R311-212-6. Security for Loans

  (a) When an applicant applies for a loan of greater than $30,000, the applicant must pledge for security personal or real property which meets or exceeds the following criteria:

  (1) The loan amount may not be greater than 80 percent of the value of the applicant's equity in the security for cases where the Department obtains a first mortgage position, or

  (2) The loan amount may not be greater than 60 percent of the value of the applicant's equity in the security for cases where the Department obtains a second mortgage position.

  (b) The applicant shall provide acceptable documentation of the value of the property to be used as security using:

  (1) a current written appraisal, performed by a State of Utah certified appraiser;

  (2) a current county tax assessment notice, or

  (3) other documentation acceptable to the Director.

  (c) A title report on all real property and a UCC-1 clearance on all personal property used as security shall be submitted to the Director by a title company or appropriate professional person approved by the Director.

  (d) When the title report indicates an existing lien or encumbrance on real property to be used as security, the existing lien holders may subordinate their interest in favor of the Department. The Department shall accept no less than a second mortgage position on real property pledged for loan security.

  (e) Whenever a corporation seeks a loan, its principals must guarantee the loan personally.

  (f) The applicant must provide a complete financial statement with cash flow projections for debt service.

  (g) Above ground storage tanks and real property on which they are located shall not be acceptable as security.

  (h) Underground storage tanks and the real property on which they are located shall not be acceptable as security unless:

  (1) The UST facility offered for security has not had a petroleum release which has not been properly remediated; and

  (2) The applicant provides documentation to demonstrate the UST facility is currently in compliance with the loan eligibility requirements set forth in R311-212-3.

  (i) If a loan is made without security, the maximum loan repayment period shall be seven years.