Md. Code Regs. 24.05.08.06

Current through Register Vol. 51, No. 24, December 2, 2024

Section 24.05.08.06 - Loan and Guaranty Terms and Requirements

A. In order to qualify for a guaranty, all loans shall meet the requirements in §§B-K of this regulation.

B. Maximum Guaranty Amount. The Authority may not guaranty more than 80 percent of the principal of a loan or more than 80 percent of the interest on the loan accrued for up to 120 days beginning with the date of a payment default payable by the Authority after the Authority receives written notice of the payment default. The maximum amount payable by the Authority under its guaranty may not exceed $1,000,000.

C. Minimum Loan Amount. The loan amount may not be less than $5,000.

D. Interest Rate. The rate of interest on the loan shall be not greater than the rate of interest determined by the Authority to be the monthly weighted average of the prime lending rate, plus 2 percent, prevailing from time to time in the City of Baltimore on unsecured commercial loans.

E. Security. Guarantied loans shall be secured by liens on machinery and equipment purchased with guarantied loan proceeds, 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.

F. Term. The loan shall mature not more than 10 years from the date of closing the loan.

G. Economic Impact. The economic impact of the loan shall be substantial. To determine the economic impact of a project, the Authority may consider:

(1) The amount of the guaranty obligation;

(2) The terms of the loan to be guaranteed;

(3) The number of new jobs that will be created by the loan;

(4) The number of jobs that will be retained because of the loan; and

(5) Any other factor that the Authority considers relevant.

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

I. 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, as amended, 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.

J. Appraisals. The Authority may require appraisals showing the value of property which is offered as collateral for the financial assistance.

K. 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 lender and the Authority life insurance in an amount acceptable to the Authority. 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. 24.05.08.06

Regulation .06 amended effective August 3, 1992 (19:15 Md. R. 1394); February 18, 2002 (29:3 Md. R. 223)
Regulation .06K amended effective March 27, 1995 (22:6 Md. R. 476)