Title 7

SECTION 1738.56

1738.56 Eligible assistance purposes.

§ 1738.56 Eligible assistance purposes.

Assistance under this part may be used to pay for any of the following expenses:

(a) To fund the construction, improvement, or acquisition of all facilities required to provide service at the broadband lending speed to rural areas, including facilities required for providing other services over the same facilities.

(b) To fund the cost of leasing facilities required to provide service at the broadband lending speed if such lease qualifies as a capital/finance lease under GAAP. Notwithstanding, assistance can only be used to fund the cost of the capital/finance lease for no more than the first three years of the lease period. If an IRU qualifies as a capital/finance lease, the entire cost of the lease will be amortized over the life of the lease and only the first 3 years of the amortized cost can be funded.

(c) To fund an acquisition, provided that:

(1) The acquisition is necessary for furnishing or improving service at the broadband lending speed;

(2) The acquired service area, if any, meets the eligibility requirements set forth in § 1738.53;

(3) The acquisition cost does not exceed 50 percent of the broadband assistance; and

(4) For the acquisition of another entity, the purchase provides the Applicant with a controlling majority interest in the entity acquired.

(d) To refinance an outstanding obligation of the Applicant on another telecommunications loan made under the RE Act or on a non-RUS loan if that loan would have been for an eligible purpose under the Rural Broadband Program provided that:

(1) No more than 50 percent of the broadband assistance amount is used to refinance a non-RUS loan;

(2) The Applicant is current with its payments on the RUS telecommunications loan(s) to be refinanced; and

(3) The amortization period for that portion of the broadband loan that will be needed for refinancing will not exceed the remaining amortization period for the loan(s) to be refinanced. If multiple notes are being refinanced, an average remaining amortization period will be calculated based on the weighted dollar average of the notes being refinanced.

(e) To fund development costs in an amount not to exceed 5 percent of the total Award amount excluding amounts requested to refinance outstanding telecommunications loans. Development costs may be reimbursed only if they are incurred prior to the date on which notification of a complete application is issued (see § 1738.203) and a loan contract is entered into with RUS. Entities that meet the requirements in § 1738.101(d) may request this funding be provided as a grant. Otherwise, the funding will be provided in the form of a loan.

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