House Bill Analysis - ESSB 5167, Linked Deposit Program (hearing date 2/21/20)
Summary
A House Bill Analysis of ESSB 5167, addressing the linked deposit program, prepared by the Office of Program Research for the Innovation, Technology & Economic Development Committee of the Washington State House of Representatives, with a hearing date of 2/21/20. The brief summary says the bill authorizes the Office of Minority and Women's Business Enterprises to adopt rules to prioritize loans under the Linked Deposit Program, and requires a line of credit with a zero balance for 12 or more months to be removed from the program. The background section says a qualifying loan cannot exceed $1 million per business. It states that the bill takes effect 90 days after adjournment of the session in which it is passed.
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“House Bill Analysis - ESSB 5167, Linked Deposit Program (hearing date 2/21/20).”
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Washington State BILL
House of Representatives
Office of Program Research ANALYSIS
Innovation, Technology & Economic
Development Committee
ESSB 5167
Brief Description: Addressing the linked deposit program.
Sponsors: Senate Committee on Financial Institutions, Economic Development & Trade
(originally sponsored by Senators Hasegawa, Saldaña, Darneille, Frockt, Keiser, Nguyen and
Mullet).
Brief Summary of Engrossed Substitute Bill
Authorizes the Office of Minority and Women's Business Enterprises to adopt rules
to prioritize loans under the Linked Deposit Program (Program) that create jobs in
underserved communities with inadequate access to capital for applicants that do not
currently have loans with other small business lending agencies.
Requires any line of credit issued under the Program with a zero balance for 12 or
more months to be removed from the Program.
Hearing Date: 2/21/20
Staff: Kyle Raymond (786-7190).
Background:
The Linked Deposit Program (Program) was created with the stated purpose of increasing access
to business capital for the state's certified minority-owned, women-owned, and veteran-owned
businesses. The Program allows certified businesses to obtain reduced interest rate loans from
participating financial institutions. Qualifying veteran-owned businesses are certified by the
Department of Veterans Affairs, and qualified minority and women-owned businesses are
certified by the Office of Minority and Women's Business Enterprises (OMWBE).
The Washington State Treasurer (Treasurer) is authorized to use short-term state treasury surplus
funds for the Program. The Treasurer may use up to $15 million per year of the total Program
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This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not a part of the legislation nor does it
constitute a statement of legislative intent.
House Bill Analysis -1- ESSB 5167
funds for reduced interest rate loans made to veteran-owned businesses, and the Treasurer may
use up to $175 million in funding for minority-owned and women-owned business loans. These
funds are deposited in qualified financial institutions as certificates of deposit (CDs) on the
condition the institution makes "qualifying loans" under the Program. The state forgoes up to 2
percent interest on the CDs and requires the financial institution to pass along the interest rate
preference to qualified loan recipients.
Qualifying loans can include lines of credit, financing of accounts receivable, working capital,
equipment purchases, real property acquisition, and other business-related financing. A
qualifying loan cannot exceed $1 million per business or have a repayment period greater than
10 years.
The OMWBE has the authority to adopt rules implementing the Program that:
ensure first priority is given to businesses that have never received a loan under the
Program;
limit the total principal loan amount any one business or owner may receive over the
business's or owner's lifetime;
limit the total amount of any one loan under the Program; and
ensure loans by community development financial institutions are made to qualified
minority and women's businesses.
The Department of Commerce (Department) provides technical assistance and loan packaging
services to the OMWBE to obtain financing under the Program. The Department consults with
the OMWBE to develop indicators that measure the Program's performance related to job
creation, job retention, and access to capital for minority and women-owned businesses.
Summary of Bill:
The Office of Minority and Women's Business Enterprises is authorized to adopt rules to
prioritize loans under the Linked Deposit Program (Program) that create jobs in underserved
communities with inadequate access to capital for applicants that do not currently have loans
with other small business lending agencies.
A line of credit issued under the Program that has a zero balance for 12 months or more must be
removed from the Program.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is
passed.
House Bill Analysis -2- ESSB 5167
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