IC 5-28-29-1 "Agreement"
Sec. 1. As used in this chapter, "agreement" means an agreement
between a lender and the corporation under which a lender may
participate in the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-2 "Amount"; "proceeds"
Sec. 2. As used in this chapter in connection with a loan,
"amount" and "proceeds" refer only to the amount covered under an
agreement, unless the context clearly requires otherwise. As added by P.L.162-2007, SEC.24.
IC 5-28-29-3 "Borrower"
Sec. 3. As used in this chapter, "borrower" means the recipient of
a loan that is, has been, or will be filed by the lender for enrollment
under the program and meets the following requirements:
(1) The borrower is a corporation, limited liability company,
partnership, joint venture, sole proprietorship, cooperative, or
other entity, whether profit or nonprofit, that is authorized to
conduct business in Indiana.
(2) The borrower is not an executive officer, a director, or a
principal shareholder of the lender, a member of the immediate
family of an executive officer, a director, or a principal
shareholder of the lender, or an entity controlled by an
executive officer, a director, a principal shareholder, or a
member of the immediate family. As added by P.L.162-2007, SEC.24.
IC 5-28-29-4 "Capital access account"
Sec. 4. As used in this chapter, "capital access account" means an
account created by the corporation for the purposes of the capital
access program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-5 "Claim"
Sec. 5. As used in this chapter, "claim" means a claim filed by the
lender under section 29 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-6 "Early loan"
Sec. 6. As used in this chapter, "early loan" means an enrolled
loan when at the time of its enrollment the total amount of previously
enrolled loans made by the lender under the program was less than
five million dollars ($5,000,000). As added by P.L.162-2007, SEC.24.
IC 5-28-29-7 "Eligible loan"
Sec. 7. As used in this chapter, "eligible loan" means a loan made
by the lender to a borrower that meets the requirements of sections
17 and 18 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-8 "Enrolled loan"
Sec. 8. As used in this chapter, "enrolled loan" means a loan
enrolled by the corporation under the terms of section 19 of this
chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-9 "Lender"
Sec. 9. As used in this chapter, "lender" means a financial
institution (as defined in IC 5-13-4-10) that has entered into an
agreement with the corporation to participate in the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-10 "Passive real estate ownership"
Sec. 10. As used in this chapter, "passive real estate ownership"
means ownership of real estate for the purpose of deriving income
from speculation, trade, or rentals, except that the term does not
include the following:
(1) Ownership of that part of real estate being used or intended
to be used for the operation of the business of the owner of the
real estate.
(2) Ownership of real estate for the purpose of construction or
renovation until the completion of the construction or
renovation phase. As added by P.L.162-2007, SEC.24.
IC 5-28-29-11 "Program"
Sec. 11. As used in this chapter, "program" refers to the capital
access program created by this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-12 "Reserve fund"
Sec. 12. As used in this chapter, "reserve fund" means an account
established by the corporation with funds accumulated under this
chapter and to cover claims made by the lender under this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-13 Establishment; purpose
Sec. 13. The capital access program is established. The purpose
of the program is to provide capital to businesses, particularly small
and medium-sized businesses, to foster economic development in
Indiana. Loans made under the program must be slightly riskier than
conventional loans, but still offer a high degree of soundness in
connection with the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-14 Duties
Sec. 14. The corporation shall do the following:
(1) Administer the program.
(2) Market the program to businesses and other persons in
Indiana in cooperation with financial institutions and statewide
associations representing financial institutions.
(3) If the reserve funds are not maintained in an account with
the lender, upon execution of an agreement between the lender
and the corporation, the corporation shall establish a reserve
fund account at the corporation for the lender for the purpose of
receiving all required premium charges to be paid by the lender
and the borrower and transfers made by the corporation under
this chapter. If the reserve funds are maintained in an account
with the lender, upon execution of an agreement between the
lender and the corporation, the corporation shall establish a
reserve fund account with the lender in the name of the
corporation for the purpose of receiving all required premium
charges to be paid by the lender and the borrower and transfers
made by the corporation under this chapter.
(4) Develop the program, in cooperation with financial
institutions and statewide associations representing financial
institutions, so that the degree of flexibility for the corporation
and the participating lenders is maximized, the state oversight
of individual loans is minimized, and the fiscal integrity of the
program is maintained.
(5) Enter into any contracts necessary to carry out the program.
(6) Take any action reasonably necessary to ensure compliance
with the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-15 Lender eligibility
Sec. 15. A lender is eligible to participate in the program upon
entering into an agreement with the corporation governing the duties
of the corporation and the lender under the program. The lender shall
provide the corporation with information regarding the lender's
participation in the program that the corporation reasonably requires.
Upon notice to the lender, the corporation may inspect the files of the
lender relating to any loans enrolled under the program during
normal business hours of the lender. As added by P.L.162-2007, SEC.24.
IC 5-28-29-16 Corporation has no legal or equitable interest; consent of
corporation unnecessary to amend documents
Sec. 16. Except upon the exercise of the corporation's right of
subrogation under section 32 of this chapter, the corporation has no
legal or equitable interest in any collateral, security, or other right of
recovery in connection with any loan enrolled in the program, and
the corporation's consent is not necessary for any amendment to the
lender's loan documents. As added by P.L.162-2007, SEC.24.
IC 5-28-29-17 Eligible loans
Sec. 17. (a) The following types of loans are eligible loans under
the program:
(1) Loans for industrial or commercial purposes.
(2) Loans to refinance loans made for the purposes in
subdivision (1).
(3) Loans for line of credit agreements established between the
lender and borrower that are used for the purposes in
subdivision (1).
(b) Eligible loans must meet the following criteria:
(1) The lender has not made the loan to enroll in the program
prior debt that is not covered under the program and that is or
was owed by the borrower to the lender.
(2) The proceeds of the loan will not be used for that part of a
project or development devoted to housing.
(3) The proceeds of the loan will not be used to finance passive
real estate ownership.
(4) The proceeds of the loan will be used to finance a project or
enterprise that is located in Indiana and that will foster
economic development in Indiana.
(c) An eligible loan may provide for an interest rate, fees, and
other terms and conditions agreed to by the lender and borrower. If
the loan amount to be borrowed is determined by a commitment
agreement that establishes a line of credit, the amount of the loan is
the maximum amount available to the borrower under the agreement. As added by P.L.162-2007, SEC.24.
IC 5-28-29-18 Loan enrollment; lender actions
Sec. 18. (a) To enroll a loan under the program, the lender must
file a completed loan enrollment form with the corporation. The
lender must also certify the following to the corporation as part of the
filing:
(1) The lender has no substantial reason to believe that the loan
is being made to a borrower who does not meet the
requirements of section 3 of this chapter.
(2) The lender has received from the borrower a written
representation, warranty, pledge, and waiver stating that the
borrower has no legal, beneficial, or equitable interest in the
nonrefundable premium charges or any other funds credited to
the reserve fund established to cover losses sustained by the
lender on enrolled loans.
(3) The loan being filed for enrollment is an eligible loan under
section 17 of this chapter.
(4) Premium charges required of the borrower and lender under
this chapter have been deposited in the reserve fund.
(b) The lender shall file the loan enrollment form within ten (10)
business days after the lender makes the loan. The date on which the
lender makes a loan is the earlier of the date on which the lender first
disburses proceeds of the loan to the borrower or the date on which
the loan documents have been executed and the lender has obligated
itself to disburse proceeds of the loan. The filing date of a loan
enrollment form is the date on which the lender does any of the
following:
(1) Delivers the required documentation to the corporation.
(2) Delivers the document to a professional courier service for
delivery to the corporation.
(3) Mails the document to the corporation by certified mail. As added by P.L.162-2007, SEC.24.
IC 5-28-29-19 Loan enrollment; corporation actions
Sec. 19. When the corporation receives a loan enrollment form,
the corporation shall enroll the loan if the information provided
under section 18 of this chapter indicates that the loan is an eligible
loan. Within five (5) business days after receipt of a loan enrollment
form for an eligible loan, the corporation shall deliver to the lender
an acknowledgment of enrollment signed by the corporation or the
corporation's designee, including documentation of the amount being
transferred by the corporation into the reserve fund under this
chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-20 Loan enrollment; partial coverage under the program
Sec. 20. When filing a loan enrollment form, the lender may
specify an amount to be covered under the program. The amount may
be less than the total amount of the loan. As added by P.L.162-2007, SEC.24.
IC 5-28-29-21 Refinancing
Sec. 21. (a) In the case of a loan to refinance a loan previously
made to the borrower by the lender that was not enrolled under the
program, the lender may obtain coverage under the program for an
amount not exceeding the amount of additional financing.
(b) If an enrolled loan is refinanced and the total amount to be
covered under the program does not exceed the covered amount of
the loan as previously enrolled, the refinanced loan may continue as
an enrolled loan without payment of additional premium charges or
transfers by the corporation to the reserve fund.
