Committee hears on HB 2350 to make Small Business Sustainability Fund permanent

Chair Winn opened the public hearing on House Bill 2350 on Jan. 29. The bill would direct the Oregon Business Development Department (Business Oregon) to establish a permanent Small Business Sustainability Fund to support retention and expansion of small businesses with grants, forgivable loans and loans.

Michael Held, a Business Oregon regional official testifying at the agency’s request, said the bill “is really about 2 things, accountability and results.” Held said the fund grew from pandemic‑era programming and transfers from the Strategic Reserve Fund and that the bill would create a dedicated fund to continue flexible financing. “This fund is a way to addressing part of that gap,” he told the committee.

Held described key program features: awards may be grants, forgivable loans or loans; awards are intended for traded sector or regionally important businesses; the statutory employee cap is under 100 employees (agency practice has focused on firms with fewer than 30 employees); and the agency has required at least 30% matching financing from other sources. Eligible project costs listed in the draft statute exclude payroll and typically cover equipment, machinery, workforce training, marketing, inventory and accounts receivable.

Held offered program results from the agency’s five years of activity: 45 awards totaling roughly $2.9 million in public funds, leveraged with about $18.3 million in private investment; 75% of projects were in rural areas; 53% were in food and beverage manufacturing and roughly 20% in advanced manufacturing. The agency said no awardees to date had entered into repayment plans with the agency, though some projects remain active.

Small business witnesses described how the fund operated in practice. Ben Doimling of Xeno Forest Products said a $75,000 award from the program helped the company build a new manufacturing line to supply the Portland airport and “allowed us to scale the impact that we could have on the state.” He described the full project as about $1 million financed with an SBA EIDL loan, a bank loan, the company’s capital and the Business Oregon award.

Tim Cowan, a former banker who testified as a private citizen, raised questions about underwriting, forgivable loans, default triggers, personal guarantees and how the agency ensures projects are structured to succeed. Business Oregon’s Deputy Director Chris Cummings and regional staff described the agency’s project underwriting: applications undergo a financial review that includes profit and loss statements, balance sheets, tax returns and business plans; the agency conducts diligence similar to traditional lenders and uses forgivable loans and grants to mitigate and manage risk while holding companies accountable to deliverables.

Committee members asked about whether grants could be used for payroll (agency: typically not), whether the program targets underserved communities (agency: no statutory targets now but outreach and regional focus produced 75% rural project placement), average award size (agency: award cap $75,000), and how much is currently in the fund (agency: about $800,000 on hand, with projects in the pipeline reducing available awards).

Multiple lawmakers asked Business Oregon for outcome information; the agency said it conducts closeouts collecting quantitative and qualitative impacts including jobs retained or created and private capital leveraged and offered to provide one‑pagers, closeout reports and application memos to the committee.

No committee votes or final actions on HB 2350 were recorded in the transcript.