Section 162-A:7-a Guarantee of Loans to Local Development Organizations.
I. Upon recommendation of the authority for the proper implementation of the declared purposes of this chapter, the governor and council may award a state guarantee of the principal of, interest on, and reasonable collection expenses related to, loans to local development organizations which provide new private capital for business loan funds and meet the requirements set forth in this section. Such state guarantee shall not at any time exceed 80 percent of the maximum principal amount that may be borrowed under the terms of the loan, plus interest and related reasonable collection expenses with respect to such loan. The full faith and credit of the state shall be pledged for any such guarantee, but the total outstanding amount of principal guaranteed by the state under this section shall not exceed, in the aggregate at any time, $3,000,000, nor shall the guarantee cause the contingent credit limit of RSA 162-A:22 to be exceeded. The authority shall establish appropriate guidelines to insure that the guarantee is used to capitalize loan funds that serve the most economically distressed areas of the state.
II. The state's guarantee of a loan under this section shall be evidenced by a guarantee agreement entered into by the state, the lender, and the borrower. Such guarantee agreement shall contain such terms and conditions as the authority and the governor and council may impose, including, without limitation, restrictions on the use of loan proceeds, restrictions on the use and operation of any project financed or assisted by the loan, provisions for the state to demand acceleration of the payment of the loan in the event of a default by the borrower, provisions for payment to the authority of guarantee fees and reimbursement of costs and expenses, provisions for reimbursement of the state if the state is required to honor the guarantee, appropriate financial covenants, and provisions for the establishment of reserves. The guarantee agreement shall specifically require that the proceeds of a guaranteed loan shall be used by the local development organization only to make loans to businesses within a particular locale or region of the state. In addition, as a condition of awarding any guarantee, the state shall be subrogated to all of the rights and security of the lender to the extent it honors the guarantee. Any guarantee agreement authorized in accordance with this section shall be executed on behalf of the state by the chairperson, vice chairperson, or executive director of the authority. The governor, with the advice and consent of the council, is authorized to draw a warrant for such sum as may be necessary out of money in the state treasury not otherwise appropriated, for the purpose of honoring any guarantee awarded under this section.
III. The amount payable under a guarantee awarded under this program may be based upon the percentage of the maximum principal amount available under the loan, and as may be determined by the authority, need not be reduced in proportion to any reduction in the principal balance of the loan.
IV. The governor and council shall not award or renew any state guarantee under this section unless after a hearing they have made the findings specified in RSA 162-A:18.
Source. 2000, 10:1, eff. July 1, 2000.