Current through Register Vol. 46, No. 39, September 25, 2024
(a)
General. Loan guarantees on program loan amounts not exceeding $500,000 shall
be available for eligible applicants who are not otherwise able to obtain loans
for the installation of cost-effective energy conservation improvements,
including onsite power production projects.
(b) Maximum amount of loan guarantee.
(1) Loan guarantees shall be available up to
a maximum of 75 percent of the outstanding principal on a program
loan.
(2) At the discretion of the
commissioner, the maximum percentage of the outstanding principal on a program
loan to be guaranteed may be adjusted, and different maximum percentages may be
established for different sectors or audiences, to reflect market changes, loan
demand and the possible need to stimulate participation in the program by
certain audiences. Notice of any revised maximum percentage will be published
in the State Register.
(c) Limitations on loan guarantees.
(1) Loan guarantees will be provided only for
program loans in which principal and interest are amortized.
(2) Loan guarantees will be available for a
maximum term of 10 years.
(3) Loan
guarantees shall become effective at the time of the program loan
closing.
(4) The Energy Investment
Loan Program guarantee may be used in conjunction with other
government-sponsored loan guarantees; provided, however, that the combined
guarantees shall not exceed 90 percent of the program loan amount.
(d) Requests for loan guarantees.
Requests for loan guarantees shall be made by the financing institution on
behalf of and with the consent of the applicant. Requests shall contain the
following materials:
(1) a completed loan
guarantee application form;
(2) a
copy of the applicant's loan application;
(3) a statement by the financing institution
that the program loan application will be rejected unless a loan guarantee is
provided, together with an analysis prepared by the financing institution which
explains why a loan guarantee is required;
(4) a completed loan guarantee financial
analysis summary form which includes a description of collateral available to
secure the loan;
(5) a recent
standard credit report on the applicant, if available;
(6) a copy of the loan analysis report
prepared for the financial institution's loan committee, and a copy of any
written determination of the loan committee with respect to the applicant, if
available;
(7) a statement signed
by the applicant requesting the loan guarantee and authorizing the release of
bank records, credit reports, and other pertinent information to the Energy
Office;
(8) a brief statement by
the applicant describing its business and personal credentials;
(9) three years of the applicant's audited or
unaudited financial statements, or three years of the applicant's income tax
returns, if available;
(10) a
listing of all known security interests in the property to be
improved;
(11) a listing of all
known pending litigation and judgments against the applicant; and
(12) such additional information as may be
required by the Energy Office.
(e) Evaluation of requests for loan
guarantees. The Energy Office shall evaluate requests for loan guarantees using
generally accepted criteria of creditworthiness. Such evaluation shall include
consideration of the following criteria with respect to the applicant:
(1) soundness of the business
enterprise;
(2) credit
history;
(3) depth of management
experience;
(4) character of the
applicant and its principals;
(5)
ability to repay the program loan;
(6) the adequacy of the collateral available
to secure the loan; and
(7) such
other criteria as the Energy Office may deem appropriate.
(f) Approval of loan guarantees.
(1) Loan guarantees will be approved only
where the Energy Office determines that there is a reasonable assurance that
the applicant will be able to repay the program loan. The Energy Office may
require, as a condition to providing a loan guarantee, that the financing
institution obtain from the proprietors, partners, officers, directors, and
principal shareholders personal guarantee(s) that the program loan will be
repaid.
(2) The Energy Office, in
its discretion, may require the applicant to apply for a program loan from a
second financing institution, where the Energy Office, following its evaluation
of the request, determines that a program loan might be obtained without the
use of a loan guarantee.
(g) Commitment to guarantee. Upon approval of
a request for a loan guarantee, the Energy Office will issue to the financing
institution, concurrent with a notice of award, a written commitment to
guarantee which will indicate:
(1) the
percentage of the outstanding principal indebtedness of the program loan that
the Energy Office will guarantee; and
(2) the period for which the loan guarantee
will be in force.
(h)
Denial of loan guarantees. The Energy Office may deny a request for a loan
guarantee for any of the following reasons:
(1) the financing institution fails to
demonstrate to the satisfaction of the Energy Office that a loan guarantee is
needed;
(2) the applicant or its
principals have been the subject of a bankruptcy proceeding within the last 10
years;
(3) the existence of liens
or judgments, or the pendency of litigation which, in the judgment of the
Energy Office, significantly impair the ability of the applicant to repay the
program loan;
(4) outstanding tax
liens have been filed against the applicant or its principals;
(5) the applicant's financial statements
indicate two years continuous negative cashflow, or projections for future
cashflow are negative;
(6) the
Energy Office lacks sufficient information regarding the applicant upon which
to base a determination; and
(7)
any other factor or combination of factors which, in the judgment of the Energy
Office, render it unlikely that the applicant will be able to repay the program
loan.
(i) Request for
payment.
(1) A financing institution shall be
entitled to request payment from the Energy Office under the loan guarantee
only after the following conditions have been satisfied:
(i) default on loan payments has
occurred;
(ii) the Energy Office
has received notification of default from the financing institution pursuant to
section
7910.8(i)
of this Part; and
(iii) the
financing institution has made a good faith effort to protect its rights and
taken action necessary to collect from the applicant. A good faith effort
includes but is not limited to the following:
(a) a petition under the Bankruptcy Act is
filed by or against the applicant;
(b) the financing institution has initiated
legal action against the applicant and any personal guarantors to undertake
collection and such proceedings have been pending for a period of at least 60
days, or a final judgment has been entered and execution thereon has been
returned unsatisfied; or
(c) the
Energy Office specifically deems, in writing, that the financing institution
has made a good faith effort with respect to a program loan in
default.
(2)
Requests for payment shall be made using forms supplied by the Energy Office
and shall be submitted to the Energy Office by certified mail return receipt
requested. Each such request shall be accompanied by a loan history report and
evidence satisfactory to the Energy Office that a good faith effort has been
made to collect on the program loan.
(j) Calculating the payment. The amount to be
paid to the financing institution under a loan guarantee shall be calculated as
follows: The amount of outstanding principal remaining on the program loan
multiplied by the percentage of such outstanding principal guaranteed by the
Energy Office, less the net proceeds from the sale of secured property and any
amounts paid under other guarantees given to secure the program loan.
(k) Guarantee termination. The guarantee may
be terminated if:
(1) the claim for payment
filed by the financing institution is satisfied;
(2) the loan is satisfied; or
(3) the terms of the loan are modified,
revised, or changed without the prior approval of the State Energy
Office.
