07-2400. Business and Industry Guaranteed Loan Program; Correction

AGENCY:

Rural Business-Cooperative Service, USDA.

ACTION:

Correcting amendment.

SUMMARY:

This document contains corrections to the final regulations which were published in the Federal Register on Monday, November 20, 2006 [71 FR 67032] regarding personal and corporate guarantees.

DATES:

Effective on May 15, 2007.

FOR FURTHER INFORMATION CONTACT:

David Lewis, Business and Industry Loan Servicing Branch, Rural Business-Cooperative Service, U.S. Department of Agriculture, STOP 3224, 1400 Independence Avenue, SW., Washington, DC 20250-3224, telephone [phone], or by e-mail to [e-mail].

SUPPLEMENTARY INFORMATION:

Background

The final regulation that is the subject of this correction was intended to require those owning a substantial stock ownership of at least 20 percent to provide a personal or corporate guarantee.

Need for Correction

As published, the final regulation contained an error, which may prove misleading and cause confusion for the public.

List of Subjects in 7 CFR Part 4279

• Loan programs—Business and Industry—Rural Development assistant, rural areas

Accordingly, 7 CFR part 4279 is corrected by making the following correcting amendment:

PART 4279—GUARANTEED LOANMAKING

1. The authority citation for part 4279 continues to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989.

Subpart B—Business and Industry Loans

2. Revise paragraph (a) of § 4279.149 to read as follows:

§ 4279.149

Personal and corporate guarantee.

(a) Unconditional personal and corporate guarantees are part of the collateral for the loan, but are not considered in determining whether a loan is adequately secured for loanmaking purposes. Agency approved personal and corporate guarantees for the full term of the loan and at least equal to the guarantor's percent interest in the borrower, times the loan amount are required from those owning at least a 20 percent interest in the borrower, unless the lender documents to the Agency's satisfaction that collateral, equity, cashflow, and profitability indicate an above-average ability to repay the loan. The guarantors will execute an Agency approved unconditional guarantee form. When warranted by an Agency assessment of potential financial risk, Agency approved guarantees may also be required of parent, subsidiaries, or affiliated companies (owning less than a 20 percent interest in the borrower) and require security for any guarantee provided under this section.

* * * * *

Dated: April 30, 2007.

Jackie J. Gleason,

Administrator, Rural Business-Cooperative Service.