An Act establishing the Biobonds Innovation Fund, the Biobonds Innovation Fund Loan Program and the Biobonds Innovation Fund Loan Guarantee Program; and providing for duties of Department of Community and Economic Development.

PRINTER'S NO. 1581
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1285
Session of
2026
INTRODUCED BY PENNYCUICK, FARRY, HAYWOOD, J. WARD AND VOGEL,
APRIL 14, 2026
REFERRED TO INSTITUTIONAL SUSTAINABILITY AND INNOVATION,
APRIL 14, 2026
AN ACT
Establishing the Biobonds Innovation Fund, the Biobonds
Innovation Fund Loan Program and the Biobonds Innovation Fund
Loan Guarantee Program; and providing for duties of
Department of Community and Economic Development.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Biobonds
Innovation Fund Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Clinical trial." A clinical investigation of a drug or
medical device under investigation in a controlled clinical
trial under any of the following:
(1) An investigational new drug application in effect
under 21 U.S.C. § 355(i) (relating to new drugs) or 42 U.S.C.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
§ 262(a)(3) (relating to regulation of biological products),
as applicable.
(2) An investigational device exemption in effect under
21 U.S.C. § 360j(g) (relating to general provisions
respecting control of devices intended for human use).
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Eligible applicant." A person, business, university or
research institution, nonprofit research organization or public-
private partnership with a physical presence in this
Commonwealth that conducts or seeks to conduct research with
respect to a drug or medical device that is, or is planned to
be, involved in one or more clinical trials.
"Eligible project." A project submitted by an eligible
applicant under section 4 or 5 for financial assistance to
support research or clinical trial-related activities authorized
by the United States Food and Drug Administration for a drug or
medical device that is the subject of a clinical trial.
"Fund." The Biobonds Innovation Fund established under
section 3(a).
"Loan." Financial assistance provided under section 4.
"Loan guarantee." A guarantee, insurance or other credit
support provided under section 5 to reduce the cost of capital
or enable financing for an eligible project.
Section 3. Biobonds Innovation Fund.
(a) Establishment.--The Biobonds Innovation Fund is
established as a separate fund in the State Treasury.
(b) Deposits.--The following shall be deposited into the
fund:
(1) Money appropriated by the General Assembly for the
20260SB1285PN1581 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
purposes of this act.
(2) Proceeds of BioBonds issued under this act.
(3) Repayments of loans, including principal, interest,
fees, penalties and other amounts received under section 4.
(4) Recoveries and proceeds arising from loan guarantees
under section 5.
(5) Private, Federal or other nonstate money accepted
for the purposes of this act.
(6) Interest earnings on money in the fund.
(c) Use.--Money in the fund shall be used solely for the
following:
(1) Loans.
(2) Loan guarantees and related credit support.
(3) The reasonable costs of implementing this act,
including underwriting, due diligence, monitoring, audits and
program evaluation.
(4) Payment of debt service or related costs.
(d) Continuing appropriation.--Money in the fund is
appropriated to the department on a continuing basis to
implement this act.
Section 4. Biobonds Innovation Fund Loan Program.
(a) Program established.--The Biobonds Innovation Fund Loan
Program is established within the department to provide low-
interest loans to eligible applicants for eligible projects.
(b) Guidelines.--The department shall prepare and adopt
guidelines establishing all of the following:
(1) Underwriting criteria and documentation
requirements.
(2) Review procedures, timelines and communications with
applicants.
20260SB1285PN1581 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(3) Ranking and selection criteria under section 7.
(4) Monitoring, reporting, audit and compliance
requirements.
(5) Other guidelines as reasonably necessary to
implement the program.
(c) Applications.--The department shall develop and post on
its publicly accessible Internet website a rolling application
process for the program. At a minimum, an application shall
include all of the following:
(1) A project narrative and work plan.
(2) A project budget and statement of use of proceeds.
(3) Evidence of clinical trial status or the planned
submission timeline.
(4) Financial statements and a proposed repayment plan.
(5) A description of private capital leveraged, if any.
(6) Certifications and disclosures required by the
department, including conflict-of-interest disclosures when
applicable.
(d) Applicant requirements.--To receive a loan under the
program, an eligible applicant shall meet all of the following
requirements:
(1) Maintain a physical presence in this Commonwealth.
(2) Agree in writing to remain based in this
Commonwealth and to conduct the majority of research
activities supported by the loan in this Commonwealth for the
duration of the loan term.
(3) Certify compliance with applicable Federal and State
laws, including licensing and regulatory requirements.
(e) Awards.--The department shall accept applications and
approve awards on a rolling basis.
20260SB1285PN1581 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(f) Loan terms.--A loan under this section may not exceed an
annual interest rate of 2%. The maximum aggregate principal
amount of loans to a single eligible applicant under the program
may not exceed $5,000,000. The department shall establish the
maximum term, amortization schedule and permitted deferral
periods and may tailor terms based on project timelines and
risk. The department may require collateral, security interests,
guarantees, letters of credit or other credit enhancement
appropriate to protect the fund.
(g) Eligible uses.--Loan proceeds may be used only for costs
directly related to an eligible project, including the
following:
(1) Clinical trials authorized by the United States Food
and Drug Administration, including Phase I, Phase II and
Phase III clinical trial activities.
(2) Preclinical translational research directly
connected to a clinical trial pathway.
(3) Regulatory preparation and submissions.
(4) Manufacturing scale-up or quality systems tied to
trial supply or trial readiness.
