Appendixes A-B to Subpart E of Part 1980 [Reserved]
7:14.1.1.1.9.2.12.55.18 :
Appendixes A-B to Subpart E of Part 1980 [Reserved]
Appendix C to Subpart E of Part 1980 - Guidelines for Loan Guarantees for Alcohol Fuel Production Facilities
7:14.1.1.1.9.2.12.55.19 : Appendix C
Appendix C to Subpart E of Part 1980 - Guidelines for Loan
Guarantees for Alcohol Fuel Production Facilities
(1) Alcohol production facility. An alcohol production
facility is a facility in which alcohol, suitable for use by itself
or in combination with other substances as a substitute for
petroleum or petrochemical feedstocks and not suitable for beverage
purposes, is manufactured from biomass.
(2) The alcohol production facility includes all facilities
necessary for the production and storage of alcohol and the
processing of the by-products of alcohol production. The intent is
to limit the alcohol and by-products processing facilities to those
facilities which are necessary to yield marketable products and
necessary for the financial success of the project. Further
refinements, such as gasoline blending or the construction of
facilities which use the alcohol or by-products in another
manufacturing process, are not considered part of the alcohol
production facility.
(3) Application will be reviewed by both B&I personnel and
the State Office engineer and forwarded to the National Office if
approval is recommended.
(4) The applicant should have a startup tangible book
equity of 20-25 percent. (Appraisal surplus and subordinated debt
are not eligible equity items.)
(5) Loan maturity maximums will be as follows:
Real Estate = 15-20 years Machinery & Equipment = 10 years or less
depending on the estimated life of the equipment involved Working
Capital = 3 years (It is assumed that the additional equity
required for these projects will provide much of the working
capital needs.)
(6) Farmers Home Administration or its successor agency under
Public Law 103-354 will ordinarily only finance new facilities and
will not get involved in the refinancing of existing ones.
(7) Priority consideration will be given to the use of primary
fuel other than petroleum or natural gas.
(8) A positive energy balance must be indicated and supported by
appropriate data; i.e., the energy content of the alcohol produced
at the alcohol production facility must be greater than the energy
used to produce the alcohol and by-products.
(9) Plant location, in relation to feedstocks, primary fuel and
markets for product and by-products, will be an important
consideration.
(10) Debt refinancing will only be considered in modest amounts
and only when necessary to provide a satisfactory lien
position.
(11) Feasibility studies are very important and required and
will be prepared by competent and knowledgeable independent
parties.
(12) Participating lenders must either have expertise or the
availability of expertise in this field.
(13) The proposed operating managers must have experience in
this or a related field.
(14) Alcohol Fuel Production Facilities are eligible for
assistance under the Drought and Disaster (D&D) Guaranteed Loan
and Disaster Assistance for Rural Business Enterprises (DARBE)
programs described in this subpart, and especially in appendix I
and appendix K. Any such loan must meet the requirements for
D&D and DARBE loans.
[52 FR 6522, Mar. 4, 1987, as amended at 53 FR 40403, Oct. 17,
1988; 54 FR 5, Jan. 3, 1989, and 54 FR 26946, June 27, 1989; 54 FR
42483, Oct. 17, 1989]
Appendix D to Subpart E of Part 1980 - Alcohol Production Facilities Planning, Performing, Development and Project Control
7:14.1.1.1.9.2.12.55.20 : Appendix D
Appendix D to Subpart E of Part 1980 - Alcohol Production
Facilities Planning, Performing, Development and Project Control
(I) Design Policy. The borrower shall ensure or cause to
be ensured that:
(A) All project facilities are designed utilizing accepted
engineering practices and are conformed to applicable Federal,
State and local codes and requirements.
(B) Proven equipment and processes are employed in all project
facilities unless an exception is granted by the Administrator or
designee of Rural Development (“Administrator”) in accordance with
paragraph (B)(2) hereof and pilot equipment or processes are used
instead.
(1) Equipment and processes shall be considered “proven” if they
have been successfully employed in other commercial facilities.
(2) Equipment and processes shall be considered pilot if they
have not been used in a commercial operation but have been operated
on a scale such that all design and material problems have been
identified and resolved and operations maintained to demonstrate
that the equipment and process may be successfully applied to the
proposed commercial operation. Pilot equipment and processes may be
considered for use in the project subject to the following:
(a) The plans, specifications, and operational data for the
applicable facilities are reviewed by the Administrator or designee
and lender. If, in the opinion of Rural Development, the proposed
processes or equipment are insufficiently developed to assure
reliable and successful operation of the project, proven processes
and equipment will be utilized.
(b) If pilot processes or equipment are used, the Administrator
or designee will also require that:
(i) Reasonable provision is made in the project for conversion
to proven equipment or processes; and
(ii) The borrower agrees to convert to proven equipment or
processes if conversion is necessary to protect the interest of the
Government in the project. A reserve account for this conversion
may be required. This account will not be an eligible loan
purpose.
(C) Facility and equipment design incorporates cost-effective
primary fuel systems, energy recovery systems and conservation
measures to the maximum extent that this is feasible and consistent
with paragraphs (I), (A), and (B) of this appendix.
(II) Technical Services. (A) The borrower is responsible
for selecting engineering consultants with suitable experience,
training and professional competence in the design and construction
of the project to assure that the completed project will operate at
the prescribed levels of performance. In discharging its
responsibility the borrower will obtain or cause to be
obtained:
(1) Full engineering services for design and construction
inspection for all project facilities. Resident inspection by
qualified persons will be required.
(2) Agreements for engineering or design/build services which
describe the project facilities in terms of the parameters critical
to the successful operation of the project. The parameters shall
include input quantities, conversion efficiency, rate of production
and fuel consumption and product quality under normal operating
conditions. The design parameters will be mutually agreed upon by
the borrower, lender, the State Director and the project engineer,
and may not be modified without the written concurrence of each of
these parties. These agreements for engineering or design/build
services will require, or the borrower will otherwise obtain,
assurance satisfactory to the State Director that:
(a) The project engineer will maintain adequate insurance to
protect the borrower, lender and the Government from incurring
expenses resulting from errors and omissions of the engineer in
performance of engineering services.
(b) The project engineer will certify that only proven equipment
and processes will be utilized in the proposed development. The
State Director may request evidence of successful operations of
such proven equipment and process. If proven equipment or processes
are not used in the project, the project engineer will identify
these items and provide the information necessary for acceptance by
the Administrator, borrower and lender in accordance with paragraph
(I)(B)(2) of this appendix.
(c) If used equipment or existing facilities are incorporated
into the project, they must be inspected by the project engineer or
by another qualified engineer of the borrower. This engineer will
prepare a report describing the proposed facilities or equipment
and will comment on their suitability for use in the project. The
report will also identify the modifications necessary for
successful integration into the project. A cost estimate will also
be included comparing new equipment and facilities to the proposed
existing facilities or used equipment. Consideration must be given
to the relative energy requirements of used and new facilities and
their relative operation and maintenance costs.
(d) The project engineer or qualified individuals representing
the manufacturer of principal equipment (or the designer/builder if
the contractor has designed the plant) will visit the plant site at
reasonable intervals for a period of one year after substantial
completion of the project. Such personnel will be experienced in
the proper operation and maintenance of applicable plant
components. A report will be presented to the borrower within two
weeks of each site visit advising the borrower of operation and
maintenance deficiencies. A copy of each report will be forwarded
to the State Director and lender by the borrower.
(e) The project engineer will prepare or supervise the
preparation of a record drawing of all facilities. One copy will be
submitted to the lender and the borrower.
(f) The project engineer or another group acceptable to the
State Director and lender will prepare an operation and maintenance
manual and assist the borrower in the start-up of the project. The
operation and maintenance manual will describe the specific
operation and maintenance procedures which must be performed for
the project to operate at its rated capacity and efficiency and
outline product testing, quality control, plant safety and
emergency shut-down procedures.
(g) The project engineer will assist the borrower in determining
acceptability of materials, equipment and construction during the
construction period, review shop drawings, payment estimates and
change orders, and assist in determining substantial completion of
the project and final completion of individual contracts. (1) The
project is substantially complete when:
(i) Construction is sufficiently completed in accordance with
plans and specifications so that the project may be used for its
intended purpose, and;
(ii) The project is producing products of the quantity and
quality and at the conversion and energy efficiencies proposed in
the completed application submitted by the lender and borrower and
approved by the Rural Development.
(2) The State Director must concur that the project is
substantially complete. The following evidence, in form and
substance satisfactory to the State Director and lender, must be
submitted prior to such concurrence:
(i) A certificate from the project engineer stating that all
facilities are substantially complete. Engineers who design
specialized equipment or processes must also certify that
construction/fabrication is acceptable in accordance with plans and
specifications previously approved by them. The certification of
the project engineer must be based upon a project start-up
procedure where the complete project operates continuously to reach
steady-state operating conditions. During this period contractors
and engineers will identify and correct problems in operations,
malfunctions in equipment, failure in materials and defects in
workmanship. After this pre-startup, the certifying engineers will
monitor project operations for a continuous period of at least 72
hours or 3 consecutive batch runs as appropriate to assure that all
equipment is operating satisfactorily at rated capacity and
efficiency.
(ii) Copies of system operation and performance data obtained
during project start-up.
(iii) Exceptions to substantial completion and a list of
nonsubstantial items which must be completed prior to release of
any contractor's retainage.
(3) If the project is not producing products of the required
quantity or quality at the prescribed conversion efficiencies, even
though the project is otherwise physically complete in accordance
with paragraph (1)(i) of this subparagraph, the project engineer
will prepare a report identifying the corrective actions including
an estimate of costs and additional time necessary to meet
established performance criteria.
(4) The project must be certified to be substantially complete
by an independent engineer if any portion of the project has been
designed or constructed by the borrower or the project engineer has
participated in any portion of the construction.
(B) Modification of plans and specifications will not be made
without the written authorization of the project engineer.
(C) The Administrator, State Director or their representative's
acceptance or concurrence in feasibility studies, preliminary
engineering reports, plans, specifications, contract documents and
payment estimates will not be construed as a representation of the
adequacy of same, reliability of cost estimates or quality of
construction, nor will such acceptance or concurrence be deemed a
waiver of any of the Government's rights or remedies against any
person or party. Reviews and construction inspections by the
Administrator, State Director or their representatives are solely
for the benefit of the Government and do not relieve the lender or
borrower of their obligation to conduct project reviews and
inspections.
(III) Project Construction.
(A) Borrower will not award contracts for the construction of
any project facilities unless and until:
(1) The borrower obtains applicable construction permits,
right-of-ways, licenses and approvals of Federal, State and local
authorities for the construction of such facilities.
(2) The State Director concurs in applicable plans,
specifications and contract documents. Standard contract documents
prescribed for use in Federally assisted projects may be used as a
guide for determining the minimum standards for contract
acceptability. These standard documents are contained in Guides 18
and 19 of subpart A of part 1942 of this chapter (available in any
Rural Development office).
(B) The borrower has the responsibility, without recourse to the
Government, for the settlement and satisfaction of all contractual
and administrative issues arising out of procurements. This
includes, but is not limited to, disputes, claims, protests of
awards, or other matters of a contractual nature. Matters
concerning violation of laws are to be referred to such local,
State, or Federal authority as may have proper jurisdiction.
(C) The borrower's attorney will review executed contract
documents including applicable performance and payment bonds and
provide a certificate to the borrower and lender that they have
been properly executed and that the persons executing these
documents have been properly authorized to do so.
(D) In all contracts for construction or facility improvement
awarded in excess of $100,000, the borrower will require bonds and
a bank letter of credit or cash deposit in escrow, assuring
performance and payment of 100 percent of the contract cost. The
surety will normally be in the form of performance and payment
bonds. Such assurance shall remain in full force and effect through
any warranty period. Companies providing performance and payment
bonds must hold a certificate of authority as an acceptable
security on Federal bonds and eligible for listing in Treasury
circular 510 as amended and be legally doing business in the State
the project is located.
(E) Project Changes. Any change in the project which may affect
collateral, its ultimate financial viability or compliance with the
conditional commitment must have prior approval of the lender and
Rural Development.
(1) Construction contracts will require that change orders
receive prior approval from the lender when such changes:
(a) Increase or decrease contract price,
(b) Materially modify contract provisions,
(c) Increase or decrease time of completion,
(d) Affect project performance.
(2) All change orders will be recorded on a chronologically
numbered contract change order as they occur. Change orders will
not be included in payment estimates until approved by the
borrower, project engineer, the lender and concurred in by Rural
Development.
(F) Warranty.
(1) All major equipment must be guaranteed by the manufacturer
to be free from defects in workmanship and materials for a period
of one year after start-up of equipment.
(2) Equipment purchased by a construction contractor or design
builder and all other work shall be further warranted to be free
from defect in material and workmanship by the contractor or the
design builder for a period of one year after substantial
completion of the contract.
(3) Applicable provisions to this effect shall be included in
equipment purchase orders or construction contracts.
(G) Lease agreements. Where the right of use or control of any
property or equipment not owned by the borrower is essential to the
successful operation of the project during the life of the loan,
such right will be evidenced by written agreements or contracts
between the owner(s) of the property or equipment and the borrower.
Lease agreements shall not contain provisions for restricted use of
the site or facility, forfeiture or similiar cancellation clauses
and shall provide for the right to transfer and lease without
restriction. Such lease contracts or agreements shall be approved
by the lender and Rural Development.
(IV) Project Control.
