2023 Colorado Revised Statutes › Title 24 - GOVERNMENT - STATE (§§ 24-1-101 — 24-116-102) › PRINCIPAL DEPARTMENTS (§§ 24-30-101 — 24-36-306) › Article 36 - Department of the Treasury (§§ 24-36-101 — 24-36-306) › Part 2 - SMALL BUSINESS RECOVERY LOAN PROGRAM (§§ 24-36-201 — 24-36-210) › Section 24-36-205 - [Repealed Effective 9/1/2024] [Renumbered Effective 9/1/2024] Small business recovery loan program - creation - requirements - oversight

(1)
(a)
The state treasurer is authorized to enter into a contract or contracts to establish a small business recovery loan program in accordance with this part 2.
(b)
The purpose of the loan program is to support the state's recovery from the economic crisis caused by COVID-19 through leveraging private investment to support Colorado small businesses recovering from the crisis caused by COVID-19 by making loans, acquiring participation interest in loans, leveraging private small business lending through the Colorado credit reserve program, or other activities that accomplish the same purpose. The loan program shall only make loans directly if federal or state bank regulators prohibit the banking industry from originating loans for the loan program.
(2)
The state treasurer may contract with the Colorado housing and finance authority created in part 7 of article
4
of title
29
or with a bank, nonprofit organization, nondepository community development financial institution, business development corporation, certified public accountant firm, or fund manager to administer a loan program. If the state treasurer contracts with an entity other than the Colorado housing and finance authority to administer a loan program, the state treasurer shall use an open and competitive process to select the entity. The state treasurer shall consult with the director of the office of economic development and the oversight board in selecting and contracting with a loan program manager.
(3)
(a)
Notwithstanding any restriction on the investment of state money set forth in section
24-36-113
or in any other provision of law, subject to the availability of money in the small business recovery fund and the requirements of this part 2:
(I)
In fiscal year 2020-21, the state treasurer may provide up to thirty million dollars in first loss capital to a loan program or programs or to the Colorado credit reserve from the small business recovery fund; and
(II)
Subject to the limitations in subsection (3)(b) of this section, in fiscal years 2021-22, 2022-23, and 2023-24, the state treasurer may provide up to a total of forty million dollars in first loss capital to a loan program or programs or to the Colorado credit reserve from the small business recovery fund.
(b)
The money provided under this subsection (3) must be provided in tranches of ten million dollars or less, up to a maximum amount of fifty million dollars in all tranches combined across fiscal years 2020-21 through 2023-24. The state treasurer shall not provide a tranche to a loan program or to the Colorado credit reserve until at least ninety percent of the money in any prior tranche has been invested in small business loans in accordance with subsection (4) of this section, as determined by the oversight board and certified by the loan program manager. Money provided to the Colorado credit reserve is considered invested in small business loans for the purposes of this subsection (3)(b) once it is paid to the Colorado housing and finance authority.
(4)
Any contract for the administration of a loan program must include the following terms in order to receive money provided by the state treasurer pursuant to subsection (3) of this section:
(a)
Except for money contributed to the Colorado credit reserve, the money provided by the state treasurer in a single tranche shall not be committed pursuant to a contract relating to a loan program until money is committed pursuant to a contract relating to a loan program from other sources at a ratio of at least four dollars from other sources for each one dollar provided by the state. If a loan program manager does not secure sufficient investments from other sources to meet this requirement within the time allowed by a contract, the money provided by the state shall be returned to the small business recovery fund.
(b)
Except for money contributed to the Colorado credit reserve, once the money in a tranche is matched in accordance with subsection (4)(a) of this section, it must be used to make loans or purchase participation interest in loans for working capital, including the purchase of equipment, to eligible borrowers, or other activities that accomplish the same purpose. The oversight board shall consult with lending industry leaders and representatives of small businesses with regard to subsections (4)(b)(I) to (4)(b)(VI) of this section. Each loan must be subject to the following terms:
(I)
The loan must be in an amount of at least ten thousand dollars but not more than five hundred thousand dollars, as determined by the oversight board;
(II)
The loan must have a maximum initial maturity of up to ten years, based on the need of the eligible borrower, with no penalty for prepayment, as determined by the oversight board. The originating lender may extend the term for purposes of restructuring the loan.
