§ 5001.451 Conditional commitment. ( a ) *Issuance.* Upon selection of an application in accordance with § 5001.315 in subpart D, the Agency will issue a conditional commitment to the lender, to be accepted by the lender and the borrower, containing conditions under which the Agency will issue a loan note guarantee. ( 1 ) Upon acceptance of the conditional commitment, the lender agrees not to modify the scope of the project, overall facility concept, project purpose, use of guaranteed loan funds, or other terms and conditions without Agency written concurrence in accordance with paragraph (c) of this section.
( 2 ) If the lender decides at any time after receiving a conditional commitment that it no longer wants a loan guarantee, the lender must immediately advise the Agency of the cancellation in writing. Upon written notification from the lender, the Agency will de-obligate the funds associated with the conditional commitment.
( b ) *Content.* The conditional commitment will address information required for issuing a loan note guarantee, including but not limited to: ( 1 ) Approved use of guaranteed loan funds (source and use of funds);
( 2 ) Rates and terms of the loan;
( 3 ) Loan agreement requirements to include: ( i ) Repayment terms and amortization provisions of the guaranteed loan;
( ii ) Description of real property collateral, list of other collateral and identification of the lender's lien priority in the collateral;
( iii ) A list of persons and entities guaranteeing payment of the guaranteed loan and their percentage of guarantee;
( iv ) Requirement as to the type and frequency of the financial statements to be required for the duration of the guaranteed loan (guarantor statements must be updated at least annually);
( v ) Prohibition against borrower assuming liabilities or obligations of others;
( vi ) Limitations on borrower dividend payments and compensation of officers, owners and members of borrower;
( vii ) Limitations on the purchase and sale of equipment other fixed assets and real estate;
( viii ) Restrictions on mergers, consolidations, or sales of the business, project, or guarantee loan collateral without the concurrence of the lender;
( ix ) Limitations on significant management changes without the concurrence of the lender;
( x ) Maximum debt-to-net worth ratio, when required by the lender or by this part;
( xi ) Minimum debt service coverage ratio, when required by the lender or by this part;
( xii ) Requirements imposed by the Agency in its conditional commitment;
( xiii ) Agency environmental requirements; and
( xiv ) Requirement for the lender and the Agency to have reasonable access to the project and financial records including access for periodic inspections of the project and financial records by a representative of the lender or the Agency; and
( xv ) Requirement for the borrower to provide the lender and the Agency performance information during the term of the guaranteed loan.
( 4 ) Loan closing requirements;
( 5 ) Lender and borrower certifications;
( 6 ) Collateral and lien position requirements; and
( 7 ) Other requirements necessary to protect the Agency.
( c ) *Change requests.* The lender can request, in writing, changes to the conditional commitment with justification. The Agency can deny, solely at its discretion, changes to the conditional commitment even if the changes are otherwise in compliance with this part. All changes to the conditional commitment must be documented by written amendment to the conditional commitment executed by all parties.
( d ) *Acceptance or withdrawal of conditional commitment.* The lender and borrower must complete and sign the conditional commitment and return a copy to the Agency within 60 days. If the conditional commitment is not accepted by both the lender and borrower within 60 days, the conditional commitment becomes null and void and the Agency will withdraw the conditional commitment and de-obligate the associated funds.
( e ) Modification, and expiration of conditional commitment. The conditional commitment issued by the Agency will be effective for a period of one year or sufficient time to complete the guaranteed loan project prior to loan closing. The lender must submit a written request to the Agency to extend the conditional commitment at least 30 days prior to its expiration date and obtain Agency approval for the extension. The Agency will consider this request only if no material adverse changes in the borrower or the borrower's financial condition have occurred since issuance of the conditional commitment. If a conditional commitment expires, the Agency will notify the lender in writing and may de-obligate the funds. Any additions or modifications to conditions stated in the original conditional commitment must be agreed upon between the lender, the borrower, and the Agency.
[85 FR 42518, July 14,2020, as amended at 86 FR 70358, Dec. 10, 2021; 87 FR 7368, Feb. 9, 2022]