162-A:13-a Working Capital Loan Guarantee Program. –
I. Upon recommendation of the authority for the proper implementation of the declared purposes of this chapter, the governor and council may award a state guarantee of the principal of, interest on, and reasonable collection expenses related to, loans which meet the requirements set forth in this section. Such state guarantee shall not at any time exceed 75 percent of the maximum principal amount that may be borrowed under the terms of the loan, plus interest and related reasonable collection expenses with respect to such loan. For purposes of this section, the term "loan" shall include, but not be limited to, revolving credit arrangements that provide for advances and repayment of principal based on the quality and amount of certain assets of a borrower, including rights to receive payments under contracts to provide services or products. The full faith and credit of the state shall be pledged for any such guarantee; provided that the guarantee shall not cause the contingent credit limit of RSA 162-A:22 to be exceeded.
II. The state's guarantee of a loan under this section shall be evidenced by a guarantee agreement entered into by the state, the lender, and the borrower. Such guarantee agreement shall contain such terms and conditions as the authority and the governor and council may impose, including, without limitation, restrictions on the use of loan proceeds, restrictions on the use and operation of any project financed or assisted by the loan, appropriate controls on the requisition of loan proceeds by the borrower, provisions for the state to demand acceleration of the payment of the loan in the event of a default by the borrower, provisions for payment to the authority of guarantee fees and reimbursement of costs and expenses, provisions for reimbursement of the state if the state is required to honor the guarantee, appropriate financial covenants, and provisions for the establishment of reserves. In addition, as a condition of awarding any guarantee, the state shall be subrogated to all of the rights and security of the lender to the extent it honors the guarantee. Any guarantee agreement authorized in accordance with this section shall be executed on behalf of the state by the chairperson, vice chairperson, or executive director of the authority. The governor, with the advice and consent of the council, is authorized to draw a warrant for such sum as may be necessary out of money in the state treasury not otherwise appropriated, for the purpose of honoring any guarantee awarded under this section.
III. Any loan guaranteed under this section shall meet the following requirements:
(a) The agreement establishing the loan shall provide for adequate monitoring of collateral by the lender in accord with reasonable commercial practices; provided, however, that for loans the maximum principal amount of which may not exceed $500,000, the authority may provide alternative monitoring measures that reduce the costs of monitoring the loan.
(b) If the principal amount that may be borrowed under the loan may vary based on the quality and amount of specific assets of the borrower, then the repayment of the loan shall be secured by a first priority security interest in such specific assets.
(c) If the principal amount that may be borrowed under the loan may vary based on the quality and amount of specific assets of the borrower, then the agreement establishing the loan shall provide that the maximum amount of principal that may be advanced shall not exceed:
(1) Ninety percent of the borrower's accounts and accounts receivable which arise in the ordinary course of the borrower's business and which are not more than 90 days old from the due date of the invoice; and
(2) Sixty percent of the borrower's inventory valued at lower of cost or market value.
(d) The maximum principal amount available under the loan to any borrower shall not exceed $2,000,000.
IV. The amount payable under a guarantee awarded under this program may be based upon the percentage of the maximum principal amount available under a loan, and as may be determined by the authority, need not be reduced in proportion to any reduction in the principal balance of the loan.
V. The governor and council shall not award or renew any state guarantee under this section unless after a hearing they have made the findings specified in RSA 162-A:18.