The subsidy is subject to an annual review. Terms of repayment of the subsidy are negotiated directly with the borrower. To expedite the approval of Guaranties, a Preferred Lender arrangement was developed with several financial institutions. The lenders currently participating in this program are Nations Bank, Signet Bank, Harbor Bank of Maryland and First National Bank of Maryland. The goal of this arrangement is to expedite the process for qualified applicants under pre-established guidelines.
Financial assistance is provided through the use of loans, loan guaranties, and equity investments.
The proceeds are used for the specific purpose of purchasing a franchise, acquiring an existing profitable business, or developing a technology based business. Equity investments may take the form of the purchase of qualified securities, certificate of interest, interest in a limited partnership and other debt and equity investments. All equity investments must be disposed of by the end of the seventh year. Before a financing relationship is begun, a general agreement regarding the probable method of exit must be developed. The most common form is for the owner to buy back its interest at a predetermined pricing formula between the fourth and seventh year.