Maryland Department of Business and Economic Development Section 5-1409
§ 5-1409.
(a) In addition to providing moneys from the Fund to assist in creating and expanding child care facilities in the State under other provisions of this subtitle, the Department may use federal or other funds provided for the purpose to make child care special loans.
(b) Child care special loans may be provided to finance the expansion or improvement of child care services at child care facilities in the State, in accordance with the terms of this section.
(c) All moneys received by the Fund for making child care special loans shall be separately accounted for, including:
(1) Federal funds allocated or granted for child care special loans, including child care and development block grant funds;
(2) Private moneys donated or granted to the Fund for child care special loans;
(3) Premiums, fees, interest payments, and principal payments on child care special loans made with federal funds;
(4) Proceeds from the sale, disposition, lease, or rental of collateral relating to child care special loans;
(5) Any other moneys made available for child care special loans; and
(6) Any federal funds for child care special loans that are used by the Department to pay costs of administering the loans.
(d) In making child care special loans, consideration shall be given to:
(1) Community need;
(2) Community income, with priority given to those communities with the lowest median family income;
(3) Care for children with teenage parents in school or training;
(4) Care for children with special needs; and
(5) Infant care.
(e) The Department may make a child care special loan to an applicant only if:
(1) The applicant meets the qualifications required by this section;
(2) The applicant meets any additional requirements imposed by the source of the funds to be loaned; and
(3) The loan will be used to assist applicants in meeting applicable State and local child care standards.
(f) To apply for financial assistance, an applicant shall submit to the Department an application containing information that the Department requires, which shall include:
(1) A detailed description of the proposed or existing child care facility;
(2) An itemization of known and estimated costs;
(3) The total amount of funds required to expand or improve the child care services at the child care facility;
(4) The funds available to the applicant without financial assistance from the Department;
(5) The amount of financial assistance sought from the Department;
(6) Evidence of the inability of the applicant to obtain the financing necessary for the facility on affordable terms through normal lending channels;
(7) Information that relates to the financial status of the applicant, including, if applicable:
(i) A current balance sheet;
(ii) A profit and loss statement; and
(iii) Credit references; and
(8) Evidence, such as a lease, option to buy, or deed, that the applicant shall be legally entitled to remain at the child care facility for at least the term of the loan.
(g) Except as provided in this section, the Department may set the terms and conditions for child care special loans.
(h) If the Department decides to lend money to an applicant, the Department shall prepare loan documents, which shall include:
(1) The rate of interest on the loan;
(2) The amount of the loan;
(3) A requirement that before each disbursement of loan proceeds is released to the applicant, the applicant and the Department cosign the request for the funds;
(4) Provisions for repayment of the loan; and
(5) Any other provisions that the Department determines are necessary, including the taking of liens and security interests in real and personal property.
(i) (1) Mortgages or deeds of trust held as security for loans made under this section which are in default may be foreclosed by the Department in the same manner as provided by the Maryland Rules for foreclosures in private transactions.
(2) The Department may take title in its name to any property foreclosed under this section as well as to convey title to such property to bona fide purchasers of the property.
(j) The term of the child care special loan may not exceed 10 years.
(k) (1) The applicant for a child care special loan to finance a child care facility must agree to operate the child care facility for at least the term of the loan and to repay the outstanding loan in full upon the loss of license, termination of lease, or transfer, sale, or refinancing of the child care facility, as applicable, before the end of the loan term.
(2) The child care special loan documents may provide for penalties for any applicant who fails to operate the child care facility for the entire term of the loan.
(l) The minimum amount of a special loan for a facility shall be $1,000 and the maximum amount shall be $10,000.
(m) (1) The proceeds of the child care special loans may be used:
(i) To assist applicants in meeting applicable State and local child care standards;
(ii) To pay for minor renovations, and for upgrading child care facilities to assure that applicants meet State and local child care standards; or
(iii) For the purchase and installation of equipment, machinery, and furniture, including equipment needed to accommodate children with special needs.
(2) The loan proceeds may not be used for the purchase or improvement of land or for the purchase, construction, or improvement of any building or facility.
