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HB 5264

DCEO-SMALL BUSINESS LOANS

104th Regular Session Introduced by Lisa Hernandez and 1 co-sponsor

Illinois creates a state-backed loan program (up to $50k, 2% interest, 5 years) for small firms affected by shocks, 100% guaranteed by the state.

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Bill Summary · HB 5264

Overview

HB 5264 would create a new loan program under the Illinois Department of Commerce and Economic Opportunity (DCEO) to aid small businesses affected by an economic shock. The program would be funded from a dedicated Economic Recovery Fund in the State treasury, with the State providing a 100% guarantee on loans issued. Participating lenders would originate and service the loans but would not be required to use their own capital. The Governor would declare when an economic shock exists, at which point loans become available to eligible small businesses. The program would end new loans once the Governor declares the shock has ended.

Purpose and intent

  • Establish a targeted, government-backed loan program to support small businesses negatively impacted by an economic shock.
  • Provide rapid access to low-interest capital to cover essential recovery-related operating expenses.
  • Stabilize local economies by sustaining employment and business operations during periods of disrupted foot traffic, sales declines, or other shocks.

Key provisions and changes

  • Creation of the Economic Recovery Fund: A special fund in the State treasury to back loans and sustain lending capacity.
  • Loan program administration: The Department of Commerce and Economic Opportunity (DCEO) may operate the program directly or via agreements with banks, credit unions, nonprofit loan administrators, or community development financial institutions (CDFIs).
  • State guarantee: The State shall provide a 100% guarantee on loans issued under this section; participating lenders act as originators and servicers and are not required to deploy their own capital.
  • Trigger for program activation: The Governor must declare an economic shock that disrupts local or regional business and markets. The Governor’s determination must be based on objective indicators (e.g., reduced foot traffic, declining sales along corridors, workforce disruptions, business closures).
  • Eligibility criteria for loans:
    • The business employed 50 or fewer persons at any one time in the prior year.
    • The business’s gross receipts in the prior year were $3,000,000 or less.
    • The business is materially impacted or located in an area determined by the Department to be materially impacted.
  • loan terms:
    • Maximum loan amount: $50,000 per business.
    • Interest rate: 2% fixed.
    • Repayment term: Up to 5 years.
    • Deferment: First 6 months after disbursement, with no repayments required during that period.
    • Prepayment: No early repayment penalty.
  • Eligible uses of loan proceeds (recovery-related operating expenses):
    • Rent/mortgage payments
    • Employee wages and benefits
    • Inventory restocking
    • Equipment repair/replacement
    • Debt repayments to maintain operations
    • Marketing or customer re-engagement
    • Other approved costs by the Department
  • Administrative framework for lenders:
    • The Department may provide administrative or origination fees to lenders to cover costs, with the possibility to deduct fees from loan disbursements.
    • The Department must establish standardized loan servicing, delinquency, and default procedures.
    • Lenders may service delinquent loans for a period determined by the Department before loan closure or write-off.
  • Fund management and risk: All interest and principal collected go into the Economic Recovery Fund to replenish lending capacity. Loans are backed by the State; losses from borrower default are borne by the Fund.
  • Cessation of new loans: Once the Governor declares the economic shock ended, no new loans may be made.
  • Effective date: The act becomes law upon passage.

Who is affected

  • Small businesses in Illinois meeting the eligibility criteria (50 or fewer employees; up to $3 million in prior-year gross receipts) that are in areas designated as materially impacted by an economic shock.
  • Lenders (banks, credit unions, nonprofit loan administrators, and community development financial institutions) that participate as originators and/or servicers.
  • DCEO, which would administer the program or manage agreements with partner lenders.
  • The Economic Recovery Fund, a dedicated state financing mechanism, backed by the State guarantee.

Procedural and timeline notes

  • Activation hinges on a Governor’s declaration of an economic shock, based on objective indicators.
  • The program operates only after such a declaration and ends for new loans once the Governor determines the shock has ended.
  • The bill authorizes the Department to adopt rules and enter into agreements to govern loan administration, servicing, and default management.
  • Funding and operation would require appropriation (i.e., the program is not self-funded without legislative appropriation).
  • The Economic Recovery Fund is created for this purpose under the State Finance Act.

Summary

HB 5264 creates a state-backed, low-interest loan program to assist small Illinois businesses (≤50 employees and ≤$3 million in prior-year receipts) affected by economic shocks. With a 100% State guarantee and a maximum $50,000 loan per business at 2% interest over up to 5 years, the program prioritizes recovery-related expenses. Activation requires a Governor’s declaration of an economic shock, supported by objective indicators, and the program would be funded via the Economic Recovery Fund, replenished by loan repayments. Lenders serve as originators/servicers while the State bears the credit risk. The Act also sets rules for administration, servicing, and end of new loan availability.

Compiled from official sources — confirm details with the bill’s official record.

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