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Federal Register / Vol. 86, No. 242 / Tuesday, December 21, 2021 / Rules and Regulations paragraphs a through g of this section.
a Type of entity. The ultimate recipient must be a legal entity that can incur debt, including but not limited to, an individual; a public organization; a private organization; or other legal entity.
b Legal authority. The ultimate recipient must have the legal authority to incur the debt and carry out the purpose of the loan.
c Citizens. An individual ultimate recipient must be a citizen. In the case of an entity ultimate recipient, at least 51 percent of the outstanding membership or ownership of the entity must be citizens.
d Location. The ultimate recipient project must be located in an eligible rural area, although funds may also be used for community projects that predominantly serve rural residents of a State. Predominantly serves means more than 50 percent of the ultimate recipients service is to rural residents of a State.
e Other financing unavailable. The ultimate recipient must be unable to finance the entirety of the proposed project from its own resources, or through commercial credit or from other Federal, State, or local programs at reasonable rates and terms.
f Legal or financial influence. 1
The intermediary and its principals including immediate families must hold no legal or financial interest or influence in or with the ultimate recipient as this is considered a conflict of interest, as defined. However, this paragraph does not prevent an intermediary that is organized as a cooperative from making a loan to one of its members per 4274.321b4 of this subpart.
2 The ultimate recipient must, along with its principals including their immediate families, hold no legal or financial interest or influence in or with the intermediary as per 4274.321b4
as this is considered a conflict of interest, as defined.
g Delinquent debt. An ultimate recipient is ineligible to receive a loan from IRP loan funds if the ultimate recipient or any of its principals has any federal delinquent debt or is debarred from engaging in business with the Federal government. IRP loan funds may not be used to satisfy any Federal delinquent debt or used to make an otherwise ineligible ultimate recipient eligible for IRP loan funds.
h Fund usage. Ultimate recipients must demonstrate, to the Agencys satisfaction, that loan funds will remain in the United States and the facility being financed will primarily create
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new or save existing jobs for rural U.S.
residents.
4274.312 4274.319
4274.320

Reserved
Loan purposes.

a Agency IRP loans. The intermediary must deposit the Agency IRP loans into the intermediarys IRP
revolving loan fund to provide loans directly to eligible ultimate recipients or in cooperation with banks and other lending organizations through loan participation agreements.
b IRP revolving loan fund loans.
Ultimate recipients receiving loans from an IRP revolving loan fund must use those loans for business or community development projects and for projects that predominately serve communities and residents in rural areas.
1 The Secretary may relend funds to eligible intermediaries for projects that:
i Promote community development;
ii Establish new businesses;
iii Establish and support microlending programs; and iv Create or retain employment opportunities.
2 Such loan purposes may include, but are not limited to, those purposes identified in paragraphs b2i through xx of this section.
i Business and industrial acquisitions when the loan will keep the business from closing, prevent the loss of employment opportunities, or provide expanded job opportunities.
ii Business construction, conversion, enlargement, repair, modernization, or development.
iii Purchase and development of land, easements, rights-of-way, buildings, facilities, leases, or materials.
iv Purchase of equipment, leasehold improvements, machinery, or supplies.
v Pollution control and abatement.
vi Transportation services.
vii Start-up operating costs and working capital.
viii Interest including interest on interim financing during the period before the facility becomes income producing, but not to exceed three years.
ix Feasibility studies.
x Debt refinancing.
A The intermediary is responsible for making prudent lending decisions based on sound underwriting principles when considering the restructuring of an ultimate recipients debt.
B Refinancing debts may be allowed only when it is determined by the intermediary that the project is viable, and refinancing is necessary to create new or save existing jobs or create or continue a needed service.
xi Reasonable fees and charges to the ultimate recipient are allowed only as
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specifically listed in this paragraph.
Authorized fees include loan documentation and fees for recording a collateral lien, environmental data collection fees, management consultant fees, and other fees for services rendered by professionals in relation to the loan project. Professionals are generally persons licensed by States or accreditation associations, such as engineers, architects, lawyers, accountants, and appraisers. Additional charges to the ultimate recipient, whether by a fee or interest rate increase, for an intermediarys costs related to loan participations are not allowed. In addition, the intermediary shall not be charged fees related to the purchase or sale of a loan participation.
The maximum amount of any fee will be what is reasonable and customary in the community or region where the project is located; provided, however, that all costs must be actual costs and shall not be marked-up beyond actual cost. Any such fees or charges are to be fully documented and justified.
xii Hotels, motels, tourist homes, bed and breakfast establishments, nonowner-occupied real estate, convention centers, and other tourist and recreational facilities except as prohibited by 4274.321. These types of facilities are allowed when the pro rata value, supported by an analysis of the supporting real estate appraisal, of the owners living quarters is deleted from the appraised value.
xiii Educational institutions.
xiv Revolving lines of credit provided the portion of the intermediarys total IRP revolving loan fund that is committed to, or in use for revolving lines of credit, will not exceed 25 percent at any time.
A All ultimate recipients receiving revolving lines of credit must reduce the outstanding balance of the revolving line of credit to zero at least once each year.
B The intermediary must approve all revolving lines of credit for a specific maximum amount and for a specific maximum time period, not to exceed two years.
C The intermediary must provide a detailed description, which will be incorporated into the intermediarys work plan and be subject to Agency approval, of how the revolving lines of credit will be operated and managed.
The description must include evidence that the intermediary has an adequate system for:
1 Interest calculations on varying balances; and 2 Monitoring and control of the ultimate recipients cash, inventory, and accounts receivable.

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