Md. Code Regs. 24.05.08.08

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

Section 24.05.08.08 - Financial Assistance Application and Processing Procedures

A. Application. Guaranty and interest subsidy applications shall be made upon standard forms prescribed by the Authority. Each application shall be accompanied by a detailed business plan which shall include but is not limited to the following:

(1) A detailed description of the proposed use or uses of the proceeds of the loan including projected cash flow analyses with underlying assumptions, marketing plans, or descriptions and appraisals;

(2) A detailed description of the funds available to the applicant;

(3) A detailed description of the proposed loan documents to be executed by the financial institution and the applicant;

(4) A detailed description of the property proposed as collateral for the loan together with the financial institution's certification as to value;

(5) Information that relates to the inability of the applicant to obtain adequate financing on reasonable terms through normal lending channels;

(6) Information that relates to the financial status of the applicant, including:

(a) A balance sheet dated within 90 days of the date of application,

(b) A profit and loss statement dated within 90 days of the date of application,

(c) Credit references, and

(d) The status of outstanding indebtedness;

(7) A proposed disbursement schedule;

(8) A proposed amortization schedule;

(9) A detailed description of the applicant's experience in the trade or business for which the loan and guaranty are sought;

(10) Information that relates to satisfaction of the applicant's meeting the requirements of Regulation .04 of this chapter;

(11) A copy of the articles of incorporation filed with the state of incorporation, bylaws, partnership agreement, or other organizational documents;

(12) A copy of the deeds and deeds of trust to all real property offered as collateral and of the certificates of title to vehicles;

(13) A copy of the letter from a financial institution dated within 90 days of the date of application evidencing that the applicant has applied for and been denied a loan for the same amount or a lesser amount of money and having similar terms;

(14) Information that relates to the economic impact to be created by the loan;

(15) A copy of a signed commitment letter from the lender outlining the terms and conditions under which the loan will be made;

(16) Other relevant information that the Authority requests.

B. Processing of Application.

(1) After execution of the application, the lender shall submit it to the Authority along with a copy of an executed commitment letter from the lender to provide financing which, at the minimum, shall state the amount, rate, and terms of the financing.

(2) To make a determination of the eligibility of the applicant and the loan in accordance with these regulations, the Authority's staff shall perform an initial review of each application and may perform a preliminary audit investigation of the books and records of the applicant.

(3) After receipt of an application for financial assistance from the guaranty fund, the Authority may determine by resolution that before the Authority makes its decision on the application, an applicant shall provide an audited financial statement which includes, but is not limited to, a balance sheet and profit and loss statement certified by an independent certified public accountant in accordance with generally accepted accounting principles.

C. Approval. Approval of a loan guaranty and, if applicable, of an interest subsidy, shall be evidenced by a signed resolution of the Authority.

D. Loan Documents. Loan documents may include:

(1) Promissory notes;

(2) Deeds of trust;

(3) Loan and security agreements;

(4) Financing statements;

(5) Personal and corporate guarantee agreements;

(6) A guaranty agreement;

(7) Assignment of life insurance; and

(8) Other documents the Authority may require.

E. Fees.

(1) As a precondition to the effectiveness of the guaranty, the Authority shall receive from the lender at closing a guaranty fee up to 1.5 percent of the loan amount and after that, on each anniversary of the closing date, an annual guaranty fee up to 1.5 percent of the average outstanding principal balance of the loan, averaged over the preceding year, by the Authority or the Executive Director. In determining the rate of the guaranty fee, the Authority may consider the following factors:

(a) Any other fees charged by the Authority or the lender;

(b) The amount of the loan or the amount of the guaranty;

(c) The economic impact caused by the loan; and

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

(2) The Authority shall require the lender or the applicant to reimburse the Authority for expenses it incurs in processing and closing the loan, such as credit reports and appraisals.

Md. Code Regs. 24.05.08.08

Regulation .08A amended effective August 3, 1992 (19:15 Md. R. 1394)
Regulation .08B, E amended effective March 27, 1995 (22:6 Md. R. 476)