1 CHAPTER 68:01:02
APEX LOAN PROGRAM
(Repealed)
Section
68:01:02:01 Definitions, Repealed.
68:01:02:02 Eligibility requirements, Repealed.
68:01:02:03 Application requirements, Repealed.
68:01:02:04 Loan amounts, Repealed.
68:01:02:05 Equity contribution, Repealed.
68:01:02:06 Permissible uses of loan proceeds, Repealed.
68:01:02:07 Impermissible uses of loan proceeds, Repealed.
68:01:02:08 Factors for action by authority, Repealed.
68:01:02:09 Action by authority on applications, Repealed.
68:01:02:10 Reservation of right to make loan, Repealed.
68:01:02:11 Acceptance by applicant -- Time restrictions, Repealed.
68:01:02:12 Review of financial status, Repealed.
68:01:02:13 Loan agreement, Repealed.
68:01:02:14 Maturity and interest rate, Repealed.
68:01:02:15 Lender agreement, Repealed.
2 68:01:02:16 Reporting requirements for regulated lender, Repealed.
68:01:02:17 Reporting requirements for borrower, Repealed.
68:01:02:18 Inspection of business by authority -- Retention of records, Repealed.
68:01:02:19 Default on loan agreement, Repealed.
68:01:02:20 Interim financing, Repealed.
3 68:01:02:01. Definitions. Words used in this chapter mean:
(1) "Applicant," a person, partnership, joint venture, corporation, profit or nonprofit
development corporation, or other qualified enterprise that has completed an APEX
application for a loan from the APEX fund;
(2) "Borrower," an applicant who has been awarded a loan from the APEX fund;
(3) "APEX," the agriculture processing and export fund;
(4) "Equity," capital that has no guaranteed or mandatory return which must be paid
out in any event, has no definite timetable for repayment of the capital investment, and may
not be withdrawn at the contributor's option without the permission of the superior debt
holders;
(5) "USDA RD," United States Department of Agriculture Rural Development;
(6) "GOED," the Governor's Office of Economic Development;
(7) "IRP," Intermediary Relending Program;
(8) "Preliminary design stage," that portion of the project associated with market
research studies identifying the project scope and need, compilation of the business plan,
4 written initial cost estimates, written site options and description, and the commitment of
the regulated lender;
(9) "Primary jobs," jobs that provide goods and services that are primarily exported
from the state, that gain market share from imports to the state, or that meet an unmet need
in the area and result in the creation of new wealth. Primary jobs are derived from
businesses that bring new income into an area, stimulate other local businesses, or assist a
community to diversify and stabilize its economy;
(10) "REDI," Revolving Economic Development Initiative;
(11) "Regulated lender," as defined in SDCL 54-3-14, including state-sanctioned
lending authorities and federally sanctioned lending authorities;
(12) "Total project costs," the direct costs associated with the purchase of land,
necessary site development and improvements, construction or acquisition and remodeling
of buildings and works necessary to the operation and protection of the project, purchase
and installation of machinery and equipment, fees for services, approved in-kind
contributions, and adequate financing of working capital.
Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, August 3, 1994; 27
SDR 66, effective January 4, 2001.
General Authority: SDCL 1-16B-14(4).
5 Law Implemented: SDCL 1-16B-37, 1-16B-44.
6 68:01:02:02. Eligibility requirements. To be eligible for a loan under this chapter,
an applicant must satisfy SDCL 1-16B-41 and be a for-profit business, a for-profit or
nonprofit development corporation, or nonprofit business cooperative that is either a start-
up business, an existing business, or the relocation of an existing business from out-of-state
that will create new jobs in South Dakota and that will do the following:
(1) Export a minimum of 75 percent of its product to entities outside the state of
South Dakota or replace an import;
(2) Provide employment opportunities for low-income persons or displaced farm
families to the maximum extent practicable;
(3) Use a South Dakota grown or produced agricultural product as at least 50 percent
of the raw material; and
(4) Locate in a municipality with a population less than 25,000, as listed according
to the latest decennial census.
An applicant may request a waiver of subdivision (1), (3), or (4) by petitioning the
authority; however, not more than two of the subdivisions may be waived for any one
applicant. A two-thirds vote by the authority is necessary to approve a waiver.
7 Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, effective August 3,
1994; 27 SDR 66, effective January 4, 2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-3, 1-16B-37, 1-16B-41, 1-16B-44.
