1. (a) Permissible use of financial assistance. The Authority's financial assistance is to be used to finance the project identified on the qualified application and must be a renewal of an existing obligation involving the Authority.
2. (b) Maximum amount financial assistance. The Authority shall not provide a loan guaranty, or a participation purchased to an applicant, including its affiliates, that exceeds the current dollar amount of the existing obligation involving the Authority.
3. (c) Extent of participation in a guaranteed loan. The Authority shall participate in each and every guaranteed loan in an amount not to exceed 80% of the Loan Guaranty Amount, not to exceed the limits in subsection (b) of this section.
4. (d) Interest. The interest rate on the guaranteed loan (not including guaranty fees) shall be the rate charged by the lender and approved by the Authority, subject to the definition established in §28.3 of this title (relating to Definitions).
5. (e) Maturity. The maturity of the direct loan, participation purchased, or loan guaranty approved by the Authority must not exceed the useful life of the collateral and may be negotiated between the Authority, the lender, and/or the borrower.
6. (f) Security. Loans should be secured by collateral of a type, amount, and value which, when considered with other criteria, affords reasonable assurance of repayment.
7. (g) Fees. The board has adopted the following fee schedule which will be used as a guideline to calculate the fees payable by the applicant to the Authority within 10 days of the initial funding of the loan. However, the Authority may approve fees as it deems appropriate on a case-by-case basis. A nonrefundable application fee will be required with the qualified application. If the qualified application is approved, the application fee will be credited as part of the total fees charged. Any and all legal fees incurred by the board in issuing a direct loan or loan guaranty will be an obligation of the applicant.
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8. (h) Closing the financial assistance provided. The lender, the applicant, and the commissioner of agriculture or his designee may attend the verification and signing of the closing documents as prepared by staff and/or the lender.

9. (i) Reporting requirements for loan guaranties and participations purchased.

   1. (1) The lender shall report in writing to the Authority as follows:

      1. (A) notification if the loan is placed on a watch list;
      2. (B) quarterly monitoring reports indicating loan balance, repayment status, and any credit changes reported to lender as indicated on the prescribed form; and
      3. (C) notification in the event of any breaches or defaults in the terms, conditions, or covenants of the note, loan agreement, or other loan documents.
   2. (2) The applicant shall provide annual financial statements including a balance sheet, income statement and cash flow statement; payment receipts of personal property taxes; and a statement of the annual employment of the applicant's business to the lender. Annual financial statements should be audited but, if not, they must be signed by the owner of the project. Annual employment shall be expressed in terms of annual full-time equivalent positions. The lender shall submit these reports to the Authority. If necessary, the Authority may request other reports or documentation reasonably necessary for an assessment of the applicant's compliance with the program.

Source Note:The provisions of this §28.10 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 17, 1994, 19 TexReg 66; amended to be effective October 4, 1995, 20 TexReg 7596; amended to be effective July 1, 1996, 21 TexReg 5685; amended to be effective December 13, 1996, 21 TexReg 11783; amended to be effective August 24, 1999, 24 TexReg 6472; amended to be effective November 28, 1999, 24 TexReg 10320; amended to be effective September 28, 2005, 30 TexReg 6049; transferred effective October 1, 2007, as publishedin the Texas Register September 28, 2007, 32 TexReg 6793.