Ill. Admin. Code tit. 38, § 350.50 - Characteristics of ADC Lending Transactions Implying Loans
Factors which are relevant, if applicable, in determining whether the risks and rewards to the state bank as a result of an ADC lending transaction are similar to those associated with a loan include the following:
a) The borrower has a
substantial equity investment in the acquisition, development or construction
project that is not funded by the state bank;
b) The borrower has provided an irrevocable
letter of credit to the state bank from a creditworthy third party for the full
amount of the loan and the entire term of the loan;
c) A take-out commitment for the full amount
of the loan has been obtained from a creditworthy third party;
d) Non-cancellable sales contracts or lease
commitments from creditworthy third parties are currently in effect and will
provide sufficient net cash flow upon completion of the project to service
principal and interest; and
e) Upon
default, the state bank has a legal right to liquidate substantial assets of
the borrower in satisfaction of the debt.
Notes
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