N.Y. Comp. Codes R. & Regs. tit. 9 § 7910.9

Current through Register Vol. 46, No. 50, December 11, 2024

Section 7910.9 - Loan guarantees

(a) General. Loan guarantees on program loan amounts not exceeding $500,000 shall be available for eligible applicants who are not otherwise able to obtain loans for the installation of cost-effective energy conservation improvements, including onsite power production projects.

(b) Maximum amount of loan guarantee.

(1) Loan guarantees shall be available up to a maximum of 75 percent of the outstanding principal on a program loan.

(2) At the discretion of the commissioner, the maximum percentage of the outstanding principal on a program loan to be guaranteed may be adjusted, and different maximum percentages may be established for different sectors or audiences, to reflect market changes, loan demand and the possible need to stimulate participation in the program by certain audiences. Notice of any revised maximum percentage will be published in the State Register.

(c) Limitations on loan guarantees.

(1) Loan guarantees will be provided only for program loans in which principal and interest are amortized.

(2) Loan guarantees will be available for a maximum term of 10 years.

(3) Loan guarantees shall become effective at the time of the program loan closing.

(4) The Energy Investment Loan Program guarantee may be used in conjunction with other government-sponsored loan guarantees; provided, however, that the combined guarantees shall not exceed 90 percent of the program loan amount.

(d) Requests for loan guarantees. Requests for loan guarantees shall be made by the financing institution on behalf of and with the consent of the applicant. Requests shall contain the following materials:

(1) a completed loan guarantee application form;

(2) a copy of the applicant's loan application;

(3) a statement by the financing institution that the program loan application will be rejected unless a loan guarantee is provided, together with an analysis prepared by the financing institution which explains why a loan guarantee is required;

(4) a completed loan guarantee financial analysis summary form which includes a description of collateral available to secure the loan;

(5) a recent standard credit report on the applicant, if available;

(6) a copy of the loan analysis report prepared for the financial institution's loan committee, and a copy of any written determination of the loan committee with respect to the applicant, if available;

(7) a statement signed by the applicant requesting the loan guarantee and authorizing the release of bank records, credit reports, and other pertinent information to the Energy Office;

(8) a brief statement by the applicant describing its business and personal credentials;

(9) three years of the applicant's audited or unaudited financial statements, or three years of the applicant's income tax returns, if available;

(10) a listing of all known security interests in the property to be improved;

(11) a listing of all known pending litigation and judgments against the applicant; and

(12) such additional information as may be required by the Energy Office.

(e) Evaluation of requests for loan guarantees. The Energy Office shall evaluate requests for loan guarantees using generally accepted criteria of creditworthiness. Such evaluation shall include consideration of the following criteria with respect to the applicant:

(1) soundness of the business enterprise;

(2) credit history;

(3) depth of management experience;

(4) character of the applicant and its principals;

(5) ability to repay the program loan;

(6) the adequacy of the collateral available to secure the loan; and

(7) such other criteria as the Energy Office may deem appropriate.

(f) Approval of loan guarantees.

(1) Loan guarantees will be approved only where the Energy Office determines that there is a reasonable assurance that the applicant will be able to repay the program loan. The Energy Office may require, as a condition to providing a loan guarantee, that the financing institution obtain from the proprietors, partners, officers, directors, and principal shareholders personal guarantee(s) that the program loan will be repaid.

(2) The Energy Office, in its discretion, may require the applicant to apply for a program loan from a second financing institution, where the Energy Office, following its evaluation of the request, determines that a program loan might be obtained without the use of a loan guarantee.

(g) Commitment to guarantee. Upon approval of a request for a loan guarantee, the Energy Office will issue to the financing institution, concurrent with a notice of award, a written commitment to guarantee which will indicate:

(1) the percentage of the outstanding principal indebtedness of the program loan that the Energy Office will guarantee; and

(2) the period for which the loan guarantee will be in force.

(h) Denial of loan guarantees. The Energy Office may deny a request for a loan guarantee for any of the following reasons:

(1) the financing institution fails to demonstrate to the satisfaction of the Energy Office that a loan guarantee is needed;

(2) the applicant or its principals have been the subject of a bankruptcy proceeding within the last 10 years;

(3) the existence of liens or judgments, or the pendency of litigation which, in the judgment of the Energy Office, significantly impair the ability of the applicant to repay the program loan;

(4) outstanding tax liens have been filed against the applicant or its principals;

(5) the applicant's financial statements indicate two years continuous negative cashflow, or projections for future cashflow are negative;

(6) the Energy Office lacks sufficient information regarding the applicant upon which to base a determination; and

(7) any other factor or combination of factors which, in the judgment of the Energy Office, render it unlikely that the applicant will be able to repay the program loan.

(i) Request for payment.

(1) A financing institution shall be entitled to request payment from the Energy Office under the loan guarantee only after the following conditions have been satisfied:

(i) default on loan payments has occurred;

(ii) the Energy Office has received notification of default from the financing institution pursuant to section 7910.8(i) of this Part; and

(iii) the financing institution has made a good faith effort to protect its rights and taken action necessary to collect from the applicant. A good faith effort includes but is not limited to the following:

(a) a petition under the Bankruptcy Act is filed by or against the applicant;

(b) the financing institution has initiated legal action against the applicant and any personal guarantors to undertake collection and such proceedings have been pending for a period of at least 60 days, or a final judgment has been entered and execution thereon has been returned unsatisfied; or

(c) the Energy Office specifically deems, in writing, that the financing institution has made a good faith effort with respect to a program loan in default.

(2) Requests for payment shall be made using forms supplied by the Energy Office and shall be submitted to the Energy Office by certified mail return receipt requested. Each such request shall be accompanied by a loan history report and evidence satisfactory to the Energy Office that a good faith effort has been made to collect on the program loan.

(j) Calculating the payment. The amount to be paid to the financing institution under a loan guarantee shall be calculated as follows: The amount of outstanding principal remaining on the program loan multiplied by the percentage of such outstanding principal guaranteed by the Energy Office, less the net proceeds from the sale of secured property and any amounts paid under other guarantees given to secure the program loan.

(k) Guarantee termination. The guarantee may be terminated if:

(1) the claim for payment filed by the financing institution is satisfied;

(2) the loan is satisfied; or

(3) the terms of the loan are modified, revised, or changed without the prior approval of the State Energy Office.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 7910.9