1. A. The Louisiana Economic Development Corporation will be guided by the following general principles in approving loan guaranties or line of credit guaranties.

   1. 1. The corporation shall confirm that the financial institution lender has sufficient commercial lending experience and financial and managerial capacity to participate in this program. The corporation may utilize, among other resources, the financial institution’s most recent call report showing the percentage of commercial loans in its portfolio.
   2. 2. The corporation shall not knowingly approve any loan guarantee or line of credit guarantee if the applicant/borrower has presently pending or outstanding any claim or liability relating to failure or inability to pay promissory notes or other evidence of indebtedness, state or federal taxes, or a bankruptcy proceeding. Louisiana Economic Development Corporation (LEDC) may review and determine, on a case-by-case basis, whether the nature, status, or materiality of such indebtedness or liabilities warrants eligibility under this program. Such determinations by LEDC shall be final.
   3. 3. The corporation shall not approve any loan, line of credit, or loan guarantee if the applicant/borrower has presently pending, at the federal, state, or local level, any proceeding concerning denial or revocation of a necessary license or permit, unless LEDC determines, on a case-by-case basis, that the pending action does not materially affect the applicant’s eligibility or the soundness of the loan.
   4. 4. The corporation shall not approve any loan, line of credit, or loan guarantee if the applicant/borrower has presently pending any legal proceeding involving a criminal violation other than misdemeanor traffic violations. Further, the corporation shall not approve any loan guarantee or line of credit guarantee if the applicant/ borrower or his/her/its principal management has a criminal record showing convictions for any criminal violations other than misdemeanor traffic violations, in which the applicant/borrower or his/hers/its principal management has not been reinstated into society
   5. 5. The terms or conditions imposed and made part of any loan guarantee or line of credit guarantee authorized by vote of the corporation board, its board screening committee or its other designated committee shall not be amended or altered by any member of the board or employee of Louisiana Economic Development except by subsequent vote of approval by the board, its board screening committee or other designated committee at the next meeting of the board or committee in open session with full explanation for such action.
   6. 6. Each financial institution lender shall be required to have a meaningful amount of its own capital resources at risk in each small business loan included in this program. Such lenders shall bear at least 20 percent or more of the loss from a small business loan default.
   7. 7. The corporation shall not subordinate its position to other creditors.

2. B. Interest Rates

   1. 1. On all loans or lines of credit guarantees, the interest rate is for each individual loan, may not exceed the National Credit Union Administration’s (NCUA) interest rate ceiling for loans made by federal credit unions as described in 12 U.S.C. § 1757(A)(vi)(I) and set by the NCUA board. Further, on all loan or line of credit guarantees, the interest rate is to be negotiated between the borrower and the lender, but shall not exceed the lesser interest rate of either; the National Credit Union Administration’s (NCUA) interest rate ceiling, that established by the Federal Credit Union Act (FCUA), that established by the Office of Comptroller of the Currency (OCC), or applicable State legislation that may be enacted.

3. C. Equity Requirements

   1. 1. The borrower must infuse not less than 15 percent into the equity in an existing or expanding business, or for a start-up operation or acquisition loan request.

   2. 2. Types of Equity:

      1. a. cash;
      2. b. paid-in capital;
      3. c. paid-in surplus and retained earnings; or
      4. d. partnership capital and retained earnings.
   3. 3. No research, development expense nor intangibles of any kind will be considered equity.

4. D. Collateral

   1. 1. The value of the collateral shall be no less than the guaranteed portion of the loan.
   2. 2. The value of the collateral required for certified small and emerging businesses loans may be up to 80 percent.
   3. 3. The collateral position may be negotiated, but it shall be no less than a sole second position.

   4. 4. Collateral Value Determination

      1. a. The appraiser must be certified by a recognized organization in the area of the collateral.
      2. b. The appraisal cannot be more than 90 days old, except for real estate loans, which cannot not be more than 6 months old.

   5. 5. Acceptable collateral may include, but shall not be limited to, the following:

      1. a. fixed assets—business real estate, buildings, fixtures;
      2. b. equipment, machinery, inventory;
      3. c. accounts receivable with supporting aging schedule; but not to exceed 80 percent of receivable value (to be used with personal guarantee only).

   6. 6. Unacceptable collateral may include, but shall not be limited to the following:

      1. a. stock in applicant/borrower company and/or related companies;
      2. b. personal items or borrower’s primary residence; and
      3. c. intangibles; to include but not limited to, digital currency such as cryptocurrency and non-fungible tokens (NFTs).
   7. 7. Personal guarantees may be offered but will not count towards the value of the collateral; if to be used, a signed and dated personal financial statements of the guarantors must also be submitted to LEDC.

5. E. Limit on the Amount of LEDC’s Guarantee

   1. 1. The corporation's loan guarantee shall be no greater than 80 percent of a loan not to exceed a guaranty amount of $1,500,000.

6. F. Terms

   1. 1. Maturity, collateral, and other loan terms shall be negotiated between the borrower and the applicant/lending institution, and the LEDC shall have an opportunity to approve the terms of such loans prior to the closing; but guaranty term periods with regard to various types of loan guaranties shall be limited as follows:

      1. a. for revolving lines of credit (RLOC) guarantee term periods may extend for up to and not exceed 3 years.
      2. b. for equipment term loans guarantee term periods may extend for up to and not exceed 5 years.
      3. c. for real estate term loans guarantee term periods may extend for up to and shall not exceed 7 years.

7. G. LEDC Program Fees

   1. 1. LEDC may charge a guaranty fee not to exceed a maximum amount of 2 percent of the guaranteed loan amount, except that:

      1. a. the guaranty program fee will be automatically waived for SEDI and SEB small business types; or
      2. b. unless the board, the board screening committee or other designated committee waives the guaranty program fee.
   2. 2. LEDC may charge an application fee of up to $150, unless the board of directors, the board’s designated committee, or LEDC staff waives the application fee.

8. H. Lender Fees

   1. 1. Lender fees shall be limited to that allowed under the United States Treasury SSBCI Capital Program Guidance. Lender fees shall be capped at $500 for loans less than $25,000 or may charge a program fee up to 2 percent for loans greater than $25,000.
   2. 2. Lender fees shall not include prepayment penalties nor double dipping fees.

Authority Note

AUTHORITY NOTE: Promulgated in accordance with R.S. 36:104, 36:108 and 51:2312

Historical Note

HISTORICAL NOTE: Promulgated by the Department of Economic Development, Office of Business Development and the Louisiana Economic Development Corporation, LR 48:1477 (June 2022), LR 48:1931 (July 2022), amended by Louisiana Economic Development, Office of Economic Development and the Louisiana Economic Development Corporation, LR 52:740 (May 2026).