secured by lien positions on collateral at the
21highest level of priority as may be determined by the area
22loan organization with the approval of the department.

23(2) State the repayment period in accordance with the
24following:

25(i) A loan for real property shall have a repayment
26period of up to [15] 18 years.

27(ii) A loan for machinery and equipment shall have a
28repayment period of up to [ten] 13 years.

29(iii) A loan for working capital shall have a
30repayment period of up to [three] six years.

1(iv) If, in a capital development project, there are
2two or more uses planned, the loan terms may be blended.

3(3) State the interest rate in accordance with the
4following:

5(i) Except as provided in subparagraph (ii), loans
6shall be made at an interest rate not to exceed [5%] 4.5%
7for the term of the loan.

8(ii) A loan to a small business which is an
9agricultural producer shall be made at an interest rate
10of not less than [2%] 1.5% for the term of the loan if
11all of the following apply:

12(A) A declaration under 35 Pa.C.S. § 7301(c)
13(relating to general authority of Governor) is in
14effect for at least ten days prior to the date of
15application.

16(B) The application is made within nine months
17of termination of the declaration.

18(C) The agricultural producer is in the area
19which has been declared to be a natural disaster
20area.

21(f) Loan administration.--A loan made under this section
22shall be administered in accordance with departmental policies
23and procedures by the area loan organization which made the
24loan. Each area loan organization shall submit an annual report
25on the form required by the department and which includes or
26demonstrates all of the following:

27(1) Each outstanding loan.

28(2) The date approved.

29(3) The original principal amount.

30(4) The current principal balance.

1(5) The interest rate.

2(6) The purpose for which the loan was made.

3(7) An enumeration of any problems or issues which have
4arisen with regard to each loan.

5(8) A statement regarding the progress of the small
6business in creating or preserving its requisite number of
7employment opportunities.

8(9) Any other information or documentation required by
9the department.

10(g) Penalty.--

11(1) Except as provided in paragraph (2), the department
12shall impose a penalty upon a recipient if the recipient
13fails to create or preserve the number of employment
14opportunities specified in its approved application.

15(2) The department may waive the penalty required by
16paragraph (1) if the department determines that the failure
17was due to circumstances outside the control of the
18recipient.

19(3) The amount of the penalty imposed under paragraph
20(1) shall be equal to an increase in the interest rate to
21[2%] 2.5% greater than the current prime interest rate for
22the remainder of the loan.

23(h) Defaults.--The department may by foreclosure take title
24to a capital development project which it financed if
25acquisition is necessary to protect a loan made under this
26section. The department shall pay all costs arising out of the
27foreclosure and acquisition from moneys held in the fund. The
28department may, in order to minimize financial losses and
29sustain employment, lease the capital development project. The
30department may withdraw moneys from the fund to purchase first

1mortgages and to make payments on first mortgages on any capital
2development project which it financed where purchase or payment
3is necessary to protect a loan made under this section. The
4department may sell, transfer, convey and assign the first
5mortgages and shall deposit any moneys derived from the sale of
6any first mortgages in the fund.

7§ 2308. Loans in distressed communities.

8(a) Application.--A small business located in a distressed
9community may submit an application and any applicable
10application fee to a community development institution
11requesting a loan for certain costs of a capital development
12project. The application shall be on the form required by the
13department and shall include or demonstrate all of the
14following:

15(1) The name and address of the applicant.

16(2) A statement that the small business is engaged in
17business-to-public service or in the mercantile, commercial
18or point-of-sale retail business sectors.

19(3) A statement of the amount of loan assistance sought.

20(4) A statement of the capital development project,
21including a detailed statement of the cost of the project.

22(5) A financial commitment from a responsible source for
23the cost of the capital development project in excess of the
24amount requested.

25(6) Any other information required by the department.

26(b) Community development institution review.--

27(1) Upon receipt of a completed application, a community
28development institution shall investigate and determine all
29of the following:

30(i) If the applicant is a small business which is

1engaged in business-to-public service or in the
2mercantile, commercial or point-of-sale retail business
3sectors in accordance with conditions or criteria
4established by the department.

5(ii) If the project is a capital development
6project.

7(iii) If the applicant has demonstrated a direct
8impact on the community in which the capital development
9project is or will be located, on residents of that
10community or on the local and/or regional economy. The
11department shall establish criteria that will assist in
12making this demonstration.

