Section 570.10  Purpose

 

a)         Direct Funding

 

1)         Through the Illinois Small Business Development Program (Program), the Department of Commerce and Economic Opportunity (Department) will provide term loans on a generally fixed-rate, low-interest basis (see Section 570.70(a)(1)) to small businesses in Illinois in cooperation with participating lenders or other investors.  The ultimate purpose of the Program is to provide economic development assistance to Illinois businesses who will provide employment opportunities for Illinois citizens, either through job creation/retention or those that modernize or improve the competitiveness of the firm.

 

2)         Any small business operating or to be located in Illinois may make an application for financial assistance under this program.  A small business includes, but is not limited to, any for-profit business organized as a sole proprietorship, partnership, corporation, joint venture, association, or cooperative.  For the purposes of this program, a small business is one that has, including its affiliates, fewer than 500 full-time employees, or is determined by the Department not to be dominant in its field.

 

3)         Minority, Veteran, Women and Disability Business Loans

 

A)        For purposes of this Part, a women owned business shall have the same definition as a female owned business under Section 2 of the Minority and Female Business Enterprise Act [30 ILCS 575/2] and a minority owned business shall have the same definition as that contained in that Act. Included for purposes of this Part, Disadvantaged Business Enterprise (DBE) and Women's Business Enterprise (WBE) shall have the same definitions as those established under Section 5 of the Illinois Purchasing Act  [30 ILCS 505/5] and Sections 3-101, 3-103, and 4-201.1 of the Illinois Highway Code  [605 ILCS 5/3-101, 3-103 and 4-201.1].

 

B)        For purposes of this Part, disability shall have the same definition as that used in Section 3 of the Americans With Disabilities Act of 1990 (42 USC 12102) and businesses owned by persons with disabilities shall mean businesses that are at least 51% owned by one or more persons with disabilities and whose management and daily business operations are controlled by one of the disabled owners.

 

C)        For purposes of this Part, veteran will have the same definition as that used in Section 9-2(o) of the Small Business Development Act (Act) [30 ILCS 750/9-2] and businesses owned by veterans will mean businesses that are at least 51% owned by veterans and whose management and daily business operations are controlled by veterans.

 

4)         Technical Assistance Grants – Provides the Department with the ability to make a grant to a not-for-profit organization, which also provides a portion of the financing with respect to the technical assistance project.  The purpose of the grant is to cause the technical assistance project to be undertaken to have the potential to improve the capital marketplace structure or to reduce information barriers that are impediments to the flow of capital.

 

5)         Development Corporation Grant Program – The purpose of the Development Corporation Grant Program is to provide grants to or through financial intermediaries whose purpose includes financing, promoting or encouraging economic development in their geographic areas.

 

b)         Indirect Funding

 

1)         Participation Loan Program – Provides the Department with the ability to purchase an interest in a standard financial intermediary loan.  This purchase provides a collateral cushion similar to companion loans.  The purpose of these agreements is to help reduce the time needed to analyze applications due to the reliance upon the financial intermediaries' due diligence by tapping into the existing infrastructure of private sector financing expertise.  The ultimate purpose of the program is to provide economic development assistance to Illinois businesses that will provide employment opportunities for Illinois citizens.  For purposes of this Part, financial intermediary shall have the same definition as those established under Section 9-2 of the Act.

 

2)         Loan Loss Reserve Program – The financial intermediaries that participate in the program make all of the credit decisions about whether to fund or reject a loan to a potential borrower.  The financial intermediary also decides whether to make conventional loans to the borrower or whether to require the borrower to participate in the Loan Loss Reserve Program as a condition of the loan.  The purpose of the program is to help borrowers that are borrowing up to $100,000 get access to capital, especially in urban areas; however, even though the program provides access to capital, it will not necessarily be low-cost capital.

 

3)         Development Corporation Participation Loan Program – The purpose of the Development Corporation Participation Loan Program is to provide loans, which may be done through the purchase of participations, to or through financial intermediaries whose purposes include financing, promoting or encouraging economic development in their geographic areas.

 

4)         Minority, Veteran, Women, and Disability Participation Loans – Businesses meeting the definitions of Section 570.10(a)(3) may be funded in accordance with Section 9-4.3 of the Act through Participation Loans and Development Corporation Participation Loans as described in subsections (b)(1) and (3).

 

5)         Rural Micro-business Loan Program

 

A)        Authorizes the Department to provide loans to small rural businesses.  Eligible participants include small rural businesses that:  

 

i)          employ 5 or fewer full-time employees, including the owner if the owner is an employee; and

 

ii)         are based on the production, processing, or marketing of agricultural products, forest products, cottage and craft products, or tourism.

 

B)        Eligible rural micro-businesses may be funded in accordance with Section 9-4.2a of the Act through Participation Loans and Development Corporation Participation Loans as described in subsections (b)(1) and (3).

