§ 1945.166 - Loan purposes.

(a) Policy on use of EM loan funds. (1) The maximum amount of an EM loan(s), in addition to the limitations contained in § 1945.163(a)(2)(x) and (e) of this subpart, is further limited to the actual dollar loss, or the actual amount of essential family and farm credit, that the applicant needs to carry on normal operations. The use of EM loan funds will be identified in the farm and home plan so that determination can readily be made as to whether such loan(s) was used for authorized purposes and compensated the borrower for all or a portion of the actual dollar loss.

(2) EM loan funds may be used for those purposes described in paragraphs (b) and (c) of this section.

(b) Real estate (Subtitle A) purposes. EM loans for real estate purposes may be made to owner-operators only. The following are authorized real estate purposes for which EM loan funds may be used:

(1) Any Farm Ownership loan purpose (see subpart A of part 1943 of this chapter);

(2) Replace land and/or water resources that cannot be restored due to the disaster;

(3) Establish a new site for farm dwellings and service buildings so that the applicant can relocate outside of a flood or mudslide prone area;

(4) Replace land necessary to restore an effective operation which was liquidated as a result of the disaster before an EM loan could be made.

(c) Operating (Subtitle B) purposes. EM loans for operating purposes may be made to owner-operators or tenant-operators. The following are authorized operating purposes for which EM loan funds may be used:

(1) Any Operating Loan purpose (see subpart A of part 1941 of this chapter);

(2) Purchase and repair of essential household contents, and pay essential family living expenses. Entity operations are not eligible for loan funds to be used for these purposes.

(3) Pay reasonable expenses customarily paid when obtaining, planning and closing a loan made for operating purposes, e.g., fees for legal, architectural and other technical services, which are required to be paid by the applicant, and which cannot be paid by the applicant from other resources. It is not intended that this paragraph be interpreted to include fees charged applicants by agricultural management consultants and other professionals for preparation of EM loan dockets, including farm and home plans and other Agency or its successor agency under Public Law 103-354 forms used in processing such loans.