AB 685

AB685:v97#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 685

An act to amend Section 12100.63 of, and to add Article 7.5 (commencing with Section 12100.70) to Chapter 1.6 of Part 2 of Division 3 of Title 2 of of, the Government Code, relating to economic recovery, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL'S DIGEST

AB 685, as amended, Solache. Small Business Resiliency and Innovation Act.

Existing law establishes the Office of Small Business Advocate (OSBA) within the Governor’s Office of Business and Economic Development, also known as GO-Biz, to advocate for causes of small business and to provide small businesses with the information they need to survive in the marketplace. Existing law also establishes the California Small Business Technical Assistance Program (SB-TAP) within OSBA, under the direct authority of the Small Business Advocate, for the purpose of assisting small businesses through free or low-cost one-on-one consulting and low-cost training by entering into grant agreements with one or more small business technical assistance centers. Under existing law, OSBA administers the Capital Infusion Program (CIP) pursuant to the SB-TAP, as specified.

Existing law sets forth the criteria that an applicant must meet to be eligible to participate in these programs, which can vary depending on whether the applicant is receiving funding from federal or private sources.This bill would revise certain eligibility criteria for the small business technical assistance center grant programs, as specified. The bill would create uniform eligibility requirements for applicants with funding from a nonstate source. The bill would also authorize a group of small business technical assistance centers to apply as a network if those centers are supported by contracts for the same program under the same funding authority.

This bill would establish the Small Business Resiliency and Innovation Act to provide assistance to small businesses. For this purpose, the bill would appropriate $26,000,000 from the General Fund to the Small Business Resiliency and Innovation Fund, which the bill would create in the State Treasury. The bill would require OSBA to administer the fund and to allocate moneys in the fund to both the CIP and the SB-TAP, and to OSBA for administrative purposes, as provided. The bill would require Go-Biz to submit a report to the Legislature detailing the allocation and expenditure of funds pursuant to these provisions on or before January 1, 2030.

This bill would declare that it is to take effect immediately as an urgency statute.

Digest Key

Vote: 2/3 Appropriation: YES Fiscal Committee: YES Local Program: NO

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Section 12100.63 of the Government Code is amended to read:

12100.63.

(a) The California Small Business Technical Assistance Program is hereby created within the California Office of the Small Business Advocate.

(b) The program shall be under the direct authority of the Small Business Advocate.

(c) The purpose of the program is to assist small businesses through free or low-cost one-on-one consulting and low-cost training by entering into grant agreements with one or more small business technical assistance centers.

(d) In implementing the program, the office shall consult with local, regional, federal, and other state public and private entities that share a similar mission to support the needs of small businesses in California.

(e) An applicant pursuant to this article shall be a small business technical assistance center, including a regional or statewide network, operating as a group or as an individual center.

(1) A small business technical assistance center operating as a group consisting of centers organized under a coordinating administrative or fiscal entity shall apply by submitting a single consolidated application to the office. The group may apply as a network with an agreement in place between organizations supported by contracts for the same program under the same funding authority.

(2) A small business technical assistance center operating as an individual center shall apply by submitting a single application for that center to the office.

(f) The office shall administer the program to provide grants to expand the capacity of small business development technical assistance centers in California, administered by and primarily funded by federal agencies, but shall also include other nonprofit small business technical assistance centers, California that can demonstrate experience, success, and capacity to expand existing small business administration programs that provide one-on-one confidential consulting and training to small businesses and entrepreneurs in this state. Except as modified by subdivision (l), an applicant shall be eligible to participate in the program if the office determines that the applicant meets all of the following criteria:

(1) At the time of applying for funds, the applicant has an active contract with a federal nonstate funding partner to administer a program in this state, or has received a letter of intent from a federal nonstate funding partner to administer a federal small business technical assistance center program in this state within the next fiscal year. Alternatively, if the applicant is not a federally contracted small business technical assistance center, the applicant shall document a private funding source with similar intent and meet the criteria defined in subdivision (s) of Section 12100.62. A group of programs may apply as a network with a single fiscal entity if the active contracts are for the same program under the same funding authority.