 

(Source:  Amended at 42 Ill. Reg. 4821, effective March 2, 2018)

 

Section 570.15  Loan Terms (Renumbered)

 

(Source:  Section 570.15 renumbered to Section 570.70(a) at 10 Ill. Reg. 19724, effective November 6, 1986)

 

Section 570.20  Application Cycle

 

a)         Direct Funding

 

1)         Applications under the Program other than the Technical Assistance Program and the Development Corporation Program will be accepted throughout the year until program funds are exhausted.  The Department or its designee (e.g., Small Business Development Center (SBDC) staff, Illinois Department of Transportation) will supply interested businesses with an application package upon request.

 

2)         Public notice of the availability of Technical Assistance Grant Program Applications and the application due date will be published in the State recognized newspaper.  Grant funds will be made available on an annual basis, if sufficient monies are allocated for the program.  Application will be due on the deadline determined by the Department.

 

3)         Public notice of the availability of Development Corporation Grant Applications and the application due date will be published in the State recognized newspaper.  Grant funds will be made available on an annual basis, if sufficient monies are allocated for the program.  Applications will be due on the deadline determined by the Department.

 

b)         Indirect Funding

 

1)         Applications under the Participation Loan Program and the Loan Loss Reserve Program will be accepted throughout the year until program funds are exhausted.  The Department or a financial intermediary will supply interested businesses with an application package upon request.

 

2)         Application for Development Corporation Participation loans to or through financial intermediaries will be accepted throughout the year until program funds are exhausted.  The Department will supply interested financial intermediaries with an application package upon request.

 

3)         Applications under the Rural Micro-business Participation Loan Program will be accepted throughout the year until appropriated or allocated program funds are exhausted  The Department or a financial intermediary will supply interested businesses with an application package upon request.

 

(Source:  Amended at 30 Ill. Reg. 8461, effective April 19, 2006)

 

Section 570.25  Application Documentation

 

a)         Direct Funding

 

1)         The application for a loan shall include documentation of the following:  

 

A)        History of the Company (if applicable) – a brief history of the business and past employment growth.

 

B)        Market Information – information on the company's products or services and identification of existing and potential major customers and competitors.

 

C)        Historic Financial Statements (if applicable) – historic financial statements for the past three years, if the business is not a new plant start-up or new business opportunity and interim statements dated no more than ninety days prior to application including:  

 

i)          Profit and Loss (Income) Statements;

 

ii)         Balance Sheets; and

 

iii)        Disclosure of Contingent Liabilities (if applicable).

 

D)        Two Year Projections – two year projections of the Profit and Loss Statement and a one year Monthly Cash Flow Projection. Except that proposed projects of less than two years in duration shall only be required to submit projections appropriate for the projects (e.g., projects of less than one year shall only need to submit cash flow projections).

 

E)        Site Map (if applicable) – an outline of the general location of the project on a site map, including the location of any floodplain areas.

 

F)         Land and Building Information ( if applicable) – for land and/or building acquisition, appraisal by a credentialed appraiser (e.g., Member American Institute (MAI) of the American Institute of Real Estate Appraisers,  Senior Realty Appraiser (SRA)) acceptable to the Department and a copy of the purchase option or agreement; for building construction or renovation, a contractor or architect's cost estimates; for space rental, a draft rental/lease agreement;  if real property and fixtures will be offered as collateral for funding, an appraisal by a credentialed appraiser acceptable to the Department.

 

G)        Description of Machinery and Equipment (if applicable) – major equipment or classes of equipment to be acquired with the Department's program funds identified; for acquisition of new machinery and equipment, attachments of reliable vendor cost estimates; for moving and installation costs, attachments of written estimates; for used machinery and equipment acquisition, an appraisal demonstrating that the fair market value is in line with the purchase price and a specific description of the equipment including serial numbers, if available.

 

H)        Description of Working Capital (if applicable) – a detailed explanation of the need for the use of the funds.

 

I)         Company Management – a listing of those individuals who are responsible for the management of the company, their positions and responsibilities, and resumes of key senior individuals (e.g., Owner, Partner, President, Vice President, Treasurer) at the company location.

 

J)         Ownership – the company will provide a detailed statement of ownership which shall include a percentage of ownership.  Such statements shall clearly identify any ownership interest which amounts to 20% or more, or any lower amount as determined by the Department, any ownership entity (e.g., individual, partnership, corporation) which is considered to be controlling the business, and/or any entity which is guaranteeing any financial or contractual activities of the company.  For all such entities which meet any conditions of this subsection, a financial statement shall be provided.  The financial statements shall include full name, home/corporate address and social security number/federal employer identification number (FEIN).

 

K)        Letters of Commitment – commitment letters documenting all sources of leveraging; loans from financial institutions must have language indicating the loan amount, the specified term and interest, collateral, conditions attendant to the loan, and the fact that the loan is approved; any commitment to purchase a revenue bond must have an executed inducement resolution and the rates, terms, and conditions of approval by the buyer.

