La. Admin. Code tit. 19 — Corporations and Business

Part II Small and Emerging Business Development Program

Chapter 1 General Provisions

La. Admin. Code tit. 19, pt. II, § 101 Statement of Policy

A. In accordance with the provisions of R.S. 51:941-945 and the provisions of the Administrative Procedure Act, R.S. 49:950-970 as amended, Louisiana Economic Development's Small and Emerging Business Development Program administers these regulations which are intended to prescribe the procedures for qualifying and certifying small and emerging businesses; to provide for bonding and other financial assistance; to provide for technical and managerial assistance; to provide for a business mentor-protégé program; to recognize achievements for small and emerging businesses; and to facilitate access to state agency procurement.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:49 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:542 (April 2003), LR 30:753 (April 2004), amended by Louisiana Economic Development, Office of Economic Development, LR 51:1864 (November 2025).

La. Admin. Code tit. 19, pt. II, § 103 Purpose

A. The purpose and intent of this Chapter is to provide the maximum opportunity for small and emerging businesses to become competitive in a non-preferential modern economy. This purpose shall be accomplished by providing a program of assistance and promotion.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:50 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:542 (April 2003), LR 30:753 (April 2004).

La. Admin. Code tit. 19, pt. II, § 105 Definitions

A. When used in these regulations, the following terms shall have meanings as set forth below.

Certification―the determination that a business qualifies for designation as a small and emerging business.

Deputy Secretary―the deputy secretary of Louisiana Economic Development.

Deputy Undersecretary―the deputy undersecretary of Louisiana Economic Development.

Firm―a business that has been certified as small and emerging.

Full-Time―working in the firm at least 20 hours per week.

Louisiana Economic Development (LED)―formerly Department of Economic Development.

Program―the Small and Emerging Business Development Program in the Department of Economic Development.

RFP―request for proposal.

Secretary―the Secretary of Louisiana Economic Development.

Small and Emerging Business (SEB)—a small business organized for profit and performing a commercially useful function which is at least 51 percent owned and controlled by one or more small and emerging business persons and for which the principal business operations of the business are located in Louisiana including Louisiana as the primary place of employment for the employees of the business. A nonprofit organization is not a small and emerging business for purposes of this Chapter.

Small and Emerging Business Person—a citizen or legal resident of the United States who has resided in Louisiana for at least 12 consecutive months and whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business, and whose diminished opportunities have precluded, or are likely to preclude, such individual from successfully competing in the open market.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:50 (January 1997), amended LR 24:430 (March 1998), amended by the Department of Economic Development, Office of Business Development, LR 29:542 (April 2003), LR 30:753 (April 2004), LR 33:2030 (October 2007), LR 36:51(January 2010), amended by Louisiana Economic Development, Office of Economic Development, LR 51:1864 (November 2025).

La. Admin. Code tit. 19, pt. II, § 107 Eligibility Requirements for Certification

A. An SEB is a firm owned and controlled by one or more small and emerging business person(s). Eligibility requirements fall into two categories, one applies to the individual owners and the other to the applicant's firm. In order to continue participation in the program, a firm and its individual owners must continue to meet all eligibility requirements.

B. Small and Emerging Business Person. For purposes of the program, a person who meets all of the criteria in this Section shall be defined as a small and emerging business person.

Citizenship. The person is a citizen or legal resident of the United States.
Louisiana Residency. The person has resided in Louisiana for at least one year.
Net Worth. The person's net worth may not exceed $400,000. The market value of the assets of the person's small and emerging business, personal residence, 401K, IRA, and other legal retirement funds will be excluded from the net worth calculation.

C. Small and Emerging Business

Ownership and Control. At least 51 percent of the company must be owned and controlled by one or more small and emerging business persons.
Principal Place of Business. The firm's principal place of business must be Louisiana.
Lawful Function. The company has been organized for profit to perform a lawful, commercially useful function.
Business Net Worth. The business' net worth at the time of application may not exceed $1,500,000.
Full Time. Managing owners who claim small and emerging business person status must work a minimum of 20 hours per week in the applicant firm.
Job Creation. An applicant firm anticipates creating new full-time jobs.

D. Requirement for Certification. Must have an e-mail address and appropriately complete the on-line application located on a website designated by LED.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:50 (January 1997), amended LR 24:430 (March 1998), LR 25:1084 (June 1999), LR 26:1572 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:542 (April 2003), LR 30:754 (April 2004), LR 33:2030 (October 2007), LR 36:52 (January 2010), amended by Louisiana Economic Development, Office of Economic Development, LR 51:1864 (November 2025).

La. Admin. Code tit. 19, pt. II, § 109 Control and Management

A. Description. An applicant firm's management and daily business operations must be controlled by an owner(s) of the applicant firm who has/have been determined to be a small and emerging business person. In order for a small and emerging business person to be found to control the firm, that individual must have managerial or technical experience and competency directly related to the primary industry in which the applicant firm is seeking program certification.

The small and emerging business person(s) upon whom eligibility is based shall control the board of directors of the firm, either in actual numbers of voting directors or through weighted voting. In the case of a two-person board of directors where one individual on the board is a small and emerging business person and one is not, the formers vote must be weighted by share ownership, worth more than one vote to achieve a minimum of 51 percent control, in order for the firm to be eligible for the program. This does not preclude the appointment of nonvoting or honorary directors. All arrangements regarding the structure and voting rights of the board must comply with state law and with the firm's articles of incorporation and/or bylaws.
Individuals who are not a small and emerging business person may be involved in the management of an applicant's firm and may be stockholders, partners, officers, and/or directors of such firm. Such individual(s), their spouse(s) or immediate family members who reside in the individual's household may not, however:

a. exercise actual control or have the power to control the applicant or certified firm;

b. be an officer or director, stockholder, or partner of another firm in the same or similar line of business as the applicant or certified firm;

c. receive excessive compensation as directors, officers, or employees from either the applicant or certified firm. Individual compensation from the firm in any form, including dividends, consulting fees, or bonuses, which is paid to a non-disadvantaged owner, his/her spouse or immediate family member residing in the same household will be deemed excessive if it exceeds the compensation received by the small and emerging business person chief executive officer, president, partner, or owner, unless the compensation is for a clearly identifiable skill for which market rates must be paid for the firm to utilize the person's expertise;

d. be former employers of the small and emerging business owner(s) of the applicant or certified firm, unless the program determines that the contemplated relationship between the former employer and the small and emerging business person or applicant firm does not give the former actual control or the potential to control the applicant or certified firm and if such relationship is in the best interest of the certified firm.

B. Non-small and emerging business person control. non-small and emerging business person(s) or entities may not control, or have the power to control, the applicant firm. Examples of activities or arrangements which may disqualify an applicant firm from certification are:

a non-small and emerging business person such as an officer or member of the board of directors of the firm, or through stock ownership, has the power to control daily direction of the business affairs of the firm;
the non-small and emerging business person or entity provides critical financial or bonding support or licenses to the firm, which directly or indirectly allows the non-small and emerging business person to gain control or direction of the firm;
a non-small and emerging business person or entity controls the firm or the individual small and emerging business person(s) through loan arrangements;
other contractual relationships exist with non- small and emerging business person or entities, the terms of which would create control over the firm.

History

Authority Note: Promulgated in accordance with R.S.51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:51 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:543 (April 2003), LR 30:754 (April 2004), LR 33:2030 (October 2007).

La. Admin. Code tit. 19, pt. II, § 111 Eligibility Requirements for Certification

A. It is the responsibility of any business wishing to participate in the program to complete the required certification process. Failure to provide complete, true, or accurate data may result in rejection of the application.

B. Certification in the SEBD Program is accomplished on-line on a website designated by LED. Applicants must have an e-mail address to become certified in the SEBD Program.

C. Certification as a SEB also does not constitute compliance with any other laws or regulations and does not relieve any firm of its obligations under other laws or regulations. Certification as a small and emerging business also does not constitute any determination by SEBD Program that the firm is responsible or capable of performing any work.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:52 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:543 (April 2003), LR 30:755 (April 2004), LR 33:2030 (October 2007), amended by Louisiana Economic Development, Office of Economic Development, LR 51:1864 (November 2025).

La. Admin. Code tit. 19, pt. II, § 113 Certification Application Procedure

A. Applicant completes and submits an on-line application at www.ledsmallbiz.com to the SEBD office.

B. The SEBD Program staff reviews the application and if it is found to be incomplete or further information is needed, the SEBD Program staff will contact applicant. If the applicant does not respond within 15 days, the application will be denied.

C. SEBD Program staff, notifies the applicant by e-mail of the decision whether or not to grant certification.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:52 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:544 (April 2003), LR 30:755 (April 2004), LR 33:2031 (October 2007), amended by Louisiana Economic Development, Office of Economic Development, LR 51:1864 (November 2025).

La. Admin. Code tit. 19, pt. II, § 115 Duration of Certification; Graduation through Growth

A. The maximum amount of time that a firm may be granted certification by the SEBD Program is unlimited until the firm graduates, by growing to exceed the eligibility requirements for certification, as provided in §107, or is terminated from the program by LED.

B. Retention of the firm in the program depends upon time, the firm's progress toward attainment of its business goals, willingness or ability to cooperate, and follow through on recommendations of the SEBD Program staff.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:52 (January 1997), amended LR 26:1572 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:544 (April 2003), LR 30:755 (April 2004), amended by the House Concurrent Resolution Number 8 of the 2006 Regular Legislative Session, LR 32:1536 (August 2006), amended by the Department of Economic Development, Office of Business Development, LR 33:2031 (October 2007), amended by Louisiana Economic Development, Office of Economic Development, LR 51:1864 (November 2025).

La. Admin. Code tit. 19, pt. II, § 117 Reports by Certified Small and Emerging Businesses

A. Mandatory Reporting. By letter, or on forms which may be identified or prescribed by the SEBD Program, certified businesses shall continue to report every five years and at times specified by the SEBD Program their financial position and attainment of the business' performance goals. Failure to report or failure to report on a timely basis, as required every five years or as otherwise requested by the SEBD Program staff, shall result in the business’ termination of its SEBD certification and from the program.

B. Verification of Eligibility. SEBD Program staff, may take any reasonable means at any time to confirm a certified firm's eligibility, such as by letter, telephone, contact with other governmental agencies, persons, companies, suppliers, or by either announced or unannounced site inspection.

C. Notification of Changes. To continue participation, a certified firm shall provide the SEBD Program, with a written statement of any changes in an address, telephone number, ownership, control, financial status, or major changes in the nature of the operation. Failure to do so may be grounds for termination of eligibility.

D. Evaluation. The SEBD Program staff, as necessary, shall evaluate the information to determine progress, areas for further improvement, resources needed by the firm, and eligibility for continued participation in the program.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:52 (January 1997), LR 26:1572 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:544 (April 2003), LR 30:755 (April 2004), amended by Louisiana Economic Development, Office of Economic Development, LR 51:1865 (November 2025).

La. Admin. Code tit. 19, pt. II, § 119 Deception Relating to Certification of a Small and Emerging Business

A. Any person found guilty of the crime of deception relating to certification of an SEB as provided in R.S. 51:944 will be discharged from the program and will not be eligible to reapply under the business name involved in the deception or any business with which such individual(s) may be associated.

History

Authority Note: Promulgated in accordance with R.S. 51:944.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:52 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:544 (April 2003), LR 30:755 (April 2004).

Chapter 3 Developmental Assistance Program

La. Admin. Code tit. 19, pt. II, § 301 Small Business Bonding Assistance

A. Purpose. The SEBD Program will coordinate technical, managerial, and indirect financial assistance through internal and external resources to assist certified small and emerging businesses in becoming competitive in the market place.

B. Developmental Steps

The certified SEB owner will be required to participate in, and complete a SEBD Program approved entrepreneurial training program. The small and emerging business owner that demonstrates adequate entrepreneurial skills or compelling reasons for not participating may be granted a waiver by the director or designee.
Determination of Additional Assistance. In consultation with the business owner, the SEBD Program staff will determine areas in which the business owner needs additional assistance.
Referral to Additional Resources. The SEBD Program will assist the firm obtain technical and/or managerial assistance from other resources, such as small business development centers, procurement centers, consultants, business networks, professional business associations, educational institutions, and other public agencies.
Ongoing Evaluation. In conjunction with the small and emerging business firm and appropriate external resources, the SEBD Program will periodically assess the SEB firm's progress toward attainment of its business goals. The SEBD Program, in conjunction with the SEB firm, will determine the effectiveness of assistance being administered. If assistance is ineffective, the SEBD Program staff will investigate and take appropriate action.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:53 (January 1997), LR 26:1573 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:544 (April 2003), LR 30:755 (April 2004), amended by the House Concurrent Resolution Number 8 of the 2006 Regular Legislative Session, LR 32:1536 (August 2006), amended by Louisiana Economic Development, Office of Economic Development, LR 51:1865 (November 2025).

Chapter 5 Mentor-Protégé Credit Program

La. Admin. Code tit. 19, pt. II, § 501 General

A. The intent of the Mentor-Protégé Tax Credit Program Act of 2007 (Act 356 of 2007; R.S. 47:6026 the provisions of which shall hereinafter be referred to as "Act 356") is to facilitate the growth and stability of Louisiana's economy by fostering the overall enhancement and development of protégé firms as a competitive contractor, subcontractor, joint venture partner, or supplier of local, state, federal, and private markets. These provisions are to be read in pari materiae with Act 356. For the purposes of this rule, the "secretary" shall be either the Secretary of Economic Development or his designee.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Small and Emerging Business Development, LR 23:53 (January 1997), amended LR 26:1573 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:545 (April 2003), LR 30:756 (April 2004), amended LR 34:602 (April 2008).

