cfr_sections
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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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| 7:7:15.1.20.2.1.1.90.1 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.1 General. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79704, Sept. 30, 2024] | (a) This part contains the regulations for Community Facilities, Water and Waste Disposal, Business and Industry, and Rural Energy for America Program loans guaranteed by the Agency and applies to lenders, holders, borrowers, and other parties involved in making, guaranteeing, holding, servicing, and liquidating such loans. The loan guarantee programs covered by this regulation are more fully described as: (1) Community Programs Guaranteed Loans (5 U.S.C. 301 and 7 U.S.C. 1989) as authorized by Section 306(a)(1) of the Consolidated Farm and Rural Development Act, 7 U.S.C. 1926(a)(1), as administered by the Rural Housing Service (RHS), herein after referred to as CF. (2) Water and Waste Disposal Program Guaranteed Loans (5 U.S.C. 301, 7 U.S.C. 1989, and 16 U.S.C. 1005) as authorized by Section 306(a)(1) of the Consolidated Farm and Rural Development Act, 7 U.S.C. 1926(a)(1), as administered by the Rural Utilities Service (RUS), herein after referred to as WWD. (3) Business and Industry Guaranteed Loans (7 U.S.C. 1932) as authorized by Section 310B, Business and Industry Direct and Guaranteed Loans, of the Consolidated Farm and Rural Development Act, 7 U.S.C. 1932, as administered by the Rural Business-Cooperative Service (RBCS), herein after referred to as B&I. (4) Rural Energy for America Program Guaranteed Loans (5 U.S.C. 301, and 7 U.S.C. 8107) as authorized by Section 9007, Title IX of the Food, Conservation, and Energy Act of 2008, as administered by the Rural Business-Cooperative Service (RBCS), herein after referred to as REAP. (b) The applicability of the provision of this part for processing and approving applications and for servicing guaranteed loans depend on when a complete application is received. The Agency will process and approve applications, and service guaranteed loans according to the provisions of this part for all complete guaranteed loan applications that it receives on or after October 1, 2020, including guaranteed loan applications submitted under any of the programs whose authorizat… | ||||
| 7:7:15.1.20.2.1.1.90.10 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.10 Federal Register notices and amendments. | RBS | Rural Development will issue annual Federal Register notices each year specifying the amount of funds available under this part for OneRD guarantees. Notices may also include the following information applicable to projects specifically funded under a particular notice: Maximum loan amounts, fees, and priority scoring for discretionary points. | |||||
| 7:7:15.1.20.2.1.1.90.11 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | §§ 5001.11-5001.99 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.1.90.12 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.100 OMB control number. | RBS | The report and recordkeeping requirements contained in this part have been approved by the Office of Management and Budget and have been assigned OMB control number 0572-0155. | |||||
| 7:7:15.1.20.2.1.1.90.2 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.2 Structure. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62196, Oct. 2, 2020; 89 FR 79704, Sept. 30, 2024] | This part is divided into six subparts as described in paragraphs (a) through (f) of this section. The provisions are applicable to each guaranteed loan made under this part, except as may be otherwise indicated. This part also contains several appendices as identified in paragraph (g) of this section. (a) Subpart A. Subpart A contains provisions that are applicable to each guaranteed loan made under this part, except as may be otherwise indicated. Topics covered include definitions; exception authority; appeal and review rights; general lender responsibilities; special initiatives; approvals, regulations, and forms; and standards for financial information. (b) Subpart B. This subpart contains provisions for determining project, borrower, and lender eligibility that are applicable to each guaranteed loan made under this part. It also contains a list of eligible and ineligible uses of loan funds, ineligible projects and conditions that would make an otherwise eligible borrower ineligible. The lender's agreement is addressed as well as maintenance of approved lender status. (c) Subpart C. This subpart contains provisions for general origination requirements, credit evaluation, appraisals, various types of guarantees, monitoring requirements, compliance with other laws, environmental responsibilities, and conflicts of interest that are applicable to each guaranteed loan made under this part. (d) Subpart D. This subpart contains provisions relating to applications for a loan guarantee under this part, including preliminary eligibility reviews, the application process, application evaluation, and the application award processes that are applicable to each guaranteed loan made under this part. (e) Subpart E. This subpart contains loan and guarantee provisions that are applicable to each guaranteed loan made under this part. Loan provisions cover interest rates, term length, loan schedule, repayment, lender fees, loan amounts, percentage of guarantee, and assignment of a guaranteed loan. Guarantee provisi… | ||||
| 7:7:15.1.20.2.1.1.90.3 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.3 Definitions. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62196, Oct. 2, 2020; 86 FR 70354, Dec. 10, 2021; 87 FR 38645, June 29, 2022; 89 FR 79704, Sept. 30, 2024; 89 FR 97477, Dec. 9, 2024; 90 FR 57351, Dec. 11, 2025] | The following definitions are applicable to the capitalized terms used in this part. Administrator means the Administrator of the Rural Housing Service, the Rural Utilities Service, or the Rural Business-Cooperative Service (or the applicable Service's successor), as applicable, within the Rural Development mission area of the U.S. Department of Agriculture (USDA). Affiliate means a person or entity that is closely attached or connected to another person or entity. For the purposes of program eligibility, the principles outlined in 13 CFR 121.301(f), and any successor regulation, are used to establish affiliation. Agency means USDA Rural Development, which includes the Rural Housing Service; the Rural Utilities Service; and the Rural Business-Cooperative Service or their successors. Agricultural producer means a person, including non-profits, directly engaged in the production of agricultural products through labor management and operations, including the cultivating, growing, and harvesting plants and crops (including farming); breeding, raising, feeding, or housing of livestock (including ranching); forestry products; hydroponics; nursery stock; or aquaculture, whereby 50 percent or greater of their gross income is derived from the operations. All gross income of the applicant entity is included for agricultural producer eligibility. The percentage is calculated as the average of gross agricultural operations income of the concern divided by the gross non-farm income of the concern for the five most recent years. If the concern has been in operation for less than 60 months but for at least 12 months, average gross agricultural operations income, and gross non-farm income for as long as the concern has been in operation will be used. Agricultural operations income may include such items as production contracts, crop insurance, commodity payments, etc. Total income may include W-2 wages, schedule C income, and other income not related to the agricultural operation. Calculations will be using the applicant… | ||||
| 7:7:15.1.20.2.1.1.90.4 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.4 Exception authority. | RBS | The Administrator may, on a case-by-case basis, grant an exception to any requirement or provision of this subpart provided that such an exception is in the best financial interests of the Federal Government. Exercise of this authority cannot be in conflict with applicable law. | |||||
| 7:7:15.1.20.2.1.1.90.5 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.5 Appeal and review rights. | RBS | Borrowers, lenders, and holders may have appeal or review rights for Agency decisions made under this part. Agency decisions that are adverse to the individual participant are appealable, while matters of general applicability are not subject to appeal; however, such decisions are reviewable for appealability by the National Appeals Division (NAD). All appeals will be conducted by NAD and will be handled in accordance with 7 CFR part 11. (a) The borrower, lender, and holder can appeal any Agency decision that directly and adversely affects them. (1) For an adverse decision that affects the borrower, the lender and borrower must jointly execute a written request for appeal of an adverse decision made by the Agency. (2) An adverse decision that affects only the lender can be appealed by the lender only. (3) An adverse decision that affects only the holder can be appealed by the holder only. (b) In cases where the Agency has denied or reduced the amount of final loss payment to the lender, the adverse decision can be appealed only by the lender. (c) A decision by a lender adverse to the interest of the borrower is not a decision by the Agency, even if it was concurred in by the Agency, and therefore cannot be reviewed for appealability or appealed to NAD. | |||||
| 7:7:15.1.20.2.1.1.90.6 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.6 General lender responsibilities. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79708, Sept. 30, 2024] | (a) Lenders are responsible for originating and servicing loans guaranteed by the Agency under this part in accordance with the provisions of this part and, for those guaranteed loans issued under one of the guaranteed loan programs identified in § 5001.1(a)(1) through (4), with the provisions of the applicable guaranteed loan program. Any action or inaction on the part of the Agency does not relieve the lender of its responsibilities. (b) Lenders can contract for services, but such contracting does not relieve a lender from its responsibilities as identified in this part or, where applicable, in the applicable guaranteed loan program identified in § 5001.1. (c) If a lender fails to comply with the requirements of this part, the Agency may reduce any loss payment in accordance with the lender's agreement and loan note guarantee. | ||||
| 7:7:15.1.20.2.1.1.90.7 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.7 Agency's special initiatives. | RBS | [89 FR 79708, Sept. 30, 2024] | Applicants submitting applications that support the implementation of strategic or special initiatives are encouraged to review the Agency's annual notice to determine if their projects are eligible for receiving priority for projects. These projects may also support the implementation of strategic economic development and community development plans on a multi-jurisdictional and multi-sectoral basis in accordance with section 6401 of the Agriculture Improvement Act of 2018 (Pub. L. 115-334). | ||||
| 7:7:15.1.20.2.1.1.90.8 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.8 Approvals, regulations, and forms. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70355, Dec. 10, 2021; 89 FR 79708, Sept. 30, 2024] | (a) When Agency approval or concurrence is required, it must be in writing and must be obtained prior to any action taken for which approval or concurrence is required. Written communication from an authorized Agency official, including any written communication approving, concurring, or otherwise communicating an Agency decision on a matter when such decision is required, may be transmitted via an electronic Agency system in accordance with Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000 (114 Stat. 464) (E-Sign Act). (b) All references to statutes and regulations include any and all successor statutes and regulations. (c) All references to forms include any and all predecessor and successor forms as specified by the Agency. (d) Copies of all regulations and forms referenced in this part can be obtained through the Agency and from the Agency's website at https://www.rd.usda.gov/onerdguaranteed. (e) 7 CFR part 5001 does not prohibit or consent to electronic signatures. Rural Development will accept electronic signatures from lenders for origination, loan closing, and servicing documents in accordance with the E-Sign Act unless otherwise prohibited by law or program. Lenders may use electronic signatures for electronic promissory notes (eNotes), deeds of trust and other documents relevant to the loan transaction, providing that the lender perfects and maintains a first lien position, an enforceable promissory note, and meets all other agency requirements including the following: (1) Lenders may submit forms to Rural Development electronically using USDA's Service Center Agencies Online Services website. Registration is limited to individuals and each individual authorized by the lender must register and upon registration may electronically sign and submit certain forms on behalf of the lender. (2) Lenders who choose to accept electronic signatures from borrowers must ensure that such signatures meet the standards and requirements set forth in the E-Sign Act, as well as all other app… | ||||
| 7:7:15.1.20.2.1.1.90.9 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | A | Subpart A—General Provisions | § 5001.9 Standards for financial information. | RBS | [89 FR 79708, Sept. 30, 2024] | (a) All financial information ( e.g., financial statements, balance sheets, financial projections, and income statements) must be prepared and submitted in accordance with accounting practices acceptable to the Agency. Such practices can include, but are not limited to, Generally Accepted Accounting Principles (GAAP) and the industry's standard accounting practice. Unless the applicant or borrower meets the threshold for an audit in accordance with 2 CFR part 200 subpart F, the type of financial statement, e.g., borrower prepared, compiled, reviewed, or audited, required is typically the decision of the lender. (b) For sole proprietorships and other situations where business assets are held personally, financial statements must be prepared using only the assets and liabilities directly attributable to the applicant's project. For these situations, assets, plus any improvements, must be valued at the lower of cost or market value. (c) A tax return is not an acceptable financial statement when underwriting a loan guaranteed under this part; however, tax return information may be used to prepare financial statements and to determine REAP eligibility. | ||||
| 7:7:15.1.20.2.1.2.90.1 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.101 Introduction. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79709, Sept. 30, 2024] | This subpart addresses the eligibility provisions for projects, borrowers, and lenders. This subpart also includes provisions for projects involving the purchase of cooperative stock or cooperative equity, the conversion of businesses to cooperatives or Employee Stock Ownership Plans (ESOP), and New Markets Tax Credits (NMTC). (a) Project eligibility. Sections 5001.102 through 5001.108 identify requirements for projects to be eligible to receive a loan guarantee under this part. Sections 5001.115 through 5001.119 identify types of projects that are not eligible for a loan guarantee under this part. The Agency will not issue a loan guarantee under this part for any project that does not meet the applicable eligibility criteria as specified. (b) Borrower eligibility. Section 5001.126 identifies the types of borrowers that are eligible to receive a loan guarantee for their projects under this part. The types of borrowers eligible to receive loan guarantees for their projects vary based on the guaranteed loan program they are applying under and that guaranteed loan program's authorizing statute as set forth in § 5001.1. Section 5001.127 identifies conditions that would make an otherwise eligible borrower ineligible for receiving a loan guarantee for its project under this part. (c) Lender eligibility. Section 5001.130 identifies the requirements for a lending entity to be an eligible lender under this part. Section 5001.131 addresses the lender's agreement, which each approved lender must execute with the Agency in order to originate and service guaranteed loans under this part. Section 5001.132 addresses provisions necessary for a lender to maintain its approved lender status. (d) Cooperative stock/cooperative equity/conversions. Section 5001.140 identifies requirements associated with issuing loan guarantees in connection with the purchase of cooperative stock, transferable stock shares, and cooperative equity and for the conversions of businesses to either cooperatives or Employee Stock Ownership Plans… | ||||
| 7:7:15.1.20.2.1.2.90.10 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.115 Ineligible projects—general. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70356, Dec. 10, 2021; 89 FR 79712, Sept. 30, 2024] | The Agency will not issue a loan guarantee under this part for any of the projects identified in this section, unless otherwise noted. The following are ineligible projects for the CF, WWD, B&I and REAP programs: (a) Any investment or arbitrage, or any speculative real estate investment other than cooperative stock, transferable stock, cooperative equity in accordance with § 5001.140 and NMTC projects in accordance with § 5001.141. (b) Golf courses and golf course infrastructure, including par-3 and executive golf courses; racetracks or facilities for the conduct of races by animals, professional or amateur drivers or jockeys; for-profit zoos or safaris; and publicly-owned or non-profit amusement parks, water parks, and similar recreational type facilities inherently commercial in nature and primarily used for recreational purposes. (c) Motion pictures and theatrical productions. (d) Funding of political or lobbying activities. (e) Guaranteeing loans made by other Federal agencies, lines of credit, or lease payments. (f) Projects that the Agency determines create, directly or indirectly, a conflict of interest. (g) Properties to be used for primarily commercial rental when the borrower has no control over tenants and services offered, except for industrial-site infrastructure development. (h) Projects that utilize technology, equipment, or systems that are not commercially available. (i) Projects that will violate the requirements of 7 CFR part 1970, or any statutes or Executive Orders regarding environmental requirements. (j) Projects used primarily for the purpose of housing Federal, State, or quasi-Federal agencies, unless it is typical of the area for communities to provide this space. (k) Community antenna television and radio services or facilities. (l) Telephone systems. In certain circumstances, when not eligible for assistance through the Agency's telecommunications program these projects may be eligible for assistance under this part. (m) New combined sanitary and storm water sewer faciliti… | ||||
| 7:7:15.1.20.2.1.2.90.11 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.116 Ineligible CF projects. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79712, Sept. 30, 2024] | The following are ineligible projects for the CF program only: (a) For industrial park sites, the financing of on-site utility systems or business and industrial buildings. (b) Inherently commercial enterprises: This type of project is typically operated by a private enterprise with an essential characteristic to produce profits. This term does not include projects operated by private enterprises on a not-for-profit basis that provide education, childcare, geriatric care, or health care to rural communities. Inherently commercial enterprises include but are not limited to: grocery stores; television and radio services or facilities; that portion of a water and/or waste disposal facility normally provided by a business or industrial user; and telecommunication facilities or services, including broadband or fiber network services that do not meet the requirements of § 5001.103(a)(6). See § 5001.103(d) for the eligibility of a commercial enterprise leasing space in an eligible project; (c) Projects where construction is completed prior to filing an application with the Agency. This restriction applies to construction completed by or for the borrower and does not preclude the purchase or acquisition of a building constructed by an independent third party or refinancing of debt in accordance with § 5001.102(d). (d) Projects where the borrower acts to circumvent the regulations provided in this subpart, causing the borrower or project being eligible when, previously, the borrower or project was ineligible. (e) Projects involving the purchase of existing facilities in which the transaction's purpose is to primarily retire the debt of the seller in order for the seller to continue to use the facility at a lower cost. Characteristics of ineligible purchase transactions may include the following: (1) An entity, which may or may not be an eligible CF borrower, forms a new eligible entity or uses an existing eligible related entity to purchase all or part of its assets; (2) The new entity uses CF guaranteed loan funds… | ||||
| 7:7:15.1.20.2.1.2.90.12 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.117 Ineligible WWD projects. | RBS | The following are ineligible projects for the WWD programs only: (a) That portion of a project normally provided by a business or industrial user, such as wastewater pretreatment. (b) Provided the existing borrower has the capacity to provide adequate service to their service territory, guaranteed loan funds may not be used to take away customers or service areas of existing USDA WWD Program direct or guaranteed loan borrowers. The requirements and limitations of 7 U.S.C. 1926(b) only apply to this section. (c) Projects where the borrower acts to circumvent the regulations provided in this subpart, causing the borrower or project being eligible when, previously, the borrower or project was ineligible. (d) Projects involving the purchase of existing facilities in which the transaction's purpose is to primarily retire the debt of the seller in order for the seller to continue to use the facility at a lower cost. | |||||
| 7:7:15.1.20.2.1.2.90.13 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.118 Ineligible B&I projects. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020] | The following are ineligible projects for the B&I program only: (a) The financing of timeshares, residential trailer parks, apartments, duplexes, or other residential housing where the primary purpose is independent housing except as authorized in § 5001.105(b)(8), or housing development sites except as authorized in § 5001.105(b)(1). (b) Projects eligible for funding under B&I that are in excess of $1 million that would either: (1) Likely result in the transfer of jobs from one area to another and increase direct employment by more than 50 employees. However, this limitation is not to be construed to prohibit assistance for the expansion of an existing business entity through the establishment of a new branch, affiliate, or subsidiary of such entity if the establishment of such branch, affiliate, or subsidiary will not result in an increase in unemployment in the area of original location or in any other area where such entity conducts business operations. An exception is when there is reason to believe that such branch, affiliate, or subsidiary is being established with the intention of closing down the operations of the existing business entity in the area or its original location or in any other area where it conducts such operations; or (2) Increase direct employment by more than 50 employees, which is calculated to or likely to result in an increase in the production of goods, materials, commodities, or the availability of services or facilities in the area when there is not sufficient demand for such goods, materials, commodities, services, or facilities to employ the efficient capacity of existing competitive commercial or industrial enterprises, unless such financial or other assistance will not have an adverse effect upon existing competitive enterprises in the area. | ||||
| 7:7:15.1.20.2.1.2.90.14 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.119 Ineligible REAP projects. | RBS | Owner occupied bed and breakfasts are ineligible projects in the REAP program. | |||||
| 7:7:15.1.20.2.1.2.90.15 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.120 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.2.90.16 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.121 Eligible uses of loan funds. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70356, Dec. 10, 2021; 89 FR 79712, Sept. 30, 2024] | Guaranteed loan funds can only be used for the items specified in this section and any other items the Agency identifies in the Federal Register. In addition, RD may allow a recipient of a loan guarantee under this part to use up to 10 percent of project funds to construct, improve, or acquire broadband infrastructure subject to the requirements of 7 CFR part 1980, subpart M. (a) CF projects. Guaranteed loan funds for an essential CF project receiving a loan guarantee under § 5001.1 may be used to pay the expenses identified in paragraphs (a)(1) through (3) of this section. (1) When necessary to ensure the successful operation or protection of the project authorized in § 5001.103, subpart B: (i) Costs for the construction or relocation of public buildings, roads, bridges, fences, utilities, or to make other public improvements; and (ii) Costs for the relocation of private buildings, roads, bridges, fences, or utilities, and other private improvements. (2) To pay the cost of conduit, such as pipe, tube, or tile for protecting electric wires or cables, and its installation in conjunction with financing facilities authorized in § 5001.103, when the cost of the conduit is less than 25 percent of the total project cost and the conduit is not essential to the operation of the eligible essential facility or service to be financed. The borrower must be the owner of the conduit. The conduit must be installed at the time of project construction and must be for public use. A project example is construction of a road. While work is being completed in preparation for the eligible road project, the borrower takes advantage of the construction to install underground conduit in anticipation of installing fiber optic cables in the near future. (3) When necessary as part of a guaranteed loan to finance a project: (i) Guarantee fees, as determined under § 5001.454; (ii) Lender fees, as provided in § 5001.403; (iii) Professional service fees and charges provided the Agency agrees that the amounts are reasonable and cust… | ||||
| 7:7:15.1.20.2.1.2.90.17 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.122 Ineligible uses of loan funds. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79713, Sept. 30, 2024] | Projects that receive a loan guarantee under this part cannot use the guaranteed loan funds for those expenses or purposes identified in paragraphs (a) through (n) of this section and for any other item the Agency identifies in accordance with § 5001.10. (a) Payment in excess of actual costs ( e.g., profit, overhead, indirect costs, and wages to owners) incurred by the contractor or other service provider on a contract or agreement that has been entered into at less than an arm's length transaction or has a potential for a conflict of interest. In situations where there is common ownership or an otherwise closely related company is being paid to do construction or installation work for a borrower, only documented costs associated with the construction or installation can be paid with guaranteed loan funds and cannot include any profit or wages to such related person. (b) Notwithstanding § 5001.102(d), payment on any other Federal loan or debt. (c) Payment of a Federal judgment, State or Federal tax lien, or other debt owed to the United States. (d) Loan finder or broker fees. (e) Refinancing debt that is owned by a loan packager or broker or their respective affiliates. (f) For loans as specified under CF and WWD, costs normally provided by a business or industrial user ( e.g., wastewater pretreatment). (g) For loans as specified under CF and WWD, any portion of the cost of a project that does not serve a rural area. (h) Rental for the use of equipment or machinery owned by the borrower. (i) For purposes not directly related to operating and maintaining the project. (j) Any EEI not identified in the applicable energy assessment or energy audit. (k) Agricultural tillage equipment, used equipment, and vehicles are ineligible for loans as specified under REAP. Costs include costs for RES and/or EEI projects that are used to improve a vehicle's ability to propel itself are ineligible uses for loan funds. For example, modifying an existing vehicle's engine to run on renewable fuels or replacing an older v… | ||||
| 7:7:15.1.20.2.1.2.90.18 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | §§ 5001.123-5001.125 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.2.90.19 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.126 Borrower eligibility. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70356, Dec. 10, 2021; 87 FR 42297, July 15, 2022; 89 FR 79714, Sept. 30, 2024] | To be eligible for a loan guarantee under this part, a borrower must meet the requirements specified in this section at the time of each guaranteed loan's approval and through issuance of the loan note guarantee. A borrower must meet the eligibility requirements specified in paragraph (a) of this section and in paragraphs (b) through (e), as applicable, of this section. (a) Legal authority and responsibility. The borrower must have, or obtain before issuance of the loan note guarantee, the legal authority necessary to construct, operate, and maintain the proposed facility and services and to obtain, give security for, and repay the proposed loan. (1) Operate and maintain the facility. The borrower is responsible for operating, maintaining, and managing the facility and providing for its continued availability and use. The borrower will retain this responsibility even though the facility may be operated, maintained, or managed by a third party under contract, management agreement, or written lease. Leases may be used for certain projects when they are the only feasible way to provide the service or facility, are the customary practice to provide such service or facility within the industry or in the State and provide for the borrower's management control of the project. Contracts, management agreements, or written leases must not contain options or other provisions for transfer of ownership unless approved by the Agency. The borrower must own and retain control of the facility at all times; however, various types of ownership structures are permitted to bring in passive investor equity. These include but are not limited to partnership flips and inverted leases, which are common in the renewable energy industry. The anticipated release of passive tax credit investor entities resulting in a change in ownership control that does not impact the financial performance of the loan, as outlined at time of loan closing, does not constitute a transfer or assumption, nor require concurrence from the Agency. (2) Co-bo… | ||||
| 7:7:15.1.20.2.1.2.90.2 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.102 Project eligibility—general. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62196, Oct. 2, 2020; 89 FR 79709, Sept. 30, 2024] | To be eligible for a loan guarantee under this part, a project must meet the requirements specified in this section and those in the applicable section in §§ 5001.103 through 5001.108. (a) Service area. For projects with a defined service area, the boundaries for the proposed service area must be chosen in such a way that no user or area will be excluded because of race, color, religion, sex, marital status, age, disability, or national origin. This does not preclude financing or constructing: (1) Projects in phases (each phase must be financially sustainable without consideration of future phases) when it is not practical to finance or construct the entire project at one time; and (2) Projects where it is not economically feasible to serve the entire service area, provided the economic feasibility is determined on the basis of the entire system or facility and not by considering the cost of separate extensions to, or parts thereof. (b) Location. A project must be located in a State and meet the rural or rural area requirements of the applicable section in §§ 5001.103 through 5001.108. (c) Tax-exempt financing. The agency is prohibited from guaranteeing a project funded with tax-exempt financing. In cases where a project involves both tax-exempt and taxable financing, the portion of the project that involves taxable financing is eligible to receive a loan guarantee if that portion of the project is separate and distinct from the part that is financed by the tax-exempt obligation, and the guaranteed loan is not essential to issuance of the tax-exempt obligation. (d) Debt refinancing. The Agency can guarantee loans for debt refinancing, as described in paragraphs (d)(1) through (5) of this section when the guaranteed loan extinguishes the debt being refinanced. These paragraphs do not apply to REAP loans, see § 5001.121(d)(14) for REAP refinancing provisions. Longer-term financing to pay off a lender's interim construction loan after project completion will not be treated as debt refinancing as long a… | ||||
| 7:7:15.1.20.2.1.2.90.20 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.127 Borrower ineligibility conditions. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79715, Sept. 30, 2024] | A potential borrower is ineligible for a guaranteed loan under this part as identified in paragraphs (a) through (g) of this section. The borrower remains ineligible until the condition causing ineligibility is resolved. (a) An entity is ineligible if any of the conditions identified in paragraphs (a)(1) through (4) of this section applies to the borrower, any owner with more than 20 percent ownership interest in the borrower (does not include passive investors), or any owner with control of the borrower. Entities with delinquent debt, as identified in paragraphs (a)(1) through (a)(4), under a repayment plan are not eligible until the debt is paid in full. (1) There is an outstanding judgment obtained by the U.S. in a Federal Court (other than U.S. Tax Court). (2) Delinquency on the payment of Federal income taxes. (3) Delinquency on Federal debt. (4) Debarment or suspension from receiving Federal assistance. The lender is responsible for verification of the borrower's status. Verification can be done at sam.gov. (b) An entity is ineligible if it derives more than 15 percent of its annual gross revenue (including any lease income from space or machines) from gambling activity, excluding State-authorized lottery proceeds or Tribal-authorized gaming proceeds, as approved by the Agency, conducted for the purpose of raising funds for the approved project. (c) An entity is ineligible if it derives income from activities of a prurient sexual nature. (d) An entity is ineligible if it derives income from illegal drugs, drug paraphernalia, or any other illegal product or activity as defined under Federal statute. A borrower that intends to lease space or enter into a power purchase agreement with a marijuana dispensary is not eligible given our borrower would be receiving income from the marijuana operation which is a violation of Federal laws as marijuana is a controlled substance under Federal law and subject to Federal prosecution under the Controlled Substances Act (21 U.S.C. 812). (e) An entity is ineligibl… | ||||
| 7:7:15.1.20.2.1.2.90.21 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | §§ 5001.128-5001.129 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.2.90.22 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.130 Lender eligibility requirements. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70356, Dec. 10, 2021; 89 FR 79715, Sept. 30, 2024] | To become a lender under this part, the lending entity must meet the requirements specified in paragraphs (a) through (d) of this section, as applicable, and become an approved participant in the Agency's electronic system. Paragraph (e) of this section contains provisions associated with lenders that have already been approved by the Agency under one of the guaranteed loan programs identified in § 5001.1of this part. If not yet an Agency-approved lender, the lending entity must include with the application a request for lender approval in accordance with this section. (a) General. The lending entity must: (1) Be domiciled in a State; (2) Not be debarred or suspended by the Federal Government or be an affiliated person of such entity that was suspended or debarred; (3) Be free from default and delinquency on any debt owed to the Federal Government; (4) Inform the Agency if it is under a consent order, or similar constraint, from a Federal or State agency. The Agency will evaluate the lending entity's eligibility on a case-by-case basis, and assess the risk of loss posed by the consent order or similar constraint, as applicable; (5) Maintain written standards of conduct covering conflicts of interest; and (6) Maintain internal audit and management control systems to evaluate and monitor the overall quality of its loan origination and servicing activities. (7) Be registered in and maintain an account in the System for Award Management (SAM) in accordance with 2 CFR 25.200. (b) Regulated lending entities. Regulated lending entities identified in paragraphs (b)(1) through (10) of this section are eligible to receive a loan guarantee under this part without documentation to the Agency provided they are subject to supervision and credit examination by the applicable agency of the United States or a state, or were created specifically by state statute and operate under the direct supervision of a state government authority. (1) Federal and State chartered banks. (2) Farm Credit Bank of the Federal Land Ba… | ||||
| 7:7:15.1.20.2.1.2.90.23 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.131 Lender's agreement. | RBS | [89 FR 79716, Sept. 30, 2024] | When approved to participate as a lender under this part, the lender must execute a lender's agreement before the Agency will issue a loan note guarantee. A new lender's agreement must be executed with any existing lender making new loans on or after October 1, 2020. Approval under one program is approval for all programs. The eligibility expiration date for non-regulated lenders will be five years from the date of the original execution of a lender's agreement as specified in § 5001.130(c) and (d). There will be only one lender's agreement issued for each lending entity based on their tax identification number. Lender's agreements will not be issued for individual branches. Subsequent loans do not require a new lender's agreement. A lender who fails to renew its lender's agreement and loses its approved lender status must continue to service any outstanding guaranteed loans in conformance with the lender's agreement last in effect and the applicable regulation under which the lender became an approved lender. Such lenders cannot submit requests for new loan guarantees. | ||||
| 7:7:15.1.20.2.1.2.90.24 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.132 Maintenance of approved lender status. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79716, Sept. 30, 2024] | Continuation of approved lender status under this part is not automatic. Lenders may lose their approved lender status as described in paragraph (a) of this section. The Agency may also revoke a lender's status as an approved lender or debar the approved lender, as described in paragraph (b) of this section. (a) Loss of approved lender status. A lender will lose its approved status if it— (1) Fails to conform with the provisions of this part or the applicable guaranteed loan program identified in § 5001.1 of this part; (2) Has no outstanding guaranteed loans with the Agency for five consecutive years; (3) Is a regulated lending entity and fails to remain in good standing with its regulator; (4) Is a non-regulated lending entity and fails to renew its approval status within 5 years of the expiration date of the lender's agreement. (b) Revocation of approved status and debarment of lender. The Agency can revoke a lender's status as an approved lender at any time for cause as specified in the lender's agreement. A decision to revoke a lender's approved status will be made by the Agency and the lender will be notified in writing. The revocation may apply to all branches of the lender, specific branches, or personnel, as appropriate. The lender must revoke the level II eAuthentication privileges of all individuals included in the revocation notice. Cause for revoking lender status includes, but is not necessarily limited to, the circumstances identified in paragraphs (b)(1) through (14) of this section. (1) Guaranteed loans originated by the lender cause substantial financial loss to the Agency. (2) Failure to maintain status as an approved lender under the applicable regulations in effect when the lender obtained approved lender status. For lenders approved under this part, this means maintaining compliance with the requirements set forth in § 5001.130. (3) Conviction of the lender or any of its officers for criminal acts in connection with any loan transaction, whether or not the loan was guaranteed by … | ||||
| 7:7:15.1.20.2.1.2.90.25 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | §§ 5001.133-5001.139 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.2.90.26 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.140 Cooperative stock/cooperative equity. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79716, Sept. 30, 2024] | Loan guarantees described in paragraphs (a) through (d) of this section are only available under B&I guaranteed loans. (a) Cooperative stock purchase program. The Agency may guarantee loans for the purchase of cooperative stock by individual farmers or ranchers in a farmer or rancher cooperative established for the purpose of processing an agricultural commodity. The cooperative may contract for services to process agricultural commodities or otherwise process value-added agricultural products during the five-year period beginning on the operation startup date of the cooperative in order to provide adequate time for the planning and construction of the processing facility of the cooperative. (1) The proceeds from the stock sale may be used to recapitalize, to develop a new processing facility or product line, or to expand an existing production facility. Guaranteed loan funds must remain in the cooperative from which stock was purchased, and the cooperative must not reinvest those funds into another entity. (2) The maximum guaranteed loan amount is $600,000 and all applications will be processed in accordance with §§ 5001.301 through 5001.303, 5001.306, 5001.315, and 5001.318 of this part, as applicable. (3) The maximum term of the guaranteed loan is seven years when the proceeds from the stock sale are used by the cooperative to recapitalize or are used for working capital. The maximum term allowable for final guaranteed loan maturity is limited to the justified useful life of the assets the cooperative purchases with the proceeds of the stock sale not to exceed 40 years or applicable State statutory limitations, whichever is less. (4) The lender will, at a minimum, obtain a valid lien on the stock, an assignment of any patronage refund, and the ability to transfer the stock to another party, or any other right or ability necessary to liquidate and dispose of the collateral in the event of a default by the borrower. The lender and borrower understand that the borrower is fully liable for the entire debt, … | ||||
| 7:7:15.1.20.2.1.2.90.27 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.141 New Markets Tax Credits Program. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70356, Dec. 10, 2021; 87 FR 7367, Feb. 9, 2022; 89 FR 79716, Sept. 30, 2024] | The New Markets Tax Credits (NMTC) Program is administered by the U.S. Department of the Treasury's (Treasury) Community Development Financial Institutions (CDFI) Fund with NMTC credits allocated to Treasury-certified Community Development Entities (CDE) across the United States to make Qualified Equity Investments (QEI) in low-income communities. NMTC related definitions and terms in this section are governed by section 45(D) of the Internal Revenue Code (26 U.S.C. 45D), and applicable Treasury regulations (26 CFR 1.45D-1). A CDE will generally establish a new subsidiary of a CDE (sub-CDE) for individual NMTC projects. Lenders and their borrowers with guaranteed loan projects that include NMTC investments must comply with the provisions in this section. To be a lender for a guaranteed loan project that involves financing under the NMTC provisions, the lending entity must meet the applicable eligibility criteria in § 5001.130. The Agency will not waive its servicing rights to a guaranteed loan or be a party to any forbearance agreement in conjunction with a NMTC project. Requests for loan guarantees that include NMTC are subject to all applicable program eligibility requirements, credit analysis, and due diligence required by part 5001. In all cases the Agency will undertake efforts to protect the best financial interests of the Federal government and collection of its guaranteed loan. The Agency will not consider any tax benefit or loss of tax benefits to the CDE, sub-CDE or NMTC investor in the servicing actions of a guaranteed loan. (a) Guaranteed Loans Directly to Qualified Active Low-Income Community Businesses (QALICB). (1) A lender that is CDE or sub-CDE under the direct control of a regulated lender or an approved non-regulated lender does not need to separately meet the requirements of § 5001.130 to make a guaranteed loan directly to a qualified active low-income community business (QALICB). (2) The provisions of § 5001.127(f) notwithstanding, a lender that is a CDE or sub-CDE may have an ownership i… | ||||
| 7:7:15.1.20.2.1.2.90.28 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | §§ 5001.142-5001.200 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.2.90.3 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.103 Eligible CF projects and requirements. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79709, Sept. 30, 2024] | For a CF projects to be eligible for a loan guarantee under this part, it must meet the criteria specified in § 5001.102 and this section and be for a borrower eligible to submit an application for the project in accordance with § 5001.126. (a) Type of project. The project must be for the construction, enlargement, extension, or to otherwise improve an essential community facility. Essential community facilities include, but are not limited to: (1) Health care facilities and services, including but not limited to hospitals and assisted living facilities providing daily living and health care assistance in compliance with Federal, Tribal and/or State licensure or certification requirements; (2) Fire, rescue, and public safety facilities and services; (3) Community, public, social, educational, or cultural facilities or services, including but not limited to: (i) Business incubators when not an inherently commercial enterprise, and the applicant demonstrates the following: (A) Applicant is a mission-driven organization such as a local or regional economic development organization; (B) The facility will be used to provide technical assistance, training, workforce development, administrative support services and vocational training to address workforce shortages in the community or region; and (C) Capacity building and support services that include at a minimum the following with the borrower demonstrating expertise in one or more of these services or presents a sustainable economically feasible program to outsource such activities: ( 1 ) Business plan development; ( 2 ) Administrative support services; ( 3 ) Training and technical assistance; ( 4 ) Mentoring, coaching, and leadership; ( 5 ) Finance and accounting workshops; ( 6 ) Programs to access capital; and ( 7 ) High-speed internet access; (ii) Thrift stores that operate as charitable organizations to enrich the quality of life for residents of the rural community they serve demonstrated by the following activities: (A) Collect and resell use… | ||||
| 7:7:15.1.20.2.1.2.90.4 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.104 Eligible WWD projects and requirements. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70355, Dec. 10, 2021; 89 FR 79710, Sept. 30, 2024] | For a WWD project to be eligible for a loan guarantee under this part, it must meet the criteria specified in § 5001.102 and this section and be for a borrower eligible to submit an application for the project in accordance with § 5001.126. (a) Type of project. The project must be for one or more of the following facilities: (1) Drinking water facilities, including but not limited to water source, treatment and distribution; (2) Sanitary sewage facilities, including but not limited to collection and treatment; (3) Solid waste facilities; or, (4) Stormwater facilities. (b) Public use. The project must be for a public purpose. (c) Project location. The project must be located in a rural area as defined in § 5001.3 of this part, except that utility projects serving both rural and non-rural areas are eligible for a loan guarantee regardless of project location. For utility service projects serving both rural and non-rural areas, the Agency will guarantee only the portion of the project necessary to provide the essential services to rural areas. The part of the facility located in a non-rural area must be necessary to provide the essential services to rural areas. (d) Service area. (1) The project must be installed to serve any user within the service area who desires service and can be feasibly and legally served. (2) The lender must determine that, when feasible and legally possible, inequities within the project's service area for the same type service proposed will be remedied by the borrower on, or before, completion of the project. Inequities are defined as unjustified variations in availability, adequacy, or quality of service. User rate schedules for portions of existing systems or facilities that were developed under different financing, rates, terms, or conditions do not necessarily constitute inequities. | ||||
| 7:7:15.1.20.2.1.2.90.5 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.105 Eligible B&I projects and requirements. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70355, Dec. 10, 2021; 89 FR 79710, Sept. 30, 2024; 90 FR 57351, Dec. 11, 2025] | For a B&I project to be eligible for a loan guarantee under this part, it must meet the criteria specified in § 5001.102, be for a borrower eligible to submit an application for the project in accordance with § 5001.126, and the uses of loan funds include, but are not limited to, the following: (a) Purpose. The purpose of the project must be to improve, develop, or finance business, industry, and employment and improve the economic and environmental climate in rural communities; the conservation, development, and use of water for aquaculture purposes; and reducing reliance on nonrenewable energy resources through development and construction of solar energy and other renewable energy systems. (b) Type of project. The project must be for one or more of the uses described in paragraphs (b)(1) through (22) of this section. (1) Purchase and development of land, buildings, or infrastructure for public or private commercial enterprises or industrial properties, including expansion or modernization. (2) Business acquisitions, start-ups, and expansions if jobs will be created or saved. A business acquisition is considered the acquisition of an entire business, not a partial stock acquisition in a business. However, acquisition or change of ownership between existing owners is an eligible project when the remaining owner(s) held their ownership and actively participated in the business operation for at least the past 24 months and the selling owner will not retain any ownership interest in the business directly or indirectly including through other entities or trusts or property rights. (3) Purchase and installation of machinery and equipment. (4) Startup costs, working capital, inventory, and supplies in the form of a permanent working capital term loan. (5) Pollution control and abatement. (6) Purchase of membership, stocks, bonds, or debentures necessary to obtain a loan from a member owned lending institution provided the purchase is required for all their borrowers and is the minimum amount required. (7)… | ||||
| 7:7:15.1.20.2.1.2.90.6 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.106 Eligible REAP—Renewable Energy System (RES) projects and requirements. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79711, Sept. 30, 2024; 90 FR 57352, Dec. 11, 2025] | For a REAP RES project to be eligible for a loan guarantee under this part, it must meet the criteria specified in § 5001.102(a) through (c) and in paragraphs (a) through (e) of this section and be for a borrower eligible to submit an application for the project in accordance with § 5001.126. If taxable bonds are utilized as debt instruments the provisions of § 5001.105(b)(19) must be met. (a) The project must be for— (1) The purchase of a new or existing RES; (2) The purchase of a refurbished RES; or (3) The retrofitting of an existing RES. (4) For the purposes of this section, only those hydroelectric sources with a rated power of 30 megawatts or less are an eligible RES. (b) The RES project must use commercially available technology. (c) The RES project must be located in a rural area unless the borrower is an agricultural producer and the application supports the production, processing, vertical integration, or marketing of agricultural products. If the agricultural producer's operation is in a non-rural area, then the application can only be for RES components that are: (1) Directly related to, and their use and purpose is limited to the agricultural production operation, such as vertically integrated operations; and (2) Part of and co-located with the agricultural production operation. (d) Where a residence is closely associated with an agricultural operation or rural small business to be served by the RES project, 50 percent or more of the energy to be generated by the RES project must be used by the agricultural operation or rural small business. This provision must be documented with the application and can be demonstrated using either of the methods identified in paragraphs (d)(1) and (2) of this section. (1) Provide a renewable energy site assessment or other documentation and calculations that demonstrate based on historical energy use that 50 percent or more of the energy to be produced by the RES project will be used in the agricultural operation or rural small business. This includes doc… | ||||
| 7:7:15.1.20.2.1.2.90.7 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.107 REAP—Energy Efficiency Improvement (EEI) projects and requirements. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79711, Sept. 30, 2024] | For a REAP EEI project to be eligible for a loan guarantee under this part, it must meet the criteria specified in § 5001.102(a) through (c) and also specified in paragraphs (a) through (d) of this section and be for a borrower eligible to submit an application for the project in accordance with § 5001.126. If taxable bonds are utilized as debt instruments the provisions of § 5001.105(b)(19) must be met. (a) The EEI project must use less energy on an annual basis than the original building and/or equipment that it will improve or replace as demonstrated in an energy assessment or energy audit as applicable. (1) If the project's total project cost is greater than $80,000, the energy assessment must be conducted by an energy auditor, an energy assessor, or an individual supervised by either an energy assessor or energy auditor. The final energy assessment must be validated and signed by the energy assessor, the energy auditor who conducted the energy assessment, or by the supervising energy assessor or energy auditor of the individual who conducted the assessment, as applicable. (2) If the project's total project cost is $80,000 or less, the energy assessment may be conducted in accordance with paragraph (a)(1) of this section or by a person that has at least 3 years of experience and completed at least five energy assessments or energy audits on similar type projects. Eligible EEI include, but are not limited to: (i) Efficiency improvements to existing RES; and (ii) Construction of a new building only when the new building is used for the same purpose as the existing building and if, based on an energy assessment or energy audit, as applicable, it is more cost effective to construct a new building that will use less energy on annual basis than to improve the energy efficiency of the existing building. (b) The EEI project must be for a commercially available technology. (c) The EEI project must be located in a rural area unless the borrower is an agricultural producer and the Application supports the product… | ||||
| 7:7:15.1.20.2.1.2.90.8 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | § 5001.108 Eligible REAP—Energy Efficient Equipment and Systems (EEE) projects and requirements. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79712, Sept. 30, 2024] | For a REAP EEE project to be eligible for a loan guarantee under this part, it must meet the criteria specified in § 5001.102(a) through (c) and in paragraphs (a) through (d) of this section and be for a borrower that is an agricultural producer eligible to submit an application for the project in accordance with § 5001.126. The EEE project can be located in a rural or non-rural area as long as the energy efficient equipment or systems are used for agricultural production or processing in accordance with paragraph (a) of this section. If the borrower plans to use taxable bonds as debt instruments the provision § 5001.105(b)(19) must be met. (a) The project must be for the purchase and installation of energy efficient equipment or systems for agricultural production or processing that exceed the following standards: (1) Energy efficiency building codes, if available; (2) Federal or State energy efficiency standards, if available; and (3) Other energy efficiency standards determined appropriate by the Secretary. (i) If no codes or standards described in such subparagraph apply to the energy efficient equipment or system to be purchased or installed pursuant to such subparagraph, the Secretary shall require, to the maximum extent practicable, such equipment or systems to meet the same efficiency measurements as the most efficient available equipment or system in the market; and (ii) The Secretary shall not provide such a loan guarantee for the purchase or installation of any energy efficient equipment or system unless more than one type of such equipment or system is available in the market. (b) The EEE project must be for commercially available technology. (c) The EEE project must have technical merit as certified by the vendor/installer. An application that does not include said certification will be deemed incomplete and therefore is not eligible to compete for funding. | ||||
| 7:7:15.1.20.2.1.2.90.9 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | B | Subpart B—Eligibility Provisions | §§ 5001.109-5001.114 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.3.90.1 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | § 5001.201 General origination requirements. | RBS | The lender is responsible for originating a guaranteed loan in accordance with the requirements of this part and in accordance with its internal origination policies and procedures to the extent they do not conflict with the requirements of this part. For each application, the lender must prepare a credit evaluation that is consistent with Agency standards found in this part. The Agency reserves the right to review the lender's credit evaluation and request additional information. Lender approval does not constitute Agency approval. | |||||
| 7:7:15.1.20.2.1.3.90.2 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | § 5001.202 Lender's credit evaluation. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70356, Dec. 10, 2021; 87 FR 7367, Feb. 9, 2022; 89 FR 79717, Sept. 30, 2024] | For each application, the lender must prepare a credit evaluation that is consistent with Agency standards found in this part. Lenders are required to only submit complete loan applications that have been approved by their institution after completion of their internal credit evaluation. The components of a lender's credit evaluation will include a written review and comment on the “Five Cs” of credit that are outlined in § 5001.202(b)(1) through (5). The Agency should be able to obtain sufficient details on the project, the borrower, and the borrower's ability to repay the loan from the lender's credit evaluation. (a) Lender's evaluation guidelines. The lender must conduct a credit evaluation using credit documentation procedures and underwriting processes that are consistent with generally accepted prudent lending practices for commercial, public and project financing, and also consistent with the lender's own policies, procedures, and lending practices. The underwriting process must include a review of each loan for which a loan guarantee is being sought under this part. Applications involving affiliated entities must include a global credit evaluation and if applicable a global historical and projected debt service coverage analysis. The lender should evaluate the relationships between all associated parties to determine potential risks which may affect our borrower and its ability to repay the loan. Entities which may have an impact on the borrower or significantly contribute to the repayment ability of the loan should provide financials for global analysis. Applications involving guarantor(s) must also include a global debt service coverage analysis of the guarantor(s) including the cash flow of the guarantor(s). In addition, the lender must review all applicable contracts, management agreements, and leases to determine they will not adversely affect either the borrower's repayment ability or the value of the collateral securing the guaranteed loan. The lender's evaluation must address any financial or o… | ||||
| 7:7:15.1.20.2.1.3.90.3 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | § 5001.203 Appraisals. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79718, Sept. 30, 2024] | Appraisals of collateral are required as set forth in this section. The lender is responsible for ensuring that appraisal values adequately reflect the actual value of the collateral based on an arm's length transaction. Completed appraisals should be submitted when the application is filed. If the appraisal has not been completed when the application is filed, the lender must submit an estimated appraised value. Prior to the issuance of the loan note guarantee, the estimated value must be supported with an appraisal acceptable to the approval official. If an appraisal is received containing any value attributed to business valuation or as a going concern, the business valuation or going concern value must be deducted from the reconciled market value prior to discounting. The Agency expects that, for appraisals of existing facilities, the appraiser will physically visit the property unless prior permission from the Agency is obtained. Appraisals are not typically required when security consists of either a revenue or general obligation bond or liens on real estate for WWD projects which rely on revenues of the facilities for loan repayment. (a) Newly-acquired chattel. A bill of sale may be submitted to support the value of newly-acquired chattel. (b) Existing chattel. The lender must obtain appraisal(s) for existing chattel collateral when its value exceeds $250,000 and will be used to meet loan to value requirements. (c) Real estate. The lender must obtain appraisals for real estate collateral when the value of the collateral exceeds $250,000 or the current limitation established under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) Public Law 101-73, 103 Stat. 183 (1989). Real estate and chattels with a value below these thresholds must be evaluated in accordance with the lender's primary regulator's policies relating to appraisals and evaluations or, if the lender is not regulated, in accordance with normal banking practices and generally accepted methods of determining value… | ||||
| 7:7:15.1.20.2.1.3.90.4 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | § 5001.204 Personal, partnership, and corporate guarantees. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70357, Dec. 10, 2021; 87 FR 7368, Feb. 9, 2022; 89 FR 79718, Sept. 30, 2024] | The provisions of this section do not apply to passive investors. (a) Except as provided in paragraph (c) of this section, Agency-approved, unsecured personal, partnership, and corporate guarantees for the full term of the guaranteed loan and at least equal to the guarantor's percent interest or membership in the borrower times the guaranteed loan amount are required from any person or entity owning a 20-percent or greater interest or membership in the borrower. In the event a portion of the borrower's ownership interest stock is sold or transferred, the Agency reserves the right to require personal or corporate guarantees from the new owners of a 20-percent or more interest in the borrower. (b) When warranted by an Agency assessment of potential financial risk, the Agency may require the following: (1) Guarantees to be secured; (2) Guarantees from any person or entity owning less than a 20-percent interest or membership in the borrower; and (3) Guarantees from persons whose ownership interest in the borrower is held indirectly through intermediate or affiliated entities. (c) Exceptions to the requirement for personal, partnership or corporate guarantees may be requested by the lender. The lender must document, to the Agency's satisfaction, that collateral, equity, cash flow, and profitability indicate an above-average ability of the borrower to repay the loan. The Agency will evaluate these requests on a case-by-case basis. (d) Each guarantor must execute an Agency-approved guarantee form in addition to any guarantee form required by the lender. (e) Any amounts paid by the Agency pursuant to a claim by a guaranteed program lender will constitute a Federal debt owed to the Agency by a guarantor of the loan, to the extent of the amount of the guarantor's guarantee. | ||||
| 7:7:15.1.20.2.1.3.90.5 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | § 5001.205 General project monitoring requirements. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70357, Dec. 10, 2021; 89 FR 79718, Sept. 30, 2024] | In complying with the requirements of this section, the lender may rely on written materials and other reports provided by an independent engineer and other qualified consultants. (a) Design requirements. The lender must ensure that all facilities constructed with guaranteed loan funds are: (1) Designed using accepted architectural, engineering, and design practices, taking into consideration any Agency comments when the facility is being designed; (2) Designed in conformance to applicable Federal, Tribal, State, and local codes and requirements; (3) Constructed to support operations at the level and quality contemplated by the borrower using accepted architectural and engineering practices; and (4) Compliant with applicable domestic procurement preference requirements including section 70914 of the Build America, Buy America Act (BABAA) within the Infrastructure Investment and Jobs Act (Pub. L. 117-58). (b) Rights-of-ways, easements, and property rights. The lender is responsible for ensuring that the borrower has: (1) Obtained valid, continuous, and adequate rights-of-way and easements, in compliance with Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) if applicable, needed for the construction, operation, and maintenance of a project; and (2) Obtained and recorded such releases, consents, or subordinations to such property rights from holders of outstanding liens or other instruments as may be necessary for the construction, operation, and maintenance of the project and to provide the required security. (c) Permits, agreements, and licenses. It is the lender's responsibility to ensure the borrower obtains all permits, agreements, and licenses that are applicable to the project. (d) Insurance. It is the lender's responsibility to ensure the borrower obtains and maintains borrower and project insurance in substance and amount similar to that ordinarily required by lenders in the industry. (e) Construction monitoring requirements. The lender, or its desi… | ||||
| 7:7:15.1.20.2.1.3.90.6 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | § 5001.206 Compliance with USDA Departmental Regulations, Policies, and other Federal laws. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79719, Sept. 30, 2024] | (a) Departmental regulations. All projects receiving a loan guarantee under this part are subject to the provisions of USDA's Departmental Regulations, as applicable. (b) Other Federal laws. Lenders and borrowers must comply with other applicable Federal laws including, but not limited to the following: (1) Equal Employment Opportunity. (2) Americans with Disabilities Act. (3) Equal Credit Opportunity Act. (4) Fair Housing Act. (5) Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA). (6) Section 70914 of the Build America, Buy America Act (BABAA) within the Infrastructure Investment and Jobs Act (Pub. L. 117-58). (7) 31 U.S.C. 3354 Do Not Pay Initiative. | ||||
| 7:7:15.1.20.2.1.3.90.7 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | § 5001.207 Environmental responsibilities. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79720, Sept. 30, 2024] | Actions taken under this part must comply with 7 CFR part 1970. The Agency is responsible for ensuring that the requirements of the National Environmental Policy Act of 1969 (under 40 CFR part 1500) and related compliance actions, such as Section 106 of the National Historic Preservation Act (under 36 CFR part 800) and section 7 of the Endangered Species Act, are met. The Agency will complete the appropriate level of environmental review in accordance with 7 CFR part 1970, “Environmental Policies and Procedures.” (a) Borrower and lender responsibilities. Both the borrower and lender must take into consideration the potential environmental impacts of the project at the earliest planning stages. The Agency recommends that the lender contact the Agency to determine environmental requirements as soon as practicable after deciding to apply for a guarantee under this part. (1) The lender is responsible for becoming familiar and ensuring compliance with Federal environmental requirements. The lender must alert the Agency to any environmental issues related to a project or items that may require extensive environmental review. Proposals that minimize the potential of any project to adversely impact the environment must be developed and provided upon request by the Agency. (2) The lender must ensure that the borrower has— (i) Provided the necessary environmental information to enable the Agency to undertake its environmental review process in accordance with 7 CFR part 1970, including the provision of all required Federal, State, and local permits; (ii) Not taken any actions or incurred any obligations with respect to the project that would either limit the range of alternatives to be considered during the Agency's environmental review process or which would have an adverse impact on the environment, such as the initiation of construction. Taking any such actions or incurring any such obligations could result in project ineligibility; and (iii) Complied with any environmental mitigation measures required by the Ag… | ||||
| 7:7:15.1.20.2.1.3.90.8 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | § 5001.208 Conflicts of interest. | RBS | The lender must report all conflicts of interests, in writing, to the Agency. | |||||
| 7:7:15.1.20.2.1.3.90.9 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | C | Subpart C—Orgination Provisions | §§ 5001.209-5001.300 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.4.90.1 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.301 Beginning the application process. | RBS | [89 FR 79720, Sept. 30, 2024] | (a) The lender must file applications and related documents through their Agency contact. (b) The lender may complete either a request for preliminary eligibility review in accordance with § 5001.302 or a full application in accordance with §§ 5001.303 through 5001.307, as applicable, to begin the process for obtaining a guaranteed loan. The Agency encourages, but does not require, lenders to file requests for preliminary eligibility reviews in order to obtain Agency comments before submitting a full application. | ||||
| 7:7:15.1.20.2.1.4.90.10 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.316 CF project priority point system and reservation of funds. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79722, Sept. 30, 2024] | This section applies to CF projects seeking a loan guarantee. Paragraphs (a) through (d) of this section outline the criteria and amount of priority points that may be awarded to an application. The highest possible priority score is 55. Paragraph (e) of this section outlines the reservation of funds for projects located in rural areas of 20,000 population or less. (a) Population priority. If the project will be located in a rural community having a population of less than 20,000—15 points. (b) Project priority. If the project will construct, enlarge, extend or otherwise improve a public safety, health clinic, early education, primary or secondary education facility—10 points. (c) Leveraging priority. If the applicant commits other funds to the project in the following percentages: (1) 50 percent or more-15 points (2) 20% up to 49%-10 points (3) 5% up to 19%-5 points (d) Administrator priority. When guaranteed loan funds are requested from a National Office reserve, the Administrator may assign up to 15 points to address: (1) Geographic distribution of funds; (2) Emergency conditions caused by economic problems or natural disasters; or (3) Initiatives that support the Agency's strategic plan. (e) Rural priority. (1) Of the funds available each Federal fiscal year, as published on the Agency's website, the following amounts shall be reserved for projects in rural areas with a population of not more than 20,000 inhabitants: (i) 100 percent of the first $200,000,000 so made available; (ii) 50 percent of the next $200,000,000 so made available; and (iii) 25 percent of all amounts exceeding $400,000,000 so made available. (2) On July 1 of each year, the Agency will evaluate the dollar amount of complete applications on hand for projects in rural areas with a population of not more than 20,000 inhabitants. The dollar amount of the complete applications will be subtracted from the reserved allocation identified in this paragraph (e) and the remaining amount will be made available through the end… | ||||
| 7:7:15.1.20.2.1.4.90.11 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.317 WWD project priority points system. | RBS | This section applies to WWD projects seeking a loan guarantee. The highest possible priority point score is 150. (a) Population priority. If the project will primarily serve a rural area having a population under 10,000, 20 points will be awarded. (b) Health priorities. If the proposed project is: (1) Needed to alleviate an emergency situation, correct unanticipated diminution or deterioration of a water supply, or to meet Safe Drinking Water Act requirements which pertain to a water system, 25 points will be awarded; (2) Required to correct inadequacies of a wastewater disposal system, or to meet health standards which pertain to a wastewater disposal system, 25 points will be awarded; or (3) Required to meet administrative orders issued to correct local, State, or Federal solid waste violations, 15 points will be awarded. (c) Service area priorities. An application is eligible to receive points under each of the categories identified in paragraphs (c)(1) through (3) of this section if the service area includes: (1) An eligible area of long-term population decline according to the last three decennial censuses, 5 points will awarded. (2) A rural county that has had 20 percent or more of its population living in poverty, as defined by the United States Census Bureau, for the last 30 years, 5 points will be awarded. (3) For a city or county with a current unemployment rate, as determined by the Department of Labor, that is 125 percent of the State-wide rate or greater, 5 points will be awarded. For projects located in certain territories that may not have unemployment rates by localities, if the applicant's proposed service area has an unemployment rate exceeding 125 percent of the national unemployment rate, 5 points will be awarded. (d) Other priorities. Applications are eligible for points under each of the following priorities: (1) If the proposed project will merge ownership, management, and operation of smaller facilities providing for more efficient management and economical service, 10 p… | |||||
| 7:7:15.1.20.2.1.4.90.12 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.318 B&I project priority point system. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70357, Dec. 10, 2021; 89 FR 79722, Sept. 30, 2024] | This section applies to B&I projects seeking a loan guarantee. When applications on hand have the same priority score, the Agency will give preference to applications involving guaranteed loans from veterans. To receive veteran points, a veteran or veterans must own 20 percent or more interest in the borrower and the borrower must sign a certification in its application to indicate that the borrower has veteran status. A maximum of 100 points can be awarded. (a) Population priority. If the project is located in an unincorporated area or in a city with a population under 25,000, 5 points will be awarded. (b) Location priority. An application is eligible to receive points under each of the categories identified in paragraphs (b)(1) through (3) of this section if the project is located within: (1) A distressed community in accordance with the Economic Innovation Group distressed community index. The list can be found on the Agency's website at: https://www.rd.usda.gov/onerdguarantee, 5 points will be awarded. (2) A rural county that has had 20 percent or more of its population living in poverty, as defined by the United States Census Bureau, for the last 30 years, 5 points will be awarded. (3) For a city or county with a current unemployment rate, as determined by the Department of Labor, 125 percent of the State-wide rate or greater, 5 points will be awarded. For projects located in certain territories that may not have unemployment rates by localities, if the applicant's proposed service area has an unemployment rate exceeding 125 percent of the national unemployment rate, 5 points will be awarded. (4) The boundaries of a federally recognized Indian Tribe's reservation, within Tribal trust lands, or within land owned by an Alaska Native Regional or Village Corporation as defined by the Alaska Native Claims Settlement Act, 5 points will be awarded. (c) Guaranteed loan features. An application is eligible to receive points under each of the categories identified in paragraphs (c)(1) through (3) of thi… | ||||
| 7:7:15.1.20.2.1.4.90.13 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.319 REAP project priority point system. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79722, Sept. 30, 2024; 90 FR 30561, July 10, 2025] | This section applies to REAP projects seeking a loan guarantee. On a periodic basis, and subject to the availability of funds, the Agency will compete each complete and eligible RES, EEI, and EEE application that is ready to be funded and whose priority score, as determined in this section, meets, or exceeds the minimum priority score. Applications that do not meet the applicable minimum score will be considered as provided in § 5001.315(c)(2). A maximum score of 90 points is possible. (a) Environmental benefits. The Agency will award up to 5 points under this criterion based on documentation or the applicant's indication in the application that the project will have a positive effect on resource conservation, public health, and the environment. If the project will have a positive impact on: (1) All three impact areas, 5 points will be awarded; (2) Any two of the three impact areas, 3 points will be awarded; or (3) Any one of the three impact areas, 1 point will be awarded. (b) Energy generated, replaced, saved, or percent efficiency. The Agency will award up to 25 points under this criterion. Each application is eligible for points under both paragraphs (b)(1) and (2) of this section. (1) Quantity of energy generated or saved per RES/EEI loan amount requested, or percent efficiency of EEE project. The Agency will award up to 10 points under this sub-criterion. Points will be awarded for either the amount of renewable energy generation per dollar of loan amount requested, which includes those projects that are replacing energy usage with a renewable source; or the actual annual average energy savings over the most recent 12, 24, 36, 48, or 60 consecutive months of operation per dollar of guaranteed loan amount requested; or the percent efficiency of the EEE project. The Agency will not award points for more than one category. (i) Renewable energy systems. The quantity of energy generated or replaced per guaranteed loan dollar requested will be determined by dividing the projected total annual energ… | ||||
| 7:7:15.1.20.2.1.4.90.14 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | §§ 5001.320-5001.400 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.4.90.2 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.302 Preliminary eligibility review. | RBS | (a) Contents. Except as otherwise indicated, each request for a preliminary eligibility review must contain the material identified in paragraphs (a)(1) through (3) of this section. This information may be submitted in a narrative format or utilizing the lender's preliminary lender's analysis or preliminary credit memo. (1) Regardless of format, the lenders must provide the following information: (i) Name of the proposed borrower and co-borrower(s) as applicable, organization type, address, contact person, email address, and telephone number; (ii) Name of the proposed lender, address, telephone number, contact person, email address; (iii) Amount of the guaranteed loan request; and if known, the percentage of guarantee requested; the proposed rates and terms of the guaranteed loan; and the source(s) of other funding; (iv) If known, a description of collateral to be offered with estimated value(s), identity of guarantors, and the amount and source of equity, other capital, and matching funds to be contributed to the project; and (v) A brief description of the project, its location, products or services provided, service area, and, as applicable, availability of raw materials and supplies. (2) Sufficient information and documentation to enable the Agency to assess borrower, lender, and project eligibility, including summaries or spreadsheets of financial statements or audits, relationships and identity of any affiliates; and copies of organizational documents, organizational charts, and existing debt instruments. (3) For REAP projects: (i) Borrower information as outlined in § 5001.307(a) and (b), and project information as outlined in § 5001.307(c). (ii) For REAP RES projects where a residence is located at or is closely associated with and shares an energy metering devise with a rural small business or agricultural operation, demonstration that 50 percent or greater of the energy to be generated by the RES will benefit the rural small business or agricultural operation. (b) Assessment. Based on the … | |||||
| 7:7:15.1.20.2.1.4.90.3 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.303 Applications for loan guarantee. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70357, Dec. 10, 2021; 89 FR 79720, Sept. 30, 2024] | The Agency will accept applications on a continuous basis. For each loan guarantee request, the lender must submit to the Agency a complete application that is in conformance with this section, and §§ 5001.304 through 5001.307, as applicable. (a) Complete applications. Lenders must submit complete applications in order to be considered for loan guarantees. Lenders are encouraged to submit a complete application in a single package; however, the Agency may accept the environmental information required by the Agency and initiate and complete its environmental reviews in advance of receiving a complete application. If an application is incomplete, the Agency will notify the lender in writing of the items necessary to address the incomplete application. Upon receipt of a complete application, the Agency will complete its evaluation. (b) Content. Lenders must provide an analysis of the scope of the project in relation to the borrower's overall operations. The application and lender's analysis should be supported by adequate documentation as applicable to the project and as listed in paragraph (c) of this section. The Agency reserves the right to request additional documentation to support the funding request. All complete applications must contain at a minimum: (1) Agency-approved application form or system that includes all items noted in this section; (2) Credit evaluation (conforming to § 5001.202). (3) Environmental information required by the Agency to conduct its environmental reviews (as specified in § 5001.207(a)(2)(i)). (4) Required financial statements including: (i) Current Agency-acceptable balance sheet and year-to-date income statements of the borrower, and any guarantor(s) dated within 90 days of submission of the complete application; (ii) Agency-acceptable historical balance sheet, income statements, and cash flow statements of the borrower for the lesser of the last three fiscal years or all years of operation; and (iii) Projected balance sheets, income statements, and cash flow statemen… | ||||
| 7:7:15.1.20.2.1.4.90.4 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.304 Specific application requirements for CF projects. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70357, Dec. 10, 2021; 89 FR 79720, Sept. 30, 2024] | In addition to the requirements specified in § 5001.303 as applicable, a lender seeking a loan guarantee for a CF project must submit a financial feasibility report prepared by a qualified firm or individual acceptable to the Agency. All projects financed under this section must meet the financial feasibility requirements of this section and must be based on projected taxes, assessments, revenues, fees, or other sources of revenues in an amount sufficient to provide for project operation and maintenance, debt payments, and compliance with lender reserve requirements, when applicable. Other sources of revenue or existence of payment guarantors are particularly important in considering the feasibility of eligible recreation projects. The financial feasibility report must take into consideration any interest rate adjustment that may be instituted under the terms of the promissory note. Financial projections for projects that are assisted living facilities, skilled nursing facilities, or similar types of eligible residential facilities must be based on no more than 90 percent occupancy. Utility projects dependent on user fees for debt repayment shall base their income and expense forecast on user estimates supported by either a State statute or local ordinance requiring mandatory hookup or signed and enforceable user agreements. If the primary use of the essential community facility is by a business and the success or failure of the facility is dependent on that business, then the economic viability of that business must also be assessed. For projects that include the purchase and installation of RES that meet the eligibility requirements of § 5001.103(a)(8), a technical report on the RES as outlined in § 5001.307(e)(1) and (2), as applicable, will be included with the applicable financial feasibility report. The type of financial feasibility report required will depend upon the size of the guaranteed loan, the collateral securing the guaranteed loan, and the financial history of the borrower. The two types of financ… | ||||
| 7:7:15.1.20.2.1.4.90.5 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.305 Specific application requirements for WWD projects. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79720, Sept. 30, 2024] | In addition to the requirements specified in § 5001.303, a lender seeking a loan guarantee for a WWD project must submit the documents specified in paragraphs (a) through (c) of this section. (a) Engineering documentation. (1) Engineering documentation must meet the level of detail the lender would typically require for a standard commercial loan, and include, at a minimum, a description of the proposed project, a cost estimate, the number of residential and non-residential connections, and the population served. The lender may request assistance to clarify the Agency's requirements and regulations; however, the Agency does not provide technical oversight or recommendations as to the technical feasibility of the project. (2) The lender must ensure that the project is designed utilizing accepted architectural and engineering practices and conforms to applicable Federal requirements ( e.g., the seismic requirements of Executive Order 12699 (55 FR 835, 3 CFR, 1990 Comp., p. 269), the debarment requirements of 2 CFR part 180 as supplemented by 2 CFR part 417, American Iron and Steel (Section 746 of Title VII of the Consolidated Appropriations Act of 2017), and the Copeland Anti-Kickback Act (18 U.S.C. 874)); State, local and Tribal codes and requirements; and facility plans or plans and specifications reviewed and approved by the applicable State, local and/or Tribal regulatory agency. The lender must also ensure that the planned project will be completed within the available funds and once completed, will be suitable for the borrower's needs. Upon completion of the project, the lender must certify that all applicable Federal requirements were met. (b) Feasibility considerations. All projects financed under this part must be based on projected taxes, assessments, revenues, fees, or other sources of revenues in an amount sufficient to provide for project operation and maintenance, any reserves required by the lender, and debt payment. The lender's financial credit analysis must take into consideration any inte… | ||||
| 7:7:15.1.20.2.1.4.90.6 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.306 Specific application requirements for B&I projects. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79721, Sept. 30, 2024] | In addition to the requirements specified in § 5001.303, as applicable, a lender requesting a B&I loan guarantee must submit the information specified in paragraph (a) of this section if the guaranteed loan amount is more than $600,000, or in (b) of this section if the guaranteed loan amount is $600,000 or less. (a) Applications requesting a guaranteed loan in an amount greater than $600,000. (1) The Agency is required to submit project information to the United States Department of Labor for their concurrence if the proposed guaranteed loan is in excess of $1,000,000.00 and will increase direct employment by more than 50 employees. The lender must provide sufficient project and demographic information to the Agency for completion of a Department of Labor review. (2) A pro forma balance sheet projected for loan closing. (3) The Agency may require a feasibility study when the lender's analysis, borrower's business plan, or project information is not sufficient to determine the technical feasibility, market feasibility, or economic viability of the project. (i) For guaranteed loans greater than $1,000,000.00 to a new business, a feasibility study prepared by an independent qualified consultant acceptable to the Agency is required. The scope of the feasibility study will be determined by the Agency and is dependent on the complexity of the project and the borrower. (ii) For loans of $1,000,000.00 or less to new and existing businesses, the Agency may require a feasibility study when the lender's analysis or other borrower information is not sufficient to determine the technical feasibility or economic viability of the project, or if the project will significantly affect the operations of a borrower who is an existing business and its historic cash flow. (iii) A technical report is required for RES identified in § 5001.307(e) and for projects utilizing other integrated processing equipment and systems. The contents of the technical report must be consistent with the requirements of § 5001.307(e)(1) and must p… | ||||
| 7:7:15.1.20.2.1.4.90.7 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.307 Specific application requirements for REAP projects. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79721, Sept. 30, 2024] | In addition to the requirements specified in § 5001.303, a lender seeking a loan guarantee for a REAP project must submit the information identified below based on total project costs. (a) Borrower eligibility information. (1) Eligible borrowers must meet the definition of agricultural producer or rural small business as defined in § 5001.3. Agricultural producers seeking funding for a RES or EEI project may apply as either a rural small business or as an agricultural producer, provided they meet the applicable eligibility requirements. Agricultural producers seeking funding for an EEE project must be eligible and apply as an agricultural producer. (2) The borrower must provide the primary NAICS code applicable to the borrower's business concern and certify on the Agency approved application form or system that it meets the definition of agricultural producer or rural small business. The Agency reserves the right to request supporting documentation to verify borrower eligibility. (b) Borrower description. Describe the ownership of the borrower, including the information specified in paragraphs (b)(1) through (3) of this section, as applicable. Include a description of the borrower's existing farm, ranch, or business operation, including how long the borrower has been in operation. Rural small businesses and agriculture operations owned by Tribes should provide documentation to adequately show the separation of the applicant and the Tribal government. (1) Describe how the borrower meets the ownership and control requirements as identified in § 5001.126(e)(2). (2) For each entity(ies) the borrower controls or entity(ies) it is controlled by, provide a list of the individual owners with their contact information. Describe the relationship between the borrower and the other entity(ies), including percentage of ownership and control, management, passive investor ownership, and any products exchanged. Organizational charts to demonstrate the structure of the borrower should be submitted when available. (3) Id… | ||||
| 7:7:15.1.20.2.1.4.90.8 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | §§ 5001.308-5001.314 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.4.90.9 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | D | Subpart D—Guarantee Application Provisions | § 5001.315 Application evaluation and award provisions. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79721, Sept. 30, 2024] | (a) General. The Agency will evaluate all applications according to the provisions of this part and may require the lender to obtain additional assistance in those areas where the lender does not have the necessary expertise to originate or service the guaranteed loan. For the purposes of this paragraph (a), “those areas” mean: (1) The type and complexity of the financing ( e.g., asset-based financing, cash flow financing, and bond financing); and (2) Loans to borrowers engaged in industries where the lender has little or no origination and/or servicing experience. (b) Evaluation and eligibility determinations. The Agency will review each complete application to make a formal determination as to: the eligibility of the borrower, lender, project, and guaranteed loan purpose and proposed use of funds; if there is a reasonable assurance of repayment ability; if sufficient collateral and equity exists; if the proposed guaranteed loan complies with all applicable statutes and regulations; and if the environmental review is complete. The Agency will only guarantee loans that are sound and that have a reasonable assurance of repayment. (1) If the Agency's evaluation and determination in accordance with this paragraph (b) is favorable, the Agency will proceed in accordance with paragraph (c) of this section. (2) If the Agency's evaluation and determination in accordance with this paragraph (b) is unfavorable, the Agency will notify the lender, in writing, as applicable, identifying the reason(s) for determining ineligibility and any applicable appeal or review rights. No further processing of the application will occur. (c) Priority score. The Agency will score each eligible application based on the point system for the respective program identified in §§ 5001.316 through 5001.319. (1) Lenders must provide necessary information related to determining the priority score, if requested by the Agency. To the extent possible, lenders should consider the established priorities of the Agency when submitting projec… | ||||
| 7:7:15.1.20.2.1.5.90.1 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.401 Interest rate provisions. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70357, Dec. 10, 2021; 89 FR 79725, Sept. 30, 2024] | Interest rates, interest rate caps, and incremental interest rate adjustment limitations on a guaranteed loan are negotiated between the lender and the borrower. The interest rate for a guaranteed loan can be either fixed or variable, or a combination thereof, as long as it is a legal rate. Interest rates cannot be more than those rates the lender customarily charges its borrowers for non-guaranteed loans in similar circumstances in the ordinary course of business. The Agency encourages each lender to use the secondary market and pass interest-rate savings on to the borrower. If an interest rate swap is utilized, the guarantee will only cover principal and interest. The lender must provide the Agency with the overall effective interest rate charged to the borrower in the swap transaction. The Agency guarantee does not cover any fees related to the swap. (a) Different rates on guaranteed and unguaranteed portion of the guaranteed loan. It is permissible to have different interest rates on the guaranteed and unguaranteed portions of the loan. (b) Variable interest rates. A variable interest rate must be an interest rate that is tied to a published base rate, as published in a national or regional financial publication, and is agreed to by the Agency. (1) The variable interest base rate must be specified in the promissory note along with any interest factors ( e.g., National Prime plus 1.0 percent). (2) The lender may adjust the variable interest rate at different intervals during the term of the loan, but not more often than quarterly. (3) The lender must incorporate, within the variable rate promissory note, a provision for adjustment of payment installments to fully amortize the loan by its maturity date. (c) Multi-rates. When multi-rates are used, the lender must provide the Agency with the overall effective interest rate for the entire loan. (d) Interest rate changes. Any change in the base rate or fixed interest rate between issuance of the conditional commitment and loan closing must be appr… | ||||
| 7:7:15.1.20.2.1.5.90.2 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.402 Term length, loan schedule, and repayment. | RBS | [86 FR 42518, July 14, 2020, as amended at 86 FR 70357, Dec. 10, 2021; 89 FR 79725, Sept. 30, 2024] | (a) Term length. The lender, with Agency concurrence, will establish and justify the guaranteed loan term based on the use of guaranteed loan funds, the useful economic life of the assets being financed and those used as collateral, and the borrower's repayment ability. The maximum term allowable for final guaranteed loan maturity is limited to the justified useful life of the project or assets used as collateral but may not exceed 40 years or limitations in the applicable State statute, whichever is less. (b) Guaranteed loan schedule and repayment. The lender must structure repayment in consideration of the borrower's cash flow and in accordance with the provisions of this section and the loan agreement. Scheduled guaranteed loan payments shall be made no less frequently than annually. In addition: (1) Both the guaranteed and unguaranteed portions of the loan must be amortized over the same term. (2) Guaranteed loans must require a periodic payment schedule that will retire the debt over the term of the loan without a balloon payment. Balloon maturities are not allowed, unless required as a loan servicing action. Payments must be amortized to maximize successful loan repayment and may vary by type of business or cash flow. (3) If the promissory note provides for an interest-only period, interest must be paid at least annually starting on a date that is no more than one year from the date of the promissory note. Scheduling of the first payment of principal and interest will be subject to consideration of whether the facility is operational and generates adequate income. However, the scheduling of the first full principal and interest payment must commence not more than 3 years from the date of the promissory note and be paid at least annually thereafter. (4) There must be no “due-on-demand” clauses without cause. Regardless of any “due-on-demand” with cause provision in a lender's promissory note, the Agency must concur in any acceleration of the guaranteed loan unless the basis for acceleration is monet… | ||||
| 7:7:15.1.20.2.1.5.90.3 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.403 Lender fees. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79725, Sept. 30, 2024] | (a) The lender may charge the borrower reasonable, routine, and customary charges and fees for the guaranteed loan provided they are similar to those charges the lender assesses other borrowers for the same type of loan not subject to a loan guarantee. The lender must document such fees in the application. The lender may also charge routine and customary prepayment penalties and late payment fees for the guaranteed loan, which must be stated in the guaranteed loan documents. (b) Default charges, penalty interest, late payment fees, and additional interest expenses are not covered by the loan note guarantee and cannot be added to the principal or interest due under any loan note guarantee in the event of a loss claim as prescribed in § 5001.521 or a repurchase as prescribed in § 5001.511. | ||||
| 7:7:15.1.20.2.1.5.90.4 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | §§ 5001.404-5001.405 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.5.90.5 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.406 Guaranteed loan amounts. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79726, Sept. 30, 2024] | Applicable guaranteed loan amounts depend on the type of project and the source of its funding. (a) CF projects. The maximum amount of a CF guaranteed loan that may be made to a borrower, including the guaranteed and unguaranteed portions of any CF guaranteed loans, the outstanding principal and interest balance of any existing CF guaranteed loans, and any new CF guaranteed loan that is the subject of an application must not exceed $100 million. (b) WWD projects. The maximum amount of a WWD guaranteed loan that may be made to a borrower, including the guaranteed and unguaranteed portions of any WWD guaranteed loans, the outstanding principal and interest balance of any existing WWD guaranteed loans, and any new WWD guaranteed loan that is the subject of an application must not exceed $50 million. (c) B&I projects. The maximum total amount of B&I guaranteed loans (including the guaranteed and unguaranteed portions of any B&I guaranteed loans, the outstanding principal and interest balance of any existing B&I guaranteed loans, and any new B&I guaranteed loan that is the subject of an application) that may be made to a borrower is limited to a maximum amount of $25 million. The Secretary, whose authority may not be redelegated, may approve, at the Secretary's discretion, guaranteed loans in excess of $25 million and up to $40 million for rural cooperatives that process value-added agricultural commodities in accordance with § 5001.105(b)(18)(i). In addition to the borrower loan limit, there is a guarantor loan limit of $100 million. (d) REAP projects. The amount of a guaranteed loan that will be made available to an eligible project and borrower under this part will be at least $5,000, not to exceed 75 percent of eligible project costs. Borrowers must demonstrate evidence of a financial contribution in the project of not less than 25 percent of total eligible project costs. (1) The maximum total amount of REAP guaranteed loans made to a borrower, including the guaranteed and unguaranteed portions of all… | ||||
| 7:7:15.1.20.2.1.5.90.6 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.407 Percentage of loan guarantee. | RBS | The percent of loan guaranteed may vary from program to program. The maximum guarantee is 90 percent of eligible guaranteed loan loss The Agency will set annually a guarantee percentage by program that will apply to loans guaranteed within each program. The annual guarantee percentage will take current Federal credit policy into consideration and may be set at or below the maximum allowed authorized by statute. The Agency will announce annual guarantee percentages each fiscal year by publishing a document in the Federal Register in accordance with § 5001.10. | |||||
| 7:7:15.1.20.2.1.5.90.7 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.408 Participation or assignment of guaranteed loan. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 86 FR 70358, Dec. 10, 2021; 89 FR 79726, Sept. 30, 2024] | (a) General. The lender may obtain participation in the loan or assign all or part of the guaranteed portion of the guaranteed loan on the secondary market subject to the conditions specified in paragraphs (a)(1) through (5) of this section or retain the entire guaranteed loan. (1) Participation. The lender may obtain participation in the loan under its normal operating procedures; however, the lender must retain title to and possession of the promissory note(s) and retain the lender's interest in the collateral. (2) Assignment. Any assignment by the lender of the guaranteed portion of the loan must be accomplished in accordance with the conditions in the lender's agreement and the provisions of this section. The holders and the borrower have no rights or obligations to one another. The holders and the borrower have no rights or obligations to one another. (3) Minimum retention by the lender. Minimum retention at all times must be from the unguaranteed portion of the loan and cannot be participated to another person. (i) The lender must hold a minimum of 7.5 percent of the total loan amount. (ii) The lender must retain its security interest in the collateral and retain the servicing responsibilities for the guaranteed loan. (iii) The Agency can approve a reduction of the minimum retention requirement below the applicable percentage on a case-by-case basis when the lender establishes to the Agency's satisfaction that reduction of the minimum retention percentage is necessary to meet compliance with the lender's regulatory authority. (4) Prohibition. The lender must not assign or participate any amount of the guaranteed or non-guaranteed portion of the loan to the borrower, borrower's officers, directors, stockholders, other owners, or to members of their immediate families, or to a parent company, an affiliate, or a subsidiary of the borrower. (5) Secondary market. The lender must properly close their loan and fully disburse loan funds of a promissory note for the purposes intended prior to ass… | ||||
| 7:7:15.1.20.2.1.5.90.8 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | §§ 5001.409-5001.449 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.5.91.10 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.451 Conditional commitment. | RBS | [85 FR 42518, July 14,2020, as amended at 86 FR 70358, Dec. 10, 2021; 87 FR 7368, Feb. 9, 2022] | (a) Issuance. Upon selection of an application in accordance with § 5001.315 in subpart D, the Agency will issue a conditional commitment to the lender, to be accepted by the lender and the borrower, containing conditions under which the Agency will issue a loan note guarantee. (1) Upon acceptance of the conditional commitment, the lender agrees not to modify the scope of the project, overall facility concept, project purpose, use of guaranteed loan funds, or other terms and conditions without Agency written concurrence in accordance with paragraph (c) of this section. (2) If the lender decides at any time after receiving a conditional commitment that it no longer wants a loan guarantee, the lender must immediately advise the Agency of the cancellation in writing. Upon written notification from the lender, the Agency will de-obligate the funds associated with the conditional commitment. (b) Content. The conditional commitment will address information required for issuing a loan note guarantee, including but not limited to: (1) Approved use of guaranteed loan funds (source and use of funds); (2) Rates and terms of the loan; (3) Loan agreement requirements to include: (i) Repayment terms and amortization provisions of the guaranteed loan; (ii) Description of real property collateral, list of other collateral and identification of the lender's lien priority in the collateral; (iii) A list of persons and entities guaranteeing payment of the guaranteed loan and their percentage of guarantee; (iv) Requirement as to the type and frequency of the financial statements to be required for the duration of the guaranteed loan (guarantor statements must be updated at least annually); (v) Prohibition against borrower assuming liabilities or obligations of others; (vi) Limitations on borrower dividend payments and compensation of officers, owners and members of borrower; (vii) Limitations on the purchase and sale of equipment other fixed assets and real estate; (viii) Restrictions on mergers, consolidations, or… | ||||
| 7:7:15.1.20.2.1.5.91.11 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.452 Loan closing and conditions precedent to issuance of loan note guarantee. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62198, Oct. 2, 2020; 86 FR 70358, Dec. 10, 2021; 89 FR 79726, Sept. 30, 2024] | (a) The lender must not close the guaranteed loan until all conditions of the conditional commitment are met. If, at a later date, it is discovered that all conditions were not met, the lender will be advised in writing that full enforceability of the guarantee by the lender may be compromised if the deficiencies are not corrected. (b) Simultaneously with or immediately after the guaranteed loan closing, the lender must provide to the Agency the guarantee fee, and the following forms and documents: (1) An Agency-approved, “Guaranteed Loan Closing Report”; (2) A copy of each executed promissory note and collateral security documents; (3) A copy of the executed final loan agreement, which must include any additional requirements imposed by the Agency in the conditional commitment; (4) The original, executed Agency-approved guarantee form(s) for any required personal, partnership or corporate guarantees; (5) The borrower's loan closing balance sheet, if required; (6) For loans to public bodies, an opinion from recognized bond counsel regarding the adequacy of the preparation, issuance, and enforceability of the debt instruments; (7) Any other documents required to comply with applicable law or required by this part, the conditional commitment or the Agency; and (8) When requesting issuance of a loan note guarantee, the lender must certify to each condition identified in paragraphs (b)(8)(iii)(A) through (V) of this section, as applicable. (i) In making its certification, the lender can rely on certain written materials ( e.g., certifications, evaluations, appraisals, financial statements, and other reports) provided by the borrower or other qualified third parties ( e.g., independent engineers, appraisers, accountants, attorneys, consultants, or other experts). (ii) If the lender is unable to provide any of the certifications required under this section, the lender must provide an explanation satisfactory to the Agency. (iii) The lender may request the loan note guarantee prior to construction in accor… | ||||
| 7:7:15.1.20.2.1.5.91.12 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.453 Issuance of the loan note guarantee. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62198, Oct. 2, 2020] | The Agency, at its sole discretion, will determine if the conditions specified in the conditional commitment have been met and whether to issue the loan note guarantee. (a) Issuance. When the Agency is satisfied that all of the conditions specified in the conditional commitment have been met and it receives all the required fees plus the executed lender's agreement from the lender, the Agency will issue the documents identified in paragraphs (a)(1) through (3) of this section, as appropriate. (1) Loan note guarantee. The Agency will provide the lender the original loan note guarantee document which the lender must attach to the promissory note. If the lender elected to use the multi-note system, the Agency will issue one loan note guarantee for the set of promissory notes. (2) Assignment guarantee agreement. If the lender assigns any guaranteed portion of a guaranteed loan to a holder, the lender, holder, and the Agency will execute an assignment guarantee agreement for each assignment. (3) Certificate of incumbency and signature. The Agency will provide the holder an executed certificate of incumbency form to verify the signature and title of the Agency official who signed the assignment guarantee agreement. (b) Agency review of closing. The Agency will review the closing documents submitted by the lender for completeness and if all conditions have been met and all documents have been provided, the Agency will issue the loan note guarantee. If the Agency determines that it cannot issue the loan note guarantee, the Agency will notify the lender, in writing, of the reasons and give the lender a reasonable period within which to satisfy the objections. If the lender satisfies the objections within the time allowed, the Agency will issue the loan note guarantee. (c) Cancellation of obligation. A lender can submit a written request to the Agency for a partial cancellation. The lender must include in this request the reason for the partial cancellation, the effective date, and the portion to be cance… | ||||
| 7:7:15.1.20.2.1.5.91.13 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.454 Guarantee fee. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70358, Dec. 10, 2021; 89 FR 79726, Sept. 30, 2024] | The guarantee fee is a one-time, non-refundable fee paid by the lender to the Agency at or before loan closing and is required to be paid before the Agency will issue the loan note guarantee. The guarantee fee rate applied will be the rate as established in the Federal Register for the fiscal year in which a guaranteed loan is obligated. The lender may pass the guarantee fee on to the borrower. (a) Guarantee fee calculation. The one-time guarantee fee is calculated by multiplying the total loan amount by the percentage of guarantee by the guarantee fee rate, which may vary by program. (b) Guarantee fee rates. The guarantee fee rate is established by the Agency in an annual document published in the Federal Register. While the fee rate may vary annually, they will not exceed the limits in table 1. Once the guarantee is obligated, the guarantee fee rate in effect at the time of obligation will remain in place even if the guarantee fee rate changes before the loan note guarantee is issued. Table 1 to § 5001.454( b )—Guarantee Fee (c) Loan note guarantee prior to completion. If the loan note guarantee is issued prior to completion of the project's construction under § 5001.205(e)(2), an additional guarantee fee of 0.50 percent will be added. (d) Reduced fee. Subject to annual limits set by the Agency and published in an annual Federal Register document, the Agency may charge a reduced guarantee fee if requested by the lender when the borrower's project meets any one of the following criteria: (1) Is located in a rural community that— (i) Is a distressed community in accordance with the Economic Innovation Group distressed community index. The list can be found on the Agency's website at: https://www.rd.usda.gov/onerdguarantee; (ii) Is experiencing long-term population decline according to the last three decennial censuses; (iii) Is in a persistent poverty county. A persistent poverty county is any county that has had 20 percent or more of its population living in poverty over the past 30 years… | ||||
| 7:7:15.1.20.2.1.5.91.14 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.455 Periodic guarantee retention fee. | RBS | The Agency will collect a periodic guarantee retention fee from the lender for as long as the loan note guarantee is outstanding in accordance with the annual notice published in the Federal Register in accordance with § 5001.10. Payment of the periodic guarantee retention fee is required to maintain the validity of the loan note guarantee. The lender may pass the fee on to the borrower but may not delay payment of the fee to the Agency while collecting the payment from the borrower. The fee rates may differ by program as published annually in a document in the Federal Register in accordance with § 5001.10. The annual Federal Register notification will include the frequency of payment for the fees. (a) Calculation. The guarantee retention fee is calculated by multiplying the full outstanding principal guaranteed loan balance as of a date(s) as published in the annual Federal Register notification, by the percentage of guarantee, by the fee rate as noted in the guaranteed loan conditional commitment. (b) Effective fee rate. The effective guarantee retention fee rate that is published in a Federal Register document in accordance with § 5001.10 at the time the guaranteed loan is obligated will be noted in the guarantee loan conditional commitment and the fee will remain in effect for the life of the loan note guarantee. (c) Payments. The guarantee retention fee payment frequency and related due date provisions will be published in the annual Federal Register notification. (1) Guarantee retention fee payments not received within 60 days after their due date are considered delinquent and, at the Agency's discretion, may result in cancellation of the loan note guarantee to the lender. The Agency will provide the lender 30 calendar days' written notice that the fee is delinquent before canceling the loan note guarantee. Holders' rights will continue in effect as specified in the loan note guarantee and assignment guarantee agreement, unless the holder took possession of an interest in the loan note… | |||||
| 7:7:15.1.20.2.1.5.91.15 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.456 Other fees. | RBS | The Agency has the authority and may at its discretion charge additional fees in order to maintain adequate levels of program funding. Prior to the Agency charging any additional fees, the Agency will publish a notice of those fees in the Federal Register in accordance with § 5001.10. All fees will be disclosed in the conditional commitment specific to the project as issued to the lender at the time approval. (a) Until the loan note guarantee is canceled by the Agency, any delinquent fees will bear interest at the promissory note rate. (b) Lenders are prohibited from selling any portion of the guaranteed loan on the secondary market if there are unpaid fees. | |||||
| 7:7:15.1.20.2.1.5.91.16 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.457 Changes prior to loan closing. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79727, Sept. 30, 2024] | (a) Change in borrower prior to closing. Any change in borrower ownership or organization prior to the issuance of the loan note guarantee must meet the applicable guaranteed program's eligibility requirements and must be approved by the Agency. (b) Transfer to new lender prior to issuance of the loan note guarantee. Prior to issuance of the loan note guarantee, a lender can request a transfer of an outstanding conditional commitment to a new lender by providing the Agency with a letter from the lender, the borrower, and the proposed new lender. The request must include the reason(s) the current lender no longer desires to be the lender for the project. (1) The Agency may approve the transfer from the current lender to the proposed new lender provided the new proposed lender is an eligible lender (see paragraph (b)(2) of this section) and no material adverse changes have occurred in the: (i) Ownership, control or legal structure of the borrower; and (ii) Borrower's written plan, scope of work, or the purpose or intent of the project. (2) The Agency will determine if the proposed new lender is eligible in accordance with § 5001.130 of this part prior to approving the transfer of lender. The new lender must execute a new application form and a lender's agreement (unless the new lender already has a valid lender's agreement with the Agency) and must complete a new credit evaluation in accordance with § 5001.202 of this part. The Agency may require the new lender to provide other updated application items as specified by the Agency. (3) If the Agency approves the transfer to the new lender, the Agency will issue a letter of amendment to the original conditional commitment reflecting the new lender who must acknowledge acceptance of the amended conditional commitment in writing. | ||||
| 7:7:15.1.20.2.1.5.91.17 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.458 Other Federal, State, and local requirements. | RBS | Beginning on the date of issuance of the loan note guarantee, lenders and borrowers must— (a) Coordinate with all appropriate Federal, State, local and Tribal agencies that may have jurisdiction or involvement in each project; and (b) Comply with all current Federal, State, local, and Tribal laws and rules, as well as applicable regulatory commission rules, that affect the project, the borrower, or lender. Compliance activities include, but are not limited to— (1) Organization and borrower's authority to design, construct, develop, operate, and maintain the proposed facilities; (2) Borrowing money, giving security, and raising revenues for repayment; (3) Land use zoning; (4) Health, safety, and sanitation standards as well as design and installation standards; and (5) Protection of the environment and consumer affairs. | |||||
| 7:7:15.1.20.2.1.5.91.18 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.459 Replacement of loan note guarantee and assignment guarantee agreement. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62198, Oct. 2, 2020; 89 FR 79727, Sept. 30, 2024] | If a loan note guarantee or assignment guarantee agreement has been lost, stolen, destroyed, mutilated, or defaced while in the custody of the lender or holder, the Agency may issue a replacement to the lender or holder, as applicable under the conditions described in paragraphs (a) through (b) of this section. The lender is prohibited from altering or modifying or approving any alterations to or modifications of any loan documents without the prior written approval of the Agency. (a) Replacement requirements. The lender must coordinate the activities of the party who seeks the replacement documents and must submit the required documents to the Agency for processing. The requirements for replacement are as follows: (1) A written statement of loss which includes: (i) Legal name and present address of either the lender or the holder who is requesting the replacement forms; (ii) Legal name and address of the lender of record; (iii) Capacity of person certifying; (iv) Full identification of the loan note guarantee or assignment guarantee agreement including the name of the borrower, the Agency's case number, date of the loan note guarantee or assignment guarantee agreement, face amount of the promissory note in which an interest was purchased, date of the promissory note, present balance of the guaranteed loan, percentage of guarantee, and, if an assignment guarantee agreement, the original named holder and the percentage of the guaranteed portion of the guaranteed loan assigned to that holder. Any existing parts of the document to be replaced must be attached to the certificate; (v) A full statement of circumstances of the loss, theft, destruction, defacement, or mutilation of the loan note guarantee or assignment guarantee agreement; and (vi) For the holder, evidence demonstrating current ownership of the assignment guarantee agreement. If the present holder is not the same as the original holder, the lender must include a copy of the endorsement of each successive holder in the chain of transfer from the… | ||||
| 7:7:15.1.20.2.1.5.91.19 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | §§ 5001.460-5001.500 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.5.91.9 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | E | Subpart E—Loan and Guarantee Provisions | § 5001.450 General. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62197, Oct. 2, 2020; 89 FR 79726, Sept. 30, 2024] | (a) Full faith and credit. A loan note guarantee issued under this part constitutes an obligation supported by the full faith and credit of the United States and is incontestable except for fraud or misrepresentation of which a lender or holder has actual knowledge at the time it becomes such lender or holder, or which a lender or holder participates in or condones. (b) Conditions of guarantee. A guaranteed loan under this part will be evidenced by a loan note guarantee issued by the Agency. (1) The entire loan must be secured by the same collateral with equal lien priority for the guaranteed and unguaranteed portions of the loan. The unguaranteed portion of the guaranteed loan will neither be paid first nor given any preference or priority over the guaranteed portion. A parity or junior lien position in the guaranteed loan collateral may be considered on a case-by-case basis and must be approved by the Agency during the loan approval process. Requirements for guaranteed loans to purchase cooperative stock are found in § 5001.140. (2) The lender must remain mortgagee and secured party of record notwithstanding the fact that another party may hold a portion of the guaranteed loan. (3) The lender will receive all payments of principal and interest on account of the entire guaranteed loan and must promptly remit to each holder and participant, if any, its pro rata share of any payment within 30 days of the lender's receipt thereof from the borrower. Holder or participant payments are determined according to their respective interest in the guaranteed loan, less only the lender's servicing fee. (4) Any claim against a loan note guarantee or assignment guarantee agreement that is attached to, or relating to, a promissory note that provides for payment of interest-on-interest, default charges, penalty interest, or late payment fees will be reduced to remove such interest, fees and charges. (5) The loan note guarantee is unenforceable by the lender to the extent that any loss is occasioned by: (i) The violati… | ||||
| 7:7:15.1.20.2.1.6.92.1 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.501 General. | RBS | The lender is responsible for servicing the entire loan and taking all servicing actions that a reasonably prudent lender would perform in servicing its own portfolio of loans that are not guaranteed. The lender must certify that it will service the guaranteed loan in accordance with this part, its loan servicing policies and procedures, and the lender's agreement. Where a lender's loan servicing policies and procedures address a corresponding requirement in this part or in the lender's agreement, the lender must comply the corresponding requirement in this part, unless otherwise approved by the Agency. (a) A lender's servicing responsibilities include, but are not limited to, (1) Periodic borrower visits; (2) Distribution of guaranteed loan funds; (3) Collecting payments on guaranteed loans; (4) Ensuring compliance with the covenants and provisions in the loan agreement, security instruments, and other supplemental agreements relating to the guaranteed loan; (5) Obtaining and analyzing financial statements; (6) Ensuring payment of taxes and insurance premiums; (7) Maintaining liens and lien priority on collateral; (8) Keeping an inventory of all collateral items, and reconciling the inventory of all collateral sold during guaranteed loan servicing, including liquidation; (9) Obtaining Agency approvals or concurrence as required; and (10) Cooperating fully with all oversight and monitoring efforts of the Agency or its representatives as specified in § 5001.502. (b) The lender must remain mortgagee and secured party of record, notwithstanding the fact that another party may hold a portion of the loan. (c) The lender must ensure that the borrower has obtained and will maintain all necessary insurance coverage appropriate to the proposed project. (d) If the Agency determines that the lender is not in compliance with its servicing responsibilities, the Agency reserves the right to take any action the Agency determines necessary to protect the Agency's interests with respect to the guaranteed loan. If th… | |||||
| 7:7:15.1.20.2.1.6.92.10 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.510 Subordination of lien position. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79727, Sept. 30, 2024] | (a) Request for subordination. A lender seeking a subordination of its lien position in collateral must submit a written request to the Agency. The lender must include in the request a financial analysis of the servicing action. The financial analysis must be fully supported by current financial statements, less than 90 calendar days old, of the borrower and guarantors. The lender must receive written Agency approval prior to the subordination. (b) Agency approval. Agency approval of the subordination request requires that: (1) The subordination of the lender's lien position enhances the borrower's business and is in the best financial interest of the Agency; (2) The lien to which the guaranteed loan is subordinated is for a fixed dollar amount or fixed credit limit and for a fixed term, after which the guaranteed loan lien priority will be restored; (3) Remaining collateral is sufficient to provide for adequate collateral coverage of the guaranteed loan after taking into account the lender's discount of collateral consistent with the lender's sound loan-to-discounted value practices and satisfactory justification of the discount used. The Agency may require a current independent appraisal in accordance with § 5001.203. However, if the original appraisal is more than one year old, but less than two years old, the lender may provide an appraisal with a new effective date of evaluation in lieu of a completely new appraisal; (4) Lien priorities remain for the portion of the loan collateral that was not subordinated; (5) The subordination of collateral to a line of credit does not extend beyond the term of the line of credit and in no event exceeds more than three years. (6) Subordination to a tax-exempt obligation is strictly prohibited in compliance with OMB Circular A-129, “Policies for Federal Credit Programs and Non-Tax Receivables.” | ||||
| 7:7:15.1.20.2.1.6.92.11 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.511 Repurchases from holders. | RBS | [85 FR 62198, Oct. 2, 2020, as amended at 89 FR 79728, Sept. 30, 2024] | (a) General. A holder can make written demand on either the lender or the Agency to repurchase the unpaid guarantee portion of the loan when the borrower is in monetary default or when the lender has failed to pay the holder its pro-rata share of any payment made by the borrower within 30 days of the lender's receipt thereof from the borrower. When making written demand on the lender, the holder must concurrently send a copy of the demand letter to the Agency. (1) The lender is encouraged to repurchase the guarantee, upon written demand of a holder, to facilitate the accounting of funds, resolve any loan problem, and resolve the monetary default, where and when reasonable. The benefit to the lender is that it may re-assign the guaranteed portion of the loan and then continue collection of its servicing fee, if any, when the monetary default is cured. (2) When a lender receives a written demand for repurchase from a holder, the lender must notify any other holder and the Agency within 30 calendar days of receipt of the written demand. The lender must inform all parties if the lender will repurchase the unpaid guaranteed portion of the loan from the requesting holder. (3) Upon repurchase the holder will re-assign the assignment guarantee agreement to the lender without recourse. (b) Repurchase by lender for loan servicing purposes. If the lender, borrower, and holder are unable to agree to restructuring of loan repayment, interest rate, or loan terms to resolve any loan problem or resolve any default and repurchase of the guaranteed portion of the loan is necessary to adequately service the loan, the holder must reassign the guaranteed portion of the loan to the lender. The reassignment must be for an amount not less than the holder's unpaid principal and accrued interest, in accordance with § 5001.450(c) of this part, on such portion less the lender's servicing fee. (1) Upon repurchase the holder will re-assign the assignment guarantee agreement to the lender without recourse. (2) The lender must not rep… | ||||
| 7:7:15.1.20.2.1.6.92.12 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.512 Additional expenditures and loans. | RBS | The lender shall not make additional expenditures on behalf of, or provide new loans to, the borrower without notification to the Agency even though such expenditures or loans will not be guaranteed. The lender shall not approve additional expenditures or new loans where the expenditure or loan will violate, or cause a violation of, any of the loan covenants in the borrower's loan agreement. | |||||
| 7:7:15.1.20.2.1.6.92.13 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.513 Interest rate changes. | RBS | [85 FR 42518, July 14, 2020, as amended at 86 FR 70358, Dec. 10, 2021] | (a) Interest rate freezes. The guaranteed loan interest rate will freeze at the earliest uncured default date and will remain unchanged until the cancellation of the loan note guarantee in compliance with § 5001.524. (b) Reductions. The borrower, lender, and holder (if any) may collectively initiate a permanent or temporary reduction in the interest rate of the guaranteed loan at any time during the life of the loan upon written agreement among these parties. After a permanent reduction, the loan note guarantee will only cover losses of interest at the reduced interest rate. (1) When the Agency is a holder, the lender must obtain Agency approval before implementing the reduction. The lender must provide a copy of the modification agreement to the Agency for approval. The Agency will approve the reduction only when it is demonstrated that the change is more viable than liquidation and that the government's financial interests are not adversely affected. (2) Factors that the Agency will consider in determining whether to approve the change are the Government's cost of borrowing money; the monetary recovery is greater than the liquidation recovery; and the project's continued viability as demonstrated by a financial feasibility analysis. (c) Increases. Unless a temporary interest rate reduction occurred, increases in fixed interest rates and increases in variable interest rate structure are prohibited. (d) Fixed rate to variable rate change. Fixed rates can be changed to variable rates to reduce the borrower's interest rate only when the variable rate has a ceiling that is less than or equal to the original fixed rate. (e) Variable rate to fixed rate change. Variable rates can be changed to a fixed rate at the request of the borrower, agreement of the holder, if any, and Agency concurrence. (f) After adjustments. The interest rates, after adjustments, must comply with the requirements for interest rates on new loans as established by paragraph § 5001.401. (g) Documentation. The lender is respon… | ||||
