(a) (1) Under the Program the Authority may not: (i) own securities representing more than 49% of the voting stock of a small business or own an interest greater than 49% in a small business; or (ii) own securities representing more than 49% of the voting stock of an enterprise acquiring an existing business or own an interest greater than 49% in an enterprise acquiring an existing business. (2) The amount of the Authority's equity participation financing in an enterprise may not exceed $2,000,000. (3) Before providing equity participation financing, the Authority shall find that there is a reasonable probability that the Authority will recover its initial investment and an adequate return on investment from the equity participation financing. (4) The Authority's investment shall be recoverable within 7 years after the equity participation financing. (5) The Authority's recovery shall be the greater of: (i) the current value of the percentage of the equity investment in the enterprise; or (ii) the amount of the initial investment in the enterprise. (6) If there is a dispute between the borrower and the Authority as to the value of the business entity at the time of recovery, the value shall be determined after obtaining at least one independent appraisal of the value from an appraiser selected from a list of at least three appraisers supplied by the Authority. (b) When an enterprise applies to the Authority for equity participation financing to acquire an existing business, an enterprise or its principals shall have: (1) an equity investment equal to at least 5% of the total cost of acquisition; and (2) at least 3 years of successful experience with demonstrated achievements and management responsibilities. (c) The Authority may provide equity participation financing for the acquisition of an existing business if the existing business: (1) has been in existence for at least 5 years; (2) has been profitable for at least 2 of the previous 3 years; (3) has sufficient cash flow to service the debt and ensure adequate return of the Authority's investment; (4) has the capacity for growth and job creation; (5) has its principal place of business in the State; and (6) has a strong customer base. (d) If the applicant enterprise is a sole proprietorship, to qualify for financial assistance under this part, the applicant shall satisfy the Authority that: (1) the applicant is of good moral character; (2) the applicant has a reputation for financial responsibility, as determined from creditors, employers, and other individuals who have personal knowledge of the applicant; (3) the applicant is a resident of the State or the principal place of business of the applicant is in the State; and (4) the applicant is unable to obtain adequate business financing on reasonable terms through normal lending channels because the applicant: (i) belongs to a group that historically has been deprived of access to normal economic or financial resources because of race, color, creed, sex, religion, or national origin; (ii) has an identifiable physical handicap that severely limits the ability of the applicant to obtain financial assistance, but that does not limit the ability of the applicant to perform the contract or other activity for which the applicant would be receiving financial assistance; (iii) has any other social or economic impediment that is beyond the control of the applicant, but that does not limit the ability of the applicant to perform the contract or other activity for which the applicant would be receiving financial assistance, including: 1. the lack of formal education or financial capacity; or 2. geographical or regional economic distress; or (iv) does not meet the established credit or investment criteria of at least one financial institution. (e) If the applicant enterprise is not a sole proprietorship, to qualify for financial assistance under this part, at least 51% of the enterprise shall be owned by individuals who meet the qualifications for applicants under subsection (d) of this section.
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