1. (1) Within the limitations established hereunder, terms and security arrangements will be flexible, depending on the type of loan and the particular characteristics of the project under consideration.
2. (2) Interest rates on loans will be set at the time the directors approve an application. Rates and terms will be fixed based upon what is necessary to make the project feasible, and will reflect market conditions, the applicant's ability to repay and project requirements. The interest rate established for any loan generally will not be lower than three percent.

3. (3) Loans generally will be made for the following terms:

   1. (i) Loans made for the purpose of financing the acquisition of real property or the acquisition, renovation or construction of facilities may be made for a term not to exceed 20 years. In a co-equal and coordinate mortgage situation, a mortgage granted to the corporation will match the term of the other mortgagee. ESD will not make construction loans except in its sole discretion in extremely limited circumstances.
   2. (ii) Loans made for the purpose of financing the acquisition of machinery and equipment may be made for a term of up to seven years, or the useful life of the collateral, whichever is less.
   3. (iii) Working capital loans will be made for a term of from up to four years.
4. (4) Standard repayment terms generally will include level debt service payments over the term of the loan. In certain circumstances, deferred or graduated payments may be permitted, provided that the loan is fully amortized over the remainder of the loan term.

5. (5) Guarantees generally will be required of any holder of 20 percent or more of the shares of the borrower in those instances in which the corporation determines that the financial circumstances of the borrower alone are insufficient reasonably to assure repayment of the program loan and such guarantee is necessary or advisable to secure repayment.

   (b) Loans, loan guarantees, and grants, including interest subsidy grants.

6. (1) Written commitments, which may be conditioned upon receipt of program assistance, are required before an application can be approved for funding.
7. (2) Before or simultaneously with disbursement of an interest subsidy grant, the loan being subsidized must be funded.
8. (3) A 10 percent equity contribution generally will be required.

(a) Loans.