CFR Subpart D

CFR Subpart D
in effect

13 C.F.R. § 109.400 Eligible Small Business Concerns.

(a) To be eligible to receive loans from an ILP Intermediary under this program, a small business must: (1) Be organized for profit; (2) Be located in the U.S.; (3) Be small under the size requirements applicable to 7(a) business loans (including Affiliates); (4) Be a startup, newly established, or growing small business; (5) Together with Affiliates and principal owners, not have credit elsewhere; and (6) Be creditworthy and demonstrate reasonable assurance of repayment of the loan. (b) The following types of businesses are not eligible to receive a loan from an ILP Intermediary under this program: (1) Nonprofit businesses (for-profit subsidiaries are eligible); (2) Financial businesses primarily engaged in the business of lending; (3) Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds; (4) Life insurance companies; (5) Businesses located in a foreign country; (6) Pyramid sale distribution plans; (7) Businesses deriving more than one-third of gross annual revenue from legal gambling activities; (8) Businesses engaged in any illegal activity; (9) Private clubs and businesses which limit the number of memberships for reasons other than capacity; (10) Government-owned entities (except for businesses owned or controlled by a Native American tribe); (11) Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting; (12) [Reserved] (13) Loan packagers earning more than one third of their gross annual revenue from packaging SBA loans; (14) Businesses in which the ILP Intermediary or any of its Associates owns an equity interest; (15) Businesses with an Associate who is currently incarcerated, serving a sentence of imprisonment imposed upon adjudication of guilty, or is under indictment for a felony or a crime of moral turpitude; (16) Businesses which: (i) Present live performances of a prurient sexual nature; or (ii) Derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature; (17) Businesses that have previously defaulted on a Federal loan or Federally assisted financing, resulting in the Federal government or any of its agencies or Departments sustaining a loss in any of its programs, and businesses owned or controlled by an applicant or any of its Associates which previously owned, operated, or controlled a business which defaulted on a Federal loan (or guaranteed a loan which was defaulted) and caused the Federal government or any of its agencies or Departments to sustain a loss in any of its programs. For purposes of this section, a compromise agreement shall also be considered a loss unless the agreement provides otherwise; (18) Businesses primarily engaged in political or lobbying activities; and (19) Speculative businesses (such as oil wildcatting); (20) Businesses located in a Coastal Barrier Resource Area (as defined in the Coastal Barriers Resource Act); (21) Businesses owned or controlled by an applicant or any of its Associates who are more than 60 days delinquent in child support under the terms of any administrative order, court order, or repayment agreement; (22) Businesses in which any Associate is an undocumented (illegal) alien; or (23) Businesses owned or controlled by an applicant or any of its Associates who are presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation by any Federal department or agency.

13 C.F.R. § 109.410 Loan limits—loans to Eligible Small Business Concerns.

No small business (including Affiliates) may have more than $200,000 outstanding under this program at one time. The provisions of § 120.151 do not apply to loans under this program.

13 C.F.R. § 109.420 Terms of loans from ILP Intermediaries to Eligible Small Business Concerns.

(a) General. The terms of a loan made by the ILP Intermediary to an Eligible Small Business Concern must be agreed to by the ILP Intermediary and the Eligible Small Business Concern. The loan terms must be within the limits established by SBA in these regulations. (b) Maximum loan size. The maximum amount of a loan by the ILP Intermediary to an Eligible Small Business Concern under this program is $200,000. (c) Maturity. The term of a loan by the ILP Intermediary to an Eligible Small Business Concern under this program must be the shortest appropriate term. The maximum loan term is 10 years or less, unless the loan finances or refinances real estate or equipment with a useful life exceeding ten years, in which case the maximum loan term is 25 years. (d) Interest rate. The maximum interest rate the ILP Intermediary may charge for loans less than or equal to $50,000 is 8.75 percent. The maximum interest rate the ILP Intermediary may charge for loans greater than $50,000 is 7%. SBA may adjust the maximum interest rates from time to time; SBA will publish any such change by Notice in the Federal Register. Changes to the maximum interest rate do not apply to loans made to Eligible Small Business Concerns prior to publication of the change in the Federal Register. (e) Fees. The ILP Intermediary must not impose any fees or direct costs on an Eligible Small Business Concern, except for the following allowed fees or direct costs: (1) Necessary out-of-pocket expenses, such as filing or recording fees; (2) The reasonable direct costs of any liquidation; (3) A late payment fee not to exceed 5 percent of the scheduled loan payment; and (4) Reasonable application and origination fees, subject to a maximum total fee cap of 1 percent of the amount of the loan to the Eligible Small Business Concern. SBA may adjust the maximum total fee cap from time to time; SBA will publish any such change by Notice in the Federal Register.

13 C.F.R. § 109.430 Loan purposes.

(a) An Eligible Small Business Concern may only use the proceeds of a loan under this program for the following purposes: (1) Working capital; (2) Real estate (except for real estate acquired and held primarily for sale, lease, or investment); and (3) The acquisition of materials, supplies, furniture, fixtures, or equipment. (b) Revolving lines of credit are permitted. However, if, at any time, SBA determines that the ILP Intermediary's operation of revolving lines of credit is causing excessive risk of loss for the intermediary or the Government, the AA/CA or designee may terminate the ILP Intermediary's authority to use the ILP Relending Fund proceeds for revolving lines of credit. Such termination will be by written notice and will prevent the ILP Intermediary from approving any new lines of credit or extending any existing revolving lines of credit beyond the effective date of termination contained in the notice.

13 C.F.R. § 109.440 Requirements imposed under other laws and orders.

Loans made by the ILP Intermediary under this program must comply with all applicable laws, including §§ 120.170 (Flood insurance), 120.172 (Flood-plain and wetlands management), 120.173 (Earthquake hazards), and the civil rights laws (see parts 112, 113, 117, and 136 of this chapter) prohibiting discrimination on the grounds of race, color, national origin, religion, sex, marital status, disability or age.

13 C.F.R. § 109.450 SBA review of ILP Intermediary loans to Eligible Small Business Concerns.

(a) Review restrictions. SBA does not review loans made by an ILP Intermediary under this program before approval of the loan by the ILP Intermediary. The ILP Intermediary is responsible for all loan decisions regarding eligibility (including size). (b) Subsequent review. SBA will periodically review loans made by an ILP Intermediary after approval of the loan by the ILP Intermediary as part of the on-site and off-site reviews described in § 109.510. If SBA discovers that an ILP Intermediary has made a loan under this program to an ineligible business or for an ineligible purpose, SBA will require the ILP Intermediary to refinance the ineligible loan with non-ILP program funds and to deposit into its ILP Relending Fund an amount equal to the outstanding principal balance on the ineligible loan.

13 C.F.R. § 109.460 Prohibition on sales of ILP Intermediary Loans to Eligible Small Business Concerns.

An ILP Intermediary may not sell all or any portion of a loan made to an Eligible Small Business Concern without prior written consent from the AA/CA or designee.

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