Cal. Code Regs. Tit. 10, § 5000 - Definitions

In addition to the definitions contained in Corporations Code section 14010, the following supplemental definitions shall govern the construction of this chapter:

(a) "Allocation" and "Allocated" mean the process of disbursing appropriated Expansion Fund moneys to a Corporation's trust fund account, except for Allocations for areas affected by a state of emergency or a disaster, which shall be disbursed pursuant to Corporations Code section 14037.6. The Allocation process is described in subsections 5070(a) through (c).

(b) "Application" means all of the information required by a Lender or Surety in order to determine whether to offer a Borrower a Loan, or a Principal a Bond.

(c) "Bond" means an obligation in writing concerning the construction or service work of Principal, binding the Surety to pay certain sums upon the occurrence of specified events connected to the payment of sums due by the Principal pursuant to a payment bond, and the obligation to complete the construction or service work, pursuant to a performance bond.

(d) "Bond Guarantee" means a Guarantee which promises the payment of all or a portion of a Claim.

(e) "Bond Line" means a specified amount and term of Bond Guarantee authority which Principal is authorized to apply against any Bond with a specified Surety during the term of the Bond Line.

(f) "Borrower" means an eligible business which has received a commitment for a Loan, or has prepared an Application. In order to be an "eligible business, the business must be either:

(1) a "Small Business" as defined in part 121 of chapter 1 of title 13 of the Code of Federal Regulations as amended;

(2) a Farm Enterprise; or

(3) a business located within an enterprise zone, as defined in subdivision (d) of section 7072 of the Government Code.

(g) "Claim" means a request for payment by a Surety made to a Corporation because of Surety's Loss under a Bond or ILOC secured by a Guarantee, pursuant to section 5010 or 5015.

(h) "Collateral" means those personal and business assets of the Borrower or Principal and guarantor subject to a lien under the Loan or Bond.

(i) "Collection Guarantee" means a Guarantee of a specified percentage of net Loan principal and ninety (90) days interest at the same percentage. "Net Loan principal" as used in this paragraph means the amount of Loan principal remaining outstanding after the Lender has fully complied with the collection procedures in section 5004.

(j) "Corporate Contract" means a contract executed exclusively between the Agency and any individual Corporation.

(k) "Default" means either a delinquency which has not been cured within ninety (90) days, or that the Borrower is in bankruptcy.

(l) "Delinquency" means the failure of the Borrower to make any payment when due, pursuant to the terms of the Loan, except for any principal payment due at the maturity of the Loan.

(m) "Demand" means a request for payment by a Lender to a Corporation pursuant to section 5003 or by a Surety to a Corporation pursuant to section 5015.

(n) "Encumbrance" means a Corporation's outstanding Guarantee balance plus the Farm Loan balance on all Guarantees and Farm Loans in effect. The Guarantee effective date is the date of the executed Guarantee agreement.

(1) The Guarantee balance is calculated as follows:

(A) For a Term Loan, the Guarantee balance is calculated as the outstanding loan balance times the Guarantee percentage.

(B) For a Line of Credit Loan, the Guarantee balance is calculated as the amount of the line times the Guarantee percentage.

(2) The Farm Loan balance is calculated as 40% of the outstanding Loan balance loaned from a trust fund account for the purpose of Farm Loans.

(o) "Farm Enterprise" means the business of producing crops, livestock products and aquatic organisms through the utilization and management of land, water, labor, capital, and basic raw materials including seed, feed, fertilizer, and fuel.

(p) "Farm Loan" means a loan as defined in section 5110(g).

(q) "Guarantee" means a written agreement to warrant the repayment of a portion of a Loan or payment of all or a portion of a Claim, with repayment from the Corporation's trust fund account. Every Guarantee of a Loan shall be either a Collection Guarantee or Loan Guarantee.

