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 related reasonable collection expenses and costs of any loan made by a private financial institution to any business that is or will be operating in the state, provided either that the loan is also guaranteed in part under a program administered by the United States Small Business Administration or that the loan is made in connection with another loan which is guaranteed in part under a program administered by the United States Small Business Administration. Such state guarantee may be up to 90 percent of the portion of the loan not guaranteed through the United States Small Business Administration, or in the case of a loan made in connection with another loan which is guaranteed in part under a program administered by the United States Small Business Administration, such state guarantee may be made up to 90 percent of the principal of such loan. The authority may execute and deliver any agreement or document required by the United States Small Business Administration to implement the guarantee program authorized in this section. The full faith and credit of the state may be pledged for any such guarantee. In addition, the guarantee shall also include interest and related reasonable collection expenses and costs and shall not cause the contingent credit limit under N.H. Rev. Stat. § 162-A:22 to be exceeded.
II. The state’s guarantee of a loan under this section shall be evidenced by a guarantee agreement entered into by the state, the lending financial institution, 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, appropriate controls on the requisition of loan proceeds by the borrower, 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. In addition, as a condition of awarding any guarantee, the state shall be subrogated to all of the rights and security of the lending financial institution 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 sum of the guarantees issued to any one borrower by both the authority and the United States Small Business Administration shall not exceed $1,500,000 of principal. The total principal amount of any loan or loans guaranteed under this section made to one borrower to finance working capital shall not exceed $1,500,000. In addition, the guarantee shall also include interest and related reasonable collection costs and expenses.
IV. The amount of any guarantee awarded under this section shall be reduced in proportion to any reduction in the principal balance of the loan.
V. The governor and council shall not award any state guarantee under this section unless after a hearing they have made the findings specified in N.H. Rev. Stat. § 162-A:18.