Section 41.8. Loan and grant conditions

(a) General conditions. The following conditions are applicable to awards of both loans and grants:

(1) The aggregate amount of funds awarded by the Board for a project may not exceed 50% of the total eligible project costs or $650,000—whichever is less.

(2) Funds awarded may be used only for the acquisition of existing buildings and land, the rehabilitation of buildings or other facilities and the purchase of equipment and furnishings necessary for the establishment of the incubator.

(3) Funds awarded may not be used for operating expenses, incubator feasibility studies or management fees for facility management.

(4) The local sponsor, at its expense, shall obtain the services of a professional engineer or architect licensed in this Commonwealth who will certify to the Board during building renovations that the expenses were incurred and were in accordance with plans approved by the Board.

(5) As a condition to receiving a loan or grant, the local sponsor shall agree to operate the incubator in accordance with the act and this chapter and the guidelines for the small business incubator program adopted by the Board.

(6) The Board may award the full amount of a loan or grant requested, but it reserves the right to award an amount less than the amount requested.

(b) Additional conditions for loans. Loans approved by the Board are also subject to the following conditions:

(1) Loans may be for a term of 10 years or the average useful life of the property as established by the United States Internal Revenue Service, whichever is greater, but the term may not be greater than 20 years. The average useful life shall be calculated using the mid-point life listed in the table of Asset Guideline Classes, IRS Publication # 534 (entitled Depreciation).

(2) Loan repayments may be deferred by the Board for up to 2 years. A deferral may be requested either at the time of the loan application or during the course of the loan repayment period. During a deferral period, interest shall continue to accrue and shall be added to the principal. The original term of the loan shall remain unchanged.

(3) The interest rate on loans will be set periodically by the Secretary and will be published as a notice in the Pennsylvania Bulletin.

(4) Funds loaned shall be secured by lien positions on collateral at the highest level of priority which can accommodate the local sponsor’s ability to raise sufficient debt and equity capital.

(5) Loan agreements entered into between the local sponsor and the Board will set forth the conditions that constitute default, and will detail the remedies available to the Board if this circumstance arises.

(6) The Board may impose other conditions as it deems necessary in order to fulfill the purposes of, and its responsibilities under, the act.

(c) Additional conditions for grants. Grants awarded by the Board shall also be subject to the following conditions:

(1) Grants awarded under the small business incubator program may not exceed $240,000.

(2) Grants shall be awarded only for incubators proposed to be located in distressed communities.

(3) Grant agreements entered into between the local sponsor and the Board will set forth the conditions under which the grant may be terminated and the grant repaid wholly or partially to the Board, and will specify other remedies available to the Board.

(4) The Board may consider an application for a grant as an application for a loan.

(5) The Board may impose other conditions as it deems necessary in order to fulfill the purposes of and its responsibilities under the act.

(d) Certificate of Occupancy. Before the incubator is occupied, the local sponsor shall submit to the Board a copy of the Certificate of Occupancy issued by the Department of Labor and Industry or, if the incubator is located in the cities of Philadelphia, Pittsburgh or Scranton, the similar document issued by the building inspection office of the respective city.

(e) Conformance to building codes. Before the incubator is occupied, the local sponsor shall submit a document to the Board from the appropriate jurisdiction certifying that the building conforms to applicable building and energy codes.