SECTION 200.105. Qualified Loan Eligibility and Approval

A PFI may request to enroll a Qualified Loan under the Program if the PFI determines the Qualified Loan:

(1) is for an amount equal to or between $5,000 and $20,000,000;

(2) is provided to a Borrower who is not an executive officer, director, or Principal of the Lender, or person with comparable official capacity with or significant ownership in the PFI, or a member of the immediate family of such a person;

(3) is not for a business enterprise in which a person described in paragraph (2) of this section has a shared ownership, investment, or other significant pecuniary interest; and

(4) is being provided to a Borrower that is a Small Business that:

(A) is not engaged in speculative activities that develop profits from fluctuations in price rather than through the normal course of trade unless those activities are incidental to the regular activities of the business and are part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business;

(B) does not earn more than half of its annual net revenue from lending activities unless the Borrower is a Community Development Financial Institution that is not a depository institution or a bank holding company or a tribal enterprise lender that is not a depository institution or a bank holding company;

(C) is not engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants;

(D) is not engaged in activities that are prohibited by state law, federal law, or other applicable laws in the jurisdiction where the business is located or conducted;

(E) at the time of loan obligation, is not delinquent in any taxes owed the State of Texas, and is in good standing with the Comptroller of Public Accounts; and

(F) does not derive any of its gross annual revenue from gambling activities.

Source Note: The provisions of this §200.105 adopted to be effective June 25, 2023, 48 TexReg 3217