13(iv) Number of employment opportunities to be
14created or preserved by the proposed capital development
15project.

16(v) If the applicant complied with all other
17criteria established by the department.

18(2) Upon being satisfied that all requirements have been
19met, the community development institution shall recommend
20the applicant to the department and forward the application
21with all supporting documentation to the department for its
22review and approval.

23(c) Department review.--

24(1) Upon receipt of a recommendation and a completed
25application, the department shall investigate and determine
26all of the following:

27(i) The ability of the applicant to meet and satisfy
28the debt service as it becomes due and payable. In
29reviewing repayment obligations, loans shall not be
30approved on the basis of direct financial return on

1investment and shall not be held to the loan loss
2standards of private commercial lenders. Loans shall be
3reviewed for the purpose of establishing a strong
4economic base and promoting entrepreneurial activity
5within the distressed community.

6(ii) The existence and sufficiency of collateral for
7the loan.

8(iii) Relevant criminal and credit history and
9ratings of the applicant as determined from outside
10credit reporting services and other sources.

11(2) If the department is satisfied that all requirements
12have been met, the department may approve the loan request in
13an amount not to exceed [$200,000 or 50%] $250,000 or 75% of
14the total capital development project costs, whichever is
15less. For the purpose of this paragraph, capital development
16project costs, except the costs related to working capital,
17incurred during the [12-month] 18-month period prior to the
18date of submission of the application to the department shall
19be considered part of the total capital development project
20costs.

21(3) The department shall notify the community
22development institution and applicant of its decision.

23(d) Approvals.--For applications which are approved, the
24department shall draw an advance equal to the principal amount
25of the loan from the fund and, prior to providing loan funds to
26the applicant, the department shall require the applicant to
27execute a note and to enter into a loan agreement. In addition
28to the requirements of subsection (e), the loan agreement shall
29include a provision requiring the recipient to use the loan
30proceeds to pay the costs of the capital development project.

1The department may impose other terms and conditions on the
2recipient if the department determines they are in the best
3interests of this Commonwealth, including a provision requiring
4collateral for any penalty imposed under subsection (g).

5(e) Loan terms.--A loan agreement entered into in accordance
6with subsection (d) shall do all of the following:

7(1) State any collateral securing the loan. The
8department may use its best judgment to identify and secure
9collateral.

10(2) State the repayment period which may be flexible.

11(3) State the interest rate which may not be less than
12[2%] 1.5% nor more than [5%] 4.5% for the term of the loan.

13(4) State that the recipient agrees to maintain, at a
14minimum, the number of jobs in existence as of the date of
15loan application.

16(f) Loan administration.--A loan made under this section
17shall be administered in accordance with departmental policies
18and procedures.

19(g) Penalty.--

20(1) Except as provided in paragraph (2), the department
21shall impose a penalty upon a recipient if the recipient
22fails to preserve the number of employment opportunities
23specified in its approved application.

24(2) The department may waive the penalty required by
25paragraph (1) if the department determines that the failure
26was due to circumstances outside the control of the
27recipient.

28(3) The amount of any penalty imposed under paragraph
29(1) shall be equal to an increase in the interest rate to
30[2%] 2.5% greater than the current prime interest rate for

1the remainder of the loan.

2(h) Defaults.--The department may take title by foreclosure
3to a capital development project which it financed where
4acquisition is necessary to protect a loan made under this
5section. The department shall pay all costs arising out of the
6foreclosure and acquisition from money held in the fund. The
7department may, in order to minimize financial losses and
8sustain employment, lease the capital development project. The
9department may withdraw money from the fund to purchase first
10mortgages and to make payments on first mortgages on any capital
11development project which it financed if purchase or payment is
12necessary to protect a loan made under this section. The
13department may sell, transfer, convey and assign the first
14mortgages and shall deposit in the fund money derived from the
15sale of any first mortgages.

16§ 2309. Pollution prevention assistance loans.

17(a) Application.--A small business may submit an application
18and any application fee to a pollution prevention assistance
19agency requesting a loan for a pollution prevention
20infrastructure. The application shall be on the form required by
21the department and shall include or demonstrate all of the
22following:

23(1) The name and address of the applicant.

24(2) A statement of the amount of loan assistance sought.

25(3) A statement of the pollution prevention
26infrastructure, including a detailed statement of the cost of
27the infrastructure.

