AUTHORITY: Implementing Section 46.19a and authorized by Section 46.40(b) of the Civil Administrative Code of Illinois (Ill. Rev. Stat. 1989, ch. 127, par. 46.19a and Ill. Rev. Stat. 1989, ch. 127, par. 46.40(b)).

SOURCE: Adopted at 9 Ill. Reg. 2256, effective February 6, 1985; amended at 9 Ill. Reg. 15829, effective October 9, 1985; amended at 15 Ill. Reg. 973, effective January 11, 1991.

SUBPART A: TECHNOLOGY CENTER PROGRAM

 

Section 540.10  Purpose of Program (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 15829, effective October 9, 1985)

 

Section 540.20  Definitions

 

            Act – Public Act 83-1349, effective September 8, 1984 (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a), which creates the Technology Innovation and Commercialization Program.

 

            Application – A request for program funds including the required statistical and narrative information and attachments.

 

            Department – The Illinois Department of Commerce and Community Affairs.

 

            Financial Aid – Grant to business wherein the Department requires repayment.

 

            Grant – Funds provided from the Department through this program.

 

            Grant Award – Contractual agreement between the Department and recipient, which includes the scope of work to be provided, the budget, and all terms and conditions of the contact.

 

            Nonexpendable Personal Property – Tangible personal property having a useful life of more than one year and an acquisition cost of $300 or more per unit.

 

            Program – The Technology Commercialization Grant-In-Aid Program.

 

            Program Income – Earnings by the recipient realized from grant supported activities.

 

            Project – An activity or activities funded under this program.

 

            Recipient – Any eligible applicant receiving funds under this program.

 

(Source:  Amended at 9 Ill. Reg. 15829, effective October 9, 1985)

 

Section 540.30  Program Responsibilities

 

a)         Responsibilities of the Department of Commerce and Community Affairs - The Department is to establish a program of grants to universities, community colleges, research institutions, research consortia, other not-for-profit entities, and Illinois Business for the purpose of fostering research and development in High Technology and the service sector leading to the development of new products and services that can be marketed by Illinois Businesses (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a(2)).

 

b)         Responsibilities of the Technology Commercialization Grants-In-Aid Council - 

 

1)         There is created an advisory council responsible for:

 

A)        Reviewing and evaluating all applications received by the Department; and

 

B)        Assisting in monitoring the projects and in evaluating the impact of the program on technological innovation and Business Development within the State (Ill. Rev. Stat. 1984, Supp., ch. 127, par. 46.19a(3)).

 

2)         Members of the Council and the Chair of the Council shall be selected in accordance with the Act.

 

(Source:  Amended at 9 Ill. Reg. 15829, effective October 9, 1985)

 

Section 540.40  Application Package

 

a)         Upon request, the Department will supply applicants with an application package.  Public notice of the availability of grants and the application due date will be published in the State recognized newspaper. Applications will be due no later than sixty days after the public notice.

 

b)         The Department will not accept an application addressing more than one proposal or category of grant activities as specified in Section 540.60 from any organization or institution.  Individual applications must be submitted for each proposal under each category.

 

c)         Applications will address the following items:

 

1)         Activities and Services – Each applicant must identify services and activities to be delivered which are designed to create jobs by fostering development of new products and services and the development of new businesses.

 

2)         Delivery Systems – The applicant must design delivery mechanisms, for example, individual case handling, referral services, seminars and conferences, special reports or periodicals, or group consulting, to carry out its services.

 

3)         Milestones and Program Results – The applicant must identify the anticipated success of each project in terms of economic results such as the number of new jobs created or retained, new business starts, new products commercialized, or number of businesses served.

 

4)         Staffing – Applicants may rely on full time staff, part time employees, on-call contracts, pro bono services, or community volunteers as necessary to conduct program activities, and may utilize graduate assistants or interns, other personnel of the applicant, or private contractors as needed.  Salaries paid to staff members of projects should be comparable with salaries established for similar positions within the institution. Applicants shall insure that all paid staff positions are limited to those essential to operate the program and shall not establish administrative or support positions for which the duties and functions are inconsistent with the delivery systems proposed.  Each project shall designate one individual, with directly related education and experience, as the project director or chief investigator, responsible for project management, internal quality control, financial and programmatic reports preparation, and other program delivery activities.

 

5)         Coordination – The applicant must describe cooperative working relationships which will be developed with other programs providing similar or related services and include letters of support.

 

6)         Budget – The applicant must submit a project budget by cost categories, as required in the Department's application package.

