State Small Business Credit Initiative - Frequently Asked Questions (Faqs) - U.s. Department Of The Treasury Page 22
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37U.S. Department of the Treasury
State Small Business Credit Initiative
13.
Are there prohibitions on combining a transaction supported with SSBCI funds with a loan
guaranteed under the U.S. Small Business Administration (SBA) 7(a) or 504 loan programs or the U.S.
Department of Agriculture (USDA) Business & Industrial (B&I) loan program?
Posted December 17, 2013. Effective February 17, 2014.
Yes. If a borrower receives a loan guaranteed by the SBA’s 7(a) or 504 loan programs or the USDA’s B&I
loan program, SSBCI funds may not be used as credit support to a loan or investment for the same
purpose as the SBA- or USDA-guaranteed loan. For example, a borrower may not use a loan guaranteed
under SBA’s 7(a) program and an SSBCI-supported loan to purchase the same real estate, including land
and improvements. In contrast, a borrower may receive two sources of Federal support in two separate
loans if the proceeds for the two loans are for different purposes. For example, if a borrower receives a
loan guaranteed under the SBA 7(a) or 504 programs or the USDA B&I program to purchase real estate
occupied by the borrower, the borrower also may receive an SSBCI-supported loan to purchase
equipment.
Participating States should maintain documentation showing that the borrower used the loan proceeds
from the two loans for different purposes. Examples of documentation include the description of the
loan purpose in the two loan agreements or promissory notes, copies of checks from the lender payable
to different vendors from the proceeds from the two loans or investments, or a statement signed by the
lender/investor or borrower/investee prior to closing the SSBCI-supported transaction indicating the
two different uses of the two loans or investments.
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14.
Are there prohibitions on enrolling the same loan or investment in more than one Approved State
Program or using more than one Approved State Program to support multiple loans or investments
for the same loan purpose? Posted December 17, 2013. Effective February 17, 2014.
Yes. One loan cannot be enrolled in more than one Approved State Program at the same time. In
addition, a lender may not divide one loan into multiple agreements or notes, each enrolled in an
Approved State Program, for the same loan purpose.
If, for example, a borrower receives two loans under separate Approved State Programs, the
Participating State should maintain documentation showing that the borrower used the loan proceeds
from the two loans for different purposes. Examples of documentation include the description of the
loan purpose in the two loan agreements or promissory notes, copies of checks from the lender payable
to different vendors from the proceeds from the two loans or investments, or a statement signed by the
lender/investor or borrower/investee prior to closing the SSBCI-supported transaction indicating the
two different uses of the two loans or investments.
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15.
Are there prohibitions on using SSBCI funds in combination with a transaction that generated tax
credits, including a New Markets Tax Credit (NMTC) or Historic Preservation Tax Credit transaction?
Posted December 17, 2013. Effective February 17, 2014.
State Small Business Credit Initiative Application
Page 22 of 37
FAQs
April 21, 2016
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