SECTION 200.2. Definitions

The following words and terms, when used in this Subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Agreement--A contract between a Financial Institution and the Office that authorizes the Financial Institution to participate in the Program and establishes, in accordance with §200.4 of this chapter (relating to Agreement), the terms required for the Financial Institution's participation.

(2) Borrower--A Qualified Business that has received a Qualified Loan from a Participating Financial Institution.

(3) Enrolled Loan--A Qualified Loan enrolled in the Program as described in §200.10 of this chapter (relating to Procedure for Enrollment of a Qualified Loan).

(4) Financial Institution--An insured depository institution, insured credit union, or Community Development Financial Institution, as each of those terms is defined in 12 U.S.C. § 4702.

(5) Fund--The Texas Small Business Credit Initiative Capital Access Fund.

(6) Loan Loss Reserve Account--An account established at a financial institution in which premiums are deposited to serve as insurance to reimburse a Participating Financial Institution for Losses on Enrolled Loans.

(7) Loss--Any original principal amount due and not paid and not more than the enrolled amount of the Qualified Loan plus reasonable out-of-pocket expenses. In the event only a portion of a Qualified Loan was enrolled, the Office limits reimbursement of out-of-pocket expenses to the ratio of the enrolled portion to the total loan amount.

(8) Office--The Economic Development and Tourism Office in the Office of the Governor.

(9) Participating Financial Institution or PFI--A Financial Institution authorized to conduct business in the State of Texas that has adequate capacity, as determined by the Office in its sole discretion, to underwrite and monitor loans and has executed an Agreement with the Office to participate in the Program.

(10) Principal of a Borrower--A person, other than an insured bank, that directly or indirectly, or acting through or in concert with one or more persons, owns, controls, or has the power to vote more than 10 percent of any class of voting securities of a member bank or company. Shares owned or controlled by a member of an individual's immediate family are considered to be held by the individual.

(11) Principal of a Lender--The principal of a lender is:

(A) If a sole proprietorship, the proprietor;

(B) If a partnership, each partner; and

(C) 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 twenty percent or more of the ownership stock or stock equivalent of the entity.

(12) Program--The Texas Small Business Credit Initiative Capital Access Program.

(13) Program Website--The dynamic web portal developed by the Office and located at https://tsbci.gov.texas.gov.

(14) Qualified Business--A Small Business authorized to conduct business in the State of Texas that meets the eligibility requirements of §200.7 of this chapter (relating Qualified Loan Eligibility and Approval).

(15) Qualified Loan--A loan or portion of a loan that is made by a PFI to a Qualified Business for a business purpose consistent with §200.8 of this chapter (relating to Eligible and Restricted Uses of Texas Small Business Credit Initiative Capital Access Program Loan Proceeds), and not contrary to state or federal law or policy.

(16) Small Business--A corporation, partnership, sole proprietorship, or other legal entity that:

(A) is domiciled in this state or has at least 51 percent of its employees located in this state;

(B) is formed to make a profit;

(C) is independently owned and operated; and

(D) employs fewer than 500 employees.

(17) Socially and Economically Disadvantaged Individuals or SEDI--Individuals 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 who are not socially disadvantaged.

(18) Treasury--The United States Department of Treasury.

(19) Very Small Business--A Small Business that employs fewer than 10 employees.

Source Note: The provisions of this §200.2 adopted to be effective June 25, 2023, 48 TexReg 3217