 

(Source:  Amended at 9 Ill. Reg. 15829, effective October 9, 1985)

 

Section 540.50  Review of Applications

 

a)         The Department staff shall screen all proposals to determine that all minimum requirements to the application package have been addressed.  All applications will then be grouped by eligible grant categories and reviewed by Department staff and by members of the Council.  In addition, outside consultants selected by the individual applicants from Technology Commercialization Centers will review the technical components of applications under the Business Innovation Research category.  This review process will begin after the application due date and take no more than 30 days, with grant awards being announced at the end of that period.

 

b)         The following review criteria will be used in reviewing and selecting applications for funding according to the weights specified.  Applications for a particular eligible grant category will be comparatively reviewed with all applications for that category and are ranked from highest to lowest based on total points awarded to each proposal.

 

1)         Proposed Activities – The proposals will be reviewed to assure their consistency with the eligible components and exemplary activities as described in Section 540.60. (30 percent weight)

 

2)         Administrative Capacity – The proposals will be reviewed to determine whether the applicant is capable of completing the proposed project successfully based on past experience or previous performance, and the scope of program coordination. (10 percent weight)

 

3)         Economic Development – The proposals will be reviewed to determine the extent to which the proposed activities are projected to result in measurable economic gains such as new business starts, new products commercialized, new jobs created or jobs retained, private sector funds leveraged, or number of businesses served.  (30 percent weight)

 

4)         Costs and Match – The Department will review proposals to determine that the costs charged to the program to carry out proposed activities are consistent with required match provisions and state and department administrative cost limits as specified in Section 540.70 of this Part. (30 percent weight)

 

c)         The Technology Commercialization Grants-In-Aid Council will recommend projects for funding from the highest ranking proposals as determined according to the review process of Section 540.50(b) until all available funds are expended.

 

d)         The Department will select projects for funding from among those recommended by the Technology Commercialization Grants-In-Aid Council. Projects will be selected for funding based on the following criteria:

 

1)         availability of funds for the category;

 

2)         applicant's performance on existing grants;

 

3)         proposed economic development activities; and

 

4)         applicant's willingness to negotiate with the department.

 

e)         At least fifty percent of the funds available will be reserved to fund projects under the Business Innovation Research category.

 

(Source:  Amended at 9 Ill. Reg. 15829, effective October 9, 1985)

 

Section 540.60  Eligible Grant Categories and Activities

 

a)         Technology Commercialization Centers – This category of projects provides for matching grants to universities, research institutions, research consortia, and other not-for-profit entities for the purpose of identifying and supporting Illinois business with services auxiliary to direct production but necessary for success in new product sales.  Centers shall engage in intensive service or coordinated sets of activities for Illinois businesses and shall engage in one or more of the following activities:

 

1)         General feasibility studies of new product, service, or venture ideas;

 

2)         Directing Research Assistance for new venture creations;

 

3)         Adaption of technologies, prototype development, and product testing;

 

4)         Developing technical and intellectual skills of business managers;

 

5)         Commercialization of new technology, concepts, services, or products;

 

6)         Aid in securing financing, marketing, and production of new products; or

 

7)         Assisting inventors in finding Illinois manufacturers of their products (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a(2)(b)(i-vii)).

 

b)         Business Innovation Research – This category of projects provides matching financial aid to Illinois businesses to fund research and consultation arrangements between businesses and universities or other not-for-profit research organizations.  Such aid to business shall provide funding for up to 50 percent of the allowable cost of the research or consultation; however, such aid from the Department shall not exceed $100,000.

 

c)         Challenge Grants

 

1)         This category of projects provides matching grants to qualified applicants who provide a contributing match for other creative systems that bridge university resources and businesses' technological, production, and development concerns.  Such grants to eligible applicants shall provide funding for up to 50 percent of the total allowable costs of the project.

 

2)         The Department shall set aside up to 10 percent of the appropriation to consider meritorious technology transfer or commercialization proposals submitted by federal research laboratories under this category.  Proposals will be evaluated in accordance with criteria in Section 540.50(a) through (d).  Unused set aside funds are available to other university commercialization activities.  The resources dedicated to the commercialization effort will be negotiated by the Department and the recipient.

 

d)         Technology Information Transfer – This category of projects provides matching grants to universities and other not-for-profit research institutions for statewide systems and mechanisms to make information on research, technology, faculty, facilities, and other resources available to Illinois businesses.  Examples of possible activities include those which have a statewide impact and which offer information to a large number of businesses, such as:

 

1)         Identify, catalog, and publish listings of commercializable patents;

 

2)         Identify, catalog, and publish new technological applications;

 

3)         Establish computerized inventories of research information sources;

 

4)         Provide businesses "On-Line" access to extended computer networks;

 

5)         Identify new commercialized products developed in Illinois; or

 

6)         Review publications and research and inform businesses of new technologies (Ill. Rev. Stat. 1984, Supp., ch. 127, par. 46.19a(2)(a)).

