C.R.S. § 24-48.5-605: Small business recovery and resiliency loan program - creation - requirements - oversight.

(1) (a) The office is authorized to enter into a contract or contracts to establish a small business recovery and resiliency loan program in accordance with this part 6.

(b) The purpose of the loan program is to support Colorado small businesses by making loans, acquiring participation interest in loans, leveraging private small business lending through the Colorado credit reserve program, or other activities that accomplish the same purpose. The loan program is also designed to support resiliency for small businesses as new challenges emerge. The loan program may only make loans directly if federal or state bank regulators prohibit the banking industry from originating loans for the loan program.

(2) The office may contract with the Colorado housing and finance authority created in part 7 of article 4 of title 29 or with a bank, nonprofit organization, nondepository community development financial institution, business development corporation, certified public accountant firm, or fund manager to administer a loan program. If the office contracts with an entity other than the Colorado housing and finance authority to administer a loan program, the office shall use an open and competitive process to select the entity. The office shall consult with the oversight board in selecting and contracting with a loan program manager.

(3) (a) Notwithstanding any restriction on the investment of state money set forth in section 24-36-113 or in any other provision of law, subject to the availability of money in the small business recovery and resiliency fund and the requirements of this part 6, the office may provide first loss capital to a loan program or programs or to the Colorado credit reserve from the small business recovery and resiliency fund.

(I) and (II) (Deleted by amendment, L. 2024.)

(b) The money provided under this subsection (3) must be provided in tranches of ten million dollars or less.

(4) Any contract for the administration of a loan program must include the following terms in order to receive money provided by the office pursuant to subsection (3) of this section:

(a) Except for money contributed to the Colorado credit reserve, the money from the small business recovery and resiliency fund provided by the office in a single tranche may not be committed pursuant to a contract relating to a loan program until money is committed pursuant to a contract relating to a loan program from other sources at a ratio of at least one dollar from other sources for each one dollar provided by the state from the small business recovery and resiliency fund. If a loan program manager does not secure sufficient investments from other sources to meet this requirement within the time allowed by a contract, the money provided by the state must be returned to the small business recovery and resiliency fund.

(b) Except for money contributed to the Colorado credit reserve, once the money in a tranche is matched in accordance with subsection (4)(a) of this section, it must be used to make loans or purchase participation interest in loans for businesses as determined by the oversight board, including working capital and the purchase of equipment. The oversight board shall consult with lending industry leaders and representatives of small businesses with regard to subsections (4)(b)(I) to (4)(b)(VI) of this section. Each loan must be subject to the following terms:

(I) The loan must be in an amount of at least ten thousand dollars but not more than five hundred thousand dollars, as determined by the oversight board;

(II) The loan must have a maximum initial maturity of up to ten years, based on the need of the eligible borrower, with no penalty for prepayment, as determined by the oversight board. The originating lender may extend the term for purposes of restructuring the loan;

(III) The principal must be amortized over the term of the loan or a longer period, as determined by the oversight board;

(IV) Principal and interest payments may be deferred for up to one year, as determined by the oversight board, with the unpaid interest being capitalized. Deferrals must be limited to circumstances of hardship.

(V) The loan must carry an interest rate that is lower than would otherwise be available on a risk-adjusted basis from a commercial lender or that bears terms that are not otherwise available from a commercial lender, as determined by the oversight board; and

(VI) The eligible borrower may provide a personal guarantee, collateral, or other security as determined by the oversight board, which may be subordinate to existing debt.

(c) The loan program shall be used to fund businesses across the state over the duration of the program and, in accordance with section 24-48.5-604 (8)(d), shall maintain targets and support businesses located in rural counties and businesses owned by women, minorities, or veterans. The program shall track the distribution of capital to counties.

(d) (I) A loan program manager shall make every effort to achieve benchmarks published by the oversight board pursuant to section 24-48.5-604 (8)(d) for the percentage of loans supported by the program that are made to businesses owned by socially and economically disadvantaged individuals, including businesses owned by women, minorities, and veterans, and to businesses located in rural counties. A loan program manager shall consult with the minority business office within the office of the governor and the division of business funding and incentives within the office to develop an outreach strategy for marketing the loan program to businesses owned by women, minorities, and veterans and businesses located in rural counties.

(II) For money contributed to the Colorado credit reserve, the oversight board may waive the requirements of this subsection (4)(d) or may establish alternative benchmarks for the percentage of loans supported by the program that are made to businesses owned by socially and economically disadvantaged individuals, including businesses owned by women, minorities, and veterans, and to businesses located in rural counties.

(e) A loan program manager shall work with the division of business funding and incentives within the office to align the program with other access to capital programs in the state.

(5) If the money in a tranche is not fully invested in small business loans as determined by the oversight board in the time period allowed under a contract, the portion of the unused money provided by the state must be returned to the small business recovery and resiliency fund.

(6) Distributions or revenue paid to the state pursuant to a contract under this section must be deposited in the small business recovery and resiliency fund.

(7) The loan program manager shall report on the implementation of the loan program to the oversight board at least quarterly, within one month after the end of each calendar quarter, or more often if requested by the oversight board. The report must include the information necessary to allow the oversight board to provide the reports required in section 24-48.5-604 (12), and any additional information requested by the board.