(A) Lender will adopt project control procedures to assure that
loan funds are applied for costs or expenses properly attributable
to the project (“Eligible Project Costs”) as proposed in the
completed application submitted by the lender and borrower and
approved by the Rural Development. A project monitoring account
(“Project Monitoring Account”) will be developed by lender for this
purpose and concurred in by the State Director. This account will
be divided into sufficient budget categories to permit adequate
control of expenditures and identification of potential budget
overruns.
(B) The first advance (“First Advance”) of loan funds to the
borrower will not commence from the Project Monitoring Account
prior to lender's receipt of evidence that:
(1) The borrower has made adequate provisions for compliance
with measures established by Rural Development to mitigate adverse
historical and environmental impacts.
(2) Applicable engineering, design/build, construction
management, inspection and plant start-up service agreements have
been obtained and accepted by the State Director and lender.
(3) The project engineer has prepared a detailed cost estimate
and construction schedule for all facilities related to the
project. This estimate must indicate that the project can be
completed with the funds available as shown on the Form RD 449-1,
“Application for Loan and Guarantee.” A reasonable contingency
amount will be included in the estimate. This contingency shall be
at least 20 percent of the estimated project costs for which firm
bids have not been received plus 5 percent of project costs for
which firm bids have been received. Construction interest and
inspection costs will be based upon a reasonable contingency for
unforeseen delays in project completion. The estimate shall include
a listing with associated costs of any proposed leasing
arrangements for property or equipment that is essential to the
successful operation of the project.
(4) All funds necessary for construction of project facilities
will be available when needed.
(5) The borrower has retained a project manager with sufficient
experience and training to supervise project construction and
engineering services on behalf of the borrower.
(C) After the first advance, future advances may be made from
the Project Monitoring Account, in accordance with prudent lender
practice, for all Eligible Project Costs established in the Project
Monitoring Account, provided these payments are made in accordance
with the terms of applicable contracts and are approved by the
borrower and, when applicable, recommended by the project
engineer.
(D) Payments for Eligible Project Costs incurred by the borrower
prior to satisfaction of the conditions precedent to the first
advance shall be made with borrower's funds or other nonguaranteed
loan funds only. These payments however, may be reimbursed through
the Project Monitoring Account as authorized by the State Director
after compliance with Paragraph (IV)(B) hereof. The lender will not
advance and the borrower will not be entitled to loan funds for
reimbursement if such costs or expenses incurred by the borrower
prior to the first advance, or at anytime thereafter, were for
costs or expenses other than Eligible Project Costs. Costs and
expenses accruing from but not limited to, interest charges imposed
by construction, equipment, material or service contracts, penalty
payments, damage claims, awards or settlements are not Eligible
Project Costs unless specifically approved by the State
Director.
(E) The lender will monitor the progress of construction and
undertake the reviews and project inspections necessary to
reasonably assure that funds are paid for Eligible Project Costs
and that problems in project development are expeditiously reported
to the State Director.
(F) The lender will prepare a monthly report showing the
expenditures made from each budget category of the Project
Monitoring Account. This report will include a review of
construction progress including proposed and approved contract
change orders and, to the extend possible, identify problems or
delays in construction or other matters which might affect
successful startup of project. This report may be based upon
information received from the project engineer and borrower and/or
independent observations of the lender. The report will be
initialed by the borrower and project engineer and submitted to the
State Director.
(G) Transfer of loan funds between established or new categories
of the Project Monitoring Account or any change in the total amount
of funds committed to the project will be reported by the lender to
the State Director as these changes occur.
Appendix E to Subpart E of Part 1980 - Environmental Assessment Guidelines
7:14.1.1.1.9.2.12.55.21 : Appendix E
Appendix E to Subpart E of Part 1980 - Environmental Assessment
Guidelines
In completing an assessment, it is important to understand the
comprehensive nature of the impacts which must be analyzed.
Consideration must be given to all potential impacts associated
with the construction of the project and its operation and
maintenance. The attainment of the project's major objectives often
induces or supports changes in population densities, land uses,
community services, transportation systems and resource
consumption. The impacts of these activities must also be
assessed.
The environmental reviewer should consult with appropriate
experts from Federal, State and local agencies, universities and
other organizations or groups whose views could be helpful in the
assessment of potential impacts. In so doing, each discussion which
is utilized in reaching a conclusion with respect to the degree of
an impact should be summarized in the assessment as accurately as
possible and include name, title, phone number, and organization of
the individual contacted, plus the date of contact. Related
correspondence should be attached to the assessment.
The Farmers Home Administration or its successor agency under
Public Law 103-354 assessment should be prepared in the following
format; it should address the listed items and questions and
contain as attachments the indicated descriptive materials, as well
as the environmental information submitted by the applicant.
These assessment guidelines have been designed to cover the wide
variety of impacts which may be encountered. Consequently, not
every issue or potential impact raised in these guildlines may be
relevant to each project. The purpose of the format is to give the
preparer an understanding of a standard range of impacts,
environmental factors and issues which may be encountered. In
preparing an assessment, each topic heading identified by a roman
numeral and each environmental factor listed under topic heading
IV, such as air quality for example, must be addressed.
The amount of analysis and material that must be provided will
depend upon the type and size of the project, the environment in
which it is located and the range and complexity of the potential
impacts. The amount of analysis and detail provided, therefore,
must be commensurate with the magnitude of the expected impact. The
analysis of each environmental factor (i.e., water quality) must be
taken to the point that a conclusion can be reached and supported
concerning the degree of the expected impact with respect to that
factor.
(I) Project description and need. Identify the name,
project number, location, and specific elements of the project
along with their sizes, and, when applicable, their design
capacities. Indicate the purpose of the project, Rural
Development's position regarding the need for it, and the extent or
area of land to be considered as the project site.
(II) Primary beneficiaries and related activities.
Identify any existing businesses or major developments that will
benefit from the project and those which will expand or locate in
the area because of the project. Specify by name, product, service,
and operations involved.
Identify any related activities which are defined as
interdependent parts of an Rural Development action. Such
undertakings are considered interdependent parts whenever they
either make possible or support the Rural Development action or are
themselves induced or supported by the Rural Development action or
another related activity. These activities may have been completed
in the very recent past and are now operational or they may
reasonably be expected to be accomplished in the near future.
Related activities may or may not be Federally permitted or
assisted. When they are, identify the involved Federal
agency(s).
In completing the remainder of the assessment, it must be
remembered that the impacts to be addressed are those which stem
from the project, the primary beneficiaries, and the related
activities.
(III) Description of project area. Describe the project
site and its present use. Describe the surrounding land uses;
indicate the directions and distances involved. The extent of the
surrounding land to be considered depends on the extent of the
impacts of the project, its related activities, and the primary
beneficiaries. Unique or sensitive areas must be pointed out. These
include residential, schools, hospitals, recreational, historical
sites, beaches, lakes, rivers, parks, floodplains, wetlands, dunes,
estuaries, barrier islands, natural landmarks, unstable soils,
steep slopes, aquifer recharge areas, important farmlands and
forestlands, prime rangelands, endangered species habitats, or
other delicate or rare ecosystems.