 

2)         The application for the Technical Assistance Grant shall include documentation of the following:

 

A)        Proposed Work Plans – Provide a detailed description of how the project will be administered to meet the project goals;

 

B)        Timelines – Provide a detailed list of dates, to include a starting and completion date, in order to show the orderly progression of the project;

 

C)        Objective and results of the project – Describe the economic development purpose being served or to be served by the Technical Assistance Grant.  Also, describe the anticipated economic development benefits, in quantifiable terms, resulting from the Technical Assistance Grant;

 

D)        Persons responsible for administering the effort – Provide a resume for each individual who will be involved in the project.  Resumes should contain present and past work experience along with educational information;

 

E)        Cost of completing the proposed effort – Provide a detailed list of all costs which will be incurred in order to complete the project; and

 

F)         Other documentation that may be necessary.

 

3)         Grant application documentation for Development Corporation shall contain the following:

 

A)        History of Applicant – Provide a brief history of the Development Corporation, legal status (e.g., stock corporation, not-for-profit, general unit of government, etc.), board structure, etc., as a separate attachment. Provide proof of authority to operate, including, as appropriate, articles of incorporation, bylaws, and a resolution of the Board to participate.

 

B)        Mission and Goals – Fully describe the economic development purpose being served or to be served by the Development Corporation and the major objectives of the Development Corporation and how it will meet these objectives.

 

C)        Local Market Needs – Identify the geographic area to be served by the Development Corporation and the typical borrowers to be served (third party beneficiaries of the Development Corporation's lending), and the primary business financing needs that shall be addressed.  Include a profile of the Development Corporation's target area.  Outside the boundaries of Cook County, the Development Corporation must service a substantial geographic area containing a significant population base (e.g., county, multi-county, statewide, etc.).

 

D)        Financial Products and Services – Describe the financial products and financial services to be offered.  This should include the type of lending and equity to be offered, term of lending to be provided, minimum and maximum amounts, if any, on loans outstanding to individual firms, etc.  If the Development Corporation is recently formed, include the timetable for implementation.

 

E)        Results Expected – Describe anticipated economic development benefits resulting from the Department's financial assistance.

 

F)         Staffing and Management – Provide a description of how and by whom the Development Corporation will be managed and staffed, including specific information on Board membership.

 

G)        Operating Procedures – Describe how the Development Corporation will be operated, proposed location of officers and/or facilities, marketing of corporate services, etc. Describe the corporate decision making process for making business loans and other types of investments, due diligence process and credit analysis procedures to be used, and application procedures to assure prudent operation of the lending and investment activity.

 

H)        Coordination and Community Involvement – Provide a description of the primary working relationships with public and private entities, such as local, state and federal financial institutions, venture capital partnerships, public or non-profit development agencies, etc.  Describe community involvement in the Development Corporation referral process (if applicable).

 

I)         Capitalization – Provide a summary of financial projections, anticipated/actual sources of operating income, the amount of Development Corporation capitalization and expected funding needs of the Development Corporation.  Specifically, include the nature and amount of bank and other corporate investments, and major stockholders or shareholders and percent of ownership.  For new Development Corporation, include a detailed timetable for securing all initial corporate financing.

 

J)         Budget Request – Identify the amount of funds requested from the Department.  The request should also detail the type of funding needed (loan, grant or investment), how it will be secured and repaid, and how it will be used (organizational costs, direct lending to third party beneficiary projects) and the anticipated schedule (timing) for using Department funds.

 

K)        Letters of Commitment – Applications must include documentation of all sources of Development Corporation matching funds in the form of specific commitment letters.  Commitment letters must have language indicating the terms and conditions attendant to the contribution, including the amount, when the contribution will be made, and any conditions which must be met before the contribution is made.

 

b)         Indirect Funding

 

1)         Participation Loan Program and Development Corporation Participation Loan Program – Documentation from the financial intermediaries shall contain the information which is required by the financial intermediary as part of its loan application and such additional information as the Department may deem necessary.  Before participations are made to the financial intermediary, the following documentation shall be required by the Department, except that a financial intermediary regularly examined by a financial institution regulator (e.g., Commissioner of Banks and Trusts, Office of the Comptroller of the Currency, etc.) may substitute documentation of good standing.

 

A)        History – A brief history of the financial intermediary, legal status (e.g., stock corporation, not-for-profit, general unit of government, etc.), board structure, etc., as a separate attachment.  Provide proof of authority to operate, including, as appropriate, articles of incorporation, bylaws, and a resolution of the Board to participate.

 

B)        Local Market Needs – Identify the geographic area served by the financial intermediary and the typical borrowers served and the major objectives of the financial intermediary.

 

C)        Historic Financial Statements -Provide historic financial statements for the past three years, if the financial intermediary is not a new start-up, including:

 

i)          Profit and Loss (Income) Statements;

 

ii)         Balance Sheets; and

 

iii)        Disclosure of Contingent Liabilities.

 

D)        Staffing and Management – Provide a description of how and by whom the financial intermediary is managed and staffed, including specific information on Board membership.

 

E)        Other Documentation – Other documentation determined by the Department to be necessary.

