Loan guarantee program created for furloughed federal employees, and money appropriated.

A bill for an act

relating to federal employees; creating a loan guarantee program for furloughed

federal employees; appropriating money.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.
new text begin
FEDERAL EMPLOYEE PERSONAL LOAN GUARANTEE PROGRAM.
new text end

new text begin

Subdivision 1.

new text end

new text begin

Definitions.

new text end

new text begin

(a) For purposes of this section, the following terms have

the meanings given.

new text end

new text begin

(b) "Affected employee" means a federal employee who during the shutdown is:

new text end

new text begin

(1) a resident of this state; and

new text end

new text begin

(2) furloughed from federal employment without pay or required to work as a federal

employee without pay.

new text end

new text begin

(c) "Commissioner" means the commissioner of employment and economic development.

new text end

new text begin

(d) "Federal employee personal loan guarantee program" or "program" is the program

created under this section to guarantee personal loans to affected employees.

new text end

new text begin

(e) "Financial institution" means a bank, bank and trust, trust company with banking

powers, savings bank, savings association, or credit union organized under the laws of this

state, any other state, or the United States; an industrial loan and thrift under Minnesota

Statutes, chapter 53; or a regulated lender under Minnesota Statutes, chapter 56. Financial

institution also includes a subsidiary or operating subsidiary of a financial institution or

bank holding company, as defined in the federal Bank Holding Company Act, United States

Code, title 12, section 1841, et seq., if the subsidiary or operating subsidiary can demonstrate

to the satisfaction of the commissioner of commerce that the subsidiary or operating

subsidiary is regulated and subject to active and ongoing oversight and supervision by a

federal banking agency, as defined in the Federal Deposit Insurance Act, United States

Code, title 12, section 1811, et seq., or the commissioner.

new text end

new text begin

(f) "Grace period" means the 90-day period after an affected employee's federal agency

is funded and the shutdown ends.

new text end

new text begin

(g) "Loan guarantee" means a guarantee of 100 percent of the amount of a personal loan.

new text end

new text begin

(h) "Personal loan" means an unsecured loan made by a financial institution to an affected

employee that complies with the requirements of this section.

new text end

new text begin

(i) "Shutdown" means the federal fiscal year 2026 partial government shutdown affecting

the Transportation Security Administration and other federal agencies that began February

14, 2026.

new text end

new text begin

Subd. 2.

new text end

new text begin

Loan guarantee program.

new text end

new text begin

A personal loan guarantee program to support

affected employees of the Transportation Security Administration and other federal agencies

is created in the Department of Employment and Economic Development. The commissioner

shall administer the personal loan guarantee program in accordance with this section.

new text end

new text begin

Subd. 3.

new text end

new text begin

Duties of commissioner.

new text end

new text begin

(a) The commissioner must approve or disapprove

an application from a financial institution to participate in the loan guarantee program within

one day after receiving the application.

new text end

new text begin

(b) The commissioner must keep administrative records regarding the personal loan

guarantee program.

new text end

new text begin

(c) The commissioner must review requests for payments of loan guarantees under

subdivision 4 and disallow any request for guarantees that do not comply with the

requirements of this section.

new text end

new text begin

(d) The commissioner must pay loan guarantees that comply with this section to a

financial institution from the federal employee personal loan account in the special revenue

fund.

new text end

new text begin

(e) The commissioner must cease accepting personal loan information from financial

institutions the day after the shutdown ends.

new text end

new text begin

(f) The commissioner must cease accepting applications and approving claims for loan

guarantees if the number of loan guarantees requested exceeds ten percent of the total number

of personal loans issued. The commissioner must inform financial institutions that have

applied to the program within two days of ceasing to accept applications or approve claims

under this paragraph.

new text end

new text begin

(g) The commissioner must wind-down and terminate operation of the program by July

31, 2028.

new text end

new text begin

Subd. 4.

new text end

new text begin

Financial institutions.

new text end

new text begin

(a) A financial institution may apply to the commissioner

to participate in the program. Upon approval by the commissioner, a financial institution

may make personal loans and receive loan guarantees.

new text end

new text begin

(b) In order to participate in the program, a financial institution must be in good standing.

