Section 457-202-7 - CreditworthinessIn deciding whether to issue any securities for a project, the chief executive officer shall determine, on the basis of available information, that it is reasonable to expect that the applicant and any guarantor will be able to pay debt service upon the securities, or that adequate security is being provided to assure repayment of the securities. Where Authority credit enhancement is being provided, the following credit criteria shall apply in addition to those criteria set forth in Chapter 101 of the Rules of the Authority, as applicable:
A. No application will be approved unless the borrower, or the borrower and guarantor combined, meets or exceeds the following financial performance criteria, as determined by the Authority: 1 Profitability for the most recent three years of operations, if applicable, and projected profitability for 3 years;2 Minimum ratio of current assets to current liabilities of 1.25 to 1;3 Maximum ratio of total debt to net worth of 3 to 1;4 Minimum debt service coverage ratio of 1.25 to 1 (net income after taxes, plus interest and depreciation, divided by annual debt service), both current (if applicable) and proposed;5 Recent financial performance, if applicable, and projected financial performance consistent with the applicable median quartile of firms in comparable businesses as reported in Robert Morris Associates Annual Statement Studies.B. In its discretion, the Authority may waive one or more of the above criteria if the Authority determines that the borrower has demonstrated a strong likelihood of being able to repay the loan, or in the event that the borrower causes to be provided to the Authority an irrevocable letter of credit or other similar instrument or undertaking which the Authority deems sufficient to provide adequate third party security for repayment of the loan and which is in form and content satisfactory to the Authority.C. No more than 90% of the total loan funds being provided to borrower for an eligible project may be credit enhanced by the Authority [except with respect to Major Business Expansion Projects, Electric Rate Stabilization Projects, Worker's Compensation Residual Market Mechanism Projects, Paper Industry Retention Projects, Transmission Facilities Projects, and Energy Distribution System Projects]. The balance of the loan funds shall be provided by a Lender the Authority finds will adequately monitor the Borrower's performance of its loan obligations.94- 457 C.M.R. ch. 202, § 7