SB 1 — Small Business Growth Act

SB1 HFAHFAT Criss,Criss Akers2-13 and Riley 2-12 #1 McODelegatesMcO Criss,Delegate AkersCriss andmoves Riley move to amend the billtitle on page one, following the enacting clause, by striking out the remainder of the bill andto insertingread inas lieufollows: Com. thereof the following:

AARTICLESub. 12.

WVfor FirstS. SMALL BUSINESS GROWTH ACT.

§5B-12-1.B.

Title.1 -- “A BILL to amend the Code of West Virginia, 1931, as amended, by adding a new article, designated §5B-12-1, §5B-12-2, §5B-12-3, §5B-12-4, §5B-12-5, §5B-12-6 and §5B-12-7, relating to establishing the WV First Small Business Growth Act;

Thedefining provisionsterms; of this article shall be known as, and may be cited as, the "WV First Small Business Growth Act".

 creating §5B-12-2.the WV First Small Business Growth Program to be administered by the Department of Commerce;

Definitions.establishing program procedures and requirements;

(a)providing Anyapplication termprocedures usedand inrequirements; this article has the meaning ascribed by this section unless a different meaning is clearly required by the context of its use or by definition in this article.(b) For purposes of this article, the term:"Affiliate" means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under the common control with another entity.

Anproviding entityfor is controlled by another entity if the controllingcertification entity holds, directly or indirectly, the majority of votingcapital or ownership interest in the controlled entity or has control over day-to-day operations of the controlled entity by contract or by law."Applicable percentage" means zero percent for the first two credit allowance dates, and 15 percent for the next four credit allowance dates."Capital investment" means any equity investment inauthority; a growth fund by a growth investor which:(A) Is acquired after the effective date of this article at its original issuance solely in exchange for cash;(B) Has 100 percent of its cash purchase price used by the growth fund to make qualified investments in eligible businesses located in this state by the third anniversary of the initial credit allowance date;

and(C)establishing Isinsurance designatedpremium bytax thecredit; growth fund as a capital investment under this article and is certified by the department under the provisions of §5B-12-3 of this code.

(D)providing Thistax termcredit shallclaimant include any capital investment that does not meet the criteria provided under paragraph (A) of this subdivision, if such investment was a capital investment in the hands of a prior holder."Credit allowance date" means the date on which the department certifies a growth fund’s capital investment and eachrecapture ofprocedures; the five anniversary dates of such date thereafter."Department" means the West Virginia Department of Commerce."Eligible business" means a business that, at the time of the initial qualified investment in the business has fewer than 250 employees and has its principal business operations in West Virginia:

Provided,prohibiting Thatcertain anyinvestments; business which is classified as an eligible business at the time of the initial investment in such business by a growth fund shall remain classified as an eligible business and may receive follow-on investments from any growth fund, and such follow-on investments shall be qualified investments even though such business may not meet the definition of an eligible business at the time of such follow-on investment."Growth fund" means an entity certified by the department under the provisions of §5B-12-3 of this code and is a person who has developed a business plan to invest in business concerns in this state under this article and has successfully solicited one or more growth investors to make capital investments in the growth fund under this article in support of the plan."Growth investor" means any entity that makes a capital investment in a growth fund."Principal business operations" means the location where at least 60 percent of a business's employees work or the location where employees who are paid at least 60 percent of such business's payroll work.

A business that has agreed to relocate employees using the proceeds of a qualified investment to establish its principal business operations in a new location shall be deemed to have its principal business operations in such new location if it satisfied the requirements of this subdivision no later than 180 days after receiving a qualified investment."Purchase price" means the amount paid to the growth fund that issues a capital investment which shall not exceed the amount of capital investment authority certified under the provisions of §5B-12-3 of this code."Qualified investment" means any investment in an eligible business or any loan to an eligible business with a stated maturity date of at least one year after the date of issuance, excluding revolving lines of credit and senior-securedrequiring debtannual unlessreporting.”. ADOPTED REJECTED  the chief executive or similar officer of the eligible business certifies that the eligible business sought and was denied similar financing from a depository institution, by a growth fund:

Provided, That with respect to any one eligible business, the maximum amount of investments made in such business by one or more growth funds, on a collective basis with all of the businesses' affiliates, with the proceeds of the capital investments, shall be the greater of 20 percent of the growth fund's capital investment authority or $7.5 million, exclusive of investments made with repaid or redeemed investments or interest or profits realized thereon."Senior-secured debt" means any loan that is secured by a first mortgage on real estate with a loan-to-value ratio of less than 80 percent.

