To amend section 122.011 and to enact sections 5903.21, 5903.22, 5903.23, 5903.24, 5903.25, 5903.26, 5903.27, 5903.28, and 5903.29 of the Revised Code to establish the Disabled Veterans Small Business Loan Program.

Section 1. That section 122.011 be amended and sections 5903.21, 5903.22, 5903.23, 5903.24, 5903.25, 5903.26, 5903.27, 5903.28, and 5903.29 of the Revised Code be enacted to read as follows:

Sec. 122.011.  (A) The development services agency shall develop and promote plans and programs designed to assure that state resources are efficiently used, economic growth is properly balanced, community growth is developed in an orderly manner, and local governments are coordinated with each other and the state, and for such purposes may do all of the following:

(1) Serve as a clearinghouse for information, data, and other materials that may be helpful or necessary to persons or local governments, as provided in section 122.073 of the Revised Code;

(2) Prepare and activate plans for the retention, development, expansion, and use of the resources and commerce of the state, as provided in section 122.04 of the Revised Code;

(3) Assist and cooperate with federal, state, and local governments and agencies of federal, state, and local governments in the coordination of programs to carry out the functions and duties of the agency;

(4) Encourage and foster research and development activities, conduct studies related to the solution of community problems, and develop recommendations for administrative or legislative actions, as provided in section 122.03 of the Revised Code;

(5) Serve as the economic and community development planning agency, which shall prepare and recommend plans and programs for the orderly growth and development of this state and which shall provide planning assistance, as provided in section 122.06 of the Revised Code;

(6) Cooperate with and provide technical assistance to state departments, political subdivisions, regional and local planning commissions, tourist associations, councils of government, community development groups, community action agencies, and other appropriate organizations for carrying out the functions and duties of the development services agency or for the solution of community problems;

(7) Coordinate the activities of state agencies that have an impact on carrying out the functions and duties of the development services agency;

(8) Encourage and assist the efforts of and cooperate with local governments to develop mutual and cooperative solutions to their common problems that relate to carrying out the purposes of this section;

(9) Study existing structure, operations, and financing of regional or local government and those state activities that involve significant relations with regional or local governmental units, recommend to the governor and to the general assembly such changes in these provisions and activities as will improve the operations of regional or local government, and conduct other studies of legal provisions that affect problems related to carrying out the purposes of this section;

(10) Create and operate a division of community development to develop and administer programs and activities that are authorized by federal statute or the Revised Code;

(11) Until October 15, 2007, establish fees and charges, in consultation with the director of agriculture, for purchasing loans from financial institutions and providing loan guarantees under the family farm loan program created under sections 901.80 to 901.83 of the Revised Code;

(12) Provide loan servicing for the loans purchased and loan guarantees provided under section 901.80 of the Revised Code as that section existed prior to October 15, 2007;

(13) Until October 15, 2007, and upon approval by the controlling board under division (A)(3) of section 901.82 of the Revised Code of the release of money to be used for purchasing a loan or providing a loan guarantee, request the release of that money in accordance with division (B) of section 166.03 of the Revised Code for use for the purposes of the fund created by section 166.031 of the Revised Code.;

(14) Allocate that portion of the national recovery zone economic development bond limitation and that portion of the national recovery zone facility bond limitation that has been allocated to the state under section 1400U-1 of the Internal Revenue Code, 26 U.S.C. 1400U-1. If any county or municipal corporation waives any portion of an allocation it receives under division (A)(14) of this section, the agency may reallocate that amount. Any allocation or reallocation shall be made in accordance with this section and section 1400U-1 of the Internal Revenue Code;

(15) Create and administer, and as it becomes advisable improve, a disabled veterans small business loan program, in consultation with the director of veterans services, under sections 5903.21 to 5903.29 of the Revised Code to provide assistance to disabled veterans who are establishing or operating small businesses in the state, and thereby to create or preserve jobs and employment opportunities and improve the economic welfare of the people of the state.

(B) The director of development services may request the attorney general to, and the attorney general, in accordance with section 109.02 of the Revised Code, shall bring a civil action in any court of competent jurisdiction. The director may be sued in the director's official capacity, in connection with this chapter, in accordance with Chapter 2743. of the Revised Code.

(C) The director shall execute a contract pursuant to section 187.04 of the Revised Code with the nonprofit corporation formed under section 187.01 of the Revised Code, and may execute any additional contracts with the corporation providing for the corporation to assist the director or agency in carrying out any duties of the director or agency under this chapter, under any other provision of the Revised Code dealing with economic development, or under a contract with the director, subject to section 187.04 of the Revised Code.

Sec. 5903.21.  As used in sections 5903.21 to 5903.29 of the Revised Code:

(A) "Disabled veteran" has the meaning defined in 38 U.S.C. 4211(3).

(B) "Small business" means a sole proprietorship, a partnership, a corporation, a limited liability company, or other business entity having fewer than four hundred employees.

Sec. 5903.22.  An individual is eligible for a loan or loan guarantee from the disabled veterans small business loan program if the individual:

(A) Is a disabled veteran;

(B) Plans to establish a small business in this state, operates a small business in this state, or owns at least a fifty-one per cent interest in an existing small business in this state;

(C) Can demonstrate that the small business, whether planned, operated, or majority-owned, reflects a viable business model;

(D) Is unable to finance the small business through ordinary financial channels at comparable terms; and

(E) Has not previously defaulted on a loan or loan guarantee received from the development services agency.

