870 R.I. Code R. 870-RICR-30-00-8.6

Current through December 3, 2024

Section 870-RICR-30-00-8.6 - Eligibility

A. In order for a Small Business Development Fund to have an Equity Investment or Debt Investment certified as a Capital Investment and eligible for credits pursuant to the Act, the Applicant shall meet the following requirements:

1. The Applicant has submitted a complete Application to the Corporation as determined by the Board under § 8.10 of this Part;

2. The Applicant is registered to do business in the State at the time of filing an Application with the Corporation;

3. The Applicant has all required licensure to conduct business in the State at the time of the filing of its Application with the Corporation;

4. The Applicant and any investor seeking an allocation of tax credits shall be in good standing with the Division of Taxation at the time of the filing of its Application with the Corporation;

5. The Applicant or an Affiliate shall be licensed as a Rural Business Investment Company, under Subtitle H of the Consolidated Farm and Rural Development Act, as amended, 7 U.S.C. § 2009cc, or as a Small Business Investment Company, under the Small Business Investment Act of 1958, as amended, 15 U.S.C. § 681;

6. The Applicant or Affiliates of the Applicant have invested at least one hundred million dollars ($100,000,000) in Nonpublic Companies;

7. The Applicant's Qualified Investments will result in the creation of Jobs Created or Jobs Retained;

8. The Applicant has submitted a Business Plan on a form promulgated by the Corporation, which shall contain the following:

a. Overview of investment strategy and target deal profile;

b. Management structure and staffing of the Applicant;

c. Biographies of the Applicant's principals, managers and/or officers;

d. Plans for collaboration with colleges, universities or other institutions of higher learning, if any;

e. Plans for collaboration with other community-based partners, if any, including any outreach to such partners;

f. A certificate from the Applicant that:

(1) all fundraising has been completed by the Applicant,

(2) it has irrevocable commitments and/or investments in place equal to its proposed total of all Capital Investments, and

(3) the total amount of the Capital Investments;

g. A certificate from each Small Business Fund Investor confirming the irrevocable commitment or investment in the Applicant;

h. A detailed description of each Small Business Fund Investor in the Applicant including the following:

(1) The name, address and principal contact for each Small Business Fund Investor in the Applicant and type of investor (individuals, partnerships, corporations, institutions, trusts, limited liability companies etc.); and

(2) The amount of the investment made or committed by each Small Business Fund Investor in the Applicant and whether the investment is an Equity Investment or Debt Investment.

i. A credible narrative to include the following for Qualified Investments:

(1) The expected date after Certification that the Applicant will start accepting applications for investments in Eligible Businesses;

(2) Anticipated fees, charges, rates and/or assessments to be charged by the Applicant for investments in Eligible Businesses;

(3) The deployment strategy including industries and/or sectors the Applicant expects to target the estimated percentage of distribution of the total investments of the Applicant across the identified industries and/or sectors in Eligible Businesses and the size, stage, industry, and other portfolio company characteristics relevant to the Applicant's investment strategy;

(4) The strategy for identifying and meeting unmet access to capital needs in the State.

(5) A delineation for Equity Investment subtypes such as seed, early-stage venture capital, late-stage venture capital, private equity; and a delineation of Qualified Loan subtypes such as construction financing, mortgage financing, equipment financing, working capital and the expected collateral associated with such loans;

(6) The expected number of Jobs Created as a result of the Applicant's investments by year and in the aggregate from Certification to the anticipated exit from the Program;

(7) The expected number of Jobs Retained as a result of the Applicant's investments by year and in the aggregate from Certification to the anticipated exit from the Program; and

(8) A breakdown of the categories of Jobs Created and/or Jobs Retained by occupational category and listing the expected average annual wages/salaries for each Job Created and/or Job Retained with respect investments.

j. A certification from the Applicant and each of its proposed Small Business Fund Investors on a form promulgated by the Corporation containing, among others, the covenants, representations and warranties and an acknowledgment that the breach of any of the covenants, representations or warranties shall result in a reduction of the tax credits pursuant to § 8.14 of this Part;

k. A complete Revenue Impact Assessment;

l. A detailed plan for marketing and outreach to Minority Business Enterprises;

m. A credible, verifiable mechanism satisfactory to the Corporation to be used and implemented by the Applicant for each of its Qualified Investments to assess whether such Qualified Investment will result in Jobs Created or Jobs Retained that would not otherwise occur but for such investment by the Applicant;

n. A credible, verifiable mechanism satisfactory to the Corporation to be used and implemented by the Applicant for each of its Qualified Investments to assess whether each Qualified Investment generates a return in excess of a corresponding tax credit awarded under the Act and these Rules;

o. A letter of support from a governmental unit or political subdivision that administered a similar tax credit program in which the Applicant or an Affiliate participated. Alternatively, a list of references from at least two governmental units or political subdivisions that administered a similar tax credit program in which the Applicant or an Affiliate participated;

p. A list of all pending litigation in which the Applicant or Affiliate is a party including the names of all parties, the date of commencement of the case and the state and court in which the case is pending;

q. A list of all litigation in which a judgment entered against the Applicant or an Affiliate including the names of all parties, the date of the judgment and the state and court in which the judgment entered together with a copy of any such judgment;

r. A list of all pending litigation in which a principal, manager, officer and/or employee of the Applicant is a party that in any way relates to claims involving investments, financing, fraud, misrepresentation, embezzlement, tax evasion, breach of fiduciary duty or claim arising from dishonesty; including the names of all parties, the date of commencement of the case and the state and court in which the case is pending; and

s. A list of all litigation in which a judgment entered against a principal, manager, officer and/or employee of the Applicant in relation to any claims involving investments, financing, fraud, misrepresentation, embezzlement, tax evasion, breach of fiduciary duty or claim arising from dishonesty; including the names of all parties, the date of judgment and the state and court in which the judgment entered together with a copy of any such judgment.

9. As of the Application Date, the Applicant has established one or more accounts with a Rhode Island branch of a Depository Institution in which the Equity Investment and/or Debt Investment received by the Applicant will be deposited if the Application is approved;

10. The Applicant has filed a Bond or other such surety or bond as may be acceptable to the Board in its discretion with the Corporation issued by a company with an A.M. Best rating of A or better that is in an amount equal to the face amount of the tax credits sought by the Applicant for the purposes of securing the obligations of the Applicant and its Small Business Fund Investors under this Part and having a term of ten years, six months. Alternatively, the Board may permit an Applicant and/or prospective tax credit recipient(s) to enter into an agreement with the Corporation by which the Applicant shall be obligated, to among other things, provide Bonds or surety in tranches over a period of years, which may include a measure by which the Bond or surety amount is equal to the difference between the cumulative amount of tax credits issued or to be issued on the next Credit Allowance Date and the amount of positive economic impact as used in § 8.5(A)(26)(b) of this Part and as certified by the Corporation; and

11. All fees due under this Part have been paid.

870 R.I. Code R. 870-RICR-30-00-8.6

Adopted effective 9/27/2019
Amended effective 3/24/2020