2020-06714. Community Development Revolving Loan Fund Access for Credit Unions

ACTION:

Notice of funding opportunity.

FUNDING OPPORTUNITY TITLE:

Community Development Revolving Loan Fund (CDRLF) Loans

CATALOG OF FEDERAL DOMESTIC ASSISTANCE (CFDA) NUMBER:

44.002.

SUMMARY:

The National Credit Union Administration (NCUA) is issuing this Notice of Funding Opportunity (NOFO) to announce the availability of loans (awards) for low-income designated credit unions (LICUs) through the CDRLF. The CDRLF serves as a source of financial support in the form of loans and technical assistance grants that better enable LICUs to support the communities in which they operate. All awards made under this NOFO are subject to funds availability and are at the NCUA's discretion.

Table of Contents

A. Program Description

B. Award Information

C. Eligibility Information

D. Application and Submission Information

E. Application Review Information

F. Federal Award Administration

G. Federal Awarding Agency

A. Program Description

The purpose of the CDRLF is to assist LICUs in providing basic financial services to their members to stimulate economic activities in their communities. The CDRLF consists of Congressional appropriations that are administered by the NCUA. Through the CDRLF, the NCUA provides financial support in the form of awards to LICUs. These funds help improve and expand the availability of financial services to these members. The NCUA accepts loan applications on a continuous basis subject to funding availability.

Since its inception, Congress has appropriated approximately $13.4 million for revolving loans through the CDRLF. The CDRLF's revolving loan component received its last appropriation in fiscal year 2005 for $200,000. Approximately $7 million will be available for loans under this NOFO as of March 27, 2020.

1. Permissible Uses of Loan Funds

The NCUA may consider requests for loan funds for various uses. A non-exhaustive list of examples of permissible uses or projects is defined in 12 CFR 705.4. The NCUA may consider other proposed uses of loan funds that are not listed if it determines the Proposal to be consistent with the purpose of the CDRLF. The list includes the following:

i. Development of new products or services for members, including new or expanded share draft or credit card programs;

ii. Partnership arrangements with community-based service organizations or government agencies;

iii. Loan programs, including, but not limited to, microbusiness loans, payday loan alternatives, education loans, and real estate loans;

iv. Acquisition, expansion, or improvement of office space or equipment, including branch facilities, ATMs, and electronic banking facilities;

v. Operational programs such as security and disaster recovery; and

vi. Responding to emergencies such as pandemics, natural disasters, economic downturns, etc. The NCUA recognizes that these emergencies will impact the credit union industry to varying degrees. The NCUA intends to support the efforts of LICUs through emergency funding needed to respond to unexpected and unplanned events. Specific details will be defined and provided in the applicable guidelines and posted on NCUA's website.

2. Authority and Regulations

i. Authority: 12 U.S.C. 1772c-1, 1756, 1757(5)(D), and (7)(I), 1766, 1782, 1784, 1785 and 1786;

ii. Regulations: The regulation governing the CDRLF is found at 12 CFR part 705. In general, this regulation is used by the NCUA to govern the CDRLF and set forth the program requirements. Additional regulations related to the low-income designation are found at 12 CFR parts 701.34 and 741.204. For the purposes of this NOFO, an “Applicant” is a Participating Credit Union that submits a complete application to the NCUA under the CDRLF. The NCUA encourages Applicants to review the regulations, this NOFO, and other program materials for a complete understanding of the program.

B. Award Information

The NCUA expects to award as many qualified credit unions as possible through this NOFO, subject to funding availability. CDRLF loans are typically made at lower than market interest rates.

Approximately $7 million, derived from prior-year appropriated and earned funds, will be available for qualified credit unions beginning March 27, 2020. The amount of funding available for CDRLF loans fluctuate whenever previously scheduled loans are fully amortized and/or if Congress makes an appropriation to the CDRLF revolving loan component. The NCUA reserves the right to: (i) Award more or less than the amounts cited above; (ii) fund, in whole or in part, any, all, or none of the applications submitted in response to this NOFO; and (iii) reallocate funds from the amount that is anticipated to be available under this NOFO to other programs, particularly if the NCUA determines that the number of awards made under this NOFO is fewer than projected.

