AB 375

This bill makes certain changes to loan guarantees made by the Wisconsin

Housing and Economic Development Authority (WHEDA).

Under current law, WHEDA may guarantee repayment of a portion of the

principal of a loan to a Wisconsin business employing 50 or fewer employees on a

full-time basis if the proceeds of the loan are used for the expansion or acquisition

of a business, the start-up of a child care business, or the start-up of a small business

in a vacant storefront located in the downtown area of a rural community (small

business loan guarantee). A small business loan guarantee may not exceed 80

percent of the principal of a loan or $200,000, whichever is less.

The bill deletes the start-up of a child care business as an eligible use of loan

proceeds subject to a small business loan guarantee, and the bill adds as an eligible

use the start-up of a small business engaged in manufacturing, processing,

contracting, agriculture, forestry, or providing services. The bill also raises the

maximum limit of a small business loan guarantee to $750,000.

Also under current law, WHEDA may guarantee a loan that meets certain

conditions to a farmer to finance farming-related expenses (agricultural production

loan guarantee). The term of a loan eligible for an agricultural production loan

guarantee may not extend past March 31 of the calendar year following the calendar

year in which the loan is made. The bill extends the eligible loan term to December

31 of the calendar year following the calendar year in which the loan is made.

Finally, under current law, small business loan guarantees and agricultural

production loan guarantees, in addition to other kinds of loans guaranteed by

WHEDA, are funded by the Wisconsin development reserve fund, which is

administered by WHEDA. The total amount of loans that may be guaranteed by

WHEDA under all loan guarantee programs funded by the Wisconsin development

reserve fund is $49,500,000. Annually on June 30, the balance remaining in the

Wisconsin development reserve fund transfers to the general fund.

The bill raises the total limit of the Wisconsin development reserve fund to

$115,000,000. The bill also establishes a $15,000,000 bonding limit for WHEDA for

all small business loan guarantees and agricultural production loan guarantees

combined. Any excess amounts raised by WHEDA under bonds for small business

loan guarantees and agricultural production loan guarantees are not transferred to

the general fund annually on June 30, but remain in the Wisconsin development

reserve fund.