(c) If an enrolled loan is refinanced in an amount exceeding the
amount of the loan as previously enrolled, the lender may obtain
coverage of the amount of the refinanced loan that exceeds the
amount covered when the loan was previously enrolled by refiling
the loan for enrollment under section 18 of this chapter.
(d) Fluctuations in the outstanding balance of a line of credit,
without increasing the enrolled amount under the program, are not a
refinancing of the loan. As added by P.L.162-2007, SEC.24.
IC 5-28-29-22 Effect of zero balances; effect of recovery under the bankruptcy
laws
Sec. 22. (a) If the outstanding balance of an enrolled loan that is
not a line of credit is reduced to zero (0), the loan is no longer an
enrolled loan. If an enrolled loan that is a line of credit has an
outstanding balance of zero (0) for a twelve (12) month period, the
line of credit is no longer an enrolled loan, unless, before the
expiration of the twelve (12) month period, the lender reaffirms in
writing to the borrower that the line of credit will remain open and
the borrower acknowledges the reaffirmation in writing.
(b) Notwithstanding subsection (a), any amount recovered from
a lender by a trustee in bankruptcy (or a similar representative of
creditors) as a preference under 11 U.S.C. 547 remains an enrolled
loan for the purpose of filing a claim against the reserve fund. As added by P.L.162-2007, SEC.24.
IC 5-28-29-23 Creation of reserve fund accounts
Sec. 23. Upon execution of an agreement between the lender and
the corporation, the corporation shall establish a reserve fund
account with the lender in the name of the corporation for the
purpose of receiving all required premium charges to be paid by the
lender and the borrower and transfers made by the corporation under
this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-24 Sufficient funds required
Sec. 24. The corporation may not accept loans for enrollment in
the program if the corporation does not have sufficient funds to make
the necessary transfer from the corporation to the reserve fund under
section 25 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-25 Premium charges
Sec. 25. The lender shall determine the premium charges payable
to the reserve fund by the lender and the borrower in connection with
a loan filed for enrollment. The premium paid by the borrower may
not be less than one and one-half percent (1.5%) or greater than three
and one-half percent (3.5%) of the amount of the loan. The premium
paid by the lender must be equal to the amount of the premium paid
by the borrower. The lender may recover the cost of the lender's
premium payment from the borrower in any manner on which the
lender and borrower agree. When enrolling a loan, the corporation
must transfer into the reserve fund from the account premium
amounts determined as follows:
(1) If the amount of a loan, plus the amount of loans previously
enrolled by the lender, is less than two million dollars
($2,000,000), the premium amount transferred must be equal to
one hundred fifty percent (150%) of the combined premiums
paid into the reserve fund by the borrower and the lender for
each enrolled loan.
(2) If, before the enrollment of the loan, the amount of loans
previously enrolled by the lender is equal to or greater than two
million dollars ($2,000,000), the premium amount transferred
must be equal to the combined premiums paid into the reserve
fund by the borrower and the lender for each enrolled loan.
(3) If the total amount of all loans previously enrolled by the
lender is less than two million dollars ($2,000,000), but the
enrollment of a loan will cause the total amount of all enrolled
loans made by the lender to exceed two million dollars
($2,000,000), the corporation shall transfer into the reserve fund
an amount equal to a percentage of the combined premiums
paid into the reserve fund by the lender and the borrower. The
percentage is determined as follows:
STEP ONE: Multiply by one hundred fifty (150) that part of
the loan that when added to the total amount of all loans
previously enrolled by the lender totals two million dollars
($2,000,000).
STEP TWO: Multiply the remaining balance of the loan by
one hundred (100).
STEP THREE: Add the STEP ONE product to the STEP
TWO product.
STEP FOUR: Divide the STEP THREE sum by the total
amount of the loan.
The corporation may transfer two (2) times the amount determined
under this section to the reserve fund if the borrower is a
disadvantaged business enterprise (as defined in IC 5-16-6.5-1). The
corporation may transfer three (3) times the amount determined
under this section to the reserve fund if the borrower is a high growth
company with high skilled jobs (as defined in IC 5-28-30-4). The
corporation may transfer to the reserve fund three (3) times the
amount determined under this section if the borrower is a child care
facility. Unless money is paid out of the reserve fund according to
the specific terms of this chapter, all money paid into the reserve
account by the lender must remain in that account. As added by P.L.162-2007, SEC.24.
IC 5-28-29-26 Reserve fund; corporation control
Sec. 26. (a) All money credited to the reserve fund is under the
exclusive control of the corporation. The corporation may not
withdraw money from the reserve fund, except as specifically
provided in this chapter.
(b) If money in the reserve fund is not deposited by the
corporation in an account with the lender, the money must be
invested or reinvested by the corporation in one (1) of the following:
(1) Direct obligations of the United States, the principal and
interest of which are unconditionally guaranteed by the United
States.
(2) A deposit account at a depository institution whose deposits
are insured by the Federal Deposit Insurance Corporation or
National Credit Union Administration.
(c) All interest earned in a reserve fund account shall be credited
to that account. Fifty percent (50%) of the interest earned may be
withdrawn by the corporation from that account and used for any
purpose. As added by P.L.162-2007, SEC.24.
IC 5-28-29-27 Reserve fund; corporation pledges
Sec. 27. The corporation shall pledge the following to the lender:
(1) The money in the reserve fund will be available to pay
claims under section 29 of this chapter.
(2) The lender will have a first security interest in the money in
the reserve fund to pay the claims.
(3) The corporation will not encumber or pledge the money to
any other party. As added by P.L.162-2007, SEC.24.
IC 5-28-29-28 Reserve fund; transaction reports; records
Sec. 28. (a) If the reserve fund is not maintained with the lender,
the corporation shall provide to the lender quarterly transaction
reports indicating the following:
(1) The balance in the reserve fund.
(2) Payments and transfers into the reserve fund.
(3) Withdrawals from the reserve fund.
(4) Interest or income earned on money credited to the reserve
fund.
(b) The records of the corporation with respect to all:
(1) payments and transfers into the reserve fund;
(2) withdrawals from the reserve fund; and
(3) interest or income earned on the money credited to the
reserve fund;
are available to the lender at the offices of the corporation during
normal business hours. As added by P.L.162-2007, SEC.24.
IC 5-28-29-29 Claims; filing
Sec. 29. (a) If the lender charges off all or part of an enrolled loan,
the lender may file a claim with the corporation. The claim must be
filed contemporaneously with the charge-off.
(b) The lender's claim may include, in addition to the amount of
principal charged off plus accrued interest, one-half (1/2) of the
reasonable documented out-of-pocket expenses incurred in pursuing
collection efforts, including preservation of collateral. The amount
of principal included in the claim may not exceed the principal
amount covered under the program. The amount of accrued interest
included in the claim may not exceed the accrued interest attributable
to the covered principal amount.
(c) The lender shall determine when and how much to charge off
on an enrolled loan in a manner consistent with the lender's normal
method for making these determinations on similar loans that are not
enrolled loans.
(d) If the lender files two (2) or more claims contemporaneously
and there are insufficient funds in the reserve fund at that time to
cover the entire amount of the claims, the lender may designate the
order of priority in which the corporation shall pay the claims. As added by P.L.162-2007, SEC.24.
IC 5-28-29-30 Claims; processing
Sec. 30. (a) Upon receipt by the corporation of a claim filed by the
lender, the corporation shall, within ten (10) business days, pay or
authorize the lender to withdraw from the reserve fund the amount
of the claim as submitted, unless the corporation reasonably
determines that:
(1) the information provided by the lender to the corporation
under this chapter was known by the lender to be false; or
(2) the lender is not otherwise in substantial compliance with
this chapter or the agreement with the corporation.
(b) If there is insufficient money in the reserve fund to cover the
entire amount of the lender's claim, the corporation shall pay to the
lender or authorize the lender to withdraw an amount equal to the
current balance in the reserve fund, and the following apply:
(1) If the enrolled loan for which the claim has been filed is not
an early loan, the payment fully satisfies the claim, and the
lender has no right to receive any further amount from the
reserve fund with respect to that claim.
(2) If the enrolled loan for which the claim has been filed is an
early loan, the corporation, upon request of the lender, shall, out
of any future funds that are transferred into the reserve fund on
subsequently enrolled loans, pay the remaining balance of the
claim upon finding that:
(A) the partial payment has not satisfied the lender's claim;
and
(B) the remaining balance of the claim is not greater than
seventy-five percent (75%) of the balance in the reserve fund
at the time the request for payment by the lender is received
by the corporation. As added by P.L.162-2007, SEC.24.
IC 5-28-29-31 Claims; subsequent lender recovery
Sec. 31. If, after payment of a claim by the corporation, the lender
recovers from a borrower any amount for which payment of the
claim was made, the following apply:
(1) If the recovered amount, when added to the claim previously
paid by the corporation in connection with an enrolled loan,
exceeds the lender's loss on that enrolled loan, the lender shall
promptly pay to the corporation for deposit in the reserve fund
the amount of the excess.