 

(Source:  Amended at 18 Ill. Reg. 6119, effective April 11, 1994)

 

Section 570.30  Application Evaluation

 

a)         Direct Funding

 

1)         Criteria for evaluating loan applications.

            The Department shall screen all applications to determine that all requirements of the application package have been addressed.  Complete applications will be reviewed and evaluated by Department staff. Applicants will be notified of deficiencies in applications and given an opportunity to correct such deficiencies through submission of additional documentation (see Section 570.25(a)(1)).  This review and evaluation process will be completed within 45 days of the Department's receipt of a complete application.  Department staff will conduct a technical and financial evaluation of each application.

 

A)        Technical Evaluation Component – Each application will be reviewed to assure compliance with technical program requirements as specified in Sections 9-2, 9-4, 9-4.2, and 9-6 of the Small Business Development Act  [30 ILCS 750/9-2, 9-4, 9-4.2, and 9-6]. The technical evaluation will address the following criteria:

 

i)          Evidence of Need for Program Funding – The company must demonstrate the need for program funds in accordance with requirements of Section 9-4(c) of the Act, including evidence that the project's financing cannot be obtained without Department participation at an interest rate and term that makes the project viable; and the leverage of other funds in accordance with Sections 9-4(a) and (b) and 9-6(a) and (b) of the Act.

 

ii)         Project Implementation Readiness – The company must demonstrate project readiness, including identifying loans and investments from all lenders and investors on letterhead, signed and dated; time schedule for project initiation; and written cost estimates from contractors, suppliers, and/or architects that support project costs.

 

iii)        Employment Impact –  

 

•           The application shall provide evidence of: employment impact/opportunity (e.g., job creation/retention), including written assurance from the company which identifies a description of the type and the number of any jobs to be created/retained; and any evidence that such jobs will generate additional wealth for the community (e.g., final goods or services produced are sold in markets outside Illinois or final goods or services produced and sold locally substitute for those imported from outside the state). Special consideration will be given to a Minority, Women and Disability Business Project or to a project which demonstrates additional need (e.g.:  Distressed community or county with an unemployment rate which is 25% higher than the State average, or a per capita income that is less than the State average, or area with limited economic development as evidenced by absence of development activities within the last two years or as evidenced by new job growth rate less than the State or national average, or

 

•           Funding would support business which has provided assurance that the project will generate business growth and make an employment impact/opportunity in the community as a result of spinoff businesses, and thus evidence that the additional jobs will be created or retained, or

 

•           Funding is needed to avert loss of a major employment source (more than 100 jobs or 2% of the local base) in the community, or

 

•           Jobs to be created or retained offer wages substantially higher than the prevailing wage in the industry as determined by the Illinois Department of Labor pursuant to the Prevailing Wage Act [820 ILCS 130], or an annual wage higher than the State's median income as computed by the Department's Division of Research and Analysis, 620 E. Adams Street, Springfield, Illinois 62701, (217) 785-6117).

 

iv)        Evidence of how the Company will modernize or improve their competitiveness.  The Company must demonstrate how they will accomplish the following:

 

•           improve productivity;

 

•           reverse an actual or expected decline in production; or

 

•           improve the Company's competitive advantage.

 

B)        Financial Evaluation Component – The applicant's financial statements, including the items in Section 570.25(a)(1)(C), (D), (G), (H), and (K), as applicable, will be reviewed through a standard credit analysis which will determine the:  liquidity and debt coverage for the project; ability of the company to manage debt; business trends, and projected earnings.  This data will be compared to similar data for companies in the same industry using the "RMA Annual Statement Studies" (published by Robert Morris Associates, P.O. Box 8500, S-1140 Philadelphia, PA. 19178), or a comparable source (1990 with no later amendments or editions) if such industry is evaluated by this source.  This standard credit analysis will determine the financial stability of the company in accordance with Section 9-4(f) of the Act.

 

2)         The criteria for evaluating the Technical Assistance Grant Program shall be the following:

 

A)        Evidence of Rationale for Program Funding – The company shall demonstrate, in accordance with Section 9-6(b) of the Act, that the project would not be undertaken unless the grant is provided along with the leverage of other funds in accordance with Section 9-6 of the Act and Section 570.60(a)(2).

 

B)        Project Implementation Readiness – The company must demonstrate project readiness, including identifying sources of cash and in-kind matching funds and time schedule for project initiation.

 

C)        Program Purpose – The degree to which the proposed project fulfills the program purpose.

 

D)        Management – The management capacity of the applicant and its potential for completing the project.

 

E)        Cost for Expected Results – The appropriateness of the project costs in terms of the project objectives, the work to be undertaken and the results expected.

 

3)         The Criteria for Evaluating Development Corporation Grant Applications are the following:

 

A)        Department staff will screen all applications to determine that all minimum requirements of the application package have been addressed. Application will be reviewed in accordance with Department review criteria listed in subsection (a)(1)(B).