Attach adequate location maps of the project area, as well as
(1) a U.S. Geological Survey “15 minute” (“7 1/2 minute” if
available) topographic map which clearly delineates the area and
the location of the project elements, (2) the Department of Housing
and Urban Development's floodplain map(s) for the project area, (3)
site photos, (4) if completed, a standard soil survey for the
project and, (5) if available, an aerial photograph of the site.
When necessary for descriptive purposes or environmental analysis,
include land use maps or other graphic information. All graphic
materials shall be of high quality resolution.
(IV) Environmental impact. (1) Air Quality - Discuss, in
terms of the amounts and types of emissions to be produced, all
aspects of the project including beneficiaries' operations and
known indirect effects (such as increased motor vehicle traffic)
which will affect air quality. Indicate the existing air quality in
the area. Indicate if topographical or meteorological conditions
hinder or affect the dispersals of air emissions. Evaluate the
impact on air quality given the types and amounts of projected
emissions, the existing air quality and topographical and
meteorological conditions. Discuss the project's consistency with
the State's air quality implementation plan for the area, the
classification of the air quality control region within which the
project is located, and the status of compliance with air quality
standards within that region. Cite any contacts with appropriate
experts and agencies which must issue necessary permits.
(2) Water Quality - Discuss, in terms of amounts and types of
effluents all aspects of the project, including primary
beneficiaries' operations and known indirect effects which will
affect water quality. Indicate the existing water quality of
surface and/or underground water to be affected. Evaluate the
impacts of the project on this existing water quality. Indicate if
an aquifer recharge area is to be adversely affected. If the
project lies within or will affect a sole source aquifer recharge
area as designated by the Environmental Protection Agency (EPA),
contact the appropriate EPA regional office to determine if its
review is necessary. If it is, attach the results of its
review.
Indicate the source and available supply of raw water and the
extent to which the additional demand will affect the raw water
supply. Describe the wastewater treatment system(s) to be used and
indicate their capacity and their adequacy in terms of the degree
of treatment provided. Discuss the characteristics and uses of the
receiving waters for any sources of discharge. If the treatment
systems are or will be inadequate or overloaded, describe the steps
being taken for necessary improvements and their completion dates.
Compare such dates to the completion date of the Rural Development
project. Analyze the impacts on the receiving water during any
estimated period of inadequate treatment.
Discuss the project's consistency with the water quality
planning for the area, such as EPA's Section 208 areawide waste
treatment management plan. Describe how surface runoff is to be
handled and the effect of erosion on streams.
Evaluate the extent to which the project may create shortages
for or otherwise adversely affect the withdrawal capabilities of
other present users of the raw water supply, particularly in terms
of possible human health, safety, or welfare problems.
For projects utilizing a groundwater supply, evaluate the
potential for the project to exceed the safe pumping rate for the
aquifer to the extent that it would (1) adversely affect the
pumping capability of present users, (2) increase the likelihood of
brackish or saltwater intrusion, thereby decreasing water quality,
or (3) substantially increase surface subsidence risks.
For projects utilizing a surface water supply, evaluate the
potential for the project to (1) reduce flows below the minimum
required for the protection of fish and wildlife or (2) reduce
water quality standards below those established for the stream
classification at the point of withdrawal or the adjacent
downstream section.
Cite contacts with appropriate experts and agencies that must
issue necessary permits.
(3) Solid Waste Management - Indicate all aspects of the
project, including primary beneficiaries' operations, and known
indirect effects which will necessitate the disposal of solid
wastes. Indicate the kinds and expected quantities of solid wastes
involved and the disposal techniques to be used. Evaluate the
adequacy to these techniques especially in relationship to air and
water quality. Indicate if recycling or resource recovery programs
are or will be used. Cite any contacts with appropriate experts and
agencies that must issue necessary permits.
(4) Land Use - Given the description of land uses as previously
indicated, evaluate (a) the effect of changing the land use of the
project site and (b) how this change in land use will affect the
surrounding land uses and those within the project's area of
environmental impact. Particularly address the potential impacts to
the unique or sensitive areas discussed under Section III,
Description of Project Area. Also address any changes in land use
which may result from demand for feedstock for the plant's
operation. Describe the existing land use plan and zoning
restrictions for the project area. Evaluate the consistency of the
project and its impacts with these plans.
(5) Transportation - Describe available facilities such as
highways and rail. Discuss whether the project will result in an
increase in motor vehicle traffic and the existing roads' ability
to safely accommodate this increase. Indicate if additional traffic
control devices are to be installed. Describe new traffic patterns
which will arise because of the project. Discuss how these new
traffic patterns will affect the land uses described above,
especially residential, hospitals, schools, and recreational.
Describe the consistency of the project's transportation impacts
with the transportation plans for the area and any air quality
control plans. Cite any contact with appropriate experts.
(6) Natural Environment - Indicate all aspects of the project,
including construction, beneficiaries' operations, and known
indirect effects which will affect the natural environment
including wildlife, their habitats, and unique natural features.
Cite contacts with appropriate experts. If an area listed on the
National Registry of Natural Landmarks may be affected, consult
with the Department of Interior and document these consultations
and any agreements reached regarding avoidance or mitigation of
potential adverse impacts.
(7) Human Population - Indicate the number of people to be
relocated and arrangements being made for this relocation. Discuss
how impacts resulting from the project such as changes in land use,
transportation changes, air emissions, noise, odor, etc., will
effect nearby residents and their lifestyles or users of the
project area and surrounding areas. Cite contacts with appropriate
experts.
(8) Construction - Indicate the potential effects of
construction of the project on air quality, water quality noise
levels, solid waste disposal, soil erosion and siltation. Describe
the measures that will be employed to limit adverse effects. Give
particular consideration to erosion, stream siltation, and clearing
operations.
(9) Energy Impacts - Indicate the project's and its primary
beneficiaries' effects on the area's existing energy supplies. This
discussion should address not only the direct energy utilization,
but any major indirect utilization resulting from the siting of the
project. Describe the availability of these supplies to the project
site. Discuss whether the project will utilize a large share of the
remaining capacity of an energy supply or will create a shortage of
such supply. Discuss any steps to be taken to conserve energy.
(10) Discuss any of the following areas which may be relevant:
noise, vibrations, safety, seismic conditions, fire prone
locations, radiation, and aesthetic considerations. Cite any
discussions with appropriate experts.
(V) Coastal Zone Management Act. Indicate if the project
is within or will impact a coastal area defined as such by the
state's approved Coastal Zone Management Program. If so, consult
with the State agency responsible for the Program to determine the
project's consistency with it. The results of this coordination
shall be included in the assessment and considered in completing
the environmental impact determination and environmental
findings,
(VI) Compliance with Advisory Council on Historic
Preservation's regulations. In this section, the environmental
reviewer shall detail the steps taken to comply with the above
regulations as specified in Subpart F of Part 1901 of this Chapter.