(r) "Goals" means the number of Loans a Corporation expects to Guarantee and the number of Farm Loans a Corporation expects to make during a specified period of time. A Corporation's Goals shall be specified in the Corporate Contract and shall be used by the Agency to establish the maximum amount of Expansion Fund moneys to be allocated to a Corporation.

(s) "Holder" means the person or entity purchasing up to ninety percent (90%) of the Loan pursuant to article 3.

(t) "ILOC" means an irrevocable letter of credit issued by a Corporation as Collateral for a Bond and which complies with the requirements set forth in section 5014.

(u) "Law" means the California Small Business Financial Development Corporation Law.

(v) "Lender" means a banking organization, including national banks and trust companies and state chartered commercial banks, savings and loan associations, credit unions, state insurance companies, mutual insurance companies, and other banking, lending, retirement, and insurance organizations, authorized to conduct business in California.

(w) "Leverage" means the calculation where the numerator is the Encumbrance and the denominator is the Corporation's trust fund account balance.

(x) "Line of Credit Loan" means a Loan for a term not to exceed one year, except for a Farm Enterprise Loan which shall have a term not to exceed two years, where the minimum repayment is structured as interest only during the term of the Loan.

(y) "Loan" means a Loan or supplier credit extended by a Lender to a Borrower, which is guaranteed pursuant to section 5002, and which is either a Term Loan, a Micro Loan, a Line of Credit Loan, or a Revolver Loan.

(z) "Loan Guarantee" means a Guarantee of a specified percentage of Loan principal and ninety (90) days interest at the same percentage.

(aa) "Loss" means any net monetary damages incurred by a Surety arising out of a Claim, or in pursuing the Surety's rights under the indemnity agreement. As used in this subsection, "net monetary damages" means loss payments, completion costs, reasonable attorneys fees, and reasonable out of pocket consultant fees, costs, and expenses, minus amounts recovered by the Surety from any source, including Collateral. The determination of such loss will take into account amounts recovered, but excluding reinsurance. As used herein, "indemnity agreement" means the written agreement whereby Principal agrees to reimburse Surety for any Loss.

(bb) "Master Agreement" means a contract executed between the Agency and one or more Corporations to implement the operating provisions of any of the programs established under the Law.

(cc) "Micro Loan" means a Term Loan not to exceed twenty-five thousand dollars.

(dd) "Multi-party Contract" means a contract executed between the Agency and one or more Corporations for the payment of a fee to the Corporations for completing Loan Guarantees and Farm Loans in excess of the Goals described in each Corporation's Corporate Contract.

(ee) "Principal" means an eligible business which has received a commitment for a Bond. In order to be an eligible business, the business must be either:

(1) a "Small Business" as defined in part 121 of chapter 1 of title 13 of the Code of Federal Regulations, as amended; or

(2) a business located within an enterprise zone, as defined in subdivision (d) of section 7072 of the Government Code.

(ff) "Proposal" means a written application to become a Corporation submitted to the Agency, and containing the information set forth in section 5061.

(gg) "Proposer" means the persons or entity submitting a Proposal to the Agency.

(hh) "Remedial Action Plan" means a written set of specifications, with corresponding dates, time frame, designed to correct the problems which resulted in the Suspension Notice or Withdrawal Notice to a Corporation.

(ii) "Revolver Loan" means a Line of Credit Loan which converts to a Term Loan after one year.

(jj) "Surety" means an insurance company licensed by the California Department of Insurance, and authorized to conduct business in California.

(kk) "Suspension" means that a Corporation is no longer registered with the Secretary of State as a small business development corporation and shall not enjoy any of the benefits of a small business development corporation.

(ll) "Temporary Withdrawal" means a limited term suspension of a Corporation's powers to execute Guarantees as long as the Temporary Withdrawal is in effect.

(mm) "Term Loan" means a Loan with regularly scheduled reductions in principal balance.

