| (a) Borrowers must use loan proceeds for a business
purpose. Business purposes include, but are not limited to:
(1) start-up costs;
(2) working capital;
(3) franchise fees; and
(4) acquisition of equipment, inventory, or services
used in the production, manufacturing, or delivery of a business's
goods or services, or in the purchase, construction, renovation, or
tenant improvements of an eligible place of business that is not for
passive real estate investment purposes.
(b) Loan proceeds shall not be used for:
(1) acquiring or holding passive investments in real
estate;
(2) the purchase of owner-occupied residential housing;
(3) the construction, improvement, or purchase of residential
housing that is owned or to be owned by the Borrower;
(4) the purchase of real property that is intended
for resale or not used for the business operations of the Borrower;
(5) the purchase of securities;
(6) lobbying activities;
(7) the purchase of good will;
(8) inside bank transactions;
(9) repayment of delinquent federal or state income
taxes unless the Borrower has a payment plan in place with the relevant
taxing authority;
(10) repayment of taxes held in trust or escrow;
(11) reimbursement of funds owed to any owner, including
any equity injection or injection of capital for the business' continuance;
(12) purchase of any portion of the ownership interest
of any owner of the Borrower, such as the acquisition of shares of
a company or the partnership interest of a partner when the proceeds
of the Enrolled Loan will go to any existing owner or partner of the
Borrower;
(13) refinance of any portion of a loan enrolled in
another credit enhancement or credit insurance program not encompassed
by 10 T.A.C. Chapter 200;
(14) a loan in which any Principal of a Borrower has
been convicted of a sex offense against a minor as such terms are
defined 34 U.S.C. 20911; or
(15) a loan that is contrary to federal or state law
or policy.
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