1. (a) Determination of need. The Authority has identified a potential need for an opportunity to provide a direct loan to eligible applicants in cooperation with the eligible applicant's local lending institution. The Authority will consider a direct loan to an eligible applicant only when an applicant and lender provide the Authority evidence that a direct loan is in the best interest of the eligible applicant, the lender and the Authority.

2. (b) Eligibility requirements. The Authority may make direct loans to eligible applicants not to exceed $250,000 provided that:

   1. (1) the lender and the applicant submit the information necessary for a qualified application as defined in §28.9 of this title (relating to Contents of Qualified Application);
   2. (2) the project meets the eligibility criteria as defined in §28.7 of this title (relating to Project Eligibility Requirements) with the exception of §28.7(a)(7) and §28.7(c);
   3. (3) the project meets the guidelines of the Authority's Credit Policy and Procedures document incorporated by reference herein as stated in §28.11(d) of this title (relating to Criteria for Approval of Financial Assistance);
   4. (4) the lender agrees, in writing, that the direct loan from the Authority is necessary for the furtherance of the project; and
   5. (5) the lender agrees to service the loan based upon the payment of a servicing fee by the Authority as agreed between lender and Authority.
3. (c) Notification of approval. Upon conditional approval of the qualified application by the board, the Authority will notify the applicant and the participating lender in writing, identifying the terms and conditions of the loan. The board may set certain time limits regarding the acceptance of the loan by the applicant and time limits regarding the closing of the loan by the applicant and the Authority, however, in no event shall the time period exceed 30 days to accept the commitment and 90 days to close the loan. The Authority will prepare the written agreements and documents necessary to close the loan in accordance with the terms and conditions set forth in the notice of approval. The Authority and the lender will disburse the loan according to the terms of the note and/or the loan agreements.
4. (d) Notification of denial. If the board denies the qualified application, the Authority will notify the applicant in writing identifying the reasons for denial. Applicants who have been denied may re-apply to the program.
5. (e) Other requirements. A qualified application for a direct loan from the Authority will be subject to the filings and considerations established in §28.8 of this title (relating to Filing Requirements and Consideration of Applications) with the exception that any reference to "lender" would be deemed as "not applicable".
6. (f) Fees. The Authority may charge fees, including origination fees, as it deems appropriate. Fees for direct loans will be adopted by the board and included on the fee schedule found at §28.10(h) of this title (relating to General Terms and Conditions of the Authority's Financial Assistance). Fees may be included in the amount of the loan provided by the Authority.
7. (g) Interest rate. The interest rate on the direct loan (not including origination fees) shall be the rate defined in §28.3(13) of this title (relating to Definitions) unless a different rate is approved by the Authority.
8. (h) Maturity. The maturity of the direct loan approved by the Authority must not exceed the useful life of the collateral and may be negotiated between the Authority and the borrower.
9. (i) Security. Loans must be secured by collateral of a type, amount, and value which, when considered with other criteria, affords reasonable assurance of repayment.
10. (j) Closing the loan. The staff of the Authority, the borrower, the commissioner of agriculture or her designee may attend the verification and signing of the closing documents as prepared by staff and its legal counsel. The closing will take place at a time and location to allow for the highest degree of convenience for the Authority, borrower and any other parties necessary to close the loan.
11. (k) Closing Costs. All closing costs, including legal fees, shall be paid by the borrower.

Source Note:The provisions of this §28.16 adopted to be effective August 24, 1999, 24 TexReg 6472.