§ 1948.112 - Interest rates.

(a) Loans made by FmHA or its successor agency under Public Law 103-354 pursuant to this subpart shall bear interest at a fixed rate of one percent (1%) per annum over the term of the loan.

(b) Interest rates charged by intermediaries to ultimate recipients shall be negotiated by those parties. Intermediaries are encouraged to make loans at the lowest possible rate, taking into account the cost of the loan funds to the intermediary and the cost of administering the loan portfolio.

(c) Interest income, service fees, and other authorized financing charges received by intermediaries operating relending programs may be used to pay for: The costs of administering the IRP, the provision of technical assistance to borrowers, the absorption of bad debts associated with IRP loans, and repayment of debt. Proposed budgets to cover the administrative costs of intermediaries must be submitted annually to FmHA or its successor agency under Public Law 103-354. All proceeds in excess of those needed to cover authorized expenses, as described above, must revolve back into the IRP and be available for relending to eligible ultimate recipients.