Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The terms and conditions of a Loan Agreement
to a Small Business shall include all of the following:
(1) Except for an Extended Guarantee, as defined
in subsection (b)(6), the maximum interest rate shall be determined based upon the
percentage of the Loan which is guaranteed by a Corporation, as set forth below in
subsections (A) through (D). The interest rate for an Extended Guarantee shall not
exceed Prime plus two percent.
(A) If the
percentage guaranteed is 95 percent, the maximum Loan interest rate shall be
Prime;
(B) If the percentage guaranteed
is 90 percent, the maximum Loan interest rate shall be Prime plus one
percent;
(C) If the percentage
guaranteed is 85 percent, the maximum Loan interest rate shall be Prime plus two
percent;
(D) If the percentage
guaranteed is 80 percent, the maximum Loan interest rate shall be Prime plus three
percent;
(2) If the Borrower
receives a Federal Disaster Loan, all proceeds from the Federal Disaster Loan shall
be used to reduce the Loan, to the extent allowed by law.
(3) The Lender shall be authorized to charge
reasonable administrative loan fees.
(4)
In the case of a Loan with an Extended Guarantee, as defined in subsection (b)(6),
the Loan shall be fully amortized. As used in this subsection, "fully amortized"
means that periodic and equal interest and principal payments are due throughout the
term of the Loan.
(b) The
terms and conditions of a Guarantee shall be consistent with the resolution of the
Corporation approving the Guarantee and shall include all of the following:
(1) The Corporation promises to pay up to 95
percent of the Loan principal and interest (100 percent if the conditions of
subclause (2) below are met) in the event of a Default, subject only to the
following restrictions:
(A) Such amount does not
exceed a total of $150,000 principal, plus the interest on the guaranteed portion of
the Loan.
(B) The Lender has complied
with any conditions contained in the resolution adopted by a Corporation's board of
directors authorizing the Guarantee; provided, however, that this restriction only
shall apply to the extent that the conditions in such resolution are expressly set
forth in the Guarantee; and
(C) The
Lender has not engaged, and will not engage, in fraudulent or grossly negligent
practices in connection with the Borrower, Guarantee, the Loan or the Loan
Agreement.
(2) In the case of
a Loan to a Small Business, the Guarantee shall include a promise to repay up to 100
percent of the Loan interest and principal if access to business records pertinent
to the Application for a Loan has been precluded by official action prohibiting
necessary reentry into the affected business premises. Evidence of the above shall
consist of a written statement of the Lender, Corporation, or public official
confirming the denial of access. In addition, the Borrower shall also specify in
writing the relevant records within the business premises, and certify that no other
copies of such records exist.
(3)
Neither the terms of the Guarantee nor the Loan shall be amended without the prior
written approval of the Borrower, Lender and the Corporation executing the
Guarantee.
(4) The Lender shall make a
good faith effort to send to the Corporation executing the Guarantee, a copy of all
correspondence mailed to the Borrower.
(5) Section
4013 Demand Procedures.
(6) The original term of a Guarantee shall not
exceed twelve (12) months. A Corporation is authorized to extend the term of a
Guarantee upon expiration of the initial twelve (12) month term so long as a Federal
Disaster Loan Application is still pending. The extension shall continue only so
long as the Application remains pending. If a Federal Disaster Loan Application is
denied, a Corporation is authorized to issue a Guarantee for a new Loan for a term
not to exceed seven years. The amount of the new Loan shall not exceed the total
owing on the previous Loan as of the date the Application was denied. A Guarantee
issued after an Application has been denied is defined as an "Extended Guarantee."
No Extended Guarantee shall be issued unless the Corporation obtains and reviews
updated financial and credit information concerning the Borrower. The Corporation is
only required to review information which updates financial and credit information
contained in the original Application.
(7) No Corporation shall be authorized to charge a
Guarantee fee for issuing a Small Business Guarantee, except for the issuance of an
Extended Guarantee, as defined in subsection (b)(6). A Corporation shall be
authorized to charge a fee of up to one percent of the Guarantee amount in the case
of an Extended Guarantee.
1. Renumbering and
amendment of section
4012 to section 4015 filed 3-22-91 as
an emergency; operative 3-22-91 (Register 91, No. 16). A Certificate of Compliance
must be transmitted to OAL by 7-22-91 or emergency language will be repealed by
operation of law on the following day.
2. Editorial correction of
printing error in subsection (a)(2) (Register 91, No. 32).
3. Repealer
and new section filed 3-19-92 as an emergency; operative 3-19-92 (Register 92, No.
15). A Certificate of Compliance must be transmitted to OAL 7-17-92 or emergency
language will be repealed by operation of law on the following day.
4.
Renumbering of former section 4015 to section 4615 and new section 4015 filed
6-2-92; operative 6-2-92 (Register 92, No. 24).
5. Amendment of
subsection (b)(1)(A) and NOTE filed 8-10-92 as an emergency; operative 8-10-92
(Register 92, No. 33). A Certificate of Compliance must be transmitted to OAL
12-8-92 or emergency language will be repealed by operation of law on the following
day.
6. Order of 8-10-92 repealed by operation of Government Code section
11346.1
(Register 94, No. 17).
7. Editorial correction of subsections (a)(1)(D),
(b)(1), and (b)(2) (Register 95, No. 13).
Note: Authority cited: Section
14075(b),
Corporations Code. Reference: Section
14075(a),
Corporations Code; and section
8684,
Government Code.