 

B)        A request for financial assistance to set up and operate a Development Corporation will be evaluated in accordance with the requirements of this Part. The review of applications will begin after the application due date and take no more than 75 working days, with financial assistance awards being announced at the end of that period.  Applications will be evaluated on the basis of:

 

i)          The extent of economic distress and unemployment in the area to be served; the nature of financial needs of the area and the geographic diversity of the  applicants;

 

ii)         The capability of the applicant and its staff as demonstrated by existing or past experience in managing work activities similar to those proposed to be undertaken;

 

iii)        Time schedule for project initiation, etc., indicating the level of project readiness;

 

iv)        Actual or anticipated amount of capitalization, extent of leveraging of other financial resource and consistency of proposed items of expenditure with the requirements of the Act;

 

v)         The merits of the proposed work plan and consistency of proposed activities with the program purpose;

 

vi)        The level of economic development results expected in terms of development financing, retooling or modernization, jobs created or retained, private funds leveraged, etc. and level of other significant benefits or impacts;

 

vii)       Evidence of direct linkages or coordination between the proposed program and private financial institutions and public investment/loan/guarantee programs; and

 

viii)      The anticipated financial feasibility of the project and its ability to maintain continuous operation beneficial to the public as determined by anticipated operational costs of less than or equal to anticipated income or the availability of equity to cover any shortfalls based on the company's historical and projected financial statements.

 

b)         Indirect Funding

            The criteria for evaluating the Participation Loan Program, the Loan Loss Reserve Program and the Development Corporation Participation Loan Program shall be the following:

 

1)         Technical Evaluation Component – Each application will be reviewed to assure compliance with technical program requirements as specified in Sections 9-2, 9-4, 9-4.2, 9-4.2a, and 9-6 of the Act [30 ILCS 750/9-2, 9-4, 9-4.2, 9-4.2a, and 9-6].  The technical evaluation will address the following criteria:

 

A)        Evidence of Need for Program Funding – The company must demonstrate the need for program funds in accordance with requirements of Section 9-4(c) of the Act, including evidence that the project's financing cannot be obtained without Department participation at an interest rate and term which makes the project viable; and the leverage of other funds in accordance with Sections 9-4(a) and (b) and 9-6(a) and (b) of the Act.

 

B)        Project Implementation Readiness – The company must demonstrate to the financial intermediary according to procedures and tests developed by the financial intermediary that it is ready to implement the project.

 

C)        Employment Impact – The application shall provide evidence of: employment impact/opportunity (e.g., job creation/retention), a description of the type and number of any jobs to be created/retained and any evidence that such jobs will generate additional wealth for the community (e.g., final goods or services proposed are sold in markets outside Illinois or final goods or services produced and sold locally substitute for those imported from outside the State).  Special consideration will be given to a Minority, Women and Disability Business Project, a Rural Micro-business Project or to a project which demonstrates additional needs; for example:

 

i)          Distressed community or county with an unemployment rate which is 25% higher than the State average, or a per capita income which is less than the State average, or

 

ii)         Area with limited economic development as evidenced by absence of development activities within the last two years or as evidenced by new job growth rate less than the State or national average, or

 

iii)        Funding would support business which has provided assurance that the project will generate business growth and make an employment impact/opportunity in the community as a result of spinoff businesses, and thus evidence that additional jobs will be created or retained, or

 

iv)        Funding is needed to avert loss of a major employment source (more than 100 jobs or 2% of the local base) in the community, or

 

v)         Jobs to be created or retained offer wages substantially higher than the prevailing wage in the industry as determined by the Illinois Department of Labor pursuant to the Prevailing Wage Act [820 ILCS 130] and Section 6-3 of the Illinois Purchasing Act [30 ILCS 505/6-3], or an annual wage higher than the State's median income as computed by the Department's Division of Research and Analysis, 620 E. Adams Street, Springfield, Illinois 62701, (217) 785-6117).

 

D)        Evidence of how the company will modernize or improve their competitiveness – The company must demonstrate how they will accomplish the following:

 

            i)          improve productivity;

 

            ii)         reverse an actual or expected decline in production; or

 

            iii)        improve the company's competitive advantage.

 

2)         Financial Evaluation Component – The financial intermediary will perform a credit analysis of the company using procedures and tests developed by the financial intermediary to determine the ability of the company to carry out the project.

 

(Source:  Amended at 30 Ill. Reg. 8461, effective April 19, 2006)

 

Section 570.40  Selection for Funding

 

a)         Direct Funding

 

1)         For any Direct Loan application which meets the criteria of Section 570.30(a)(1), Department staff or designee will then conduct field visit evaluations to verify information in the application, leading to the final funding decision. The field visit will analyze the following:

 

A)        an assessment of the project in terms of the employment impact/opportunity involved, in relation to the value of the funds requested and types of jobs preferred as described in Section 570.30(a)(1)(A)(iii);

 

B)        an assessment of the project in terms of the modernization and improvement of competitiveness of the company, in relation to the value of the funds requested as described in Section 570.30(a)(1)(A)(iv);

 

C)        a verification of submitted application information; and

 

D)        past performance of the applicant under previous Departmental programs, if applicable (e.g., success in previous projects and the level of compliance with previous agreements).

