State department would offer forgivable loans to local businesses

The Department of Community and Economic Development would run a loan program for eligible local businesses. A business may qualify if it is in an area the department identifies as an eligible commercial corridor, or plans to locate there within six months after loan approval. The department would decide which areas qualify and set the program guidelines. The bill would take effect 90 days after enactment.

The department would review applications competitively and could award loans from $25,000 to $50,000. Loans could pay for eligible improvements at a business’s new or existing location, such as equipment, security systems, lighting, or refrigeration. The department would weigh a project’s neighborhood business mix, customer traffic, unmet needs, financial feasibility, the applicant’s investment, community support, and effects on jobs. The bill would take effect 90 days after enactment.

The department would forgive a loan if the recipient meets program guidelines for five years; otherwise, the recipient would have to repay it. These terms would apply to recipients of loans under the program. If a recipient fails to meet the guidelines, repayment would be due within five years. Interest on the principal would begin when the recipient fails to meet the guidelines. Forgiven loans would not count as taxable income under Article III of the Tax Reform Code. The five-year period would apply to meeting program guidelines; interest would start when a recipient fails to meet them.

The department would report each year on program applications, loans, and possible changes to its guidelines. The report would cover the program’s operation during the preceding fiscal year. The reports would go to the Governor and specified legislative committee leaders. The first report would be due December 31, 2026, with later reports due each year.