Louisiana Administrative Code › Title 19 - CORPORATION AND BUSINESS › Part VII - Louisiana Economic Development Corporation › Subpart 13 - Collateral Support Program › Chapter 91 - SSBCI Collateral Support Program ARPA 2021 › Section VII-9101 - Purpose

Current through Register Vol. 50, No. 6, June 20, 2024
A. The Louisiana
				  Economic Development Corporation (LEDC or Corporation) wishes to stimulate the
				  flow of private capital, including short, medium and long-term loans, lines of
				  credit loans, and other related financial assistance for the sound financing of
				  the development, expansion, and retention of small business concerns in
				  Louisiana, as a means of helping them grow and expand their businesses and of
				  providing higher levels of employment, income growth, and expanded economic
				  opportunities, especially to small businesses owned by socially and
				  economically disadvantaged individuals (SEDI).
B. Through The American Rescue Plan Act of
				  2021, which reauthorized the State Small Business Credit Initiative (SSBCI),
				  the U.S. Congress has appropriated funds to be allocated and disbursed to the
				  states that have created programs to increase the amount of capital made
				  available by private lenders to small businesses, and the State of Louisiana
				  has been approved to receive and disburse SSBCI funds within the SSBCI Program.
				  The Louisiana Department of Economic Development LED), which will be working
				  with and through the LEDC, has been designated to provide services for the
				  SSBCI, including the collateral support program (CSP), which by a master lender
				  CSP participation agreement previously entered into, and a LEDC CSP loan and
				  deposit agreement, each between LEDC and the lender, will provide for the LEDC
				  to place a cash deposit with the lender to make additional capital available
				  for a portion of the loan, and to serve as cash collateral for a portion of the
				  loan. The Louisiana Economic Development Corporation (LEDC), working with LED,
				  will utilize SSBCI funds to increase access to credit and capital funding to
				  further assist small businesses statewide, to expand loan capabilities to a
				  broader range of businesses statewide, to direct a greater concentration on
				  those small businesses, and to reach, identify and promote small business
				  growth in low and moderate income communities, in minority communities, in
				  other underserved communities, and to small businesses owned by socially and
				  economically disadvantaged individuals across our state.
C. The CSP establishes pledged cash
				  collateral accounts with participating lenders to enhance loan collateral for
				  qualified small business borrowers exhibiting a shortfall in collateral and who
				  would not otherwise be able to obtain financing on acceptable terms and
				  conditions. Collateral deposits are established on an individual loan basis and
				  are available to cover loan losses in the event of default by the borrower.
				  Upon loan maturity and repayment, deposits are returned to LEDC for recycling
				  to other qualified small business borrowers.
D. Interested small businesses will be
				  referred to participating lenders for loan and collateral support deposit
				  qualification purposes. Participating lenders will apply to LEDC for collateral
				  support deposits on behalf of their qualified small business borrowers.
				  Participating lenders are responsible for their own credit underwriting
				  decisions and originating the loans. LEDC's responsibilities are: to ensure
				  compliance with CSP requirements; to establish and manage collateral support
				  accounts; to promote and market the CSP through outreach activities to inform
				  lenders, small businesses and trade associations of the Program; to generate
				  increased small business activity, awareness and access to additional sources
				  of capital to start and expand existing business opportunities, as well as
				  participation in the Program; and to report to the U.S. Treasury.
E. In considering approval or acceptance of
				  the loans presented to LEDC through lenders having previously agreed to
				  participate in the Collateral Support Program (CSP), the corporation will
				  consider sound business purpose loans and lines of credit, so long as SSBCI
				  resources permit. The board of directors of the corporation recognizes that
				  collateralizing loans and lines of credit carries certain risks and is willing
				  to undertake reasonable exposure.
F. LEDC will monitor the program, including
				  the repayment progress of borrowers, as well as the servicing performance of
				  participating lenders, in order to ensure successful outcomes in the form of
				  program utilization and eventual securing of funds for these groups.
AUTHORITY
					 NOTE: Promulgated in accordance with R.S. 36:104, 36:108 and
					 51:2312