An Act to Establish a Small-cap Loan Guarantee Program for
Maine Legislature, Session 132, LD 1238
Committee: Housing and Economic Development
Sponsors: ARCHER, BRADSTREET
Amends: 30-A MRSA §4834

Legislative Document
No. 1238
H.P. 813
House of Representatives, March 25, 2025
An Act to Establish a Small-cap Loan Guarantee Program for 
Affordable Housing Investments
Reference to the Committee on Housing and Economic Development suggested and 
ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative ARCHER of Saco.
Cosponsored by Senator BRADSTREET of Kennebec and
Representatives: GERE of Kennebunkport, JULIA of Waterville, MACIAS of Topsham.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  30-A MRSA §4834 is enacted to read:
§4834.  Small-cap Loan Guarantee Program
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "Administrator" means the Maine State Housing Authority or an organization 
contracted by the Maine State Housing Authority to administer the program.
B.  "Affordable housing" means a housing unit that is affordable to a household with 
an income at or below 80% of the area median income, as defined by the United States 
Department of Housing and Urban Development.
C.  "Loan guarantee" means the State's promise to repay a portion or all of a loan made 
to a participant if the participant defaults.
D.  "Low-income housing" means a housing unit that is specifically designed to serve 
a household with an income at or below 60% of the area median income, as defined by 
the United States Department of Housing and Urban Development.
E.  "Participant" means an eligible investor or developer that participates in the 
program.
F.  "Program" means the Small-cap Loan Guarantee Program established in subsection 
2.
G.  "Small-cap project" means an affordable housing or low-income housing 
construction or rehabilitation project with a value of $1,000,000 or less.
2.  Small-cap Loan Guarantee Program established.  The Small-cap Loan 
Guarantee Program is established to provide a state-backed loan guarantee to an investor 
or developer that commits to a small-cap project. The program is administered by the Maine 
State Housing Authority, which may contract with an organization to administer the 
program. The program must:
A.  Offer state-backed loan guarantees to participants on financing for small-cap 
projects;
B.  Prioritize small-cap projects that provide long-term options or increase housing 
stock for low-income housing, particularly in underserved areas; and
C.  Require that a housing unit constructed or rehabilitated by a loan backed by the 
program retains its original status as affordable housing or low-income housing for 10 
years from the date of completion of the small-cap project.
3.  Program eligibility.  To be eligible for the program, an investor or developer must:
A.  Submit a detailed proposal for a small-cap project that states:
(1)  The number of housing units to be constructed or rehabilitated;
(2)  The expected impact on the community; and
(3)  The proposed financing structure;
B.  Demonstrate financial stability and the ability to complete the small-cap project 
under paragraph A on time and within budget; 
C.  Enter into a loan guarantee agreement with the administrator; 
D.  Pay the application fee under subsection 6; and
E.  Comply with all state and local zoning, building and environmental laws, rules and 
regulations.
4.  Loan guarantee conditions.  A loan guarantee for a small-cap project loan:
A.  Covers an amount of the loan based upon the risk level of the loan as determined 
by the administrator;
B.  May cover up to 20% of the amount of the loan, subject to availability of funds in 
the program; and
C.  Remains in place for the duration of the loan repayment period up to 20 years.
5.  Default; administrator's authority to bill participants.  If a participant defaults 
on a loan backed by a loan guarantee:
A.  The administrator may assume responsibility for repayment of the loan up to the 
guaranteed portion of the loan amount in accordance with the loan guarantee agreement 
under subsection 3, paragraph C;
B.  Upon repaying the loan, the administrator may bill the participant for the full 
amount paid by the administrator, including any interest, penalty or fee related to the 
default;
C.  The administrator may pursue any legal means necessary to recover funds owed 
under paragraph B, including filing a lien against the participant's property or seeking 
a court judgment; 
D.  If the default is determined to be caused by a fraudulent action by the participant, 
the administrator may pursue other penalties as provided by law; and
E.  The participant must repay the full amount owed to the State under paragraph B and 
any additional costs incurred by the administrator in collecting the amount within a 
period determined by the administrator, not to exceed 10 years.
6.  Application fee.  The program is funded by an application fee paid by the 
participant upon application to the program, which covers program administrative and 
operational costs. The amount of the application fee is determined by the administrator 
based on the total loan guarantee amount and risk assessment of the small-cap project under 
subsection 4. 
7.  Evaluation; report.  The administrator shall conduct an annual evaluation of the 
program to assess the program's effectiveness in meeting program goals of increasing 
affordable housing availability and supporting investors and developers of small-cap 
projects. The Maine State Housing Authority shall submit an annual report based upon the 
evaluation and detailing the use of program funds, the status of active loans backed by loan 
guarantees and the number of affordable housing and low-income housing units 
constructed or rehabilitated to the joint standing committee of the Legislature having 
jurisdiction over housing and economic development matters.
8.  Oversight.  If the Maine State Housing Authority contracts with an organization to 
administer the program, the Maine State Housing Authority shall exercise oversight over 
the organization's administration of the program. The State Auditor shall review the 
program annually to ensure compliance with this section and to monitor the financial health 
of the program.
9.  Rules.  The Maine State Housing Authority shall adopt rules to carry out the 
purposes of this section. Rules adopted under this subsection are routine technical rules 
under Title 5, chapter 375, subchapter 2-A.
Sec. 2.  Small-cap Loan Guarantee Program implementation.  On or before 
January 1, 2027, the Maine State Housing Authority or an organization contracted by the 
Maine State Housing Authority shall begin accepting applications for the Small-cap Loan 
Guarantee Program established under the Maine Revised Statutes, Title 30-A, section 4834.
Sec. 3.  Effective date. This Act takes effect July 1, 2026.
SUMMARY
This bill creates the Small-cap Loan Guarantee Program, through which the State 
provides loan guarantees to investors and developers for small-cap projects.  A small-cap 
project is an affordable housing or low-income housing construction or rehabilitation 
project with a value of $1,000,000 or less. Under the bill, affordable housing is housing 
that is affordable to a household with an income at or below 80% of the area median 
income, as defined by the United States Department of Housing and Urban Development, 
and low-income housing is housing specifically designed to serve a household with an 
income at or below 60% of the area median income, as defined by the United States 
Department of Housing and Urban Development. The program is administered by the 
Maine State Housing Authority or an organization contracted by the Maine State Housing 
Authority to administer the program and funded by application fees based upon the amount 
and risk assessed of each loan guaranteed by the program.