(2) The department may charge fees in connection with an application submitted under this section and, if the application is approved, with processing and monitoring a loan agreement entered into pursuant to subsection (4) of this section. Fees collected must be deposited in the Small Business Expansion Loan Fund and may be used to pay the administrative costs and expenses of the department in administering the fund and implementing the provisions of this section and ORS 285B.133.
(3) Upon receipt of an application submitted under this section, the department shall determine whether the applicant is eligible to receive a loan from the Small Business Expansion Loan Fund established under ORS 285B.133. The department may approve an application if, after investigation, the department finds that:
(a) The applicant operates a business with 50 or fewer employees that is in the traded sector, as defined in ORS 285A.010, or that primarily supports traded sector industries;
(b) The loan has a reasonable prospect of repayment;
(c) The applicant demonstrates a reasonable potential for high growth that may support economic diversification of the state or the region in which the business is conducted, or increase employment opportunities or retain existing jobs in the state or region;
(d) The applicant demonstrates readiness for market; and
(e) There is or will be a sufficient amount of moneys in the Small Business Expansion Loan Fund to make a loan to the applicant.
(4) If the department approves an application under this section, the department and the applicant shall enter into a loan agreement that provides, at a minimum, the following:
(a) That loan proceeds may be used only to support acquisition of business assets or to pay for business operating expenses. Loan proceeds may not be used to refinance personal debt or debt not used for business purposes.
(b) A plan for repayment of moneys borrowed from the Small Business Expansion Loan Fund. The department may specify the terms of repayment, singly or in any combination, by royalties, on the basis of a percentage of business revenues, by installment payments of principal, installment payments of interest or installment payments of both principal and interest, or otherwise. The plan must set forth a schedule of payments, the term of the loan and the manner of determining when loan payments are delinquent. The department, in its sole discretion, shall establish the terms of repayment, which must be structured so that the repayment plan and pricing:
(A) Based on the total repayment costs, do not directly compete with traditional commercial lending services;
(B) Are commensurate with the risk taken by the department when making a loan to the applicant; and
(C) To the greatest extent possible, are anticipated to cover operational expenses and losses that the department may incur in the administration of the loan program.
(c) That the loan must be secured by sufficient collateral and security. The department may specify by rule the types of collateral and security that are acceptable to secure repayment of the loan, including but not limited to personal guarantees, business or corporate guarantees and pledges of business and personal assets.
(d) That the liability of the state under the agreement may not exceed the availability of moneys in the Small Business Expansion Loan Fund.
(5)(a) The Director of the Oregon Business Development Department, or the director’s designee, may approve loans of up to $250,000 each. Loans greater than $250,000 each may be approved by the Oregon Business Development Commission, or the commission’s designee. No loan may be made for an amount greater than $2 million.
(b) Immediately upon receiving loan proceeds, a successful applicant shall pay to the department an amount equal to one and one-half percent of the principal amount of the loan, for deposit in the Small Business Expansion Loan Fund.
(6) Up to 20 percent of all moneys available for lending in the Small Business Expansion Loan Fund on July 1 of each fiscal year may be reserved for loans to applicants who are individuals considered to have low to moderate household income and low to moderate personal net worth, as defined by the department by rule, and who operate businesses:
(a) Controlled and with at least 51 percent ownership interest in the business by minorities, women or honorably discharged veterans; or
(b) That are located outside of the Portland, Oregon, Metropolitan Statistical Area.
(7)(a) The department shall adopt rules to implement the provisions of this section. Before adopting rules under this paragraph, the department shall consult with a representative from an association representing banks in this state.
(b) The department may adopt rules that establish preferences in making loans under this section to individuals or businesses owned by individuals in underserved communities and in rural communities that may have insufficient access to diverse types of capital and traditional commercial or private financing.
(c) The department may adopt rules establishing a loan amount limit of less than $2 million for purposes of subsection (5) of this section. [2018 c.71 §1]
Note: 285B.130 and 285B.133 were enacted into law by the Legislative Assembly but were not added to or made a part of ORS chapter 285B or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.