(2) For purposes of this section and section 32 of this chapter,
the lender's loss on an enrolled loan shall be the amount of
principal charged off by the lender plus accrued interest plus
one-half (1/2) of the reasonable and documented out-of-pocket
expenses incurred by the lender in pursuing collection efforts. As added by P.L.162-2007, SEC.24.
IC 5-28-29-32 Claims; subrogation
Sec. 32. (a) If the payment of a claim has fully covered the
lender's loss on an enrolled loan or if the payment of a claim when
combined with any recovery from the borrower has fully covered the
lender's loss, the corporation, upon request, is subrogated to the
rights of the lender with respect to any collateral, security, or other
right of recovery in connection with the loan that has not been
realized by the lender. The lender thereafter shall assign to the
corporation any right, title, or interest to any collateral, security, or
other right of recovery in connection with the loan.
(b) If an assignment has been made under subsection (a), the
corporation is not required to undertake the obligations of the lender
under the lender's loan documents, except for obligations directly
related to the corporation's assigned rights of recovery in connection
with the loan. The lender shall fulfill any other obligations the lender
has under the loan documents in the same manner and to the same
degree as would be required if the assignment had not been made.
The lender shall provide the corporation with all reasonable
assistance the corporation requests in proceeding with respect to any
collateral, security, or other right of recovery, except that the lender
does not need to incur any out-of-pocket expenses.
(c) If the corporation desires to exercise the right of subrogation
in connection with an enrolled loan, and would be entitled to
exercise that right except that the lender's loss has not been fully
covered, the corporation, at the corporation's option, may pay from
funds in the reserve fund an amount sufficient to result in the lender's
loss being fully covered. A payment under this subsection may cover
a principal amount not covered under the program or not included in
the lender's claim. Upon making a payment under this subsection, the
corporation is subrogated to the rights of the lender in accordance
with subsection (a).
(d) Notwithstanding any other provision of this section, the
corporation may not exercise the right of subrogation unless the
corporation determines, in the corporation's discretion, that the
lender has not exercised reasonable care and diligence in collection
activities with respect to the loan, or that there is a reasonable basis
for believing that the lender will not exercise reasonable care and
diligence in the future with respect to those collection activities. As added by P.L.162-2007, SEC.24.
IC 5-28-29-33 Reporting
Sec. 33. (a) Before July 16, October 16, January 16, and April 16
of each year, the lender shall file a quarterly report with the
corporation indicating the number and total outstanding balances of
all enrolled loans for the period of the three (3) preceding calendar
months. A quarterly report is not required for a quarter that ends with
a balance in the reserve fund of zero (0), except that a year-end
report must be filed before July 16 for the preceding twelve (12)
calendar months ending June 30. In computing the total outstanding
balance of all enrolled loans, the balance of a loan may not be greater
than the covered amount of the loan as enrolled.
(b) If a year-end report filed under this section indicates that, for
the immediately preceding twelve (12) calendar month period ending
June 30, the balance in the reserve fund continuously exceeded fifty
percent (50%) of the total outstanding balance of all enrolled loans,
including unfunded parts of enrolled loans that are lines of credit, the
corporation may make a withdrawal from the reserve fund. The
amount of the withdrawal may not be greater than the minimum
amount of any excess as continuously maintained over the
immediately preceding twelve (12) calendar month period ending
June 30. Withdrawals of excess reserve funds by the corporation
under this section may be used for any purpose.
(c) If a year-end report is not filed within thirty (30) days after the
original due date of the report, the corporation may make a
withdrawal from the reserve fund based on the corporation's
determination from an inspection of the lender's files that, for the
immediately preceding twelve (12) calendar month period ending
June 30, the balance in the reserve fund continuously exceeded fifty
percent (50%) of the aggregate outstanding balance of all enrolled
loans, including unfunded parts of enrolled loans that are lines of
credit. The amount of the withdrawal may not be greater than the
minimum amount of any excess as continuously maintained over the
immediately preceding twelve (12) calendar month period ending
June 30. Withdrawals of excess reserve funds by the corporation
under this section may be used for any purpose.
(d) The right of the corporation to make a withdrawal from the
reserve fund under subsection (b) or (c) is subject to the following
provisions:
(1) If a year-end report is filed by July 16 or not more than
thirty (30) days after July 16, the corporation has the right of
withdrawal for a period of ninety (90) days from the date of the
filing of the report with the corporation.
(2) If a year-end report is not filed by July 16 or not more than
thirty (30) days after July 16, the corporation has the right of
withdrawal for a period of ninety (90) days from the date the
corporation determines from an inspection of the lender's files
that the corporation is entitled to make a withdrawal from the
reserve fund under this section. As added by P.L.162-2007, SEC.24.
IC 5-28-29-34 Terminating the obligation to enroll loans
Sec. 34. The corporation may terminate the obligation to a lender
to enroll loans under the program if the corporation determines that
the lender is not in substantial compliance with the requirements of
the program or the requirements of section 23 of this chapter. The
termination takes effect on the date specified in the notice of
termination, except that the termination does not apply to a loan
made on or before the date on which the notice of termination is
received by the lender. If the corporation is terminating the
enrollment of loans for all participating lenders under the program,
the corporation shall provide at least ninety (90) days notice to the
lender. A termination under this section is prospective only and does
not apply to a loan previously refinanced. After termination, the
amount covered under the program may not be increased beyond the
covered amount as previously enrolled. As added by P.L.162-2007, SEC.24.
IC 5-28-29-35 Capital access account
Sec. 35. (a) The corporation shall establish a capital access
account. The corporation shall use the capital access account to carry
out the provisions of the capital access program. The capital access
account consists of all money that is:
(1) appropriated by the general assembly;
(2) transferred by the corporation from the industrial
development guaranty fund; or
(3) transferred by the corporation from the general funds of the
corporation.
(b) The expenses of the corporation attributable and allocated by
the corporation to the capital access program shall be paid from the
capital access account. As added by P.L.162-2007, SEC.24.
IC 5-28-29-1 "Agreement"
Sec. 1. As used in this chapter, "agreement" means an agreement
between a lender and the corporation under which a lender may
participate in the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-2 "Amount"; "proceeds"
Sec. 2. As used in this chapter in connection with a loan,
"amount" and "proceeds" refer only to the amount covered under an
agreement, unless the context clearly requires otherwise. As added by P.L.162-2007, SEC.24.
IC 5-28-29-3 "Borrower"
Sec. 3. As used in this chapter, "borrower" means the recipient of
a loan that is, has been, or will be filed by the lender for enrollment
under the program and meets the following requirements:
(1) The borrower is a corporation, limited liability company,
partnership, joint venture, sole proprietorship, cooperative, or
other entity, whether profit or nonprofit, that is authorized to
conduct business in Indiana.
(2) The borrower is not an executive officer, a director, or a
principal shareholder of the lender, a member of the immediate
family of an executive officer, a director, or a principal
shareholder of the lender, or an entity controlled by an
executive officer, a director, a principal shareholder, or a
member of the immediate family. As added by P.L.162-2007, SEC.24.
IC 5-28-29-4 "Capital access account"
Sec. 4. As used in this chapter, "capital access account" means an
account created by the corporation for the purposes of the capital
access program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-5 "Claim"
Sec. 5. As used in this chapter, "claim" means a claim filed by the
lender under section 29 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-6 "Early loan"
Sec. 6. As used in this chapter, "early loan" means an enrolled
loan when at the time of its enrollment the total amount of previously
enrolled loans made by the lender under the program was less than
five million dollars ($5,000,000). As added by P.L.162-2007, SEC.24.
IC 5-28-29-7 "Eligible loan"
Sec. 7. As used in this chapter, "eligible loan" means a loan made
by the lender to a borrower that meets the requirements of sections
17 and 18 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-8 "Enrolled loan"
Sec. 8. As used in this chapter, "enrolled loan" means a loan
enrolled by the corporation under the terms of section 19 of this
chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-9 "Lender"
Sec. 9. As used in this chapter, "lender" means a financial
institution (as defined in IC 5-13-4-10) that has entered into an
agreement with the corporation to participate in the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-10 "Passive real estate ownership"
Sec. 10. As used in this chapter, "passive real estate ownership"
means ownership of real estate for the purpose of deriving income
from speculation, trade, or rentals, except that the term does not
include the following:
(1) Ownership of that part of real estate being used or intended
to be used for the operation of the business of the owner of the
real estate.
(2) Ownership of real estate for the purpose of construction or
renovation until the completion of the construction or
renovation phase. As added by P.L.162-2007, SEC.24.
IC 5-28-29-11 "Program"
Sec. 11. As used in this chapter, "program" refers to the capital
access program created by this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-12 "Reserve fund"
Sec. 12. As used in this chapter, "reserve fund" means an account
established by the corporation with funds accumulated under this
chapter and to cover claims made by the lender under this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-13 Establishment; purpose
Sec. 13. The capital access program is established. The purpose
of the program is to provide capital to businesses, particularly small
and medium-sized businesses, to foster economic development in
Indiana. Loans made under the program must be slightly riskier than
conventional loans, but still offer a high degree of soundness in
connection with the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-14 Duties
Sec. 14. The corporation shall do the following:
(1) Administer the program.