"State tax liability" means the tax imposed by §33-3­14, §33-3-14a, §33-3-16 or §33-3-17 of this code, or any other insurance premium or retaliatory tax imposed on an insurance company by the state:

 Provided, That if the tax liability imposed under these sections is eliminated or reduced, the term "state tax liability" shall also include any tax liability imposed by this state on an insurance company or other person that had premium tax liability under the laws of this state for the purpose of making up tax revenue lost by the state as a result of the elimination or reduction of the taxes imposed under said sections:

Provided, however, That no provision of this article may be construed or operate to reduce distributions or allocations otherwise required to be made for purposes other than for deposit in the general revenue fund, if applicable, under §33-3-14, §33-3-14a, §33-3-14d, §33-3-14e and §33-3-33 of this code.

An insurance company claiming a credit against state premium tax or retaliatory tax shall not be required to pay any additional premium tax, retaliatory tax, fee, charge, or other penalty or tax imposed on an insurer as a result of applying for or claiming the credit authorized by this article.

The credit may fully offset any retaliatory tax imposed by this state.

  §5B-12-3.

Program established;

application.

(a) There is hereby created the WV First Small Business Growth Program, to be administered by the Department of Commerce.

(b) A growth fund that seeks to have an equity investment certified as a capital investment eligible for credits authorized under the provisions of this article shall apply to the department.

The department shall begin accepting applications within 90 days of the effective date of this article.

The application shall include:(1) The amount of capital investment requested;(2) A copy of the growth fund applicant’s or an affiliate of the growth fund applicant’s licenses as a rural business investment company under 7 U.S.C.

§ 2009cc or as a small business investment company under 15 U.S.C.

§ 681, and a certificate executed by an executive officer of the growth fund applicant attesting that such license remains in effect and has not been revoked;(3) Evidence that, as of the date the application is submitted, the growth fund applicant or affiliates of the growth fund applicant have invested at least $100 million in nonpublic companies located in counties within the United States with a population of less than 75,000 according to the 2020 Federal Decennial Census of the United States;

such evidence may be in the form of a list containing the names of the companies, their location and the amounts invested by the growth fund applicant or affiliates of the applicant, provided that an officer of the growth fund applicant certifies such list;(4) A business plan that includes a revenue-impact assessment projecting state and local tax revenue to be generated by the growth fund applicant’s proposed qualified investments, prepared by a nationally recognized, third-party, independent economic forecasting firm using a dynamic economic forecasting model that analyzes the growth fund applicant’s business plan over the 10 years following the date that the application is submitted to the department.

Such plan shall include an estimate of the number of jobs created and jobs retained in this state as a result of the growth fund applicant’s qualified investments;

and(5) A nonrefundable application fee of $5,000 payable to the department.(c) Within 30 days after the receipt of a completed application, the department shall grant or deny the application in full or in part.

The department shall deny the application if:(1) The growth fund applicant does not satisfy all the criteria provided by subsection (b) of this section;(2) The revenue-impact assessment submitted with the application does not demonstrate that the growth fund applicant’s business plan will result in a positive fiscal impact on the state over a 10-year period that exceeds the cumulative amount of credits that would be issued to the growth fund applicant if the application was approved;

or(3) The department has already approved the maximum amount of capital investment authority under §5B-12-4 of this code.(d) If the department denies any part of the application, it shall inform the growth fund applicant of the grounds for such denial.

If the growth fund applicant provides any additional information required by the department or otherwise completes its application within 15 days of the notice of denial, the application shall be considered complete as of the original date of submission.

If the growth fund applicant fails to provide the information or fails to complete its application within the 15-day period, the application shall remain denied and must be resubmitted with a new submission date and a new application fee.(e) Upon approval of an application, the department shall certify the proposed equity investment as a capital investment eligible for credits under this article, subject to limitations laid out in §5B-12-4 of this code.

The department shall provide written notice of the certification to the growth fund applicant which shall include the amount of the growth fund applicant’s capital investment authority and a schedule of credits by year and amount related to the capital investment authority.

The department shall certify capital investments in the order that the application is received by the department.

Applications received on the same day shall be deemed to have been received simultaneously.

For applications that are complete and received on the same day, the department shall certify applications in proportionate percentages based upon the ratio of the amount of capital investment authority requested in all applications.