Administrative Rules of Montana › Department 8 - COMMERCE › Chapter 8.99 - MONTANA OFFICE OF TOURISM AND BUSINESS DEVELOPMENT DIVISION › Subchapter 8.99.5 - Microbusiness Finance Program › Rule 8.99.504 - DEVELOPMENT LOAN - TERMS

Current through Register Vol. 13, July 5, 2024
(1) Development
				loans shall be renewable at intervals of no more than four years.
(2) Development loans shall require, at a
				minimum, the payment of interest on a quarterly basis.
(3) The loan agreement shall require that the
				MBDC provide management training and preloan and postloan technical assistance
				as described in the MBDCs application for certification.
(4) The loan agreement will specify reporting
				obligations of the MBDC to the department, including scheduling and format of
				reporting.
(5) The loan agreement
				will require the MBDC to purchase and maintain insurance protection from the
				loss of development loan funds due to the dishonest or fraudulent activities of
				the employees of the MBDC. The insurance must provide coverage of all MBDC
				employees having access to development loan funds in an amount equal to or
				greater than the total outstanding indebtedness of the MBDC that has been
				issued by the department to the MBDC under the authority of the Microbusiness
				Development Act.
(6) The initial
				department development loan to a certified MBDC shall not exceed the maximum
				amount the certified MBDC can reasonably be expected to lend to eligible
				microbusinesses, in an effective and sound manner, within two years after loan
				closing. After two years from the closing of the initial development loan, at
				least 60 percent of the total principal balance of the certified MBDC's
				development loan shall be loaned out to eligible microbusinesses. The loan out
				rate shall be calculated as follows: total revolving loan fund microbusiness
				loan receivables multiplied by.86, divided by the total development loan
				principal balance outstanding.
(7)
				On a quarterly basis, all MBDCs shall report, in writing, the total revolving
				loan fund microbusiness loan receivables and the resulting loan out rate to the
				department. If the reported loan out rate falls below the 60 percent loan out
				rate standard for a 12 month period, the MBDC shall return the excess funds to
				the department, except for any MBDC that has an outstanding development loan
				principal balance that is less than $250,000. The dollar amount of development
				loan funds equivalent to the difference between the actual percentage of
				development loan funds loaned out and the 60 percent loan out rate standard is
				referred to as "excess funds''. If excess funds are returned by the MBDC to the
				department, a certified MBDC may apply for additional development loan funds in
				the future, provided that the certified MBDC meets the requirements established
				in ARM 8.99.502.
(8) All development loan funds received by a
				MBDC and all MBDC matching loan funds are assets of the revolving loan fund.
				For as long as any part of a development loan to a MBDC remains unpaid, the
				MBDC shall maintain the revolving loan fund. The MBDC may transfer additional
				assets into the revolving loan fund. The receivables created by making loans to
				eligible microbusinesses, the MBDC's security interest in collateral pledged by
				microbusinesses, collections on the receivables, interest, fees, and any other
				income or assets derived from the operation of the revolving loan fund are
				assets of the revolving loan fund.
(9) The portion of the revolving loan fund
				that consists of development loan funds shall only be used for making direct
				loans by the certified MBDC to microbusinesses or guaranteeing loans made
				directly by banks to microbusinesses in accordance with the provisions of
				17-6-401, MCA, et seq. The portion
				of the revolving loan fund that consists of MBDC matching loan funds shall only
				be used for securing the development loan and/or making direct loans by the
				certified MBDC to microbusinesses or guaranteeing loans made directly by banks
				to microbusinesses in accordance with the provisions of
				17-6-401, MCA, et seq. The portion
				of the revolving loan fund that includes revolving loan fund income may be used
				for development loan debt service, reasonable revolving loan fund
				administrative costs, funded loan loss reserves, or making direct loans by the
				certified MBDC to microbusinesses or guaranteeing loans made directly by banks
				to microbusinesses in accordance with the provisions of
				17-6-401, MCA, et seq.
(10) The MBDCs shall follow generally
				accepted accounting principles (GAAP) to identify and record revolving loan
				fund assets and to prepare, present, and report revolving loan fund financial
				statements (balance sheet and income statement) as follows:
(a) the MBDC shall maintain a separate
				accounting ledger for the revolving loan fund; and
(b) each MBDC shall provide the department
				with a copy of an annual organization wide audit that is prepared by an
				independent certified public accountant that is licensed by the state of
				Montana.