§ 835-20

Illinois § 835-20

• Jurisdiction: Illinois
• Topic: GOVERNMENT
• Ch. 20: EXECUTIVE BRANCH
• Act 20 ILCS 3501/: Illinois Finance Authority Act.
• Art.: Article 835 - Veterans Assistance

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State Guarantees for loans to qualified veteran-owned small businesses. (a) The Authority is authorized to issue State Guarantees to lenders for loans to qualified veteran-owned small businesses for the general corporate purposes of those qualified veteran-owned small businesses. Lenders shall apply for the State Guarantees on forms provided by the Authority, certify that the application and any other documents submitted are true and correct, and pay an administrative fee as determined by the Authority. The applicant shall be responsible for paying any fees or charges involved in recording mortgages, releases, and financing statements, and any other similar fees or charges as the Authority may require. The application shall, at a minimum, contain the name, address, present credit and financial information, including cash flow statements, financial statements, and balance sheets, of the qualified veteran-owned small business, any other information pertinent to the application, and the collateral to be used to secure the State Guarantee. In addition, the lender must agree to charge an interest rate, which may vary, on the loan that the Authority determines to be below the market rate of interest generally available to the borrower. If both the lender and applicant agree, the interest rate on the loan subject to a State Guarantee can be converted to a fixed interest rate at any time during the term of the loan. Any State Guarantees provided under this Section shall (i) not exceed $500,000 per qualified veteran-owned small business, (ii) not exceed a term of 15 years, and (iii) be subject to an annual review and renewal by the lender and the Authority; provided that only one such State Guarantee shall be made per qualified veteran-owned small business, except that additional State Guarantees may be made for purposes of expansion of projects financed in part by a previously issued State Guarantee. No State Guarantee shall be revoked by the Authority without a 90-day notice, in writing, to all parties. The lender shall not call due any loan for any reason except for lack of performance, insufficient collateral, or maturity. A lender may review and withdraw or continue with a State Guarantee on an annual basis after the first 5 years following closing of the loan application if the loan contract provides for an interest rate that does not vary. A lender shall not withdraw a State Guarantee if the loan contract provides for an interest rate that may vary, except for reasons set forth in this Section. (b) The Authority shall provide or renew a State Guarantee to a lender if: (1) a fee equal to 25 basis points on the loan is paid to the Authority on an annual basis by the lender; (2) the application provides collateral acceptable to the Authority that is at least equal to the State's portion of the Guarantee to be provided; (3) the lender assumes all responsibility and costs for pursuing legal action on collecting any loan that is delinquent or in default; and (4) the lender is responsible for the first 15% of the outstanding principal of the note for which the State Guarantee has been applied. (c) If, for any reason, the General Assembly fails to make an appropriation sufficient to meet the obligations under a State Guarantee, this Act shall constitute an irrevocable and continuing appropriation of an amount necessary to secure guarantees as defaults occur and the irrevocable and continuing authority for, and direction to, the State Treasurer and the Comptroller to make the necessary transfers to the Industrial Project Insurance Fund, the Illinois Agricultural Loan Guarantee Fund, or the Illinois Farmer and Agribusiness Loan Guarantee Fund, or any combination of those funds, as directed by the Governor, out of the General Revenue Fund. In the event of a default by the borrower on a loan subject to a State Guarantee under this Section, Section 830-30, Section 830-35, Section 830-45, Section 830-50, or Section 830-55, the lender shall be entitled to, and the Authority shall direct payment on, the State Guarantee after 90 days of delinquency. Payments by the Authority to satisfy claims against the State Guarantee shall be made, in whole or in part, from any of the following funds in such order and in such amounts as the Authority shall determine: (1) the Industrial Project Insurance Fund created under Article 805 of this Act (if the Authority exercises its discretion under subsection (j) of Section 805-20); (2) the Illinois Farmer and Agribusiness Loan Guarantee Fund; or (3) the Illinois Agricultural Loan Guarantee Fund. It shall be the responsibility of the lender to proceed with collecting and disposing of collateral on the State Guarantee under this Section within 14 months after the State Guarantee is declared delinquent. If the lender does not dispose of the collateral within that 14-month period, the lender shall be liable to repay to the State interest on the State Guarantee at a rate equal to the same rate that the lender charges on the State Guarantee, provided that the Authority shall have the authority to extend the 14-month period for a lender in the case of bankruptcy or extenuating circumstances. The applicable fund or funds shall be reimbursed for any amounts paid under this Section, Section 830-30, Section 830-35, Section 830-45, Section 830-50, or Section 830-55 upon liquidation of the collateral. The Authority, by resolution of the Board, may borrow sums from a fund or funds and provide for repayment as soon as may be practical upon receipt of payments of principal and interest by a borrower on loans subject to a State Guarantee under this Section, Section 830-30, Section 830-35, Section 830-45, Section 830-50, or Section 830-55. Money may be borrowed from the Fund by the Authority for the sole purpose of paying certain interest costs for borrowers associated with selling a loan subject to a State Guarantee under this Section, Section 830-30, Section 830-35, Section 830-45, Section 830-50, or Section 830-55 in a secondary market as may be deemed reasonable and necessary by the Authority. (d) Notwithstanding the provisions of this Section with respect to the qualified veteran-owned small businesses and lenders who may obtain State Guarantees, the Authority may adopt rules establishing the eligibility of qualified veteran-owned small businesses and lenders to participate in the State Guarantee program and the terms, standards, and procedures that will apply, if the Authority finds that emergency conditions in Illinois have created the need for State Guarantees pursuant to terms, standards, and procedures other than those specified in this Section.

Legislative History

(Source: P.A. 99-509, eff. 6-24-16 .)