The act creates the Colorado startup loan program (program) in the office of economic development (office) as a revolving loan program to provide loans and grants to businesses seeking capital to start, restart, or restructure a business. The office must contract with a business nonprofit organization, bank, nondepository community development financial institution, or other entity to administer the program, and does not have direct lending authority to make loans under the program.
The office or an administrator is required to establish policies for the program, including:
- The process and deadlines for applying to the program;
- The eligibility criteria for businesses;
- Maximum assistance levels for loans and grants;
- Loan terms, program fees, and underwriting and risk management policies; and
- Reporting requirements for recipients.
The policies must be developed with the goal of generating enough return to replenish the Colorado startup loan program fund for further loan allocations.
In determining the eligibility of applicants and the size and terms of loans and grants, the office or an administrator must consider:
- The need of the business to restructure as a result of the COVID-19 pandemic or the ability of the business to fill gaps left by closures resulting from the COVID-19 pandemic;
- The financial losses or other impacts from the COVID-19 pandemic that may inhibit an entrepreneur from obtaining capital through traditional sources;
- Whether the applicant or the applicant's community faces other barriers to accessing capital from traditional sources; and
- The applicant's financial needs and the likelihood the applicant would need to be supported by a nontraditional lender.
If the administrator determines that an applicant would likely be eligible to receive a loan and may obtain more favorable terms from a traditional financial institution, the administrator must notify the applicant in a timely manner.
The office is required to work with the minority business office and other stakeholders to promote the program to businesses that are owned by women, minorities, and veterans and to businesses in rural and underserved communities. By September 1, 2021, the office is required to develop and administer a marketing initiative for the program in coordination with the minority business office and other stakeholders.
The act creates the Colorado startup loan program fund. The state treasurer is required to transfer $30 million from the general fund to the Colorado startup loan program fund on the effective date of the act. The money is continuously appropriated to the office for the program. In addition, $10 million is appropriated from the economic recovery and relief cash fund to the Colorado startup loan program fund. This money is continuously appropriated to the office to provide loans and grants through the program to respond to the negative impacts of the COVID-19 pandemic, subject to the requirements in state and federal law.
(Note: This summary applies to this bill as enacted.)