Md. Code Regs. 24.05.07.09

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

Section 24.05.07.09 - Equity Guaranty Terms and Requirements

A. Equity guaranties shall meet the requirements in §§B-H of this regulation.

B. Maximum Equity Guaranty Amount. The maximum equity guaranty amount may not exceed the lesser of:

(1) 10 percent of the investor's equity investment in the applicant; or

(2) $500,000.

C. Terms. The terms of the equity guaranty shall be determined by the Authority.

D. Security. The equity guarantees shall be secured by the personal guaranties of the applicant's owners and any other collateral required by 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.

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

F. Change of Applicant Eligibility. If at any time the applicant ceases to satisfy the requirements of Regulation .04 of this chapter, the Authority may, in accordance with the terms of the equity guaranty documents between the Authority, the investor, and the applicant, accelerate the payment of the entire equity investment.

G. Change of Ownership. If at any time during the term of the equity guaranty the applicant sells, ceases to own, assigns, transfers, or otherwise disposes of, all or any part of the business performing the contract, the Authority, in accordance with the terms of the equity guaranty documents between the Authority, the investor, and the applicant, may accelerate the payment of the entire principal and interest due under the guarantied loan.

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

Md. Code Regs. 24.05.07.09

Regulation .09 amended effective August 3, 1992 (19:15 Md. R. 1394)