La. Admin. Code tit. 19, pt. II, § 503 Guidelines for Participation

A. The Mentor/Protégé Program will be open to participation by any business entity, large or small, which meets the criteria for participation as outlined below.

Mentor Firms:

a. committed and able to provide professional guidance and support to its protégés to facilitate their development and growth, particularly in the critical areas of private and public procurements in construction;

b. demonstrates favorable financial health, including profitability for at least the last two years;

c. demonstrates the capability to provide managerial or technical skills transfer or capacity building;

d. capable of contracting with private and public entities;

e. in "good standing" with the Secretary of State, and not in violation of any state statutes, rules, or governing policies;

f. must remain in the program for the period of the developmental assistance as defined in the mentor/protégé plan; and

g. such other requirements by the secretary as shall be consistent with Act 356.

Protégé Firms:

a. is not an affiliate or related party of the mentor;

b. currently certified active in the Department of Economic Development's Small and Emerging Business Development Program, or is registered in the state's Small Entrepreneurship/Hudson Initiative Program;

c. in "good standing" with the Secretary of State, and not in violation of any state statutes, rules, or governing policies;

d. must remain in the program for the period of the developmental assistance as defined in the mentor/protégé plan; and

e. such other requirements by the secretary as shall be consistent with Act 356.

B. Mentor Application and Selection

Approval of the secretary shall be obtained upon receipt and satisfactory review of an application that provides the information contained in the department's mentor application template (see Attachment A). Upon receipt, the secretary shall make such requests for other information necessary to a determination that the business should or should not be certified as a mentor under the rules and consistent with Act 356.
The application shall be reviewed by the Department of Economic Development to determine if the applicant qualifies as a mentor under the rules and consistent with Act 356.
Mentor applicant shall be notified by email of the status of the application.

C. Protégé Selection

Selection of the protégé is the responsibility, and at the discretion, of the mentor, with the concurrence of Louisiana Economic Development.
Protégés shall be selected from firms that are certified active in the Small and Emerging Business Development program, or are registered in the Small Entrepreneurship/Hudson Initiative program, and who are otherwise qualified under these rules before it begins participation in the mentor-protégé arrangement. A protégé selected from another source or reference must be referred to the Department of Economic Development for certification in the Small and Emerging Business Development program or the Small Entrepreneurship/Hudson Initiative program. The protégé must meet the department's guidelines for certification in one or both of these programs as a condition of the mentor/protégé agreement acceptance.
The mentor or Department of Economic Development will notify protégé of its application status.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Small and Emerging Business Development, LR 26:1573 (August 2000), amended by Department of Economic Development, Office of Business Development, LR 29:545 (April 2003), LR 30:756 (April 2004), LR 34:602 (April 2008).

La. Admin. Code tit. 19, pt. II, § 505 The Mentor-Protégé Agreement

A. The mentor-protégé agreement is a written agreement between the mentor and protégé, and approved by the Department of Economic Development.

B. The mentor/protégé agreement, signed by the respective firms, shall be submitted to the Department of Economic Development for approval. The agreement shall contain a description of the developmental assistance that is mutually agreed upon and in the best developmental interest of the protégé firm.

C. The mentor-protégé agreement may set a fee schedule to cover the direct and indirect cost for such services rendered by the mentor for specific training and assistance to the protégé through the life of the agreement.

D. The mentor/protégé agreement shall include information on the mentor's ability to provide managerial or technical skills transfer or capacity building.

E. The mentor-protégé agreement shall include termination provisions complying with notice and due process rights of both parties and a statement agreeing to submit periodic report reviews and cooperate in any studies or surveys as may be required by the department in order to determine the extent of compliance with the terms of the agreement.

F. The submitted mentor/protégé agreement shall be reviewed by Louisiana Economic Development and approved if the agreement is in compliance with the program's mentor/ protégé guidelines and is consistent with Act 356.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Small and Emerging Business Development, LR 26:1573 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:545 (April 2003), LR 30:757 (April 2004), LR 34:603 (April 2008).

La. Admin. Code tit. 19, pt. II, § 507 Internal Controls and Monitoring

A. The Secretary of the Department of Economic Development, or his designee, will designate and may change from time to time, one or more persons on his staff to act as the department's project representative or as the "mentor-protégé agreement monitor" for each mentor-protégé agreement, to provide liaison between the mentor, protégé and the department, and to perform various duties which are specifically provided for in the mentor-protégé agreement.

B. The mentor and protégé are responsible to inform the department of any problems, delays or adverse conditions which will materially affect their ability to attain agreement objectives, prevent the meeting of time schedules and goals, or preclude the attainment of agreement work units by established time schedules and goals. A statement of the action taken or contemplated by the mentor and protégé and any assistance which may be needed to resolve the situation shall accompany such disclosure.

C. Department controls will include:

approving, reviewing and evaluating mentor/protégé agreements for goals and objectives;
reviewing quarterly progress reports submitted by mentors and protégés on protégé development to measure protégé progress against the approved agreement, and a final report within 30 days following the completion of the agreement, or by July 31 each year, whichever comes first.
requesting and reviewing periodic reports and any studies or surveys as may be required by the program to determine program effectiveness and impact on the growth, stability and competitive position of small and emerging businesses in the state of Louisiana; and
continuous improvement of the program via ongoing and systematic research and development of program features, guidelines and operations.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Small and Emerging Business Development, LR 26:1574 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:546 (April 2003), LR 30:757 (April 2004), LR 34:603 (April 2008), LR 36:52 (January 2010).

La. Admin. Code tit. 19, pt. II, § 509 The Mentor-Protégé Tax Credit

A. The following mentor-protégé tax credit rules shall be applicable to mentors who enter into a mentor-protégé agreement.

The mentor may earn and apply for and, if qualified, be granted a refundable credit on any income or corporation franchise tax liability owed to the state by the mentor. The amount of the refundable credit shall be established by the Department of Economic Development and contained in the mentor-protégé agreement.
The amount of the tax credits granted pursuant to the provisions of this Part shall not exceed $50,000 per mentor-protégé agreement.
The mentor may participate in no more than two mentor-protégé agreements in any one tax year without the prior written approval of the secretary.
The mentor-protégé tax credits granted by the Department of Economic Development in any fiscal year shall not exceed $1,000,000.
The mentor-protégé tax credit shall be deemed earned on the date of the investment and may be claimed in the tax year in which the investment is made. The credit earned by an individual shall be claimed on their individual income tax return, the credit earned by an S-corporation shall be claimed as provided by R.S. 47:1675(G), the credit earned by a corporation other than an S-corporation shall be claimed on the corporation income and franchise tax return of the corporation, and the credit earned by a pass through entity shall be claimed on the income or franchise tax returns of the members or partners as provided by R.S. 47:1675(F).
A tax credit granted pursuant to this Part shall expire and have no value or effect on tax liability beginning with the twenty-first tax year after the tax year in which it was originally earned, applied for, and granted.
In the event it is subsequently determined by the Department of Economic Development that the mentor has not complied with the requirements of the mentor-protégé agreement, or that the mentor was otherwise not qualified to earn a tax credit pursuant to this Part, any tax credits previously earned and applied against the mentor's tax liability shall be recaptured and added to the tax liability of the mentor for the year that such determination is made.
The secretary shall provide the mentor with all necessary and appropriate tax credit certificates as provided by statute and as shall assist the Department of Revenue in its determination of applicability of the credit

History

Authority Note: Promulgated in accordance with R.S. 51: 942
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Small and Emerging Business Development, LR 26:1574 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:546 (April 2003), LR 30:757 (April 2004), LR 34:604 (April 2008).

La. Admin. Code tit. 19, pt. II, § 511 Termination of Mentor-Protégé Agreement

A. Termination for Cause. The state may terminate the mentor-protégé agreement for cause based upon the failure of the mentor or protégé to comply with the terms and/or conditions of the agreement, provided that the state shall give the mentor or protégé written notice specifying the failure. If within 30 days after receipt of such notice, the mentor or protégé shall not have either corrected such failure or, in a case which cannot be corrected in 30 days, begun in good faith to correct said failure and thereafter proceeded diligently to complete such correction, then the state may, at its option, place the mentor or protégé in default and the agreement shall terminate on the date specified in such notice. The mentor or protégé may exercise any rights available to it under Louisiana law to terminate for cause upon the failure of the state to comply with the terms and conditions of the agreement; provided that the mentor or protégé shall give the state written notice specifying the state's failure and a reasonable opportunity for the state to cure the defect.

B. Termination for Convenience. Either party may terminate the agreement at any time by giving 30 days written notice. The mentor shall be entitled to payment for deliverables in progress, to the extent work has been performed satisfactorily. The state may amend and/or terminate the agreement due to budgetary reductions or changes in funding priorities by the state upon giving 30 days written notice.

History

Authority Note: Promulgated in accordance with R.S. 51: 942
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Small and Emerging Business Development, LR 26:1574 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:546 (April 2003), LR 30:757 (April 2004), LR 34:604 (April 2008).

Chapter 9 Small Business Bonding Program

La. Admin. Code tit. 19, pt. II, § 901 Small Business Bonding Assistance

A. Program Activities―Louisiana Contractors Accreditation Institute (LCAI)

Eligibility. All SEB construction contractors who are certified by the Small and Emerging Business Development Program, Department of Economic Development, are eligible to attend the institute. However, other contracting businesses will be invited to attend the institute but they will not be able to receive bond guarantee assistance until they have been certified by the SEBD Program.
Standards and Procedures for Determining Course Content. The staff of Bonding Assistance Program (BAP) will once a year, or as budget permits, consult with the heads of the construction schools in Louisiana approved by the Board of Regents and Department of Education to ensure that current course content adequately prepares the students to run their construction firms in a businesslike manner.
Attendance. Attendance is open to only certified or potentially certified small and emerging business construction contractors. However, contractors must register for the institute he or she wishes to attend. Each contractor who successfully completes the LCAI will be issued a certificate of accreditation.
Accreditation without Institute Attendance. An SEB firm may request to be accredited without attendance. The staff of the BAP will conduct a review of the firm. If the contractor can present evidence he conducts business within standards set by best practices, an accreditation may be issued to the firm.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:53 (January 1997), amended LR 24:430 (March 1998), LR 26:1575 (August 2000), amended by the Department of Economic Development, Office of Business Development, LR 29:547 (April 2003), LR 30:758 (April 2004).

La. Admin. Code tit. 19, pt. II, § 903 Direct Bonding Assistance

A. Direct Bonding Assistance⎯Eligibility

All certified active small and emerging construction businesses, and all other certified SEBs (non-construction) may be eligible for surety bond guarantee assistance not to exceed the lesser of 25 percent of contract or $200,000 on any single project.
Beginning July 1, 2017, firms with previously approved SEBD certification status expiring after July 1, 2017 but prior to July 1, 2020, may be granted continued eligibility for the Direct Bonding Assistance Program for a period of up to three years, but no later than July 1, 2020.
All obligations, whether contractual or financial, will require the approval of the undersecretary.

B. Application Process

A small business bonding program applicant requesting a bond guaranty is first required to contact a surety company interested in insuring such a bond contingent on SEBD approval. The aforesaid surety will contact SEBD to discern eligibility requirements and submit a formal application on behalf of the business concern.
Application for surety bond guarantee assistance including contractor or business underwriting data as prescribed by surety companies shall be submitted by the contractor or it's agent to the surety company.
Manager of BAP or designee will:

a. determine and document that business is eligible to participate in program;

b. secure proof that project has been awarded to contractor or business, in the case of performance and payment bonds;

c. determine worthiness of the project based on advice and input from surety company;

d. make recommendations to the BRAS director as required.

C. Surety Companies

Criteria for Eligibility and Continuation in the Program. A surety company must have a certificate of authority from, and its rates approved by, the Department of Insurance, and appear in the most current edition of the U.S. Treasury Circular 570.

a. BAP, at its sole discretion, may refuse to recommend the issuance of further guarantees/letters of credit (LC) to a participating surety where the administration finds any of the following:

i. fraud or misrepresentation in any of the sureties business dealings, BAP-related or not;

ii. imprudent underwriting standards;

iii. excessive losses (as compared to other participating sureties);

iv. failure of a surety to consent to BAP audit;

v. evidence of discriminatory practices; and

vi. consideration of other relevant factors.

b. BAP, at its sole discretion, may refuse to recommend the issuance of further guarantees/LC to a participating surety where the Department of Economic Development finds that the surety has failed to adhere to prudent underwriting standards or other practices relative to those of other sureties participating in the BAP. Any surety that has been denied participation in the program may file an appeal, in writing, delivered by certified mail to the Secretary of the Department of Economic Development, or a designee, who will review the adverse action and will render the final decision for the department. Appeals must be received no later than 30 days from the issuance of the secretary's, or designee's, decision.

Subsuretyship. A lead or primary surety must be designated by those sureties who desire to bond a contract together. BAP will recommend a guarantee only to one surety. This does not mean that surety agreements cannot be entered. In a default situation, BAP will recommend to indemnify only the lead or primary surety, which will have an indemnification agreement with its re-insurers.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 24:430 (March 1998), amended by the Department of Economic Development, Office of Business Development, LR 29:547 (April 2003), LR 30:758 (April 2004), LR 36:52 (January 2010), amended by the Department of Economic Development, Office of the Secretary, LR 43:2102 (November 2017).

