1. (a) Prior to the issuance of each loan award, the Authority shall require each Loan Recipient to agree to terms and conditions set forth in a written Loan Agreement, which shall specify the loan amount, repayment period, covenants, and requirements in the event of inability to make payments or default.
2. (b) The Loan Agreement requires the Charter School benefitting from the loan to have a valid CDS Code.

3. (c) The Loan Agreement shall require each Loan Recipient to agree to each of the following:

   1. (1) Having its loan payments intercepted and offset at the state level, pursuant to Sections 41365(f) of the Education Code;
   2. (2) Defending, indemnifying and holding harmless the Authority and the State, and all officers, trustees, agents, and employees of the same, from and against any and all claims, losses, costs, damages, or liability of any kind or nature, whether direct or indirect, arising from or relating to the loan or the Program;
   3. (3) Complying with any audit provisions as may be required by the Authority, State Controller, or the California State Auditor;
   4. (4) The Charter School for which the loan is received maintains a valid charter and operates continuously throughout the term of the loan. The Authority reserves the right to contact the Chartering Authority directly seeking written verification that the Charter School for which the loan is received is in Good Standing and in compliance with the terms of its charter;
   5. (5) Notifying the Authority of any material changes to its financial condition that occur between the time of Application and the end of the loan period and within 30 days of said changes occurring;
   6. (6) Ensuring that the expenditure of all loan funds is consistent with the intent of the Program and solely for the purpose of supporting the operations and financing of the Charter School;
   7. (7) Notifying the Authority within 30 days of a Loan Recipient's determination that all or a portion of loan funds are no longer needed for their intended use, as identified in the Application, and returning to the Authority all such funds that have already been disbursed; and
   8. (8) Such other terms and conditions as agreed upon by the Authority and the Charter School.
4. (d) The Loan Agreement shall include a loan repayment schedule.

5. (e) In the case of insufficient funds to make the annual payment during a fiscal year, any available funds will be offset as scheduled and any deficit / amount owed will be added to the next scheduled apportionment offset in the same fiscal year.

   1. (1) If the total of insufficient funds is not offset by the end of the fiscal year, then the deficit / amount owed will be invoiced to the Charter School and will be repaid within 60 days.
   2. (2) If a Charter School closes or fails to open within the next fiscal year after its final loan disbursement, all funds disbursed previously must be repaid within 60 calendar days, unless granted an extension by the Authority.
6. (f) The Authority shall set up accounts receivable for any Charter School that is past due on loan repayment or that has defaulted on repayment of a Loan.
7. (g) In the event a Loan Recipient is unable to repay the loan and the Charter School is operated by an Affiliated Entity or Chartering Authority, the Affiliated Entity or Chartering Authority shall be liable for repayment of the loan.
8. (h) In the event the Loan Recipient is unable to repay the loan and is operated by an Affiliated Entity or Chartering Authority, and the corresponding Affiliated Entity or Charter Authority is an awardee under one of the Authority's other programs, the Authority may offset unrestricted funds from the relevant program in order to ensure repayment of the loan.

Note: Authority cited: Section 41365, Education Code. Reference: Sections 41365 and 41366.5, Education Code.

History

1. New section filed 2-3-2014 as an emergency; operative 2-3-2014 (Register 2014, No. 6). A Certificate of Compliance must be transmitted to OAL by 8-4-2014 or emergency language will be repealed by operation of law on the following day.

2. New section refiled 8-4-2014 as an emergency; operative 8-4-2014 (Register 2014, No. 32). A Certificate of Compliance must be transmitted to OAL by 11-3-2014 or emergency language will be repealed by operation of law on the following day.

3. New section refiled 10-27-2014 as an emergency; operative 11-3-2014 (Register 2014, No. 44). A Certificate of Compliance must be transmitted to OAL by 2-2-2015 or emergency language will be repealed by operation of law on the following day.

4. Certificate of Compliance as to 10-27-2014 order, including new subsection (b), subsection relettering and amendment of newly designated subsection (g), transmitted to OAL 1-29-2015 and filed 3-10-2015; amendments effective 3-10-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 11).

5. Amendment of subsections (b), (c)(3), (c)(6)-(7), (e)(2) and (g) filed 12-1-2016; operative 12-1-2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 49).

6. Amendment of subsection (d) and new subsection (h) filed 4-20-2020 as an emergency; operative 4-20-2020 (Register 2020, No. 17). A Certificate of Compliance must be transmitted to OAL by 10-19-2020 or emergency language will be repealed by operation of law on the following day.

7. Emergency filed 4-20-2020 extended 60 days (Executive Order N-40-20) (Register 2020, No. 22). A Certificate of Compliance must be transmitted to OAL by 12-18-2020 or emergency language will be repealed by operation of law on the following day.

8. Certificate of Compliance as to 4-20-2020 order, including nonsubstantive amendment of subsection (c)(4), transmitted to OAL 11-16-2020 and filed 12-30-2020 (Register 2021, No. 1).

9. Amendment of subsections (b), (c)(2), (c)(4)-(5), (c)(7), (e)(2) and (g)-(h) filed 12-29-2025 as a deemed emergency pursuant to Education Code section 41365(h); operative 1-1-2026 (Register 2026, No. 1). A Certificate of Compliance must be transmitted to OAL by 6-30-2026 or emergency language will be repealed by operation of law on the following day.

10. Amendment of subsections (b), (c)(2), (c)(4)-(5), (c)(7), (e)(2) and (g)-(h) refiled 6-19-2026 as a deemed emergency pursuant to Education Code section 41365(h); operative 7-1-2026 (Register 2026, No. 25). A Certificate of Compliance must be transmitted to OAL by 9-29-2026 or emergency language will be repealed by operation of law on the following day.