Sec. 5903.23.  An individual may apply for a loan or loan guarantee under the disabled veterans small business loan program by completing and filing an application with the director of development services on, and by attachments to, the prescribed form. The director shall prescribe a form for the application, and shall design the form so that it elicits facts and documentation establishing the applicant's eligibility for a loan or loan guarantee, and includes a space for the applicant to sign and date the application. By signing and dating the application, the applicant certifies that the applicant is eligible for a loan or loan guarantee under the disabled veterans small business loan program, and if a loan or loan guarantee is received, that the applicant will use the loan, or loan money that is covered by a loan guarantee, only to establish or operate a small business in the state, as the case may be.

The director shall provide a blank application form to an individual upon request. The director may enable a blank application to be downloaded from the development services agency web site.

Sec.  5903.24. (A) The director of development services shall accept a properly completed application for a loan or loan guarantee under the disabled veterans small business loan program. The director shall evaluate the application and verify whether the applicant is eligible for the loan or loan guarantee applied for. If the applicant is eligible, the director, insofar as funds are available in the disabled veterans small business loan program fund, may make a loan or provide a loan guarantee to the applicant.

(B) The director shall neither offer nor agree to a loan or loan guarantee under the disabled veterans small business loan program unless:

(1) It is consistent with the purpose of the disabled veterans small business loan program and the recipient's business model;

(2) The amount of the loan or loan guarantee does not exceed seventy-five per cent of the total amount the recipient proposes to spend in establishing or operating the small business; and

(3) The amount loaned or guaranteed is secured by a first or second mortgage or other security interest on the small business or, if it is acceptable to the director, by a first or second mortgage on, or other security interest in, other property of the recipient.

Except as otherwise provided by law, a first mortgage or other security interest securing the amount loaned or guaranteed has priority over all other mortgages and security interests in the small business, but not over a mortgage or other security interest that was previously made by a financial institution in connection with the establishment, acquisition, or expansion of all or part of the small business. Except as otherwise provided by law, a second mortgage or security interest securing the amount loaned or guaranteed, including a mortgage securing a loan or guarantee when the foregoing exception applies, is subordinate to the first mortgage or security interest in the small business and has priority over all other mortgages or security interests.

(C) The director shall enter into a contract with the recipient of a loan or loan guarantee under the disabled veterans small business loan program. The contract shall specify the amount of the loan or loan guarantee, the interest rate on a loan, the amount of a loan guarantee, times for payment of principal and interest on a loan, service fees and charges, and other terms and conditions of the loan or loan guarantee.

Sec.  5903.25. (A) The director of development services shall define the conditions under which the recipient of a loan under the disabled veterans small business loan program is in default under the loan, and shall specify how the director is to verify amounts for which the director becomes liable under a loan guarantee.

(B) The director shall attempt to recover from the recipient an amount that is in default under a loan, or an amount for which the director becomes liable under a loan guarantee. If the director fails to recover from the recipient, the director shall notify the attorney general. The attorney general shall commence and prosecute a civil action to recover the amount in default or for which the director has become liable.

Sec. 5903.26.  If an individual misrepresents the individual's self for the purpose of obtaining a loan or loan guarantee under the disabled veterans small business loan program, the individual is guilty of theft by deception under section 2913.02 of the Revised Code.

Sec. 5903.27.  There is the disabled veterans small business loan program fund in the state treasury. Appropriations made to the disabled veterans small business loan program, and grants, gifts, bequests, and other contributions to the program, shall be deposited into the fund. Money received from the repayment of a loan under the program, and money recovered after a default of a loan or accrual of liability under a loan guarantee, shall be deposited into the fund. Investment earnings of the fund shall be credited to the fund. The director of development services shall use money in the fund to make loans and to create a reserve for loan guarantees under the program.

Sec. 5903.28.  The director of development services, under Chapter 119. of the Revised Code, shall adopt and may amend or rescind rules necessary to create and administer, and as it becomes advisable improve, the disabled veterans small business loan program.

Sec. 5903.29.  The director of development services annually not later than the first day of March shall prepare a report describing operations of the disabled veterans small business loan program during the preceding calendar year. The report shall include information with regard to:

(A) The number of applications received, the number of applications rejected for improper completion, and the number of applications accepted and denied;

(B) The number and amount of loans and loan guarantees made, classified into descriptive ranges;

(C) A description of the small businesses for which loans have been made or guaranteed, and a discussion of how those businesses have created or preserved jobs and employment opportunities and improved the economic welfare of the people of the state;

(D) The number and amount of loans in default, the number and amount of loan guarantees that have resulted in liability, the number and amount of defaulted loans and guarantees paid out that have been recovered, classified into descriptive ranges; and

(E) Any other information the director considers necessary to explain administration of the disabled veterans small business loan program during the preceding calendar year.

The director shall transmit a copy of the report to the governor, the president and minority leader of the senate, the speaker and minority leader of the house of representatives, and the director of veterans services.

Section 2. That existing section 122.011 of the Revised Code is hereby repealed.