Both houses of the Legislature voted by overwhelming majorities Thursday to override Gov. Paul LePage’s veto of a bond referendum that would provide $12 million in additional funding for two small-business loan programs.
The Senate approved the veto override by a vote of 31-4. The House of Representatives approved it by a vote of 118-28. Both votes occurred without debate.
The bill, L.D. 1827, won strong bipartisan approval when it was introduced, passing 29-3 in the Senate and 123-23 in the House.
The bond proposal will go before voters statewide in November. It calls for an additional $4 million to insure portions of bank loans made to small businesses under the state’s Commercial Loan Insurance Program, and $8 million more for the Regional Economic Development Revolving Loan Program. Both programs are administered by the Finance Authority of Maine, a state financing agency.
State finance officials, representatives of economic-development organizations and business owners testified in favor of the bill March 27 before the Legislature’s Appropriations Committee.
However, LePage said the borrowing would put too great a burden on Maine taxpayers, particularly the $8 million in bonds required for the revolving loan program. He also questioned the program’s selection criteria.
The Commercial Loan Insurance Program guarantees repayment of as much as 90 percent of private loans to most qualifying small businesses in the program. It offers a 100 percent loan guarantee to veterans, oil storage facility projects and waste oil disposal site cleanup projects. It can be used only when a lender, such as a bank, otherwise would not be willing to issue a loan based on the perceived risk of default.
The Regional Economic Development Revolving Loan Program offers loans of as much as $250,000, with terms as long as 20 years, to qualifying small businesses through regional, nonprofit economic development organizations. In a revolving loan program, funds paid back from loans are used to issue new loans.
Since the loan program was created by the Legislature in 1993, FAME has disbursed $16.2 million, which has seeded 772 revolving loans to Maine businesses, said FAME Government Affairs and Communications Manager William Norbert.
However, available funds for the program are mostly tied up in existing loans, and demand for such loans is increasing, he said.
The bill’s original language would have authorized the state to issue $73 million in bonds to fund seven business-development programs and organizations. It later was whittled down to $12 million for two programs.
The bonds would be repaid over a 10-year period at an annual interest rate of 4.5 percent, for a total repayment amount of about $15 million.
The state’s existing $16.2 million allocation for the revolving loan program has leveraged nearly $259 million in additional private and public financing, an overall ratio of 16 to 1, Norbert said, while helping to create or retain a total of about 10,500 jobs.
J. Craig Anderson can be contacted at 791-6390 or at: