cfr_sections
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31 rows where part_number = 1744 sorted by section_id
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| section_id ▼ | title_number | title_name | chapter | subchapter | part_number | part_name | subpart | subpart_name | section_number | section_heading | agency | authority | source_citation | amendment_citations | full_text |
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| 7:7:11.1.2.1.22.2.1.1 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | § 1744.20 General. | RUS | [66 FR 41758, Aug. 9, 2001] | (a) Recent changes in the telecommunications industry, including deregulation and technological developments, have caused Rural Utilities Service (RUS) borrowers and other organizations providing telecommunications services to consider undertaking projects that provide new telecommunications services and other telecommunications services not ordinarily financed by RUS. Although some of these services may not be eligible for financing under the Rural Electrification Act of 1936 (RE Act), these services may nevertheless advance RE Act objectives where the borrower obtains financing from private lenders. The borrower's financial strength and the assurance of repayment of outstanding Government debt may be improved as a result of providing such telecommunications services. (b) To facilitate the financing of new services and other services not ordinarily financed by RUS, RUS is willing to consider accommodating the Government's lien on telecommunications borrowers' systems or accommodating or subordinating the Government's lien on after-acquired property of telecommunications borrowers. To expedite this process, requests for lien accommodations meeting the requirements of § 1744.30 will receive automatic approval from RUS. (c) This subpart establishes RUS policy with respect to all requests for lien accommodations and subordinations for loans from private lenders. For borrowers that do not qualify for automatic lien accommodations in accordance with § 1744.30, RUS will consider lien accommodations for RE Act purposes under § 1744.40 and non-Act purposes under § 1744.50. | ||||
| 7:7:11.1.2.1.22.2.1.10 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | §§ 1744.56-1744.59 [Reserved] | RUS | ||||||
| 7:7:11.1.2.1.22.2.1.2 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | § 1744.21 Definitions. | RUS | [66 FR 41758, Aug. 9, 2001, as amended at 84 FR 59922, Nov. 7, 2019] | The following definitions apply to this subpart: Administrator means the Administrator of RUS. Advance means transferring funds from RUS or a lender guaranteed by RUS to the borrower's construction fund. After-acquired property means property which is to be acquired by the borrower and which would be subject to the lien of the Government mortgage when acquired. Amortization expense means the sum of the balances of the following accounts of the borrower: All references to account numbers are to the Uniform System of Accounts (7 CFR part 1770, subpart B). Asset means a future economic benefit obtained or controlled by the borrower as a result of past transactions or events. Automatic lien accommodation means the approval, by RUS, of a request to share the Government's lien on a pari passu or pro-rata basis with a private lender in accordance with the provisions of § 1744.30. Borrower means any organization that has an outstanding telecommunications loan made or guaranteed by RUS, or that is seeking such financing. See 7 CFR part 1735. Construction Fund means the RUS Construction Fund Account into which all advances of loan funds are deposited pursuant to the provisions of the loan documents. Debt Service Coverage (DSC) ratio means the ratio of the sum of the borrower's net income, depreciation and amortization expense, and interest expense, all divided by the sum of all payments of principal and interest required to be paid by the borrower during the year on all its debt from any source with a maturity greater than 1 year and capital lease obligations. Default means any event or occurrence which, unless corrected, will, with the passage of time and the giving of proper notices, give rise to remedies under one or more of the loan documents. Depreciation expense means the sum of the balances of the following accounts of the borrower: All references to account numbers are to the Uniform System of Accounts (7 CFR part 1770, subpart B). Disbursement means a transfer of money by the borrower out… | ||||
| 7:7:11.1.2.1.22.2.1.3 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | §§ 1744.22-1744.29 [Reserved] | RUS | ||||||
| 7:7:11.1.2.1.22.2.1.4 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | § 1744.30 Automatic lien accommodations. | RUS | [66 FR 41760, Aug. 9, 2001] | (a) Purposes and requirements for approval. Automatic lien accommodations are available only for refinancing and refunding of notes secured by the borrower's existing Government mortgage; financing assets, to be owned by the borrower, to provide telecommunications services; or financing assets, to be owned by a wholly-owned subsidiary of the borrower, to provide telecommunications services in accordance with the procedures set forth in this section. (b) Private lender responsibility. The private lender is responsible for ensuring that its notes, for which an automatic lien accommodation has been approved as set forth in this section, are secured under the mortgage. The private lender is responsible for ensuring that the supplemental mortgage is a valid and binding instrument enforceable in accordance with its terms, and recorded and filed in accordance with applicable law. If the private lender determines that additional documents are required or that RUS must take additional actions to secure the notes under the mortgage, the private lender shall follow the procedures set forth in § 1744.40 or § 1744.50, as appropriate. (c) Refinancing and refunding. The Administrator will automatically approve a borrower's execution of private lender notes and the securing of such notes on a pari passu or pro-rata basis with all other notes secured under the Government mortgage, when such private lender notes are issued for the purpose of refinancing or refunding any notes secured under the Government mortgage, provided that all of the following conditions are met: (1) No default has occurred and is continuing under the Government mortgage; (2) The borrower has delivered to the Administrator, at least 10 business days before the private lender notes are to be executed, a certification and agreement executed by the President of the borrower's Board of Directors, such certification and agreement to be substantially in the form set forth in Appendix A of this subpart, providing that: (i) No default has occurred and is c… | ||||
| 7:7:11.1.2.1.22.2.1.5 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | § 1744.40 Act purposes. | RUS | [51 FR 32430, Sept. 12, 1986. Redesignated at 55 FR 39396, Sept. 27, 1990, and further redesignated at 66 FR 41760, Aug. 9, 2001] | (a) Borrowers are encouraged to submit requests for accommodation of the Government's lien on the borrower's system in order to facilitate obtaining financing from private lenders for purposes provided in the RE Act. (b) The Administrator will consider requests for the subordination of the Government's lien on after-acquired property which will enable borrowers to obtain financing from private lenders for purposes provided in the Act: Provided, however, that property integral to the operation of projects financed with loans made or guaranteed by RUS shall be financed with funds obtained through lien accommodations instead of lien subordinations, unless the Administrator determines that it is in the Government's interest to do otherwise. | ||||
| 7:7:11.1.2.1.22.2.1.6 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | §§ 1744.41-1744.49 [Reserved] | RUS | ||||||
| 7:7:11.1.2.1.22.2.1.7 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | § 1744.50 Non-Act purposes. | RUS | [51 FR 32430, Sept. 12, 1986. Redesignated at 55 FR 39396, Sept. 27, 1990, as amended at 59 FR 43716, Aug. 25, 1994. Redesignated at 66 FR 41760, Aug. 9, 2001, as amended at 66 FR 41763, Aug. 9, 2001] | (a) The Administrator will consider requests for the accommodation of the Government's lien on the borrower's system or the subordination of the Government's lien on after-acquired property which will enable the borrowers to obtain financing from private lenders for the purpose of providing new telecommunication services which may not be eligible for financing under the Act if the Administrator is satisfied that: (1) The borrower will have the ability to repay its existing and proposed indebtedness; (2) The security for outstanding Government loans and guarantees is reasonably adequate and will not be adversely affected by the accommodation or subordination; and (3) Approval of the request is in the interests of the Government with respect to the financial soundness of the borrower and other matters, such as assuring that the borrower's system is constructed cost-effectively using sound engineering practices. (b) In determining that the security for outstanding Government loans and guarantees is reasonably adequate and will not be adversely affected by the accommodation or subordination the Administrator will consider, among other matters, when applicable, the following: (1) Market forecasts for the project; (2) Projected revenues, expenses and net income of the borrower's existing system and the project; (3) Maximum debt service on indebtedness of both the borrower's system and the project; (4) Projected rate of return on the borrower's investment in the project; (5) Fair market value of property acquired by the borrower as part of the project; (6) Impact of the project on the ratio of the borrower's secured debt to assets; (7) Projected growth in borrower's system and project equity; and (8) Amount of funds available for plant additions, replacements and other similar costs of the system and the project. (c) In determining whether the accommodation or subordination is in the interests of the Government, the Administrator may consider, among other matters, whether the project will improve the borrow… | ||||
| 7:7:11.1.2.1.22.2.1.8 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | §§ 1744.51-1744.54 [Reserved] | RUS | ||||||
| 7:7:11.1.2.1.22.2.1.9 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | B | Subpart B—Lien Accommodations and Subordination Policy | § 1744.55 Application procedures. | RUS | [51 FR 32430, Sept. 12, 1986. Redesignated at 55 FR 39396, Sept. 27, 1990, and further redesignated at 66 FR 41760, Aug. 9, 2001, as amended at 66 FR 41763, Aug. 9, 2001] | (a) Requests for information regarding applications for lien accommodations or subordination under this part should be addressed to the Assistant Administrator, Telecommunications Program, Rural Utilities Service, Washington, DC 20250-1590. (b) An application for a lien accommodation or subordination shall include the following supporting information: (1) A board Resolution from the applicant requesting the lien accommodation or subordination and stating the general purpose for which the funds from the private lender will be used, the proposed amount of the loan, and the proposed terms and conditions of the loan; (2) An opinion from counsel representing the applicant that the applicant has the authority under its articles of incorporation, bylaws, and under applicable state law to undertake the project; (3) Engineering and pertinent studies related to the projects or purposes to be financed, when applicable; (4) Feasibility studies with pro forma financial statements showing the ability to repay the loan and provide an appropriate margin or net income; (5) Any other information or documentation deemed pertinent by the borrower or the Administrator in support of the application. (c) When the Administrator makes a determination that an application for an accommodation or subordination will not be approved the Administrator shall set forth the reasons therefor in writing and furnish such determination and reasons to the borrower within 30 days of the determination. | ||||
| 7:7:11.1.2.1.22.3.1.1 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.60 General. | RUS | (a) The standard loan documents (as defined in 7 CFR part 1758) contain provisions regarding advances and disbursements of loan funds by telephone borrowers. This part implements certain of the provisions by setting forth requirements and procedures to be followed by borrowers in obtaining advances and making disbursements of loan and nonloan funds. (b) This part supersedes any sections of RUS Bulletins with which it is in conflict. | |||||
| 7:7:11.1.2.1.22.3.1.10 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.69 [Reserved] | RUS | ||||||
| 7:7:11.1.2.1.22.3.1.2 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.61 [Reserved] | RUS | ||||||
| 7:7:11.1.2.1.22.3.1.3 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.62 Introduction. | RUS | RUS is under no obligation to make or approve advances of loan funds unless the borrower is in compliance with all terms and conditions of the loan documents. The borrower shall use funds in its construction fund only to make disbursements approved by RUS. | |||||
| 7:7:11.1.2.1.22.3.1.4 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.63 The telephone loan budget. | RUS | When the loan is made, RUS provides the borrower a Telephone Loan Budget, RUS Form 493. This budget divides the loan into budget accounts such as “Engineering.” When a contract or other document is approved by RUS, funds are encumbered from the appropriate budget account. See 7 CFR part 1753. | |||||
| 7:7:11.1.2.1.22.3.1.5 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.64 Budget adjustment. | RUS | (a) If more funds are required than are available in a budget account, the borrower may request RUS's approval of a budget adjustment to use funds from another account. The request shall include an explanation of the change, the budget account to be used, and a description of how the adjustment will affect loan purposes. RUS will not approve a budget adjustment that affects other loan purposes unless the borrower satisfies RUS that the additional funds are available from another source, requests a deficiency loan, or scales back the project. (b) RUS may make a budget adjustment without a formal request by the borrower when a budget account is insufficient to encumber funds for a contract that otherwise would be approved by RUS. See 7 CFR part 1753. | |||||
| 7:7:11.1.2.1.22.3.1.6 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.65 The construction fund. | RUS | (a) The construction fund is used by the borrower primarily to hold advances until disbursed. (b) All advances shall be deposited in the construction fund. (c) RUS may require that other funds be deposited in the construction fund. These may include equity or general fund contributions to construction, service termination payments, proceeds from the sale of property, amounts recovered from insurance for losses during the construction period, and interest received on loan funds in savings or interest bearing checking accounts, and similar receipts. Deposit slips for any deposit to the construction fund shall show the source and amount of funds deposited and be executed by an authorized representative of the bank. (d) Funds shall be disbursed only up to the amount approved for advance on the FRS as described in § 1744.66. No funds may be withdrawn from the fund except for loan purposes approved by RUS. (e) The disbursement of nonloan funds requires the same RUS approvals as loan funds. (f) Disbursements must be evidenced by canceled checks. The invoices and supporting documentation needed for construction contracts are specified in the contracts and in 7 CFR part 1753. Disbursements to reimburse the borrower's general funds shall be documented by a reimbursement schedule, to be retained in the borrower's files, that lists the construction fund check number, date, and an explanation of amounts reimbursed by budget account. | |||||
| 7:7:11.1.2.1.22.3.1.7 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.66 The financial requirement statement (FRS). | RUS | [54 FR 12186, Mar. 24, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, as amended at 56 FR 26600, June 10, 1991] | (a) To request advances, the borrower must submit to RUS an FRS, a description of the advances desired, and other information related to the transactions when required by RUS. (b) The FRS is used by RUS and the borrower to record and control transactions in the construction fund. Approved contracts and other items are shown on the FRS under “Approved Purposes.” Except as noted below, the amount approved for advance is 100 percent of the amount encumbered for that item. Funds are approved for advance as follows: (1) Construction —(i) Construction contracts and force account proposals. Ninety percent of the encumbered amount (95 percent for outside plant), with the final 10 percent (5 percent) approved when RUS approves the closeout documents. When a contract contains supplement “A” (See 7 CFR part 1753), 90 percent (95 percent) of the contract is approved less materials supplied by the borrower. For the Supplement “A” materials, which are a separate entry on the FRS, 100 percent of the material cost is approved. (ii) Work orders. The portion of the work order summary (See 7 CFR part 1753) determined by RUS to be for approved loan purposes. (iii) Work order fund. Based on a borrower's request as described in 7 CFR part 1753. (iv) Real estate. Upon request by the borrower after submission of evidence of a valid title. (v) Right of way procurement. Based on the borrower's itemized costs. (vi) Joint use charges. Based on copies of invoices from the other utility. (2) Engineering —(i) Preloan engineering. Based on a final itemized invoice from the engineer. (ii) Postloan engineering contracts. The amount shown on the engineering estimate, RUS Form 506, less the amount estimated for construction contract closeouts. The balance is approved when the engineering contract is closed. (iii) Force account engineering. Ninety percent of the total amount of the RUS approved force account engineering proposal. The balance is approved when the force account engineering proposal is closed. (3) Office… | ||||
| 7:7:11.1.2.1.22.3.1.8 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.67 Temporary excess construction funds. | RUS | [54 FR 12186, Mar. 24, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, as amended at 58 FR 66257, Dec. 20, 1993; 84 FR 59922, Nov. 7, 2019] | (a) When unanticipated events delay the borrower's disbursement of advanced funds, the funds may be used as follows: (1) With RUS loan funds for loans approved prior to November 1, 1993, or hardship loan funds, the borrower may invest the funds in 5 percent Treasury Certificates of Indebtedness—RUS Series. (2) With RUS cost-of-money or FFB loan funds, the following apply: (i) The borrower may invest the funds in short term securities issued by the United States Treasury. (ii) If permitted by state law, the borrower may deposit the funds in savings accounts, including certificates of deposit, of federally insured savings institutions. (3) Funds advanced by a guaranteed lender other than the FFB may, if so permitted by such lender, be invested under the terms and conditions described above for FFB advances. (4) Any security or investment made under this authorization shall identify the borrower by its corporate name followed by the words “Trustee, Rural Utilities Service.” (5) All temporary investments and all income derived from them shall be considered part of the construction fund and be subject to the same controls as cash in that account. (6) Securities and other investments shall have maturity dates or liquidating provisions that ensure the availability of funds as required for the completion of projects and the payment of obligations. (7) Any instrument evidencing a security or other investment herein authorized to be purchased or made, may not be sold, discounted, or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose. (8) The Administrator may, at his sole discretion, require a borrower to pledge any security or other evidence of investment authorized hereby by forwarding to him all pertinent instruments and related documentation as he may reasonably require. (9) Borrowers shall be responsible for the safekeeping of securities and other investments. (b) All interest and income received from investments of temporary excess funds, as descr… | ||||
| 7:7:11.1.2.1.22.3.1.9 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | C | Subpart C—Advance and Disbursement of Funds | § 1744.68 Order and method of advances of telephone loan funds. | RUS | [54 FR 12186, Mar. 24, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, as amended at 58 FR 66257, Dec. 20, 1993, as amended at 84 FR 59922, Nov. 7, 2019] | (a) Borrowers may specify the sequence of advances of funds under any combination of approved telephone loans from RUS or FFB, except that for all loans approved on or after November 1, 1993, the borrower may use loan funds: (1) Only for purposes for which that type of loan ( i.e. Hardship, RUS cost-of-money, or FFB) may be made; and (2) Only in exchanges that qualify for the type of loan from which the funds are drawn. (b) The first or subsequent advances of loan funds may be conditioned on the satisfaction of certain requirements stated in the borrower's loan contract. (c) Normally, only one payment is made by the Automatic Clearing House (ACH) for an advance of funds. (d) Borrowers of RUS funds may request advances by wire service only for amounts greater than $500,000 or for advances to borrowers outside the Continental United States. FFB advances in any amount over $100,000 can be sent by wire service. (e) The following information shall be included with the FRS: (1) Name and address of borrower's bank. (2) If borrower's bank is not a member of the Federal Reserve System, the name and address of its correspondent bank that is a member of the Federal Reserve System. (3) American Bankers Association (ABA) nine digit identifier of the receiving banks (routing number and check digit). (4) Borrower's bank account title and number. (5) Any other necessary identifying information. | ||||
| 7:7:11.1.2.1.22.5.1.1 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.200 General statement. | RUS | [58 FR 52642, Oct. 12, 1993, as amended at 84 FR 59923, Nov. 7, 2019] | (a) RUS telephone borrowers are encouraged to utilize their own funds to participate in the economic development of rural areas, provided that such activity does not impair a borrower's ability to provide modern telecommunications services at reasonable rates or to repay its indebtedness to RUS and other lenders. When considering loans, investments, or guarantees, borrowers are expected to act in accordance with prudent business practices and in conformity with the laws of the jurisdictions in which they serve. (b) [Reserved] | ||||
| 7:7:11.1.2.1.22.5.1.10 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.209 Records. | RUS | (a) The records of borrowers, including records relating to qualified investments, shall be subject to the auditing procedures prescribed in part 1773 of this chapter. RUS reserves the right to review the records of the borrower relating to qualified investments to determine if the borrower is in compliance with this subpart. (b) Borrowers shall report to RUS on the end-of-year operating report, RUS Form 479, the current status and principal amount of each qualified investment it has made or is committed to make pursuant to § 1744.202. | |||||
| 7:7:11.1.2.1.22.5.1.11 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.210 Effect of this subpart on RUS loan contract and mortgage. | RUS | (a) Except as expressly provided in this subpart, the borrower shall comply with all provisions of its loan contract with RUS, its notes issued to RUS, and the RUS mortgage, including all provisions thereof relating to investments not covered by this subpart. (b) Nothing in this subpart shall affect any rights of supplemental lenders under the RUS mortgage, or other creditors of the borrower, to limit a borrower's investments, loans and guarantees to levels below those permitted in § 1744.202. (c) As used in paragraph (b) of this section, supplemental lender means a creditor of the borrower, other than RUS, whose loan to the borrower is secured by the RUS mortgage. | |||||
