§ 1948.103 - Eligibility requirements.

(a) The intermediaries which may receive FmHA or its successor agency under Public Law 103-354 loan funds for relending to ultimate recipients are:

(1) Private nonprofit corporations.

(2) Public agencies—Any State or local government, or any branch or agency of such government having the authority to act on behalf of that government, borrow funds, and engage in activities eligible for funding under this subpart.

(3) Indian groups—Indian tribes on a Federal or State reservation or other federally recognized tribal groups.

(4) Cooperatives—Incorporated or unincorporated associations, at least 51 percent of whose members are rural residents, whose members have one vote each, and which conduct, for the mutual benefit of their members, such operations as producing, purchasing, marketing, processing or other activities aimed at improving the income of their members as producers or their purchasing power as consumers.

(b) The intermediary must:

(1) Have the legal authority necessary for carrying out the proposed loan purposes and for obtaining, giving security for, and repaying the proposed loan.

(2) Have a proven record of successfully assisting rural business and industry. Such record will normally consist of:

(i) Recent experience in loanmaking and servicing for loans that are similar in nature to this program;

(ii) A delinquency rate acceptable to FmHA or its successor agency under Public Law 103-354 on the loans in the intermediary's portfolio;

(iii) A background and expertise of the intermediary's staff that will be making and servicing the portfolio acceptable to FmHA or its successor agency under Public Law 103-354; and

(iv) Capitalization of the intermediary (for making such loans) acceptable to FmHA or its successor agency under Public Law 103-354.

(c) No loans will be extended to an intermediary unless:

(1) There is adequate assurance of repayment of the loan based on the fiscal and managerial capabilities of the applicant.

(2) The loan is not otherwise available on reasonable (i.e., usual and customary) rates and terms from private sources or other Federal, State or local programs. The intermediary and each ultimate recipient must certify and document that the ultimate recipient is unable to finance the proposed project from their own resources or through commercial credit or other Federal, State or local programs at reasonable rates and terms.

(3) The amount of the loan, together with other funds available, is adequate to assure completion of the project or achieve the purposes for which the loan is made.

(4) The total amount of Agency loan funds requested by the intermediary plus the outstanding balance of existing IRP loan(s) will meet one of the following conditions:

(i) IRP loan funds will not exceed $4 million per intermediary for loans approved on or before August 28, 1996.

(ii) IRP loan funds will not exceed $2 million per intermediary for loans approved after August 28, 1996.

(d) At least 51 percent of the outstanding interest in any intermediary and ultimate recipient must have membership or be owned by those who are either citizens of the United States or reside in the United States after being legally admitted for permanent residence.