Section 26-C2904. LOAN REQUIREMENTS – COLLATERAL SUPPORT PROGRAM

 

2904.1Loans or investments facilitated by the Collateral Support Program shall be used for a business purpose, including working capital, inventory, expansion, renovations, start-up costs, and refinancing.  The entire proceeds of the loan or investment shall be used within the District. 

 

2904.2The loan proceeds from the Collateral Support Program shall not be used:

 

(a) To repay delinquent federal or District of Columbia income taxes unless the Eligible Recipient has a payment plan in place with the relevant taxing authority;

 

(b) To repay taxes held in trust or escrow; for example, payroll or sales taxes;

 

(c) To reimburse funds owed to any owner, including any equity injection or injection of capital for the business’s continuance;

 

(d) To purchase any portion of the ownership interest of any owner of the business;

 

(e) To acquire or hold passive investments;

 

(f) For refinancing of existing debt, other than a refinancing permitted by § 2904.9;

 

(g) For legal or illegal gambling; or

 

(h) For evangelizing, proselytizing, or lobbying.

 

2904.3Personal guarantees must be given by any individual holding twenty percent (20%) or more ownership interest in the Eligible Recipient.

 

2904.4An Eligible Lender shall apply to file a loan for enrollment in the Collateral Support Program by:

 

(a) Delivering to DISB a copy of the District SSBCI Program Enrollment Form executed by an authorized officer of the Eligible Lender;

 

(b) Delivering to DISB documentation of the residency of the Eligible Recipient’s employees;

 

(c)Providing DISB with any other documentation and information related to the loan that DISB requires; and

 

(d)Complying with any other enrollment procedures that DISB may reasonably require in writing.

 

2904.5 DISB shall review the loan and related transaction documents that memorialize the terms and conditions of the loan, and DISB shall issue a final approval if the loan, Eligible Lender, Eligible Recipient, and other aspects of the transaction are determined to comply and satisfy all applicable requirements.

 

2904.6If DISB issues a final approval of the loan, the Eligible Lender and Eligible Recipient shall execute all documentation requested by DISB to memorialize the terms and conditions of the loan to be enrolled in the Collateral Support Program.

 

2904.7The Eligible Lender, Eligible Recipient, and all other parties to the transaction shall execute all of the documents required to close or settle the transaction.  The terms, conditions, and material language of the executed documents shall be consistent with those upon which DISB issued a final approval.

 

2904.8The loan shall be considered enrolled in the Collateral Support Program when DISB receives copies of all executed transaction documents that it previously approved and submits a funding request to the Office of the Chief Financial Officer.

 

2904.9A loan or line of credit refinanced from a different lender may be enrolled in the Collateral Support Program. Loans or lines of credit with the same lender or its affiliate may be refinanced and enrolled in the Collateral Support Program if the loans and lines of credit meet the following conditions:

 

(a) The new loan or line of credit includes the advancement of new monies to a small business borrower (excluding closing costs);

 

(b) The new credit supported with Collateral Support Program funding is based on new underwriting of the small business’s ability to repay and a new approval by the Eligible Lender;

 

(c) The proceeds from the new credit are only used to satisfy the outstanding balance of a loan or line of credit that has already matured or otherwise termed and the prior debt was used for an eligible business purpose, as defined  above; and

 

(d) The new credit has not been extended for the sole purpose of refinancing existing debt owed to the same financial institution lender.

 

2904.10 If the outstanding balance of a loan that is not a line of credit is reduced to zero (0), that loan shall no longer be considered an Enrolled Loan in the Collateral Support Program.

 

2904.11If a loan that is a line of credit has an outstanding balance of zero (0) for twelve (12) consecutive months, it will no longer be considered an Enrolled Loan in the Collateral Support Program, unless, before the expiration of the twelve (12) month period, the Eligible Lender has reaffirmed in writing to the Eligible Recipient that the line of credit will remain open and the Eligible Recipient has acknowledged that reaffirmation in writing to the Eligible Lender and DISB.

 

2904.12To renew an enrolled line of credit or extend the maturity date of an enrolled line of credit the following shall occur:

 

(a) An Eligible Lender shall send notice to DISB of the renewal or extension;

 

(b) The Eligible Recipient shall consent to the extension in writing;

 

(c) DISB shall receive a new enrollment form; and

 

(d) DISB shall approve the extension. 

 

2904.13If an enrolled line of credit is not renewed or extended, it shall no longer be   considered enrolled in the Collateral Support Program after its maturity date has passed.

 

2904.14If an enrolled line of credit has an outstanding balance of zero (0) for twelve (12) consecutive months, it shall no longer be enrolled in the Collateral Support Program, unless, before the expiration of the twelve (12) month period, the Eligible Lender has reaffirmed in writing to the Eligible Recipient that the line of credit shall remain open and the Eligible Recipient has acknowledged that reaffirmation in writing to the Eligible Lender and DISB. 

 

 

authority

Section 105(c) of the 21st Century Financial Modernization Act of 2000, effective June 9, 2001 (D.C. Law 13-308; D.C. Official Code § 26-551.05(c) (2012 Repl. and 2016 Supp.)).

source

Final Rulemaking published at 61 DCR 9181 (September 5, 2014); as amended by Final Rulemaking published at 63 DCR 11535 (September 16, 2016).