Sec. 481.408. RESERVE ACCOUNT. (a) On approval by the bank and after entering into a participation agreement with the bank, a participating financial institution making a capital access loan shall establish a reserve account. The reserve account shall be used by the institution only to cover any losses arising from a default of a capital access loan made by the institution under this subchapter or as otherwise provided by this subchapter.

(b) When a participating financial institution makes a loan enrolled in the program, the institution shall require the borrower to pay to the institution a fee in an amount that is not less than two percent but not more than three percent of the principal amount of the loan, which the financial institution shall deposit in the reserve account. The institution shall also deposit in the reserve account an amount equal to the amount of the fee received by the institution from the borrower under this subsection. The institution may recover from the borrower all or part of the amount the institution is required to pay under this subsection in any manner agreed to by the institution and borrower.

(c) For each capital access loan made by a financial institution, the institution shall certify to the bank, within the period prescribed by the bank, that the institution has made a capital access loan, the amount the institution has deposited in the reserve account, including the amount of fees received from the borrower, and, if applicable, that the borrower is financing an enterprise project or is located in or financing a project, activity, or enterprise in an area designated as an enterprise zone under Chapter 2303.

(d) On receipt of a certification made under Subsection (c) and subject to Section 481.409, the bank shall deposit in the institution's reserve account for each capital access loan made by the institution:

(1) an amount equal to the amount deposited by the institution for each loan if the institution:

(A) has assets of more than $1 billion; or

(B) has previously enrolled loans in the program that in the aggregate are more than $2 million;

(2) an amount equal to 150 percent of the total amount deposited under Subsection (b) for each loan if the institution is not described by Subdivision (1); or

(3) notwithstanding Subdivisions (1) and (2), an amount equal to 200 percent of the total amount deposited under Subsection (b) for each loan if:

(A) the borrower is financing an enterprise project or is located in or financing a project, activity, or enterprise in an area designated as an enterprise zone under Chapter 2303;

(B) the borrower is a small or medium-sized business or a nonprofit organization that operates or proposes to operate a day-care center or a group day-care home, as those terms are defined by Section 42.002, Human Resources Code; or

(C) the participating financial institution is a community development financial institution, as that term is defined by 12 U.S.C. Section 4702, as amended.

(e) A participating financial institution must obtain approval from the bank to withdraw funds from the reserve account.

Added by Acts 1997, 75th Leg., ch. 1163, Sec. 1, eff. Sept. 1, 1997. Amended by Acts 2003, 78th Leg., ch. 814, Sec. 1.57, eff. Sept. 1, 2003.