(5) Data infrastructure, cybersecurity, software
validation and trial operations systems directly supporting
trial execution or compliance.
(h) Ineligible uses.--Loan proceeds may not be used for any
of the following:
(1) Acquisition costs, mergers or purchase of
controlling interests.
(2) Marketing or advertising expenses unrelated to trial
recruitment conducted in compliance with Federal and State
law.
20260SB1285PN1581 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(3) Refinancing or repayment of existing debt, except as
expressly permitted by departmental guideline to reduce
overall project risk.
(4) Executive compensation not directly attributable to
performance of the eligible project.
(i) Breach and remedies.--If the department determines that
an eligible applicant materially breached a requirement
specified in the application or a loan agreement, the department
may declare the loan in default, accelerate repayment of
outstanding principal and accrued interest and pursue available
remedies, including any of the following:
(1) Suspending disbursements.
(2) Requiring a corrective action plan.
(3) Assessing reasonable fees or penalties authorized by
guideline.
(4) Referring matters for enforcement if the department
suspects fraud or material misrepresentation.
(j) Custody and disbursements.--The State Treasurer shall be
custodian of the fund. The department shall approve
disbursements from the fund in accordance with this act.
Section 5. Biobonds Innovation Fund Loan Guarantee Program.
(a) Program established.--The Biobonds Innovation Fund Loan
Guarantee Program is established within the department to
provide loan guarantees or other credit support to eligible
applicants for eligible projects to reduce borrowing costs and
expand access to capital. In implementing the program, the
department shall consult with the Department of Health and the
State Treasurer.
(b) Applications and standards.--The department shall accept
applications for the program on a rolling basis. The department
20260SB1285PN1581 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
shall establish procedures and underwriting standards for the
program.
(c) Forms of support.--The department may provide any of the
following under the program:
(1) Guarantees of principal or interest.
(2) Partial guarantees.
(3) Credit insurance arrangements.
(4) Other credit enhancement mechanisms as reasonably
necessary to implement the program.
(d) Limitations.--The department shall establish all of the
following for the purposes of the program:
(1) Maximum guarantee amounts.
(2) The maximum percentage of a single obligation that
may be guaranteed.
(3) Eligible lenders or financing counterparties.
(4) Required fees, reserves or risk-sharing terms.
(5) Default, recovery and subrogation procedures.
(e) Program costs.--Administrative and program costs may be
paid from the fund, subject to reasonable limitations
established by the department.
Section 6. Duties of department.
The department shall have the following duties:
(1) Administer the fund, the Biobonds Innovation Fund
Loan Program and the Biobonds Innovation Fund Loan Guarantee
Program.
(2) Develop and publish guidelines, forms and scoring
criteria.
(3) Conduct due diligence, underwriting, compliance
monitoring and audits.
(4) Contract for technical, scientific, legal or
20260SB1285PN1581 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
financial expertise necessary to evaluate eligible projects.
(5) Coordinate with Commonwealth agencies, including the
Department of Health, to assess the public health impact of
funded projects.
(6) Take actions necessary to collect repayments,
enforce agreements and protect the assets in the fund.
(7) Develop standard terms and conditions for loan
agreements, guarantee agreements and related instruments.
Section 7. Ranking and selection criteria.
In awarding loans or guarantees under this act, the
department shall consider and rank eligible projects based upon
criteria established by the department. The criteria shall
include, at a minimum, the following:
(1) Public health impact.
(2) Whether the project addresses an unmet medical need.
(3) Scientific readiness and feasibility.
(4) The amount of private capital leveraged.
(5) Job creation, workforce development or economic
impact within this Commonwealth.
(6) Likelihood of commercialization or measurable
deployment of the resulting drug or medical device.
Section 8. Annual report.
(a) Report required.--No later than October 31 of each year,
the department shall provide an annual report to all of the
following:
(1) The Governor.
(2) The President pro tempore of the Senate.
(3) The Speaker of the House of Representatives.
(4) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
20260SB1285PN1581 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(5) The chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(6) The chairperson and minority chairperson of the
Health and Human Services Committee of the Senate.
(7) The chairperson and minority chairperson of the
Health Committee of the House of Representatives.
(b) Contents.--The department shall include, at a minimum,
all of the following in the annual report:
(1) A current list of projects receiving assistance
under the Biobonds Innovation Fund Loan Program and the
Biobonds Innovation Fund Loan Guarantee Program.
(2) The status and performance of loans and guarantees,
including repayment and default rates.
(3) The reasons for problems achieving desired volumes
of BioBonds or the ability of the Biobonds Innovation Fund
Loan Program and the Biobonds Innovation Fund Loan Guarantee
Program to proceed at a faster pace.
(4) An analysis of risk to this Commonwealth and the
fund in providing guarantees and credit support.
(5) Recommended improvements to the Biobonds Innovation
Fund Loan Program and the Biobonds Innovation Fund Loan
Guarantee Program.
(6) Estimated economic impact of the Biobonds Innovation
Fund Loan Program and the Biobonds Innovation Fund Loan
Guarantee Program within this Commonwealth.
(c) Posting.--The department shall post and maintain the
annual report on the department's publicly accessible Internet
website.
Section 9. Regulations.
The department may promulgate regulations as necessary to
20260SB1285PN1581 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
implement this act.
Section 10. Effective date.
This act shall take effect in 60 days.
20260SB1285PN1581 - 10 -
1
2
3