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Law360 (June 9, 2020, 6:39 PM EDT) -- Colorado would partially fund a small-business recovery loan program by selling insurance premium tax credits under a bill approved Tuesday by the state House, aimed at helping small businesses recover from the novel coronavirus pandemic's economic effects.
H.B. 1413 passed the House by a 43-18 vote, with four excused. The bill would authorize the state treasurer to set up a loan program and contract with private entities that would provide investments for loans to Colorado small businesses. The treasurer would be allowed to issue up to $40 million in insurance premium tax credit certificates in fiscal year 2020-2021 and another $28 million in certificates in fiscal year 2021-2022, with the proceeds from the issuances going to the investments for the fund, according to the bill.
Rep. Shannon Bird, D-Westminster, one of the bill's sponsors, hailed it as a creative solution at a time when financial resources are scarce.
"We have a collaborative effort that has now pulled together a $250 million loan fund that leverages private capital, and it's available for the benefit of small businesses reserved for all 64 counties across the state of Colorado," Bird said in a Monday House floor session.
Under the bill, proceeds from the tax credit purchases would be invested in tranches of up to $10 million each, for up to $30 million in fiscal year 2020-2021 and $30 million in fiscal year 2021-2022, although the total investment across both years would be capped at $50 million. The investments would have to be matched at a ratio of 4-to-1 by investments from other sources before being used to make loans to Colorado businesses.
For a tax credit certificate issued in fiscal year 2020-2021, the credit buyer could claim half the credit in calendar year 2026 and half in 2027. For a certificate issued in fiscal year 2021-2022, the credit could be claimed beginning in calendar year 2028. The credit cannot exceed a taxpayer's liability for that year, the bill said.
The credits could not be used to offset a liability incurred in a taxable year beginning after Dec. 31, 2031, according to the bill. The fund would be repealed on July 1, 2029.
Companies across the country have been negatively affected by the different states' reactions to the pandemic, which often included the shutting down of nonessential businesses. Democratic Gov. Jared Polis declared a disaster emergency in Colorado and ordered nonessential businesses closed in March.
Republican leadership in the House did not respond to requests for comment.
Bird did not respond to requests for additional comment.
--Editing by Neil Cohen.
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