1. A. Those CDFIs, and other qualifying lenders, participating in the Micro Lending Program shall be guided by the following general principles in making loans.

   1. 1. The lender shall not knowingly approve any loan if the applicant has any presently pending or outstanding claim or liability relating to the failure or inability to pay promissory notes or other evidence of indebtedness, including state or federal taxes, or bankruptcy proceeding. However, 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.
   2. 2. The lender shall not approve any loan if the applicant has presently pending, at the federal, state, or local level, any proceeding concerning the denial or revocation of a necessary license or permit. However, Louisiana Economic Development Corporation (LEDC) may review and determine, on a case-by-case basis, that the pending action does not materially affect the applicant’s eligibility or the soundness of the loan. Such determinations by LEDC shall be final.
   3. 3. The terms or conditions imposed and made part of any enrolled loan authorized by vote of the corporation board shall not be amended or altered by any member of the board or employee of Louisiana Economic Development except by subsequent vote of approval to accept the changes of said enrolled loan by the board, its board screening committee or other designated committees at the next meeting of the board or committee in open session with full explanation for such action.
2. B. Loan amounts under this program are intended to be smaller in size and shall be listed in the Micro Lending Agreement.

3. C. Interest Rates

   1. 1. On all loans or lines of credits under this chapter, at the time obligation and throughout the duration of the loan, including default rates, the interest rate is to be negotiated between the lender and borrower, but shall 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 loans or lines of credits, the interest rate shall not exceed the lesser interest rate of either; the National Credit Union Administration (NCUA) interest rate ceiling, that established by the Federal Credit Union Act (FCUA), that established by the Office of the Comptroller of the Currency (OCC), or applicable state legislation that may be enacted.

4. D. Borrower’s Collateral

   1. 1. The value of the borrower’s collateral shall be determined according to the lender’s normal lending criteria and policy. Loans greater than $50,000 shall require collateral.
   2. 2. Collateral position shall be negotiated but will be no less than a sole second position.

   3. 3. Unacceptable collateral includes:

      1. a. stock in applicant company and/or related companies;
      2. b. personal residence

5. E. Equity

   1. 1. Equity requirements shall be determined according to the lenders normal loan criteria and policy.

6. F. Terms

   1. 1. Terms may be negotiated with the lender but in no case shall the terms exceed five years.

7. G. LEDC Fees

   1. 1. 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.
   2. 2. LEDC will waive the application fee for SEDI, SEB and VSB business types.

8. H. Lender Fees

   1. 1. 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.

9. I. Use of Funds

   1. 1. Purchase of fixed assets, including buildings that will be occupied by the applicant to the extent of at least 51 percent.
   2. 2. Purchase of equipment, machinery, or inventory.
   3. 3. Line of credit for accounts receivable or inventory.

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 48:1484 (June 2022), LR 48:1925 (July 2022), amended by Louisiana Economic Development, Office of Economic Development and the Louisiana Economic Development Corporation, LR 52:738 (May 2026).