69th Legislature approves HB 924 regulating financing for construction loans

The Montana Legislature introduced House Bill 924 on April 3, 2025, aiming to enhance financial support for business enterprises through structured loan agreements. The bill seeks to address the challenges faced by businesses in accessing affordable financing, particularly in sectors like construction and ethanol production.

Key provisions of House Bill 924 include the establishment of a loan framework where participating private financial institutions can charge interest rates aligned with the national prime interest rate, capped between 6% and 12%. Borrowers have the option to request either fixed or adjustable rates, providing flexibility in repayment terms. Additionally, the bill prohibits prepayment penalties, ensuring that businesses can pay off loans without incurring extra costs.

The legislation mandates that private financial institutions participate in loans up to 85% of their lending limit, while the state board must cover 75% of the loan amount. This structure is designed to encourage private investment in business ventures while minimizing risk for lenders. Notably, businesses receiving loans are restricted from paying bonuses or dividends to investors until the loan is fully repaid, although exceptions exist for ethanol production and public utilities under specific conditions.

Debate surrounding House Bill 924 has focused on its potential impact on economic growth and job creation. Proponents argue that the bill will stimulate investment in key industries, fostering job opportunities and innovation. Critics, however, express concerns about the implications of restricting dividend payments, suggesting it may deter investment in the long term.

The bill's passage could have significant economic implications for Montana, particularly in bolstering sectors that are vital to the state's economy. By facilitating access to capital, House Bill 924 aims to empower businesses to expand and innovate, potentially leading to increased employment and economic resilience.

As the legislative process continues, stakeholders are closely monitoring the bill's progress, with discussions expected to intensify as it moves through committee reviews and potential amendments. The outcome of House Bill 924 could set a precedent for future financial support initiatives in Montana, shaping the landscape for business financing in the state.