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.03, 
  1.5             subdivision 1, and by adding a subdivision; proposing 
  1.6             coding for new law in Minnesota Statutes, chapter 41B. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1996, section 41B.03, 
  1.9   subdivision 1, is amended to read: 
  1.10     Subdivision 1.  [ELIGIBILITY GENERALLY.] To be eligible for 
  1.11  a program in sections 41B.01 to 41B.23: 
  1.12     (1) a borrower must be a resident of Minnesota or a 
  1.13  domestic family farm corporation, as defined in section 500.24, 
  1.14  subdivision 2; 
  1.15     (2) except for rural small business loans, the borrower or 
  1.16  one of the borrowers must be the principal operator of the farm 
  1.17  or, for a prospective homestead redemption borrower, must have 
  1.18  at one time been the principal operator of a farm; and 
  1.19     (3) the borrower must not receive assistance under sections 
  1.20  41B.01 to 41B.23 exceeding an aggregate of $100,000 in loans 
  1.21  during the borrower's lifetime. 
  1.22     Sec. 2.  Minnesota Statutes 1996, section 41B.03, is 
  1.23  amended by adding a subdivision to read: 
  1.24     Subd. 7.  [ELIGIBILITY FOR RURAL SMALL BUSINESS LOANS.] In 
  1.25  addition to the requirements under subdivision 1, a prospective 
  1.26  borrower for a rural small business loan must: 
  2.1      (1) demonstrate a need for the loan; 
  2.2      (2) demonstrate an ability to repay the loan; 
  2.3      (3) make a cash contribution to the down payment for the 
  2.4   business in an amount at least equal to the loan amount; and 
  2.5      (4) certify that the borrower will operate the business for 
  2.6   which the loan is made. 
  2.7      Sec. 3.  [41B.047] [RURAL SMALL BUSINESS LOAN PROGRAM.] 
  2.8      Subdivision 1.  [ESTABLISHMENT.] The authority may 
  2.9   establish and implement a rural small business loan program to 
  2.10  facilitate the transfer and continued operation of small 
  2.11  businesses in rural Minnesota. 
  2.12     Subd. 2.  [PROGRAM REQUIREMENTS.] (a) The requirements of 
  2.13  this subdivision apply to the rural small business loan program. 
  2.14     (b) Loans may be made to assist buyers with down payments 
  2.15  for purchases of businesses in towns or cities with populations 
  2.16  under 5,000 or in unincorporated areas in rural counties. 
  2.17     (c) When businesses are to be purchased by contract for 
  2.18  deed, the borrower must obtain the seller's agreement to record 
  2.19  an enforceable lien against the business property in favor of 
  2.20  the authority in the amount of the loan. 
  2.21     (d) A loan made under this program shall not exceed ten 
  2.22  percent of the purchase price of the business. 
  2.23     (e) A loan made under this program shall not exceed $15,000.
  2.24     Sec. 4.  [APPROPRIATION.] 
  2.25     $500,000 is appropriated from the general fund to the 
  2.26  Minnesota rural finance authority for the rural small business 
  2.27  loan program. 
  2.28     Sec. 5.  [EFFECTIVE DATE.] 
  2.29     Sections 1 to 3 are effective July 1, 1997.