Md. Code Regs. 24.05.18.08

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

Section 24.05.18.08 - Application and Processing Procedures

A. Loan Application.

(1) Loan applications shall be made on standard forms required by the Department.

(2) Each application shall include:

(a) A detailed strategic business plan for achieving a goal of technology commercialization or manufacturing modernization for long-term growth;

(b) The total amount of funds required for the activities described in the strategic business plan;

(c) The amount and type of funds available to the applicant without financial assistance from the Department;

(d) The amount of financial assistance sought from the Department and a description of the applicant's proposed use of proceeds;

(e) Information concerning where in the State the activities to be financed with the defense adjustment loan will take place and what economic and environmental impact the activities are expected to have on that area;

(f) Evidence of the inability of the applicant to obtain the financing necessary for the activities described in the strategic business plan on affordable terms through normal lending channels;

(g) Information that relates to the financial status of the applicant, including, if applicable:

(i) A current balance sheet,

(ii) A recent profit and loss statement,

(iii) Credit references, including a recent credit report, and

(iv) Income tax returns;

(h) Information that relates to potential security for the loan; and

(i) Any other relevant information the Department requests.

B. Initial Review. The Department shall subject each application to an initial review for a preliminary determination of the applicant's eligibility in accordance with these regulations.

C. Loan Approval. Each loan shall be approved by the Secretary or by the Defense Adjustment Financing Committee.

D. Loan Documents.

(1) The Department shall prepare and provide the applicant with copies of relevant standard form loan documents.

(2) Loan documents shall include:

(a) The rate of interest on the loan;

(b) The amount of the loan;

(c) Provisions for repayment of the loan;

(d) Other provisions the Department determines are necessary to secure the loan, including, if applicable, the taking of liens and security interests in real and personal property; and

(e) For loans made with restricted funds, the provisions required by EDA and set forth in Regulation .07 of this chapter.

(3) Loan documents may include:

(a) A promissory note;

(b) A loan agreement;

(c) A security agreement;

(d) A deed of trust or mortgage;

(e) An agreement of prior lien holder;

(f) Personal and corporate guarantees; and

(g) Other documents the Department may require, including the applicant's insurance information and articles of incorporation filed with the state of incorporation, bylaws, partnership agreement, or other organizational documents, and certificates of good standing as appropriate.

E. Fees.

(1) The applicant shall pay the following fees:

(a) Upon application for the loan, a nonrefundable application fee of $100; and

(b) At the loan closing, a commitment fee of 1 percent of the loan amount.

(2) The Department may also require the applicant to pay for expenses incurred in processing and closing the loan, such as fees for appraisals and credit reports.

(3) The Department may instruct the borrower to pay the application fee and 1/2 of the commitment fee directly to a designated local economic development agency, if the agency:

(a) Has entered into a written agreement with the Department; and

(b) Originated the loan.

F. Violations. If an applicant violates any provision of the loan documents or ceases to meet the requirements of the Act, on reasonable notice to the applicant, the Department may:

(1) Withhold from the applicant further advances of loan proceeds until the applicant complies with the agreement or requirements; and

(2) Exercise any other remedy for which the loan documents provide.

G. Fund Limitations. The faith and credit of the State are not pledged to the Fund.

Md. Code Regs. 24.05.18.08