Section 187.3 - Eligible and Restricted Uses of Capital Access Loans(a) To qualify as a capital access loan, a loan must be made to a small or medium size business or to a nonprofit organization and be used by the business or nonprofit organization for any project, activity, or enterprise in this state that is in furtherance of economic development.(b) The eligible applicant must apply the capital access loan to working capital or to the purchase, construction, or lease of capital assets, including buildings and equipment used by the business or nonprofit organization. Working capital uses include the cost of exporting, accounts receivable, payroll, inventory, and other financing needs of the business or organization.(c) A loan is not eligible to be enrolled under this subchapter for:(1) construction or purchase of residential housing;(2) simple real estate investments, excluding the development or improvement of commercial real estate occupied by the applicant's business or organization. The purchase or development of commercial real estate will be considered a "simple real estate investment" unless the eligible borrower occupies at least 51% of the usable space of the property being financed. Should the owners of the eligible business wish the commercial real estate to be owned by a separate legal entity, such ownership structure will be allowed so long as the eligible business occupies 51% of the usable space and the eligible business guarantees the real estate loan.(3) refinancing of existing loans not originally enrolled under, Chapter 481, Government Code, Subchapter BB. Taking over or refinancing the indebtedness of eligible borrowers held at unrelated financial institutions will not be defined as refinancing under this section; or(4) inside bank transactions.10 Tex. Admin. Code § 187.3
The provisions of this §187.3 adopted to be effective September 15, 1997, 22 TexReg 8967.