Tenn. Comp. R. & Regs. 0680-01-.13 - MONETARY LIMITATIONS
(1) Generally, the
monetary limitation placed on a classification of a license may be determined
as follows:
(a) For applicants having no
apparent deficiency with respect to plant or equipment, the lesser of:
1. Ten (10) times the applicant's net worth;
or
2. Ten (10) times the
applicant's working capital. Accounts receivable that are more than three (3)
months overdue may not be included within the calculation of working
capital.
(b) At the
Board's discretion, renewal applicants having no apparent deficiency with
respect to plant or equipment, but with limited working capital, the greater
of:
1. Ten (10) times the applicant's working
capital; or
2. Fifty percent (50%)
of the applicant's net worth.
(c) For other applicants, a lesser amount
reflecting the degree of lack of plant or equipment.
(2) Lines of credit and indemnities (on forms
furnished by the Board) may be considered to raise a monetary limitation. Lines
of credit may be added up to its full value to the working capital. Credit for
indemnities will be limited to fifty percent (50%). However, if the applicant
has a negative working capital, lines of credit will be recognized at fifty
percent (50%) of value.
(3) A
Guaranty Agreement, line of credit, bond, or other indemnity may be required in
addition to the financial statement in the following situations,
(a) Applicants that have a primarily cash
financial statement without fixed assets and;
(b) If an applicant company is completely or
partly owned by a parent company then the Board may require the parent company
to provide a financial statement along with a "Guaranty Agreement" in which the
parent company agrees to guarantee the debts and obligations of the subsidiary
company for all debts and obligations arising out of the contracting activities
of the applicant. If the parent company cannot provide a "Guaranty Agreement"
they may request the board to consider a bond in the Board's format. This bond
would not be accepted in lieu of providing a financial statement.
(4) A Guaranty Agreement may be
utilized when an applicant wishes to supplement the working capital and/or net
worth portion of their financial statement. The guarantor must submit a
personal financial statement with a personal guaranty agreement.
(5) The Board reserves the right to accept or
decline Guaranty Agreements as a supplement to applicant financial statements
depending on the individual circumstances of each application.
(6) If a guarantor's spouse is named on the
financial statement submitted with the Guaranty Agreement then the named spouse
must also sign the Guaranty Agreement.
(7) All Guaranty Agreements shall expire on
the same date as the license that the agreement was provided to
support.
(8) Subject to such
tolerance, no contractor shall engage, or offer to engage, in any project of
which the cost (including all material and labor furnished by or through
another source other than the owner) would exceed the monetary limitation
placed on his license. If a contractor holds a license with more than one
classification with different monetary limits, the monetary limits shall not be
combined to bid a project.
(a) A tolerance of
ten percent (10%) of the monetary limit is allowed, except for the BC-A/r
licensees.
(9) Where an
applicant can demonstrate having a minimum working capital and net worth of
three hundred thousand dollars ($300,000) or more, the Board may, in its
discretion, award the applicant an unlimited license, allowing the contractor
to bid or offer to contract on any project within a classification the
contractor is licensed of any size that the contractor can financially
support.
Notes
Authority: T.C.A. ยงยง 62-6-108, 62-6-111, and 62-6-116.
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