 

2)         Applications that best meet the objectives of the programs and demonstrate the greatest potential for job creation/retention or those which modernize or improve the competitiveness of the firm will receive loan or grant funds, until all available funds are expended.

 

3)         For any Technical Assistance Grant application which meets the criteria of Section 570.30(a)(2), Department staff will verify information in the application, leading to the final funding decision.  The evaluation will analyze the following:

 

A)        a verification of submitted application information; and

 

B)        past performance of the applicant under previous Departmental programs, if applicable (e.g., success in previous projects and the level of compliance with previous agreements).

 

4)         A request for financial assistance to organize a Development Corporation will be evaluated in accordance with the requirement of Section 570.30(a)(3). The review of applications will begin after the application due date and take no more than 75 working days, with financial assistance awards being announced at the end of that period.

 

b)         Indirect Funding

 

1)         For the Participation Loan Program Application, the financial intermediary staff will be responsible for the verification of the information in the application.  The Department staff will evaluate the information submitted by the financial intermediary in order to determine that all requirements of the application package have been addressed.

 

2)         For the Loan Loss Reserve Program Application, the financial intermediary staff will be responsible for the verification of the information in the application.

 

3)         For the Development Corporation Participation Program, the financial intermediary staff will be responsible for the verification of the information in the application.  The Department staff will evaluate the information submitted by the financial intermediary in order to determine that all requirements of the application package have been addressed.

 

4)         For the Rural Micro-businesses Participation Loan Program, in addition to the requirements of subsection (b)(1) or (3), the Department:

 

A)        will determine the amount, term, interest rate, and allowable uses of each loan participation awarded; and

 

B)        will allocate no less than 80% of the amount available for this program for loans to businesses that are located in counties with a population of 100,000 or less.

 

(Source:  Amended at 30 Ill. Reg. 8461, effective April 19, 2006)

 

Section 570.50  Funding Limitations

 

a)         Direct Funding

 

1)         In accordance with Sections 9-4(b) and 9-4.3(b) of the Act, the Department shall finance no more than the lesser of 25% of the total project or $750,000 (50% of the project or $100,000 for Minority, Women and Disability Business Loans) unless the Director waives limitations governing the amount of the loan/grant and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project, in accordance with Sections 570.30(a) and 570.40(a), and the subsequent employment impact/opportunity, from occurring.

 

2)         For the Technical Assistance Grant Program, the funding limitation will not exceed $25,000 unless a Director waiver is granted.  The recipient of grant funds shall be required to provide a portion of the financing with respect to the project.  The recipients' financing may be in the form of cash, in-kind services or any other form approved by the Department.

 

3)         Department Financial Assistance to a Development Corporation in the form of a grant shall be limited to not more than $10,000, unless a Director waiver is granted.

 

b)         Indirect Funding

 

1)         For each loan in which the Department buys a participation under the Participation Loan Program, the financial intermediary will be required to retain at least 50% of the amount of its loan.  The Department's participation will not exceed 25% of the total amount of the project or $2,000,000.  In accordance with subsection (a)(1), the Director may waive limitation governing the amount of the loan and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project.

 

2)         As to the amounts received by the ultimate recipients of funds, the Loan Loss Reserve Program funding limitations will be established by the financial intermediary staff involved.

 

3)         Department Financial Assistance to or through a Development Corporation in the form of a participation shall not be made for more than  50% of the Development Corporation's loan and the Department's participation will not exceed 25% of the total amount of the project or $2,000,000, unless the Director waives limitations governing the amount of the loan and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project, in accordance with subsection (a)(1).

 

4)         Notwithstanding the provisions of subsections (b)(1) and (3), Minority, Veteran, Women and Disability Participation Loans, in accordance with Section 9-4.3 of the Act, shall not exceed the lesser of $400,000 or 50% of the total amount of the project unless a Director waiver is granted.

 

5)         Rural Micro-business Participation Loans, in accordance with Section 9-4.2a of the Act, shall not exceed the lesser of $25,000 or 50% of the total amount of the project, unless the Director determines that a waiver of these limits is required to meet the purposes of the Act and is in accordance with subsections (b)(1) and (3).

 

(Source:  Amended at 42 Ill. Reg. 4821, effective March 2, 2018)

 

Section 570.60  Allowable Leverage

 

a)         Direct Funding

 

1)         In addition to the forms of allowable leverage defined in Sections 9-4(a) and 9-6(a) of the Act, allowable leverage will include such tangible assets as:  

 

A)        under-utilized land and/or buildings which are a part of the project;

 

B)        machinery and equipment brought into the state from another state;

 

C)        cash equity provided by the principals, stockholders, or other investors; and

 

D)        funds expended by the business prior to the date of a loan or grant award; existing in-state equipment, land, buildings, furnishings, inventory (already owned and being utilized); lines of credit; post-project costs; and debt refinancing will not be considered as leverage.

 

2)         For the Technical Assistance Grant Program, forms of allowable leverage are cash and in-kind services.  In-kind services may include the following:

 

A)        real or personal property;

 

B)        services; or

 

C)        any other form as designated by the Department.