 

(Source:  Amended at 9 Ill. Reg. 15829, effective October 9, 1985)

 

Section 540.70  Program Administration Requirements

 

a)         Program Targeting – Services provided through grants under Sections 540.60(a) and (d) of this program must benefit Illinois business as that term is defined in Section 46.19a(2)(e) of the Civil Administrative Code of Illinois (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a(2)(e)) and as determined by the review process in Section 540.50.

 

b)         Eligible Grant Recipients – Grants may be awarded by the Department to business, universities, research institutions, research consortia, and other not-for-profit entities, consistent with the legislative intent for each particular grant category as specified in Section 540.60 of this Part.

 

c)         Property Records – The recipient agrees to maintain property records and at least annually conduct an inventory of all equipment or nonexpendable personal property purchased with grant funds.  Equipment must be used on the original project as long as needed.  While being used on the original project, equipment may be made available for "shared use" with other activities provided that use will not interfere with its use for the original project.  When no longer needed for the original purpose, equipment may be used for other projects (projects of the Department are to be given first priority, if there is a choice).

 

d)         Record Retention and Review – Recipients and their subcontractors must permit any agent authorized by the Department upon presentation of credentials, in accordance with the constitutional limitations on administrative searches, to have full access to and the right to examine any documents, papers and records of the recipient involving transactions related to a grant under this program.  To the extent authorized by the Freedom of Information Act (Supp. to Ill. Rev. Stat. 1983, ch. 116, pars. 201 et seq.), the Department will not make public any information disclosing program supported technical information if the recipient believes such disclosure would affect the commercialization potential of the project.  The term "subcontractor" as used in this clause excludes purchase orders not exceeding $2,500.00.

 

e)         Financial Management Standards – A recipient's financial management system shall be structured under the Accounting Standards of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA) (June, 1984) in accordance with the reporting requirements specified in Section 540.70(u) of this Part.  The recipient is accountable for funds received under this grant and shall maintain effective control and accountability over all funds, equipment, property, and other assets under the grant.  The recipient shall keep records which detail the recipient's expenditures of grant funds and accurately document the recipient's Expenditure Summary and Payments Request Form submitted pursuant to Section 540.70(u).

 

f)         Method of Compensation –

 

1)         Payments pursuant to a grant are subject to the availability of funds appropriated by the General Assembly.

 

2)         Payments to the recipient are subject to the initiation of an invoice voucher.  The first payment for program initiation may be an advance for the first month's cash needs.  Thereafter, the payments are dual purpose in that they will be sufficient to cover the expenditures to date as well as the cash needs of the recipient for the next period.

 

g)         Audits – The recipient will conduct an audit of all program records which reflect the actual activities conducted and the actual costs and expenses incurred by the recipient, using an independent public accountant, certified and licensed by authority of the State of Illinois.  The audit must be conducted in accordance with generally accepted auditing standards adopted by the Codification of Statements on Auditing Standards of the AICPA (January, 1983) and must be submitted to the Department within 45 days of the expiration of the grant.  If the recipient is routinely audited by the Auditor General of the State of Illinois, the grant need not be audited separately by the recipient.  The audit is to include both the state and required matching share of the project.  The recipient shall be responsible for taking the necessary steps to correct any deficiencies disclosed by such audit, including such action as the Department, based on its review of the audit report, may direct.  Ten copies of each audit report shall be transmitted to the Department.  The recipient shall keep a copy of each audit on file for at least three (3) years.

 

h)         Modification and Amendment of the Grant – The Grant Award is subject to revision as follows:

 

1)         Modifications by Operation of Law – The Grant Award is subject to such modifications as may be required by changes in state law or regulations.  Any such required modification shall be incorporated into and made a part of the grant within the provisions of the Illinois Grant Recovery Act (Ill. Rev. Stat. 1983, ch. 127, par. 2301 et seq.).  The Department shall notify in writing the recipient of any amendment to such regulations.

 

2)         Modifications in Budget – If the recipient has reason to believe that its operation for the grant period will exceed the budgeted amount, it shall request prior approval of the Department, except that upon specific prior approval of the Department the recipient may vary budgeted line items or cost categories.  Any changes in cost categories or line items shall not alter the activities or delivery systems for the project.  Requests for budget variations shall be in writing and shall give justifications for the requested variations.  The Department will approve modification requests if they are necessary to achieve program objectives; required by increases or decreases in program funding; or result in greater cost efficiencies.  If the Department approves the modification request, the recipient will be notified in writing of the change and effective date.  If the Department rejects the modification, the Department will notify the recipient in writing of the reason(s) for denial.