| 7:7:15.1.20.2.1.6.92.14 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.514 Lender failure. | RBS | (a) General. In the event a lender fails or ceases to service a guaranteed loan, the Agency will make the successor lending entity aware of the statutory and regulatory requirements and will provide instruction to the successor lending entity on a case-by-case basis. Such instructions may include the Agency's determination that the Agency will service the entire loan or the guaranteed portion of the loan. (1) Any successor lender must take such action that a reasonable lender would take if it did not have a loan note guarantee to protect the lender and Agency's mutual interest. (2) A successor entity approved by the Agency as a lender will be afforded the benefits of the loan note guarantee in the sharing of any loss and eligible expenses subject to the limits that are set forth in the regulations governing the loan guarantee. (b) Non-regulated lender. If the successor lending entity is a non-regulated lender, the lending entity is prohibited from making changes to the lender's agreement and related documents on the guaranteed loan. The successor lending entity must comply with the provisions of this part, including promptly applying to become a lender if not already an eligible lender. If the successor lending entity is not or fails to become a lender as set forth in § 5001.130 of this part within 60 calendar days, the loan note guarantee will not be enforceable. (c) Regulated lender. Where the failed lending entity is an FDIC regulated lender, the FDIC and the Agency will enter into an Inter-Agency Agreement regarding the FDIC's role as the successor lending entity, and all parties are to abide by this agreement or successor document(s). This agreement sets forth the duties and responsibilities of each Agency when a lender fails. When the FDIC is not the successor to a failed regulated lender, the regulatory agency serving as the successor lending entity and the Agency will abide by terms of the lender's agreement as executed by the originating lender. The Agency reserves the right to request a meetin… | |||||
| 7:7:15.1.20.2.1.6.92.15 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.515 Default by borrower. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62199, Oct. 2, 2020] | When there is a default by a borrower, the lender must act prudently and expeditiously in working with the borrower to bring the account current or cure the default through restructuring if a realistic plan can be developed, or to accelerate the account and conduct a liquidation in accordance with § 5001.517 and in a manner that will minimize any potential loss. (a) Default notification and meetings. The lender must notify the Agency within the timeframe as provided in § 5001.502(a)(3)(i). (1) The lender will provide this notification by submitting the guaranteed loan borrower default status report in the Agency's electronic reporting system. The lender must update the loan's status each month until such time as the loan is no longer in default. (2) If a monetary default exceeds 30 calendar days, the lender must meet with the borrower and, if necessary, the Agency within 45 calendar days of the date of the default to discuss the situation. The lender must provide the Agency with a written summary of the meeting, including any decisions and actions agreed upon within 10 calendar days of the meeting. (b) Curative options. In considering curative actions, providing a permanent cure without adversely affecting the risk to the Agency and the lender is the paramount objective. The lender may consider temporary curative actions ( e.g., payment deferments or collateral subordination) provided they strengthen the loan and are in the best financial interest of the lender and the Agency. (1) Curative actions (subject to the rights of any holder and Agency concurrence) include, but are not limited to, the following options: (i) Deferment of principal and/or interest payments; (ii) An additional unguaranteed temporary loan by the lender to bring the account current; (iii) Re-amortization of or rescheduling the payments on the loan excluding capitalization of accrued interest; (iv) Transfer and assumption of the loan in accordance with § 5001.506; (v) Reorganization; (vi) Liquidation; (vii) Changes in interest… | ||||
| 7:7:15.1.20.2.1.6.92.16 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.516 Protective advances. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79728, Sept. 30, 2024; 89 FR 97477, Dec. 9, 2024] | Protective advances are allowed only when they are necessary to preserve the value of the collateral. Therefore, a lender must exercise sound judgment in determining that the protective advance preserves collateral and recovery is actually enhanced by making the advance. (a) Protective advances must be reasonable with respect to the outstanding loan amount and the value of the collateral being preserved. (b) A lender cannot make protective advances in lieu of additional loans. (c) A lender must obtain written Agency approval for any protective advance that will cumulatively amount to more than $200,000, or 10 percent of the aggregate outstanding balance of principal and interest, whichever is less, to the same borrower. Payment of real estate taxes by the lender is considered a protective advance, subject to the requirements of this section, and does not require Agency advance approval. (d) Protective advances constitute an indebtedness of the borrower to the lender and must be secured by collateral to the same extent as the original guaranteed loan. It is the lender's responsibility to ensure that any protective advances are secured by the collateral of the guaranteed loan. (e) Notwithstanding § 5001.22(c) of this part, upon Agency approval, protective advances can be used to pay Federal tax liens or other Federal debt. (f) A Protective advance claim will be paid only at the time of the final payment as indicated in the report of loss. In the event of a final loss, protective advances may accrue interest at the promissory note rate from the date of such advance and will be guaranteed at the same percentage of loss as provided for in the loan note guarantee. The loan note guarantee will not cover interest on the protective advance accruing after the interest termination date. (g) The maximum loss to be paid by the Agency will never exceed the original loan amount plus accrued interest times the percentage of guarantee regardless of any protective advances made. (h) Holders do not have an interest in prote… | ||||
| 7:7:15.1.20.2.1.6.92.17 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.517 Liquidation. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79728, Sept. 30, 2024] | In the event of one or more incidents of default or third-party actions that the borrower cannot or will not cure or eliminate within a reasonable period of time, the lender, with Agency consent, must provide for liquidation in accordance with paragraphs (a) through (n) of this section. The lender is responsible for initiating actions immediately and as necessary to assure a prompt, orderly liquidation that will provide maximum recovery. The Agency reserves the right to unilaterally conclude that liquidation is necessary and require the lender to assign the collateral to the Agency and the Agency will then liquidate the loan per paragraph (o) of this section. (a) Decision to liquidate. A decision to liquidate a loan or proceed otherwise must be made when the lender determines that the default cannot be cured or when the Agency and the lender determine that it is in the best interest of the Agency and the lender to liquidate. The decision to liquidate or proceed otherwise with the borrower must be made as soon as possible when one or more of the following exist: (1) The loan is 90 calendar days behind on any scheduled payment and the lender and the borrower have not been able to cure the delinquency; (2) Delaying liquidation will jeopardize full or maximum recovery on the loan; or (3) The borrower or lender is uncooperative in resolving the problem or the Agency or lender has reason to believe the borrower is not acting in good faith, and immediate liquidation would minimize loss to the Agency. (b) Repurchase of loan. When the decision to liquidate a loan is made, if any portion of the loan has been sold or assigned under § 5001.408 of this part and has not already been repurchased, the lender must make provisions for repurchase in accordance with § 5001.511. (c) Lender's liquidation plan. Within 30 calendar days after the lender decides to liquidate a loan, the lender must submit a written, proposed plan of liquidation to the Agency for approval. The liquidation plan must be detailed and include at le… | ||||
| 7:7:15.1.20.2.1.6.92.18 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.518 [Reserved] | RBS | ||||||
| 7:7:15.1.20.2.1.6.92.19 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.519 Bankruptcy. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79728, Sept. 30, 2024] | (a) Lender's responsibilities. The lender is responsible for protecting the guaranteed loan and the collateral securing it in bankruptcy and any related appellate proceedings. These responsibilities include, but are not limited to, the following: (1) Taking actions that result in greater recoveries and avoiding actions that are likely not to be cost-effective; (2) Monitoring confirmed bankruptcy plans to determine borrower compliance, and, if the borrower fails to comply, pursuing appropriate relief, including seeking a dismissal of the bankruptcy plan; (3) Requesting modifications of any proposed bankruptcy plan whenever it appears that the lender could obtain additional recoveries via plan modification; (4) Filing a proof of claim, when necessary, and all the necessary papers and pleadings concerning the case; (5) Attending and, when necessary, participating in meetings of the creditors and all court proceedings; (6) Immediately seeking adequate protection of the collateral if it is subject to being used by the trustee in bankruptcy or the debtor in possession; (7) When appropriate, seeking involuntary conversion of a pending chapter 11 case to a liquidation proceeding or seeking dismissal of the proceedings; (8) Submitting a default status report within 15 calendar days after the date when the borrower defaults and every 30 calendar days thereafter until the default is resolved or a final loss claim is paid by the Agency; and (9) Informing the Agency within 10 working days upon notification of the filing of a bankruptcy case and keeping the Agency adequately and regularly informed, in writing, of all aspects of the proceedings, at a minimum, on a bi-monthly basis. (b) Appraisals. In a Chapter 9 or Chapter 11 reorganization, the lender must obtain an independent appraisal of the collateral if the Agency has determined that an independent appraisal is necessary. With written Agency consent, the lender and Agency will equally share the cost of any independent appraisal fee to protect the guaranteed … | ||||
| 7:7:15.1.20.2.1.6.92.2 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.502 Oversight and monitoring. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79727, Sept. 30, 2024] | The Agency will employ various oversight and monitoring activities in order to ensure compliance with this part. All lenders involved in any manner with any loan note guarantee issued under this part or under a loan note guaranteed previously issued under a guaranteed loan program identified in § 5001.1 of this part must cooperate fully with the Agency in its oversight and monitoring efforts, including, but not necessarily limited to, those identified in paragraphs (a) through (c) of this section. (a) Reports and notifications. Lenders must submit to the Agency reports and notifications as required by this part. To facilitate the Agency's oversight and monitoring including, but not necessarily limited to, those identified in paragraphs (a)(1) through (4), as applicable, of this section. (1) Status reports. No less than semi-annual status reports as of June 30 and December 31 each year (unless more frequent reports are needed as determined by the Agency to protect the financial interests of the government) regarding the condition of the lender's guaranteed loan portfolio (including borrower status and loan classification) and any material change in the general financial condition of any borrower since the last report was submitted. The lender must submit these reports within 30 calendar days after the reporting period, using the appropriate Agency online reporting system. (2) Default reports. Monthly default reports for each guaranteed loan in monetary default using the appropriate Agency online reporting system are due on the 15th working day of each month. (3) Notifications. The lender(s) must notify the Agency by written notification within 15 calendar days of any: (i) Loan agreement violation by any borrower, including when the borrower is 30 days past due or is otherwise in default of the covenants in the loan agreement; (ii) Permanent or temporary reduction in the interest rate; (iii) Downgrade in the lender's loan classification of any guaranteed loan; and (iv) Protective advances in accorda… | ||||
| 7:7:15.1.20.2.1.6.92.20 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.520 Litigation. | RBS | (a) In all litigation proceedings involving the borrower, the lender is responsible for protecting the rights of the lender and the Agency with respect to the loan and keeping the Agency adequately and regularly informed, in writing, of all aspects of the proceedings. If the Agency determines that the lender is not adequately protecting the rights of the lender or the Agency with respect to the loan, the Agency reserves the right to take any legal action the Agency determines necessary to protect the rights of the lender and Agency, on behalf of the lender or the Agency. If the Agency exercises this right, the lender must cooperate with the Agency. The Agency will assess against the lender any cost the Agency incurs with such action. (b) Notwithstanding any other provision of this part, the Agency reserves the right to be represented by the U.S. Department of Justice in any litigation where the Agency is named as a party. | |||||
| 7:7:15.1.20.2.1.6.92.21 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.521 Loss calculations and payment. | RBS | [85 FR 42518, July 14, 2020, as amended at 89 FR 79728, Sept. 30, 2024] | Unless the Agency anticipates a future recovery, the Agency will make a final settlement with the lender after the collateral is liquidated or after settlement and compromise of all parties has been completed. The Agency has the right to recover losses paid under the guarantee from any party that may be liable. (a) Report of loss form. The lender must use the report of loss form for all estimated and final loss claim requests. (b) Estimated loss claim. The lender must submit to the Agency a completed report of loss form for all estimated loss claims. In calculating the estimated loss, the lender must use the estimated or current appraised liquidation value of the collateral. (c) Estimated loss payment. The Agency will approve estimated loss payments only after it has approved the lender's liquidation plan. For a loan which has been approved by the Agency for a debt write-down (or debt restructure), the maximum amount of loss payment will not exceed the percent of guarantee multiplied by the difference between the outstanding principal and interest balance of the loan before the write-down and the outstanding balance of the loan after the write-down. (1) The amount of an estimated loss payment must be credited first as a deduction from the principal balance of the loan with any remaining balance to accrued interest. (2) The estimated loss payment cannot be applied as a payment on the loan for purposes of reducing the unpaid balance owed by the borrower for status reporting or any debt collection actions against the borrower or any guarantors. (d) Reduction of loss claims payable. (1) Negligent loan origination and negligent loan servicing will result in a reduction of loss claims payable under the guarantee to the lender if any losses have occurred as the result of such negligence. The Agency will assess against the lender any cost to the Agency associated with actions taken by the Agency necessary to protect the Agency's interests with respect to the loan where a lender is not in compliance with its… | ||||
| 7:7:15.1.20.2.1.6.92.22 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.522 Future recovery. | RBS | After a final loss claim has been paid, the lender must use reasonable efforts to collect from any party still liable for future recovery unless the Agency notifies the lender otherwise. Any net proceeds from future recovery will be split pro rata between the lender and the Agency based on the percent of the loan guarantee even if the loan note guarantee has been terminated. Once the Agency determines a debt is Federal debt and provides notice to the lender, that Federal debt is excluded from future recovery. The lender must cease all collection efforts against the borrower and any individual or corporate guarantors upon referral of the debts by the Agency for collection in accordance with part 3 of this title. The Agency will not share with the lender any collection of Federal debt made by the Federal Government from any liable party to the guaranteed loan. | |||||
| 7:7:15.1.20.2.1.6.92.23 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.523 Property acquired by the lender. | RBS | (a) Collateral preservation. When a lender acquires title to the collateral and the final loss claim is not paid until final disposition, the lender must proceed as quickly as possible to develop a plan to fully protect the collateral from deterioration (weather, vandalism, etc.). Hazard insurance in an amount necessary to cover the market value of the collateral must be maintained. (b) Collateral sale. (1) Upon acquiring the collateral, the lender must prepare and submit without delay to the Agency a plan on the best method for the sale of the collateral, keeping in mind any prospective purchasers. The Agency must approve the plan in writing. If an existing approved liquidation plan addresses the disposition of acquired property, no further review is required unless modification of the plan is needed. (2) Whenever the conversion of collateral to cash can reasonably be expected to result in a negative net recovery amount, the lender should consider abandonment of the collateral. If the lender seeks to abandon the collateral, the lender must obtain written Agency approval before abandoning the collateral. (c) Re-title collateral. Any collateral accepted by the lender must not be titled in the Agency's name in whole or in part. | |||||
| 7:7:15.1.20.2.1.6.92.24 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | § 5001.524 Termination of loan note guarantee. | RBS | [85 FR 42518, July 14, 2020, as amended at 85 FR 62199, Oct. 2, 2020] | Each loan note guarantee issued under this part or under one of the guaranteed loan programs identified in § 5001.1 of this part will terminate automatically when one of the events described in paragraphs (a) through (c) of this section occur. The lender will maintain its guaranteed loan files for at least three years after termination of the loan note guarantee. (a) The guaranteed loan is paid in full; (b) Full payment by the Agency of any loss claim or compromised settlement except for future recovery provisions; or (c) Written request from the lender to the Agency to terminate the guarantee, which will be effective the date the Agency receives the request provided that the lender holds all the guaranteed portion of the loan. | ||||
| 7:7:15.1.20.2.1.6.92.25 | 7 | Agriculture | L | 5001 | PART 5001—GUARANTEED LOANS | F | Subpart F—Servicing Provisions | §§ 5001.525-5001.600 [Reserved] | RBS |
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