(a) As used in this section: (1) “Corporation” means Connecticut Innovations, Incorporated, and (2) “financial institution” means an eligible financial institution, as defined in subsection (e) of § 32-23d, which is approved by the corporation to participate in the program established by this section.

(b) In order to stimulate and encourage the growth and development of the state economy, the Connecticut Capital Access Fund is created to provide portfolio insurance to participating financial institutions to assist them in making loans that are somewhat riskier than conventional loans. The insurance shall be based on a portfolio insurance mechanism applicable to loans enrolled by a financial institution in the program, rather than loans by loan guarantees. The state, acting through Connecticut Innovations, Incorporated, shall enter into a participation agreement with each financial institution approved to participate in the program. A participation agreement entered into by the corporation and a financial institution shall establish a separate loan loss reserve account within such financial institution or a third-party financial institution approved by Connecticut Innovations, Incorporated, owned and controlled by Connecticut Innovations, Incorporated, but earmarked to cover losses on loans enrolled by that financial institution in the program. A separate loan loss reserve account shall be established for each participating financial institution. Each time a financial institution enrolls a loan in the program, payments shall be made into the earmarked loan loss reserve account by the borrower, financial institution and the corporation, in amounts consistent with the provisions of the participation agreement. The financial institution shall be allowed to recover the cost of its payment from the borrower.

(c) To carry out the purposes of this section, the corporation shall have those powers set forth in § 32-23. The corporation shall also have the power to take all reasonable steps and exercise all available remedies necessary or desirable to protect the obligations or interests of the corporation including, but not limited to, the purchase or redemption in foreclosure proceedings, bankruptcy proceedings or in other judicial proceedings of any property on which it holds a mortgage or other lien or in which it has an interest, and for such purposes payment may be made from the Connecticut Capital Access Fund.

(d) Approval of loans for which payments may be made into an account established under this section shall be within the sole discretion of the financial institution making the loan except that such loans shall comply with the requirements specified in the participation agreement.

(e) The corporation shall adopt written procedures in accordance with § 1-121 for implementing the program. Such written procedures shall include the form of participation agreement which shall set forth procedures for use of the program and the rights and responsibilities of participating financial institutions and the corporation. The participation agreement shall require that loans enrolled in the program shall be for a business purpose in the state and shall not be used for residential housing, passive real estate ownership, an insider transaction or to refinance a prior loan by the financial institution which was not covered under the program, except that if new funds are provided to a borrower, an amount equal to the amount of the new funds may be covered under the program.

(f) (1) For the purposes described in subdivision (2) of this subsection, the State Bond Commission shall have the power, from time to time, to authorize the issuance of bonds of the state in one or more series and in principal amounts not exceeding in the aggregate five million dollars.

(2) The proceeds of the sale of said bonds, to the extent of the amount stated in subdivision (1) of this subsection, shall be used by the Department of Economic and Community Development to make grants to Connecticut Innovations, Incorporated for deposit in the Connecticut Capital Access Fund to be used for the purposes authorized under this section and § 32-341.

(3) All provisions of § 3-20, or the exercise of any right or power granted thereby which are not inconsistent with the provisions of this section are hereby adopted and shall apply to all bonds authorized by the State Bond Commission pursuant to this section, and temporary notes in anticipation of the money to be derived from the sale of any such bonds so authorized may be issued in accordance with said § 3-20 and from time to time renewed. Such bonds shall mature at such time or times not exceeding twenty years from their respective dates as may be provided in or pursuant to the resolution or resolutions of the State Bond Commission authorizing such bonds. None of said bonds shall be authorized except upon a finding by the State Bond Commission that there has been filed with it a request for such authorization, which is signed by or on behalf of the Secretary of the Office of Policy and Management and states such terms and conditions as said commission, in its discretion, may require. Said bonds issued pursuant to this section shall be general obligations of the state and the full faith and credit of the state of Connecticut are pledged for the payment of the principal of and interest on said bonds as the same become due, and accordingly and as part of the contract of the state with the holders of said bonds, appropriation of all amounts necessary for punctual payment of such principal and interest is hereby made, and the Treasurer shall pay such principal and interest as the same become due.