La. Admin. Code tit. 19, pt. II, § 907 Management Construction/Risk Management Company

A. Surety may require contractor to engage a management construction/risk management company to do, at a minimum, an independent take off and review of all low bid projects and advise BAP of their findings, this determination shall be made based on the surety's standard underwriting procedures. Surety may also require contractor to engage a management construction/risk management company to provide the following services:

review of the initial bond request for compatibility of the contractor with the scope of work as outlined in the solicitation;
job cost breakdown and bid preparation assistance;
monitor all projects once awarded. This will include a full (critical path) reporting throughout the life of the contract;
funds receipt and disbursement through a job-specific account on each project. This will include compliance with all lien waivers, releases and vendor payment verification;
make itself immediately available for project completion on any defaults at no additional fee to the project cost.

B. Management construction/risk management company engaged by contractor shall be pre-approved by BAP and surety. BAP shall not receive any portion of any fees paid to management construction/risk management company by contractor.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 24:431 (March 1998), amended by the Department of Economic Development, Office of Business Development, LR 29:548 (April 2003), LR 30:759 (April 2004).

La. Admin. Code tit. 19, pt. II, § 909 Underwriting a BAP Guaranteed Bond

A. In underwriting a BAP guaranteed bond, the surety is required to adhere to the surety industry's general principles and practices used in evaluating the credit and capacity; and is also required to adhere to those rules, principles, and practices as may be published from time to time by the BAP.

B. Once an application for a bond guarantee/LC is received from a contractor, a review will be conducted in order to determine whether the small and emerging business is eligible for BAP's surety bond guarantee assistance. This review will focus on the presence of a requirement for surety bonds and other statutory requirements.

Bonds

a. There must be a specific contract amount in dollars or obligee estimate of the contract amount, in writing, on other than firm fixed price contracts.

b. There must be nothing in the contract or the proposed bond that would prevent the surety, at its election, from performing the contract rather than paying the penalty.

c. BAP, having guaranteed the bid bond, may refuse to recommend guarantee of the required payment and performance bonds when the actual contract price exceeds the original bid and the next higher bid amount. In such an instance, the surety would either issue the payment and performance bond without BAP's guarantee, or suffer default in fulfilling the bid bond, which should result in claims against the surety and surety's claim against BAP.

Types of Bond Guarantees. BAP guarantees will be limited to certain bid, performance, and payment bonds issued in connection with a contract. Bid, performance, and payment bonds listed in the contract bonds section, Rate Manual of Fidelity, Forgery and Surety Bonds, published by the Surety Association of America, will be eligible for a BAP guarantee. In addition, the BAP guarantee may be expressly extended, in writing, to an ancillary bond incidental to the contract and essential to its performance.
Ineligible Bond Situations and Exceptions

a. If the contracted work is already underway, no guarantee will be issued unless the director or a designee consents, in writing, to an exception.

b. While it should not be a common occurrence, and is in fact to be discouraged, applications for surety bonds may occasionally be submitted for consideration after a job is in process. In such cases, the surety must submit, as part of the application, the following additional information:

i. evidence from the contractor that the surety bond requirement was contained in the original job contract;

ii. adequate documentation as to why a surety bond was not previously secured and is now being required;

iii. certification by contractor: list of all suppliers indicating that they are paid up to date, attaching a waiver of lien from each; that all labor costs are current; that all subcontractors are paid to their current position of work and a waiver of lien from each;

iv. certification by obligee that the job has been satisfactorily completed to present status; and

v. certification from the architect or engineer that the job is in compliance with plans and specifications; and is satisfactory to the present.

c. There are prepared forms published by the American Institute of Architects (AIA), which may be used for the purposes listed above.

C. The surety must satisfy to BAP that there is reasonable expectation that the small and emerging business will perform the covenants and conditions of the contract with respect to which a bond is required. BAP's evaluation will consider the small and emerging business' experience, reputation, and its present and projected financial condition. Finally, BAP must be satisfied as to the reasonableness of cost and the feasibility of successful completion of the contract. The BAP's determination will take into account the standards and principles of the surety industry.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 24:431 (March 1998), amended by the Department of Economic Development, Office of Business Development, LR 29:548 (April 2003), LR 30:759 (April 2004).

La. Admin. Code tit. 19, pt. II, § 911 Guarantee

A. Amount of Guarantee. Providing collateral in the form of an irrevocable letter of credit to the surety may be posted on an individual project basis, for one or more projects at any one time, at the discretion of the Department of Economic Development.

B. Surety Bond Guarantee Agreement

Terms and Conditions

a. The guarantee agreement is made exclusively for the benefit of BAP and the surety; it does not confer any rights or benefits on any other party including any right of action against BAP by any person claiming under the bond. When problems occur on a contract substantive enough to involve the surety, the surety is authorized to take actions it deems necessary. Regardless of the extent or outcome of surety's involvement, the surety's services, including legal fees and other expenses, will be chargeable to the contractor unless otherwise settled.

b. Any agreement by BAP to guarantee a surety bond issued by a surety company shall contain the following terms and conditions:

i. the surety represents that the bond or bonds being issued are appropriate to the contract requiring them;

ii. the surety represents that the terms and conditions of the bond or bonds executed are in accordance with those generally used by the surety for the type of bond or bonds involved;

iii. the surety affirms that without the BAP guarantee to surety, it will not issue the bond or bonds to the principal;

iv. the surety shall take all steps necessary to mitigate any loss resulting from principal's default;

v. the surety shall inform BAP of any suit or claim filed against it on any guaranteed bond within 30 days of surety's receipt of notice thereof. Unless BAP decides otherwise, and so notifies surety within 30 days of BAP's receipt of surety's notice, surety shall take charge of the suit for claim and compromise, settle or defend such suit or claim until so notified. BAP shall be bound by the surety's actions in such matters;

vi. the surety shall not join BAP as a third party in any lawsuit to which surety is a party unless BAP has denied liability in writing or BAP has consented to such joinder.

c. When contractor successfully completes bonded job a status inquiry report is signed by appropriate parties and is forwarded to surety's collateral department. Surety shall release standby letter of credit within 90 days of recordation of acceptance date shown on status inquiry report.

d. Variances. The terms and conditions of BAP's guarantee commitment or actual bond guarantee may vary from surety to surety and contract to contract depending on BAP's experiences with a particular surety and other relevant factors. In determining whether BAP's experience with a surety warrants terms and conditions which may be at variance with terms and conditions applicable to another surety, BAP will consider, among other things, the adequacy of the surety's underwriting; the adequacy of the surety's substantiation and documentation of its claims practice; the surety's loss ratio and its efforts to minimize loss on BAP guaranteed bonds; and other factors. Any surety which deems itself adversely affected by the director's exercise of the foregoing authority may file an appeal with the Secretary of the Department of Economic Development. The secretary will render the final decision.

Reinsurance Agreement. In all guarantee situations, BAP agrees to reimburse the participating surety up to the agreed-upon percentage of any and all losses incurred by virtue of default on a particular contract. The participating surety agrees to handle all claims, with recoveries being shared on a pro rata basis with BAP. This includes reinsurance agreements between the surety and any other licensed surety or reinsurance company. In other words, no indemnity agreement can be made to inure solely to the benefit of the surety to recover its exposure on any bond guarantee by BAP without BAP participating in its pro rata share.
Default

a. Notice of Default. Surety shall notify BAP if it becomes aware of any circumstances which may cause the contractor to fail to timely complete the project in accordance with the provisions of the contract. Where BAP receives information from other sources indicating a contractor is in potential violation of his contract, the information is to be relayed to the surety for its information and appropriate action.

b. Default Claims, Indemnity Pursuit, and Settlement

i. The sole authority and responsibility in BAP for handling claims arising from a contractor's default on a surety bond guaranteed by the BAP shall remain with the director and undersecretary relative to BAP's guarantee. The director and undersecretary will process and negotiate all claim matters with surety company representatives.

ii. In those situations where BAP's share is $500 or less, the surety shall notify the contractor, by letter, of its outstanding debt with no further active pursuit undertaken by the surety for which BAP would be requested to reimburse.

iii. In those situations where BAP's share is over $500 through $2,500, the surety shall promptly develop financial background information on the debtor contractor. These findings will determine whether it is economically justified to further pursue indemnity recovery or to close the file.

iv. In those situations where BAP's share is over $2,500, the surety shall pursue recovery through its normal method, assessing and comparing the estimated cost of recovery efforts with the probable monetary gain from the effort prior to exercising its rights under LC.

v. The surety shall advise BAP of attempts made to contact indemnitor or to attach other assets, and the outcome of these attempts. The surety shall insure that BAP is credited with its respective apportionment of all recovery within 90 days of the recovery.

vi. At the culmination of subrogation and indemnity recovery efforts, the surety shall notify the obligor of the total amount outstanding. A copy of the notice sent to the contractor shall be promptly forwarded to the BAP. After recovery efforts have been exhausted, the surety and BAP will make final reconciliation on the defaulted case, and close the file on that particular contractor's project. Prior to closing the file, surety shall conduct a recapitulation of the account to assure that BAP has been correctly credited with all funds recovered from any and all sources.

vii. Under the terms and conditions of the surety bond guarantee agreement, the authority to act upon proposed settlement offers in connection with defaulted surety bonds lies with the surety, not with the BAP. A settlement occurs when a defaulted contractor and its surety agree upon a total amount and/or conditions which will satisfy the contractor's indebtedness to the surety, and which will result in closing the loss file. The surety must pay BAP its pro rata share of such settlement. BAP, immediately upon receipt of same, closes the file.

Reinstatement. A contractor's contractual relationship is with the surety company. Therefore, all matters pertaining to reinstatement must be arranged with and through the surety. BAP's contractual relationship is with the surety company only. Because of these relationships, BAP will neither negotiate nor discuss with a contractor amounts owed the surety by the contractor, or settlement thereof.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 24:432 (March 1998), amended by the Department of Economic Development, Office of Business Development, LR 29:549 (April 2003), LR 30:760 (April 2004).

La. Admin. Code tit. 19, pt. II, § 913 Audits

A. At all reasonable times, BAP or designee may audit the office of either a participating agency, its attorneys, or the contractor or subcontractor completing the contract, all documents, files, books, records and other material relevant to the surety bond guarantee commitments. Failure of a surety to consent to such an audit will be grounds for BAP to refuse to issue further surety guarantees until such time as the surety consents to such audit. However, when BAP has so refused to issue further guarantees the surety may appeal such action to the Secretary of the Department of Economic Development. All appeals must be in writing and delivered by certified mail within 30 days of receiving the director's, or designee's written issuance of notice that no further guarantees will be issued. Otherwise the director's, or designee's, decision becomes final.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 24:433 (March 1998), amended by the Department of Economic Development, Office of Business Development, LR 29:550 (April 2003), LR 30:761 (April 2004).

La. Admin. Code tit. 19, pt. II, § 915 Ancillary Authority

A. The director, with the approval of the undersecretary and assistant secretary, will have the authority to commit funds and enter into agreements which are consistent with and further the goals of this program. This authority would include, but not be limited to, designating a pool of funds upon which only a particular surety has recourse to, in the event of a contractor default.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 24:433 (March 1998), amended by the Department of Economic Development, Office of Business Development, LR 29:550 (April 2003), LR 30:761 (April 2004).

Chapter 11 Promotion of Small and Emerging Businesses

La. Admin. Code tit. 19, pt. II, § 1101 Promotion

A. Directory

Compilation. The SEBD Program shall compile a directory of all certified SEBs and make it available to the businesses and governmental agencies.
Frequency of Publication. The directory shall be updated at least annually, based upon information provided by certified businesses. The SEBD Program may issue updated directories more frequently.
Volume and Distribution. At least one copy of the directory will be made available to each state agency and educational institution, and copies will be provided to the state library. Additional copies may be made available to the public and governmental agencies as SEBD Program's resources permit.
Available Information. Public information concerning a small and emerging business may be obtained by contacting the Small and Emerging Business Development Program staff during normal working hours.

B. Other Promotional Means. The SEBD Program will utilize other feasible means of promoting small and emerging businesses, such as, but not limited to, the internet, World Wide Web, electronic bulletin boards, trade shows, or private sector contacts.

History

Authority Note: Promulgated in accordance with R.S. 51:942.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:54 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:550 (April 2003), LR 30:761 (April 2004).

Chapter 13 Complaints and Investigations

La. Admin. Code tit. 19, pt. II, § 1301 Complaints and Investigation of Ineligibility

A. Right to File Complaint. Any individual, firm, or governmental agency which believes that a certified business does not qualify for certification may file a written, signed complaint with the SEBD Program. The complaint must contain sufficient information for SEBD Program staff to conduct an investigation, including specific identification of the affected business, basis for the charge of ineligibility, and identification, mailing address, and telephone number of the complainant.

B. Right to Due Process. No small and emerging business shall be decertified based upon a complaint, without first having had an opportunity to respond to the allegations; however, failure of the small and emerging business to respond to the SEBD Program's notification within 30 calendar days of mailing from the Program may result in revocation of certification.

C. Investigative Procedure

Notification of Allegation. The SEBD Program shall notify the certified business which is subject of the complaint by certified mail, return receipt requested, of the allegation within 15 calendar days of the complaint's receipt.
Investigation Conducted. Within available resources, the SEBD Program shall investigate each complaint as promptly as possible. In no event shall the investigation extend beyond 60 calendar days from the date that the complaint was received.
Cooperation. The small and emerging business shall cooperate fully with the investigation and make its staff and records available to the SEBD Program, if requested. Insufficient cooperation may be grounds for concluding that the firm has not borne the burden of proving to the satisfaction of the SEBD Program that it is eligible for certification, resulting in revocation of certification.
Upon completion of the investigation, the SEBD Program's staff shall make a determination and issue a written decision which either rejects the complaint or revokes the certification within 10 working days. A copy of the written decision shall be sent to the firm that was subject of the complaint, the complainant, and the director of the SEBD Program of State Purchasing.

