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12 U.S.C. § 5703 — Approving States for participation

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

12 U.S.C. § 5703 — Approving States for participation

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Source location: Title 12, Chapter 54, § 5703; chapter-054-state-small-business-credit-initiative.md

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**(a) Application** Any State may apply to the Secretary for approval to be a participating State under the Program and to be eligible for an allocation of Federal funds under the Program. **(b) General approval criteria** The Secretary shall approve a State to be a participating State, if— (1) a specific department, agency, or political subdivision of the State has been designated to implement a State program and participate in the Program; (2) all legal actions necessary to enable such designated department, agency, or political subdivision to implement a State program and participate in the Program have been accomplished; (3) the State has filed an application with the Secretary for approval of a State capital access program under [section 5704 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section5704&num=0&edition=prelim) or approval as a State other credit support program under [section 5705 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section5705&num=0&edition=prelim), in each case within the time period provided in the respective section; and (4) the State and the Secretary have executed an allocation agreement that— (A) conforms to the requirements of this chapter; (B) ensures that the State program complies with such national standards as are established by the Secretary under [section 5708(a)(2) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section5708/a/2&num=0&edition=prelim); (C) sets forth internal control, compliance, and reporting requirements as established by the Secretary, and such other terms and conditions necessary to carry out the purposes of this chapter, including an agreement by the State to allow the Secretary to audit State programs; (D) requires that the State program be fully positioned, within 90 days of the State’s execution of the allocation agreement with the Secretary, to act on providing the kind of credit support that the State program was established to provide; and (E) includes an agreement by the State to deliver to the Secretary, and update annually, a schedule describing how the State intends to apportion among its State programs the Federal funds allocated to the State. **(c) Contractual arrangements for implementation of State programs** A State may be approved to be a participating State, and be eligible for an allocation of Federal funds under the Program, if the State has contractual arrangements for the implementation and administration of its State program with— (1) an existing, approved State program administered by another State; or (2) an authorized agent of, or entity supervised by, the State, including for-profit and not-for-profit entities. **(d) Special permission** (1) **Circumstances when a municipality may apply directly** — If a State does not, within 60 days after March 11, 2021, file with the Secretary a notice of its intent to apply for approval by the Secretary of a State program or within 9 months after March 11, 2021, file with the Secretary a complete application for approval of a State program, the Secretary may grant to municipalities of that State a special permission that will allow them to apply directly to the Secretary without the State for approval to be participating municipalities. (2) **Timing requirements applicable to municipalities applying directly** — To qualify for the special permission, a municipality of a State shall be required, within 12 months after March 11, 2021, to file with the Secretary a complete application for approval by the Secretary of a State program. (3) **Notices of intent and applications from more than 1 municipality** — A municipality of a State may combine with 1 or more other municipalities of that State to file a joint notice of intent to file and a joint application. (4) **Approval criteria** — The general approval criteria in paragraphs (2) and (4) shall apply. (5) **Allocation to municipalities** (A) *If more than 3* — If more than 3 municipalities, or combination of municipalities as provided in paragraph (3), of a State apply for approval by the Secretary to be participating municipalities under this subsection, and the applications meet the approval criteria in paragraph (4), the Secretary shall allocate Federal funds to the 3 municipalities with the largest populations. (B) *If 3 or fewer* — If 3 or fewer municipalities, or combination of municipalities as provided in paragraph (3), of a State apply for approval by the Secretary to be participating municipalities under this subsection, and the applications meet the approval criteria in paragraph (4), the Secretary shall allocate Federal funds to each applicant municipality or combination of municipalities. (6) **Apportionment of allocated amount among participating municipalities** — If the Secretary approves municipalities to be participating municipalities under this subsection, the Secretary shall apportion the full amount of the Federal funds that are allocated to that State to municipalities that are approved under this subsection in amounts proportionate to the population of those municipalities, based on the most recent available decennial census. (7) **Approving State programs for municipalities** — If the Secretary approves municipalities to be participating municipalities under this subsection, the Secretary shall take into account the additional considerations in [section 5705(d) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section5705/d&num=0&edition=prelim) in making the determination under section 5704 or 5705 of this title that the State program or programs to be implemented by the participating municipalities, including a State capital access program, is eligible for Federal contributions to, or for the account of, the State program.

