2.2-2288 - Power to issue bonds to purchase ninety percent guaranteed portion of loans.
§ 2.2-2288. Power to issue bonds to purchase ninety percent guaranteedportion of loans.
In addition to and not as a limitation upon the powers to issue bonds aselsewhere expressed in this article, the Authority may, with proceeds of anissue of its bonds, participate with lenders in making or purchasing smallbusiness loans, not exceeding as to any one such loan one million dollars inprincipal amount, to be serviced by such lenders, provided that:
1. The Authority's share shall not exceed ninety percent of the totalprincipal amount of any such loan, and such participation shall be payablewith interest at the same times, but not necessarily at the same interestrate, as the share of the lender, and both shares shall be equally andratably secured by a valid mortgage on, or security interest in, real orpersonal property or by any other security satisfactory to the Authority tosecure payment of the loan; however, the Authority's share of any such loanmay equal 100 percent of the total principal amount of the small businessloan if the lender participating in the making or purchasing of such smallbusiness loan by servicing the loan, purchases 100 percent of the totalamount of the bonds issued by the Authority in connection with or allocableto such small business loan;
2. The total principal amount of the Authority's share shall not exceedninety percent of the value of the property securing the small business loan,unless the amount in excess of ninety percent is:
a. Loaned from available funds that are not proceeds received directly fromthe sale of the Authority's bonds and are not restricted under the terms ofthe resolution authorizing, or the indenture securing such bonds, or
b. Insured or guaranteed by a federal agency or by a private insurerqualified to write such insurance in the Commonwealth, insuring a percentageof any claim for loss at least equal to that percentage of the value by whichthe small business loan exceeds ninety percent thereof;
3. The value of the property securing the small business loan is certified bythe participating lender, on the basis of such appraisals, bids, purchaseorders, and engineers' certificates as the Authority may require; providedthat the value of items purchased and constructed from the proceeds of thesmall business loan shall not be deemed, for purposes of this section, toexceed the contract price in respect of purchase or construction;
4. The Authority shall not disburse funds under a commitment to participatein a small business loan for the construction or substantial improvement ofproperty until the construction or improvement has been completed, unless alender furnishes an irrevocable letter of credit or a qualified corporatesurety furnishes payment and performance bonds, in either event satisfactoryto the Authority and in an aggregate amount equal to the cost of suchconstruction or improvement;
5. No other indebtedness may be secured by a mortgage on, or securityinterest in, property securing a small business loan made or purchasedpursuant to this subdivision without the prior express written authorizationof the Authority; and
6. The participating lender agrees to use the proceeds of the small businessloan to lend to eligible small businesses in the Commonwealth.
(1984, c. 749, § 9-209; 2001, c. 844.)