History

Authority Note: Promulgated in accordance with R.S. 51:944.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:54 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:551 (April 2003), LR 30:762 (April 2004).

La. Admin. Code tit. 19, pt. II, § 1303 Grounds and Procedure for Reconsideration of Denial

A. Right to Petition. A decision by the SEBD Program to deny issuing certification, deny renewal of certification, or to revoke certification will be reconsidered after an applicant business has submitted a written petition for reconsideration to the staff of the SEBD Program.

B. Grounds. Grounds for petitioning the SEBD Program to reconsider a denial or revocation of certification are that the Small and Emerging Business Development Program:

did not have all relevant information;
misapplied its rules;
otherwise made an error in reaching it original decision.

C. Right to Petition for Reconsideration. A petitioning business may appeal SEBD Program's decision to deny issuance of certification, to deny recertification, or to revoke certification. Only a firm which is subject of the denial or revocation has a right to petition for reconsideration.

Petition Submitted. The appellant business submits a written petition for reconsideration to the SEBD Program's staff. If the petition has not been received by the SEBD Program within 30 days of the date of the letter announcing the denial or revocation, the SEBD Program's decision becomes administratively final.
The petition shall specify grounds upon which a reconsideration is justified and the type of remedy requested. The petition for reconsideration must also clearly identify a contact person, mailing address, telephone number. The petitioning firm may provide any additional information which would be pertinent to the issue.
Acknowledgment. Upon receiving a petition for reconsideration, SEBD Program shall acknowledge its receipt by sending certified mail, return receipt requested, to the petitioner within five working days.
Reconsideration. The SEBD Program shall consider the petition and review all pertinent information, including additional information provided by the appellant business. The SEBD Program may conduct further investigation as necessary.
Notification of Decision. No later than 60 calendar days from receipt of the petition for reconsideration, the SEBD Program shall notify the petitioner by certified mail, return receipt requested, of its decision either to affirm the denial or revocation, with specific reason(s) of the grounds for the decision.

D. Final Decision. A decision to deny, revoke, or suspend certification following consideration of a petition for reconsideration is final.

History

Authority Note: Promulgated in accordance with R.S. 51:944.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Division of Economically Disadvantaged Business Development, LR 23:55 (January 1997), amended by the Department of Economic Development, Office of Business Development, LR 29:551 (April 2003), LR 30:762 (April 2004).

Part III Minority Business Enterprises

Chapter 25 Louisiana Competes Regional Economic Development Program—“Louisiana Competes Program”

La. Admin. Code tit. 19, pt. III, § 2501 Preamble and Purpose

A. The legislature recognizes the strong competition among states to attract new business and industry and to grow existing business and industry.

B. It is further recognized that different regions have different characteristics and attributes which are advantageous to specific sectors of the economy.

C. The legislature believes that local citizens working through regional economic development organizations (“REDO’s”) are uniquely positioned to support the state’s overall economic development efforts by identifying and directing how certain resources are best utilized to take advantage of a region’s distinctive economic potential.

D. The purpose of this program is therefore for the Department of Economic Development, (“LED”) to provide grants to REDO’s to provide locally developed and tailored services directly relating to attracting new business and industry and growing existing business and industry.

History

Authority Note: Promulgated in accordance with R.S. 39:1481 et seq.
Historical Note: Promulgated by the Department of Economic Development, Office of Business Development, LR 49:1030 (June 2023).

La. Admin. Code tit. 19, pt. III, § 2503 Definitions

Cooperative Endeavor Agreement—that agreement between a regional economic development organization and LED, through which the parties set forth the amount of the grant, the terms, conditions and compliance requirements. Abbreviated as CEA.

Grant—an award from the Louisiana Competes Economic Development Program to a regional economic development organization.

LED—the Louisiana Department of Economic Development.

Louisiana Competes Program—this program, the Louisiana Competes Regional Economic Development Program.

Other Property—property that is not publicly owned, to the extent allowable under Article VII, Section 14 of the Louisiana Constitution or other applicable state law, as approved by LED and subject to §2507.B.2.

Public Site—a site which a public entity owns.

Qualified Expenditure—in accordance with R.S. 39:1484, #2107 of these program rules, and as confirmed and approved by LED.

Regional Economic Development Organization—any of the following eight organizations: the Baton Rouge Area Chamber; the Central Louisiana Economic Development Alliance; Greater New Orleans, Inc.; the Northeast Louisiana Economic Alliance; the North Louisiana Economic Partnership; One Acadiana; the South Central Planning and Development Commission; the Southwest Louisiana Economic Development Alliance, or any of their successors. Abbreviated and also known as “REDO”,

Secretary—the Secretary of the Department of Economic Development

Site—immovable property, with or without improvements thereon, located in the state.

History

Authority Note: Promulgated in accordance with R.S. 39:1481 et seq.
Historical Note: Promulgated by the Department of Economic Development, Office of Business Development, LR 49:1030 (June 2023).

La. Admin. Code tit. 19, pt. III, § 2505 Award Process

A. The secretary shall promulgate administrative rules for the program, in accordance with the Administrative Procedure Act and in consultation with the 8 enumerated REDO’s and the Louisiana Chamber of Commerce Foundation.

B. Within thirty calendar days after adoption of program rules, the REDO’s and the state, through LED, shall enter into an initial cooperative endeavor agreement (“CEA”), which will specify the objectives and intent of the REDO’s, the amount of the award, the terms and conditions of the award and the compliance requirements to be confirmed by LED. REDO obligations shall be limited under the CEA to the following:

identifying high-priority sites for the purpose of attracting economic development projects;
developing high-priority sites for the purpose of attracting economic development projects;
developing and subsequently providing an annual report of all activities related to the objectives of the CEA undertaken in any previous year;
maintaining records and an accurate accounting of all expenditures;
adhering to state and federal non-discrimination laws;
adhering to the provisions of R.S. 39:1602.1;
applying a ten percent local match;

a. a REDO shall not expend any grant funds without simultaneously applying local matching funds equaling 10 percent of the cost being paid.

b. local matching funds cannot come from the LED provided Regional Awards and Matching Grant Program Tier 1 funds;

c. funds originating from any lawful source other than the state shall constitute local matching funds.

C. The initial CEA with each REDO shall have a term of two years, which shall automatically renew for successive one-year periods until such times as all initial funds provided for in the CEA have been expended, as verified and confirmed in writing by LED.

D. Funds may be disbursed by LED to REDO’s after execution of a CEA on a cost reimbursement basis, or may be direct vendor pay by LED on behalf of REDO, after submission of all required compliance documentation to LED.

E. Each REDO shall receive a grant in the amount of up to one-eight of the funds appropriated;

An initial grant in the amount of up to $1million shall be allocated to each REDO, in accordance with a total program allocation of $8 million incorporated in Act 170 of the 2022 Regular Session of the Louisiana Legislature;
Thereafter, each REDO shall receive a subsequent grant in the amount of up to one-eighth of any annual funds specifically appropriated to LED for the Louisiana Competes Program.

History

Authority Note: Promulgated in accordance with R.S. 39:1481 et seq.
Historical Note: Promulgated by the Department Economic Development, Office of Business Development, LR 49:1030 (June 2023).

La. Admin. Code tit. 19, pt. III, § 2507 Qualified Expenditures

A. REDO’s shall only use grant funds to pay for qualified expenditures related to the furtherance of economic development within the region it represents.

B. Qualified expenditures are limited to site development costs for publicly owned property or other property to the extent allowable under Article VII, Section 14 of the Constitution of Louisiana and other applicable state law, as approved in writing by LED.

Grant awards for development of other property, in proportion to awards for development of publicly owned property, may be limited by the secretary if determined to be in the best interests of the state.
Reimbursement of funds expended on other property is contingent upon written evidence being provided to LED that such development costs are allowable under Article VII, Section 14 of the Constitution and any other applicable state law. Such evidence may include but not be limited to a final judicial determination from a court of competent jurisdiction.

C. Eligible site development costs may include but not be limited to the following:

studies;
surveys;
development of plans and specifications;
real estate services and transactions, such as option agreements, rights of first refusal and infrastructure improvements may be considered qualified expenditures if they further attributes of the site as a developable property and adequate supporting documentation is submitted to LED. LED will evaluate submissions on a case by case basis, but would consider the following to be examples of improvements:

a. the construction of water, sewer or rail lines, roads or the development of rights of way.

b. the removal of an existing structure;

due diligence;
remediation;
wetland delineation;
professional services for architectural, engineering, legal, construction, and financial services related to site development.

D. Ineligible site development costs may include but not be limited to the following:

salaries, wages or benefits;
travel expenses incurred by REDO officers, employees or contractors;
alcohol;
land, building, offices, equipment, or vehicles used primarily for the administrative operations of the REDO.

History

Authority Note: Promulgated in accordance with. R.S. 39:1481 et seq.
Historical Note: Promulgated by the Department of Economic Development, Office of Business Development, LR 49:1031 (June 2023).

Part V Secretary of State

Chapter 1 Domestic Corporations

La. Admin. Code tit. 19, pt. V, § 100 Secure Business Filings Service

A. The Department of State has developed and now offers a secure business filings (SBF) service designed to discourage fraudulent business filings in Louisiana. The service will notify a corporation via email whenever amendments are submitted on the corporation through geauxBIZ. The corporation will have the opportunity to review the filing and approve or reject further processing by the Department of State.

B. Any person who has a geauxBIZ account with a verified email address can enroll in the optional SBF service. The enrollment application must be authorized by a person who is a named officer, director, member, manager, or partner of record (the authorizing authority). The identity of the authorizing authority must be verified by completing a secure business filing service enrollment application authorization which must be verified by a licensed notary public in the state where the authorizing authority resides. A copy of the authorization form can be found on the department’s website. The authorization application is required for all SBF applicants, even if the applicant is the approval authority.

C. Business entities will have an opportunity to review the filing and approve or reject further processing by the Department of State. To approve a filing, the corporation must provide the PIN assigned to the corporation within five days of receiving notification of a pending file. If the corporation rejects a filing or if five days passes with no action performed, the filing will not be processed by the Department of State.

D. The corporation is responsible for PIN usage and security. The Department of State will not be responsible for unauthorized usage of the PIN or changes made to the corporation’s business record as a result of an unauthorized user entering the correct PIN. The department reserves the right to cancel the SBF service, change the PIN, remove an SBF enrollee, change the SBF service terms and conditions, or act to prevent or prosecute fraudulent activity at any time.

E. An enrollment does not expire; however, it can be cancelled by the enrollee, by another authorized applicant, or by the Department of State. Enrollments are non-transferrable. A new SBF enrollment application must be completed to reinstate a cancelled enrollment or to change the SBF enrollment to a different geauxBIZ user. Once the enrollment application is approved by the department, the department will provide the corporation with a personal identification number (PIN) that will be unique to the corporation. The corporation can give the PIN to any person filing amendments on the corporation’s behalf.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 42:905 (June 2016), amended LR 44:1451 (August 2018).

La. Admin. Code tit. 19, pt. V, § 102 Commercial API Service

A. The Department of State has developed and now offers an optional paid Commercial API Subscription service which will allow customers, such as banks, service companies and agencies doing enforcement activities, to search for business entity filings using their back-end systems. This will allow the customer to integrate validation of business information into their processes, such as a bank creating a business checking account without having to open a browser, navigate to the secretary of state website, type in the business name, and click search. They could even populate data from the business information that the secretary of state has on file into fields in their application. The service will also allow customers to validate certificates issued by the Office of the Secretary of State to confirm their authenticity. The secretary of state currently does not know which customers are using the website. When customers sign up for the service, the secretary of state will have the contact information to provide better and more reliable service to them, and if there are any issues the secretary of state will know which customers to inform. The secretary of state has had to block legitimate customers from accessing the secretary of state website to try and prevent performance issues caused by people trying to harvest data from the site or just wreak havoc. The API would ensure legitimate business customers have access to the business data.

B. Any person who has a department single sign-on account with a verified email address can enroll in the optional Commercial API. The enrollment application will be completed online on the secretary of state website.

C. The service has a one-year non-refundable renewable subscription fee of $500. The subscription renewal form will be found on the secretary of state website. Enrollments are non-transferrable.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 46:1233 (September 2020).

Chapter 5 Nonprofit Corporations

La. Admin. Code tit. 19, pt. V, § 500 Secure Business Filings Service

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 42:906 (June 2016), amended LR 44:1452 (August 2018).

La. Admin. Code tit. 19, pt. V, § 502 Commercial API Service

C. The service has a one-year non-refundable renewable subscription fee of $500. The subscription renewal form will be found on the secretary of state website. Enrollments are non-transferrable.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR, 46:1233 (September 2020).

Chapter 7 Foreign Corporations

La. Admin. Code tit. 19, pt. V, § 700 Secure Business Filings Service

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 42:906 (June 2016), amended LR 44:1452 (August 2018).

La. Admin. Code tit. 19, pt. V, § 701 Notification of Foreign Corporation Not Registered with the Department of State

A. When the Department of State is made aware that a foreign corporation is transacting business in this state without a valid certificate of authority, the secretary of state shall notify the foreign corporation by certified mail (return receipt requested) that a certificate of authority is required and must be obtained within 30 days of receipt of the notification.

B. If the foreign corporation does not comply and obtain the certificate of authority within the 30-day period after notification, the Department of State shall investigate the foreign corporation and determine the penalty to be assessed in accordance with the penalty schedule detailed in §703. The foreign corporation shall be notified by certified mail (return receipt requested) that the penalty has been assessed and will have 60 days in which to pay the penalty to the Department of State.

C. If the foreign corporation does not pay the penalty as assessed within the 60-day period, the secretary of state shall notify the attorney general to institute proceedings against the foreign corporation to collect such penalty.