(2) Market the program to businesses and other persons in
Indiana in cooperation with financial institutions and statewide
associations representing financial institutions.
(3) If the reserve funds are not maintained in an account with
the lender, upon execution of an agreement between the lender
and the corporation, the corporation shall establish a reserve
fund account at the corporation for the lender for the purpose of
receiving all required premium charges to be paid by the lender
and the borrower and transfers made by the corporation under
this chapter. If the reserve funds are maintained in an account
with the lender, upon execution of an agreement between the
lender and the corporation, the corporation shall establish a
reserve fund account with the lender in the name of the
corporation for the purpose of receiving all required premium
charges to be paid by the lender and the borrower and transfers
made by the corporation under this chapter.
(4) Develop the program, in cooperation with financial
institutions and statewide associations representing financial
institutions, so that the degree of flexibility for the corporation
and the participating lenders is maximized, the state oversight
of individual loans is minimized, and the fiscal integrity of the
program is maintained.
(5) Enter into any contracts necessary to carry out the program.
(6) Take any action reasonably necessary to ensure compliance
with the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-15 Lender eligibility
Sec. 15. A lender is eligible to participate in the program upon
entering into an agreement with the corporation governing the duties
of the corporation and the lender under the program. The lender shall
provide the corporation with information regarding the lender's
participation in the program that the corporation reasonably requires.
Upon notice to the lender, the corporation may inspect the files of the
lender relating to any loans enrolled under the program during
normal business hours of the lender. As added by P.L.162-2007, SEC.24.
IC 5-28-29-16 Corporation has no legal or equitable interest; consent of
corporation unnecessary to amend documents
Sec. 16. Except upon the exercise of the corporation's right of
subrogation under section 32 of this chapter, the corporation has no
legal or equitable interest in any collateral, security, or other right of
recovery in connection with any loan enrolled in the program, and
the corporation's consent is not necessary for any amendment to the
lender's loan documents. As added by P.L.162-2007, SEC.24.
IC 5-28-29-17 Eligible loans
Sec. 17. (a) The following types of loans are eligible loans under
the program:
(1) Loans for industrial or commercial purposes.
(2) Loans to refinance loans made for the purposes in
subdivision (1).
(3) Loans for line of credit agreements established between the
lender and borrower that are used for the purposes in
subdivision (1).
(b) Eligible loans must meet the following criteria:
(1) The lender has not made the loan to enroll in the program
prior debt that is not covered under the program and that is or
was owed by the borrower to the lender.
(2) The proceeds of the loan will not be used for that part of a
project or development devoted to housing.
(3) The proceeds of the loan will not be used to finance passive
real estate ownership.
(4) The proceeds of the loan will be used to finance a project or
enterprise that is located in Indiana and that will foster
economic development in Indiana.
(c) An eligible loan may provide for an interest rate, fees, and
other terms and conditions agreed to by the lender and borrower. If
the loan amount to be borrowed is determined by a commitment
agreement that establishes a line of credit, the amount of the loan is
the maximum amount available to the borrower under the agreement. As added by P.L.162-2007, SEC.24.
IC 5-28-29-18 Loan enrollment; lender actions
Sec. 18. (a) To enroll a loan under the program, the lender must
file a completed loan enrollment form with the corporation. The
lender must also certify the following to the corporation as part of the
filing:
(1) The lender has no substantial reason to believe that the loan
is being made to a borrower who does not meet the
requirements of section 3 of this chapter.
(2) The lender has received from the borrower a written
representation, warranty, pledge, and waiver stating that the
borrower has no legal, beneficial, or equitable interest in the
nonrefundable premium charges or any other funds credited to
the reserve fund established to cover losses sustained by the
lender on enrolled loans.
(3) The loan being filed for enrollment is an eligible loan under
section 17 of this chapter.
(4) Premium charges required of the borrower and lender under
this chapter have been deposited in the reserve fund.
(b) The lender shall file the loan enrollment form within ten (10)
business days after the lender makes the loan. The date on which the
lender makes a loan is the earlier of the date on which the lender first
disburses proceeds of the loan to the borrower or the date on which
the loan documents have been executed and the lender has obligated
itself to disburse proceeds of the loan. The filing date of a loan
enrollment form is the date on which the lender does any of the
following:
(1) Delivers the required documentation to the corporation.
(2) Delivers the document to a professional courier service for
delivery to the corporation.
(3) Mails the document to the corporation by certified mail. As added by P.L.162-2007, SEC.24.
IC 5-28-29-19 Loan enrollment; corporation actions
Sec. 19. When the corporation receives a loan enrollment form,
the corporation shall enroll the loan if the information provided
under section 18 of this chapter indicates that the loan is an eligible
loan. Within five (5) business days after receipt of a loan enrollment
form for an eligible loan, the corporation shall deliver to the lender
an acknowledgment of enrollment signed by the corporation or the
corporation's designee, including documentation of the amount being
transferred by the corporation into the reserve fund under this
chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-20 Loan enrollment; partial coverage under the program
Sec. 20. When filing a loan enrollment form, the lender may
specify an amount to be covered under the program. The amount may
be less than the total amount of the loan. As added by P.L.162-2007, SEC.24.
IC 5-28-29-21 Refinancing
Sec. 21. (a) In the case of a loan to refinance a loan previously
made to the borrower by the lender that was not enrolled under the
program, the lender may obtain coverage under the program for an
amount not exceeding the amount of additional financing.
(b) If an enrolled loan is refinanced and the total amount to be
covered under the program does not exceed the covered amount of
the loan as previously enrolled, the refinanced loan may continue as
an enrolled loan without payment of additional premium charges or
transfers by the corporation to the reserve fund.
(c) If an enrolled loan is refinanced in an amount exceeding the
amount of the loan as previously enrolled, the lender may obtain
coverage of the amount of the refinanced loan that exceeds the
amount covered when the loan was previously enrolled by refiling
the loan for enrollment under section 18 of this chapter.
(d) Fluctuations in the outstanding balance of a line of credit,
without increasing the enrolled amount under the program, are not a
refinancing of the loan. As added by P.L.162-2007, SEC.24.
IC 5-28-29-22 Effect of zero balances; effect of recovery under the bankruptcy
laws
Sec. 22. (a) If the outstanding balance of an enrolled loan that is
not a line of credit is reduced to zero (0), the loan is no longer an
enrolled loan. If an enrolled loan that is a line of credit has an
outstanding balance of zero (0) for a twelve (12) month period, the
line of credit is no longer an enrolled loan, unless, before the
expiration of the twelve (12) month period, the lender reaffirms in
writing to the borrower that the line of credit will remain open and
the borrower acknowledges the reaffirmation in writing.
(b) Notwithstanding subsection (a), any amount recovered from
a lender by a trustee in bankruptcy (or a similar representative of
creditors) as a preference under 11 U.S.C. 547 remains an enrolled
loan for the purpose of filing a claim against the reserve fund. As added by P.L.162-2007, SEC.24.
IC 5-28-29-23 Creation of reserve fund accounts
Sec. 23. Upon execution of an agreement between the lender and
the corporation, the corporation shall establish a reserve fund
account with the lender in the name of the corporation for the
purpose of receiving all required premium charges to be paid by the
lender and the borrower and transfers made by the corporation under
this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-24 Sufficient funds required
Sec. 24. The corporation may not accept loans for enrollment in
the program if the corporation does not have sufficient funds to make
the necessary transfer from the corporation to the reserve fund under
section 25 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-25 Premium charges
Sec. 25. The lender shall determine the premium charges payable
to the reserve fund by the lender and the borrower in connection with
a loan filed for enrollment. The premium paid by the borrower may
not be less than one and one-half percent (1.5%) or greater than three
and one-half percent (3.5%) of the amount of the loan. The premium
paid by the lender must be equal to the amount of the premium paid
by the borrower. The lender may recover the cost of the lender's
premium payment from the borrower in any manner on which the
lender and borrower agree. When enrolling a loan, the corporation
must transfer into the reserve fund from the account premium
amounts determined as follows:
(1) If the amount of a loan, plus the amount of loans previously
enrolled by the lender, is less than two million dollars
($2,000,000), the premium amount transferred must be equal to
one hundred fifty percent (150%) of the combined premiums
paid into the reserve fund by the borrower and the lender for
each enrolled loan.
(2) If, before the enrollment of the loan, the amount of loans
previously enrolled by the lender is equal to or greater than two
million dollars ($2,000,000), the premium amount transferred
must be equal to the combined premiums paid into the reserve
fund by the borrower and the lender for each enrolled loan.
