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 subsecs. (d) and (e). Subsec. (f). Pub. L. 117–2, § 3301(c), added subsec. (f). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2021 AMENDMENT Amendment by Pub. L. 117–2 applicable with respect to funds appropriated under section 3301 of Pub. L. 117–2 and funds appropriated on and after Mar. 11, 2021, see section 3301(g) of Pub. L. 117–2, set out as a note under section 5701 of this title. § 5703. Approving States for participation (a) Application Any State may apply to the Secretary for ap- proval to be a participating State under the Pro- gram and to be eligible for an allocation of Fed- eral 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 polit- ical subdivision of the State has been des- ignated 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 accom- plished; (3) the State has filed an application with the Secretary for approval of a State capital access program under section 5704 of this title or approval as a State other credit support program under section 5705 of this title, in each case within the time period provided in the respective section; and (4) the State and the Secretary have exe- cuted an allocation agreement that— (A) conforms to the requirements of this chapter; (B) ensures that the State program com- plies with such national standards as are es- tablished by the Secretary under section 5708(a)(2) of this title; (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 pur- poses of this chapter, including an agree- ment 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 agree- ment 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 annu- ally, a schedule describing how the State in- tends to apportion among its State programs the Federal funds allocated to the State. (c) Contractual arrangements for implementa- tion of State programs A State may be approved to be a participating State, and be eligible for an allocation of Fed- eral funds under the Program, if the State has contractual arrangements for the implementa- tion and administration of its State program with— (1) an existing, approved State program ad- ministered by another State; or (2) an authorized agent of, or entity super- vised 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 Sec- retary 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 munici- palities of that State a special permission that will allow them to apply directly to the Sec- retary without the State for approval to be participating municipalities. (2) Timing requirements applicable to munici- palities applying directly To qualify for the special permission, a mu- nicipality 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. Page 2018 TITLE 12—BANKS AND BANKING § 5704 (5) Allocation to municipalities (A) If more than 3 If more than 3 municipalities, or combina- tion of municipalities as provided in para- graph (3), of a State apply for approval by the Secretary to be participating munici- palities under this subsection, and the appli- cations meet the approval criteria in para- graph (4), the Secretary shall allocate Fed- eral funds to the 3 municipalities with the largest populations. (B) If 3 or fewer If 3 or fewer municipalities, or combina- tion of municipalities as provided in para- graph (3), of a State apply for approval by the Secretary to be participating munici- palities under this subsection, and the appli- cations meet the approval criteria in para- graph (4), the Secretary shall allocate Fed- eral 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 sub- section, the Secretary shall apportion the full amount of the Federal funds that are allocated to that State to municipalities that are ap- proved under this subsection in amounts pro- portionate to the population of those munici- palities, based on the most recent available decennial census. (7) Approving State programs for municipali- ties If the Secretary approves municipalities to be participating municipalities under this sub- section, the Secretary shall take into account the additional considerations in section 5705(d) of this title 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. (Pub. L. 111–240, title III, § 3004, Sept. 27, 2010, 124 Stat. 2573; Pub. L. 117–2, title III, § 3301(a)(1)(B), Mar. 11, 2021, 135 Stat. 69.) Editorial Notes AMENDMENTS 2021—Subsec. (d)(1), (2). Pub. L. 117–2 substituted ‘‘March 11, 2021’’ for ‘‘September 27, 2010’’ whenever ap- pearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2021 AMENDMENT Amendment by Pub. L. 117–2 applicable with respect to funds appropriated under section 3301 of Pub. L. 117–2 and funds appropriated on and after Mar. 11, 2021, see section 3301(g) of Pub. L. 117–2, set out as a note under section 5701 of this title. § 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 cap- ital access program as eligible for Federal con- tributions 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; 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 ap- proved 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 in- surance premium charges paid by the borrower and the financial institution to the reserve fund for any newly enrolled loan; and (4) provides its portfolio insurance solely for loans that meet both the following require- ments: (A) The borrower has 500 employees or less at the time that the loan is enrolled in the Program. (B) The loan amount does not exceed $5,000,000. (d) Federal contributions to approved State cap- ital access programs A State capital access program approved under this section will be eligible for receiving Federal contributions to the reserve fund in an amount equal to the sum of the amount of the insurance premium charges paid by the bor- rowers and by the financial institution to the re- serve fund for loans that meet the requirements in subsection (c)(4). A participating State may use the Federal contribution to make its con- tribution to the reserve fund of an approved State capital access program. (e) Minimum program requirements for State capital access programs The Secretary shall, by regulation or other guidance, prescribe Program requirements that meet the following minimum requirements: (1) Experience and capacity The participating State shall determine for each financial institution that participates in