In addition to the definitions contained in Corporations Code
section 14010, the following supplemental definitions shall govern the
construction of this chapter:
"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
Guarantee" means a Guarantee which promises the payment of all or a portion of
(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.
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:
a "Small Business" as
defined in part 121 of chapter 1 of title 1
3 of the Code of Federal Regulations
(2) a Farm Enterprise;
(3) a business located within an
enterprise zone, as defined in subdivision (d) of section 7072 of the
"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.
"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
(k) "Default" means
either a delinquency which has not been cured within ninety (90) days, or that
the Borrower is in bankruptcy.
"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.
means a request for payment by a Lender to a Corporation pursuant to section
5003 or by a Surety to a Corporation pursuant to section5015
"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
The Guarantee balance
is calculated as follows:
(A) For a Term Loan,
the Guarantee balance is calculated as the outstanding loan balance times the
(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
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.
"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
(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
(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.
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
(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.
"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:
"Small Business" as defined in part 121 of chapter 1 of title 1
3 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
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.
"Revolver Loan" means a Line of Credit Loan which converts to a Term Loan after
(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.