 

3)         For the Development Corporation Grant Program, the recipient of the grant funds shall be required to provide a portion of the financing with respect to the project.  The recipient's financing shall be in the form of cash.  Department funds must be matched 1:1 by cash from private sources.  None of the matching funds shall have originated as a loan or a grant or other investment of local, State or federal government funding.  Gifts, grants, loans, revolving loan funds, or stock purchases by local, State, or federal governments are encouraged but will not be considered in calculating Development Corporation match.

 

b)         Indirect Funding

 

1)         For the Participation Loan Program, the allowable leverage shall be in the form of a loan, letter of credit, guarantee, purchase or any other form approved by the Department, along with Section 570.60(a)(1).

 

2)         For the Loan Reserve Program, the allowable leverage will be established by the financial intermediary staff involved.

 

3)         For Development Corporation Participations, the allowable leverage shall be in the form of a loan, letter of credit, guarantee, bond purchase or any other form approved by the Department, along with Section 570.60(a)(1).

 

4)         For the Rural Micro-business Participation Loan Program, the borrower shall provide equity capital in an amount equal to 10% of the first $10,000 of the required funds and equity capital, other loans, or leveraged capital, or any combination thereof, in an amount equal to 50% of any additional required funds.

 

(Source:  Amended at 30 Ill. Reg. 8461, effective April 19, 2006)

 

Section 570.70  Administrative Requirements

 

a)         Direct Funding

 

1)         Loan Recipients

 

A)        Loan Terms – Loans for real estate normally will be repaid over a period of up to 10 to 25 years; loans primarily utilized for machinery and equipment will generally vary from 5 to 10 years. Loans not secured by a lien on tangible assets generally require personal guarantees.  Loans primarily intended for short term working capital needs will normally be repaid over a period of 3 months to 5 years.  These loans will generally require personal guarantees from all individuals/entities owning or controlling 20 percent or more of the applicant company, or any lower amount as determined by the Department.  For small companies without major identifiable principals (e.g., no one owns 20% or more of the company), the amount of the loan may be limited to 80% of the value of the fixed asset securing the loan. Periodic installments shall be due and payable to the Department in the method and time(s) specified in the loan agreement.  All payments shall be applied first to interest and then to principal on all simple interest loans.  All payments on amortized loans will be applied to the amortization schedule as stated.

 

B)        Reporting – The Recipient (applicant receiving loan funds) will provide, at least annually, information and reports required by the Department (e.g., reports on job creation/retention; financial statement of assets, liabilities, and net worth).  

 

C)        Monitoring and Evaluation – Recipients 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 loan from the Department.

 

D)       Recipients shall keep detailed records of the project and the use of loan proceeds.  Recipients of loans of more than $100,000 shall furnish to the Department, with the submission of financial statements (see Section 570.70(a)(1)(E)) following the expenditure of project funds, a written audit of the project and the use of loan proceeds.  The audit shall be conducted by certified public accountants licensed by the State of Illinois in accordance with the Illinois Public Accounting Act (Ill. Rev. Stat. 1991, ch. 111, pars. 5500-5536) [225 ILCS 450] unless for good cause, the Department allows the audit to be conducted by an accountant certified by the proper authorities of another state and shall be in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accountants (AICPA) (1991, with no later amendments or editions). The address of the AICPA is:  1211 Avenue of the Americas, New York NY 10036-8775.  For Recipients of loans equal to or less than $100,000 the Department or its designee will conduct one or more inspections of the project and the use of loan proceeds records to verify the use of project funds.

 

E)        Financial Statements – The Recipient shall provide as often as requested by the Department, an unaudited financial statement of the Recipient as at the end of the quarter of the Recipient's fiscal year then elapsed, certified by the Recipient's principal financial officer (e.g., controller, treasurer, chief financial officer) and prepared in accordance with generally accepted accounting principles (issued by the Financial Accounting Standards Board (FASB) (1991, no later amendments or editions) located at 401 Merritt Seven, P.O. Box 5116, Norwalk CT 06856) and fairly presenting the financial position and results of all operations of the Recipient for such quarter.  The Recipient shall furnish to the Department:

 

i)          if the original amount of the loan is less than or equal to $100,000, as soon as available, but not later than 120 days after the end of each fiscal year of the Recipient, a true and correct copy of the Recipient's federal income tax return for such year just ended; provided, however, that if the Recipient provides the Department with a copy of a request for automatic extension filed by the Recipient with the Internal Revenue Service, the required date of delivery shall automatically be extended for four months if the Recipient is an individual and six months if the Recipient is a corporation;

 

ii)         if the original amount of the loan is greater than $100,000 but less than or equal to $250,000, as soon as available, but not later than 120 days after the end of each fiscal year of the Recipient, financial statements of the Recipient as at the end of such year (reviewed by certified public accountants, licensed by the State of Illinois or any other state and satisfactory to the Department) containing a certificate of the aforesaid public accountants certifying to the Department that they are not aware of the occurrence or existence of any condition or event which constitutes a default; or

 

iii)        if the original amount of the loan is greater than $250,000, as soon as available, but not later than 120 days after the end of each fiscal year of the Recipient, financial statements of the Recipient as at the end of such year examined  by certified public accountants (licensed by the State of Illinois or any other state and satisfactory to the Department) containing the unqualified opinion of such public accountants with respect to the financial statements and a certificate of the aforesaid public accountants certifying to the Department that they are not aware of the occurrence or existence of any condition or event which constitutes a default.