First, indicate that the National Register of Historic Places,
including its monthly supplements, has been reviewed and whether
there are any listed properties located within the area to be
affected by the project. Second, indicate the steps taken such as
historical/archeological surveys to determine if there are any
properties eligible for listing located within the affected area.
Summarize the results of the consultation with the State Historic
Preservation Officer (SHPO) and attach appropriate documentation of
the SHPO's views. Discuss the views of any other experts contacted.
Based upon the above review process and the views of the SHPO,
state whether or not an eligible or listed property will be
affected.
If there will be an effect, discuss all of the steps and
protective measures taken to complete the Advisory Council's
regulations. Describe the affected property and the nature of the
effect. Attach to the asessment the results of the coordination
process with the Advisory Council on Historic Preservation.
(VII) Compliance with the Wild and Scenic Rivers Act.
Indicate whether the project will affect a river or portion of it
which is either included in the National Wild and Scenic Rivers
System or designated for potential addition to the System. This
analysis shall be conducted through discussions with the
appropriate regional office of the National Park Service or the
Forest Service when its lands are involved, as well as the
appropriate State agencies having implementation authorities. A
summary of discussions held or any required formal coordination
shall be included in the assessment.
(VIII) Compliance with the Endangered Species Act.
Indicate whether the project will either (1) affect a listed
endangered or threatened species or critical habitat or (2)
adversely affect a proposed critical habitat for an endangered or
threatened species or jeopardize the continued existence of a
proposed endangered or threatened species. This analysis shall be
conducted in consultation with the Fish and Wildlife Service and
the National Marine Fisheries Service, when appropriate.
The results of any required coordination shall be included in
the assessment along with any completed biological opinion and
mitigation measures to be required for the project. These factors
shall be considered in completing the environmental impact
determination.
(IX) Compliance with Executive Order 11988, Floodplain
Management, and Executive Order 11990, Protection of Wetlands.
Indicate whether the project is either located within a 100-year
floodplain (500-year floodplain for a critical action) or a wetland
or will impact a floodplain or wetland. If so, determine if there
is a practicable alternative project or location. If there is no
such alternative, determine whether all practicable mitigation
measures are included in the project and document as an attachment
these determinations and the steps taken to inform the public,
locate alternatives, and mitigate potential adverse impacts. See
the U.S. Water Resource Council's Floodplain Management
Guidelines for more specific guidance.
(X) State Environmental Policy Act. Indicate if the
proposed project is subject to a State environmental policy act or
similar regulation. Summarize the results of compliance with these
requirements and attach available documentation.
(XI) Consultation requirements. Attach the comments of
any State or local agency received through the implementation of
Executive Order 12372, Intergovernmental Review of Federal
Programs.
(XII) Environmental analysis of participating Federal
agency. Indicate if another federal agency is participating in
the project either through the provision of additional funds, a
companion project, or a permit review authority. Summarize the
results of the involved agency's environmental impact analysis and
attach available documentation.
(XIII) Reaction to project. Discuss any negative comments
or public views raised about the project and the consideration
given to these comments. Indicate whether a public hearing or
public information meeting has been held either by the applicant or
Rural Development to include a summary of the results and any
objections raised. Indicate any other examples of the community's
awareness of the project, such as newspaper articles or public
notifications.
(XIV) Cumulative impacts. Summarize the cumulative
impacts of this project and the related activities. Give particular
attention to land use changes and air and water quality impacts.
Summarize the results of the environmental impact analysis done for
any of these related activities and/or your discussion with the
sponsoring agencies. Attach available documentation of the
analysis.
(XV) Adverse impact. Summarize the potential adverse
impacts of the proposal as pointed out in the above analysis.
(XVI) Alternatives. Discuss the feasibility of
alternatives to the project and their environmental impacts. These
alternatives should include (a) alternative location, (b)
alternative designs, (c) alternative projects having similar
benefits, and (d) no project.
(XVII) Mitigation measures. Describe any measures which
will be taken or required by Rural Development to avoid or mitigate
the identified adverse impacts. Such measures shall be included as
special requirements or provisions to the offer of financial
assistance.
Appendixes F-G to Subpart E of Part 1980 [Reserved]
7:14.1.1.1.9.2.12.55.22 :
Appendixes F-G to Subpart E of Part 1980 [Reserved]
Appendix H to Subpart E of Part 1980 - Suggested Format for the Opinion of the Lender's Legal Counsel
7:14.1.1.1.9.2.12.55.23 : Appendix H
Appendix H to Subpart E of Part 1980 - Suggested Format for the
Opinion of the Lender's Legal Counsel (Legal Opinion to be Retyped
on Lender's Counsel's Letterhead) To: (Name of Lender).
I/We have acted as counsel to (Lender) ____ in connection with a
$ (amount) ____ (type) ____ loan by the (Lender) ____ (hereinafter
“the Lender” to (Borrower) ____ (hereinafter “Borrower”), the terms
of which loans are set forth in a certain Loan Agreement
(hereinafter “the Loan Agreement”) executed by the Lender and
Borrower on (date) ____.
In connection with this loan, I/we have examined:
1. The corporate records of Borrower, including its Articles of
Incorporation, By-Laws and Resolutions of its Board of
Directors.
2. The Loan Agreement between the Lender and Borrower.
3. The Security Agreement executed by Borrower on (date)
____.
4. The Guaranty (where applicable) executed on (date) ____ by
(personal guarantors) ____.
5. Financing Statements executed by Borrower and the Lender.
6. Real Estate Mortgages dated ____ and executed by Borrower in
favor of the Lender.
7. Real Estate Mortgages dated ____ and/or other security
documents dated____ executed by (personal guarantors) ____ in favor
of the Bank.
8. The appropriate title and/or lien searches relating to
Borrower's property.
9. The pledge of stock and instruments related thereto.
10. Such other materials, including relevant provisions of the
laws of this state as I/we have deemed pertinent as a basis for
rendering the opinion hereafter set forth.
In Some Circumstances
11. Lease(s) between Borrower and (lessor's name) ____ for the
rental of (property being rented) ____, (if real property, give the
address of the premises; if machinery equipment, etc., give brief,
precise description of property for a (length of lease) ____ term
commencing on (date) ____.
Based on the foregoing examinations, I am/we are of the opinion
and advise you that:
1. Borrower is a duly organized corporation in good standing
under the laws of the Commonwealth/State of (State) ____.
2. Borrower has the necessary corporate power to authorize and
has taken the necessary corporate action to authorize the Loan
Agreement and to execute and deliver the Note, Security Agreement,
Financing Statement, and Mortgage. Said instruments hereinafter
collectively referred to as the “Loan Instruments.”
3. The Loan Instruments were all duly authorized, executed, and
delivered and constitute the valid and legally binding obligation
of the Borrower and collectively create and valid (first) lien upon
or valid security interest in favor of the Lender, in the security
covered thereby, and are enforceable in accordance with their terms
except to the extent that the enforceability (but not the validity)
thereof may be limited by laws of bankruptcy, insolvency, or other
laws generally affecting creditors' rights.
