La. Admin. Code tit. 19 § VII-509

Current through Register Vol. 50, No. 8, August 20, 2024

Section VII-509 - General Loan Guaranty and Participation Provisions

A. The Louisiana Economic Development Corporation will be guided by the following general principles in approving loan guaranties, line of credit guaranties, or loan participations.

1. The corporation shall confirm that the financial institution lender has sufficient commercial lending experience and financial and managerial capacity to participate in this program. The corporation may utilize, among other resources, the financial institution's most recent call report showing the percentage of commercial loans in its portfolio.

2. The corporation shall not knowingly approve any loan guarantee, line of credit guarantee, or loan participation if the applicant/borrower has presently pending or outstanding any claim or liability relating to failure or inability to pay promissory notes or other evidence of indebtedness, state or federal taxes, or a bankruptcy proceeding; nor shall the corporation approve any loan, line of credit, loan guarantee or participation if the applicant/borrower has presently pending, at the federal, state, or local level, any proceeding concerning denial or revocation of a necessary license or permit or any legal proceeding involving a criminal violation other than misdemeanor traffic violations. Further, the corporation shall not approve any loan guarantee, line of credit guarantee, or participation if the applicant/ borrower or his/her/its principle management has a criminal record showing convictions for any criminal violations other than misdemeanor traffic violations.

3. The terms or conditions imposed and made part of any loan guarantee, line of credit guarantee, or loan participation authorized by vote of the corporation board, its board screening committee or its other designated committee shall not be amended or altered by any member of the board or employee of the Department of Economic Development except by subsequent vote of approval by the board, its board screening committee or other designated committee at the next meeting of the board or committee in open session with full explanation for such action.

4. Each financial institution lender shall be required to have a meaningful amount of its own capital resources at risk in each small business loan included in this program. Such lenders shall bear at least 20 percent or more of the loss from a small business loan default.

5. The corporation shall not subordinate its position to other creditors.

B. Interest Rates

1. On all loans or lines of credit guarantees, the interest rate is for each individual loan, at the time of obligation, may not exceed the National Credit Union Administration's (NCUA) interest rate ceiling for loans made by federal credit unions as described in 12 U.S.C. § 1757(A)(vi)(I) and set by the NCUA board. . Further, on all loan or line of credit guarantees, the interest rate is to be negotiated between the borrower and the lender, but shall not exceed the lesser interest rate of either; the National Credit Union Administration's (NCUA) interest rate ceiling, that established by the Federal Credit Union Act (FCUA), that established by the Office of Comptroller of the Currency (OCC), or applicable State legislation that may be enacted.

C. Equity Requirements

1. The borrower must infuse not less than 15 percent into the equity in an existing or expanding business, or for a start-up operation or acquisition loan request.

D. Limit on the Amount of LEDC's Guarantee

1. The corporation's loan guarantee shall be no greater than 80 percent of a loan not to exceed a guaranty amount of $1,500,000.

E. Terms

1. All of the provisions contained in §109.F.1.a - c. of Chapter 1 of the Small Business Loan Guaranty Program, with regard to term periods of various types of loan guaranties, shall also apply to this Chapter 3 Program.

F. LEDC Program Fees

1. LEDC will charge a guaranty fee not to exceed a maximum amount of 2 percent of the guaranteed loan amount, except that:

a. the guaranty program fee will be automatically waived for SEDI and SEB small business types; or

b. unless the board, the board screening committee or other designated committee waives the guaranty program fee.

2. LEDC will charge no application fee.

La. Admin. Code tit. 19, § VII-509

Promulgated by the Department of Economic Development, Office of Business Development and the Louisiana Economic Development Corporation, LR 481477 (6/1/2022), Amended LR 481931 (7/1/2022).

AUTHORITY NOTE: Promulgated in accordance with R.S. 36:104, 36:108 and 51:2312