Md. Code Regs. 24.05.07.07

Current through Register Vol. 51, No. 22, November 1, 2024

Section 24.05.07.07 - Guarantied Loan Terms and Requirements

Guarantied loans shall meet the following requirements:

A. Maximum Guaranty Amount. The part of the loan to be guarantied may not exceed $500,000.

B. Interest Rate. The interest rate to be paid on guarantied loans shall be a reasonable rate approved by the Authority.

C. Security. Guarantied loans shall be secured by liens on machinery and equipment purchased with guarantied loan proceeds, assignment of the contract to the lender or the Authority, as appropriate, the personal guaranties of the applicant's owners, and any other collateral approved by the lender and the Authority, which may include, but is not limited to, liens on the business assets of the applicant and deeds of trust on real property owned by the applicant or the applicant's owners.

D. Term. The term of each loan guaranty may not exceed the term of the contract for which the loan is provided, unless the Authority finds that a longer term better carries out the purposes of the Act.

E. Late Charges. Late charges, as permitted by law, may be imposed.

F. Title Insurance. If the guarantied loan is to be secured by real property, the Authority may require the:

(1) Applicant to provide an American Land Title Association Loan Policy issued by a title insurance company acceptable to the Authority for an amount equal to the maximum principal amount of the loan, insuring the Authority, evidencing that title to property offered as collateral on the date of closing is vested in the applicant, and containing only standard exceptions and encumbrances approved by the Authority.

(2) Title insurance policy to be accompanied by a survey, certified in the manner required by the Authority and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Authority. The title insurance policy may not contain any survey exceptions.

G. Appraisals. The Authority may require appraisals done by qualified appraisers showing the value of property which is offered as collateral for the financial assistance.

H. Insurance. Before providing financial assistance, the Authority may require the applicant or the applicant's owners and key managers to obtain and assign to the Authority and the lender life insurance in the amount of the financial assistance. The Authority may also require business interruption insurance, hazard and casualty insurance, liability insurance, vehicle insurance, flood insurance, homeowner's insurance, workers' compensation insurance, and other appropriate forms of insurance.

Md. Code Regs. 24.05.07.07

Regulation .07A and H amended effective August 3, 1992 (19:15 Md. R. 1394)