Current through Rules and Regulations filed through September 23, 2024
Each lender or investor must obtain an assurance from the borrower affirming:
(1) The loan or investment proceeds must be used for a "business purpose." A business purpose includes, but is not limited to, start-up costs, working capital, franchise fees, and acquisition of equipment, inventory, or 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. SSBCI funds may be used to purchase any tangible or intangible assets except goodwill. The term "business purpose" excludes acquiring or holding passive investments in real estate; the purchase of securities except as permitted in certification (2)(d) below; and lobbying activities (as defined in Section 3 (7) of the Lobbying Disclosure Act of 1995, P.L. 104-65, as amended (2 U.S.C. §
1602(7)).
(2) The loan or investment proceeds will not be used to:
(a) repay delinquent federal or state income taxes unless the borrower or investee 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 investment or investment of capital for the business' continuance; or
(d) purchase any portion of the ownership interest of any owner of the business, except for the purchase of an interest in an employee stock ownership plan qualifying under section 401 of the Internal Revenue Code, worker cooperative, or related vehicle, provided that the transaction results in the employee stock ownership plan or other employee-owned entity holding a majority interest (on a fully diluted basis) in the business.
(3) For a borrower participating in the loan/credit program only, the borrower is not:
(a) an executive officer, director, or principal shareholder of the lender;
(b) a member of the immediate family of an executive officer, director, or principal shareholder of the lender: or
(c) related interest or immediate family of an executive officer, director, or principal shareholder of the lender.
(4) The borrower or investee is not:
(a) 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 related to the regular activities of the business through the normal course of trade; or
(b) a business that earns more than half of its annual net revenue from lending activities; unless the business is (1) a CDFI that is not a depository institution or a bank holding company; or (2) a Tribal enterprise lender that is not a depository institution or a bank holding company; 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, if permitted by federal law, applicable law in the jurisdiction where the business is located or conducted (this includes businesses that make, sell, service, or distribute products or services used in connection with illegal activity, unless such use can be shown to be completely outside of the business's intended market); this category of businesses includes direct and indirect marijuana businesses, as defined in SBA Standard Operating Procedure 50 10 6; or
(e) a business deriving more than one-third of gross annual revenue from legal gambling activities.
(5) For an investee participating in a venture capital/equity program:
(a) The investee is compliant with the venture capital program conflict of interest standards set forth in section VIII.f of the SSBCI Capital Program Policy Guidelines. Briefly, these standards provide that no SSBCI insider, or a family member or business partner of an SSBCI insider, has a personal financial interest in the investee unless an exception specified in Section VIII.f of the SSBCI Capital Program Policy Guidelines applies. The terms "SSBCI insider," "family member," "business partner," and "personal financial interest" have the meaning set forth in Section VIII.f of the SSBCI Capital Program Policy Guidelines.
(b) No principal of the investee has been convicted of a sex offense against a minor (as such terms are defined in 34 U.S.C. §
20911). 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 50 percent or more ownership interest of any class of the partnership interests; if a corporation, limited liability company, association, development company, or other entity, 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 50 percent or more of any class of equity interest in the entity; and if a partnership where the managing partner is a corporation, limited liability company, association, development company, or other entity, each director and each of the five most highly compensated executives or officers of the entity.
(6) No principal of the borrowing entity has been convicted of a sex offense against a minor (as such terms are defined in 34 U.S.C. §
20911). For the purposes of this certification, "principal" is defined as if a sole proprietorship, the proprietor; if a partnership, each partner; if a corporation, limited liability company, association, development company, or other entity, each director, each of the five most highly compensated executives, officers, or employees of the entity, and each direct or indirect holder of 20 percent or more of the ownership stock or stock equivalent of the entity.
O.C.G.A. §§
50-8-3, 50-8-8.
