Or. Admin. R. 123-017-0035 - Loan Agreement
If the Finance Committee approves the business development project, the Finance Committee or the Director, on behalf of the state, and the borrower may enter into a loan contract of not more than $2,000,000, secured by good and sufficient collateral (except as noted in OAR 123-017-0030(1)(c)), as determined by the Finance Committee, that shall set forth, among other matters:
(1) A plan for repayment by
the borrower to the Oregon Business Development Fund moneys borrowed from the
Fund used for the business development project with interest charged on those
moneys at the fixed rate of one percentage point more than the prevailing
interest rate on United States Treasury bills, notes or bonds of a comparable
maturity. Loans made from the Oregon Targeted Development Account shall be made
at a fixed interest rate of four percentage points less than the prevailing
prime rate. Loans made under the conditions of OAR 123-0017-0015(10) shall be
made at a fixed interest rate of not less than five percentage points over the
prevailing prime rate. The rate on any loan shall not be less than four
percent. For the purposes of this section, the prevailing interest rate shall
be the last published daily interest rate as set forth in the most recent
Federal Reserve Statistical Release H.15(519) that the Department has received
at the time the loan is approved. The repayment plan, among other matters:
(a) Shall provide for commencement of
repayment by the applicant of moneys used for the business development project
and interest thereon no later than one year after the date of the loan contract
or at such other time as the Finance Committee may provide;
(b) May provide for reasonable extension of
the time for making any repayment in emergency or hardship circumstances if
approved by the Finance Committee or the Director;
(c) Shall provide for such evidence of debt
assurance of, and security for, repayment of the loan as is considered
necessary by the Finance Committee;
(d) Shall set forth a schedule of payments
and the period of loan which shall not exceed the usable life of the contracted
project or 25 years from the date of the contract, whichever is less. The
payment schedule shall include repayment of interest that accrues during any
period of delay in repayment authorized by subsection (a) of this section, and
the payment schedule may require payments of varying amounts for collection of
accrued interest. The term of the Fund loan will normally be matched to, and
not exceed twice that of, the commercial or private lender participating in the
project, if applicable. Loans from the Oregon Targeted Development Account
shall be for a maximum term of 5 years, with a maximum amortization of 15
years. Loans made under the terms of OAR 123-017-0015(10) shall be for a
maximum term of 5 years, with a maximum amortization of 20 years.
(e) A request to renew any loan from the Fund
that has reached its scheduled maturity and has not been repaid in full may be
approved by the Finance Committee (or Director if the principal balance does
not exceed $250,000), with any additional terms and conditions, including
interest rate, that it may determine. A new application, including an
application fee and supporting documentation, are required to initiate review
of the request.
(f) Shall set forth
a procedure for formal declaration of delinquency or default of payment by the
Department. Loans shall be declared delinquent when any payment is more than
ten days late. Borrower shall be notified in writing of declaration of
delinquency, and shall have 31 days from the original payment date to bring the
loan current. If the loan is not brought current, or arrangements satisfactory
to the Department for bringing the loan current have not been made, the
Department may declare the loan in default, declare the entire outstanding
indebtedness to be forthwith due and payable and assign the loan to the
Attorney General for collection; The Finance Committee or the Director or their
designee is authorized to approve any modification of terms on a loan that is
delinquent or in default as deemed necessary or prudent to most likely effect
repayment of the loan to the Fund.
(2) Provisions satisfactory to the Department
for field engineering and inspection, the Department to be the final judge of
completion of the contract.
(3)
That the liability of the state under the contract is contingent upon the
availability of moneys in the Oregon Business Development Fund for use in the
business development project.
(4)
Such further provisions as the Finance Committee considers necessary to ensure
expenditure of the funds for the purposes set forth in the approved
application.
(5) That the borrower
is responsible for payment of:
(a) All of the
expenses of the operation and maintenance of the project, including adequate
insurance;
(b) All taxes and
special assessments levied with respect to the leased premises and payable
during the term of the lease;
(c)
Insurance premiums and providing insurance in amount and coverage acceptable to
the Finance Committee. Such insurance shall include but shall not be limited
to: fire and hazard insurance, liability insurance and flood insurance (if
applicable); and
(d) Out-of-pocket
costs associated with the loan closing which may include but are not limited to
filing and recording fees, title insurance and appraisals, and attorney
fees.
(6) That the
borrower will provide to the Department on an annual basis, within 120 days of
the end of its fiscal year, the same type of financial statements as required
by the participating bank. The Finance Committee or the Department may require
additional financial information.
(7) The Finance Committee, or Director for
loans under $250,000, may require an assignment of life insurance on active
principals in borrower.
(8) The
Department, at its sole discretion, may require the execution of a Commitment
Letter and receipt of a non-refundable Commitment Fee to secure resources
necessary to fund the loan. The Commitment Fee will be applied at closing to
the loan fee. If the loan does not close, the Commitment Fee will not be
refunded.
(9) In the case of loans
of more than $100,000 that are funded by proceeds from the Oregon Lottery, that
the borrower shall make a good faith effort to hire and retain low-income
individuals who have received job training assistance from publicly funded job
training providers and enter into a first-source hiring agreement with a
publicly funded job training provider.
(10) If the loan will result in the
construction, expansion, rehabilitation or remodeling of a facility to which
the public has access, adequate access for handicapped persons must be
provided. This provision applies only to firms that deal directly with the
general public in the normal and usual course of their business, and to
facilities in which business is customarily transacted by and with members of
the general public.
(11) If a
project involves building construction, expansion, rehabilitation or
modification, a loan from the fund shall be permanent and not interim
financing.
Notes
Statutory/Other Authority: ORS 285A.075
Statutes/Other Implemented: ORS 285B.062 & 285B.092
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