3 Alaska Admin. Code § 102.080

Current through October 17, 2024
Section 3 AAC 102.080 - Conditions of guarantees
(a) In addition to the requirements of 3 AAC 102.020, the following conditions must be met in order for the authority to issue a guarantee:
(1) the loan must meet the requirements of AS 44.88.730(a)(1);
(2) the borrower must demonstrate the ability to repay the loan as required in AS 44.88.730(a)(3);
(3) the term of the loan may not exceed 10 years;
(4) the portion of the loan not guaranteed by the authority must be held by the originating financial institution or another institution approved by the authority; and
(5) loan guarantee must provide a benefit to the project, business, or nonprofit activity.
(b) The authority may provide a guarantee of up to 100 percent of a loan that qualifies under AS 44.88.700-44.88.799 and this chapter. The authority, in its discretion, shall determine the final percentage of the guarantee by evaluating the following:
(1) whether the application requirements of this chapter have been met;
(2) the applicant's credit rating;
(3) the economic and financial viability of the proposed project;
(4) the impact of the proposed guarantee on the $40,000,000 limit of AS 44.88.760;
(5) any other commercially reasonable underwriting criteria the authority determines to be pertinent to the application, the nature of the applicant or of the proposed project.
(c) The ratio of the guarantee to the outstanding principal of the loan may not increase over the term of the loan.
(d) The authority may guarantee the payment of interest on the guaranteed portion of a loan in the manner established by the authority in the loan guarantee authorization and loan guarantee agreement.
(e) The authority may not provide a guarantee of more than $20,000,000.
(f) The authority may not guarantee loans to refinance existing debt unless the refinancing
(1) is necessary to extend substantial debt payments over a longer period of time, thereby improving the project's or activity's net cash flow and working capital position consistent with the useful life of the assets being refinanced;
(2) assists with short-term debt or cash expenditures when lenders will not extend reasonable longer terms to the applicant; and
(3) creates additional economic opportunity or improves the viability of the project, business, or nonprofit activity other than just reducing the liability of the lender; or
(4) is necessary to place a permanent loan subsequent to an interim loan for financing of the project.
(g) A one-time guarantee fee of 150 basis points the principal amount guaranteed is due when the authority issues its guarantee to the financial institution.
(h) Payment of guarantees will come exclusively from reserves set aside by the authority for this purpose. The holders of a loan guarantee issued by the authority can look only to the reserves set aside by the authority for this purpose for payment of the guarantee and not to the general assets of the authority. The guarantee authorization shall expressly limit the liability of the authority as provided in this subsection. The authority will set aside reserves that are, in the judgment of the authority, adequate to cover outstanding guarantees. Upon request of an applicant or a financial institution holding a loan guarantee of the authority or proposing to make a loan that may be guaranteed by the authority, the authority will provide information as to the amount of the reserves set aside for this purpose.

3 AAC 102.080

Eff. 3/29/2013, Register 207; am 6/28/2018, Register 227, October 2018

Even though 3 AAC 102.080 was adopted and effective 3/29/2013, it was not published until Register 207, October 2013.

Authority:AS 44.88.085

AS 44.88.730

AS 44.88.770