| 7:7:11.1.2.1.22.5.1.2 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.201 Definitions. | RUS | [58 FR 52642, Oct. 12, 1993, as amended at 59 FR 66440, Dec. 27, 1994; 84 FR 59923, Nov. 7, 2019] | As used in this subpart: Administrator means the Administrator of the Rural Utilities Service (RUS). Advance means any funds provided of which repayment is expected. Affiliated company means any organization that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the borrower. Borrower means any organization which has an outstanding loan made by RUS or guaranteed by RUS, or which is seeking such financing. Extension of credit means to make loans or advances. Guarantee means to undertake collaterally to answer for the payment of another's debt or the performance of another's duty, liability, or obligation, including, without limitation, the obligations of affiliated companies. Some examples of such guarantees would include: (1) Guarantees of payment or collection on a note or other debt instrument; (2) Issuing performance bonds or completion bonds; or (3) Cosigning leases or other obligations of third parties. Maximum investment ratio means that the aggregate of all qualified investments by the borrower including the proposed qualified investment shall not be more than one-third of the net worth of the borrower. Minimum total assets ratio means the borrower's net worth is at least twenty percent of its total assets including the proposed qualified investment. Net plant means the sum of the balances of the following accounts of the borrower: Note: All references to account numbers are to the Uniform System of Accounts (47 CFR part 32). Net worth means the sum of the balances of the following accounts of the borrower: Note: For nonprofit organizations, owners' equity is shown in subaccounts of 4540 and 4550. All references regarding account numbers are to the Uniform System of Accounts (47 CFR part 32). Qualified investment is defined in § 1744.202(b). RE Act means the Rural Electrification Act of 1936, as amended (7 U.S.C. 901 et seq. ). REA means the Rural Electrification Administration formerly an agency of t… | ||||
| 7:7:11.1.2.1.22.5.1.3 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.202 Borrowers may make qualified investments without prior approval of the Administrator. | RUS | (a) A borrower that equals or exceeds the minimum total assets ratio may make a qualified investment, defined in paragraph (b) of this section without prior written approval of the Administrator. (b) A qualified investment is a rural development investment, defined in paragraph (d) of this section meeting the following criteria: (1) Unless the borrower's commitment is a guarantee, extension of credit, or advance, the borrower receives any financial return accruing to such investment, or the borrower's proportionate share of such return; (2) Unless the borrower's commitment is a guarantee, extension of credit, or advance, the borrower retains title to any asset acquired with such investment, or the borrower's proportionate share of such title; and (3) The funds committed are the borrower's own funds. As used in this subpart, the term own funds shall not include proceeds of loans made, guaranteed or lien accommodated by RUS; funds necessary to make timely payments of principal and interest on loans made, guaranteed or lien accommodated by RUS; and funds on deposit in the cash construction fund-trustee account, as defined in the borrower's loan contract with RUS. (c) A rural development investment will not be considered to be a qualified investment to the extent that the amount of such investments exceeds the borrower's maximum investment ratio. (d) A rural development investment is an investment, extension of credit, advance, or guarantee by a borrower for a period longer than one year and for one or more of the following purposes: (1) Improve the economic well-being of rural residents and alleviate the problems of low income, elderly, minority, and otherwise disadvantaged rural residents; (2) Improve the business and employment opportunities, occupational training and employment services, health care services, educational opportunities, energy utilization and availability, housing, transportation, community services, community facilities, water supplies, sewage and solid waste management systems, credit av… | |||||
| 7:7:11.1.2.1.22.5.1.4 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.203 Establishing amount of rural development investment. | RUS | For purposes of determining whether a rural development investment is within the limits of the borrower's maximum investment ratio or the minimum total assets ratio, the amount of the qualified investment shall be the total amount of funds committed to the rural development project as of the date of determination. The total amount of funds committed to the rural development project includes: (a) The principal amount of loans and advances made by the borrower; (b) Guarantees made by the borrower; and (c) A reasonable estimate of the amount the borrower is committed to provide to the rural development project in future years. | |||||