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

12 U.S.C. § 5704 — Approving State capital access programs

**(a) Application** A participating State that establishes a new, or has an existing, State capital access program that meets the eligibility criteria in subsection (c) may apply to Secretary to have the State capital access program approved as eligible for Federal contributions to the reserve fund. **(b) Approval** The Secretary shall approve such State capital access program as eligible for Federal contributions to the reserve fund if— (1) within 60 days after March 11, 2021, the State has filed with the Secretary a notice of intent to apply for approval by the Secretary of a State capital access program; (2) within 9 months after March 11, 2021, the State has filed with the Secretary a complete application for approval by the Secretary of a capital access program; (3) the State satisfies the requirements of subsections (a) and (b) of [section 5703 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section5703&num=0&edition=prelim); and (4) the State capital access program meets the eligibility criteria in subsection (c). **(c) Eligibility criteria for State capital access programs** For a State capital access program to be approved under this section, that program shall be required to be a program of the State that— (1) provides portfolio insurance for business loans based on a separate loan-loss reserve fund for each financial institution; (2) requires insurance premiums to be paid by the financial institution lenders and by the business borrowers to the reserve fund to have their loans enrolled in the reserve fund; (3) provides for contributions to be made by the State to the reserve fund in amounts at least equal to the sum of the amount of the insurance premium charges paid by the borrower and the financial institution to

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

12 U.S.C. § 5701 — Definitions

In this chapter, the following definitions shall apply: (1) **Appropriate committees of Congress** — The term “appropriate committees of Congress” means— (A) the Committee on Small Business and Entrepreneurship, the Committee on Agriculture, Nutrition, and Forestry, the Committee on Banking, Housing, and Urban Affairs, the Committee on Finance, the Committee on the Budget, and the Committee on Appropriations of the Senate; and (B) the Committee on Small Business, the Committee on Agriculture, the Committee on Financial Services, the Committee on Ways and Means, the Committee on the Budget, and the Committee on Appropriations of the House of Representatives. (2) **Appropriate Federal banking agency** — The term “appropriate Federal banking agency”— (A) has the same meaning as in [section 1813(q) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1813/q&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) **Enrolled loan** — The term “enrolled loan” means a loan made by a financial institution lender that is enrolled by a participating State in an approved State capital access program in accordance with this chapter. (4) **Federal contribution** — The term “Federal contribution” means the portion of the contribution made by a participating State to, or for the account of, an approved State program that is made with Federal funds allocated to the State by the Secretary under [section 5702 of this title](https://uscode.house.gov/view.xhtml?r

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

12 U.S.C. § 5705 — Approving collateral support and other innovative credit access and guarantee initiatives for small businesses and manufacturers

**(a) Application** A participating State that establishes a new, or has an existing, credit support program that meets the eligibility criteria in subsection (c) may apply to the Secretary to have the State other credit support program approved as eligible for Federal contributions to, or for the account of, the State program. **(b) Approval** The Secretary shall approve such State other credit support program as eligible for Federal contributions to, or for the account of, the program if— (1) the Secretary determines that the State satisfies the requirements of paragraphs (1) through (3) of [section 5704(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section5704/b&num=0&edition=prelim); (2) the Secretary determines that the State other credit support program meets the eligibility criteria in subsection (c); (3) the Secretary determines the State other credit support program to be eligible based on the additional considerations in subsection (d); and (4) within 9 months after March 11, 2021, the State has filed with Treasury a complete application for Treasury approval. **(c) Eligibility criteria for State other credit support programs** For a State other credit support program to be approved under this section, that program shall be required to be a program of the State that— (1) can demonstrate that, at a minimum, $1 of public investment by the State program will cause and result in $1 of new private credit; (2) can demonstrate a reasonable expectation that, when considered with all other State programs of the State, such State programs together have the ability to use amounts of new Federal contributions to, or for the account of, all such programs in the State to cause and result in amounts of new small business lendi

