DEPARTMENT OF ENVIRONMENTAL QUALITY  
OFFICE OF ENVIRONMENTAL ASSISTANCE  
SMALL BUSINESS POLLUTION PREVENTION ASSISTANCE LOAN FUND  
(By authority conferred on the director of the department of environmental quality by  
section 14514 of 1994 PA 451, MCL 324.14514, Executive Reorganization Order No.  
1995-16, MCL 324.99903, Executive Reorganization Order No. 2009-31, MCL  
324.99919, and Executive Reorganization Order No. 2011-1, MCL 324.99921.)  
R 324.14501 Definitions.  
Rule 1. As used in these rules:  
(a) "Applicant" means a business that applies for a small business pollution prevention  
loan.  
(b) "Department" means the department of environmental quality.  
(c) "Director" means the director of the department or his or her designated representative.  
(d) "Eligible pollution prevention project" means a pollution prevention project that meets  
the criteria in these rules.  
(e) "Energy usage" means the use of nonrenewable resources to support business  
operations, including electricity, water, and natural gas.  
(f) "Fixed asset" means a permanent asset that is not consumed or converted into cash or  
its equivalent during a 12-month period.  
(g) "Fund," as defined in part 145 of 1994 PA 451, MCL 324.14513 et seq., means the  
small business pollution prevention assistance revolving loan fund.  
(h) "Lender agreement" means a binding agreement between a lending institution and the  
department that sets forth the terms and conditions for a lending institution to make loans  
and otherwise participate in the small business pollution prevention loan program.  
(i) "Lending institution" means a bank, out-of-state bank, or national bank, foreign bank  
branch, association, savings bank, or credit union organized under the laws of this state,  
another state, the District of Columbia, the United States, or a territory or protectorate of  
the United States that has entered into a lender agreement with the department.  
(j) "Loan agreement" means a written contract or agreement between a lending institution  
and a loan recipient that describes the terms of the small business pollution prevention loan.  
(k) "Loan recipient" means a small business that has been approved for and issued a small  
business pollution prevention loan.  
(l) "RETAP audit" means a pollution prevention assessment conducted by engineers,  
scientists, and other qualified professionals participating in the retired engineer technical  
assistance program established under part 145 of 1994 PA 451, MCL 324.14501 et seq.  
(m) "Small business pollution prevention loan" means a low-interest loan to a small  
business to finance an eligible pollution prevention project as provided for under these  
rules and part 145 of 1994 PA 451, MCL 324.14513 et seq.  
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(n) "Small business pollution prevention loan program" means the program the  
department administers to provide small business pollution prevention loans under these  
rules.  
(o) “Supplemental agreement” means a binding agreement between an applicant and the  
department that sets forth the terms and conditions for the applicant to receive funds and  
otherwise participate in the small business pollution prevention loan program.  
(p) Terms used in these rules have the same meaning as those defined and used in part  
145 of 1994 PA 451.  
History: 1998-2000 AACS; 2013 AACS.  
R 324.14502 Purpose.  
Rule 2. The purpose of these rules is to establish requirements for participation in the  
Michigan small business pollution prevention loan program, including applicability,  
eligibility, binding agreements, obligations, and procedures.  
History: 1998-2000 AACS.  
R 324.14503 Applicant eligibility.  
Rule 3. (1) An applicant for a small business pollution prevention loan must meet all of  
the following requirements:  
(a) Qualify as a small business as defined in MCL 324.14501(j).  
(b) Apply for a small business pollution prevention loan in coordination with a lending  
institution under these rules.  
(c) Propose to utilize the small business pollution prevention loan to undertake an eligible  
pollution prevention project in Michigan.  
(d) Commence the proposed pollution prevention project within 180 days of receipt of a  
loan.  
(e) Not have received a loan as described in these rules within the prior 3-year period.  
(2) To be eligible for a loan from the fund for a qualified agricultural energy production  
system, an applicant shall also meet requirements in MCL 324.14513(5).  