Notes

Cal. Code Regs. Tit. 10, § 5000

1. New chapter 7 (sections 5000 through 5012, 5020 through 5022, 50230, 5040 through 5046, 5060, 5061, 5070 through 5076) filed 5-27-69 as an emergency; effective upon filing (Register 69, No. 22).
2. Certificate of Compliance-Sec. 11422.1, Gov. Code, and amendment effective thirtieth day after filing, filed 9-23-69 (Register 69, No. 39).
3. Amendment to NOTE and section filed 6-3-77; effective thirtieth day thereafter (Register 77, No. 23).
4. Repealer of chapter 7 (sections 5000-5110) and new chapter 7 (sections 5000-5076) filed 5-30-80; effective thirtieth day thereafter (Register 80, No. 22). For prior history see Registers 69, No. 39; 70, No. 46; 71, No. 10; 72, No. 33; 77, No. 13; 77, No. 23; 77, No. 41; 78, No. 17; 79, No. 50 and 80, No. 15.
5. Editorial correction filed 5-19-82 (Register 82, No. 21).
6. Repealer and new section filed 6-24-91; operative 7-24-91 (Register 91, No. 42).
7. Amendment of chapter heading and new subsections (c)-(c)(4), (i)-(i)(2), (k), (o) and (w), subsection relettering, and amendment of NOTE filed 11-4-93 as an emergency; operative 11-4-93 (Register 93, No. 45). A Certificate of Compliance must be transmitted to OAL by 3-4-94 or emergency language will be repealed by operation of law on the following day.
8. Amendment of section and NOTE filed 2-15-94 as an emergency; operative 2-15-94 (Register 94, No. 7). A Certificate of Compliance must be transmitted to OAL by 6-15-94 or emergency language will be repealed by operation of law on the following day.
9. Certificate of Compliance as to 11-4-93 order transmitted to OAL 3-3-94 and filed 3-15-94 (Register 94, No. 11).
10. Reinstatement of section as it existed prior to emergency amendment filed 2-16-95 by operation of Government Code section 11346.1(f) (Register 95, No. 7).
11. Amendment filed 4-17-95 as an emergency; operative 4-17-95 (Register 95, No. 16). A Certificate of Compliance must be transmitted to OAL by 8-15-95 or emergency language will be repealed by operation of law on the following day.
12. Certificate of Compliance as to 4-17-95 order transmitted to OAL 6-12-95 and filed 7-25-95 (Register 95, No. 30).
13. Amendment of section and NOTE filed 1-19-99 as an emergency; operative 1-19-99 (Register 99, No. 4). A Certificate of Compliance must be transmitted to OAL by 7-19-99 or emergency language will be repealed by operation of law on the following day.
14. Certificate of Compliance as to 1-19-99 order, including further amendment of subsections (a) and (k), repealer of subsection (cc) and subsection relettering, transmitted to OAL 6-3-99 and filed 7-9-99 (Register 99, No. 28).
15. Amendment filed 12-27-2004 as a deemed emergency pursuant to Corporations Code section 14024; operative 12-27-2004 (Register 2004, No. 53). A Certificate of Compliance must be transmitted to OAL by 6-27-2005 or emergency language will be repealed by operation of law on the following day.
16. Editorial correction of HISTORY 15 (Register 2005, No. 27).
17. Certificate of Compliance as to 12-27-2004 order, including amendment of chapter heading and NOTE, transmitted to OAL 5-25-2005 and filed 7-7-2005 (Register 2005, No. 27).
18. New subsections (u) and (bb) and subsection relettering filed 8-4-2008 as an emergency; operative 8-4-2008 (Register 2008, No. 32). A Certificate of Compliance must be transmitted to OAL by 2-2-2009 or emergency language will be repealed by operation of law on the following day.
19. Certificate of Compliance as to 8-4-2008 order transmitted to OAL 1-26-2009 and filed 2-19-2009 (Register 2009, No. 8).

Note: Authority cited: Section 14024, Corporations Code. Reference: Sections 14002, 14010, 14028, 14036, 14037.6, 14038, 14041, 14071 and 14071.5, Corporations Code.