4. The execution and delivery of the Loan Instruments and
compliance with the provisions thereof under the circumstances
contemplated thereby did not, do not and will not in any material
respect conflict with, constitute default under, or contravene any
contract or agreement or other instrument to which the Borrower is
a party or any existing law, regulation, court order, or consent
decree or device to which the Borrower is subject.
5. All applicable Federal, State and local tax returns and
reports as required have been duly filed by Borrower and all
Federal, State and local taxes, assessments and other governmental
charges imposed upon Borrower or its respective assets, which are
due and payable, have been paid.
6. The guaranty has been duly executed by the Guarantors and is
a legal, valid and binding joint and several obligations of the
Guarantors, enforceable in accordance with its terms, except to the
extent that the enforceability (but not the validity) thereof may
be limited by laws of bankruptcy, insolvency, or other laws
generally affecting creditors' rights.
7. All necessary consents, approvals, or authorizations of any
governmental agency or regulatory authority or of stockholders
which are necessary have been obtained. The improvements and the
use of the property comply in all respects with all Federal, State,
and local laws applicable thereto.
8. (In cases involving subordinate or other than first lien
position) That the mortgage/deed of trust on Borrower's real estate
and (fixtures, e.g., machinery and equipment) and the security
interest on (type of collateral, e.g., machinery and equipment,
accounts, receivables and inventory) both given as security to the
Lender for the Loan, will be subordinate to (first mortgagee) ____
given as security for a loan in the amount of $____ and the
security interest in Borrower's (type of collateral, e.g., accounts
inventory) ____ given to (secured creditor) ____ as security for a
loan (state type of loan, i.e., revolving line of credit, ____ if
known) in the amount of $____.
9. That there are no liens, as of the date hereof, on record
with respect to the property of Borrower other than those set forth
above.
10. There are no actions, suits or proceedings pending or, to
the best of our knowledge, threatened before any court or
administrative agency against Borrower which could materially
adversely affect the financial condition and operations of
Borrower.
11. Borrower has good and marketable title to the real estate
security free and clear of all liens and encumbrances other than
those set forth above. I/we have no knowledge of any defect in the
title of the Borrower to the property described in the Loan
Instruments.
12. Borrower is the absolute owner of all property given to
secure the repayment of the loan, free and clear of all liens,
encumbrances, and security interests.
13. Duly executed and valid functioning statements have been
filed in all offices in which it is necessary to file financing
statements to fully perfect the security interests granted in the
Loan Instruments.
14. Duly executed real estate mortgages/deeds of trust have been
recorded in all offices in which it is necessary to record to fully
perfect the security interests granted in the Loan Instruments.
15. (IN SOME OTHER CIRCUMSTANCES) The Indemnification Agreement
has been duly executed by the Indemnitors and is a legal, valid and
binding joint and several obligation of the Indemnitors,
enforceable in accordance with its terms, except to the extent that
the enforceability (but not the validity) thereof may be limited by
laws of bankruptcy, insolvency, or other laws generally affecting
creditors' rights.
16. That the lease contains a valid and enforceable right of
assignment and right of reassignment, enforceable in accordance
with its terms, except to the extent the enforceability (but not
the validity) thereof may be limited by laws of bankruptcy,
insolvency, or other laws generally affecting creditors'
rights.
17. The Lender's lien has been duly noted on all motor vehicle
titles, stock certificates or other instruments where such
notations are required for proper perfection of security interests
therein.
18. That a valid pledge of the outstanding and unissued stock
and/or shares of Borrower has been obtained and the Lender has a
validly perfected and enforceable security interest in the
shares/stock of Borrower, except to the extent the enforceability
thereof may be limited by laws of bankruptcy, insolvency, or other
laws generally affecting creditors rights.
[52 FR 6522, Mar. 4, 1987]
Appendix I to Subpart E of Part 1980 - Instructions for Loan Guarantees for Drought and Disaster Relief
7:14.1.1.1.9.2.12.55.24 : Appendix I
Appendix I to Subpart E of Part 1980 - Instructions for Loan
Guarantees for Drought and Disaster Relief
A. In general. Drought and Disaster (D&D) guaranteed
loans are authorized by section 331 (“Disaster Assistance for Rural
Business Enterprises”) of the Disaster Assistance Act of 1988,
which provides for guarantees of up to 90 percent of the unpaid
principal amount of qualifying loans. Interest and protective
advances are not covered by the guarantee. Drought and Disaster
Guaranteed Loans may be either to assist in alleviating financial
distress caused to rural business entities, directly or indirectly,
by drought, hail, excessive moisture, or related conditions
occurring in 1988, or to assist such entities that refinance or
restructure debt as a result of losses incurred, directly or
indirectly, because of such natural disasters. Where used in this
appendix, the term “natural disaster(s)” refers only to drought,
hail, excessive moisture, and related conditions occurring in 1988.
All provisions of Subparts A and E of Part 1980 of this chapter
apply to D&D loans, except as provided in this appendix. All
forms used in connection with a D&D loan will be those used in
connection with a B&I guaranteed loan, except for the following
three forms that are incorporated in this Appendix I of this
Subpart E, made a part hereof:
(1) Form FmHA or its successor agency under Public Law 103-354
1980-68, “Lender's Agreement - Drought and Disaster Guaranteed
Loans,” or successor form will be used instead of Form FmHA or its
successor agency under Public Law 103-354 449-35, “Lender's
Agreement.”
(2) Form FmHA or its successor agency under Public Law 103-354
1980-69, “Loan Note Guarantee - Drought and Disaster Guaranteed
Loans,” or successor form will be used instead of Form FmHA or its
successor agency under Public Law 103-354 449-34, “Loan Note
Guarantee.”
(3) Form FmHA or its successor agency under Public Law 103-354
1980-70, “Assignment Guarantee Agreement - Drought and Disaster
Guaranteed Loans,” or successor form will be used instead of Form
FmHA or its successor agency under Public Law 103-354 449-36,
“Assignment Guarantee Agreement.”
B. Loan purpose. Except for §§ 1980.411(a)(11), 1980.412,
and section C., below, loan procees may be used for purposes
described in § 1980.411(a) if such use of loan proceeds will assist
in alleviating financial distress caused, directly or indirectly,
by drought, hail, excessive moisture, or related conditions which
occurred in 1988. In lieu of the debt refinancing requirements in §
1980.411(a)(11), the following refinancing requirements apply to
D&D loans. Loan proceeds to be used for refinancing must be
used solely for refinancing or restructuring of debts as a result
of losses incurred, directly or indirectly, as a result of drought,
hail, excessive moisture, or related condition occurring in 1988,
and such refinancing or restructuring of debt(s) must be essential
for the borrower to meet its financial obligations in a timely
fashion. In addition, D&D loan proceeds may be used for hotels,
motels, tourist or recreation facilities which meet the eligibility
requirements for D&D guaranteed loans.