 

3)         Other Modifications by Department or Recipient – If either the Department or the recipient desires to modify the terms of the Grant Award other than as set forth in subsections (1) and (2) above, written notice of the proposed modification shall be given to the other party.  No modification shall take effect unless agreed to in writing by both the Department and the recipient, except that if the Department proposes a modification without prior agreement of the recipient, the recipient will be notified of the modification by registered letter and be notified that failure to respond within 30 days of the date of the letter will be deemed acceptance of the modification, which will become effective as of the specified future date.

 

i)          Suspension and Termination –

 

1)         If the Department believes that a recipient has failed to comply with the terms and conditions of the Grant Award, then the Department shall suspend the grant and withhold further payments until the grant is terminated, or the recipient's failure has been corrected.  The Department will determine that a recipient has failed to comply with the terms and conditions of a grant when:

 

A)        The Department has notified the recipient in writing of the existence of circumstances such as, consistent failure to submit required reports, failure to protect inventory, misuse of equipment purchased with grant funds, evidence of fraud and abuse, consistent failure to meet performance standards, or failure to resolve negotiated points of the agreement, and

 

B)        the recipient fails to develop and implement a corrective action plan within 45 days of the Department's notice.

 

2)         A grant shall be terminated in the absence of full state funding; if the Department determines that the recipient has failed to comply with the terms and conditions of the grant in whole or in part; or if the Department and the recipient agree to terminate the grant.

 

j)          Nondiscrimination – The recipient shall refrain from unlawful discrimination in employment and undertake affirmative action to assure equality of employment opportunity and eliminate the effects of past discrimination in accordance with the Illinois Human Rights Act (Ill. Rev. Stat. 1983, ch. 68, pars. 1-101 et seq.).

 

k)         Complaint Process – In the case of a recipient complaint, the Department will follow the procedures outlined in the Administrative Review Law (Ill. Rev. Stat. 1983, ch. 110, pars. 3-101 et seq.).

 

l)          Royalty-Free Use for State Agencies – The Department, or its agents, shall negotiate royalties with recipients on any subject data, copyrights, patents, or technical data to be developed under the recipient's contract as part of the specified work plan if the product or service to be developed by the grantee is subsequently licensed for production (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a(2)).  These royalties shall include negotiated monetary compensation and royalty-free use of the product or service by the Department.

 

m)        Patent and Technical Information – Recipient copyright and patent policies must provide for protection of technical information, identify ownership and control of patents, detail procedures for the sale or licensing of patents and protect government use of patented and copyrighted items.

 

n)         Publication, Promotion, and Marketing – Recipients must inform the Department of the nature and contents of all public information and promotional documents prior to or concurrent with the dissemination of such information and documents (i.e., program reports, annual reports, informational brochures, fact sheets, manuals, or other similar documents).  Any failure to submit this information shall not be the sole basis for termination of a Grant Award.  In addition, all such documents must include acknowledgement of the support of the Department of Commerce and Community Affairs and must include logo(s) identified by the Department.

 

o)         Program Coordination – The Department will require applicants to arrange for program coordination with existing services of federal or state agencies and with those projects funded under this program.

 

p)         Program Income – Income generated under any program and accrued interest on such program income shall be used to further program objectives when retained by the recipient or may be remitted to the State.

 

q)         Administrative Costs – There is a 15 percent ceiling on the amount of a Department grant which can be used for general indirect costs incurred.  Entities which want to recover indirect costs shall do so in accordance with their approved cost plan.  An approved cost plan is one which has been approved by the entity's cognizant federal agency or the Department.

 

r)          Program Match – Each recipient must match Department funds.  Match can include in-kind or cash contributions as well as indirect cost contributions.  Program income generated from project activities can also be counted as match.  Grant monies or other funds received from the federal government or from state entities can be counted as match, provided that such funds are reprogrammed to directly relate to the objectives of the project. Matching contributions must:

 

1)         be under the control of the project officer;

 

2)         be identified in the recipient's application as necessary for the proper and efficient administration of the project;

 

3)         be incurred during the Grant Award period;

 

4)         be supported by records of services rendered and/or detailed documentation of costs incurred; and

 

5)         not be a general expense of the recipient which is incurred in carrying out overall responsibilities other than those required under this grant.

