JACKSON — PEER has reviewed seven business development loan programs of the Mississippi Development Authority (MDA).
Of the loan programs PEER reviewed, PEER reports four had annual utilization rates of approximately 28 percent or less between FY 2006 and FY 2010, with some years of no utilization reported. As of June 30, 2010, those four business development loan programs carried a total loan fund balance of approximately $47.7 million.
For those underutilized programs in which state general obligation debt remains outstanding, the debt used to create these programs has become a financial burden to the state without the intended benefits, PEER said. In programs for which no further debt exists and the state’s obligation to the bondholder has expired, the Legislature could utilize unspent proceeds for whatever purposes it deems prudent.
PEER’s recommendations include:
• The Mississippi Development Authority should annually review the utilization of its loan/incentive programs and present an annual assessment to the Legislature detailing historical program usage and recommendations for changes in either program administration or legislation that would increase program activity and/or eliminate programs with low activity. The Legislature should consider placing a moratorium on bonds issued to fund business development loan programs administered by MDA until such assessment is completed.
• The House and Senate appropriations committees should meet with MDA officials to determine which business development loan funds must be retained to cover obligations. The Legislature should then consider reclaiming unspent proceeds for other options, such as crediting funds to the state Treasury for retirement of debt.
• The Legislature should enact legislation that changes the interest rate requirement for the Small Business Assistance Loan Program to eliminate the possibility of the program being inoperable as a result of statute if/when the federal discount rate falls where the maximum interest rate that can be applied to loans in this program is lower than the statutory minimum.