Rhode Island economic development officials and small-business owners say the creation of a proposed $20-million growth capital financing program will stimulate the expansion of developing companies here.

Legislation introduced in the General Assembly would reallocate existing guarantee authority granted to the Rhode Island Industrial-Recreational Building Authority to help companies get capital from private sector lenders using assets other than real estate, machinery and equipment.

The proposal is part of the Rhode Island Economic Development Corporation’s plan that identified gaps in the state’s financing programs and has set a goal of increasing the number of jobs that pay above the national average wage of $42,000 from 40 to 60 percent.

The program is similar to programs in neighboring states, including Massachusetts and Connecticut.

The Senate bill is cosponsored by Senate Majority Leader M. Teresa Paiva Weed, D-Newport, Sen. William Walaska, D-Warwick, Sen. Walter Felag, D-Warren, and Sen. David Bates, R-Barrington. The House legislation is sponsored by House Majority Leader Gordon Fox, D-Providence.

“Many years ago companies would use assets like machinery and equipment to secure capital. Today’s new economy businesses are much better served with working capital programs that recognize the value of assets like patents, proprietary processes, brands and licenses,” said Peter Collins, founder and president, a2b Tracking Solutions, a Portsmouth company that develops scanning technology.

The Industrial Recreational Building Authority has $80 million in guarantee authority based on legislation passed in 1958, when the program was created. About $64 million of this authority is not currently committed. The IRBA board has passed a resolution reducing IRBA’s guarantee authority from $80 million to $50 million. The legislation currently under consideration will create a new authority to create a $20 million Growth Capital Guarantee Program. The state’s overall contingent liability will decrease by $10 million.

“Companies ready to grow in Rhode Island often face difficulties accessing the capital they need to expand and create new jobs,” said EDC executive director Saul Kaplan. “Most of the state’s existing loan products are traditional asset-based loans and are not available to growth companies with non-conventional balance sheets. This Growth Capital Guarantee Program will enable growth in high-wage sectors where Rhode Island has a strong position to create more good jobs.”

The legislation proposes that the Growth Capital Guarantee program be managed by the EDC and its board with policies and procedures consistent with IRBA and the Small Business Loan Fund program.

Walaska said, “It is critical that Rhode Island move quickly to update its financial tools to reflect today’s business needs. Our economic prosperity depends on our ability to respond to changes in the marketplace and to make sure that our economic development tool kit remains aligned with our strategy for high-wage job creation.”

To qualify for the program, companies will need to demonstrate that they have established revenue, a strong customer base and strong prospects for creating new jobs. Guaranties will only be provided to banks and venture lenders with relevant underwriting experience, a proven track record and loan management expertise.

Fox said, “The Rhode Island marketplace struggles to provide growth capital to knowledge-economy companies poised for growth. This new program will help close the financing gap.”

Proponents of the legislation hope the Senate and House bills will pass quickly, citing an immediate need to get more capital into the marketplace, reposition Rhode Island’s economy and stimulate job growth.

BioProcess Technologies CEO Tim Burns said, “Access to capital is essential to adding the jobs and bringing in the talent a company needs to grow and expand into new markets. When a new opportunity emerges, companies like ours must be a position to respond quickly.”

Bioprocess Technologies, cofounded by Burns and John Haley, develop wastewater management treatment systems.

Hearings on the two bills have not yet been scheduled.