La. Admin. Code tit. 19 § VII-7609

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

Section VII-7609 - General Loan Provisions

A. Those CDFIs, and other qualifying lenders, participating in the Micro Lending Program shall be guided by the following general principles in making loans.

1. The lender shall not knowingly approve any loans if the applicant has presently pending or outstanding any claim or liability relating to failure or inability to pay promissory notes or other evidence of indebtedness including state or federal taxes, or bankruptcy proceeding; nor shall the lender approve any loan if the applicant has presently pending, at the federal, state, or local level, any proceeding concerning denial or revocation of a necessary license or permit.

2. The terms or conditions imposed and made part of any enrolled loan authorized by vote of the corporation board 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 to accept the changes of said enrolled loan by the board, its board screening committee or other designated committees at the next meeting of the board or committee in in open session with full explanation for such action.

B. Loan amounts under this program are intended to be smaller in size and may range from $1,000 to $100,000.

C. Interest Rates

1. On all loans or lines of credits under this chapter, at the time of obligation, the interest rate is to be negotiated between the lender and borrower, but shall 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 loans or lines of credits, the interest rate shall not exceed the lesser interest rate of either; the National Credit Union Administration (NCUA) interest rate ceiling, that established by the Federal Credit Union Act (FCUA), that established by the Office of the Comptroller of the Currency (OCC), or applicable state legislation that may be enacted.

D. Borrower's Collateral

1. The value of the borrower's collateral shall be determined according to the lender's normal lending criteria and policy. Loans greater than $50,000 shall require collateral.

2. Collateral position shall be negotiated but will be no less than a sole second position.

3. Unacceptable collateral includes:

a. stock in applicant company and/or related companies;

b. personal residence

E. Equity

1. Equity requirements shall be determined according to the lenders normal loan criteria and policy.

F. Terms

1. Terms may be negotiated with the lender but in no case shall the terms exceed five years.

G. LEDC Fees

1. LEDC may charge a $100 application fee, unless the Board, the Board Screening Committee, other designated committee, or LEDC staff waives the application fee.

2. LEDC will waive the application fee for SEDI, SEB and VSB business types.

3. LEDC may charge a program fee up to $500 for loans less than $25,000 or may charge a program fee up to 2 percent for loans greater than $25,000.6

H. Use of Funds

1. Purchase of fixed assets, including buildings that will be occupied by the applicant to the extent of at least 51 percent.

2. Purchase of equipment, machinery, or inventory.

3. Line of credit for accounts receivable or inventory.

La. Admin. Code tit. 19, § VII-7609

Promulgated by the Department of Economic Development, Office of Business Development and the Louisiana Economic Development Corporation, LR 481484 (6/1/2022), Amended LR 481925 (7/1/2022).

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