Mississippi Administrative Code › Title 6 - Economic Development › Part 9 - Economic Development Division › Chapter 5 - Mississippi Community Development Financial Institution (CDFI) Small Business Loan Fund Program › Rule 6-9-5.5 - Supported Uses and Transactions of SBLF Funding

Current through June 25, 2024
Participants must use SBLF funding in accordance with
				  Treasury regulations promulgated for the SSBCI program, including 31 C.F.R.
				  Subtitle A, Part 35, Subpart C.
Participants must use SBLF funds for the provision of capital
				  to eligible borrowers. Requirements for eligible SBLF transactions and
				  borrowers are as follows:
* 100% of SBLF funding must be used for Mississippi
				  companies;
* No more than 50% of SSBCI funds in an individual
				  transaction;
* Participants are required to:
* target an average borrower or investee size of 500
				  employees or less,
* not extend credit or investment support to borrowers or
				  investees that have more than 750 employees,
* target support towards loans or investments with an average
				  principal or investment amount of $5 million or less, and
* not provide credit or investment support if a given
				  transaction exceeds $20 million.
* Eligible transactions may not enroll any portion of an
				  SBA-guaranteed loan or the unguaranteed portion of any other federal loan,
				  including the U.S. Department of Agriculture's Business and Industry (USDA
				  B&I) loan program loan.
* One loan cannot be enrolled in more than one approved
				  program at the same time. A lender may not divide one loan into multiple
				  agreements or notes, each enrolled in an approved program, for the same loan
				  purpose.
* a borrower may receive two sources of federal support in
				  two separate loans if the proceeds for the two loans are for different
				  purposes.
* Eligible business purposes for SBLF transactions include,
				  but are not limited to:
* Start-up costs, working capital, franchise fees,
* Acquisition of equipment,
* Inventory
* Services used in the production, manufacturing, or delivery
				  of a business's goods or services, or in the purchase, construction,
				  renovation, or tenant improvements of an eligible place of business that is not
				  for passive real estate investment purposes, or
* The purchase of any tangible or intangible assets except
				  goodwill.
While SBLF funds cannot be combined with tax-credit enabled
				  funds at the state level, Federal New Market Tax Credits (NMTC), or Historic
				  Tax Credits to make the one-to-one match, SSBCI funds can be used alongside
				  Historic Tax Credits and NMTCs in an individual transaction, but they may not
				  count towards a fund's overall leverage.
* Eligible small business borrowers may not:
* Be a business where any principal of the company has been
				  convicted of a sex offense against a minor;
* Be a business engaged in speculative activities that profit
				  from fluctuations in price, 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 or through the normal course of trade;
* Be a business that earns more than half of its annual net
				  revenue from lending activities, unless the business is:
* a CDFI that is not a depository institution or a bank
				  holding company, or
* a Tribal enterprise lender that is not a depository
				  institution or a bank holding company;
* Be 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;
* Be a business engaged in activities that are prohibited by
				  state and/or federal law, or
* Be a business deriving more than one-third of gross annual
				  revenue from legal gambling activities.
The participant must secure an assurance from each borrower
				  affirming that the borrower is not:
* An executive officer, director, or principal shareholder of
				  the financial institution lender;
* A related interest or immediate family member of such an
				  executive officer, director, or principal shareholder of the financial
				  institution lender.
* A related interest or immediate family member of such an
				  executive officer, director, or principal shareholder of the financial
				  institution lender.
For 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 relationships described in 12 C.F.R. part 215.
Permissible borrowers may include jurisdiction-designated
				  charitable, religious, or other non-profit or philanthropic institutions;
				  government-owned corporations; consumer and marketing cooperatives; and
				  faith-based organizations, provided the loan is for a "business purpose" as
				  defined above. Permissible borrowers may also include sole proprietors,
				  independent contractors, worker cooperatives, and other employee-owned
				  entities, as well as Tribal enterprises, provided that all applicable program
				  requirements are satisfied.
Miss. Code
				  Ann. §
										57-10-601;
				  12 USC §
											5701 et seq.; 12 C.F.R. part 21 ; 31 C.F.R.
				  Subtitle A, Part 35, Subpart C.