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| To amend section 122.011 and to enact sections | 1 |
| 5903.21, 5903.22, 5903.23, 5903.24, 5903.25, | 2 |
| 5903.26, 5903.27, 5903.28, and 5903.29 of the | 3 |
| Revised Code to establish the Disabled Veterans | 4 |
| Small Business Loan Program. | 5 |
| Section 1. That section 122.011 be amended and sections | 6 |
| 5903.21, 5903.22, 5903.23, 5903.24, 5903.25, 5903.26, 5903.27, | 7 |
| 5903.28, and 5903.29 of the Revised Code be enacted to read as | 8 |
| follows: | 9 |
| Sec. 122.011. (A) The development services agency shall | 10 |
| develop and promote plans and programs designed to assure that | 11 |
| state resources are efficiently used, economic growth is properly | 12 |
| balanced, community growth is developed in an orderly manner, and | 13 |
| local governments are coordinated with each other and the state, | 14 |
| and for such purposes may do all of the following: | 15 |
| (1) Serve as a clearinghouse for information, data, and other | 16 |
| materials that may be helpful or necessary to persons or local | 17 |
| governments, as provided in section 122.073 of the Revised Code; | 18 |
| (2) Prepare and activate plans for the retention, | 19 |
| development, expansion, and use of the resources and commerce of | 20 |
| the state, as provided in section 122.04 of the Revised Code; | 21 |
| (3) Assist and cooperate with federal, state, and local | 22 |
| governments and agencies of federal, state, and local governments | 23 |
| in the coordination of programs to carry out the functions and | 24 |
| duties of the agency; | 25 |
| (4) Encourage and foster research and development activities, | 26 |
| conduct studies related to the solution of community problems, and | 27 |
| develop recommendations for administrative or legislative actions, | 28 |
| as provided in section 122.03 of the Revised Code; | 29 |
| (5) Serve as the economic and community development planning | 30 |
| agency, which shall prepare and recommend plans and programs for | 31 |
| the orderly growth and development of this state and which shall | 32 |
| provide planning assistance, as provided in section 122.06 of the | 33 |
| Revised Code; | 34 |
| (6) Cooperate with and provide technical assistance to state | 35 |
| departments, political subdivisions, regional and local planning | 36 |
| commissions, tourist associations, councils of government, | 37 |
| community development groups, community action agencies, and other | 38 |
| appropriate organizations for carrying out the functions and | 39 |
| duties of the development services agency or for the solution of | 40 |
| community problems; | 41 |
| (7) Coordinate the activities of state agencies that have an | 42 |
| impact on carrying out the functions and duties of the development | 43 |
| services agency; | 44 |
| (8) Encourage and assist the efforts of and cooperate with | 45 |
| local governments to develop mutual and cooperative solutions to | 46 |
| their common problems that relate to carrying out the purposes of | 47 |
| this section; | 48 |
| (9) Study existing structure, operations, and financing of | 49 |
| regional or local government and those state activities that | 50 |
| involve significant relations with regional or local governmental | 51 |
| units, recommend to the governor and to the general assembly such | 52 |
| changes in these provisions and activities as will improve the | 53 |
| operations of regional or local government, and conduct other | 54 |
| studies of legal provisions that affect problems related to | 55 |
| carrying out the purposes of this section; | 56 |
| (10) Create and operate a division of community development | 57 |
| to develop and administer programs and activities that are | 58 |
| authorized by federal statute or the Revised Code; | 59 |
| (11) Until October 15, 2007, establish fees and charges, in | 60 |
| consultation with the director of agriculture, for purchasing | 61 |
| loans from financial institutions and providing loan guarantees | 62 |
| under the family farm loan program created under sections 901.80 | 63 |
| to 901.83 of the Revised Code; | 64 |
| (12) Provide loan servicing for the loans purchased and loan | 65 |
| guarantees provided under section 901.80 of the Revised Code as | 66 |
| that section existed prior to October 15, 2007; | 67 |
| (13) Until October 15, 2007, and upon approval by the | 68 |
| controlling board under division (A)(3) of section 901.82 of the | 69 |
| Revised Code of the release of money to be used for purchasing a | 70 |
| loan or providing a loan guarantee, request the release of that | 71 |
| money in accordance with division (B) of section 166.03 of the | 72 |
| Revised Code for use for the purposes of the fund created by | 73 |
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section 166.031 of the Revised Code | 74 |
| (14) Allocate that portion of the national recovery zone | 75 |
| economic development bond limitation and that portion of the | 76 |
| national recovery zone facility bond limitation that has been | 77 |
| allocated to the state under section 1400U-1 of the Internal | 78 |
| Revenue Code, 26 U.S.C. 1400U-1. If any county or municipal | 79 |
| corporation waives any portion of an allocation it receives under | 80 |
| division (A)(14) of this section, the agency may reallocate that | 81 |
| amount. Any allocation or reallocation shall be made in accordance | 82 |
| with this section and section 1400U-1 of the Internal Revenue | 83 |
