HB 1303
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
First Reader
House Bill 1303 (Delegate Henson)
Ways and Means
Small, Minority, and Women-Owned Business Financial Assistance - Use of
Funds
This bill requires an agency or unit of State government administering a program
authorized in response to a disaster to allow a small, minority, or women-owned business
that is not in good standing with the State Department of Assessments and Taxation
(SDAT) to apply to conditionally participate in the program, as specified. The business
may receive 40% of the assistance that it would have otherwise received, but for its lack of
good standing, and may use the funds to bring the business into compliance with annual
reporting requirements, pay outstanding personal property taxes owed, and any penalties,
interest, and fees associated with noncompliance with State law or business regulation. If
the assistance is in the form of a loan, the portion used to pay the above costs must be
forgiven. If the business enters into good standing during the period of conditional
participation, the business may participate fully in the program and must be provided with
the remaining financial assistance under the program.
Fiscal Summary
State Effect: State expenditures likely increase for administrative costs associated with
the additional requirements for State disaster assistance programs. Financial assistance
provided under such programs is also delayed and reallocated. Depending on the structure
and funding of any future program, the effect could be significant. The effect on State
revenues is unclear, as discussed below. The bill may also limit use of future federal
funding for disaster relief.
Local Effect: Personal property tax revenues increase from State programmatic funding
received and used by conditional applicants under the bill to repay outstanding balances.
Expenditures are not affected.
Small Business Effect: Meaningful.
 Analysis
Bill Summary: “Disaster” means a catastrophic event, including a natural disaster, an
epidemic, a pandemic, or any other public health emergency. “Financial assistance” means
need-based monetary aid provided by the State to small, minority, and women-owned
businesses, including loans, forgivable loans, and grants. Small, minority, or
women-owned business is not defined.
An applicant for conditional participation in a program must reasonably demonstrate to the
administering department that the business was in operation for the period of time
applicable under the regulations generally governing the financial assistance program. An
applicant may do so by providing gross sales receipts showing transaction dates, dated
financial statements, and sworn affidavits made by a person with knowledge of the
business’s operations.
Current Law: The State has authorized many programs designed to provide financial
assistance to businesses in response to the COVID-19 pandemic, although many programs
were not need-based, and were instead first-come, first served. See page 12 of the
Operating Budget Analysis for the Maryland Department of Commerce on the Department
of Legislative Services website for an overview of the programs, funding levels and
sources, and implementation challenges.
State Fiscal Effect: When SDAT issues a certificate verifying that a business entity is in
“good standing,” it means that all documents and fees required by law to be submitted to
the department have been received and that no other government agency has notified the
department that the entity is delinquent in tax payments. SDAT regulations specify the
SDAT-specific requirements for different types of businesses.
While the bill does not alter the amount of initial funding available under any future disaster
programs, it modifies the timing of disbursements and, potentially, the amount recouped
from disaster program loans. The bill also creates additional administrative requirements
for any agency administering the assistance – which further compounds other
administrative issues associated with standing up a program in the wake of a disaster. The
effects likely increase administrative expenditures associated with any such programs and,
depending on their structure and funding, the effect could be significant.
Up to 40% of funding received under a State disaster program may ultimately be used to
repay the State and/or local governments for amounts owed. Commerce, a likely agency to
administer any such State program, advises that this is currently a disallowed use of funds
received through its financial assistance programs. Still, the net effect on State revenues is
unclear, as there are competing potential effects:
HB 1303/ Page 2
 typically, ineligible grant funding is eligible to repay the State, but also local
personal property taxes (zero to net-positive effect on State revenue); and
 loan funds can be used to repay the State, but also local property taxes, and amounts
used for those purposes are forgiven (zero to net-negative effect on State revenue).
Finally, State programs authorized in response to a disaster may also use federal funds –
as was the case for several Commerce programs in response to COVID-19. Depending on
restrictions placed on the use of such federal funds, the bill may result in their use being
disallowed for an affected program.
Local Revenues: Personal property tax revenues increase from State programmatic
funding received and used by conditional applicants under the bill to repay outstanding
balances. The timing and amounts cannot be predicted.
Small Business Effect: The bill reallocates funding from businesses that are in good
standing with SDAT to those that, at least originally, are not. In a program with a limited
budget, the bill results in some small businesses receiving funds when they otherwise
would not and some businesses not receiving funds when they otherwise would. The bill
also effectively encumbers a portion of any program’s financial assistance for a period of
up to six months – the remaining 60% of available assistance for conditional recipients –
which delays the distribution of those funds.
Additional Information
Prior Introductions: None.
Designated Cross File: None.
Information Source(s): Department of Commerce; State Department of Assessments and
Taxation; Department of Legislative Services
Fiscal Note History: First Reader - March 9, 2021
rh/vlg
Analysis by: Stephen M. Ross Direct Inquiries to:
(410) 946-5510
(301) 970-5510
HB 1303/ Page 3


Statutes affected:
Text - First - Small, Minority, and Women-Owned Business Financial Assistance - Use of Funds: 2-901 State Finance and Procurement, 2-902 State Finance and Procurement, 2-903 State Finance and Procurement