 

iv)        if a Recipient has complied with Section 570.70(a)(1)(D) and has submitted financial statements in accordance with Section 570(a)(1)(E)(ii) or (iii) covering the fiscal year ending after the date of funding, the Department may, for good cause (i.e., financial hardship, merger, change of fiscal year end, etc.), accept:

 

for a loan with an original amount of at least $100,000, but less than $250,000, a copy of the Recipient's federal tax return and compiled financial statements, or

 

for a loan with an original amount of $250,00, or more, reviewed financial statements.

 

2)         Development Corporation Grant Recipients

 

A)        Financial Assistance Agreement – During formal negotiations and discussions held with the Department, the Department and the applicant will agree to the scope of work of the agreement and the period of the agreement.

 

B)        Financial Statements – The Development Corporation will provide, at least annually, information and reports required by the Department, including the Corporation's balance sheet, profit and loss statement, and other financial reports due within 45 calendar days after the end of the State fiscal year.

 

C)        Progress Reports – Progress reports, pertaining to and describing the progress toward the project goals, shall be submitted to the Department by the recipient as specified in the grant agreement.

 

D)        Method of Compensation – Payments pursuant to Financial Assistance Award are subject to the availability of funds appropriated to the Department by the Illinois General Assembly.  Payments to the Development Corporation are subject to the initiation of an invoice voucher.  Financial assistance must be obligated, vouchered and liquidated within the period of the agreement or some period of time as determined by the Department.

 

E)        Record Review and Monitoring – Development Corporations 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 Development Corporation involving transactions related to a Financial Assistance Award 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.

 

F)         Audits

 

i)          The Development Corporation shall be responsible for securing an audit of all loan records and such audit must be performed by an independent certified public accountant, licensed by authority of the State of Illinois pursuant to the Illinois Public Accounting Act [225 ILCS 450].  The audit must be conducted in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accounting (AICPA).

 

ii)         The Development Corporation shall work cooperatively with the audit firm selected; actively work with both the audit firm and the Department to resolve any and all audit findings; and work cooperatively with the Department's staff in preparing for, conducting, and resolving audits.

 

iii)        The Department reserves the right to conduct special audits, including but not limited to an agency-wide audit, at any time during normal working hours, of funds expended under Department grants.

 

iv)        Any independent public accounting firm that provides consultant services to a Development Corporation is prohibited from conducting an audit of that Development Corporation for the period during which services were rendered.

 

3)         Technical Assistance Grant Recipients

 

A)        Financial Assistance Agreement – During formal negotiation and discussions, the Department and the applicant will agree to the scope of work and the period of the grant agreement.

 

B)        Expenditure Summary – The recipient shall maintain appropriate records of actual grant related costs and leverage expended by the recipient.  These grant related costs and leverage expenditures shall be reported to the Department as specified in the grant agreement.

 

C)        Progress Reports – Progress reports, pertaining to and describing the progress toward the project goals, shall be submitted to the Department by the recipient as specified in the grant agreement.

 

D)        Department Monitoring and Evaluation – A recipient must permit any agent authorized by the Department, upon presentation of credentials, to have full access to and the right to examine any document, papers and records of the recipient involving transactions related to financial assistance from the Department.

 

E)        Method of Compensation – Payments under this program shall be reimbursements of eligible costs.  Payments pursuant to a grant are subject to the availability of funds appropriated to the Department by the Illinois General Assembly.  Payments to the recipient are subject to receipt of invoice vouchers and conformance with the terms of the approved grant agreement.

 

b)         Indirect Funding

 

1)         For the Participation Loan Program, financial statements of the recipients required by the financial intermediary shall be submitted to the Department by the financial intermediary, in accordance with and as stated in the Agreements established and approved by the Department and executed by the recipient and the financial intermediary.  Other reporting (e.g., employment impact, modernization effectiveness or competitive improvement), as deemed necessary by the Department, shall be obtained from the recipient.

 

2)         For the Loan Reserve Program, the administrative requirements will be established by the financial intermediary.

 

3)         For the Development Corporation Participation Loan Program, financial statements of the recipients required by the financial intermediary shall be submitted to the Department by the financial intermediary, in accordance with and as stated in the Agreements established and approved by the Department and executed by the recipient and the financial intermediary. Other reporting (e.g., employment impact, modernization effectiveness or competitive improvement), as deemed necessary by the Department, shall be obtained from the recipient.

 

(Source:  Amended at 18 Ill. Reg. 6119, effective April 11, 1994)