(2) (A) The applicant provided a plan of action and commitment to fully draw down all of the federal funds available using local cash match and state funds not described in Section 12100.65 during the duration of the award period. Alternatively, if the applicant is not a federally contracted small business technical assistance center, the applicant shall present a plan of action for drawing down any match required by those private funding sources using local cash match outside of state funds not described in Section 12100.65 during the award period. The office may request that the applicant provide details relating to the source and amount of these nonstate local match funds. utilize the funding to operate a small business technical assistance program solely with the contracted nonstate funding partner.

(B) If the applicant is a new small business technical assistance center, the applicant has demonstrated the ability to fully draw down substantially all federal or private funds available to it. must show capacity to effectively operate, including reporting, with only the nonstate funds.

(3) The requested funding amount does not exceed the total federal award specified in the contract with the federal nonstate funding partner contract, or the private funding sources specified, but in any event is no less than twenty-five thousand dollars ($25,000).

(4) The applicant seeks funding for one or more years, but no more than five years in duration.

(5) The grant agreements authorized by this article are not subject to the model contract provisions developed pursuant to Chapter 14.27 (commencing with Section 67325) of Part 40 of Division 5 of Title 3 of the Education Code.

(6) The applicant has a fiscal agent that is able to receive nonfederal funds. state funds and has demonstrable experience reporting on small business assistance or other programs.

(g) The office shall issue a request for proposal for grants under the program, which may contain the following information:

(1) The eligibility requirements described in subdivision (e).

(2) The available funding range.

(3) Funding instruments.

(4) The local cash match requirement described in subdivision (f).

(5) Operational capacity.

(6) The duration of the program.

(7) The start date of the program.

(8) Narrative requirements.

(9) Reporting requirements.

(10) Required attachments.

(11) Submission requirements.

(12) Application evaluation criteria.

(13) An announcement of an awards timeline.

(h) (1) The office shall evaluate applications received based on the following factors:

(A) The proposed use of the requested funding, including the specificity, measurability, and ability of the applicant to document and achieve the goals and objectives identified in its application.

(B) The proposed management strategy of the applicant to achieve its goals and objectives identified in its application.

(C) The applicant’s ability to complement and leverage the work of other local, state, federal, nonprofit, or private business technical assistance resource providers.

(D) The applicant’s historical performance with federal funding partner contracts or private funding sources and the strength of its fiscal controls.

(2) The office shall prioritize funding for applications that best meet the factors listed in paragraph (1) and give preference to applications that propose new or enhanced services to underserved business groups, including women, minority, and veteran-owned businesses, and businesses in low-wealth, rural, and disaster-impacted communities included in a state or federal emergency declaration or proclamation.

(i) State funds provided pursuant to the program shall be used to expand consulting and training services through existing and new centers, including satellite offices. State funds provided pursuant to the program shall not supplant nonstate local cash match dollars included in a federal small business technical assistance center’s plan described in subparagraph (A) of paragraph (2) of subdivision (f) or in any nonfederal small business technical assistance center’s plan.

(j) Subject to appropriation of necessary funds by the Legislature, a supplemental grant program designated as the California Dream Fund Program shall be established by the office to provide microgrants as described in this subdivision. The microgrants shall be disbursed through California Small Business Technical Assistance Program grantees. California Small Business Technical Assistance Program applicants, as prescribed by the office, may also request state funds designated as the California Dream Fund Program moneys to provide microgrants up to ten thousand dollars ($10,000) to seed entrepreneurship and small business creation in underserved small business groups that are facing capital and opportunity gaps. These microgrants shall be made available to startup clients participating in intensive startup training and consulting with the center networks.

(k) For purposes of implementing the California Dream Fund Program, a person or entity shall not seek information that is unnecessary to determine eligibility, including whether the individual is undocumented. Information that may be collected from individuals participating in the California Dream Fund Program shall not constitute a record subject to disclosure under Division 10 (commencing with Section 7920.000) of Title 1.