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

12 U.S.C. § 5702 — Federal funds allocated to States

**(a) Program established; purpose** There is established the State Small Business Credit Initiative, to be administered by the Secretary. Under the Program, the Secretary shall allocate Federal funds to participating States and make the allocated funds available to the participating States as provided in this section for the uses described in this section. **(b) Allocation formula** (1) **In general** — Not later than 30 days after March 11, 2021, the Secretary shall allocate Federal funds to participating States so that each State is eligible to receive an amount equal to what the State would receive under the 2021 allocation, as determined under paragraph (2). (2) **2021 allocation formula** (A) *In general* — With respect to States other than Tribal governments, the Secretary shall determine the 2021 allocation by allocating Federal funds among the States in the proportion that each such State’s 2020 State employment decline bears to the aggregate of the 2020 State employment declines for all States. (B) *Minimum allocation* — The Secretary shall adjust the allocations under subparagraph (A) for each State to the extent necessary to ensure that no State receives less than 0.9 percent of the Federal funds. (C) *11 So in original. Two subpars. (C) have been enacted. 2020 State employment decline defined* — In this paragraph and with respect to a State, the term “2020 State employment decline” means the excess (if any) of— (i) the number of individuals employed in such State determined for December 2019; over (ii) the number of individuals employed in such State determined for December 2020. (C) *1 Separate allocation for Tribal governments* (i) *In general* — With respect to States that are Tribal governments, the Secretary shall determin

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

12 U.S.C. § 5703 — Approving States for participation

Page 2017 TITLE 12—BANKS AND BANKING § 5703 (1) required allocation of funds by 30 days after Sept. 27, 2010. Subsec. (b)(2). Pub. L. 117–2, § 3301(a)(1)(A)(ii)(II)(bb), substituted ‘‘2020’’ for ‘‘2008’’ wherever appearing. Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(aa), substituted ‘‘2021’’ for ‘‘2009’’ in heading and in subpar. (A). Subsec. (b)(2)(A). Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(cc), substituted ‘‘With respect to States other than Tribal governments, the Secretary’’ for ‘‘The Secretary’’. Subsec. (b)(2)(C). Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(ee), added subpar. (C) relating to separate allocation for tribal governments. Subsec. (b)(2)(C)(i). Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(dd), substituted ‘‘2019’’ for ‘‘2007’’ in cl. (i) of subpar. (C) defining 2020 State employment de- cline. Subsec. (b)(2)(D). Pub. L. 117–2, § 3301(a)(1)(A)(i)(II)(ee), added subpar. (D). Subsec. (b)(3). Pub. L. 117–2, § 3301(a)(1)(A)(i)(III), struck out par. (3) which provided for the 2010 alloca- tion formula. Subsec. (c)(1)(A)(iii). Pub. L. 117–2, § 3301(a)(1)(A)(ii)(I), inserted before period at end ‘‘that have delivered loans or investments to eligible busi- nesses’’. Subsec. (c)(4). Pub. L. 117–2, § 3301(a)(1)(A)(ii)(II), amended par. (4) generally. Prior to amendment, text read as follows: ‘‘Any portion of a participating State’s allocated amount that has not been transferred to the State under this section by the end of the 2-year period beginning on the date that the Secretary approves the State for participation may be deemed by the Sec- retary to be no longer allocated to the State and no longer available to the State and shall be returned to the General Fund of the Treasury.’’ Subsecs. (d), (e). Pub. L. 117–2, § 3301(b), added s

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