28(4) A financial commitment from a responsible source for
29the cost of the pollution prevention infrastructure in excess
30of the amount requested.

1(5) Any other information required by the department.

2(b) Pollution prevention assistance agency review.--

3(1) Upon receipt of a completed application, a pollution
4prevention assistance agency shall investigate and determine
5all of the following:

6(i) If the applicant is a small business.

7(ii) If the project is for pollution prevention
8infrastructure.

9(iii) If the applicant complied with all other
10criteria established by the department.

11(2) Upon being satisfied that all requirements have been
12met, the pollution prevention assistance agency shall
13recommend the applicant to the department and forward the
14application with all supporting documentation to the
15department for its review and approval.

16(c) Department review.--

17(1) Upon receipt of a recommendation and a completed
18application, the department shall investigate and determine
19all of the following:

20(i) If the pollution prevention infrastructure
21demonstrates a substantial likelihood of preventing or
22reducing pollution. The Department of Environmental
23Protection shall assist the department in reviewing the
24applications and provide technical assistance.

25(ii) The ability of the applicant to meet and
26satisfy the debt service as it becomes due and payable.
27In reviewing repayment obligations, loans shall not be
28approved on the basis of direct financial return on
29investment and shall not be held to the loan loss
30standards of private commercial lenders. Loans shall be

1reviewed for the purpose of reducing pollution through
2source reduction technologies or processes.

3(iii) The existence and sufficiency of collateral
4for the loan.

5(iv) Relevant criminal and credit history and
6ratings of the applicant as determined from outside
7credit reporting services and other sources.

8(2) If the department is satisfied that all requirements
9have been met, the department may approve the loan request. A
10loan approved under this subsection may not exceed the lesser
11of:

12(i) [$100,000] $150,000; or

13(ii) [75%] 85% of infrastructure costs.

14(3) The department shall notify the pollution prevention
15assistance agency and applicant of its decision.

16(d) Approvals.--For applications which are approved, the
17department shall draw an advance equal to the principal amount
18of the loan from the Pollution Prevention Assistance Account.
19Prior to providing loan funds to the applicant, the department
20shall require the applicant to execute a note and to enter into
21a loan agreement. In addition to the requirements of subsection
22(e), the loan agreement shall include a provision requiring the
23recipient to use the loan proceeds to pay the costs of the
24pollution prevention infrastructure. The department may impose
25other terms and conditions on the recipient if the department
26determines they are in the best interests of this Commonwealth,
27including a provision requiring collateral for any penalty
28imposed under subsection (g).

29(e) Loan terms.--A loan agreement entered into in accordance
30with subsection (d) shall do all of the following:

1(1) State the collateral securing the loan. All loans
2shall be secured by lien positions on collateral at the
3highest level of priority as may be determined by the
4department.

5(2) State the repayment period which may not exceed [10]
615 years.

7(3) State that the interest rate is [2%] 1.5%.

8(4) State that any loan fee is not to exceed [5%] 3.5%
9of the loan amount.

10(f) Loan administration.--A loan made under this section
11shall be administered in accordance with departmental policies
12and procedures.

13(g) Penalty.--

14(1) Except as provided in paragraph (2), the department
15shall impose a penalty upon a recipient if the recipient
16fails to carry out the pollution prevention infrastructure
17project as specified in its approved application.

18(2) The department may waive the penalty required by
19paragraph (1) if the department determines that the failure
20was due to circumstances outside the control of the
21recipient.

22(3) The amount of any penalty imposed under paragraph
23(1) shall be equal to an increase in the interest rate to
24[2%] 3% greater than the current prime interest rate for the
25remainder of the loan.

26(h) Defaults.--The department may take title by foreclosure
27to a pollution prevention infrastructure which it financed if
28acquisition is necessary to protect a loan made under this
29section. The department shall pay all costs arising out of the
30foreclosure and acquisition from money held in the Pollution

1Prevention Assistance Account. The department may, in order to
2minimize financial losses and sustain employment, lease the
3pollution prevention infrastructure. The department may withdraw
4money from the Pollution Prevention Assistance Account to
5purchase first mortgages and to make payments on first mortgages
6on any pollution prevention infrastructure which it financed if
7the purchase or payment is necessary to protect a loan made
8under this section. The department may sell, transfer, convey
9and assign the first mortgages and shall deposit any money
10derived from the sale of any first mortgages in the Pollution
11Prevention Assistance Account.

