Louisiana Administrative Code › Title 19 - CORPORATION AND BUSINESS › Part VII - Louisiana Economic Development Corporation › Subpart 1 - Small Business Loan Guaranty Program › Chapter 5 - SSBCI Loan Guaranty ARPA 2021 › Section VII-505 - Application Process

Current through Register Vol. 50, No. 6, June 20, 2024
A. Any
				  applicant/borrower(s) applying for either a loan, loan guarantee, line of
				  credit guarantee, loan guaranty or loan participation will be required first to
				  contact a financial lending institution (a bank or other commercial lending
				  entity) that is willing to entertain, originate, process and service such a
				  loan or line of credit with the prospect of a guaranty or a participation, and
				  the lender will then contact LEDC for qualification and shall submit a complete
				  application to LEDC for review and approval. The financial institution shall
				  also be responsible for obtaining assurances of eligibility from each
				  borrower.
B. Businesses applying
				  for consideration as a SEDI owned business will have to self-certify under
				  conditions in Clauses i -iii to the extent allowed under the Louisiana Public
				  Records Law,
				  R.S.
				  44:1 et seq. Confidential information in the
				  files of LEDC and its accounts acquired in the course of its duty will be used
				  solely by and for LEDC.
C. Loan
				  Purpose Requirements and Prohibitions. In addition to the application process
				  provisions provided in the Section mentioned in the above Subsection A, in
				  connection with each loan to be enrolled under this Chapter 3 program the
				  financial institution lender shall also be responsible for obtaining and
				  providing to LEDC with the lender's application an assurance from each borrower
				  stating that the loan proceeds shall not be used for any impermissible purpose
				  under the SSBCI program. And additionally, each financial institution lender
				  must also obtain and provide to LEDC with its application under this Chapter 3
				  program an assurance from the borrower affirming:
1. the loan proceeds must be used for a
				  business purpose. A business purpose includes, but is not limited to, start-up
				  costs, working capital, business procurement, franchise fees, equipment,
				  inventory, as well as the purchase, construction renovation or tenant
				  improvements of an eligible place of business that is not for passive real
				  estate investment purposes. The definition of business purpose excludes
				  activities that relate to acquiring or holding passive investments such as
				  commercial real estate ownership, the purchase of securities; and lobbying
				  activities as defined in Section 3 (7) of the Lobbying Disclosure Act of 1995,
				  P.L.
				  104-65, as amended;
2. the loan proceeds will not be used to:
a. repay a delinquent federal or state income
				  taxes unless the borrower has a payment plan in place with the relevant taxing
				  authority; or
b. repay taxes held
				  in trust or escrow, e.g. payroll or sales taxes; or
c. reimburse funds owed to any owner,
				  including any equity injection or injection of capital for the business'
				  continuance; or
d. purchase any
				  portion of the ownership interest of any owner of the business;
3. the borrower is not:
a. an executive officer, director, or
				  principal shareholder of the financial institution lender; or
b. a member of the immediate family of an
				  executive officer, director, or principal shareholder of the financial
				  institution lenders; or
c. a
				  related interest of an such executive officer, director, principal shareholder,
				  or member of the immediate family; (For the purposes of these three borrower
				  restrictions, the terms
executive officer
,
director
,
principal shareholder
,
immediate family
, and
related interest
refer
				  to the same relationship to a financial institution lender as the relationship
				  described in part 215 of title 12 of the Code of Federal Regulations, or any
				  successor to such part.)
4. the borrower is not:
a. a business engaged in speculative
				  activities that develop profits from fluctuations in price rather than through
				  normal course of trade, such as wildcatting for oil and dealing in commodities
				  futures, unless those activities are incidental to the regular activities of
				  the business and part of a legitimate risk management strategy to guard against
				  price fluctuations related to the regular activities of the business; or
NOTE: Permissible borrowers include state-designated
					 charitable, religious, or other non-profit or eleemosynary institutions,
					 government-owned corporations, consumer and marketing cooperatives, and
					 faith-based organizations provided the loan is for a
business
					 purpose
as defined above.
b. a business that earns more than half of
				  its annual net revenue from lending activities; unless the business is a
				  non-bank or non-bank holding company certified as a community development
				  financial institution; or
c. a
				  business engaged in pyramid sales, where a participant's primary incentive is
				  based on the sales made by an ever-increasing number of participants;
				  or
d. a business engaged in
				  activities that are prohibited by federal law or applicable law in the
				  jurisdiction where the business is located or conducted. (Included in these
				  activities is the production, servicing, or distribution of otherwise legal
				  products that are to be used in connection with an illegal activity, such as
				  selling drug paraphernalia or operating a motel that knowingly permits illegal
				  prostitution); this category of business includes direct and indirect marijuana
				  businesses, as defined in SBA Standard Operating Procedures 50 10 6;
				  or
e. a business engaged in
				  gambling enterprises, unless the business earns less than 33 percent of its
				  annual net revenue from lottery sales;
5. no principal of the borrowing entity has
				  been convicted of a sex offense against a minor (as such terms are defined in
				  section 111 of the Sex Offender Registration and Notification Act
				  (42
				  U.S.C. 16911)). For the purposes of this
				  certification,
principal
is defined as "if a sole
				  proprietorship, the proprietor; if a partnership, each managing partner and
				  each partner who is a natural person and holds a 20 percent or more ownership
				  interest in the partnership; and if a corporation, limited liability company,
				  association or a development company, each director, each of the five most
				  highly compensated executives or officers of the entity, and each natural
				  person who is a direct or indirect holder of 20 percent or more of the
				  ownership stock or stock equivalent of the entity."