 

s)         Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1983, ch. 127, par. 2310), all interest earned on funds held by the recipient under this grant shall become part of the grant when earned; however, interest earned on grant funds may be retained by the recipient when the cost of accounting for the interest or allocating the interest to the grant is more than the amount of interest earned.  Any interest earned under the grant, and not expended as grant principal during the term of the grant, shall be returned to the Department.

 

t)          Return of Unobligated Funds – In accordance with Section 4(d) of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1983, ch. 127, par. 2304), the recipient shall refund to the Department within 45 days after the expiration of the grant any balance of funds that were unobligated at the end of the grant period.

 

u)         Program Reports – Each recipient is required to report financial and programmatic data to the Department on a regular basis on forms prepared by the Department.  Standard reports are as follows:

 

1)         Expenditure Summary – The recipient shall maintain appropriate records of actual grants costs on Expenditure Summaries supplied by the Department.  These Expenditure Summaries will identify line item costs charged to the grant and line item matching share supplied by the applicant or third parties.  Expenditure Summaries are to be submitted to the Department by the 10^th day following the end of each month.

 

2)         Client Status Report – Each recipient shall maintain individual records of each client provided service through the project using the Client Status Report supplied by the Department.  These Client Status Reports will identify basic demographic information about the firm being assisted, summarize the work plan designed for this firm, and relate the manner and types of service delivered.  One copy of each active Client Status Report shall be delivered to the Department on a monthly basis, due the 10th day following the end of each month.

 

3)         Quarterly Program Report – Each recipient shall prepare a Quarterly Program Report in the form designated by the Department.  The Quarterly Program Report shall include an aggregated statistical summary of small businesses and firms served, their demographic composition, and the types of services delivered; and a narrative report on progress towards achieving objectives and activities, economic impact of the program, and a list of business/institutional interactions.  Quarterly Program Reports shall be submitted to the Department by the 10th day following the end of each program quarter.

 

v)         Monitoring and Evaluation – The Department will monitor and evaluate the grant made to the recipient under this program.  The grant will be monitored for compliance with the Section 540.70 and will be monitored periodically throughout the program year.  The grant will be evaluated to gauge its impact upon the business community and for the effective and efficient utilization of funds.  Evaluations will occur both during the operation of the program and upon its completion.

 

w)        State Not Liable – The recipient shall save the State of Illinois harmless from any and all claims, demands, and actions based upon or arising out of any services performed by themselves or by their associates and employers under this grant.

 

(Source:  Amended at 9 Ill Reg. 15829, effective October 9, 1985)

SUBPART B: ENTREPRENEURIAL INVESTMENT INITIATIVE PROGRAM

 

Section 540.110  Purpose

 

The Entrepreneurial Investment Initiative Program provides matching grant funds to eligible local economic development agencies so that the local agency can make loans to start-up businesses to encourage new business formation. Under this program, the Department shall issue a request for proposals to economic development agencies, seeking those that wish to operate a Revolving Loan Fund including projects targeted to serving low-income, unemployed individuals. Those agencies selected for participation shall either operate or coordinate with a self-employment training program as defined in 56 Ill. Adm. Code 2650.20. Once approved, the economic development agency would be authorized to submit requests to draw against funding allocated by the Department, up to the amount of commitment made to the local economic development agency subject to appropriation by the General Assembly.

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)

 

Section 540.120  Definitions

 

            "Certified Development Corporations" – Not-for-profit financial intermediaries that are made up of both public and private investment partners who have long-term participation agreements or equity investments with the corporation and can show letters of commitment or letters of credit to that effect as well as articles of incorporation or by-laws providing proof of authority to operate in the State of Illinois.

 

            "Department" – The Illinois Department of Commerce and Community Affairs.

 

            "Designated Zone Organizations" – Those economic development agency organizations located in areas designated as enterprise zones, areas which can provide certain tax credits, worker benefits and other incentives to stimulate economic growth.

 

            "Economic Development Agency" – For the purposes of this Part, includes non-profit regional planning commissions, certified development corporations, non-profit organizations, designated zone organizations, universities, community colleges, community action agencies, and small business development centers.

 

            "Grant Agreement" – The contractual agreement between the Department and recipient, which includes the scope of work to be provided, the time period for performance of the agreement, the budget, and all terms and conditions of the contract.

 

            "Local Revolving Loan Fund (RLF)" – A pool of funds from which loans are made and to which all or a portion of recaptured interest and principle are paid on an ongoing basis, initially capitalized with Department funds and local funds of at least 50 percent of the Department's share.

 

            "Project Operator" – Any economic development agency proposing or managing a local revolving loan fund.