8 68:01:02:03. Application requirements. Application forms shall be provided by
the GOED and must be completed and signed before an application is presented to the
board. Information from a REDI fund application may be considered and applied to an
APEX fund application.
Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, effective August 3,
1994.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-40, 1-16B-44.
Cross-Reference: REDI fund, ch 68:02:01.
9 68:01:02:04. Loan amounts. A loan may not exceed the lesser of $250,000 or 75
percent of the total project costs. No more than 25percent of an IRP loan may be used for
loans in excess of $150,000. This limit does not apply to revolved funds.
Source: 16 SDR 158, effective March 25, 1990; 27 SDR 66, effective January 4,
2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-43, 1-16B-44.
10 68:01:02:05. Equity contribution. An applicant must provide an equity
contribution of a minimum of 10 percent of the total project costs as determined by the
authority.
In-kind contributions and completed work may be applied toward the equity
contribution and total project costs if, in the judgment of the authority and the USDA RD,
such in-kind contributions and work completed contribute sufficiently to the current
project.
The equity requirement may be waived by a two-thirds vote of the authority, with
the approval of USDA RD.
Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, effective August 3,
1994; 27 SDR 66, effective January 4, 2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-43, 1-16B-44.
11 68:01:02:06. Permissible uses of loan proceeds. APEX loan proceeds may be used
for the following purposes;
(1) Purchase and development of land, easements, rights-of-way, buildings,
facilities, leases, or materials;
(2) Construction or acquisition and remodeling of buildings and works necessary to
the operation and protection of the project;
(3) Purchase and installation of machinery, equipment, and leasehold
improvements;
(4) Fees, services, and costs related to the construction of the project;
(5) Other purposes not listed in this section and not prohibited in § 68:01:02:07, as
individually approved by the authority and the USDA RD;
(6) Business construction, conversion, enlargement, repair, modernization, or
development; and
(7) Business and industrial acquisitions if the loan will keep the business from
closing, prevent the loss of employment opportunities, or provide expanded job
opportunities.
12
Source: 16 SDR 158, effective March 25, 1990; 27 SDR 66, effective January 4,
2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-4, 1-16B-37, 1-16B-44.
13 68:01:02:07. Impermissible uses of loan proceeds. The borrower may not use the
proceeds for any of the following purposes:
(1) Agricultural production;
(2) Transfer of ownership, unless the loan will keep the business from closing,
prevent the loss of employment opportunities in the area, or provide expanded job
opportunities;
(3) Financing or refinancing the preliminary design stage or existing debt;
(4) Assistance in excess of what is needed to accomplish the purpose of the ultimate
recipient's project;
(5) Distribution or payment to the owners, partners, shareholders, or beneficiaries of
the ultimate recipient or members of their families if such persons will retain any portion
of their equity in the ultimate recipient;
(6) Charitable institutions that would not have revenue from sales or fees to support
the operation and repay the loan, churches, organizations affiliated with or sponsored by
churches, and fraternal organizations;
14 (7) Assistance to government employees, military personnel, or principals or
employees of the intermediary or organizations for which such persons are directors or
officers or in which they have ownership of 20 percent of more;
(8) A loan to an ultimate recipient who has an application pending with or a loan
outstanding from another intermediary involving an IRP revolving fund if the total IRP
loans would exceed the limits established in Sec. 4274.331 (b) of Rural Development
Instruction 4274-D as of February 6, 1998;
(9) Community antenna television services or facilities;
(10) Any illegal activity;
(11) Any project that is in violation of either a federal, state, or local environmental
protection law or regulation or an enforceable land use restriction unless the assistance
given will result in curing or removing the violation;
(12) Lending and investment institutions and insurance companies; and
(13) Golf courses, race tracks, or gambling facilities.
Source: 16 SDR 158, effective March 25, 1990; 27 SDR 66, effective January 4,
2001.
