Section 26-C2912. ELIGIBLE RECIPIENTS – LOAN PARTICIPATION PROGRAM

 

2912.1             An Eligible Recipient under the Loan Participation Program shall:

 

(a) Be a non-public company that is registered in the District and is subject to tax under the laws of the District and continues as such as long as the Loan Participation Program supports the loan;

 

(b) Have at closing, or sign an agreement pledging that it will have within six (6) months after funding:

 

(1)Its principal offices within the District, demonstrated by a lease or a deed; and

 

(2)At least seventy-five percent (75%) of its employees working in the District and who continue as such as long as the District’s portion of the loan participation is outstanding; and

 

(c) Have less than seven hundred and fifty (750) existing employees, including those of its affiliates and subsidiaries.

 

2912.2To qualify for Loan Participation, an Eligible Recipient may also be subject to at least one of the following requirements:

 

(a) Provide proof by the time of funding that District residents are employed in at least fifty percent (50%) of its W-2 and 1099 employee positions;

 

(b) Sign an agreement by the time of funding pledging that at least fifty percent (50%) of its W-2 and 1099 employee positions will be occupied by District residents within six (6) months of funding;

 

(c) Provide proof by the time of funding that the Eligible Recipient is at least fifty percent (50%) owned by District residents and provides at least twenty-five percent (25%) of its W-2 and 1099 employee positions to District residents; or

 

(d) Demonstrate by the time of funding that the Eligible Recipient will, within six months of funding, create or retain at least one District resident job for every $100,000 in loan participation that the District provides. 

 

2912.3If the funding from the District of Columbia to an Eligible Recipient that is not a Certified Business Enterprise is three hundred thousand dollars ($300,000) or more, the Eligible Recipient shall execute a First Source Agreement if District law requires.   

 

2912.4The Commissioner may waive the provisions of §§ 2911.1 – 2912.3 and may extend the deadlines, in whole or in part if the Eligible Recipient demonstrates a reasonable need for waiver, if such waiver will not violate the U.S. Department of the Treasury’s SSBCI Guidelines, and the waiver is in the best interest of the District.

 

2912.5The Eligible Recipient and any owner of the Eligible Recipient that has at least a twenty percent (20%) interest in the Eligible Recipient shall execute covenants pledging to continue to comply with Loan Participation Program requirements of maintaining its principal offices within the District and maintaining the requisite number of its W-2 and 1099 employee positions occupied by District residents.

 

2912.6An Eligible Recipient shall not be:

 

(a)An executive officer, director, or principal shareholder of the financial institution or qualified non-profit organization enrolling the loan;

 

(b)A member of the immediate family of an executive officer, director, or principal shareholder of the financial institution or qualified non-profit organization enrolling the loan; 

 

(c)A related interest of such an executive officer, director, principal shareholder, or member of the immediate family;

 

(d)A business engaged in speculative activities that develop profits from fluctuations in price rather than through normal course of trade, such as wildcatting for oil or dealing in commodities futures, unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business;

 

(e)A business that earns more than half of its annual net revenue from lending activities, unless the business is a non-bank or non-bank holding company or Community Development Financial Institution;

 

(f)A business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

 

(g)A business engaged in activities that are prohibited by federal or District of Columbia law.

 

2912.7For the purpose of these Eligible Recipient restrictions, as described in §§ 2912.6 (a), (b) and (c) above, the terms “executive officer,” “director,” “principal shareholder,” “immediate family,” and “related interest” refer to the same relationship to a financial institution lender or qualified non-profit organization as the relationship described in 12 C.F.R. part 215, or any successor to such part.

 

2912.8Eligible Recipients under the Loan Participation Program shall certify that no principal of the Eligible Recipient has been convicted of a sex offense against a minor as such term is defined in Section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. § 16911). 

 

2912.9For the purposes of the certification required in § 2911.2(d) and § 2912.8, “principal” is defined as:

 

(a) If a sole proprietorship, the proprietor;

 

(b) If a partnership, each managing partner and each partner who holds twenty percent (20%) or more ownership interest in the partnership; or 

 

(c) If a corporation, limited liability company, association, or a development company, each director, each of the five (5) most highly compensated executives, officers, or employees of the entity, and each direct or indirect holder of twenty percent (20%) or more of the ownership stock or stock equivalent of the entity.

 

2912.10An Eligible Recipient’s breach of the continuing eligibility requirements in § 2912.1 and, where applicable § 2912.2, may result in a penalty being assessed to the Eligible Recipient  not to exceed the amount of the District’s participation in the Eligible Recipient’s loan.

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2912.11A breach by the Eligible Recipient of the continuing eligibility requirements in § 2912.1 and, where applicable § 2912.2, that occurred without the Eligible Lender’s assistance shall not impact the District’s participation in the loan pledged to the Lender.   

 

2912.12 An Eligible Lender shall be required to repurchase the District’s participation in the loan if at the time of funding the Eligible Recipient failed to meet the eligibility criteria in § 2912.1, and where applicable § 2912.2, and the Eligible Lender knew that the Eligible Recipient failed to meet the eligibility criteria at the time of funding.

 

 

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).