The specific terms and conditions governing a CDRLF award will be established in the loan documents that each Participating Credit Union must sign prior to disbursement of funds. The rest of this section contains general award information regarding loans made through the CDRLF.

1. Loan Amount

The NCUA makes loans based on the financial condition of the credit union. The applicable regulation does not provide a maximum limit on loan applications for consideration, but in practice the NCUA discourages loan applications of higher than $500,000 to mitigate risk. There is no minimum loan amount. CDRLF loan awards typically range from $250,000 to $500,000. The amount of the loan will be based on the following factors:

i. Funds availability:

ii. Credit worthiness of the credit union;

iii. Financial need;

iv. Demonstrated capability of the credit union to provide financial and related services to its members; and

v. Concurrence from the credit union's NCUA regional office and/or the applicable the State Supervisory Authority (SSA) for qualifying state-chartered credit unions.

2. Maturity

CDRLF loans will generally mature in five years. The loan period may be shorter at the NCUA's discretion or at the request of the credit union, but in no case will the term exceed five years.

3. Interest Rate

The interest rate on CDRLF loans is governed by the CDRLF Loan Interest Rate Policy. The policy can be found on the NCUA's website at https://www.ncua.gov/​support-services/​credit-union-resources-expansion/​grants-loans/​loans. CDRLF loans are generally offered at a fixed rate for the full term. The NCUA reserves the right to reduce the interest rate when it benefits the objectives of CDRLF priorities and/or initiatives.

The NCUA may decide to lower the interest rate and change the loan terms during emergency conditions as described under Section A Permissible Use of Loan Funds of this document.

4. Repayment

All loans must be repaid to the NCUA regardless of how they are accounted for by the Participating Credit Union.

i. Principal: The entire principal is due at maturity.

ii. Interest: Interest is due in semi-annual payments beginning six months after the initial distribution of the loan.

iii. Principal Prepayment: There is no penalty for principal prepayment. Principal prepayments may be made as often as monthly.

C. Eligibility Information

1. Eligible Applicants

This NOFO is open to credit unions that meet the eligibility requirements defined in 12 CFR part 705. A credit union must have a low-income designation obtained in accordance with 12 CFR 701.34 or 741.204 in order to participate in the CDRLF.

i. Non-Federally Insured Applicants: Each Applicant that is a non-federally insured, state-chartered credit union must submit additional application materials. These additional materials are more fully described in 12 CFR 705.7(b)(3) and in the application.

a. Non-federally insured, state-chartered credit unions must agree to be examined by the NCUA. The specific terms and covenants pertaining to this condition will be provided in the award agreement of the Participating Credit Union.

2. Matching Funds (if Applicable)

At its discretion, the NCUA may require the Applicant to submit a functional plan to meet the matching funds requirement depending on the financial condition of the Applicant. The NCUA anticipates that most Applicants will not be required to obtain matching funds. 12 CFR 705.5(g) of the NCUA's regulations describe the overall requirements for matching funds.

i. Matching Funds Requirements: The specific terms and covenants pertaining to any matching funds requirement will be provided in the loan agreement of the Participating Credit Union. Following, are general matching fund requirements. The NCUA, in its sole discretion, may amend these requirements depending upon its evaluation of the Applicant, but in no case will the amended requirements be greater than the conditions listed below.

a. The amount of matching funds required must generally be in an amount equal to the loan amount.

b. Matching funds must be from non-governmental member or nonmember share deposits.

c. Any loan monies matched by nonmember share deposits are not subject to the 20% limitation on nonmember deposits defined in 12 CFR 701.32.

d. Participating Credit Unions must maintain the outstanding loan amount in the total amount of share deposits for the duration of the loan. Once the loan is repaid, nonmember share deposits accepted to meet the matching requirement are subject to requirements defined in defined in 12 CFR 701.32.

ii. Criteria for Matching Funds: The NCUA will use the following criteria to determine whether to require an Applicant to have matching funds as a condition of its loan.

a. CAMEL Composite Rating

b. CAMEL Management Rating

c. CAMEL Asset Quality Rating

d. Regional Director Concurrence

e. Net Worth Ratio

iii. Documentation of Matching Funds: The NCUA may contact the matching funds source to discuss the matching funds and the documentation that the Applicant has provided. If the NCUA determines that any portion of the Applicant's matching funds is ineligible under this NOFO, the NCUA, in its sole discretion, may permit the Applicant to offer alternative matching funds as a substitute for the ineligible matching funds. In this case, the Applicant must provide acceptable alternative matching funds documentation within 10 business days of the NCUA's request.