(3) If the total amount of all loans previously enrolled by the
lender is less than two million dollars ($2,000,000), but the
enrollment of a loan will cause the total amount of all enrolled
loans made by the lender to exceed two million dollars
($2,000,000), the corporation shall transfer into the reserve fund
an amount equal to a percentage of the combined premiums
paid into the reserve fund by the lender and the borrower. The
percentage is determined as follows:
STEP ONE: Multiply by one hundred fifty (150) that part of
the loan that when added to the total amount of all loans
previously enrolled by the lender totals two million dollars
($2,000,000).
STEP TWO: Multiply the remaining balance of the loan by
one hundred (100).
STEP THREE: Add the STEP ONE product to the STEP
TWO product.
STEP FOUR: Divide the STEP THREE sum by the total
amount of the loan.
The corporation may transfer two (2) times the amount determined
under this section to the reserve fund if the borrower is a
disadvantaged business enterprise (as defined in IC 5-16-6.5-1). The
corporation may transfer three (3) times the amount determined
under this section to the reserve fund if the borrower is a high growth
company with high skilled jobs (as defined in IC 5-28-30-4). The
corporation may transfer to the reserve fund three (3) times the
amount determined under this section if the borrower is a child care
facility. Unless money is paid out of the reserve fund according to
the specific terms of this chapter, all money paid into the reserve
account by the lender must remain in that account. As added by P.L.162-2007, SEC.24.
IC 5-28-29-26 Reserve fund; corporation control
Sec. 26. (a) All money credited to the reserve fund is under the
exclusive control of the corporation. The corporation may not
withdraw money from the reserve fund, except as specifically
provided in this chapter.
(b) If money in the reserve fund is not deposited by the
corporation in an account with the lender, the money must be
invested or reinvested by the corporation in one (1) of the following:
(1) Direct obligations of the United States, the principal and
interest of which are unconditionally guaranteed by the United
States.
(2) A deposit account at a depository institution whose deposits
are insured by the Federal Deposit Insurance Corporation or
National Credit Union Administration.
(c) All interest earned in a reserve fund account shall be credited
to that account. Fifty percent (50%) of the interest earned may be
withdrawn by the corporation from that account and used for any
purpose. As added by P.L.162-2007, SEC.24.
IC 5-28-29-27 Reserve fund; corporation pledges
Sec. 27. The corporation shall pledge the following to the lender:
(1) The money in the reserve fund will be available to pay
claims under section 29 of this chapter.
(2) The lender will have a first security interest in the money in
the reserve fund to pay the claims.
(3) The corporation will not encumber or pledge the money to
any other party. As added by P.L.162-2007, SEC.24.
IC 5-28-29-28 Reserve fund; transaction reports; records
Sec. 28. (a) If the reserve fund is not maintained with the lender,
the corporation shall provide to the lender quarterly transaction
reports indicating the following:
(1) The balance in the reserve fund.
(2) Payments and transfers into the reserve fund.
(3) Withdrawals from the reserve fund.
(4) Interest or income earned on money credited to the reserve
fund.
(b) The records of the corporation with respect to all:
(1) payments and transfers into the reserve fund;
(2) withdrawals from the reserve fund; and
(3) interest or income earned on the money credited to the
reserve fund;
are available to the lender at the offices of the corporation during
normal business hours. As added by P.L.162-2007, SEC.24.
IC 5-28-29-29 Claims; filing
Sec. 29. (a) If the lender charges off all or part of an enrolled loan,
the lender may file a claim with the corporation. The claim must be
filed contemporaneously with the charge-off.
(b) The lender's claim may include, in addition to the amount of
principal charged off plus accrued interest, one-half (1/2) of the
reasonable documented out-of-pocket expenses incurred in pursuing
collection efforts, including preservation of collateral. The amount
of principal included in the claim may not exceed the principal
amount covered under the program. The amount of accrued interest
included in the claim may not exceed the accrued interest attributable
to the covered principal amount.
(c) The lender shall determine when and how much to charge off
on an enrolled loan in a manner consistent with the lender's normal
method for making these determinations on similar loans that are not
enrolled loans.
(d) If the lender files two (2) or more claims contemporaneously
and there are insufficient funds in the reserve fund at that time to
cover the entire amount of the claims, the lender may designate the
order of priority in which the corporation shall pay the claims. As added by P.L.162-2007, SEC.24.
IC 5-28-29-30 Claims; processing
Sec. 30. (a) Upon receipt by the corporation of a claim filed by the
lender, the corporation shall, within ten (10) business days, pay or
authorize the lender to withdraw from the reserve fund the amount
of the claim as submitted, unless the corporation reasonably
determines that:
(1) the information provided by the lender to the corporation
under this chapter was known by the lender to be false; or
(2) the lender is not otherwise in substantial compliance with
this chapter or the agreement with the corporation.
(b) If there is insufficient money in the reserve fund to cover the
entire amount of the lender's claim, the corporation shall pay to the
lender or authorize the lender to withdraw an amount equal to the
current balance in the reserve fund, and the following apply:
(1) If the enrolled loan for which the claim has been filed is not
an early loan, the payment fully satisfies the claim, and the
lender has no right to receive any further amount from the
reserve fund with respect to that claim.
(2) If the enrolled loan for which the claim has been filed is an
early loan, the corporation, upon request of the lender, shall, out
of any future funds that are transferred into the reserve fund on
subsequently enrolled loans, pay the remaining balance of the
claim upon finding that:
(A) the partial payment has not satisfied the lender's claim;
and
(B) the remaining balance of the claim is not greater than
seventy-five percent (75%) of the balance in the reserve fund
at the time the request for payment by the lender is received
by the corporation. As added by P.L.162-2007, SEC.24.
IC 5-28-29-31 Claims; subsequent lender recovery
Sec. 31. If, after payment of a claim by the corporation, the lender
recovers from a borrower any amount for which payment of the
claim was made, the following apply:
(1) If the recovered amount, when added to the claim previously
paid by the corporation in connection with an enrolled loan,
exceeds the lender's loss on that enrolled loan, the lender shall
promptly pay to the corporation for deposit in the reserve fund
the amount of the excess.
(2) For purposes of this section and section 32 of this chapter,
the lender's loss on an enrolled loan shall be the amount of
principal charged off by the lender plus accrued interest plus
one-half (1/2) of the reasonable and documented out-of-pocket
expenses incurred by the lender in pursuing collection efforts. As added by P.L.162-2007, SEC.24.
IC 5-28-29-32 Claims; subrogation
Sec. 32. (a) If the payment of a claim has fully covered the
lender's loss on an enrolled loan or if the payment of a claim when
combined with any recovery from the borrower has fully covered the
lender's loss, the corporation, upon request, is subrogated to the
rights of the lender with respect to any collateral, security, or other
right of recovery in connection with the loan that has not been
realized by the lender. The lender thereafter shall assign to the
corporation any right, title, or interest to any collateral, security, or
other right of recovery in connection with the loan.
(b) If an assignment has been made under subsection (a), the
corporation is not required to undertake the obligations of the lender
under the lender's loan documents, except for obligations directly
related to the corporation's assigned rights of recovery in connection
with the loan. The lender shall fulfill any other obligations the lender
has under the loan documents in the same manner and to the same
degree as would be required if the assignment had not been made.
The lender shall provide the corporation with all reasonable
assistance the corporation requests in proceeding with respect to any
collateral, security, or other right of recovery, except that the lender
does not need to incur any out-of-pocket expenses.
(c) If the corporation desires to exercise the right of subrogation
in connection with an enrolled loan, and would be entitled to
exercise that right except that the lender's loss has not been fully
covered, the corporation, at the corporation's option, may pay from
funds in the reserve fund an amount sufficient to result in the lender's
loss being fully covered. A payment under this subsection may cover
a principal amount not covered under the program or not included in
the lender's claim. Upon making a payment under this subsection, the
corporation is subrogated to the rights of the lender in accordance
with subsection (a).
(d) Notwithstanding any other provision of this section, the
corporation may not exercise the right of subrogation unless the
corporation determines, in the corporation's discretion, that the
lender has not exercised reasonable care and diligence in collection
activities with respect to the loan, or that there is a reasonable basis
for believing that the lender will not exercise reasonable care and
diligence in the future with respect to those collection activities. As added by P.L.162-2007, SEC.24.
IC 5-28-29-33 Reporting
Sec. 33. (a) Before July 16, October 16, January 16, and April 16
of each year, the lender shall file a quarterly report with the
corporation indicating the number and total outstanding balances of
all enrolled loans for the period of the three (3) preceding calendar
months. A quarterly report is not required for a quarter that ends with
a balance in the reserve fund of zero (0), except that a year-end
report must be filed before July 16 for the preceding twelve (12)
calendar months ending June 30. In computing the total outstanding
balance of all enrolled loans, the balance of a loan may not be greater
than the covered amount of the loan as enrolled.
