# Housing and Community Development (GHS)

## Title 6. Division of Neighborhood Revitalization

### Subtitle 3. Neighborhood Business Development Program

#### Section 6-301

(a) In this subtitle the following words have the meanings indicated.

(b)

  (1) "Development costs" means the costs incurred to develop, redevelop, or expand a neighborhood business development project.

  (2) "Development costs" includes the costs of:

    (i) necessary studies, surveys, plans, and specifications;

    (ii) architectural, engineering, or other special services, including flood plain studies, environmental audits, and critical area or wetland assessments;

    (iii) land and improvements;

    (iv) site preparation;

    (v) construction, reconstruction, and rehabilitation;

    (vi) machinery, equipment, and furnishings;

    (vii) essential operating costs, including working capital and occupancy expenses;

    (viii) indemnity and surety bonds and premiums on insurance;

    (ix) temporary relocation expenses; and

    (x) other costs determined to be acceptable by the Department.

(c) "Eligible opportunity zone" means an area designated as a qualified opportunity zone under Sec. 1400Z-1 of the Internal Revenue Code that is located in Allegany County, Garrett County, Somerset County, or Wicomico County.

(d) "Food desert" means the part of a priority funding area or an eligible opportunity zone designated by the Secretary under Sec. 6-308(c) of this subtitle.

(e) "Fund" means the Neighborhood Business Development Fund.

(f) "Microenterprise" means a business that qualifies as a microenterprise under Sec. 6-302 of this subtitle.

(g) "Priority funding area" means an area designated as a priority funding area under Sec. 5-7B-02 of the State Finance and Procurement Article.

(h) "Program" means the Neighborhood Business Development Program.

(i)

  (1) "Project" means a neighborhood business development project that receives financial assistance from the Fund.

  (2) "Project" includes:

    (i) a microenterprise project that receives financial assistance from the Fund; and

    (ii) a food desert project that receives financial assistance from the Fund.

(j) "Small business" means a business that qualifies as a small business under Sec. 6-302 of this subtitle.

(k) "Sustainable community" means the part of a priority funding area that:

  (1) as determined by the Sustainable Growth Subcabinet, satisfies the requirements of Sec. 6-205 of this title;

  (2) has been designated as a BRAC Revitalization and Incentive Zone under Title 5, Subtitle 13 of the Economic Development Article; or

  (3) has been designated a transit-oriented development under Sec. 7-101 of the Transportation Article.

#### Section 6-302

A business qualifies as a small business or a microenterprise if the number of its employees and the amount of its annual receipts do not exceed limits that the Department sets by regulation for a small business or a microenterprise.

#### Section 6-303

(a) There is a Neighborhood Business Development Program.

(b) The purposes of the Program are:

  (1) in priority funding areas or eligible opportunity zones, to:

    (i) help develop, redevelop, or expand small businesses and microenterprises;

    (ii) stimulate investment by the private sector;

    (iii) invest in revitalization projects for small businesses and microenterprises; and

    (iv) stimulate political subdivisions to participate in developing and expanding small businesses and microenterprises; and

  (2) in food deserts or parts of priority funding areas or eligible opportunity zones that serve food deserts, to help create and retain small businesses and other food-related enterprises that provide fresh fruits, vegetables, and other healthy foods to residents in the food desert.

(c) The Program includes:

  (1) the Business Development Program; and

  (2) the Capital Access Program.

#### Section 6-304

(a) There is a Business Development Program in the Neighborhood Business Development Program.

(b) The Business Development Program shall provide financial assistance to projects in priority funding areas or eligible opportunity zones.

#### Section 6-305

(a)

  (1) A small business, nonprofit organization, or microenterprise may apply for financial assistance under the Business Development Program.

  (2) The Department shall review each application.

(b) An applicant may qualify for financial assistance for a project in a priority funding area or an eligible opportunity zone if the application demonstrates that:

  (1) the financial assistance from the Fund is the minimum amount necessary to make the project financially feasible;

  (2) the project is ready to proceed when it receives financial assistance from the Business Development Program; and

  (3) any food desert project includes a plan to seek out sources of Maryland-grown produce and Maryland produced foods.

(c)

  (1) The Department shall provide written notice to the political subdivision in which the proposed project is located.

  (2) Except as provided in paragraph (3) of this subsection, the Department may not approve an application unless the political subdivision in which the proposed project is located approves the application by:

    (i) resolution; or

    (ii) letter, delivered to the Department by the political subdivision's authorized designee, expressing support of the plan or project.