 

            "Recipient" – Any economic development agency receiving grant funds under this program and administering a local Revolving Loan Fund.

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)

 

Section 540.130  Application Availability

 

a)         Grant applications shall be made available on an annual basis if sufficient funds are allocated for the program.

 

b)         Any economic development agency seeking grant monies to set up and operate a Revolving Loan Fund shall submit a grant application on forms provided by the Department. A standard grant application form shall be used statewide. Upon request, the Department shall supply potential applicants with the application package.

 

c)         Public notice of the availability of grant applications and the application due date shall be published in the state recognized newspaper. Applications shall be due on specific dates established by the Department. The due date shall be no less than 45 days after publication of the public notice.

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)

 

Section 540.140  Program Application Contents

 

Applications must address the following items:

 

a)         Needs Within the Local Capital Market – Provide information on the local financial markets, including banking philosophy in the area, constraints imposed on development by local lending policies of financial institutions and the availability of private capital to invest. Describe how the local revolving loan fund project shall be designed to directly address those constraints that have been identified. Show the extent to which the local demand for public loans justifies the size of the grant being requested.

 

AGENCY NOTE:  The Department will be looking for examples of absence of lending in certain geographical areas, relatively high or floating interest rates for all or certain types of loans because the bank's costs of funds is high or variable, unavailability of loans that are a longer term (greater than five years) because the bank's deposits are also short term, and unavailability of lending capital or limits on the size of available capital.  A deposit to investment ratio of less than 20% would indicate a conservative posture of local banks.  A weak entrepreneurial environment or low number of new business start ups in an area would indicate problems or weaknesses in the ability of conventional lenders to serve borrowers and business financing needs.

 

b)         Business and Job Development Strategy – Identify the types of eligible borrowers which are to be served and the geographic area to be served such as:  supporting entrepreneurial and self-employment opportunities; serving local area low-income and unemployed residents; serving individuals within a county, multi-county area, statewide, etc.; or assisting those who are unable to secure credit from conventional sources. Also list the job development goals of the RLF project, for example, the expected ratio of new full-time or part-time businesses or jobs created by a borrower to the amount of RLF proceeds provided.

 

c)         Staffing and Management Activities – Describe the procedures and demonstrate the capacity to manage and operate the RLF locally. Describe how the project shall carry out loan packaging and processing, servicing, tracking repayments, and collection processes. Provide proof of authority to operate a revolving loan fund, including, as appropriate, articles of incorporation, by-laws, and a resolution of the board of directors of the organization authorizing participation.

 

d)         Individual Loan Standards – Describe the parameters under which RLF loan financing shall be provided to a borrower. Identify the types of loans anticipated (for example deferred loans, debt with equity features or others), the interest rates to be charged, allowable uses of funds, and length of loans expected.

 

e)         Budget and RLF Capital Management Strategy – Identify the amount and from what source(s) the Project Operator shall provide a match for the Department's grant, at least equal to one-half the amount of the grant from the Department, which shall serve as the source(s) of capital to start the RLF. Describe how these other financing sources shall be induced to participate.

 

f)         Financial Evaluation – Describe procedures to assure that eligible borrowers which shall be financed from the local RLF shall undergo an evaluation and state the qualifications, experience, and responsibility of the parties involved in this process.

 

g)         Loan Agreement – Describe elements of the loan agreement, loan security and collateral, and insurance requirements, so as to assure adequate protection of the use of funds. Describe the role the Project Operator shall play in establishing terms for the loans and in monitoring the progress of the loan. Describe procedures for handling defaulted loans.

 

h)         Marketing Activities – Show how the RLF project shall be adequately marketed to eligible start-up businesses. Detail clearly the outreach activities, types of local application materials, direct advertising, community discussions, or linkages with potential referral sources.

 

i)          Business Assistance Strategy – Describe mechanisms to be used to assure that borrowers (start-up business owners receiving financial assistance) have received business training and education, or have completed a Self-Employment Training Course, have a business and finance plan, and have experience in the proposed business area. In addition, identify support service mechanisms to provide ongoing management support, technical assistance, and guidance to the start-up business.

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)

 

Section 540.150  Application Review Process

 

a)         Department staff shall screen applications to determine that all minimum requirements of the application package have been addressed. Applications will be reviewed in accordance with Department review criteria noted in subsection (b) of this Section.