In order to be in good standing, a financial institution must not be subject to:

new text end

new text begin

(1) a formal agreement with the Office of the Comptroller of the Currency;

new text end

new text begin

(2) a consent order or cease and desist order issued by the Federal Deposit Insurance

Corporation;

new text end

new text begin

(3) a consent order or cease and desist order from the commissioner of commerce;

new text end

new text begin

(4) a letter of understanding and agreement or consent order issued by the National

Credit Union Administration; or

new text end

new text begin

(5) a finding by the commissioner that the financial institution has failed to comply with

this section.

new text end

new text begin

(c) A financial institution must document a personal loan with the following information:

new text end

new text begin

(1) evidence of the affected employee's employment status, income, and residence; and

new text end

new text begin

(2) the amount of unemployment compensation benefits the affected employee has

received or is eligible to receive during the shutdown.

new text end

new text begin

(d) A financial institution must notify the commissioner within one day of making a

personal loan. This notification must be in a form and manner determined by the

commissioner.

new text end

new text begin

(e) A financial institution must provide an affected employee with information regarding

credit counseling services offered by the financial institution or nonprofit credit counselors.

new text end

new text begin

(f) If a financial institution has made a good faith effort to collect on a personal loan

180 days after the grace period has concluded, the financial institution may submit a request

for payment of a loan guarantee from the commissioner.

new text end

new text begin

(g) The commissioner shall prepare a form for financial institutions to use in applying

for loan guarantees. The form shall include:

new text end

new text begin

(1) the name and contact information of the financial institution, including the name and

title of a contact person;

new text end

new text begin

(2) evidence that the financial institution's efforts to collect the personal loan have been

in accordance with the financial institution's collection policies;

new text end

new text begin

(3) the amount of the personal loan provided to the affected employee; and

new text end

new text begin

(4) the loan guarantee amount that is being requested from the program.

new text end

new text begin

Subd. 5.

new text end

new text begin

Personal loan; terms.

new text end

new text begin

(a) A personal loan must:

new text end

new text begin

(1) not require an affected employee to repay in part or in full the personal loan earlier

than the end of the grace period;

new text end

new text begin

(2) not require an affected employee to repay the loan in full earlier than 180 days after

the end of the grace period;

new text end

new text begin

(3) allow an affected employee to repay the personal loan in no fewer than three and no

more than six equal installments; and

new text end

new text begin

(4) not charge interest on the principal or charge fees until 180 days after the grace

period.

new text end

new text begin

(b) A loan to an affected employee must not exceed the lesser of:

new text end

new text begin

(1) $7,500;

new text end

new text begin

(2) the affected employee's most recent monthly net pay; or

new text end

new text begin

(3) four times the amount the affected employee has reported to the financial institution

in weekly unemployment compensation benefits that the employee has received or is eligible

to receive.

new text end

new text begin

(c) An affected employee is eligible for an additional personal loan for each 30-day

period that the shutdown continues. An affected employee may have up to three personal

loans.

new text end

Sec. 2.
new text begin
FEDERAL EMPLOYEE PERSONAL LOAN GUARANTEE PROGRAM

ACCOUNT.
new text end

new text begin

The federal employee personal loan guarantee account is created in the special revenue

fund.

new text end

Sec. 3.
new text begin
FEDERAL EMPLOYEE PERSONAL LOAN GUARANTEE PROGRAM;

APPROPRIATION.
new text end

new text begin

$....... in fiscal year 2026 is appropriated from the general fund to the commissioner of

employment and economic development for deposit in the federal employee personal loan

guarantee program account in the special revenue fund. This is a onetime appropriation.

Any amount remaining in the account as of August 1, 2028, is transferred to the general

fund.

new text end

Sec. 4.
new text begin
EFFECTIVE DATE.
new text end

new text begin

Sections 1 to 3 are effective the day following final enactment.

new text end