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HF 5009

Loan guarantee program created for furloughed federal employees, and money appropriated.

2025-2026 Regular Session Introduced by Brad Tabke

Minnesota will guarantee personal loans to furloughed federal employees during the 2026 shutdown, with a one-time funding, capped loans, quick lender approval, and a sunset by 2028

Introduction and first reading, referred to Workforce, Labor, and Economic Development Finance and Policy
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WeVote Research Nonpartisan
Bill Summary · HF 5009

Summary of HF 5009 (2025-2026) – Minnesota

Purpose and intent

  • Create a Minnesota-administered loan guarantee program to assist furloughed federal employees during the 2026 federal government shutdown.
  • Provide financial support through guaranteed personal loans, funded by a dedicated account in Minnesota’s special revenue fund.
  • Establish a temporary, targeted program with a clear sunset and a onetime appropriation, ending by July 31, 2028, with any remaining funds transferred to the general fund.

Key provisions and changes

Section 1: Federal Employee Personal Loan Guarantee Program

  • Defines key terms:
    • Affected employee: a Minnesota resident who is furloughed or unpaid due to the shutdown.
    • Grace period: 90 days after the shutdown ends when unemployment/funding resumes.
    • Loan guarantee: 100% guarantee of the loan amount.
    • Personal loan: unsecured loan from a financial institution to an affected employee.
    • Shutdown scope: specifically references the February 14, 2026, shutdown affecting TSA and other federal agencies.
  • Creates and administers a loan guarantee program under the Minnesota Department of Employment and Economic Development (DEED), overseen by the Commissioner.
  • Administrative duties for the Commissioner:
    • Approve/disapprove participating lenders within 1 day of application.
    • Maintain administrative records and review guarantee claims.
    • Pay eligible guarantees from the federal employee personal loan account in the special revenue fund.
    • Stop accepting loan data the day after shutdown ends.
    • Cease accepting applications and approving claims if guarantees exceed 10% of the total loans issued; notify participating lenders within 2 days of ceasing.
    • Wind down and terminate the program by July 31, 2028.
  • Financial institutions (lenders) duties:
    • May apply to participate; must be in good standing and not subject to certain federal or state enforcement orders.
    • Document loan details (employee status, income, residence; unemployment benefits eligibility/amounts).
    • Notify the commissioner within 1 day of making a loan.
    • Provide credit counseling information to affected employees.
    • May submit a guarantee payment request after a 180-day grace period if collection efforts were made in good faith.
    • The Commissioner will provide a standard application form for guarantees, with required information (lender contact, collection efforts, loan amount, requested guarantee amount).

Section 1: Personal loan terms and limits

  • Terms for loans to affected employees:
    • No early repayment requirements before the end of the grace period; no early full repayment within 180 days after the grace period ends.
    • Repayment schedule: 3 to 6 equal installments.
    • No interest or fees charged until 180 days after the grace period ends.
    • Loan amount cap: the lesser of $7,500; or the borrower’s most recent net monthly pay; or four times the weekly unemployment benefit amount received or eligible for.
    • Eligibility for additional loans: up to three loans per affected employee for each 30-day period the shutdown continues.

Section 2: Account creation

  • Creates the Federal Employee Personal Loan Guarantee Program Account within the Special Revenue Fund.

Section 3: Appropriation

  • Onetime appropriation (exact dollar amount not specified in the text provided) from the General Fund to DEED for deposit into the program account for Fiscal Year 2026.
  • Any remaining funds in the account by August 1, 2028, must be transferred to the General Fund.

Section 4: Effective date

  • Sections 1–3 become effective the day after final enactment.

Who is affected

  • Affected employees: Minnesota residents who were furloughed or unpaid due to the federal shutdown.
  • Financial institutions: Minnesota and eligible out-of-state banks, credit unions, and regulated lenders that participate in the program and issue personal loans to affected employees.
  • State agencies: Minnesota Department of Employment and Economic Development (DEED) administers the program; oversight by the Commissioner of Employment and Economic Development.
  • Unemployment timing: relies on the shutdown end date and grace period for loan terms.

Procedural and timeline notes

  • Program duration: active during the 2026 shutdown with wind-down completed by July 31, 2028.
  • Funding mechanism: a dedicated special revenue fund account funded by a one-time general fund appropriation in 2026; any remaining funds returned to the general fund by 2028.
  • Oversight trigger: program may halt accepting new guarantees if guarantees reach 10% of total loans issued; lenders must be informed within 2 days of stopping.
  • Post-shutdown data handling: the state stops receiving loan information the day after the shutdown ends.

Overall assessment

HF 5009 proposes a targeted, time-limited state-backed loan guarantee program to help Minnesota-based federal employees facing income disruption during a specific 2026 shutdown. It sets clear loan terms, lender qualifications, administrative responsibilities, and a defined sunset with a mechanism to revert unspent funds to the state. The program is designed to be rapid to implement (1-day lender approval), with emphasis on accessibility for affected employees while maintaining fiscal controls to prevent runaway guarantees.

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

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