COMAR 24.05.18.05. Use of Loan Proceeds

A. Loan proceeds may be used for working capital, equipment, furnishings, fixtures, and the construction, rehabilitation, or purchase of real property to:

(1) Modernize manufacturing operations;

(2) Develop commercial applications for technology; or

(3) Enter into and compete in new economic markets.

B. Loan proceeds consisting of restricted funds may not be used to:

(1) Acquire an equity position in a private business;

(2) Subsidize interest payments on existing debt;

(3) Provide the equity contribution required of borrowers under other federal loan programs;

(4) Acquire an interest in a business, either through the purchase of stock or through the acquisition of assets, unless the need for a loan is sufficiently justified and documented in the loan application;

(5) Refinance existing debt unless:

(a) There is sound economic justification, and

(b) In the loan application the applicant sufficiently documents that the program is not replacing private capital solely for the purpose of reducing the risk of loss to an existing lender, or lenders, or to lower the cost of financing to the applicant; or

(6) Invest in interest-bearing accounts, certificates of deposit, or other investments not related to the objectives of the program.