History

Authority Note: Promulgated in accordance with R.S. 12:314.1 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 42:69 (January 2016).

La. Admin. Code tit. 19, pt. V, § 702 Commercial API Service

A. The Department of State has developed and now offers an optional paid Commercial API subscription service which will allow customers, such as banks, service companies and agencies doing enforcement activities, to search for business entity filings using their back-end systems. This will allow the customer to integrate validation of business information into their processes, such as a bank creating a business checking account without having to open a browser, navigate to the secretary of state website, type in the business name, and click search. They could even populate data from the business information that the secretary of state has on file into fields in their application. The service will also allow customers to validate certificates issued by the Office of the Secretary of State to confirm their authenticity. The secretary of state currently does not know which customers are using the website. When customers sign up for the service, the secretary of state will have the contact information to provide better and more reliable service to them, and if there are any issues the secretary of state will know which customers to inform. The secretary of state has had to block legitimate customers from accessing the secretary of state website to try and prevent performance issues caused by people trying to harvest data from the site or just wreak havoc. The API would ensure legitimate business customers have access to the business data.

C. The service has a one-year non-refundable renewable subscription fee of $500. The subscription renewal form will be found on the secretary of state website. Enrollments are non-transferrable.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 46:1233 (September 2020).

La. Admin. Code tit. 19, pt. V, § 703 Foreign Corporation Penalty Schedule

A. The secretary of state hereby adopts the following penalty schedule for foreign corporations transacting business in this state without a valid certificate of authority.

For a foreign corporation transacting business in the state for less than one year, the penalty fee shall be $500.
For a foreign corporation transacting business in the state for greater than one year but less than three years, the penalty fee shall be $750.
For a foreign corporation transacting business in the state for greater than three years, the penalty fee shall be $1,000.

B. The acceptable forms of payment are: check, money orders, cashier’s check, and credit card. For any check returned to the department as NSF, there will be a charge of $25. There will be a $5 service charge for payments by credit card. Payment shall either be hand delivered to the department (Business Services Division, Twelve United Plaza, 8585 Archives Avenue, Baton Rouge, LA) or mailed to the department (Department of State, Business Services Division, P.O. Box 94125, Baton Rouge, LA 70804-9095).

History

Authority Note: Promulgated in accordance with R.S. 12:314.1 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 42:69 (January 2016).

Chapter 9 Special Corporations

La. Admin. Code tit. 19, pt. V, § 900 Secure Business Filings Service

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 42:907 (June 2016), amended LR 44:1453 (August 2018).

La. Admin. Code tit. 19, pt. V, § 902 Commercial API Service

C. The service has a one-year non-refundable renewable subscription fee of $500. The subscription renewal form will be found on the secretary of state website. Enrollments are non-transferrable.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 46:1234 (September 2020).

Chapter 11 Limited Liability Companies

La. Admin. Code tit. 19, pt. V, § 1100 Secure Business Filings Service

A. The Department of State has developed and now offers a secure business filings (SBF) service designed to discourage fraudulent business filings in Louisiana. The service will notify a limited liability company via email whenever amendments are submitted on the limited liability company through geauxBIZ. The limited liability company will have the opportunity to review the filing and approve or reject further processing by the Department of State.

C. Business entities will have an opportunity to review the filing and approve or reject further processing by the Department of State. To approve a filing, the limited liability company must provide the PIN assigned to the limited liability company within five days of receiving notification of a pending file. If the limited liability company rejects a filing or if five days passes with no action performed, the filing will not be processed by the Department of State.

D. The limited liability company is responsible for PIN usage and security. The Department of State will not be responsible for unauthorized usage of the PIN or changes made to the limited liability company’s business record as a result of an unauthorized user entering the correct PIN. The department reserves the right to cancel the SBF service, change the PIN, remove an SBF enrollee, change the SBF service terms and conditions, or act to prevent or prosecute fraudulent activity at any time.

E. An enrollment does not expire; however, it can be cancelled by the enrollee, by another authorized applicant, or by the Department of State. Enrollments are non-transferrable. A new SBF enrollment application must be completed to reinstate a cancelled enrollment or to change the SBF enrollment to a different geauxBIZ user. Once the enrollment application is approved by the department, the department will provide the limited liability company with a personal identification number (PIN) that will be unique to the limited liability company. The limited liability company can give the PIN to any person filing amendments on the limited liability company’s behalf.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 42:907 (June 2016), amended LR 44:1453 (August 2018).

La. Admin. Code tit. 19, pt. V, § 1102 Commercial API Service

C. The service has a one-year non-refundable renewable subscription fee of $500. The subscription renewal form will be found on the secretary of state website. Enrollments are non-transferrable.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR, 46:1234 (September 2020).

Chapter 13 Partnerships

La. Admin. Code tit. 19, pt. V, § 1300 Secure Business Filings Service

A. The Department of State has developed and now offers a secure business filings (SBF) service designed to discourage fraudulent business filings in Louisiana. The service will notify a partnership via email whenever amendments are submitted on the partnership through geauxBIZ. The partnership will have the opportunity to review the filing and approve or reject further processing by the Department of State.

C. Business entities will have an opportunity to review the filing and approve or reject further processing by the Department of State. To approve a filing, the partnership must provide the PIN assigned to the partnership within five days of receiving notification of a pending file. If the partnership rejects a filing or if five days passes with no action performed, the filing will not be processed by the Department of State.

D. The partnership is responsible for PIN usage and security. The Department of State will not be responsible for unauthorized usage of the PIN or changes made to the partnership’s business record as a result of an unauthorized user entering the correct PIN. The department reserves the right to cancel the SBF service, change the PIN, remove an SBF enrollee, change the SBF service terms and conditions, or act to prevent or prosecute fraudulent activity at any time.

E. An enrollment does not expire; however, it can be cancelled by the enrollee, by another authorized applicant, or by the Department of State. Enrollments are non-transferrable. A new SBF enrollment application must be completed to reinstate a cancelled enrollment or to change the SBF enrollment to a different geauxBIZ user. Once the enrollment application is approved by the department, the department will provide the partnership with a personal identification number (PIN) that will be unique to the partnership. The partnership can give the PIN to any person filing amendments on the partnership’s behalf.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 42:907 (June 2016), amended LR 44:1454 (August 2018).

La. Admin. Code tit. 19, pt. V, § 1302 Commercial API Service

A. The Department of State has developed and now offers an optional paid Commercial API subscription service which will allow customers, such as banks, service companies and agencies doing enforcement activities, to search for business entity filings using their back-end systems. This will allow the customer to integrate validation of business information into their processes, such as a bank creating a business checking account, without having to open a browser, navigate to the secretary of state website, type in the business name, and click search. They could even populate data from the business information that the secretary of state has on file into fields in their application. The service will also allow customers to validate certificates issued by the Office of the Secretary of State to confirm their authenticity. The secretary of state currently does not know which customers are using the website. When customers sign up for the service, the secretary of state will have the contact information to provide better and more reliable service to them, and if there are any issues the secretary of state will know which customers to inform. The secretary of state has had to block legitimate customers from accessing the secretary of state website to try and prevent performance issues caused by people trying to harvest data from the site or just wreak havoc. The API would ensure legitimate business customers have access to the business data.

C. The service has a one-year non-refundable renewable subscription fee of $500. The subscription renewal form will be found on the secretary of state website. Enrollments are non-transferrable.

History

Authority Note: Promulgated in accordance with R.S. 49:222 and R.S. 36:742.
Historical Note: Promulgated by the Department of State, Business Services Division, LR 46:1234 (September 2020).

Part VII Louisiana Economic Development Corporation

Subpart 1 Small Business Loan and Guaranty Program (SBL and GP)

Chapter 1 Loan Guaranty Policies

La. Admin. Code tit. 19, pt. VII, § 101 Purpose

A. The Louisiana Economic Development Corporation (LEDC) wishes to stimulate the flow of private capital, medium to long-term loans, lines of credit loans, loan guaranties, loan participations and other financial assistance for the sound financing of the development, expansion, and retention of small business concerns in Louisiana, as a means of helping them grow and expand their businesses and of providing higher levels of employment, income growth, and expanded economic opportunities, especially to small and emerging businesses and disabled person business enterprises and within distressed and rural areas of our state.

B. The corporation will consider sound business loans, lines of credit, loan guaranties and loan participations so long as resources permit. The board of directors of the corporation recognizes that lending money, guaranteeing loans or participating in loans carries certain risks and is willing to undertake reasonable exposure.

C. LEDC will monitor the program, including the repayment progress of borrowers, as well as the servicing performance of participating lenders.

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:445 (June 1989), repromulgated LR 23:40 (January 1997), LR 26:2255 (October 2000), amended LR 26:2255 (October 2000), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:993 (April 2012), LR 48:1469 (June 2022), LR 48:1917 (July 2022).

La. Admin. Code tit. 19, pt. VII, § 103 Definitions

Board⎯Board of Directors of Louisiana Economic Development Corporation.

Borrower⎯also referred to herein as the applicant/borrower or customer/borrower; the business person or entity borrowing and accepting the loaned funds from the lender.

Corporation⎯Louisiana Economic Development Corporation.

Disabled Person's Business Enterprise⎯a small business concern which is at least 51 percent owned and controlled by a disabled person, as defined by the federal Americans with Disabilities Act of 1990.

Financial Institution⎯also referred to herein as a bank, financial lending institution, lending institution, commercial lending entity, or lender; includes any insured depository institution, insured credit union, or community development financial institution, as those terms are defined in §103 of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702).

Lead Lender⎯the bank or other lender that makes or originates the loan with the borrower.

LED⎯Louisiana Department of Economic Development.

LEDC⎯Louisiana Economic Development Corporation.

Lender⎯also referred to herein as the applicant/lender; the financial institution originating the loan and providing the loan funds to the borrower.

Lender Insider—an executive officer, director, or principal shareholder of the lender, or a member of the immediate family of an executive officer, director or principal shareholder of the lender, or a related interest of such executive officer, director, principal shareholder or member of the immediate family. For the purposes of this provision, the terms executive officer, director, principal shareholder, immediate family, and related interest shall have the respective meaning ascribed thereto in Federal Reserve Act Sections 22(g) and (h), Federal Reserve Board Regulation O and applicable Office of the Comptroller of the Currency or Office of Thrift Supervision.

Loan—the temporary provision of money or funds for a business purpose, usually for a limited term and requiring the payment of interest along with the repayment of the loaned funds. As used herein, the word “loan” includes a line of credit loan guarantee, term loan guarantee and loan participation.

Loan Guaranty or Guarantee⎯an agreement to pay the loan of another borrower, up to any limit in the amount guaranteed as provided in the agreement, in case the original borrower defaults in or is unable to comply with his repayment obligation.

Loan Participation⎯an agreement to participate as a lender in a loan or to acquire from the lender a share or ownership interest in a loan. A purchase participation or purchase transaction is one in which the state purchases a portion of a loan originated by a lender; and a companion loan, a parallel loan, or a co-lending participation is one in which the lender originates a loan and the state originates a second loan to the same borrower. (In the latter case, the state’s second loan may be subordinate or co-equal to the first loan originated by the lender.) Loan participations enable the state to act as a lender, in partnership with a financial institution lender, to provide small business loans at attractive terms.

Permanent Full-Time Jobs⎯refers to direct jobs which are not contract jobs, that are permanent and not temporary in nature, requiring employees to work an average of 30 or more hours per week.

Small and Emerging Business—a Louisiana business certified as a Small and Emerging Business (SEB) by the Louisiana Department of Economic Development's Small Business Services.

Small Business Concern⎯as defined by SBA for purposes of size eligibility as set forth by 13 CFR 121.

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 23:40 (January 1997), amended LR 26:2255 (October 2000), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:993 (April 2012), LR 48:1469 (June 2022), LR 48:1917 (July 2022).

La. Admin. Code tit. 19, pt. VII, § 105 Application Process

A. Any applicant/borrower(s) applying for either a loan guarantee, line of credit guarantee, or loan participation will be required first to contact a financial lending institution (a bank or other commercial lending entity) that is willing to entertain, originate, process and service such a loan or line of credit with the prospect of a guaranty or a participation, and the lender will then contact LEDC for qualification and shall submit a complete application to LEDC for review and approval. The financial institution shall also be responsible for obtaining assurances of eligibility from each borrower.

B. Information submitted to LEDC with the application representing the applicant's/borrower’s business plan, financial position, financial projections, personal financial statements and background checks will be kept confidential to the extent allowed under the Louisiana Public Records Law, R.S. 44:1 et seq. Confidential information in the files of LEDC and its accounts acquired in the course of its duty will be used solely by and for LEDC.

C. The following submission and review policies shall be followed.

A completed Louisiana Economic Development Corporation application form must be submitted to LEDC.
Small and Emerging Businesses (SEBs) applying for assistance under that provision will have to submit a copy of the certification from the Louisiana Department of Economic Development’s Small Business Services, along with the request for financial assistance.
Businesses applying for consideration under the disabled person's business enterprise provision shall submit adequate information to support the disabled status.
The applicant/lender shall submit to LEDC its complete analysis and evaluation, proposed loan structure, and commitment letter to the borrower. LEDC staff may do its own analysis and evaluation of the application, independent of the lending institution's analysis and evaluation.
The applicant/lender shall submit to LEDC the same pertinent data that it submitted to the lending institution's loan committee, whatever pertinent data the lending institution can legally supply.
LEDC staff will review the application and analysis, and then make recommendations. The staff will work with the applicant/lender on terms of the loan, including interest rate, maturity, collateral, other loan terms, and any LEDC loan stipulations or requirements.
The LEDC's board screening committee or the board’s other designated committee will review only the completed applications submitted by LEDC staff and may approve or disapprove applications within its authority as established by the LEDC board, or will make recommendations to the LEDC board.
The applicant/borrower(s) or their designated representative, and the loan officer or a representative of the lending institution are not required to attend the board screening committee or other designated committee meeting unless requested by LEDC or its staff to do so.
The applicant/borrower(s) or their designated representative, and the loan officer or a representative of the lending institution shall be required to attend the LEDC’s board of directors meeting wherein the application will be considered by the board.
LEDC's board of directors, the board screening committee, or the board’s other designated committee that has considered the application within its authority has the final approval authority for such applications.
The applicant/borrower or the lending institution will be notified within five (5) business days by mail or e-mail of the outcome of the application process.
An LEDC commitment letter, including LEDC’s terms, and any stipulations or requirements, will be mailed or e-mailed by LEDC staff to the lending institution within five business days of approval by the LEDC Board or its committee.

