Rule 110-25-1-.07 - Loan Terms(1) Terms for the Loans, including interest rate, amortization, loan fees, collateral and other consideration, will be determined during the underwriting process based upon the nature of the assets financed, the needs of the sub-recipient business and the risk associated with the project. In general, funds will either be loaned directly to the subrecipient business or transferred to recipient local governments or authorities with conditions that determine the terms and covenants required in the loan to the sub-recipient business, including eligible uses, collateral requirements, and private-investment and job-creation commitments.(2) Generally, loans will be secured, at a minimum, by the assets to be financed, (e.g., via a UCC security interest, a leasehold deed to secure debt) and with other security (e.g. corporate guarantees) on an as-needed basis. The interest rates on the loans will generally be below market-rate financing as an incentive to move the project forward and to improve the company's cash flow; interest payments may be deferred until the end of the loan term.(3) If funds are passed through a local government authority, then that entity shall reimburse the total amount of the loan funds to the Department; provided, however, that the reimbursement obligation shall generally be limited to payments made by the Company under the loan. Reimbursement by the recipient shall be made in periodic payments in amounts equivalent to payments made by the Company under the loan, less any fees that might be agreed upon in writing between the recipient and the Department.(4) All loan repayments, including interest, fees and principal repayments, shall be recaptured by DCA in the LSFF program fund to be reloaned to future eligible borrowers and to cover administrative costs of the program.(5) Generally, the terms of the loan shall contain at least one "triggering event" that will require the acceleration of the term of the loan. For example, a loan with a term of ten years may be accelerated to a three-year term in the event that the sub-recipient Company is acquired, has an initial public offering, or receives regulatory approval from a governing agency (e.g., the FDA or USDA).(6) In most cases, loans will contain terms requiring immediate and full repayment of the Loan balance if the company moves its operations out of Georgia, closes the LSFF-funded facility, is sold or liquidated. The Department also reserves the right to establish criteria for the recapture of loan funds upon transfer of project assets to an entity other than the sub-recipient business or upon any event that violates state law, the public purpose of the loan program, any of the loan conditions, or any intergovernmental contract provision. All recaptured funds must be returned to the Department unless otherwise specified by the Department.Ga. Comp. R. & Regs. R. 110-25-1-.07
O.C.G.A. Secs. 50-8-8, 50-26-5, 50-26-8, 50-26-18.
Original Rule entitled "Loan Terms" adopted. F. Dec. 16, 2005; eff. Jan. 5, 2006. Grant Chapter 110-25-1 originally submitted on December 16, 2005, as rules. Error discovered and corrected in Nov. 2007. Original grant description entitled "Loan Terms" submitted December 16, 2005.