Sec. 1. 10 MRSA, c. 10 is enacted to read:

CHAPTER 10

REVOLVING LOAN FUND FOR SMALL BUSINESS INITIATIVES

§365.__Revolving loan fund established

1. Fund established.__The State Revolving Loan Fund for Small Business Initiatives, referred to in this chapter as the "fund," is established to provide financial assistance in the form of start-up capital, including costs of technical assistance and expansion funding for small businesses.__This fund is established pursuant to state policy to encourage and enhance job creation through new business start-up and business expansion.

2.__Administration.__The fund is administered by the Department of Economic and Community Development, which serves as a grantor of the funds appropriated for this fund.__The fund provides capital to eligible projects at an interest rate of one point below the prevailing prime interest rate.__The fund is established as a revolving fund, into which must be deposited all amounts appropriated to the fund, interest earnings on the fund and amounts repaid to the fund by a participating regional development corporation.__A regional development corporation is a nonprofit corporation established under Title 13, chapter 81; Title 13-B; Title 30-A.__Upon repayment of the loans issued under this fund, 100% of the principal and 50% of the interest net of administration charges must be redeposited in the fund on a semiannual basis.__The remaining 50% of the interest net of administration charges must be paid into the General Fund.__ Amounts deposited in the fund must be used by the department for the purposes authorized in this section.

3.__Pilot project; eligible corporations.__The department shall provide funds appropriated under this chapter only to the Eastern Maine Development Corporation, referred to in this chapter as the "corporation," for the purposes of conducting a 5- year pilot project in Washington County and Hancock County to determine the effectiveness of this fund.__The corporation must allocate no more than 50% of the total available funding under this chapter to projects in Washington County and no more than 50% to projects in Hancock County.__The corporation may subcontract with local nonprofit organizations in each county to carry out the purposes of this chapter.__Following the pilot project period and pursuant to subsection 13, the department shall provide funds to regional economic development corporations, to nonprofit development corporations serving 3 or