(III)
The principal must be amortized over the term of the loan or a longer period, as determined by the oversight board;
(IV)
Principal and interest payments may be deferred for up to one year, as determined by the oversight board, with the unpaid interest being capitalized. Deferrals must be limited to circumstances of hardship created by the COVID-19 pandemic.
(V)
The loan must carry an interest rate that is lower than would otherwise be available on a risk-adjusted basis from a commercial lender or that bears terms that are not otherwise available from a commercial lender, as determined by the oversight board; and
(VI)
The eligible borrower may provide a personal guarantee, collateral, or other security as determined by the oversight board, which may be subordinate to existing debt.
(c)
(I)
In order to ensure geographic equity, each tranche of loan funding must be subject to an initial period of time in which a portion of the money is allocated to each county on a basis proportional to the county's share of small businesses relative to the state, the county's share of small business employees relative to the state, the county's share of small business personal property relative to the state, or other similar metrics as determined by the oversight board, or based on a formula established under subsection (4)(c)(IV) of this section. The money allocated to each county must be reserved for applications from eligible borrowers located in that county for the initial period of time. For the purposes of this subsection (4)(c), an eligible borrower is considered to be located in the county in which it has its principal place of business, as reflected in its most recent filing with the secretary of state or subject to such other documentation as the oversight board establishes. The oversight board shall determine the amount of time in which the money in each tranche is subject to a geographic restriction under this subsection (4)(c)(I).
(II)
Once the time period established by the oversight board under subsection (4)(c)(I) of this section has passed, all money remaining in the tranche is available to eligible borrowers on a statewide basis.
(III)
For money contributed to the Colorado credit reserve, the oversight board may waive the requirements of this subsection (4)(c) or establish alternative geographic distribution requirements or targets.
(IV)
For any tranche of loan funding, the oversight board may, in its discretion, establish an alternative formula for the allocation of funds to counties for purposes of subsection (4)(c)(I) of this section that accounts for how affected each county has been by the COVID-19 pandemic and its impacts.
(d)
(I)
A loan program manager shall make every effort to achieve benchmarks published by the oversight board pursuant to section
24-36-204 (8)(d)
for the percentage of loans supported by the program that are made to businesses owned by socially and economically disadvantaged individuals, including businesses owned by women, minorities, and veterans and to businesses located in rural counties. A loan program manager shall consult with the minority business office within the office of the governor and the division of business funding and incentives within the office of economic development to develop an outreach strategy for marketing the loan program to businesses owned by women, minorities, and veterans and businesses located in rural counties.
(II)
For money contributed to the Colorado credit reserve, the oversight board may waive the requirements of this subsection (4)(d) or may establish alternative benchmarks for the percentage of loans supported by the program that are made to businesses owned by socially and economically disadvantaged individuals, including businesses owned by women, minorities, and veterans and to businesses located in rural counties.
(e)
A loan program manager shall work with the division of business funding and incentives within the office of economic development to align the program with other access to capital programs in the state.
(5)
If the money in a tranche is not fully invested in small business loans as determined by the oversight board in the time period allowed under a contract, the portion of the unused money provided by the state shall be returned to the small business recovery fund.
(6)
Distributions or revenue paid to the state pursuant to a contract under this section shall be deposited in the small business recovery fund; except that, if such distributions or revenue are paid after the small business recovery fund is repealed, the money shall be paid to the state treasurer, who shall credit the money to the general fund.
(7)
The loan program manager shall report on the implementation of the loan program to the oversight board at least quarterly, within one month after the end of each calendar quarter, or more often if requested by the oversight board. The reports must include the information necessary to allow the board to provide the reports required in section
24-36-204 (12)
, and any additional information requested by the board.
Repealed by 2024 Ch. 355,§ 2, eff. 9/1/2024.
Renumbered as C.R.S. §
24-48.5-605
by 2024 Ch. 355,§ 1, eff. 9/1/2024.
Amended by 2022 Ch. 374, § 2, eff. 6/3/2022.
Added by 2020 Ch. 121, § 1, eff. 6/23/2020.
L. 2020: Entire part added, (HB 20-1413), ch. 510, p. 510, § 1, effective June 23.