Sec. 26.10.12.06. Loan Terms and Requirements

A. Loans shall meet the requirements in § B-----L of this regulation.

B. Maximum Loan Amount.

(1) A loan may not exceed $50,000 per site for underground storage tank upgrade or replacement.

(2) The aggregate amount of all loans awarded under the Program to a single applicant in any calendar year may not exceed $150,000, unless the Secretary determines that extraordinary circumstances exist.

C. Term. A loan shall be repaid in full within a term not to exceed 15 years.

D. Interest Rate.

(1) The interest rate to be paid on a loan shall be equal to or greater than the bond issue yield on the State general obligation bond sale immediately preceding the date on which the Board of Public Works approves the loan, rounded up to the nearest 1/10 of 1 percent, as determined and established by the Department in the loan documents.

(2) The interest rate shall be:

(a) The bond issue yield, rounded up to the nearest 1/10 of 1 percent, for a borrower whose tangible net worth is equal to or less than $1,500,000;

(b) The bond issue yield plus 0.5 percent, rounded up to the nearest 1/10 of 1 percent, for a borrower whose tangible net worth is greater than $1,500,000 and equal to or less than $2,500,000; or

(c) The bond issue yield plus 1 percent, rounded up to the nearest 1/10 of 1 percent, for a borrower whose tangible net worth is greater than $2,500,000.

E. Disbursement. Disbursement is conditioned on providing the Department:

(1) One or more executed contracts satisfactory to the Department for the upgrade or replacement, containing costs consistent with the project budget contained in the loan agreement; and

(2) Copies of any permits or other authorizations required to be issued by the Department or any other governmental entity for the upgrade or replacement.

F. Security. The collateral or other security for the loan, and the terms and conditions pertaining to it, is as determined and approved by the Department and may include the following:

(1) Personal guarantees;

(2) Security interests in personal property;

(3) Deeds of trust on business and nonbusiness real property;

(4) Appropriate forms of insurance, including hazard, liability, flood, life, and business interruption insurance; and

(5) Any other collateral or other security required by the Department.

G. Title Insurance. If a loan is to be secured by real property, the Department may require the:

(1) Applicant to provide title insurance satisfactory to the Department, issued by a title insurance company acceptable to the Department, naming the Department as an insured, and containing only exceptions and encumbrances acceptable to the Department; and

(2) Title insurance policy to be accompanied by a survey, certified in the manner required by the Department and the title company issuing the title insurance, showing that there are no easements or encroachments upon or other matters pertaining to the property, except those acceptable to the Department.

H. Appraisals. The Department may require an appraisal by a qualified appraiser showing the property's market value for any real or any personal property offered as collateral for a loan.

I. Environmental Audit. The Department may require information relating to environmental issues and an environmental audit regarding the proposed project and of any real or personal property that is offered as collateral for the loan.

J. Late Charges and Default Interest Rates. Each loan agreement shall contain a provision obligating the borrower, in the event of a default, to pay late charges and a default interest rate in excess of the regular interest rate.

K. Collection Charges. Each loan agreement shall contain a provision obligating the borrower to pay a collection charge equal to 17 percent of the outstanding principal balance of the loan in the event of a referral of the loan for collection to the State Central Collection Unit, an assistant attorney general, or any other attorney.

L. Compliance with Laws. Each loan agreement shall provide that the following shall constitute a default authorizing the Department, at its option, to declare the unpaid principal and all other amounts due under the loan immediately due and payable:

(1) Failure of the borrower to remain in compliance with any law or regulation governing the installation, operation, or use of underground storage tanks; or

(2) Use of the proceeds of a loan for a purpose other than one authorized by Environment Article, Title 4, Subtitle 6, Annotated Code of Maryland.