1.1                          A bill for an act
  1.2             relating to economic development; establishing a rural 
  1.3             small business loan program; appropriating money; 
  1.4             amending Minnesota Statutes 1996, section 41B.025, by 
  1.5             adding a subdivision. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1996, section 41B.025, is 
  1.8   amended by adding a subdivision to read: 
  1.9      Subd. 5a.  [MEETINGS.] Meetings of the authority may be 
  1.10  held by way of electronic media, including, but not limited to, 
  1.11  telephonic communication. 
  1.12     Sec. 2.  [RURAL SMALL BUSINESS LOAN PROGRAM.] 
  1.13     Subdivision 1.  [ESTABLISHMENT.] The rural finance 
  1.14  authority must establish a pilot program for rural small 
  1.15  business loans to facilitate the transfer and continued 
  1.16  operation of small businesses in rural Minnesota.  The authority 
  1.17  may utilize nonstate organizations to administer the pilot 
  1.18  program. 
  1.19     Subd. 2.  [REVOLVING FUND.] There is established in the 
  1.20  state treasury a rural small business revolving fund that is 
  1.21  eligible to receive appropriations.  All repayments of loans 
  1.22  granted under subdivision 1, including principal and interest, 
  1.23  must be deposited into this fund.  Interest earned on money in 
  1.24  the fund accrues to the fund, and money in the fund is 
  1.25  appropriated to the commissioner of agriculture for purposes of 
  2.1   the rural small business loan program, including costs incurred 
  2.2   by the authority to establish and administer the program. 
  2.3      Subd. 3.  [PROGRAM REQUIREMENTS.] (a) The requirements of 
  2.4   this subdivision apply to the rural small business loan pilot 
  2.5   program. 
  2.6      (b) Loans may be made to assist buyers with down payments 
  2.7   for purchases of businesses in towns or cities with populations 
  2.8   under 5,000 or in unincorporated areas in rural counties. 
  2.9      (c) When businesses are to be purchased by contract for 
  2.10  deed, the borrower must obtain the seller's agreement to record 
  2.11  an enforceable lien against the business property in favor of 
  2.12  the authority in the amount of the loan. 
  2.13     (d) The rural finance authority must hold the first lien on 
  2.14  all real and personal property financed under this program. 
  2.15     (e) A loan made under this program must not exceed ten 
  2.16  percent of the purchase price of the business. 
  2.17     (f) A loan made under this program must not exceed $15,000. 
  2.18     (g) The authority may impose a reasonable nonrefundable 
  2.19  application fee for each application for a loan participation 
  2.20  and an origination fee for each loan issued under the rural 
  2.21  small business loan program.  The origination fee initially 
  2.22  shall be set at 0.5 percent and the application fee at $50.  The 
  2.23  authority may review the fees annually and make adjustments as 
  2.24  necessary.  The fees must be deposited in the state treasury and 
  2.25  credited to the rural small business revolving fund. 
  2.26     Subd. 4.  [ELIGIBILITY FOR RURAL SMALL BUSINESS LOANS.] A 
  2.27  prospective borrower for a rural small business loan must: 
  2.28     (1) be a resident of Minnesota or a closely held 
  2.29  corporation under Minnesota Statutes, section 302A.011, 
  2.30  subdivision 6a; 
  2.31     (2) have sufficient education, training, or experience in 
  2.32  the type of business for which the loan is desired or agree to 
  2.33  participate in a business entrepreneur training program approved 
  2.34  by the commissioner of agriculture for at least two years; 
  2.35     (3) demonstrate a need for the loan; 
  2.36     (4) demonstrate an ability to repay the loan; 
  3.1      (5) make a cash contribution to the down payment for the 
  3.2   business in an amount at least equal to the loan amount; 
  3.3      (6) certify that the borrower or one of the borrowers will 
  3.4   operate the business for which the loan is made; and 
  3.5      (7) certify that the business will be the principal 
  3.6   occupation of the borrower. 
  3.7      Sec. 3.  [APPROPRIATION.] 
  3.8      $250,000 is appropriated from the general fund to the 
  3.9   Minnesota rural finance authority for the rural small business 
  3.10  loan pilot program. 
  3.11     Sec. 4.  [EFFECTIVE DATE.] 
  3.12     Section 1 is effective July 1, 1997.