§ 695. State development companies

• (a) Congressional finding and declaration of purpose

  The Congress hereby finds and declares that the purpose of this subchapter is to foster economic development and to create or preserve job opportunities in both urban and rural areas by providing long-term financing for small business concerns through the development company program authorized by this subchapter.

• (b) Loans; obligations of development companies

  The Administration is authorized to make loans to State development companies to assist in carrying out the purposes of this chapter. Any funds advanced under this subsection shall be in exchange for obligations of the development company which bear interest at such rate, and contain such other terms, as the Administration may fix, and funds may be so advanced without regard to the use and investment by the development company of funds secured by it from other sources.

• (c) Maximum loans to development companies

  The total amount of obligations purchased and outstanding at any one time by the Administration under this section from any one State development company shall not exceed the total amount borrowed by it from all other sources. Funds advanced to a State development company under this section shall be treated on an equal basis with those funds borrowed by such company after August 21, 1958, regardless of source, which have the highest priority, except when this requirement is waived by the Administrator.

• (d) Eligibility for assistance

  In order to qualify for assistance under this subchapter, the development company must demonstrate that the project to be funded is directed toward at least one of the following economic development objectives -

  • (1) the creation of job opportunities within two years of the completion of the project or the preservation or retention of jobs attributable to the project;
  • (2) improving the economy of the locality, such as stimulating other business development in the community, bringing new income into the area, or assisting the community in diversifying and stabilizing its economy; or
  • (3) the achievement of one or more of the following public policy goals:
    • (A) business district revitalization,
    • (B) expansion of exports,
    • (C) expansion of minority business development,
    • (D) rural development,
    • (E) enhanced economic competition, including the advancement of technology, plan retooling, conversion to robotics, or competition with imports,
    • (F) changes necessitated by Federal budget cutbacks, including defense related industries, or
    • (G) business restructuring arising from Federally mandated standards or policies affecting the environment or the safety and health of employees. If eligibility is based upon the criteria set forth in paragraph (2) or (3), the project need not meet the job creation or job preservation criteria developed by the Administration if the overall portfolio of the development company meets or exceeds such job creation or retention criteria.