C. Ineligible loan purposes. See § 1980.412. Except for
hotels, motels, tourist and recreation facilities mentioned in
section B of this appendix, purposes listed as ineligible B&I
loan purposes are ineligible D&D loan purposes. In addition,
D&D guaranteed loans may not be used for:
(1) Business expansion, acquisition of real estate, machinery,
equipment, inventory, other goods or services, or for any other
purpose unless related directly to the financial distress or loss
that is the basis for the D&D guaranteed loan.
(2) Any eligible agricultural production purpose if annual
tillage of the soil is involved.
(3) Refinancing or restructuring debt(s) which are or were in
payment default more than 60 consecutive days during the 12 months
preceding the date of the adverse financial effect of the natural
disaster of 1988 upon the borrower.
D. Transactions which will not be guaranteed. In addition
to transactions listed in § 1980.413, Rural Development will not
guarantee:
(1) D&D guaranteed loan(s) to any borrower if the total
cumulative principal amount of D&D guaranteed loan(s) to that
borrower would exceed $500,000, or
(2) Any D&D guaranteed loan if the completed application is
not received by Rural Developmenton or before September 30,
1991.
E. Borrower equity requirements. See § 1980.441. In lieu
of the borrower equity requirements in § 1980.441, paragraphs (a)
and (b), the following applies to D&D loans. Tangibles balance
sheet equity must be positive when the Loan Note Guarantee is
issued. Equity must be such that, when considered with other credit
factors, repayment of the loan and the continued success of the
business operation are reasonably assured. Requirements of §
1980.441(c) apply to D&D guaranteed loans.
F. Filing and processing preapplications and
applications. See § 1980.451. All requirements of § 1980.451
remain in effect. But, in addition to the information required as
part of a preapplication under § 1980.451(f), and unless previously
submitted, as a part of an application under § 1980.451(i) evidence
is required which demonstrates:
(1) The causal relationship between a 1988 natural disaster and
the financial distress or loss upon which the preapplication or
application is based; and,
(2) That the amount of the loan requested is not greater than
the amount necessary for curing the problems caused by the natural
disaster. Financial distress or loss shall be determined on the
basis of a comparison of financial data for comparable periods of
time and need not necessarily be based on data at the year's end.
Evidence submitted may include, but is not limited to, the
following:
(a) Evidence of financial loss or distress (including loss or
distress caused by business interruption) resulting from physical
damage caused by natural disaster, or
(b) Evidence that the financial loss and/or distress of the
business is the direct or indirect result of loss of sales,
business interruption, loss of markets, shortage of raw materials,
or decline in patronage or customers caused by a natural disaster.
It must be shown that business operations were damaged as a result
of such natural disaster.
G. Loan guarantee limit. See § 1980.20 of Subpart A. The
maximum loss covered by the Loan Note Guarantee, Form FmHA or its
successor agency under Public Law 103-354 1980-69, can never exceed
the percentage of guarantee multiplied by the unpaid principal
amount of the loan as evidenced by the note(s) or by assumption
agreement(s). Interest, capitalized interest, and protective
advances are not covered by the guarantee of a D&D loan.
H. Percentage of guarantee. See § 1980.420. The maximum
percentage of guarantee on a D&D loan is 90 percent of the
unpaid principal.
I. Lender's existing unguaranteed exposure. The
provisions of § 1980.452 Administrative C. 1(d) do not apply.
J. No direct or “insured” loans. Sections 1980.423(b),
1980.488(b), 1980.481, 1980.411(b), and other provisions of this
subpart dealing with “insured” or direct loans do not apply to
D&D loans. All D&D loans are Rural Development guaranteed
loans. Rural Development has no authority to make D&D loans
directly to borrowers.
[54 FR 5, Jan. 3, 1989, as amended at 54 FR 14792, Apr. 13, 1989;
54 FR 26946, June 27, 1989; 80 FR 9911, Feb. 24, 2015] Editor's
Note:At 80 FR 9911, Feb. 24, 2015, appendix I was amended by
removing “Form FmHA or its successor agency under Public Law
103-354” in paragraphs X.D and X.F and adding “Form RD” in its
place; however the amendment could not be incorporated because the
paragraphs did not exist. Additionally the appendix was amended by
removing “will be used” in paragraphs IV., and E.1 and 2, and
adding “or successor form will be used” in its place; however, the
amendments could not be incorporated because the paragraphs did not
exist.
Appendix J to Subpart E of Part 1980 [Reserved]
7:14.1.1.1.9.2.12.55.25 : Appendix J
Appendix J to Subpart E of Part 1980 [Reserved]
Appendix K to Subpart E of Part 1980 - Regulations for Loan Guarantees for Disaster Assistance For Rural Business Enterprises
7:14.1.1.1.9.2.12.55.26 : Appendix K
Appendix K to Subpart E of Part 1980 - Regulations for Loan
Guarantees for Disaster Assistance For Rural Business Enterprises
A. In general
Disaster Assistance for Rural Business Enterprises (DARBE)
guaranteed loans are authorized by Section 401 of the Disaster
Assistance Act of 1989, which provides for guarantees of up to 90
percent of the unpaid principal and interest amount of qualifying
loans, or $2,500,000 whichever is less, to any one borrower. DARBE
guaranteed loans may be either to assist in alleviating financial
distress caused to rural business entities, directly or indirectly,
by drought, freeze, storm, excessive moisture, earthquake, or
related conditions occurring in 1988 or 1989, or to assist such
entities that refinance or restructure debt as a result of losses
incurred, directly or indirectly, because of such natural
disasters. Where used in this appendix, the term “natural
disaster(s)” refers only to drought, freeze, storm, excessive
moisture, earthquake, and related conditions occurring in 1988 or
1989. All provisions of subparts A and E of part 1980 of this
chapter apply to DARBE loans, except as provided in this appendix.
All forms used in connection with a DARBE loan will be those used
in connection with a Business and Industrial (B&I) guaranteed
loan, except for the following three forms that are incorporated in
this appendix K of this subpart E, made a part hereof:
(1) Form RD 1980-71, “Lender's Agreement - Disaster Assistance
for Rural Business Enterprise Guaranteed Loans,” or successor form
will be used instead of Form RD 449-35, “Lender's Agreement.”
(2) Form RD 1980-72, “Loan Note Guarantee - Disaster Assistance
for Rural Business Enterprise Guaranteed Loans,” or successor form
will be used instead of Form RD 449-34, “Loan Note Guarantee.”
(3) Form RD 1980-73, “Assignment Guarantee Agreement - Disaster
Assistance for Rural Business Enterprise Guaranteed Loans,” or
successor form will be used instead of Form RD 449-36, “Assignment
Guarantee Agreement.”
