Md. Code Regs. 24.05.07.04

Current through Register Vol. 51, No. 21, October 18, 2024

Section 24.05.07.04 - Eligible Applicants

A. The Authority shall be satisfied that the following requirements to qualify for financial assistance have been met by applicants who are sole proprietors and by the owners of at least 70 percent of business enterprises that are not sole proprietorships:

(1) The applicant is of good moral character;

(2) As determined from creditors, employers, and other individuals who have personal knowledge of the applicant, the applicant has a reputation for financial responsibility;

(3) The applicant is a resident of Maryland or the applicant's principal place of business is in Maryland;

(4) The applicant is unable to obtain adequate business financing on reasonable terms through normal lending channels because the applicant:

(a) Belongs to a group that historically has been deprived of access to normal economic or financial resources because of race, color, creed, sex, religion, or national origin;

(b) Has an identifiable physical handicap that severely limits the ability of the applicant to obtain financial assistance, but does not limit the ability of the applicant to perform the contract or other activity for which the applicant would be receiving financial assistance;

(c) Has any other social or economic impediment that is beyond the personal control of the applicant, such as a lack of formal education or financial capacity or geographical or regional economic distress but that does not limit the ability of the applicant to perform the contract or other activity for which the applicant would be receiving financial assistance; or

(d) Does not meet the established credit criteria of at least one financial institution; and

(5) The applicant or owners of the applicant who qualify as socially or economically disadvantaged under §A(4) of this regulation actually control as well as own at least 70 percent of the business enterprise.

B. Establishing Eligibility.

(1) The applicant's owner may establish the economic impediment of lack of formal education under §A(4)(c) of this regulation by demonstrating that the applicant's owner has not achieved the type or level of academic or vocational training that in the Authority's determination is typical of business owners in the industry in which the applicant is operating.

(2) The applicant or owners of the applicant may establish the economic impediment of lack of financial capacity under §A(4)(c) of this regulation by demonstrating that the applicant or owners of the applicant do not have the collateral, working capital, positive credit history, or financial experience, training, or expertise that in the Authority's determination is typical of businesses that are able to obtain financing through normal channels.

(3) The applicant may establish the economic impediment of regional economic distress under §A(4)(c) of this regulation by demonstrating that the applicant is located or operates in areas defined as economically distressed by the State or federal government, or a local government, including:

(a) Designated Neighborhoods, as designated by the Department of Housing and Community Development pursuant to Article 83B, §4-202, Annotated Code of Maryland;

(b) Enterprise Zones, as designated by the Secretary pursuant to Article 83A, §5-401, Annotated Code of Maryland; and

(c) Empowerment Zones, as designated by the federal government pursuant to 26 U.S.C. § 1391.

(4) To qualify as economically disadvantaged under §A(4)(c) of this regulation, each applicant or owner shall have a net worth of $500,000 or less. Net worth is calculated deducting any interest in the business receiving financial assistance from the Authority, and any equity in real estate, including the applicant's or owner's primary personal residence, that is being used for collateral for the financial assistance from the Authority.

C. Applicants shall also meet the following requirements to qualify for financial assistance:

(1) Be in good standing and qualified to do business in Maryland;

(2) Have the legal capacity and all necessary legal authorization to incur the obligations of the financial assistance;

(3) Demonstrate creditworthiness and repayment capability acceptable to the Authority;

(4) For a direct loan, in the reasonable determination of the Authority, be unable to afford or secure private financing or to obtain other public or private sources of funds needed to perform the contract;

(5) For a guarantied loan, provide evidence that the applicant has applied for and been denied a loan for the same amount on similar terms by a financial institution;

(6) For an equity guaranty, show that the investor is not a person who:

(a) Previously held an equity investment in the applicant;

(b) Previously participated in the management of the applicant; or

(c) In any other manner is related to:

(i) The applicant, or

(ii) Any of its current stockholders, officers, or other management personnel;

(7) Demonstrate the capacity to manage the business enterprise for which financial assistance is sought.

Md. Code Regs. 24.05.07.04

Regulation .04 amended effective February 18, 2002 (29:3 Md. R. 223)