(b) If a year-end report filed under this section indicates that, for
the immediately preceding twelve (12) calendar month period ending
June 30, the balance in the reserve fund continuously exceeded fifty
percent (50%) of the total outstanding balance of all enrolled loans,
including unfunded parts of enrolled loans that are lines of credit, the
corporation may make a withdrawal from the reserve fund. The
amount of the withdrawal may not be greater than the minimum
amount of any excess as continuously maintained over the
immediately preceding twelve (12) calendar month period ending
June 30. Withdrawals of excess reserve funds by the corporation
under this section may be used for any purpose.
(c) If a year-end report is not filed within thirty (30) days after the
original due date of the report, the corporation may make a
withdrawal from the reserve fund based on the corporation's
determination from an inspection of the lender's files that, for the
immediately preceding twelve (12) calendar month period ending
June 30, the balance in the reserve fund continuously exceeded fifty
percent (50%) of the aggregate outstanding balance of all enrolled
loans, including unfunded parts of enrolled loans that are lines of
credit. The amount of the withdrawal may not be greater than the
minimum amount of any excess as continuously maintained over the
immediately preceding twelve (12) calendar month period ending
June 30. Withdrawals of excess reserve funds by the corporation
under this section may be used for any purpose.
(d) The right of the corporation to make a withdrawal from the
reserve fund under subsection (b) or (c) is subject to the following
provisions:
(1) If a year-end report is filed by July 16 or not more than
thirty (30) days after July 16, the corporation has the right of
withdrawal for a period of ninety (90) days from the date of the
filing of the report with the corporation.
(2) If a year-end report is not filed by July 16 or not more than
thirty (30) days after July 16, the corporation has the right of
withdrawal for a period of ninety (90) days from the date the
corporation determines from an inspection of the lender's files
that the corporation is entitled to make a withdrawal from the
reserve fund under this section. As added by P.L.162-2007, SEC.24.
IC 5-28-29-34 Terminating the obligation to enroll loans
Sec. 34. The corporation may terminate the obligation to a lender
to enroll loans under the program if the corporation determines that
the lender is not in substantial compliance with the requirements of
the program or the requirements of section 23 of this chapter. The
termination takes effect on the date specified in the notice of
termination, except that the termination does not apply to a loan
made on or before the date on which the notice of termination is
received by the lender. If the corporation is terminating the
enrollment of loans for all participating lenders under the program,
the corporation shall provide at least ninety (90) days notice to the
lender. A termination under this section is prospective only and does
not apply to a loan previously refinanced. After termination, the
amount covered under the program may not be increased beyond the
covered amount as previously enrolled. As added by P.L.162-2007, SEC.24.
IC 5-28-29-35 Capital access account
Sec. 35. (a) The corporation shall establish a capital access
account. The corporation shall use the capital access account to carry
out the provisions of the capital access program. The capital access
account consists of all money that is:
(1) appropriated by the general assembly;
(2) transferred by the corporation from the industrial
development guaranty fund; or
(3) transferred by the corporation from the general funds of the
corporation.
(b) The expenses of the corporation attributable and allocated by
the corporation to the capital access program shall be paid from the
capital access account. As added by P.L.162-2007, SEC.24.
IC 5-28-29-1 "Agreement"
Sec. 1. As used in this chapter, "agreement" means an agreement
between a lender and the corporation under which a lender may
participate in the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-2 "Amount"; "proceeds"
Sec. 2. As used in this chapter in connection with a loan,
"amount" and "proceeds" refer only to the amount covered under an
agreement, unless the context clearly requires otherwise. As added by P.L.162-2007, SEC.24.
IC 5-28-29-3 "Borrower"
Sec. 3. As used in this chapter, "borrower" means the recipient of
a loan that is, has been, or will be filed by the lender for enrollment
under the program and meets the following requirements:
(1) The borrower is a corporation, limited liability company,
partnership, joint venture, sole proprietorship, cooperative, or
other entity, whether profit or nonprofit, that is authorized to
conduct business in Indiana.
(2) The borrower is not an executive officer, a director, or a
principal shareholder of the lender, a member of the immediate
family of an executive officer, a director, or a principal
shareholder of the lender, or an entity controlled by an
executive officer, a director, a principal shareholder, or a
member of the immediate family. As added by P.L.162-2007, SEC.24.
IC 5-28-29-4 "Capital access account"
Sec. 4. As used in this chapter, "capital access account" means an
account created by the corporation for the purposes of the capital
access program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-5 "Claim"
Sec. 5. As used in this chapter, "claim" means a claim filed by the
lender under section 29 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-6 "Early loan"
Sec. 6. As used in this chapter, "early loan" means an enrolled
loan when at the time of its enrollment the total amount of previously
enrolled loans made by the lender under the program was less than
five million dollars ($5,000,000). As added by P.L.162-2007, SEC.24.
IC 5-28-29-7 "Eligible loan"
Sec. 7. As used in this chapter, "eligible loan" means a loan made
by the lender to a borrower that meets the requirements of sections
17 and 18 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-8 "Enrolled loan"
Sec. 8. As used in this chapter, "enrolled loan" means a loan
enrolled by the corporation under the terms of section 19 of this
chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-9 "Lender"
Sec. 9. As used in this chapter, "lender" means a financial
institution (as defined in IC 5-13-4-10) that has entered into an
agreement with the corporation to participate in the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-10 "Passive real estate ownership"
Sec. 10. As used in this chapter, "passive real estate ownership"
means ownership of real estate for the purpose of deriving income
from speculation, trade, or rentals, except that the term does not
include the following:
(1) Ownership of that part of real estate being used or intended
to be used for the operation of the business of the owner of the
real estate.
(2) Ownership of real estate for the purpose of construction or
renovation until the completion of the construction or
renovation phase. As added by P.L.162-2007, SEC.24.
IC 5-28-29-11 "Program"
Sec. 11. As used in this chapter, "program" refers to the capital
access program created by this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-12 "Reserve fund"
Sec. 12. As used in this chapter, "reserve fund" means an account
established by the corporation with funds accumulated under this
chapter and to cover claims made by the lender under this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-13 Establishment; purpose
Sec. 13. The capital access program is established. The purpose
of the program is to provide capital to businesses, particularly small
and medium-sized businesses, to foster economic development in
Indiana. Loans made under the program must be slightly riskier than
conventional loans, but still offer a high degree of soundness in
connection with the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-14 Duties
Sec. 14. The corporation shall do the following:
(1) Administer the program.
(2) Market the program to businesses and other persons in
Indiana in cooperation with financial institutions and statewide
associations representing financial institutions.
(3) If the reserve funds are not maintained in an account with
the lender, upon execution of an agreement between the lender
and the corporation, the corporation shall establish a reserve
fund account at the corporation for the lender for the purpose of
receiving all required premium charges to be paid by the lender
and the borrower and transfers made by the corporation under
this chapter. If the reserve funds are maintained in an account
with the lender, upon execution of an agreement between the
lender and the corporation, the corporation shall establish a
reserve fund account with the lender in the name of the
corporation for the purpose of receiving all required premium
charges to be paid by the lender and the borrower and transfers
made by the corporation under this chapter.
(4) Develop the program, in cooperation with financial
institutions and statewide associations representing financial
institutions, so that the degree of flexibility for the corporation
and the participating lenders is maximized, the state oversight
of individual loans is minimized, and the fiscal integrity of the
program is maintained.
(5) Enter into any contracts necessary to carry out the program.
(6) Take any action reasonably necessary to ensure compliance
with the program. As added by P.L.162-2007, SEC.24.
IC 5-28-29-15 Lender eligibility
Sec. 15. A lender is eligible to participate in the program upon
entering into an agreement with the corporation governing the duties
of the corporation and the lender under the program. The lender shall
provide the corporation with information regarding the lender's
participation in the program that the corporation reasonably requires.
Upon notice to the lender, the corporation may inspect the files of the
lender relating to any loans enrolled under the program during
normal business hours of the lender. As added by P.L.162-2007, SEC.24.
IC 5-28-29-16 Corporation has no legal or equitable interest; consent of
corporation unnecessary to amend documents
Sec. 16. Except upon the exercise of the corporation's right of
subrogation under section 32 of this chapter, the corporation has no
legal or equitable interest in any collateral, security, or other right of
recovery in connection with any loan enrolled in the program, and
the corporation's consent is not necessary for any amendment to the
lender's loan documents. As added by P.L.162-2007, SEC.24.
IC 5-28-29-17 Eligible loans
Sec. 17. (a) The following types of loans are eligible loans under
the program:
(1) Loans for industrial or commercial purposes.
(2) Loans to refinance loans made for the purposes in
subdivision (1).
(3) Loans for line of credit agreements established between the
lender and borrower that are used for the purposes in
subdivision (1).
(b) Eligible loans must meet the following criteria:
(1) The lender has not made the loan to enroll in the program
prior debt that is not covered under the program and that is or
was owed by the borrower to the lender.
(2) The proceeds of the loan will not be used for that part of a
project or development devoted to housing.
(3) The proceeds of the loan will not be used to finance passive
real estate ownership.
(4) The proceeds of the loan will be used to finance a project or
enterprise that is located in Indiana and that will foster
economic development in Indiana.
