851

MICROLOAN FUND

851.1 The Department shall implement and administer the Microloan Fund (“Microloan Fund”) established pursuant to section 2375(b) of the Act. The Microloan Fund is a financing tool designed to sustain and/or increase the level of business activity, job creation and retention, and provide access to capital for the sustainability and expansion of designated categories of CBEs.

851.2 Funding issued from the Microloan Fund may be structured as a grant, senior or subordinated secured loan, or as a loan guarantee. The Department may, in its discretion, outsource the loan underwriting process to a qualified non-profit organization or financial institution.

851.3 To be eligible for funding from the Microloan Fund a recipient must:

(a) Be certified pursuant to the Act as an SBE and a DBE;

(b) Be independently owned, operated, and controlled;

(c) Be in good standing with the Department of Consumer and Regulatory Affairs; and

(d) Have a Certificate of Clean Hands from the Office of Tax and Revenue.

851.4 The following are ineligible to receive funding from the Microloan Fund:

(a) Businesses that have operated for less than two (2) years;

(b) Street vendors; and

(c) Regional or national franchise businesses.

851.5 The Department shall give preference for financial assistance to (i) eligible recipients that are certified pursuant to the Act as a Resident Owned Business, and (ii) eligible recipients that serve or whose principal office is located in a DC Main Streets corridor, a Neighborhood Investment Program Target Area, or another area identified by the Mayor for economic development or commercial revitalization. The Department shall maintain and make available a list of such eligible target areas. The preference may be in the form of higher funding amounts, different rates or terms for funding, or such other form as the Department may determine in its discretion best serves the goals and purposes of the Microloan Fund.

851.6 An eligible recipient may use proceeds from the Microloan Fund for the following purposes:

(a) Working capital;

(b) Inventory;

(c) Acquisition or repair of furniture, fixtures, machinery, or equipment;

(d) Ecologically-efficient improvements;

(e) Contract cash flow assistance;

(f) Purchase or implementation of financial management systems (e.g., point of sale, upgrades to meet prime contractor standards);

(g) Leasehold improvements; or

(h) Property renovation.

851.7 The Department shall develop underwriting criteria and rates and terms for funding from the Microloan Fund. Such criteria shall include, at minimum, the maximum funding amount(s), interest rate(s) and any applicable deferral periods, term limits, security or collateral requirements and fees and costs. The Department shall include the underwriting criteria with the application and/or publish the underwriting criteria on its website. The Department may modify the underwriting criteria as necessary to account for changes in budgeted amounts of the Microloan Fund or changing needs of the local business community. The Department may work with a qualified non-profit organization and/or financial institution to develop and/or modify as necessary the underwriting criteria.

851.8 An eligible recipient seeking funding from the Microloan Fund shall submit a written application to the Department on such form or forms as may be prescribed by the Department. The application shall include, at a minimum, submission of the following documents and information:

(a) Current CBE Certification and evidence that the applicant is certified as an SBE and a DBE;

(b) Clean Hands Certification from the Office of Tax and Revenue;

(c) Certificate of Good Standing from the Department of Consumer and Regulatory Affairs;

(d) Financial status of the applicant including, but not limited to, current and past tax returns, balance sheet(s) and profit and loss statements;

(e) Amount of funding from the Microloan Fund requested by the applicant;

(f) Reason for requesting funding from the Microloan Fund; and

(g) Any other information or documents the Department may require in order to assess the applicant's eligibility and/or credit worthiness.

851.9 The Department, and/or any qualified non-profit organization or financial

institution to which the Department has outsourced the underwriting process, shall review and evaluate an application for funding from the Microloan Fund for completeness, underwriting analysis and funding determination. Incomplete applications shall be returned to the applicant.

851.10 Within sixty (60) days of receipt of a complete application, the Department or its non-profit or financial institution partner shall notify the applicant whether the funding request has been approved, denied, or if additional information is needed to make a determination. If an application is denied, the Department or its non-profit/financial institution partner shall provide the applicant an explanation of the underwriting determination.

851.11 The Department may, in its discretion, require the potential borrower or borrower to participate in targeted training, technical assistance, and/or periodic monitoring to help strengthen business operations as a condition of funding from the Microloan Fund or as a pre-condition for future funding.

SOURCE: Final Rulemaking published at 56 DCR 8439 (October 23, 2009), incorporating by reference text of Proposed Rulemaking published at 56 DCR 5622, 5654 (July 10, 2009).