12§ 2310. Export financing loans.

13(a) Application.--A person may submit an application and any
14applicable application fee to the department or its area loan
15organization requesting a loan for certain costs of a capital
16development project which will be used in export activities. The
17application must be on the form required by the department and
18must include or demonstrate all of the following:

19(1) The name and address of the applicant.

20(2) A statement of the amount of loan assistance sought.

21(3) A statement of the capital development project,
22including a detailed statement of the cost of the project.

23(4) A financial commitment from a responsible source for
24any cost of the capital development project in excess of the
25amount requested.

26(5) A statement that the loan, if approved, would not
27supplant funding from private sector sources on commercially
28reasonable terms.

29(6) Any other information required by the department.

30(b) Review.--Upon receipt of a completed application, the

1department shall investigate and determine all of the following:

2(1) If the applicant is an export business.

3(2) If the project is a capital development project.

4(3) The ability of the applicant to meet and satisfy the
5debt service as it becomes due and payable.

6(4) The existence and sufficiency of collateral for the
7loan.

8(5) Relevant criminal and credit history and ratings of
9the applicant as determined from outside credit reporting
10services and other sources.

11(6) Number of employment opportunities to be created or
12preserved by the proposed capital development project.

13(7) If the applicant complied with all other criteria
14established by the department.

15(c) Approvals.--If the department is satisfied that all
16requirements have been met, the department may approve the loan
17request. A loan approved under this section may not exceed
18[$350,000] $400,000. The department shall notify the applicant
19and, if applicable, the area loan organization of its decision.
20The department shall reserve an amount equal to the principal
21amount of the loan within the fund or the special account
22authorized by section 2304(c)(2) (relating to fund and
23accounts). Prior to providing funds to the applicant, the
24department shall require the applicant to execute a note and
25enter into a loan agreement. In addition to the requirements of
26subsection (d), the loan agreement shall include a provision
27requiring the recipient to use the loan proceeds to pay the
28costs of the capital development project. The department may
29impose other terms and conditions on the recipient if the
30department determines they are in the best interests of this

1Commonwealth, including any of the following:

2(1) A provision requiring collateral for any penalty
3imposed under subsection (f).

4(2) A provision requiring the person to be eligible for
5an insurance policy.

6(3) A provision requiring the loan to be guaranteed by
7the Working Capital Guaranty Program offered by the Ex-Im
8Bank.

9(4) A provision requiring an export credit sales
10contract insured by an insurance policy.

11(d) Loan terms.--A loan agreement entered into in accordance
12with subsection (c) shall do all of the following:

13(1) State the collateral securing the loan. All loans
14shall be secured by lien positions on collateral at the
15highest level of priority as may be determined by the
16department.

17(2) State the repayment period as determined by the
18department.

19(3) State the interest rate as determined by the
20department.

21(e) Loan administration.--A loan made under this section
22shall be administered in accordance with departmental policies
23and procedures.

24(f) Penalty.--

25(1) Except as provided in paragraph (2), the department
26shall impose a penalty upon a recipient if the recipient
27fails to carry out the export activities specified in its
28approved application.

29(2) The department may waive the penalty required by
30paragraph (1) if the department determines that the failure

1was due to circumstances outside the control of the
2recipient.

3(3) The amount of the penalty imposed under paragraph
4(1) shall be equal to an increase in the interest rate to 2%
5greater than the current prime interest rate for the
6remainder of the loan.

7(g) Defaults.--The department may, by foreclosure, take
8title to a capital development project which it financed if
9acquisition is necessary to protect a loan made under this
10section. The department shall pay all costs arising out of the
11foreclosure and acquisition from money held in the fund or a
12special account authorized by section 2304(c)(2). The department
13may, in order to minimize financial losses and sustain
14employment, lease the capital development project. The
15department may withdraw money from the fund or a special account
16authorized by section 2304(c)(2) to purchase first mortgages and
17to make payments on first mortgages on any capital development
18project which it financed if purchase or payment is necessary to
19protect a loan made under this section. The department may sell,
20transfer, convey and assign the first mortgages and shall
21deposit any money derived from the sale of any first mortgages
22in the fund or a special account authorized by section 2304(c)
23(2).

24Section 2. This act shall take effect in 60 days.