| Code; | 84 |
| (15) Create and administer, and as it becomes advisable | 85 |
| improve, a disabled veterans small business loan program, in | 86 |
| consultation with the director of veterans services, under | 87 |
| sections 5903.21 to 5903.29 of the Revised Code to provide | 88 |
| assistance to disabled veterans who are establishing or operating | 89 |
| small businesses in the state, and thereby to create or preserve | 90 |
| jobs and employment opportunities and improve the economic welfare | 91 |
| of the people of the state. | 92 |
| (B) The director of development services may request the | 93 |
| attorney general to, and the attorney general, in accordance with | 94 |
| section 109.02 of the Revised Code, shall bring a civil action in | 95 |
| any court of competent jurisdiction. The director may be sued in | 96 |
| the director's official capacity, in connection with this chapter, | 97 |
| in accordance with Chapter 2743. of the Revised Code. | 98 |
| (C) The director shall execute a contract pursuant to section | 99 |
| 187.04 of the Revised Code with the nonprofit corporation formed | 100 |
| under section 187.01 of the Revised Code, and may execute any | 101 |
| additional contracts with the corporation providing for the | 102 |
| corporation to assist the director or agency in carrying out any | 103 |
| duties of the director or agency under this chapter, under any | 104 |
| other provision of the Revised Code dealing with economic | 105 |
| development, or under a contract with the director, subject to | 106 |
| section 187.04 of the Revised Code. | 107 |
| Sec. 5903.21. As used in sections 5903.21 to 5903.29 of the | 108 |
| Revised Code: | 109 |
| (A) "Disabled veteran" has the meaning defined in 38 U.S.C. | 110 |
| 4211(3). | 111 |
| (B) "Small business" means a sole proprietorship, a | 112 |
| partnership, a corporation, a limited liability company, or other | 113 |
| business entity having fewer than four hundred employees. | 114 |
| Sec. 5903.22. An individual is eligible for a loan or loan | 115 |
| guarantee from the disabled veterans small business loan program | 116 |
| if the individual: | 117 |
| (A) Is a disabled veteran; | 118 |
| (B) Plans to establish a small business in this state, | 119 |
| operates a small business in this state, or owns at least a | 120 |
| fifty-one per cent interest in an existing small business in this | 121 |
| state; | 122 |
| (C) Can demonstrate that the small business, whether planned, | 123 |
| operated, or majority-owned, reflects a viable business model; | 124 |
| (D) Is unable to finance the small business through ordinary | 125 |
| financial channels at comparable terms; and | 126 |
| (E) Has not previously defaulted on a loan or loan guarantee | 127 |
| received from the development services agency. | 128 |
| Sec. 5903.23. An individual may apply for a loan or loan | 129 |
| guarantee under the disabled veterans small business loan program | 130 |
| by completing and filing an application with the director of | 131 |
| development services on, and by attachments to, the prescribed | 132 |
| form. The director shall prescribe a form for the application, and | 133 |
| shall design the form so that it elicits facts and documentation | 134 |
| establishing the applicant's eligibility for a loan or loan | 135 |
| guarantee, and includes a space for the applicant to sign and date | 136 |
| the application. By signing and dating the application, the | 137 |
| applicant certifies that the applicant is eligible for a loan or | 138 |
| loan guarantee under the disabled veterans small business loan | 139 |
| program, and if a loan or loan guarantee is received, that the | 140 |
| applicant will use the loan, or loan money that is covered by a | 141 |
| loan guarantee, only to establish or operate a small business in | 142 |
| the state, as the case may be. | 143 |
| The director shall provide a blank application form to an | 144 |
| individual upon request. The director may enable a blank | 145 |
| application to be downloaded from the development services agency | 146 |
| web site. | 147 |
| Sec. 5903.24. (A) The director of development services shall | 148 |
| accept a properly completed application for a loan or loan | 149 |
| guarantee under the disabled veterans small business loan program. | 150 |
| The director shall evaluate the application and verify whether the | 151 |
| applicant is eligible for the loan or loan guarantee applied for. | 152 |
| If the applicant is eligible, the director, insofar as funds are | 153 |
| available in the disabled veterans small business loan program | 154 |
| fund, may make a loan or provide a loan guarantee to the | 155 |
| applicant. | 156 |
| (B) The director shall neither offer nor agree to a loan or | 157 |
| loan guarantee under the disabled veterans small business loan | 158 |
| program unless: | 159 |
| (1) It is consistent with the purpose of the disabled | 160 |
| veterans small business loan program and the recipient's business | 161 |
| model; | 162 |
| (2) The amount of the loan or loan guarantee does not exceed | 163 |
| seventy-five per cent of the total amount the recipient proposes | 164 |
| to spend in establishing or operating the small business; and | 165 |
| (3) The amount loaned or guaranteed is secured by a first or | 166 |
| second mortgage or other security interest on the small business | 167 |
| or, if it is acceptable to the director, by a first or second | 168 |
