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(a) A guarantee under this article guarantees payment of outstanding principal, unpaid interest as described in (b) of this section, and liquidation expenses acceptable to the authority on a loan up to the amounts stated in the guarantee authorization in accordance with the terms and conditions set out in the loan guarantee agreement. A guarantee or portion of a guarantee that relates to an export transaction guarantees against commercial and political loss. The guarantee does not apply to penalties, late fees or interest accruing under a default interest rate. Liquidation expenses must receive written approval from the authority before expenditure, to be reimbursable pro rata.
(b) A guarantee issued under this article guarantees payment of accrued and unpaid interest for a period of time not to exceed
(1) 90 days for loans or parts of loans not made to support an export transaction;
(2) 180 days for loans or parts of loans made for a post-shipment loan guarantee to support an export transaction; or
(3) 270 days for loans or parts of loans made for a pre-shipment loan guarantee to support an export transaction.
(c) A loan guaranteed by the authority may be made for the purpose of either financing or refinancing real property, tangible personal property, or working capital, or for the purpose of financing or refinancing an export transaction and shall contain the terms set out in this section to the fullest extent permitted under AS 44.88.500 - 44.88.599.
(1) If the loan is to be secured by real property, then the terms of the loan must comply with 3 AAC 99.330 except that the loan term may not exceed 20 years, and the authority will, in its discretion, waive the priority of lien or security interest under 3 AAC 99.730(d) .
(2) If the loan is to be secured by tangible personal property, then the terms of the loan must comply with 3 AAC 99.340, except that the authority will, in its discretion, waive the priority of lien or security interest under 3 AAC 99.730(d) .
(3) If the loan is to be secured solely by inventory and accounts receivable, then the loan term may not exceed one year; however, the loan may be renewed, in an amount no greater than the original loan, by the financial institution up to four times for up to one year for each renewal.
(4) If the loan is for working capital, then the term of the loan may not exceed five years; however, the loan term must be commensurate with the economic life of the collateral offered as security for the loan. The loan must contain other terms satisfactory to the authority.
(5) If the loan is for an export transaction, then
(A) a pre-shipment export guarantee becomes effective before commencement of providing services or the export contract date of shipment of the goods or products. The term of a pre-shipment export guarantee may not exceed 270 days before providing services or the export contract date of shipment of the goods or products. However, the financial institution servicing the loan may apply for a 90-day extension of the pre-shipment export guarantee;
(B) a post-shipment guarantee becomes effective after completion of providing services or the date of shipment of the goods or products. The term of post-shipment export guarantee may not exceed 180 days from the date of completion of services or shipment of the goods or products. However, the financial institution servicing the loan may apply for a 90-day extension of the post-shipment guarantee.
(d) A loan guaranteed by the authority must be secured to the satisfaction of the authority by either real or tangible personal property or inventory and accounts receivable except that the requirement of collateral may be waived, solely at the authority's discretion, on a case-by-case basis for a loan guarantee of $100,000 or less if the loan term does not exceed five years.
(e) If collateral is required, no loan-to-value may exceed 75 percent.
(f) A guarantee for a loan will be effective and will remain in effect upon the execution of and as long as there is strict adherence to the terms and conditions of the guarantee authorization.
(g) The authority may require the borrower, on a guarantee or portion of guarantee that relates to an export transaction, to obtain insurance against some or all of the commercial and political loss guaranteed under this section.
(h) The authority may guarantee up to 80 percent of any loan that qualifies under AS 44.88.500 - 44.88.599. No guarantee by the authority will exceed $1,000,000. No guarantee will be issued to a borrower that cumulatively, with the outstanding principal balance of other authority guaranteed indebtedness of that borrower, exceeds $1,000,000. Only one guarantee under 3 AAC 99.720(b) will be issued to the same or related borrowers. For the purposes of this subsection, a borrower is related to another borrower if
(1) the relationship between such borrowers would result in a disallowance of losses under section 267 or 707(b) of the Internal Revenue Code of 1986, as amended; or
(2) such borrowers are members of the same controlled group of corporations (as defined in section 1563(a) of the Internal Revenue Code of 1986, as amended, except that more than 50 percent shall be substituted for at least 80 percent each place it appears in that section).
(i) A loan for working capital, loans secured by inventory and account receivable, and loans made to support an export transaction must contain payment provisions satisfactory to the authority. All other loans to be guaranteed by the authority must contain complete amortization provisions satisfactory to the authority requiring periodic payments by the borrower.
History: Eff. 8/1/88, Register 107; am 11/22/88, Register 109; am 11/30/90, Register 118; am 7/19/91, Register 119; am 9/25/92, Register 124; am 12/2/94, Register 134; am 10/23/96, Register 141; am 2/11/99, Register 150; am 11/1/99, Register 153; am 2/8/2001, Register 158
Authority: AS 44.88.080
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Last modified 7/05/2006