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(a) Application. A local sponsor may submit an application to the Board to obtain a grant, loan or loan guarantee to establish an incubator. Each application shall:
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(1) Demonstrate that:
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(A) a facility exists that can be transformed into an incubator at a specified cost; or
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(B) in the case of new and expansion construction, appropriate existing facilities are not available within the geographic area and an incubator facility will be constructed or expanded at a specified cost.
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(2) Demonstrate the ability to directly provide or arrange for the provision of business development services for tenants of the incubator. These services must include, but not be limited to, financial consulting assistance, management and marketing assistance and physical services.
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(3) Demonstrate a potential for sustained use of the incubator facility by eligible tenants, through a feasibility study or sound business plan.
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(4) Demonstrate the ability to manage and operate the incubator facility in accordance with criteria determined by the Board.
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(5) Include other information as the Board may require through rules or regulations.
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(b) Review of application. The Board shall review and accept applications based on the following criteria:
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(1) Ability of the local sponsor to carry out the provisions of section 1275 of this subchapter;
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(2) Economic impact of the incubator on the community;
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(3) Conformance with territorial-wide and island economic development plans if such exist;
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(4) Location of the incubator, in order to encourage geographic distribution of incubators across the Territory; and
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(5) Such other criteria as may be established by the board through rules or regulations.
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(c) Grant and loan conditions.
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(1) Grants and loans awarded or guaranteed may be used only for
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(A) feasibility studies and business plans,
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(B) the acquisition and leasing of land and buildings,
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(C) the construction, rehabilitation and expansion of buildings or other facilities, and
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(D) the purchase of equipment and furnishings that are necessary for the establishment and operation of the incubator.
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(2) With the exception of feasibility studies and business plans, grants, loans and loan guarantees may not be the sole source of funds or total eligible project costs. The maximum grant amount awarded in any project may not exceed $250,000. Grants may be provided only to projects located in areas designated as distressed under the Enterprise Zone Program Act of title 29 Virgin Islands Code, chapter 19.
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(3) Funds loaned must be secured by lien positions on collateral at the highest level of priority which can accommodate the borrower’s ability to raise sufficient debt and equity capital. When the obligation of a local sponsor is guaranteed, the financial institution holding the obligation shall be required to adequately secure the obligation.
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(4) Grants, loans and loan guarantees for an incubator in which the facility is currently leased may only be made if the applicant intends to buy the facility. These loans must be secured by a leasehold mortgage.
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(5) Payment of interest and principal on loans may be deferred at the discretion of the Board.
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(6) Funds may be loaned for a maximum of ten years or the useful life of the property, as established by the United States Department of Treasury, whichever is greater.
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(d) Receipt of grants and economic development. The Board shall:
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(1) Develop the incubators, criteria for receipt of grant funds, including criteria related to organizational capacity, community need, and the availability of other economic development; resources;
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(2) Accept and receive grants, gifts, and pledges of funds for the support of the Program, which shall be deposited in the Small Business Incubator Fund established in section 1273.
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(3) Integrate the promotion of small business incubators as economic development tools in its strategic plan.
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