Code of Maryland Regulations
Title 24 - DEPARTMENT OF COMMERCE
Subtitle 05 - ECONOMIC DEVELOPMENT
Chapter 24.05.07 - Small Business Development Contract Financing Fund
Section 24.05.07.11 - Direct Loan Terms and Requirements
Current through Register Vol. 51, No. 6, March 22, 2024
A. Direct loans shall meet the requirements in §§B-M of this regulation.
B. Maximum Direct Loan Amount. The maximum direct loan amount may not exceed $500,000.
C. Interest Rate. The interest rate to be paid on a direct loan shall equal the market rate for a conventional loan of comparable risk unless the Authority finds that a lower rate better carries out the purposes of the Act.
D. Security. Each direct loan shall be secured by the assignment of the contract to the Authority, the personal guaranties of the applicant's owners and any other collateral required by the Authority, which may include, but is not limited to, liens on the business assets of the applicant and deeds of trust on real property owned by the applicant or the applicant's owners.
E. Term. The term of each direct loan may not exceed the term of the contract, unless the Authority finds that a longer term better carries out the purposes of the Act.
F. Payment Schedule. The Authority shall prepare a payment schedule that provides money to the applicant in the amounts and at times that the applicant needs the money to perform the contract.
G. Late Charge. Late charges, as permitted by law, may be imposed.
H. Cosigning Requests. Before each advance of money is released to the applicant, the applicant and the Authority shall cosign the request for money.
I. Repayment. The Authority's direct loan documents shall contain provisions for repayment of the direct loan.
J. Change of Applicant Eligibility. If at any time the applicant ceases to satisfy the requirements of Regulation .04 of this chapter, the Authority may, in accordance with the terms of the direct loan documents between the Authority and the applicant, accelerate the payment of the entire principal and interest due under the direct loan.
K. Change of Ownership. If at any time during the term of the direct loan the applicant or any owner of the applicant sells, ceases to own, assigns, transfers, or otherwise disposes of, all or any part of the business performing the contract, the Authority, in accordance with the terms of the direct loan documents between the Authority and the applicant, may accelerate the payment of the entire principal and interest due under the direct loan.
L. Title Insurance. If the direct loan is to be secured by real property, the Authority may require:
M. Insurance. The Authority may require the applicant or the applicant's owners and key managers to obtain life insurance in the amount of the direct loan. The Authority may also require business interruption insurance, hazard and casualty insurance, flood insurance, homeowner's insurance, workers' compensation insurance, and other appropriate forms of insurance.
N. Appraisals. The Authority may require appraisals by qualified appraisers showing the property's value for each item of real or personal property offered as collateral.