 

b)         A request for a grant to set up and operate a Revolving Loan Fund shall be evaluated in accordance with the requirements of this subsection. The application evaluation process consists of a review by staff selected from various divisions of the Department.  This staff reviews the applications using the Likert Ranking System in a competitive individual case by case study. Elements are of general equal weight.  (All evaluation personnel then rerank the highest rated applications for a final rank order, with the highest selected for funding.)  The review of applications submitted by the due date shall be completed no more than 45 working days after the application due date, with grant awards being announced at the end of that period. Applications will be comparatively evaluated on the basis of:

 

1)         The geographic area to be served, the extent of economic distress and unemployment in the area to be served, and the nature of financial needs of the area.  Economic distress and financial needs may be documented by providing data from U.S. Bureau of Labor Statistics or Illinois Department of Employment Security reflecting area specific unemployment rates, hours and earnings of production workers, help wanted indexes, bankruptcy filings, personal income, new business incorporations, interest rates, deposit to loan ratios of lending institutions, etc.;

 

2)         The necessity, sufficiency, and consistency (merits) of the proposed work plan and proposed activities with requirements of Sections 540.140 and 540.160;

 

3)         The demonstrated capability and past experience of the applicant in managing the work activities similar to those proposed;

 

4)         The amount of matching funds, as authorized pursuant to Section 540.180, shall be provided, at a minimum, at an amount of at least 50 percent of the Department's share, and preferably 100 percent of the Department's share;

 

5)         Letters of cooperation between the proposed program and a self-employment training course;

 

6)         The level of economic development results expected including but not limited to new businesses started, jobs created, and private funds leveraged; and

 

7)         The extent to which those organizations have not previously been assisted with a Department grant (which could be or is being used as a Revolving Loan Fund).

 

c)         Applications which best meet the evaluation standards of subsection (b) of this Section will be selected for funding. Priority shall be given to programs which serve high poverty areas, enterprise zones or both.

 

d)         Upon selection, the Department shall notify applicants of the amount of grant, if any, which may be used to set up and operate the local Revolving Loan Fund. The Department shall issue a grant agreement for signature by the local Project Operator.

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)

 

Section 540.160  General Terms for RLF Loans

 

a)         Business Plans – The RLF Operator shall assure that all loan applications shall contain a certification and assurance that the small business applicants have received business development training or education, have a business and finance plan and have experience in the proposed business area (Section 46.19a(2)(f) of the Civil Administrative Code of Illinois (Ill. Rev. Stat. 1989, ch. 127, par. 46.19 a(2)(f)).

 

b)         Loan Approval – The RLF Operator is ultimately responsible for receiving business plans, approving loans for eligible borrowers, arranging for loan closing, securing signed notes and collateral agreements for the loan, filing Commerce Commission notices, securing a first source (employment) agreement if needed, disbursing RLF loan proceeds to the borrower, administration of the loan portfolio, servicing of loan repayments and all other duties and responsibilities for operation of the RLF.

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)

 

Section 540.170  Administrative Standards

 

a)         Grant Agreement – During formal negotiations and discussions held with the Department, the Department and the applicant shall agree to the scope of work of the grant agreement and the period of the grant agreement which shall be no longer than two years.

 

b)         Complaint Process – In the event of a complaint, the Department shall follow the procedures outlined in 47 Ill. Adm. Code 10 (Review and Appeal Procedures).

 

c)         Administrative Costs – The Project Operator may use up to 10 percent of the grant funds for administrative costs as specified in the grant agreement.

 

d)         Conflict of Interest – Each Project Operator shall assure there is no conflict between borrowers and members of the applicant's staff, board or loan review committee to the extent that no staff, board or loan review committee member shall have any financial interest in nor shall the member profit from, any loan to a borrower.

 

e)         Reports – The Department shall require that on a bi-monthly, quarterly, or, at a minimum, a semi-annual basis, reports shall be prepared by the Project Operator pertaining to and describing items such as its progress in lending funds, specific business assisted and jobs created, the amount of funds loaned, repayments received and jobs created or retained. A copy shall be delivered to the Department within 15 calendar days of the end of each designated period.  Incomplete reports shall be returned to the Project Operator with deficiencies noted.

 

f)         Record Review and Monitoring – Recipients and their subcontractors, if any, must permit any agent authorized by the Department, upon presentation of credentials, to have full access to and the right to examine any documents, papers and records of the recipient involving transactions related to a grant under this program, for three (3) years from the date of submission of the final progress report or until audit findings have been resolved, whichever is later.

 

g)         Record Retention Requirements – All recipients must maintain records in accordance with the provisions contained in the Secretary of State's regulations (44 Ill. Adm. Code 4000) and the Records Act (Ill. Rev. Stat. 1989, ch. 116, par. 43.4 et seq.).

