1. (a) Projects. An applicant is eligible for assistance from the Authority if the proposed project meets the following criteria:

   1. (1) the project provides significant benefits for the expansion or development of diversified, innovative, or value-added production, processing, marketing, or exporting of Texas agricultural products; provided that the board shall give priority to agricultural businesses that include producers of Texas agricultural products; provided, also, that the board will give preference to applicants, the majority ownership of which is held by citizens of the United States; and if the applicant is a corporation, the board will give preference to a corporation organized under the laws of the State of Texas with majority ownership by Texas residents; provided further, that the board will give preference to applicants who are Texas residents doing business in the state and to applicants who can demonstrate that the financed activities will take place predominantly in the state; provided that the board will also give preference to those agricultural businesses that demonstrate a significant new technology or market opportunity for Texas producers; provided, finally, that the board may decline to assist those businesses whose primary purpose is to establish or expand conventional agricultural production;
   2. (2) the project will create or retain employment, directly or indirectly;
   3. (3) there is a reasonable level of equity in the project, which is determined on a case-by-case basis by the Authority and the lender; provided that the applicant must provide at least 10% of the total cost of the project for an existing business and at least 25% of the total costs of the project for a start-up;
   4. (4) the applicant must be a legal entity under the laws of the United States of America;
   5. (5) the applicant has its principal place of business in the state;
   6. (6) the applicant's principal owner or owners provide personal guarantees for the loan satisfactory to the Authority;
   7. (7) the lender submits a letter of commitment to make the loan based on a partial guaranty from the Authority; and
   8. (8) the applicant provides evidence satisfactory to the board that financial assistance is not otherwise available.

2. (b) Project costs. The proceeds of the guaranteed loan may be used to finance costs incurred in connection with the innovative, diversified, or value-added production, processing, marketing, or export of Texas agricultural products, including, but not limited to, the costs of:

   1. (1) acquisition of and improvements to land or interests in land;
   2. (2) acquisition, construction, rehabilitation, operation, and maintenance of buildings, improvements, and structures;
   3. (3) site preparations;
   4. (4) architectural, engineering, legal, and related services;
   5. (5) acquisition, installation, rehabilitation, operation and maintenance of machinery, equipment, furnishings, and facilities;
   6. (6) acquisition, processing, or distribution of inventory;
   7. (7) research and development;
   8. (8) financing fees and charges;
   9. (9) interest during acquisition or construction;
   10. (10) necessary reserve fund;
   11. (11) acquisition of licenses, permits, and approvals from any governmental entity; and
   12. (12) pre-export and export expenses.
3. (c) Ineligible project costs. Costs which are not eligible include, but are not limited to, refinancing of existing debt, where the refinancing will improve the lender's position in the loan, whether classified or not, by allowing for the refinancing of those projects through the program.

Source Note:The provisions of this §28.7 adopted to be effective April 23, 1991, 16 TexReg 2051; amended to be effective March 10, 1992, 17 TexReg 1533; amended to be effective January 6, 1993, 17 TexReg 9027; amended to be effective January 17, 1994, 19 TexReg 66; amended to be effective October 4, 1994, 19 TexReg 7434; amended to be effective October 4, 1995, 20 TexReg 7596.