| 7:7:11.1.2.1.22.5.1.5 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.204 Rural development investments that do not meet the ratio requirements. | RUS | (a) Each borrower is authorized to make investments other than qualified investments only in accordance with the provisions of the borrower's mortgage with RUS. Without RUS's approval, the portion of any investment of funds or commitment to invest funds for any rural development investment that will exceed the borrower's maximum investment ratio or cause the borrower to fall below the minimum total assets ratio, must comply with the provisions of the RUS mortgage. (b) RUS will consider, on a case-by-case basis, requests for approval of rural development investments not constituting qualified investments. RUS may condition such approval, if granted, on such requirements and restrictions as RUS may determine to be in the best interests of the Government, including, without limitation, the borrower's agreement to limit dividends or distributions of capital by an amount specified by RUS. Requests for such approvals must be submitted in writing to the relevant RUS regional office and shall include: (1) A description of the rural development project and the type of investment to be made, such as a loan, guarantee, stock purchase or equity investment; (2) A reasonable estimate of the amount the borrower is committed to provide to the rural development project including investments that may be required in the future; and (3) A pro forma balance sheet and cash flow statement for the period covering the borrower's future commitments to the rural development project. (c) In determining whether to approve a rural development investment that may cause the borrower to exceed the maximum investment ratio or to fall below the minimum total assets ratio in the future, RUS will consider annual increases to the borrower's net worth and total assets as might be reasonably anticipated from the borrower's normal operations. | |||||
| 7:7:11.1.2.1.22.5.1.6 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.205 Determinations and application of limitations described in § 1744.202. | RUS | (a) RUS will not include qualified investments, including qualified investments in affiliated companies, in calculating the amount of dividend or capital distributions a borrower may make under its RUS mortgage. (b) A borrower's investment in its net plant shall not be considered a rural development investment for purposes of calculating the maximum investment ratio or the minimum total assets ratio. (c) The borrower's net worth and total assets shall be determined using the balances of the respective accounts of the borrower as of December 31 of the last complete calendar year preceding the date on which the borrower's maximum investment ratio and minimum total assets ratio are calculated. (d) All determinations required to be made under 7 U.S.C. 926 or this subpart will be made in accordance with the Uniform System of Accounts (USoA)(47 CFR part 32). References to specific USoA accounts shall include revised or replacement accounts. | |||||
| 7:7:11.1.2.1.22.5.1.7 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.206 Effect of subsequent failure to maintain ratios. | RUS | If an expenditure constitutes a qualified investment under the terms of this subpart, it does not cease to be a qualified investment merely because subsequently the borrower fails to maintain the maximum investment ratio or the minimum total assets ratio. | |||||
| 7:7:11.1.2.1.22.5.1.8 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.207 Investment not to jeopardize loan security. | RUS | A borrower shall not make a qualified investment or a rural development investment which jeopardizes: (a) The security of loans made or guaranteed by RUS; or (b) The borrower's ability to repay such loans under the terms and conditions as agreed. | |||||
| 7:7:11.1.2.1.22.5.1.9 | 7 | Agriculture | XVII | 1744 | PART 1744—POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS | E | Subpart E—Borrower Investments | § 1744.208 Rural development investments before November 28, 1990. | RUS | All investments made by a borrower shall be subject to the provisions of this subpart, regardless of when the investment was made or whether it has been approved by RUS. Any restrictions required by RUS as a condition to approving a rural development investment before November 28, 1990, shall continue to be in effect to the extent that such investment exceeds the maximum investment ratio or causes the borrower to fall below the minimum total assets ratio. |
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