This chapter provides policies and procedures for the Department to certify and enroll loans from financial institutions to eligible minority business enterprises and small businesses under the Linked Deposit Program, established pursuant to the State Finance and Procurement Article, §§6-211 and 6-212, Annotated Code of Maryland. In this chapter, the following words have the meanings indicated. Terms Defined. “Certified minority business enterprise” means a minority business enterprise certified under State Finance and Procurement Article, Title 14, Subtitle 3, Annotated Code of Maryland. “Department” means the Department of Housing and Community Development. “Financial institution” has the meaning stated in State Finance and Procurement Article, §6-201, Annotated Code of Maryland. “Program” means the Linked Deposit Program established under State Finance and Procurement Article, §6-211, Annotated Code of Maryland. “Program loan” means a loan made under this chapter. “Secretary” means the Secretary of Housing and Community Development. “Small business” means a business that is qualified under State Finance and Procurement Article, Title 14, Subtitle 5, Annotated Code of Maryland. “Treasurer's Office” means the Office of the State Treasurer. A loan is eligible under the Program if the loan: Is made by a financial institution that is eligible to participate in the Program under Regulation .04B of this chapter; Meets the financial institution's lending criteria; Has a term not exceeding 10 years; Is made to a certified minority business enterprise or a small business that will use the proceeds for a project or activity primarily located in Maryland; Has an interest rate that is lower than the interest rate the financial institution would charge for a loan for a similar purpose and term by at least: 2 percentage points; or The difference between the financial institution’s rate on a 60-month certificate of deposit and the interest rate acceptable to the Treasurer’s Office for its deposits; Does not exceed $1,000,000 when added to any other loans the borrower received under the Program; Has points or fees charged by the financial institution at closing not exceeding 1 percent of the loan amount; and Complies with all terms and conditions of this chapter. The proceeds of a Program loan may not be used: For the furtherance of sectarian religious instruction; In connection with the design, acquisition, or construction of any building used or to be used as a place of sectarian religious worship or instruction; or In connection with any program or department of divinity for any religious denomination, including but not limited to religious services, religious instruction, or other activities that have an explicitly religious purpose. To be eligible to receive a Program loan, an applicant shall be a certified minority business enterprise or a small business. To be eligible to make Program loans, a financial institution shall be designated by the Treasurer's office as a depository for State money and as eligible to participate in the Program. An applicant may choose to submit an application directly to: One or more participating financial institutions; or The Department, to be forwarded to all participating financial institutions. For an application submitted directly to a financial institution under §A(1) of this regulation, the following procedures apply: Before making a loan commitment to the applicant, the financial institution shall submit an application to the Department on forms prescribed by the Department; The Department may require that the application be submitted in electronic form; and After receipt of a completed application, the Department shall either: Confirm that the applicant is a certified minority business enterprise or a small business and notify the applicant and the financial institution in writing that the applicant meets the program requirement that it be a certified minority business enterprise or a small business; or Notify the applicant and the financial institution in writing that the application has been denied because the applicant is not a certified minority business enterprise or a small business. For an application submitted to the Department under §A(2) of this regulation, the following procedures apply: An applicant shall submit a completed application to the Department on forms prescribed by the Department; An applicant may submit the application in electronic form or written form; After the receipt of a completed application, the Department shall either: Confirm that the applicant is a certified minority business enterprise or a small business; or Notify the applicant in writing if its application has been denied because it is not a certified minority business enterprise or a small business; and If the Department confirms that the applicant is a certified minority business enterprise or a small business, the Department shall provide: All financial institutions eligible to participate in the Program with a copy of the completed application; and The applicant with a list of all financial institutions that received a copy of the application. If a financial institution decides to offer the applicant a loan, it shall: Provide the applicant and the Department with a commitment letter describing the terms and conditions of the loan, including the interest rate and fees charged by the financial institution; and Certify to the Department on forms approved by the Department that the loan will meet the requirements of Regulation .03 of this chapter. If a financial institution declines to offer the applicant a loan, it shall: Notify the applicant and Department in writing; and Comply with all State