(c) An eligible loan may provide for an interest rate, fees, and
other terms and conditions agreed to by the lender and borrower. If
the loan amount to be borrowed is determined by a commitment
agreement that establishes a line of credit, the amount of the loan is
the maximum amount available to the borrower under the agreement. As added by P.L.162-2007, SEC.24.
IC 5-28-29-18 Loan enrollment; lender actions
Sec. 18. (a) To enroll a loan under the program, the lender must
file a completed loan enrollment form with the corporation. The
lender must also certify the following to the corporation as part of the
filing:
(1) The lender has no substantial reason to believe that the loan
is being made to a borrower who does not meet the
requirements of section 3 of this chapter.
(2) The lender has received from the borrower a written
representation, warranty, pledge, and waiver stating that the
borrower has no legal, beneficial, or equitable interest in the
nonrefundable premium charges or any other funds credited to
the reserve fund established to cover losses sustained by the
lender on enrolled loans.
(3) The loan being filed for enrollment is an eligible loan under
section 17 of this chapter.
(4) Premium charges required of the borrower and lender under
this chapter have been deposited in the reserve fund.
(b) The lender shall file the loan enrollment form within ten (10)
business days after the lender makes the loan. The date on which the
lender makes a loan is the earlier of the date on which the lender first
disburses proceeds of the loan to the borrower or the date on which
the loan documents have been executed and the lender has obligated
itself to disburse proceeds of the loan. The filing date of a loan
enrollment form is the date on which the lender does any of the
following:
(1) Delivers the required documentation to the corporation.
(2) Delivers the document to a professional courier service for
delivery to the corporation.
(3) Mails the document to the corporation by certified mail. As added by P.L.162-2007, SEC.24.
IC 5-28-29-19 Loan enrollment; corporation actions
Sec. 19. When the corporation receives a loan enrollment form,
the corporation shall enroll the loan if the information provided
under section 18 of this chapter indicates that the loan is an eligible
loan. Within five (5) business days after receipt of a loan enrollment
form for an eligible loan, the corporation shall deliver to the lender
an acknowledgment of enrollment signed by the corporation or the
corporation's designee, including documentation of the amount being
transferred by the corporation into the reserve fund under this
chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-20 Loan enrollment; partial coverage under the program
Sec. 20. When filing a loan enrollment form, the lender may
specify an amount to be covered under the program. The amount may
be less than the total amount of the loan. As added by P.L.162-2007, SEC.24.
IC 5-28-29-21 Refinancing
Sec. 21. (a) In the case of a loan to refinance a loan previously
made to the borrower by the lender that was not enrolled under the
program, the lender may obtain coverage under the program for an
amount not exceeding the amount of additional financing.
(b) If an enrolled loan is refinanced and the total amount to be
covered under the program does not exceed the covered amount of
the loan as previously enrolled, the refinanced loan may continue as
an enrolled loan without payment of additional premium charges or
transfers by the corporation to the reserve fund.
(c) If an enrolled loan is refinanced in an amount exceeding the
amount of the loan as previously enrolled, the lender may obtain
coverage of the amount of the refinanced loan that exceeds the
amount covered when the loan was previously enrolled by refiling
the loan for enrollment under section 18 of this chapter.
(d) Fluctuations in the outstanding balance of a line of credit,
without increasing the enrolled amount under the program, are not a
refinancing of the loan. As added by P.L.162-2007, SEC.24.
IC 5-28-29-22 Effect of zero balances; effect of recovery under the bankruptcy
laws
Sec. 22. (a) If the outstanding balance of an enrolled loan that is
not a line of credit is reduced to zero (0), the loan is no longer an
enrolled loan. If an enrolled loan that is a line of credit has an
outstanding balance of zero (0) for a twelve (12) month period, the
line of credit is no longer an enrolled loan, unless, before the
expiration of the twelve (12) month period, the lender reaffirms in
writing to the borrower that the line of credit will remain open and
the borrower acknowledges the reaffirmation in writing.
(b) Notwithstanding subsection (a), any amount recovered from
a lender by a trustee in bankruptcy (or a similar representative of
creditors) as a preference under 11 U.S.C. 547 remains an enrolled
loan for the purpose of filing a claim against the reserve fund. As added by P.L.162-2007, SEC.24.
IC 5-28-29-23 Creation of reserve fund accounts
Sec. 23. Upon execution of an agreement between the lender and
the corporation, the corporation shall establish a reserve fund
account with the lender in the name of the corporation for the
purpose of receiving all required premium charges to be paid by the
lender and the borrower and transfers made by the corporation under
this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-24 Sufficient funds required
Sec. 24. The corporation may not accept loans for enrollment in
the program if the corporation does not have sufficient funds to make
the necessary transfer from the corporation to the reserve fund under
section 25 of this chapter. As added by P.L.162-2007, SEC.24.
IC 5-28-29-25 Premium charges
Sec. 25. The lender shall determine the premium charges payable
to the reserve fund by the lender and the borrower in connection with
a loan filed for enrollment. The premium paid by the borrower may
not be less than one and one-half percent (1.5%) or greater than three
and one-half percent (3.5%) of the amount of the loan. The premium
paid by the lender must be equal to the amount of the premium paid
by the borrower. The lender may recover the cost of the lender's
premium payment from the borrower in any manner on which the
lender and borrower agree. When enrolling a loan, the corporation
must transfer into the reserve fund from the account premium
amounts determined as follows:
(1) If the amount of a loan, plus the amount of loans previously
enrolled by the lender, is less than two million dollars
($2,000,000), the premium amount transferred must be equal to
one hundred fifty percent (150%) of the combined premiums
paid into the reserve fund by the borrower and the lender for
each enrolled loan.
(2) If, before the enrollment of the loan, the amount of loans
previously enrolled by the lender is equal to or greater than two
million dollars ($2,000,000), the premium amount transferred
must be equal to the combined premiums paid into the reserve
fund by the borrower and the lender for each enrolled loan.
(3) If the total amount of all loans previously enrolled by the
lender is less than two million dollars ($2,000,000), but the
enrollment of a loan will cause the total amount of all enrolled
loans made by the lender to exceed two million dollars
($2,000,000), the corporation shall transfer into the reserve fund
an amount equal to a percentage of the combined premiums
paid into the reserve fund by the lender and the borrower. The
percentage is determined as follows:
STEP ONE: Multiply by one hundred fifty (150) that part of
the loan that when added to the total amount of all loans
previously enrolled by the lender totals two million dollars
($2,000,000).
STEP TWO: Multiply the remaining balance of the loan by
one hundred (100).
STEP THREE: Add the STEP ONE product to the STEP
TWO product.
STEP FOUR: Divide the STEP THREE sum by the total
amount of the loan.
The corporation may transfer two (2) times the amount determined
under this section to the reserve fund if the borrower is a
disadvantaged business enterprise (as defined in IC 5-16-6.5-1). The
corporation may transfer three (3) times the amount determined
under this section to the reserve fund if the borrower is a high growth
company with high skilled jobs (as defined in IC 5-28-30-4). The
corporation may transfer to the reserve fund three (3) times the
amount determined under this section if the borrower is a child care
facility. Unless money is paid out of the reserve fund according to
the specific terms of this chapter, all money paid into the reserve
account by the lender must remain in that account. As added by P.L.162-2007, SEC.24.
IC 5-28-29-26 Reserve fund; corporation control
Sec. 26. (a) All money credited to the reserve fund is under the
exclusive control of the corporation. The corporation may not
withdraw money from the reserve fund, except as specifically
provided in this chapter.
(b) If money in the reserve fund is not deposited by the
corporation in an account with the lender, the money must be
invested or reinvested by the corporation in one (1) of the following:
(1) Direct obligations of the United States, the principal and
interest of which are unconditionally guaranteed by the United
States.
(2) A deposit account at a depository institution whose deposits
are insured by the Federal Deposit Insurance Corporation or
National Credit Union Administration.
(c) All interest earned in a reserve fund account shall be credited
to that account. Fifty percent (50%) of the interest earned may be
withdrawn by the corporation from that account and used for any
purpose. As added by P.L.162-2007, SEC.24.
IC 5-28-29-27 Reserve fund; corporation pledges
Sec. 27. The corporation shall pledge the following to the lender:
(1) The money in the reserve fund will be available to pay
claims under section 29 of this chapter.
(2) The lender will have a first security interest in the money in
the reserve fund to pay the claims.
(3) The corporation will not encumber or pledge the money to
any other party. As added by P.L.162-2007, SEC.24.
IC 5-28-29-28 Reserve fund; transaction reports; records
Sec. 28. (a) If the reserve fund is not maintained with the lender,
the corporation shall provide to the lender quarterly transaction
reports indicating the following:
(1) The balance in the reserve fund.
(2) Payments and transfers into the reserve fund.
(3) Withdrawals from the reserve fund.
(4) Interest or income earned on money credited to the reserve
fund.