History: 1998-2000 AACS; 2013 AACS.  
R 324.14504 Eligible pollution prevention project.  
Rule 4. (1) An eligible pollution prevention project shall directly result in the reduction  
or elimination of environmental waste generated, energy used or water, or hazards to public  
health associated with environmental waste at the small business and shall be 1 or more of  
the following:  
(a) A pollution prevention recommendation made in a RETAP audit.  
(b) A pollution prevention expenditure at the small business, including an expenditure for  
any of the following:  
(i) Equipment or technology modifications.  
(ii) Process or procedure modifications.  
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(iii) Reformulation, reclamation, or redesign of products.  
(iv) Substitution of raw materials.  
(v) Improvements in housekeeping, maintenance, or inventory control.  
(vi) Pollution prevention training of employees.  
(vii) On-site energy conservation studies or specifications.  
(viii) On-site energy efficiency projects.  
(ix) On-site water conservation projects.  
(x) Qualified agricultural energy production systems.  
(2) The following projects or expenditures are not eligible pollution prevention projects:  
(a) Costs incurred before the effective date of the loan agreement.  
(b) Refinancing pre-existing obligations or debt.  
(c) Financing building or construction costs that are not integral to the project.  
(d) Financing salaries, wages, benefits, travel, or operating costs other than those listed in  
subrule (1)(b) of this rule of the applicant business.  
(e) Taxes, attorney fees, permits or licenses, or land acquisition.  
(f) Projects or expenditures designed to increase process output or production.  
History: 1998-2000 AACS; 2013 AACS.  
R 324.14505 Loan application process.  
Rule 5. (1) A small business shall file an application for a small business pollution  
prevention loan on an application form provided by the department.  
(2) The application shall include all of the following information:  
(a) Applicant and lending institution contact information.  
(b) A description of the pollution prevention project, which provides sufficient detail to  
properly evaluate the proposed project and determine whether it meets the criteria of R  
324.14504.  
(c) The expected reduction in environmental waste, water, or energy used.  
(d) A project implementation schedule.  
(e) The small business pollution prevention loan amount.  
(f) Certification that all necessary construction permits and operating licenses have been  
obtained, or will be obtained, under applicable laws and regulations.  
(3) The lending institution or applicant shall submit the completed loan application and  
supporting documentation to the department for approval. At a minimum, supporting  
documentation shall include all of the following:  
(a) Written cost estimate(s) for all project costs.  
(b) A loan commitment letter from the lending institution including the following  
information:  
(i) A commitment to participate in the small business pollution prevention loan program  
with the department.  
(ii) The lending institution’s federal tax identification number.  
(iii) The conclusion that the loan recipient can service the debt of the full loan amount  
requested.  
(iv) A description of the loan term, interest rate on the lending institution loan portion,  
and the collateral to be taken as security for the loan.  
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(4) A lending institution shall not award a small business pollution prevention loan until  
it receives a notice from the department that the project described in the application is an  
eligible pollution prevention project.  
(5) A lending institution shall execute a small business pollution prevention loan under  
terms in the loan agreement and the lender agreement.  
(6) The applicant shall execute a small business pollution prevention loan under terms in  
the loan agreement and the supplemental agreement.  
History: 1998-2000 AACS; 2013 AACS.  
R 324.14506 Lending institution responsibilities.  
Rule 6. (1) A lending institution shall enter into a lender agreement with the department.  
(2) A lender agreement shall provide for all of the following:  
(a) A lending institution may make a small business pollution prevention loan to a loan  
recipient with participation from the fund not to exceed the amount specified in MCL  
324.14513(6).  
(b) The total amount of the loan shall be shared equally by the lending institution and the  
fund, unless the director increases the fund's share of the loan to ensure that the fund's  
interest rate of return is not less than 0%.  
(c) The lending institution shall notify the department of the effective interest rate being  
assessed to the applicant, including the interest rate assessed as part of the fund's share and  
the interest rate assessed as part of the lending institution's share.  
