Sec. 489.213. ELIGIBLE PRODUCTS AND BUSINESSES; FINANCING. (a) Financing may be made under this subchapter only for a product or small business approved by the bank.

(b) In determining eligible products and businesses, the bank shall give special preference to products or businesses in the areas of semiconductors, nanotechnology, biotechnology, and biomedicine that have the greatest likelihood of commercial success, job creation, and job retention in this state. The bank shall give further preference to providing financing to projects or businesses that are:

(1) grantees under the small business innovation research program established under 15 U.S.C. Section 638, as amended;

(2) companies formed in this state to commercialize research funded at least in part with state funds;

(3) applicants that have acquired other sources of financing;

(4) companies formed in this state and receiving assistance from designated state small business development centers; or

(5) applicants who are residents of this state doing business in this state and performing financed activities predominantly in this state.

(c) The board shall adopt rules governing the terms and conditions of the financing, specifically including requirements for appropriate security or collateral, equity interest, and the rights and remedies of the board and bank in the event of a default on the loan. The rules must include a requirement that applicants report to the bank on the use of money distributed through either fund.

(d) Before approving the provision of financing to a person, the bank shall enter into an agreement with the person under which the bank will obtain an appropriate portion of royalties, patent rights, equitable interests, or a combination of those royalties, rights, and interests from or in the product or the proceeds of the product for which financing is requested. Contracts executed under this subchapter must include agreements to ensure proper use of funds and the receipt of royalties, patent rights, or equity interest, as appropriate.

(e) The board may appoint an advisory committee of experts in the areas of semiconductors, nanotechnology, biotechnology, and biomedicine to review projects and businesses seeking financing from the bank.

(f) Repealed by Acts 2003, 78th Leg., 3rd C.S., ch. 10, Sec. 9.02.

(g) A claim of the state for a payment owed to the state under this subchapter by a person who has been provided financing has priority over all other claims against the person.

(h) Any business in this state is eligible for funding distributed through the small business incubator fund if it is determined that the business is substantially likely to develop and expand the opportunities for small businesses in the semiconductor, nanotechnology, biotechnology, or biomedicine industry in this state.

Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1, 2003. Amended by Acts 2003, 78th Leg., 3rd C.S., ch. 10, Sec. 9.01, eff. Oct. 20, 2003; Acts 2003, 78th Leg., 3rd C.S., ch. 10, Sec. 9.02, eff. Oct. 20, 2003.