History

Authority Note: Promulgated in accordance with R.S. 51:2312.
Historical Note: Promulgated by the Department Economic Development, Economic Development Corporation, LR 15:446 (June 1989), amended LR 23:40 (January 1997), LR 26:2255 (October 2000), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:994 (April 2012), LR 48:1470 (June 2022), LR 48:1918 (July 2022).

La. Admin. Code tit. 19, pt. VII, § 107 Eligibility/Ineligibility for Participation in This Program

A. In connection with the business purpose for the requested loan: for loans up to and not to exceed $100,000, applicant/borrower shall create in this state at least one or shall retain in this state at least one permanent full-time job; and for loans in excess of $100,000, applicant/borrower(s) shall create in this state at least two new permanent full-time jobs.

B. The following businesses shall be eligible for participation in this program, except for those ineligible businesses and purposes hereinafter shown:

small business concerns organized as a sole proprietorship qualified to do and doing business in Louisiana, or either a for profit corporation, partnership, limited liability company, limited liability partnership, joint venture, cooperative, non-profit entity with an eligible business purpose as defined above, or other entity which is registered and authorized to conduct business in the state of Louisiana that maintain an office in Louisiana;
Small and Emerging Businesses (SEBs) certified by LED’s Small Business Services that maintain an office in Louisiana;
disabled person's business enterprises authorized to do and doing business in Louisiana, that maintain an office in Louisiana; or
funding requests for any business purpose may be considered, except for the following ineligible businesses or purposes:

a. restaurants (except for regional or national franchises),including grills, cafes, fast food operations, motorized vehicle, trailer, curb-side, sidewalk or street vender food operations, and any other business or project established for the principal purpose of dispensing cooked food for consumption on or off the premises having been in operations less than two years;

b. bars, saloons, daiquiri shops, operations for the sale of alcoholic popsicles and other alcoholic food items, packaged liquor stores, including any other business or project established for the principal purpose of dispensing, packaging, or distributing alcoholic beverages;

c. any business or establishment which has gaming or gambling as its principal business;

d. any business or establishment which has consumer or commercial financing as its business;

e. funding for the acquisition, renovation, or alteration of a building or property for the principal purpose of real estate speculation, rental, or any other passive real estate investment purposes;

f. funding for the principal purpose of refinancing existing debt unless under the following conditions:

i. a lender may refinance a borrower’s existing loan, line of credit, extension of credit, or other debt originally made by an unaffiliated lender only if the following conditions are met:

(a). the amount of the refinanced loan or other debt is at least 150 percent of the previous outstanding balance;

(b). the transaction results in a 30 percent reduction in the fee-adjusted APR contracted for the term of the new debt, to help ensure that funding is used only for transactions that meaningfully benefit borrowers by providing access to sustainable products; and

(c). proceeds of the transaction are not used to finance an extraordinary dividend or other distribution.

ii. a lender may use funds to support a new extension of credit that repays the amount due on a matured loan or other debt that was previously used for an eligible business purpose when all the following conditions are met:

(a). the amount of the new loan or other debt is at least 150 percent of the outstanding amount of the matured loan or other debt;

(b). the new credit supported with funding is based on a new underwriting of the small business’s ability to repay the loan and new approval by the lender;

(c). the prior loan or other debt has been paid as agreed and the borrower was not in default of any financial covenants under the loan or debt for at least the previous 36 months (or since origination, if shorter); and

(d). proceeds of the transaction are not used to finance an extraordinary dividend or other distribution.

g. funding for the purpose of buying out any stockholder or equity holder by another stockholder or equity holder in a business;

h. funding for the purpose of establishing a park, theme park, amusement park, or camping facility; or

i. funding for the purpose of buying out any family member or reimbursing any family member.

j. funding for the purpose of pyramid sales;

k. funding activities related either directly or indirectly to cryptocurrency.

History

Authority Note: Promulgated in accordance with R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:446 (June 1989), amended LR 23:41 (January 1997), LR 26:2255 (October 2000), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:994 (April 2012), LR 44:229 (February 2018), LR 48:1470 (June 2022), LR 48:1918 (July 2022).

La. Admin. Code tit. 19, pt. VII, § 109 General Loan Guaranty and Loan Participation Provisions

A. The Louisiana Economic Development Corporation will be guided by the following general principles in approving loan guaranties, line of credit guaranties, or loan participations.

The corporation shall confirm that the financial institution lender has sufficient commercial lending experience and financial and managerial capacity to participate in this program. The corporation may utilize, among other resources, the financial institution’s most recent call report showing the percentage of commercial loans in its portfolio.
The corporation shall not knowingly approve any loan guarantee, line of credit guarantee, or loan participation if the applicant/borrower has presently pending or outstanding any claim or liability relating to failure or inability to pay promissory notes or other evidence of indebtedness, state or federal taxes, or a bankruptcy proceeding; nor shall the corporation approve any loan, line of credit, loan guarantee or participation if the applicant/borrower has presently pending, at the federal, state, or local level, any proceeding concerning denial or revocation of a necessary license or permit or any legal proceeding involving a criminal violation other than misdemeanor traffic violations. Further, the corporation shall not approve any loan guarantee, line of credit guarantee, or participation if the applicant/ borrower or his/her/its principle management has a criminal record showing convictions for any criminal violations other than misdemeanor traffic violations.
The terms or conditions imposed and made part of any loan guarantee, line of credit guarantee, or loan participation authorized by vote of the corporation board, its board screening committee or its other designated committee shall not be amended or altered by any member of the Board or employee of the Department of Economic Development except by subsequent vote of approval by the board, its board screening committee or other designated committee at the next meeting of the board or committee in open session with full explanation for such action.
Each financial institution lender shall be required to have a meaningful amount of its own capital resources at risk in each small business loan included in this program. Such lenders shall bear at 20 percent or more of the loss from a small business loan default.
The corporation shall not subordinate its position to other creditors.

B. Interest Rate

On all loans or lines of credit guarantees, the interest rate is to be negotiated between the borrower and the lender, but shall not exceed the lesser interest rate of either; 5 percent per annum above New York prime as published in the Wall Street Journal at either a fixed or variable rate; the interest rate cap as established by either the Federal Credit Union Act (FCUA), that established by the Office of the Comptroller of the Currency (OCC), or applicable State legislation that may be enacted.
On all participation loans, the rate shall be determined by utilizing the rate for a U.S. Government Treasury security for the time period that coincides with the term of the participation and adding between 1 and 5 percentage points.

C. Collateral

The value of the collateral shall be no less than the guaranteed portion of the loan.
The value of the collateral required for certified small and emerging businesses loans may be up to 80 percent.
The collateral position may be negotiated, but it shall be no less than a sole second position.
Collateral Value Determination

a. The appraiser must be certified by a recognized organization in the area of the collateral.

b. The appraisal shall not be more than 90 days old, except for real estate loans, which shall not be more than 6 months old.

Acceptable collateral may include, but shall not be limited to, the following:

a. fixed assets—business real estate, buildings, fixtures;

b. equipment, machinery, inventory;

c. accounts receivable with supporting aging schedule; but not to exceed 80 percent of receivable value (to be used with personal guarantee only).

Unacceptable collateral may include, but shall not be limited to the following:

a. stock in applicant/borrower company and/or related companies;

b. personal items or borrower’s primary residence;

c. intangibles; to include but not limited to, digital currency such as cryptocurrency and NFTs.

Personal guarantees may be offered but will not count towards the value of the collateral; if to be used, a signed and dated personal financial statements of the guarantors must also be submitted to LEDC.

D. Equity Requirements

Equity required will be no less than 15 percent of the loan or line of credit amount for a start-up operation, or acquisition, or expansion. However, if the equity requirement as noted above is not available for a guarantee the following chart may be applied which provides for a guarantee fee attached to a lesser equity position.

Equity Percent

Guarantee Fee

15 Percent

3.00 Percent

14 Percent

3.20 Percent

13 Percent

3.40 Percent

12 Percent

3.60 Percent

11 Percent

3.80 Percent

10 Percent

4.00 Percent

*In no case shall the equity position be less than 10 percent.

Equity is defined to be:

a. cash;

b. paid-in capital;

c. paid-in surplus and retained earnings; or

d. partnership capital and retained earnings.

No research, development expense nor intangibles of any kind will be considered equity.

E. Limit on the Amount of LEDC’s Guarantee:

For small business loans, the corporation's loan guarantee shall be: no greater than 80 percent of a loan not to exceed a guaranty amount of $1,500,000.
For certified small and emerging business loans, or disabled person's business enterprise loans, the corporation's loan guarantee shall be: no greater than 90 percent of a loan not to exceed a guaranty amount of $1,500,000.
For small businesses, the corporation's loan participation shall be no greater than 40 percent, but in no case shall it exceed $1,500,000.
For certified small and emerging businesses, or disabled person's business enterprises, the corporation's loan participation shall be no greater than 50 percent, but in no case shall it exceed $1,000,000.

F. Terms

Maturity, collateral, and other loan terms shall be negotiated between the borrower and the applicant/lending institution, and the LEDC shall have an opportunity to approve the terms of such loans prior to the closing; but guaranty term periods with regard to various types of loan guaranties shall be limited as follows:

a. for revolving lines of credit (RLOC) guarantee term periods may extend for up to and not exceed seven years.

b. for equipment term loans guarantee term periods may extend for up to and not exceed 10 years.

c. for real estate term loans guarantee term periods may extend for up to and shall not exceed 25 years.

G. LEDC SBLGP Program Fees

LEDC will charge a guaranty program fee not to exceed a maximum amount of 4 percent on the guaranteed loan amount, unless the board, the board screening committee or other designated committee waives the guaranty fee.
LEDC will charge a $100 application fee, unless the board, the board screening committee or other designated committee waives the application fee.
LEDC will share in a pro-rata position in any fees assessed by the lender on a loan participation.
LEDC will waive the application fee and program fee for businesses certified by LED as an SEB.

H. Use of Loan Funds

Loan funds may be used for business purposes, including but not limited to the purchase of fixed assets, including buildings that will be occupied by the applicant/borrower to the extent of at least 51 percent.
Loan funds may be used for the purchase of equipment, machinery, or inventory.
Loan funds may be used for a line of credit for accounts receivable or inventory.
Debt restructure may be considered by LEDC, but will not be considered when the debt:

a. exceeds 25 percent of the total loan, with the following exception:

i. a maximum of 35 percent may be considered on a guaranteed loan, but the guaranteed percentage will be decreased by 5 percent;

b. pays off a creditor or creditors who are inadequately secured;

c. provides funds to pay off a debt to principals of the borrower business; and/or

d. provides funds to pay off family members.

Loan funds may not be used to buy out stockholders or equity holders of any kind, by any other stockholder or equity holder.
Loan funds may not be used to purchase any speculative investment or real estate development.

History

Authority Note: Promulgated in accordance with R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:448 (June 1989), amended LR 23:41 (January 1997), LR 26:2256 (October 2000), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and the Louisiana Economic Development Corporation, LR 38:995 (April 2012), LR 40:274 (February 2014), LR 44:229 (February 2018), LR 48:1470 (June 2022), LR 48:1918 (July 2022).

La. Admin. Code tit. 19, pt. VII, § 111 General Guaranty Agreement Provisions

A. Guaranty Agreement

The lending institution shall conduct all of the customer/borrower interaction, and shall be responsible for the proper administration and monitoring of the loan or line of credit, including monthly invoicing, collections, and loan workouts, and the proper liquidation of the collateral in the event of a default.
The loan or line of credit shall not be sold, assigned, participated out, or otherwise transferred without the prior written consent of the LEDC board.
If liquidation through foreclosure occurs, the lender will sell the collateral, handle the legal proceedings, and absorb all expenses associated with these activities.
There will be a reduction of the guarantee:

a. in proportion to the principal reduction of the amortized portion of the loan or line of credit;

b. if no principal reduction has occurred in any annual period of the loan or line of credit, a reduction in the guarantee amount will be made proportional to the remaining guarantee life.

The guarantee will cover the unpaid principal amount owed only.
Delinquency will be defined according to the lender's normal lending policy and all remedies will be outlined in the guarantee agreement. Notification of delinquency will be made to the corporation in writing by submitting a completed, signed and dated SBLGP banker loan status monthly report within five business days after the end of the month/reporting period and as stated in the guarantee agreement.

B. Loan Participation Agreement

The lending institution shall conduct all of the customer/borrower interaction, and shall be responsible for the proper administration and monitoring of the loan, including monthly invoicing, collections, and loan workouts, and the proper liquidation of the collateral in the event of a default.
The lead lender will hold no less participation in the loan than that equal to LEDC's, but not to exceed its legal lending limit.
The lead lender may sell other participations with LEDC's consent.
Should liquidation through foreclosure occur, the lender will sell the collateral and handle the legal proceedings and absorb all expenses associated with these activities.
The lender is able to set its rate according to risk, and may blend its rate with the LEDC rate to yield a lower overall rate to a project.
Delinquency will be defined according to the lender's normal lending policy and all remedies will be outlined in the participation agreement. Notification of delinquency will be made to the corporation in writing by submitting a completed, signed and dated SBLGP banker loan status monthly report within five business days after the end of the month/reporting period, as stated in the loan participation agreement.