(b) The records of the corporation with respect to all:
(1) payments and transfers into the reserve fund;
(2) withdrawals from the reserve fund; and
(3) interest or income earned on the money credited to the
reserve fund;
are available to the lender at the offices of the corporation during
normal business hours. As added by P.L.162-2007, SEC.24.
IC 5-28-29-29 Claims; filing
Sec. 29. (a) If the lender charges off all or part of an enrolled loan,
the lender may file a claim with the corporation. The claim must be
filed contemporaneously with the charge-off.
(b) The lender's claim may include, in addition to the amount of
principal charged off plus accrued interest, one-half (1/2) of the
reasonable documented out-of-pocket expenses incurred in pursuing
collection efforts, including preservation of collateral. The amount
of principal included in the claim may not exceed the principal
amount covered under the program. The amount of accrued interest
included in the claim may not exceed the accrued interest attributable
to the covered principal amount.
(c) The lender shall determine when and how much to charge off
on an enrolled loan in a manner consistent with the lender's normal
method for making these determinations on similar loans that are not
enrolled loans.
(d) If the lender files two (2) or more claims contemporaneously
and there are insufficient funds in the reserve fund at that time to
cover the entire amount of the claims, the lender may designate the
order of priority in which the corporation shall pay the claims. As added by P.L.162-2007, SEC.24.
IC 5-28-29-30 Claims; processing
Sec. 30. (a) Upon receipt by the corporation of a claim filed by the
lender, the corporation shall, within ten (10) business days, pay or
authorize the lender to withdraw from the reserve fund the amount
of the claim as submitted, unless the corporation reasonably
determines that:
(1) the information provided by the lender to the corporation
under this chapter was known by the lender to be false; or
(2) the lender is not otherwise in substantial compliance with
this chapter or the agreement with the corporation.
(b) If there is insufficient money in the reserve fund to cover the
entire amount of the lender's claim, the corporation shall pay to the
lender or authorize the lender to withdraw an amount equal to the
current balance in the reserve fund, and the following apply:
(1) If the enrolled loan for which the claim has been filed is not
an early loan, the payment fully satisfies the claim, and the
lender has no right to receive any further amount from the
reserve fund with respect to that claim.
(2) If the enrolled loan for which the claim has been filed is an
early loan, the corporation, upon request of the lender, shall, out
of any future funds that are transferred into the reserve fund on
subsequently enrolled loans, pay the remaining balance of the
claim upon finding that:
(A) the partial payment has not satisfied the lender's claim;
and
(B) the remaining balance of the claim is not greater than
seventy-five percent (75%) of the balance in the reserve fund
at the time the request for payment by the lender is received
by the corporation. As added by P.L.162-2007, SEC.24.
IC 5-28-29-31 Claims; subsequent lender recovery
Sec. 31. If, after payment of a claim by the corporation, the lender
recovers from a borrower any amount for which payment of the
claim was made, the following apply:
(1) If the recovered amount, when added to the claim previously
paid by the corporation in connection with an enrolled loan,
exceeds the lender's loss on that enrolled loan, the lender shall
promptly pay to the corporation for deposit in the reserve fund
the amount of the excess.
(2) For purposes of this section and section 32 of this chapter,
the lender's loss on an enrolled loan shall be the amount of
principal charged off by the lender plus accrued interest plus
one-half (1/2) of the reasonable and documented out-of-pocket
expenses incurred by the lender in pursuing collection efforts. As added by P.L.162-2007, SEC.24.
IC 5-28-29-32 Claims; subrogation
Sec. 32. (a) If the payment of a claim has fully covered the
lender's loss on an enrolled loan or if the payment of a claim when
combined with any recovery from the borrower has fully covered the
lender's loss, the corporation, upon request, is subrogated to the
rights of the lender with respect to any collateral, security, or other
right of recovery in connection with the loan that has not been
realized by the lender. The lender thereafter shall assign to the
corporation any right, title, or interest to any collateral, security, or
other right of recovery in connection with the loan.
(b) If an assignment has been made under subsection (a), the
corporation is not required to undertake the obligations of the lender
under the lender's loan documents, except for obligations directly
related to the corporation's assigned rights of recovery in connection
with the loan. The lender shall fulfill any other obligations the lender
has under the loan documents in the same manner and to the same
degree as would be required if the assignment had not been made.
The lender shall provide the corporation with all reasonable
assistance the corporation requests in proceeding with respect to any
collateral, security, or other right of recovery, except that the lender
does not need to incur any out-of-pocket expenses.
(c) If the corporation desires to exercise the right of subrogation
in connection with an enrolled loan, and would be entitled to
exercise that right except that the lender's loss has not been fully
covered, the corporation, at the corporation's option, may pay from
funds in the reserve fund an amount sufficient to result in the lender's
loss being fully covered. A payment under this subsection may cover
a principal amount not covered under the program or not included in
the lender's claim. Upon making a payment under this subsection, the
corporation is subrogated to the rights of the lender in accordance
with subsection (a).
(d) Notwithstanding any other provision of this section, the
corporation may not exercise the right of subrogation unless the
corporation determines, in the corporation's discretion, that the
lender has not exercised reasonable care and diligence in collection
activities with respect to the loan, or that there is a reasonable basis
for believing that the lender will not exercise reasonable care and
diligence in the future with respect to those collection activities. As added by P.L.162-2007, SEC.24.
IC 5-28-29-33 Reporting
Sec. 33. (a) Before July 16, October 16, January 16, and April 16
of each year, the lender shall file a quarterly report with the
corporation indicating the number and total outstanding balances of
all enrolled loans for the period of the three (3) preceding calendar
months. A quarterly report is not required for a quarter that ends with
a balance in the reserve fund of zero (0), except that a year-end
report must be filed before July 16 for the preceding twelve (12)
calendar months ending June 30. In computing the total outstanding
balance of all enrolled loans, the balance of a loan may not be greater
than the covered amount of the loan as enrolled.
(b) If a year-end report filed under this section indicates that, for
the immediately preceding twelve (12) calendar month period ending
June 30, the balance in the reserve fund continuously exceeded fifty
percent (50%) of the total outstanding balance of all enrolled loans,
including unfunded parts of enrolled loans that are lines of credit, the
corporation may make a withdrawal from the reserve fund. The
amount of the withdrawal may not be greater than the minimum
amount of any excess as continuously maintained over the
immediately preceding twelve (12) calendar month period ending
June 30. Withdrawals of excess reserve funds by the corporation
under this section may be used for any purpose.
(c) If a year-end report is not filed within thirty (30) days after the
original due date of the report, the corporation may make a
withdrawal from the reserve fund based on the corporation's
determination from an inspection of the lender's files that, for the
immediately preceding twelve (12) calendar month period ending
June 30, the balance in the reserve fund continuously exceeded fifty
percent (50%) of the aggregate outstanding balance of all enrolled
loans, including unfunded parts of enrolled loans that are lines of
credit. The amount of the withdrawal may not be greater than the
minimum amount of any excess as continuously maintained over the
immediately preceding twelve (12) calendar month period ending
June 30. Withdrawals of excess reserve funds by the corporation
under this section may be used for any purpose.
(d) The right of the corporation to make a withdrawal from the
reserve fund under subsection (b) or (c) is subject to the following
provisions:
(1) If a year-end report is filed by July 16 or not more than
thirty (30) days after July 16, the corporation has the right of
withdrawal for a period of ninety (90) days from the date of the
filing of the report with the corporation.
(2) If a year-end report is not filed by July 16 or not more than
thirty (30) days after July 16, the corporation has the right of
withdrawal for a period of ninety (90) days from the date the
corporation determines from an inspection of the lender's files
that the corporation is entitled to make a withdrawal from the
reserve fund under this section. As added by P.L.162-2007, SEC.24.
IC 5-28-29-34 Terminating the obligation to enroll loans
Sec. 34. The corporation may terminate the obligation to a lender
to enroll loans under the program if the corporation determines that
the lender is not in substantial compliance with the requirements of
the program or the requirements of section 23 of this chapter. The
termination takes effect on the date specified in the notice of
termination, except that the termination does not apply to a loan
made on or before the date on which the notice of termination is
received by the lender. If the corporation is terminating the
enrollment of loans for all participating lenders under the program,
the corporation shall provide at least ninety (90) days notice to the
lender. A termination under this section is prospective only and does
not apply to a loan previously refinanced. After termination, the
amount covered under the program may not be increased beyond the
covered amount as previously enrolled. As added by P.L.162-2007, SEC.24.
IC 5-28-29-35 Capital access account
Sec. 35. (a) The corporation shall establish a capital access
account. The corporation shall use the capital access account to carry
out the provisions of the capital access program. The capital access
account consists of all money that is:
(1) appropriated by the general assembly;
(2) transferred by the corporation from the industrial
development guaranty fund; or
(3) transferred by the corporation from the general funds of the
corporation.
(b) The expenses of the corporation attributable and allocated by
the corporation to the capital access program shall be paid from the
capital access account. As added by P.L.162-2007, SEC.24.
