§ 5-540
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/md/economic-development/5-540A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
§5–540.
(1)The Authority may use the Fund to guarantee up to 80% of the principal of and interest on a long–term loan made by a financial institution to an applicant only if:
(i)the applicant meets the requirements under § 5–541 of this subtitle and has not violated § 5–545 of this subtitle;
(ii)the loan amount is $5,000 or more and the maximum amount payable by the Authority under the guaranty does not exceed $2,000,000;
(iii)the loan is used for:
1. working capital;
2. refinancing the applicant’s existing debt;
3. acquisition and installation of equipment;
4. making necessary improvements to real property that the applicant leases or owns in fee simple; or
5. acquiring real property that the applicant will own in fee simple if the property is to be used in the applicant’s trade or business for which the guaranty is sought and the financial institution or the Authority places a lien on the property;
(iv)the loan matures within 10 years after the closing date of the loan; and
(v)the interest rate does not exceed the monthly weighted average of the prime lending rate prevailing in Baltimore City on unsecured commercial loans, plus 2%, as determined by the Authority.
(2)The Authority may authorize the provision of a guaranty under this section in the following forms:
(i)an irrevocable letter of credit;
(ii)an official treasurer’s check;
(iii)funds on deposit in an escrow or other depository account; or
(iv)any other legal instrument promising a financial institution restitution or reimbursement for its loan losses, within the limits of the guaranty.
(3)Any terms and conditions governing the instruments described under paragraph
(2)of this subsection may not be so onerous as to discourage the financial institution from offering the loan.
(i)The Authority may only approve a guaranty under this section if the Authority determines that the loan to be guaranteed will have a substantial economic impact.
(ii)To determine the economic impact of a loan, the Authority may consider:
1. the amount of the guaranty obligation;
2. the terms of the loan to be guaranteed;
3. the number of new jobs that the loan will create; and
4. any other factor that the Authority considers relevant.
(1)In addition to a loan guaranty, the Authority may provide an interest subsidy for the benefit of the applicant.
(2)The subsidy:
(i)may be for the life of the loan;
(ii)may not exceed 4%;
(iii)shall be payable quarterly; and
(iv)shall be made to the financial institution that makes the loan that the Authority guarantees.
(i)The subsidy may not exceed the difference between:
1. the interest rate on the guaranteed loan; and
2. the discount interest rate that the Federal Reserve Bank uses.
(ii)The interest rate may not exceed the monthly weighted average of the prime lending rate that prevails in Baltimore City on unsecured commercial loans, as the Authority determines as of the date of closing, plus 2%.
(4)The subsidy may not be paid during any period in which the loan is in default.
(c)In providing financial assistance under this section, the Authority shall recognize the need to serve applicants from all political subdivisions in the State.