C. Borrower Agreement

At the discretion of LEDC, the borrower will agree to strengthen management skills by participation in a form of continuing education acceptable to LEDC.
The borrower shall provide initial proof as well as an annual report of job creation, including the number of jobs, job titles and salaries.

History

Authority Note: Promulgated in accordance with R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:448 (June 1989), amended LR 23:42 (January 1997), LR 26:2257 (October 2000), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:996 (April 2012), LR 48:1472 (June 2022), LR 48:1920 (July 2022).

La. Admin. Code tit. 19, pt. VII, § 113 Confidentiality

A. Confidential information in the files of the corporation and its accounts acquired in the course of its duty is to be used solely for the corporation. The corporation is not obliged to give out any credit rating or confidential information regarding the applicant/borrower (see Louisiana Attorney General’s Opinion #82-860).

History

Authority Note: Promulgated in accordance with R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:453 (June 1989), amended LR 23:43 (January 1997), LR 26:2257 (October 2000), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:997 (April 2012).

La. Admin. Code tit. 19, pt. VII, § 115 Conflict of Interest

A. No member of the corporation, employee thereof, or employee of the Department of Economic Development, or members of their immediate families shall either directly or indirectly be a party to or be in any manner interested in any contract or agreement with the corporation for any matter, cause, or thing whatsoever by reason whereof any liability or indebtedness shall in any way be created against such corporation. If any contract or agreement shall be made in violation of the provisions of this Section, the same shall be null and void, and no action shall be maintained thereon against the corporation.

History

Authority Note: Promulgated in accordance with R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Economic Development Corporation, LR 15:453 (June 1989), amended LR 23:43 (January 1997), LR 26:2258 (October 2000), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:997 (April 2012).

La. Admin. Code tit. 19, pt. VII, § 117 Guidelines

A. The Louisiana Economic Development Corporation (LEDC), or the Louisiana Department of Economic Development, also known as Louisiana Economic Development (LED), as the administrator of this program for LEDC, may make, create, or issue from time to time Guidelines interpreting, construing, explaining and/or supplementing these Rules; and may revise, supplement, or otherwise change or modify the guidelines at any time with or without notice.

History

Authority Note: Promulgated in accordance with R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 44:229 (February 2018).

Chapter 3 Loan and Guaranty Policies for the State Small Business Credit Initiative (SSBCI) Program

La. Admin. Code tit. 19, pt. VII, § 301 Purpose

A. The purposes for this Chapter 3 program shall be the same as the purposes previously provided in Section 101 of Chapter 1 of the Small Business Loan and Guaranty Program which shall also apply to this Chapter 3 program (except that loan participations will not be utilized in this Chapter 3 program); and additionally this Chapter 3 program is to establish loan and guaranty policies for the federal program entitled the State Small Business Credit Initiative (SSBCI) Program and to accommodate the requirements of this federal program. The Louisiana Economic Development Corporation (LEDC) will utilize SSBCI funds to increase access to credit and capital funding to further assist small businesses statewide, to expand loan capabilities to include a broader range of businesses statewide, to direct a greater concentration on those small businesses, and to reach, identify and promote small business growth in low and moderate income communities, in minority communities, in other underserved communities, and to women- and minority-owned businesses. This LEDC program and the SSBCI funding will be marketed through outreach activities to inform lenders, small businesses and trade associations of the program, and to generate increased small business activity, awareness and access to additional sources of capital to start and expand existing business opportunities, as well as participation in the program. The LEDC will also monitor these plans, including the repayment progress of borrowers, the servicing performance of participating lenders, and to ensure successful outcomes in the form of program utilization and eventual securing of funds for these groups.

B. The LEDC wishes to maintain for this Chapter 3 Program all of the purposes of §101 and all of the other Sections and provisions of Chapter 1 of the Small Business Loan and Guaranty Program shown above, except where there is a need for the policies of this Program to be different from Chapter 1. For this reason, all of the Sections and provisions of Chapter 1 above shall also apply to this Chapter 3, except in those instances where a different or additional rule or policy is provided below in this Chapter 3.

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:997 (April 2012).

La. Admin. Code tit. 19, pt. VII, § 303 Definitions

A. All of the same definitions provided in Section 103 of Chapter 1 of the Small Business Loan and Guaranty Program shall also apply to this Chapter 3 program.

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:998 (April 2012).

La. Admin. Code tit. 19, pt. VII, § 305 Application Process

A. Except as may be hereinafter provided, all of the provisions contained in §105 of Chapter 1 of the Small Business Loan and Guaranty Program shall also apply to this Chapter 3 program (except that loan participations will not be utilized in this Chapter 3 program).

B. Loan Purpose Requirements and Prohibitions. In addition to the application process provisions provided in the Section mentioned in the above Subsection A, in connection with each loan to be enrolled under this Chapter 3 program the financial institution lender shall also be responsible for obtaining and providing to LEDC with the lender’s application an assurance from each borrower stating that the loan proceeds shall not be used for any impermissible purpose under the SSBCI Program. And additionally, each financial institution lender must also obtain and provide to LEDC with its application under this Chapter 3 program an assurance from the borrower affirming:

the loan proceeds must be used for a business purpose. A business purpose includes, but is not limited to, start up costs, working capital, business procurement, franchise fees, equipment, inventory, as well as the purchase, construction renovation or tenant improvements of an eligible place of business that is not for passive real estate investment purposes. The definition of business purpose excludes activities that relate to acquiring or holding passive investments such as commercial real estate ownership, the purchase of securities; and lobbying activities as defined in section 3 (7) of the Lobbying Disclosure Act of 1995, P.L. 104-65, as amended;
the loan proceeds will not be used to:

a. repay a delinquent federal or state income taxes unless the borrower has a payment plan in place with the relevant taxing authority; or

b. repay taxes held in trust or escrow, e.g. payroll or sales taxes; or

c. reimburse funds owed to any owner, including any equity injection or injection of capital for the business’ continuance; or

d. purchase any portion of the ownership interest of any owner of the business;

the borrower is not:

a. an executive officer, director, or principal shareholder of the financial institution lender; or

b. a member of the immediate family of an executive officer, director, or principal shareholder of the financial institution lenders; or

c. a related interest of an such executive officer, director, principal shareholder, or member of the immediate family;

i. for the purposes of these three borrower restrictions, the terms executive officer, director, principal shareholder, immediate family, and related interest refer to the same relationship to a financial institution lender as the relationship described in part 215 of title 12 of the Code of Federal Regulations, or any successor to such part;

the borrower is not:

a. a business engaged in speculative activities that develop profits from fluctuations in price rather than through normal course of trade, such as wildcatting for oil and dealing in commodities futures, unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business;

NOTE: Permissible borrowers include state-designated charitable, religious, or other non-profit or eleemosynary institutions, government-owned corporations, consumer and marketing cooperatives, and faith-based organizations provided the loan is for a “business purpose” as defined above.

b. a business that earns more than half of its annual net revenue from lending activities; unless the business is a non-bank or non-bank holding company certified as a community development financial institution; or

c. a business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

d. a business engaged in activities that are prohibited by federal law or applicable law in the jurisdiction where the business is located or conducted (Included in these activities is the production, servicing, or distribution of otherwise legal products that are to be used in connection with an illegal activity, such as selling drug paraphernalia or operating a motel that knowingly permits illegal prostitution.); or

e. a business engaged in gambling enterprises, unless the business earns less than 33 percent of its annual net revenue from lottery sales;

no principal of the borrowing entity has been convicted of a sex offense against a minor [as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911)]. For the purposes of this certification, principal is defined as if a sole proprietorship, the proprietor; if a partnership, each managing partner and each partner who is a natural person and holds a 20 percent or more ownership interest in the partnership; and if a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives or officers of the entity, and each natural person who is a direct or indirect holder of 20 percent or more of the ownership stock or stock equivalent of the entity.

C. The financial institution lender must also provide to LEDC with its application, in connection with each loan to be enrolled under this Chapter 3 program, an assurance affirming:

he loan has not been made in order to place under the protection of the approved state Capital Access Program (CAP) prior debt that is not covered under the approved state CAP and that is or was owed by the borrower to the financial institution lender or to an affiliate of the financial institution lender;
the loan is not a refinancing of a loan previously made to that borrower by the financial institution lender or an affiliate of the financial institution lender;
no principal of the financial institution lender has been convicted of a sex offense against a minor [as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911)]. For the purposes of this certification, principal is defined as if a sole proprietorship, the proprietor; if a partnership, each partner; if a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives, officers, or employees of the entity, and each direct or indirect holder of 20 percent or more of the ownership stock or stock equivalent of the entity.

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:998 (April 2012).

La. Admin. Code tit. 19, pt. VII, § 307 Eligibility/Ineligibility for Participation in This Program

A. Except as may be hereinafter provided, all of the provisions contained in §107 of Chapter 1 of the Small Business Loan and Guaranty Program shall also apply to this Chapter 3 program (except that loan participations will not be utilized in this Chapter 3 program).

B. In addition to the eligibility and ineligibility provisions provided in the Section mentioned in the above Subsection A, applicant/borrowers and loans, lines of credit and loan guarantees in connection with this Chapter 3 program shall meet the following criteria:

the applicant/borrower(s) shall employ 500 employees or less at the time the loan is enrolled in this program;
this credit support shall not be extended to applicant/borrower(s) that have more than 750 employees;
any loan supported in this program shall not exceed a principal amount of $5,000,000;
any credit extended through this program shall not exceed a principal amount of $20,000,000;
SSBCI funds utilized in this Chapter 3 program will be permitted only for new extensions of credit; that is, funds of the SSBCI Program shall not be used to support existing extensions of credit, including but not limited to prior loans, lines of credit or other borrowing, that were previously made available as part of a state small business credit enhancement program; and
Small Business Administration (SBA) guaranteed loans shall not be purchased in loan participations through this program.

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:999 (April 2012).

La. Admin. Code tit. 19, pt. VII, § 309 General Loan, Credit, Guaranty and Participation Provisions

A. Except as may be hereinafter provided, all of the provisions contained in §109 of Chapter 1 of the Small Business Loan and Guaranty Program shall also apply to this Chapter 3 program (except that loan participations will not be utilized in this Chapter 3 program).

B. Interest Rates

On all loan or line of credit guarantees, the interest rate is to be negotiated between the borrower and the lender, but shall not exceed 5 percent per annum above New York prime as published in the Wall Street Journal at either a fixed or variable rate.

C. Equity Requirements

To qualify for this Chapter 3 program, the borrower must infuse not less than 15 percent into the equity in an existing or expanding business, or not less than 20 percent into the equity of a start-up operation or an acquisition.

D. Limit on the Amount of LEDC’s Guarantee

In connection with loans included in this Chapter 3 program, for certified small and emerging business loans, or disabled person's business enterprise loans, the corporation's loan guarantee shall be:

a. no greater than 75 percent of a loan of up to $2,000,000; or

b. if the loan request exceeds $2,000,000, the guaranty shall not exceed $1,500,000.

E. Terms

For loan guaranties included in this Chapter 3 program, all of the provisions contained in §109.F.1.a, b and c of Chapter 1 of the Small Business Loan and Guaranty Program, with regard to term periods of various types of loan guaranties, shall also apply to this Chapter 3 program.

F. LEDC Fees

In connection with loans and guaranties included in this Chapter 3 program, LEDC will charge a guaranty fee not to exceed a maximum amount of 2 percent of the guaranteed loan amount, unless the board, the board screening committee or other designated committee waives the guaranty fee.
In connection with loans and guaranties included in this Chapter 3 program, LEDC will charge no application fee.

History

Authority Note: Promulgated in accordance with R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and the Louisiana Economic Development Corporation, LR 38:999 (April 2012), LR 40:274 (February 2014).

La. Admin. Code tit. 19, pt. VII, § 311 General Agreement Provisions

A. Except as may be hereinafter provided, all of the provisions contained in §111 of Chapter 1 of the Small Business Loan and Guaranty Program shall also apply to this Chapter 3 program (except that loan participations will not be utilized in this Chapter 3 program).

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:999 (April 2012).

La. Admin. Code tit. 19, pt. VII, § 313 Confidentiality

A. All of the provisions contained in §113 of Chapter 1 of the Small Business Loan and Guaranty Program shall also apply to this Chapter 3 program.

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:999 (April 2012).

La. Admin. Code tit. 19, pt. VII, § 315 Conflict of Interest

A. All of the provisions contained in §115 of Chapter 1 of the Small Business Loan and Guaranty Program shall also apply to this Chapter 3 program.

History

Authority Note: Promulgated in accordance with LA. R.S. 51:2312.
Historical Note: Promulgated by the Department of Economic Development, Office of the Secretary, Office of Business Development and Louisiana Economic Development Corporation, LR 38:1000 (April 2012).

Chapter 5 SSBCI Loan Guaranty ARPA 2021

La. Admin. Code tit. 19, pt. VII, § 501 Purpose

A. The purpose of this program is to utilize federal SSBCI funds to strengthen state programs that support private financing to small businesses as a response to the economic effects of the COVID-19 pandemic, in accordance with prevailing federal guidelines issued by the U.S. Treasury.

