Current through Register 2024 Notice Reg. No. 38, September 20, 2024
In addition to the terms and conditions set forth in Section
8072, the following additional
provisions shall apply to the Collateral Support Program:
(a) Participating Financial Institutions must
submit to the Authority a Collateral Support Program Request and receive an
Initial Approval prior to the funding of the loan. The Collateral Support
Program Request shall include all of the information required in Section
8072, in addition to the following:
(1) The type of the Qualified Loan, including
whether the Qualified Loan is:
(A) A term
loan, a bridge loan, or a line of credit
(2) The term of support, which shall be up to
a maximum of 60 months.
(3) The
requested amount of Collateral Support, subject to the limits in this
Section.
(4) The anticipated date
of loan disbursement.
(5) Risk
Assessment of the Borrower that shall include the following:
(A) Collateral Support Contribution, based on
the Participating Financial Institution's usual credit policy;
(B) Any appraisals applicable to the use of
the proceeds or collateral;
(C) An
evaluation demonstrating the need for the Collateral Support, including an
evaluation demonstrating a strong credit profile of the borrower and the loan
except for the lack of collateral;
(D) Description of all other available
collateral, including that of any co-guarantors; and
(E) Confirmation that all such other
available collateral shall be pledged and liquidated first in the event of a
default, work-out or charge-off; and the order in which it shall be liquidated
prior to making a claim against the Collateral Support.
(b) The Authority shall, upon
receipt of a Collateral Support Program Request from the Participating
Financial Institution, provide an Initial Approval if the Executive Director
determines that the Qualified Loan meets the requirements of the Collateral
Support Program.
(1) The Authority shall
review each Collateral Support Program Request for completeness, for
consistency with the terms and conditions for a Qualified Business and a
Qualified Loan, and to determine whether the Authority shall offer and
underwrite the Collateral Support.
(2) The Executive Director shall notify the
Participating Financial Institution of the Executive Director's determination
within 15 business days after receipt by the Authority of all documentation
required to make such determination. The Executive Director's determination
shall be final.
(3) At the time of
Initial Approval, the Executive Director shall also be authorized to require
reasonable conditions, contingencies, or additional parameters necessary to
support a prudent underwriting of the Collateral Support by the Authority,
including but not limited to additional requirements to ensure the eligibility
of the Borrower and the loan, the availability of cash flow, the value of the
available collateral, and the liquidation plan in the event of a
default.
(4) The Initial Approval
will include confirmation of the following:
(A) The total anticipated amount of the
Qualified Loan.
(B) The term of
enrollment of the Qualified Loan.
(C) The total amount of the Collateral
Support, including Severely Affected Community or Socially and Economically
Disadvantaged Individual incentives if applicable.
(D) The applicable Closing Fee.
(E) Any conditions, contingencies, or
additional parameters deemed reasonable by the Executive Director.
(5) Upon the Initial Approval of
the Collateral Support Program Request, the Authority will issue notice of such
approval with instructions for the Participating Financial Institution to open
a Loss Reserve Account pursuant to Section
8078.32 and deposit the Borrower's
Closing Fee prior to the disbursement of the loan.
(6) The Initial Approval of the Collateral
Support Program Request is valid for ninety (90) days.
(c) Within fifteen (15) business days of the
closing of a Qualified Loan that has received with Initial Approval, the
Participating Financial Institution shall complete and submit to the Authority
the following for Final Enrollment:
(1)
Changes, if any, to the total amount of the Qualified Loan.
(2) Changes, if any, to the term of
enrollment of the Qualified Loan.
(3) Revisions, if any, to the Risk Assessment
of the Borrower.
(4) Documentation
responsive to any conditions, contingencies, or additional parameters placed on
the Collateral Support Program Request.
(5) All certifications and representations
required by the Participating Financial Institution and Borrower.
(6) Proof of Closing Fee deposit and Loss
Reserve Account opening.
(7) The
date of the disbursement of loan proceeds to the Borrower. The date of the
disbursement must be after the date of the Initial Approval, and prior to the
Final Enrollment.
(d)
Collateral Support shall be determined based on the amount of loan and term of
loan enrollment as follows:
(1) Small Business
Loans are eligible to receive up to 40% of the loan value.
(2) All loans are eligible for a five (5)
year term of support.
(3) All loans
are eligible for an additional Severely Affected Community (SAC) Contribution
if the Qualifying Business is located in a Severely Affected Community, or if
the Qualified Business is considered to be Socially and Economically
Disadvantaged in an amount of 10% of the loan value, not to exceed 25% of the
Collateral Support.
(e)
Closing Fees shall be calculated based on the amount of Collateral Support
(exclusive of the additional Severely Affected Community (SAC) Contribution) or
Socially and Economically Disadvantaged (SEDI) Contribution) determined by the
term of Collateral Support as follows:
(1) For
all loans there shall be a minimum Closing Fee of 0.50% of the Collateral
Support, or $1000, whichever is greater.
(2) All loans will be subject to Closing Fees
based on the Term of Support as follows:
(A)
If Term of Support is less than or equal to 12 months, the fee will be 0.5% of
the Collateral Support.
(B) If Term
of Support is greater than 12 months, but does not exceed 24 months, the fee
will be 0.75% of the Collateral Support, unless the loan is for a Bridge Loan,
in which case the fee will be 0.50% of the Collateral Support.
(C) If Term of Support is greater than 24
months, but does not exceed 36 months, the fee will be 2.00% of the Collateral
Support.
(D) If Term of Support is
greater than 36 months, but does not exceed 48 months, the fee will be 2.75% of
the Collateral Support.
(E) If the
Term of Support is greater than 48 months, but does not exceed 60 months, the
fee will be 3.00% of the Collateral Support.
(3) For lines of credit, the fee will be
calculated based on the Collateral Support amount as provided in subdivision
(e)(2). Prior to the expiration of the original Term of Enrollment, the
Participating Financial Institution may request an extension, contingent upon
current underwriting and subject to a 1.0% fee per year for each annual renewal
up to a maximum of 60 months.
(4)
For Bridge Loans, prior to the expiration of the original Term of Enrollment,
the Participating Financial Institution may request an extension in writing.
There is no fee associated with an approved extension as long as the total Term
of Support as extended does not exceed 24 months. If the effect of any
extension or series of extensions would increase the total Term of Support for
the Bridge Loan into a tier associated with a higher Closing Fee, then any
difference between the fees paid at closing and the newly calculated fees
associated with the amended Term of Support would be charged to the
Participating Financial Institution upon approval of the extension.
Note: Authority cited: Sections 44520 and 44559.5, Health
and Safety Code. Reference: Sections 44559.2, 44559.4 and 44559.12, Health and
Safety Code; and Section 1798.17, Civil Code.
Note: Authority cited: Sections
44520
and
44559.5,
Health and Safety Code. Reference: Sections
44559.2,
44559.4
and
44559.12,
Health and Safety Code; and Section
1798.17, Civil
Code.
