1. A. Collateral Deposit Agreement

   1. 1. The lender shall conduct all of the customer/borrower interaction, and shall be responsible for the proper administration and monitoring of the loan (or line of credit), including monthly invoicing, collections, and loan workouts, and the proper liquidation of the collateral in the event of a default.
   2. 2. The lender shall agree to underwrite each loan (including line of credit) using its normal underwriting criteria and will perform a credit analysis of the borrower for each loan, assuming full responsibility for credit and ongoing security of the loan and will follow prudent industry loan underwriting processes and will determine that the collateral support to be provided under the CSP will be instrumental in order for the lender to make the loan. Lender will also determine that the amount required for deposit to the LEDC’s collateral deposit account does not exceed the amount necessary to provide sufficient collateral for the loan.
   3. 3. The lender shall be responsible for the preparation of all loan (including line of credit) documents to be used in connection with such loans made and accepted under this program.
   4. 4. The lender shall rely solely on the funds deposited with the lender by LEDC in the cash collateral deposit account (the principal amount, but not the accrued interest on the deposit which is not included as a portion of the security for the unpaid principal due on the loan) provided as security for the repayment of the agreed percentage of the principal amount of the unpaid principal balance due on the loan made and accepted under this program. The lender shall indemnify and hold harmless the LEDC, the state of Louisiana, including any commissioners, directors, participants, officers, agents, employees and contractors (collectively, the "Indemnified Person(s)") who shall not be liable to the lender for any reason arising out of or related in any way to the loan or the loan documents, against all claims, costs and expenses. This Section shall survive the payment in full of the loan, any return or draw upon the cash collateral deposit for the loan, or any termination of the applicable deposit agreement or other loan documents.
   5. 5. The LEDC accepted loan (including line of credit) enrolled into this program shall not be sold, assigned, participated with other lenders (within lender’s 20 percent risk interest, as provided above in §9109.A.4), or otherwise transferred by lender without the prior written consent of the LEDC board.
   6. 6. Loan delinquency will be defined according to the lender's normal lending policy. Notification of delinquency will be made to the corporation in writing by lender submitting a completed, signed and dated CSP banker loan status monthly report within ten days after the end of each month as stated in the collateral deposit agreement.
   7. 7. If default by borrower continues for more than 90 calendar days in making payment, when due, of any installment of principal or interest on any note, the lender may demand in writing to LEDC to release the funds in the deposit account by submitting a completed, signed and dated claim form notifying LEDC of the default reasonably describing the circumstances of the default. Once the release is requested, the lender may begin their standard collection and liquidation process.
   8. 8. All collection efforts, legal and liquidation processes shall be handled by the lender. In all collection efforts, legal and liquidation processes through foreclosure or otherwise, the lender will sell the collateral, handle the legal proceedings and documents, and absorb all expenses associated with these activities. All servicing actions, including collections, shall be the responsibility of the holder who shall follow accepted standards of loan servicing and collection employed by prudent lenders generally.
   9. 9. Thereafter, should any funds remain in the deposit account after the withdrawal and application of such funds, the remaining amount on deposit shall be returned by lender to LEDC, plus all interest accrued on the deposit account, which accrued interest on LEDC’s deposit account is not included as a portion of the collateral securing the loan.

2. B. LEDC Collateral Deposit Agreement

   1. 1. The LEDC collateral deposit agreement shall provide for the pledge by LEDC of cash collateral to the lender under this collateral support program (CSP). On or about the closing of the loan documents, LEDC shall deposit with the lender cash collateral in an amount not to exceed 50 percent of the principal amount of the loan, and not to exceed a maximum of $250,000, on loan amounts no greater than $500,000; or LEDC shall deposit with the lender cash collateral in an amount not to exceed 25 percent of the principal amount of the loan, and not to exceed a maximum of $250,000, on loan amounts greater than $500,000 but less than $1,000,000, accepted by LEDC under this program to be placed in an interest bearing account or certificate of deposit (the LEDC CSP loan and deposit account or deposit account) in the name of LEDC to be maintained with the lender until the loan has been repaid, or the deposited funds are applied to the payment of not to exceed 25 percent or 50 percent (depending on the principal amount of the loan) or $250,000 of the outstanding unpaid principal balance (but not the interest, lender fees or costs of collection) due on the loan; and thereafter, should any funds remain in the deposit account after the application of such funds, the remaining amount shall be returned by lender to LEDC, plus all interest accrued on the deposit account which is not included as a portion of the collateral securing the loan.
   2. 2. The corporation's cash collateral deposit shall be no greater than 25 percent or 50 percent (depending on the principal amount of the loan) for qualifying loan amounts not to exceed $250,000 of the total original principal amount of the loan (or line of credit). LEDC’s cash collateral deposit shall be pledged by LEDC to provide security for the payment of the agreed percentage of the principal amount of the loan or line of credit, not including interest due thereon. The lender shall retain an at risk position on each loan (or line of credit) of at least 20 percent of the original principal amount of the loan, or as payments are made and funds from other efforts are applied to the loan, and the principal amount is thereby reduced, lender’s risk shall be likewise reduced to 20 percent of the unpaid principal balance remaining due, plus all interest accrued on the loan.
   3. 3. There may be from time to time, in the event LEDC elects to do so, a reduction of the LEDC’s cash collateral deposit in proportion to the principal reduction of the amortized portion of the loan or line of credit; or if no principal reduction has occurred in any annual period of the loan (or line of credit), a reduction in the cash collateral deposit amount may be made in proportion to the remaining life of the loan or line of credit.
   4. 4. The LEDC’s cash collateral deposit will secure and cover up to no more than 25 percent or 50 percent (depending on the principal amount of the Loan) on the unpaid balance on the principal amount owed only.
   5. 5. The corporation’s cash collateral deposit account shall not be cross-pledged nor cross-collateralized with any other loan.

3. C. Reporting

   1. 1. Reporting will be required by all lenders under this program as required by the U.S. Treasury under the SSBCI program and as required by the state.

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 48:1467 (June 2022), LR 48:1912 (July 2022), amended by Louisiana Economic Development, Office of Economic Development and the Louisiana Economic Development Corporation, LR 52:732 (May 2026).