3. Data Universal Numbering System (DUNS) Number

The Data Universal Numbering System (DUNS) number is a unique nine-character number used to identify your organization. The federal government uses the DUNS number to track how federal money is allocated. Registering for a DUNS number is FREE. Applicants can obtain a DUNS number by visiting the Dun & Bradstreet (D&B) website or calling 1-866-705-5711. The NCUA will not consider an application that does not include a valid DUNS number issued by Dun and Bradstreet (D&B). Such an application will be deemed incomplete and will be declined.

4. Employer Identification Number

Each application must include a valid and current Employer Identification Number (EIN) issued by the U.S. Internal Revenue Service (IRS). The NCUA will not consider an application that does not include a valid and current EIN. Such an application will be deemed incomplete and will be declined. Information on how to obtain an EIN may be found on the IRS's website.

5. System for Award Management

All Applicants are required by federal law to have an active registration with the federal government's System for Award Management (SAM) prior to applying for funding. SAM is a web-based, government-wide application that collects, validates, stores, and disseminates business information about the federal government's trading partners in support of the contract awards, grants, and electronic payment processes. An active SAM account status and CAGE number is required to apply for a CDRLF award. Credit unions that have an existing registration with SAM must recertify and maintain an active status annually. The SAM registration and recertification process is FREE. First-time SAM users can register by following the instructions in the Quick Start Guide for New Registrations. Existing users can recertify or renew their SAM account status by following the instructions in the Quick Start Guide for Renewing Registrations. The NCUA will not consider an applicant that does not have an active SAM status. Such an application will be deemed incomplete and will be declined.

6. Other Eligibility Requirements

i. Financial Viability: Applicants must meet the underwriting standards established by the NCUA, including those pertaining to financial viability, as set forth in the application and defined in 12 CFR 705.7(c).

ii. Compliance with Past Agreements: In evaluating funding requests under this NOFO, the NCUA will consider an Applicant's record of compliance with past agreements. The NCUA, in its sole discretion, will determine whether to consider an application from an Applicant with a past record of noncompliance, including any deobligation (i.e. removal of unused awards) of funds.

a. If an Applicant is in default of a previously executed agreement with the NCUA, the NCUA will not consider an application for funding under this NOFO.

b. If an Applicant is a prior Participating Credit Union under the CDRLF and has unused awards as of the date of application, the NCUA may request a narrative from the Applicant that addresses the reason for its record of noncompliance. The NCUA, in its sole discretion, will determine whether the reason is sufficient to proceed with the review of the application.

D. Application and Submission Information

1. Application

Under this NOFO, all applications must be submitted online in the NCUA's web-based application system, CyberGrants, in order to be considered. Applications must be submitted online at https://www.cybergrants.com/​ncua/​applications. The application and related documents are also located on the NCUA's website at https://www.ncua.gov/​services/​Pages/​resources-expansion/​grants-loans.aspx.

2. Minimum Application Content

At a minimum, the application will require credit unions to provide information about the following core application contents: (i) Project title; (ii) loan amount requested; (iii) total cost of the proposed project; (iv) project activity or objective; and (v) proposed use of the loan funds.

3. Submission Dates and Times

i. COVID-19 Emergency Support Loan: The NCUA will accept applications beginning March 27, 2020, at 9:00 a.m. eastern time (ET) for this initiative. Applications must be submitted by May 22, 2020, at 11:59 p.m. ET.

ii. All Other Loans: The NCUA accepts applications on a continuous basis subject to funding availability.

