SECTION 612:25-4-27. Initial inventory and supplies

(a)   Initial inventory. A licensed manager may acquire initial merchandise for resale by purchasing it with his/her own funds, utilizing self-employment assistance that may be available from DRS or other public and private sources, or use of a merchandise loan provided by the State Licensing Agency (SLA).

(b)   Merchandise loan. When necessary to enable a licensed manager to acquire initial merchandise inventory, the SLA may extend a merchandise loan subject to the following terms:

(1)   The amount of the loan will be determined by the SLA in consultation with the licensed manager and based on an assessment of merchandise necessary to initiate sales.

(2)   The total amount of the loan will not exceed the average of the prior year's inventories without approval from the BEP operations coordinator.

(3)   All merchandise purchased and placed on a merchandise loan must have prior approval by the SLA. The SLA will not make multiple purchases from any purveyor.

(4)   The incoming licensed manager, BEP business consultant and BEP operations coordinator will determine what may be purchased from the existing stock of the outgoing facility manager. Only salable merchandise may be purchased. The BEP business consultant and operations coordinator will also assist the out-going manager in selling any remaining salable merchandise and its interim storage.

(5)   A merchandise loan must be repaid to the SLA by a licensed manager in monthly installments equaling two percent (2%) of monthly gross sales. A licensed manager shall not allow the facility inventory level to fall below that of the balance of the merchandise loan. Managers receiving loans will sign a merchandise security agreement that will be retained on file by DRS and released to the manager when loan repayment is complete along with a letter from the BEP Operations Coordinator officially notifying the licensed manager of their full repayment of the loan.

(6)   When a merchandise loan is secured by stock, a licensed manager may not permit the ownership of the stock to vest in any person or organization other than the SLA.

(7)   When a licensed manager leaves a business enterprise, any remaining merchandise loan balance (and other unmet obligations to the SLA) will be subtracted from the ending inventory to determine the manager's equity in the ending stock.

(c)   Failure of licensed manager to repay loan.

(1)   If a licensed manager's merchandise loan payment is not received in the BEP office within five days after the due date, the licensed manager will be placed on probation and is not eligible to make application into the selection process.

(2)   If a licensed manager's merchandise loan payment remains delinquent through the succeeding month and is not received in the BEP office within five days after the succeeding month's due date, the BEP operations coordinator will recommend suspension or termination of the operator's agreement by the SLA director unless an alternate repayment schedule has been approved by the SLA. The SLA will initiate action to collect a remaining merchandise loan balance when a loan payment is two months overdue.

(3)   When a licensed manager leaves the program for any reason, the merchandise loan is due in full unless arrangements are made with the SLA to divide the balance into twelve (12) equal payments that will be due on the first day of each month.

(d)   Second merchandise loan.

(1)   Under documented extreme circumstances, a licensed manager who has paid off his/her previous merchandise loan may receive a second merchandise loan for the same facility when it has been determined that the loan is necessary to allow the licensed manager to remain in his/her facility.

(2)   If a licensed manager requires a second merchandise loan while the first loan is still outstanding, other than for the expansion of his/her facility, he/she will be placed on probation until one of the loans is paid in full.

(3)   Second merchandise loans for the purpose of facility expansion will be limited to 50% of the cost of additional salable merchandise needed.

(e)   It is the incoming manager's choice to procure any merchandise from the out-going manager. If this condition occurs, the outgoing manager must be given a one-week notice prior to the facility turnover to the new manager.

[Source: Added at 14 Ok Reg 1472, eff 7-1-97; Amended at 22 Ok Reg 2222, eff 7-1-05; Amended at 29 Ok Reg 1447, eff 7-1-12; Amended at 31 Ok Reg 2397, eff 9-12-14; Amended at 32 Ok Reg 1312, eff 8-27-15]