340-180-0070 Loan Guarantee (1) The Department shall issue a loan guarantee, not to exceed the lesser of 80 percent of the loan principal or $64,000, to a commercial lending institution for a loan to provide soil remediation, UST upgrading, and replacement of USTs at a facility containing motor fuel where: (a) A loan guarantee certificate has been issued to the loan applicant; (b) The loan guarantee does not provide a guarantee for work other than approved work authorized in OAR 340-180-0050; (c) The loan is amortized with equal payments over the term of the loan where the interest rate is fixed, or with equal principal payments over the term of the loan where the interest rate is variable. NOTE: To assure that funds are available from the UST Compliance and Corrective Action Fund (USTCCAF) to pay loan guarantees during the life of the loan, it is necessary for most loans to have equal payments over the term of the loan. The Department, however, recognizes that the lending policies may differ between commercial lending institutions and may differ between individual loans, particularly during construction. The Department expects that equal loan payments will start after construction is complete. The Department is willing to consider other loan arrangements and other loan repayment schedules subsequent to the initial loan, such as multiple loans and loan refinancing where USTCCAF monies are available to pay loan guarantees, upon default, in full. Each new loan arrangement may be approved by the Department on a case by case basis. The final maturity date of the loan may not exceed ten years from the initial note date. (d) The loan maturity date of the loan does not exceed ten years from the initial closing date; (e) The commercial lending institution has approved the loan, subject to receiving the loan guarantee from the Department; and (f) The loan applicant or the commercial lending institution has provided the terms of the loan to the Department. The terms of the loan include but are not limited to: (A) Amount of loan; (B) Down payment; (C) Interest rate; and (D) The term of the loan from the initial note date. (2) The loan guarantee shall terminate on the first to occur of: (a) Thirty days after loan maturity date, including all extensions or renewals or extensions caused by the Department under OAR 340-180-0080(2)(b). NOTE: For example, if the initial note has a five year maturity date it’s maturity date may be extended beyond five years, but not past ten years. The loan guarantee will terminate 30 days after the new maturity date. All of the above rules apply to any extension of the maturity date. (b) Upon payment of the loan guarantee to the commercial lending institution; or (c) When the loan guarantee provided by the Department is replaced by a loan guarantee provided by the U.S. Small Business Administration (SBA). (3) The commercial lending institution shall notify the Department promptly when a loan guaranteed by the Department is paid in full or replaced with a S.B.A. loan guarantee. (4) The payment of the loan guarantee is subject to monies being allocated and being available from the Underground Storage Tank Compliance and Corrective Action Fund. NOTE: The funds available for payment of loan guarantees upon loan default is estimated to be $1,375,000, where 20 percent of the loans default during the life of the program. The Department expects to provide $13,752,000 in loan guarantees for approximately 245 loans, where the Department provides the guarantee throughout the life of the loan. It is expected that the SBA (U.S. Small Business Administration) will agree to provide their loan guarantee (takeout the loan) after the soil cleanup and UST construction work is complete, approximately six months after the Department issued the original loan guarantee The Department encourages transfer of loan guarantees to the SBA or to conventional financing in order to increase the number of loan guarantees provided by the Department. Statutory/Other Authority: ORS 466.706 - 466.995 Statutes/Other Implemented: OL 1989 & Ch. 1071 History: DEQ 13-1990, f. & cert. ef. 3-13-90 DEQ 25-1989(Temp), f. & cert. ef. 10-26-89