Ga. Comp. R. & Regs. R. 110-25-1-.07 - Loan Terms
(1) Terms for the Loans, including interest
rate, amortization, loan fees, collateral and other consideration, will be
determined during the underwriting process based upon the nature of the assets
financed, the needs of the sub-recipient business and the risk associated with
the project. In general, funds will either be loaned directly to the
subrecipient business or transferred to recipient local governments or
authorities with conditions that determine the terms and covenants required in
the loan to the sub-recipient business, including eligible uses, collateral
requirements, and private-investment and job-creation commitments.
(2) Generally, loans will be secured, at a
minimum, by the assets to be financed, (e.g., via a UCC security interest, a
leasehold deed to secure debt) and with other security (e.g. corporate
guarantees) on an as-needed basis. The interest rates on the loans will
generally be below market-rate financing as an incentive to move the project
forward and to improve the company's cash flow; interest payments may be
deferred until the end of the loan term.
(3) If funds are passed through a local
government authority, then that entity shall reimburse the total amount of the
loan funds to the Department; provided, however, that the reimbursement
obligation shall generally be limited to payments made by the Company under the
loan. Reimbursement by the recipient shall be made in periodic payments in
amounts equivalent to payments made by the Company under the loan, less any
fees that might be agreed upon in writing between the recipient and the
Department.
(4) All loan
repayments, including interest, fees and principal repayments, shall be
recaptured by DCA in the LSFF program fund to be reloaned to future eligible
borrowers and to cover administrative costs of the program.
(5) Generally, the terms of the loan shall
contain at least one "triggering event" that will require the acceleration of
the term of the loan. For example, a loan with a term of ten years may be
accelerated to a three-year term in the event that the sub-recipient Company is
acquired, has an initial public offering, or receives regulatory approval from
a governing agency (e.g., the FDA or USDA).
(6) In most cases, loans will contain terms
requiring immediate and full repayment of the Loan balance if the company moves
its operations out of Georgia, closes the LSFF-funded facility, is sold or
liquidated. The Department also reserves the right to establish criteria for
the recapture of loan funds upon transfer of project assets to an entity other
than the sub-recipient business or upon any event that violates state law, the
public purpose of the loan program, any of the loan conditions, or any
intergovernmental contract provision. All recaptured funds must be returned to
the Department unless otherwise specified by the Department.
Notes
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