B. Loan purposes
Loan proceeds may be used for purposes described in §
1980.411(a), except in lieu of the debt refinancing requirements in
§ 1980.411(a)(11), the following refinancing requirements apply to
DARBE loans. Loan proceeds to be used for refinancing must be used
solely for refinancing or restructuring of debts as a result of
losses incurred, directly or indirectly, as a result of drought,
freeze, storm, excessive moisture, earthquake, or related
conditions occurring in 1988 or 1989, and such refinancing or
restructuring of debt(s) must be essential for the borrower to meet
its financial obligations in a timely fashion. DARBE loan proceeds
may be used for hotels, motels, tourist, or recreation facilities
which meet the eligibility requirements of DARBE guaranteed loans
in addition to the eligible loan purposes as stated in RD
Instruction 1980-E. In addition, DARBE loan proceeds may be used
for business enterprises engaged in agricultural production
(production agriculture) which means the cultivation, production
(growing), and harvesting, either directly or through integrated
operations, of agricultural products (crops, animals, birds, and
marine life, either for fibers or food for human consumption), and
disposal or marketing thereof, the raising, housing, feeding
(including commercial custom feedlots), breeding, hatching, control
and/or management of farm and domestic animals. Other eligible uses
of loan proceeds under agricultural production include:
(1) Commercial nurseries primarily engaged in the production of
ornamental plants and trees and other nursery products such as
bulbs, florists' greens, flowers, shrubbery, flower and vegetable
seeds, sod, and the growing of vegetables from seed to the
transplant stage.
(2) Forestry which includes establishments primarily engaged in
the operation of timber tracts, tree farms, forest nurseries, and
related activities such as reforestation.
(3) Loans for livestock and poultry processing as identified
under eligible purposes.
(4) The growing of mushrooms or hydroponics.
In addition, those business enterprises which qualify for
assistance as agricultural production must be ineligible entities
for FmHA or its successor agency under Public Law 103-354 farmer
program loans because the entity exceeds the definition of a
family-size farm as defined by RD Instruction 1941-A, §
1941.4(d).
C. Ineligible loan purposes
RD Instruction 1980-E, § 1980.412 are ineligible purposes for
DARBE guaranteed loans except for hotels, motels, tourist,
recreation facilities and agricultural production (production
agriculture) as defined in § 1980.412(e), DARBE guaranteed loans
may not be used for:
(1) Business expansion, acquisition of real estate, machinery,
equipment, inventory, other goods or services, or for any other
purpose unless related directly to the financial distress or loss
that is the basis for the DARBE guaranteed loan.
(2) Alleviating financial distress of entities engaged in
agricultural production that are eligible for other Rural
Development -type farm loan programs.
D. Transactions which will not be guaranteed
In addition to transactions listed in RD Instruction 1980-E, §
1980.413, except for § 1980.413(a)(3), Rural Development will not
make DARBE guaranteed loans if the completed application is not
received by Rural Development on or before September 30, 1991, nor
will Rural Development make subsequent DARBE guarantee loans.
E. Borrower equity requirements
See RD Instruction 1980-E, § 1980.441. In lieu of the borrower
equity requirements in § 1980.441, paragraphs (a) and (b), the
following applies to DARBE loans. Tangible balance sheet equity
must be positive when the Loan Note Guarantee is issued. Equity
must be such that, when considered with other credit factors,
repayment of the loan and the continued success of the business
operation are reasonably assured. Requirements of § 1980.441(c)
apply to DARBE guaranteed loans.
F. Filing and processing preapplications and applications
See RD Instruction 1980-E, § 1980.451. All requirements of §
1980.451 remain in effect. In addition to the information required
as part of a preapplication under § 1980.451(f), and unless
previously submitted as a part of an application under §
1980.451(i) evidence is required which demonstrates to Rural
Development 's satisfaction:
(1) The causal relationship between a 1988 or 1989 natural
disaster and the financial distress or loss upon which the
preapplication or application is based; and,
(2) That the amount of the loan requested is not greater than
the amount necessary for curing the problems caused by the natural
disaster. Financial distress or loss shall be determined on the
basis of a comparison of financial data for comparable periods of
time and need not necessarily be based on data at the year's end.
Evidence submitted may include, but is not limited to, the
following:
(a) Evidence of financial loss or distress (including loss or
distress caused by business interruption) resulting from physical
damage caused by natural disaster, or
(b) Evidence that the financial loss and/or distress of the
business is the direct or indirect result of loss of sales,
business interruption, loss of markets, shortage of raw materials,
or decline in patronage or customers caused by a nautral disaster.
It must be shown that business operations were damaged as a result
of such natural disaster.
(3) Evidence of compliance with Sodbuster and Swampbuster
requirements as referenced in paragraph K below.
G. Loan guarantee limit. The total principal amount of
DARBE guaranteed loans to any one borrower cannot exceed
$10,000,000. The maximum loss covered by Form RD 1980-72, “Loan
Note Guarantee DARBE,” (or successor form) issued on any one
borrower can never exceed the percentage of guarantee multiplied by
the unpaid principal and accrued interest on the loan as evidenced
by the note(s) or by assumption agreement(s), and protective
advances, or $2,500,000, whichever is the lesser amount.
H. Percentage of guarantee. The provisions of RD
instruction 1980-E, § 1980.420 will not apply to DARBE. For loans
in excess of $2,000,000, the percentage of guarantee will be
calculated so that the guaranteed portion of the principal amount
of the loan cannot exceed $2,000,000. For loans of $2,000,000 or
less the maximum percentage of guarantee will be 90 percent. For
example, a loan of $10,000,000 would not exceed a 20 percent
guarantee; a $5,000,000 loan would not exceed a 40 percent
guarantee.
I. Lender's existing unguaranteed exposure
The provisions of § 1980.452 ADMINISTRATIVE C. 1(d) do not
apply.
J. No direct or insured loans
RD Instruction 1980-E, §§ 1980.423(b), 1980.488(b), 1980.481,
1980.411(b), and other provisions of this subpart dealing with
insured or direct loans do not apply to DARBE loans. All DARBE
loans are Rural Development guaranteed loans. Rural Development has
no authority to make DARBE loans directly to borrowers.
K. Sodbuster and Swampbuster requirements
The provisions of 7 CFR part 1970 will apply to loans made to
rural business enterprises engaged in agricultural production.
[54 FR 42483, Oct. 17, 1989, as amended at 55 FR 137, Jan. 3, 1990;
55 FR 19245, May 8, 1990; 80 FR 9911, Feb. 24, 2015; 81 FR 11048,
Mar. 2, 2016]
Exhibit G to Subpart E of Part 1980
7:14.1.1.1.9.2.12.55.27 :
Exhibit G to Subpart E of Part 1980 Note:
The Exhibit is not published in the Code of Federal Regulations.
It is available in any Rural Development office.
[54 FR 1599, Jan. 13, 1989, as amended at 80 FR 9911, Feb. 24,
2015]