B. The Louisiana Economic Development Corporation (LEDC) will utilize SSBCI funds from ARPA 2021 to increase access to credit and capital funding to further assist small businesses statewide, to expand loan capabilities to include a broader range of businesses statewide, to direct a greater concentration on those small businesses, and to reach, identify and promote small business growth, especially to Socially and Economically Disadvantaged Businesses (SEDI) and Small and Emerging Businesses (SEB).

History

Authority Note: Promulgated in accordance with R.S. 36:104, 36:108 and 51:2312
Historical Note: Promulgated by the Department of Economic Development, Office of Business Development and the Louisiana Economic Development Corporation, LR 48:1472 (June 2022), LR 48:1926 (July 2022), amended by Louisiana Economic Development, Office of Economic Development and the Louisiana Economic Development Corporation, LR 52:739 (May 2026).

La. Admin. Code tit. 19, pt. VII, § 503 Definitions

A. Terms not otherwise defined in this Chapter shall have the same meaning given to them in prevailing federal guidelines issued by the U.S. Treasury, unless the context clearly requires otherwise.

B. In this Chapter, the following terms shall have the meanings provided herein, unless the context clearly indicates otherwise.

Board—Board of Directors of Louisiana Economic Development Corporation.

Borrower—also referred to herein as the applicant/borrower or customer/borrower; the business person or entity borrowing and accepting the loaned funds from the Lender.

CDFI-Community Development Financial Institution (CDFI)—has the meaning given that term under Section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994.

CDFI Investment Area—areas defined by CDFI which are generally low-income, high-poverty geographies that receive neither sufficient access to capital nor support for the needs of small businesses, including minority-owned businesses. For purposes of SSBCI, Treasury has determined that the entirety of American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands constitute a CDFI Investment Area.

Corporation—Louisiana Economic Development Corporation.

Disabled Person's Business Enterprise—a small business concern which is at least 51 percent owned and controlled by a disabled person, as defined by the federal Americans with Disabilities Act of 1990.

Double-Dipping Fees—occurs when a lender issues new credit to refinance prior credit without forgiving a portion of the fee already paid resulting in the borrower paying a fee on top of a fee.

Financial Institution—also referred to herein as a Bank, Financial Lending Institution, Lending Institution, Commercial Lending Entity, or Lender; includes any insured depository institution, insured credit union, or community development financial institution, as those terms are defined in Section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4702).

Lead Lender—the bank or other lender that makes or originates the loan with the borrower.

LED—Louisiana Economic Development, formerly Louisiana Department of Economic Development.

LEDC—Louisiana Economic Development Corporation.

Lender—also referred to herein as the applicant/lender; the Financial Institution originating the loan and providing the loan funds to the borrower.

Lender Insider—an executive officer, director, or principal shareholder of the Lender, or a member of the immediate family of an executive officer, director or principal shareholder of the Lender, or a related interest of such executive officer, director, principal shareholder or member of the immediate family. For the purposes of this provision, the terms executive officer, director, principal shareholder, immediate family, and related interest shall have the respective meaning ascribed thereto in Federal Reserve Act Sections 22(g) and (h), Federal Reserve Board Regulation O and applicable Office of the Comptroller of the Currency or Office of Thrift Supervision.

Loan—the temporary provision of money or funds for a business purpose, usually for a limited term and requiring the payment of interest along with the repayment of the loaned funds. As used herein, the word loan includes a line of credit loan guarantee, and term loan guarantee.

Loan Guaranty or Guarantee—an agreement to pay the loan of another borrower, up to any limit in the amount guaranteed as provided in the agreement, in case the original borrower defaults in or is unable to comply with his repayment obligation.

Loan Guaranty Agreement—the executed agreement between LEDC and a participating Lender specifying participation terms, loan parameters and other conditions for program compliance.

Permanent Full-Time Jobs—refers to direct jobs which are not contract jobs, that are permanent and not temporary in nature, requiring employees to work an average of 30 or more hours per week.

Prepayment Fees—also referred to as Prepayment penalty, fee imposed upon the borrower when all or part of a loan is paid before the scheduled loan term ends.

Small and Emerging Business—a Louisiana business certified as a Small and Emerging Business (SEB) by Louisiana Economic Development's Small Business Services.

Small Business Concern—as defined by SBA for purposes of size eligibility as set forth by 13 C.F.R. 121.

Socially and Economically Disadvantaged Individual (SEDI) Owned Business⎯(for the purposes of this program).

a. business enterprises that certify that they are owned and controlled by individuals who have had their access to credit on reasonable terms diminished as compared to others in comparable economic circumstances, due to their:

i. membership of a group that has been subjected to racial or ethnic prejudice or cultural bias within American society;

ii. gender;

iii. veteran status;

iv. limited English proficiency;

v. physical handicap;

vi. long-term residence in an environment isolated from the mainstream of American society;

vii. membership of a federally or state-recognized Indian Tribe;

viii. long-term residence in a rural community;

ix. residence in a U.S. territory;

x. residence in a community undergoing economic transitions (including communities impacted by the shift towards a net-zero economy or deindustrialization); or

xi. membership of another underserved community as defined in U.S. Executive Order 13985;

b. business enterprises that certify that they are owned and controlled by individuals whose residences are in CDFI investment areas, as defined in prevailing federal guidelines issued by the U.S. Treasury;

c. business enterprises that certify that they will operate a location in a CDFI investment area, as defined in prevailing federal guidelines issued by the U.S. Treasury; or

d. business enterprises that are located in CDFI Investment Areas, as defined in prevailing federal guidelines issued by the U.S. Treasury.

business enterprises that are located in CDFI Investment Areas, as defined in prevailing federal guidelines issued by the U.S. Treasury.

Very Small Business—a business with fewer than 10 employees; may include independent contractors and sole proprietors

History

Authority Note: Promulgated in accordance with R.S. 36:104, 36:108 and 51:2312
Historical Note: Promulgated by the Department of Economic Development, Office of Business Development and the Louisiana Economic Development Corporation, LR 48:1473 (June 2022), LR 48:1927 (July 2022), amended by Louisiana Economic Development, Office of Economic Development and the Louisiana Economic Development Corporation, LR 52:739 (May 2026).

La. Admin. Code tit. 19, pt. VII, § 505 Application Process

A. Any applicant/borrower(s) applying for either a line of credit guarantee or loan guaranty will be required first to contact a financial lending institution (a bank or other commercial lending entity) that is willing to entertain, originate, process and service such a loan or line of credit with the prospect of a guaranty, and the lender will then contact LEDC for qualification and shall submit a complete application to LEDC for review and approval. The financial institution shall also be responsible for obtaining assurances of eligibility from each borrower.

B. Businesses applying for consideration as a SEDI owned business will have to self-certify under conditions in Clauses i -iii to the extent allowed under the Louisiana Public Records Law, R.S. 44:1 et seq. Confidential information in the files of LEDC and its accounts acquired in the course of its duty will be used solely by and for LEDC.

C. Loan Purpose Requirements and Prohibitions. In addition to the application process provisions provided in the Section mentioned in the above Subsection A, in connection with each loan to be enrolled under this Chapter 5 program the financial institution lender shall also be responsible for obtaining and providing to LEDC with the lender’s application an assurance from each borrower stating that the loan proceeds shall not be used for any impermissible purpose under the SSBCI program. And additionally, each financial institution lender must also obtain and provide to LEDC with its application under this Chapter 5 program an assurance from the borrower affirming:

The loan proceeds must be used for an eligible business purpose. An eligible business purpose includes, but is not limited to, start-up costs, working capital, business procurement, franchise fees, equipment, inventory, as well as the purchase, construction renovation or tenant improvements of an eligible place of business that is not for passive real estate investment purposes. The definition of business purpose excludes activities that relate to acquiring or holding passive investments such as commercial real estate ownership, the purchase of securities; and lobbying activities as defined in Section 3 (7) of the Lobbying Disclosure Act of 1995, P.L. 104-65, as amended.
The loan proceeds will not be used to:

a. repay a delinquent federal or state income taxes unless the borrower has a payment plan in place with the relevant taxing authority; or

b. repay taxes held in trust or escrow, e.g. payroll or sales taxes; or

c. reimburse funds owed to any owner, including any equity injection or injection of capital for the business’ continuance; or

d. purchase any portion of the ownership interest of any owner of the business.

The borrower is not:

a. an executive officer, director, or principal shareholder of the financial institution lender; or

b. a member of the immediate family of an executive officer, director, or principal shareholder of the financial institution lenders; or

c. a related interest of an such executive officer, director, principal shareholder, or member of the immediate family.

NOTE: (For the purposes of these three borrower restrictions, the terms executive officer, director, principal shareholder, immediate family, and related interest refer to the same relationship to a financial institution lender as the relationship described in part 215 of title 12 of the Code of Federal Regulations, or any successor to such part.)

The borrower is not:

c. a business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

d. a business engaged in activities that are prohibited by federal law or applicable law in the jurisdiction where the business is located or conducted. (Included in these activities is the production, servicing, or distribution of otherwise legal products that are to be used in connection with an illegal activity, such as selling drug paraphernalia or operating a motel that knowingly permits illegal prostitution); this category of business includes direct and indirect marijuana businesses, as defined in SBA Standard Operating Procedures 50 10 6; or

e. a business engaged in gambling enterprises, unless the business earns less than 33 percent of its annual net revenue from lottery sales.

No principal of the borrowing entity has been convicted of a sex offense against a minor (as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911)). For the purposes of this certification, principal is defined as “if a sole proprietorship, the proprietor; if a partnership, each managing partner and each partner who is a natural person and holds a 20 percent or more ownership interest in the partnership; and if a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives or officers of the entity, and each natural person who is a direct or indirect holder of 20 percent or more of the ownership stock or stock equivalent of the entity.”

D. The financial institution lender must also provide to LEDC with its application, in connection with each loan to be enrolled under this program, an assurance affirming:

the loan has not been made in order to place under the protection of the approved state capital access program (CAP) prior debt that is not covered under the approved state CAP and that is or was owed by the borrower to the financial institution lender or to an affiliate of the financial institution lender;
the loan is not a refinancing of a loan previously made to that borrower by the financial institution lender or an affiliate of the financial institution lender; and
No principal of the financial institution lender has been convicted of a sex offense against a minor (as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911)). For the purposes of this certification, principal is defined as if a sole proprietorship, the proprietor; if a partnership, each partner; if a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives, officers, or employees of the entity, and each direct or indirect holder of 20 percent or more of the ownership stock or stock equivalent of the entity.

E. The following submission and review policies shall be followed:

a completed Louisiana Economic Development Corporation application form must be submitted to LEDC;
small and emerging businesses (SEBs) applying for assistance under that provision will have to submit a copy of the certification from the Louisiana Department of Economic Development’s Small Business Services , along with the request for financial assistance;
businesses applying for consideration under the disabled person's business enterprise provision shall submit adequate information to support the disabled status;
the applicant/lender shall submit to LEDC its complete analysis and evaluation, proposed loan structure, and commitment letter to the borrower. LEDC staff may do its own analysis and evaluation of the application, independent of the lending institution's analysis and evaluation;
the applicant/lender shall submit to LEDC the same pertinent data that it submitted to the lending institution's loan committee, whatever pertinent data the lending institution can legally supply;
LEDC staff will review the application and analysis, and then make recommendations. The staff will work with the applicant/lender on terms of the loan, including interest rate, maturity, collateral, other loan terms, and any LEDC loan stipulations or requirements;
the LEDC's board screening committee or the board’s other designated committee will review only the completed applications submitted by LEDC staff and may approve or disapprove applications within its authority as established by the LEDC board, or will make recommendations to the LEDC board;
the applicant/borrower(s) or their designated representative, and the loan officer or a representative of the lending institution are not required to attend the board screening committee or other designated committee meeting unless requested by LEDC or its staff to do so;
the applicant/borrower(s) or their designated representative, and the loan officer or a representative of the lending institution shall be required to attend the LEDC’s board of directors meeting wherein the application will be considered by the board;
LEDC's board of directors, the board screening committee, or the board’s other designated committee that has considered the application within its authority has the final approval authority for such applications.
the applicant/borrower or the lending institution will be notified by mail or email of the outcome of the application process; and
an LEDC commitment letter, including LEDC’s terms, and any stipulations or requirements, will be mailed or e-mailed by LEDC staff to the lending institution by the LEDC Board or its committee.

History

Authority Note: Promulgated in accordance with R.S. 36:104, 36:108 and 51:2312
Historical Note: Promulgated by the Department of Economic Development, Office of Business Development and the Louisiana Economic Development Corporation, LR 48:1474 (June 2022), LR 48:1928 (July 2022), amended by Louisiana Economic Development, Office of Economic Development and the Louisiana Economic Development Corporation, LR 52:740 (May 2026).

La. Admin. Code tit. 19, pt. VII, § 507 Eligibility/Ineligibility for Participation in This Program

A. Funding requests for any business purpose may be considered, however, the following businesses and purposes shall be considered.

Eligible:

a. small business concerns authorized to do and doing business in Louisiana, that maintain an office in Louisiana; small business concerns organized as a sole proprietorship qualified to do and doing business in Louisiana, or either a for profit corporation, partnership, limited liability company, limited liability partnership, joint venture, cooperative, non-profit entity with an eligible business purpose as defined above, or other entity which is registered and authorized to conduct business in the State of Louisiana that maintain an office in Louisiana

b. certified small and emerging businesses (SEBs) certified by LED’s small business services that maintain an office in Louisiana ;

c. disabled person's business enterprises authorized to do and doing business in Louisiana, that maintain an office in Louisiana; and

d. in connection with the business purpose for the requested loan, for loans less than $100,000, small business shall create or retain at least one full-time job; and, for loans greater than $100,000, small business shall create or retain at least two full-time jobs, as directed and approved by LEDC.

Ineligible: