SECTION 177.6. Application

(a) To apply for financing from the fund, an applicant shall submit to the bank:

(1) an application for financing on a form prescribed by the bank; and

(2) an application fee as prescribed by the bank, payable to the Office of the Governor, Texas Economic Development Bank.

(b) The application must include a business plan containing the information required by the bank. All confidential and proprietary information shall be identified by the applicant in the business plan. This information must be treated as confidential as provided by the exception set forth in Government Code, Section 489.215, and other law. The business plan will include at a minimum, as applicable, information regarding:

(1) an executive summary which does not contain any confidential or proprietary information and is no longer than two typewritten, double spaced pages;

(2) the prior three years audited financial statements, as applicable, and projected financial statements, including loan repayment. The financial documents must include the applicant's income statement, balance sheet and cash flow statement;

(3) the applicant's present markets and market prospects;

(4) a discussion of the economic and other benefits to the State of Texas, including the anticipated effects on the emerging technology industry cluster(s) in which the applicant belongs;

(5) the background and integrity of the applicant's management;

(6) a statement of the feasibility of the product for which financing is requested, including the state of development of any product to be developed and the proposed schedule of its commercialization;

(7) if applicable, documentation of attempts to obtain private financing;

(8) a financial plan that shows how loan proceeds will generate income to repay the loan;

(9) use of funds and business model;

(10) the name, street address, mailing address, telephone number, fax number and electronic mail address for the business and the business' authorized officer with a signed statement from each, as applicable, that the contents of the application are true and correct to their best knowledge and belief; and

(11) authorization of the applicant's board of directors to participate in the program.

(c) In determining which products and businesses are eligible for financing, the bank shall consider criteria, which includes but is not limited to, the following:

(1) the product or business for which financing is requested is economically sound;

(2) there is a reasonable expectation that the product or business will be successful;

(3) the product or business will create or preserve jobs and otherwise benefit the economy of the state;

(4) the applicant has the management resources and other funding to complete the project;

(5) financing is necessary because full financing is unavailable in traditional capital markets or credit has been offered on terms that would preclude the success of the project;

(6) there is reasonable assurance that the potential revenues to be derived from the sale of the product will be sufficient to repay any financing approved by the bank;

(7) the extent to which the product or business will leverage non-state funds;

(8) the number of jobs to be created or retained in the state; and

(9) availability of program funds.

(d) In determining eligible products and businesses, the bank shall give special preference to products or businesses in the areas of semiconductors, nanotechnology, biotechnology, biomedicine, and such other emerging technologies or areas that have the greatest likelihood of commercial success, job creation, and job retention in this state.

(e) The bank shall give further preference to providing financing to projects or businesses that are:

(1) grantees under the small business innovation research program established under 15 U.S.C. Section 638, as amended;

(2) companies formed in this state to commercialize research funded at least in part with state funds;

(3) applicants that have acquired other sources of financing;

(4) companies formed in this state and receiving assistance from designated state small business development centers; or

(5) applicants who are residents of this state doing business in this state and performing financed activities predominantly in this state.

(f) After considering the application and all other information it considers relevant, the bank shall approve or deny the application and promptly notify the applicant of its decision.

(g) Application and closing fee. The Bank shall charge an application fee of $500.00 for all applications. In addition, successful applicants may be required to pay, upon financing by the bank, a closing fee.

Source Note: The provisions of this §177.6 adopted to be effective May 29, 2005, 30 TexReg 3089