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Federal Register / Vol. 86, No. 235 / Friday, December 10, 2021 / Rules and Regulations
public or private commercial enterprises or industrial properties, including expansion or modernization.

8 Tourist and recreation facilities, including hotels, motels, bed and breakfast establishments, and resort trailer parks and campgrounds operated as a public or private commercial enterprise. Owner-occupied housing, such as bed and breakfasts, hotels and motels are only allowed when the pro rata value of a direct owners living quarters, based on square footage, is deducted from the use of loan proceeds.
9 Educational or training facilities including other CF projects when not eligible for financing through Rural Housing Service or Community Facilities programs.
10 Development and construction of broadband and telecommunication systems, including modification of existing systems, that are not otherwise eligible for funding in the RUS program or if funding is unavailable in the RUS
program, subject to the Public Notice Filing requirements of 7 CFR
1738.106a and the additional reporting requirements of 7 CFR 1738.107.

d
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i A minimum of 10 percent balance sheet equity including subordinated debt when subject to a standstill agreement for the life of the loan, or a maximum debt-to-balance sheet equity ratio of 9 to 1, at loan closing;
ii A 10 percent or more of total eligible project costs, borrower investment of equity or other funds into the project including grants or subordinated debt when subject to a standstill agreement for the life of the loan;

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i A minimum of 10 percent balance sheet equity including subordinated debt when subject to a standstill agreement for the life of the loan, or a maximum debt-to-balance sheet equity ratio of 9 to 1 at loan closing; or ii Borrower investment of equity or other funds including subordinated debt when subject to a standstill agreement for the life of the loan and grants into the project in an amount of 10 percent or more of total eligible project cost;
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i A minimum of 25 percent balance sheet equity including subordinated debt when subject to a standstill agreement for the life of the loan, or a maximum debt-to-equity ratio of 3 to 1, at guaranteed loan closing; or
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ii Borrower investment of equity or other funds including subordinated debt when subject to a standstill agreement for the life of the loan and grants into the project in an amount of 25 percent or more of total eligible project cost;
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i A minimum of 20 percent balance sheet equity including subordinated debt when subject to a standstill agreement for the life of the loan, or a maximum debt-to-equity ratio of 4 to 1, at guaranteed loan closing, or;
ii Borrower investment of equity or other funds including subordinated debt when subject to a standstill agreement for the life of the loan and grants into the project in an amount of 25 percent or more of total eligible project cost;
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ii Reductions. The Agency may reduce the minimum equity requirement for an existing business when personal or corporate guarantees are obtained in accordance with 5001.204 of this part; and all pro forma statements indicate the business to be financed meets or exceeds the median quartile as identified in the Risk Management Associations Annual Statement Studies or similar publication for the current ratio, quick ratio, debt-to-worth ratio, and debt service coverage ratio.

6. Amend 5001.115 by revising paragraph n to read as follows:
5001.115

Ineligible projectsgeneral.

n Except as provided in 5001.105b8, owner-occupied housing.

5001.115

Amended
7. Amend 5001.115 by removing paragraph s.
8. Amend 5001.121 by revising the introductory paragraph and paragraph c6 to read as follows:

5001.121

Eligible uses of loan funds.

Guaranteed loan funds can only be used for the items specified in this section. 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 related to the project financed, subject to the requirements of 7 CFR part 1980, subpart M.

c
6 Takeout of interim financing:
Guaranteeing a loan that provides for
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permanent, long-term financing after project completion to pay off a lenders interim loan will not be treated as debt refinancing provided that the lender submits a complete request for preliminary eligibility review or complete application that proposes such interim financing prior to closing the interim loan. The borrower must take no action until the conclusion of the environmental review process prior to any action that would have an adverse effect on the environment or limit the choices of any reasonable alternatives to be considered by the Agency.
9. Amend 5001.126 by redesignating paragraphs e3 through 4 as paragraphs e4 through 5 and adding a new e3 to read as follows:
5001.126

Borrower eligibility.

3 End users. If the controlling interest in the applicant entity is otherwise eligible as an applicant and a legal transaction between two parties for the sale of energy in an open market is being proposed, the Agency will not consider the energy end-users as part of the analysis of the eligibility of the applicant. However, if the proposed end-user would be an ineligible applicant, such as an entity which is residential in nature or a non-profit entity, and the REAP applicant entity is a newly formed special-purpose entity with substantially the same ownership as the proposed end-user, then the REAP applicant entity is not eligible.
10. Amend 5001.130 by adding paragraph a6 to read as follows:
5001.130

Lender eligibility requirements.

a
6 Be registered in and maintain an account in the System for Award Management SAM in accordance with 2 CFR 25.200.

11. Amend 5001.141 by revising paragraph a2 to read as follows:
5001.141

New markets tax credits.

a
2 The provisions of 5001.127f notwithstanding, a lender that is a CDE
or sub-CDE may have an ownership interest in the borrower provided that each condition specified in paragraphs a2i through iii of this section is met.

Subpart COrigination Provisions 12. Amend 5001.202 by revising paragraph b5 to read as follows:

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