| mortgage on, or other security interest in, other property of the | 169 |
| recipient. | 170 |
| Except as otherwise provided by law, a first mortgage or | 171 |
| other security interest securing the amount loaned or guaranteed | 172 |
| has priority over all other mortgages and security interests in | 173 |
| the small business, but not over a mortgage or other security | 174 |
| interest that was previously made by a financial institution in | 175 |
| connection with the establishment, acquisition, or expansion of | 176 |
| all or part of the small business. Except as otherwise provided by | 177 |
| law, a second mortgage or security interest securing the amount | 178 |
| loaned or guaranteed, including a mortgage securing a loan or | 179 |
| guarantee when the foregoing exception applies, is subordinate to | 180 |
| the first mortgage or security interest in the small business and | 181 |
| has priority over all other mortgages or security interests. | 182 |
| (C) The director shall enter into a contract with the | 183 |
| recipient of a loan or loan guarantee under the disabled veterans | 184 |
| small business loan program. The contract shall specify the amount | 185 |
| of the loan or loan guarantee, the interest rate on a loan, the | 186 |
| amount of a loan guarantee, times for payment of principal and | 187 |
| interest on a loan, service fees and charges, and other terms and | 188 |
| conditions of the loan or loan guarantee. | 189 |
| Sec. 5903.25. (A) The director of development services shall | 190 |
| define the conditions under which the recipient of a loan under | 191 |
| the disabled veterans small business loan program is in default | 192 |
| under the loan, and shall specify how the director is to verify | 193 |
| amounts for which the director becomes liable under a loan | 194 |
| guarantee. | 195 |
| (B) The director shall attempt to recover from the recipient | 196 |
| an amount that is in default under a loan, or an amount for which | 197 |
| the director becomes liable under a loan guarantee. If the | 198 |
| director fails to recover from the recipient, the director shall | 199 |
| notify the attorney general. The attorney general shall commence | 200 |
| and prosecute a civil action to recover the amount in default or | 201 |
| for which the director has become liable. | 202 |
| Sec. 5903.26. If an individual misrepresents the | 203 |
| individual's self for the purpose of obtaining a loan or loan | 204 |
| guarantee under the disabled veterans small business loan program, | 205 |
| the individual is guilty of theft by deception under section | 206 |
| 2913.02 of the Revised Code. | 207 |
| Sec. 5903.27. There is the disabled veterans small business | 208 |
| loan program fund in the state treasury. Appropriations made to | 209 |
| the disabled veterans small business loan program, and grants, | 210 |
| gifts, bequests, and other contributions to the program, shall be | 211 |
| deposited into the fund. Money received from the repayment of a | 212 |
| loan under the program, and money recovered after a default of a | 213 |
| loan or accrual of liability under a loan guarantee, shall be | 214 |
| deposited into the fund. Investment earnings of the fund shall be | 215 |
| credited to the fund. The director of development services shall | 216 |
| use money in the fund to make loans and to create a reserve for | 217 |
| loan guarantees under the program. | 218 |
| Sec. 5903.28. The director of development services, under | 219 |
| Chapter 119. of the Revised Code, shall adopt and may amend or | 220 |
| rescind rules necessary to create and administer, and as it | 221 |
| becomes advisable improve, the disabled veterans small business | 222 |
| loan program. | 223 |
| Sec. 5903.29. The director of development services annually | 224 |
| not later than the first day of March shall prepare a report | 225 |
| describing operations of the disabled veterans small business loan | 226 |
| program during the preceding calendar year. The report shall | 227 |
| include information with regard to: | 228 |
| (A) The number of applications received, the number of | 229 |
| applications rejected for improper completion, and the number of | 230 |
| applications accepted and denied; | 231 |
| (B) The number and amount of loans and loan guarantees made, | 232 |
| classified into descriptive ranges; | 233 |
| (C) A description of the small businesses for which loans | 234 |
| have been made or guaranteed, and a discussion of how those | 235 |
| businesses have created or preserved jobs and employment | 236 |
| opportunities and improved the economic welfare of the people of | 237 |
| the state; | 238 |
| (D) The number and amount of loans in default, the number and | 239 |
| amount of loan guarantees that have resulted in liability, the | 240 |
| number and amount of defaulted loans and guarantees paid out that | 241 |
| have been recovered, classified into descriptive ranges; and | 242 |
| (E) Any other information the director considers necessary to | 243 |
| explain administration of the disabled veterans small business | 244 |
| loan program during the preceding calendar year. | 245 |
| The director shall transmit a copy of the report to the | 246 |
| governor, the president and minority leader of the senate, the | 247 |
| speaker and minority leader of the house of representatives, and | 248 |
| the director of veterans services. | 249 |
| Section 2. That existing section 122.011 of the Revised Code | 250 |
| is hereby repealed. | 251 |