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12 U.S.C. § 4743 — Approving States for participation

Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4743 — Approving States for participation

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Source file: Laws/federal/codes/united-states-code/title-12/section-4743-approving-states-for-participation--b8f4e02790.md
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Source location: Title 12, Chapter 47, § 4743; chapter-047-community-development-banking.md

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**(a) Application** Any State may apply to the Fund for approval to be a participating State under the Program and to be eligible for reimbursement by the Fund pursuant to [section 4747 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4747&num=0&edition=prelim). **(b) Approval criteria** The Fund shall approve a State to be a participating State, if— (1) a specific department or agency of the State has been designated to implement the Program; (2) all legal actions necessary to enable such designated department or agency to implement the Program have been accomplished; (3) funds in the amount of at least $1 for every 2 people residing in the State (as of the last decennial census for which data have been released) are available and have been legally committed to contributions by the State to reserve funds, with such funds being available without time limit and without requiring additional legal action, except that such requirements shall not be construed to limit the authority of the State to take action at a later time that results in the termination of its obligation to enroll loans and make contributions to reserve funds; (4) the State has prescribed a form of participation agreement to be entered into between it and each participating financial institution that is consistent with the requirements and purposes of this subchapter; and (5) the State and the Fund have executed a reimbursement agreement that conforms to the requirements of this subchapter. **(c) Existing State programs** (1) **In general** — A State that is not a participating State, but that has its own capital access program providing portfolio insurance for business loans (based on a separate loss reserve fund for each financial institution), may apply at any time to the Fund to be approved to be a participating State. The Fund shall approve such State to be a participating State, and to be eligible for reimbursements by the Fund pursuant to [section 4747 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4747&num=0&edition=prelim), if the State— (A) satisfies the requirements of subsections (a) and (b); and (B) certifies that each affected financial institution has satisfied the requirements of [section 4744 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4744&num=0&edition=prelim). (2) **Applicable terms of participation** (A) *Status of institutions* — If a State is approved for participation under paragraph (1), each financial institution with a participation agreement in effect with the participating State shall immediately be considered a participating financial institution. Reimbursements may be made under section 4747 11 See References in Text note below. of this title in connection with all contributions made to the reserve fund by the State in connection with lending that occurs on or after the date on which the Fund approves the State for participation. (B) *Effective date of participation* — If an amended participation agreement that conforms with [section 4745 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4745&num=0&edition=prelim) is required in order to secure participation approval by the Fund, contributions subject to reimbursement under [section 4747 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4747&num=0&edition=prelim) shall include only those contributions made to a reserve fund with respect to loans enrolled on or after the date that an amended participation agreement between the participating State and the participating financial institution becomes effective. (C) *Use of accumulated reserve funds* — A State that is approved for participation in accordance with this subsection may continue to implement the program 22 So in original. Probably should be capitalized. utilizing the reserve funds accumulated under the State program. **(d) Prior appropriations requirement** The Fund shall not approve a State for participation in the Program until at least $50,000,000 has been appropriated to the Fund (subject to an appropriations Act), without fiscal year limitation, for the purpose of making reimbursements pursuant to [section 4747 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4747&num=0&edition=prelim) and otherwise carrying out this subchapter. **(e) Amendments to agreements** If a State that has been approved to be a participating State wishes to amend its form of participation agreement and continue to be a participating State, such State shall submit such amendment for review by the Fund in accordance with subsection (b)(4). Any such amendment shall become effective only after it has been approved by the Fund.

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4745 — Terms of participation agreements

**(a) In general** The participation agreement to be entered into by a participating State and a participating financial institution shall include all provisions required by this section, and shall not include any provisions inconsistent with the provisions of this section. **(b) Establishment of separate reserve funds** A separate reserve fund shall be established by the participating State for each participating financial institution. All funds credited to a reserve fund shall be the exclusive property of the participating State. Each reserve fund shall be an administrative account for the purposes of— (1) receiving all required premium charges to be paid by the borrower and participating financial institution and contributions by the participating State; and (2) disbursing funds, either to cover losses sustained by the participating financial institution in connection with loans made under the Program, or as contemplated by subsections (d) and (r). **(c) Investment authority** Subject to applicable State law, the participating State may invest, or cause to be invested, funds held in a reserve fund by establishing a deposit account at the participating financial institution in the name of the participating State. In the event that funds in the reserve fund are not deposited in such an account, such funds shall be invested in a form that the participating State determines is safe and liquid. **(d) Earned income and interest** Interest or income earned on the funds credited to a reserve fund shall be deemed to be part of the reserve fund, except that a participating State may, as further specified in the participation agreement, provide authority for the participating State to withdraw some or all of such interest or income earned. **(e) Loan terms and conditions*

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4747 — Reimbursement by Fund

**(a) Reimbursements** Not later than 30 calendar days after receiving a report filed in compliance with [section 4746 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4746&num=0&edition=prelim), the Fund shall reimburse the participating State in an amount equal to 50 percent of the amount of contributions by the participating State to the reserve funds that are subject to reimbursement by the Fund pursuant to [section 4746 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4746&num=0&edition=prelim) and this section. The Fund shall reimburse participating States, as it receives reports pursuant to [section 4746(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4746/a&num=0&edition=prelim), until available funds are expended. **(b) Size of assisted borrower** The Fund shall not provide any reimbursement to a participating State with respect to an enrolled loan made to a borrower that has 500 or more employees at the time that the loan is enrolled in the Program. **(c) Three-year maximum** The amount of reimbursement to be provided by the Fund to a participating State over any 3-year period in connection with loans made to any single borrower or any group of borrowers among which a common enterprise exists shall not exceed $75,000. For purposes of this subsection, “common enterprise” shall have the same meaning as in part 32 of title 12 of the Code of Federal Regulations, or any successor to that part. **(d) Loans totaling less than $2,000,000** In connection with a loan in which the covered amount of the loan plus the covered amount of all previous loans enrolled by a participating financial institution does not exceed $2,000,000, the amount

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4744 — Participation agreements

**(a) In general** A participating State may enter into a participation agreement with any financial institution determined by the participating State, after consultation with the appropriate Federal banking agency, to have sufficient commercial lending experience and financial and managerial capacity to participate in the Program. The determination by the State shall not be reviewable by the Fund. **(b) Participating financial institutions** Upon entering into the participation agreement with the participating State, the financial institution shall become a participating financial institution eligible to enroll loans under the Program.

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4742 — Definitions

For purposes of this subchapter— (1) the term “Fund” means the Community Development Financial Institutions Fund established under [section 4703 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4703&num=0&edition=prelim); (2) the term “appropriate Federal banking agency”— (A) has the same meaning as in [section 1813 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1813&num=0&edition=prelim); and (B) includes the National Credit Union Administration Board in the case of any credit union the deposits of which are insured in accordance with the Federal Credit Union Act [[12 U.S.C. 1751](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1751&num=0&edition=prelim) et seq.]; (3) the term “early loan” means a loan enrolled at a time when the aggregate covered amount of loans previously enrolled under the Program by a particular participating financial institution is less than $5,000,000; (4) the term “enrolled loan” means a loan made by a participating financial institution that is enrolled by a participating State in accordance with this subchapter; (5) the term “financial institution” means any federally chartered or State-chartered commercial bank, savings association, savings bank, or credit union; (6) the term “participating financial institution” means any financial institution that has entered into a participation agreement with a participating State in accordance with [section 4744 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4744&num=0&edition=prelim); (7) the term “participating State” means any State that has been approved for participation in the Program in accordance with [section 4743 of this titl

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4743 — Approving States for participation

Page 1755 TITLE 12—BANKS AND BANKING § 4743 1 So in original. Probably should be capitalized. 1 See References in Text note below. 2 So in original. Probably should be capitalized. (9) the term ‘‘Program’’ means the Small Business Capital Enhancement Program estab- lished under this subchapter; (10) the term ‘‘reserve fund’’ means a fund, established by a participating State, ear- marked for a particular participating financial institution, for the purposes of— (A) depositing all required premium charges paid by the participating financial institution and by each borrower receiving a loan under the Program from a participating financial institution; (B) depositing contributions made by the participating State; and (C) covering losses on enrolled loans by disbursing accumulated funds; and (11) the term ‘‘State’’ means— (A) a State of the United States; (B) the District of Columbia; (C) any political subdivision of a State of the United States, which subdivision has a population in excess of the population of the least populated State of the United States; and (D) any other political subdivision of a State of the United States that the Fund de- termines has the capacity to participate in the program.1 (Pub. L. 103–325, title II, § 252, Sept. 23, 1994, 108 Stat. 2204.) Editorial Notes REFERENCES IN TEXT The Federal Credit Union Act, referred to in par. (2)(B), is act June 26, 1934, ch. 750, 48 Stat. 1216, which is classified generally to chapter 14 (§ 1751 et seq.) of this title. For complete classification of this Act to the Code, see section 1751 of this title and Tables. § 4743. Approving States for participation (a) Application Any State may apply to the Fund for approval to be a participating State under the Program and to be e

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