E. Application Review Information

1. Eligibility and Completeness Review

The NCUA will review each application to determine whether it is complete and that the Applicant meets the eligibility requirements described in the regulations, program guidelines, and in this NOFO. An incomplete application or one that does not meet the eligibility requirements will be declined without further consideration.

2. Evaluation Criteria

The evaluation criteria is fully described in 12 CFR 705.7(c). The NCUA will evaluate each application on accordance with the criteria described in the regulation, this NOFO and program guidelines: Financial performance, compatibility, feasibility, and examination information and applicable concurrence. Each initiative, due to its structure and impact, have varying degrees of evaluation criteria assigned which are reflected in the guidelines for credit union's information.

3. Application Review

The purpose of the application review is to determine whether the NCUA should support and fund the loan request. During this phase of the review, the NCUA reviews the credit union's prior financial and operational performance, the collateral offered to securitize the loan (if applicable), and its longevity in operation. The NCUA reserves the right to contact the Applicant during its review for the purpose of clarifying or confirming information contained in the application. If so contacted, the Applicant must respond within the time specified by the NCUA or the NCUA, in its sole discretion, may decline the application without further consideration.

4. Examination Information and Applicable Concurrence

The NCUA will not approve an award to a credit union for which it's NCUA regional examining office or SSA, if applicable, indicates it has safety and soundness concerns. If the NCUA regional office or SSA identifies a safety and soundness concern, the NCUA, in conjunction with the regional office or SSA, will assess whether the condition of the Applicant is adequate to undertake the activities for which funding is requested, and the obligations of the loan and its conditions. The NCUA, in its sole discretion, may defer decision on funding an application until the credit union's safety and soundness conditions improve.

5. Funding Selection

The NCUA will make its funding selections based on a consistent scoring tier for each Applicant. The NCUA will consider the impact of the funding. In addition, the NCUA may consider the geographic diversity of the Applicants in its funding decisions.

F. Federal Award Administration

1. Federal Award Notice

The NCUA will notify each Applicant of its funding decision by email. Applicants that are approved for funding will also receive instructions on how to proceed with disbursement of the award.

2. Administrative and National Policy Requirements

i. Loan Agreement: Each Participating Credit Union under this NOFO must enter into an agreement with the NCUA before the NCUA will disburse the award funds. The agreement documents include, for example, a promissory note, loan agreement, repayment schedule, and security agreement (if applicable). The agreement will include the terms and conditions of funding, including but not limited to the: (i) Award amount; (ii) interest rate; (iii) repayment requirements; (iv) accounting treatment; (v) impact measures; and (vi) reporting requirements.

ii. Failure to Sign Agreement: The NCUA, in its sole discretion, may rescind an award if the Applicant fails to sign and return the agreement or any other requested documentation, within the time specified by the NCUA.

iii. Multiple Disbursements: The NCUA may determine, in its sole discretion, to fund a loan in multiple disbursements. In such cases, the process for disbursement will be specified by the NCUA in the loan agreement.

3. Reporting

The reporting requirements are more fully described in 12 CFR 705.9. Annually, each Participating Credit Union will submit a report to the NCUA. The report will address the Participating Credit Union's use of the loan funds; the impact of funding; and explanation of any failure to meet objectives for use of proceeds, outcome, or impact. The NCUA, in its sole discretion, may modify these requirements. However, such reporting requirements will be modified only after notice to affected credit unions.

i. Report Form: Applicable credit unions will be notified regarding the submission of the report form. A Participating Credit Union is responsible for timely and complete submission of the report. The NCUA will use such information to monitor each Participating Credit Union's compliance with the requirements of its loan agreement and to assess the impact of the CDRLF loan.

G. Federal Awarding Agency

1. Methods of Contact

Further information can be found at https://www.ncua.gov/​services/​Pages/​resources-expansion/​grants-loans.aspx. For questions related to the CDRLF, email the NCUA's Office of Credit Union Resources and Expansion at [e-mail].

2. Information Technology Support

People who have visual or mobility impairments that prevent them from using the NCUA's website should call [phone] for guidance (this is not a toll free number).

By the National Credit Union Administration Board on March 26, 2020.

Gerard Poliquin,

Secretary of the Board.