Legislature(2017 - 2018)BELTZ 105 (TSBldg)
03/20/2018 01:30 PM Senate LABOR & COMMERCE
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SB157 | |
SB76 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
*+ | SB 157 | TELECONFERENCED | |
+= | SB 76 | TELECONFERENCED | |
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SB 157-MICROLOAN REVOLVING FUND & LOANS 1:33:14 PM CHAIR COSTELLO announced the consideration of SB [157]. 1:33:35 PM MIKE NAVARRE, Commissioner, Department of Commerce, Community and Economic Development (DCCED), Juneau, Alaska, stated that SB 157 offers minor changes to an existing loan fund to allow better access and utilization by residents of Alaska and to help promote the economy. 1:34:05 PM BRITTENY CIONI-HAYWOOD, Director, Division of Economic Development, Department of Commerce, Community and Economic Development (DCCED), Juneau, Alaska, said SB 157 amends the revolving microloan fund. The purpose of the fund is to promote economic development in Alaska by assisting small and microbusinesses that may not have access to traditional financing. This access is badly needed capital that facilitates startups, expansion, and job creation throughout Alaska with a specific policy emphasis on rural communities. New businesses are responsible for 80 percent of new jobs in the United States and small startups and businesses have difficulty obtaining funding. Having an effective microloan fund focuses on lifestyle businesses, particularly those owned by rural Alaskans, immigrant entrepreneurs, and minorities. These loans could unlock a large number of new businesses that could serve as economic anchors in small communities. MS. CIONI-HAYWOOD said that the legislature created the microloan fund in 2012. The loans are made for working capital, equipment, construction, and other commercial purposes. The applicant must be an Alaska resident for a minimum of a year and loans may not be made to pay for costs incurred six months before the loan application. The current terms and conditions do not provide enough flexibility to allow micro businesses with limited cash flow to take advantage of the opportunity the loan should provide. The terms of the loan are one way to incentivize small businesses to take entrepreneurial risks to create Alaska jobs. The proposed changes in the bill will help propel growth in this sector and once the business is established and growing, it can avail itself of private sector financing. 1:36:52 PM MS. CIONI-HAYWOOD said the bill will correct the lower tier for a bank denial from $34,999 to $5,000. It increases the maximum loan term from six to 15 years and increases the interest rate calculation by one percentage point. The interest would be 6.25 percent today. It takes it from prime plus one percent to prime plus two percent. CHAIR COSTELLO stated support for the program. 1:37:42 PM SENATOR GARDNER asked the rationale for extending the loan term to 15 years. MS. CIONI-HAYWOOD cited the example of a loan for $35,000. The loan payment at 6 percent over five years is almost $700 a month. Amortizing that over 15 years drops the payment to under $300 a month. This helps with cash flow, which is often an issue for small and micro businesses. She pointed out that the maximum loan amount is not always granted SENATOR GARDNER asked if there was a standard for the type of collateral used. MS. CIONI-HAYWOOD said it's a case-by-case determination. 1:39:34 PM SENATOR STEVENS asked her to share information about successful loans. MS. CIONI-HAYWOOD said nine loans are outstanding and 14 have been approved over the life of the fund. Loans have been used for purchase of a boat trailer for a startup charter business, rebuilding an engine for a water taxi, remodeling a bed-and- breakfast, overhauling an aircraft engine, commercial kitchen equipment, and equipment for a photographer. 1:40:41 PM SENATOR MEYER asked if the state has made money off the loans. MS. CIONI-HAYWOOD said she didn't have information on the amount the state has made. One loan defaulted. SENATOR MEYER asked where the money goes. MS. CIONI-HAYWOOD said it stays within the revolving loan fund and is used for additional loans. 1:42:02 PM CHAIR COSTELLO opened public testimony on SB 157. 1:42:14 PM JULIET SHEPERD, Project Manager, Fairbanks Economic Development Corporation, Fairbanks, Alaska, testified in support of SB 157. She said she works closely with startups and small businesses. Fairbanks Economic Development (FEDC) supports SB 157. FEDC is a trustee for Kiva, which makes zero percent crowdfunding loans from $10,000 to $25,000 with a 36-month repayment period. Kiva loans fill a unique niche. The proposed improvements to the Alaska microloan revolving loan fund will help extend the reach of affordable, traditional funding to micro businesses, particularly in rural Alaska, and will help grow the Alaska economy. 1:45:07 PM CHAIR COSTELLO closed public testimony on SB 157. 1:45:17 PM SENATOR MEYER moved to report SB 157 from committee with individual recommendations and attached fiscal note(s). 1:45:31 PM CHAIR COSTELLO announced that without objection SB 157 moved from the Senate Labor and Commerce Standing Committee.
Document Name | Date/Time | Subjects |
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SB 157 - Version A.PDF |
SL&C 3/20/2018 1:30:00 PM |
SB 157 |
SB 157 - Transmittal Letter.pdf |
SL&C 3/20/2018 1:30:00 PM |
SB 157 |
SB 157 - Sectional Analysis.pdf |
SL&C 3/20/2018 1:30:00 PM |
SB 157 |
SB157-DCCED-INV-01-22-18.PDF |
SL&C 3/20/2018 1:30:00 PM |
SB 157 |