  (3) If the Department does not receive notice of approval or denial of an application from the affected jurisdictions within 15 days after notice of the proposed project is given in accordance with paragraph (1) of this subsection, the Department may approve the application.

(d) Financial assistance under the Business Development Program may be provided to a small business, nonprofit organization, or microenterprise as:

  (1) a grant;

  (2) a loan;

  (3) a reduction in the principal obligation of or interest rate on a loan or portion of a loan;

  (4) a prepayment of interest on a subordinate or superior loan or portion of a loan;

  (5) an assurance;

  (6) a guarantee;

  (7) any other form of credit enhancement; or

  (8) a promissory note that may be converted to an equity ownership interest and liquidated at the earliest opportunity to realize the highest market value for the Department.

(e)

  (1) The Department shall reserve at least the lesser of $5,000,000 or the annual capital appropriation for the Fund to make financial assistance available to projects located in sustainable communities.

  (2) The Department may meet the funding obligations for sustainable communities and food deserts by using any financial assistance available to the Department that is authorized to be used for these projects.

#### Section 6-307

(a) Financial assistance under the Business Development Program shall be on the terms that the Department considers necessary to make the project financially feasible.

(b) Financial assistance under the Business Development Program may be used for:

  (1) a part of the development costs of a project;

  (2) the development costs, working capital, or business expenses of a microenterprise project; or

  (3) in accordance with Sec. 6-308.3 of this subtitle, small loans for food desert projects.

(c) The Department may require that financial assistance under the Business Development Program be secured by a mortgage or other security instrument, which may be subordinate to other security interests.

(d) The Department may modify the interest rate, the time or amount of payment, or any other term of a grant or loan to facilitate the successful completion or operation of a project.

(e) The Department may contract for services related to the Business Development Program.

#### Section 6-308

(a) The Department shall:

  (1) administer the Business Development Program;

  (2) adopt regulations to carry out the Business Development Program, including a process to designate an area as a food desert under subsection (c) of this section; and

  (3) make a reasonable, good faith effort to make 25% of the Business Development Program loans and grants to microenterprises.

(b) The Department may:

  (1) sell, assign, or otherwise dispose of a Program loan or revenue from a loan on terms and conditions acceptable to the Department, including selling loans at a discount, if the maximum sale proceeds in any fiscal year do not exceed limits that the Department sets by regulation;

  (2) apply the proceeds received from a sale, assignment, or other disposition under item (1) of this subsection to the Fund;

  (3) pledge a Program loan as security for any:

    (i) business project loan, bond, or security that is issued, made, or purchased by the Community Development Administration under Title 4 of this article; or

    (ii) insurance, guaranty, or credit enhancement on a Program loan or business project under Sec. 4-223 of this article; and

  (4) without approval or execution by the Board of Public Works, sell or assign any equity interest acquired under Sec. 6-305(d) of this subtitle.

(c) The Secretary, on the recommendation of the Interagency Food Desert Advisory Committee established under Sec. 6-308.2 of this subtitle, may designate an area as a food desert after considering the following factors:

  (1) availability of fresh fruit, vegetables, and other healthy foods in the area;

  (2) income levels of local residents;

  (3) transportation needs of local residents and the availability of public transportation;

  (4) comments from local governments; and

  (5) any other factors that the Department considers relevant.

#### Section 6-308.1

(a) If the Department determines that an entity is capable of administering financial assistance under the Program, the entity may originate and administer financial assistance in accordance with standards the Department adopts by regulation.

(b)

  (1) The Department shall adopt regulations to establish standards for determining the eligibility of an entity to administer financial assistance under the Program.

  (2) The standards shall include provisions on:

    (i) the size, training, and experience of the professional staff that would administer the financial assistance; and

    (ii) the capability of the professional staff to:

      (1) determine financial capacity of a borrower;

      (2) originate financial assistance; and

      (3) evaluate applications for financial assistance.

(c) The Department may:

  (1) help train employees of an approved entity to administer financial assistance in accordance with standards that the Department adopts;

  (2) charge and collect from a borrower:

    (i) reasonable origination, application, and processing fees; and

    (ii) other charges, fees, or reimbursements incidental to the financial assistance;

  (3) include the fees and charges listed in item (2) of this subsection in the amount of financial assistance;

  (4) pay an approved entity a reasonable origination, application, and processing fee for the financial assistance that is originated by the approved entity;

  (5) directly fund the financial assistance that is originated by an approved entity;

  (6) provide financial assistance to an approved entity for the purpose of the approved entity making the financial assistance in accordance with this subtitle;

  (7) purchase or commit to purchase from approved entities any form of financial assistance that meets the requirements of this subtitle and any regulations adopted under this subtitle; and

  (8) enter into agreements with approved entities to collectively lend money on a project that meets the requirements of this subtitle and any regulations adopted under this subtitle.

