§ 42-64-13.1. Assistance to urban communities for economic revitalization.
(a) The Rhode Island commerce corporation shall, in furtherance of its responsibility to assist urban communities, provide for the establishment of an urban enterprise equity fund, the establishment of an urban business incubator, and such other programs and activities as the corporation may deem appropriate to assist with urban revitalization.
(b) For purposes of this section, the following words and terms shall have the following meanings:
(1) "Equity" shall mean cash or cash equivalents, through personal or other assets that are either pledged to or become part of a small business venture. Equity constitutes resources that are considered part of the balance sheet of the small business.
(2) "Equity Financing" shall be a loan from an institution, bank, non-bank or any other resource, by which terms and conditions are established for repayment of the debt. For the purposes of this legislation, "Equity Financing" shall be deeply subordinated on the balance sheet of the business, and by this deep subordination is converted to equity on the balance sheet. "Equity Financing" by virtue of its subordination shall be the last loan to be paid out of the cash flow of the business.
(3) "Fund" shall mean a revolving loan fund used to provide equity to assist start-up and existing businesses in securing resources from lenders including, but not limited to, private sector lending institutions, and federal and non-federal public sector lenders.
(4) "Small business" shall mean any corporation, partnership, sole proprietorship, or other business entity qualifying as "small" under the standards contained in 13 C.F.R. § 121.101 et seq.
(5) "Urban" shall mean any community, which exceeds two thousand (2000) persons per square mile as established by the most recent federal census.
(c) Establishment of an Urban Enterprise Equity Fund.
(1)(i) In order to provide "Equity Financing," commonly referred to as either "Equity" or "Equity Debt," to assist small businesses finance investments, the general assembly establishes the urban enterprise fund.
(ii) This fund will be located at and administered by the commerce corporation, referred to as the corporation, hereinafter for the purposes of providing equity financing to assist small businesses in obtaining additional resources for capital investments. Seventy-five percent (75%) of the fund financing shall be targeted to urban small businesses located in enterprise zones established pursuant to chapter 64.3 of title 42. The corporation shall be responsible for the establishment of "the urban enterprise fund" and for the adoption of rules and standards and guidelines, eligibility qualifications, and performance measures for the fund. Such rules shall limit the amount of equity financing from the fund in any small business to an amount not to exceed one hundred thousand ($100,000) dollars and shall provide, inter alia that the corporation be allowed to take stock, stock options, stock warrants, equity or other ownership interests in the small business to which it is providing such Equity Financing.
(2) Nothing herein provided with regard to equity and Equity Financing shall be deemed to prevent or restrict the corporation or other private lenders from providing additional financing to the small business under traditional methods, conventional financing with or without credit enhancements for the purposes of fulfilling the necessary instruments to finance the small business.
(3) In the implementation of the provisions of this paragraph, the corporation is encouraged to utilize credit enhancements such as the U.S. Small Business Administration's (SBA) Guaranteed Loan Program in conjunction with SBA's participating lenders to make the small business financing transactions in the best interest of the Small Business.
(4) The corporation will annually report the status and performance of the Urban Enterprise Equity Fund to the general assembly on or before the first Tuesday of November.
(d)(1) Establishment of an urban business incubator. There is hereby authorized, established, and created an urban business incubator to be located in an enterprise zone, as defined in chapter 64.3 of this title. The incubator shall be designed to foster the growth of businesses through a multi-tenant, mixed-use facility serving companies in a variety of industries including, but not limited to: services, distribution, light manufacturing, or technology-based businesses. The incubator shall provide a range of services designed to assist these new businesses, including, but not limited to: flexible leases, shared office equipment, use of common areas such as conference rooms, and will provide (directly or indirectly) easily accessible business management, training, financial, legal, accounting, and marketing services.
(2) The incubator shall be established as a non-business corporation, and shall have tax exempt status under U.S. Internal Revenue Code § 501(c)(3), 26 U.S.C. § 501(c)(3), and shall have an independent board of directors. The board of directors, in consultation with the corporations, shall adopt guidelines and performance measures for the purposes of operating and monitoring the incubator.
(e) The general assembly shall annually appropriate the sums it deems necessary to carry out the provisions of subsections (c) and (d) of this section.
(P.L. 1998, ch. 31, art. 16, § 1; P.L. 1998, ch. 392, § 2; P.L. 1999, ch. 95, § 1; P.L. 1999, ch. 154, § 1; P.L. 2006, ch. 216, § 39; P.L. 2013, ch. 243, § 3; P.L. 2013, ch. 490, § 3.)