15 USC 696 – Loans for plant acquisition, construction, conversion and expansion
The Administration may, in addition to its authority under section 695 of this title, make loans for plant acquisition, construction, conversion or expansion, including the acquisition of land, to State and local development companies, and such loans may be made or effected either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis: Provided, however, That the foregoing powers shall be subject to the following restrictions and limitations:
Terms Used In 15 USC 696
- Administration: means the Small Business Administration. See 15 USC 662
- Administrator: means the Administrator of the Small Business Administration. See 15 USC 662
- Appraisal: A determination of property value.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- development companies: means enterprises incorporated under State law with the authority to promote and assist the growth and development of small-business concerns in the areas covered by their operations. See 15 USC 662
- Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. Source: OCC
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- State: includes the several States, the territories and possessions of the United States, the Commonwealth of Puerto Rico, and the District of Columbia. See 15 USC 662
(1)
(2)
(A)
(i) $5,000,000 for each small business concern if the loan proceeds will not be directed toward a goal or project described in clause (ii), (iii), (iv), or (v);
(ii) $5,000,000 for each small business concern if the loan proceeds will be directed toward 1 or more of the public policy goals described under section 695(d)(3) of this title;
(iii) $5,500,000 for each project of a small manufacturer;
(iv) $5,500,000 for each project that reduces the borrower’s energy consumption by at least 10 percent; and
(v) $5,500,000 for each project that generates renewable energy or renewable fuels, such as biodiesel or ethanol production.
(B)
(i) the primary business of which is classified in sector 31, 32, or 33 of the North American Industrial Classification System; and
(ii) all of the production facilities of which are located in the United States.
(3)
(A)
(B)
(i)
(I) State or local governments;
(II) banks or other financial institutions;
(III) foundations or other not-for-profit institutions; or
(IV) the small business concern (or its owners, stockholders, or affiliates) receiving assistance through a body authorized by this subchapter.
(ii)
(C)
(i) at least 15 percent of the total cost of the project financed, if the small business concern has been in operation for a period of 2 years or less;
(ii) at least 15 percent of the total cost of the project financed if the project involves the construction of a limited or single purpose building or structure;
(iii) at least 20 percent of the total cost of the project financed if the project involves both of the conditions set forth in clauses (i) and (ii); or
(iv) at least 10 percent of the total cost of the project financed, in all other circumstances, at the discretion of the development company.
(D)
(E)
(i)
(ii)
(I) In general.—With respect to commercial real property provided by the small business concern as collateral, an appraisal of the property by a State licensed or certified appraiser—
(aa) shall be required by the Administration before disbursement of the loan if the estimated value of that property is more than the Federal banking regulator appraisal threshold; or
(bb) may be required by the Administration or the lender before disbursement of the loan if the estimated value of that property is equal to or less than the Federal banking regulator appraisal threshold, and such appraisal is necessary for appropriate evaluation of creditworthiness.
(II) Federal banking regulator appraisal threshold defined.—For purposes of this clause, the term “Federal banking regulator appraisal threshold” means the lesser of the threshold amounts set by the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation for when a federally related transaction that is a commercial real estate transaction requires an appraisal prepared by a State licensed or certified appraiser.
(4) If the project is to construct a new facility, up to 33 per centum of the total project may be leased, if reasonable projections of growth demonstrate that the assisted small business concern will need additional space within three years and will fully utilize such additional space within ten years.
(5)
(6)
(7)
(A)
(B)
(i) the proceeds of the indebtedness were used to acquire land, including a building situated thereon, to construct a building thereon, or to purchase equipment;
(ii) the existing indebtedness is collateralized by fixed assets;
(iii) the existing indebtedness was incurred for the benefit of the small business concern;
(iv) the financing under this subchapter will be used only for refinancing existing indebtedness or costs relating to the project financed under this subchapter;
(v) the financing under this subchapter will provide a substantial benefit to the borrower when prepayment penalties, financing fees, and other financing costs are accounted for;
(vi) the borrower has been current on all payments due on the existing debt for not less than 1 year preceding the date of refinancing; and
(vii) the financing under section 697a of this title will provide better terms or rate of interest than the existing indebtedness at the time of refinancing.
(C)
(i)
(I) the term “borrower” means a small business concern that submits an application to a development company for financing under this subparagraph;
(II) the term “eligible fixed asset” means tangible property relating to which the Administrator may provide financing under this section; and
(III) the term “qualified debt” means indebtedness—
(aa) that was incurred not less than 6 months before the date of the application for assistance under this subparagraph;
(bb) that is a commercial loan;
(cc) the proceeds of which were used to acquire an eligible fixed asset;
(dd) that was incurred for the benefit of the small business concern; and
(ee) that is collateralized by eligible fixed assets.
(ii)
(I) the amount of the financing is not more than 90 percent of the value of the collateral for the financing, except that, if the appraised value of the eligible fixed assets serving as collateral for the financing is less than the amount equal to 125 percent of the amount of the financing, the borrower may provide additional cash or other collateral to eliminate any deficiency;
(II) the borrower has been in operation for all of the 2-year period ending on the date the loan application is submitted; and
(III) for a financing for which the Administrator determines there will be an additional cost attributable to the refinancing of the qualified debt, the borrower agrees to pay a fee in an amount equal to the anticipated additional cost.
(iii)
(I)
(II)
(aa) a specific description of the expenses for which the additional financing is requested; and
(bb) an itemization of the amount of each expense.
(III)
(iv)
(I)
(aa)
(bb)
(II)
(aa) the number of full-time employees of the borrower on the date on which the borrower applies for a loan under this subparagraph; and
(bb) the product obtained by multiplying—
(AA) the number of part-time employees of the borrower on the date on which the borrower applies for a loan under this subparagraph, by
(BB) the quotient obtained by dividing the average number of hours each part time employee of the borrower works each week by 40.
(v)