17-6-407 . Microbusiness development loan account -- criteria -- limitations.
(1)(a) There is in the state special revenue fund a microbusiness development loan account into which funds allocated for that purpose and money received in repayment of the principal of development loans must be deposited.
(b)The department may make development loans from the account to a certified microbusiness development corporation.
(2)There is an economic development state special revenue account created in 90-1-205 in which the following money must be deposited:
(a)all interest received on development loans received directly from microbusiness development corporations;
(b)service charges or fees received from certified microbusiness development corporations;
(c)grants, donations, and private or publi
Free access — add to your briefcase to read the full text and ask questions with AI
17-6-407 . Microbusiness development loan account -- criteria -- limitations. (1) (a) There is in the state special revenue fund a microbusiness development loan account into which funds allocated for that purpose and money received in repayment of the principal of development loans must be deposited.
(b) The department may make development loans from the account to a certified microbusiness development corporation.
(2) There is an economic development state special revenue account created in 90-1-205 in which the following money must be deposited:
(a) all interest received on development loans received directly from microbusiness development corporations;
(b) service charges or fees received from certified microbusiness development corporations;
(c) grants, donations, and private or public income; and
(d) all interest earned on money in the account and interest earned on money in the account provided for in subsection (1)(a).
(3) Subject to subsection (1), a certified microbusiness development corporation that receives a development loan may apply for an additional loan if the applicant meets the performance criteria established by the department.
(4) To establish the criteria for making development loans, the department shall consider:
(a) the plan for providing services to microbusinesses;
(b) the scope of services to be provided by the certified microbusiness development corporation;
(c) the geographic representation of all regions of the state, including urban, rural, and tribal communities;
(d) the plan for providing service to minorities, women, and low-income persons;
(e) the ability of the corporation to provide business training and technical assistance to microbusiness clients;
(f) the ability of the corporation, with a plan, to:
(i) monitor and provide financial oversight of recipients of microbusiness loans;
(ii) administer a revolving loan fund; and
(iii) investigate and qualify financing proposals and to service credit accounts;
(g) sources and sufficiency of operating funds for the certified microbusiness development corporation; and
(h) the intent of the corporation, with a plan and written indications of local institutional support, to provide services to a designated multicounty region of the state.
(5) Development loan funds may be used by a certified microbusiness development corporation to:
(a) satisfy matching fund requirements for other state, federal, or private funding only if funding is intended and used for the purpose of providing or enhancing the certified microbusiness development corporation's ability to provide and administer loans, technical assistance, or management training to microbusinesses;
(b) establish a revolving loan fund from which the certified microbusiness development corporation may make loans to qualified microbusinesses, provided that a single loan does not exceed $100,000 and the outstanding balance of all loans to a microbusiness or a project participated in by more than one microbusiness or to two or more microbusinesses in which any one person holds more than a 20% equity share does not exceed $100,000;
(c) establish a guarantee fund from which the certified microbusiness development corporation may guarantee loans made by financial institutions to qualified microbusinesses. However, a single guarantee may not exceed $100,000, and the aggregate of all guarantees to a microbusiness or a project participated in by more than one microbusiness or to two or more microbusinesses in which any one person holds more than a 20% equity share may not exceed $100,000.
(6) Development loan funds may not be:
(a) loaned for relending or investment in stocks, bonds, or other securities or for property not intended for use in production by the recipient of the loan; or
(b) used to:
(i) refinance a nonperforming loan held by a financial institution; or
(ii) pay the operating costs of a certified microbusiness development corporation. However, interest income earned from the proceeds of a development loan may be used to pay operating expenses.
(7) Certified microbusiness development corporations are required to contribute cash from other sources to leverage and secure development loans from the program. Contributions provided by the corporation must be on a ratio of at least $1 from other sources for each $6 from the program. These contributions may come from a public or private source other than the program and may be in the form of equity capital, loans, or grants.
(8) Development loans must be made pursuant to a development loan agreement and may be amortization or term loans, bear interest at less than the market rate, be renewable, be callable, and contain other terms and conditions considered appropriate by the department and that are consistent with the purposes of and with rules promulgated to implement this part.
(9) Each certified microbusiness development corporation that receives a development loan under this part shall provide the department with an annual audit from an independent certified public accountant. The audit must cover all of the microbusiness development corporation's activities and must include verification of compliance with requirements specific to the microbusiness program.
(10) A certified microbusiness development corporation that is in default for nonperformance under rules established by the department may be required to refund the outstanding balance of development loans awarded prior to the default declaration. A development loan is secured by a first lien on all funds and all receivables administered under the authority of the microbusiness development act by the corporation receiving the loan.