15 General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-4, 1-16B-37, 1-16B-44.
16 68:01:02:08. Factors for action by authority. The authority, when making a
decision on an application, may, in addition to other factors necessary to make a sound loan
decision, consider the following:
(1) Program impact factors:
(a) Population of the community where the project is to be located;
(b) Amount of agricultural products used;
(c) Number of jobs created for low-income persons and displaced farm families;
(d) Amount of loan requested;
(e) Net economic effect of increasing or stabilizing the economy on the
community, area, and state;
(f) Competitive effect on existing businesses;
(g) Support of the public entities of the community and area;
(h) The amount of the owner's equity contributed to the project;
(i) The effect of the project on the environment, health, and safety of the people
in the community and state;
(j) Compatibility with economic development plans of the area and state;
(k) Potential for creating quality jobs and growth of those jobs;
(l) Payroll pay structure; and
(m) Employee benefit package;
(2) Business feasibility factors:
17
(a) The potential success of the business;
(b) The character, experience, management record, and background of the
applicant;
(c) The capacity of the applicant to repay the loan. In determining the capacity
of the applicant, the authority shall consider the following:
(i) The amount of the loan;
(ii) The economic feasibility of the project and product;
(iii) The ability of the applicant to service the debt from cash flow of
operations, capital, or collateral;
(iv) The review of financial status of the project, business plan, and
applicant;
(v) The satisfaction of engineering standards, legal requirements, and
environmental regulations; and
(vi) The availability of necessary public utilities;
(d) The total capitalization of the project, which includes all capitalization
subordinated to APEX;
(e) The terms and conditions of the loan and their compatibility with the needs
of the business and APEX; and
(f) The availability of sufficient unencumbered collateral to secure the interests
of APEX.
18
Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, effective August 3,
1994.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-44.
19 68:01:02:09. Action by authority on applications. Within 60 days after the GOED
receives a completed application, the authority, in accordance with SDCL 1-16B-38, shall
either approve the application as requested, disapprove the application for modification,
approve the application contingent on the realization of certain defined conditions, or
disapprove the application.
The authority may extend the time for consideration of an application for up to 50
additional days by advising the applicant of the extension in writing or by telephone.
Source: 16 SDR 158, effective March 25, 1990.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-14(4), 1-16B-37, 1-16B-38, 1-16B-44.
20 68:01:02:10. Reservation of right to make loan. If the authority approves the loan
application, the application shall then be sent to USDA RD for approval. Except as
provided in this section, no loan agreement may be entered into unless USDA RD approves
the loan.
If USDA RD rejects a loan application, the authority, in accordance with SDCL 1-
16B-38, may approve the loan from authority funds or revolving funds that are not subject
to an agreement between the authority and USDA RD if the loan meets the guidelines in
this chapter.
Source: 16 SDR 158, effective March 25, 1990; 27 SDR 66, effective January 4,
2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-41, 1-16B-43, 1-16B-46.
21 68:01:02:11. Acceptance by applicant -- Time restrictions. Within six months
after the official loan approval by the authority and USDA RD, the applicant must accept
the commitment letter of the authority in writing or the approval may be withdrawn at the
discretion of the authority.
Within six months after written acceptance, the applicant must begin the project.
Final disbursement of the loan proceeds must be made within one year after approval by
the authority, unless the time is extended by the authority pursuant to prior written consent.
The request for extension must be submitted at a regularly scheduled meeting prior to the
expiration of the six-month period. The authority shall decide the length of the extension
period.
Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, effective August 3,
1994; 27 SDR 66, effective January 4, 2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-14(4), 1-16B-37, 1-16B-44.
22 68:01:02:12. Review of financial status. After the loan is approved by the authority
and the USDA RD but before the loan agreement is entered into, the authority or the GOED
may conduct an overall review of the applicant's financial status. This review may include
an analysis of all assets and liabilities and an analysis of the ability of the business to service
and honor the loan commitments. If the applicant's financial condition has materially
changed since the approval of the loan, the authority may disapprove the loan or seek
modification of loan amounts and equity contributions.
Source: 16 SDR 158, effective March 25, 1990; 27 SDR 66, effective January 4,
2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-44, 1-16B-46.
23 68:01:02:13. Loan agreement. After the application for a loan is approved by the
authority and the USDA RD and after the financial status of the applicant is reviewed, the
authority shall execute a loan agreement with the borrower. The loan agreement shall
contain the rights and responsibilities of the parties and the terms and conditions of the
loan. The requirements to secure the loan shall be included in the loan agreement.
Loans may be secured or unsecured. Secured loans may be secured by liens on the
interest of the borrower in all real and personal property, tangible or intangible; easements;
rights-of-way; water rights; leasehold interest used in connection with the project; and any
other assets of the borrower considered necessary by the authority to adequately
collateralize the loan.
Source: 16 SDR 158, effective March 25, 1990; 27 SDR 66, effective January 4,
2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-44, 1-16B-46.
