Loan and Insurance Terms and Conditions
Interest rate and term. The rate of interest on the insured loan and the term of the loan shall be agreed between the financial institution and a borrower. The maximum term for insurance per borrower project is:
the lesser of fifteen (15) years or the useful life of the assets being financed or the useful life of the assets securing the loan for the Conventional Insurance, First Loss Insurance, or Collateral Support Insurance, or
one year plus four annual renewals for the Evergreen Entrants Insurance or Evergreen Plus Insurance.
Collateral. Repayment of an insured loan shall be secured by such collateral as the Department deems prudent.
Insured loans may, at the discretion of the Department, be secured by collateral valued for collateral purposes at less than the amount of the insured loan, provided the borrower, its principals, and the guarantors, to the satisfaction of the Department, are of good character, have good credit histories, and exhibit the ability to service the proposed and existing debt;
Real estate or unmovable machinery or equipment constituting a significant portion of collateral for an insured loan shall be located within the state. Mobile machinery or equipment, including vessels, constituting a significant portion of collateral for repayment of an insured loan shall be registered with and taxed by the state or municipal authorities, if the State or municipal authorities register or tax machinery or equipment of a type similar to the collateral, and shall be stored or berthed in the state when not in use.
The Department may, at its sole discretion, require independent collateral valuation and appraisal of the real property or other assets securing the loan.
Covenants. The covenants and requirements of the loan shall be established by the financial institution in accordance with prudent lending practices. The Department may require such additional covenants and requirements as may be necessary, prudent or desirable. At a minimum, the loan documents should require the borrower to:
Make periodic payments of principal and interest, with the exception of short term working capital loans or evergreen working capital loans or lines of credit where periodic interest payments with a balloon principal payment and/or term options may be acceptable, as determined by the Department;
Make any lease payments;
Maintain adequate insurance on collateral, and maintain books and records on the business;
Pay any taxes or governmental charges assessed against the collateral and comply with all applicable laws and regulations;
Keep the collateral free of liens and encumbrances except for as may be expressly accepted by the financial institution and Department;
Provide for periodic financial reports to the financial institution;
Pay advances necessary to protect the collateral and all expenses of protecting or enforcing the rights of the financial institution and Department.