Section 8260 - General Terms and Conditions of GuarantiesIn addition to the terms and conditions set forth in Article 2 of this subchapter, loan guaranties shall also be subject to all of the following terms and conditions:
(a) A single guaranty shall not exceed eighty percent (80%) of the principal and interest due and owing on a loan for eligible project costs, and the total amount of all outstanding loan guaranties for any one borrower shall not exceed two million dollars ($2,000,000).(b) The term of the guaranty shall be the lesser of twenty (20) years or the term of the loan, and shall be subject to termination conditions described in subsection 8263.(c) The guaranty shall contain a requirement that the maximum amount of interest to be paid is one hundred twenty (120) days at the guarantied percentage, after the lender receives the notice defined in section 8263(d).(d) The guaranty shall contain a statement that the lender send to the department, or its contractor executing the guaranty, a copy of all delinquency notices tendered to the borrower.(e) The guaranty shall contain a description of the procedures and the responsibilities of the lender and the department or its contractor subsequent to default, including information on whether the guaranty is a loan guaranty or a collection guaranty.(f) The guaranty shall contain section 8261 demand procedures.(g) The guaranty shall contain an acknowledgment by the lender that in the event of a demand, the lender will allow a representative of the Department of Financial Institutions, or other auditor selected by the department or its contractor, to examine the lender's loan files.(h) The guaranty shall contain an agreement to abide by binding arbitration by the American Arbitration Association in the event that the department or its contractor denies the requested demand pursuant to section 8261 or 8262, or the amount paid to the lender is less than the amount contained in the demand letter.(i) The guaranty shall acknowledge that the full faith and credit of the State of California is not, and shall not be, pledged to the Loan Guaranty Fund; and the State of California is not, and shall not be, liable for loan defaults that exceed the balance of funds on deposit in the Loan Guaranty Fund.(j) If the department utilizes a contractor to administer the guaranty, the guaranty authorizes the contractor to charge a guaranty applicant an application fee not to exceed two hundred fifty dollars ($250.00) and a guaranty fee not to exceed two percent (2%) of the principal amount guarantied.(k) The department or its contractor shall approve a guaranty application and issue a guaranty if it finds that all of the following conditions have been met: (1) The aggregate amount of all outstanding guaranties, plus the amount of the requested guaranty, will not exceed four (4) times the current balance in the Loan Guaranty Fund;(2) The applicant is eligible pursuant to this subchapter;(3) The use of the proceeds of the loan being guarantied is eligible pursuant to this subchapter;(4) The project is in accordance with the threshold and priority criteria set forth in section 8254;(5) Not more than fifty percent (50%) of the loan proceeds shall be used to refinance existing loans;(6) Repayment of the loan is secured by reasonably available collateral which may include, but shall not be limited to, a deed of trust on the property assisted with the guarantied loan and the personal guaranties of any shareholders or partners;(7) There is no probability that the loan being guarantied would be made by the lender under reasonable terms or conditions without the guaranty, and the applicant has demonstrated a reasonable prospect of repayment of the guarantied loan;(8) The application includes a lender certification;(9) The lender's loan documents contain an agreement by the borrower to maintain a current, valid child care license for the facility during the term of the guarantied loan;(10) The lender's loan documents contain an agreement by the borrower to provide child care and development services at the facility for which the loan was made, for the lesser of twenty (20) years or the term of the guarantied loan, unless the borrower is a family child care provider temporarily ceasing providing child care and development services and complying with section 8260(k)(11);(11) The lender's loan documents require that the borrower shall notify the lender and the department or its contractor within fourteen (14) calendar days of the cessation of child care and development services in the facility for which the guarantied loan was made ("cessation notice");(12) In the case of a family child care provider borrower that ceases to provide services but retains its license and intends to resume services, the cessation notice shall also include: (i) the reasons for the interruption in services; and(ii) a date for resuming services. The borrower may amend the resumption of services date declared in the cessation notice by submitting an amended cessation notice to the lender and the department or its contractor. The lender's loan documents shall also contain a requirement that any cessation of services exceeding three years from the date of the initial cessation notice shall constitute a default of the loan;(13) The lender's loan documents contain a provision that, with the exception of a family child care provider temporarily ceasing to provide services in compliance with section 8260(k)(11), failure by the borrower to continue operation of the licensed facility assisted with the guaranty for child care and development shall constitute a default or breach under the lender's loan documents;(14) The lender has complied with all material conditions contained in the guaranty, including perfecting its security interest in all collateral, and the lender has not engaged, and will not engage, in fraudulent or grossly negligent practices in connection with the borrower, guaranty, the loan or the loan agreement; and(15) The department's contractor, if any, is also not the lender.Cal. Code Regs. Tit. 25, § 8260
1. New section filed 4-16-99 as an emergency; operative 4-16-99 (Register 99, No. 16). A Certificate of Compliance must be transmitted to OAL by 10-13-99 pursuant to Education Code section 8277.6 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 10-1-99 as an emergency; operative 10-13-99 (Register 99, No. 40). A Certificate of Compliance must be transmitted to OAL by 2-10-2000 or emergency language will be repealed by operation of law on the following day.
3. Repealed by operation of Government Code section 11346.1(g) (Register 2000, No. 9).
4. New section filed 2-2-2001; operative 2-2-2001 pursuant to Government Code section 11343.4(c) (Register 2001, No. 5). Note: Authority cited: Section 8277.6(g), Education Code. Reference: Sections 8277.5(d), 8277.6(b) and (g), Education Code.
1. New section filed 4-16-99 as an emergency; operative 4-16-99 (Register 99, No. 16). A Certificate of Compliance must be transmitted to OAL by 10-13-99 pursuant to Education Code section 8277.6 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 10-1-99 as an emergency; operative 10-13-99 (Register 99, No. 40). A Certificate of Compliance must be transmitted to OAL by 2-10-2000 or emergency language will be repealed by operation of law on the following day.
3. Repealed by operation of Government Code section 11346.1(g) (Register 2000, No. 9).
4. New section filed 2-2-2001; operative 2-2-2001 pursuant to Government Code section 11343.4(c) (Register 2001, No. 5).