S.D. Admin. R. 12:22:02:06

Current through Register Vol. 51, page 67, December 16, 2024

Section 12:22:02:06 - Permissible uses of loan proceeds

VAARP loan proceeds must be used for community development projects, establishment of new businesses, expansion of existing businesses, creation of employment opportunities or saving existing jobs, and add value to South Dakota agricultural commodities through further processing or marketing. Such uses may include:

(1) Business and industrial acquisitions if the loan will keep the business from closing, prevent the loss of employment opportunities, or provide expanded job opportunities;

(2) Business construction, conversion, enlargement, repair, modernization, or development;

(3) Purchase or leasing of land, and the development thereof, including easements, rights-of-way, or buildings;

(4) Purchase of equipment, leasehold improvements, machinery, or supplies;

(5) Pollution control or abatement;

(6) Transportation services;

(7) Start-up operating costs and working capital;

(8) Interest during the period before the project becomes operational, but not to exceed three years;

(9) Feasibility studies;

(10) Debt refinancing, under the following conditions:

(a) The VAFA shall make a complete review to determine whether the loan will restructure debts on a schedule that will allow the borrower to operate successfully and pay off the loan;

(b) Refinancing loans are allowed only if VAFA determines that the project is viable and refinancing is necessary to create new or save existing jobs or create or continue a needed service; and

(c) On any request for refinancing of existing secured loans, the VAFA will require, at a minimum, the previously held collateral as security for the loans and may not pay off a creditor in excess of the value of the collateral;

(11) Revolving lines of credit, if:

(a) No more than 25 percent of VAARP loan fund may be committed to or in use for revolving lines of credit at any time;

(b) All borrowers receiving revolving lines of credit are required to reduce the outstanding balance of the revolving line of credit to zero at least once on or before each anniversary of the making of the loan;

(c) No revolving line of credit loan exceeds the limits established in § 12:22:02:04;

(d) All revolving line of credit loans have a specific final due date, not to exceed a term of two years; and

(e) The VAFA receives the agency's written authorization to use the IRP revolving fund for revolving lines of credit.

S.D. Admin. R. 12:22:02:06

28 SDR 44, effective 10/2/2001.

General Authority: SDCL 1-16E-24.

Law Implemented: SDCL 1-16E-8.