Loan requirements in addition to those specified in SDCL chapter 1-16B are as follows:

1. (1) The amount of the loan, net of the amount required to be deposited in the loan reserve account, may not exceed the lesser of the project costs, plus costs of issuance and capitalized interest, or the sum of the following: eighty percent of the appraised fair market value of the project upon completion, less the outstanding principal amount of any prior mortgage that is not to be discharged with proceeds of bonds of the series, fifty percent of the appraised fair market value of any equipment provided as security, and one hundred percent of the stated amount of any letters of credit or surety obligations;
2. (2) To the extent project costs exceed the amount of the loan to be deposited in the loan account, other than to pay costs of issuance, the borrower must provide equity by making a cash contribution or providing a letter of credit, a surety obligation, additional collateral, or some other assurance of completion of the project and payment of project costs;
3. (3) The borrower shall provide title insurance in an amount equal to the loan less the amount deposited in the loan reserve account;
4. (4) The borrower shall provide evidence satisfactory to the authority that the project can be completed in a timely fashion;
5. (5) The maximum term of the loan may not exceed eighty percent of the useful life of the project, twenty years, or the final stated maturity of the series of bonds financing the loan, whichever is less;
6. (6) The borrower shall demonstrate to the satisfaction of the authority a capacity to make the scheduled payments of principal and interest on the loan pursuant to the provisions of a loan agreement;
7. (7) The borrower shall demonstrate an adequate source of working capital based on projections;
8. (8) A guaranty in favor of the authority must be executed by persons having a twenty-percent-ownership interest in the borrower unless shares of the borrower are traded on a stock exchange or by any corporate guarantor;
9. (9) The borrower shall supply financial statements for each of the three full fiscal years prior to the date of issuance of the series of bonds and interim financial statements when available; and
10. (10) Facilities that are not owner-occupied must be leased to meet debt service. The borrower shall provide assignments of leases and of rent payments to the authority by the date of issuance of any bonds. The terms and conditions of the leasehold estate securing a loan are subject to approval of the authority.

Source: 13 SDR 134, effective March 31, 1987; 21 SDR 14, effective August 3, 1994 ; 52 SDR 49, effective November 17, 2025 .

General Authority: SDCL 1-16B-70 .

Law Implemented: SDCL 1-16B-14 (7), 1-16B-15 , 1-16B-18 .

Prior versions effective: 1994-08-03.