24 68:01:02:14. Maturity and interest rate. The maturity of the loan may not be more
than 20 years with regular payments amortized over the term of the loan with a balloon
payment prior to maturity. The authority shall match the term with the useful life of the
assets being financed.
The interest rate of the loan shall be for a fixed rate as negotiated.
The borrower is responsible for arranging other financing when the note becomes
due. If the borrower is unable to obtain financing, the borrower may apply before the loan
due date for an extension of the loan by the authority at an interest rate and for a time period
to be set by the authority.
Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, effective August 3,
1994; 27 SDR 66, effective January 4, 2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-44, 1-16B-46.
25 68:01:02:15. Lender agreement. After an application is approved for a loan from
APEX and USDA RD, the authority shall execute a lender agreement with the regulated
lender. The lender agreement shall provide the rights and responsibilities of the lender and
the authority and the terms and conditions of the agreement. The requirement for a lender
agreement may be waived at the discretion of the board based upon participation of a
participating lender or a servicing lender or if the applicant is a participant in other loan
programs within the GOED.
The borrower is responsible for any servicing fee. The regulated lender's servicing
fee may include any necessary contracting to monitor or service the loan that is performed
by the lender or any other authority-approved party. The authority may enter into a
participation agreement, servicing agreement, or both with a regulated lender and borrower
concerning any APEX loan.
Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, effective August 3,
1994; 27 SDR 66, effective January 4, 2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-14(5), 1-16B-37, 1-16B-46.
26 68:01:02:16. Reporting requirements for regulated lender. A regulated lender
that enters into a servicing agreement may submit to the authority a regular management
report, inventory report, asset report, and operations report as directed by the authority. The
regulated lender shall also assist the borrower in complying with the borrower's reporting
requirements.
Source: 16 SDR 158, effective March 25, 1990.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-14(5), 1-16B-37, 1-16B-46.
27 68:01:02:17. Reporting requirements for borrower. The borrower shall submit
to the authority annually a report containing the following information:
(1) An employment report;
(2) The amount of agricultural products used in the business and the amount of the
product that is exported from the state;
(3) The number of jobs for low-income persons and displaced farm families;
(4) Financial statements in a form acceptable to the authority as specified in the loan
authorization document; and
(5) Other information as requested by the authority.
The authority may require that the financial statements be compiled, reviewed, or
audited by an independent accountant at the expense of the borrower.
Source: 16 SDR 158, effective March 25, 1990; 21 SDR 14, effective August 3,
1994.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-44, 1-16B-46.
28 68:01:02:18. Inspection of business by authority -- Retention of records. During
the term of the loan, the authority or GOED may inspect construction, inspect the operation
of the business, and request the borrower to provide accounting records, payments, and
invoices to ensure compliance with the terms of the loan agreement. The borrower shall
retain accounting and tax records for the term of the loan or for a period of three years,
whichever is longer.
The authority may contract for project monitoring and servicing during the planning,
construction, and operation of the business and project.
Source: 16 SDR 158, effective March 25, 1990.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-44, 1-16B-46.
29 68:01:02:19. Default on loan agreement. If the borrower violates any of the terms
of the loan agreement, the authority may place the borrower in default. Upon default, the
authority may do one or more of the following:
(1) Declare immediately due and payable the entire principal amount then
outstanding and the accrued interest;
(2) Take possession of the facility; repair, maintain, operate, sell, lease, or otherwise
dispose of the facility to another entity; and charge the account of the borrower for expenses
for repair, maintenance, and operation of the project and other expenses necessary to cure
the cause of the default;
(3) Take any other action considered appropriate by the authority to protect the
interest of the authority and USDA RD;
(4) Exercise any and all rights of a creditor under the South Dakota uniform
commercial code or any other statute; and
(5) Take any action allowed by, enforce any responsibility imposed upon the
borrower by, or enforce any remedies agreed to in the loan agreement executed between
the borrower and the authority.
30 Source: 16 SDR 158, effective March 25, 1990; 27 SDR 66, effective January 4,
2001.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-44, 1-16B-46.
31 68:01:02:20. Interim financing. Interim financing is not refinancing of existing
debt. The authority may require that the borrower use a commitment for an APEX loan to
secure interim financing from a regulated lender. The authority shall satisfy the interim
financing loan in accordance with the terms of the interim financing loan agreement upon
certification of completion of the project in accordance with the APEX commitment.
Source: 16 SDR 158, effective March 25, 1990.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-37, 1-16B-44, 1-16B-46.