(l) (1) If an applicant’s federal contract was canceled, frozen, or rescinded in the 2024–25 fiscal year, then for grants made in fiscal years 2025–26 to 2027–28, inclusive, the requirements in subdivision (f) are modified, as follows:

(A) The applicant may use its 2023–24 federal fiscal year contract to meet the requirement described in paragraph (1) of subdivision (f) to have an active contract with a federal funding partner to administer a program in this state.

(B) The requirement described in paragraph (2) of subdivision (f) shall be waived if the applicant meets all of the following criteria:

(i) The applicant received an award pursuant to this chapter as a federal small business technical assistance center during the 2022–23, 2023–24, and 2024–25 funding rounds.

(ii) The office determines that the applicant successfully implemented their awarded contracts in 2023 and 2024.

(C) An applicant may use the total contract award amount in its 2023–24 federal fiscal year contract to meet the requirement described in paragraph (3) of subdivision (f) that the requested funding amount made in a grant pursuant to this chapter not exceed the total federal award specified in the contract with the federal funding partner contract.

(2) This subdivision shall not apply if the office determines that the contract was canceled, frozen, or rescinded based upon a finding and declaration of noncompliance.

(3) State funding adjustments authorized pursuant to this subdivision shall be temporary and limited.

(4) State funding provided pursuant to this subdivision may also be used for outreach efforts to ensure that small businesses, including those in underserved and rural communities, are aware of, and can access, technical assistance services.

(5) The office shall review and confirm that the applicant continues to meet state performance standards and provides high-quality, equitable technical assistance services. The office shall report its findings and actions to the Legislature. A report to be submitted pursuant to this paragraph shall be submitted in compliance with Section 9795 of the Government Code.

(6) This subdivision shall remain operative until June 30, 2029.

SECTION 1.SEC. 2.

Article 7.5 (commencing with Section 12100.70) is added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, to read:

Article 7.5. Small Business Resiliency and Innovation Act

12100.70.

This article shall be known, and may be cited, as the Small Business Resiliency and Innovation Act.

12100.71.

The Legislature finds and declares all of the following:

(a) The Capital Infusion Program (CIP) was created for the purpose of providing small businesses with the necessary resources to pursue strategic initiatives and is administered by the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development (GO-Biz). The CIP has been instrumental in supporting small businesses by providing technical assistance regarding access to capital.

(b) The Small Business Technical Assistance Program (SB-TAP), which is under the direct authority of the Small Business Advocate, is another critical resource for small businesses, providing essential wraparound technical assistance to support recovery and resilience.

12100.72.

(a) The sum of twenty-six million dollars ($26,000,000) is hereby appropriated from the General Fund to the Small Business Resilience and Innovation Fund, which is hereby created within the State Treasury. The Office of Small Business Advocate shall administer the fund and shall allocate moneys as follows:

(1) Seven million dollars ($7,000,000) for the Small Business Technical Assistance Program.

(2) Seventeen million dollars ($17,000,000) for the Capital Infusion Program.

(3) Two million dollars ($2,000,000) for staff augmentation, administrative support, program oversight, and accountability activities of the Office of the Small Business Advocate.

(b) Moneys within the fund shall be used solely for the purpose of providing assistance to small businesses.

12100.73.

(a) GO-Biz shall submit a report to the Legislature on or before January 1, 2030, detailing the allocation and expenditure of funds pursuant to this article.

(b) The report shall include, but not be limited to, all of the following:

(1) The number of businesses assisted.

(2) The types of assistance provided.

(3) An assessment of the impact on business resilience and innovation.

(c) The report shall also include a detailed accounting of the allocation and impact of the funds appropriated to the SB-TAP and CIP.

(d) The report shall be submitted in compliance with Section 9795.

SEC. 2.SEC. 3.

The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SEC. 3.SEC. 4.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:

Small businesses are the primary source of employment and economic stability in communities throughout California, and ongoing economic volatility, rising costs, and constrained credit markets have placed an increasing number of small businesses at risk of closure or relocation. These conditions pose an immediate threat to local employment, household income, and community stability. To allow the state to deploy assistance without delay, stabilize small businesses, preserve jobs, and protect the economic health and safety of communities across California, it is necessary that this act take effect immediately.