West Bill Lends Underutilized Contractors Up To $500K For Bonds

The text as introduced · 1,240 words

89R1345 CXP-D

By: West
S.B. No. 222

A BILL TO BE ENTITLED

AN ACT

relating to the creation of a revolving loan program to fund the

purchase by historically underutilized businesses of certain bonds

required for public work contracts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 2253, Government Code, is amended by

adding Subchapter E to read as follows:

SUBCHAPTER E. REVOLVING LOAN PROGRAM FOR BOND ASSISTANCE

Sec. 2253.101. DEFINITIONS. In this subchapter:

(1) "Historically underutilized business" has the

meaning assigned by Section 2161.001.

(2) "Revolving loan program" means the program

established by the comptroller under this subchapter.

Sec. 2253.102. REVOLVING LOAN PROGRAM. (a) The

comptroller by rule shall establish a revolving loan program to

provide loans to historically underutilized businesses to assist

the businesses in the purchase of performance and payment bonds

required by this chapter for public work contracts with a

governmental entity. The comptroller may not charge interest on a

loan provided under the program.

(b) The comptroller by rule shall set the terms and other

requirements for a loan made under the revolving loan program,

including guidelines for the repayment of the loans.

(c) The comptroller may not contract with another entity to

manage the revolving loan program.

Sec. 2253.103. ELIGIBILITY FOR LOANS. (a) To be eligible

for a loan under the revolving loan program, an applicant must:

(1) be a historically underutilized business

operating in the construction business or a building trade;

(2) have been in business at least one year before

applying for the loan;

(3) have its principal place of business in this

state; and

(4) demonstrate the ability to meet all experience and

financial standards required for the contract for which the

business is seeking the bond assistance.

(b) A historically underutilized business that has not

previously replied to a solicitation for a public work contract as a

prime contractor or subcontractor may apply for a loan under the

revolving loan program. A historically underutilized business that

has previously entered into a public work contract with a

governmental entity and paid for its own bonds required under the

contract is not precluded from applying for a loan under the

revolving loan program.

(c) The comptroller may by rule adopt additional

eligibility requirements for participation in the revolving loan

program.

Sec. 2253.104. INELIGIBILITY FOR LOAN. (a) A historically

underutilized business that has defaulted on a performance or

payment bond required under a public work contract is not eligible

to receive a loan under the revolving loan program before the fifth

anniversary of the date the historically underutilized business

defaulted on the bond.

(b) A historically underutilized business that has filed

for bankruptcy is not eligible to receive a loan under the revolving

loan program before the seventh anniversary of the date the

historically underutilized business filed for bankruptcy.

Sec. 2253.105. SUBCONTRACTING. A historically

underutilized business that receives a loan under the revolving

loan program for bond assistance for a public work contract with a

governmental entity and who is a prime contractor:

(1) may not subcontract more than 75 percent of the

contract; and

(2) shall use the historically underutilized business

guidelines under Chapter 2161, the governmental entity's

guidelines, or the guidelines specified in the contract in awarding

any subcontracts under the contract.

Sec. 2253.106. LOAN AMOUNTS. (a) A historically

underutilized business that has not previously entered into a

public work contract with a governmental entity may receive a loan

under the revolving loan program in an amount up to $100,000.

(b) A historically underutilized business that has

completed at least one public work contract with a governmental

entity may receive a loan under the revolving loan program in an

amount up to $200,000.

(c) A historically underutilized business that has

completed two or more public work contracts with a governmental

entity may receive a loan under the revolving loan program in an

amount up to:

(1) $250,000 if the business is a subcontractor except

as provided by Subdivision (2)(B); or

(2) $500,000 if the business is:

(A) a prime contractor; or

(B) a subcontractor:

(i) on a public work contract in which the

value of the subcontract is greater than $10 million; or

(ii) that can demonstrate an inability to

secure a bond under normal market conditions.

Sec. 2253.107. PAYMENT TO SURETY. The comptroller shall

pay the proceeds of a loan made under the revolving loan program

under this subchapter directly to the surety company issuing the

bond.

Sec. 2253.108. DEFAULT. (a) If a historically

underutilized business that receives a loan under the revolving

loan program defaults on a performance or payment bond for which the

loan was provided, the comptroller and the attorney general shall

institute appropriate proceedings for any available legal remedy to

recover the amount of the loan.

(b) The comptroller may withhold any state money owed to a

historically underutilized business described by Subsection (a)

for other contracts or business with the state conducted by the

historically underutilized business.

(c) A historically underutilized business described by

Subsection (a) may not contract with a governmental entity until

the business has repaid at least one-half of the loan amount

received by the business under the revolving loan program for

purchase of the performance or payment bond subject to the default.

Sec. 2253.109. TEXAS HISTORICALLY UNDERUTILIZED BUSINESS

BOND ASSISTANCE REVOLVING LOAN ACCOUNT. (a) The Texas

historically underutilized business bond assistance revolving loan

account is an account in the general revenue fund administered by

the comptroller.

(b) Money in the account may be used only for loans made

under this subchapter.

(c) The comptroller shall deposit to the credit of the

account:

(1) money appropriated to the comptroller for the

purpose of this subchapter;

(2) money the comptroller receives as a gift, grant,

or donation for the purpose of this subchapter;

(3) money received by the comptroller for the

repayment of a loan made under the revolving loan program, and any

fee charged to make the loan; and

(4) notwithstanding Section 404.071, all interest

attributable to money held in the account.

(d) Money in the account may be appropriated only to the

comptroller for the purposes of administering the account.

(e) The comptroller may not contract with another entity to

administer the account.

Sec. 2253.110. GIFTS AND GRANTS. The comptroller may

solicit and accept gifts and grants from any public or private

source for the purposes of this subchapter.

Sec. 2253.111. RULEMAKING AUTHORITY. The comptroller shall

adopt rules to implement this subchapter.

Sec. 2253.112. REPORTING REQUIREMENTS. Not later than

January 15 of each year, the comptroller shall report to the

legislature:

(1) the total dollar amount of assistance provided in

the preceding year;

(2) the total number of businesses to which assistance

was provided in the preceding year;

(3) the total number of state contracts secured by

businesses to which assistance was provided in the preceding year;

(4) the total number of applications for assistance in

the preceding year; and

(5) the remaining dollar balance in the Texas

historically underutilized business bond assistance revolving loan

account as of December 31 of the preceding year.

Sec. 2253.113. AUDIT BY STATE AUDITOR. (a) The state

auditor shall conduct a biennial financial audit and effectiveness

audit of the revolving loan program to evaluate the program's

performance.

(b) The state auditor shall report the results of the audits

to the legislature not later than January 8 of each odd-numbered

year.

SECTION 2. This Act takes effect September 1, 2025.