Small Business Financial Development Corporations

Title 1, Division 3, Part 5, Chapter 1 deals with California Small Business Financial Development Corporations. Article 1 is the introduction. Section 14000 names the act the California Small Business Financial Development Corporation Law.

Section 14001 contains four statements of legislative intent. Section 14002 contains a severability clause.

Article 2 contains definitions. Section 14003 defines the following terms: “bank,” “bank board,” “board of directors,” “California Small Business Board,” “corporation,” “directives and requirements,” “executive director,” “expansion fund,” “financial company,” “financial institution,” “financial products,” “loan committee,” “microbusiness lender,” “program manager,” “trust fund,” and “trust fund account.”

Article 3 deals with the program manager. Section 14004 requires the program manager to do ten specified actions. The program manager may attend and participate at corporation meetings. The program manager, or their designee, is an ex officio, nonvoting representative on the board of directors and loan committees of each corporation. 

Section 14004.1 was created as an advisory board to the California Infrastructure and Economic Development Bank Board, the executive director, and the program manager. The California Small Business Board may also advise the Governor and the Small Business Advocate regarding issues and programs affecting California’s small business community. The California Small Business Board consists of the seven specified members.

Section 14004.2 requires the bank board to approve new corporations recommended by the program manager, based on an examination of each of four specified actions.

Article 4 deals with new corporations. Section 14005 requires, upon approval by the bank board to become a corporation, an entity to adopt or amend its articles of incorporation to comply with five specified requirements.

Section 14006 states that, if the bank board concurs with the findings of the program manager, the bank board directs the program manager to approve the articles of incorporation and endorses the approval thereon and forward the same to the Secretary of State for his or her approval and filing.

Section 14007 provides that the corporation’s existence as a small business financial development corporation begins upon the filing of the articles with the Secretary of State and continues perpetually, unless otherwise expressly provided for by law.

Section 14009 requires each corporation to have provisions establishing a grievance procedure for employees, clients, or potential clients, to appeal a decision or obtain redress of an action done by the staff or loan committee of the corporation. The procedures is established in writing during the probationary period of a new corporation.

Section 14011 provides that the Nonprofit Public Benefit Corporation Law applies to corporations formed under this chapter, except as to matters otherwise provided for in this chapter.

Section 14012 states that, for six months following the establishment of a corporation, commencing upon filing of the articles of incorporation with the Secretary of State, a corporation is on probation. While on probation, a corporation may be suspended if suspension is recommended by the program manager and affirmed by the executive director.