and federal requirements regarding the denial of a loan. Notification. Within 3 business days of receiving a Program loan, the borrower shall notify the Department that the loan has closed. Forms. Applications for enrollment of a loan under the Program by the financial institutions shall be made on forms prescribed by the Department. Submission of Documentation. Within 10 business days of making a Program loan, the financial institution shall submit all loan documents, forms, and other documentation required by the Department. Review by Department. Within 10 business days of receipt of all forms and documentation from the financial institution, the Department shall determine if the loan closed in conformity with the criteria of Regulation .03 of this chapter. If the Department determines that a loan is eligible, it shall enroll the loan in the Program and notify the Treasurer's Office and the financial institution in writing of its decision. If the Department determines that a loan is not eligible, it shall notify the financial institution in writing stating the reason the loan is not eligible. An applicant or financial institution may request that the Department reconsider its decision in accordance with Regulation .07E of this chapter. Reconsideration. An applicant or a financial institution may request reconsideration of a Department decision that a loan is not eligible for the Program by submitting a written request to the Secretary or the Secretary's designee within 30 days following the date of the Department's written decision. The request for reconsideration shall address each reason for the decision and provide documentation supporting reasons for reconsideration of the issues. The Secretary shall respond in writing to the applicant's request for reconsideration within 30 days of receipt by the Secretary of the request for reconsideration. An initial decision or reconsideration of a decision is not a contested case within the meaning of the Administrative Procedure Act or COMAR 05.01.01.02. The Secretary, in the Secretary's sole discretion, may delegate to an authorized officer of the Department the authority to approve, disapprove, or approve with modifications a request for reconsideration of a determination of ineligibility under the Program. A borrower that receives a Program loan shall maintain its status as a certified minority business enterprise or a small business for the term of the Program loan. The Department shall notify the Treasurer's Office in writing if the borrower is decertified as a minority business enterprise or no longer meets the definition of a small business for any reason during the term of the Program loan. If a borrower is decertified as a minority business enterprise or disqualified as a small business during the term of the Program loan and upon written notification: The Treasurer's Office shall reduce the amount of the certificate of deposit purchased from the financial institution under the Program by the amount of the outstanding principal balance of the specified Program loan; and If permitted by the loan documents, the financial institution may increase the interest rate of the Program loan by the lesser of: 2 percent; or The difference between the financial institution’s rate on a 60-month certificate of deposit and the interest rate acceptable to the Treasurer’s Office for its deposits, as determined as of the date that the loan closed. A minority business enterprise that loses its certification or a small business that no longer qualifies as a small business due to revenue or employee growth may not be considered decertified for purposes of this regulation. The requirements of this chapter are in addition to any other State, federal, and local laws or regulations that are applicable to the financial institution, and do not preempt or supersede any of those requirements. The Secretary may waive or vary provisions of this chapter: To the extent that the waiver or variance is consistent with State Finance and Procurement Article, §6-211, Annotated Code of Maryland; and If, in the written determination of the Secretary, the application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of State Finance and Procurement Article, §6-211, Annotated Code of Maryland. Electronic Means. The Department may require the financial institution to submit any written documentation required in this chapter by electronic means. Subject to all State and federal privacy requirements, the Department may require a participating financial institution to provide reports that contain: The number of loans made under the Program; The dollar value of loans made under the Program; The performance of the loans made under the Program; The type of business that received loans; and Any other information requested by the Department related to the Program. Program Guidelines. The Department may establish from time to time Program guidelines containing procedures, required reports, forms, and other matters related to the Program. State Finance and Procurement Article, §§6-211 and 6-212, Annotated Code of Maryland Effective date: October 22, 2007 (34:21 Md. R. 1913) Regulation .01 amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .02B amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .03A amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .04A amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .05 repealed and new Regulation .05 adopted effective November 2, 2009 (36:22 Md. R. 1722) Regulation .05B, C amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .08 amended effective September 1, 2014 (41:17 Md. R. 970) Regulation .08D adopted effective November 2, 2009 (36:22 Md. R. 1722)