#### Section 6-308.2

(a) There is an Interagency Food Desert Advisory Committee.

(b) The Committee consists of the following seven members:

  (1) the Secretary, or the Secretary's designee;

  (2) the Secretary of Agriculture, or the Secretary's designee;

  (3) the Secretary of Planning, or the Secretary's designee;

  (4) the Secretary of Health, or the Secretary's designee;

  (5) the Secretary of Human Services, or the Secretary's designee;

  (6) the Secretary of Commerce, or the Secretary's designee; and

  (7) the Secretary of Education, or the Secretary's designee.

(c) The Secretary or the Secretary's designee is the chair of the Committee.

(d) The Department shall provide staff for the Committee.

(e) The Committee shall:

  (1) advise and make recommendations to the Department on the development and adoption of regulations related to food desert projects;

  (2) make recommendations to the Secretary on applications for designating an area as a food desert; and

  (3) make recommendations for interagency coordination to reduce the number of food deserts and promote healthy food access for Maryland neighborhoods.

#### Section 6-308.3

(a) If the Department determines that an entity is capable of administering a food desert project, the entity may originate and administer financial assistance to a food desert project in accordance with standards the Department adopts by regulation.

(b) The Department may:

  (1) pay an approved entity a reasonable origination, application, and processing fee for each food desert project that is originated by the approved entity;

  (2) directly fund the financial assistance for a food desert project that is originated by an approved entity;

  (3) provide financial assistance to an approved entity for the purpose of the approved entity providing financial assistance for a food desert project in accordance with this subtitle; and

  (4)

    (i) provide small loans in amounts that are not more than $100,000 per loan to an approved entity for assistance in providing or maintaining access to healthy food in urban or rural food deserts, including by providing loans for:

      (1) refrigerators, freezers, and other equipment; and

      (2) subject to subsection (c) of this section, operating costs incurred in providing access to healthy food in urban or rural food deserts; and

    (ii) work with intermediaries to administer the small loans authorized under item (i) of this paragraph.

(c) The Department shall forgive a loan for operating costs made under subsection (b)(4)(i)2 of this section after 5 years, if the loan recipient maintains continuous operations at the same location during that time.

#### Section 6-308.4

(a) On or before December 1 of each year, the Department shall submit a report on the Program, in accordance with Sec. 2-1257 of the State Government Article, to the Senate Budget and Taxation Committee, the Senate Education, Health, and Environmental Affairs Committee, the House Appropriations Committee, and the House Environment and Transportation Committee.

(b) The report under subsection (a) of this section shall include:

  (1) the names of approved entities awarded financial assistance for food desert projects;

  (2) the type of activities in which the approved entities are engaged;

  (3) the location of the approved entity's operation;

  (4) the amount of each grant award;

  (5) the number of employees employed by the approved entity;

  (6) the basis for approving the grant;

  (7) an explanation of how the approved entity's operation advances the policy goal of reducing food deserts; and

  (8) if available, how long the grantee's operation stayed in business following the awarding of the grant.

#### Section 6-309

(a) There is a Capital Access Program in the Neighborhood Business Development Program.

(b) The purposes of the Capital Access Program are to:

  (1) stimulate private sector lending to small businesses throughout the State; and

  (2) encourage private lenders to provide for a reserve of money as additional security for private sector loans made under this section.

(c) The Department may enter into a Capital Access Program participation agreement with each lender eligible to participate in the Capital Access Program.

(d) To be eligible to participate in the Capital Access Program, a lender:

  (1) shall be a federally insured financial institution, as defined in Sec. 1-101 of the Financial Institutions Article, or another institution regulated by the Commissioner of Financial Regulation; and

  (2) shall enter into a participation agreement with the Department that:

    (i) requires the lender to agree to:

      (1) enroll in the Capital Access Program loans that the lender makes to an eligible small business;

      (2) establish a loan reserve account with a federally insured financial institution as additional security to cover losses of the lender on loans that the lender enrolls; and

      (3) contribute money to the loan reserve account for each loan that the lender enrolls; and

    (ii) allows the lender to commingle in the reserve account contributions made for loans that the lender enrolls.