 

h)         Historic Preservation – Grantees shall require from third parties receiving financial assistance, certification that the project does not involve the destruction, alteration, renovation, transfer or sale, or utilization of an historic property, structure or structures, or the introduction of visual, audible or atmospheric elements to an historic property, structure or structures, and will, therefore, not result in any changes in the character or use of any historic property.

 

i)          Relocation – Grantees shall require from third parties receiving financial assistance, certification that the project does not involve relocating a facility or workers from any location in Illinois outside of the community in which the business project will be conducted.

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)

 

Section 540.180  Financial Assistance Standards

 

a)         Financial Management System – A recipient's financial management system shall include cash management, signature authority and bonding requirements and shall be structured to meet the accounting standards of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA) (September 19, 1987 with no later amendments or editions). The recipient is accountable for funds received under this grant and shall maintain effective control and accountability over all funds and other assets under the grant.

 

b)         Matching Funds – Matching funds for an RLF project shall consist of cash funds and in-kind services made available and used in the project, under the control of the Project Operator. Other contributions which take the form of loans from a financial institution or other lender directly to an eligible business venture are not considered match to the RLF.

 

c)         Audits – The recipient shall be responsible for securing an audit of all loan records and such audit must be performed by an independent public accountant, certified and licensed by authority of the State of Illinois pursuant to the Illinois Accounting Act (Ill. Rev. Stat. 1989, ch. 111, pars. 5-500.01 et seq.).  The audit must be conducted in accordance with generally accepted auditing standards adopted by the AICPA (1989 with no later amendments or editions).

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)

 

Section 540.190  Modification, Suspension and Termination of Grants

 

a)         Modification and Amendment of the Grant – The grant award is subject to revision as follows:

 

1)         Modifications by Operation of Law – The grant award is subject to such modifications as may be required by changes in State law or regulations. Any such required modifications shall be incorporated into and made part of the grant within the provisions of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1989, ch. 127, pars. 2301 et seq.). The Department shall notify in writing the recipient of any amendment to such regulations.

 

2)         Modifications in Budget – A recipient's request for budget variations in the amount or line item costs shall be in writing by registered letter and shall give justifications for the requested variations. The Department may approve modification requests, if, in the Department's sole determination, such is necessary to achieve program objectives of the program application contents set out in Section 540.140. Any changes in cost categories or line items shall not alter the activities or deliverables for the project. If the Department approves the modification request, the recipient will be notified in writing of the change and the effective date of the change.

 

3)         Other Modification by Department or Recipient – If either the Department or the recipient requests to modify the terms of the grant award other than as set forth in subsections (a)(1) and (2) above, written notice of the proposed modification shall be given to the other party. No modifications shall take effect unless agreed to in writing by both the Department and the recipient.

 

b)         Suspension –

 

1)         If the Department believes that a recipient has failed to faithfully perform the terms and conditions of the scope of work of the project, then the Department shall suspend the grant and withhold further payments until the grant is terminated, or the recipient's failure has been corrected. The recipient may appeal such decision as provided in Section 540.170(b) of this Subpart.

 

2)         The Department will determine that a recipient has failed to faithfully perform the terms and conditions of the scope of work of the project when:

 

A)        The Department has notified the recipient in writing of the existence of circumstances such as repeated failure to submit required reports; misapplication of grant funds; evidence of fraud and abuse; repeated failure to meet performance objectives, timelines, or standards; failure to provide or substantiate matching funds; or failure to resolve negotiated points of the agreement; and

 

B)        The recipient fails to develop and implement a corrective action plan satisfactory to the Department within 30 calendar days of the Department's notice.

 

c)         Termination of Financial Assistance – Financial assistance shall be terminated for the following reasons:

 

1)         Termination Due to Loss of Funding – In the absence of State funding for a specific year, all grants that year shall be terminated in full. In the event of a partial loss of State funding, the Department shall make proportionate cuts to all recipients.

 

2)         Termination for Cause – If the Department determines that the recipient has failed to comply with the terms and conditions of the financial assistance; has failed to observe or perform or cause the observance or performance of any covenant contained in the agreement; or any statement, certification, representation or warranty made by or on behalf of the recipient shall prove to have been untrue or incorrect in any material respect when made, the Department shall terminate the grants in whole, or in part, at any time before the date of completion.

 

3)         Termination by Agreement – The Department and the recipient shall terminate the grant in whole, or in part, when the Department and the recipient agree that the continuation of the project would not produce beneficial results commensurate with the future expenditures of funds.

 

(Source:  Added at 15 Ill. Reg. 973, effective January 11, 1991)