(d) The effective interest rate that the loan recipient pays on the full amount of the loan  
under the loan agreement shall not exceed 5%.  
(e) The lending institution shall provide an executed copy of the loan agreement to the  
department.  
(f) Only appropriate and reasonable costs or fees associated with processing the loan are  
eligible for reimbursement as part of the loan.  
(g) The lending institution will remit principal and interest payments not less frequently  
than on a quarterly basis to the fund until the loan is repaid in full.  
(h) The lending institution will pursue the collection of all defaulted loans until brought  
current, collected in full, reduced to a judgment, or settled with the concurrence of the  
department.  
(i) The lending institution will consider loan recipients who fail to complete the project  
to be in default of the loan. This provision shall be included in all loan agreements.  
History: 1998-2000 AACS; 2013 AACS.  
R 324.14507 Small business loan recipient responsibilities.  
Rule 7. (1) In addition to any financial provisions required by the lending institution,  
within 90 days of the project eligibility determination, the small business loan recipient  
shall enter into a supplemental agreement with the department.  
(2) A supplemental agreement shall provide for all of the following:  
(a) Initiate work on the pollution prevention project within 180 days of signing the loan  
documents or supplemental agreement.  
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(b) Secure qualified personnel or contractors, or both, to complete the pollution  
prevention activities specified in the loan application.  
(c) Notify the department in writing within 30 days of project completion.  
(d) Within 90 days of project completion, submit to the department a final report upon  
project completion describing the pollution prevention benefits attained, including a  
demonstration of the expected reduction in environmental waste, water, or energy usage.  
(e) Obtain written department approval of any amendments to the proposed project, before  
making the change.  
(f) Maintain project records and documentation under generally accepted accounting  
principles and practices for a minimum of 3 years after the project is completed.  
(g) Maintain all of the following documentation at the loan recipient's business:  
(i) Copies of invoices and evidence of payment of invoiced expenditures.  
(ii) Information pertinent to the project implementation as agreed to in the loan  
application.  
(iii) Evidence that the project was implemented in compliance with applicable rules and  
regulations.  
(h) Upon completion, operate the project for pollution prevention purposes and in  
accordance with applicable environmental laws and regulations.  
(3) Upon reasonable notice, the department or its duly authorized representatives shall  
have access to examine the pollution prevention project and the records or documents  
maintained by the small business under these rules.  
History: 1998-2000 AACS; 2013 AACS.  
R 324.14508 Project review; approval process; other actions.  
Rule 8. (1) The department shall process loan applications on an as-received basis.  
(2) The department shall determine whether the application and supporting  
documentation meet the requirements of these rules within 30 days of receipt of a complete  
application.  
(3) The department shall notify the lending institution and the applicant, in writing,  
within 14 days of making its determination.  
(4) A loan recipient shall not proceed with the pollution prevention project until the  
recipient is notified in writing by the lending institution to proceed.  
(5) The department's determination of project eligibility is valid for 90 days from the date  
of notification.  
(6) The lending institution or the loan recipient shall promptly notify the department, in  
writing, of any substantive change to an eligible pollution prevention project before  
expenditure or encumbrance of any loan funds.  
(7) The department will remit payment for its share of the loan from the fund to the  
lending institution within 30 days from the date of receipt of the executed loan agreement.  
(8) In the case of an ineligibility determination, the department shall provide the applicant  
with written notice of the reason for the determination. There is no formal appeal of the  
department's loan decision.  
(9) Subject to the provisions of R 324.14503(1)(e), a small business can reapply for a loan  
at any time.  
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(10) If the department or the lending institution determines that a loan recipient has  
defaulted on any agreements signed or obligations pursuant to this part, in addition to the  
actions specified in the lender and supplemental agreements, the department may take any  
legal actions available to remedy the default.  
History: 1998-2000 AACS; 2013 AACS.  
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