Current through Register Vol. 47, No. 6, September 18, 2024
(1)
Program
eligibility. To be eligible under the program, an applicant shall meet
all of the following requirements:
a. The
applicant shall be a business interested in establishing an ESOP. To establish
that this criterion is met, the applicant shall state the reasons for its
interest in establishing an ESOP.
b. The applicant shall be, or be willing to
become, an IRS subchapter C or subchapter S corporation. To establish that this
criterion is met, the applicant shall include a copy of its articles and
documentation establishing the applicable IRS election. An applicant not yet a
corporation may be required to execute a letter of intent.
c. The applicant shall have a valuation that
is sufficient to make an ESOP feasible. To establish that this criterion is
met, the applicant shall provide information estimating the value of the
business and information about the source of that estimate. This information
may be a good-faith estimate. The authority will not set a specific minimum
valuation; however, applicants are advised that a business with valuation less
than $5 million may not be considered a feasible candidate for an
ESOP.
d. The applicant shall have a
number of employees, eligible employee types, and a total payroll that are
sufficient to make an ESOP feasible. To establish that this criterion is met,
the applicant shall provide relevant payroll information. The authority will
not set a specific minimum number of employees; however, applicants are advised
that a business with fewer than 25 employees may not be a feasible candidate
for an ESOP.
e. The applicant shall
have a cash flow level sufficient to make an ESOP feasible. To establish that
this criterion is met, the applicant shall provide relevant financial
statements. The authority will not set a minimum cash flow level; however,
applicants are advised that a business with cash flow less than $500,000 may
not be a feasible candidate for an ESOP.
f. The applicant is not a retail
business.
g. The applicant is not a
publicly traded company.
h. The
applicant has not completed a feasibility study for purposes of exploring an
ESOP formation in the three years prior to application for the program. An
applicant who has engaged a service provider as of the time of application
shall provide a copy of the engagement letter to the authority.
(2)
Application
scoring. A business meeting the requirements of subrule 56.4(1) may
apply to the authority for financial assistance under the program. The
authority will review applications for completeness. The authority may engage
an ESOP advisory panel for assistance in evaluating the applications as needed.
As part of the evaluation process, an applicant may be required to interview
with authority staff and with members of the ESOP advisory panel about the
applicant's business, future plans, and interest in forming an ESOP. Authority
staff will evaluate the applications and give them an average numerical score
between 0 and 100. The numerical score will reflect the extent to which an
applicant is a feasible candidate for an ESOP. In determining the numerical
score, the authority will take into account the extent to which each applicant
meets the requirements of subrule 56.4(1). The authority will keep records of
the scoring process and make those records available to applicants.
(3)
Funding decisions. Each
application, including its numerical score, will be referred to the director
with a recommended funding decision. The director will make the final funding
decision on each application, taking into consideration the score and the
funding recommendation of authority staff. The director may not approve funding
for an application that receives an average score of less than 50
points.
