HF5009

Purpose

This bill creates a new program to help certain federal workers who live in Minnesota during a federal government shutdown. It aims to provide financial support by guaranteeing personal loans made to affected employees, helping them cover expenses while they are not being paid.

Key terms and who is covered

• Affected employee: a federal worker who lives in Minnesota and is furloughed or required to work without pay during the shutdown.
• Shutdown: the federal fiscal year 2026 partial government shutdown that began February 14, 2026.
• Transportation Security Administration (TSA) and other federal agencies are specifically mentioned as affected.
• Department of Employment and Economic Development (DEED): the state agency that administers the program.
• Financial institution: banks, credit unions, or similar lenders that participate in the program and meet certain standards.
• Personal loan: an unsecured loan made to an affected employee.

How the program works (administration and process)

• The program is created in the Department of Employment and Economic Development and overseen by the commissioner.
• Participating financial institutions apply to join the program and, if approved, can issue personal loans to affected employees and receive a guaranteed payment from the state.
• The commissioner must approve or disapprove each institution’s application within one day.
• The commissioner keeps records and reviews loan guarantee claims for compliance.
• The process stops accepting new loan information or approving claims once the shutdown ends, or if the total guarantees reach a cap (10% of the total number of personal loans issued).

Financial structure and funding

• A special fund called the Federal Employee Personal Loan Guarantee Program Account in the state’s Special Revenue Fund holds the money used for guarantees.
• A one-time appropriation from the General Fund in fiscal year 2026 provides initial funding for this account; any remaining money by August 1, 2028 must be transferred to the general fund.
• The program ends by July 31, 2028, and the state winds down operations after that date.

How loans and guarantees work

• Guarantee: The state guarantees 100% of the loan amount to the lender.
• Loan terms:
  • Loans are unsecured and must be repaid in 3 to 6 equal installments.
  • No loan payments or fees are required during the grace period, which lasts 90 days after the federal agency funding resumes.
  • No interest or fees accrue during the grace period and until 180 days after the grace period ends.
• Loan limits:
  • The maximum loan amount is the lesser of: $7,500; the affected employee’s most recent monthly net pay; or four times the unemployment benefits the employee has received or is eligible to receive during the shutdown.
• Availability:
  • An affected employee may receive up to three loans, with a new loan available for each 30-day period the shutdown continues.
• Oversight and reporting:
  • Institutions must document the employee’s status, income, residence, and unemployment benefits, and notify the commissioner within one day of making a loan.
  • Institutions must provide credit counseling information to the employee.
  • After 180 days beyond the grace period, good-faith efforts to collect may lead the lender to request a loan guarantee payment from the commissioner.

Definitions of important dates and limits

• Grace period: 90 days after the shutdown ends (funding for federal agencies resumes).
• End date for program guarantees: the program must wind down and end on July 31, 2028.
• Cap on guarantees: if guarantees exceed 10% of the total number of personal loans issued, the commissioner will stop accepting new applications or approving claims and inform participating institutions within two days.

What counts as a successful program outcome

• Quick processing of loan guarantees for lenders (1-day approval for institutions).
• Financial relief for affected Minnesota residents during the shutdown.
• A controlled, time-limited program with clear rules for ending and winding down.

Significant changes from current law

• Establishes a new, state-backed loan guarantee program funded by a one-time state appropriation.
• Creates a new paid pathway for federal employees during a shutdown to obtain guaranteed personal loans through participating Minnesota financial institutions.
• Sets specific caps, timing, and administrative procedures for funding, guarantees, and wind-down.

Relevant terms affected employee; federal employee personal loan guarantee program; loan guarantee; personal loan; grace period; shutdown; Transportation Security Administration; Department of Employment and Economic Development; special revenue fund; federal employee personal loan account; financial institution; good standing; unsecured loan; unemployment compensation benefits; credit counseling; 7,500 dollars; monthly net pay; unemployment benefits; 10% cap; wind down; July 31, 2028; appropriation; one-time appropriation.