(e) To be eligible for a loan under the Capital Access Program, a borrower:

  (1) shall be a small business that meets the eligibility requirements set out in the Capital Access Program participation agreement between the borrower's lender and the Department; and

  (2) shall agree with the lender to contribute money to the loan reserve account that the lender establishes.

(f)

  (1) The Department may use the Fund to contribute up to $1,000,000 per fiscal year to loan reserve accounts established under subsection (d) of this section.

  (2) The contributions by the Department are exempt from the requirements of Title 6, Subtitle 2, and Titles 11 through 17, of the State Finance and Procurement Article.

(g)

  (1) Enrolling a loan in the Capital Access Program does not pledge the faith, credit, or taxing power of the State, the Department, the Neighborhood Business Development Program, or the Fund.

  (2) The State, the Department, the Neighborhood Business Development Program, and the Fund are not liable for losses of a lender on an enrolled loan, except to the extent of the loan reserve account that the lender establishes under the Capital Access Program.

(h) A project financed by a loan enrolled in the Capital Access Program shall be in a priority funding area as required by Title 5, Subtitle 7B of the State Finance and Procurement Article.

(i) A lender shall treat a default on a loan enrolled in the Capital Access Program in the same way that the lender treats defaults on other loans.

(j) The Department may require that, before a lender withdraws money from a reserve account to cover losses on a defaulted enrolled loan, the lender agree that, if the reserve account fully covers the losses, the lender will assign to the Department or subrogate the Department to the right, title, and interest of the lender in and to:

  (1) the loan;

  (2) collateral and security for the loan; and

  (3) every other right of recovery in connection with the loan.

(k)

  (1) After a default on a loan enrolled in the Capital Access Program, the Department may acquire, hold, improve, operate pending sale or other disposition, sell, assign, exchange, transfer, convey, lease, mortgage, or otherwise dispose of or encumber property that secures or is collateral for all or part of the loan, including:

    (i) real property;

    (ii) personal property; and

    (iii) evidence of indebtedness.

  (2) The Department may act under this subsection:

    (i) in its name or in the name of the Neighborhood Business Development Program; and

    (ii) notwithstanding Titles 10 through 17 of the State Finance and Procurement Article.

(l) The Department shall adopt regulations to carry out the Capital Access Program.

#### Section 6-310

(a) There is a Neighborhood Business Development Fund.

(b) The Department shall use the Fund to:

  (1) operate and pay expenses of the Program; and

  (2) provide financial assistance to small businesses, nonprofit organizations, and microenterprises.

(c)

  (1) The Department shall administer the Fund.

  (2) The State Treasurer shall hold and the Comptroller shall account for the Fund.

(d) The Fund is a continuing, nonlapsing special fund that is not subject to Sec. 7-302 of the State Finance and Procurement Article.

(e) The Fund consists of:

  (1) money appropriated in the State budget for the Program;

  (2) any repayment or prepayment of financial assistance under this subtitle or under the State Action Loans for Targeted Areas Program under former Article 83B, Title 4, Subtitle 6, of the Code;

  (3) money transferred to the Fund from any other fund as provided in this article;

  (4) money received from the sale, assignment, or other disposition of Program loans and equity interests;

  (5) other money received by the Program under this subtitle or from the Community Development Administration under Subtitle 2 of this title; and

  (6) investment earnings of the Fund.

(f) The Fund shall be invested in the same way as other State money.

(g) With the approval of the Legislative Policy Committee and, subject to Sec. 7-209 of the State Finance and Procurement Article, after the first 8 months of a fiscal year, the Department may transfer unencumbered money in the Fund to:

  (1) any other fund established under this title;

  (2) the Community Development Administration to provide financial assistance to business projects; and

  (3) the Maryland Housing Fund under Title 3 of this article to provide insurance, credit enhancement, or a guaranty on:

    (i) a Program loan; or

    (ii) a business project loan, bond, or security that is issued, made, or purchased by the Community Development Administration under Title 4 of this article.

#### Section 6-311

(a)

  (1) A person may not knowingly make or cause to be made a false statement or report in a document required to be submitted to the Department by an agreement relating to financial assistance under the Program.

  (2) An applicant for financial assistance under the Program may not knowingly make or cause to be made any false statement or report to influence the action of the Department on an application or to influence any action of the Department affecting financial assistance already provided.

(b) A person who violates this section is guilty of a misdemeanor and on conviction is subject to imprisonment not exceeding 5 years or a fine not exceeding $50,000 or both.

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Md. Code Ann., Hous. & Cmty. Dev. (as displayed at mgaleg.maryland.gov, October 16, 2026)